20-F

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                   FORM 20-F

       
[ ]       REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
          THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       OR
[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE TRANSITION PERIOD FROM                TO



                    COMMISSION FILE NUMBER:

                            VIVENDI UNIVERSAL, S.A.
             (Exact name of Registrant as specified in its charter)

                                                    
                        N/A                                             REPUBLIC OF FRANCE
  (Translation of Registrant's name into English)        (Jurisdiction of incorporation or organization)



                            42, AVENUE DE FRIEDLAND
                              75380 PARIS CEDEX 08
                                     FRANCE
                    (Address of principal executive offices)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:



                                                               NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                         ON WHICH REGISTERED
                    -------------------                        ---------------------
                                                           
Ordinary Shares, nominal value E 5.50 per share               New York Stock Exchange*
American Depositary Shares (as evidenced by American
  Depositary Receipts), each representing one share, nominal
  value E 5.50 per share                                      New York Stock Exchange


- ---------------
* Listed, not for trading or quotation purposes, but only in connection with the
  registration of American Depositary Shares, pursuant to the requirements of
  the Securities and Exchange Commission.

                             ---------------------

   SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE
                                   ACT:  NONE

 SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
                               OF THE ACT:  NONE

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:

                                                            
American Depositary Shares..................................      92,029,885
Ordinary Shares, nominal value E 5.50 per share.............   1,068,558,994



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                             
      Yes [X]                   No [ ]



Indicate by check mark which financial statement item the Registrant has elected
to follow:

                             
  Item 17 [ ]                   Item 18 [X]



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- --------------------------------------------------------------------------------


                          PRESENTATION OF INFORMATION

     This Annual Report on Form 20-F (referred to herein as this "annual report"
or this "document") has been filed with the United States Securities and
Exchange Commission (SEC).

     "Vivendi Universal" refers to Vivendi Universal, S.A., a societe anonyme, a
form of limited liability company, organized under the laws of the Republic of
France, and its direct and indirect subsidiaries. "Vivendi" refers to Vivendi,
S.A., the predecessor company to Vivendi Universal. Unless the context requires
otherwise, references to "we," "us" and "our" mean Vivendi Universal, S.A. and
its subsidiaries or its predecessor company and its subsidiaries. "Vivendi
Universal Entertainment" and "VUE" refer to Vivendi Universal Entertainment
LLLP, a limited liability limited partnership organized under the laws of the
State of Delaware. "Vivendi Environnement" changed its name pursuant to a
shareholder resolution adopted on April 30, 2003 to "Veolia Environnement."
"Shares" refers to the ordinary shares of Vivendi Universal. The principal
trading market for the ordinary shares of Vivendi Universal is EuroNext Paris
S.A., or the Paris Bourse. "ADS" or "ADR" refers to the American Depositary
Shares or Receipts, respectively, of Vivendi Universal which are listed on the
New York Stock Exchange, or NYSE, each of which represents the right to receive
one Vivendi Universal ordinary share.

     This annual report includes Vivendi Universal's Consolidated Financial
Statements for the years ended December 31, 2002, 2001 and 2000 and as of
December 31, 2002 and 2001. Vivendi Universal's Consolidated Financial
Statements, including the notes thereto, are included in "Item 18--Financial
Statements" and have been prepared in accordance with generally accepted
accounting principles in France, which we refer to in this annual report as
"French GAAP." Unless otherwise noted, the financial information contained in
this annual report is presented in accordance with French GAAP. French GAAP is
based on requirements set forth in French law and in European regulations and
differs significantly from generally accepted accounting principles in the
United States, which we refer to in this annual report as "US GAAP." See Note 17
to our Consolidated Financial Statements for a description of the significant
differences between French GAAP and US GAAP, a reconciliation of net income,
shareholders' equity and other measures from French GAAP to US GAAP and
condensed consolidated US GAAP balance sheets and statements of income.

     Various amounts in this document are shown in millions for presentation
purposes. Such amounts have been rounded and, accordingly, may not total.
Rounding differences may also exist for percentages.

                              CURRENCY TRANSLATION

     Under the provisions of the Treaty on European Union negotiated at
Maastricht in 1991 and signed by the then 12 member states of the European Union
in early 1992, a European Monetary Union, known as the EMU, was implemented on
January 1, 1999 and a single European currency, known as the euro, was
introduced. The following 12 member states participate in the EMU and have
adopted the euro as their national currency: Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and
Spain. The legal rate of conversion between the French franc and the euro (Euro,
euro or E) was fixed on December 31, 1998 at E 1.00 = FF6.55957, and we have
translated French francs into euros at that rate.

     Share capital in Vivendi Universal is represented by ordinary shares with a
nominal value of E 5.50 per share. Our shares are denominated in euros. Because
we intend to pay cash dividends denominated in euros, exchange rate fluctuations
will affect the US dollar amounts that shareholders will receive on conversion
of dividends from euros to dollars.

     We publish our Consolidated Financial Statements in euros. Unless noted
otherwise, all amounts in this annual report are expressed in euros. The
currency of the United States will be referred to as "US dollars," "US$," "$" or
"dollars." For historical exchange rate information, refer to "Item 3--Key
Information--Exchange Rate Information." For a discussion of the impact of
foreign currency fluctuations on Vivendi Universal's financial condition and
results of operations, see "Item 5--Operating and Financial Review and
Prospects."

                                        i


                           FORWARD-LOOKING STATEMENTS

     This annual report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, or the Securities Act, and Section
21E of the Securities Exchange Act of 1934, or Exchange Act. Forward-looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to dispositions, acquisitions,
working capital and capital requirements, available liquidity, maturity of debt
obligations, business trends and other information that is not historical
information. Forward-looking statements can be identified by context. For
example, when we use the words such as "estimate(s)," "aim(s)," "expect(s),"
"feel(s)," "will," "may," "believe(s)," "anticipate(s)" and similar expressions
in this document, we are intending to identify those statements as
forward-looking. All forward-looking statements, including without limitation
the launching or prospective development of new business initiatives and
products, anticipated music or motion picture releases, Internet or theme park
projects, and anticipated cost savings from asset divestitures and synergies are
based upon our current expectations and various assumptions. Our expectations,
beliefs, assumptions and projections are expressed in good faith, and we believe
there is a reasonable basis for them. There can be no assurance, however, that
managements' expectations, beliefs and projections will be achieved.

     There are a number of risks and uncertainties that could cause our actual
results to differ materially from our forward-looking statements. These include,
among others:

     - general economic and business conditions, particularly a general economic
       downturn;

     - industry trends;

     - increases in our leverage;

     - reduced liquidity;

     - the terms and conditions of our asset divestitures and the timing
       thereof;

     - changes in our ownership structure;

     - competition;

     - changes in our business strategy and development plans;

     - challenges to, or losses or infringement of, our intellectual property
       rights;

     - changes in customer preference;

     - technological advancements;

     - political conditions;

     - financial and equity markets;

     - foreign currency exchange rate fluctuations;

     - legal and regulatory requirements and the outcome of legal proceedings
       and pending investigations;

     - environmental liabilities;

     - natural disasters; and

     - war or acts of terrorism.

     The foregoing list is not exhaustive and there are other factors that may
cause actual results to differ materially from the forward-looking statements.
We urge you to review and consider carefully the various disclosures we make
concerning the factors that may affect our business, including the disclosures
made in "Item 3--Key Information--Risk Factors," "Item 5--Operating and
Financial Review and Prospects," and "Item 11--Quantitative and Qualitative
Disclosures About Market Risk." All forward-forward looking statements
attributable to us or persons acting on our behalf apply only as of the date of
this document and are

                                        ii


expressly qualified in their entirety by the cautionary statements included in
this document. We undertake no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.

                                EXPLANATORY NOTE

     Unless otherwise indicated, all references to our competitive positions
made in this document are in terms of revenue generated.

          ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS

     Vivendi Universal is a corporation organized under the laws of the Republic
of France. Many of Vivendi Universal's directors and officers are citizens or
residents of countries other than the United States. Substantial portions of
Vivendi Universal's assets are located outside the United States. Accordingly,
it may be difficult for investors:

     - to obtain jurisdiction over Vivendi Universal or its directors or
       officers in courts in the United States in actions predicated on the
       civil liability provisions of the US federal securities laws;

     - to enforce against Vivendi Universal or its directors or officers
       judgments obtained in such actions;

     - to obtain judgments against Vivendi Universal or its directors or
       officers in original actions in non-US courts predicated solely upon the
       US federal securities laws; or

     - to enforce against Vivendi Universal or its directors or officers in
       non-US courts judgments of courts in the United States predicated upon
       the civil liability provisions of the US federal securities laws.

     Actions brought in France for enforcement of judgments of US courts
rendered against French persons, including directors and officers of Vivendi
Universal, would require those persons to waive their right to be sued in France
under Article 15 of the French Civil Code. In addition, actions in the United
States under the US federal securities laws could be affected under certain
circumstances by the French law of July 16, 1980, which may preclude or restrict
the obtaining of evidence in France or from French persons in connection with
those actions.

                                       iii


                               TABLE OF CONTENTS



                                                                        PAGE
                                                                        ----
                                                                  
Item 1:   Identity of Directors, Senior Management and Advisers.......    1
Item 2:   Offer Statistics and Expected Timetable.....................    1
Item 3:   Key Information.............................................    1
Item 4:   Information on the Company..................................   13
Item 5:   Operating and Financial Review and Prospects................   68
Item 6:   Directors, Senior Management and Employees..................  109
Item 7:   Major Shareholders and Related Party Transactions...........  126
Item 8:   Financial Information.......................................  127
Item 9:   The Offer and Listing.......................................  132
Item 10:  Additional Information......................................  134
          Quantitative and Qualitative Disclosures About Market
Item 11:  Risk........................................................  150
Item 12:  Description of Securities Other than Equity Securities......  153
Item 13:  Default, Dividend Arrearages and Delinquencies..............  153
Item 14:  Material Modifications to the Rights of Security Holders....  153
Item 15:  Controls and Procedures.....................................  153
Item 16:  [Reserved]..................................................  154
Item 17:  Financial Statements........................................  154
Item 18:  Financial Statements........................................  154
Item 19:  Exhibits....................................................  154



ITEM 1:  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.

ITEM 2:  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3:  KEY INFORMATION

  SELECTED FINANCIAL DATA

     The selected consolidated financial data at year end and for each of the
years in the three-year period ended December 31, 2002 has been derived from our
Consolidated Financial Statements and the related notes appearing elsewhere in
this annual report. The selected consolidated financial data at year end and for
each of the years in the two-year period ended December 31, 1999 has been
derived from our Consolidated Financial Statements not included in this annual
report. You should read this section together with "Item 5--Operating and
Financial Review and Prospects" and our Consolidated Financial Statements
included in this annual report.

     Our Consolidated Financial Statements have been prepared in accordance with
French GAAP, which differs in certain significant respects from US GAAP. The
principal differences between French GAAP and US GAAP, as they relate to us, are
described in Note 17 to our Consolidated Financial Statements. For a discussion
of significant transactions and accounting changes that affect the comparability
of our Consolidated Financial Statements and the financial data presented below,
refer to "Item 5--Operating and Financial Review and Prospects" and the notes to
our Consolidated Financial Statements.

     Our Consolidated Financial Statements and the selected financial data
presented below are reported in euros. For periods presented prior to January 1,
1999, our financial statements are reported in French francs and translated into
euros using the official fixed exchange rate of E 1.00 = FF6.55957, applicable
since December 31, 1998.



                                                                    YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
                                                                                        
INCOME STATEMENT
Amounts in accordance with French GAAP
  Revenue...............................   28,112    58,150    57,360    41,580    41,798    40,855    41,623   31,737
  Revenue outside France................   16,405    31,759    33,075    20,647    20,624    17,244    17,829   10,313
  Operating income......................    1,877     3,788     3,795     1,823     2,571     1,836     2,281    1,331
  Exceptional items, net................    1,125     1,049     2,365     3,812     2,947      (846)     (838)     249
  Goodwill amortization.................   19,434    19,719    15,203       634       634       606       612      210
  Minority interest.....................      574       844       594       625       625      (159)        5      212
  Net income (loss).....................  (23,301)  (23,301)  (13,597)    2,299     2,299     1,435     1,431    1,121
  Basic earnings (loss) per share.......   (21.43)   (21.43)   (13.53)     3.63      3.63      2.70      2.70     2.46
  Diluted earnings (loss) per share.....   (21.43)   (21.43)   (13.53)     3.41      3.41      2.49      2.49     2.40
  Dividends per share...................      1.0       1.0       1.0       1.0       1.0       1.0       1.0      0.9
  Average shares outstanding
    (millions)(7).......................  1,087.4   1,087.4   1,004.8     633.8     633.8     530.5     530.5    456.6
  Shares outstanding at year-end
    (millions)..........................  1,068.6   1,068.6   1,085.8   1,080.8   1,080.8     595.6     595.6    478.4
Amounts in accordance with US GAAP(2)
  Revenue...............................       --    40,062    51,733    34,276    34,276    36,543    36,543       --
  Net income............................       --   (44,447)   (1,172)    1,908     1,908       246       246      565
  Basic earnings per share..............       --    (40.89)    (1.19)     3.24      3.24      0.48      0.48     1.29
  Diluted earnings per share............       --    (40.89)    (1.19)     3.03      3.03      0.48      0.48     1.25


                                        1




                                                                    YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
                                                                                        
FINANCIAL POSITION
Amounts in accordance with French GAAP
  Shareholders' equity..................       --    14,020    36,748    56,675    56,675    10,777    10,892    7,840
  Minority interest.....................       --     5,497    10,208     9,787     9,787     3,755     4,052    2,423
  Net financial debt(6).................       --    10,753    28,879    25,514    25,514    22,833    22,833    6,502
  Total assets..........................       --    69,333   139,002   150,738   150,738    84,614    82,777   48,982
  Total long-term assets................       --    48,495    99,074   112,580   112,580    47,916    45,341   26,073
Amounts in accordance with US GAAP
  Shareholders' equity..................       --    11,065    54,268    64,729    64,729    16,954    16,954   10,265
  Total assets..........................       --    69,200   151,139   151,818   151,818    74,497    74,497       --
CASH FLOW DATA
Amounts in accordance with French GAAP
  Net cash provided by operating
    activities..........................    2,795     4,670     4,500     2,514     2,514       772     1,409    2,898
  Net cash provided by (used for)
    investing activities................    4,109       405     4,340    (1,481)   (1,481)  (12,918)  (13,556)  (2,926)
  Net cash (used for) provided by
    financing activities................   (2,461)   (3,792)   (7,469)     (631)     (631)   13,746    13,746      223
  Capital expenditures..................    1,729     4,134     5,338     5,800     5,800     6,154     6,792    4,478


- ---------------

(1) This French GAAP consolidated statement of income and cash flow data has
    been shown to present our scope of consolidation as of December 31, 2002. It
    illustrates the accounting of Veolia Environnement using the equity method
    from January 1, 2002, instead of December 31, 2002. See Note 2 to our
    Consolidated Financial Statements.

(2) 2002 amounts under US GAAP reflect the use of the equity method of
    accounting for our investment in Veolia Environnement beginning July 1,
    2002, which represents a significant difference in revenues and the
    presentation of cash flows in the French GAAP financial statements.

(3) On December 31, 2002, Vivendi Universal applied the option proposed in the
    paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Divested businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the
    divestiture of which was completed in February 2003; and Comareg, the
    divestiture of which was completed in May 2003. See Notes 2 and 3 to our
    Consolidated Financial Statements.

(4) Restated to give effect to changes in accounting policies adopted in 2001
    (see Note 1 to our Consolidated Financial Statements).

(5) In order to facilitate the comparability of 2000 and 1999 consolidated
    financial results, the 1999 consolidated results are presented in accordance
    with accounting policies in effect in 2000.

(6) Net financial debt is defined as the sum of long-term debt, bank overdrafts
    and other short-term borrowings, cash and cash equivalents, other marketable
    securities and financial receivables. The first four components are separate
    line items in the Consolidated Balance Sheet. Financial receivables are
    comprised of short-term loans receivable (also a separate line item in the
    Consolidated Balance Sheet) and net interest-bearing long-term loans
    receivable (included in other investments in the Consolidated Balance
    Sheet). Net interest-bearing long-term loans receivable were E 855 million
    and E 1,455 million, respectively, at December 31, 2002 and December 31,
    2001.

(7) Excluding treasury shares recorded as a reduction of shareholders' equity.

                                        2


EXCHANGE RATE INFORMATION

     The following table sets forth, for the periods indicated, the
end-of-period, average, high and low noon buying rates in the City of New York
for cable transfers as certified for customs purposes by the Federal Reserve
Bank of New York. Unless otherwise indicated, such rates are set forth as US
dollars per euro. On June 25, 2003, the noon buying rate was E 1.00 = $1.16.



                                                          PERIOD   AVERAGE
MONTH ENDED                                                END     RATE(1)   HIGH   LOW
- -----------                                               ------   -------   ----   ----
                                                                        
May 31, 2003............................................   1.18     1.16     1.19   1.12
April 30, 2003..........................................   1.12     1.09     1.12   1.06
March 31, 2003..........................................   1.09     1.08     1.11   1.05
February 28, 2003.......................................   1.08     1.08     1.09   1.07
January 31, 2003........................................   1.07     1.06     1.09   1.04
December 2002...........................................   1.05     1.02     1.05   0.99




                                                          PERIOD   AVERAGE
YEAR ENDED                                                 END     RATE(2)   HIGH   LOW
- ----------                                                ------   -------   ----   ----
                                                                        
December 31, 2002.......................................   0.95     1.06     1.17   0.95
December 31, 2001.......................................   0.89     0.89     0.95   0.84
December 31, 2000.......................................   0.94     0.92     1.03   0.83
December 31, 1999.......................................   1.00     1.06     1.17   1.00
December 31, 1998(3)....................................   5.59     5.90     6.21   5.38


- ---------------

(1) The average of the exchange rates for all days during the applicable month.

(2) The average of the exchange rates on the last day of each month during the
    applicable year.

(3) The exchange rates for the year ended December 31, 1998, are set forth as
    French francs per US dollar and are based on the rates quoted by the Federal
    Reserve Bank of New York for French francs per $1.00.

DIVIDENDS

     The table below sets forth the total dividends paid per Vivendi Universal
ordinary share and Vivendi Universal American Depositary Share (ADS) from 1998
through 2002. The amounts shown exclude the avoir fiscal, a French tax credit
described under "Item 10--Additional Information--Taxation." We have
historically paid annual dividends in respect of our prior fiscal year. We have
rounded dividend amounts to the nearest cent.



                                                              DIVIDEND PER    DIVIDEND PER
                                                             ORDINARY SHARE       ADS
                                                             --------------   ------------
                                                               (EUROS)(1)     (DOLLARS)(2)
                                                                        
1998(3)....................................................       0.92            0.17
1999.......................................................       1.00            0.22
2000(4)....................................................       1.00            0.89
2001.......................................................       1.00            0.89
2002.......................................................       1.00            0.91


- ---------------

(1) Until 1999 (i.e., until the dividend for the year ended December 31, 1998),
    we paid dividends in French francs. Amounts in French francs have been
    translated at the official fixed exchange rate of E 1.00 = FF6.55957.

(2) Translated solely for convenience into US dollars at the noon buying rates
    on the respective dividend payments date, or on the following business day
    if such date was not a business day in the US. The noon buying rate may
    differ from the rate that may be used by the depositary to convert euros to
    US dollars for the purpose of making payments to holders of ADSs.

                                        3


(3) Restated for a 3-for-1 stock split which occurred on May 11, 1999.

(4) Prior to December 8, 2000, the date of the completion of the Vivendi S.A.,
    The Seagram Company Ltd. and Canal Plus S.A. merger transactions (described
    below under "Item 4--Information on the Company--History and Development of
    the Company"), each Vivendi ADS represented one-fifth of a Vivendi ordinary
    share, while each Vivendi Universal ADS now represents one Vivendi Universal
    ordinary share.

RISK FACTORS

     You should carefully review the risk factors described below in addition to
the other information presented in this document.

WE AND OUR SUBSIDIARIES REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE AND
REPAY OUR DEBT. OUR ABILITY TO GENERATE SUFFICIENT CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.

     While our ability and the ability of our subsidiaries to fund working
capital for our operations, research and development and capital expenditures
depends on our future operating performance which cannot be predicted with
assurance, we believe that our current cash position plus our unused credit
facilities should provide a sound basis for funding these cash requirements.

     Despite the significant extension of the maturity profile of our debt
achieved through the refinancing plan that we have undertaken in 2003, we expect
that there will be a shortfall in the funding necessary to meet our debt-service
obligations. In addition, we face a significant number of contingent
obligations, some of which are likely to require significant cash payments by
us. We expect to meet these funding requirements with the proceeds from our
asset divestiture program described in "Item 4--History and Development of the
Company--Our Strategy." There can be no assurance, however, that asset
divestitures will be sufficient to make up the shortfall or that our cash needs
over the term of the divestiture program will not exceed our current estimates.

     If our future cash flows from operations, capital resources and from sales
of assets are insufficient to pay our obligations as they mature or to fund our
liquidity needs, we and our subsidiaries may be forced to:

     - reduce or delay our business activities, capital expenditures or research
       and development;

     - obtain additional debt or equity capital; or

     - restructure or refinance all or a portion of our debt on or before
       maturity.

     In particular, our subsidiaries Vivendi Universal Entertainment LLLP, or
VUE, and Societe d'Investissement pour la Telephonie S.A., or SIT, have
significant indebtedness and are relying on refinancing and operating cash flow
to service and repay that indebtedness.

     We cannot assure you that we and our subsidiaries would be able to
accomplish any of these alternatives on a timely basis or on satisfactory terms,
if at all. In addition, our existing debt and any future debt may limit our and
our subsidiaries' ability to pursue any of these alternatives.

WE ARE SELLING A PORTION OF OUR ASSETS AND BUSINESSES TO MEET OUR DEBT
OBLIGATIONS AND DECREASE OUR LEVERAGE.

     To meet our debt obligations and decrease our leverage, we are in the
process of disposing of a portion of our assets and businesses. After new
management was appointed in July 2002, we announced a goal of E 16 billion in
asset divestitures by the end of 2004. In the second half of 2002, we sold
assets and businesses for aggregate consideration of approximately E 6.7
billion, including approximately E 0.4 billion in assumed debt. For 2003, we
have announced the goal of E 7 billion in asset sales and, through March 31,
2003, we have sold assets for aggregate consideration of approximately E .7
billion. We are currently also evaluating bids for the purchase of all or
portions of VUE and VU Games as well as a possible initial public offering of
the

                                        4


equity of VUE. If we disposed of assets worth E 7 billion in 2003, we anticipate
our net debt would decrease by only a portion of that amount. See "Item
4--History and Development of the Company--Our Strategy."

     We can offer no assurances that we will be able to locate potential buyers
for our assets and businesses or will be able to consummate any sales to
potential buyers we do locate. For example, certain asset transfer restrictions
contained in the amended and restated limited liability limited partnership
agreement of VUE (the "Partnership Agreement") that certain of Vivendi
Universal's affiliates entered into in connection with Vivendi Universal's
acquisition of the entertainment assets of InterActiveCorp (formerly known as
USA Interactive and prior thereto as USA Networks, Inc.), or USAi, will require
us to obtain the consent of our partner for certain transactions. See "Item
4--History and Development of the Company--2002 Significant Transactions." Some
other factors that may make it difficult or impossible for us to sell our assets
or businesses are:

     - restrictive covenants in our current and future debt facilities;

     - shareholders agreements and minority interests;

     - ongoing litigation and investigations; and

     - the need to receive governmental approvals, including antitrust and
       regulatory approvals.

     Our divestitures may prove unsuccessful or may otherwise have a material
adverse effect on our ability to conduct business, our operations and our
financial condition. For example, we may not always be able to obtain the
optimal price for assets and businesses we are required or plan to sell or may
receive a price that is substantially lower than the price we paid for the
assets or businesses being disposed of. In addition, our continuing operations
may suffer as a result of losing synergies with the assets and businesses sold.
On December 23, 2002, we sold Houghton Mifflin and have received approximately
$1.3 billion in consideration therefor. We paid approximately $2.2 billion for
Houghton Mifflin in July 2001. On December 23, 2002, we sold our approximately
10% interest in Echostar for total consideration of approximately E 1.0 billion;
we had paid a total consideration of approximately E 1.7 billion for that
interest on January 22, 2002.

OUR SUBSTANTIAL DEBT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION OR RESULTS
OF OPERATIONS AND PREVENT US FROM FULFILLING OUR OBLIGATIONS.

     We have a significant amount of debt. As of December 31, 2002, we had
E 19.6 billion of gross debt on a consolidated basis. See "Item 5--Operating and
Financial Review and Prospects -- Liquidity and Capital Resources" and our
Consolidated Financial Statements for further information about our substantial
debt.

     Our substantial debt and the covenants in our debt instruments could have
important consequences. For example, these instruments are causing us to dispose
of assets and businesses and they could:

     - require us to dedicate a substantial portion of our cash flows from
       operations to payments on our debt, which will reduce our funds available
       for working capital, capital expenditures, research and development and
       other general corporate purposes;

     - limit our flexibility in planning for, or reacting to, changes in
       distribution or marketing of our products, customer demands and
       competitive pressures in the industries we serve;

     - limit our ability to undertake acquisitions;

     - place us at a competitive disadvantage compared to our competitors that
       have less debt than we do;

     - restrict our use of proceeds from asset sales or new issuances of equity
       or debt or from new bank debt facilities;

     - increase our vulnerability, and reduce our flexibility to respond, to
       general and industry-specific adverse economic conditions; and

     - limit our ability to borrow additional funds and increase the cost of any
       such borrowing.

                                        5


     We may incur substantial additional debt in the future. The terms of our
debt restrict but do not prohibit us from incurring additional debt. The
addition of further debt to our current debt levels could further increase the
leverage-related risks discussed herein.

OUR SALES OF ASSETS AND BUSINESSES HAVE RESULTED IN, AND WILL RESULT IN, THE
REMOVAL OF THE RESULTS OF THOSE BUSINESSES AND ASSETS FROM OUR FINANCIAL RESULTS
AND MAY INCREASE THE VOLATILITY OF OUR FINANCIAL RESULTS.

     Sales of our assets and businesses have caused, and will continue to cause,
our revenues and operating income to decrease and may cause our financial
results to become more volatile or may otherwise materially adversely affect us.
Since the beginning of 2002, we have disposed of businesses and assets that, if
we had held them, would have contributed significantly to our revenue and
operating income.

WE HAVE ENGAGED IN A SUBSTANTIAL NUMBER OF SIGNIFICANT ACQUISITION AND
DISPOSITION TRANSACTIONS IN RECENT YEARS, WHICH MAKES IT DIFFICULT TO COMPARE
OUR RESULTS FROM PERIOD TO PERIOD.

     We have engaged in a substantial number of significant acquisitions and
dispositions and other complex financial transactions in recent years, which
makes it difficult to analyze our results and to compare them from period to
period. In order to facilitate comparison of our results between recent periods,
we present financial information on a pro forma basis, both on a consolidated
basis and for our individual business segments, giving effect to these
transactions as if they had occurred on earlier dates. However, pro forma
financial information is not necessarily indicative of results that would have
been achieved had the transactions actually occurred on such earlier dates.
Moreover, we present pro forma information based on a number of assumptions. For
example, we present pro forma information consistent with French GAAP, as if the
transactions had occurred at the beginning of 2001. Given our asset divestiture
program, our results will continue to be difficult to compare from period to
period in the future.

WE HAVE BEEN, AND COULD BE, ADVERSELY AFFECTED BY A DOWNGRADE OF OUR DEBT
RATINGS BY RATING AGENCIES.

     In the second half of 2002, we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002,
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed the next day with a one-notch downgrade in our credit rating to BBB-
with a negative outlook. On August 14, 2002, Moody's lowered the long term
senior unsecured debt rating of Vivendi Universal to B1 and assigned a Ba2
senior implied rating to the company under review for possible downgrade, and
Standard & Poor's downgraded the long term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, 2002, Moody's downgraded Vivendi
Universal's senior implied rating to Ba3, leaving the senior unsecured ratings
unchanged at B1, under review for possible downgrade. These downgrades caused us
to lose, to a significant extent, access to the capital markets, and, most
importantly, to the commercial paper market, historically our main source of
funding for working capital needs, and they also triggered default and covenant
provisions under some of our debt facilities. While our current debt facilities
do not contain further rating triggers, additional downgrades by either Standard
& Poor's or Moody's could exacerbate our liquidity problems, increase our costs
of borrowing, result in our being unable to secure new financing and affect our
ability to make payments on outstanding debt instruments and to comply with
other existing obligations.

WE ARE A PARTY TO NUMEROUS LEGAL PROCEEDINGS AND INVESTIGATIONS THAT COULD HAVE
A NEGATIVE EFFECT ON US.

     We are party to lawsuits and investigations in France and in the United
States that could have a material adverse effect on us. In France, the
Commission des Operations de Bourse commenced in July 2002 an investigation
regarding certain of our financial statements. In the United States, Vivendi
Universal is party to a number of suits and investigations concerning
allegations challenging the accuracy of our financial statements and certain
public statements made by us describing our financial condition from late 2000
through 2002:

     - Vivendi Universal is named as a defendant in a consolidated securities
       class action filed in the United States District Court for the Southern
       District of New York.

                                        6


     - Vivendi Universal is being investigated by the Office of the United
       States Attorney for the Southern District of New York, and by the SEC.

     - Vivendi Universal is named as a defendant in a suit filed by Liberty
       Media on March 28, 2003, which on May 13, 2003, was consolidated for
       pre-trial purposes into the securities class action pending in the United
       States District Court for the Southern District of New York.

     In addition, Vivendi Universal, USI Entertainment Inc. and VUE have been
sued by USAi and one of its affiliates for specific performance of what the
plaintiffs contend to be VUE's obligation to make certain tax payments. Vivendi
Universal may also be liable to pay, in accordance with an investment agreement
with Elektrim S.A., a substantial portion of any damages awarded against
Elektrim in two ongoing arbitrations to resolve disputes concerning the
acquisition and transfer of certain shares in a subsidiary company by Elektrim.

     In the opinion of Vivendi Universal, the plaintiffs' claims in the legal
proceedings lack merit, and Vivendi Universal intends to defend against such
claims vigorously. However, the outcome of any of these legal proceedings or
investigations or any additional proceedings or investigations that may be
initiated in the future could have a material adverse effect on us. For a more
complete discussion of our legal proceedings and investigations, see "Item
8--Litigation."

WE HAVE A NUMBER OF CONTINGENT LIABILITIES THAT COULD CAUSE US TO MAKE
SUBSTANTIAL PAYMENTS.

     We have a number of significant contingent liabilities. These liabilities
are generally described in "Item 5--Operating and Financial Review and
Prospects" and in Notes 11 and 17.4 to our Consolidated Financial Statements
included in this document. If we were forced to make a payment due to one or
more of these contingent liabilities, it could have an adverse effect on our
financial condition and our ability to make payments under our debt instruments.

OUR BUSINESS OPERATIONS IN SOME COUNTRIES ARE SUBJECT TO ADDITIONAL RISKS.

     We conduct business in markets around the world. The risks associated with
conducting business internationally, and in particular in some countries outside
of Western Europe, the US and Canada, can include, among other risks:

     - fluctuations in currency exchange rates (including the dollar/euro
       exchange rate) and currency devaluations;

     - restrictions on the repatriation of capital;

     - differences and unexpected changes in regulatory environment, including
       environmental, health and safety, local planning, zoning and labor laws,
       rules and regulations;

     - varying tax regimes which could adversely affect our results of
       operations or cash flows, including regulations relating to transfer
       pricing and withholding taxes on remittances and other payments by
       subsidiaries and joint ventures;

     - exposure to different legal standards and enforcement mechanisms and the
       associated cost of compliance therewith;

     - difficulties in attracting and retaining qualified management and
       employees or rationalizing our workforce;

     - tariffs, duties, export controls and other trade barriers;

     - longer accounts receivable payment cycles and difficulties in collecting
       accounts receivable;

     - limited legal protection and enforcement of intellectual property rights;

     - insufficient provisions for retirement obligations;

     - recessionary trends, inflation and instability of the financial markets;

                                        7


     - higher interest rates; and

     - political instability and the possibility of wars and terrorist acts.

     We may not be able to insure or hedge against these risks and we may not be
able to ensure compliance with all of the applicable regulations without
incurring additional costs. Furthermore, financing may not be available in
countries with less than investment-grade sovereign credit ratings. As a result,
it may be difficult to create or maintain profit-making operations in developing
markets.

UNFAVORABLE CURRENCY EXCHANGE RATE FLUCTUATIONS COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.

     We have substantial assets, liabilities, revenues and costs denominated in
currencies other than euros. To prepare our Consolidated Financial Statements we
must translate those assets, liabilities, revenues and expenses into euros at
then-applicable exchange rates. Consequently, increases and decreases in the
value of the euro versus other currencies will affect the amount of these items
in our Consolidated Financial Statements, even if their value has not changed in
their original currency. These translations could result in significant changes
to our results of operations from period to period.

     In addition, to the extent that we incur expenses that are not denominated
in the same currency as the related revenues, exchange rate fluctuations could
cause our expenses to increase as a percentage of net sales, affecting our
profitability and cash flows.

WE MAY NOT BE ABLE TO MEET ANTICIPATED CAPITAL REQUIREMENTS FOR CERTAIN
TRANSACTIONS.

     We may engage in projects that require us to seek substantial amounts of
funds through various forms of financing. Our ability to arrange financing for
projects and our cost of capital depends on numerous factors, including general
economic and capital market conditions, availability of credit from banks and
other financial institutions, investor confidence in our businesses,
restrictions in debt instruments, success of current projects, perceived quality
of new projects and tax and securities laws. We may forego attractive business
opportunities and lose market share if we cannot secure financing on
satisfactory terms.

WE MAY SUFFER REDUCED PROFITS OR LOSSES AS A RESULT OF INTENSE COMPETITION.

     The majority of the industries in which we operate are highly competitive
and require substantial human and capital resources. Many other companies serve
the markets in which we compete. From time to time, our competitors may reduce
their prices in an effort to expand market share and introduce new technologies
or services, or improve the quality of their services. We may lose business if
we are unable to match the prices, technologies or service quality offered by
our competitors.

     In addition, most of our main businesses rely on some important third-party
content. There is no assurance that the desired rights to content will be
available on commercially reasonable terms, and as the markets in which our
businesses operate become more competitive, the cost of obtaining this
third-party content could increase. Any of these competitive effects could have
a material adverse effect on our business and financial performance.

WE MAY NOT BE SUCCESSFUL IN DEVELOPING NEW TECHNOLOGIES OR INTRODUCING NEW
PRODUCTS AND SERVICES.

     Many of the industries in which we operate are subject to rapid and
significant changes in technology and are characterized by the frequent
introduction of new products and services. Pursuit of necessary technological
advances may require substantial investments of time and resources and we may
not succeed in developing marketable technologies. Furthermore, we may not be
able to identify and develop new product and service opportunities in a timely
manner. Finally, technological advances may render our existing products
obsolete, forcing us to write off investments made in those products and
services and to make substantial new investments.

                                        8


WE MAY HAVE DIFFICULTY ENFORCING OUR INTELLECTUAL PROPERTY RIGHTS.

     The decreasing cost of electronic and computer equipment and related
technology has made it easier to create unauthorized versions of audio and
audiovisual products such as compact discs, videotapes and DVDs. A substantial
portion of our revenue comes from the sale of audio and audiovisual products
that are potentially subject to unauthorized copying. Similarly, advances in
Internet technology have increasingly made it possible for computer users to
share audio and audiovisual information without the permission of the copyright
owners and without paying royalties to holders of applicable intellectual
property or other rights. A large portion of intellectual property is
potentially subject to widespread, uncompensated dissemination on the Internet.
If we fail to obtain appropriate relief through the judicial process or the
complete enforcement of judicial decisions issued in our favor, or if we fail to
develop effective means of protecting our intellectual property or
entertainment-related products and services, our results of operations and
financial position may suffer.

CHALLENGES TO OUR RIGHTS TO USE INTELLECTUAL PROPERTY COULD HAVE A NEGATIVE
EFFECT ON US.

     Many of our main businesses are heavily dependent on intellectual property
owned and licensed by us. Challenges by third parties claiming infringement of
their proprietary rights, if upheld, could result in the loss of intellectual
property which we depend on to generate revenues and could result in damages or
injunctive relief being imposed against us. Even challenges that we are
successful in defending may result in substantial costs and diversion of
resources, which could have an adverse effect on our operations.

WE MAY NOT BE ABLE TO RETAIN OR OBTAIN REQUIRED LICENSES, PERMITS, APPROVALS AND
CONSENTS.

     We need to retain or obtain a variety of permits and approvals from
regulatory authorities to conduct and expand each of our businesses. The process
for obtaining these permits and approvals is often lengthy, complex and
unpredictable. Moreover, the cost for renewing or obtaining permits and
approvals may be prohibitive. If we are unable to retain or obtain the permits
and approvals we need to conduct and expand our businesses at a reasonable cost
and in a timely manner -- in particular, licenses to provide telecommunications
services -- our ability to achieve our strategic objectives could be impaired.
The regulatory environment in which our businesses operate is complex and
subject to change, and adverse changes in that environment could impose costs on
us or limit our revenue.

THE LOSS OF KEY PERSONNEL COULD HURT OUR OPERATIONS.

     Our success and the success of our business units depends upon the
continuing contributions of our executive officers and other key operating
personnel. The complete or partial loss of their services could adversely affect
our businesses.

RESTRUCTURING AT OUR BUSINESS UNITS MAY ADVERSELY AFFECT OUR OPERATIONS AND
FINANCIAL CONDITION.

     In an effort to cut costs and rationalize operations, our business units
may engage in restructuring, including closures of facilities and reduction of
workforce. If a business unit fails to properly carry out any restructuring, the
relevant business's ability to conduct its operations and the business's results
could be adversely affected. Restructurings, closures and layoffs may also harm
our employee relationships, public relationships and governmental relationships
which would in turn adversely affect our operations and results. For example, in
March 2003, Canal+ Group announced an employee reduction as part of its overall
restructuring plan. The program calls for a reduction of 305 positions, mainly
administration and technical support personnel. In addition, 138 positions in
certain support functions will be outsourced. The announcement of this program
may result in a deterioration of our labor relations and may have an adverse
effect on our operations.

CEGETEL GROUP EXPECTS TO MAKE SIGNIFICANT INVESTMENTS IN NETWORKS AND NEW
TECHNOLOGY AND ANTICIPATED BENEFITS OF THESE INVESTMENTS MAY NOT BE REALIZED.

     Cegetel Group expects to make substantial investments in its mobile
networks, particularly in connection with the rollout of its UMTS mobile network
over the next several years in view of increased usage and the
                                        9


need to offer new services and greater functionality afforded by UMTS
technology. Accordingly, the level of Cegetel Group's capital expenditures in
future years is expected to exceed current levels. The development of UMTS
technology is taking longer than anticipated. Consumer acceptance of UMTS or
other new technology may be less than expected and will depend on a number of
factors, including the availability of applications which exploit the potential
of the technology and the breadth and quality of available content. If the
introduction of UMTS services is further delayed or UMTS fails to achieve the
expected advantages over existing technologies, Cegetel Group may be unable to
recoup its network investment.

REGULATIONS REGARDING ELECTROMAGNETIC RADIATION OR FUTURE CLAIMS WITH RESPECT TO
ELECTROMAGNETIC RADIATION COULD HAVE AN ADVERSE EFFECT ON OUR MOBILE TELEPHONE
REVENUES AND OPERATIONS.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR, an 80% owned subsidiary of Cegetel
Group, is also, along with the other French mobile telephony operators, in the
process of entering into agreements with various cities, including the city of
Paris, that will set up local guidelines. The International Cancer Research
Center, authorized by the World Health Organization, is currently conducting a
large-scale epidemiological study, the conclusions of which are expected to be
published in 2004. We cannot assure you that future regulations will not have a
negative impact on our revenues operations. We also cannot assure you that
claims, relating to electromagnetic radiation will not arise against us and our
mobile telephony operations in the future and have an adverse effect on our
revenues and operations. In addition, even the perception of possible health
risks, could lead to reduced demand for our mobile telephony services and have
an adverse effect on our revenues and operations.

OUR CONTENT ASSETS IN TELEVISION, MOTION PICTURES AND MUSIC MAY NOT BE
COMMERCIALLY SUCCESSFUL.

     A significant amount of our revenue comes from the production and
distribution of content offerings such as feature films, television series and
audio recordings. The success of content offerings depends primarily upon their
acceptance by the public, which is difficult to predict. The market for these
products is highly competitive and competing products are often released into
the marketplace at the same time. The commercial success of a motion picture,
television series or audio recording depends on the quality and acceptance of
competing offerings released into the marketplace at or near the same time, the
availability of alternative forms of entertainment and leisure time activities,
general economic conditions and other tangible and intangible factors, all of
which can change quickly. Our motion picture business is particularly dependent
on the success of a limited number of releases. Universal Picture Group, or UPG,
typically releases 14 to 16 motion pictures a year and the commercial failure of
just a few of these motion pictures can have a significant adverse impact on
UPG's results for both the year of release and the following year. This is
particularly true for motion pictures with high production costs, and in 2003,
UPG intends to release an unusually large number of high production cost motion
pictures. Our failure to produce and distribute motion pictures, television
series and audio recordings with broad consumer appeal could materially harm our
business, financial condition and prospects for growth.

THE RECORDED MUSIC MARKET HAS BEEN DECLINING AND MAY CONTINUE TO DECLINE.

     Economic recession, CD-R piracy and illegal downloading of music from the
Internet and growing competition for consumer discretionary spending and shelf
space are all contributing to a declining recorded music market. Additionally,
the period of growth in recorded music sales driven by the introduction and
penetration of the CD format has ended and no profitable new format has emerged
to take its place. Worldwide sales were down as the music market witnessed an
estimated market decline of 9.5% in 2002. Double-digit declines were experienced
in the US, Japan and Germany. Of the world's five major music markets only
France reported growth. There are no assurances that the recorded music market
will not

                                        10


continue to decline. A declining recorded music market is likely to lead to the
loss of revenue and operating income at Universal Music Group, or UMG.

UMG HAS BEEN LOSING, AND IS LIKELY TO CONTINUE TO LOSE, SALES DUE TO
UNAUTHORIZED COPIES AND PIRACY.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry, or IFPI. IFPI estimates that 1.9
billion pirated units were manufactured in 2001, equivalent to about 40% of all
CDs and cassettes sold globally. According to IFPI estimates, about 28% of all
CDs sold in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made and have had, and, we believe, will continue to
have, an adverse effect on UMG.

OUR MOTION PICTURE BUSINESSES MAY LOSE SALES DUE TO UNAUTHORIZED COPIES AND
PIRACY.

     Technological advances and the conversion of motion pictures into digital
formats have made it easier to create, transmit and "share" high quality
unauthorized copies of motion pictures in theatrical release, on videotapes and
DVDs, from pay-per-view through unauthorized set top boxes and other devices and
through unlicensed broadcasts on free TV and the Internet. Unauthorized copies
and piracy of these products compete against legitimate sales of these products.
The motion picture business is dependent upon the enforcement of copyrights. A
failure to obtain appropriate relief from unauthorized copying through judicial
decisions and legislation and an inability to curtail piracy rampant in some
regions of the world are threats to the motion picture business and may have an
adverse effect on our motion picture business.

CHANGES IN ECONOMIC CONDITIONS COULD AFFECT THE REVENUE WE RECEIVE FROM
TELEVISION PROGRAMMING THAT WE PRODUCE AND FROM OUR TELEVISION CHANNELS.

     Our television production and distribution and cable networks are directly
and indirectly dependent on advertising for their revenue. Changes in US, global
or regional economic conditions may affect the advertising market for broadcast
and cable television programming, which in turn may affect the volume of, and
price for, the advertising on our cable networks and shows and the volume of,
and price for, the programming we are able to sell.

CONSOLIDATION AMONG CABLE AND SATELLITE DISTRIBUTORS MAY HARM OUR CABLE
TELEVISION NETWORKS.

     Cable and satellite operators continue to consolidate, making our cable
television networks increasingly dependent on fewer operators. If these
operators fail to carry our cable television networks or use their increased
bargaining power to negotiate less favorable terms of carriage, our cable
television network business could be adversely affected.

THE INCREASE IN THE NUMBER OF CABLE TELEVISION NETWORKS MAY ADVERSELY AFFECT OUR
CABLE TELEVISION NETWORKS.

     Our cable networks compete directly with other cable television networks as
well as with local and network broadcast channels for distribution, programming,
viewing audience and advertising revenue. Growth in distribution platforms has
led to the introduction of many new cable television networks. The increased
competition may make it more difficult to place our cable networks on satellite
and cable distribution networks, acquire attractive programming or attract
necessary audiences or suitable advertising revenue.

OUR TELEVISION PRODUCTION AND DISTRIBUTION BUSINESSES FACE INCREASED
COMPETITION.

     Our produced programs, including television series, made-for-television and
made-for-video motion pictures, compete in a worldwide television marketplace
that has become ever more competitive as digital
                                        11


cable and satellite delivery increasingly expand the number of channels (and
competing programs) available to consumers. Competition in the critical US
production market has also been increased by the growing consolidation and
vertical integration of several large television and media giants. The 1995
repeal of the financial interest and syndication rules in the US has permitted
these conglomerates to combine ownership of television production businesses
with broadcast networks. As a result, the current US broadcast networks -- ABC,
CBS, NBC, Fox, The WB and UPN -- are able to fill their schedules with a large
percentage of self-owned programs, thus reducing the number of time slots
available to VUE's Universal Television Group and other "outside" producers. For
the fall 2002 season, the top five producers in total hours on network
television were all affiliated with a broadcast network. Approximately 40% of
Universal Television Group's revenues came from broadcast license program fees
in 2002. We can offer no assurances that we will be able to maintain or grow
these revenues in the face of increased competition.

NEW TECHNOLOGIES MAY HARM OUR CABLE TELEVISION NETWORKS.

     A number of new personal video recorders, such as TIVO in the United
States, have emerged in recent years. These recorders often contain features
allowing viewers to watch pre-recorded programs without advertising. The effect
of these recorders on viewing patterns and exposure to advertising could have an
adverse effect on our operations and results.

OUR THEME PARK AND RESORT GROUP MAY CONTINUE TO BE NEGATIVELY AFFECTED BY
INTERNATIONAL, POLITICAL AND MILITARY DEVELOPMENTS.

     The terrorist attacks of September 11, 2001, the threat and outbreak of war
and the threat of further terrorist attacks have resulted in significant
reductions in domestic and international travel that negatively affected our
theme park and resort activities. These developments have had a continued impact
on vacation travel, group conventions and tourism in general. Any further
outbreak or escalation of hostilities, any further terrorist attack, the
perceived threat of hostilities or terrorist attack or a change in public
perception regarding current developments would be likely to have an additional
negative impact on our operations.

CANAL+ GROUP IS SUBJECT TO FRENCH AND OTHER EUROPEAN CONTENT AND EXPENDITURE
PROVISIONS THAT RESTRICT ITS ABILITY TO CONDUCT ITS BUSINESS.

     Canal+ Group is regulated by various statutes, regulations and orders. In
particular, under its French broadcast authorization, the premium channel Canal+
is subject to the following regulations: (i) no more than 49% of its capital
stock may be held by a single shareholder and (ii) 60% of the films broadcast by
the channel must be European films and 40% must be French Language films. Each
year Canal+ must invest 20% of its total prior-year revenues in the acquisition
of film rights, including 9% which must be devoted to French language films and
3% to non-French language European films. At least 75% of the French movies must
not be acquired from Canal+ Group controlled companies. Canal+ has an obligation
to invest 4.5% of its revenues in original TV movies and dramas. Canal+ Group
also operates in Belgium, Spain, the Netherlands, Poland and the Nordic
countries pursuant to the regulations of each of these countries which generally
stipulate, as do the French, financing levels for European and national content.
These regulations severely limit Canal+ Group's ability to choose content and
otherwise manage its business and could have an adverse effect on its operations
and results.

ONE OF OUR TWO INDEPENDENT PUBLIC ACCOUNTANTS, BARBIER FRINAULT & CIE, WAS
FORMERLY A MEMBER OF ANDERSEN WORLDWIDE, AS WAS ARTHUR ANDERSEN LLP, WHICH HAS
BEEN FOUND GUILTY OF A FEDERAL OBSTRUCTION OF JUSTICE CHARGE, AND HOLDERS OF OUR
SECURITIES LIKELY WILL BE UNABLE TO EXERCISE EFFECTIVE REMEDIES AGAINST ANDERSEN
WORLDWIDE IN ANY LEGAL ACTION.

     One of our two independent public accountants, Barbier Frinault & Cie, was
formerly a member of Andersen Worldwide, as was Arthur Andersen LLP, and during
that period provided us with auditing services, including issuing an audit
report with respect to our audited consolidated financial statements for the
fiscal years ended December 30, 2001, and December 31, 2002. On June 15, 2002, a
jury in Houston, Texas found

                                        12


Arthur Andersen LLP guilty of a federal obstruction of justice charge arising
from the federal government's investigation of Enron Corp. On August 31, 2002,
Arthur Andersen LLP ceased practicing before the SEC.

     Andersen Worldwide has not reissued its audit report with respect to our
audited consolidated financial statements prepared by it. Furthermore, Andersen
Worldwide has not consented to the inclusion of its audit report herein. As a
result, investors in our securities likely will not have an effective remedy
against Andersen Worldwide in connection with a material misstatement or
omission with respect to our audited consolidated financial statements, any
registration statement or any other filing we make with the SEC, including any
claim under Section 11 of the Securities Act with respect to such registration
statement. In addition, even if investors were able to assert such a claim, as a
result of its conviction and other lawsuits, Andersen Worldwide may not have
sufficient assets to satisfy claims made by investors or by us that might arise
under federal securities laws or otherwise relating to any alleged material
misstatement or omission with respect to our audited consolidated financial
statements.

ITEM 4:  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     The commercial name of our company is Vivendi Universal, and the legal name
of our company is Vivendi Universal, S.A. Vivendi Universal is a societe
anonyme, a form of limited liability company, initially organized under the name
Sofiee, S.A. on December 11, 1987, for a term of 99 years in accordance with the
French commercial code. Our registered office is located at 42, avenue de
Friedland, 75380 Paris Cedex 08, France, and the telephone number of our
registered office is 33 1 71 71 1000. Our agent in the US is Vivendi Universal
US Holding Co., located at 800 Third Avenue, 5th Floor, New York, New York
10022. All matters addressed to our agent should be to the attention of the Vice
President.

     We were formed through the merger in December 2000 of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A., with Vivendi Universal continuing as the
surviving parent entity, or the Merger Transactions. From our origins as a water
company, we expanded our business rapidly in the 1990s and transformed ourselves
into a media and telecommunications company with the December 2000 merger and
the May 2002 acquisition of the entertainment assets of InterActiveCorp
(formerly known as USA Interactive and prior thereto as USA Networks), or USAi.
Following the appointment of new management in July 2002, we commenced a
significant asset divestiture program aimed at reducing the group's
indebtedness, which we are pursuing actively. We have already largely exited the
environmental services and publishing businesses and sold various smaller
operations. See "Item 5--Operating and Financial Review and Prospects--Recent
Developments" and "--Our Strategy" below.

     We are one of the largest media and telecommunications groups in the world.
Our attractive portfolio of assets include, among others, the following
businesses: mobile and fixed-line telecommunications, recorded music, film,
television, theme parks and resorts and interactive entertainment and
educational software. See "--Business Overview."

  Our Strategy

     We are a company in transition. Our principal strategic focus is to return
to an investment grade credit profile by continuing to reduce our leverage while
maintaining sufficient liquidity.

     The primary means by which we intend to achieve this goal is through the
completion of our E 16 billion asset divestiture program by the end of 2004. In
the second half of 2002, we sold E 6.7 billion of assets. In 2003, we intend to
sell an additional E 7.0 billion of assets. We have initiated numerous asset
divestiture processes, and we are not dependent on any single asset sale to meet
our divestiture target. We have begun exploring strategic options that could
lead to the partial or total divestiture of VUE and VU Games. We have received
multiple, preliminary bids relating to one or more of these businesses and are
currently evaluating them. As of yet there is no pre-established structure or
calendar for any particular divestiture. In parallel, we are also exploring the
option of listing up to 25 to 30% of the share capital of VUE in an initial
public equity offering. In the first quarter of 2003, we have closed asset sales
for an aggregate consideration of

                                        13


approximately E 726 million. From April 1, 2003 to June 25, 2003, we have signed
and closed asset sales for an estimated aggregate consideration of E 1.7
billion.



                                                                             TOTAL         CASH
DATE                                    ASSET                            CONSIDERATION   RECEIVED
- ----                                    -----                            -------------   --------
                                                                              (IN MILLIONS)
                                                                                
July 2002      B2B/Health.............................................      E   150      E   150
July 2002      Lagardere..............................................           44           44
July 2002      Vinci..................................................          291          291
August 2002    Vizzavi................................................          143          143
December 2002  Houghton Mifflin.......................................        1,567        1,195
December 2002  Other Publishing.......................................        1,138        1,121
December 2002  Veolia Environnement...................................        1,856        1,856
December 2002  Echostar...............................................        1,037        1,037
December 2002  Sithe Energies Inc.....................................          319          319
               Others.................................................          108          108
                                                                            -------      -------
               TOTAL 2ND HALF 2002(1).................................      E 6,653      E 6,264
                                                                            -------      -------
February 2003  Express-Expansion-Etudiant.............................      E   200      E   200
February 2003  Canal+ Technologies....................................          191          170(2)
February 2003  USAi Warrants..........................................          256          256
               Others.................................................           79           79
                                                                            -------      -------
               TOTAL 1ST QUARTER 2003(1)..............................      E   726      E   705
                                                                            -------      -------
               TOTAL 2ND HALF 2002 & 1ST QUARTER 2003(1)..............      E 7,379      E 6,969
                                                                            =======      =======


- ---------------

(1) Actual numbers after deduction of divestiture fees and expenses

(2) Of which E 90 million of cash consideration was received in 2002 (excludes
    E 21 million received in May 2003)



                                                                           TOTAL           CASH
DATE                                  ASSET                           CONSIDERATION(1)   RECEIVED
- ----                                  -----                           ----------------   --------
                                                                             (IN MILLIONS)
                                                                                
April 2003     Telepiu.............................................       E   871        E   407(2)
May 2003       Vivendi Telecom Hungary.............................           325             10(3)
May 2003       Egypt (telecom).....................................            43             43
May 2003       Comareg.............................................           135            135
June 2003      Sithe Asia..........................................            40             40
June 2003      VUE: 10 Universal City Plaza........................           160            160
               Other closed transactions as of June 25, 2003.......           169            169(4)
                                                                          -------        -------
               TOTAL APRIL 1 -- JUNE 25, 2003......................       E 1,743        E   964
                                                                          =======        =======


- ---------------

(1) Amounts subject to adjustment to reflect the deduction of divestiture fees
    and expenses, currency rate fluctuations and purchase price adjustments

(2) Does not include a remaining amount of E 50 million of consideration held in
    escrow that may be received

(3) Does not include a remaining amount of E 10 million of deferred purchase
    consideration that may be received

(4) Includes E39 million to be received by Vivendi Universal in the second half
    of 2003.

                                        14


  2003 Significant Transactions

     For a discussion of significant transactions that have occurred in 2003,
see "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

  2002 Significant Transactions

     Acquisition of the Entertainment Assets of USA Networks, Inc.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, through the limited liability
limited partnership, Vivendi Universal Entertainment LLLP, or VUE, in which
Vivendi Universal has an approximately 93% voting interest and an approximately
86% economic interest. As part of the transaction, Vivendi Universal and its
affiliates surrendered 320.9 million shares of USANi LLC that were previously
exchangeable into shares of USAi stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USAi common stock, which were
retained by Vivendi Universal.

     As consideration for the transaction, USAi received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (May 2022).
USAi may require Vivendi Universal to purchase the Class B preferred interests,
and Vivendi Universal may require USAi to sell to it the Class B preferred
interests, for a number of USAi shares having a market value equal to the
accreted face value of the Class B preferred interests at such time, subject to
a maximum of 56.6 million USAi shares. The parties also agreed to put and call
options on USAi's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USAi at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studios in cash or Vivendi Universal listed common
equity securities.

     In addition, Mr. Diller, USAi's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal to
purchase his common interest and, at any time after the second anniversary of
the closing, Universal may purchase Mr. Diller's common interest. In either
case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
in cash or Vivendi Universal listed common equity securities. The fair value of
$275 million of Mr. Diller's common interest has been recorded as part of the
total purchase consideration at the acquisition date. As part of Vivendi
Universal's preliminary purchase price allocation, $15 million has been recorded
as the value of Mr. Diller's non-competition arrangement, which is being
amortized on a straight-line basis over a period of 18 months. The $275 million
minimum value of the common interest is accounted for by Vivendi Universal as a
minority interest in VUE. Any increases in fair value above the minimum put
price of the common interest and any subsequent decreases in fair value to the
minimum put price of the common interest are recognized in operations by Vivendi
Universal (for US GAAP purposes only).

     Under the VUE partnership agreement, VUE is subject to a number of
covenants for the benefit of the holder of the Class A Preferred Interests in
VUE (currently USAi), including a cap on indebtedness and a restriction on asset
transfers by VUE and its subsidiaries. Certain of the covenants, including those
specified above, would cease to apply if an irrevocable letter of credit were
issued in an amount equal to the accrued value of such interests at maturity
(approximately $2 billion in 2022).

     In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
detriment" (defined to mean the present value of the loss of USAi's tax deferral
on the transaction) arising from certain actions taken by

                                        15


VUE prior to May 7, 2017, including selling assets contributed by USAi to VUE
and repaying the $1.62 billion in debt used to finance the cash distribution
made to USAi at the closing.

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USAi, with
exercise prices ranging from $27.50 to $37.50 per share. The warrants were
issued to Vivendi Universal in return for an agreement to enter into certain
commercial arrangements with USAi. At this time, no commercial arrangement is in
place. A portion of the warrants were sold in February 2003. The remainder of
the warrants are expected to be sold on June 30, 2003. For more information, see
"Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     The entertainment assets acquired by Vivendi Universal were USAi's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita Electric Industrial Co., Ltd., or
Matsushita).

     The acquisition cost of the USAi entertainment assets amounts to E 11,008
million and was determined with the assistance of an independent third-party
valuation firm.

     Acquisition of Additional Interest in Multithematiques

     In connection with the sale of its shares in USAi, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

     Divestiture of Interest in Veolia Environnement

     Following a decision taken by its Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in Fomento de Construcciones y Contratas which
otherwise would have been exercisable once Vivendi Universal ownership interest
in Veolia Environnement fell below 50%.

     The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree," carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repurchase agreement on December 27, 2002, Vivendi Universal
entered into a forward sale for the same number of shares to this financial
institution at the price of the investment. As a result, Vivendi Universal
reduced its debt by E 1,479 million and held 47.7% of the share capital of
Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the banks that
managed the June transaction and a group of new investors entered into an
amendment to the June 24, 2002 agreement. Under
                                        16


the terms of the amended agreement, Vivendi Universal agreed to sell 82.5
million shares of Veolia Environnement, representing 20.4 % of Veolia
Environnement's share capital, and the new investors agreed to become subject to
the lock-up on dispositions of these shares previously agreed to by Vivendi
Universal for the remaining term of that lock-up agreement, i.e. until December
21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this divestiture, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

     Divestiture of Vivendi Universal Publishing's Professional and Health
Divisions

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions of VUP. In
parallel with this divestiture, Vivendi Universal acquired 25% of the capital
stock of the acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and
Apax (9.5%). The transaction was concluded on July 19, 2002 with Vivendi
Universal's sale to the investors of the shares acquired in the leveraged
buy-out. The transaction reduced profit before tax by E 298 million.

     Sale of Stake in Vizzavi Europe

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As part of the transaction, Vivendi Universal took over 100% of Vizzavi France.
This transaction generated a capital gain of E 90 million.

     Divestiture of Publishing Activities

     The Board of Directors of Vivendi Universal on August 13, 2002, decided to
sell the American publisher Houghton Mifflin acquired in 2001. On September 25,
2002, the Board decided that the sale should occur as soon as possible and
cover, in addition to Houghton Mifflin, all of the activities of VUP.

     These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the divestiture of
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly-owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains the competition approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprised of Thomas H. Lee and Bain Capital.
The purchase price was approximately E1.6 billion, of which approximately
                                        17


E1.2 billion in cash has been received. As a result of this transaction, Vivendi
Universal recognized a capital loss of E 822 million before tax, including a
foreign currency translation loss of E 236 million.

     Acquisition of Additional Interest in UGC

     On December 23, 2002, following the exercise by Banque Nationale de Paris
of the put granted by Vivendi Universal in July 1997, Vivendi Universal
acquired, for a total consideration of E 59.3 million, 5.3 million of UGC shares
representing 16% of share capital of UGC. Vivendi Universal's 58% interest in
UGC does not provide for operational control of the company due to a
shareholders' agreement. Accordingly, this investment is still accounted for
using the equity method.

     Divestiture of Telepiu

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The transaction was approved by the European
Commission on April 2, 2003 and completed on April 30, 2003. As part of the
acquisition agreement, all litigation between the parties, including Canal+'s
litigation against NDS, will be dropped. The purchase price was E 871 million,
consisting of the assumption of E 414 million in debt and a cash payment of
E 457 million. The cash payment includes a E 13 million adjustment corresponding
to the reimbursement of the accounts payable net of debt adjustment.

    Unwinding of the Total Return Swap in Connection with the Divestiture of
    Vivendi Universal's Investment in BSkyB plc

     In order to comply with the conditions imposed by the European Commission
in October 2001 on the merger of Vivendi, Seagram and Canal+, Vivendi Universal
sold 96% (approximately 400 million common shares) of its investment in BSkyB's
common shares and E 81 million of money market securities to two qualifying
special purpose entities (QSPEs). Concurrently, Vivendi Universal entered into a
total rate of return swap with the same financial institution that held all of
the beneficial interests of the QSPEs, thus allowing Vivendi Universal to
maintain its exposure to rises and falls in the price of BSkyB shares until
October 2005.

     In December 2001, the financial institution controlling the beneficial
interest of the QSPEs issued 150 million equity certificates repayable in BSkyB
shares, at 700 pence per share. As a result, Vivendi Universal and the financial
institution were able to reduce the nominal amount of the swap by 37% and thus
fix a value of 150 million BSkyB shares and create a capital gain of E 647
million after tax.

     In May 2002, this financial institution sold the remaining 250 million
BSkyB shares held by the QSPEs, and concurrently, Vivendi Universal and the
financial institution terminated the total return swap on those shares, which
were settled at approximately 670 pence per share, before Vivendi Universal's
payment of related costs. As a result of this transaction, Vivendi Universal
recognized a pre-tax gain of approximately E 1.6 billion, net of expenses, and
was able to reduce gross debt by E 3.9 billion.

     In addition, in February 2002, Vivendi Universal released its remaining
holding of 14.4 million shares in BSkyB by exercising its option to exchange a
convertible bond for BSkyB shares issued by Pathe that came into Vivendi
Universal's possession when it acquired Pathe. The redemption date was fixed on
March 6, 2002, at a redemption price of 100% of the principal amount plus
accrued interest to that date. Holders of the bonds were entitled to convert
them into 188.5236 shares of BSkyB per FFr10,000 principal amount of bonds up to
and including February 26, 2002.

    Divestiture of an Investment in EchoStar Communication Corporation

     On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
position, 57.6 million Class A common shares, back to EchoStar. Total net
proceeds of the sale were $1.066 billion, generating a capital loss of E 674
million before tax.

                                        18


     Vivendi Universal held these Class A common shares following the conversion
of the 5.8 million Echostar Class D preferred stock acquired in January 2002 for
$1.5 billion. Each Class D preferred stock was convertible into 10 EchoStar
Class A common shares.

     Divestiture of Investment in Vinci

     In July 2002, Vivendi Universal sold 5.3 million Vinci shares for a total
of E 343.8 million, thereby generating a pre-tax, capital gain of E 153 million.
At the same time, Vivendi Universal bought call options on 5.3 million shares at
E 88.81 for E 53 million allowing the group to cover the bonds exchangeable for
Vinci shares issued in February 2001 for E 527.4 million.

     Disposition of Sithe

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), a US power generation company, finalized the sale of a
49.9% stake in Sithe to Exelon (Fossil) Holdings, Inc., (Exelon), for
approximately $696 million. The net proceeds of the transaction to Vivendi
Universal were approximately $475 million. Following this transaction, Exelon
became the controlling shareholder of Sithe, with Vivendi Universal retaining an
interest of approximately 34%. As a result of the transaction, Vivendi Universal
ceased to consolidate Sithe's results of operations for accounting purposes
effective December 31, 2000.

     On December 18, 2002, Vivendi Universal sold its remaining 34% stake in
Sithe Energies, to Apollo Energy LLC. Net cash proceeds of this transaction were
E 319 million, generating a capital loss of E 232 million before tax. Under the
terms of this transaction, Vivendi Universal retained the rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe. Vivendi Universal transferred these rights and
obligations to Marubeni for $47 million on June 11, 2003. See "Item 5--Operating
and Financial Review and Prospects--Subsequent Events."

     Settlement Agreement with Pernod Ricard-Diageo

     On August 7, 2002, Vivendi Universal, Pernod Ricard and Diageo reached a
global settlement of outstanding claims relating to post-closing adjustments
arising from the acquisition of Seagram's spirits and wine concluded in December
2000 and closed in December 2001.

     Notes Mandatorily Redeemable for New Shares of Vivendi Universal

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion, redeemable in Vivendi Universal new shares on November
25, 2005, at a rate of one share for one bond. The bonds bear interest at 8.25%
per annum. The total amount of discounted interest was paid to the bondholders
on November 28, 2002, for an amount of E 233 million. The bondholders can call
for redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 -- (annual rate of interest multiplied by the
outstanding bond lifetime expressed in years).

     Events between January 1 and December 31, 2002 related to Treasury Shares

     At December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital at an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April, 6, 969,865 shares at an
       average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public;

     - sold 55 million shares to two financial institutions on January 7 at a
       price of E 60 per share;

                                        19


     - transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi LLC and USAi and the 27% interest in
       Multithematiques;

     - sold a further 94,157 shares to employees exercising their stock options;
       and

     - cancelled 20,469,967 shares on December 20, 2002 following the decision
       by the Board of Directors on August 13, 2002 based on the authorization
       obtained in General Meeting of Shareholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million of call options on Vivendi Universal shares in
       order to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement, which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital which represents a gross amount of E 44 million and an average cost per
share of E 77.9. The majority of these treasury shares are classified as
marketable securities and held in connection with certain employee stock option
plans of MP3.com, Inc.

     Sale of Put Options on Its Own Shares

     In connection with its share repurchase program, Vivendi Universal sold put
options on its own shares by which it agrees to buy its own shares on specified
dates at the exercise price. As of December 31, 2002 and December 31, 2001,
Vivendi Universal had outstanding obligations on 3.1 million and 22.8 million
shares respectively. The average exercise prices were E 50.5 and E 70,
respectively, resulting in a potential commitment of E 154 million and E 1,597
million, respectively. These put options are only exercisable on their exercise
date and expire during the first quarter of 2003. According to the terms of the
contracts for these put options, they may be settled at the option of Vivendi
Universal either by the purchase of the shares at the exercise price or payment,
in cash, of the difference between the market price of the shares and the
exercise price.

     The cost to Vivendi Universal during 2002 from option holders exercising
their rights was E 589 million, which represents the premium paid in the event
of a cash settlement of the difference between their market price and the
exercise price. Further, at the end of December 2002, Vivendi Universal marked
to market put options with a specific, future exercise date. This resulted in a
provision of E 104 million, corresponding to the premium that will have to be
paid out by Vivendi Universal in the event of a cash settlement.

     Renunciation by Convertible Bondholders on the Guarantee agreed by Vivendi
     Universal

     Holders of 1.5% 1999 -- 2005 Veolia Environnement bonds exchangeable for
new or existing Vivendi Universal shares held a general meeting on August 20,
2002. At this meeting, the bondholders renounced, effective September 1, 2002,
any rights to the guarantee provided by Vivendi Universal in respect of Veolia
Environnement's obligations under these bonds and, as a consequence, renounced
certain rights under the liability clause in the event of a default by Vivendi
Universal. In exchange, the nominal interest rate was increased by 0.75%,
thereby increasing the interest rate from 1.5% to 2.25%.

     Reorganization of Vivendi Universal Headquarters

     In October 2002, Vivendi Universal initiated a reorganization plan
regarding its headquarters in Paris, as well as its locations outside France. It
aims to:

     - redefine and refocus the headquarters' tasks on holding company
       activities;

     - concentrate all those tasks in Paris, with New York becoming a
       representative office for the company, primarily responsible for
       functions relating to North America; and

     - achieve full-year savings of around E 140 million compared with the total
       2002 budget of E 313 million. These savings will be generated by a very
       significant cut in non-payroll costs (fees for external services, in
       particular), as well as a reduction in the number of employees at all
       headquarters sites.
                                        20


     With regard to the Paris headquarters, the plan provides for eliminating
146 positions out of a total of 327 employees. To address potential employment
ramifications, in consultation with the labor unions, Vivendi Universal is
taking measures -- in particular, with regard to job mobility -- to ensure that
all employees are offered the most optimal solutions possible.

  2001 SIGNIFICANT TRANSACTIONS

     Purchase of Interest in Maroc Telecom

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and shared voting rights.

     Acquisition of Houghton Mifflin Company

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company, a
leading US educational publisher, for a total of approximately $2.2 billion,
including assumption of Houghton Mifflin's average net debt of approximately
$500 million. Houghton Mifflin was sold on December 30, 2002.

     Acquisition of MP3.com, Inc.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc., for approximately $400 million, or $5 per share in a combined cash and
stock transaction.

     Disposition of Interest in France Loisirs

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

     Disposition of AOL France

     In March 2001, Vivendi Universal announced the conclusion of a deal with
America Online, Inc., a subsidiary of the AOL Time Warner Group, under which
Cegetel and Canal+ Group swapped their interest in the AOL France joint venture
for AOL Europe shares. Both groups also signed distribution and marketing
agreements. Cegetel and Canal+ Group thus swapped their 55% share of AOL France
for junior preferred shares of AOL Europe valued at $725 million and paying a 6%
annual dividend. These preferred shares were sold, in late June 2001, to an
unrelated financial company for a price corresponding to their present value
marked up by their coupon value, or a total of $719 million. If this investment
was consolidated, an asset representing the junior preferred shares and a
liability representing the corresponding debt would be recorded in the
Consolidated Financial Statements in the amount of $812 million. This
transaction generated a net capital gain of E 402 million.

    Issuance of bonds exchangeable for Veolia Environnement shares

     In February 2001, Vivendi Universal placed E 1.8 billion principal amount
of bonds exchangeable into Veolia Environnement stock on a one-for-one basis.
The bonds correspond to 9.3% of the capital stock of Veolia Environnement. The
2%, five-year bonds were issued at a price of E 55.90, a 30% premium over the
previous day's weighted-average price.

     Issuance of bonds exchangeable for Vinci shares

     In February 2001, Vivendi Universal placed E 457 million principal amount
of bonds exchangeable for shares of Vinci, a company in which Vivendi Universal
has an 8.67% stake. The 1%, five-year bonds were issued at a price of E 77.35, a
30% premium to Vinci's then-current stock price. Each bond is exchangeable for
one Vinci share. On February 5, 2001, the lead manager for the bond offering
exercised an over-allotment
                                        21


option to purchase E 70 million additional principal amount of the bonds, thus
increasing the overall amount of the issuance to E 527 million.

     Sale of 9.3% Interest in Veolia Environnement

     In December 2001, Vivendi Universal sold 32.4 million shares or a 9.3%
interest in Veolia Environnement for approximately E 38 per share or total
proceeds of E 1.2 billion, generating pre-tax capital gains of E 116 million
(net of E 10 million fees). The 9.3% interest sold had been held separately as
it was allocated to exchangeable bonds issued in February 2001. At the same
time, Veolia Environnement agreed to issue one free warrant for each share held
to its shareholders, with every seven warrants giving holders the right to a new
share of Veolia Environnement at E 55 per share until March 2006. These
transactions did not modify Vivendi Universal's 63% consolidated interest in
Veolia Environnement as the warrant issue replaces the shares sold that were
allocated to the exchangeable bonds.

     Canal+ Group's Sale of its Stake in Eurosport

     In January 2001, Canal+ Group announced that it had sold its 49.5% interest
in European sports channel Eurosport International and its 39% interest in
Eurosport France to TF1. Proceeds from the sale amounted to E 303 million for
Canal+ Group and E 345 million for Vivendi Universal, as its subsidiary Havas
Image also sold its interest in Eurosport France. Canal+ Group will remain a
distribution channel for Eurosport. Canal+ Group had acquired its interest in
Eurosport International and Eurosport France from ESPN in May 2000.

     Sale of Stake in Havas Advertising

     In June 2001, Vivendi Universal sold its remaining 9.9% interest in Havas
Advertising, the world's fifth largest advertising and communications consulting
group, to institutional investors and Havas Advertising itself. The E 484
million transaction, conducted with the approval of Havas Advertising
management, generated pre-tax capital gains of E 125 million. In December 2001,
Vivendi Universal sold the rights to the "Havas" name to Havas Advertising for
approximately E 4.6 million.

     Participation in Elektrim

     In September 2001, Elektrim Telekomunikacja, in which Vivendi Universal has
a 49% interest, acquired all of Elektrim SA's landline telecommunications and
Internet assets. Vivendi Universal loaned Elektrim Telekomunikacja E 485
million, at arm's-length conditions, to provide them with the necessary funds
for the acquisition.

     UMTS License

     In July 2001, the French government officially granted SFR, an indirect
subsidiary of Vivendi Universal, a license to provide 3G (third generation) UMTS
mobile telephony services in France. UMTS is a high-speed standard for mobile
telephony that will allow Vivendi Universal, through SFR, to provide an
extensive range of new services, including video telephony and high-speed access
to the Internet and to corporate intranets. The license was initially granted
for a period of 15 years and a license fee of E 4.95 billion, with payments
spread over the 15-year period. However, as a result of a delay in the
manufacture of equipment and infrastructure for UMTS technology and the economic
weakness in the telecommunications industry, the original terms of the license
were renegotiated with the French government. In October 2001, the French
government announced the revised terms of the 3G UMTS license. The license was
extended to a period of 20 years and the license fee was split into two
parts -- a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. The new arrangement reduces cash expenditures related to the license
during 2001 to 2003 by more than E 2 billion and is expected to contribute to an
improvement in Vivendi Universal's cash flow and debt position.

                                        22


     UPC Alliance

     In August 2001, Canal+ Group and United Pan-Europe Communications N.V.
(UPC) agreed to merge their respective Polish satellite TV platforms Cyfra+ and
Wizja TV as well as the Canal+ Polska premium channel, to form a common Polish
digital TV platform. The new company (TKP) is managed and controlled by Canal+
Group, which owns 75% of TKP. UPC will contributed its Polish satellite assets
to TKP in exchange for a 25% interest and E 150 million in cash. As part of this
transaction Canal+ Polska is available on UPC's Polish cable network, in which
UPC will retain 100% control. The agreement was finalized in December 2001 after
having received regulatory approval. TKP was consolidated in the accounts of
Vivendi Universal at December 31, 2001. The new joint platform were launched in
the first quarter of 2002 with a base of more than 700,000 subscribers.

  2000 SIGNIFICANT TRANSACTIONS

     Merger of Vivendi, Seagram and Canal+

     On December 8, 2000, Vivendi, Seagram and Canal+ completed a series of
transactions in which the three companies combined to create Vivendi Universal.
The terms of the merger transactions included: Vivendi Universal's combination,
through its subsidiaries, with Seagram in accordance with a plan of arrangement
under Canadian law, in which holders of Seagram common shares (other than those
exercising dissenters' rights) received 0.80 Vivendi Universal American
Depositary Shares (ADSs), or a combination of 0.80 non-voting exchangeable
shares of Vivendi Universal's wholly-owned Canadian subsidiary Vivendi Universal
Exchangeco (exchangeable shares) and an equal number of related voting rights in
Vivendi Universal, for each Seagram common share held; Vivendi Universal's
merger with Canal+, in which Canal+ shareholders received two Vivendi Universal
ordinary shares for each Canal+ ordinary share they held and kept their existing
shares in Canal+, which retained the French premium pay television channel
business.

     In connection with the merger transactions, on December 19, 2000, Vivendi
Universal entered into an agreement with Diageo and Pernod Ricard to sell its
spirits and wine business. The sale closed on December 21, 2001 and Vivendi
Universal received approximately $8.1 billion in cash, an amount that resulted
in after-tax proceeds of approximately $7.7 billion. The spirits and wine
business generated revenues of E 5 billion and operating income of E 0.8 billion
in 2001. Prior to its sale, Vivendi Universal accounted for the spirits and wine
business as an investment held for sale on the balance sheet, and net income of
the spirits and wine business in 2001 effectively reduced goodwill associated
with the Seagram acquisition. No gain was recognized upon the ultimate sale of
the spirits and wine business.

     Disposition of Non-Core Construction and Real Estate Businesses

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

     Formation/IPO of Veolia Environnement

     Veolia Environnement was formed at the end of 1999. It brought together the
majority of our water, waste management, energy services and transportation
businesses, as well as our interest in Fomento de Construcciones y Contratas
(FCC). Veolia Environnement's formation was achieved by either the contribution
of existing businesses and companies or the purchase of shares. Generale des
Eaux, Dalkia and
                                        23


Compagnie Generale d'Entreprises Automobiles were transferred at book value in
accordance with tax provisions applicable to certain mergers. United States
Filter Corporation (US Filter) and our interest in FCC were acquired by Veolia
Environnement in December 1999. In July 2000, Veolia Environnement sold
approximately 37% of its shares to the French public and to institutional
investors in France and elsewhere in an initial public offering (IPO).

     Lagardere alliance

     In July 2000, pursuant to an alliance between Canal+ Group and Lagardere, a
French media company, Lagardere acquired an approximate 34% stake in
CanalSatellite and a 27.4% stake in MultiThematiques. Canal+ reduced its stake
in Multithematiques to 27.4% (Vivendi reduced its indirect interest to 9%).
Canal+ and Lagardere also set up three joint ventures. The first, 51% owned by
Lagardere and 49% by Canal+, will own and operate existing theme channels and
intends to create others. The second, 51% owned by Lagardere and 49% by
CanalSatellite, will oversee interactive services for new channels jointly
created by CanalSatellite and Lagardere. The third, a 50/50 joint venture
between Lagardere and MultiThematiques, will create and distribute new
theme-based channels based on Lagardere's international brands.

  PUBLIC TAKEOVER OFFERS

     To our knowledge, we have not been the target of any public takeover offer
by third parties in respect of our shares during the last or current fiscal
year. Moreover, we have not sought to acquire another company in a public
takeover except as might be disclosed in this document in the last or current
fiscal year.

BUSINESS OVERVIEW

GENERAL

     We are one of the largest media and telecommunications groups in the world.
We focus on the following six distinct businesses which are leaders in
telecommunications, music, TV & film, and games, with a variety of other
non-core operations and investments:

     CEGETEL GROUP.  Cegetel Group, through its 80% owned subsidiary, Societe
Francaise du Radiotelephone, or SFR, is the second largest mobile
telecommunications operator in France and through its 90% owned subsidiary,
Cegetel S.A., is the second largest fixed-line operator in France. SFR has a
35.1% market share in a stable three-operator market in France, and is well
positioned to benefit from the strong growth of the French wireless market. In
early 2003, we increased our ownership interest to 70% of Cegetel Group.

     UNIVERSAL MUSIC GROUP (UMG).  UMG is the largest recorded music business in
the world. UMG acquires, manufactures, markets and distributes recorded music in
71 countries. Key recording artists include Eminem, Shania Twain, U2 and
Ashanti. In addition to its recorded music business, UMG is the third largest
music publisher in the world. UMG also manufactures, sells and distributes music
video and DVD products, and owns mail-order music/video clubs. We own
approximately 92% of UMG.

     VIVENDI UNIVERSAL ENTERTAINMENT (VUE).  We own approximately 86% of VUE, a
US-based entertainment company active in the film, television, and theme parks
and resorts businesses. We are currently evaluating proposals from potential
bidders for the possible sale of all or a portion of VUE. VUE operates through
the following entities:

     - UNIVERSAL PICTURES GROUP (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets. Recent
       motion picture releases include Gladiator, The Mummy franchise, A
       Beautiful Mind, 8 Mile, Erin Brockovich, Red Dragon and The Fast and The
       Furious. UPG's 2003 movie slate includes Bruce Almighty, The Hulk, 2 Fast
       2 Furious, Peter Pan and Dr. Seuss' The Cat in the Hat.

                                        24


     - UNIVERSAL TELEVISION GROUP (UTG).  UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide, including Law and
       Order, Jerry Springer, Taken and Monk.

     - UNIVERSAL PARKS & RESORTS (UPR).  UPR is the second largest destination
       theme park operator in the world. UPR owns interests and operates theme
       parks and resorts in the US, Japan and Spain, including Universal Studios
       in Hollywood, California and Universal Studios in Orlando, Florida.

     CANAL+ GROUP.  Canal+ Group is the leader in the production and
distribution of digital and analog pay-TV in France (principally through its
premium channel, Canal+, and its digital satellite platform, CanalSatellite).
Canal+ Group has 6.95 million individual subscriptions in France. Canal+ Group
is also a leading European studio involved in the production, co-production,
acquisition and distribution of feature films and television programs and owns
interests in pay-TV activities in Spain, Poland and elsewhere. We own 100% of
Canal+ Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast
license for our premium channel Canal+ and 66% of CanalSatellite.

     MAROC TELECOM.  Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco, with a 70% share of the wireless
market. We have a 35% ownership stake in Maroc Telecom. However, through our
control of the executive board and management, we exercise day-to-day control
over the business and, in accordance with French GAAP, consolidate it in our
financial statements.

     VIVENDI UNIVERSAL GAMES (VU GAMES).  VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handheld devices and consoles. We own 99% of VU Games, and we are currently
evaluating proposals for the possible disposition of all or a portion of this
business.

SEGMENT DATA

     The contribution of our business segments to our consolidated revenues for
each of 2002, 2001 and 2000, in each case after the elimination of intersegment
transactions, is as follows:



                                                  YEAR ENDED DECEMBER 31,
                                    ----------------------------------------------------
                                                ACTUAL                  PRO FORMA(3)
                                    ------------------------------   -------------------
                                    2002(1)      2001     2000(2)      2002       2001
                                    --------   --------   --------   --------   --------
                                                       (IN MILLIONS)
                                                                 
REVENUES
Cegetel Group.....................  E  7,067   E  6,384   E  5,129   E  7,067   E  6,384
Universal Music Group.............     6,276      6,560        495      6,276      6,560
Vivendi Universal Entertainment...     6,270      4,938        194      6,978      6,874
Canal+ Group......................     4,833      4,563      4,054      4,742      4,563
Maroc Telecom.....................     1,487      1,013         --      1,487      1,351
Vivendi Universal Games(4)........       794        657        572        794        657
                                    --------   --------   --------   --------   --------
                                      26,727     24,115     10,444     27,344     26,389
Other(5)(7).......................     1,385      1,289      2,667      1,385      1,344
                                    --------   --------   --------   --------   --------
Total Vivendi Universal (excluding
  businesses sold in 2002)........    28,112     25,404     13,111     28,729     27,733
Veolia Environnement..............    30,038     29,094     26,294         --         --
                                    --------   --------   --------   --------   --------
                                      58,150     54,498     39,405     28,729     27,733
VUP assets sold during
  2002(6)(7)......................        --      2,862      2,175         --         --
                                    --------   --------   --------   --------   --------
                                    E 58,150   E 57,360   E 41,580   E 28,729   E 27,733
                                    ========   ========   ========   ========   ========


                                        25


- ---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

(2) 2000 results restated for changes in accounting policies adopted in 2001, as
    discussed further in "Item 5--Operating and Financial Review and Prospects."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. The pro
    forma results are not necessarily indicative of the combined results that
    would have occurred had the events actually occurred at the beginning of
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities
    (e.g., Adi/Adibou in France and Jumpstart in the United States).

(5) Principally comprised of Vivendi Telecom International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described above) and Houghton Mifflin sold in December 2002
    and Vivendi Universal Publishing's Business to Business and Health divisions
    sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to Consolidated Financial Statements. In such Note 12.2, Publishing
    excluding Games includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

GEOGRAPHIC DATA

     The contribution of selected geographic markets to our consolidated revenue
for each of 2002, 2001 and 2000 is as follows:



                                                           YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
                                                                     
France................................................  E 26,391   E 24,285   E 20,933
United Kingdom........................................     3,765      4,170      2,992
Rest of Europe........................................    11,327     10,456      7,421
United States of America..............................    10,810     12,654      7,009
Rest of World.........................................     5,857      5,795      3,225
                                                        --------   --------   --------
                                                        E 58,150   E 57,360   E 41,580
                                                        ========   ========   ========


                                        26


OUR SEGMENTS

  CEGETEL GROUP

     Cegetel Group, formed at the end of 1997, is the second largest
telecommunications operator in France with approximately 16.8 million customers,
and more than 8,700 employees as of December 31, 2002. Cegetel Group is the only
private operator in France to cover all telecommunications activities: mobile
telephony, through SFR, an 80% owned subsidiary of Cegetel Group, and fixed
telephony and data and Internet transmission, through Cegetel S.A., a directly
and indirectly 90% owned subsidiary of Cegetel Group. Its customer base includes
residential, professional and corporate customers. Cegetel Group's presence in
all these fields forms the core of its business and one of its major assets.

     In January 2003, Vivendi Universal acquired an additional 26% interest in
Cegetel Group from the BT Group, raising its direct and indirect interest to its
current 70%. Our strategic partner in Cegetel Group is Vodafone.

     The following table sets forth the breakdown of Cegetel Group's revenues by
activity for each of the periods indicated.

                                    REVENUES



                                                             YEAR ENDED DECEMBER 31,
                                                        ---------------------------------
                                                         2002         2001         2000
                                                        -------   -------------   -------
                                                                  (IN MILLIONS)
                                                                         
Mobile Telephony......................................  E 6,146      E 5,606      E 4,626
Fixed Telephony, Data and Internet....................      905          756          469
Holdings and Other....................................       16           22           34
                                                        -------      -------      -------
TOTAL.................................................  E 7,067      E 6,384      E 5,129
                                                        =======      =======      =======


  Mobile Telephony

     SFR is the second largest mobile telephony operator in France. In 2002, it
increased its customer base from 12.6 million to 13.5 million, and its market
share from 33.9% to 35.1%, at year end according to Autorite de Regulation des
Telecommunications (ART), the French telecom regulatory authority. In terms of
geographic coverage, SFR covers 98% of the population in France, and has signed
international roaming agreements with operators in more than 150 countries or
territories. The market share of SFR's two competitors, the France Telecom
subsidiary, Orange France, and Bouygues Telecom were 49.8% and 15.1%,
respectively, at the end of 2002, according to ART.

     SFR operates in a stable three operator market. The French market has
relatively low penetration compared to other European Union countries with 64%
penetration compared to a European Union average of 78% as of December 31, 2002
according to ART and the Mobile Communications survey of December 2002,
respectively.

     SFR's mobile services are provided using the global system for mobile
communications standard (GSM), the dominant digital standard in Europe. SFR's
GSM license expires in 2006.

                                        27


     The following table sets forth a breakdown of SFR's revenues from mobile
telephony services and equipment sales for each of the periods indicated.

                                    REVENUES



                                                             YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
                                                                      
Mobile telephony services................................  E 5,675   E 5,086   E 4,121
Equipment sales..........................................      471       520       505
                                                           -------   -------   -------
TOTAL MOBILE.............................................  E 6,146   E 5,606   E 4,626
                                                           =======   =======   =======


     The following table sets forth mobile telephony operating information for
the French market and for SFR for each of the periods indicated.

                             OPERATING INFORMATION



                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
                                                                   
French(1) mobile telephony users (at year end, in
  millions)(2)..............................................  38.6   37.0   29.7
  Postpaid..................................................  21.5   18.9   16.4
  Prepaid...................................................  17.1   18.1   13.3
SFR/SRR customers (at year end, in millions)(1)(2)..........  13.5   12.6   10.2
  Postpaid..................................................   7.2    6.3    5.8
  Prepaid...................................................   6.4    6.2    4.3
SFR Churn (in %/month)......................................   2.2%   2.0%   1.8%


- ---------------

(1) French metropolitan and overseas departments.

(2) According to ART as of December 2002.

     In 2002, SFR saw an increase in its total customer base of 0.9 million or
8%. SFR saw an increase in its higher revenue generating postpaid customers in
2002 of 0.8 million or 13%, in line with the market as a whole. This was
partially due to the successful development of the Universal Music Mobile offer
launched in September 2001 in the teen market segment, which reached 500,000
customers at the end of December 2002 and to the implementation of a strong
retention policy. Prepaid customers increased by 0.1 million or 2% compared to a
decline of 5% for the French prepaid market as a whole.

     SFR takes pro-active measures to attract and retain postpaid contract
customers, focusing on the high-end and long-term customer. In 2002, over 50% of
SFR's new postpaid contract customers signed up for an initial period of 24
months. SFR seeks to re-engage high value postpaid contract customers beyond
their initial

                                        28


period through new tariffs and options and at end 2002 approximately 75% of the
SFR contract base was re-engaged after their initial period.

     SFR operates a dense, high-quality GSM mobile telecommunications network.
This network is capable of providing service to 98% of the French population.
SFR has roaming agreements with 150 countries. In addition, since December 2000,
SFR has been providing General Packet Radio System (GPRS) on its network, which
permits greater bandwidth data communications. GPRS is deployed throughout the
company's network.

     SFR has been awarded a 3G license for a 20 year period (2001-2021) by the
French government, for consideration consisting of a one time fixed payment of
E 619 million, which was paid in September 2001, and annual fees equal to 1% of
the future revenues generated from the UMTS network. UMTS is a third generation
mobile radio system that creates additional mobile radio capacity and enables
broadband media applications while also providing high speed Internet access. In
connection with the development of its UMTS network in the next few years SFR
plans to significantly increase its capital expenditures. As a result of the
UMTS roll out in France occurring after the roll out in some other major
European countries, SFR believes it should benefit from the experience of
telecommunication companies in those countries.

     The use of mobile phones for text messages and multimedia experienced
significant growth in 2002, with nearly 2.3 billion Short Messaging Services, or
SMS, sent by SFR customers. This was twice the number of SMS sent in 2001, and
15% above SFR's initial objective of 2 billion for 2002. SFR also recorded more
than 400,000 multimedia messages sent from its network between the introduction
of its multimedia services in October 2002 and the end of 2002. 260,000 SFR
Packs integrating multimedia terminals were sold between October 2002 and the
end of 2002. At year-end, multimedia phones represented 45% of new SFR customers
and more than half of mobile renewals.

     Generally, tariffs in the French mobile telephony market have been stable,
with the introduction of new low-end postpaid plans. In 2002, the French mobile
telephony market also saw the introduction of per second rates for voice
communications.

  Fixed Telephony, Data and Internet

     Cegetel is the leading private operator for fixed telecommunications in
France with 3.3 million residential and professional customers and more than
16,000 business customers at the end of 2002. 70% of the businesses listed on
the CAC 40 index are Cegetel customers.

     Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has seen sustained revenue growth. The following table sets forth
revenues generated by fixed telephony, data and Internet for the periods
indicated.

                                    REVENUES



                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                              ---------------------
                                                              2002    2001    2000
                                                              -----   -----   -----
                                                                     
Revenues (millions).........................................  E 905   E 756   E 469
  Of which Residential and Professional (in %)..............     48%     45%     41%
  Of which Corporate (in %).................................     52%     55%     59%


     Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has also seen sustained growth in its operations. The table below sets
forth fixed telephony operational information for the periods indicated.

                                        29


                            OPERATIONAL INFORMATION



                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
                                                                       
Traffic (minutes, in billions)..............................    8.2      5.2      3.8
Customers
  Residential and Professional (in thousands)...............  3,286    2,860    2,418
  Corporate Voice sites (in thousands)......................     60       55       35
  Corporate Data sites (in thousands).......................     15       12        9


     In 2002, Cegetel transported more than 8 billion minutes of phone
telecommunications, an increase of nearly 60% over 2001. At the same time,
Cegetel won more than 400,000 new residential and professional customers, and
was the first French fixed telecom operator to earn ISO 9001 version 2000
certification for all its operations for corporate customers.

     In addition to traditional fixed telephony products, Cegetel offers
small-and medium-sized businesses Internet protocol virtual private networks (IP
VPN) and high-speed data offerings (ADSL) specifically designed to meet their
needs. Since October 2002, Cegetel has offered very high-speed network services
(Ethernet) to large businesses. Cegetel Group also manages France's Reseau Sante
Social, or RSS, France's Social Security Network, the intranet for health
professionals under a public service license, which was the leading network for
the medical world in 2002, with 48,200 subscribers and 300 health institutions
connected, including half of the University Hospitals in France.

     The year 2002 was also marked by the continued deregulation of the local
telecommunications market in France. The market was first deregulated in 2001
and Cegetel began to compete with the incumbent operator, France Telecom, in May
2001. In 2002, Cegetel began to offer flat rates, a first in the French private
fixed market.

     In 2002, Cegetel completed the installation of a large national
distribution network. Cegetel also expanded its telephone services for
businesses in 2002 by offering to manage their customer relations through 800
numbers and call center services.

  Network

     The strategy of Cegetel Group is to invest in its own telecommunications
networks in order to offer its customers a broad range of services and ensure
complete quality control. Cegetel Group's mobile and fixed activities are based
on a common transport platform, the network of Telecom Developpement (TD), a
joint subsidiary of Cegetel Group and SNCF (the French national railway), which
carried 33.8 billion minutes in 2002, representing approximately 14% of the
French telecommunications traffic and nearly one-fourth of French Internet
traffic. Cegetel Group has a 49.9% interest in TD. The mobile network of SFR was
composed of 12,500 GSM sites at the end of 2002.

     SFR continues to make investments in its GSM network in order to maintain
high quality of service and to increase capacity. In 2002, Cegetel Group had
capital expenditures of E 300 million relating to its mobile network. As noted
above, SFR expects to significantly increase its capital expenditures in
connection with the build out of its UMTS network.

     With respect to its fixed telephony network, Cegetel Group relies on TD,
which has the most extensive alternative network of telecom infrastructures in
France, with 20,000 km of optical fibers and more than 500 points of presence.

     This network control strategy benefits from the new possibilities linked to
the arrival of high-speed transmission and the unbundling of the local loop.

                                        30


  Competition

     Cegetel Group faces a high degree of competition in both the mobile and
fixed telephony markets. Currently, Cegetel Group's principal competitors in
mobile telephony are Orange France and Bouygues Telecom. SFR also expects Orange
France and Bouygues Telecom will be its principal competitors for 3G customers
when commercial UMTS services are introduced in France. The French government
offered a fourth UMTS license on December 29, 2001, but to date there has not
been any candidate for this license. In fixed telephony, Cegetel Group's main
competitors, in addition to the incumbent operator France Telecom, are
LDCom/Siris, Tele2, and Completel. As with other telecommunications operators,
Cegetel Group is also subject to indirect competition from providers of other
telecommunications services in France.

     Competitive pressures have led to reductions in tariffs and increased
customer retention costs as operators seek to manage the level of customer
churn.

  Regulatory Environment

     The French telecommunications market was broadly deregulated with the
adoption of the Telecommunications Regulatory Act of July 26, 1996 and its
related regulations. Many of the provisions of the applicable regulations are
designed to foster competition in the French telecommunications market. These
regulations apply both to operators of fixed line networks and to operators of
mobile networks.

     The operator of any public telecommunications network in France exerting
significant influence over the fixed line market is required to permit
interconnection with its network on the basis of the long run incremental cost
of providing the relevant service. Access to the local loop (unbundling of the
copper pair) was authorized by decree in September 2000, and established by
European regulation at the end of 2000.

     All fixed line operators are required to allow their customers to select a
long distance carrier on a call by call basis by entering a numeric prefix when
dialing. Customers may also opt to "pre-select" their long distance carrier so
that the subscriber can access his carrier's network without having to dial a
prefix. In 2002, carrier pre-selection was extended to local numbers. Prior to
this, all local calls were routed over France Telecom. Accordingly, France
Telecom's access subscribers may now pre-select an alternative carrier for all
of their fixed line calls.

     Mobile operators in France exerting significant influence over the wireless
public telephony market are also required to offer interconnection. The ART
deems both Orange France and SFR to have significant influence over the wireless
retail market and the domestic interconnection market, and SFR is therefore
subject to the rules governing this type of operator. As a result, SFR has been
required to reduce its interconnection rates for terminating calls on its
network.

     ART, the French telecom regulatory authority, monitors application of the
law and is consulted on proposed laws, decrees and regulations for the sector.
It assigns frequencies and numbers and has the authority to settle disputes
concerning interconnection.

     Two types of licenses apply to the telecommunications market, licenses
issued by the Minister for Telecommunications to operators that establish and
operate networks open to the public (L 33-1 licenses) or issued by the ART (L
33-2 licenses) for independent networks, and licenses issued by the Minister to
telephone service providers (L 34-1 licenses). The market for providing other
telecommunications services is not regulated.

     Through SFR, TD and Cegetel, Cegetel Group holds national licenses that
allow us to provide all telecommunications services: transmission and access,
voice and data, fixed and mobile.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR is also, along with the other French
mobile

                                        31


telephony operators, in the process of entering into agreements with different
cities of France including the city of Paris, that will set up local guidelines.

  Research and Development

     Through projects initiated several years ago, Cegetel Group focuses its
research and development efforts in four complementary areas:

     - involvement in national research networks through cooperative research
       projects and an active presence in decision-making agencies and strategic
       authorities;

     - contribution to university research projects via the Cegetel -- SFR
       Foundation and significant contacts with the academic world;

     - active participation in standardization in the IP and 3G mobile segments;
       and

     - increasing introductions of prototypes of new services with about twenty
       services.

     Cegetel Group conducts pre-competitive research and development, with
particular emphasis on integrating standard components. Through experiments on
existing platforms, Cegetel Group also conducts research and development on the
preparation of next generation technologies, such as the all IP network, and, in
collaboration with Monaco Telecom, in which VTI holds a 55% stake, 3G wireless
technology.

     Because of its structure and size, Cegetel Group has a network research
strategy. The complementary nature of the academic world, manufacturers, public
laboratories and operator partners contributes to an optimized effort and an
efficient pooling of project results.

     This substantial research and development effort is reflected in a number
of patents, primarily for services related to the mobile Internet,
geopositioning, and voice services.

     Cegetel Group's research and development costs in 2002 totaled E 58.7
million.

  MUSIC

     Our music business is operated through UMG, the largest recorded music
business in the world measured by revenues according to management estimates for
2002 and the International Federation of Phonographic Industry (IFPI) for 2001.
We have a 92.3% interest in UMG. UMG acquires, manufactures, markets and
distributes recorded music through a network of subsidiaries, joint ventures and
licensees in 71 countries. UMG also manufactures, sells and distributes music
video and DVD products, licenses music copyrights, and owns music/video clubs in
certain territories. By way of licenses to third parties, UMG participates in
and encourages online electronic music distribution.

     UMG is also active in the music publishing market, in which UMG acquires
rights to musical compositions (as opposed to recordings) in order to license
them for use in recordings and related uses, such as films, advertisements or
live performances. Management believes that UMG is the number three global music
publishing company with over one million owned or administered titles.

                                        32


     The following table provides a breakdown of UMG's revenues and selected
market share information on a geographic basis for the periods indicated:

                                    REVENUES



                                           YEAR ENDED                        YEAR ENDED
                                       DECEMBER 31, 2002,                DECEMBER 31, 2001,
                                 -------------------------------   -------------------------------
                                    REVENUE      MARKET SHARE(1)      REVENUE      MARKET SHARE(2)
                                 -------------   ---------------   -------------   ---------------
                                 (IN MILLIONS)         (%)         (IN MILLIONS)         (%)
                                                                       
North America..................     E 2,772           29.0            E 2,921           28.3
Europe.........................       2,588           27.3              2,655           26.5
Far East.......................         588           12.2                671           11.0
ANZ/Africa.....................         139           24.5                137           22.7
Latin America..................         190           18.3                176           15.0
                                    -------           ----            -------           ----
TOTAL..........................     E 6,276           24.4            E 6,560           23.5
                                    =======           ====            =======           ====


- ---------------

(1) Market share data is based on UMG estimates. Market share data from third
    party sources is not available in all regions. Third party market share data
    is not available for 2002.

(2) 2001 market share data is based on IFPI estimates.

  Recorded Music

     UMG's recorded music business is the largest in the world. UMG holds
particularly strong positions in the important North American and European music
markets, which together account for nearly three-quarters of global sales.

     UMG has a strong collection of major recording labels including: popular
music labels Island/Def Jam, Interscope/Geffen/A&M, MCA Records, Mercury
Records, Polydor and Universal Motown Records Group; classical labels Decca,
Deutsche Grammophon and Philips; and jazz labels Verve and Impulse! Records.
Interscope/Geffen/A&M, with artists such as Eminem, Sheryl Crow, No Doubt,
Enrique Iglesias and Vanessa Carlton, was the number one label in the US in
current album market share in 2002 according to SoundScan. Island/Def Jam, with
artists such as Ashanti, Musiq and Cam'ron, was the number two US label.

     In an industry in which size confers significant scale benefits, UMG's
recorded music business has been steadily increasing its market share. While
2002 was a challenging year for the music industry, with global market sales
declining an estimated 9.5% due to the combined effect of economic downturn,
piracy and illegal downloading of music from the Internet, UMG outperformed its
major competitors, increasing its global market share, according to UMG
management estimates, from 23.5% at year end 2001 to 24.5% at year end 2002.

     The key to UMG's success in growing its market share has been its ability
to consistently spot, attract and retain a relatively high proportion of
successful artists and market them effectively. We believe this is mainly due
to:

     - The relative stability of the management team compared to UMG's major
       competitors, which has allowed UMG to have a consistent strategy to
       respond effectively to industry and social trends and challenges;

     - UMG's size and strength in distribution which builds on itself by
       attracting established artists;

     - UMG's huge catalog of prior hit releases that provide a stable and
       profitable revenue stream, accounting for nearly one-third of sales,
       without significant additional investment;

     - UMG's diverse array of decentralized labels that complement each other
       through their focus on different genres, sub-genres and market segments
       thereby mitigating the effect of changes in consumer tastes; and

                                        33


     - Multi-album contracts which secure long-term relationships with some of
       the most important artists in the industry.

     UMG generally acquires the contractual right to the output of musical
artists by paying them an advance against a percentage royalty on the wholesale
or retail price of their recordings. With a few exceptions, rights are
contracted on an exclusive and global basis. UMG manages approximately 2,000
active artists and has approximately 50,000 albums in its active product
catalog.

     In line with the rest of the industry, UMG's revenues and profits are
driven by hits, with a relatively small proportion of releases accounting for
the majority of sales. Therefore, UMG's labels usually sign new artists for
multi-album contracts, typically up to six albums (most of these albums at UMG's
option) so that those artists that become successful are tied-in sufficiently to
support the cost of producing the vast majority of recordings that are not as
commercially successful. Established artists command higher advances and royalty
rates and it is not unusual for a recording company to renegotiate contract
terms with a successful artist. However, UMG is not dependent on any one artist.
UMG's top 15 album releases accounted for 14% of unit volume in 2002.

     Best selling albums in 2002 included those by Eminem, Shania Twain and
Nelly. Eminem recordings, including the 8 Mile original sound track, sold over
21 million copies worldwide in 2002. The strength and depth of UMG's catalog was
highlighted once again with Greatest Hits albums for U2, Nirvana and Elton John
selling over 11 million units in the aggregate. New artists also made a
significant contribution to activity and releases from Ashanti and Vanessa
Carlton shipped in excess of 6 million units in the aggregate. In 2003, UMG
released the successful 50 Cent debut album and also has scheduled releases of
new albums by Ashanti, Blink 182, Dr. Dre, Jay Z, Limp Bizkit, Nickelback, Sting
and Texas.

     In addition to recently released recordings, we also market and sell
recordings from our catalog of prior releases. Sales from this library account
for a significant and stable part of our recorded music revenues each year. We
own the largest catalog of recorded music in the world, with performers from the
US and the UK and around the world, including: ABBA, Louis Armstrong, Chuck
Berry, James Brown, Eric Clapton, Patsy Cline, John Coltrane, Count Basie, Bill
Evans, Ella Fitzgerald, The Four Tops, Marvin Gaye, Jimi Hendrix, Billie
Holiday, Buddy Holly, The Jackson Five, Antonio Carlos Jobim, Herbert von
Karajan, Bob Marley, Nirvana, The Police, Smokey Robinson, Diana Ross & The
Supremes, Rod Stewart, Muddy Waters, Hank Williams and The Who.

     The average price of a CD album in the US has fallen at a compound annual
rate of 2.5% from $21.50 in 1983 to $14.02 by 2000 according to the Recording
Industry Association of America (RIAA). Discounting to drive momentum on certain
releases, increased competition from other forms of entertainment, such as home
video DVDs, and discounting by retailers to build store traffic, have all
contributed to lowered prices. In general, the period of growth in recorded
music sales driven by the introduction and penetration of the CD format has
ended, and no profitable new format has emerged to drive growth.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality, unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry. IFPI estimates that 1.9 billion pirated
units were manufactured in 2001, equivalent to about 40% of all CDs and
cassettes sold globally. According to IFPI estimates, about 28% of all CDs sold
in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. The industry is, however, increasing its
enforcement activities against piracy. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made. In order to address unauthorized copying and
pirating threats, UMG continues to experiment with a variety of technologies
designed to prevent CD copying and duplication. In 2002, UMG released a number
of titles with copy protection primarily in Europe and, to a lesser extent, in
North America.

                                        34


     UMG markets its recordings and artists through advertising and otherwise
gaining exposure for them through magazines, radio, TV, Internet, other media
and point-of-sale material. Public appearances and performances are an important
element in the marketing process. We arrange for television and radio
appearances and may provide financing for concert tours by some artists. TV
marketing of both specially compiled products and new albums is becoming
increasingly important. Marketing is carried out on a country-by-country basis,
although global priorities and strategies for certain artists are set centrally.
Music sales are weighted towards the last quarter of the calendar year, when
approximately one-third of annual revenues are generated.

     In all major countries in which our products are sold except Japan, we have
our own distribution services for the warehousing and delivery of finished
products to wholesalers and retailers. In certain countries we have entered into
distribution joint ventures with other record companies. We also sell music and
video products directly to the consumer, principally through two direct mail
club organizations: Britannia Music in the UK and D.I.A.L. in France.

  E-Commerce and Electronic Delivery

     UMG continues to encourage and participate in new methods to distribute,
market, sell, program and syndicate music and music-related programming by
exploiting the potential of new technological platforms. We believe that
emerging technologies will be strategically important to the future of the music
business. Evolving technology will allow current customers to sample and
purchase music in a variety of new ways and will expose potential customers to
new music. Through a variety of independent initiatives and strategic alliances,
we continue to invest resources in the technology and electronic commerce areas
that will allow the music business to be conducted over the Internet, cellular
networks, cable and satellite.

     pressplay, a joint venture of UMG and Sony Music Entertainment, offers
access to hundreds of thousands of tracks from all five majors and many
independent record companies for a monthly fee. pressplay's subscribers also may
retain tracks permanently for an additional fee. UMG also licenses its music to
other subscription services including Musicnet, Listen.com's Rhapsody, Full
Audio and Streamwaves. Consumers may customize Internet radio streams so that
the music they prefer is played more often, or they may simply listen to
programming provided for everyone. In all of these cases, UMG receives a fee or
commission each time someone accesses music to which it owns the rights. On May
19, 2003, Roxio, Inc. acquired substantially all of the interests of pressplay.
See "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     UMG also offers over 90,000 of its recorded music tracks for purchase as
permanent downloads through third party sites. UMG's music is available through
the Apple Music Store. UMG is also working with Liquid Audio to power download
sales that are available on Liquid.com, Windowsmedia.com, Towerrecords.com,
Musicrebellion.com, MP3.com and more than 25 other affiliate partner websites.
The Liquid Audio tracks are available in the Windows Media and Liquid Audio
formats, and like the tracks available at the Apple Music Store, can be
downloaded, burned to a CD-R, or transferred to a secure portable device. UMG
also continues to sell or license its music catalog through various other
non-exclusive agreements, both for digital "a la carte" downloading services as
well as interactive radio services. For example, UMG has issued catalog licenses
to Listen.com and MusicNet for their on-demand subscription services and to
Musicmatch and RCS for their interactive radio services.

  Music Publishing

     Music publishing involves the acquisition of rights to, and licensing of,
musical compositions (as opposed to recordings). We enter into agreements with
composers and authors of musical compositions for the purpose of licensing the
compositions for use in sound recordings, films, videos and by way of live
performances and broadcasting. In addition, we license compositions for use in
printed sheet music and song folios. We also license and acquire catalogs of
musical compositions from third parties such as other music publishers and
composers and authors who have retained or re-acquired rights. Accordingly,
revenues in this sector are

                                        35


generated largely through licensing fees, with much smaller revenues from sales
of printed sheet music and song folios.

     Our publishing catalog includes more than one million titles that we own or
administer, including some of the world's most popular songs, such as "American
Pie," "Strangers in the Night," "Good Vibrations," "I Wanna Hold Your Hand,"
"Candle in the Wind," "I Will Survive" and "Sitting on the Dock of the Bay,"
among many others. Among the significant artists and songwriters represented are
ABBA, Prince, The Beach Boys, George Brassens, Bon Jovi, Gloria Estefan, Eddy
Mitchell, Andre Rieu, Shania Twain, Andrew Lloyd Webber and U2. Legendary
composers represented include Leonard Bernstein, Elton John and Bernie Taupin,
and Henry Mancini. Significant acquisitions in 2002 included Koch Music
Publishing and the Tupac Shakur catalog as well as compositions by Ashanti,
Avril Lavigne, Gloria Estefan, Anastacia, Rob Davis, Royksopp, Liam Gallagher,
Jorge Luis Piloto, Paul Kelly, Murlyn Songs, Jack Johnson and The Hives, among
others.

  Competition

     The profitability of a company's recorded music business depends on its
ability to attract, develop and promote recording artists, the public acceptance
of those artists and the recordings released in a particular period. UMG
competes for creative talent both for new artists and those artists who have
already established themselves through another label with the following major
record companies: EMI, Bertelsmann Music Group, Warner Music Group and Sony
Music Entertainment. UMG also faces competition from independents that are
frequently distributed by other major record companies. Although independent
labels have a significant combined market share, no label on its own has
influence over the market. Changes in market share are essentially a function of
a company's artist rosters and release schedules.

     The music industry also competes for consumer discretionary spending with
other entertainment products such as video games and motion pictures.
Competition for shelf space has intensified in recent years due to the success
of DVD video and further consolidation in the retail sector in the US and in
Europe which is increasing the quantity of product being sold through
multinational retailers and buying groups and other discount chains.

     Finally, the recorded music business continues to be adversely affected by
pressed disc and CD-R piracy, home CD burning and the downloading of music from
the Internet. On-demand music subscription services such as pressplay and
on-demand "a la carte" services are being developed to offer the consumer a
viable, legitimate, copy-protected online source of music. See "--Recorded
Music."

  Regulatory Environment

     The recorded music, music publishing, manufacturing and distribution
businesses that comprise UMG are subject to applicable national statutes, common
law and regulations in each territory in which it operates. In the US, these
agencies include, without limitation, the US Department of Justice, the Federal
Trade Commission (FTC), the Environmental Protection Agency and the Occupational
Safety and Health Administration, and in the various states they include the
Attorney General and other labor, health and safety agencies. Additionally, in
the US, certain UMG companies entered into a Consent Decree in 2000 with the
Federal Trade Commission for seven years wherein they agreed not to make the
receipt of any co-operative advertising funds for their pre-recorded music
product contingent on the price or price level at which such product is
advertised or promoted.

     In the European Union, UMG is subject to additional pan-territorial
regulatory controls, in particular relating to merger control and antitrust
regulation. UMG is also subject to an undertaking given to the European
Commission arising out of Vivendi's purchase of Seagram, which, for a five-year
period (ending in December 2005), requires that UMG shall not discriminate in
favor of Vizzavi (formerly a joint venture between Vivendi Universal and
Vodafone) in supplying music for downloading and streaming online in the
European Economic area. An undertaking given in connection with Vivendi's
purchase of Seagram to the Canadian Department of Heritage also requires UMG to
continue its investments in Canada's domestic music industry.

                                        36


     Continuing compliance with the consent decree and undertakings mentioned
above do not have a material effect on the business of UMG.

  Research and Development

     UMG seeks to participate to the fullest extent in the digital distribution
of recorded music and to protect its copyrights and the rights of its contracted
artists from unauthorized digital or physical distribution. To this end, UMG has
established a new business and technology arm, eLabs. This unit supervises UMG's
digitization of content and the online distribution of that content, and
generally reviews the licensing of that content to third parties. In addition,
it generally reviews and considers the technologies being developed by others
for application in UMG businesses, such as technological defenses against piracy
in all forms, and is engaged in various projects intended to open new
distribution channels or improve existing ones.

VIVENDI UNIVERSAL ENTERTAINMENT (VUE)

     Our film, television and parks and resorts businesses are conducted
primarily through VUE, a limited liability limited partnership 86% held by
Vivendi Universal. VUE was formed in April 2002 and used for the May 2002
transaction among Vivendi Universal, Universal Studios, Inc., USA Networks, Inc.
(now known as InterActiveCorp, which we refer to as USAi), USANi LLC, Liberty
Media Corporation and Barry Diller. In this transaction, Universal Studios, Inc.
contributed to VUE the Universal Studios Group, consisting of Universal's film,
television and recreation businesses, and USA Networks Inc. contributed its
ownership interest in the USA Entertainment Group, consisting of USA Cable (now
known as Universal Television Networks), USA Films (now Focus Features) and
Studios USA (now known as Universal TV LLC).

     The primary businesses in which VUE engages are:

     - Universal Pictures Group (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets;

     - Universal Television Group (UTG).  UTG is engaged in the production and
       distribution of television programming worldwide as well as the ownership
       and operation of four domestic cable television networks, including USA
       Network and the Sci Fi Channel, and a network of international television
       channels outside of the United States; and

     - Universal Parks & Resorts (UPR).  UPR owns and operates theme parks,
       entertainment complexes and specialty retail stores worldwide.

     In addition to VUE's three primary businesses, VUE also has a Universal
Studios Operations Group which is responsible for providing quality
production/post production facilities and services to both internal and external
productions. It is also responsible for managing VUE's lower lot facility in Los
Angeles and ensuring that services to VUE's employees, tenants and productions
are uninterrupted.

     Effective April 1, 2003, Barry Diller resigned as interim chief executive
of Vivendi Universal Entertainment.

                                        37


     The following table shows the pro forma revenue for each of the primary
businesses in which VUE is engaged for each of the periods indicated:

                                    REVENUES



                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
                                                                  
UPG.........................................................  E 3,927   E 3,803
UTG.........................................................    2,199     2,134
UPR and Other...............................................      852       937
                                                              -------   -------
Total.......................................................  E 6,978   E 6,874
                                                              =======   =======


     The revenue and operational information and data relating to VUE and its
businesses set forth in this section is presented on a pro forma basis, adjusted
to include the results of the entertainment assets of USAi, which was acquired
in May 2002, as if it had been acquired on January 1, 2001, and the results of
Universal Studios international television networks in 2002 (in the actual 2002
results, the results of Universal Studios international television networks were
reported by Canal+ Group).

UNIVERSAL PICTURES GROUP (UPG)

     VUE, through Universal Pictures and Focus Features, is a major producer and
distributor of feature films worldwide. Universal Pictures and Focus Features
produce feature films that are initially distributed to theatres and,
thereafter, through other "windows" of distribution, including non-theatrical,
home video and DVD, pay-per-view and video-on-demand, and pay, free and basic
cable and satellite television.

     Key geographic markets for motion picture distribution, as described in the
preceding paragraph, include the United States, Canada, Europe, Asia, Latin
America and Australia.

     The following tables show information on VUE's motion picture revenue for
each of the periods indicated, broken down by geographic market and "release
window":

                               GEOGRAPHIC MARKET



                                                                  YEAR ENDED
                                                               DECEMBER 31, 2002
                                                               -----------------
                                                                 (IN MILLIONS)
                                                            
North America...............................................        E 2,239
Europe......................................................          1,217
Rest of the World...........................................            471
                                                                    -------
Total.......................................................        E 3,927
                                                                    =======


                                 RELEASE WINDOW



                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
                                                                  
Theatrical..................................................  E   746   E   913
Home Video..................................................    2,239     2,016
Television..................................................      943       875
                                                              -------   -------
Total.......................................................  E 3,927   E 3,803
                                                              =======   =======


                                        38


     Major motion pictures released in recent years include Erin Brockovich,
Gladiator, The Mummy Returns, Meet the Parents, The Fast and the Furious,
Jurassic Park III, Dr. Seuss' How The Grinch Stole Christmas, A Beautiful Mind,
The Scorpion King, Red Dragon, The Bourne Identity and 8 Mile. In addition, the
Universal Pictures Group produces animated and live-action family programming
for home video and television distribution and licenses merchandise in various
parts of the world.

     VUE, through its wholly-owned subsidiaries, distributes its motion pictures
in the United States and Canada to theaters. Throughout the rest of the world,
VUE distributes its motion pictures through United International Pictures B.V.,
a joint venture owned equally by Universal Studios International B.V., a wholly
owned subsidiary of VUE, and Viacom International (Netherlands) B.V.
(Paramount). Through an agreement with DreamWorks SKG, VUE also distributes
theatrically DreamWorks' motion pictures outside of the United States and
Canada.

     The distribution of VUE's products on videocassettes and DVDs is handled by
wholly-owned subsidiaries of VUE throughout the world. Through a servicing
agreement with DreamWorks SKG, VUE also distributes DreamWorks' home video
products throughout the world.

     After a motion picture's theatrical exhibition and its home video/DVD
release, VUE seeks to generate revenues from various other distribution
channels, including non-theatrical distribution (such as airlines, hotels,
cruise ships and armed forces facilities) and various forms of television
distribution. Television distribution includes worldwide exhibition on
pay-per-view and video-on-demand services, subscription pay television services,
network and basic cable and satellite television services, and independent
television stations. VUE does not always have rights in all media of exhibition
to all motion pictures that it theatrically releases and does not necessarily
distribute a given motion picture in all of the foregoing media in all markets.

     VUE's licensing arrangements may be on an "output" basis, where the
licensee is obligated to exhibit some or all of VUE's future motion pictures or
programs over a given period of time, or on a package basis, where the licensee
is obligated to exhibit one or more specified motion pictures or programs. In
the US, VUE has output arrangements for pay-per-view and/or video-on-demand
exhibition with parties such as DirecTV, EchoStar and iNDemand. As for pay
television, VUE has output arrangements with Home Box Office, providing for the
licensing of films released for theatrical exhibition through the year 2010, as
well as a partially overlapping arrangement with Starz Encore Group, providing
for the licensing of a portion of the films released for theatrical exhibition
through the year 2004. VUE also licenses motion pictures and other programs to
the broadcast television networks ABC, NBC, CBS, Fox, UPN and The WB, to
independent broadcast television stations and to basic cable networks, such as
AMC, Bravo, Comedy Central, MTV, Sci Fi Channel, TBS and USA; domestically,
these licenses are generally made on a package basis. In international markets,
VUE licenses motion pictures and other programs on both an output and package
basis to leading third-party pay-per-view and video-on-demand services and to
free, basic and pay television services, including programming services operated
by various affiliated entities and several joint ventures with various other
major studios and other partners.

  UNIVERSAL TELEVISION GROUP (UTG)

     UTG is engaged in two primary businesses:

     - UTG Cable.  UTG's cable business owns and operates four domestic cable
       television networks and a network of international pay television
       channels outside of the United States; and

     - Television Production and Distribution.  UTG's television production and
       distribution business is engaged in the production and distribution of
       television programming worldwide.

                                        39


     The following table shows UTG's revenues for each of the primary businesses
in which UTG is engaged broken down for each of the periods indicated:

                                    REVENUES



                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------    -------
                                                                (IN MILLIONS)
                                                                   
Cable Television Networks...................................  E 1,252(1) E 1,338
Television Production and Distribution......................      947        795
                                                              -------    -------
Total.......................................................  E 2,199    E 2,134
                                                              =======    =======


- ---------------

(1) Includes international TV channels (in the actual 2002 results, the results
    of Universal Studios international television networks were reported by
    Canal+ Group).

     In 2002, 78% of UTG's revenues were generated in North America. VUE also
distributes worldwide current television series and made-for-video and
made-for-television motion pictures, as well as titles from its extensive motion
picture and television library, which consists of varying rights to thousands of
previously released feature films and many well-known television series and
made-for-video and made-for-television motion pictures. In the US, such licenses
are generally made on a package basis, while outside the US such licenses may be
either on an output or package basis depending on the territory and licensee
involved.

  Cable Television Networks

     In the US, VUE operates four domestic 24-hour, basic cable television
networks, USA Network, Sci Fi Channel, TRIO and NewsWorld International (NWI).

     Cable television networks derive virtually all of their revenue from two
sources:

     - Affiliate revenues.  Per subscriber fees paid by the cable television
       operators and other distributors to cable television channel providers.
       These revenues generally provide more stable and predictable cash flow;
       and

     - Advertising revenues.  The sale of advertising time to national
       advertisers during the programming carried on each of the networks.

     The relative stability of affiliate revenues helps reduce cable television
networks' sensitivity to advertising cycles. UTG's cable television network
combined revenue streams have grown at an average rate of 10% over the past 5
years. The total market size, between affiliate and revenue fees, is estimated
to be $17.5 billion (Kagan/UTV Research).

     The following table shows a breakdown of UTG's cable television network
revenues for each of the periods indicated:

                                    REVENUES



                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                              2002(1)    2001
                                                              -------   -------
                                                                (IN MILLIONS)
                                                                  
Cable Television Networks
  Affiliate revenues (subscription fees)....................  E   721   E   695
  Advertising revenues......................................      531       643
                                                              -------   -------
Total.......................................................  E 1,252   E 1,338
                                                              =======   =======


                                        40


- ---------------

(1) Includes international television networks (in the actual 2002 results, the
    results of Universal Studios international television networks were reported
    by Canal+ Group).

     USA Network is a general entertainment network featuring original series
and movies, theatrical movies, off-network television series and major sporting
events, designed to appeal to the available audiences during particular viewing
hours. In general, USA Network's programming is targeted at viewers between the
ages of 18 and 54. According to Nielsen Media Research, as of December 31, 2002,
USA Network was available in approximately 87 million US households. According
to Nielsen Media Research, for 2002, USA Network was first among all domestic
basic cable television networks in primetime ratings among adults 18-49 (Mon-Sun
7pm-11pm).

     USA Network's program line-up features original series, including the two
highest rated original dramatic series on basic cable television (Dead Zone and
Monk) and approximately six movies/mini-series produced exclusively for it each
year. USA Network's programming also includes off-network series, such as JAG,
Nash Bridges, Walker, Texas Ranger, Law & Order: Special Victims Unit and Law &
Order: Criminal Intent, and major theatrically released feature films. USA
Network is home to the AFI Life Achievement Awards, Eco-Challenge, exclusive
midweek coverage of the US Open Tennis Championships, The Westminster Kennel
Club Dog Show, and early round coverage of The Masters, The Ryder Cup and other
major PGA Tour golf events.

     Sci Fi Channel was launched in 1992. Sci Fi Channel features science
fiction, horror, fantasy, paranormal and reality programming. In general, Sci Fi
Channel's programming is designed to appeal to viewers between the ages of 25 to
54. According to Nielsen Media Research, as of December 31, 2002, Sci Fi Channel
was available in approximately 79.4 million US households. According to Nielsen
Media Research, in 2002, Sci Fi Channel was sixth among all basic cable
television networks in adults 25-54 and ninth in adults 18-49.

     Sci Fi Channel's program lineup includes many original dramatic and reality
series, such as: Stargate: SG-1, Farscape, Tremors: The Series, Crossing Over
With John Edward and Scare Tactics. Additionally, Sci Fi Channel airs popular
vintage series ranging from The Twilight Zone to Quantum Leap to digitally-
remastered episodes of the original Star Trek series. Sci Fi Channel
continuously updates its programming library with popular current sci-fi fare
such as X-Files, The Outer Limits, Babylon 5 and Beyond Belief: Fact or Fiction.
Additionally, Sci Fi Channel features many popular theatrical movies, as well as
movies and mini-series made specifically for the network. In 2002, Sci Fi
Channel grabbed headlines with the record-breaking 20-hour original premiere
mini-series, Stephen Spielberg Presents Taken. In 2003, Sci Fi Channel will
telecast two more mini-series made directly for it -- Frank Herbert's Children
of Dune and Battlestar Gallactica.

     TRIO and NWI were acquired by USA Cable from the Canadian Broadcasting
Corporation and Power Broadcasting Inc. in May 2000. TRIO relaunched in June
2001 as "popular arts television" featuring the best in film, fashion, music,
stage and popular culture. NWI is a 24-hour international news channel that
presents newscasts every hour as well as long-form contemporary magazine shows.
At December 31, 2002, TRIO and NWI were available in 15 million and 14 million
households, respectively.

     USA Network and Sci Fi Channel typically enter into long-term agreements
for their major off-network series programming. Their original series
commitments usually start with less than a full year's commitment, generally a
pilot episode, but contain options for further production over several years.
These original productions will include specials, series, and
made-for-television movies. USA Network, and to a lesser extent, Sci Fi Channel,
acquire theatrical films in both their "network" windows and "pre-syndication"
windows. Under these arrangements, the acquisition of such rights is often
concluded many years before the actual exhibition of the films begins on the
network. Each network's original films start production less than a year prior
to their initial exhibition.

  International Television Networks

     Universal Studios Networks Worldwide Limited and various other indirect
subsidiaries of Universal Studios, Inc. operate a network of international
television channels. As of December 31, 2002, Universal Studios Networks
Worldwide manages branded television channels in 25 countries outside of the
United

                                        41


States. 13th Street -- The Action & Suspense Channel reaches television
subscribers via satellite and cable systems in France, Germany and Spain. Studio
Universal, a basic-tier television movie channel, is currently available to
cable and satellite subscribers in Germany, and to satellite subscribers in
Italy. The Sci Fi Channel, a basic-tier television channel with a
science-fiction theme, is currently available to cable and satellite subscribers
in the UK. Finally, the USA Network channel, a basic-tier general entertainment
channel, is offered to cable and satellite subscribers in Brazil, through a
local joint venture partially owned by a Universal Studios subsidiary, and in 19
other countries in Latin America. In 2002, the results of Universal Studios
international television networks were reported by Canal+ Group.

  Television Production and Distribution

     VUE is one of the major suppliers of television programs made for worldwide
exhibition. Through its various subsidiaries, VUE either directly produces, or
finances and acquires ownership of, and distributes a broad variety of
television series, made-for-television movies, mini-series, children's shows and
game and reality-based programs.

     The production business tends to be less predictable than the cable
television business as it requires significant upfront investment with no
guarantee of the success of a television series. Typically, a show is created on
a pilot format, which, if successful, will be licensed by a broadcast network
for a number of seasons. License fees paid by the network typically do not cover
costs, meaning that a television show typically only becomes profitable after
entering syndication (usually after four seasons). However, approximately 90% of
shows are cancelled before the fourth season. This means that the key drivers
for the television production and distribution business are the recruitment and
retention of creative talent and a good "hit ratio" of successful television
shows that are launched.

     VUE is a supplier of primetime dramatic and comedy programming for initial
exhibition on the US broadcast networks, including (during the 2002/03
television season) the long-running series Law & Order and its spinoffs, Law &
Order: Special Victims Unit and Law & Order: Criminal Intent, the newly launched
Dragnet and several series co-produced with individual US networks, including
The District and The Agency on CBS, and American Dreams on NBC. VUE is likewise
a leading supplier of programs for initial exhibition in US domestic syndication
(i.e., sales to individual television stations or station groups). During the
2002/03 season, these programs included talk shows -- Maury (hosted by Maury
Povich) and The Jerry Springer Show -- and such game and reality shows as Blind
Date, Fifth Wheel and Crossing Over With John Edward. VUE also finances,
acquires and distributes programs produced for initial exhibition on VUE's US
cable television networks, including the dramatic series Tremors on Sci Fi
Channel and Monk on USA Network, as well as the epic mini-series Helen of Troy
for USA Network. VUE also has a majority interest in the new production label
Reveille LLC, which recently launched the new series Nashville Star on USA
Network, as well as two new series -- The Restaurant and The Fast & the
Furious -- on NBC.

  UNIVERSAL PARKS & RESORTS (UPR)

     Universal Parks & Resorts is a leader in the development and operation of
theme parks. UPR owns 100% of Universal Studios Hollywood, the world's largest
combined movie studio and movie theme park, and Universal CityWalk Hollywood, a
complex that offers shopping, dining, cinemas and entertainment, each located in
Universal City, California. Additionally, through joint ventures with
Blackstone, UPR owns 50% of Universal Studios Florida -- a combined movie studio
and movie theme park, Universal's Islands of Adventure -- an adjacent theme park
in Orlando, Florida, and Universal CityWalk Orlando -- a complex that offers
shopping, dining, cinemas and entertainment. Further stakes include a 25%
interest in UCF Hotel Venture -- a joint venture owning three hotels adjacent to
the Orlando theme parks, a 37% interest in Universal Mediterranea near
Barcelona, Spain, comprised of a theme park, water park and two hotels, and a
24% interest in Universal Studios Japan in Osaka. The Universal Orlando joint
venture has recently completed a $500 million bond offering. In connection with
this offering, Blackstone and VUE agreed that Blackstone will lend to VUE (or a
subsidiary of VUE) its share of certain distributions from the joint ventures,
up to approximately $22.5 million.

                                        42


     The US market is now mature and further growth is more likely to come from
business expansion in Asia and Europe.

     UPR's business is seasonal and bad weather can adversely impact attendance
at theme parks and resorts. Attendance at theme parks follows a seasonal pattern
which coincides closely with holiday and school schedules. Prolonged bad or
mixed weather conditions during seasonal peak attendance periods may reduce
attendance causing a greater decline in revenues than if those conditions
occurred during a low attendance period.

     Theme park construction and operation is capital-intensive. Maintenance
capital expenditures can absorb 5% to 10% of revenues, while the cost of
developing a new destination park can range from $1 to $2 billion. UPR attempts
to share the costs of developing the parks by taking only a partial equity
interest while signing agreements to manage the completed parks. For managing
the parks, UPR receives an annual management fee.

     On February 10, 2003, UPR (through its wholly owned Mauritius entity
Universal Studios Holding, Ltd.) entered into a joint venture with two partners
in the People's Republic of China for the construction of a theme park in
Shanghai. UPR will have a 25% interest in the joint venture. The agreement
provides that UPR will manage day-to-day operations of the park and will have
key veto rights. The total project cost is estimated to be $875 million. The
agreement remains subject to governmental approval in China and other
significant conditions subsequent.

     VUE has agreed to provide a project completion guarantee in respect of the
Shanghai theme park joint venture on a pro rata basis based upon its
subsidiary's 25% ownership interest in the joint venture. This project
completion guarantee is expected to include the guarantee of UPR's pro rata
share of all amounts owing under an approximately $563 million bank loan to the
joint venture. The obligations under this guarantee will be payable if the
Shanghai theme park is abandoned or is not completed on or prior to the Project
Completion Date. The "Project Completion Date" is expected to be a date no
earlier than 42 months and no later than 51 months after the physical site,
including certain improvements, is delivered to the joint venture so that it can
commence construction. That delivery could occur as early as June 2003. The
guarantee will be released upon completion of project construction.

  COMPETITION

  Competition in the Motion Picture Industry

     There are eight major competitors in the motion picture industry in the US
and several independents that compete aggressively against each other in all
aspects of the production, acquisition and distribution of motion pictures.
These companies include Universal Pictures, The Walt Disney Company, Warner
Bros., DreamWorks SKG, Paramount Pictures Corporation, Metro-Goldwyn-Mayer
Studios, Inc., Twentieth-Century Fox Film Corporation and Sony (through
Columbia/Tri-Star and Sony Pictures). These US "majors" compete against each
other and against independent motion picture companies for product, talent and
revenue received at the box office from the distribution of motion pictures
through all of the distribution channels discussed above. Market share in the US
and international markets varies widely from picture to picture, by "window" and
geographic market, and year to year given the volatility in the commercial
acceptance of motion pictures by consumers. In 2002, according to the Motion
Picture Association of America, Universal Pictures ranked fifth in the US
theatrical market with a 9.3% market share.

     Competition is also intense in distributing VUE's theatrical motion
pictures in the various television markets. There are numerous suppliers of
television programming worldwide, including the television networks, the other
major studios and independent producers, all of which compete actively for the
limited number of broadcast hours available on free, basic cable and pay
television. In addition, unlike VUE, many of the other major studios are
affiliated with major broadcast television networks, which can provide a ready
means of distributing their products, as well as an additional source of
earnings that can offset the fluctuations in the financial performance of their
motion picture and television operations.

                                        43


  Competition in Television Production and Distribution

     VUE produces television programs in a highly competitive environment, as
such programs must compete with television product supplied by other producers,
as well as all other forms of entertainment and leisure time activities. Within
the television industry, VUE must first compete for the creative
talent -- writers, actors, producers -- and the underlying literary properties
needed to produce television shows. VUE's produced programs, including
television series and made-for-television and made-for-video motion pictures,
must then strive for success in a worldwide television marketplace that has
become ever more competitive as digital cable and satellite delivery
increasingly expand the number of channels (and competing programs) available to
consumers. Competition in the critical US production market has also been
increased by the growing consolidation and vertical integration of several large
television and media giants. In particular, the 1995 repeal of the financial
interest and syndication rules in the US has permitted these conglomerates to
combine ownership of television production businesses with broadcast networks.
As a result, the current US broadcast networks -- ABC, CBS, NBC, Fox, The WB and
UPN -- are able to fill their schedules with a large percentage of self-owned
programs, thus reducing the number of time slots available to VUE and other
"outside" producers. Nonetheless, up through the current 2002/03 season, VUE
continues to be one of the primary "independent" suppliers of broadcast network
programming. VUE has also achieved success in producing original programming for
VUE's own cable networks and remains a leading producer of "first-run"
syndicated product. Internationally, competition can be exacerbated due to
regulatory and local market factors, including the imposition of quotas,
limiting the amount of foreign programming those television services are
permitted to exhibit, and increases in the availability of locally produced
programs.

  Competition in the Cable Television Industry

     VUE's basic cable television networks compete for access to customers and
for audience share and revenue with other cable program services, broadcasters,
and other forms of entertainment. Cable operators and other distributors only
contract to carry a limited number of the available networks. Therefore, they
may decide not to offer a particular network to their subscribers, or they may
package a network with other networks in a manner that only a portion of their
subscribers will receive the service (for example, by charging an additional
fee). In addition, there has been increased consolidation among cable operators,
so that VUE's networks have become increasingly subject to the carriage
decisions made by a small number of operators. This consolidation may reduce the
per-subscriber fees received from cable operators in the future. This
consolidation also means that the loss by any network of any one or more of its
major distributors could have a material adverse impact on the network. The
competition for advertising revenues also has become more intense as the number
of television networks has increased. While many factors affect advertising
rates, ultimately they are dependent on the numbers and types of viewers that a
program attracts. As more networks compete for viewers, it becomes increasingly
difficult to increase or even maintain a network's number of viewers. Moreover,
to do so may require a network to spend significantly greater amounts of money
on programming. Therefore, greater pressure may be placed on a network's ability
to maintain advertising revenue levels and to try and generate increases. The
competition for third-party programming also is likely to increase. Many
networks, including VUE's networks, are affiliated with companies that produce
programming. This programming is becoming increasingly difficult to acquire by
third parties or unaffiliated networks. As a result, there is likely to be
strong competition to acquire remaining programming.

  Competition in the Theme Park Industry

     Theme parks can be separated into two main categories: destination parks
(the largest parks, historically located within the US territory, attracting
both US and overseas visitors) and regional parks (smaller parks, attended by
visitors living in the same area). UPR operates in the first category together
with market leader Disney, though recent declines in travel have decreased the
proportion of non-local visitors. Companies such as Six Flags and Cedar Fair
operate in the regional park segment. Barriers to entry, especially in the
destination park segment, are high as development of new parks is constrained by
availability of land and capital.

                                        44


     VUE, through Universal Parks & Resorts, competes aggressively against other
major theme park operators including The Walt Disney Company, Anheuser Busch
Companies, Paramount Parks, Six Flags and Cedar Fair.

  LEGAL AND REGULATORY ENVIRONMENT

  Legal and Regulatory Environment in Motion Picture Production and Distribution

     In the US, the motion picture production and distribution businesses are
largely unregulated due to protections given to expressive works under the
United States Constitution. There are, however, many federal, state and local
statutes and regulations that are integral to the business and under which the
businesses operate including, without limitation, the copyright, trademark,
antitrust, anti-discrimination and environmental, health and safety laws and
regulations. In addition, many federal and state agencies exercise some degree
of oversight and, at times, may initiate investigations and enforcement
proceedings with regard to industry practices. These agencies include, without
limitation, the United States Department of Justice, the Federal Trade
Commission, the Department of Labor, the Equal Employment Opportunity
Commission, the Environmental Protection Agency and the Occupational Safety and
Health Administration and, in the State of California, the Attorney General, the
Department of Toxic Substances Control and the California Department of
Industrial Relations. VUE, through a variety of internal policies and compliance
procedures, regulates itself in many of these areas. In a few limited areas, a
consent decree and undertakings further regulate the operations of VUE. In the
US, the motion picture distribution and exhibition industries are regulated by
the consent decree in US v. Paramount Pictures, Inc.; this consent decree,
affirmed in 1950, prohibits certain conduct by film distributors, including
price fixing and product tying, and requires film distributors to license
products on a film-by-film and theater-by-theater basis. In the European Union,
VUE is regulated by an undertaking in the pay-TV area which, for a five-year
period in each affected country, starting from the end of Universal's existing
first window output deal in that country, will regulate certain business with
Canal+; and is regulated in the film distribution area through an undertaking
given by United International Pictures, the joint venture through which VUE
distributes its feature films theatrically outside of the US and Canada. An
undertaking with the Canadian Department of Heritage also regulates certain
operations of Universal Studios Canada. Continuing compliance with the laws,
regulations, consent decree and undertakings mentioned in this paragraph do not
have a material effect on the business of VUE.

  Legal and Regulatory Environment in Television Production and Distribution

     Many countries enforce quotas that restrict the amount of US-produced
television programming that may be aired on television in such countries. There
can be no assurances that additional television quotas will not be enacted or
that countries that already impose quotas will not more strictly enforce them.
Additional or more restrictive quotas or stricter enforcement of existing quotas
could adversely affect VUE's business by limiting its ability to exploit its
motion pictures and television products internationally.

     Distribution rights to motion pictures and other programs are granted legal
protection under US copyright law and the copyright laws of many foreign
countries, which generally provide civil and criminal penalties for the
unauthorized duplication and exhibition thereof. VUE's ability to distribute and
exploit its motion pictures and other television programming is affected by the
strength and effectiveness of these laws. VUE attempts to take appropriate and
reasonable measures to secure, protect and maintain copyright protection for all
of its motion pictures and other television programming under the laws of
applicable jurisdictions. However, despite these measures, motion picture piracy
continues to be extensive in many parts of the world, including South America,
Asia, the countries of the former Soviet Union and other former Eastern Bloc
countries. In the past, various trade associations have enacted voluntary
embargoes of motion picture exports to certain countries in order to pressure
the governments of those countries to be more aggressive in preventing motion
picture piracy. In addition, the US government has publicly considered trade
sanctions against specific countries that do not take steps to prevent copyright
infringement of US-produced motion pictures. There can be no assurance that
voluntary industry embargoes or US government trade sanctions will be enacted or
be effective. If enacted, such actions could impact the amount of revenue that
VUE realizes from the international exploitation of its motion pictures
depending upon the countries subject to such action and the duration of
                                        45


such action, and if not enacted or not effective or if other measures are not
taken, VUE may continue to lose an indeterminate amount of revenue as a result
of piracy.

     US television stations and networks, as well as foreign governments, impose
content restrictions on motion pictures that may restrict in whole or in part
exhibition on television or in a particular territory. There can be no assurance
that such restrictions will not limit or alter VUE's ability to exhibit certain
motion pictures in such media or markets.

     VUE is subject to certain regulations by the European Union and other
international regulatory authorities. The European Commission recently initiated
investigations into certain aspects of licensing relationships between studios
and channel operators, and there are no assurances that limitations or
restrictions enacted as a result of those investigations or otherwise will not
adversely affect VUE's business and financial results.

  Legal and Regulatory Environment Affecting Television Channels and Programming

     The communications industry, including the operation of television
broadcast stations, cable television systems, satellite distribution systems and
other multichannel distribution systems and, in some respects, vertically
integrated cable programmers, is subject to a substantial federal regulation,
particularly under the Communications Act of 1934, as amended, and the related
rules and regulations of the Federal Communications Commission (FCC).

     Cable Programming.  The Cable Television Consumer Protection and
Competition Act of 1992 prohibits a cable operator from engaging in unfair
methods of competition that prevent or significantly hinder competing
multichannel video programming distributors from providing satellite-delivered
programming to their subscribers. The FCC has adopted regulations to (1) prevent
a cable operator that has an attributable interest, including voting or
non-voting stock ownership of at least 5%, in a programming vendor from
exercising improper influence over the programming vendor in the latter's
dealings with competitors to cable; and (2) prevent a programmer in which a
cable operator has an attributable interest from discriminating among cable
operators and other multichannel video programming distributors, including other
cable operators.

     Cable television systems in the US are also subject to regulation pursuant
to franchises granted by a municipality or other state or local governmental
entity.

     Digital Television.  The FCC has taken a number of steps to implement
digital television service (including high-definition television) in the US,
including the adoption of a final table of digital channel allotments and rules
for the implementation of digital television. The table of digital allotments
provides each existing television station licensee or permittee with a second
broadcast channel to be used during the transition to digital television,
conditioned upon surrender of one of the channels at the end of the digital
television transition period. The FCC set a target date of May 2002 for
completion of construction of digital television facilities and 2006 for
expiration of the digital transition period, subject to biennial reviews to
evaluate the progress of digital television, including the rate of consumer
acceptance. Although the FCC has granted waivers of the May 2002 target date to
a number of stations and a number of requests for waivers are pending, the
number of stations providing both digital and analog programming has steadily
increased and is expected to do so at an accelerated rate during the next
several years. Under the FCC's rules, deployment of digital television is taking
place in the major television markets more rapidly than in smaller markets; and,
in those markets where digital television channels are now operational, cable
programmers face competition from both over-the-air analog and over-the-air
digital television service.

     Must-Carry/Retransmission Consent.  Full-power television broadcasters are
required to make triennial elections to exercise "must-carry" or "retransmission
consent" rights with respect to their carriage by cable systems in each
broadcaster's local market. By electing must-carry rights, a television
broadcaster demands carriage on a specified channel on cable systems within its
television market, defined by Nielsen as a Designated Market Area.
Alternatively, if a television broadcaster chooses to exercise retransmission
consent rights, it can prohibit cable systems from carrying its signal or grant
the appropriate cable system the authority

                                        46


to retransmit the broadcast signal for a fee or other consideration. The FCC
currently is conducting a rulemaking proceeding to determine whether, in certain
circumstances, it should require carriage of a television station's digital and
analog signals. Some stations have exercised retransmission consent rights with
respect to digital programming with the result that cable operators are carrying
some combination of the digital and analog programming on their systems.

     Regulations Applicable to Cable Systems Affecting Programming.  Cable
television operators also are subject to regulations concerning the commercial
limits in children's programming, and closed captioning. The FCC's closed
captioning rules, which became effective January 1, 1998, provide for the phased
implementation, beginning in the year 2000, of a universal on-screen captioning
requirement with respect to the vast majority of video programming. Cable
television operators are also subject to regulations concerning commercial
limits on children's programming, political advertising and indecency standards.
Although all of these content regulations formally apply to the cable operator,
cable programmers are required to distribute programming that meets these
restrictions.

  Legal and Regulatory Environment in the Theme Park Business

     VUE, through Universal Parks & Resorts, operates theme parks around the
world in accordance with the highest health, safety and environmental standards.
In the State of California, legislation and implementing regulations require the
reporting to the state of certain incidents that occur on permanent amusement
rides, which result in the death or serious injury to a guest. VUE and the other
major theme park operators in Florida voluntarily report similar incidents that
occur in their Florida theme parks to the state. These requirements and
practices do not have a material effect on the business of VUE.

  CANAL+ GROUP

     Canal+ Group has two principal lines of business:

          Pay-TV France:  the leader in the production and distribution of
     pay-TV in France, through Canal+ premium channel, CanalSatellite digital
     platform, NC Numericable cable platform and multiThematiques theme
     channels; and

          StudioCanal:  a leading European studio involved in the production,
     co-production, acquisition and distribution of feature films and television
     programs.

     In addition to its two primary lines of business, Canal+ Group also has
other European pay-TV and sports interests.

     We own 100% of Canal+ Group, which in turn owns 49% of Canal+ S.A. and 66%
of CanalSatellite.

     The following table shows Canal+ Group's revenues for the periods
indicated, broken down by business line.

                                    REVENUES



                                                             YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
                                                                      
Pay-TV -- France.........................................  E 2,652   E 2,530   E 2,427
StudioCanal..............................................      455       429       328
Other(1).................................................    1,635     1,604     1,299
                                                           -------   -------   -------
CANAL+ GROUP.............................................  E 4,742   E 4,563   E 4,054
                                                           =======   =======   =======


- ---------------

(1) Other is primarily comprised of international pay-TV, including Telepiu,
    Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies and Expand.

                                        47


     The revenue and operational information relating to Canal+ Group and its
businesses is presented on a pro forma basis to exclude the results of Universal
Studio's international television networks in 2002. In the actual 2002 results,
the results of Universal Studios international television networks were reported
by Canal+ Group.

     Subscription revenues, which are the largest portion of Canal+ Group's
revenues, depend primarily on four factors: subscription growth, churn rates and
programming packages chosen by subscribers which may increase monthly
subscription rates.

     Pay-TV is a subscription business. As a result, Canal+ Group has steady
monthly income and predictable revenues. Over 50% of new subscriptions for
Canal+ Group's pay-TV operations are gained during the last four months of the
year.

     Canal+ Group has suffered losses in recent years in large part due to its
international growth strategy. In late 2002, Canal+ Group announced that it
would restructure its business around its French pay-TV and film production
businesses, and certain of its other assets have been or are in the process of
being sold. On February 5, 2003, Canal+ Group disposed of its 89% interest in
Canal+ Technologies, a supplier of software for digital television. Canal+ Group
has also agreed to sell Telepiu, the Italian pay-TV business, to News
Corporation. The Telepiu divestiture received the approval of the European
Commission on April 2, 2003 and was completed on April 30, 2003.

  Pay-TV -- France

     Canal+ Group's pay-TV operations in France are engaged in the production of
pay-TV channels (Canal+, Multithematiques and others) and the operation of
satellite and cable platforms (CanalSatellite and NC Numericable).

     The cost of purchasing rights for premium channel programming, including
investments required in French and European programming described below, is the
largest operating cost for Canal+ Group, representing over 70% of operating
costs in 2002. Other operating expenses include subscriber acquisition costs
(sales commissions and marketing expenses), subscriber management costs (cost of
set-top boxes which are rented to the subscribers, call centers, etc.), and
transmission costs.

     The French Audiovisual Council has granted licenses to Canal+ Group for
five channels (the maximum number allowed to be under common ownership) for
future digital terrestrial broadcasting in France. Those channels are Canal+,
Sport+, I-Television, Planete and CineCinema.

  Canal+

     Canal+ was the first premium pay-TV channel in Europe and remains the
leading pay-TV channel in France. Canal+, which broadcasts recent films and
sports events on an exclusive basis, is available through customized local
versions in eleven European countries. In France, Canal+ is available both as an
analog channel and on cable and satellite. French digital satellite and cable
subscribers have access to a multiplex of four Canal+ channels.

     Under French law, Canal+ Group cannot own more than its existing 49%
interest in the broadcasting activities of Canal+. Canal+ Group holds this
interest through a 49% interest in Canal+ S.A., a publicly traded company listed
on the Paris Second Marche, which owns the Canal+ channel.

     Canal+'s 2002 revenues were generated mainly by subscriptions (94%) and
advertising (5%).

                                        48


     The following table shows information about Canal+'s subscriptions, for the
periods indicated:

                                 SUBSCRIPTIONS



                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
                                                              (IN THOUSANDS, EXCEPT %)
                                                                       
Subscription base French pay-TV market(1)
  Digital...................................................  5,631    5,075    4,473
  Analog....................................................  4,554    4,625    4,723
Subscription base Canal+ (premium)
  Digital...................................................  1,613    1,505    1,396
  Analog....................................................  2,864    3,046    3,224
Churn (annual)..............................................   10.6%    10.8%     9.9%


- ---------------

(1) Includes cable, satellite and direct-to-air.

     Subscription information is based on Canal+ Group's compilation of
subscription figures provided by the relevant companies and the cable
association Aform.

     Canal+ attracts subscribers principally through its films and sports
offerings. Canal+ broadcasts more than 400 films annually, about 80% of which
are French TV premieres. Canal+ sports offerings include French premier league
soccer, Champions League and other major European soccer leagues, horse racing,
rugby union, golf, boxing and various US sports. Canal+ also offers original
premium programs.

     Among Canal+'s sports offerings, French soccer premier league is an
important driver of our subscriber base and Canal+ pays significant licensing
fees for the right to broadcast games. The French premier league current
contract expires in June 2004. Canal+ and the French soccer premier league
negotiated an agreement whereby Canal+ would have had exclusive broadcasting
rights for the premier league 2004-2007 seasons. However, upon petition by
Canal+'s competitor Television par Satellite (TPS), the French competition
council stayed effectiveness of this agreement. As a result of a court
recommended mediation with TPS, all parties concerned agreed in April 2003 to
extend the existing contract for the duration of one year (i.e., through the end
of the 2004-2005 season). See "Item 8--Financial Information--Litigation."

     Obligations contained in Canal+'s broadcasting license impose significant
requirements on Canal+'s investments, broadcasting and use of revenues. See
"--Regulatory Environment."

  Theme Channels

     Canal+ Group has approximately 40 theme channels across Europe including
approximately 20 theme channels in France. As part of its strategic
restructuring, Canal+ will be focusing this activity on the French market.

  CanalSatellite

     Canal+ Group owns 66% of CanalSatellite, the leading French Satellite TV
platform. The remaining shares are held by Group Lagardere. Launched in 1992 as
a small platform distributed through analog technology, CanalSatellite upgraded
to digital technology in 1996 and is now the leading satellite platform in
France. At the end of 2002, CanalSatellite had a share of approximately 63% of
the French satellite market with over two million subscribers. CanalSatellite
offers over 230 channels, some of which are exclusive.

                                        49


     CanalSatellite's revenues are driven by subscriptions. The following table
shows information about CanalSatellite's subscriptions for the periods
indicated:

                                 SUBSCRIPTIONS



                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
                                                                       
CanalSatellite subscriptions (thousands)....................  2,046    1,822    1,598
Churn (annual)..............................................    8.4%     9.9%    10.3%


     With the assistance of Canal+ Technologies the digital platforms of Canal+
Group in Spain, Poland and France, including CanalSatellite, launched the
digital TV industry's largest-ever operation to change the smart cards in set
top boxes. More than 7 million cards with a new chip and a new version of the
access control software were exchanged in 2002 to combat piracy.

     Canal+ Group sold Canal+ Technologies in early 2003 to Thomson. Canal+
Technologies will continue to provide the services it previously provided to
Canal+ Group pursuant to a long term contract. CanalSatellite started marketing
in early 2003 a new generation of digital set top boxes equipped with a hard
drive that uses a new version of MediaHighway, the digital interactive system
developed by Canal+ Technologies and based on the new international standards
for interactive television (DVB-MHP). These set-top boxes, known as Pilotime,
offer a broad range of original and innovative services.

  NC Numericable

     Canal+ Group operates the French cable platform, NC Numericable. At the end
of 2002, NC Numericable had a share of approximately 16% of the French cable
market, with 406,933 subscriptions. NC Numericable leases its network from
France Telecom.

  StudioCanal

     StudioCanal is a major player in the production, co-production, acquisition
and distribution of European and American films for theaters. StudioCanal has
one of the largest film libraries in the world, including over 5,000 well-known
films of different genres, including Terminator 2, Basic Instinct, The Graduate,
The Producers, The Third Man, Breathless, Chicken Run, Billy Elliot, Grand
Illusion, Bridget Jones's Diary, Brotherhood of the Wolf. Some of StudioCanal's
distribution rights are worldwide, others are limited to Europe and France.
StudioCanal's TV program library represents more than 40,000 hours of viewing.

     Along with Canal+, StudioCanal is involved in the financing of
approximately 80% of French films, which together makes them the main sponsor of
the domestic industry.

     StudioCanal is also engaged in audiovisual production (through its
subsidiary StudioExpand) and is active in video and DVD distribution, music
publishing, and product licensing.

     In 2002, StudioCanal produced, co-produced or acquired six films that sold
more than one million tickets in France, including Roman Polanski's The Pianist,
L'Auberge espagnole (Euro Pudding) by Cedric Klapisch, Decalage horaire (Jet
Lag) by Daniele Thompson, and Michael Mann's Ali. Two films co-produced by
StudioCanal earned two prestigious awards at the 2002 Cannes Festival: the Palme
d'Or for The Pianist and the award for Best Director for Im Kwon Taek's
Chiwaseon. The company has been extremely successful with the video and DVD
releases in France of Bridget Jones's Diary, Zinedine Zidane "Comme dans un
reve," Traffic and We Were Soldiers. Roman Polanski's The Pianist received three
Academy Awards (Best Director, Best Actor and Best Adapted Screenplay) in 2003.

                                        50


  Other

     In addition to its two primary lines of business, Canal+ Group also has the
following other European pay-TV and sports interests:

          Sogecable.  Sogecable, a listed Spanish holding company, is 21.3%
     owned by Canal+ Group. Sogecable's other strategic shareholder is Prisa,
     the leading Spanish media group, which also owns 21.3% of Sogecable.
     Sogecable's two main activities, which represent more than 80% of its
     revenues, are Canal+, a terrestrial premium channel for sports and films,
     and CanalSatelite Digital, a DTH platform. CanalSatelite Digital is the
     largest and most successful satellite TV operator in Spain, and competes
     with Via Digital, a Telefonica affiliate. In January 2003, Sogecable and
     Telefonica agreed to merge their digital platforms, CanalSatelite Digital
     and Via Digital, subject to local regulatory and other approvals. On
     completion of the merger, Via Digital shareholders will receive 23% of the
     capital stock of Sogecable in return for their Via Digital shares. The
     merger of the two companies will create the largest pay-TV operator in
     Spain with more than 3 million subscriptions. The merged company will be
     the only satellite television operator in Spain.

          Nordic Countries.  In the Nordic countries, in June 2002 Canal+ Group
     sold its 50% stake in the Canal Digital distribution platform to Telenor,
     which already held the other 50% stake. We are in the process of selling
     the Group's Nordic channels. In the interim, Canal Digital continues to
     exclusively distribute the satellite segment of such channels.

          Cyfra+.  In Poland, the digital television platforms Cyfra+ and Wizja
     TV merged into a single satellite system, TKP, in 2002. The merged Cyfra+
     package is now the leading pay-TV and satellite platform in Poland with an
     expanded premium offer and a stronger programming package and is 75% owned
     by Canal+ Group and Polcom Invest and 25% owned by UPC. As of December 31,
     2002, Cyfra+ had one million subscriptions.

          Telepiu.  In October 2002, an agreement was signed with News
     Corporation and Telecom Italia for the sale of 100% of the pay-TV platform
     Telepiu in Italy to News Corporation. The acquisition of Telepiu by News
     Corporation, which intends to merge it with its Stream platform, was
     approved by the European Commission on April 2, 2003 and completed on April
     30, 2003. As of December 31, 2002, Telepiu had 1.55 million subscriptions
     to its premium channel and 1.75 million subscriptions to its digital
     platform.

          Canal+ Benelux.  Canal+ Group operates in Belgium and the Netherlands
     through its wholly-owned subsidiary, Canal+ Benelux, by offering premium
     channels and packages of theme channels. As of December 2002, Canal+
     Benelux had 689,000 subscriptions.

          Media Overseas.  Media Overseas is a 100% Vivendi Universal affiliate,
     managed by Canal+ Group and dealing with over 500,000 subscriptions of
     Canal+/CanalSatellite in the French overseas territories and some
     French-speaking African countries.

          Sportfive.  Canal+ Group and RTL Group each own 46% of Sportfive, with
     the balance held by Mr. Jean-Claude Darmon. Sportfive, created from the
     combination of the sports rights activities of Sport+ (a subsidiary of
     Canal+ Group), UFA Sports (a subsidiary of RTL Group) and Groupe Jean-
     Claude Darmon, holds a leading market position with a broad range of
     international TV and marketing of sports rights, primarily for football
     clubs and leagues around the world. Sportfive has more than 320 football
     clubs under contract, more than 40 national federations and leagues, as
     well as the international basketball, handball and rugby federations.

          PSG.  Paris Saint Germain is the only Paris based premier league
     soccer club and is one of France's leading soccer clubs. In 2001, Canal+
     Group increased its interest in PSG to 90.88%.

  Competition

     Competition in the basic pay-TV market remains largely national due to
language and cultural factors specific to each country. The French pay-TV market
is dominated by satellite and Canal+. Cable penetration is low compared to
America and certain other European countries.
                                        51


     In its French pay-TV business, Canal+ Group's principal competitor is TPS.
Cable operators (other than our subsidiary NC Numericable) also compete in this
market. The increase in broadcast channels being made possible by new digital
technology (such as digital broadcast television already introduced in several
European countries and the anticipated introduction of ADSL) will lead to the
arrival of newcomers in the pay-TV sectors.

     The development of new distribution media, particularly DVDs, which offer a
certain number of films before they are released on pay-TV channels, also
fosters real competition for a premium channel such as Canal+.

     In the theme channel business, competition is more international than in
the basic pay-TV business. International labels initiated by American
communication companies and studios such as MTV, Fox Kids or the Disney Channel
are developing rapidly.

     In the film and TV programming sector, StudioCanal's main competitors are
the American and other national production companies.

  Regulatory Environment

     The media industry in Europe is regulated by various national statutes,
regulations and orders, often administered by national agencies such as the
French Audiovisual Council. These agencies usually grant renewable broadcast
licenses for specific terms. In France, Canal+ holds a pay-TV broadcast license
for over-the-air, satellite and cable broadcasts, which was renewed for a
five-year period starting in December 2000.

     Under Canal+'s French broadcast authorization, Canal+ is subject to the
following regulations: (i) no more than 49% of its capital stock may be held by
a single shareholder and (ii) 60% of the films broadcast by the channel must be
European films, and 40% must be French Language films. Each year Canal+ must
invest 20% of its total prior-year revenues in the acquisition of film rights,
9% of which must be devoted to French language films and 3% to European films
other than French films. At least 75% of the French movies must be acquired from
non-Canal+ Group controlled companies. Canal+ has an obligation to invest 4.5%
of its turnover in original TV movies and dramas.

     Canal+ Group also operates in Belgium, Spain, the Netherlands, Poland and
the Nordic countries pursuant to the regulations of each of these countries
which generally stipulate, as does France, financing levels for European and
national content.

     The European Union generally regulates competitive matters, including
strategic combinations. The European Union has also adopted a series of
directives that influence the communications business, in particular the
directive known as "Television without Frontiers," and directives governing
intellectual property, e-commerce, data protection, and telecommunications.

  Research and Development

     Canal+ Group's research and development costs in 2002 totaled E 51 million,
primarily consisting of costs of Canal+ Technologies, and were incurred
primarily for new digital and image processing technologies.

  MAROC TELECOM

     The following table shows Maroc Telecom's revenues for the periods
indicated:

                                    REVENUES



                                                         YEAR ENDED DECEMBER 31,
                                                  -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                  -----------------   -----------------
                                                   2002      2001      2002      2001
                                                  -------   -------   -------   -------
                                                              (IN MILLIONS)
                                                                    
Maroc Telecom revenues..........................  E 1,487   E 1,013   E 1,487   E 1,351


                                        52


     The revenue and operational information and data relating to Maroc Telecom
set forth in this section is presented on a pro forma basis, adjusted to include
the results of Maroc Telecom for all periods.

     The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of the acquisition by us in April 2001.

     Maroc Telecom is Morocco's incumbent telecommunications operator. The
company was created in 1998 following its spin-off from the ONPT (the Moroccan
national postal and telecommunications administration). Morocco's mobile
telephone market opened to competition in 2000 with the successful bid for
licenses by a consortium led by Telefonica of Spain. In the past three years and
with Vivendi Universal's assistance, the company has transformed itself into a
highly profitable, market-oriented business focused on its customers, in
accordance with international standards of the industry.

     Vivendi Universal acquired its current ownership interest and became Maroc
Telecom's strategic partner in 2001 following an auction process organized by
the Moroccan government. With our 35% shareholding interest, we control Maroc
Telecom under the terms of a shareholder's agreement entered into in connection
with the acquisition of our stake. The remaining shares of Maroc Telecom are
owned by the Kingdom of Morocco.

     Under the shareholders' agreement, the Kingdom has put options on an
additional 16% of the Maroc Telecom shares exercisable beginning in September
2003 at a fair market price determined by an appraisal procedure. If the Kingdom
exercises this put right and we acquire the shares, we will also have a right of
first refusal on the Kingdom's remaining shares. We have granted the Kingdom a
pledge on our existing 35% interest in Maroc Telecom to secure the purchase
price of the 16% interest for the period between the exercise of the put and its
settlement in cash. Under the shareholders' agreement we cannot sell our shares
in Maroc Telecom without the approval of the Kingdom of Morocco for a period of
five years from the date of the shareholder's agreement.

     In accordance with the Articles of Association and pursuant to the
Shareholders' Agreement, we appoint a majority of both the Supervisory board and
the Executive board of Maroc Telecom, including the chairman of the executive
board. In addition, we exercise the majority voting rights at shareholder's
meetings. As a result, Maroc Telecom is fully consolidated in our financial
statements.

     Maroc Telecom is Morocco's largest (and Africa's second largest)
telecommunications operator, operating in both the fixed line business, where it
currently remains the sole provider, and the fast growing mobile business, where
it is the country's largest operator. Maroc Telecom revenues increased 10% to
E 1.5 billion in 2002. Fixed-line, data and international revenues represented
62% of Maroc Telecom's revenues in 2002, while mobile revenues represented the
remaining 38%.

  Fixed Line Telephony

     Fixed line telephony remains Maroc Telecom's largest business in terms of
revenues. Our fixed line business includes traditional residential,
international and business services and our public telephony service, data
transmission solutions for companies, and our Internet access and portal
businesses.

     The number of fixed lines in Morocco grew steadily until 1999, reaching a
total of 1.5 million, before falling between 1999 and 2002. The two main factors
explaining this trend are the introduction of competition from the mobile
network as of 1999 and the company's clean-up of its fixed-line customer base in
2001, when a significant number of customers who had stopped using or were no
longer paying for their service were removed. The number of fixed lines has now
stabilized and is expected to be stable in the future.

     Revenue growth was maintained over the period despite the decline in the
number of fixed lines, as international and fixed-to-mobile business revenues
and public telephony all grew. The public telephony business comprises the
public pay telephone network as well as a network of approximately 17,000
teleboutiques. Teleboutiques are managed by private sector entrepreneurs who
rent on average four or five lines per store. They are charged reduced rates due
to the high volume of calls per line and resell calls to customers at retail
prices.

                                        53


  Data Transmission and Internet

     Maroc Telecom's growing data transfer business provides companies with data
transfer solutions including x.25, frame relay, digital and analogue leased
lines and IP, primarily for its business customers.

     Our Internet business offers packet switched ISP services to fixed-line
subscribers under the Menara brand. At the end of 2002, Maroc Telecom got its
ADSL service ready to launch; which it believes will be one of its primary
growth areas at its launch, upon receipt of approval by the appropriate
regulatory authority. At year end 2002, the company had approximately 32,000
subscribers to its Internet access services.

  Mobile Telephony

     Maroc Telecom launched its prepaid services in 1999 and its customer base
has grown rapidly since. At year-end 2002, the company had over 4.5 million
mobile users.

     Maroc Telecom offered the only mobile service in Morocco until mid-2000,
when a second operator commenced business. At year-end 2002, the company
estimates that it had an approximate 70% share in the mobile telephony market.
At the end of 2002, the overall penetration rate in mobile telephony in Morocco
was estimated at 21.6%.

     Maroc Telecom's customer base is over 95% prepaid, reflecting preferences
in the Moroccan market. Maroc Telecom believes that its network of 17,000
teleboutiques, which is a key distribution channel for prepaid cards, is a major
competitive advantage.

     After eliminating delinquent customers from its postpaid customer base in
2001, postpaid subscribers increased in 2002. The company particularly targets
business customers for its postpaid services.

  Network

     Fixed-line services and data transmission

     Maroc Telecom's fully digital network has a switching capacity of 2 million
lines and provides national coverage thanks to the emphasis placed on servicing
newly created urban areas and improving network reliability.

     Maroc Telecom operates a fully digital network and an optic fiber
inter-city transmission infrastructure with high-speed data transmission
capacity. International bandwidth has been gradually increased to reach
4*34Mbit/s.

     Mobile telephony

     Maroc Telecom has emphasized growing both its population and its country
coverage. At the end of 2002 Maroc Telecom had 3,000 GSM sites, against 2,600 in
2001 and 600 in 1999. In 2002, over 95% of the Moroccan population was covered,
the efficiency rate was greater than 95% and the drop call rate was less than
2%.

     Maroc Telecom has signed 179 roaming agreements with operators in 85
countries around the world.

  Competition

     The auction for a second fixed telephony license in 2002 was unsuccessful,
and Maroc Telecom remains the single fixed-line operator in the Moroccan market.
The government has, however, announced its intention to hold another auction
before the end of 2003.

     Competition has existed in the mobile telephony market since the granting
of a second mobile license in 1999 to Medi Telecom. Medi Telecom, with an
estimated 30% market share in 2002, is a subsidiary of Telefonica, Portugal
Telecom and a group of Moroccan investors led by BMCE.

                                        54


     Maroc Telecom has an estimated 72% share of the Moroccan Internet market.
Maroc Telecom main competitors in this market are: Maroc Connect (subsidiary of
Wanadoo) with an 18% market share, and various other smaller ISPs.

     Specific licenses (VSAT, 3RP, GMPCS) have been granted for specific market
segments (businesses and international communications).

  Regulatory Environment

     The Kingdom has created a regulatory authority Agence Nationale de
Reglementation des Telecommunications (ANRT) which is responsible for
implementing free competition and regulating the telecommunications market. The
liberalization and privatization of the Moroccan telecommunications market
advocated by the World Bank is implemented and managed by the ANRT.

     The terms and conditions governing Maroc Telecom set out its rights and
obligations as the fixed-line operator regarding universal service. The ANRT has
not announced the granting of UMTS licenses.

     Principal regulatory developments in 2002 were the leveling of retail
tariffs and other price regulations and the authorization for Internet traffic
to use the public telephone network.

  Vivendi Universal Games (VU Games)

     VU Games is one of the world's leading publishers of interactive
entertainment and educational software. VU Games develops, markets and
distributes its games and educational software products for all major platforms,
including PC, consoles (Sony's PlayStation2, Microsoft's Xbox and Nintendo's
GameCube) and handheld (Nintendo's GameBoy Advance). VU Games' revenue for the
2002 fiscal year was E 794 million and for the 2001 fiscal year was E 657
million. In 2002, 63% of VU Games' revenue came from North America, 27% came
from Europe and 10% came from Asia/Pacific and Rest of the World.

     VU Games is the sixth largest publisher of consumer software with an
approximate 5% share of worldwide market. VU Games is the second-largest
publisher of PC consumer software worldwide, holding the number-one position in
South Korea, and the number two position in North America, France, Germany, UK,
Spain and Australia (source: NPD Funworld, PC Data, Chart-Track, GFK, Inform,
Interbase. Figures include sales of PC kids, PC education, PC productivity, PC
games and all console software categories. Latest available 12 months (December
2002) except for Germany (November 2002).

     VU Games maintains a strong heritage as a leader in PC games and
educational software. For 2002, VU Games' PC revenues represented 56% of total
revenues. VU Games' performance in the PC segment was driven by key releases
such as Warcraft III, NASCAR 2002, The Thing, J.R.R. Tolkien's The Lord of the
Rings: The Fellowship of the Ring, Jumpstart Advanced, and Barbie. VU Games'
development studios -- Black Label Games, Blizzard Entertainment, Coktel,
Knowledge Adventure, Massive Entertainment and Sierra Entertainment -- have
delivered some of the industry's most successful PC titles across numerous
genres.

     VU Games entered the console software business in 2001, with the assumption
of management responsibility for Universal Interactive (UI), which is held
through Universal Studios. Since then, VU Games has expanded its publishing
business with the establishment of Black Label and an affiliate-label program
called the Partner Publishing Group. Within one year, VU Games increased its
console sales from 21% to 44% of total revenues. Today, all of VU Games' studios
are engaged in the development of console titles while maintaining their
commitment to the PC segment.

     In the online games arena, VU Games has sophisticated groups of developers
whose experience includes Battle.net, a leading online games network launched in
1997 with over 12 million active users; Half-Life, the number-one online action
game; and Tribes: Aerial Assault, one of the first third-party titles to support
online game-play over the Internet using Sony's PlayStation 2 system.

     Strong game brands are a cornerstone of VU Games' success. VU Games'
product library consists of 378 active titles, including industry-leading,
multi-million unit selling brand franchises such as Diablo, Starcraft,
                                        55


Warcraft, Spyro the Dragon, Crash Bandicoot, Half-Life and Jumpstart. In March
2003, The Simpsons was added to VU Games' product library as a result of an
agreement with Fox Interactive.

     VU Games' brand portfolio includes a balanced mix of original content (52%
of all titles), licensed properties (30% of all titles) and third-party releases
(18% of all titles).

     In the future, VU Games intends to continue producing high-quality and
innovative game franchises such as The Hulk and X-Files, expansion sets and
updated versions of blockbuster series such as Warcraft, Counter Strike and
Crash Bandicoot, and the migration of best-selling franchises such as Starcraft
and SWAT from PC to console.

  Competition

     The consumer software market is quite fragmented. The worldwide leader is
Electronic Arts Games, with a 15% share. The top-ten players have a combined 60%
worldwide market share.

  Regulatory Environment

     VU Games voluntarily participates in self-regulatory ratings systems
established by various industry organizations around the world. In the US, VU
Games adheres to ratings, advertising guidelines and online privacy principles
adopted by the Entertainment Software Association. Pursuant to these guidelines,
VU Games indicates in its product-packaging and advertising the age group for
which the particular product is appropriate and a brief description of its
content. VU Games operates in compliance with local legal requirements where
applicable to computer games and video games (in countries such as Germany and
South Korea) as well as with local statutory rating systems. Complying with such
rating systems and local laws does not have a material effect on the business of
VU Games.

  OTHER

  Veolia Environnement (VE)

     Until June 2002, we held approximately 63% of the share capital of Veolia
Environnement, an environmental services business with global operations. In
July 2002, we reduced our stake to approximately 40.8% of the outstanding share
capital of Veolia Environnement and through an additional sale on December 24,
2002, we reduced our stake to approximately 20.4%. Our investment in Veolia
Environnement is now accounted for using the equity method. As part of the
December sale, we granted to the purchasers a call option exercisable until
December 23, 2004 to purchase our remaining stake in Veolia Environnement at
E 26.5 per share. For information on this call option, see "Item 5--Operating
and Financial Review and Prospects--Contingent Liabilities."

     Veolia Environnement has operations in more than 100 countries on five
continents, divided into four main divisions:

     - Vivendi Water for water services;

     - Dalkia for energy services;

     - Onyx for waste management; and

     - Connex for transport.

     Veolia Environnement's revenues were E 30.1 billion in 2002, E 29.1 billion
in 2001 and E 26.3 billion in 2000.

     Veolia Environnement's stock has been listed for trading on the Premier
Marche of Euronext Paris since July 2000, and has also been listed on the New
York Stock Exchange in the form of American Depositary Receipts (ADRs) since
October 2001.

                                        56


  Vivendi Telecom International (VTI)

     Vivendi Telecom International operates our fixed and mobile
telecommunications businesses outside France and Morocco. While Vivendi
Universal's interest in Maroc Telecom is held through VTI, it is reported as a
separate segment and is discussed separately herein.

     VTI's revenue, excluding Maroc Telecom, was E 461 million in 2002, E 242
million in 2001 and E 141 million in 2000.

     In 2002, we decided to explore selling VTI's stakes in Hungary, Poland,
Egypt and Kenya in order to focus on our core businesses.

     Monaco

     VTI owns 55% of Monaco Telecom, the incumbent telecommunications operator
in the Principality. The remaining 45% stake is held by the Principality of
Monaco.

     Spain

     VTI is one of the principal shareholders of the Spanish communication
company Xfera Moviles, which won one of the four UMTS licenses in Spain in 2000.
Due to technological delays in the development of UMTS, the date of the
commercial launch and deployment of the UMTS network has been postponed. As a
result of this postponement, Xfera cut its work force in 2002. The Xfera
Shareholders' Agreement dated January 12, 2000 contains a provision which gives
the founding shareholders (including VTI) the possibility to acquire the shares
held by Vodafone in Xfera in certain defined circumstances. Vodafone claims that
such provision amounts to a call option and that, together with the other two
founding shareholders, VTI exercised such call option by way of letters sent to
Vodafone in January 2001. VTI contests Vodafone's claims, including its
interpretation of such provision. See "Item 5--Operating and Financial Review
and Prospects--Commitments and Contingencies."

     Hungary

     Operating under the name Vivendi Telecom Hungary, VTI's subsidiary Matel BV
is the second largest fixed line telecommunications operator in Hungary.

     VTI signed an agreement to sell Vivendi Telecom Hungary for E 325 million,
including the assumption of E 305 million in net debt in December 2002. The sale
was completed in May 2003.

     Poland

     Vivendi Universal and VTI jointly hold 49% of Elektrim Telekomunikacja
(ET), a major player in the Polish telecommunications market.

     In November 2002, ET entered into an agreement to sell the cable television
services of its wholly owned subsidiary, EI Viv Telecom for E 110 million. The
completion of this sale remains subject to Polish regulatory approval.

     In February 2003, ET sold part of its Polish fixed telephony business for
approximately E 17 million. ET is exploring various options with respect to its
fixed telephony operations as well as its 51% stake in PTC, a mobile telephone
operator with approximately 5 million customers at the end of 2002.

     For a description of certain litigation relating to Vivendi Universal's
interest in ET, see "Item 8--Financial Information--Litigation."

     Kenya

     In 2002, KenCell, VTI's 60% subsidiary, showed strong growth in spite of a
difficult economic climate. At the end of 2002, KenCell had more than 450,000
customers (compared to 56,000 at the end of 2000 and 250,000 at the end of
2001), and a 49% market share.
                                        57


     Egypt

     On February 25, 2003, VTI signed a share purchase agreement to sell its
interest in Vodafone Egypt Telecommunications for an aggregate consideration of
E 40 million. The transaction completion is subject to regulatory approvals and
various other closing conditions.

  Vivendi Universal Net (VUNet)

     VUNet, a wholly owned subsidiary of Vivendi Universal, and its subsidiary,
Vivendi Universal Net USA Group, Inc., hold Vivendi Universal's Internet and new
technology operations.

     In 2002, Vivendi Universal carried out a strategic review of its Internet
operations. This led to the implementation of a cost and investment reduction
program, and the closure of a number of subsidiaries. We anticipate closing some
of the remaining Internet division companies and integrating the others into the
businesses to which they report within Vivendi Universal.

  Publishing

     In late 2002, Vivendi Universal sold its principal publishing assets,
including Houghton Mifflin (which had been acquired in 2001) and almost all of
its other publishing assets worldwide.

  Vivendi Valorisation

     Vivendi Valorisation holds a portfolio of real estate assets which formerly
were part of our property and construction segment.

     The majority of these assets, which we intend to sell, are associated with
our past involvement in long-term residential and commercial property
developments.

SEASONALITY

     Our business is not seasonal, except as noted in the descriptions of UPR
and UMG. See "--Our Segments--Vivendi Universal Entertainment (VUE)--Universal
Parks & Resorts (UPR)" and "--Our Segments--Music."

RAW MATERIALS

     Raw materials are not important to our business in a material way, except
as they are used in the production of motion picture and television, in the
production of video products and in the production of compact disks.

     The primary material utilized in motion picture and television production
is raw film stock. Film stock is purchased by subsidiaries of VUE for initial
film production, and by third party film laboratories that produce release
prints of theatrical films for VUE. Film stock is purchased from large
manufacturers of photographic products located in the United States and other
countries. Availability of raw film stock is good and no problems have been
encountered. The price of raw film stock has had low volatility, and VUE and
such third party film laboratories further reduce their exposure to price
changes by securing pricing under long-term contracts with such film suppliers.

     The primary materials used in production of video products are videotape,
and polycarbonate to produce DVDs. These materials are purchased by third party
video duplicators from large manufacturers located in the United States and
other countries. Availability of such materials is good and no problems have
been encountered. The price of videotape has had low volatility, and such cost
is a small percentage of the cost to VUE of the final videotape product. The
price of polycarbonate has had some volatility related to petroleum price
fluctuations, but these have not been significant enough to be passed through to
VUE by the third party duplicators.

     The primary material used in production of compact discs is polycarbonate.
UMG purchases polycarbonate from large suppliers located in the United States
and other countries. Availability of polycarbonate
                                        58


is good and no problems have been encountered. The price of polycarbonate has
had some volatility related to petroleum price fluctuations, but such cost is a
small percentage of UMG's cost of goods.

ORGANIZATIONAL STRUCTURE

     The following table sets forth the subsidiaries through which we conducted
the majority of our operations as of December 31, 2002 (subsidiaries are
indented following their respective parent companies).



                                    COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
                                                                              
CEGETEL GROUP
Cegetel Groupe S.A...............     France       Consolidated      59%               44%
  Cegetel S.A....................     France       Consolidated               80%                  90%
  Societe Francaise du
    Radiotelephone S.A. (SFR)....     France       Consolidated               80%                  80%
  Telecom Developpement (TD).....     France          Equity                  50%                  50%
MUSIC
Centenary Holding N.V............   Netherlands    Consolidated      92%               92%
  Universal Music (UK) Holdings
    Ltd..........................       UK         Consolidated              100%                 100%
  Universal Entertainment GmbH...     Germany      Consolidated              100%                 100%
  Universal Music K.K............      Japan       Consolidated              100%                 100%
  Universal Music S.A.S..........     France       Consolidated              100%                 100%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  PolyGram Holding, Inc..........       USA        Consolidated              100%                 100%
  Interscope Records.............       USA        Consolidated              100%                 100%
  UMG Recordings, Inc. ..........       USA        Consolidated              100%                 100%

VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V............................   Netherlands    Consolidated      92%               92%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  Vivendi Universal Entertainment
    LLLP.........................       USA        Consolidated               93%                  86%

CANAL+ GROUP
Groupe Canal+ S.A................     France       Consolidated     100%              100%
  Canal Plus S.A.................     France       Consolidated               49%                  49%
  CanalSatellite S.A.............     France       Consolidated               67%                  67%
  StudioCanal S.A................     France       Consolidated              100%                 100%
  Multithematiques...............     France       Consolidated               64%                  64%

MAROC TELECOM S.A................     Morocco      Consolidated               51%                  35%

VIVENDI UNIVERSAL GAMES, INC.....       USA        Consolidated               99%                  99%

HOLDING & CORPORATE
  Societe d'Investissement pour
    la Telephonie (SIT)..........     France       Consolidated     100%              100%
  UGC............................     France          Equity         58%               58%

VIVENDI TELECOM INTERNATIONAL
  S.A............................     France       Consolidated     100%              100%
  Vivendi Telecom Hungary........     Hungary      Consolidated              100%                 100%
  Kencell S.A....................      Kenya       Consolidated               60%                  60%
  Monaco Telecom S.A.M...........     Monaco       Consolidated               55%                  55%
  Elektrim Telekomunikacja
    S.A..........................     Poland          Equity                  49%                  49%
  Xfera Moviles S.A..............      Spain          Equity                  26%                  26%


                                        59




                                    COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
                                                                              

PUBLISHING ACTIVITIES EXCL. VU
  GAMES
Vivendi Universal Publishing
  S.A............................     France       Consolidated     100%              100%
  Groupe Express-Expansion
    S.A..........................     France       Consolidated              100%                 100%
  Comareg S.A....................     France       Consolidated              100%                 100%
  Atica..........................     Brazil       Consolidated               98%                  49%

VIVENDI UNIVERSAL NET
Vivendi Universal Net S.A........     France       Consolidated     100%              100%
  i-France S.A...................     France       Consolidated              100%                 100%
  Scoot Europe N.V...............     Belgium      Consolidated              100%                 100%
  Ad-2-One S.A...................     France       Consolidated              100%                 100%
  CanalNumedia S.A...............     France       Consolidated              100%                 100%
Vivendi Universal Net U.S.A.
  Group, Inc.....................       USA        Consolidated     100%              100%
  MP3.com, Inc...................       USA        Consolidated              100%                 100%
  Emusic.com, Inc................       USA        Consolidated              100%                 100%
  Flipside, Inc./Uproar, Inc.....       USA        Consolidated              100%                 100%
VEOLIA ENVIRONNEMENT S.A.........     France          Equity         20%               20%


For more information on the above table, see Note 13 to our Consolidated
Financial Statements included in this document.

PROPERTY, PLANT AND EQUIPMENT

     In connection with our music, publishing, and TV & film businesses, we own
manufacturing facilities in the US and Germany and office buildings and
warehouse facilities in various countries. To support the rest of its business
operations around the world, Vivendi Universal leases the majority of the real
estate it requires.

     USG owns, develops and manages the Universal City complex in Hollywood,
California, spanning approximately 415 acres and is comprised of: Universal
Studios, a complex of production and studio facilities and supporting office
space; the Universal Studios Hollywood Theme Park and CityWalk, an integrated
retail and entertainment complex offering shopping, cinemas, dining and
open-area food and beverage facilities; the Sheraton-Universal Hotel, owned by
Universal Studios and leased to Sheraton; and the Hilton Hotel, which Universal
Studios leases to the entity owning and operating the hotel. In addition,
Universal Studios owns the following theme park facilities: Universal Studios
Florida and Islands of Adventure, in Orlando, Florida; Universal Studios Japan
in Osaka, Japan; and Universal Mediterranean near Barcelona, Spain.

     We have various commitments for the purchase of property, plant and
equipment, materials, supplies and items of investment related to the ordinary
conduct of business.

PATENTS, LICENSES, CONTRACTS, MANUFACTURING PROCESSES

     Although we have patents, licenses, contracts and manufacturing processes,
no one of these in particular is material to Vivendi Universal.

     Canal+ Group acquires films and the rights to sports events, which are then
broadcast on its channels. TV programs are acquired through exclusive
medium-term contracts for the broadcasting of upcoming productions from US
studios. For sports events, multi-year contracts are signed with sports clubs
and federations. In 2001, the main broadcasting rights CANAL+ Group has acquired
are the French soccer championship through to 2004, retransmission rights for
the Champions League through to 2003, and the national and international rights
for some Italian soccer clubs, including Juventus (Turin), Inter (Milan) and
Milan AC.

     Canal+ TV's broadcasting license in France expires in December 2005.

                                        60


ENVIRONMENTAL MATTERS

     Our operations are subject to evolving and increasingly stringent
environmental regulations in a number of jurisdictions. In December 2002, the
Los Angeles Regional Water Quality Control Board proposed a $308,000 civil
penalty in connection with certain alleged exceedances of VUE's wastewater
discharge permit in Universal City. We believe the exceedances are not the
result of our operations and are working with the agency to resolve the matter.
Other than this proposed penalty, as of March 21, 2003, there have been no
significant losses or claims related to environmental matters.

SUMMARY OF INDEBTEDNESS

     Set forth below is a description of certain of our outstanding debt
instruments as of June 25, 2003. The descriptions set forth below do not purport
to be complete and are qualified in their entirety by reference to the
agreements themselves.

DUAL CURRENCY CREDIT FACILITY

     Vivendi Universal has entered into a E 2.5 billion dual currency term and
revolving credit facility (the Dual Currency Credit Facility) dated as of May
13, 2003, among Vivendi Universal, as borrower, certain of its subsidiaries, as
guarantors, the lenders party thereto, and Societe Generale, as facility and
security agent. The facility is available as a liquidity back-up to the disposal
of assets and subject to certain exceptions for general corporate purposes.

     The facility is comprised of (a) a three-year E 1.5 billion revolving
credit facility (Tranche A) at LIBOR or EURIBOR plus an applicable margin that,
depending on Vivendi Universal's credit ratings, ranges from 1.00% to 2.75% per
annum and (b) a E 1.0 billion term loan (Tranche B) with a 2.75% per annum
margin over LIBOR or EURIBOR maturing on the third anniversary of the date of
the Dual Currency Credit Facility. Borrowings under the Dual Currency Credit
Facility may be made in Euros or U.S. Dollars. Currently, Tranche B is fully
drawn and Tranche A is undrawn.

     Vivendi Universal is required to pay commitment fees at an annual rate of
40% of the then applicable margin for Tranche A (subject to a cap of 1.00% per
annum) and 1.00% per annum for Tranche B, in each case calculated on the undrawn
and uncanceled amount of commitments of the applicable tranche during the
availability period. Accrued commitment fees are payable quarterly in arrear and
on the final maturity date of the Dual Currency Credit Facility. Vivendi
Universal also pays the facility agent an annual agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Dual Currency Credit Facility rank pari passu with their
obligations under the Multicurrency Revolving Credit Facility (described below).
The obligations of Vivendi Universal and the subsidiary guarantors under each of
the Dual Currency Credit Facility and the Multicurrency Revolving Credit
Facility are secured on a pro rata basis among the respective lenders by a first
priority lien on certain assets of Vivendi Universal and the subsidiary
guarantors, including (a) capital stock in certain subsidiaries, (b) deposit
accounts and (c) 85% of all intercompany loans owed to Vivendi Universal and
such subsidiary guarantors. In addition, Vivendi Universal and the subsidiary
guarantors have agreed to subordinate their obligations under 85% of their
intercompany loans to their obligations under each of the Dual Currency Credit
Facility and the Multicurrency Revolving Credit Facility. The security and
subordination obligations are suspended after Vivendi Universal attains and
maintains an investment grade rating for a continuous period of 180 days.

     The Dual Currency Credit Facility contains customary negative covenants
which place restrictions on, among other things, the ability of Vivendi
Universal and the subsidiary guarantors to incur debt, to incur financial
guarantees, to pay distributions in respect of capital stock or to repay capital
stock, to make certain investments, to enter into leasing arrangements or
mergers and acquisitions, to dispose of assets and to create security interests.
Furthermore, the Dual Currency Credit Facility places certain limitations on the
ability of Vivendi Universal and certain of its subsidiaries to make or incur
intra group loans, subject to certain exceptions. Certain of these restrictions
are suspended three months after Vivendi Universal attains an investment grade
rating.

                                        61


     The Dual Currency Credit Facility also requires Vivendi Universal and the
subsidiary guarantors to observe certain customary affirmative covenants,
including, but not limited to, relevant authorizations, maintenance of status,
certain bank accounts and insurance, protection of intellectual property rights,
payment of taxes, compliance with ERISA reporting requirements, compliance with
laws (including environmental laws), provision of financial and other
information and notification of defaults. Furthermore, Vivendi Universal and the
subsidiary guarantors must ensure that in any three-month period, the aggregate
amount of net cash available plus the aggregate undrawn amount under all
existing facilities is more than E 100 million.

     In addition, Vivendi Universal must maintain various financial ratios,
including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     The Dual Currency Credit Facility allows for voluntary prepayment if
Vivendi Universal gives at least three business days' notice, subject to a
minimum payment threshold and integral multiple requirements. Such voluntary
prepayments will be applied pro rata among the lenders. Vivendi Universal must
also prepay at the same time and in the same amount, the Multicurrency Revolving
Credit Facility.

     Provided that Vivendi Universal gives at least three business days' notice,
it may, without penalty or indemnity obligations, cancel the unutilized portions
of the total commitments in whole or in part, subject to a minimum threshold and
integral multiple requirements. Such voluntary cancellations will be applied pro
rata against the commitments under each tranche, subject to certain exceptions,
and against each lender's commitment in the relevant tranche Vivendi Universal
must also cancel, at the same time and in the same amount, the Multicurrency
Revolving Credit Facility.

     Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Dual Currency Credit Facility is subject to mandatory prepayment with certain
proceeds, including but not limited to, 33% of net debt issue proceeds, 50% of
net dividend proceeds, 16 2/3% of net equity issue proceeds and 16 2/3% of net
asset disposal proceeds (other than the disposal of VE shares (of which 50% is
required to be prepaid), and the disposal of Cegetel Group and SIT (of which 25%
is required to be prepaid).

     In addition, the Dual Currency Credit Facility is subject to, regardless of
Vivendi Universal's rating, mandatory prepayment upon (a) Vivendi Universal's
failure to comply with the specified financial ratios or (b) the occurrence of a
change of control event or (c) the occurrence of a special mandatory cancelation
of the Senior Notes.

     The Dual Currency Credit Facility contains customary event of default
provisions including, but not limited to, provisions relating to nonpayment,
misrepresentation and breach of other obligations under the loan documents,
cross-default, breach of covenants, insolvency, and insolvency proceedings,
material adverse changes, certain material ERISA events and cessation of
business.

MULTICURRENCY REVOLVING CREDIT FACILITY

     Vivendi Universal has entered into a E 3 billion multicurrency revolving
credit facility (Multicurrency Revolving Credit Facility) dated March 15, 2002,
as amended on February 6, 2003, and as further amended and restated on May 13,
2003, among Vivendi Universal, as a borrower and the obligors' agent, certain of
its subsidiaries, as guarantors, the lenders party thereto and Societe Generale,
as facility and security agent. Currently, E 2.3 billion of the Multicurrency
Revolving Credit Facility is drawn.

     Borrowings under the Multicurrency Revolving Credit Facility that are
denominated in Euros bear interest at EURIBOR plus a margin of 1.50% per annum,
which margin will be reduced to 1.00% per annum
                                        62


after Vivendi Universal attains and maintains an investment grade rating for a
continuous period of 90 days. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in any permissible currency other than
Euros bear interest at LIBOR plus a margin of 1.50% per annum, which margin will
be reduced to 1.00% per annum after Vivendi Universal attains and maintains an
investment grade rating for a continuous period of 90 days. The Multicurrency
Revolving Credit Facility matures on March 15, 2007.

     Vivendi Universal is required to pay commitment fees at an annual rate of
50% of the then applicable margin on the undrawn, uncanceled amount of each
bank's commitment until the final maturity date of the Multicurrency Revolving
Credit Facility. Accrued commitment fees are payable quarterly in arrear and on
the final maturity date of the Multicurrency Revolving Credit Facility. Vivendi
Universal is also required to pay a utilization fee at a rate of 0.05% per annum
on the aggregate amount of all loans then outstanding for each day the aggregate
amount of all loans then outstanding exceeds 50% of the then total commitments
under the Multicurrency Revolving Credit Facility. In addition, Vivendi
Universal has agreed to pay certain fees to those banks that consented to
certain waivers and consents under the Multicurrency Revolving Credit Facility.
The amount of any such waiver fee is computed at a rate of 0.20% per annum on
the consenting bank's commitment or, if greater, its participation in the loans
on the applicable waiver fee date. We also pay the facility agent an annual
agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Multicurrency Revolving Credit Facility rank pari passu
with their obligations under the Dual Currency Credit Facility. The obligations
of Vivendi Universal and the subsidiary guarantors under each of the Dual
Currency Credit Facility and the Multicurrency Revolving Credit Facility are
secured on a pro rata basis among the respective lenders as described above
under the description of the Dual Currency Credit Facility.

     The Multicurrency Revolving Credit Facility contains customary negative
covenants which place restrictions on, among other things, the incurrence of
certain security interests, guarantees, disposal of assets, mergers and
acquisitions. Furthermore, the Multicurrency Revolving Credit Facility places
restrictions that prevent Vivendi Universal from making any substantial change
to the general nature or scope of its business and its subsidiaries from that
conducted on May 13, 2003. Also, Vivendi Universal may not make certain
amendments to the Senior Notes.

     The Multicurrency Revolving Credit Facility also requires Vivendi Universal
and the subsidiary guarantors to observe certain customary affirmative
covenants, including, but not limited to, relevant authorizations, maintenance
of insurance and status, perfection and protection of security interest,
compliance with environmental laws and notification of defaults. Vivendi
Universal is also required to provide financial and other information to the
facility agent. In addition, Vivendi Universal must maintain various financial
ratios, including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     Any borrower under the Multicurrency Revolving Credit Facility may
voluntarily prepay any loan made to it in whole or in part if such borrower
gives at least ten days' notice, subject to a minimum payment threshold and
integral multiple requirements. Such voluntary prepayments will be applied pro
rata among the lenders. Provided the obligor's agent gives at least ten days'
notice, it may, without penalty or obligation to indemnify, cancel the
unutilized portions of the total commitments in whole or in part, subject to a
minimum threshold and integral multiple requirements. Any voluntary cancelation
in part will be applied pro rata against the commitment of each bank. In the
case of a voluntary prepayment or cancelation, Vivendi Universal must also
prepay or cancel at the same time and in the same amount, the Dual Currency
Credit Facility.

                                        63


     Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Multicurrency Revolving Credit Facility is subject to, mandatory prepayment with
certain proceeds, including but not limited to, 50% of net dividend proceeds,
16 2/3% of net equity issue proceeds and 16 2/3% of net asset disposal proceeds
(other than the disposal of VE shares (of which 50% is required to be prepaid),
and the disposal of Cegetel Group and SIT (of which 25% is required to be
prepaid).

     In addition, subject to certain conditions, the Multicurrency Revolving
Credit Facility is subject to, regardless of Vivendi Universal's rating,
mandatory prepayment upon (a) Vivendi Universal's failure to comply with the
specified financial ratios or (b) the occurrence of a change of control event.

     The Multicurrency Revolving Credit Facility contains customary event of
default provisions including, but not limited to, provisions relating to
nonpayment, misrepresentation and breach of other obligations under the loan
documents, cross-default, breach of covenants, insolvency and insolvency
proceedings, material adverse changes, cessation of business and unlawfulness.

SENIOR NOTES DUE 2010

     On April 3, 2003, Vivendi Universal issued $935 million in aggregate
principal amount of 9.25% Senior Notes due 2010 and E 325 million in aggregate
principal amount of 9.50% Senior Notes due 2010 (collectively referred to as the
Senior Notes). The Euro denominated Senior Notes were issued at a discount to
yield 9.75%. The Senior Notes are issued under an Indenture dated as of April 8,
2003, between Vivendi Universal and The Bank of New York, as trustee (the
Indenture). In connection with the issuance of the Senior Notes, we have entered
into an Exchange and Registration Rights Agreement dated April 8, 2003, with the
initial purchasers of the Senior Notes (the Registration Rights Agreement).

     The Senior Notes mature on April 15, 2010, and interest payments are
payable on April 15 and October 15 of each year, commencing on October 15, 2003.

     Pursuant to the Registration Rights Agreement, Vivendi Universal will, at
its cost, for the benefit of the holders of the Senior Notes, to:

     - no later than 90 days after the issue date of the Senior Notes, file a
       registration statement with the SEC with respect to a registered offer to
       exchange the Senior Notes for new Senior Notes of Vivendi Universal
       (Exchange Notes) having terms substantially identical in all material
       respects to the Senior Notes (except that the Exchange Notes will not
       contain terms with respect to transfer restrictions or payment of
       additional interest); and

     - use its reasonable best efforts to cause the exchange offer registration
       statement to be declared effective under the Securities Act as soon as
       practicable but not later than 240 days after the issue date of the
       Senior Notes.

     The Senior Notes are Vivendi Universal's general unsecured obligations.
They rank pari passu in right of payment with all of Vivendi Universal's
existing and future unsecured senior indebtedness and senior in right of payment
to any of Vivendi Universal's future subordinated indebtedness. The Senior Notes
are effectively junior to Vivendi Universal's secured indebtedness up to the
value of the collateral securing such indebtedness.

     Prior to the time that the Senior Notes receive an investment grade rating
from both Standard & Poor's and Moody's and certain other conditions are
satisfied (a Fall Away Event), the Indenture places certain restrictions on,
Vivendi Universal's and its restricted subsidiaries' among other things,
incurrence of debt, issuance preferred stock, payment of dividends in respect
of, or a repurchase of, capital stock of Vivendi Universal, investments,
creation of liens, or restrictions on the ability of our restricted subsidiaries
to pay dividends or other amounts to Vivendi Universal, sale and leaseback
transactions, transactions with affiliates, expansion into unrelated businesses,
incurrence of financial guarantees, incurrence of indebtedness which is, subject
to certain conditions, subordinated in right of payment to any other
indebtedness of Vivendi Universal, and consolidation, merger or sale of all or
substantially all assets.

                                        64


     After a Fall Away Event occurs with respect to either series of Senior
Notes, the above limitations will no longer apply to that series of Senior
Notes, except that the indenture will continue to place restrictions on the
ability of Vivendi Universal and its restricted subsidiaries to, among other
things, create liens, enter into specified sale and leaseback transactions and
consolidate, merge or sell all or substantially all assets.

     At any time prior to April 15, 2006, Vivendi Universal may use, subject to
certain conditions, the net cash proceeds from any equity offering with gross
proceeds of at least E 50 million to redeem up to 35% of the Senior Notes at a
redemption price equal to 109.25% of the principal amount plus accrued and
unpaid interest, in the case of the US dollar-denominated Senior Notes, and
109.50% of the principal amount plus accrued and unpaid interest, in the case of
Euro-denominated Senior Notes. At any time prior to April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at a redemption price equal
to 100% of their principal amount and accrued and unpaid interest plus the
applicable make-whole premium. At any time on or after April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at the redemption prices
(expressed as a percentage of principal amount) set forth below plus accrued and
unpaid interest, if redeemed during the 12-month period beginning on April 15 of
the years indicated below:



YEAR                                             DOLLAR NOTE PERCENTAGE   EURO NOTE PERCENTAGE
- ----                                             ----------------------   --------------------
                                                                    
2007...........................................         104.625%                104.750%
2008...........................................         102.313%                102.375%
2009 and thereafter............................         100.000%                100.000%


     Before the occurrence of a Fall Away Event, the holders of the Senior Notes
may, subject to certain conditions, require Vivendi Universal to repurchase the
Senior Notes (a) for a price equal to 101% of the principal amount plus accrued
and unpaid interest upon a change of control or (b) for a price equal to 100% of
the principal amount plus accrued and unpaid interest with a portion of the net
cash proceeds of certain assets sales.

     The indenture contains customary event of default provisions including
nonpayment, cross-default, failure to pay judgments, bankruptcy, insolvency and
breach of covenants or other obligations.

SECURITIZATION FACILITY

     On March 31, 2003, Film Funding, a subsidiary of VUE, borrowed $750 million
under a securitization facility (the Securitization Facility) based on future
video (including DVD and VHS) and television revenues in the United States from
part of its existing film library and future theatrical pictures. As part of the
Securitization Facility, certain subsidiaries of VUE transferred film assets
which generate these revenues and certain other related assets to Film Funding
and agreed to sell additional similar assets relating to future theatrical
pictures. The proceeds of the Securitization Facility were used by VUE to retire
$700 million of the $1.62 billion owed under the VUE Bridge Facility (described
below), and to establish a funded reserve account required under the terms of
the Securitization Facility, to be used to fund certain expenses related to
exploitation of the film assets (e.g., costs of duplication and distribution
expenses). Borrowings under the Securitization Facility currently bear interest
at a rate of 1.50% over one-month LIBOR. The Securitization Facility has the
benefit of a financial guaranty insurance policy issued by Ambac Assurance
Corporation which guarantees to the lenders timely payment of interest and
ultimate payment of principal. The Securitization Facility is scheduled to
amortize over three years, commencing three years after the initial borrowing.

     The Securitization Facility was arranged by Banc of America Securities LLC
and J.P. Morgan Securities, Inc. with the funding being provided to Film Funding
by a number of commercial paper conduit purchasers. Film Funding also received
364-day commitments from banks to provide funding if the conduit purchasers do
not provide funding. If the commitments are not renewed, all or a portion of the
Securitization Facility could commence amortization earlier than the third
anniversary of the initial borrowing.

                                        65


     The Securitization Facility contains partial amortization events, early
amortization events and event of default provisions that are triggered by, among
other things, a failure to satisfy collateral performance tests, nonpayment,
misrepresentation and breach of other obligations under the securitization
documents, cross-default, insolvency and insolvency proceedings, judgments, and
the ineffectiveness of the security interests and failure to satisfy an interest
coverage test for VUE. Occurrence of any of these events could cause a
requirement to amortize a portion or all of the Securitization Facility prior to
the scheduled date.

     The Securitization Facility places certain obligations on Film Funding and
VUE and its other subsidiaries to maintain their distinct corporate identity,
including but not limited to restrictions on the commingling of funds,
maintenance of records, books of account and financial statements, and
restrictions on the ability of Film Funding on the one hand, and VUE and its
subsidiaries, on the other hand, to guarantee, hold themselves out as liable for
or pledge assets to secure obligations of the other.

SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE FACILITY

     We have entered into a E 1.3 billion facility (the Acquisition Facility)
dated December 6, 2002, as amended as of June 25, 2003, among SIT, as the
borrower, Vivendi Universal, a syndicate of lenders, Credit Lyonnais, as agent,
and The Royal Bank of Scotland, as security trustee. The Acquisition Facility
was entered into by SIT to finance the purchase by SIT of 26% of the share
capital of Cegetel Group.

     The outstanding amount of the loan under the Acquisition Facility is E 1.3
billion. The maturity date of the loan is June 30, 2004. SIT may request an
extension of the maturity date to June 30, 2010, by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. There is a scheduled repayment of E 105 million on June 30, 2003.

     Borrowings under the Acquisition Facility bear interest at EURIBOR plus a
margin of 4.00%, subject to certain adjustments.

     The Acquisition Facility contains certain negative covenants which restrict
or limit the ability of SIT and Cegetel Group and its subsidiaries to, among
other things, create certain liens, dispose of certain assets, incur certain
indebtedness, declare or pay certain dividends or distributions and pay certain
management, advisory or other fees. In addition, SIT and Cegetel Group are
required to maintain various financial ratios, including:

     - minimum Cegetel Group EBITDA;

     - maximum ratios of Cegetel Group total net debt to Cegetel Group EBITDA;
       and

     - minimum ratios of Cegetel Group cash flow to the total funding costs of
       SIT.

     SIT may, on not less than five business days' notice, cancel all or part of
the undrawn part of the Acquisition Facility or prepay all or part of the
outstanding loan, in each case subject to certain minimum requirements. The
Acquisition Facility also provides for mandatory prepayment upon, among other
things:

     - Vivendi Universal ceasing to own the entire issued share capital of SIT;

     - SIT disposing of all or any of the Cegetel Group shares acquired by it in
       the transaction financed by loans made under the Acquisition Facility;

     - Vivendi Universal or its subsidiaries disposing of all or any Cegetel
       Group shares owned by any of them as of the date of the acquisition
       agreement, subject to certain exceptions; and

     - Cegetel Group disposing of any shares held by it in Societe Francaise du
       Radiotelephone or any of its material subsidiaries.

     The Acquisition Facility also requires, subject to certain exceptions,
mandatory repayment of the loan from the net proceeds of new equity share
capital issued by SIT and certain dividends or distributions from Cegetel Group
received by SIT.

                                        66


     The Acquisition Facility contains customary event of default provisions,
including provisions relating to nonpayment, misrepresentation, insolvency,
unlawfulness, cessation of business and material adverse change.

VUE LOAN AGREEMENT

     On June 24, 2003, VUE entered into a $920 million loan agreement with Bank
of America, N.A. and JPMorgan Chase Bank, as co-administrative agents, the
lenders party thereto, Barclays Bank PLC, as syndication agent, and JPMorgan
Chase Bank, as collateral agent and as paying agent (the VUE Loan Agreement).
The full amount of the facility was drawn at closing and the proceeds have been
used to repay the remaining outstanding portion of the $1.62 billion loan dated
May 3, 2002, as amended and restated as of November 25, 2002.

     Borrowings under the VUE Loan Agreement are denominated in US Dollars and
bear interest at either Eurodollar rate plus a margin of 2.75% or ABR plus a
margin of 1.75%. The loan will mature in 16 consecutive quarterly installments
commencing on September 30, 2004, each of which shall be equal to, in the case
of the first 12 installments, 0.25% of the loan principal and, in the case of
each of the last four installments, 24.25% of the loan principal.

     Certain of VUE's subsidiaries guarantee VUE's obligations under the VUE
Loan Agreement. VUE's obligations as borrower and the guarantors' obligations
are secured by a first priority lien on the assets of VUE and the guarantors,
and portions of the collateral may be released in certain transactions and
circumstances. In addition, Vivendi Universal and certain of its subsidiaries
have agreed to the subordination of inter-company indebtedness owing to them by
VUE and the guarantors.

     The VUE Loan Agreement contains negative covenants that restrict the
ability of VUE and certain of its subsidiaries to engage in certain activities,
including, but not limited to:

     - limitations on creating or permitting to subsist certain security
       interests on their assets;

     - limitations on disposals of assets;

     - limitations on the incurrence of indebtedness (including financial
       guarantees);

     - limitations on investment;

     - limitations on restricted payments (unless the loans are rated investment
       grade), such as limitations on the payment of dividends or distributions
       of other amounts in respect of equity interests, as well as limitations
       on investments in, purchases of any indebtedness owing to, or other
       payments on account of, Vivendi Universal and its subsidiaries, and
       intercompany loans to Vivendi Universal and its subsidiaries;

     - limitations on transactions with affiliates, sale and leaseback
       transactions, swap agreements, changes in fiscal periods, negative
       pledges, restrictions on subsidiary distributions, and permitted lines of
       business; and

     - limitations on fundamental changes, including mergers, consolidations,
       and amalgamations.

     In addition, VUE must maintain certain financial ratios at all times,
namely:

     - maximum ratios of consolidated indebtedness to consolidated EBITDA;

     - maximum cash leverage ratios;

     - maximum senior leverage ratios;

     - minimum ratios of consolidated EBITDA to consolidated interest expense;
       and

     - minimum ratios of cash EBITDA to consolidated fixed charges.

     Unless the loans under the VUE Loan Agreement are rated investment grade,
the VUE Loan Agreement, subject to certain exceptions, (a) places limitations on
the ability of VUE and its subsidiaries to make loans, advances or pay dividends
to Vivendi Universal and certain of its subsidiaries that are not VUE or
                                        67


subsidiaries of VUE, (b) limits the net balance of loans between VUE, including
its subsidiaries, and Vivendi Universal, including its subsidiaries, to an
aggregate of $600 million and (c) prohibits VUE from distributing the net
proceeds from the disposal of certain assets.

     The VUE Loan Agreement also requires VUE and certain of its subsidiaries to
observe certain affirmative covenants, including, but not limited to, relevant
authorizations, maintenance of property and insurance, compliance with laws and
obligations, provision of financial and other information, maintenance of the
separateness of Vivendi Universal entities and VUE entities in respect of funds,
assets, accounts, records and corporate formalities, maintenance and
contributions of collateral, interest rate protection and notification of
defaults.

     VUE may voluntarily prepay loans under the VUE Loan Agreement in whole or
in part if it gives at least three business days' notice, subject to a minimum
payment threshold and integral multiple requirements. Subject to certain
conditions, VUE must prepay the loans (or, in some cases, cash collateralize its
obligations) under the VUE Loan Agreement with the proceeds of certain issuances
of indebtedness, asset sales, issuances of equity interests and recovery events.

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our operations should be read in conjunction
with our Consolidated Financial Statements and related notes included elsewhere
in this document.

BASIS OF PRESENTATION

     The discussion presented below focuses on an analysis of Vivendi
Universal's financial and business segment results prepared in accordance with
generally accepted accounting principles in France (French GAAP), which differ
in certain significant respects from accounting principles generally accepted in
the United States (US GAAP). For a discussion of the most significant
reconciling items see "Results of Operations--Adjustments to Conform to US GAAP"
in Note 17 to our Consolidated Financial Statements included in this document.

     The company, under previous management, announced that it intended to fully
adopt US GAAP reporting standards beginning in 2002 as supplemental financial
information for investors. Following the change in senior management in July
2002, it was decided that Vivendi Universal, as a French Company, would
prospectively only report its primary financial statements in French GAAP with a
reconciliation to US GAAP. The company will, however, periodically publish
selected US GAAP financial information as required under certain of its debt
agreements.

RECENT DEVELOPMENTS

     Following a period of significant acquisition-related growth from the late
1990's through the first half of 2002, the associated increase in leverage led
to heightened concerns during the first half of 2002 over the validity of
Vivendi Universal's strategy in a deteriorating environment and, eventually, to
the appointment of a new management team. See "Item 4--Information on the
Company--History and Development of the Company." Concerns over Vivendi
Universal's strategy and financial flexibility led Moody's to reduce Vivendi
Universal's senior debt rating on July 1, 2002, from Baa3 to Ba1, under review
for possible further downgrade. Standard & Poor's followed suit the next day,
with a one-notch downgrade to BBB- with a negative outlook. The unfavorable
development in our rating continued during the balance of 2002. See "--Liquidity
and Capital Resources." The July downgrades had an immediate impact on Vivendi
Universal's short-term liquidity. In particular Vivendi Universal lost, to a
significant extent, access to the capital markets, and most importantly to the
commercial paper market, historically its main source of funding for working
capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view of
putting in place a longer-term solution once the new management had the
opportunity to better assess the medium-term situation. Following its review,
the new management revised the previous

                                        68


management's cash-flow projections for the period from July 2002 to December
2004 and wrote-off E 11 billion in acquisition-related goodwill while adding
E 3.4 billion in financial provisions. This resulted in a E 12.3 billion net
loss in the first half of 2002, which was publicly announced on August 14, 2002.
At the same time, Vivendi Universal announced a E 16 billion asset divestiture
program intended to be completed by 2004 in order to substantially reduce debt.

     During the second half of 2002, Vivendi Universal closed asset sales for
total consideration of approximately E 6.7 billion, including the assumption by
the acquirers of the assets of approximately E 0.4 billion in debt, and we have
continued to complete divestitures in 2003. At December 31, 2002, Vivendi
Universal's net debt was E 12.3 billion compared with E 37.1 billion at December
31, 2001. Excluding the net debt of Veolia Environnement which, following
divestitures of an additional portion of our shareholding interest therein in
2002, was deconsolidated from Vivendi Universal's balance sheet on December 31,
2002, net debt fell by approximately E 9.0 billion. In the first half of 2003 we
implemented a refinancing plan in order to give us substantial flexibility in
connection with the execution of our asset divestiture program, to increase
funds available to Vivendi Universal and to extend the scheduled maturities of
our debt facilities. For a description of our material outstanding indebtedness,
see "Item 4--Information on the Company--Summary of Indebtedness."

COMPARABILITY

 PRO FORMA INFORMATION; ACQUISITIONS AND DIVESTITURES.

     The pro forma information presented below, which is not compliant with
Article 11 of the Securities and Exchange Commission Regulation SX, has been
included since it is required under French GAAP in Vivendi Universal's
Consolidated Financial Statements to promote comparability. Such information has
been presented in Note 2 to our Consolidated Financial Statements.

     As several significant transactions completed in 2001 and 2002 have
realigned our businesses and impacted the comparability of our financial
statements, we present financial information for these years both for our
consolidated group and for each of our business segments on a pro forma basis.
The pro forma information illustrates the effect of the acquisitions of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc Telecom in
April 2001 and MP3.com in August 2001, and the disposition of certain interests
in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. Additionally, the pro forma
information include the results of Universal Studios international television
networks in Vivendi Universal Entertainment in both 2002 and 2001 (in the actual
2002 results, the results of Universal Studios international television networks
were reported by Canal+ Group). This reclassification has no impact on the
overall results of Vivendi Universal. We believe that pro forma results may help
the reader to better understand our business results as they include comparable
operations in each year presented. However, it should be noted that the
pre-acquisition results of an acquired business accounted for on a historical
cost basis are not directly comparable to the post-acquisition results of
acquired entities whose initial purchase price was allocated on a fair value
basis. The pro forma results are not necessarily indicative of the combined
results that would have occurred had the events actually occurred at the
beginning of 2001.

     For a discussion of the above transactions and other significant
transactions that have occurred during the period 2000 to 2002, see "Item
4--Information on the Company--History and Development of the Company."

     Given our ongoing asset divestiture program, our year to year comparisons
of financial results will continue to be difficult in coming years.

 REALIGNMENT OF SEGMENT REPORTING

     In 2002, we realigned our segment reporting to reflect the new business
organization and management structures resulting from the change in management
and the dispositions of businesses which occurred in the second half of the
year.

                                        69


 CHANGES IN ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENT PRESENTATION

     In 2001, Vivendi Universal adopted new accounting principles and modified
its financial statement presentation in order to more closely align accounting
policies between French GAAP and US GAAP. The principal changes, as they relate
to the discussion presented below, are as follows:

     - As permitted by French Regulation 99.02 (sec.41), Vivendi Universal
       elected to present its Consolidated Statement of Income in a format that
       classifies income and expenses by function rather than by nature, which
       was the format presented in prior years.

     - For our subsidiary Veolia Environnement (which was deconsolidated from
       the Vivendi Universal balance sheet as of December 31, 2002), revenues
       include operating subsidiaries and exclude revenues related to
       construction of assets for internal use.

     - The definition of exceptional items has been restricted to include only
       material items of an unusual nature that arise from events or
       transactions outside the ordinary course of business and which are not
       expected to recur. For Vivendi Universal, exceptional items are primarily
       comprised of gains and losses on the divestiture of businesses.
       Exceptional items are presented as a separate component in our
       Consolidated Statement of Income after operating income and financial
       expenses but before income taxes. Prior to 2001, Vivendi Universal had a
       broader definition of exceptional items, including restructuring costs,
       plant dismantling and closure costs and the effect of guarantees given
       when exercised, among others. These items are now included as a component
       of operating income.

     In order to facilitate the discussion and comparability of 2001 and 2000
financial results, we have presented the 2000 financial statements on a
comparable basis.

     In 2000, Vivendi Universal adopted new accounting principles related to
foreign currency translation/ transactions, subscriber acquisition costs and
sports broadcasting rights as follows:

     - Income and expenses of subsidiaries whose functional currency is not the
       euro, which were previously translated at the year-end exchange rate, are
       now translated at the average exchange rate during the period. Gains on
       foreign currency transactions, which were previously deferred, are now
       recorded in current period earnings.

     - Subscriber acquisition costs, which were previously spread over 12 months
       from the date the line was put into service, are now charged to expense.

     - Broadcasting rights acquired by Canal+ Group are now capitalized as
       intangible assets and are amortized over the period of the agreement. The
       cumulative effect of this change had no impact on net income in 2000.
       Total assets increased by E 2 billion in 2000 (most of which related to
       intangible assets) and total liabilities and shareholders' equity
       increased by the same amount.

     For further discussion of some of the policies used in preparing our
financial statements and comparability see Note 1 to our Consolidated Financial
Statements.

GOODWILL, IMPAIRMENT OF GOODWILL AND FINANCIAL ASSETS

     Vivendi Universal's acquisition-related growth strategy resulted in
significant goodwill on its balance sheet. By the end of 2000, goodwill amounted
to E 47.1 billion. In view of the continuing deterioration of the economy since
December 2000, Vivendi Universal recorded significant goodwill impairment in
both 2001 (E 13.5 billion) and 2002 (E 18.4 billion).

     Following these impairments, and the other changes in goodwill described in
Note 3 to our Consolidated Financial Statements, goodwill at December 31, 2002
stood at E 20 billion. Vivendi Universal is required under French GAAP to add
goodwill of approximately E 3 billion to its balance sheet as a consequence of
the acquisition of an additional interest in Cegetel Group in January 2003.
Under French GAAP, goodwill is amortized over a 40 year period. Recurring
amortization totaled E 1.3 billion in 2002 and E 1.7 billion in 2001, and
Vivendi Universal expects to continue to incur significant expense for goodwill
amortization in the coming years. Under US GAAP, goodwill is no longer amortized
but is subject to annual impairment tests.
                                        70


     Impairments are calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual significant difference between the book
value and the realizable value.

     This exceptional impairment, in both 2002 and 2001, was calculated as the
difference between the net book value of the impacted businesses and their
value, as estimated with the assistance of independent valuation experts. Fair
value is determined as follows:

     - The fair value of the business units is determined by an analysis of
       discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, and the market price for publicly-listed business
       units.

     - The fair values of the business units included in the asset divestiture
       program are assessed on the basis of their market value. Market value is
       defined as the amount that could be obtained at the date of sale for an
       asset where the transaction is concluded at normal market conditions, net
       of transaction costs.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, rate of return and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of directors. The rate of return
was based upon an analysis of the average cost of capital of the relevant
business units. Their cost of capital and growth rate were determined by taking
into account the specific business environment in which each business unit
operated, and specifically the maturity of the market and the geographic
localization of its operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Accounting policies discussed in this section are those that we consider to
be critical to an understanding of our financial statements because their
application places the most significant demands on our ability to judge the
effect of inherently uncertain matters on our financial results. For all of
these policies, we caution that future events rarely develop exactly as
forecast, and that the best estimates routinely require adjustment.

     USE OF ESTIMATES -- The preparation of these financial statements requires
management to make informed estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to the
sale of future and existing music and publishing related products, as well as
from the distribution of theatrical and television products, in order to
evaluate the ultimate recoverability of accounts receivable, film inventory,
artist and author advances and investments and in determining valuation
allowances for investments, long-lived assets, pension liabilities and deferred
taxes. Estimates and judgments are also required and regularly evaluated
concerning financing operations, restructuring costs, contingencies and
litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ significantly from
these estimates under different assumptions or conditions.

     MERGER ACCOUNTING -- Vivendi Universal completed several significant
transactions during the periods covered by its Consolidated Financial Statements
included in this document. Generally accepted accounting principles require that
acquisitions be recorded based on an assessment of the fair value at the
acquisition date of the tangible and intangible assets acquired and liabilities
assumed. As a result of recent acquisitions, Vivendi Universal, with the
assistance of third-party valuation experts in certain areas, has estimated the
fair value of intangible assets (such as film and television libraries, music
catalogs and trade names), tangible assets (such as property, equipment,
inventory and marketable securities), liabilities and commitments (such as
favorable or unfavorable leases and contracts and certain restructuring costs
incident to the acquisitions)
                                        71


and preacquisition contingencies (such as litigation) for use in recording the
purchase price of its acquisitions. The excess of purchase price over net assets
acquired is reflected as goodwill. Should the value of acquired intangible or
tangible assets, including goodwill, become impaired, a non-cash write-down of
these assets may be required. Should restructuring costs incidental to the
acquisition, which in the case of Vivendi Universal generally relate to employee
severance costs, differ from the liability established at the time of
acquisition, additional cash charges to operations or non-cash releases of the
established liability to operations may be required. Ultimate settlement of
preacquisition contingencies could differ significantly from the contingency
reflected at the time of acquisition, which could lead to additional cash
charges to operations or non-cash release of the established liability to
operations.

     REVENUE RECOGNITION -- For Music, revenues from the sale of recorded music,
net of provision for estimated returns and allowances, are recognized on
shipment to third parties.

     For VUE and Canal+ Group segments, theatrical revenues from the
distribution of films are recognized as the films are exhibited. Home video
product revenues, less a provision for estimated returns and allowances, are
recognized upon availability of product for retail sale to the ultimate
customer. Revenues from television and pay television licensing agreements are
recognized when the films are available for telecast, and all other conditions
of the sale have been met. Revenues from television subscription services
related to cable and satellite programming are recognized as the services are
provided. Revenues at theme parks are recognized at the time of visitor
attendance. Revenue for retail operations is recognized at point-of-sale.

     Revenues from telephone service and installation are recognized as they
occur. Subscriptions are billed monthly in advance, and recorded as a deferred
revenue liability, before transfer to earnings of the period during which the
service is provided. Prepaid fees are deferred and recognized as the purchased
minutes are used. Service discounts are accounted for as a reduction of revenue
when the service is used, or on provision of line access in the case of pack
discounts.

     Vivendi Universal records VU Games revenue when goods are shipped to the
customer except if risk of ownership does not transfer to the customer upon
shipment.

     Finally, Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed.

     VALUATION OF LONG-LIVED ASSETS -- Vivendi Universal reviews the carrying
value of its long lived assets held and used, intangible assets that do not have
indefinite lives and long lived assets to be disposed of whenever events or
changes in circumstances indicate that the carrying value of the assets may not
be recoverable. This review is performed using estimates of future cash flows.
Management believes that the estimates of future cash flows and fair value are
reasonable; however, changes in estimates resulting from lower future cash flows
and fair value due to unforeseen changes in business assumptions could
negatively affect the valuations of those long-lived assets.

     GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE LIVES -- Vivendi
Universal regularly reviews the carrying value of goodwill and other intangible
assets that are determined to have an indefinite life. These assets are tested
for impairment on an annual basis and more frequently if an event occurs or
circumstances change that would more likely than not reduce the fair value of
these assets below the carrying value. The fair value of these assets is
determined using a discounted cash flow analysis, which is based on business
plans approved by the Board or, if this method is irrelevant for the business
unit, other standard criteria are used including: a comparison to similar listed
companies, an assessment of the value attributed to the business units involved
in recent transactions and an assessment of the fair value of the business unit
included in the asset divestiture program. Management believes that the
estimates of future cash flows and fair value are reasonable; however, changes
in estimates resulting in lower cash flows and fair value due to unforeseen
changes in business assumptions could negatively affect the valuations.

     PENSION BENEFIT COSTS -- Vivendi Universal's pension benefit obligations
and the related costs are calculated using actuarial models and assumptions
applicable in the countries where the plans are located, principally the United
States, Canada, United Kingdom, France, Germany and Japan. Two critical assump-
                                        72


tions, discount rate and expected return on assets, are important elements of
plan expense and/or liability measurement. We evaluate these critical
assumptions at least annually. Other assumptions involve demographic factors
such as retirement, mortality, turnover and rate of compensation increase. These
assumptions are evaluated periodically and are updated to reflect our
experience. Actual results in any given year will often differ from actuarial
assumptions because of economic and other factors. The discount rate enables us
to state expected future cash flows at a present value on the measurement date.
We have little latitude in selecting this rate, as it is required to represent
the market rate for high-quality fixed income investments. A lower discount rate
increases the present value of benefit obligations and increases pension
expense. We reduced our weighted average discount rate from 6.3% in 2001 to 5.7%
in 2002 to reflect market interest rate conditions. For our US plans, a further
50 basis point decrease in the discount rate would increase pension expense by
approximately E 1 million per year. To determine the expected long-term rate of
return on pension plan assets, we consider the current and expected asset
allocations, as well as historical and expected returns on various categories of
plan assets. For our US plans, a 50 basis point decrease in the expected return
on assets of principal plans would increase pension expense on our principal
plans by approximately E 2 million per year. We assumed that the weighted
average of long-term returns on our pension plans were 7.2% in 2002 and 7.4% in
2001. Further information on our principal pension plans is provided in Note
17.4 to our Consolidated Financial Statements, including disclosure of these
assumptions.

     FILM AND TELEVISION REVENUES AND COSTS -- Vivendi Universal expenses the
cost of film and television production over the applicable product life cycle
based on the ratio of current period's gross revenues to the estimated remaining
total gross revenues. These estimates are calculated based on an individual
production basis. Estimates of total gross revenues can change for a variety of
factors, including the level of market acceptance, advertising rates and
subscriber fees. Television rights for sports, theatrical movies, series and
other programs are charged to expense based on the life cycle of the program
over the license period. Estimates of usage of television network programming
can change based on competition and audience acceptance. Accordingly, revenue
estimates and planned usage are reviewed periodically and are revised if
necessary. A change in revenue projections or planned usage could have an impact
on our results of operations. Costs of film and television productions and
programming rights are subject to valuation adjustments pursuant to the
applicable accounting rules. If actual demand or market conditions are less
favorable than our projections, potentially significant film, television or
programming cost write-downs may be required.

     MUSIC ADVANCES TO ARTISTS -- For established artists, Vivendi Universal
capitalizes advances and direct costs associated with the creation of record
masters and expenses these costs as the related royalties are earned or when the
amounts are determined to be unrecoverable. An established recording artist is
an artist whose past performance and current popularity provides a sound basis
for estimating the recoverability of the advance. Advances to artists who are
not established are expensed as incurred. Estimates of recoverability can change
based on the current popularity of the artist based on sales through the
reporting period. If it appears that a portion of the advance is not recoverable
from royalties to be earned by the artist, a provision is made in the period
that a loss becomes apparent.

     FINANCIAL INSTRUMENTS -- Vivendi Universal uses various techniques designed
to manage risk and costs associated with its financing. Vivendi Universal
commonly uses exchangeable debt, which represents long-term debt exchangeable
for common stock of another publicly traded company or Vivendi Universal itself.
Generally, the bondholder may choose to receive either cash or the underlying
security at settlement. Should the underlying security decline in value, this
may result in the recording of an allowance related to the valuation of the
security by Vivendi Universal and could result in the bondholder electing to
receive cash at settlement. In addition, Vivendi Universal uses various
derivative financial instruments to hedge exposure to fluctuations in interest
rates, currency exchange rates and investments in debt and equity securities.

     RECEIVABLES FROM EQUITY AFFILIATES -- Vivendi Universal holds minority
interest receivables in companies having operations or technology in areas
within or adjacent to its strategic focus. Some of these companies are publicly
traded and their share prices are highly volatile while some of these companies
are non-publicly traded and their value is difficult to determine. Vivendi
Universal records an investment impairment charge when it believes an investment
has experienced a decline in value that is other than temporary, and records an
allowance for receivables if recoverability is uncertain. Future adverse changes
in market conditions or poor
                                        73


operating results of underlying investments could result in losses or an
inability to recover the carrying value of the investments or receivables,
thereby possibly requiring an impairment charge in the future.

     DEFERRED TAX ASSETS -- Vivendi Universal records deferred tax assets in the
amount that it believes is more likely than not to be realized. While we have
future taxable income and ongoing prudent and feasible tax planning strategies,
in the event we were to determine that we would not be able to realize all or
part of our net deferred tax assets in the future, an adjustment to the deferred
tax assets would be charged to income in the period such determination was made.
Likewise, should Vivendi Universal determine that it would be able to realize
its deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax assets would increase income in the period such
determination was made.

     CONTINGENCIES -- Vivendi Universal records liabilities when it is probable
that a liability has been incurred and the amount of the loss is reasonably
estimable. Disclosure is required when there is a reasonable possibility that
the ultimate loss will exceed the recorded provision. Contingent liabilities are
often resolved over long time periods. Estimating probable losses requires
analysis of multiple forecasts that often depend on judgments about potential
actions by third parties such as regulators. Further information on commitments
and contingencies is included in Note 11 to our Consolidated Financial
Statements.

                                        74


                             RESULTS OF OPERATIONS

EARNINGS SUMMARY



                                                        YEAR ENDED DECEMBER 31,
                                        --------------------------------------------------------
                                                     ACTUAL                    PRO FORMA(3)
                                        --------------------------------   ---------------------
                                         2002(1)      2001      2000(2)      2002        2001
                                        ---------   ---------   --------   ---------   ---------
                                                (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                        
REVENUES..............................  E  58,150   E  57,360   E 41,580   E  28,729   E  27,733
OPERATING INCOME......................      3,788       3,795      1,823       2,037       2,113
Financial expenses, net...............     (1,333)     (1,455)    (1,288)       (624)       (724)
Financial provisions..................     (2,895)       (482)      (196)     (2,786)       (410)
Other income (expense)................       (514)          9        722        (658)         26
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................       (954)      1,867      1,061      (2,031)      1,005
Exceptional items, net................      1,049       2,365      3,812         561       2,328
Income tax expense....................     (2,556)     (1,579)    (1,009)     (2,319)     (1,043)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................     (2,461)      2,653      3,864      (3,789)      2,290
Equity in earnings of disposed
  businesses(1).......................         17          --         --          --          --
Equity in losses of unconsolidated
  companies...........................       (294)       (453)      (306)       (266)       (802)
Goodwill amortization.................     (1,277)     (1,688)      (634)     (1,040)     (1,438)
Goodwill impairment...................    (18,442)    (13,515)        --     (18,442)    (12,519)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST............................    (22,457)    (13,003)     2,924     (23,537)    (12,469)
Minority interest.....................       (844)       (594)      (625)       (571)       (759)
                                        ---------   ---------   --------   ---------   ---------
NET INCOME (LOSS).....................  E (23,301)  E (13,597)  E  2,299   E (24,108)  E (13,228)
                                        =========   =========   ========   =========   =========
EARNINGS (LOSS) PER SHARE
  Basic...............................  E  (21.43)  E  (13.53)  E   3.63   E  (22.17)  E  (12.81)
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING(4)
  Basic...............................    1,087.4     1,004.8      633.8         n/a         n/a
Net cash provided by operating
  activities..........................  E   4,670   E   4,500   E  2,514         n/a         n/a
Net cash provided by (used for)
  investing activities................        405       4,340     (1,481)        n/a         n/a
Net cash used for financing
  activities..........................     (3,792)     (7,469)      (631)        n/a         n/a


- ---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games,
    publishing activities in Brazil, the consumer press division (the
    divestiture of which was completed in February 2003) and Comareg (the
    divestiture of which was completed in May 2003).

                                        75


(2) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. The pro
    forma results are not necessarily indicative of the combined results that
    would have occurred had the events actually occurred at the beginning of
    2001.

(4) Excludes treasury shares recorded as a reduction of shareholders' equity.

COMPARISON OF 2002 VERSUS 2001

     Where indicated, the following comparison of 2002 versus 2001 discusses
results of operations on both an actual basis and a pro forma basis. Pro forma
results of operations reflects the effect of the acquisitions of the
entertainment assets of USAi, Maroc Telecom and MP3.com, disposition of certain
interests in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. See Note 2 to our
Consolidated Financial Statements for further information on pro forma results
of operations.

 REVENUES

     Actual -- Total revenues increased 1% (3% on a constant currency basis)
from E 57.4 billion in 2001 to E 58.1 billion in 2002, primarily reflecting the
acquisition in May 2002 of USAi's entertainment assets, partially offset by the
fact that revenues generated by Vivendi Universal Publishing operations sold in
2002 are not included in 2002 revenues whereas they are included in 2001
revenues. See the discussion in "-- Comparability."

     Pro Forma -- On a pro forma basis, revenues increased 4% (6% on a constant
currency basis) from E 27.7 billion in 2001 to E 28.7 billion in 2002, with
Cegetel Group leading revenue increases in all our operating segments other than
Universal Music Group.

     For an analysis of revenues by business segment, see "-- Business Segment
Results."

 COST OF REVENUES

     Cost of revenues represented 69.8% of revenues or E 40.6 billion in 2002
compared to 68.9% of revenues or E 39.5 billion in 2001. The loss in gross
margin came from: Canal+ Group, due to increases in programming costs and the
write-off of films at Studio Canal, Universal Music due to declining revenues
and higher Artist & Repertoire (A&R) and royalty costs, the deconsolidation of
Publishing businesses sold which operated at gross margins of 50% and Veolia
Environnement, mainly due to negative impact of currency exchange rates. Cegetel
and Maroc reported margin improvements as the result of managing costs
efficiently as revenues rose, in particular thanks to productivity gains in
interconnection and network costs at Cegetel. Vivendi Universal Entertainment's
margins improved mainly due to the inclusion of eight months of performance of
USA Entertainment assets in 2002. USA Entertainment assets include USA Networks,
Sci Fi Channel as well as the highly profitable Law & Order franchise. The full
year consolidation of Maroc Telecom and the seven-

                                        76


month consolidation of USAi entertainment assets also contributed to the E 1.1
billion increase in cost of revenues.

 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 22.2% of revenues
or E 12.9 billion in 2002 compared to 23.9% of revenues or E 13.7 billion in
2001. In relation to revenues, the cost improvements are attributed to the
deconsolidation of the Publishing businesses sold as they carried higher
selling, general and administrative costs at 38% of revenues compared to the
group average and cost management at Cegetel and Maroc Telecom, which reflects
the effect of economies of scale as fixed costs were spread over a larger
revenue base and the contributive margin from the acquired USAi entertainment
assets at Vivendi Universal Entertainment. These improvements were offset by a
significant increase in expenses at Holding and Corporate related to pensions
and insurance.

 OPERATING INCOME

     Actual -- Total operating income was unchanged at E 3.8 billion in 2002
compared to 2001 as increases in cost of revenues and other operating expenses
were offset by a decline in selling, general and administrative expenses.

     Pro Forma -- On a pro forma basis, operating income declined 4% (1% on a
constant currency basis) from E 2.1 billion to E 2.0 billion as increases in
cost of revenues and other operating expenses were partially offset by a decline
in selling, general and administrative expenses. Operating income in our six
core operating segments increased 18% (21% on a constant currency basis) from
E 2.7 billion to E 3.2 billion, primarily reflecting strength at Cegetel Group
and reduced losses at Canal+ Group. However, operating losses incurred by other
businesses, including holding and corporate, at E 1.1 billion, more than offset
the overall improvement in our core businesses.

     For an analysis of operating income (loss) by business segment, see
"-- Business Segment Results."

 Financial Expenses, Net

     In 2002, net financial expenses amounted to E 1.3 billion, a decline of 8%
compared to 2001. The sales of Houghton Mifflin, the majority of Vivendi
Universal Publishing's other operations, our investment in EchoStar and a
portion of our interest in Veolia Environnement at the end of the year
significantly reduced our debt level. However, the first half of the year
included the cost of financing the acquisition of the entertainment assets of
USAi and EchoStar. The average cost of debt in 2002 was 4.1% (excluding Veolia
Environnement) compared to 4.0% in 2001. Of the total financing costs in 2002,
E 683 million pertained to Veolia Environnement, which was deconsolidated at the
end of the year.

 Financial Provisions

     Financial provisions increased significantly in 2002 to E 2.9 billion from
E 482 million in 2001, primarily due to non-cash charges required to reduce the
carrying value of certain publicly traded and privately held investments that
experienced other-than-temporary declines. The most significant provisions
related to: the investment in Elektrim Telecommunikacja (E 609 million); the
USAi warrants (E 454 million); interest rate swaps (E 261 million); Vivendi
Universal call option premium (E 226 million); investments in UGC and UGC Cine
Cite (E 220 million); investments in international telecoms operations (E 175
million); and the investment in DuPont shares (E 173 million). For additional
details, see Note 10 to our Consolidated Financial Statements.

 Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other expense of E 514 million was incurred in
2002 compared to other income earned of E 9 million in 2001. In 2002, other
expense was

                                        77


primarily comprised of expenses of E 589 million related to the buy-back of
Vivendi Universal puts and E 193 million in fees related to the renegotiation of
credit facilities resulting from the liquidity crisis, partially offset by
capital gains of E 255 million (primarily related to the sale of Vinci shares
and divestitures by Veolia Environnement), E 58 million in dividends from
unconsolidated companies and foreign exchange gains of E 24 million. In 2001,
other income was primarily comprised of capital gains of E 143 million,
principally related to the sale of Sante Luxembourg and St. Gobain shares,
foreign exchange gains of E 51 million, dividends from unconsolidated companies
of E 13 million and E 71 million premium expense on the buy-back of Vivendi
Universal puts.

 Exceptional Items, Net

     As discussed above under "--Comparability--Changes in Accounting Principles
and Financial Statement Presentation," the definition of exceptional items was
restricted in 2001 to include only material items of an unusual nature that
arise from events or transactions outside the ordinary course of business and
which are not expected to recur. In 2002, net exceptional income totaled E 1
billion, the principal components of which were capital gains on the divestiture
of and/or dilution of our interest in other companies, including: E 1.6 billion
for BSkyB; E 1.4 billion for Veolia Environnement; E 329 million for Vivendi
Universal Publishing's European publishing operations; E 172 million for Canal
Digital and E 90 million for Vizzavi Europe. Partially offsetting these gains
were capital losses on the divestitures of Houghton Mifflin (E 822 million),
EchoStar (E 674 million), Vivendi Universal Publishing's business-to-business
and health divisions (E 298 million) and Sithe (E 232 million), and a E 360
million provision related to the anticipated sale of Telepiu.

     Net exceptional income in 2001 totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of a 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

 Income Taxes

     In 2002, income tax expense totaled E 2.6 billion, an increase of 62% over
the prior year. Of the total, approximately E 1.1 billion related to recurring
operations, including E 544 million for Cegetel Group, and E 1.0 billion related
to exceptional items (mainly the use of deferred tax), which did not generate
any cash outflow. Cegetel Group and Maroc Telecom are not part of our
consolidated tax group, which has the effect that losses elsewhere in the group
are not available to offset profits taxable at those entities. As a result,
excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2002 was 84% compared to
40.8% in 2001.

 Equity in Earnings of Disposed Businesses

     Equity in earnings of disposed businesses was E 17 million in 2002.
Disposed businesses include all of Vivendi Universal Publishing's operations
excluding Vivendi Universal Games, publishing activities in Brazil, the consumer
press division (the divestiture of which was completed in February 2003) and
Comareg (the divestiture of which was completed in May 2003).

 Equity in Losses of Unconsolidated Companies

     In 2002, equity in losses of unconsolidated companies decreased 35% to
E 294 million primarily due to decreased losses from Internet affiliates and
Canal+ Group. Partially offsetting these improvements was the loss of equity
income following the May 2002 acquisition and consolidation of the entertainment
assets of USAi, which had previously been accounted for using the equity method,
and increased losses at international telecoms affiliates.

                                        78


 Goodwill Amortization

     In 2002, recurring goodwill amortization declined 24% to E 1.3 billion,
primarily due to the impact of goodwill impairment charges taken in prior
periods.

 Goodwill Impairment

     In view of the continued deterioration of the economy in 2002 and the
resulting decline in the value of some media and telecommunications assets,
combined with the impact of the future increased cost of capital to the group as
a result of liquidity issues, E 18.4 billion of goodwill was written down in
2002, including E 11 billion recorded as of June 30, 2002.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group;

     - E 6.5 billion for Vivendi Universal Entertainment;

     - E 5.4 billion for Canal+ Group; and

     - E 1.2 billion for international telecoms and Internet assets.

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity, in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, as adjusted for accumulated goodwill amortization recorded
since the acquisition. However, the impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders' equity. The "theoretical" goodwill impairment for
2002 amounts to E 0.7 billion.

     For further discussion of goodwill impairment, see Note 3 to our
Consolidated Financial Statements.

 Minority Interest

     In 2002, minority interest expense increased 42% to E  844 million,
primarily due to the May 2002 acquisition of the entertainment assets of USAi,
the dilution of our interest in Veolia Environnement and improved profitability
at Cegetel Group.

 Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 23.3 billion or E 21.43 per share (basic and diluted) was
incurred in 2002, compared with a net loss of E 13.6 billion or E 13.53 per
share (basic and diluted) in 2001.

 Adjustments to Conform to US GAAP

     Net Income -- For the years ended December 31, 2002 and 2001, the net loss
under US GAAP was E 44,447 million and E 1,172 million, respectively, compared
to a net loss of E 23,301 million and E 13,597 million under French GAAP. The
most significant reconciling item in both periods was goodwill impairment. In
2001, under French GAAP, following the market decline particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after minority interest concerning Veolia Environnement). Under US GAAP,
according to SFAS 121, no impairment was indicated as of December 31, 2001, and
accordingly the goodwill impairment charge accounted for under French GAAP was
reversed, increasing US GAAP net income in 2001 by approximately E 12.6 billion.
In 2002, under French GAAP, in light of the deteriorating economic conditions
and the impact of the higher financing cost for Vivendi Universal, an additional
impairment charge of approximately E 18.4 billion was recorded. Under US GAAP,
Vivendi Universal adopted SFAS 142 and 144 and recorded an impairment charge of
E 38.3 billion. Another reconciling item, specific to 2002 and 2001, resulted
from the differential accounting treatment for the sale of our investment in
BSkyB, which decreased
                                        79


US GAAP net income by approximately E 1,417 million in 2002 and increased US
GAAP net income by approximately E 73 million in 2001.

     Operating Income -- In 2001 and prior years, the most significant
reconciling item between French and US GAAP operating income was goodwill
amortization. Under French GAAP, goodwill amortization is excluded from
operating income, while under US GAAP goodwill amortization was included as a
component of operating income. Under US GAAP, with the adoption of SFAS 142 in
2002, Vivendi Universal ceased amortizing goodwill thus eliminating this
reconciling item. In 2002, the accounting for Vivendi Universal's investment in
Veolia Environnement gave rise to a reconciling item specific only to that year.
Under French GAAP, Vivendi Universal consolidated its investment in Veolia
Environnement until December 31, 2002, when Vivendi Universal reduced its
ownership interest in Veolia Environnement from 41% down to 20.4%. Until that
date, Vivendi Universal held more than 40% of Veolia Environnement's outstanding
shares and no other shareholder held, directly or indirectly, a greater
proportion of Veolia Environnement's voting rights than Vivendi Universal. Under
US GAAP, the equity method of accounting was applied beginning July 1, 2002, the
date at which Vivendi Universal's equity and voting interest was reduced to 48%.
While this difference between French GAAP and US GAAP had no impact on the
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP, it is a reconciling item at the operating income level. The most
significant reconciling items impacting operating income in all periods
presented relate to exceptional items and proportionate consolidation. French
GAAP defines exceptional items differently from the definition of extraordinary
items under US GAAP. None of the items included in exceptional items under
French GAAP qualify as extraordinary items under US GAAP. Consequently, these
items are reclassified to the appropriate income statement captions determined
under US GAAP. Under French GAAP, exceptional items are excluded from operating
income. Under US GAAP, with the exception of gains and losses on sales of shares
of affiliated companies, exceptional items have been included in the
determination of operating income. Gains and losses on sales of shares of
affiliated companies are classified as other income (loss), which is not a
component of operating income under US GAAP. Under French GAAP, investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4 to our Consolidated Financial
Statements. While this difference in accounting policy has no effect on either
net income or shareholders' equity, it is a reconciling item at the operating
income level.

     For further discussion of the significant items in reconciling French GAAP
and US GAAP, as they apply to the Vivendi Universal, see Note 17 to our
Consolidated Financial Statements.

COMPARISON OF 2001 VERSUS 2000

 REVENUES

     Total revenues increased 38% to E 57.4 billion in 2001, primarily due to
the inclusion of full twelve-month results of the acquired Seagram's operations
in 2001 (compared to twenty-three days in 2000) and the impact of the 2001
acquisitions of Maroc Telecom, Houghton Mifflin and MP3.com.

     For a detailed analysis of revenues by business segment, see "--Business
Segment Results."

  COST OF REVENUES

     Cost of revenues represented 68.9% of revenues or E 39.5 billion in 2001
compared to 72.6% of revenues or E 30.2 billion in 2000. The gross margin
improvement was due to reduction of handset costs at Cegetel and the mix effect
of including the Music business for a full twelve months in 2001 versus less
than one month in 2000. Music reported a gross margin of 55% in 2001. The E 9.3
billion increase in cost of revenues is primarily due to: growth at the Cegetel
and Veolia Environnement units plus the full year consolidation of Universal
Music Group, Vivendi Universal Entertainment (formerly Universal Studios Group)
and the part year consolidations of Maroc Telecom and Houghton Mifflin.
                                        80


  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 23.9 % of revenues
or E 13.7 billion compared to 21.7% of revenues or E 9.0 billion in 2000. The
increase in these expenses relative to revenues is primarily due to the
inclusion of the Music business for a full twelve months in 2001 versus less
than one month in 2000. The Music business reported a higher ratio compared to
the group average of selling, general and administrative expenses to revenues of
44% in 2001. In addition, the Internet and Holding costs were higher due to the
expansion of activities in these areas. Cegetel reduced expenses as a percentage
of revenues due to the effect of economies of scale as fixed costs were spread
over a larger revenue base. The E 4.7 billion increase in these expenses is
primarily due to the full year consolidation of Universal Music Group, Vivendi
Universal Entertainment (formerly Universal Studios Group) and the part year
consolidations of Maroc Telecom and Houghton Mifflin.

  OPERATING INCOME

     In 2001, total operating income more than doubled to E 3.8 billion,
principally due to the inclusion of full twelve-month results of the acquired
Seagram's operations in 2001 and the 2001 acquisitions of Maroc Telecom,
Houghton Mifflin and MP3.com, as discussed above.

     For a detailed analysis of operating income by business segment, see
"--Business Segment Results."

  Financial Expenses, Net

     In 2001, net financial expenses at E 1.5 billion, increased E 167 million
or 13%, as a higher average level of debt associated with our acquisitions was
partially offset by a lower average cost of debt of 4.02% compared to 5.15% in
2000.

  Financial Provisions

     Financial provisions increased 146% in 2001 to E 482 million, primarily due
to non-cash charges required to reduce the carrying value of certain publicly
traded and privately held investments that experienced other than temporary
declines.

  Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other income declined E 713 million in 2001 to
E 9 million, primarily due to reduced capital gains on the sale of portfolio
investments. In 2001, capital gains were E 143 million, primarily related to the
sale of Sante Luxembourg and St. Gobain shares. In 2000, capital gains were
E 702 million, primarily related to the sale of Alcatel shares and treasury
stock. Other income in 2001 also included E 51 million of foreign exchange
gains, E 13 million of dividends from unconsolidated companies and E 71 million
premium expense on the buy-back of Vivendi Universal puts.

  Exceptional Items, Net

     In 2001, net exceptional income totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

     Net exceptional income in 2000 totaled E 3.8 billion, the principal
components of which were gains of: E 780 million on the dilution of our interest
in Veolia Environnement due to its IPO (initial public offering), E 735 million
in the Dalkia/EDF transactions, E 534 million and E 473 million on the dilution
of our interests in Vinci and BSkyB, respectively, E 408 million on the
Lagardere/CanalSatellite/MultiThematiques alliance, E 372 million on the
dilution of our interest in Sithe and sale of the GPU power plants and E 178
million on the dilution of our interest in Havas Advertising.
                                        81


  Income Taxes

     In 2001, our income and deferred tax provision increased 56% to E 1.6
billion, primarily due to the inclusion of full twelve-month results of the
acquired Seagram operations in 2001 (compared to twenty-three days in 2000).
Excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2001 was 40.8%.

  Equity in Losses of Unconsolidated Companies

     In 2001, equity in losses of unconsolidated companies increased 48% to
E 453 million, primarily due to increased losses from Internet affiliates,
principally Vizzavi and Scoot.com, which increased 200% to E 291 million. Losses
at Canal+ Group's affiliates more than doubled to E 236 million, primarily due
to the poor performance of operations in Poland. Partially offsetting these
increases was the divestiture of BSkyB, which reduced equity losses by E 119
million year-on-year. In 2001, equity earnings of USAi also had a positive
impact of E 141 million.

  Goodwill Amortization

     In 2001, recurring goodwill amortization increased to almost E 1.7 billion,
primarily due to the inclusion of a full twelve-months of goodwill amortization
related to the merger with Seagram and Canal+.

  Goodwill Impairment

     Our 2001 annual review for impairment of the carrying value of long-lived
assets resulted in a non-recurring, non-cash charge of E 13.5 billion. This
charge is comprised of the following:

     - E 3.1 billion for Universal Music Group;

     - E 1.3 billion for Universal Studios Group;

     - E 6.0 billion for Canal+ Group;

     - E 1.6 billion for international telecoms and Internet assets;

     - E 0.9 billion for Veolia Environnement (including E 0.3 billion minority
       interest); and

     - E 0.6 billion for equity investments.

  Minority Interest

     In 2001, minority interest, at E 594 million, decreased 5%. The merger with
Seagram and acquisition of an interest in Maroc Telecom increased minority
interest by approximately E 174 million, and improved profitability at Cegetel
Group increased minority interest by approximately E 247 million. Offsetting
these increases were reductions of approximately E 459 million related to our
environmental services businesses (including E 0.3 billion related to the
goodwill impairment charge) and E 106 million related to the divestiture of
non-core businesses.

  Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 13.6 billion or E 13.53 per share (basic and diluted) was
incurred in 2001, compared with net income earned of E 2.3 billion or E 3.63 per
basic share in 2000.

                                        82


                            BUSINESS SEGMENT RESULTS



                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                PRO FORMA(3)
                                         ---------------------------   -----------------
                                         2002(1)    2001     2000(2)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
                                                                  
REVENUES
  Cegetel Group........................  E 7,067   E 6,384   E 5,129   E 7,067   E 6,384
  Universal Music Group................    6,276     6,560       495     6,276     6,560
  Vivendi Universal Entertainment......    6,270     4,938       194     6,978     6,874
  Canal+ Group.........................    4,833     4,563     4,054     4,742     4,563
  Maroc Telecom........................    1,487     1,013        --     1,487     1,351
  Vivendi Universal Games(4)...........      794       657       572       794       657
                                         -------   -------   -------   -------   -------
                                          26,727    24,115    10,444    27,344    26,389
  Other(5)(7)..........................    1,385     1,289     2,667     1,385     1,344
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........   28,112    25,404    13,111    28,729    27,733
  Veolia Environnement.................   30,038    29,094    26,294        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    54,498    39,405    28,729    27,733
  VUP assets sold during 2002(6)(7)....       --     2,862     2,175        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    57,360    41,580    28,729    27,733
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Cegetel Group........................    1,449       928       453     1,449       928
  Universal Music Group................      556       719        86       556       719
  Vivendi Universal Entertainment......      816       300       (13)      946       928
  Canal+ Group.........................     (325)     (374)     (341)     (295)     (374)
  Maroc Telecom........................      468       387        --       468       475
  Vivendi Universal Games(4)...........       63        18       (41)       63        18
                                         -------   -------   -------   -------   -------
                                           3,027     1,978       144     3,187     2,694
  Holding & Corporate..................     (665)     (326)     (212)     (665)     (326)
  Other(5)(7)..........................     (485)     (244)      192      (485)     (255)
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........    1,877     1,408       124     2,037     2,113
  Veolia Environnement.................    1,911     1,964     1,589        --        --
                                         -------   -------   -------   -------   -------
                                           3,788     3,372     1,713     2,037     2,113
  VUP assets sold during 2002(6)(7)....       --       423       110        --        --
                                         -------   -------   -------   -------   -------
                                         E 3,788   E 3,795   E 1,823   E 2,037   E 2,113
                                         =======   =======   =======   =======   =======


- ---------------

(1) December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23 100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

                                        83


(2) Reflects changes in accounting principles and financial statements
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. The pro
    forma results are not necessarily indicative of the combined results that
    would have occurred had the events actually occurred at the beginning of
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities e.g.
    Adi/Adibou in France and Jumpstart in the US.

(5) Principally comprised of Vivendi Telecoms International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described in note 5 above) and Houghton Mifflin sold in
    December 2002 and Vivendi Universal Publishing's Business to Business and
    Health divisions sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to our Consolidated Financial Statements. In Note 12.2, "Publishing
    excluding Games" includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

                                 CEGETEL GROUP



                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
                                                                  
REVENUES
  Mobile...............................  E 6,146   E 5,606   E 4,626   E 6,146   E 5,606
  Fixed and Other......................      921       778       503       921       778
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................    7,067     6,384     5,129     7,067     6,384
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Mobile...............................    1,552     1,107       630     1,552     1,107
  Fixed and Other......................     (103)     (179)     (177)     (103)     (179)
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................  E 1,449   E   928   E   453   E 1,449   E   928
                                         =======   =======   =======   =======   =======


  2002 versus 2001

     In 2002, Cegetel Group's revenues increased 11% to E 7.1 billion and
operating income increased 56% to E 1.4 billion. The improved results reflect
strong performances at both our mobile and fixed telephony divisions.

                                        84


  Mobile:

     In 2002, despite a slowdown in overall market growth, SFR's revenues
increased 10% to E 6.1 billion. This revenue growth was driven primarily by
growth in the number of customers, which increased 8% to 13.55 million (13.18
million customers excluding SRR, SFR's subsidiary in La Reunion, an overseas
department of France). The number of prepaid customers increased 2% to 6.36
million, while the number of postpaid customers increased 13% to 7.19 million.

     In 2002, SFR's operating income increased 40% to E 1.55 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 5% year-on-year.

  Fixed and Other:

     In 2002, revenue generated by Cegetel Group's fixed telephony and other
services grew 18% to E 921 million, primarily due to the introduction of
customer pre-selection for local calls on January 1, 2002 and an increase in
subscribers. Total voice traffic minutes increased 58% year-on-year, while data
and Internet traffic revenues increased 11%.

     Cegetel Group's fixed telephony and other services operating losses
declined 43% year-on-year to E 103 million primarily due to increased revenues
and continued cost control measures.

  2001 versus 2000

     In 2001, Cegetel Group's revenues increased 24% to E 6.4 billion and
operating income more than doubled to E 928 million. The significantly improved
results reflect the strong performance at both our mobile and fixed telephony
divisions.

  Mobile:

     In 2001, SFR's revenues increased 21% to E 5.6 billion. SFR's revenue
growth was driven primarily by growth in the number of customers, which
increased 24% to 12.6 million customers (12.2 million customers excluding SRR,
SFR's subsidiary in La Reunion). The number of prepaid customers increased 44%
to 6.2 million, while the number of postpaid customers increased 9% to 6.4
million.

     In 2001, SFR's operating income increased 76% to E 1.1 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 23% year-on-year.

  Fixed and Other:

     In 2001, revenue generated by Cegetel Group's fixed telephony and other
services grew 55% to E 778 million, primarily due to an increase in the number
of subscribers. Total voice traffic minutes increased 36% year-on-year, while
data and Internet traffic revenues increased 49%.

     Cegetel Group's fixed telephony and other services operating losses
increased 1% year-on-year to E 179 million primarily due to start-up costs on
new business.

                                        85


                             UNIVERSAL MUSIC GROUP



                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
                                                                  
REVENUES
  North America........................  E 2,772   E 2,921   E   179   E 2,772   E 2,921
  Europe...............................    2,588     2,655       229     2,588     2,655
  Far East.............................      588       671        60       588       671
  ANZ/Africa...........................      139       137        10       139       137
  Latin America........................      190       176        17       190       176
                                         -------   -------   -------   -------   -------
     Universal Music Group.............    6,276     6,560       495     6,276     6,560
OPERATING INCOME
     Universal Music Group.............  E   556   E   719   E    86   E   556   E   719
                                         =======   =======   =======   =======   =======


- ---------------

(1) Includes twenty-three days of Universal Music Group's operations since the
    completion of the merger on December 8, 2000.

     2002 versus 2001

     The year 2002 was challenging for the music industry due to the combined
effects of a downturn in the global economy, CD-R piracy and illegal downloading
of music from the Internet and growing competition for consumer discretionary
spending and shelf space at retail outlets. Worldwide music sales were down as
the music market witnessed an estimated global market decline of 9.5%.
Double-digit declines were experienced in the US, Japan and Germany, with only
France of the world's five major music markets reporting growth.

     While UMG outperformed the market, increasing its global market share,
revenue declined 4% to E 6.3 billion due to the unfavorable market conditions
and adverse currency movements, particularly the strengthening of the euro
versus the dollar, and higher returns reserves. In constant currency, revenues
declined 1%. In 2002, North American revenues were down 4% year-on-year due to
the strengthening of the euro. On a constant currency basis, revenues were up 1%
despite weak music market conditions, with sales in the overall North American
music market estimated to have declined 10.6%. In Europe, where music sales are
estimated to have declined 5.8%, UMG revenues were down 3% versus 2001, with
solid growth in France more than offset by declines in UMG's European Music Club
operations and in Germany. In Asia, where the music market is estimated to have
declined 13.4%, UMG revenues were down 13% due to adverse currency movements,
higher returns reserves and discounts. In constant currency, revenues were down
6%. Sales in the music market in ANZ/Africa were down an estimated 6.4% in 2002
after growing 5.9% last year. However, UMG revenues increased by 1% (5% in
constant currency) due to a strong performance in South Africa. The Latin
American music market contracted an estimated 8.2% in 2002. In this market, UMG
revenues were down 13% due to adverse currency movements. In constant currency,
revenues rose 4% with all key Latin America markets reporting growth.

     In 2002, operating income at UMG declined 23% (19% in constant currency) to
E 556 million reflecting reduced margins on lower levels of activity and higher
Artist and Repertoire (A&R) development costs and royalty costs, which were
partly offset by reductions in overhead and marketing costs and gains on the
sale of UMG's share of MTV Asia, real estate and other assets.

     UMG continues to focus on strengthening its worldwide leadership position
and believes that it has a strong 2003 release schedule. However, the worldwide
music market is expected to further decline in 2003. In this challenging
environment, UMG continues to win market share. Despite continued focus on cost
control, operating margin is expected to decline.

                                        86


     2001 versus 2000

     As 2000 results only include twenty-three days of UMG operations since the
completion of the merger on December 8, 2000, a comparison between 2001 and 2000
results is not meaningful.

                        VIVENDI UNIVERSAL ENTERTAINMENT



                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
                                                                  
REVENUES
  Universal Pictures Group.............  E 3,877   E 3,615             E 3,927   E 3,803
  Universal Television Group...........    1,522       333               2,199     2,134
  Universal Parks & Resorts and
     Other(2)..........................      871       990                 852       937
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...    6,270     4,938      194      6,978     6,874
OPERATING INCOME (LOSS)
  Universal Pictures Group.............      662       376                 648       365
  Universal Television Group...........      430        11                 573       649
  Universal Parks & Resorts and
     Other(2)..........................     (276)      (87)               (275)      (86)
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...  E   816   E   300    E (13)   E   946   E   928
                                         =======   =======    =====    =======   =======


- ---------------

(1) Includes twenty-three days of VUE (formerly USG) operations since the
    completion of the merger on December 8, 2000.

(2) Other includes primarily Spencer Gifts and Universal Operations Group.

     2002 versus 2001

     Vivendi Universal Entertainment (VUE) revenues in 2002 increased 27% to
E 6.3 billion principally due to the acquisition of the entertainment assets of
USAi in May 2002. On a pro forma basis, VUE revenues increased 2% (5% on a
constant currency basis) to E 7 billion, driven by increased revenues of
Universal Pictures and Universal Television, which were partially offset by
lower revenues at Universal Parks & Resorts and Other.

     VUE operating income reached E 816 million, up 172% on an actual basis. On
a pro forma basis, VUE's operating income increased 2% (6% on a constant
currency basis) to E 946 million, primarily as a result of strong video sales at
Universal Pictures, partially offset by lower results at Universal Television,
Universal Parks & Resorts and Other.

     Full year highlights by business segment, on a pro forma basis, include:

     Universal Pictures:

     Universal Pictures' revenues were E 3.9 billion, an increase of 3% versus
the prior year (7% increase on a constant currency basis). The studio benefited
from strong performance in home video and television, driven by prior years'
theatrical releases, which included such titles as The Mummy, The Mummy Returns,
The Fast and the Furious, and American Pie 2.

     Operating income increased 78% (85% on a constant currency basis) versus
the prior year to E 648 million. Results were driven by strong video performance
combined with lower film amortization expense as a result of a less robust 2002
film slate. The 2003 film slate includes several major releases, including Bruce
Almighty, The Hulk, 2 Fast 2 Furious, Dr. Seuss' Cat in the Hat and Peter Pan.
The commercial success of these films will be a particularly important factor
for results in 2003.

                                        87


  Universal Television:

     Universal Television revenues were E 2.2 billion, an increase of 3% from
the prior year (6% increase on a constant currency basis). Universal Television
Production's revenues increased 15%, to E 1 billion, due to increased license
fees for continuing series, such as the Law & Order franchise and Just Shoot Me,
and the success of new series, such as American Dreams. These results were
partially offset by lower advertising revenues at Universal Television Networks
as a result of the weak advertising market.

     Operating income decreased 12% from the prior year (down 9% on a constant
currency basis) due to weakness in the advertising market in addition to higher
programming costs from investments in new original programming at Universal
Television Networks.

  Universal Parks & Resorts and Other:

     The Universal Parks & Resorts and Other segment revenues were E 852
million, down 9% versus the prior year (down 5% on a constant currency basis).
Universal Parks & Resorts revenues, which represent roughly half of the
segment's revenues, were down 11% on a constant currency basis as a result of
lower management fees from theme park joint ventures and lower land sales. Lower
theme park management fees reflect in part continued reduced travel and park
visits following the September 11 terrorist attacks. Spencer Gifts' revenues
were down 3% as a result of lower holiday sales.

     Operating income decreased 220% versus the prior year (down 238% on a
constant currency basis). Lower management fees from theme park joint ventures,
reduced land sales and lower holiday sales at Spencer Gifts contributed to the
decline, but the primary driver was a E 107 million charge taken at Spencer
Gifts. The write down effectively reduces the asset value of this non-core asset
to its current market value.

     2001 versus 2000

     As 2000 results only include twenty-three days of VUE operations since the
completion of the merger of Vivendi, Seagram and Canal+ on December 8, 2000, a
comparison between 2001 and 2000 results is not meaningful.

                                  CANAL+ GROUP



                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
                                                                  
REVENUES
  Pay-TV -- France.....................  E 2,652   E 2,530   E 2,427   E 2,652   E 2,530
  Film -- StudioCanal..................      455       429       328       455       429
  Other................................    1,726     1,604     1,299     1,635     1,604
                                         -------   -------   -------   -------   -------
     Canal+ Group......................    4,833     4,563     4,054     4,742     4,563
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Pay-TV -- France.....................      182       182       154       182       182
  Film -- StudioCanal..................      (91)     (162)       22       (91)     (162)
  Other................................     (416)     (394)     (517)     (386)     (394)
                                         -------   -------   -------   -------   -------
     Canal+ Group......................  E  (325)  E  (374)  E  (341)  E  (295)  E  (374)
                                         =======   =======   =======   =======   =======


     2002 versus 2001

     At Canal+ Group, revenues increased 6% to E 4.8 billion and operating
losses declined by 13% to E 325 million. On a pro forma basis, which excludes
the results of Universal Studios international television

                                        88


networks (now reported by VUE), Canal+ Group reported 4% revenue growth to E 4.7
billion and a 21% improvement in operating losses to E 295 million.

     Full year highlights by business line, on a pro forma basis adjusted as
described above, include:

  Pay-TV -- France:

     In 2002, pay-TV revenues in France increased 5% to E 2.7 billion on overall
subscription growth. At the end of 2002, in total, pay-TV activities in France
(Canal+, CanalSatellite and NC Numericable) represented approximately 7 million
subscriptions, an increase of 2% over the prior year end. At the French premium
channel, Canal+, overall revenues were flat year-on-year as the full year impact
of the 2001 fee increase was offset by a decline in subscriptions of 74,000.
Canal+ ended the year with 4.8 million subscriptions. The revenue increase in
the pay-TV -- France operations was attributable to the solid performance at
CanalSatellite, which reached the two million subscription mark in December 2002
(representing a net increase of 224,000 new subscriptions). NC Numericable also
performed strongly due to an increase in the number of subscribers to its
Internet access service.

     In 2002, operating income from pay-TV in France was unchanged at E 182
million. The performance improvement in the business units in 2002 was offset by
the reversal of a provision in 2001 and a change in the consolidation of
multiThematiques in 2002 (100% consolidation of the loss in 2002, compared to
equity in 2001).

  Film -- StudioCanal:

     In 2002, StudioCanal's revenues were up 6% to E 455 million. Revenues from
UK operations (Working Title) compensated for lower film library revenues in
France and a decline in distribution revenues in Germany.

     In 2002, StudioCanal reduced its operating loss by 44% to E 91 million.
This loss is primarily attributable to the write-off of films on StudioCanal's
balance sheet.

  Other:

     Other is primarily non-core activities comprised of international pay-TV,
including Telepiu, Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies
and Expand, which have been or are in the process of being sold. Other revenues,
at E 1.6 billion, were stable year-on-year. Revenue growth generated by the
international pay-TV business units reflects a 20% increase in international
subscriptions but was offset by a revenue decline at Canal+ Technologies (due to
the ITV Digital and Winfirst bankruptcies).

     Operating losses improved slightly from E 394 million in 2001 to E 386
million in 2002. The improvement is primarily due to an approximate E 120
million reduction in operating losses at Telepiu reflecting increased revenues
attributable to increased subscribers and reduced piracy following the
introduction of new encryption technology. The reduced Telepiu losses were
partially offset by restructuring costs at the holding company level.

     2001 versus 2000

     At Canal+ Group, revenues increased 13% to E 4.6 billion, while the
operating loss increased 9.7% to E 374 million.

  Pay-TV -- France:

     Revenues increased 4% to E 2.5 billion primarily due to the strong
performance of CanalSatellite. Total pay-TV France subscriptions at the end of
2001 were 6.8 million, a 2.5% increase compared to 2000, primarily reflecting
digital platform growth, which added 224,000 subscriptions, up 14% compared to
2000.

     Operating income increased 18% to E 182 million due to the strong
performance by CanalSatellite.

                                        89


  Film -- StudioCanal:

     At StudioCanal revenues increased 30% to E 429 million reflecting the
success of several films produced and/or distributed, including Hannibal and
Crimson River in Germany, and Brotherhood of the Wolf, Traffic, What Women Want,
Belphegor and Bridget Jones's Diary in France. Video and DVD sales also
increased, driven by the success of Scary Movie, Chicken Run, Scream 3, Jamel
and Brotherhood of the Wolf.

     An operating loss of E 162 million was incurred in 2001 compared to
operating income earned of E 22 million in 2000, primarily due to higher film
amortization on a larger film slate.

  Other:

     Other revenues, at E 1.6 billion, increased 23%, primarily due to the
growth in European Pay-TV activities. Operating losses improved from E 517
million in 2000 to E 394 million in 2001. These losses were largely driven by
Telepiu, which reduced its loss from its 2000 level but still suffered from
piracy and increased churn. Canal+ Nordic strongly improved its performance in
2001, reducing its loss to near break-even, due to a significant decrease in
churn.

                                 MAROC TELECOM



                                                   YEAR ENDED DECEMBER 31,
                                       ------------------------------------------------
                                                  ACTUAL                  PRO FORMA
                                       ----------------------------   -----------------
                                        2002      2001       2000      2002      2001
                                       -------   -------   --------   -------   -------
                                                        (IN MILLIONS)
                                                                 
REVENUES
  Maroc Telecom......................  E 1,487   E 1,013         NA   E 1,487   E 1,351
OPERATING INCOME
  Maroc Telecom......................      468       387         NA       468       475


     The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of its acquisition in April 2001. In order to
present meaningful comparative information for assessing earnings trends at
Maroc Telecom, the following discussion focuses on pro forma results, which
include twelve months of operations in both 2002 and 2001.

     2002 versus 2001

     In 2002, revenues at Maroc Telecom increased to E 1.5 billion in 2002, up
10%. On a constant currency basis, revenues were up by 14%. Revenues grew in
both our fixed-line and mobile business, with the substantial increase in the
mobile subscriber base accounting for most of the increase. Fixed-line and
international revenues represented 62% of 2002 total revenues, with mobile
revenue accounting for the remaining 38% on a constant currency basis. At
December 31, 2002, Maroc Telecom had over 4.5 million mobile users.

     Operating income decreased 1% (increased 1% on a constant currency basis)
to E 468 million reflecting the impact of restructuring costs and amortization
of the value of the acquired GSM license, both of which were recognized for the
first time in 2002.

                                        90


     2001 versus 2000

     The 2000 results do not include the operations of Maroc Telecom as it was
only acquired in April 2001.

                            VIVENDI UNIVERSAL GAMES



                                                       YEAR ENDED DECEMBER 31,
                                                -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                ---------------------   -------------
                                                2002    2001    2000    2002    2001
                                                -----   -----   -----   -----   -----
                                                            (IN MILLIONS)
                                                                 
REVENUES
  Vivendi Universal Games.....................  E 794   E 657   E 572   E 794   E 657
OPERATING INCOME (LOSS)
  Vivendi Universal Games.....................     63      18     (41)     63      18


     2002 versus 2001

     Revenues increased to E 794 million for the year, an increase of 21% over
the prior year. On a constant currency basis, revenues were up 25%. Growth was
driven by the company's continued strength in the PC games market, as well as
its rapidly escalating presence in the console games market.

     Operating income was E 63 million for the year, an increase of E 45
million, over the prior year. The 2001 operating income included restructuring
costs of approximately E 37 million. The balance of the increase in 2002 was due
to higher gross profit on sales, partially offset by increased marketing and
product development costs.

     2001 versus 2000

     Revenues increased in 2001 to E 657 million, an increase of 15% over the
prior year, primarily due to the full year impact of the December 2000
acquisition of Universal Studio's interactive games business as part of the
merger of Vivendi, Seagram and Canal+ S.A.

     Operating income in 2001 was E 18 million, an improvement over an operating
loss of E 41 million in 2000. The turnaround reflects the improvement in
operating efficiencies following the combination of the two companies. The 2001
operating income includes a restructuring charge of approximately E 37 million.

OTHER BUSINESSES

     Other businesses principally include:

     - Vivendi Telecom International (VTI) -- Operating income at VTI increased
       to E 44 million in 2002 from E 15 million in 2001, primarily reflecting
       the full consolidation of Monaco Telecom in the second half of 2001 and
       Kencell (Kenya) in December 2001.

     - Internet -- Operating losses incurred by our Internet businesses improved
       to E 232 million in 2002 from E 290 million in 2001. This improvement
       reflects our ongoing efforts to close unprofitable operations and control
       costs.

     - Other -- Other principally includes Vivendi Valorisation, the holder of
       real estate assets which we intend to sell. The operating loss in 2002
       amounted to E 299 million primarily as a result of increased provisions
       related to the reduction in rental value of the real estate holdings.

     - Vivendi Universal Publishing assets not sold during 2002 -- Comprised of
       the Consumer Press division (Groupe Express-Expansion -- Groupe
       l'Etudiant) sold in February 2003, Comareg, sold in May 2003, and the
       Brazilian operations -- Atica & Scipione. These businesses generated
       operating income of E 2 million in 2002.

                                        91


  Veolia Environnement

     In 2002, total revenues for Veolia Environnement increased 3% (5% on a
constant currency basis) to E 30 billion. Revenues from core businesses, at
E 28.1 billion, increased almost 6% (7% on a constant currency basis), of which
5% resulted from internal growth. The revenue growth was generated by new
contracts for municipal and industrial outsourcing services, including several
that combined the services of two or more divisions.

     Operating income declined 3% to E 1.9 billion. Operating income from core
businesses rose 2% (3% on a constant currency basis) in 2002 while the
contribution from non-core businesses was down due to divestitures made during
the year. All core business contributed to operating income growth. In the Water
division, the good level of business activity in France, the gradually
increasing impact of outsourcing contracts won outside of France and the
turnaround of Vivendi Water Systems offset the slowdown in the industrial
equipment market in the United States and higher insurance costs. The Waste
division benefited from measures taken to improve profitability. In the Energy
Services division, growth was primarily attributable to the integration of the
Italian company SIRAM and developments in Northern and Central Europe. In the
Transportation division, new contracts signed in Europe and the United States
more than offset the cancellation of the South Central contract in the United
Kingdom. FCC's operating income increased principally due to its service
businesses.

     Veolia Environnement's published figures may differ from the figures
presented in Vivendi Universal's Consolidated Financial Statements, primarily
due to the elimination of non-material intercompany transactions. Moreover,
Vivendi Universal's definition of operating income differs from Veolia
Environnement's definition of EBIT utilized in their December 31, 2002 accounts,
which does not include restructuring charges of E 56 million.

  Vivendi Universal Publishing Assets Sold in 2002

     Vivendi Universal Publishing assets sold in 2002 include the European
publishing operations (excluding those described above) and Houghton Mifflin,
both of which were sold in December 2002 and the Business to Business and Health
divisions sold in June 2002.

  Holding & Corporate

     Holding and corporate expenses doubled year-on-year from E 326 million in
2001 to E 665 million in 2002. The key drivers of this increase were a E 122
million provision for headquarters restructuring, E 92 million in pension and
benefits charges primarily related to North American employees, a E 28 million
one-time provision for risk on a vacant lease and a E 56 million exceptional
insurance charge.

IMPACT OF INFLATION

     Inflation did not have a material effect on our financial results during
the year ended December 31, 2002.

FOREIGN CURRENCY

     Vivendi Universal is exposed to changes in foreign currency exchange rates.
Currency fluctuations may adversely affect its operational and financial
earnings. In seeking to minimize the risks and costs associated with currency
fluctuations, Vivendi Universal follows a centrally administered risk management
policy approved by its Board of Directors. As part of this policy, Vivendi
Universal uses various derivative financial instruments to manage foreign
currency exchange rate. Vivendi Universal generally does not use derivative
financial instruments for trading or speculative purposes. For more information
on Vivendi Universal's foreign currency risk management, see "Item
11--Quantitative and Qualitative Disclosures About Market Risk."

                                        92


LIQUIDITY AND CAPITAL RESOURCES

     Financial Position -- At December 31, 2002, Vivendi Universal had E 12.3
billion of total financial debt and E 7.3 billion of cash and cash equivalents
compared to E 37.1 billion of total financial debt and E 4.7 billion of cash and
equivalents at December 31, 2001. Of the total financial debt at December 31,
2002, total long-term debt was E 10.5 billion. For more information, see Note 7
to our Consolidated Financial Statements included in this document.

  CASH FLOW



                                                           YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
                                                                     
Cash flow from operating activities...................  E  4,670   E  4,500   E  2,514
Cash flow from investing activities...................       405      4,340     (1,481)
Cash flow from financing activities...................    (3,792)    (7,469)      (631)
Effect of foreign currency exchange rate changes on
  cash and cash equivalents...........................     1,287         83          7
                                                        --------   --------   --------
CHANGE IN CASH AND CASH EQUIVALENTS...................  E  2,570   E  1,454   E    409
                                                        ========   ========   ========


     As described in "Item 3--Risk Factors," we believe there will be a
shortfall in the funding necessary to meet our cash needs. See "Item 3--Risk
Factors" for a description of how we propose to provide the additional working
capital needed.

  Cash Flow from Operating Activities

     Cash flow from operating activities totaled E 4.7 billion in 2002, an
increase of E 0.2 billion from 2001 primarily due to improvements in working
capital. Excluding Veolia Environnement, Cegetel Group and Maroc Telecom, cash
flow from operations was negative E 0.1 billion, including dividends received
from Veolia Environnement and Maroc Telecom of E 0.1 billion.

     In 2001, cash flow from operating activities totaled E 4.5 billion compared
to E 2.5 billion in 2000. The significant improvement was primarily due to
operating earnings generating incremental cash flow of E 1.1 billion and
improvements in working capital of E 1.5 billion, which was partially offset by
E 600 million relating to the restructuring costs in connection with the
December 2000 merger. In 2000, cash flow from operating activities was E 2.5
billion, primarily coming from Cegetel Group, Vivendi Universal Publishing and
Veolia Environnement.

  Cash Flow from Investing Activities

     Cash flow from investing activities was E 0.4 billion in 2002 compared to
E 4.3 billion in 2001. Contributing to cash from investing activities in 2002
were sales for aggregate consideration of E 11.0 billion including Vivendi
Universal Publishing assets for E 3.2 billion, Veolia Environnement shares for
E 3.3 billion and EchoStar for E 1.0 billion. Offsetting divestiture proceeds
were net capital expenditures of E 4.0 billion and other investing activities of
E 6.6 billion, including investing activities made by Veolia Environnement of
E 2.8 billion and the acquisition of EchoStar for E 1.7 billion.

     In 2001 investing activities included the sale of the spirits and wine
business for E 9.4 billion and the divestiture of BSkyB shares for E 4.0 billion
offset by net capital expenditures of E 4.4 billion and the acquisitions of
Houghton Mifflin for E 2.0 billion and Maroc Telecom for E 2.4 billion.

     In 2000 net cash used for investing activities was E 1.5 billion,
reflecting notably the purchase of treasury shares held as marketable securities
for E 2.5 billion.

                                        93


  Cash Flow from Financing Activities

     In 2002, cash flow from financing activities was negative E 3.8 billion
compared to negative E 7.5 billion in 2001. In 2002, the principal components
included the repayment of short and long-term debt of E 7.9 billion, dividends
paid of E 1.3 billion, a cash payment to USAi of $1.62 billion, partially offset
by the issuance of long-term debt of E 2.7 billion, proceeds from the issuance
of Veolia Environnement shares of E 1.5 billion, the net proceeds from the sale
of treasury shares of E 2.9 billion including payments related to Vivendi
Universal put options of E 0.9 billion.

     In 2001, the principal components included a E 5.9 billion repayment of
long-term borrowings and other liabilities, a E 1.7 billion repayment of
short-term borrowings, the purchase of treasury stock for E 4.3 billion and cash
dividends paid of E 1.4 billion, partially offset by E 5.2 billion proceeds from
the issuance of long-term borrowings and other liabilities and E 0.6 billion net
proceeds from the issuance of common stock. In 2000, cash flow from financing
activities was negative E 0.6 billion.

CAPITAL RESOURCES

     In the second half of 2002 we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed suit the next day, with a one-notch downgrade to BBB- with a negative
outlook. On August 14, Moody's lowered the long-term senior unsecured debt
rating of Vivendi Universal to B1 and assigned a Ba2 senior implied rating to
Vivendi Universal, with this rating under review for possible downgrade, and
Standard & Poor's downgraded the long-term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, Moody's downgraded Vivendi Universal's
senior implied rating to Ba3, leaving the senior unsecured ratings unchanged at
B1, under review for possible downgrade. On January 3, 2003, Standard & Poor's
removed Vivendi Universal's long-term ratings credit watch. Beginning in July of
2002, these downgrades caused us to lose, to a significant extent, access to the
capital markets, and, most importantly, to the commercial paper market,
historically our main source of funding for working capital needs and triggered
default and covenant provisions under some of our debt documents. While our
current debt instruments do not contain rating triggers, further downgrades by
either Standards & Poor's or Moody's could result in liquidity problems,
increase our costs of borrowing, result in our being unable to secure new
financing and affect our ability to make payments on outstanding debt
instruments and to comply with other existing obligations.

     At December 31, 2002, our consolidated net debt was E 12.3 billion compared
with E 37.1 billion at December 31, 2001. Excluding the net debt of Veolia
Environnement, which, following divestitures of a portion of our shareholding
interest therein in 2002, was deconsolidated from Vivendi Universal's balance
sheet on December 31, 2002, net debt fell by approximately E 9.0 billion.

     The principal terms of our currently outstanding credit facilities are
described under "Item 4--Information on the Company--Summary of Indebtedness."
Under these facilities, Vivendi Universal and VUE are subject to certain
financial covenants which require them to maintain various financial ratios,
including:

     - For VUE, maximum ratios of consolidated financial indebtedness to
       consolidated EBITDA and minimum ratios to consolidated EBITDA to
       consolidated interest expense; and

     - For Vivendi Universal on a consolidated basis, maximum ratios of net
       financial debt to cash EBITDA, minimum ratios of cash EBITDA to net
       financing costs and maximum total gross financial debt.

     The definition of the above items is specified in the agreements.

     Vivendi Universal believes that Vivendi Universal and VUE are each in
compliance with each of their respective financial covenants as of December 31,
2002.

                                        94


  Maturity Profile

     The following table provides a summary of the impact of the refinancing
transactions undertaken prior to May 2003 on the maturity profile of debt and
undrawn facilities of Vivendi Universal through December 31, 2004.

             MATURITY PROFILE -- VIVENDI UNIVERSAL (PARENT COMPANY)
                                 (IN BILLIONS)



                                                 AGGREGATE MATURITIES   AGGREGATE
                                                 PRE-REFINANCING PLAN   MATURITIES   EXTENSION
                                                 --------------------   ----------   ---------
                                                                            
Q2 2003........................................         E 0.17            E 0.17      E   --
Q3 2003........................................           1.78(1)           1.51(1)     0.27
Q4 2003........................................           1.07              0.20        0.87
Q1 2004........................................           3.48(2)           2.58(2)     0.90
Q2 2004........................................             --                --          --
Q3 2004........................................           0.15              0.15          --
Q4 2004........................................           0.51              0.01        0.50
                                                        ------            ------      ------
Total maturities Q2 2003 -- Q4 2004............         E 7.16            E 4.62      E 2.54
                                                        ======            ======      ======


- ---------------

(1) Includes cash redemption amount of BSkyB exchangeable 1% notes issued in
    July 2000 and maturing on July 5, 2003.

(2) Assumes early redemption, at the option of the bondholders on March 1, 2004,
    of Vinci exchangeable 1% notes issued in February 2001 with scheduled
    maturity of March 1, 2006, and includes the cash redemption amount of
    Vivendi Universal convertible 1.25% bonds issued in January 1999 and
    maturing on January 1, 2004.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Subsequent Events."

RESTRICTIONS ON TRANSFERS FROM SUBSIDIARIES TO VIVENDI UNIVERSAL

     Our cash flow on a consolidated basis is not all available to Vivendi
Universal at the parent company level. In particular:

     - Dividends and other distributions (including payment of interest,
       repayments of loans and other returns on investment or other payments)
       from our subsidiaries are restricted under certain agreements. For
       example, the VUE Loan Agreement, described in "Item 4--Information on the
       Company--Summary of Indebtedness," places limitations on the ability of
       VUE to pay dividends to Vivendi Universal and otherwise limits the net
       balance of loans between VUE and Vivendi Universal to an aggregate of
       $600 million outstanding at any one time. As of March 31, 2003, VUE had
       aggregate outstanding loans of $114 million to Vivendi Universal.

     - Many of our subsidiaries who are less than wholly owned are unable to
       pool their cash with us and must pay a portion of any dividends to other
       shareholders. These subsidiaries include Cegetel Group and Maroc Telecom.
       In 2002, Cegetel Group did not pay a dividend and Maroc Telecom paid a
       dividend of E 19 million to Vivendi Telecom International.

     In addition, the ability of our subsidiaries to make certain distributions
also may be limited by financial assistance rules, corporate benefit laws and
other legal restrictions which, if violated, might require the recipient to
refund unlawful payments. In particular, under company law (including the French
Civil Code (code civil) and the French Commercial Code (code de commerce) and
similar laws in other jurisdictions) our subsidiaries are generally prohibited
from paying dividends except out of profits legally available for distribution.

                                        95


COMMITMENTS AND CONTINGENCIES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, Directors, committees of
       the Board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or
       divestitures;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments; and

     - review of all contracts and agreements.

  Contractual Obligations

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our Consolidated Financial Statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our Consolidated Financial
Statements, but are required to be disclosed. The following table summarizes our
significant contractual obligations and commercial commitments at December 31,
2002:



                                                        PAYMENTS DUE IN
                                ----------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2      AFTER
                                 TOTAL       A YEAR       AND 2 YEARS     AND 5 YEARS    5 YEARS
                                --------   -----------   -------------   -------------   -------
                                                         (IN MILLIONS)
                                                                          
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455          --        E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177       9,177             --              --           --
Sports rights(2)..............     1,065         469            331             265           --
Broadcasting rights(3)........       506         214            140             121           31
Creative talent and employment
  agreements(4)...............       250          55             50              60           85
Other(5)......................       240         223             15               2           --
                                --------    --------        -------         -------      -------
Total.........................  E 21,693    E 10,138        E 3,414         E 4,461      E 3,680
                                ========    ========        =======         =======      =======


                                        96




                                                         PAYMENTS DUE IN
                                 ---------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2     AFTER 5
                                  TOTAL      A YEAR       AND 2 YEARS     AND 5 YEARS     YEARS
                                 -------   -----------   -------------   -------------   -------
                                                          (IN MILLIONS)
                                                                          
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E    373        E   330         E   655      E   510
Sports rights(2)...............    1,440          --            265           1,175           --
Broadcasting rights(3).........    2,690         834            513           1,056          287
Creative talent and employment
  agreements(4)................    1,473         823            296             289           65
Real estate defeasance(7)......      846                                                     846
Other..........................      701         213            121             280           87
                                 -------    --------        -------         -------      -------
Total..........................  E 9,018    E  2,243        E 1,525         E 3,455      E 1,795
                                 =======    ========        =======         =======      =======


- ---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchase option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of soccer rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under "--Contingencies").

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    divestiture to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third was completed in April 2000. The
    annual rental expenses approximate E 34.4 million. In December 1996, three
    buildings in Berlin were sold and leased back under ten to thirty year
    leases at an annual rental expense of approximately E 29.6 million. The
    difference between Vivendi Universal's rental obligation under the leases
    and the market rent received by Vivendi Universal is provided for when
    unfavorable.

  Contingencies

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. Our most significant contingent liabilities
at December 31, 2002 are summarized below:

     Cegetel Group

     - In connection with the August 2001 sale of AOL Europe Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOL Europe preferred shares up to a

                                        97


       share of 66% and 34%, respectively, through a mirror total return swap
       with Vivendi Universal. In December 2002, a portion of the total return
       swap between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continued to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal were obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner whereby AOL Time Warner agreed to acquire the AOL Europe preferred
      shares through the exercise of a call option on April 8, 2003 for an
      amount of $812.5 million, payable in either cash or shares of AOL Time
      Warner common stock or a combination of both. AOL Time Warner elected to
      make the payment for the call option in cash and, as a result, the total
      return swap was unwound on April 9, 2003 and no further amounts are
      payable pursuant to the transaction. Vivendi Universal recorded a
      provision of $100 million in its 2002 accounts to cover market risk under
      the terms of the total return swap in the event AOL Time Warner had opted
      for payment for the call option in its own shares. This provision has now
      become unnecessary and will be reversed in the second quarter 2003
      accounts.

     Universal Music Group

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of $100.3 million
       (E 92.6 million).

     Vivendi Universal Entertainment

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USAi, USAi and Mr. Barry Diller received 5.44% and 1.50%,
       respectively, of the common interests in VUE, the group formed by
       combining such assets and those of the Universal Studios Group. Vivendi
       Universal agreed to certain put arrangements with respect to the common
       interests in VUE. Beginning on May 7, 2003, Mr. Barry Diller may put his
       common interests to Universal Studios, Inc. for the greater of their fair
       market value and $275 million. Beginning on May 7, 2010, USAi may put its
       common interests to Universal Studios, Inc. for their fair market value.
       In each case, these amounts may, at Universal Studio, Inc.'s election, be
       paid in cash or in Vivendi Universal shares.

      Under the VUE partnership agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USAi), including a cap on indebtedness and a restriction
      on asset transfers by VUE and its subsidiaries. Certain of the covenants,
      including those specified above, would cease to apply if an irrevocable
      letter of credit were issued in an amount equal to the accrued value of
      such interests at maturity (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
      detriment" (defined to mean the present value of the loss of USAi's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USAi to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USAi at the closing.

     - In 1987, Universal City Development Partners, Ltd., or Universal City
       Development Partners, entered into an agreement with a creative
       consultant to supply consulting services for a fee based on its gross
       revenues. The consultant is also entitled to a fee based on the gross
       revenues of all gated motion picture and/or television themed attractions
       owned or operated, in whole or in part, by (or pursuant to a license
       from) Universal City Development Partners or MCA Inc. (now Universal
       Studios, Inc.), any
                                        98


       of their partners or any of their affiliates ("comparable projects"),
       other than at Universal City, California. At present, the only theme park
       which may be a comparable project is VUE's partially owned park in Osaka,
       Japan. It is possible that comparable projects will be created in the
       future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City Development
      Partners for its parks were $14.8 million, $16.6 million and $14.7
      million, respectively. Fees with respect to the park in Japan were $13.2
      million for 2001 and $10.5 million for 2002. The consultant may also be
      entitled to participate in certain sales of equity by the partners of
      Universal City Development Partners and to participate in certain real
      estate development activities of the partners of Universal City
      Development Partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City Development Partners represented under the agreement that
      the consultant's interest in each of its parks and in any comparable
      projects will have priority over the interests of all financiers, lenders
      and others who may have an interest in that park or project. Universal
      City Development Partners's obligations under the agreement are guaranteed
      by Universal Studios, Inc. and Universal Studios, Inc.'s obligations under
      that guarantee have in turn been assumed by VUE.

     Canal+ Group

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of license fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

     Maroc Telecom

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake in Maroc Telecom to guarantee the
       payment of the above put option, if exercised.

     Vivendi Telecom International

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately

                                        99


       E 51 million (or the proportionate value of E 51 million if less than 29%
       is sold) and (ii) its residual 16% interest at fair value. Between May
       26, 2004 and December 31, 2009, Societe Nationale de Financement can put
       its entire 45% interest at fair value. The option may be exercised in
       increments but each exercise must be for not less than 10% of the shares.
       The fair value of Monaco Telecom will be independently determined by an
       appraisal procedure.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory). These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon the commercial launch of UMTS services. Given the
       very low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

     Corporate and Other

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholder's Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with the foregoing, Vivendi Universal must retain at least 30%
       of the gross assets or at least 10% of the net assets (values are
       determined as of December 8, 2000) until the end of the five year period
       ending on December 31, 2005. At the present time, Vivendi Universal is in
       compliance with this provision. Vivendi Universal does not intend to
       violate the provision and trigger the GRA.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's divestiture of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as described in Note 3.2.3
       to the Consolidated Financial Statements. Vivendi Universal's most
       important contingent liabilities under these agreements are:

      -- Certain recurring expenses involving network renewal costs in the water
         and energy businesses were originally to be reimbursed by Vivendi
         Universal up to an initial limit of E 15.2 million a year indexed over
         a period of 12 years. This limit has now been raised to E 30.4 million
         indexed starting in the year 2002. The additional amount potentially
         due above the E 15.2 million initial limit will, however, be payable
         only from January 2005 and bear interest at the legal rate. If the
         aggregate amount of replacement costs borne by Veolia Environnement
         were to exceed the initial limit of

                                       100


         E 228.6 million, this excess would be covered by Vivendi Universal up
         to a maximum amount of E 76.2 million.

      -- It has been agreed that the current Vivendi Universal interest in the
         company Aguas Argentinas will be retained by Vivendi Universal.
         Guarantees related to this company, which made up an amount of
         approximately $50 million have been retained by Vivendi Universal above
         a first tranche of $5 million assumed by Veolia Environnement.

     - In connection with Vivendi Universal's December 2002 divestiture of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favor of
       new investors as well as banks participating in the E 2.5 billion Dual
       Currency Credit Facility and the E 3 billion Multicurrency Revolving
       Credit Facility. Under an arrangement entered into in connection with the
       December 2002 divestiture, Vivendi Universal has committed to pay an
       indemnity equal to E 3 per call option to new investors in the event that
       the loans or guarantees related to the Dual Currency Credit Facility or
       the Multicurrency Revolving Credit Facility are called for reimbursement.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as of December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002 three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     The following table summarizes the contingencies described above and the
other contingencies described in note 11 to the Consolidated Financial
Statements.



TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
- ---------------------------          -----------------------------------   ---------
                                                                     
Telecom Developpement buy/sell       Price to be determined                --
  agreement with SNCF
3G UMTS license                      1% revenue earned when service        2021
                                     commences (expected to be in 2004)
Miscellaneous guarantees granted by  E 40 million                          2003/2012
  Cegetel
Rondor contingent purchase price     E 223 million                         Settled


                                       101




TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
- ---------------------------          -----------------------------------   ---------
                                                                     
Put option on Roc-a-fella record     0 to E 15 million                     2005
  label joint venture
Put option on Murder Inc. records    0 to $20 million                      2007
Guarantee for operating shortfall    0 to $20 million                      --
  of pressplay joint venture
Put option on VUE
- -- 1.5% of common interest in VUE    Greater of fair market value and      --
   to Barry Diller from May 7, 2003  $275 million
- -- 5.4% of common interest in VUE    At fair value                         --
   to USAi from May 2010
Two guarantees in connection with    Residual guarantee of $1 million      --
  VUE's Equity investment in UCDP
Guarantee for operating shortfall    $7.5 million                          --
  of Universal City Florida Hotel
  Venture
Guarantee of lease payments in       0 to $154 million                     --
  connection with UCI/CIC equity
  Investment
Capital contributions in connection  $19.5 million                         --
  with equity investment in
  MovieLink
Surety bond related to ITC           $27.8 million                         --
  Entertainment's "Streetscenes"
  film Property
Agreement with creative consultant
- -- consulting services               Fee based on gross revenues           --
- -- additional fee                    Based on gross revenues of themed     --
                                     attractions at certain parks
- -- right of termination              Fair market value, starting in 2010   --
Executive officer option to acquire  Approximately $24.9 million           2005
  0.2% of VUE's affiliate shares
Guarantee provided to English        L200 million, 50% of which is         2004
  Premier League football            counterguaranteed by the RTL Group
Put option equal to 16% of Maroc     At fair market value                  2005
  Telecom
Grant of a put option of 45% of
  Monaco Telecom
- -- until May 25, 2004                0 to 29% for a proportionate of 0     2004
                                     to 51 million euros and the
                                     residual 16% interest at fair value
- -- between May 26, 2004 and          45% interest at fair value or in      2009
   December 31, 2009                 increments but each exercise must
                                     be not for less than 10%
Guarantees to Afghan state re:       Capped at $2.4 million                --
  performance of obligations of
  Telecom Development Company of
  Afghanistan and to the Agha Khan
  Fund for Economic Development
Commitment to fund Afghan Telecom    Up to $10.5 million                   --
  BV Company
Bank guarantee Xfera                 Approximately E 140 million           --


                                       102




TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
- ---------------------------          -----------------------------------   ---------
                                                                     
Bank guarantee provided to Spanish   E 48 million                          --
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera
"Call option" of the Xfera stake     Subject to arbitration proceedings    --
  held by Vodafone
Shareholders' governance agreement                                         2005
  with members of the Bronfman
  family
Divestiture of Interest in Veolia
  Environnement
- -- Reimbursement of replacement      E 30.4 million indexed starting in    --
   costs                             the year 2002 payable from January
                                     2005 subject to legal interest rate
                                     If total amount paid by VE exceeds    --
                                     E 228.6 million excess would be
                                     covered by VU up to an amount of
                                     E 76.2 million
- -- Guarantees re: Aguas Argentinas   Approximately $50 million with        --
                                     first $5 million assumed by VE
- -- Other guarantees re: commitments  Approximately E 250 million           --
   made by VE subsidiaries
- -- Comfort letters issued in favor   Approximately E 20 million            --
   of VE subsidiaries
Indemnity to VE share call option    E 3 per call option (approximately    2004
  Holders                            E 250 million)
Sale of put options on own shares    3.1 million shares at an exercise     Settled
  in 2003                            price of E 50.50
Put option on 19.7% of capital       Currently estimated at E 70 million   2007
  stake in UGC
Debt premiums potentially due to     E 27.6 million                        2006
  holders of bonds exchangeable
  into VE and Vinci shares
Counter-guarantee on surety bonds    $47.5 million                         --
Pledges and guarantees related to    E 274 million                         2002/2020
  real estate operations
Sale of Seagram's spirits and wine   0 to $1 billion                       2003
  Assets
Sale of VUP's B2B and Health         Price adjustment clause and           2004
  divisions                          guarantee clause related to
                                     liabilities up to E 500 million per
                                     division
Sale of VUP's European publishing    Guarantees capped at E 240 million    --
  Activities
Sale of Houghton Mifflin             Losses in excess of $20 million not   --
                                     to exceed $166 million
Sale of 50% stake in Vizzavi         Certain standard guarantees up to     --
                                     its 50% share
Sale of Sithe                        Guarantees capped at $480 million     2004/2005
Guarantees on sale of land and       Guarantees capped at E 150 million    2017
  buildings businesses


                                       103




TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
- ---------------------------          -----------------------------------   ---------
                                                                     
Sale of hotels to the consortium     Commercialization guarantee kept at   2004
  ABC                                80% of the value of each hotel
Shareholders' governance agreement   --                                    --
  with members of the Bronfman
  Family


CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets were
as follows at December 31, 2002:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E 300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004;

     - second ranking collateral after that issued in connection with the E 1
       billion Dual Currency Revolving Credit Facility and the E 300 million CDX
       IXIS Revolving Facility, and that issued to holders of call options on
       Veolia Environnement shares, allocated in connection with the syndicated
       lines of credit of E 3 billion and E 850 million set up, respectively, in
       March 2002 and March 1999 to Societe Generale in connection with two
       loans of E 490 million in the aggregate, and Bayerische Landesbank and
       LineInvest Limited, in connection with financing of the purchase of AOL
       Europe preferred shares or to an amount equal to one-third of the total
       amount of the transaction (i.e. about E 270 million);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million);

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP);

     - pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract; and

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom, if exercised.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Operating and Financial
Review and Prospects--Subsequent Events." Vivendi Universal has new indebtedness
incurred since December 31, 2002. For a description of Vivendi Universal's
material indebtedness, see "Item 4--Information on the Company--Summary of
Indebtedness."

                                       104


LITIGATION

     We are subject to various litigation. See "Item 8--Financial
Information--Litigation."

RESEARCH AND DEVELOPMENT

     Research and development plays an important role in several of our
businesses. See "Item 4--Information on the Company--Our Segments--Cegetel
Group," "Item 4--Information on the Company--Our Segments--Music" and "Item
4--Information on the Company--Our Segments--Canal+ Group."

SUBSEQUENT EVENTS

     On December 3, 2002, Vivendi Universal's board of directors unanimously
decided to exercise its pre-emptive rights on BT Group's 26% interest in Cegetel
Group, in order to obtain a 70% interest in the French telecommunications
operator. In January 2003, Vivendi Universal purchased BT Group's 26% interest
in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was carried out through
the Societe d'Investissement pour la Telephonie S.A. (SIT), as follows: (i) SIT,
owned, controlled and consolidated by Vivendi Universal, became the legal owner
of the 26% shareholding at an acquisition cost of E 4 billion and (ii) SIT was
financed by E 2.7 billion equity, contributed in cash by Vivendi Universal and
by the E 1.3 billion Acquisition Facility described below. Debt service of this
loan, which was drawn on January 23, 2003, will be provided through dividends
paid in respect of its 26% shareholding in Cegetel Group.

     As a result, Cegetel Group will continue to be consolidated by Vivendi
Universal, with a 70% interest (the 26% shareholding acquired from BT Group in
addition to its historical 44% interest). The goodwill recognized as a result of
this transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     On December 6, 2002, Vivendi Universal entered into a E 1.3 billion
facility (the Acquisition Facility) among SIT, as the borrower, Vivendi
Universal, a syndicate of lenders, Credit Lyonnais, as agent, and The Royal Bank
of Scotland, as security trustee. The Acquisition Facility was entered into by
SIT to finance the purchase of the share capital of Cegetel Group described
above. The outstanding amount of the loan under the Acquisition Facility is
E 1.3 billion. The maturity date of the loan is June 30, 2004. SIT may request
an extension of the maturity date to June 30, 2010 by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. Borrowings under the Acquisition Facility bear interest at
EURIBOR plus a margin of 4.00%, subject to certain adjustments. See "Item
4--Information on the Company--Summary of Indebtedness."

     On February 4, 2003, the sale of Consumer Press Division (Groupe
Express-Expansion/Groupe l'Etudiant) to the Socpresse Group was finalized,
following the authorization by The Economy and Finance Ministry in January 2003.
The amount collected was E 200 million.

     On February 5, 2003, Vivendi Universal closed the sale of its 89% stake in
Canal+ Technologies to Thomson for E 190 million in cash, of which E 90 million
was collected in 2002, E 79 million was collected in 2003 and the remainder is
expected to be paid pending any post-closing purchase price adjustments.

     On February 6, 2003, Mr. Bertrand Meheut was appointed as Member and
Chairman of Group Canal+ S.A. Management Board, in replacement of Mr. Xavier
Couture, who resigned at the Supervisory board's session of February 7, 2003.

     In February 2003, Vivendi Universal sold 32 million warrants relating to
USAi to a financial institution. These warrants were initially acquired in
connection with the acquisition of the entertainment assets of USAi. Pursuant to
this transaction, Vivendi Universal received $276 million, net of fees.

                                       105


     Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

     On March 11, 2003, Vivendi Universal Canada Inc. (VU Canada), a company in
the Vivendi Universal group, announced that it had satisfied its contractual
guarantee made on August 1, 2000, to the former shareholders of the California
company, Rondor Music International, Inc. The former Rondor shareholders
received 8.844 million shares, representing 0.8% of capital stock and the
remainder in cash of US $100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.50 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between US
$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

     On March 19, 2003, VUE received a commitment from Banc of America
Securities LLC and J.P. Morgan Securities Inc. to syndicate a new $500 million
senior secured credit facility and underwrite $300 million thereof. On March 19,
2003, VUE also received a commitment for an extension from September 30, 2003 to
December 31, 2003 of up to $420 million under its term facility dated as of May
3, 2002 (the VUE Bridge Facility).

     On March 19, 2003, Mr. Barry Diller announced his resignation from his
temporary position as chief executive officer of VUE. Mr. Diller had been
serving in such capacity since the formation of VUE in May 2002 and was not
party to an employment agreement. Mr. Jean-Rene Fourtou has assumed the role of
chief executive officer of VUE and is working with the existing management team.
Mr. Diller's resignation has no effect on the rights and obligations of Vivendi
Universal, VUE, USAi or Mr. Diller under the VUE partnership agreement. The
termination date for USAi's and Mr. Diller's noncompetition agreements with VUE
is now November 7, 2003, Mr. Diller's put on his common stock remains
exercisable beginning on May 7, 2003, and Universal's call option on Mr.
Diller's common interest in VUE is exercisable beginning on May 7, 2004.

     On March 28, 2003, Liberty Media Corporation and certain of its affiliates
filed suit against Vivendi Universal, Jean-Marie Messier (the former CEO of
Vivendi Universal), Guillaume Hannezo (the former CFO of Vivendi Universal) and
Universal Studios, Inc. The complaint arises from the transaction that was
agreed in December 2001 and resulted in the formation of VUE in May 2002. As
part of that transaction, Vivendi Universal transferred 37.4 million shares of
Vivendi Universal to Liberty Media in exchange for equity in USANI LLC and USAi
and Liberty Media's 27.4% interest in the European cable television company,
MultiThematiques.

     In the opinion of Vivendi Universal, the plaintiffs' claims are without
merit, and Vivendi Universal intends to defend against these claims vigorously.
It is not possible at this early stage of this suit to predict the outcome and
duration with any certainty or to quantify any potential damages or the
likelihood of any other remedies. The impact of this litigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of this litigation. Vivendi does not expect this
litigation to have
                                       106


any material effect on its asset divestiture program. For more information, see
"Item 8--Financial Information--Litigation."

     On March 31, 2003, a subsidiary of VUE, Universal Film Funding LLC, or Film
Funding, borrowed $750 million under a securitization facility, based on future
video (including DVD and VHS) and television revenues in the United States from
part of Universal's film library and future theatrical pictures to be released
by Universal. As part of the securitization facility, certain subsidiaries of
VUE transferred assets relating to Universal's film library which generate these
revenues and certain other related assets to Film Funding and agreed to sell
additional similar assets relating to its future theatrical pictures. The
proceeds of the Securitization Facility were used by VUE to retire $700 million
of the $1.62 billion owed under the VUE Bridge Facility, and to establish a
funded reserve account required under the terms of the securitization facility,
to be used to fund certain expenses related to exploitation of the film assets
(e.g., costs of duplication and distribution expenses). The securitization
facility is scheduled to amortize over three years, commencing three years after
the initial borrowing. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On April 2, 2003, the European Commission issued its approval of the sale
by Canal+ Group of Telepiu, the Italian pay-TV business, to News Corporation.
The transaction was completed on April 30, 2003 and amounted to E 871 million,
comprised of E 414 million of debt assumption and E 457 million of cash. The
cash payment includes a E 13 million adjustment corresponding to the
reimbursement of the accounts payable net of debt adjustment.

     On April 3, 2003, Vivendi Universal closed an offering of E 1.2 billion
senior notes due 2010 (Senior Notes), consisting of $935 million 9.25%
dollar-denominated notes and E 325 million 9.5% euro-denominated notes, sold at
a discount to yield 9.75%. The gross proceeds from the offering were placed in
escrow pending the entry by Vivendi Universal into a new credit facility, which
was consummated on May 13, 2003. See "Item 4--Information on the
Company--Summary of Indebtedness."

     On May 13, 2003, Vivendi Universal amended its E 3 billion multicurrency
revolving credit facility (Multicurrency Revolving Credit Facility) dated March
15, 2002, as previously amended on February 6, 2003, with a syndicate of banks,
as lenders, and Barclays Capital, Bayerische Landesbank Girozentrale, BNP
Paribas, Credit Agricole Indosuez, Credit Lyonnais, Deutsche Bank AG, SG
Investment Banking and Sumitomo Mitsui Banking Corporation, as mandated lead
arrangers, and Societe Generale, as facility agent. Borrowings under the
Multicurrency Revolving Credit Facility that are denominated in Euros bear
interest at EURIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon
the occurrence of certain events. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in a currency other than Euros bear
interest at LIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon the
occurrence of certain events. The Multicurrency Revolving Credit Facility
matures on March 15, 2007. E 2.3 billion of the Multicurrency Revolving Credit
Facility is currently drawn. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On May 13, 2003, Vivendi Universal concluded an agreement on the
divestiture of its fixed-line telephony activities in Hungary to a consortium
led by AIG Emerging Europe Infrastructure Fund and GMT Communications Partners
Ltd. The amount of the transaction is E 325 million and, upon closing, will
lower Vivendi Universal's debt by E 315 million.

     On May 13, 2003, Vivendi Universal entered into a E 2.5 billion dual
currency term and revolving credit facility (the Dual Currency Credit Facility)
dated as of May 13, 2003, among Vivendi Universal, as a borrower and as a
guarantor, certain of its subsidiaries, as guarantors (Vivendi Universal and the
guarantors are collectively referred to as the Obligors), the lenders party
thereto and Societe Generale, as facility and security agent. The facility is
comprised of (a) a three-year E 1.5 billion revolving credit facility (Tranche
A) at EURIBOR or LIBOR plus an applicable margin that, depending on Vivendi
Universal's credit ratings, ranges from 1.00% to 2.75% and (b) a E 1.0 billion
term loan (Tranche B) with a 2.75% per annum margin over EURIBOR or LIBOR
maturing on the third anniversary of the date of the Dual Currency Credit
Facility. See "Item 4--Information on the Company--Summary of Indebtedness."

                                       107


     Following the closing of the Dual Currency Credit Facility and the Senior
Notes offering, Vivendi Universal repaid and cancelled the following
indebtedness: (i) E 200 million outstanding under the CDC IXIS Revolving Credit
Facility dated as of January 15, 2003, as amended on February 6, 2003, (ii)
E 850 million outstanding under the E 850 million Revolving Credit Facility,
dated March 2, 1999, as amended as of February 6, 2003, (iii) E 215 million
outstanding under the E 215 million Revolving Credit Facility, dated June 6,
2002, as amended on February 6, 2003, and (iv) E 275 million outstanding under
the E 275 million Revolving Credit Facility dated June 28, 2002, as amended on
February 6, 2003. In addition, Vivendi Universal canceled the undrawn E 1.0
billion dual Currency Revolving Credit Facility, dated as of November 26, 2002,
as amended on February 6, 2003.

     On May 19, 2003, Roxio, Inc. acquired substantially all of the interests of
pressplay, the joint venture of Universal Music Group (UMG) and Sony Music
Entertainment. Each of UMG and Sony Music Entertainment received 1,957,262
shares of Roxio common stock and $6,250,000 in cash from the transaction. In
addition, UMG has retained a 0.2% interest in pressplay, which has been renamed
"Napster, LLC."

     Edgar Bronfman, Jr. has informed Vivendi Universal of his intention to lead
a consortium to purchase American assets of Vivendi Universal. As a result, on
May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend (i) the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof, (ii) certain
provisions of agreements between the Bronfman family and Vivendi Universal and
(iii) the employment agreement between Edgar Bronfman, Jr. and a subsidiary of
Vivendi Universal.

     On May 28, 2003, Vivendi Universal sold Comareg for cash proceeds of E 135
million to the France Antilles group.

     On May 30, 2003, Vivendi Universal sold Spencer Gifts, a US novelty
knick-knack chain, to an investor group led by privately held Gordon Brothers
Group and Palladin Capital Group Inc. for consideration consisting of preferred
and common stock of Spencer Gifts LLC, the surviving entity following the
transaction.

     On June 6, 2003, Barry Diller gave notice that his designee, USAi, would
exercise his right of first refusal to purchase all of the remaining 28.8
million warrants to acquire shares of USAi that Vivendi Universal owns. This
transaction is expected to close on June 30, 2003. The warrants were acquired in
connection with the acquisition of the entertainment assets of USAi.

     As a result of its reduced interests in USAi, Vivendi Universal and its
affiliates will no longer be subject to the right of first refusal or other
transfer restrictions in its stockholders agreement with Liberty Media
Corporation and Mr. Diller. Under agreements with USAi, however, Universal
Studios, Inc. and its affiliates must continue to hold the 56.6 million USAi
shares generally free of liens and in special purpose entities until
satisfaction of the put or call on the Class B preferred interests in VUE (held
by USAi), which can occur no earlier than May 2022. Mr. Diller will continue to
hold a proxy on all such USAi shares. In addition, Mr. Diller's standstill
obligations under the Stockholders Agreement, including his obligation not to
acquire Vivendi Universal or any of its subsidiaries, will continue to apply in
accordance with the stockholders agreement.

     On June 11, 2003, Vivendi Universal transferred its rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe to the Japanese group Marubeni for $47 million.
See "Item 4--Information on the Company--History and Development of the
Company--2002 Significant Transactions--Disposition of Sithe."

     On June 24, 2003, VUE closed and syndicated the $920 million VUE Loan
Agreement. See "Item 4--Information on the Company--Summary of Indebtedness."

     On June 18, 2003, Vivendi Universal sold 10 Universal City Plaza to a group
of U.S. investors. The asset is a 35-story Los Angeles tower block and Universal
Studios will continue to rent the building. The amount of the transaction is
$190 million and has already been received.

                                       108


     On June 23, 2003, an agreement was signed by Venditelecom and VTI for the
sale of their entire stake in Xfera for E 1 to FCC, ACS, Inversiones Aramayona,
Acesa Telecom and Telvent. Under the terms of the transaction, the purchasers
will put in place new license guarantees within 30 days, at which time the
existing guarantees provided by Vivendi Universal in favor of the Spanish
government will be released except for those deriving from the spectrum fee tax
claims for the years 2001, 2002 and 2003. The purchasers have also indemnified
Vivendi Universal for damages arising out of certain disputes. Upon consummation
of the transaction and release of the guarantees, Vivendi Universal will have no
further interest in Xfera.

     Vivendi Universal has begun exploring strategic options that could lead to
the partial or total divestiture of VUE and VU Games. Vivendi Universal has
received multiple, preliminary bids relating to one or more of these businesses
and is currently evaluating them. As of yet there is no pre-established
structure or calendar for any particular divestiture. In parallel, Vivendi
Universal is also exploring the option of listing up to 25 to 30% of the share
capital of Vivendi Universal Entertainment in an initial public equity offering.

ITEM 6:  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

THE BOARD OF DIRECTORS

 General

     Vivendi Universal's board of directors is currently composed of twelve
directors including our Chairman and Chief Executive Officer. The board of
directors can be composed of three to eighteen members. Our directors are
elected by our shareholders for renewable terms of a maximum of four years,
subject to the provisions of Vivendi Universal's statutes relating to age
limits. The board of directors of Vivendi Universal is composed as follows:



                                                                             EXPIRATION OF
NAME                                      AGE            POSITION            CURRENT TERM
- ----                                      ---            --------            -------------
                                                                    
Jean-Rene Fourtou(4)....................  64         Chairman and CEO            2004
Edgar Bronfman, Jr.(1)(3)(4)............  48    Director and Vice Chairman       2004
Claude Bebear(4)........................  67             Director                2004
Gerard Bremond..........................  65             Director                2004
Edgar M. Bronfman(2)(3)(4)..............  74             Director                2004
Bertrand Collomb........................  60             Director                2004
Fernando Falco y Fernandez de Cordova...  64             Director                2006
Paul Fribourg...........................  49             Director                2004
Gabriel Hawawini........................  55             Director                2006
Gerard Kleisterlee......................  56             Director                2004
Marie-Josee Kravis......................  53             Director                2005
Henri Lachmann..........................  64             Director                2004


- ---------------
(1) Son of Edgar M. Bronfman.

(2) Father of Edgar Bronfman, Jr.

(3) Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
    consortium to purchase American assets of Vivendi Universal. As a result, on
    May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
    mutually agreed to suspend (i) the participation of Edgar M. Bronfman and
    Edgar Bronfman, Jr. in the Board of Directors and any committee thereof,
    (ii) certain provisions of agreements between the Bronfman family and
    Vivendi Universal and (iii) the employment agreement between Edgar Bronfman,
    Jr. and a subsidiary of Vivendi Universal.

(4) Under French law, this director is not considered independent.

     Other than those described in the footnotes above, there are no familial
relationships among our directors and executive officers.

                                       109


 Biographies

     JEAN-RENE FOURTOU was appointed to the board of directors of Vivendi
Universal in July 2002 and has served as Chairman and Chief Executive Officer of
Vivendi Universal since July 2002. He has also served as Chief Executive Officer
of USI Entertainment Inc. since that date. He is Chairman of the supervisory
board of the Canal+ Group and member of the supervisory boards of AXA and
Aventis. Mr. Fourtou is currently a director of AXA Financial Inc, Cap Gemini
and EADS, among others. He also serves as President of the International Chamber
of Commerce. From December 1999 to May 2002, Mr. Fourtou carried out the
functions of Vice-Chairman and Chief Executive Officer of Aventis. Since that
date, he has been Honorary Chairman of Aventis and Vice-Chairman of the
supervisory board.

     EDGAR BRONFMAN, JR.  was appointed to the board of directors of Vivendi
Universal in 2000, serving as Vice-Chairman of the board until he and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. He is Chief Executive of Lexa Partners LLC
and a partner of Accretive Technologies LLC. He is also a director of
InterActiveCorp, A&G Group Limited, Equitant Inc., Fandago and NewRoads, and a
member of the Board of The New York University Medical Center and the Board of
Governors of The Joseph H. Lauder Institute of Management & International
Studies at the University of Pennsylvania. Prior to December 2000, he had been
President and Chief Executive Officer of The Seagram Company Ltd., a post he had
held since June 1994, and from 1989 to June 1994 he was President and Chief
Operating Officer of Seagram.

     CLAUDE BEBEAR was appointed to the board of directors of Vivendi Universal
in July 2002. He currently serves as Chairman of the supervisory board of the
AXA Group and Chairman and Chief Executive Officer of FINAXA. From 1982 to 2000,
Mr. Bebear served as Chairman and Chief Executive Officer of Mutuelles Unies,
which became Axa in 1984. Mr. Bebear set up and presides over the Institut du
Mecenat de Solidarite, an organization with a humanitarian and social vocation,
as well as the Institut Montaigne, an independent political think-tank. He is
also a Director of BNP Paribas, Schneider Electric and various AXA Group
subsidiaries.

     GERARD BREMOND was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman of the SA Pierre et Vacances
Tourisme, SA Pierre et Vacances Tourisme France, SA Pierre et Vacances Conseil
Immobilier and of Maeva Group. He is also a director of Med Pierre et Vacances
SI (Spain) and Groupe Maeva, among others.

     EDGAR M. BRONFMAN was appointed to the board of directors of Vivendi
Universal in December 2000. He and Vivendi Universal mutually agreed that his
participation in the Board of Directors and any committee thereof would be
suspended following May 20, 2003, when Edgar Bronfman, Jr. informed Vivendi
Universal of his intention to lead a consortium to purchase American assets of
Vivendi Universal. Mr. Bronfman is currently Chairman of the World Jewish
Congress, the World Jewish Restitution Organization and World Jewish Campus Life
(Hillel). The Universities of Rochester and New York, the Hebrew University of
Jerusalem, the A. B. Freeman School of Business at Tulane University, Williams
College and Pace University have all awarded him various honorary degrees in the
arts, business and philosophy. He received the Presidential Medal of Freedom,
the highest American civil award, from President Clinton, and he is also a
Chevalier de la Legion d'Honneur. Mr. Bronfman serves as Chairman of the
Presidential Advisory Commission on Holocaust Assets in the United States, the
Samuel Bronfman Foundation, Inc. and the Anti-Defamation League. He is also a
director of the American Society for Technion and the Weizmann Institute of
Science. He is also a member of the Council on Foreign Relations, the Foreign
Policy Association and the Museum of Jewish Heritage. He is the former Chairman
of the Board of The Seagram Company Ltd.

     BERTRAND COLLOMB was appointed to the board of directors of Vivendi
Universal in January 2003. He has served as Chairman and Chief Executive Officer
of the Lafarge Group. He is also Chairman of the Association Francaise des
Entreprises Privees (AFEP) and, on December 10, 2001, was elected to the
Academie des Sciences Morales et Politiques. Mr. Collomb is also a director of
TotalFinalElf, Atco and Unilever plc. He is also a member of the supervisory
board of Allianz.

                                       110


     FERNANDO FALCO Y FERNANDEZ DE CORDOVA was appointed to the board of
directors of Vivendi Universal in September 2002. He served as Chairman of the
Organization and the Syndicate of Riesgos del Tietat, Chairman of the Group Vins
Rene Barbier -- Conde de Caralt et Segura Viudas and Vice-Chairman of the Banco
de Extremadura, as well as a member of the boards of directors of various
companies. He served as Chairman of the Real Automovil Club de Espana until
November 14, 2002. He was also a member of the Higher Council for Traffic and
Road Safety (Ministry of the Interior) and participates in the Group for Urban
Mobility (Madrid). Until 2002, he served as Vice-Chairman of the World Council
for Tourism and Motoring of the FIA, whose head office is in Paris. In June
1998, he was appointed Chairman of the AIT based in Geneva, a function he
carried out until 2001. He is a member of the Regional Council of the ASEPEYO of
Madrid. He currently serves as director of Fomento de Construcciones y Contratas
(FCC) and Vinexco Espagne. He is also Chairman of the Committee of the
Organizador del Salon International des Automovil de Madrid.

     PAUL FRIBOURG was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman and Chief Executive Officer of
the ContiGroup Companies (formerly Continental Grain Company). He is also
Chairman of the Lauder Institute at Wharton Business School. He is a member of
the Council on Foreign Relations, and a director of the Appeal of Conscience
Foundation. He is also a director of Park East Synagogue, The Browning School,
New York University, Nightingale-Bamford School, America-China Society, Loews
Corporation, Appeal of Conscience Foundation, The Lauder Institute/Wharton
Business School and Wyndham International.

     GABRIEL HAWAWINI was appointed to the board of directors of Vivendi
Universal in May 2003. He is The Henry Grunfeld Professor of Investment Banking
of INSEAD in Fontainebleau, France, where he also currently serves as Dean. His
previous appointments include the deanship of the school's development campaign
(1998 - 2000), the deanship of the Doctoral Program (1998 - 1999), the
directorship of the Euro-Asia Centre (1988 - 1994), the Yamaichi Professorship
in Finance (1989 - 1994), and the coordination of the Finance Area (1985 - 1987
and 1996 - 1999). Trained in France as a chemical engineer (University of
Toulouse), he received his doctorate in economics and finance from New York
University in 1977. Before joining INSEAD, he taught at New York University, the
City University of New York and Columbia University (1974-1982).

     GERARD KLEISTERLEE was appointed to the board of directors of Vivendi
Universal in July 2002. Since April 30, 2001, he has been Chairman and Chief
Executive Officer of the Royal Philips Electronics Group and Chairman of the
Executive Committee. In 1981, he was appointed General Manager of the Group's
Professional Audio Systems division (today a division of Consumer Electronics).
In 1996, he became Chairman of Philips Taiwan and Regional Manager of Philips
Components for the Asia Pacific region. From September 1997 to June 1998, he was
also in charge of the group's activities in China. Finally, from January 1999 to
September 2000, he was Chairman and Chief Executive Officer of Philips
Components. Mr. Kleisterlee is also Chairman of the supervisory board of The
Technical University in Eindhoven.

     MARIE-JOSEE KRAVIS was appointed to the board of directors of Vivendi
Universal in April 2001. Ms. Kravis has also served as director of USAi since
March 2001. Ms. Kravis is an economist specializing in the analysis of
government policies and strategic plans; and is a lead writer on economic
analyses for the "National Post," a Canadian newspaper. In 1994, she was made a
Senior Fellow of the Hudson Institute. Ms. Kravis is a director of Hollinger
International Inc. and The Ford Motor Company, as well as a member of the board
of trustees of The Hudson Institute, The Museum of Modern Art and The Institute
for Advanced Study. She is also Senior Fellow of the Council on Foreign
Relations and a member of the US Secretary of Energy's Advisory Board.

     HENRI LACHMANN was appointed to the board of directors of Vivendi Universal
in 2000. He currently serves as Chairman and Chief Executive Officer of
Schneider Electric Group SAS. He is also a member of supervisory boards or a
director of various AXA Group subsidiaries. Mr. Lachmann is a director of FINAXA
and ANSA, a member of the supervisory board of Norbert Dentressangle Group, and
a member of the Guidance Committee of L'Institut de l'Entreprise.

                                       111


SENIOR EXECUTIVES

 General

     The table below shows the names of our senior executives and members of the
executive committee, their current positions and principal responsibilities:



NAME                                 AGE         POSITIONS AND RESPONSIBILITIES
- ----                                 ---         ------------------------------
                                     
Jean-Rene Fourtou..................  64    Chairman and Chief Executive Officer
Jean-Bernard Levy..................  48    Chief Operating Officer
Jacques Espinasse..................  60    Senior Executive Vice President and Chief
                                           Financial Officer
Robert de Metz.....................  51    Senior Executive Vice President,
                                           Divestitures, Mergers and Acquisitions
Andrew J. Kaslow...................  53    Senior Executive Vice President, Human
                                           Resources
Jean-Francois Dubos................  58    Executive Vice President and General
                                           Counsel
Michel Bourgeois...................  53    Executive Vice President, Corporate
                                           Communications
Rene Penisson......................  61    Advisor, Social Relations and Organization
Hubert Joly........................  43    Executive Vice President, Monitoring of US
                                           Assets, and Deputy Chief Financial Officer
Regis Turrini......................  44    Executive Vice President Divestitures,
                                           Mergers and Acquisitions


 Biographies

     Biographies of all Senior Executives are set forth below. The biography for
Jean-Rene Fourtou is provided under "--The Board of Directors--Biographies."

     JEAN-BERNARD LEVY was appointed Chief Operating Officer of Vivendi
Universal in August 2002. From 1998 to 2002, he was Managing Partner, Corporate
Finance, of the French equities broker Oddo Pinatton. Mr. Levy was also Chairman
and Chief Executive Officer of Matra Communication from 1995 to 1998. From 1993
to 1994, he was Chief of Staff to the French Minister for Industry, Post Office,
Telecommunications and Foreign Trade, Mr. Gerard Longuet. From 1988 to 1993, he
was General Manager, Communication Satellites, of Matra Marconi Space. From 1986
to 1988, he acted as Technical Adviser to the French Minister for Post Office
and Telecommunications, Mr. Gerard Longuet, and from 1982 to 1986, served as
Vice President, Human Resources Corporate Headquarters Department of France
Telecom.

     JACQUES ESPINASSE was appointed Senior Executive Vice President and Chief
Financial Officer of Vivendi Universal in July 2002. He is also a member of the
Executive Committee of Vivendi Universal. Mr. Espinasse formerly was Chief
Operating Officer of TPS, a French satellite television channel, since 1999. He
became a member of the board of directors of TPS in 2001. Previously, he held a
variety of senior management positions in major French companies, including CEP
Communication and Groupe Larousse Nathan, where he was appointed Senior
Executive Vice President in 1984. In 1985, he became Chief Financial Officer of
the Havas group. He was named Senior Executive Vice President of the group when
it was privatized in May 1987 and held such position until January 1994.

     ROBERT DE METZ was appointed Senior Executive Vice President, Divestitures,
Mergers and Acquisitions of Vivendi Universal in September 2002. He previously
worked as a fund manager. He was a member of the executive board of directors of
Paribas from 1997 to 2000, where his main responsibilities included the
execution of many mergers and acquisitions.

     ANDREW J. KASLOW was appointed Senior Executive Vice President of Human
Resources for Vivendi Universal in January 2002. Mr. Kaslow was most recently
Senior Vice President, People Development, of AOL Time Warner. Previously,
Andrew Kaslow was Senior Vice President, Human Resources, of Time

                                       112


Warner, appointed to that position in January 1999. Prior to joining Time
Warner, he was Senior Vice President of Human Resources at Becton Dickinson and
Company, a global medical devices and diagnostics company. From 1993 to 1996,
Mr. Kaslow was Vice President of Human Resources at Pepsico Inc. Mr. Kaslow
serves on the board of directors of New Jersey Public Broadcasting (NJN), Newark
Public Radio (WBGO-FM), Ramapo College and the Labor Policy Association (LPA).

     JEAN-FRANCOIS DUBOS is Executive Vice President and General Counsel of
Vivendi Universal. In this capacity, Mr. Dubos is responsible for managing the
group's legal and administrative services departments. He is also a member of
the French Administrative Supreme Court (Maitre des Requetes au Conseil d'Etat),
currently on temporary leave. Mr. Dubos joined Compagnie Generale des Eaux, the
predecessor of Vivendi Universal, as deputy to the Chief Executive Officer in
1991, and since 1994, has held the position of General Counsel. From 1993 to
1999, he was the Chief Executive Officer of the group's subsidiary Carrousel du
Louvre. From 1984 to 1991, while a full-time member of the French Administrative
Supreme Court (Conseil d'Etat), he worked on a wide range of matters, including
education, interior affairs, urban planning, historical preservation and
codification of laws. From 1981 to 1984, he was co-head of the cabinet of the
French Ministry of Defense. Mr. Dubos currently serves on the board of directors
of two of our subsidiaries, Fomento de Construcciones y Contratas and Portland
Valderrivas, and several water distribution companies (e.g., Societe des Eaux de
Melun and Mediterranea de Aguas), as well as on the supervisory board of Groupe
Canal+ S.A.

     MICHEL BOURGEOIS was appointed Executive Vice President Corporate
Communications of Vivendi Universal in September 2002. In this position, he is
responsible for corporate communications, internal communications, media, public
relations and public affairs. From 2000 to 2002, Michel Bourgeois was Executive
Vice President Corporate Communications, France, of the pharmaceuticals company
Aventis. Mr. Bourgeois previously held successive positions at Rhone Poulenc
from 1987 to 2000, in Media Relations, Corporate Communications and was Adviser
to the Chairman, Jean-Rene Fourtou, from 1995 to 2000.

     RENE PENISSON was appointed Adviser to the Chairman and Chief Executive
Officer, Social Relations and Organization of Vivendi Universal in September
2002. From 1999 to 2002 he was a member of the Executive Committee of Aventis;
Senior Executive Vice President, Human Resources of Aventis and Chairman of
Aventis Animal Nutrition and of RP Industrialization. From 1997 to 1999, he
served as member of the Executive Committee of Rhone Poulenc S.A. From 1982 to
1997, Mr. Penisson was Executive Vice President, Basic Chemicals Division of
Rhone Poulenc; Chief Operating Officer of Rhone Poulenc Chimie and Senior
Executive Vice President, Human Resources of the Rhone Poulenc Group.

     HUBERT JOLY was appointed Executive Vice President, Monitoring of US Assets
in August 2002 and Deputy Chief Financial Officer in April 2003. Prior to this,
Mr. Joly was Executive Vice President and Group Chief Information Officer of
Vivendi Universal from November 2001 to November 2002. From December 2000 to
October 2001, Mr. Joly was responsible for the integration of Vivendi
Universal's North American activities. Between July 1999 and June 2001, Mr. Joly
was Chief Executive Officer of Havas Interactive, known today as Vivendi
Universal Games, Vivendi Universal's interactive entertainment and educational
software publishing division. Prior to joining Havas Interactive, Hubert Joly
served as Vice President of Electronic Data Systems (EDS) Europe and Chairman
and Chief Executive Officer of EDS France. Previously, he spent 12 years at
McKinsey & Company, Inc. in San Francisco, New York and Paris, specializing in
high technology.

     REGIS TURRINI was appointed Executive Vice President of Vivendi Universal,
in charge of divestitures, mergers and acquisitions in January 2003. He reports
to Robert de Metz, Senior Executive Vice President of Vivendi Universal. Mr.
Turrini is an attorney admitted to the Paris bar, and a graduate of the Paris
Institute of Political Sciences and ENA. He began his career as a judge to the
court dealing with disputes in the French civil service. He then joined law
firms Cleary Gottlieb Steen & Hamilton (1989 - 1992), followed by Jeantet &
Associes (1992 - 1995), as a corporate lawyer. In 1995, Mr. Turrini joined the
investment bank ARJIL & Associes (Lagardere group) as executive director. He was
then appointed managing director and, from 2000, managing partner.

                                       113


BOARD PRACTICES

     Under our statuts, as modified in accordance with the provisions of the
French New Economic Regulations Act and approved at the Shareholders' Meeting
held on April 24, 2002, Vivendi Universal is managed by a board of directors
composed of no less than three members and no more than eighteen members. The
Board currently consists of 12 members. Under our statuts, shareholders elect
board members for four year renewable terms.

BOARD'S JURISDICTION

     The Board reviews, among other things:

     - Strategic agreements and directions;

     - New business acquisitions, asset divestitures and internally developed
       activities which could significantly affect its earnings or materially
       modify its balance sheet structure;

     - The annual, half-yearly and quarterly financial statements and the Audit
       Committee's report;

     - Material agreements entered into and, at the Audit Committee's
       suggestion, the accounting methods used;

     - Terms for implementing the compliance program and the environmental and
       social report; and

     - The annual report of important litigation.

     Based on the recommendation of the Human Resources Committee, the Board
determines the compensation of senior executives.

     The Chairman represents the Board. He organizes and directs its operations
and ensures its smooth functioning.

     The general management of Vivendi Universal is the responsibility of the
Chief Executive Officer, who is currently also the Chairman of the Board. The
Chief Executive Officer is vested with the broadest powers to act in all
circumstances on behalf of Vivendi Universal. He exercises these powers subject
to the limitations imposed by law.

CORPORATE GOVERNANCE

     Vivendi Universal is seeking to apply the highest international standards
of corporate governance and, through the Disclosure Committee, is organizing the
implementation of the new rules and procedures imposed by the Sarbanes-Oxley
Act. Vivendi Universal's board of directors has therefore taken the following
new actions:

     - Increased the number of committees, drawn from the board of directors, to
       four: the Audit Committee, the Human Resources Committee, the Strategy
       and Finance Committee and the Corporate Governance Committee. Their
       respective compositions and missions have been enlarged (see below);

     - Created special Disclosure Committee to ensure accuracy of publicly
       disclosed information;

     - Adopted an Internal Charter governing the operation of the board of
       directors;

     - Empowered the board of directors to appoint two independent advisors for
       their expertise;

     - Established a Vigilance Program reviewed by the Audit Committee and
       remitted to the Group's workers' committee and to the European Social
       Dialogue Committee;

     - Created Internet retransmission of general meetings;

     - Created voting at general meetings via the Internet and holding meetings
       by video-conference; and

     - Provided for representation of the workers' committee at general
       meetings.

                                       114


     In addition, it had previously taken the following actions:

     - Suppression of double voting rights in order to assure equality of
       shareholder rights;

     - Suppression of the policy of issuing stock in the event of a takeover
       bid;

     - Shortening the length of time securities need to be blocked for the
       exercise of voting rights;

     - Suppression of the proportioning of voting rights at the general
       shareholders meeting upon voting participation reaching 60%;

     - Shortening directors' terms to four years; and

     - Appointment of an employee director when employee participation in the
       share capital reaches 3%.

BOARD COMMITTEES

 CREATION AND FUNCTIONING OF COMMITTEES--COMMON ATTRIBUTES

     The permanent committees of the board are as follows: (i) Strategy and
Finance Committee, (ii) Audit Committee, (iii) Human Resources Committee and
(iv) Corporate Governance Committee.

     Each committee shall fulfill a role of review, analysis and preparation
with respect to certain deliberations of the board. Each committee shall
produce, within its area of expertise, proposals, recommendations and opinions,
where appropriate. The committees have no decision-making authority; they serve
a purely consultative function, acting under the authority of the board, to
which they are accountable.

     Committee members shall be appointed by the board and cannot appoint
proxies. Unless otherwise decided by the board, the committee members' terms
shall be the same as their respective director's terms, and shall be renewable.
The board shall appoint a chairman for each committee, who shall preside over
the committee for the duration of his or her mandate as a committee member. The
committee chairman or one of its members shall report upon the committee's work
to the board at its next scheduled meeting.

     Each committee shall meet upon being convened by its chairman and shall set
its own meeting schedule. Committee meetings shall be held at Vivendi
Universal's headquarters or in any other location designated by the chairman.
Committee meetings may also be held by telephone conference or videoconference.
The chairman of each committee shall draw up the agenda of the meetings and
shall preside over the committee's deliberations. Minutes of each meeting shall
be drawn up by the Secretary of the board, who shall attend the meetings of each
of the board committees.

     Each committee shall be able to invite to its meetings, as it deems
necessary or appropriate, any member of Vivendi Universal's management. Each
committee will set forth its own charter, which has to be approved by the board,
pursuant to the provisions of the board's internal charter.

     In addition to the permanent committees, the board may decide to form ad
hoc committees, for a limited term, with regard to certain exceptional
transactions or assignments.

 AUDIT COMMITTEE

 Composition

     The Audit Committee shall be comprised of at least 3 directors, all of whom
must be independent and must have finance or accounting skills. At least one
member shall be a financial expert (as defined in the Sarbanes-Oxley Act), with
a thorough understanding of accounting standards, as well as practical
experience in the preparation of financial statements and the application of
prevailing accounting regulations. The current members are Henri Lachmann
(Chairman), Gerard Bremond, Fernando Falco and Gabriel Hawawini.

                                       115


 Functions

     The mission of the Audit Committee is to prepare the board's decisions, and
to render its recommendations or issue its opinions with regard to the
accounting procedures governing the Group's functioning, particularly in the
following areas:

     - review of Vivendi Universal's accounts and consolidated annual,
       semi-annual and, possibly, quarterly accounts before they are presented
       to the board;

     - coherence and effectiveness of Vivendi Universal's internal control
       measures;

     - follow-up of the mandates accorded to the external and internal auditors
       and review of the conclusions of their audits;

     - accounting methods and principles; activities to be included within
       Vivendi Universal's consolidated accounts;

     - Vivendi Universal's off-balance sheet risks and commitments;

     - mode of selection of the statutory auditors, issuance of an opinion on
       the amount of the fees solicited for the carrying out of the legally
       mandated audit, and verification of compliance with the regulations
       ensuring their independence;

     - issuance of an opinion with respect to the annual report of the
       Compliance Program and proposal of any measures that may render it more
       effective; and

     - any matter that it considers may constitute a risk for Vivendi Universal
       or a serious procedural problem.

 Mode of Functioning

     The Audit Committee shall meet at least 4 times a year and at any other
time that Vivendi Universal requires. The members of the committee shall
receive, upon their appointment, current and detailed information with regard to
the accounts, finances and operations of Vivendi Universal and its group. For
the purpose of carrying out its tasks, the committee may, with no executive
directors present, meet with the statutory auditors and the members of Vivendi
Universal's management responsible for preparing financial statements and
conducting internal audits, including the Chief Financial Officer, the Chief
Accounting Officer and the Treasurer.

     With respect to internal audit and risk management, the committee shall
review the most significant off-balance sheet commitments, meet with the
Director of Internal Audit, render its opinion on the organization of, and work
performed by, the internal audit department. The committee shall receive the
reports of the internal audit department or a periodic summary of these reports.

     For the purpose of carrying out its task of selecting Vivendi Universal's
statutory auditors, the committee shall have at its disposal information
regarding (i) the amount of the fees paid by Vivendi Universal, and, if need be,
its subsidiaries, to Vivendi Universal's auditors and (ii) the global networks
to which the statutory auditors belong; with a view to ensuring that the amount
of such fees, the conditions of payment, or the percentage of such fees in these
firms' overall revenues do not compromise the independence of the statutory
auditors. More generally, the committee shall be responsible for ensuring
compliance with the rules guaranteeing the independence of the statutory
auditors.

     The committee shall review Vivendi Universal's financial statements no less
than two days before the presentation of the statements to the board. The
committee shall receive a memorandum from the statutory auditors summarizing the
results and the accounting options adopted, and a memorandum from the Chief
Financial Officer describing the exposure to off-balance sheet risks and
commitments. The statutory auditors shall be present at the meetings of the
Audit Committee at which Vivendi Universal's accounts are reviewed. The Audit
Committee may have recourse to external experts, when it deems necessary, at
Vivendi Universal's expense.

                                       116


 STRATEGY AND FINANCE COMMITTEE

 Composition

     The Strategy and Finance Committee shall be comprised of at least 4
directors, none of whom shall be an insider director. The current members are
Claude Bebear (Chairman), Gerard Kleisterlee, Paul Fribourg and Gerard Bremond.
Edgar Bronfman, Jr. was also a member until Mr. Bronfman and Vivendi Universal
mutually agreed that his participation in the Board of Directors and any
committee thereof would be suspended following May 20, 2003, when he informed
Vivendi Universal of his intention to lead a consortium to purchase American
assets of Vivendi Universal.

 Functions

     Its mission is to prepare the board's decisions, and to render its
recommendations or issue its opinions with regard to the procedures governing
the Group's functioning, particularly in the following areas:

     - Vivendi Universal's strategic direction;

     - acquisitions and sales of participations and assets of a sizeable nature;

     - strategic joint ventures and/or industry and financial cooperation
       agreements;

     - sizeable internal restructuring operations;

     - transactions falling outside Vivendi Universal's announced strategy;

     - financial transactions likely to affect the structure of the balance
       sheet;

     - sizeable financial transactions; and

     - the liquidity and debt situation of Vivendi Universal.

 Mode of Functioning

     The Strategy and Finance Committee shall meet at least 4 times a year and
at any other time that Vivendi Universal requires. For the purpose of carrying
out its tasks, the committee may, with no executive directors present, meet with
the members of Vivendi Universal's management responsible for preparing
financial statements and conducting internal audits, including the Chief
Financial Officer, the Chief Accounting Officer and the Treasurer. The Strategy
and Finance Committee may have recourse to external experts, when it deems
necessary, at Vivendi Universal's expense.

 HUMAN RESOURCES COMMITTEE

 Composition

     The Human Resources Committee shall be comprised of at least 3 directors, a
majority of whom must be independent and none of whom shall be an insider
director. The current members are Marie-Josee Kravis (Chairperson), Bertrand
Collomb and Paul Fribourg.

 Functions

     The mission of the Human Resources Committee shall be to prepare the
board's decisions and issue its recommendations with regard to the following
matters:

     - compensation of the Chief Executive Officer and executive management and,
       in particular, determination of the variable component of their
       compensation; analysis of the alignment of the method of determining the
       variable component of their compensation with (i) the evaluation carried
       out annually, as the case may be, of their performance, and (ii) the
       implementation of Vivendi Universal's medium-term strategy. The committee
       may choose to commission a comparative study or analysis by an
       independent consultant of the contributing factors on which the
       compensation of the executive directors is based.
                                       117


     - policy of allocation of options to subscribe for or purchase shares
       ("stock options") to the executive directors, principal executives and
       management teams of Vivendi Universal and its Group;

     - proposal for the allocation and modes of payment of directors' fees paid
       to the members of the board and its committees;

     - the Group's overall policy of remuneration of its principal executives;

     - review and issuance of an opinion with regard to liability coverage and
       complementary retirement packages for Vivendi Universal's officers and
       directors; and

     - review and issuance of an opinion with regard to the recruitment of
       management personnel.

 Mode of Functioning

     The Human Resources Committee shall meet at least 3 times a year and at any
other time that Vivendi Universal requires. The Human Resources Committee may
have recourse to external experts, when it deems necessary, at Vivendi
Universal's expense.

 CORPORATE GOVERNANCE COMMITTEE

 Composition

     The Corporate Governance Committee shall be comprised of at least 3
directors, with no insider directors. The current members are Claude Bebear
(Co-Chairman), Marie-Josee Kravis and Bertrand Collomb. Edgar Bronfman, Jr.
served as Co-Chairman with Claude Bebear until Mr. Bronfman and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal.

 Functions

     The mission of the Corporate Governance Committee shall be to prepare the
board's resolutions and give its recommendations to the board with regard to the
following matters:

     - review of candidates for directorship and composition and functions of
       the board committees;

     - determination and review of the criteria of independence with respect to
       directors;

     - succession plan with regard to the Chairman;

     - evaluation of the organization and functioning of the board;

     - preparation of the annual meeting concerning the evaluation of Vivendi
       Universal's Chief Executive Officer;

     - review of national and international practices in the field of corporate
       governance, and their conditions of application; and

     - review of and recommendations regarding Vivendi Universal's corporate
       governance measures.

 Mode of Functioning

     The Corporate Governance Committee shall meet at least three times a year.
The Corporate Governance Committee may have recourse to external experts, when
it deems necessary, at Vivendi Universal's expense.

 COMPENSATION

     The board establishes compensation for officers, upon recommendation of the
Human Resources Committee, and for directors, upon recommendation of the
Corporate Governance Committee. Such compensation may be comprised of both a
fixed and a variable component.

                                       118


  COMPENSATION OF DIRECTORS

     For a full year, each director receives director's fees of E 50,000.

     This amount is increased by E 11,000 for the function of member of the
Human Resources Committee and E 22,000 for the function of member of the Audit
Committee. This amount is doubled for the chairmen of these two committees.

     Director's fees paid in 2002 were as follows:



                                                              (IN EUROS)
                                                              ----------
                                                           
CURRENT MEMBERS OF THE BOARD OF DIRECTORS
Mr. Jean-Rene Fourtou(1)....................................          0
Mr. Claude Bebear...........................................     23,500
Mr. Edgar Bronfman, Jr. ....................................     60,404
Mr. Edgar M. Bronfman.......................................     65,807
Mr. Gerard Kleisterlee......................................     18,000
Mrs. Marie-Josee Kravis.....................................     76,807
Mr. Henri Lachmann..........................................     82,307
FORMER DIRECTORS WHO HELD A MANDATE IN 2002 AND EARLY 2003
Mr. Bernard Arnault.........................................     45,108
Mr. Jean-Louis Beffa........................................     36,904
Mr. Richard Brown...........................................     52,464
Mr. Jean-Marc Espalioux.....................................     54,904
Mr. Dominique Hoenn.........................................     18,000
Mr. Philippe Foriel-Destezet................................     36,724
Mr. Jacques Friedmann.......................................     54,904
Mrs. Esther Koplowitz.......................................     42,298
Mr. Pierre Lescure..........................................     36,904
Mr. Eric Licoys.............................................     50,737
Mr. Jean-Marie Messier......................................     36,904
Mr. Samuel Minzberg.........................................     57,938
Mr. Simon Murray............................................     36,904
Mr. Serge Tchuruk...........................................     60,358
Mr. Rene Thomas.............................................     36,904
Mr. Marc Vienot.............................................     90,964
                                                              ---------
TOTAL.......................................................  1,075,744
                                                              =========


- ---------------

(1) Mr. Fourtou waived the payment of his director's fees for year 2002.

     Upon recommendation of the Human Resources Committee, the board of
directors decided on September 25, 2002 to modify the distribution of director's
fees, decreed at its meeting on December 11, 2000. As of the fourth quarter
2002, payment of director's fees to members of the board of directors and the
committees shall be made depending on their actual presence at meetings and on
the specific work carried out.

  Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr.

     In connection with Edgar M. Bronfman's retirement from executive positions
with Vivendi Universal and its affiliates effective December 31, 2001, Vivendi
Universal agreed to provide Mr. Bronfman with office space, the services of an
assistant and a driver, and the use of a Vivendi Universal leased vehicle in New
York City until December 2011.

                                       119


     Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
(Vivendi Universal U.S.), dated September 25, 2002 (the Agreement), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal U.S. in connection with the U.S.
entertainment businesses of Vivendi Universal and its U.S. affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal U.S. without "Cause" (other than by reason of death or "disability")
or by Mr. Bronfman for "Good Reason" (as these terms are defined under the
Agreement), Mr. Bronfman will also be entitled to receive a lump-sum payment
equal to the total amount of salary that Mr. Bronfman would have received had
his employment under the Agreement continued through December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal U.S. will reimburse Mr. Bronfman for all legal fees and related
expenses incurred in connection with, or arising out of, any dispute in respect
of severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal U.S. will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal U.S. and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal and Edgar Bronfman, Jr. mutually agreed to
suspend certain provisions of the Agreement.

  COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER

     On the recommendation of the Human Resources Committee, the remuneration of
the Chairman and Chief Executive Officer for 2002 is composed of the following
elements: annual fixed salary: E 1 million; bonus target 150% (maximum: 250%);
options: 1,000,000 stock options without discount. Retirement: 2.5% of the
target compensation per year of service as Chairman and Chief Executive Officer,
cash exit possible. In 2002, Mr. Jean-Rene Fourtou, Chairman and Chief Executive
Officer since July 3, 2002, received from Vivendi Universal a gross remuneration
of E 497,368, including fringe benefits. Mr. Jean-Rene Fourtou holds 193,959
Vivendi Universal shares. He waived his director's fees as a director of Vivendi
Universal and received director's fees of E 9,767 as a director and member of
the supervisory board for the subsidiaries of Vivendi Universal, controlled
within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF EXECUTIVE OFFICERS

     In 2002, Mr. Jean-Marie Messier, Chairman and Chief Executive Officer until
July 1, 2002, received a gross remuneration of E 5,635,854, including fringe
benefits. He did not benefit from any attribution of stock options. He received
E 84,384 in director's fees as a director of Vivendi Universal and as a director
and
                                       120


member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.
At June 30, 2002, Mr. Jean-Marie Messier held 361,377 Vivendi Universal shares.

     On September 25, 2002, the board of directors ratified the decision taken
by the general management of Vivendi Universal, upon the advice of its lawyers,
to refuse a severance package to Mr. Messier and to put an end to the fringe
benefits he was enjoying. The board of directors left it to its Chairman to
decide on the possibility of starting a proceeding and the choice of arbitration
proceedings. Following an arbitration convention on October 31, 2002, the
dispute was submitted to an Arbitration Tribunal constituted on January 17,
2003, under the aegis of the American Arbitration Association in New York and
composed of three arbitrators.

     On June 27, 2003, the arbitration tribunal issued its award. It denied
Vivendi Universal's claim that Mr. Messier's so-called U.S. Termination
Agreement be voided. The arbitration tribunal ordered Vivendi Universal to pay
Mr. Messier the aggregate amount of E20.5 million provided for in this
agreement, less the portion of Mr. Messier's compensation that had been paid to
him during the third quarter of 2002, which Vivendi Universal asked to be
reimbursed. The arbitration tribunal also denied Vivendi Universal's claim for
the repayment of the unpaid rent and charges of the New York apartment.

     Mr. Edgar Bronfman, Jr., Vice-Chairman, received in 2002, E 17,108,366 in
gross remuneration, fringe benefits and a severance package relating to his
duties as an executive officer of Vivendi Universal. His Consultancy Agreement
was terminated, at his request, on September 25, 2002. Since this date, he has
been a part-time employee of Vivendi Universal U.S. Holding Co. pursuant to an
employment agreement. Mr. Bronfman and Vivendi Universal mutually agreed to
suspend certain provisions his employment agreement following May 20, 2003, when
he informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. For more information, see "--Additional
Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr."

     Mr. Eric Licoys, Co-Chief Operating Officer and a director until September
5, 2002, received from Vivendi Universal a gross remuneration of E 5,098,444,
including fringe benefits and a severance package. In addition, he received
E 103,784 in director's fees as a director of Vivendi Universal and as a
director and member of the supervisory board for the subsidiaries of Vivendi
Universal controlled within the meaning of article 233-16 of the French
commercial code.

     Mr. Pierre Lescure, Co-Chief Operating Officer and a director until April
24, 2002, received from Canal+ Group gross remuneration of E 4,124,915,
including fringe benefits and a severance package. In addition, he received
E 43,764 in director's fees as a director of Vivendi Universal and as a director
and member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF SENIOR EXECUTIVES

     The ten most highly compensated of Vivendi Universal's senior executives
earned an aggregate of E 55.24 million in 2002. Nine of these top ten executives
were US senior executives.

LOANS AND GUARANTEES GRANTED TO DIRECTORS OR MEMBERS OF THE GENERAL MANAGEMENT

     Vivendi Universal has not granted or agreed to any loan or guarantee for
the benefit of members of board of directors nor members of the general
management.

                                       121


EMPLOYEES

     The number of Vivendi Universal employees on December 31, 2002, was
approximately 61,815. The table below shows a breakdown of employees by business
segments as of the end of the period specified:



                                            NUMBER OF           NUMBER OF           NUMBER OF
                                        EMPLOYEES IN 2002   EMPLOYEES IN 2001   EMPLOYEES IN 1999
                                        -----------------   -----------------   -----------------
                                                                       
Telecoms..............................       24,375               30,023              10,261
Music.................................       11,754               12,017              12,102
TV & Film.............................       22,146               20,344              27,624
Publishing (2000 & 2001)..............        2,074               22,010                  --
Games (2002)..........................           --                   --              21,434
Internet..............................          995                1,138                 958
Head Office...........................          471                  687               1,012
Other*................................          N/A              295,285             253,989
                                             ------              -------             -------
TOTAL.................................       61,815              381,504             327,380
                                             ======              =======             =======


- ---------------

* Veolia Environnement

     Our employees' membership in trade unions varies from country to country,
and we are party to numerous collective bargaining agreements. As is generally
required by law, we renegotiate our labor agreements in Europe annually in each
country in which we operate.

     Although we have experienced strikes and work stoppages in the past, we
believe that relations with our employees are generally good. We are not aware
of any material labor arrangement that has expired or is soon to expire and that
is not expected to be satisfactorily renewed or replaced in a timely manner.

THE GOVERNANCE AGREEMENT

     We are a party to a governance agreement with certain former Seagram
shareholders that are members or affiliates of the Bronfman family (the
"Bronfman Shareholders") entered into December 2000. In addition to the
provisions described below, the governance agreement restricts the transfer of
Vivendi Universal shares held by the Bronfman Shareholders and contains other
provisions relating to the ownership, holding, transfer and registration of our
shares.

     In the governance agreement Vivendi Universal agreed, among other things,
not to dispose of Seagram shares in a taxable transaction and not to dispose of
substantially all of the assets acquired by Vivendi Universal from Seagram in a
transaction that would trigger the Gain Recognition Agreement (GRA) entered into
by the Bronfmans and result in recognition of taxable gain to them. under the
applicable US income tax regulations, to comply with the foregoing, Vivendi
Universal must retain at least 30% of the gross assets or at least 10% of the
net assets (values are determined as of December 8, 2000) until the end of the
five-year period ending on December 31, 2005. Vivendi Universal is in compliance
with this provision and does not intend to violate it and trigger the GRA.

     Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
consortium to purchase American assets of Vivendi Universal. As a result, on May
20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman mutually
agreed to suspend the participation of Edgar M. Bronfman and Edgar Bronfman, Jr.
in the Board of Directors and any committee thereof. Also, as of May 20, 2003,
Vivendi Universal has suspended certain provisions of the Governance Agreement,
thereby allowing the Bronfman Shareholders to make a bid to purchase American
assets of Vivendi Universal.

  DESIGNEES TO OUR BOARD OF DIRECTORS

     Under the governance agreement, Vivendi Universal has elected to, and is
required to use best efforts to, cause the continuation for a four-year term on
its board of directors of five former members of Seagram's

                                       122


board of directors or their replacements. Two of the designees are parties to
the governance agreement (Edgar M. Bronfman and Edgar Bronfman, Jr.), one
designee is unaffiliated with the Bronfman family (non-Bronfman designees), and
the two remaining seats are vacant.

     Following the expiration of the initial four-year period, and for so long
as the Bronfman Shareholders continue beneficially to own the applicable
percentage of the number of Vivendi Universal voting securities (as described
below) owned by them immediately following the effective time of the
arrangement, we will use our best efforts to cause the election of the number of
individuals designated by the Bronfman Shareholders indicated below:



                                                              NUMBER OF
                                                              BRONFMAN
PERCENTAGE OF INITIAL INVESTMENT                              DESIGNEES
- --------------------------------                              ---------
                                                           
more than 75%...............................................      3
more than 50% but less than or equal to 75%.................      2
more than 25% but less than or equal to 50%.................      1


     After the initial four-year term, the re-appointment of the non-Bronfman
designees will be at our discretion.

     "Vivendi Universal voting securities" are securities that generally entitle
the holder to vote for members of Vivendi Universal's board of directors, or
securities issued in substitution for such securities, including Vivendi
Universal ordinary shares, Vivendi Universal ADSs and Exchangeable Shares.

  DESIGNEES TO THE COMMITTEES OF OUR BOARD OF DIRECTORS

     For so long as either (i) the Bronfman Shareholders have the right to
designate at least two members of Vivendi Universal's board of directors or (ii)
the Bronfman Shareholders are collectively the largest holders of Vivendi
Universal voting securities other than Vivendi Universal and its affiliates, we
must:

     - appoint and maintain a designee of the Bronfman Shareholders as the
       chairman of the Human Resources Committee of our board of directors;

     - cause the chairman of the Human Resources Committee to be appointed and
       maintained as a member of the nominating committee of our board of
       directors;

     - cause the Human Resources Committee to be responsible for proposing the
       nomination of all directors, other than the Bronfman designees;

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of the Audit Committee of our board of directors;
       and

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of any subsequently formed executive or similar
       committee, if the failure of the Bronfman Shareholders to participate
       would be inconsistent with the purposes of the board and committee
       participation rights described above.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof.

SHARE OWNERSHIP

     The following table shows the number of Vivendi Universal voting securities
beneficially owned, percentage of voting securities beneficially owned and
number of options beneficially owned by each of the

                                       123


members of the Vivendi Universal board of directors that beneficially owns more
than 1% of Vivendi Universal voting securities as of December 31, 2002:



                                                 NUMBER OF         PERCENTAGE OF      NUMBER OF
BENEFICIAL OWNER                             VOTING SECURITIES   VOTING SECURITIES*   OPTIONS(1)
- ----------------                             -----------------   ------------------   ----------
                                                                             
Edgar M. Bronfman..........................     26,376,563(2)          2.47%            452,960
Edgar Bronfman, Jr.........................     28,486,209(3)          2.67%          3,751,666


- ---------------

 *  Less than 1%

(1) References to quantity of options in this table are to the number of voting
    securities which are acquired upon exercise of the options held by the
    optionholder.

(2) Includes 24,541,219 ADSs owned indirectly by The Edgar Miles Bronfman Trust,
    a trust established for the benefit of Edgar M. Bronfman and his descendants
    (the "EMBT"), and 1,189,212 ADSs owned directly by the PBBT/Edgar Miles
    Bronfman Family Trust, a trust established for the benefit of Edgar M.
    Bronfman and his descendants ("PBBT/EMBFT"), trusts for which Mr. Bronfman
    serves as a trustee, 888 ADSs owned directly by Mr. Bronfman, 452,960 ADSs
    issuable upon the exercise of options which are currently exercisable, and
    192,284 ADSs owned by two charitable foundations of which Mr. Bronfman is
    among the trustees or directors. Mr. Bronfman disclaims beneficial ownership
    of the foregoing ADSs, except to the extent of his beneficial interest in
    the EMBT and the PBBT/EMBFT and with respect to ADSs owned directly by him.

(3) Includes 24,541,219 ADSs owned indirectly by the EMBT trust for which Mr.
    Bronfman serves as a trustee, 792 ADSs owned directly by Mr. Bronfman,
    3,751,666 ADSs issuable upon exercise of options which are currently
    exercisable, 192,000 ADSs owned by a charitable foundation of which Mr.
    Bronfman is among the trustees and 532 ADSs in which Mr. Bronfman has an
    indirect interest through an investment in the Retirement Savings and
    Investment Plan for Employees of Joseph E. Seagram & Sons, Inc. and
    Affiliates (based on the value of such investment as of December 4, 2000).
    Mr. Bronfman disclaims beneficial ownership of the foregoing ADSs, except to
    the extent of his beneficial interest in the EMBT and with respect to ADSs
    owned directly by him.

STOCK OPTION PLANS

     Since the Vivendi-Seagram-Canal+ merger in December 2000, Vivendi Universal
has granted stock options to senior executives, as well as within its
subsidiaries and affiliates, under three stock option plans and one stock
subscription option plan. With the exception of the Outperformance Plan (SO IV),
options granted to U.S.-based executives are options to purchase Vivendi
Universal American Depositary Shares (ADS). Senior Executives employed outside
of the United States are granted options to purchase Vivendi Universal shares.
Vivendi Universal uses several criteria for determining whether and to whom
stock options will be granted: his/her degree of responsibility; job
performance; recognition and reward to those executives who have accomplished
significant operations; and as a means of identifying and recognizing executives
of high potential.

     Since December 2000, Vivendi Universal has made significant option grants
to a select group of executives in the following manner:

     - 10,886,898 options to purchase ADSs or Vivendi Universal shares,
       representing 1% of Vivendi Universal's outstanding share capital, were
       granted to 3,681 beneficiaries in December 2000, exercisable at a strike
       price, without discount, of E 78.64 or $67.85.

     - 5,200,000 options, representing 0.48% of Vivendi Universal's outstanding
       share capital, were granted to a select group (approximately 100) senior
       executives in December 2000 under the Outperformance Plan. The vesting
       and exercisability of these stock options are linked to the
       outperformance of Vivendi Universal against a weighted index media
       company performance comprised of 60% Media MSCI and 40% Stoxx Media.

                                       124


     - 13,333,627 options to purchase ADSs, representing 1.23% of Vivendi
       Universal's share capital then outstanding, were granted to 2,816
       beneficiaries in October 2001, exercisable at a strike price, without
       discount, of E 48.20 or $44.25.

     - 3,619,300 options to purchase ADSs, representing 0.33% of Vivendi
       Universal's share capital then outstanding, were granted to 51
       beneficiaries in September 2002, exercisable at a strike price of E 12.10
       or $11.79.

     As a consequence of the 2002 dividend payment taken from the retained
earnings (in accordance with applicable rules), we adjusted the exercise prices
and number of Vivendi Universal shares or ADSs subject to each outstanding stock
option and the number of Vivendi Universal shares or ADSs reserved for issuance
under each of the existing stock option plans in order to preserve the value of
each option.

     The significant features of the stock option plans and the stock
subscription option plan under which we have made option grants are the
following:

     SO I (TRADITIONAL OPTIONS)

          Options granted under SO I have an eight-year term. These options
     normally vest over three years from the date of grant in equal one-third
     amounts, and become exercisable, with respect to the then vested portion of
     the grant after the second anniversary of the grant date. After the third
     anniversary of the grant date, the entire grant is vested and exercisable.
     Employees terminated by Vivendi Universal and its subsidiaries and
     affiliates retain any options granted under this plan that have vested
     before their termination date and the plan permits the acceleration of
     vesting in connection with an optionholder's termination of employment upon
     approval of Vivendi Universal's Chief Executive Officer and the board of
     directors. In the event of a bid or tender offer for all or substantially
     all of the shares of Vivendi Universal, options granted under SO I
     immediately vest and become exercisable and the underlying shares are
     freely transferable without any condition.

     SO II

          The options granted under SO II are exercisable from September 18,
     2000, to September 17, 2003, at an adjusted unit price of E 48.64, and from
     September 18, 2003 to September 17, 2004, at an adjusted unit price of
     E 52.05.

     SO III

          The options granted under SO III vest and become exercisable after a
     5-year period following the date of grant (May 11, 1999) and remain
     exercisable until the expiration of the 8-year validity period of the plan.
     The number of options that can be exercised will be determined based on the
     performance of Vivendi Universal's stock vis-a-vis a benchmark price index
     composed of a basket of indexes (10% Media, 35% Telecoms, 10% Utilities).

     SO IV (SO-CALLED OVER PERFORMANCE OPTIONS)

          The options granted under SO IV vest and become exercisable after a
     6-year period following the date of grant and remain exercisable until the
     expiration of the 8-year validity period of the plan; provided, however,
     that the vesting of such options will be accelerated based on the
     performance of Vivendi Universal's stock price vis-a-vis the movement of
     the combined index, 60% MSCI and 40% Stoxx Media as follows:

          - if, after a 3-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 9% or more;

          - if, after a 4-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 12% or more; or

                                       125


          - if, after a 5-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 15% or more.

          In addition, following each of the third, fourth and fifth
     anniversaries of the date of grant, the vesting of such options will be
     accelerated after each quarter if the performance of Vivendi Universal's
     stock price exceeds the index performance by the percentage required for
     the period examined, increased by 0.75% per quarter (x% + 0.75% per
     quarter).

          In the event of a public offering, the options granted under SO IV
     will become vested and immediately exercisable and the shares underlying
     such options will be immediately transferable.

ITEM 7:  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDER

     To our knowledge, no individual shareholder owns beneficially, or exercises
control or direction over, 5% or more of the outstanding Vivendi Universal
ordinary shares. There are 43,167,709 (excluding exercisable options) Vivendi
Universal ADSs and exchangeable shares held by the Bronfman shareholders and
subject to the governance agreement. The foregoing shares, collectively,
represent approximately 4% of the voting securities of Vivendi Universal. The
information for the Bronfman shareholders is based on their holdings as of
December 31, 2002. The governance agreement is described under "Item
6--Directors, Senior Management and Employees--The Governance Agreement".

RELATED PARTY TRANSACTIONS

  Claridge Inc.

     For the period January 1, 2001, through December 1, 2001, Claridge Inc.
(Claridge) reimbursed Seagram for the use of aircraft owned by such subsidiary
in the amount of $26,712. The payment represented Claridge's pro rata share of
the applicable operating expenses of the aircraft. For the same period, Seagram
paid or accrued rent and reimbursed expenses to Claridge in the amount of
Cdn$133,338 (and Cdn$2,090 for the current fiscal year) for the use by Seagram
of office and parking space and secretarial services. The Charles Rosner
Bronfman Family Trust, a trust established for the benefit of Charles R.
Bronfman and his descendants, owns all the shares of Claridge. Charles R.
Bronfman and Samuel Minzberg are among the directors and officers of Claridge.

  The Andrea & Charles Bronfman Philanthropies, Inc.

     For the period January 1, 2001, through December 31, 2001, The Andrea &
Charles Bronfman Philanthropies, Inc., a charitable organization, paid or
accrued rent and reimbursed Vivendi Universal in the amount of $67,368 (and
$87,635 during the current fiscal year) for use by such organization of office
space in Vivendi Universal's offices in New York. Andrea Bronfman and Charles R.
Bronfman are directors of The Andrea & Charles Bronfman Philanthropies, Inc.

  Frank Alcock

     As of December 21, 2001, we divested the spirits and wine business to which
Frank Alcock, Edgar Bronfman, Jr.'s father-in-law, previously had provided
consulting services.

  Purchase of Vivendi Universal Shares from the Bronfman Family

     Vivendi Universal purchased 15,400,000 American Depository Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADSs representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share on the Paris stock market on May 29, 2001, with a 0.9% discount.

                                       126


  Acquisition of The Four Seasons Restaurant

     Pursuant to a Stock Purchase Agreement dated as of October 28, 2002,
between FS Investments LLC ("FSI") and Vivendi Universal Holding I Corp.
("VUHI"), an indirect, wholly owned subsidiary of Vivendi Universal, VUHI has
sold its entire 51% equity interest in Classic Restaurants Corp. ("Classics"),
together with certain debt owed by Classics to VUHI, to FSI for approximately
$4.3 million in cash. Classics, together with other shareholders, owns The Four
Seasons Restaurant in New York City. Edgar Bronfman, Jr., together with his
father and other family members, control FSI. This transaction, which closed on
May 22, 2003, arose pursuant to agreements governing the terms of Mr. Bronfman's
resignation as Executive Vice Chairman of Vivendi Universal on March 31, 2002.
Under those agreements, Mr. Bronfman exercised an option to purchase VUHI's
equity interest in Classics for its fair market value as determined by an
independent, expert appraisal.

  Employment Arrangement with Edgar Bronfman, Jr.

     Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
dated September 25, 2002, Edgar Bronfman, Jr. currently serves as an executive
employee and an advisor to the Chief Executive Officer of Vivendi Universal U.S.
in connection with the U.S. entertainment businesses of Vivendi Universal and
its U.S. affiliates. For a description of the employment agreement, see "Item
6--Directors, Senior Management and Employees--Compensation--Compensation of
Directors--Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman,
Jr."

  Related Companies

     On August 1, 2001, Vivendi Universal and Cegetel Group opened a cash
account in the name of both parties into which Cegetel Group deposited certain
excess cash (the amount of which changed over time). Vivendi Universal paid
interest on the funds in the account. That agreement, as extended by an
amendment dated January 2, 2002, provided that the account would remain open
until July 31, 2002, subject to the right of either party to terminate the
agreement earlier. Vivendi Universal fully repaid the outstanding balance of the
cash account on July 5, 2002. The balance repaid on that date was
E720,147,923.30.

     For a description of other transactions with related companies, see Note 14
to our Consolidated Financial Statements.

ITEM 8:  FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS (SEE ITEM 18)

LITIGATION

     In addition to the legal proceedings described below, Vivendi Universal is
involved in a number of legal proceedings incidental to the normal conduct of
our business.

  SECURITIES CLASS ACTION LITIGATION

     In July 2002, following the announcement of the resignation of Jean-Marie
Messier (our former CEO), sixteen separate putative class action suits were
filed against Vivendi Universal, Mr. Messier and (in nine cases) Guillaume
Hannezo (our former CFO), challenging the accuracy of certain public disclosures
made by Vivendi Universal regarding Vivendi Universal's financial condition
during 2001 and 2002. Those actions have been consolidated in the United States
District Court for the Southern District of New York as In re Vivendi Universal,
S.A. Securities Litigation (Master File No. 02 CV 5571 (HB)).

     The consolidated class action complaint, filed January 7, 2003, alleges
violations of the Securities Act and the Exchange Act against Vivendi Universal
and Messrs. Messier and Hannezo. The Securities Act allegations relate to
allegedly false and materially misleading statements or omissions in the
registration and proxy statements that were issued at the time of our merger
with Seagram in late 2000. These "false statements" are primarily alleged to be
violations of French or US GAAP that caused the financial statements

                                       127


of Vivendi to be wrong. The Exchange Act allegations relate to allegedly false
or materially misleading statements or omissions in certain of our public
statements made between October 30, 2000, and August 14, 2002, such as press
releases and financial statements, which purportedly failed to disclose Vivendi
Universal's true financial condition. Plaintiffs seek damages from all three
defendants in an unspecified amount.

     The alleged classes pleaded in the consolidated complaint include all
purchasers of our ADSs and common stock from October 30, 2000, to August 14,
2002, as well as all holders of the common stock of Seagram that was exchanged
for Vivendi Universal stock in the merger with Seagram and the acquisition of
Canal Plus, and those shareholders of Vivendi Universal or Seagram who were
entitled to vote on the merger (excluding certain specified holders). The Court
has not yet certified these classes.

     Vivendi Universal, Mr. Messier and Mr. Hannezo each filed a separate motion
to dismiss the consolidated complaint on February 24, 2003. Those motions each
ask the Court to dismiss the case in its entirety on the grounds that the
consolidated complaint is not legally sufficient. Plaintiffs filed papers
opposing those motions to dismiss on March 26, 2003. Vivendi Universal, Mr.
Messier and Mr. Hannezo filed reply papers in further support of the motions on
April 10, 2003. The Court heard oral argument on the motions on May 15, 2003. A
decision on the motions to dismiss by the Court is still pending, and is not
expected before late June 2003.

     It is not possible at this early stage of the litigation to predict the
outcome and duration with any certainty or to quantify any potential damages;
the impact of this litigation on Vivendi Universal could be material if Vivendi
Universal were not to prevail in a final, non-appealable determination of this
litigation. In the opinion of Vivendi Universal, the plaintiffs' claims lack
merit, and Vivendi Universal intends to defend against such claims vigorously.

  LIBERTY MEDIA CORPORATION SUIT

     On March 28, 2003, Liberty Media Corporation ("Liberty Media") and certain
of its affiliates filed suit against Vivendi Universal, Jean-Marie Messier (our
former CEO), Guillaume Hannezo (our former CFO) and Universal Studios, Inc. in
the United States District Court for the Southern District of New York. That
suit is captioned Liberty Media Corp., et al. v. Vivendi Universal, S.A., et al.
(CA No. 03 CV 2175 (HB)). The complaint arises from the transaction among
Vivendi Universal, Universal Studios, Inc., USAi, USANi LLC, Liberty Media and
Barry Diller that was agreed in December 2001 and resulted in the formation of
VUE in May 2002. As part of the transaction, Vivendi Universal transferred 37.4
million shares of Vivendi Universal to Liberty Media in exchange for equity in
USANi LLC and USAi and Liberty Media's 27.4% interest in the European cable
television company, multiThematiques.

     Plaintiffs' claims are based upon allegedly false or materially misleading
statements or omissions by the defendants during the period March 2001 to June
2002, in certain press releases, conference calls, financial statements and
filings, which purportedly failed to disclose Vivendi Universal's true financial
condition, and/or other information allegedly material to investors in its
shares. Plaintiffs seek damages from all four defendants in an unspecified
amount, as well as equitable and/or injunctive relief.

     In the opinion of Vivendi Universal, while the purported legal bases for
the Liberty Media plaintiffs' claims differ in certain respects, the allegations
are based upon substantially the same underlying circumstances and events
identified in the securities class action litigation filed in the United States
District Court for the Southern District of New York and described above. By
letters to the Court dated April 3 and April 15, 2003, Vivendi Universal
accordingly requested the consolidation of the Liberty Media suit with the
securities class action litigation. The Court held a hearing on May 8, 2003, to
address Vivendi Universal's request. On May 13, 2003, the Court issued an order
consolidating, for all pre-trial purposes, the Liberty Media suit with the
securities class action litigation pending before Judge Baer in the United
States District Court for the Southern District of New York.

     In the opinion of Vivendi Universal, the Liberty Media plaintiffs' claims
are without merit, and Vivendi Universal intends to defend against such claims
vigorously.

                                       128


  INVESTIGATION BY THE FRENCH COB

     On July 4, 2002, the French COB (Commission des Operations de Bourse)
commenced an investigation into certain of Vivendi Universal's financial
statements. The investigation is being led by the COB's Inspection Services
division. Vivendi Universal is co-operating fully with the Inspection Services
in its investigation. This investigation is continuing. As of the date hereof,
it is not possible to predict the outcome with any certainty.

  INVESTIGATIONS BY THE SEC AND THE OFFICE OF THE U.S. ATTORNEY FOR THE SOUTHERN
  DISTRICT OF NEW YORK

     Vivendi Universal is presently being investigated as part of two ongoing
investigations being conducted by the SEC and the Office of the U.S. Attorney
for the Southern District of New York. On July 29, 2002, the Southeast Regional
Office of the SEC advised Vivendi Universal that it had commenced an informal
inquiry into certain conduct at Vivendi Universal during the period January 1,
2000, to date. By letter dated November 19, 2002, the SEC advised Vivendi
Universal that its informal inquiry had been transformed into a formal
investigation. As part of those investigations, the SEC and the U.S. Attorney
are examining Vivendi Universal's accounting treatment of certain transactions
after October 2000, as well as the accuracy of the Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002.

     The SEC has issued three subpoenas dated November 19, 2002, January 9,
2003, and April 2, 2003, seeking the production of certain documents by Vivendi
Universal. On November 26, 2002, the Office of the U.S. Attorney for the
Southern District of New York served Vivendi Universal with a Grand Jury
subpoena seeking copies of the same documents produced to the SEC pursuant to
its first subpoena dated November 19, 2002. On March 18, 2003, the SEC requested
additional information from Vivendi Universal on a variety of accounting issues.
Vivendi Universal is actively cooperating with both investigations, and has
produced documents to both the SEC and the Office of the U.S. Attorney for the
Southern District of New York. Vivendi Universal has made presentations to the
staffs on certain issues, and Vivendi Universal made certain of its directors
and employees available for depositions and interviews. Those investigations are
both continuing. At the present time it is not possible to predict the outcome
of either investigation with any certainty.

  MP3.COM SECURITIES LITIGATION

     Commencing in May, 2001, MP3.com and certain of its previous and current
managers and directors have been the subject of certain class action suits filed
in the United States District Court for the Southern District of New York
alleging publication of misleading information in the prospectus and certain of
the documents relating to MP3.com's initial public offering. These actions have
been consolidated by way of an order dated September 6, 2001. On February 19,
2003, the Court denied a motion to dismiss the claim. This litigation is
ongoing.

  MP3.COM COPYRIGHT INFRINGEMENT LITIGATION

     MP3.com is currently involved in various copyright infringement suits filed
in Federal courts in New York, New Jersey and California related to the
availability of content on its My.M3.com service from January to May of 2000.
This litigation is ongoing.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND INTERACTIVECORP

     In connection with Vivendi Universal's acquisition of the entertainment
assets of InterActiveCorp (formerly known as USA Interactive and prior thereto
as USA Networks, Inc.), or USAi, certain of Vivendi Universal's affiliates
entered into an amended and restated limited liability limited partnership
agreement of Vivendi Universal Entertainment LLLP, or VUE (the group formed by
combining such assets and those of Universal Studios Group), dated as of May 7,
2002 (the "Partnership Agreement"), with USAi and certain of its affiliates and
Mr. Barry Diller. Pursuant to the Partnership Agreement, certain affiliates of
Vivendi Universal, USAi and certain of its affiliates and Mr. Barry Diller
received approximately 93.1%, 5.4% and 1.5%, respectively, of the common
interests in VUE. A subsidiary of USAi also received preferred interests in
                                       129


VUE, with initial face values of $750 million and $1.75 billion. There is a
disagreement among the parties relating to the interpretation of the provision
for tax distributions set forth in the Partnership Agreement.

     USAi has advised Vivendi Universal and has publicly disclosed that it
believes VUE is obligated, pursuant to the Partnership Agreement, to make cash
distributions after the close of each taxable year with respect to the taxable
income of VUE allocated to USAi's preferred interests for such taxable year.
Although USAi has stated that the actual amounts of cash distributions that it
believes are payable with respect to taxable income allocated to the preferred
interests would depend on several factors, it has estimated that those cash
distributions could have a present value to USAi of up to approximately $620
million. Vivendi Universal believes that USAi's position is without merit and
has so advised USAi.

     On April 15, 2003, USAi and one if its affiliates filed suit against
Vivendi Universal, USI Entertainment, Inc. and VUE in the Court of Chancery of
the State of Delaware. That suit is captioned USA Interactive, et al. v. Vivendi
Universal, S.A., et al., (CA No. 20260-NC). Vivendi was served with the
complaint on April 24, 2003. Plaintiffs seek an order requiring specific
performance of what they contend to be VUE's obligation to make tax
distributions to USAi and its affiliates, as well as a declaration from the
Court that VUE is obligated to make cash distributions to USAi and its
affiliates in that amount.

     To date the disagreement remains unresolved. Vivendi Universal believes
that the USAi plaintiffs' claims are without merit, and Vivendi Universal
intends to defend against such claims vigorously.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Pursuant to an Investment Agreement dated June 1999, Vivendi Universal and
Elektrim S.A. ("Elektrim") created a holding company, Elektrim Telekomunikacja
Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU and 70% by Elektrim.
Pursuant to that Investment Agreement, Elektrim agreed to contribute to Elektrim
Telekomunikacja its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o
("PTC") plus an additional 13.9% interest to be acquired from PTC's minority
shareholders. Before such contributions were made, Vivendi Universal and
Elektrim signed a Second Amended and Restated Investment Agreement in December
1999 pursuant to which Vivendi Universal increased its ownership in Elektrim
Telekomunikacja to 49% and Elektrim contributed its 48% direct interest in PTC,
as well as its 100% shareholding in the Bresnan Company, to Elektrim
Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT sought (a) a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999, breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective; (b) an order requiring
3.126% of the PTC shares acquired by Elektrim to be transferred to DT at fair
market value; and (c) an order for certain damages. The first arbitration took
place in November 2001 with subsequent hearings in March and May 2002. On April
24, 2003, the arbitral panel issued its decision with respect to the first
arbitration. The panel rejected DT's allegation that its pre-emption rights had
been violated, and dismissed DT's claim.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and certain provisions of
the governing documents of PTC. In this second arbitration proceeding, DT is
seeking either a declaration that the transfer of the PTC shares by Elektrim to
Elektrim Telekomunikacja in December 1999 was ineffective and that the shares
remained owned by Elektrim or an order requiring the transfer of all of the PTC
shares currently held by Elektrim Telekomunikacja to Elektrim. A declaration
that Elektrim had violated the PTC shareholders' agreement would allow DT to
exercise a call option under the PTC shareholders' agreement to purchase at net
book value the PTC shares contributed by Elektrim to Elektrim Telekomunikacja. A
hearing relating to this arbitration took place in February 2003 and a further
hearing is

                                       130


planned for September or October 2003. No indication has been given as to when a
decision will be issued with respect to this second arbitration.

  VOTING IRREGULARITIES AT GENERAL SHAREHOLDERS MEETING

     In a judgment dated May 2, 2002, the Commercial Court of Paris, following
submissions from Vivendi Universal, various shareholders and other interested
parties, stated that certain irregularities in the voting at the general
shareholders meeting on April 24, 2002, may cause the nullification of certain
resolutions rejected by shareholders at that meeting. The Court appointed an
expert to ascertain the possibility and existence of electronic manipulation of
the voting. In his report submitted on December 10, 2002, the Court's expert
accepted that there may have been radio interference with, or a malfunction of,
the voting equipment used at the general shareholders meeting.

     Following a determination that the resolutions at issue are no longer
pertinent to Vivendi Universal in 2003, Vivendi Universal and its shareholders
submitted a request for dismissal of this suit, which the Commercial Court
granted on February 4, 2003.

  INVESTIGATION RELATING TO CERTAIN FINANCIAL ACCOUNTS AND INFORMATION

     In July 2002, a French association of minority shareholders, APPAC, as well
as the president of that association in an individual capacity as a Vivendi
Universal shareholder, each filed a criminal complaint, in accordance with
French law, against an unspecified defendant. The two complaints were
consolidated on November 13, 2002, and three examining magistrates were
appointed. The French public prosecutor's initial indictment in this matter
specified potential crimes relating to the presentation and publication of
inaccurate, untrue and unfaithful accounts for Vivendi Universal for the 2000
and 2001 fiscal years; the distribution of sham dividends by Vivendi Universal
for the 2001 fiscal year; and the public distribution of false or deceptive
information concerning Vivendi Universal's condition and future prospects.
Vivendi Universal's application to join the action as a plaintiff was accepted
by order dated January 14, 2003. The other plaintiffs have appealed against this
order. That appeal was considered by the Court on May 14, 2003. On June 25,
2003, the Court of Appeals confirmed the order permitting Vivendi Universal to
join the action as a plaintiff.

  TRANSFER OF BROADCASTING RIGHTS FOR SOCCER PREMIER LEAGUE MATCHES TO CANAL+
  AND KIOSQUE

     On December 14, 2002, the board of the French soccer premier league (LFP)
awarded the exclusive broadcasting rights for French soccer premier league
matches for the 2004-2007 seasons to Canal+. By an order dated January 23, 2003,
the French competition authorities, pursuant to a complaint filed by TPS,
suspended attribution of the rights to Canal+ until such time as the authorities
could render a decision on the merits of the tender process and its outcome. On
February 6, 2003, Canal+ and Kiosque sought to have the court of appeal in Paris
cancel or amend the authorities' order. On February 16, 2003, the Court of
Appeal invited the parties to enter into a legal mediation procedure and the
parties agreed to do so. The Court of Appeal appointed two mediators on February
25, 2003. As a result of this court recommended mediation, all parties concerned
agreed to extend the duration of the existing contracts for an additional year
(i.e., through the 2004-2005 season). All suits have now been dismissed.

  INVESTIGATION BY THE U.S. INTERNAL REVENUE SERVICE

     The IRS has challenged the reported tax treatment by The Seagram Company
Ltd. ("Seagram") of the redemption in April 1995 of 156 million of the DuPont
shares held by Seagram. The IRS has proposed an adjustment against Seagram
which, if ultimately sustained, would result in Seagram owing approximately $1.5
billion in additional tax in respect of such redemption, plus interest from 1995
through March 2003 of approximately $1.2 billion (before tax benefits). Vivendi
Universal believes that it has adequately reserved in its financial statements
with respect to such matter. The matter is currently before the Appeals Division
of the IRS. While the outcome of any controversy cannot be predicted with
complete certainty, Vivendi Universal believes that this dispute with the IRS
will be resolved so as not to have a material adverse effect on its financial
statements as a whole.

                                       131


  MESSIER TERMINATION AGREEMENT

     In July, 2002, an agreement relating to the termination of Jean-Marie
Messier, as Chief Executive Officer of Vivendi Universal, was submitted to the
Board of Directors of Vivendi Universal for approval. Following the Board's
refusal to approve that agreement, the management of Vivendi Universal, upon the
advice of Vivendi Universal's lawyers, decided to refuse to pay a severance
package to Mr. Messier, to put an end to the fringe benefits he was enjoying and
to ask for the repayment by Mr. Messier of his salary for July and August 2002,
which was paid to him by a U.S. subsidiary of Vivendi Universal. On September
25, 2002, the Vivendi Universal Board of Directors ratified the decision made by
Vivendi Universal's management.

     Pursuant to an arbitration agreement dated October 31, 2002 the dispute was
submitted to an arbitration tribunal constituted on January 17, 2003, under the
sponsorship of the American Arbitration Association in New York and composed of
three arbitrators. On June 27, 2003, the arbitration tribunal issued its award.
It denied Vivendi Universal's claim that Mr. Messier's so-called U.S.
Termination Agreement be voided. The arbitration tribunal ordered Vivendi
Universal to pay Mr. Messier the aggregate amount of E20.5 million provided for
in this agreement, less the portion of Mr. Messier's compensation that had been
paid to him during the third quarter of 2002, which Vivendi Universal asked to
be reimbursed. After reviewing the tribunal findings, Vivendi Universal intends
to challenge this decision through all available legal means, both in France and
in the United States.

  TVT RECORDS AND TVT MUSIC

     On August 20, 2002, TVT Records and TVT Music (collectively "TVT") filed
suit in Federal court in New York against The Island Def Jam Music Group ("IDJ")
and its Chairman, Lyor Cohen ("Cohen"), for breach of contract, tortious
interference with contract, promissory estoppel, and fraud in connection with
TVT's claim that IDJ and Cohen blocked the delivery of an album to TVT by the
band "CMC." TVT also alleged related copyright infringement claims against IDJ.
After a trial on liability in March 2003, IDJ and Cohen were found liable on all
claims, except that the jury did not find liability for fraudulent
misrepresentation or fraudulent inducement, but did find liability for
fraudulent concealment. Following the subsequent damages trial, on May 6, 2003,
the jury awarded TVT $132 million in damages, comprised of approximately $24
million in compensatory damages and $108 million in punitive damages. On June
16, 2003, IDJ and Cohen filed post-trial motions seeking to set aside the jury's
verdict. IDJ and Cohen are likely to file an appeal.

ITEM 9:  THE OFFER AND LISTING

MARKET PRICE INFORMATION

     Our ordinary shares currently trade on Euronext Paris SA and our ADSs trade
on the NYSE. The table below sets forth the reported high and low sales prices
of Vivendi and Vivendi Universal ordinary shares and ADSs on the Paris Bourse
and on the NYSE, respectively (and, for periods before September 2000, the high
and low bids for Vivendi ADSs in the over-the-counter market). For periods
before the completion of the Merger Transactions on December 8, 2000, the table
sets forth price information for Vivendi ordinary shares and ADSs; for periods
after that date, the table sets forth price information for Vivendi Universal
ordinary shares and ADSs. Each Vivendi ADS represented one-fifth of a Vivendi
ordinary share before the completion of the Merger Transactions, while each
Vivendi Universal ADS now represents one Vivendi Universal ordinary share. To
facilitate comparison of information (i) for periods before and after December
8, 2000, price information for the Vivendi ADSs is shown as if each Vivendi ADS
represented one Vivendi ordinary share, and (ii) the market prices for periods
prior to May 11, 1999 are restated to reflect the 3:1 stock split that occurred
on May 11, 1999. Prices are rounded to the nearest cent.

                                       132


  Last Six Months



                                                    EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
                                                                    
May, 2003........................................  E 15.95   E 13.28   $17.50   $15.55
April, 2003......................................    14.93     12.03    16.66    13.36
March, 2003......................................    14.80     11.03    15.85    12.15
February, 2003...................................    16.39     11.63    17.57    12.75
January, 2003....................................    17.98     14.92    18.90    16.40
December, 2002...................................    17.65     14.65    17.36    14.93
November, 2002...................................    17.29     10.86    16.79    11.06


  Last Two Years by Quarter



                                                   EURONEXT PARIS           NYSE
                                                 (ORDINARY SHARES)         (ADSS)
                                                 ------------------   ----------------
                                                   HIGH       LOW      HIGH      LOW
                                                 --------   -------   -------   ------
                                                                    
2003
Second Quarter (through May 31)................  E  15.95   E 12.03   $ 17.50   $13.36
First Quarter..................................     17.98     11.03     18.90    12.15
2002
Fourth Quarter.................................  E  17.65   E 10.72   $ 17.36   $10.80
Third Quarter..................................     26.11      8.62     24.20     8.90
Second Quarter.................................     44.24     16.10     39.10    17.79
First Quarter..................................     64.40     40.66     57.90    35.65
2001
Fourth Quarter.................................     62.15     45.65     54.80    42.57
Third Quarter..................................     71.50     40.22     61.01    37.30
Second Quarter.................................     79.70     61.40     69.23    54.85
First Quarter..................................     82.00     61.20     76.00    54.30


  Last Five Years



                                                    EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
                                                                    
2003 (through May 31, 2003).....................   E 17.98   E 11.03   $57.90   $26.75
2002............................................     64.40      8.62   57.90      8.90
2001............................................     82.00     40.22   76.00     37.30
2000............................................    150.00     68.60   142.50    50.00
1999............................................     92.95     61.10   101.65    66.25
1998............................................     72.35     39.82   85.85     43.55


     We urge you to obtain current market quotations.

ARRANGEMENTS FOR TRANSFER AND RESTRICTIONS ON TRANSFERABILITY

     Our statuts do not contain any restrictions relating to the transfer of
shares.

     Registered shares must be converted into bearer form before being
transferred on the Euronext Paris and, accordingly, must be recorded in an
account maintained by an accredited intermediary. A shareholder may initiate a
transfer by giving instructions to the relevant accredited intermediary. For
dealings on the Euronext

                                       133


Paris, a tax assessed on the price at which the securities are traded, or impot
sur les operations de bourse, is payable at the rate of 0.3% on transactions of
less than E 152,449 and at a rate of 0.15% for larger trades. This tax is
subject to a maximum assessment of E 612 per transaction. Non-residents of
France are not required to pay this tax. In addition, a fee or commission is
payable to the broker involved in the transaction, regardless of whether the
transaction occurs in France. No registration duty is normally payable in
France, unless a transfer instrument has been executed in France.

ITEM 10:  ADDITIONAL INFORMATION

GENERAL

     As of December 31, 2002, there were 1,068,148,584 Vivendi Universal
ordinary shares outstanding (including treasury shares). As of April 30, 2003,
we had 283,970 ordinary shares in treasury, with a gross book value of E 19.8
million. All of these ordinary shares were issued to Vivendi Universal and were
fully paid. Our ordinary shares have a nominal value of E 5.50 per share.
Vivendi Universal's statuts provide that ordinary shares may be held in
registered or bearer form, at the option of the shareholder.

SHARE CAPITAL INFORMATION

     As of April 29, 2003, we had 1,070,554,674 ordinary shares outstanding. We
estimate that as of that date, approximately 33.4% of our shares traded on the
Euronext Paris SA were held by French residents and approximately 23.9% by
residents of the US.

     As of April 29, 2003, there were 2,170 registered holders of ADSs holding a
total of 92,160,022 ADSs. As of April 29, 2003, there were 1,615 registered
holders of ADSs within the US holding a total of 91,570,190 ADSs.

UNDERTAKINGS TO INCREASE VIVENDI UNIVERSAL'S SHARE CAPITAL

     As of December 31, 2002, Vivendi Universal had undertaken to increase its
capital in connection with redeemable and convertible bonds, options, and
exchangeable shares.

     - Convertible bonds -- In January 1999, Vivendi issued 6,028,369 bonds to
       the public. Each bond is convertible into 3.124 Vivendi Universal
       ordinary shares. As of May 23, 2003, 6,024,329 of these bonds were
       outstanding and convertible into a total of 18,820,004 ordinary shares
       (which may be treasury or newly issued shares). The bonds are scheduled
       to be redeemed in 2003;

     - Veolia Environnement convertible bonds -- In April 1999, Veolia
       Environnement issued 10,516,606 bonds to the public. Each bond is
       convertible into 3.124 ordinary shares of Vivendi Universal or Veolia
       Environnement. As of May 23, 2003, 5,331,055 of these bonds were
       outstanding and convertible into a total of 16,654,225 shares (which may
       be treasury or newly-issued shares). The bonds are scheduled to be
       redeemed in 2005;

     - Options granted pursuant to Vivendi Universal share subscription
       plans -- As of December 31, 2002, there were outstanding options to
       subscribe for 31,579,751 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 5,518,568 pursuant to Vivendi plans and 26,061,183 pursuant to
       former Seagram plans); As of May 23, 2003, there were outstanding options
       to subscribe for 33,233,550 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 7,172,367 pursuant to former Vivendi plans and 26,061,183
       pursuant to former Seagram plans).

     - Convertible Bonds -- In connection with the Merger Transactions, we
       issued on December 8, 2000, bonds redeemable into 401,582,689 Vivendi
       Universal ordinary shares. These bonds were or are to be redeemed for (i)
       the ADSs of Vivendi Universal received by holders of Seagram common
       shares on closing of the merger, (ii) ADSs of Vivendi Universal to be
       issued to holders of exchangeable shares of Vivendi Universal Exchangeco
       Inc. when such holders exchange such shares from time to time,

                                       134


       (iii) ADSs of Vivendi Universal to be issued to holders of stock options
       or stock appreciation rights of Seagram on exercise of such options or
       rights, and (iv) ADSs of Vivendi Universal to be issued to holders of
       other convertible securities of Seagram, such as the ACES, on conversion
       of such securities. As of May 23, 2003, bonds redeemable into 35,125,424
       Vivendi Universal ordinary shares were outstanding.

     - Notes mandatorily redeemable into ordinary shares -- On November 19,
       2002, Vivendi Universal issued 78,678,206 bonds to the public. Each bond
       is redeemable into one Vivendi Universal ordinary share. As of May 23,
       2003, 78,678,206 of these bonds were outstanding and redeemable into
       78,678,206 shares. The bonds are scheduled to be redeemed in 2005.

     Under the French commercial code, shareholders of French companies such as
Vivendi Universal have certain rights to purchase, on a pro rata basis,
securities issued by Vivendi Universal.

OPTIONS TO PURCHASE VIVENDI UNIVERSAL SECURITIES

     We have several share purchase option plans for the benefit of our
executive officers, management and other staff. As of May 23, 2003, options to
purchase approximately 57,771,981 Vivendi Universal ordinary shares or ADSs were
outstanding pursuant to these plans. The average expiration date of these
options was August 2008 and the average exercise price was E 65.58 for ordinary
shares and $53.61 for ADSs. Options to purchase shares of common stock of
MP3.com were converted into options to purchase ADSs of Vivendi Universal on
August 28, 2001. As of May 23, 2003, options to purchase approximately 431,575
Vivendi Universal ADSs were outstanding pursuant to these plans. The average
expiration date of these options was February 2010 and the average exercise
price was $136.84.

     Options to purchase shares of common stock of USAi were converted into
options to purchase ADSs of Vivendi Universal on May 7, August 5 and August 7,
2002. As of May 23, 2003, options to purchase approximately 5,987,114 Vivendi
Universal ADSs were outstanding pursuant to these plans. The average expiration
date of these options was October 2010 and the average exercise price was
$20.89.

HISTORY OF SHARE CAPITAL

     The table below sets forth the history of the share capital of Vivendi
Universal, S.A., formerly known as Sofiee S.A. Sofiee was a shell company
incorporated in 1987, and on December 8, 2000 it was the recipient of all the
assets in connection with the Merger Transactions described under "Item
4--Information on the Company--History and Development of the Company."



                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
- -------   -------------------   -------------   ----------   --------------------   ----------------   -------------
                                                                                     
12/17/87  Formation                     2,500     FF 100          FF 250,000.00              250,000           2,500
05/14/98  Capital increase         16,784,000        100       1,678,400,000.00        1,678,650.000      16,786,500
06/15/00  Conversion of the                 0       E 16                 E 0.00          268,584,000      16,786,500
          capital to Euros
06/15/00  Capital increase                  0       16.5                   0.00          276,977,250      16,786,500
06/15/00  Three-for-one stock               0        5.5                   0.00          276,977,250      50,359,500
          split
12/08/00  Merger Transactions   1,029,666,247        5.5       5,663,164,358.50        5,940,141,609   1,080,025,747
12/31/00  Bonds redemption,           782,696        5.5           4,304,828.00        5,944,446,437   1,080,808,443
          warrants
          conversion,
          exercise of
          subscription option
01/18/01  Capital increase            343,127        5.5           1,887,198.50        5,946,333,635   1,081,151,570
          Group savings Plan
          3rd block 2000


                                       135




                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
- -------   -------------------   -------------   ----------   --------------------   ----------------   -------------
                                                                                     
04/24/01  Bonds redemption,        25,026,898        5.5         137,647,939.00     6,083,981,574.00   1,106,178,468
          warrants
          conversion,
          exercise of
          subscription option
04/26/01  Capital increase            350,392        5.5           1,927,156.00     6,085,908,730.00   1,106,528,860
          Group Savings Plan
          1st block 2001
06/28/01  Bonds redemption,        11,448,920        5.5             62,969,060        6,148,877,790   1,117,977,780
          warrants
          conversion,
          exercise of
          subscription option
06/28/01  Cancellation --        (10,301,924)        5.5           (56,660,582)        6,092,217,208   1,107,675,856
          consolidation of
          bare legal and
          beneficial
          ownership rights
06/28/01  Cancellation           (22,000,000)        5.5          (121,000,000)        5,971,217,208   1,085,675,856
          Treasury Shares
07/25/01  Capital increase            917,745        5.5           5,047,597,50        5,976,264,805   1,086,593,601
          Group Savings Plan
          2nd block 2001
09/25/01  Bonds redemption,         3,221,230        5.5             17,716,765        5,993,981,570   1,089,814,831
          exercise of
          subscription option
09/25/01  Cancellation --         (3,153,175)        5.5        (17,342,462.50)        5,976,639,108   1,086,661,656
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Bonds redemption,         3,304,178        5.5             18,172,979        5,994,812,087   1,089,965,834
          exercise of
          subscription option
11/14/01  Cancellation --         (3,183,881)        5.5        (17,511,345.50)     5,977,300,741.50   1,086,781,953
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Cancellation            (1,484,560)        5.5            (8,165,080)     5,969,135,661.50   1,085,297,393
          Treasury Shares
12/31/01  Bonds redemption,           530,126        5.5              2,915,693     5,972,051,354.50   1,085,827,519
          exercise of
          subscription option
01/17/02  Capital increase          1,337,609        5.5           7,356,849.50        5,979,408,204   1,087,165,128
          Group Savings Plan
          3rd block 2001
01/24/02  Bonds redemption,           737,593        5.5           4,056,761.50     5,983,464,965.50   1,087,902,721
          exercise of
          subscription option
01/24/02  Cancellation --           (203,560)        5.5            (1,119,580)     5,982,345,385.50   1,087,699,161
          consolidation of
          bare legal and
          beneficial
          ownership rights
04/24/02  Bonds redemption,           961,530        5.5              5,288,415     5,987,633,800.50   1,088,660,691
          exercise of
          subscription option
04/24/02  Cancellation --           (351,988)        5.5            (1,935,934)     5,985,697,866.50   1,088,308,703
          consolidation of
          bare legal and
          beneficial
          ownership rights


                                       136




                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
- -------   -------------------   -------------   ----------   --------------------   ----------------   -------------
                                                                                     
06/25/02  Bonds redemption,         3,455,065        5.5          19,002,857.50        6,004,700,724   1,091,763,768
          exercise of
          subscription option
06/25/02  Cancellation --         (3,450,553)        5.5        (18,978,041.50)     5,985,722,682.50   1,088,313,215
          consolidation of
          bare legal and
          beneficial
          ownership rights
08/13/02  Bonds redemption,         7,195,874        5.5             39,577,307     6,025,299,989.50   1,095,509,089
          exercise of
          subscription option
08/13/02  Cancellation --         (6,890,538)        5.5           (37,897,959)     5,987,402,030.50   1,088,618,551
          consolidation of
          bare legal and
          beneficial
          ownership Rights
12/20/02  Cancellation of        (20,469,967)        5.5       (112,584,818.50)        5,874,817,212   1,068,148,584
          Treasury Shares
01/15/03  Capital increase          2,402,142        5.5             13,211,781        5,888,028,993   1,070,550,726
          Group Savings Plan
          2002
01/29/03  Bonds redemption            455,510        5.5              2,505,305        5,890,534,298   1,071,006,236
01/29/03  Cancellation --           (451,562)        5.5              2,483,591        5,888,050,707   1,070,554,674
          consolidation of
          bare legal and
          beneficial
          ownership Rights


ORGANIZATIONAL DOCUMENT OF VIVENDI UNIVERSAL

  PURPOSES

     Under Article 2 of our statuts, the corporate purpose of Vivendi Universal
is to engage in all media and communications activities and all activities
related to the environment, to manage, acquire and sell securities of other
companies and to engage in any transactions related to the foregoing purposes.

  DIRECTORS

     Under the French commercial code, each director must be a shareholder of
Vivendi Universal. Our statuts provide that a director must own at least 750
shares of Vivendi Universal for as long as he or she serves as a director.

     The French commercial code provides that each director is eligible for
reappointment upon the expiration of his or her term of office. Our statuts fix
the term of reappointment at four years, provided that no more than one-fifth of
the directors may be 70 or older. No individual director may be over 75.

     Under the French commercial code, any transaction directly or indirectly
between a company and a member of its board of directors, its officers or one of
its shareholders holding more than 5% of voting securities, if any, that cannot
be reasonably considered to be in the ordinary course of business of the company
or is not at arm's-length, is subject to the board of directors' prior consent.
A member of the board of directors may not participate in a vote to consent to a
transaction in which he or she is directly or indirectly interested. Any such
transaction concluded without the prior consent of the board of directors can be
voided if it is harmful to the company. The interested member of the board of
directors or officer can be held liable on this basis. The statutory auditor
must be informed of the transaction within one month following its conclusion
and must prepare a special report to be submitted to the shareholders for
approval at their next meeting. In the event the transaction is not ratified by
the shareholders at a shareholders meeting, it will remain enforceable by third
parties against the company, but the company may in turn hold the interested
member of the board of directors and, in some circumstances, the other members
of the board of directors, liable for any damages it

                                       137


may suffer as a result. In addition, the transaction may be canceled if it is
fraudulent. Moreover, certain transactions between a corporation and a member of
its board of directors who is a natural person or its officers, if any, are
prohibited under the French commercial code.

     Our directors are not authorized, in the absence of an independent quorum,
to vote compensation to themselves or other directors.

ORDINARY AND EXTRAORDINARY MEETINGS

  GENERAL

     In accordance with the French commercial code, there are two types of
shareholders general meetings: ordinary and extraordinary.

     Ordinary general meetings of shareholders are required for matters that are
not specifically reserved by law to extraordinary general meetings, such as:

     - approving annual financial statements (individual and consolidated);

     - electing, replacing and removing members of the board of directors;

     - appointing independent auditors;

     - declaring dividends or authorizing dividends to be paid in shares; and

     - issuing debt securities.

     Extraordinary general meetings of shareholders are required for approval of
matters such as amendments to our statuts, including any amendment required in
connection with extraordinary corporate actions.

     Extraordinary corporate actions also include:

     - changing our name or corporate purpose;

     - increasing or decreasing our share capital;

     - creating a new class of equity securities;

     - authorizing the issuance of investment certificates or convertible or
       exchangeable securities;

     - establishing any other rights to equity securities;

     - selling or transferring substantially all of our assets; and

     - our voluntary liquidation.

  SHAREHOLDERS MEETINGS

     The French commercial code requires our board of directors to convene an
annual ordinary general meeting of shareholders for approval of the annual
accounts. This meeting must be held within six months of the end of each fiscal
year. This period may be extended by an order of the President of the Commercial
Court (Tribunal de Commerce). The board of directors may also convene an
ordinary or extraordinary meeting of shareholders upon proper notice at any time
during the year. If the board of directors fails to convene a shareholders
meeting, our independent auditors or a court-appointed agent may call the
meeting. Any of the following may request the court to appoint an agent:

     - one or several shareholders holding at least 5% of our share capital;

     - the workers' committee (Comite d'Entreprise) in an emergency;

     - an interested party in an emergency;

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least 2%
       of the voting rights of Vivendi Universal; or

                                       138


     - in a bankruptcy, our liquidator or court-appointed agent may also call a
       shareholders meeting in some instances.

     Shareholders holding more than 50% of our share capital or voting rights
may also convene a shareholders meeting after a public offer or a sale of a
controlling stake of Vivendi Universal's capital.

  NOTICE OF SHAREHOLDERS MEETINGS

     We must announce general meetings at least 30 days in advance by means of a
preliminary notice published in the Bulletin des Annonces Legales Obligatoires
(the BALO). The preliminary notice must first be sent to the COB. The COB also
recommends that the preliminary notice be published in a financial newspaper of
national circulation in France. The preliminary notice must disclose, among
other things, the time, date, and place of the meeting, whether the meeting will
be ordinary or extraordinary, the agenda, a draft of the resolutions to be
submitted to the shareholders, a description of the procedures which holders of
bearer shares must follow to attend the meeting, the procedure for voting by
mail, and a statement informing the shareholders that they may propose
additional resolutions to the board of directors within ten days of the
publication of the notice.

     We must send a final notice containing the agenda and other information
about the meeting at least 15 days prior to the meeting or at least six days
prior to the resumption of any meeting adjourned for lack of a quorum. The final
notice must be sent by mail to all registered shareholders who have held shares
for more than one month prior to the date of the preliminary notice. The final
notice must also be published in the BALO and in a newspaper authorized to
publish legal announcements in the local administrative department in which we
are registered, with prior notice having been given to the COB.

     In general, shareholders can take action at shareholders meetings only on
matters listed in the agenda for the meeting. One exception to this rule is that
shareholders may take action with respect to the dismissal of members of the
board of directors and various other matters regardless of whether these actions
are on the agenda. Additional resolutions to be submitted for approval by the
shareholders at the meeting may be proposed to the board of directors (within
ten days of the publication of the preliminary notice in the BALO) by:

     - one or several shareholders holding a specified percentage of shares
       (currently 0.5%); or

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least a
       specified percentage of Vivendi Universal's voting rights (currently 1%).

     The board of directors must submit properly proposed resolutions to a vote
of the shareholders.

     Before a meeting of shareholders, any shareholder may submit written
questions to the board of directors relating to the agenda for the meeting. The
management board must respond to these questions during the meeting.

  ATTENDANCE AND VOTING AT SHAREHOLDERS MEETINGS

     Each share confers on the shareholder the right to cast one vote, subject
to certain limited exceptions under our statuts. Shareholders may attend
ordinary meetings and extraordinary meetings and exercise their voting rights
subject to the conditions specified in the French commercial code and our
statuts. There is no requirement that shareholders have a minimum number of
shares in order to attend or to be represented at an ordinary or extraordinary
general meeting.

     To participate in any general meeting, a holder of shares held in
registered form must have shares registered in his or her name in a shareholder
account maintained by Vivendi Universal or on its behalf by an agent appointed
by Vivendi Universal at the latest at 3:00 pm (Paris time) on the day preceding
the meeting. A holder of bearer shares must obtain a certificate from the
accredited intermediary with whom the holder has deposited his or her shares.
This certificate must indicate the number of bearer shares the holder owns and
must state that these shares are not transferable until the time fixed for the
meeting. The holder must deposit
                                       139


this certificate at the place specified in the notice of the meeting at the
latest at 3:00 pm (Paris time) on the day preceding the meeting.

  PROXIES AND VOTES BY MAIL

     In general, all shareholders who have properly registered their shares or
duly presented a certificate from their accredited financial intermediary may
participate in general meetings. Shareholders may participate in general
meetings either in person or by proxy. Shareholders may vote in person, by proxy
or by mail. Upon decision of the board of directors specified in the notice of
meeting, shareholders may also vote by Internet.

     Proxies will be sent to any shareholder on request. To be counted, those
proxies must be received at Vivendi Universal's registered office, or at any
other address indicated on the notice convening the meeting, prior to the date
of the meeting. A shareholder may grant proxies to his or her spouse or to
another shareholder. A shareholder that is a corporation may grant proxies to a
legal representative. Alternatively, the shareholder may send a blank proxy
without nominating any representative. In this case, the chairman of the meeting
will vote those blank proxies in favor of all resolutions proposed by the board
of directors and against all others.

     With respect to votes by mail, we are required to send shareholders a
voting form. The completed form must be returned to Vivendi Universal at least
three days prior to the date of the shareholders meeting.

  QUORUM

     The French commercial code requires that 25% of the shares entitled to
voting rights must be represented by shareholders present in person or voting by
mail or by proxy to fulfill the quorum requirement for:

     - an ordinary general meeting; or

     - an extraordinary general meeting where an increase in Vivendi Universal's
       share capital is proposed through incorporation of reserves, profits or
       share premium.

     The quorum requirement is one-third of the shares entitled to voting
rights, on the same basis, for any other extraordinary general meeting.

     If a quorum is not present at a meeting, the meeting is adjourned. When an
adjourned meeting is resumed, there is no quorum requirement for an ordinary
meeting or for an extraordinary general meeting where an increase in Vivendi
Universal's share capital is proposed through incorporation of reserves, profits
or share premium. However, only questions that are on the agenda of the
adjourned meeting may be discussed and voted upon. In the case of any other
reconvened extraordinary general meeting, shareholders representing at least 25%
of outstanding voting rights must be present in person or be voting by mail or
proxy for a quorum. If a quorum is not present, the reconvened meeting may be
adjourned for a maximum of two months. Any deliberation by the shareholders that
takes place without a quorum is void.

  MAJORITY

     A simple majority of shareholders may pass any resolution on matters
required to be considered at an ordinary general meeting, or concerning a
capital increase by incorporation of reserves, profits or share premium at an
extraordinary general meeting. At any other extraordinary general meeting, a
two-thirds majority of the shareholder votes cast is required.

     A unanimous shareholder vote is required to increase liabilities of
shareholders.

     Abstention from voting by those present or those represented by proxy or
voting mail is counted as a vote against the resolution submitted to the
shareholder vote.

     In general, a shareholder is entitled to one vote per share at any general
meeting. Under the French commercial code, shares of a company held by entities
controlled directly or indirectly by that company are not entitled to voting
rights and are not considered for quorum purposes.

                                       140


  Limitations on Right to Own Securities

     Neither French law nor our statuts contain any provision that limits the
right to own Vivendi Universal's securities or limits the rights of
shareholders, including non-resident or foreign shareholders, to hold or
exercise voting rights associated with those securities, except as described
below under "--Anti-Takeover Provisions."

  Anti-Takeover Provisions

     Our statuts provide that any person or group that fails to notify the
company within 15 days of acquiring or disposing of 0.5% or any multiple of 0.5%
of our ordinary shares may be deprived of voting rights for shares in excess of
the unreported fraction. Vivendi Universal's statuts also adjust the voting
rights of shareholders who own (within the meaning of the statuts and Article L
233-9 of the French commercial code to which those statuts refer) in excess of
2% of the total voting power of Vivendi Universal through the application of a
formula designed to limit the voting power of these shareholders to that which
they would possess if 100% of the shareholders were present at the meeting at
which the vote in question takes place. This last provision is not applicable to
any shareholders meeting where a quorum of 60% or more is present.

  ANTI-TAKEOVER EFFECTS OF APPLICABLE LAW REGULATIONS

     In addition, the French commercial code provides that any individual or
entity, acting alone or in concert with others, that becomes the owner, directly
or indirectly, of more than 5%, 10%, 20%, one-third, 50% or two-thirds of the
outstanding shares or voting rights of a listed company in France, such as
Vivendi Universal, or that increases or decreases its shareholding or voting
rights above or below any of those percentages, must notify Vivendi Universal
within 15 calendar days of the date it crosses such thresholds of the number of
shares it holds and their voting rights. The individual or entity must also
notify the Conseil des Marches Financiers (CMF) within five trading days of the
date it crosses these thresholds.

     The French New Economic Regulation Act has also imposed the notification to
the CMF of any agreement which provides preferential conditions of acquisition
or divestiture of shares representing 0.5% or more of the share capital or
voting securities, failing which such provision will be unenforceable during the
course of a tender offer.

     French law and COB regulations impose additional reporting requirements on
persons who acquire more than 10% or 20% of the outstanding shares or voting
rights of a listed company. These persons must file a report with the company,
the COB and the CMF within fifteen days of the date they cross the threshold. In
the report, the acquirer must specify its intentions for the following 12-month
period, including whether or not it intends to continue its purchases, to
acquire control of the company in question or to nominate candidates for the
board of directors. The CMF makes the notice public. The acquirer must also
publish a press release stating its intentions in a financial newspaper of
national circulation in France. The acquirer may amend its stated intentions,
provided that it does soon the basis of significant changes in its own situation
or that of its shareholders. Upon any change of intention, it must file a new
report.

     Under CMF regulations, and subject to limited exemptions granted by the
CMF, any person or persons acting in concert that own in excess of one-third of
the share capital or voting rights of a French listed company must initiate a
public tender offer for the balance of the share capital of such company.

     To permit holders to give the required notice, Vivendi Universal is
required to publish in the BALO no later than 15 calendar days after the annual
ordinary general meeting of shareholders information with respect to the total
number of voting rights outstanding as of the date of such meeting. In addition,
if the number of outstanding voting rights changes by 5% or more between two
annual ordinary general meetings, Vivendi Universal is required to publish in
the BALO, within 15 calendar days of such change, the number of voting rights
outstanding and provide the CMF with written notice of such information. The CMF
publishes the total number of voting rights so notified by all listed companies
in a weekly notice (avis), noting the date each such number was last updated.

                                       141


     If any shareholder fails to comply with the notification requirement
described above, the shares or voting rights in excess of the relevant threshold
will be deprived of voting rights for all shareholders meetings until the end of
a two-year period following the date on which their owner complies with the
notification requirements. In addition, any shareholder who fails to comply with
these requirements may have all or part of its voting rights suspended for up to
five years by the Commercial Court at the request of the chairman, any
shareholder or the COB, and may be subject to a fine.

VIVENDI UNIVERSAL ORDINARY SHARES

  DIVIDENDS

     Dividends on our ordinary shares are distributed to shareholders pro rata.
Outstanding dividends are payable to shareholders on the date of the
shareholders meeting at which the distribution of dividends is approved, subject
to any conditions imposed by the shareholders at the meeting. The dividend
payment date is decided by the shareholders at an ordinary general meeting (or
by the board of directors in the absence of such a decision by the
shareholders). Under the French commercial code, we must pay any dividends
within nine months of the end of our fiscal year unless otherwise authorized by
court order. Subject to certain conditions, the board of directors can decide
the distribution of interim dividends during the course of the fiscal year, but
in any case before the approval of the annual accounts by the annual ordinary
general meeting of shareholders. Dividends on shares that are not claimed within
five years of the date of declared payment revert to the French government.

  VOTING RIGHTS

     In general, each Vivendi Universal ordinary share carries the right to cast
one vote in shareholder elections. However, our statuts adjust the voting rights
of shareholders who own in excess of 2% of the total voting power of Vivendi
Universal through the application of a formula designed to limit the voting
power of those shareholders to that which they would possess if 100% of the
shareholders were present at the meeting at which the vote in question takes
place. See above "--Anti-Takeover Provisions." This provision is not applicable
to any shareholders meeting where a quorum of 60% or more is present.

  LIQUIDATION RIGHTS

     If Vivendi Universal is liquidated, any assets remaining after payment of
its debts, liquidation expenses and all of its remaining obligations will be
distributed first to repay in full the nominal value of its shares. Any surplus
will be distributed pro rata among shareholders in proportion to the nominal
value of their shareholdings.

  PRE-EMPTIVE RIGHTS

     Under the French commercial code, if we issue additional shares, or any
equity securities or other specific kinds of additional securities carrying a
right, directly or indirectly, to purchase equity securities issued by us for
cash, current shareholders will have pre-emptive rights on these securities on a
pro rata basis. These pre-emptive rights will require Vivendi Universal to give
priority treatment to those shareholders over other persons wishing to subscribe
for the securities. The rights entitle the individual or entity that holds them
to subscribe to an issue of any securities that may increase our share capital
by means of a cash payment or a set-off of cash debts. Pre-emptive rights are
transferable during the subscription period relating to a particular offering.
These rights may also be listed on the Euronext Paris SA.

     A two-thirds majority of our ordinary shares entitled to vote at an
extraordinary general meeting may vote to waive pre-emptive rights with respect
to any particular offering. French law requires a company's board of directors
and independent auditors to present reports that specifically address any
proposal to waive pre-emptive rights. In the event of a waiver, the issue of
securities must be completed within the period prescribed by law. The
shareholders may also decide at an extraordinary general meeting to give the
existing shareholders a non-transferable priority right to subscribe for the new
securities during a limited period of time. Shareholders may also waive their
own pre-emptive rights with respect to any particular offering.
                                       142


  AMENDMENTS TO RIGHTS OF HOLDERS

     The rights of holders of our ordinary shares can be amended only by action
of an extraordinary general meeting. Pursuant to French law, in some cases where
an amendment would increase shareholders obligations, a special majority is
required for approval. Depending on the particular proposed amendment, the
special majority may be two-thirds, three-quarters or unanimity of the voting
shares. Consistent with French law, the Vivendi Universal statuts require a
quorum of one-third of the voting shares for an extraordinary general meeting.

MATERIAL CONTRACTS

     In view of the size and scope of the operations of our company, we believe
that the only agreements to which we or any of our subsidiaries are a party that
could be considered material to our company as a whole are as follows: (1) the E
2.5 billion Dual Currency Credit Facility, (2) the E 3.0 billion Multicurrency
Revolving Credit Facility, (3) the $920 million VUE Facility, (4) the E1.3
billion SIT Acquisition Facility and (5) the indenture governing the Senior
Notes. For a description of each of these contracts, see "Item 4--Information on
the Company--Summary of Indebtedness."

EXCHANGE CONTROLS

     The French commercial code currently does not limit the right of
nonresidents of France or non-French persons to own and vote shares. However,
nonresidents of France must file an administrative notice with French
authorities in connection with the acquisition of a controlling interest in our
company. Under existing administrative rulings, ownership of 20% or more of our
share capital or voting rights is regarded as a controlling interest, but a
lower percentage might be held to be a controlling interest in some
circumstances depending upon factors such as:

     - the acquiring party's intentions; and

     - the acquiring party's ability to elect directors, and financial reliance
       by us on the acquiring party.

     French exchange control regulations currently do not limit the amount of
payments that we may remit to nonresidents of France. Laws and regulations
concerning foreign exchange controls do require, however, that all payments or
transfers of funds made by a French resident to a nonresident be handled by an
accredited intermediary. In France, all registered banks and most credit
establishments are accredited intermediaries.

TAXATION

     On August 31, 1994, the United States and France entered into the
Convention between the United States of America and France for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital (the Treaty). The following is a general summary of the
principal tax effects that may apply to you as a holder of our ordinary shares
or ADSs for purposes of US federal income tax and French tax, if all of the
following apply to you:

     - you own, directly or indirectly, less than 10% of our share capital;

     - you are:

        - an individual who is a citizen or resident of the US for US federal
          income tax purposes;

        - a corporation or other entity taxable as a corporation that is created
          or organized in or under the laws of the US or any political
          subdivision thereof;

        - an estate, the income of which is subject to US federal income
          taxation regardless of its source; or

        - a trust, if a court within the US is able to exercise primary
          supervision over its administration and one or more US persons have
          the authority to control all of the substantial decisions of the
          trust;

     - you are entitled to the benefits of the Treaty under the "Limitations of
       Benefits" article of the Treaty;

                                       143


     - you hold your ordinary shares or ADSs of our company as capital assets;
       and

     - your functional currency is the US dollar.

     If a partnership holds ordinary shares or ADSs, the US federal income tax
treatment of a partner will generally depend upon the status of the partner and
upon the activities of the partnership. If you are a partner of a partnership
holding ordinary shares or ADSs, you should consult your own tax advisor.

     This summary is based in part upon the representations of the depositary,
and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. In general, and taking
into account these assumptions, holders of ADSs will be treated as the owners of
the ordinary shares represented by such ADSs, and exchanges of ordinary shares
for ADSs, and ADSs for ordinary shares, will not be subject to US federal income
or French tax.

     YOU ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
CONSEQUENCES TO YOU OF ACQUIRING, OWNING OR DISPOSING OF VIVENDI UNIVERSAL
ORDINARY SHARES OR ADSS, RATHER THAN RELYING ON THIS SUMMARY. The summary may
not apply to you or may not completely or accurately describe tax consequences
to you. For example, special rules may apply to US expatriates, insurance
companies, tax-exempt organizations, financial institutions, persons subject to
the alternative minimum tax, securities broker-dealers, traders in securities
that elect to mark-to-market and persons holding their ordinary shares or ADSs
as parties to a straddle or conversion transaction, among others. Those special
rules are not discussed in this annual report. The summary is based on the laws,
conventions and treaties in force as of the date of this annual report, all of
which are subject to changes, possibly with retroactive effect. Also, this
summary does not discuss any tax rules other than US federal income tax and
French tax rules. Further, the US and French tax authorities and courts are not
bound by this summary and may disagree with its conclusions.

  TAXATION OF DIVIDENDS

  Withholding Tax and Avoir Fiscal

     We will withhold tax from your dividend at the reduced rate of 15%,
provided that you have complied with the following procedures:

     - You must complete French Treasury Form RF1 A EU-No. 5052, "Application
       for Refund," and send it to the French tax authorities before the date of
       payment of the dividend. If you are not an individual, you must also send
       the French tax authorities an affidavit attesting that you are the
       beneficial owner of all the rights attached to the full ownership of the
       ordinary shares or ADSs, including, among other things, the dividend
       rights, at the Centre des Impots des Non Residents, 9 rue d'Uzes, 75094
       Paris Cedex 2, France.

     - If you cannot complete Form RF1 A EU-No. 5052 before the date of payment
       of the dividend, you may complete a simplified certificate and send it to
       the French tax authorities. This certificate must state that:

     - you are a resident of the US for purposes of the Treaty;

     - your ownership of our ordinary shares or ADSs is not effectively
       connected with a permanent establishment or a fixed base in France;

     - you own all the rights attached to the full ownership of the ordinary
       shares or ADSs, including, among other things, the dividend rights;

     - you meet all the requirements of the Treaty for the reduced rate of
       withholding tax; and

     - you claim the reduced rate of withholding tax.

     If you have not completed Form RF1 A EU-No. 5052 or the simplified
certificate before the dividend payment date, we will deduct French withholding
tax at the rate of 25%. In that case, you may claim a refund of the excess
withholding tax by completing and providing the French tax authorities with Form
RF1 A EU-No. 5052 before December 31 of the calendar year following the year
during which the dividend is paid.
                                       144


     The Application for Refund, together with instructions, can be obtained
from the US Internal Revenue Service or from the Centre des Impots des Non
Residents upon request. After completing it, you send it to the Centre des
Impots des Non Residents.

     Under the Treaty, you may be entitled, in certain circumstances, to a
French tax credit (called the avoir fiscal). Effective January 1, 2002, under
French tax law, a resident of France is entitled to an avoir fiscal in respect
of a dividend received from a French corporation. Under regulation n degrees 4
J-2-01 of the French Revenue Code, the avoir fiscal is limited to dividends
approved at the annual general meeting of shareholders. The avoir fiscal is
equal to 50% of the amount of the dividend for individuals, 50% for companies
owning more than 5% of Vivendi Universal's capital and 10% for other
shareholders. You may be entitled to a payment equal to the avoir fiscal, less a
15% withholding tax, if any one of the following applies to you:

     - you are an individual or other non-corporate holder that is a resident of
       the US for purposes of the Treaty;

     - you are a US corporation, other than a regulated investment company that
       owns less than 10% of our share capital;

     - you are a US corporation that is a regulated investment company and that
       owns, directly or indirectly, less than 10% of the share capital of our
       company, provided that less than 20% of your ordinary shares or ADSs are
       beneficially owned by persons who are neither citizens nor residents of
       the US; or

     - you are a partnership or trust that is a resident of the US for purposes
       of the Treaty, but only to the extent that your partners, beneficiaries
       or grantors would qualify as eligible under the first or second points on
       this list and are subject to US income tax with respect to such dividends
       and payment of the avoir fiscal.

     If you are eligible, you may claim the avoir fiscal by completing Form RF1
A EU-No. 5052 and sending it to the French tax authorities at the Centre des
Impots des Non Residents before December 31 of the year following the year in
which the dividend is paid. As noted below, you will not receive this payment
until after January 15 of the calendar year following the year in which the
dividend was paid. To receive the payment, you must submit a claim to the French
tax authorities and attest that you are subject to US federal income taxes on
the payment of the avoir fiscal and the related dividend. For partnerships or
trusts, the partners, beneficiaries or grantors, as applicable, must make this
attestation.

     Specific rules apply to the following:

     - tax-exempt US pension funds, which include the exempt pension funds
       established and managed in order to pay retirement benefits subject to
       the provisions of Section 401(a) of the Internal Revenue Code (qualified
       retirement plans), Section 403 of the Internal Revenue Code (tax deferred
       annuity contracts) or Section 457 of the Internal Revenue Code (deferred
       compensation plans); and

     - various other tax-exempt entities, including certain state-owned
       institutions, not-for-profit organizations and individuals (with respect
       to dividends they beneficially own and that are derived from an
       individual retirement account).

     Entities in these two categories are eligible for a reduced withholding tax
rate of 15% on dividends, subject to the same withholding tax filing
requirements as eligible US holders, except that they may have to supply
additional documentation evidencing their entitlement to these benefits. These
entities are not entitled to the full avoir fiscal. They may claim a partial
avoir fiscal equal to 30/85 of the gross avoir fiscal, provided that they own,
directly or indirectly, less than 10% of our capital and that they satisfy the
filing formalities specified in Internal Revenue Service regulations.

     The avoir fiscal or partial avoir fiscal and any French withholding tax
refund are generally expected to be paid within 12 months after the holder of
ordinary shares or ADSs files Form RF1 A EU-No. 5052. However, they will not be
paid before January 15 following the end of the calendar year in which the
dividend is paid.

     For US federal income tax purposes, the gross amount of a dividend and any
avoir fiscal, including any French withholding tax, will be included in your
gross income as dividend income when payment is actually or
                                       145


constructively received by the shareholder in the case of ordinary shares or the
depositary in the case of ADSs, to the extent they are paid out of our current
or accumulated earnings and profits as calculated for US federal income tax
purposes. If those dividends constitute qualified dividend income ("QDI") and
you are an individual holder of our ordinary shares or ADSs, you will generally
pay tax on such dividends at rates applicable to net capital gains (see
"Taxation of Capital Gains"), provided that certain holding period requirements
are satisfied. Dividends paid by our company will be QDI if we are a Qualified
Foreign Corporation ("QFC") at the time the dividends are paid. We believe that
we are currently, and will continue to be, a QFC so as to allow dividends paid
by us to be QDI for US federal income tax purposes. If you are a corporate
holder of our ordinary shares or ADSs, you will not benefit from the reduced
rate on dividends available to individual holders. Dividends paid by our company
will not give rise to any US dividends received deduction.

     Also for US federal income tax purposes, the amount of any dividend paid in
euros or French francs, including any French withholding taxes, will be equal to
the US dollar value of the euros or French francs on the date the dividend is
included in income, regardless of whether the payment is in fact converted into
US dollars. You will generally be required to recognize US source ordinary
income or loss when you sell or dispose of euros or French francs. You may also
be required to recognize foreign currency gain or loss if you receive a refund
under the Treaty of tax withheld in excess of the Treaty rate. This foreign
currency gain or loss will generally be US source ordinary income or loss.

     To the extent that any dividends paid exceed our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
distribution will be treated as follows:

     - first, as a tax-free return of capital to the extent of the adjusted tax
       basis in your ordinary shares or ADSs, which will cause a reduction in
       the adjusted tax basis of your ordinary shares or ADSs in our company.
       This adjustment will increase the amount of gain, or decrease the amount
       of loss, that you will recognize if you later dispose of those ordinary
       shares or ADSs; and

     - second, the balance of the dividend in excess of the adjusted tax basis
       in your ordinary shares or ADSs will be taxed as capital gain recognized
       on a sale or exchange.

     French withholding tax imposed on the dividends you receive and on any
avoir fiscal at 15% under the Treaty is treated as payment of a foreign income
tax. You may take this amount as a deduction from your gross income or a credit
against your US federal income tax liability, subject to specific conditions and
limitations. Dividends will generally constitute foreign source "passive" income
for foreign tax credit purposes. For recipients predominantly engaged in the
active conduct of a banking, insurance, financing or similar business, dividends
paid by our company will generally constitute foreign source "financial
services" income for foreign tax credit purposes.

  THE PRECOMPTE

     A French company must pay an equalization tax (called the precompte) to the
French tax authorities if it distributes dividends out of:

     - profits that have not been taxed at the ordinary corporate income tax
       rate, or

     - profits that have been earned and taxed more than five years before the
       distribution.

     The amount of the precompte is 50% of the net dividends before withholding
tax.

     If you are not entitled to the full avoir fiscal, you may generally obtain
a refund from the French tax authorities of any precompte paid by us with
respect to dividends distributed to you. Under the Treaty, the amount of the
precompte refunded to US residents is reduced by the 15% withholding tax applied
to dividends and by the partial avoir fiscal, if any. You are entitled to a
refund of any precompte that we actually pay in cash, but not to any precompte
that we pay by offsetting French and/or foreign tax credits. To apply for a
refund of the precompte, you should file French Treasury Form RF1 B EU-No. 5053
before the end of the year following the year in which the dividend was paid.
The form and its instructions are available from the Internal Revenue Service in
the United States or from the Centre des Impots des Non Residents.
                                       146


     For US federal income tax purposes, the amount of the precompte, including
any French withholding tax, will be included in your gross income as dividend
income in the year you receive it to the extent the precompte is paid out of our
current or accumulated earnings and profits as calculated for US federal income
tax purposes. If you are an individual holder of our ordinary shares or ADSs,
you will generally pay tax on such dividends at rates applicable to net capital
gains (see "Taxation of Capital Gains"), provided that certain holding period
requirements are satisfied. If you are a corporate holder of our ordinary shares
or ADSs, you will not benefit from the reduced rate on dividends available to
individual holders. The amount of precompte included in your gross income as
dividend income will not give rise to any US dividends received deduction. The
amount of any precompte paid in euros or French francs, including any French
withholding taxes, will be equal to the US dollar value of the euros or French
francs on the date the precompte is included in income, regardless of whether
the payment is in fact converted into US dollars. You will generally be required
to recognize a US source ordinary income or loss when you sell or dispose of the
euros or French francs.

     To the extent that any precompte paid exceeds our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
amount of precompte you receive will be treated first as a tax-free return of
capital to the extent of the adjusted tax basis in your ordinary shares or ADSs
and the balance will be taxed as capital gain recognized on a sale or exchange
(see "Withholding Tax and Avoir Fiscal").

     French withholding tax imposed on the precompte you receive is treated as
payment of a foreign income tax. You may take this amount as a deduction from
your gross income or a credit against your US federal income tax liability,
subject to specific conditions and limitations. The refund of precompte will
generally constitute foreign source "passive" income for foreign tax credit
purposes. For recipients predominantly engaged in the active conduct of a
banking, insurance, financing or similar business, the refund of precompte will
generally constitute foreign source "financial services" income for foreign tax
credit purposes.

  TAXATION OF CAPITAL GAINS

     If you are a resident of the US for purposes of the Treaty, you will not be
subject to French tax on any capital gain if you sell or exchange your ordinary
shares or ADSs, unless you have a permanent establishment or fixed base in
France and the ordinary shares or ADSs you sold or exchanged were part of the
business property of that permanent establishment or fixed base. Special rules
apply to individuals who are residents of more than one country.

     In general, for US federal income tax purposes, you will recognize capital
gain or loss if you sell or exchange your ordinary shares or ADSs. in an amount
equal to the difference between the amount realized on such sale or other
taxable exchange and your adjusted tax basis in your ordinary shares or ADSs.
Under current law, capital gains realized by corporate and individual taxpayers
are generally subject to US federal income tax at the same rate as ordinary
income, except that long term capital gains realized by individuals, trusts and
estates are subject to US federal income tax at a maximum rate of 15% for
taxable years beginning before January 1, 2009 (20% thereafter). Any gain or
loss will generally be US source gain or loss. The deductibility of capital
losses may be subject to certain limitations.

     If you are a cash basis holder who receives foreign currency in connection
with a sale or other taxable exchange of your ordinary shares or ADSs, your
amount realized will be based on the US dollar value of the foreign currency you
receive with respect to such ordinary shares or ADSs, as determined on the
settlement date of such sale or other taxable exchange.

     If you are an accrual basis holder, you may elect the same treatment
required of cash basis holders with respect to a sale or other taxable exchange
of your ordinary shares or ADSs provided that the election is applied
consistently from year to year. Such election may not be changed without the
consent of the Internal Revenue Service. If you are an accrual basis holder and
do not elect to be treated as a cash basis holder (pursuant to the Treasury
Regulations applicable to foreign currency transactions) for this purpose, you
may have a foreign currency gain or loss for US federal income tax purposes
because of differences between the US dollar value of the foreign currency
received prevailing on the date of the sale or other taxable exchange of
ordinary shares or ADSs and the date of payment. Any such currency gain or loss
generally will be treated as
                                       147


ordinary income or loss and would be in addition to gain or loss, if any, that
you recognized on the sale or other taxable exchange of your ordinary shares or
ADSs.

  PASSIVE FOREIGN INVESTMENT COMPANY RULES

     We believe that we will not be treated as a passive foreign investment
company, or PFIC, for US federal income tax purposes for the current taxable
year or for future taxable years. However, an actual determination of PFIC
status is fundamentally factual in nature and cannot be made until the close of
the applicable taxable year. We will be a PFIC for any taxable year in which
either:

     - 75% or more of our gross income is passive income; or

     - our assets that produce passive income or that are held for the
       production of passive income amount to at least 50% of the value of our
       total assets on average.

     For purposes of this test, we will be treated as directly owning our
proportionate share of the assets, and directly receiving our proportionate
share of the gross income, of each corporation in which we own, directly or
indirectly, at least 25% of the value of the shares of such corporation.

     If we were to become a PFIC, the tax applicable to distributions on our
ordinary shares or ADSs and any gains you realize when you dispose of our
ordinary shares or ADSs may be less favorable to you. You should consult your
own tax advisors regarding the PFIC rules and their effect on you if you
purchase our ordinary shares or ADSs.

  FRENCH ESTATE AND GIFT TAXES

     Under "The Convention between the United States of America and the French
Republic for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Estates, Inheritance and Gifts of November 24,
1978," if you transfer your ordinary shares or ADSs by gift or if they are
transferred by reason of your death, that transfer will be subject to French
gift or inheritance tax only if one of the following applies:

     - you are domiciled in France at the time of making the gift, or at the
       time of your death; or

     - you used the shares in conducting a business through a permanent
       establishment or fixed base in France, or you held the ordinary shares or
       ADSs for that use.

  FRENCH WEALTH TAX

     The French wealth tax does not generally apply to our ordinary shares or
ADSs if governance agreement restricts the transfer of Vivendi Universal shares.

  US INFORMATION REPORTING AND BACKUP WITHHOLDING

     Dividend payments on the ordinary shares or ADSs and proceeds from the
sale, exchange or other disposition of the ordinary shares or ADSs may be
subject to information reporting to the Internal Revenue Service and possible US
backup withholding. US federal backup withholding generally is imposed,
currently at a rate of 28% (31% for 2011 and thereafter), on specified payments
to persons that fail to furnish required information. Backup withholding will
not apply to a holder who furnishes a correct taxpayer identification number or
certificate of foreign status and makes any other required certification, or who
is otherwise exempt from backup withholding. Any US persons required to
establish their exempt status generally must file Internal Revenue Service Form
W-9, entitled Request for Taxpayer Identification Number and Certification.

     Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against your US federal income tax liability. You
may obtain a refund of any excess amounts withheld under the backup withholding
rules by filing the appropriate claim for refund with the Internal Revenue
Service and furnishing any required information.

                                       148


DIVIDENDS

  DIVIDENDS

     We may only pay dividends out of our "distributable profits," plus any
amounts held in our reserve that the shareholders decide to make available for
distribution. These amounts may not include those that are specifically required
to be held in reserve by law or our statuts. Distributable profits consist of
the unconsolidated statutory net profit we generate in each fiscal year, as
increased or reduced by any profit or loss carried forward from prior years,
less any contributions to the reserve accounts made pursuant to law or our
statuts. This restriction on the payment of dividends also applies to each of
our French subsidiaries on an unconsolidated basis.

  LEGAL RESERVE

     The French commercial code provides that societes anonymes such as our
company must allocate 5% of their unconsolidated statutory net profit each year
to their legal reserve fund before dividends may be paid with respect to that
year. Funds must be allocated until the amount in the legal reserve is equal to
10% of the aggregate nominal value of the issued and outstanding share capital.
As of December 31, 2002, the legal reserve amounted 82.16 million euros. The
legal reserve of any company subject to this requirement may be distributed to
shareholders only upon liquidation of the company.

  APPROVAL OF DIVIDENDS

     Under the French commercial code, the board may propose a dividend for
approval by the shareholders at the annual general meeting of shareholders. If
we have earned distributable profits since the end of the preceding fiscal year,
as reflected in an interim income statement certified by our auditors, the board
may distribute interim dividends to the extent of the distributable profits for
the period covered by the interim income statement. The board exercises this
authority subject to French law and regulations and may do so without obtaining
shareholder approval, unless such distribution is of shares.

  DISTRIBUTION OF DIVIDENDS

     Dividends are distributed to shareholders pro rata. Outstanding dividends
are payable to shareholders on the date of the shareholders meeting at which the
distribution of dividends is approved. In the case of interim dividends,
distributions are made to shareholders on the date of the management board
meeting at which the distribution of interim dividends is approved. The actual
dividend payment date is decided by the shareholders in an ordinary general
meeting (or by the board of directors in the absence of such a decision by the
shareholders).

  TIMING OF PAYMENT

     According to the French commercial code, we must pay any dividends within
nine months of the end of our fiscal year unless otherwise authorized by court
order. Dividends on shares that are not claimed within five years of the date of
declared payment revert to the French State.

  DOCUMENTS ON DISPLAY

     Documents referred to in this document can be inspected at our offices at
42, avenue de Friedland, Paris Cedex 75380, France.

     We are subject to the periodic reporting and other informational
requirements of the Exchange Act. Under the Exchange Act, we are required to
file reports and other information with the SEC. Specifically, we are required
to file annually a Form 20-F no later than six months after the close of each
fiscal year. Copies of reports and other information, when so filed, may be
inspected without charge and may be obtained at prescribed rates at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549. The public may obtain information regarding the
Washington, D.C. Public Reference Room by calling the Commission at
1-800-SEC-0330. The public may also view documents we
                                       149


have filed with the SEC on the internet at www.sec.gov. As a foreign private
issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions in Section 16 of the Exchange Act.

ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

     Vivendi Universal currently has primary exposures to several market risks,
principally interest rate risk, exchange rate and currency risk and equity
market risk.

     Interest rate exposures are primarily related to the indebtedness of
Vivendi Universal. See Note 7 to the Consolidated Financial Statements included
in this document.

     Currency exposures are primarily related to the operational activities of
several business units of Vivendi Universal that operate globally and collect
revenues in foreign currencies, in particular the US dollar.

     Equity market exposure is primarily related to several investments and
equity-linked derivatives held by Vivendi Universal. See Note 8 and Note 9 to
the Consolidated Financial Statements included in this document.

     Vivendi Universal manages these exposures by entering into derivatives
contracts, as described below.

  Interest Rate Risk Management

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against changes in future cash flows required for interest payments on
variable rate debt. The following table summarizes information about Vivendi
Universal's interest rate risk management instruments:



                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
                                                                       
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................    E   626      E  5,868
  Average interest rate paid................................       5.80%         3.36%
  Average interest rate received............................       2.85%         5.01%
  Expiry:
     Due within one year....................................    E   387      E  2,282
     Due between two and five years.........................        208         1,526
     Due after five years...................................         31         2,060


                                       150




                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
                                                                       
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................    E 8,492      E 10,284
  Average interest rate paid................................       4.50%         4.25%
  Average interest rate received............................       2.82%         2.97%
  Expiry:
     Due within one year....................................    E 1,818      E  2,766
     Due between two and five years.........................      4,410         3,951
     Due after five years...................................      2,264         3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................    E    --      E  3,392
  Guarantee rate............................................                     4.78%
  Expiry:
     Due within one year....................................    E    --      E    150
     Due between two and five years.........................         --         1,391
     Due after five years...................................         --         1,851


- ---------------

(1) These instruments were sold in 2002.

     A sensitivity analysis of the impact of a global increase of interest rates
of 1% on the net income (loss) generates an additional accounting charge of E19
million, assuming a constant level of indebtedness.

  Foreign Currency Risk Management

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese yen, British pound and Canadian
dollar. The following table summarizes information about Vivendi Universal's
foreign currency risk management instruments:



                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
                                                                  
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................    3,315       640
  Purchase against the euro.................................       45     1,065
  Expiry:
     Due within one year....................................    3,360     1,705
     Due between two and five years.........................       --        --
     Due after five years...................................       --        --


                                       151




                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
                                                                  
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................    1,437     1,027
  Purchase against the euro.................................      594     1,683
  Expiry:
     Due within one year....................................    2,031     2,447
     Due between two and five years.........................       --       263
     Due after five years...................................       --        --


     Approximately 90% of these derivatives are US dollar denominated. As of
December 31, 2002, an unfavorable movement of 10% of the currencies held by
Vivendi Universal would generate an additional accounting charge of E122 million
for 2003, assuming constant net currency exposures over the year.

     Another sensitivity analysis, based on an exchange rate of E1 = $1,
presents the impact of a hypothetical change of 8% in this exchange rate: (i) an
appreciation of the US dollar against euro would generate an increase of around
2.5% in consolidated revenues, and (ii) depreciation of the US dollar against
euro would generate a decrease of around 2.5% in consolidated revenues.

  Equity Market Risk Management

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities, as well
as to exposures relating to equity options linked to the hedging of several of
our convertible bonds and other options. During 2002 and 2001, Vivendi Universal
hedged certain equity-linked debts using specialized indexed swaps. These swaps,
with notional amounts totaling E 266 million in 2002 versus E 377 million in
2001 will progressively expire over eight years. The swaps are used to hedge the
underlying debts.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.



                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
                                                                 
Equity-linked swaps:
Notional amount.............................................  E  266      E  377
Expiry:
  Due within one year.......................................     132          46
  Due between two and five years............................      11         208
  Due after five years......................................     123         123
Equity Options & others
  Notional Amount...........................................  E5,630      E3,155(1)
  Expiry
     Due within one year....................................     157       1,190
     Due between two and five years.........................   4,522       1,966
     Due after five years...................................     951


                                       152




                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
                                                                 
Total return swaps:
  Notional amount...........................................  E  788      E3,511
  Expiry:
     Due within one year....................................     788          --
     Due between two and five years.........................      --       3,511


- ---------------
(1) This figure includes the notional amount, i.e. the strike price, of the
    equity-linked derivatives. These instruments are described in Note 2, Note
    8, Note 9 and Note 11 to the Consolidated Financial Statements included in
    this document.

     In addition to these instruments, Vivendi Universal is exposed to
fluctuations in the share price of InterActiveCorp price through VUE Preferred B
Shares. This exposure is matched by InterActiveCorp shares held by several
subsidiaries of Vivendi Universal. The terms of these shares are described in
the Notes to the Consolidated Financial Statements included in this document.

     A sensitivity analysis made using assumption related to a one-time global
decrease of 10% in share price of all securities owned would reduce the
valuation of the equity-linked portfolio of Vivendi Universal by E194 million.

  Credit Concentrations and Counter-Party Risk

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

ITEM 12:  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

                                    PART II

ITEM 13:  DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

     [None.]

ITEM 14:  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

     [None.]

ITEM 15:  CONTROLS AND PROCEDURES

     Our Chairman and Chief Executive Officer and our Chief Financial Officer
have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rule 13a-14(c)) as of a date
within 90 days of the filing of this Annual Report on Form 20-F. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that, as of the evaluation date, our disclosure controls and
procedures were effective to ensure that material information

                                       153


relating to us and our consolidated subsidiaries would be made known to them by
others within these entities, particularly during the period in which this
annual report was being prepared, in order to allow timely decisions regarding
required disclosure.

     Following a change in senior management in the summer of 2002, Vivendi
Universal is engaged in a reorganization of its business activities, through
refinancing efforts and an asset divestiture program. As a result, we have
effected significant changes to the structure of the group. In the context of
these changes, we are taking the opportunity to reevaluate our internal controls
and have begun to implement changes. To our knowledge and except as noted above,
there are no other factors that could significantly affect our internal controls
subsequent to the evaluation date.

ITEM 16:  [RESERVED]

ITEM 16A:  AUDIT COMMITTEE FINANCIAL EXPERT

     Not applicable.

ITEM 16B:  CODE OF ETHICS

     Not applicable.

ITEM 16C:  PRINCIPAL ACCOUNTING FEES AND SERVICES

     Not applicable.

                                    PART III

ITEM 17:  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18:  FINANCIAL STATEMENTS

     See our Consolidated Financial Statements beginning at page F1.

ITEM 19:  EXHIBITS



EXHIBIT
NUMBER                               DESCRIPTION
- -------                              -----------
          
  1.1        Vivendi Universal Restated Corporate statuts (organizational
             document) (English translation).
  2.1        Deposit Agreement dated as of April 19, 1995, as amended and
             restated as of September 11, 2000, and as further amended
             and restated as of December 8, 2000, among Vivendi
             Universal, S.A., The Bank of New York, as Depositary, and
             all the Owners and Beneficial Owners from time to time of
             American Depositary Shares issued thereunder (incorporated
             by reference to Vivendi Universal's Registration Statement
             on Form 8-A dated December 29, 2000, file number 001-16301).
  2.2        Vivendi Universal agrees to furnish to the Commission on
             request a copy of any instrument defining the rights of
             holders of long-term debt of Vivendi Universal and of any
             subsidiary for which consolidated or unconsolidated
             financial statements are required to be filed.
  4.1        Merger Agreement, dated as of June 19, 2000, by and among
             Vivendi S.A., Canal Plus S.A., Sofiee S.A., 3744531 Canada
             Inc. and The Seagram Company Ltd. (incorporated by reference
             to Vivendi Universal's Registration Statement on Form F-4
             dated October 30, 2000, file number 333-48966).
  4.2        Shareholder Governance Agreement, dated as of June 19, 2000,
             by and among Vivendi S.A., Sofiee S.A. and certain
             shareholders of The Seagram Company Ltd. (incorporated by
             reference to Vivendi Universal's Registration Statement on
             Form F-4 dated October 30, 2000, file number 333-48966).


                                       154




EXHIBIT
NUMBER                               DESCRIPTION
- -------                              -----------
          
  4.3        Stock and Asset Purchase Agreement, dated as of December 19,
             2000, among Vivendi Universal S.A., Pernod Ricard S.A. and
             Diageo plc (incorporated by reference to Vivendi Universal's
             Registration Statement on Form F-4 dated February 5, 2001,
             file number 333-55000).
  4.4        Transaction Agreement, dated as of December 16, 2001, by and
             among Vivendi Universal, S.A., Universal Studios, Inc., USA
             Networks, Inc., USANi LLC and Liberty Media Corporation
             (incorporated by reference to Vivendi Universal's Report of
             Foreign Private Issuer on Form 6-K dated December 19, 2001,
             file number 001-16301).
  4.5        Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holding XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Networks, Inc., USANi Sub LLC, New-U
             Studios Holdings, Inc. and Barry Diller (incorporated by
             reference to Vivendi Universal's Schedule 13D/A dated May
             17, 2002, file number 005-42990).
  4.6        Amendment No. 1 dated as of November 25, 2002, to the
             Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holdings XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Interactive, (formerly known as USA
             Networks, Inc.), USANi Sub LLC, New-U Studios Holdings,
             Inc., Barry Diller, Vivendi Universal S.A., Universal
             Studios, Inc., Sub I -- USA Holding LLC, USI -- USA Holding
             LLC, USIE -- USA Holding LLC and V -- USA Holding LLC
             (incorporated by reference to Vivendi Universal's Schedule
             13D/A dated February 20, 2003, file number 005-42990).
  4.7        E2.5 billion Dual Currency Term and Revolving Credit
             Facility dated as of May 13, 2003, among Vivendi Universal
             S.A., as borrower, certain of its subsidiaries, as
             guarantors, the lenders party thereto, and Societe Generale,
             as facility agent and security agent.
  4.8        Restated Credit Agreement dated as of March 15, 2002, as
             amended on February 6, 2003, and as further amended and
             restated on May 13, 2003, among Vivendi Universal S.A., as a
             borrower and the obligors' agent, certain of its
             subsidiaries, as guarantors, the lenders party thereto and
             Societe Generale, as facility and security agent.
  4.9        Loan Agreement dated as of June 24, 2003, among Vivendi
             Universal Entertainment LLLP, as borrower, the lenders from
             time to time party thereto, Bank of America, N.A. and
             JPMorgan Chase Bank, as co-administrative agents, Barclays
             Bank PLC, as syndication agent, and JPMorgan Chase Bank, as
             collateral agent and paying agent.
  4.10       Facility Agreement dated December 6, 2002, among Societe
             d'Investissement pour la Telephonie S.A., as borrower, the
             lenders party thereto, Credit Lyonnais, as agent, and The
             Royal Bank of Scotland PLC, as security trustee; as amended
             by an Amendment Letter, dated January 20, 2003; as further
             amended by a 2nd Amendment Letter, dated January 21, 2003;
             as further amended by a 3rd Amendment Letter, dated March
             31, 2003; and as further amended by a 4th Amendment Letter,
             dated June 25, 2003.
  4.11       Indenture dated as of April 8, 2003, between Vivendi
             Universal S.A. and The Bank of New York, as trustee.
  4.12       Letter Agreement dated December 17, 2001, between Vivendi
             Universal S.A. and Edgar M. Bronfman.


                                       155




EXHIBIT
NUMBER                               DESCRIPTION
- -------                              -----------
          
  4.13       Employment Agreement dated September 25, 2002, by and
             between Vivendi Universal U.S. Holding Co. and Edgar
             Bronfman, Jr.
  8.1        Subsidiaries of Vivendi Universal S.A.
 11.1        Consent of RSM Salustro Reydel and Barbier Frinault & Cie.
 11.2        Consent of RSM Salustro Reydel.
 11.3        Certification of Chief Executive Officer and Chief Financial
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
             2002.
 11.4        Certification furnished pursuant to 18 U.S.C. Section 1350,
             as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
             of 2002.


                                       156


                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                          VIVENDI UNIVERSAL, S.A.

                                          By:     /s/ JACQUES ESPINASSE
                                            ------------------------------------
                                            Name: Jacques Expinasse
                                            Title: Senior Executive Vice
                                                   President and Chief Financial
                                                   Officer

Date: June 30, 2003

                                       157


                               VIVENDI UNIVERSAL

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                              PAGE
                                                              ----
                                                           
Report of Independent Public Accountants....................  F-2
Report of Independent Public Accountants....................  F-3
Consolidated Statement of Income............................  F-4
Consolidated Balance Sheet..................................  F-5
Consolidated Statement of Cash Flows........................  F-6
Consolidated Statement of Shareholders' Equity..............  F-8
Notes to Consolidated Financial Statements..................  F-9


                                       F-1


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2002 and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for the year then ended, expressed in Euros. We have also audited
the information presented in Note 17 which includes the effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the company and
shareholder's equity as of and for the year ended December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of the Company as of December
31, 2001 and December 31, 2000 and for each of the two years in the period ended
December 31, 2001, were jointly audited by Barbier Frinault & Cie, a member firm
of Andersen Worldwide and RSM Salustro Reydel and whose report dated March 28,
2002, except for Note 14 as to which the date is May 24, 2002, expressed an
unqualified opinion on these statements. Andersen Worldwide has ceased operating
as a member of the Securities and Exchange Commission Practice Section of the
American Institute of the Certified Public Accountants.

     We conducted our audit in accordance with auditing standards generally
accepted in France and the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statements presentation. We believe that our
audit provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (i) the financial position of the Company as of
December 31, 2002 and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
France and (ii) the information with respect to accounting principles generally
accepted in the United States of America as of and for the year ended December
31, 2002 set forth in Note 17.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States of America and the effect of those
differences on consolidated net income for year ended December 31, 2002 and
shareholders' equity as of December 31, 2002 is set forth in Note 17 to the
consolidated financial statements.

                                                
/s/ RSM Salustro Reydel                                     /s/ Barbier Frinault & Cie
RSM Salustro Reydel                                Barbier Frinault & Cie
                                                   A member firm of Ernst & Young International



                                 Paris, France
                                 April 2, 2003
 (Except with respect to matters discussed in Note 17 as to which date is June
                                   27, 2003)
                                       F-2


                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS(1)

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2001 and
December 31, 2000 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001, expressed in Euros. We have also audited the
information presented in Note 14, which includes the approximate effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the Company for the
years ended December 31, 2001, 2000 and 1999 and on shareholders' equity of the
Company as of December 31, 2001 and 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in France and the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statements presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (a) the financial position of Vivendi Universal and
subsidiaries as of December 31, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
France and (b) the information with respect to accounting principles generally
accepted in the United States of America as of December 31, 2001 and 2000 and
for the years ended December 31, 2001, 2000 and 1999 set forth in Note 14.

     Without calling into question the opinion expressed above, we wish to draw
your attention to the sub-section "Changes in Accounting Principles and
Financial Statement Presentation" of the section of the notes "Summary of
Significant Accounting Policies and Practices" which states the change in
presentation of the Consolidated Statement of Income and the change in
definition of the exceptional items.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States and the approximate effect of those
differences on consolidated net income for each of the three years in the period
ended December 31, 2001 and shareholders' equity as of December 31, 2001 and
2000 is set forth in Note 14 to the consolidated financial statements.

/s/ Barbier Frinault & Cie                               /s/ RSM Salustro Reydel
Barbier Frinault & Cie,                                      RSM Salustro Reydel
a member firm of Andersen Worldwide

                                 Paris, France
                                 March 28, 2002
(Except with respect to the matters discussed in Note 14 as to which the date is
                                 May 24, 2002)

- ---------------

     1 This report is a copy of the previously issued joint audit report which
has not been reissued.
                                       F-3


                        CONSOLIDATED STATEMENT OF INCOME



                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                      2002
                                                  ILLUSTRATION
                                                    VE EQUITY       2002        2001
                                                  ACCOUNTING(1)   ACTUAL(2)    ACTUAL    2000(4)
                                                  -------------   ---------   --------   --------
                                                   (UNAUDITED)
                                                  (IN MILLIONS OF EUROS EXCEPT PER SHARE AMOUNTS)
                                                                             
REVENUES........................................    E 28,112      E 58,150    E 57,360   E 41,580
Cost of revenues................................     (16,749)      (40,574)    (39,526)   (30,181)
Selling, general and administrative Expenses....      (8,919)      (12,937)    (13,699)    (9,004)
Other operating expenses, net...................        (567)         (851)       (340)      (572)
                                                    --------      --------    --------   --------
OPERATING INCOME................................       1,877         3,788       3,795      1,823
Financing expenses..............................        (650)       (1,333)     (1,455)    (1,288)
Financial provisions............................      (2,786)       (2,895)       (482)      (196)
Other income (expense)..........................        (658)         (514)          9        722
                                                    --------      --------    --------   --------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.............................      (2,217)         (954)      1,867      1,061
Exceptional items, net..........................       1,125         1,049       2,365      3,812
Income tax (expense) benefit....................      (2,119)       (2,556)     (1,579)    (1,009)
                                                    --------      --------    --------   --------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY
  INTEREST AND MINORITY INTEREST................      (3,211)       (2,461)      2,653      3,864
Equity in (losses) earnings of disposed
  businesses(2).................................          17            17          --         --
Equity in (losses) earnings of unconsolidated
  Companies.....................................         (99)         (294)       (453)      (306)
Goodwill amortization...........................        (992)       (1,277)     (1,688)      (634)
Goodwill impairment.............................     (18,442)      (18,442)    (13,515)        --
                                                    --------      --------    --------   --------
INCOME (LOSS) BEFORE MINORITY INTEREST..........     (22,727)      (22,457)    (13,003)     2,924
Minority interest...............................        (574)         (844)       (594)      (625)
                                                    --------      --------    --------   --------
NET INCOME (LOSS)...............................    E(23,301)     E(23,301)   E(13,597)  E  2,299
                                                    ========      ========    ========   ========
EARNINGS (LOSS) PER BASIC SHARE.................    E (21.43)     E (21.43)   E (13.53)  E   3.63
                                                    ========      ========    ========   ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN
  MILLIONS)(3)..................................     1,087.4       1,087.4     1,004.8      633.8


- ---------------

(1) This consolidated statement of income has been shown to present the Group's
    scope of consolidation as at December 31, 2002. It illustrates the
    accounting of Veolia Environnement using the equity method from January 1st,
    2002 instead of December 31st, 2002. (See Note 2).

(2) At December 31, 2002, Vivendi Universal has applied the option proposed in
    the paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses". Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the disposal
    of which was completed in February 2003; and Comareg, the disposal of which
    is pending (see Note 2 and 3).

(3) Excluding treasury shares recorded as a reduction of shareholders' equity.

(4) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4


                           CONSOLIDATED BALANCE SHEET



                                                                        DECEMBER 31,
                                                              ---------------------------------
                                                       NOTE     2002        2001        2000
                                                       ----   ---------   ---------   ---------
                                                                   (IN MILLIONS OF EUROS)
                                                                          
                                            ASSETS
Goodwill, net........................................    3    E  20,062   E  37,617   E  47,133
Other intangible assets, net.........................   10       14,706      23,302      20,180
Property, plant and equipment, net...................   10        7,686      23,396      19,989
Investments accounted for using the equity method....    4        1,903       9,176       9,177
Other investments....................................    4        4,138       5,583       7,342
Seagram's spirit and wine net assets held for sale...                --          --       8,759
                                                              ---------   ---------   ---------
TOTAL LONG-TERM ASSETS...............................            48,495      99,074     112,580
                                                              ---------   ---------   ---------
Inventories and work-in-progress.....................   10        1,310       3,163       3,219
Accounts receivable..................................   10        9,892      21,094      19,242
Deferred tax assets..................................    9        1,613       4,225       3,908
Short-term loans receivable..........................               640       2,948       1,171
Cash and cash equivalents............................    7        7,295       4,725       3,271
Other marketable securities..........................   10           88       3,773       7,347
                                                              ---------   ---------   ---------
TOTAL CURRENT ASSETS.................................            20,838      39,928      38,158
                                                              ---------   ---------   ---------
TOTAL ASSETS.........................................         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========
                             LIABILITIES AND SHAREHOLDERS' EQUITY
Share capital........................................         E   5,877   E   5,972   E   5.945
Additional paid-in capital...........................            27,687      28,837      27,913
Retained earnings....................................           (19,544)      1,939      22,817
                                                              ---------   ---------   ---------
TOTAL SHAREHOLDERS' EQUITY...........................    5       14,020      36,748      56,675
Minority interest....................................    5        5,497      10,208       9,787
Other equity.........................................    5        1,000          --          --
Deferred income......................................               579       1,856       1,560
Provisions and allowances............................    6        3,581       6,331       5,946
Long-term debt.......................................    7       10,455      27,777      23,954
Other non-current liabilities and accrued expenses...   10        3,894       5,688       6,337
                                                              ---------   ---------   ---------
                                                                 39,026      88,608     104,259
                                                              ---------   ---------   ---------
Accounts payable.....................................   10       13,273      26,414      23,497
Deferred taxes.......................................    9        7,857       9,977       8,130
Bank overdrafts and other short-term borrowings......    7        9,177      14,003      14,852
                                                              ---------   ---------   ---------
TOTAL CURRENT LIABILITIES............................            30,307      50,394      46,479
                                                              ---------   ---------   ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...........         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========


  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5


                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
                                                                            
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)...............................   E (23,301)   E (23,301)  E (13,597)  E   2,299
Reversal of equity in (losses) earnings of sold
  businesses....................................         (17)         (17)         --
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization.................      22,103       24,040      19,050       4,038
  Financial provisions(8).......................       2,786        2,895         482          92
  Gain on sale of property and equipment and
     financial assets, net......................      (1,541)      (1,748)     (2,546)     (3,910)
  Undistributed earnings from affiliates, net...         373          473         439         343
  Deferred taxes................................       1,589        1,608         379         231
  Minority interest.............................         574          844         594         625
Changes in assets and liabilities, net of effect
  of acquisitions and dispositions:.............         229         (124)       (301)     (1,204)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......       2,795        4,670       4,500       2,514
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant, equipment and
  other.........................................      (1,729)      (4,134)     (5,338)     (5,800)
Proceeds from sale of property, plant, equipment
  and other.....................................         158          158         464       2,822
Purchase of investments(4)......................      (2,000)      (4,792)     (8,203)     (3,133)
Sale of investments(4)..........................       9,233       10,987       1,947       3,787
Sale of spirits and wine business...............          --           --       9,359          --
Sale (Purchase) of portfolio investments........          --           --       4,395         233
Net decrease (increase) in financial
  receivables...................................      (1,875)      (2,027)        278       4,452
Purchase of treasury shares held as marketable
  securities....................................          --           --        (141)     (2,456)
Sales (purchases) of other marketable
  securities....................................         322          213       1,579      (1,386)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY (USED FOR) INVESTING
  ACTIVITIES....................................       4,109          405       4,340      (1,481)
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term
  borrowings....................................      (3,271)      (5,991)     (1,670)      2,432
Notes mandatorily redeemable for new shares of
  Vivendi Universal.............................         767          767
Proceeds from issuance of borrowings and other
  long-term debt................................         369        2,748       5,195      16,370
Principal payment on borrowings and other
  long-term liabilities.........................         510       (1,854)     (5,900)    (21,923)
Net proceeds from issuance of common shares.....          68        1,622         582       3,396
Sales (purchases) of treasury shares(5).........       1,973        1,973      (4,253)       (106)
Cash dividends paid(6)..........................      (1,120)      (1,300)     (1,423)       (800)
Cash payment to USA Interactive(7)..............      (1,757)      (1,757)         --          --
                                                   ---------    ---------   ---------   ---------
NET CASH (USED FOR) PROVIDED BY FINANCING
  ACTIVITIES....................................      (2,461)      (3,792)     (7,469)       (631)


                                       F-6




                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
                                                                            
Effect of foreign currency exchange rate changes
  on cash and cash equivalents..................         981        1,287          83           7
                                                   ---------    ---------   ---------   ---------
CHANGE IN CASH AND CASH EQUIVALENTS.............   E   5,424    E   2,570   E   1,454   E     409
                                                   =========    =========   =========   =========
CASH AND CASH EQUIVALENTS:
Beginning.......................................   E   1,871    E   4,725   E   3,271   E   2,862
                                                   =========    =========   =========   =========
Ending..........................................   E   7,295    E   7,295   E   4,725   E   3,271
                                                   =========    =========   =========   =========


- ---------------

(1) Includes 100% of Cegetel, Maroc Telecom and Vivendi Universal Entertainment
    which are controlled by Vivendi Universal with a 44%, 35% and 86% interest,
    respectively (see Note 13). The cash contribution from these companies for
    the year ended December 31, 2002 is disclosed in paragraph 10.3.1.

    At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) This statement of cash flows has been shown to present the Group's scope of
    consolidation as at December 31, 2002. It illustrates the accounting of
    Veolia Environnement using the equity method from January 1st, 2002 instead
    of December 31st, 2002.

(3) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(4) Includes net cash from acquired or disposed companies. As of December 31,
    2002, the impact on net debt of these transactions is shown in paragraph
    7.2.

(5) Including impact of settlement of put options on Vivendi Universal shares
    (E 883) million as of December 31, 2002.

(6) Including E 1,048 million of dividends paid by Vivendi Universal SA.

(7) See Note 3.

(8) See Note 10.1.3.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-7


                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY



                                          COMMON SHARES       ADDITIONAL                  NET
                                      ---------------------    PAID-IN     RETAINED     INCOME     SHAREHOLDERS'
                                        NUMBER      AMOUNT     CAPITAL     EARNINGS     (LOSS)        EQUITY
                                      -----------   -------   ----------   ---------   ---------   -------------
                                      (THOUSANDS)                      (IN MILLIONS OF EUROS)
                                                                                 
BALANCE AT DECEMBER 31, 1999........     595,648    E 3,276    E 4,351     E   1,834   E   1,431     E  10,892
Changes in accounting method........          --         --         --          (120)          4          (116)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 1999........     595,648      3,276      4,351         1,714       1,435        10,776
Net loss for the year 2000..........          --         --         --            --       2,299         2,299
Foreign currency translation
  adjustment........................          --         --         --          (735)         --          (735)
Appropriation of net income.........          --         --         --         1,435      (1,435)           --
Dividends paid, E 1 per share.......          --         --         --          (566)         --          (566)
Goodwill from business combinations
  reversed following the disposition
  of BSkyB, Vinci, Nexity and 34% of
  Multithematique...................          --         --        781           (44)         --           737
Merger transactions among Vivendi,
  Seagram and Canal Plus............     486,561      2,676     23,372        18,792          --        44,840
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      11,185         62        585            --          --           647
Treasury shares allocation..........     (12,586)       (69)    (1,176)           --          --        (1,245)
Release of revaluation surplus and
  other.............................          --         --         --           (78)         --           (78)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2000........   1,080,808      5,945     27,913        20,518       2,299        56,675
Net loss for the year 2001..........          --         --         --            --     (13,597)      (13,597)
Foreign currency translation
  adjustment........................          --         --         --         1,483          --         1,483
Appropriation of net income.........          --         --         --         2,299      (2,299)           --
Dividends paid, E 1 per share.......          --         --         --        (1,203)         --        (1,203)
Goodwill from business combination
  reversed following the disposition
  of TV Sport.......................          --         --         --            35          --            35
Conversion of ex-Seagram
  exchangeables.....................      31,549        173      2,335        (2,508)         --            --
Conversion of ex-Seagram stock
  options...........................       3,452         19        255            --          --           274
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      10,142         56        419            --          --           475
Common shares cancelled (treasury
  shares)...........................     (40,123)      (221)    (2,070)           --          --        (2,291)
Treasury shares allocation..........          --         --         --        (4,634)         --        (4,634)
Release of revaluation surplus and
  other.............................          --         --        (15)         (454)         --          (469)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2001........   1,085,828      5,972     28,837        15,536     (13,597)       36,748
Net loss for the year 2002..........          --         --         --            --     (23,301)      (23,301)
Foreign currency translation
  adjustment........................          --         --         --        (3,615)         --        (3,615)
Appropriation of net income.........          --         --         --       (13,597)     13,597            --
Dividends paid, E 1 per share(1)....          --         --       (890)         (421)         --        (1,311)
Goodwill from business combination
  reversed..........................          --         --         --         1,001          --         1,001
Conversion of ex-Seagram
  exchangeables.....................      11,463         63        848          (887)         --            24
Conversion of ex-Seagram stock
  options...........................       1,239          7         92            --          --            99
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......       1,396          8         48            --          --            56
Common shares cancelled (treasury
  shares)...........................     (31,367)      (173)    (1,248)           --          --        (1,421)
Treasury shares allocation..........          --         --         --         5,907          --         5,907
Release of revaluation surplus and
  other.............................          --         --         --          (167)         --          (167)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2002........   1,068,559      5,877     27,687         3,757     (23,301)       14,020


- ---------------

(1) Of which "precompte" of E 263 million.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-8


NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 DESCRIPTION OF BUSINESS

     Vivendi Universal is one of the largest media and telecommunications groups
in the world.

     Vivendi Universal's portfolio of assets includes operations in six
principal segments:

     Cegetel Group -- Cegetel Group, through its 80% owned subsidiary, SFR, is a
mobile telecommunications operator in France and through its 90% owned
subsidiary, Cegetel S.A., is also a fixed line operator in France.

     Universal Music Group (UMG) -- UMG is a recorded music business. UMG
acquires, manufactures, markets and distributes recorded music in 63 countries.
In addition to its recorded music business, UMG also publishes music. UMG
manufactures, sells and distributes music video and DVD products, and owns mail-
order music/video clubs. Vivendi Universal owns approximately 92% of UMG.

     Vivendi Universal Entertainment (VUE) -- Vivendi Universal owns
approximately 86% of VUE, a US-based entertainment company active in the film,
television, and theme parks and resorts businesses through the following
entities:

     - Universal Pictures Group (UPG) -- UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets.

     - Universal Television Group (UTG) -- UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide.

     - Universal Parks and Resorts (UPR) -- UPR is a destination theme park
       operator. UPR owns interests in and operates theme parks and resorts in
       the US, Japan and Spain including Universal Studios in Hollywood,
       California and Universal Studios in Orlando, Florida.

     Canal+ Group -- Canal+ Group produces and distributes digital and analog
pay-TV in France (principally through its premium channel, Canal+, and its
digital satellite platform, CanalSatellite). Canal+ Group has 6.95 million
individual subscriptions in France. Canal+ Group is also a leading European
studio involved in the production, co-production, acquisition and distribution
of feature films and television programs and owns interests in pay-TV activities
in Italy, Spain, Poland and elsewhere. Vivendi Universal owns 100% of Canal+
Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast license
for the premium channel Canal+, and Vivendi Universal owns 67% of
CanalSatellite.

     Maroc Telecom -- Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco. Vivendi Universal has a 35%
ownership stake in Maroc Telecom. However, through its control of the executive
board and management, Vivendi Universal exercises day-to-day control over the
business and consolidates it in its financial statements.

     Vivendi Universal Games (VU Games) -- VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handhelds and consoles. Vivendi Universal owns 99% of VU Games.

     Vivendi Universal was formed through the merger of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A. in December 2000. From its origins as a
water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media and telecommunications company with the December
2000 merger and the May 2002 acquisition of the entertainment assets of USA
Networks. Following the appointment of new management in July 2002, Vivendi
Universal commenced a significant asset disposal program aimed at reducing the
group's indebtedness, which Vivendi Universal is pursuing actively. Vivendi
Universal has already largely exited the environmental services and publishing
businesses and sold various smaller operations.

                                       F-9


1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

1.2.1 BASIS OF PRESENTATION

     Vivendi Universal has prepared its consolidated financial statements in
accordance with accounting principles generally accepted in France (French
GAAP). Vivendi Universal has applied the methodology for consolidated financial
statements based on Regulation 99.02 as approved by the "Comite de la
Reglementation Comptable" (French Accounting Standards Board). The financial
statements of foreign subsidiaries have, when necessary, been adjusted to comply
with French GAAP rules.

     French GAAP rules differ in certain respects from accounting principles
generally accepted in the United States (US GAAP). A description of these
differences and their effects on net income and shareholders' equity is
discussed in Note 17.

     The consolidated financial statements are presented in French GAAP format,
but also incorporate certain modifications and additional disclosures designed
to conform more closely with US GAAP style financial statements.

     Vivendi Universal has a December 31 year-end. Subsidiaries that do not have
a December 31 year-end prepare interim financial statements, except when their
year-end falls within the three months prior to December 31. Subsidiaries
acquired are included in the consolidated financial statements from the
acquisition date, or, for convenience reasons and if the impact is not material,
the most recent balance sheet date. The consolidated financial statements
include the accounts of Vivendi Universal and its subsidiaries after elimination
of material intercompany accounts and transactions.

1.2.2 PRINCIPLES OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS

     All companies in which Vivendi Universal has an interest exceeding 50%, or
over which it has another form of legal or effective control (including Cegetel
and Maroc Telecom), are consolidated. In addition, Vivendi Universal only
consolidates a subsidiary if no other shareholder or group of shareholders
exercises substantive participating rights which would enable it to veto or
block routine decisions taken by Vivendi Universal.

     Subsidiaries in which Vivendi Universal has an interest exceeding 20% or
otherwise exercises significant influence are consolidated by the equity method.
Vivendi Universal also uses the equity method for consolidating its investments
in certain subsidiaries in which it owns less than 20% of the voting shares. In
these cases, Vivendi Universal exercises significant influence over the
operating and financial decisions of the subsidiary either (a) through
representation on the subsidiary's Board of Directors in excess of its
percentage interest, or (b) because there is no other shareholder with a
majority voting interest in the subsidiary, or (c) because Vivendi Universal
exercises substantive participating rights that enable Vivendi Universal to veto
or block decisions taken by the subsidiary board.

     The proportionate method of consolidation is used for investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies. For such entities, which are within the Veolia Environnement Group
only, Vivendi Universal records its proportionate interest in the consolidated
balance sheet and consolidated income statement accounts.

     All other investments, which are not consolidated, are accounted for at
cost. A valuation allowance is established for any negative difference between
carrying value and fair value that is determined to be other than temporary.

     For additional explanations on the accounting treatment difference under
French and US GAAP regarding Special Purpose Entity (SPE), please refer to Note
17.1.

                                       F-10


1.2.3 USE OF ESTIMATES

     The preparation of these financial statements requires management to make
informed estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, management evaluates its
estimates and judgments, including those related to the sale of future and
existing music and publishing related products, as well as from the distribution
of theatrical and television products, in order to evaluate the ultimate
recoverability of accounts receivable, film inventory, artist and author
advances and investments and in determining valuation allowances for
investments, long-lived assets, pension liabilities and deferred taxes.
Estimates and judgments are also required and regularly evaluated concerning
financing operations, restructuring costs, contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ significantly from these estimates
under different assumptions or conditions.

1.2.4 FOREIGN CURRENCY TRANSLATION

     Translation of subsidiaries' financial statements -- Financial statements
of subsidiaries for which the reporting currency is not the euro are translated
into euros at applicable exchange rates. All asset and liability accounts are
translated at the appropriate year-end exchange rate, and all income and expense
accounts and cash flow statements are translated at average exchange rates for
the year. The resulting translation gains and losses are recorded in
shareholders' equity. For subsidiaries operating in highly inflationary
economies, the financial statements are translated into the stable currency of a
dominant country in the same economic region. Related translation gains or
losses are recorded in current period earnings. These financial statements are
then translated from the stable currency into euros at the closing exchange
rates, and related translation gains or losses are recorded in shareholders'
equity. The exchange rates for the main currencies used to establish the
consolidated financial statements were as followed:



                                            DECEMBER 31, 2002             DECEMBER 31, 2001
                                       ---------------------------   ---------------------------
                                       CLOSING RATE   AVERAGE RATE   CLOSING RATE   AVERAGE RATE
                                       ------------   ------------   ------------   ------------
                                                                        
US Dollar............................     1.030          0.934          0.878          0.897
GBP..................................     0.646          0.626          0.608          0.623


     Foreign currency transactions -- Foreign currency transactions are
converted into euros at the exchange rate on the transaction date. The resulting
exchange gains and losses are recorded in current period earnings. Exchange
gains or losses on borrowings denominated in foreign currencies that qualify as
hedges for net investments in foreign subsidiaries are recorded in shareholders'
equity.

1.2.5 CONSOLIDATED STATEMENT OF INCOME

     As permitted by Regulation 99.02 (Section 41), Vivendi Universal has
elected to present its Consolidated Statement of Income in a format that
classifies income and expenses by function rather than by nature.

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
(for additional information on revenue recognition, please refer to Note 17.9).
Advances to established recording artists and direct costs associated with the
creation of record masters are capitalized and are expensed as the related
royalties are earned, or when the amounts are determined to be unrecoverable.
The advances are expensed when past performance or current popularity does not
provide a sound basis for estimating that the advance will be recovered from
future royalties.

     TV & Film -- Generally, theatrical films are produced or acquired for
initial exhibition in the worldwide theatrical market followed by distribution
in the home video, pay television, network exhibition, television

                                       F-11


syndication and basic cable television market. Television films from our library
may be licensed for domestic and foreign syndication, cable or pay television
and home video. Theatrical revenues from the distribution of films are
recognized as the films are exhibited. Home video product revenues, less a
provision for estimated returns and allowances, are recognized upon availability
of product for retail sale to the ultimate customer. Revenues from television
and pay television licensing agreements are recognized when the films are
available for telecast, and all other conditions of the sale have been met.
Revenues from television subscription services related to cable and satellite
programming are recognized as the services are provided. Revenues at theme parks
are recognized at the time of visitor attendance. Revenues for retail operations
are recognized at point-of-sale.

     Film and television costs are stated at the lower of cost less accumulated
amortization, or net realizable value. The estimated total film and television
production and participation costs are expensed based on the ratio of the
current periods gross revenues to estimated total gross revenues from all
sources on an individual production basis. The costs of licenses and rights to
exhibit theatrical movies and other programming on cable and pay TV channels are
recorded at the contract price, generally when the screening certificate has
been obtained and the programming is available for exhibition, or on the date
the contract is signed, if later. The costs for theatrical movies and other
long-term programming are amortized as the programming is exhibited. The costs
of multi-year sports rights are amortized over the term of the contract.

     Estimates of TV & Film total gross revenues and costs can change
significantly due to a variety of factors, including the level of market
acceptance of film and television products and subscriber fees. Accordingly,
revenue and cost estimates are reviewed periodically and prospective revisions
to amortization rates or write-downs to net realizable value may occur. Such
adjustments could have a material effect on the results of operations in future
periods.

     Telecoms -- Telephone service and installation revenues are recognized as
they occur. Subscriptions are billed monthly in advance, and recorded as a
deferred revenue liability, before transfer to earnings of the period during
which the service is provided. Prepaid fees are deferred and recognized as the
purchased minutes are used. Service discounts are accounted for as a reduction
of revenue when the service is used, or on provision of line access in the case
of pack discounts.

     Games -- Vivendi Universal Games records revenue when goods are shipped to
the customer except if risk of ownership does not transfer to the customer upon
shipment.

     Internet -- Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed. Revenues from e-commerce
activities are recognized when the products sold are shipped to customers.

     Publishing -- Magazine advertising revenues are recognized when the
advertisements are published. Publication subscription revenues are recognized
over the term of the subscription on a straight-line basis. Revenues from the
sale of books, magazines, interactive games and other multimedia products are
recognized when the products are shipped based on gross sales less a provision
for future returns.

     Environmental Services -- Revenues on public service contracts are
recognized on transfer of ownership or as services are provided, according to
the terms of the contract. Title is considered to have passed to the customer
when goods are shipped. The revenues include operating subsidies and exclude
production for own use. Specific measures concerning this activity are discussed
in the Document de reference issued by Veolia Environnement for the year ended
December 31, 2002.

                                       F-12


1.2.7 RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred.

1.2.8 ACCOUNTING FOR COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE
      MARKETED

     All costs incurred to establish the technological feasibility of a computer
software product to be sold, leased, or otherwise marketed are research and
development costs, and are expensed as they are incurred. The technological
feasibility of a computer software product is established when all planning,
designing, coding, and testing activities that are necessary to establish that
the product can be produced to meet its design specifications have been
completed.

1.2.9 ACCOUNTING FOR INTERNAL USE SOFTWARE

     Direct internal and external costs incurred to develop computer software
for internal use, including web site development costs, are capitalized during
the application development stage. Application development stage costs generally
include software configuration, coding, installation and testing. Costs of
significant upgrades and enhancements that result in additional functionality
are also capitalized. Costs incurred for maintenance and minor upgrades and
enhancements are expensed as incurred.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years (for additional information
on advertising costs, please refer to Note 17.9).

1.2.11 INCOME OF CONSOLIDATED COMPANIES BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
       GOODWILL AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST

     Income from operations before exceptional items and income taxes includes
the business activities of consolidated companies and the cost of financing. It
does not include exceptional items.

1.2.12 EXCEPTIONAL ITEMS

     The definition of exceptional items is restricted to material items of an
unusual nature that arise from events or transactions outside the ordinary
course of business and which are not expected to recur. They principally include
capital gains and losses on the disposal of business activities and the
abandonment of related receivables where relevant.

1.2.13 DEFERRED TAXES

     Deferred tax assets and liabilities are recognized based on the differences
between the financial statement and tax base values of assets and liabilities.
Deferred tax amounts, recorded at the applicable rate at closing date, are
adjusted to allow for the impact of changes in French tax law and current tax
rates. Deferred tax assets are recognized for deductable timing differences, tax
losses and tax losses carry-overs. Their net realizable value is estimated
according to recovery prospects. Deferred tax assets on retained earnings of
foreign subsidiaries are not recorded.

1.2.14 EARNINGS PER SHARE

     The Group presents two earnings per share (EPS) amounts, basic and diluted.
Basic EPS is calculated by dividing net income by the weighted average number of
common shares outstanding, including treasury shares reported as marketable
securities, during the year. Diluted EPS adjusts basic EPS for the effects of
convertible securities, stock options and other potentially dilutive financial
instruments, where such effect is dilutive during the exercise period.

                                       F-13


1.2.15 GOODWILL AND BUSINESS COMBINATIONS

     All business combinations are accounted for as purchases. Under the
purchase accounting method, assets acquired and liabilities assumed are recorded
at fair value. The excess of the purchase price over the fair value of net
assets acquired, if any, is capitalized as goodwill and amortized over the
estimated period of benefit on a straight-line basis.

     Prior to December 31, 1999, French GAAP permitted certain significant
acquisitions to be accounted for as mergers. Under this method, assets and
liabilities of the acquired company were accounted for at historical cost. The
difference between the value of shares issued in the merger and the value of net
assets acquired was recorded as goodwill.

     Up to the end of 1999, acquisitions completed through the issuance of
shares, that portion of goodwill attributable to such proceeds could be recorded
as a reduction of shareholders' equity, up to the amount of the related share
premium.

     Amortization periods for goodwill range from 20 to 40 years for our
Environmental Services businesses and from 7 to 40 years for our other
businesses.

     Following exceptional depreciation in 2001 and the first half of 2002 based
on a comparison of goodwill current fair value and net book value, Vivendi
Universal prospectively modified the amortization base for the goodwill
concerned as from July 1, 2002. This base is now taken as the net value of
goodwill after recurring amortization and exceptional depreciation as at June
30, 2002. The straight-line method is applied over the residual period of the
depreciation schedule.

1.2.16 OTHER INTANGIBLE ASSETS

     Vivendi Universal has acquired substantial intangible assets, including
music catalogs, artists' contracts, music and audiovisual publishing assets,
film and television libraries, international television networks, editorial
inventories, distribution networks, customer bases, copyrights and trademarks.
Music catalogs, artists' contracts and music publishing assets are amortized
over periods ranging from 14 to 20 years (for additional information on other
intangible assets, please refer to Note 17.9).

1.2.17 UMTS LICENSE

     In August 2001, SFR acquired a 20-year license to provide 3G (third
generation) UMTS mobile telephony services in France. The license fee was split
in two: a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. Pursuant to a notice issued by the "Conseil National de la
Comptabilite" on January 9, 2002, the license was recognized as intangible
assets for E 619 million. It will be amortized on a straight-line basis from the
date when the service commences until the license maturity (i.e. August 2021).
Regarding future payments, they will be expensed when they occur since they are
not easily valuable.

1.2.18 PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is carried at cost. Depreciation is computed
using the straight-line method based on the estimated useful life of the assets,
generally 20-30 years for buildings and 3-15 years for equipment and machinery.
Assets financed by lease contracts that include a purchase option (known in
France as "credit-bail") are capitalized and amortized over the shorter of the
lease term or the estimated useful life of the assets. Amortization expenses on
assets acquired under such leases are included in depreciation expenses.

1.2.19 VALUATION OF LONG-LIVED ASSETS

     Vivendi Universal reviews the carrying value of long-lived assets,
including goodwill and other intangible assets, for impairment at each closing
or whenever facts, events or changes in circumstances, both internally and
externally, indicate that the carrying amount may not be recoverable. Any such
conceptual impairment is measured, for each reporting unit, by comparing the net
book value and current fair value of the asset where

                                       F-14


the current value depends on the underlying nature of its market value or value
in use. The reporting unit is defined as an operating segment, or one level
below an operating segment if the components of an operating segment constitute
businesses with no similar economic characteristics. Market value is defined as
the amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transaction costs.
Normal market conditions are those for transactions between fully informed,
independent and consenting parties. Value in use is defined as the value of
future economic benefits to be obtained from utilisation or write-off of the
asset. It is calculated from estimated future economic benefits:

     - generally, the fair value of business units is determined by the analysis
       of discounted cash flows;

     - if this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, market price for business units quoted at the Stock
       Exchange;

     - when using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

1.2.20 INVENTORIES

     Inventories are valued either on a first-in-first-out or a weighted average
cost basis and are recorded at the lower of cost or net realizable value.

1.2.21 CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

     Cash and cash equivalents consist of cash in banks and highly liquid
investments with original maturities of three months or less and are recorded at
cost, which approximates fair value due to the short-term maturity.

     Marketable securities consist of other highly liquid investments and
Vivendi Universal treasury shares acquired in open market transactions or in
connection with stock options granted to directors and employees. Vivendi
Universal treasury shares held for other reasons are recorded as a reduction of
shareholders' equity. Marketable securities are carried at cost and a valuation
allowance is accrued if the fair value is less than the carrying value.

1.2.22 BONDS EXCHANGEABLE FOR VIVENDI UNIVERSAL SHARES

     On issuance of bonds exchangeable for shares the premium is not recorded as
a liability. This is because the borrowing is intended to be redeemed in the
form of shares and consequently represents a contingent liability. An accrual is
made from issuance to redemption or conversion, as soon as the share price
passes below the redemption price, to cover probable cash redemption of the
bonds.

1.2.23 DERIVATIVE FINANCIAL INSTRUMENTS

     The Group uses various derivative financial instruments that predominantly
qualify as hedges to manage its exposure to fluctuations in interest rates,
foreign currency exchange rates and investments in equity and debt securities.
These instruments include interest rate and cross-currency swap agreements,
forward exchange contracts and interest rate caps. Interest rate swaps and caps
are used to manage net exposure to interest rate changes related to borrowings
and to lower overall borrowing costs. Interest rate swaps that modify borrowings
or designated assets are accounted for on an accrual basis. Premiums paid for
interest rate caps are expensed as incurred. Cross-currency swaps and forward
exchange contracts are used to reduce earnings and cash flow volatility
associated with changes in foreign exchange rates and to protect the value of
existing foreign currency assets and liabilities. Gains and losses arising from
the change in the fair value of currency instruments that qualify for hedge
accounting treatment are deferred until related gains or losses on hedged items
are realized. Other derivative financial instruments are used by the Group to
hedge a part of public debt with principal repayment terms based on the value of
Vivendi Universal stock. These instruments effectively modify the principal
terms to a fixed amount and the rates to floating rates. Any derivative
financial instruments that do not qualify as hedges for financial reporting
purposes are recorded at the lower of cost or
                                       F-15


fair value. Loss relating to the periodic change in fair value is recorded as
income or expense of the current period.

1.2.24 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions, postretirement health care and life insurance and
postemployment benefits, principally severance for eligible employees.
Retirement pensions are provided for substantially all of our employees through
defined benefit or defined contribution plans, which are integrated with local
social security and multi-employer plans.

     For defined benefit plans, pension expense and plan contributions are
determined by independent actuaries using the projected unit cost method. This
method considers the probability of employees remaining with Vivendi Universal
until retirement, foreseeable changes in future compensation and an appropriate
discount rate for each country in which we maintain a pension plan. This results
in the recognition of pension-related assets and liabilities and related net
expense over the estimated term of service of our employees. Our funding policy
is consistent with applicable government funding requirements and regulations.
Pension plans may be funded with investments in various instruments such as
insurance contracts and equity and debt investment securities, but they do not
hold investments in Vivendi Universal's shares. Contributions to defined
contribution and multi-employer plans are funded and expensed currently. The
costs of post-retirement and post-employment benefits are accrued based on
actuarial studies performed by independent third-party acturial firms.

     Furthermore, Vivendi Universal has adopted the following rules:

     - Vivendi Universal uses fair value of plan assets in order to compute
       expected return, as well as to determine the amount of unrecognized
       actuarial gains and losses to be amortized during the reporting period;

     - The actuarial gains and losses are amortized using the minimal
       amortization method: the amounts of unamortized actuarial gains and
       losses recognized is the excess of 10 percent of the greater of the
       projected benefit obligation or the fair value of plan assets divided by
       the average remaining service period of active employees (or, if all or
       almost all of a plan's participants are inactive, the average remaining
       life expectancy of the inactive participants).

1.2.25 STOCK BASED COMPENSATION

     Vivendi Universal maintains stock option incentive plans that grant options
on its common shares to certain directors and employees and also to certain
employees of equity method investees. The purpose of these stock options plans
is to align the interest of management with the interest of shareholders by
providing an additional incentive to improve company performance and increase
share price on a long-term basis.

     In case of the issuance of new shares, shareholders' equity is credited for
the cumulative strike price to reflect the issuance of shares upon the exercise
of options. In the other cases, treasury shares held to fulfill obligations
under stock options granted are recorded as marketable securities and are
carried at the lower of their historical cost or their fair value or the strike
price of the stock-options hedged. Vivendi Universal recognizes any resulting
holding gain in the period that the shares are sold to the plan.

     Vivendi Universal also maintains employee stock purchase plans that allow
substantially all its full-time employees and those of certain of its
subsidiaries and equity method investees to purchase shares in Vivendi
Universal. Shares purchased by employees under these plans are subject to
certain restrictions relating to their sale or transfer.

1.2.26 CONSOLIDATED CASH FLOW STATEMENT

     The Consolidated Cash Flow Statement contains the information necessary to
analyze changes in the Group's cash position. The cash definition applied by the
Group prior to January 1, 2001, led to deduction of

                                       F-16


bank overdrafts from cash and cash equivalents. As from January 1, 2001, bank
overdrafts are now classified as short-term borrowings within the Consolidated
Cash Flow Statement. Since that date, "cash" now only represents cash and cash
equivalents recorded as Consolidated Balance Sheet assets.

NOTE 2 SUPPLEMENTARY FINANCIAL INFORMATION

2.1 DATA COMPARABILITY

     At December 31, 2002, Vivendi Universal has applied the option proposed in
the paragraph 23100 of the French rules 99-02 and presents the equity in
(losses) earnings of businesses which were sold during the year on one line in
the consolidated statement of income. This treatment concerns all of Vivendi
Universal Publishing excluding: Vivendi Universal Games; publishing activities
in Brazil; the consumer press division, which was sold in February 2003; and
Comareg, the sale of which is currently pending. Furthermore, in order to
present the Group's scope of consolidation as at December 31, 2002, a statement
of income illustrating the accounting for Veolia Environnement by using the
equity method from January 1st, 2002 instead of December 31st, 2002, has been
shown page 1.



                                                    VEOLIA        SOLD PUBLISHING
                                               ENVIRONNEMENT(1)    BUSINESSES(2)     TOTAL
                                               ----------------   ---------------   --------
                                                          (IN MILLIONS OF EUROS)
                                                                           
Revenues.....................................      E 30,038           E 2,838       E 32,876
Operating income.............................         1,911               268          2,179
Financial income.............................          (648)             (116)          (764)
Exceptional items............................           (76)              (50)          (126)
Net income (loss) at December 31, 2002.......           235                17            252
                                                   ========           =======       ========


- ---------------

(1) Veolia Environnement is fully consolidated in the consolidated statement of
    income actual 2002.

(2) Vivendi Universal publishing activities, excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, which was sold
    in February 2003; and Comareg, the sale of which is currently pending. These
    items are presented on the line "equity in (losses) earnings of disposed
    businesses" in the consolidated statement of income actual 2002.

2.2 2001 AND 2002 PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

     2001 and 2002 unaudited pro forma financial information is reported as if
the following transactions (described in Note 3) had occurred on January 1, 2001
for the pro forma income statements for the 2001 and 2002 financial years, and
at December 31, 2001 for the pro forma balance sheet at that date:

     - Reduction of participation in Veolia Environnement.

     - Disposal of all Vivendi Universal publishing activities(1) (activities
       disposed over 2002), excluding Vivendi Universal Games, publishing
       activities in Brazil, the consumer press division and Comareg.

     - Acquisition of the entertainment assets of USA Networks Inc.
       (consolidated in the actual financial statements as from May 7, 2002).

     - Acquisition of Maroc Telecom (consolidated in the actual financial
       statements as from April 1, 2001).

     - Acquisition of MP3 (consolidated in the actual financial statements as
       from September 1, 2001).

     This unaudited pro forma financial information is not necessarily
indicative of the results Vivendi Universal would have reported had the
transactions described above actually occurred at the dates adopted for

- ---------------

     1 Houghton Mifflin has been consolidated in the actual financial statements
       of the Group since July 1, 2001.
                                       F-17


preparation of the pro forma financial information. The accompanying pro forma
information is not intended to comply with Article 11 of regulation SX.

2.2.1 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2002 (UNAUDITED)



                                                      YEAR ENDED DECEMBER 31, 2002
                               --------------------------------------------------------------------------
                                           REDUCTION OF       DISPOSAL OF   ACQUISITIONS
                                           PARTICIPATION      PUBLISHING        USA            PROFORMA
                                ACTUAL         IN VE          ACTIVITIES    NETWORKS(1)       (UNAUDITED)
                               ---------   -------------      -----------   ------------      -----------
                                                         (IN MILLIONS OF EUROS)
                                                                               
REVENUES.....................  E  58,150     E (30,038)(a)      E   --         E  617(h)       E  28,729
Cost of revenues.............    (40,574)       23,825(a)           --           (340)(h)        (17,089)
Selling, general and
  administrative expenses....    (12,937)        4,018(a)           --           (117)(h)         (9,036)
Other operating expenses,
  net........................       (851)          284(a)           --             --(h)            (567)
                               ---------     ---------          ------         ------          ---------
OPERATING INCOME.............      3,788        (1,911)(a)          --            160(h)           2,037
Financial expenses, net......     (1,333)          713(a)(d)        78(g)         (82)(h)(j)        (624)
Financial provisions.........     (2,895)          109(a)           --             --(h)          (2,786)
Other income (expense).......       (514)         (144)(a)          --             --(h)            (658)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST..........       (954)       (1,233)(a)          78             78(h)          (2,031)
Exceptional items, net.......      1,049        (1,332)(a)(c)      844(f)          --(h)             561
Income tax (expense)
  benefit....................     (2,556)          437(a)         (192)(f)         (8)(h)(k)      (2,319)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...................     (2,461)       (2,128)(a)         730             70(h)          (3,789)
Equity in (losses) earnings
  of disposed businesses.....         17            --(a)          (17)(e)         --                 --
Equity in (losses) earnings
  of unconsolidated
  companies..................       (294)           72(a)(b)        --            (44)(h)(i)        (266)
Goodwill amortization........     (1,277)          285(a)           --            (48)(h)         (1,040)
Goodwill impairment..........    (18,442)           --(a)           --             --(h)         (18,442)
                               ---------     ---------          ------         ------          ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST...................    (22,457)       (1,771)(a)         713            (22)(h)        (23,537)
Minority interest............       (844)          270(a)           --              3(h)(l)         (571)
                               ---------     ---------          ------         ------          ---------
NET INCOME (LOSS)............  E (23,301)       (1,501)            713            (19)         E (24,108)
                               =========     =========          ======         ======          =========
EARNINGS (LOSS) PER BASIC
  SHARE......................  E  (21.43)                                                      E  (22.17)
                               =========                                                       =========


- ---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002.

                                       F-18


2.2.2 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2001 (UNAUDITED)



                                                   YEAR ENDED DECEMBER 31, 2001
                           -----------------------------------------------------------------------------
                                                                           ACQUISITION
                                       REDUCTION OF       DISPOSAL OF     USA NETWORKS,
                                       PARTICIPATION      PUBLISHING      MAROC TELECOM       PROFORMA
                            ACTUAL         IN VE          ACTIVITIES       AND MP3(1)        (UNAUDITED)
                           ---------   -------------      -----------     -------------      -----------
                                                      (IN MILLIONS OF EUROS)
                                                                              
REVENUES.................  E  57,360     E (29,094)(a)     E (2,862)(e)     E  2,329(h)       E  27,733
Cost of revenues.........    (39,526)       23,404(a)         1,309(e)        (1,014)(h)        (15,827)
Selling, general and
  administrative
  expenses...............    (13,699)        3,664(a)         1,084(e)          (610)(h)         (9,561)
Other operating expenses,
  net....................       (340)           62(a)            46(e)            --(h)            (232)
                           ---------     ---------         --------         --------          ---------
OPERATING INCOME.........      3,795        (1,964)(a)         (423)(e)          705(h)           2,113
Financial expenses,
  net....................     (1,455)          826(a)(d)        153(e)(g)       (248)(h)(j)        (724)
Financial provisions.....       (482)           54(a)            18(e)            --(h)            (410)
Other income (expense)...          9            36(a)            (2)(e)          (17)(h)             26
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST......      1,867        (1,048)(a)         (254)(e)          440(h)           1,005
Exceptional items, net...      2,365           (39)(a)(c)         2(e)            --(h)           2,328
Income tax (expense)
  benefit................     (1,579)          462(a)           119(e)           (45)(h)(k)      (1,043)
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...............      2,653          (625)(a)         (133)(e)          395(h)           2,290
Equity in (losses)
  earnings of
  unconsolidated
  companies..............       (453)         (209)(a)(b)         4(e)          (144)(h)(i)        (802)
Goodwill amortization....     (1,688)          341(a)            38(e)          (129)(h)         (1,438)
Goodwill impairment......    (13,515)          996(a)            --(e)            --(h)         (12,519)
                           ---------     ---------         --------         --------          ---------
INCOME (LOSS) BEFORE
  MINORITY INTEREST......    (13,003)          503(a)           (91)(e)          122(h)         (12,469)
Minority interest........       (594)         (136)(a)            5(e)           (34)(h)(l)        (759)
                           ---------     ---------         --------         --------          ---------
NET INCOME (LOSS)........  E (13,597)    E     367         E    (86)        E     88          E (13,228)
                           =========     =========         ========         ========          =========
EARNINGS (LOSS) PER BASIC
  SHARE..................  E  (13.53)                                                         E  (12.81)
                           =========                                                          =========


- ---------------

(1) Related to the Entertainment Assets of USA Networks, Inc., Maroc Telecom and
    MP3.com

     The unaudited pro forma adjustments for the income statement are as
follows:

- - REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate 2002 and 2001 Veolia Environnement income statements.

     (b) Record 2002 and 2001 equity earnings for Veolia Environnement,
respectively E 113 million and E (147) million, at the December 2002 interest
rate (20.4%).
                                       F-19


     (c) Eliminate capital gains and dilution profit of E 1,408 million (net of
fees) recorded in 2002 as a result of the reduction of Vivendi Universal's
participation in Veolia Environnement.

     (d) Record the reduction in interest expense, assuming that the E 1,479
million proceeds from the disposal of 15.5% of Veolia Environnement shares
received on June 28, 2002 were received at the beginning of 2001, and assuming
that they were utilized for the purpose of reducing financial debt. The proceeds
taken into account for this calculation represent only the fraction of the
proceeds from the disposals of Vivendi Universal's participation in Veolia
Environnement not allocated to the financing of the January 2003 acquisition of
British Telecom's 26% participation in Cegetel. Using the group's average
financing cost for 2001 and 2002 (4.0% and 4.1%, respectively), the reduction in
interest expense amounts to E 30 million in 2002 (prorata temporis) and E 60
million in 2001.

     No tax effect has been recorded on adjustments (c) and (d) as described
above, since taxes on capital gains realized in France have been offset against
tax loss carryforwards within the French tax group.

- - DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (e) Deconsolidate 2001 income statement of publishing activities and
eliminate equity in earnings of disposed businesses recorded for a net amount of
E 17 million in 2002.

     (f) Eliminate E 844 million of capital losses (net of fees) recorded in
2002 as a result of the disposal of publishing activities.

     (g) Record the reduction in interest expense, assuming that a fraction of
the proceeds from the disposal of publishing activities, which occurred in 2002,
was received at the beginning of 2001, and assuming that it has been utilized
for the purpose of reducing financial debt. The proceeds taken into account for
this calculation represents only the fraction of the proceeds from the disposals
of Vivendi Universal's publishing activities not allocated to the financing of
the January 2003 acquisition of British Telecom's 26% participation in Cegetel.
Using the group's average financing cost for 2001 and 2002 (4.0% and 4.1%,
respectively), the reduction in interest expense amounts to E 78 million in 2002
(prorata temporis) and E 94 million in 2001.

     No tax effect has been recorded on adjustments (f) and (g) as described
above, since capital losses realized in France have been offset against tax loss
carryforwards within the French tax group.

- - ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, OF MAROC TELECOM AND
  OF MP3.COM

     (h) Consolidate the income statement of the entities detailed below,
starting at the beginning of 2001.

          a.  Entertainment assets of USA Networks, Inc. (fully consolidated
     starting May 7 in 2002 actual financial statements and consolidated as an
     equity investment in 2001 actual financial statements)

          b.  Maroc Telecom (consolidated starting April 1, 2001 in actual
     financial statements)

          c.  MP3.com (consolidated starting September 1, 2001 in actual
     financial statements)

     (i) Eliminate equity earnings in USANi LLC. Until May 7, 2002, Vivendi
Universal accounted for its 47.9% interest in USANi LLC as an equity investment,
which earnings amounted to E 44 million and E 144 million, respectively in 2002
and 2001.

     (j) Record the additional interest expense, assuming that the
acquisitions -- as described in note (h) -- were completed at the beginning of
the financial year. For Maroc Telecom and MP3.com, the interest rate used is the
group's average financing cost for 2001 (4.0%), resulting in increased interest
expense of E 24 million and E 7 million, respectively.

Regarding the entertainment assets of USA Networks, the interest expense has
been calculated using the interest rates of the $1.6 billion bridge loan and of
the preferred A and B interests (totalling $2.5 billion).

     (k) Includes tax effect on adjustment (j) as described above.

                                       F-20


     (l) Record minority interest, mainly related to USA Interactive and Barry
Diller interest in Vivendi Universal Entertainment.

2.2.3 CONSOLIDATED BALANCE SHEET PRO FORMA 2001 (UNAUDITED)



                                                        DECEMBER 31, 2001
                          ------------------------------------------------------------------------------
                                      REDUCTION OF        DISPOSAL OF      ACQUISITION
                                      PARTICIPATION       PUBLISHING           USA
                           ACTUAL         IN VE           ACTIVITIES       NETWORKS(1)        PROFORMA
                          ---------   -------------       -----------      -----------       -----------
                                                                                             (UNAUDITED)
                                                      (IN MILLIONS OF EUROS)
                                                                              
ASSETS
Goodwill, net...........  E  37,617     E  (4,875)(a)      E (2,151)(f)     E  9,221(k)(l)    E 39,812
Other intangible assets,
  net...................     23,302        (4,486)(a)        (3,006)(f)        1,771(k)         17,581
Equity investments......      9,176          (170)(a)(b)          3(f)        (6,669)(k)(m)      2,340
Tangible and other
  financial assets......     28,979       (15,514)(a)          (452)(f)(g)     1,247(k)(m)      14,260
                          ---------     ---------          --------         --------          --------
TOTAL LONG-TERM
  ASSETS................     99,074       (25,045)           (5,606)           5,570            73,993
                          ---------     ---------          --------         --------          --------
Accounts receivable.....     21,094       (11,003)(a)        (1,613)(f)        1,232(k)(n)       9,710
Other current assets....     14,109        (3,616)(a)          (789)(f)          253(k)          9,957
Cash and cash
  equivalents...........      4,725          (998)(a)(c)        694(f)(h)         --(k)          4,421
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT ASSETS....     39,928       (15,617)           (1,708)           1,485            24,088
                          ---------     ---------          --------         --------          --------
TOTAL ASSETS............  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========
LIABILITIES AND
  SHAREHOLDERS' EQUITY
Shareholders' equity....  E  36,748     E   3,297(a)(d)    E   (844)(f)(i)  E    356(k)(o)    E 39,557
Minority interests......     10,208        (5,538)(a)           (43)(f)        1,025(k)(p)       5,652
Other long term
  liabilities...........     13,875        (4,700)(a)          (351)(f)          440(k)          9,264
Long-term debt..........     27,777       (14,539)(a)(e)       (997)(f)(j)     2,848(k)(q)      15,089
                          ---------     ---------          --------         --------          --------
                             88,608       (21,480)           (2,235)           4,669            69,562
                          ---------     ---------          --------         --------          --------
Accounts payable........     26,414       (12,345)(a)        (1,661)(f)          540(k)         12,948
Deferred taxes..........      9,977        (1,340)(a)          (279)(f)           --(k)          8,358
Short-term debt.........     14,003        (5,497)(a)        (3,139)(f)        1,846(k)(q)       7,213
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT
  LIABILITIES...........     50,394       (19,182)           (5,079)           2,386            28,519
                          ---------     ---------          --------         --------          --------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY................  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========


- ---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002

- - REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate the balance sheet of Veolia Environnement.

     (b) Record as an equity investment Veolia Environnement for an amount of
E 448 million.

     (c) Record the proceeds resulting from the disposal of 20.4% of Veolia
Environnement shares sold on December 24, 2002, for an amount of E 1,856
million. These proceeds have been allocated to the financing of the January 2003
acquisition of British Telecom's 26% participation in Cegetel.

     (d) Record the proceeds and the associated capital gains.

                                       F-21


     (e) Record the proceeds resulting from the disposal of 15.5% of Veolia
Environnement shares sold on June 28, 2002, for an amount of E 1,479 million,
considering that these proceeds have been allocated to the reduction of Vivendi
Universal financial debt.

- - DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (f) Deconsolidate the balance sheet of Vivendi Universal publishing
activities sold in 2002.

     (g) Record the intercompany transactions between Vivendi Universal and the
publishing activities sold in 2002 that were historically eliminated in the
consolidated balance sheet of Vivendi Universal.

     (h) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 879 million, corresponding to the portion of the proceeds
allocated to the financing of the January 2003 acquisition of BT Group's 26%
participation in Cegetel.

     (i) Record the proceeds and the associated capital losses.

     (j) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 316 million, corresponding to the portion of the proceeds
allocated to the reduction of Vivendi Universal financial debt; record the
proceeds resulting from the disposal of other publishing activities sold in
2002.

- - ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS

     (k) Consolidate the balance sheet of the acquired entertainment assets of
USA Networks, Inc.

     (l) Record the goodwill resulting from the preliminary purchase price
allocation of the acquired entertainment assets of USA Networks, Inc.

     (m) Includes the following items (see Note 3.2.1)

          a.  Eliminate of 282 million shares held by Vivendi Universal and
     previously consolidated as an equity investment, for an amount of E 6,669
     million.

          b.  Record USA Interactive warrants issued to Vivendi Universal, for a
     amount of E 475 million, net of allowance.

          c.  Record 25 million USA Interactive shares acquired from Liberty
     Media in connection with the acquisition of the entertainment assets of USA
     Networks, for an amount of E 623 million.

     (n) Record the reimbursement premium on Class A and Class B preferred
interests, for an amount of E 861 million.

     (o) Record the value of the 27.6 million treasury shares transferred to
Liberty Media, for an amount of E 971 million; record the depreciation allowance
of USA Interactive warrants, for an amount of E 615 million.

     (p) Record USA Interactive and Barry Diller's common interest in VUE of
5.44% and 1.5% respectively.

     (q) Record cash payment to USA Interactive for an amount of E 1,846
million; record Class A and Class B preferred interests issued to USA
Interactive for a total amount of E 2,848 million.

     The pro forma information presented above, which is not compliant with
Article 11 of SEC Regulation SX, has been included since it is required under
French GAAP in the Company's consolidated financial statement to promote
comparability.

                                       F-22


NOTE 3 GOODWILL

3.1 CHANGES IN GOODWILL



                                                                ACCUMULATED    GOODWILL,
                                                     GOODWILL   AMORTIZATION      NET
                                                     --------   ------------   ---------
                                                           (IN MILLIONS OF EUROS)
                                                                      
BALANCE AT DECEMBER 31, 2000.......................  E 49,054    E  (1,921)    E  47,133
Changes in consolidation scope.....................     3,541           62         3,603
Amortization.......................................        --       (2,148)       (2,148)
Impairment.........................................        --      (12,194)      (12,194)
Foreign currency translation adjustments...........     1,564         (341)        1,223
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2001.......................  E 54,159    E (16,542)    E  37,617
                                                     ========    =========     =========
Changes in consolidation scope.....................     1,705        3,742         5,447
Amortization.......................................        --       (1,277)       (1,277)
Impairment.........................................        --      (18,442)      (18,442)
Foreign currency translation adjustments...........    (4,114)         831        (3,283)
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2002.......................  E 51,750    E (31,688)    E  20,062
                                                     ========    =========     =========


3.2 ACQUISITIONS AND DISPOSITIONS

SIGNIFICANT ACQUISITIONS AND DISPOSITIONS THAT OCCURRED IN 2002

3.2.1 ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, INC.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of USA Interactive (formerly USA Networks, Inc.) with the
formation of Vivendi Universal Entertainment LLLP (VUE), a limited liability
limited partnership that is approximately 93% owned by non-wholly owned
subsidiaries of Vivendi Universal. As part of the transaction, Vivendi Universal
and its affiliates surrendered 320.9 million shares of USANi LLC that were
previously exchangeable into shares of USA stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USA common stock, which were
retained by Vivendi Universal (see Note 4.3).

     As consideration for the transaction, USA received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (i.e. May
2022). USA may require Vivendi Universal to purchase the Class B preferred
interests, and Vivendi Universal may require USA to sell to it the Class B
preferred interests, for a number of USA shares having a market value equal to
the accreted face value of the Class B preferred interests at such time, subject
to a maximum of 56.6 million USA shares. The parties also agreed to put and call
options on USA's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USA at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studio in cash or Vivendi Universal listed common equity
securities. For information on the VUE Partnership Agreement, see Note 11.

     In addition, Mr. Diller, USA's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal
Studio, Inc. (a subsidiary of Vivendi Universal) to purchase his common interest
and at any time after the later of (a) the second anniversary of the closing and
(b) the time Mr. Diller is no longer the VUE chief executive officer, Universal
Studio, Inc. may purchase Mr. Diller's common interest. In either

                                       F-23


case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
Studio, Inc. in cash or Vivendi Universal listed common equity securities. The
fair value of $275 million of Mr. Diller's common interest has been recorded as
part of the total purchase consideration at the acquisition date. As part of
Vivendi Universal's preliminary purchase price allocation, $15 million has been
recorded as the value of Mr. Diller's non-competition arrangement, which is
being amortized on a straight-line basis over a period of 18 months. The $275
million minimum value of the common interest is accounted for by Vivendi
Universal as a minority interest in VUE. Any increases in fair value above the
minimum put price of the common interest and any subsequent decreases in fair
value to the minimum put price of the common interest, are recognized in
operations by Vivendi Universal (for US GAAP purposes, only).

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USA, with
exercise prices ranging from $27.5 to $37.5 per share. The warrants were issued
to Vivendi Universal in return for an agreement to enter into certain commercial
arrangements with USA. At this time, no commercial arrangement is in place. A
portion of the warrants were sold in February 2003 (see Note 16).

     The entertainment assets acquired by Vivendi Universal were USA's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita).

     The acquisition cost of the USA entertainment assets amounts to E 11,008
million, and was determined with the assistance of an independent third-party
valuation firm, and is detailed as follows:



                                                              IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
                                                           
320.9 million USANi LLC shares surrendered(2)...............       7,386
Cash paid to USA Interactive(3).............................       1,774
Class B preferred interests VUE issued to USA
  Interactive(4)............................................       1,918
Premiums on class B preferred shares(5).....................        (529)
Class A preferred interests VUE issued to USA
  Interactive(6)............................................         822
Premiums on class A preferred shares(5).....................        (299)
Common interest of 5,44% in VUE issued to USA
  Interactive(7)............................................         707
Common interest of 1,5% in VUE issued to Barry Diller(7)....         278
USA Interactive warrants issued to Vivendi Universal(8).....      (1,049)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======


- ---------------

(1) Exchange rate euro/dollar: 0.9125 as of May 7, 2002.

(2) Approximately 282 million shares of USANi LLC already held by Vivendi
    Universal and its affiliates and 38.7 million shares of USANi LLC acquired
    from Liberty Media. The shares already held were valued at their book value,
    i.e. E 6,415 million. The shares acquired in exchange for Vivendi Universal
    common shares were valued using the average closing price of Vivendi
    Universal's common shares 11 days before and after the transaction
    announcement date of December 16, 2001.

(3) Leveraged partnership distribution of $1.62 billion.

(4) Corresponds to face value of these securities. Their key features are:

     -- 1.4% annual paid-in-kind dividend accreting quarterly,

     -- 3.6% annual cash dividend.

                                       F-24


     -- Put/call arrangement exercisable from May 2022,

     -- Redeemed immediately after a put/call in cash in the amount equal to the
        accreted face value at such time.

(5) Corresponds to the difference between the fair value (calculated based on a
    7.5% discount rate) and the reimbursement value of the preferred interests
    A&B. This difference is assimilated to a premium, which is amortized on a
    straight-line basis until the maturity date.

(6) Corresponds to face value of these securities. Their key features are:

     -- Maturity: 20 years,

     -- Annual PIK dividend of 5%, accreting quarterly,

     -- Settlement at maturity in cash in the amount equal to accreted face
        value.

(7) Portion of VUE fair value estimated as of May 7, 2002, including discounts
    for lack of control and marketability.

(8) The value of the warrants was estimated using the Black-Scholes option
    pricing model. The key assumptions used are: USA Interactive volatility:
    50%, and risk-free rate: 5.54%.

     With the assistance of an independent third-party valuation firm, Vivendi
Universal has performed a preliminary purchase price allocation study in order
to allocate the purchase price among assets acquired and the liabilities
assumed.

     A final purchase price allocation will be completed by April 2003 and may
result in modifications to certain items. The following table shows this
preliminary allocation:



                                                              IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
                                                           
Goodwill(2).................................................       9,608
Film costs, trademarks and other intangible assets..........       1,704
Other assets................................................         639
Other liabilities...........................................        (943)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======


- ---------------

(1) Exchange rate euro/dollar : 0.9125 as of May 7, 2002.

(2) Amortized over a 40-year period, on a straight-line basis.

3.2.2 INCREASED HOLDING IN MULTITHEMATIQUES

     In connection with the sale of its shares in USA Networks, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

3.2.3 REDUCTION OF HOLDING IN VEOLIA ENVIRONNEMENT

     Following a decision taken by the Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in FCC which otherwise would have been
exerciseable once Vivendi Universal ownership interest in Veolia Environnement
fell below 50%.

                                       F-25


     The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree", carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repo on December 27, 2002, Vivendi Universal entered into a
forward sale for the same number of shares to this financial institution at the
price of the investment. As a result, Vivendi Universal reduced its debt by
E 1,479 million and held 47.7% of the share capital of Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the amendment
to the contract signed on June 24, 2002 was signed with the banks which managed
the June transaction and a group of new investors. Under the terms of the
amended agreement, Vivendi Universal agreed to sell 82.5 million shares of
Veolia Environnement, representing 20.4% of Veolia Environnement's share
capital, and the new investors agreed to assume a lock-up on these shares
previously agreed to by Vivendi Universal for the remaining term of that
commitment, i.e. until December 21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this disposal, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

3.2.4 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S PROFESSIONAL AND HEALTH
      DIVISION

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions. In parallel
with this disposal, Vivendi Universal acquired 25% of the capital stock of the
acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and Apax (9.5%).
The transaction was concluded on July 19, 2002 with Vivendi Universal's sale to
the investors of the shares acquired in the leveraged buy out. The transaction
reduced profit before tax by E 298 million.

3.2.5 SALE OF STAKE IN VIZZAVI EUROPE

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As a part of the transaction, Vivendi Universal took over 100% of Vizzavi
France. This transaction generated a capital gain of E 90 million.

3.2.6 DISPOSITION OF PUBLISHING ACTIVITIES

     The Board of Directors on August 13, 2002, decided to sell the American
publisher Houghton Mifflin acquired in 2001. On September 25, 2002, the Board
decided that the sale should occur as soon as possible and cover, in addition to
Houghton Mifflin, all of Vivendi Universal Publishing's activities.
                                       F-26


     These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the disposal of the
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains competition law approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprising Thomas H. Lee and Bain Capital. The
gross proceeds from the sale amounted to $1,660 million. As a result of this
transaction, Vivendi Universal recognized a capital loss of E 822 million before
tax, including a foreign currency translation loss of E 236 million.

     THE IMPACTS OF DISPOSITIONS IN 2002 ON THE FINANCIAL DEBT AND THE INCOME
BEFORE TAX AND MINORITY INTEREST ARE SUMMARIZED IN NOTES 7.2 AND 10.1.4.

     SOME DISPOSITIONS AGREED TO IN 2002 ARE BEING FINALIZED AT THE CLOSING. THE
MAIN TRANSACTIONS ARE THE FOLLOWING:

3.2.7 DISPOSAL OF TELEPIU

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The stated purchase price was E 920 million,
consisting of the assumption of up to E 450 million in debt and a cash payment
of E 470 million. However, this cash payment will be adjusted downward by the
amount of outstanding accounts payable at closing. A provision of E 360 million
was recorded to cover the estimated loss. (see Note 6)

     The acquisition, which is subject to regulatory approval, is expected to be
completed soon. As part of the acquisition agreement, all litigation between the
parties, including Canal+'s litigation against NDS, has been suspended and will
be permanently withdrawn when the transaction closes.

3.2.8 DISPOSAL OF CANAL+ TECHNOLOGIES

     Canal+ Group, a Vivendi Universal subsidiary, sold its 89% stake in Canal+
Technologies on September 25, 2002, to Thomson Multimedia for E 190 million in
cash. This transaction, approved by the respective Boards authorized by the
relevant competition authorities was closed on January 31, 2003 on the basis of
E 190 million in cash, of which E 90 million was collected in 2002, E 79 million
has been collected in 2003 and the remainder is expected to be paid after any
post-closing adjustments. (See Note 16)

3.2.9 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S CONSUMER PRESS DIVISION

     On August 30, 2002 Vivendi Universal and the Socpresse group entered into
an agreement to sell the consumer press division of Vivendi Universal Publishing
(Groupe Express-Expansion and Groupe l'Etudiant) and Comareg (including Delta
Diffusion, which is to join Mediapost). The two transactions are together worth
a total cash amount of E 330 million. The sale of Consumer Press Division to the
Socpresse Group was finalized on February 4, 2003 following the authorization by
The Economy and Finance Ministry in January 2003. The amount collected was E 200
million. The sale of Comareg to France Antilles is expected to take place at a
later time, as it remains subject to the approval of the European Commission.
(See Note 16)

                                       F-27


MAIN ACQUISITIONS AND DISPOSITIONS IN 2001 INCLUDED:

3.2.10 PURCHASE OF INTEREST IN MAROC TELECOM

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and share voting rights. The following
table shows the final allocation of the purchase price:



                                                              MAROC TELECOM
                                                              -------------
                                                              (IN MILLIONS
                                                                OF EUROS)
                                                           
Fair value of net assets acquired...........................     E   335
Telecom license(1)..........................................         340
Deferred tax liabilities....................................        (119)
Goodwill recorded as an asset(2)............................       1,862
                                                                 -------
Purchase price..............................................     E 2,418
                                                                 =======


- ---------------

(1) The telecom license is amortized on a straight line basis over 15 years.

(2) The goodwill is amortized on a straight line basis over 40 years.

3.2.11 ACQUISITION OF HOUGHTON MIFFLIN COMPANY

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company
(Houghton Mifflin), a leading US educational publisher, for a total of
approximately US$2.2 billion, including assumption of Houghton Mifflin's average
net debt of approximately US$500 million. Houghton Mifflin was sold on December
30, 2002.

3.2.12 ACQUISITION OF MP3.COM, INC.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc. (MP3.com) for approximately US$400 million or US$5 per share in a combined
cash and stock transaction.

3.2.13 DISPOSITION OF INTEREST IN FRANCE LOISIRS

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

MAIN ACQUISITIONS AND DISPOSITIONS IN 2000 INCLUDED:

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     On December 8, 2000, Vivendi, Seagram and Canal Plus completed a series of
transactions in which the three companies combined to create Vivendi Universal
(the "Merger Transactions"). The terms of the Merger Transactions included:

     - Vivendi's combination, through its subsidiaries, with Seagram in
       accordance with a plan of arrangement under Canadian law, in which
       holders of Seagram common shares (other than those exercising dissenters'
       rights) received 0.80 Vivendi Universal American Depositary Shares
       (ADSs), or a combination of 0.80 non-voting exchangeable shares of
       Vivendi Universal's wholly owned Canadian subsidiary Vivendi Universal
       Exchangeco (exchangeable shares) and an equal number of related voting
       rights in Vivendi Universal, for each Seagram common share held;

     - Vivendi Universal's merger with Canal Plus, in which Canal Plus
       shareholders received two Vivendi Universal ordinary shares for each
       Canal Plus ordinary share they held and kept their existing shares in
       Canal Plus, which retained the French premium pay television channel
       business;

                                       F-28


     - Vivendi accounted for the Merger Transactions with Seagram and Canal Plus
       using the purchase method of accounting for business combinations.

SEAGRAM

     Seagram was acquired for an aggregate cost of E 32,565 million, consisting
of the issuance of approximately 356.1 million common shares valued at E 91.45
per share. The value of the shares issued was determined based on the average
market price of Vivendi's common shares over the five day period before and
after the final terms of the acquisition were announced, which was on July 4,
2000.

     Allocation of Purchase Price -- At the time of the Merger Transactions,
Vivendi Universal recorded each asset acquired and liability assumed at its
estimated fair value. This preliminary purchase price study has been reviewed
and adjusted when appraisals or other valuation data were obtained within the
one-year period from the completion of the Merger Transactions. Subsequent to
the recording of the preliminary purchase price allocation, adjustments were
made in respect of the value of the investment in USA Networks, deferred taxes,
and the completion of a trademark valuation study. The excess of the total
consideration paid over the fair value of the tangible and intangible assets
acquired less liabilities assumed was recorded as goodwill, which is amortized
on a straight-line basis over a 40-year period. Acquired film library, music
catalogs, artists' contracts and music publishing assets are amortized over
periods ranging from 14 to 20 years. Other intangible assets are amortized over
a 40-year period, on a straight-line basis.

     The following table shows the final allocation of the purchase price to the
fair values of assets and liabilities recorded, adjusted in order to reflect the
changes in fair values of assets and liabilities recorded in the preliminary
allocation of the purchase price in December 2000.



                                                                SEAGRAM
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
                                                           
Accounts receivable, net....................................   E   2,721
Film library, music catalogs, artists' contracts and
  advances..................................................       7,781
Trade names.................................................       1,600
Goodwill....................................................      25,859
Investment in USA Networks..................................       6,940
Spirits and wine assets held for sale.......................       8,693
Other assets................................................       7,383
Accrued expenses and other current liabilities..............      (3,680)
Royalties payable and participations........................      (3,181)
Other non-current liabilities...............................      (2,700)
Minority interest...........................................      (2,275)
Deferred income tax liability...............................      (7,840)
Cash acquired...............................................       1,288
Debt assumed................................................     (10,024)
                                                               ---------
Purchase price..............................................   E  32,565
                                                               =========


     Disposal of Seagram's Spirits and Wine Business -- In connection with the
Merger Transactions, on December 19, 2000, Vivendi Universal entered into an
agreement with Diageo and Pernod Ricard to sell its spirits and wine business.
The sale closed on December 21, 2001 and Vivendi Universal received
approximately US$8.1 billion in cash, an amount that resulted in after-tax
proceeds of approximately US$7.7 billion. The spirits and wine business
generated revenues of E 5 billion and operating income of E 0.8 billion in 2001.
Prior to its sale, Vivendi Universal accounted for the spirits and wine business
as an investment held for sale on the balance sheet, and net income of the
spirits and wine business in 2001 effectively reduced goodwill associated with
the Seagram acquisition. No gain was recognized upon the ultimate sale of the
spirits and wine business.

                                       F-29


CANAL PLUS

     Canal Plus was acquired for an aggregate cost of E 12,537 million,
consisting of the issuance of approximately 130.6 million ordinary shares valued
at E 94.88 per share, and the cost induced by the conversion of stock options
plans of Canal Plus. The value of the shares issued was determined based on the
average market price of Vivendi's ordinary shares over the five day period
before and after the final terms of the acquisition were announced, which was on
June 20, 2000.

     At the time the step acquisition was made, Vivendi Universal recorded each
asset acquired and each liability assumed at its estimated fair value. The
excess of the total consideration paid for the acquired company over the fair
value of the tangible and intangible assets acquired less liabilities assumed
was recorded as goodwill. As a result of the acquisition of Canal Plus, Vivendi
Universal recorded approximately E 12,544 million as goodwill, which is
amortized on a straight-line basis over a 40-year period. Prior to the Merger
Transactions, Vivendi acquired control of Canal Plus in September 1999, through
the acquisition of an additional 15% of the outstanding shares for approximately
E 1.4 billion. Goodwill of E 1,159 million arising in connection with the
acquisition was recorded as a reduction of shareholders' equity, as a charge to
issue premiums in connection with the capital increases used in part to finance
the acquisition. The acquisition increased Vivendi's ownership percentage from
34% at December 31, 1998 to 49% at December 31, 1999. (For additional
information on the purchase price allocation of Canal Plus, please refer to Note
17.9)

3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. Following the transaction, Exelon is the controlling shareholder of
Sithe and Vivendi Universal ceased to consolidate Sithe's results of operations
for accounting purposes effective December 31, 2000. In April 2000, Sithe sold
21 independent power production plants to Reliant Energy Power Generation for
E 2.13 billion. This transaction generated a capital gain of E 415 million. In
December 2002 Vivendi Universal sold its remaining stake, excluding Asia
subsidiaries, to Apollo Energy LLC. (For additional information on the
disposition of Sithe, please refer to Note 17.9)

3.2.16 DISPOSITION OF NON-CORE CONSTRUCTION AND REAL ESTATE BUSINESSES

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

3.2.17 TELECOMS AND INTERNET ACQUISITIONS

     Additionally, in January 2000, Vivendi Telecom International (VTI), a
wholly owned direct subsidiary of Vivendi Universal, acquired 100% of the
outstanding shares of United Telecom International (UTI), a Hungarian
telecommunications company for E 130 million, including E 123 million of
goodwill, which is being amortized on a straight line basis over 20 years. In
March 2000, Vivendi Universal acquired 100% of I-France for E 149 million,
including E 146 million of goodwill. In April and July 2000, Vivendi Universal
acquired 22.4% of Scoot.com PLC for E 443 million, including E 359 million of
goodwill.

                                       F-30


3.3 IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND FINANCIAL ASSETS

3.3.1 GOODWILL

     In 2001, following the market decline, the annual review of goodwill
resulted in a non-cash, non-recurring impairment charge of E 12.9 billion
(E 12.6 billion after E 0.3 billion minority interest related to Veolia
Environnement). The charge was comprised of:

     - E 3.1 billion for Universal Music Group

     - E 1.3 billion for Universal Studio Group

     - E 6.0 billion for Canal+

     - E 1.6 billion for international telecoms and internet assets

     - E 0.6 billion for Veolia Environnement (net of E 0.3 billion minority
       interest)

     In view of the deterioration of the economy since December 2001, and the
recent decline in value of some media assets, combined with the impact of the
increase in the cost of capital, the group has taken the decision to take a
provision against goodwill on certain acquisitions of E 18.4 billion as at
December 31, 2002, including E 11 billion registered as of June 30, 2002. This
impairment has been calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual, significant difference between the book
value and the realizable value.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group

     - E 6.5 billion for Vivendi Universal Entertainment

     - E 5.4 billion for Canal+

     - E 1.2 billion for international telecoms and internet assets

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, adjusted for theoretical accumulated goodwill amortization
recorded since the acquisition. The "theoretical" goodwill impairment for 2002
amounts to E 0.7 billion. The impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders equity. The total amount of goodwill recorded as a
reduction of shareholder's equity as at December 31, 2002 is discussed in Note
5.

     This exceptional write-off was calculated as the difference between the net
book value of the business units and the fair value we estimated with the
assistance of a third party appraiser when necessary. The impacted business
units are those for which the deterioration of the economy combined with the
impact of the increase in the cost of capital resulted in a risk of a reduction
of their value. Standard evaluation methods have allowed us to establish fair
values, as described in the next paragraph.

     The fair values of the business units durably owned by the group are
assessed at the value in use. Value in use is defined as the value of future
economic benefits to be obtained from utilization plus terminal value of the
asset. It is calculated from estimated future economic benefits:

     - Generally, the fair value of business units is determined by the analysis
       of discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment based on the value attributed to the business units involved
       in recent transactions, market price for business units quoted at the
       Stock Exchange.
                                       F-31


     - When using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

     The fair values of the business units involved in the asset disposal
program, which was approved by the Board of Directors on September 25, 2002, are
assessed on the basis of their market value. Market value is defined as the
amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transactions costs.
It generally corresponds to the most recent valuation of the business unit
presented to Vivendi Universal's Board of Directors.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, discount rate and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of Directors. The discount rate was
based upon an analysis of the average cost of capital of the relevant business
units. Their cost of capital and growth rate were determined by taking into
account the specific business environment in which each business unit operated,
and specifically the maturity of the market and the geographic localization of
its operations.

     For information, the principal assumptions by business were:

     - Cegetel Group: evaluation from the transaction with BT Group as of
       January 22, 2003 (acquisition of 26% interest in Cegetel for E 4
       billion).

     - Music: analysis of discounted cash flow (discount rate of 9%, versus a
       range of 8% to 9% at December 31, 2001, growth rate of 4%, versus 4% and
       6% at December 31, 2001) or comparison to similar listed companies.

     - VUE: analysis of future discounted cash flow (with the following discount
       rate and growth rate) and comparison to similar listed companies:

        - Universal Picture Group: a discount rate of 10%, versus a range of 6%
          to 7% at December 31, 2001, and a growth rate of 3%, versus -1% and 5%
          at December 31, 2001.

        - USA Cable: a discount rate of 10%, and a growth rate of 6%.

        - Universal Parks and Resorts: a discount rate of 8.5%, versus 8% at
          December 31, 2001, and a growth rate of 3%, versus 3% at December 31,
          2001.

     - Canal+ Group:

        - Canal+ (Canal+ France, CanalSatellite, Media Overseas,
          Multithematique): analysis of discounted cash flows with a discount
          rate of 9.1%, versus 9% at December 31, 2001; growth rate between 2%
          (Canal+ France) and 4.5% (CanalSatellite), versus 3% (Canal+ France)
          and 4% (CanalSatellite) at December 31, 2001.

        - Studio Canal: analysis of discounted cash flow (discount rate of 9.2%,
          growth rate of 2.5% to 3.5%).

        - Sogecable and Sport Five are valued at the stock market price, after
          including a liquidity discount for the latter.

        - Other international assets or under disposal: (including Telepiu,
          Canal+ Benelux, Canal+ Poland, Canal+ Nordic, Canal+ Technologies and
          Numericable): latest market value.

     - VU Games: analysis of discounted cash flow (discount rate of 13%; growth
       rate of 7%) and comparison to similar listed companies.

     - Maroc Telecom: analysis of discounted cash flow (discount rate of 13.1%,
       versus 11% and 13% at December 31, 2001, and a growth rate of 2.5% to
       3.5%, versus 3.5% and 5.5% at December 31, 2001).

     - Other International assets in telecommunications and the internet: latest
       market value.

                                       F-32


     The net impact in changes in goodwill can be summarized as follows:



                                                                                           NET BALANCE
                              NET BALANCE                                  CHANGES IN           AT
                             AT JANUARY 1,                                CONSOLIDATION    DECEMBER 31,
                                 2002        AMORTIZATION   IMPAIRMENT   SCOPE AND OTHER       2002
                             -------------   ------------   ----------   ---------------   ------------
                                                       (IN MILLIONS OF EUROS)
                                                                            
Telecoms...................      3,043             (75)         (744)          (474)           1,750
Music......................     12,763            (355)       (5,300)        (1,629)           5,479
Vivendi Universal
  Entertainment............      7,472            (250)       (6,500)         7,915            8,637
Groupe Canal+..............      8,002            (189)       (5,436)         1,580            3,957
Holding & Corporate........     (1,353)             34            --          1,367               48
Internet...................        638            (140)         (462)           (28)               8
Publishing.................      2,161             (17)           --         (1,966)             178
Environmental Services.....      4,888            (285)           --         (4,603)              --
Other......................          3              --            --              2                5
                                ------          ------       -------         ------           ------
TOTAL VIVENDI UNIVERSAL....     37,617          (1,277)      (18,442)         2,164           20,062
                                ======          ======       =======         ======           ======


3.3.2 FINANCIAL ASSETS

     Financial provisions of E 2.2 billion were recorded in 2002, E 1.2 billion
of which was reflected by a reduction in asset value and E 0.9 billion as a
provision. This action was taken to reflect the decline in the market since the
beginning of the year and the reevaluation by the Board of Directors of the
growth potential of certain listed and unlisted investments. Standard evaluation
methods used were, notably:

     - Investments involving recent transactions or those that are currently
       under discussion have been assessed at the value attributed to them in
       the respective transaction.

     - Investments in listed companies have been valued at the market value.

3.3.3 SUMMARY

     The impact of impairment described above can be summarized as follows:



                                                        PROVISIONS
                                        IMPAIRMENT OF      AND         GOODWILL      TOTAL
                                           ASSETS       ALLOWANCES    IMPAIRMENT   IMPAIRMENT
                                        -------------   ----------    ----------   ----------
                                                        (IN MILLION OF EUROS)
                                                                       
Telecoms..............................        (728)(1)      (142)(2)       (744)      (1,614)
Music.................................          --            --         (5,300)      (5,300)
Vivendi Universal Entertainment.......          --            --         (6,500)      (6,500)
Group Canal+..........................          --          (360)(3)     (5,436)      (5,796)
Internet..............................        (120)(4)        --           (462)        (582)
Other.................................        (393)(5)      (427)(6)         --         (820)
                                          --------        ------      ---------    ---------
                                          E (1,241)       E (929)     E (18,442)   E (20,612)
                                          ========        ======      =========    =========


- ---------------

(1) Of which, Elektrim Telekomunikacja represents (E 609) million (see Note 4).

(2) Representing international telecom assets (see Note 6).

(3) Representing Telepiu, disposal of which has to be completed (see Note 6).

(4) Representing Softbank Capital Partners (see Note 4).

(5) Of which Dupont (E 173) million (see Note 4), provision related to UGC/UGC
    Cine Cite investments (E 220) million (see Note 4).

                                       F-33


(6) Of which amortization of the BNP call (E 226) million (see Note 6), a
    provision for Vivendi Universal puts of (E 104) million (see Note 6).

NOTE 4 INVESTMENTS

     Vivendi Universal's investments consist of:



                                                                 DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------   --------
                                                               (IN MILLIONS OF
                                                                    EUROS)
                                                                  
Investments accounted for using the equity method...........  E 1,903   E  9,176
Other investments
  Investments accounted for using the cost method...........      378      1,150
  Portfolio investments -- securities.......................    1,899      1,814
  Portfolio investments -- other............................    1,861      2,619
                                                              -------   --------
                                                                4,138      5,583
                                                              -------   --------
                                                              E 6,041   E 14,759
                                                              =======   ========


4.1 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

  THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT EQUITY METHOD INVESTMENTS:



                                                            PROPORTIONATE SHARE
                               OWNERSHIP CONTROL                 OF EQUITY             PROPORTIONATE SHARE OF NET INCOME (LOSS)
                          ---------------------------   ---------------------------   ------------------------------------------
                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                              2002           2001           2002           2001           2002           2001           2000
                          ------------   ------------   ------------   ------------   ------------   ------------   ------------
                                                                  (IN MILLIONS OF EUROS)
                                                                                               
Veolia
  Environnement(1)......      20.4%            --         E   304        E    --         E   --         E   --         E   --
USANi LLC(2)............        --           47.9%             --          6,669             44            144             --
UC Development
  Partners(3)...........      50.0%          50.0%            358            364             (6)           (46)            --
Sundance Channel(4).....      50.0%          10.0%            156            185             --             --             --
Universal Studios
  Florida(3)............      50.0%          50.0%            147            168              1              5             --
Port Aventura...........      37.0%          37.0%             85            101              1             (2)            --
Universal Studios
  Japan.................      24.0%          24.0%             40             85            (30)            25             --
UGC(5)..................      58.0%          39.3%             47             83            (12)             7             (2)
UGC Cine cite(6)........      15.6%          15.6%             31             69             --              1             (3)
SPORTFIVE(7)............      46.4%          35.6%            294            229              2             --             --
TKP and Cyfra+(8).......        --             --              --             --             --           (122)           (26)
Elektrim Telekomunikacja
  SP(9).................      49.0%          49.0%             --            521           (115)           (28)           (31)
Telecom
  Developpement(10).....      49.9%          49.9%            286            281              5             12             27
Xfera Moviles...........      26.2%          26.2%             --             72            (59)           (35)            (6)
Societe Financiere de
  Distribution (SFD)....      49.0%          49.0%             --            (74)            --            (23)           (37)
Vizzavi Europe(11)......        --           50.0%             --           (466)           (71)          (193)           (44)
Other(12)...............        --             --             155            889            (54)          (198)          (184)
                                                          -------        -------         ------         ------         ------
                                                          E 1,903        E 9,176         E (294)        E (453)        E (306)
                                                          =======        =======         ======         ======         ======


                                       F-34


- ---------------

 (1) Following the dispositions and dilution occurred in 2002, Vivendi
     Universal's interest in Veolia Environnement is accounted for under the
     equity method from December 31, 2002. (see Note 3) The market value of this
     participation as of December 31, 2002 amounted to E 1,833 million.

 (2) Year-on-year change reflects the USA Networks transaction. (see Note 3)

 (3) There is no shareholder with the majority voting interest in these
     companies. Moreover, shareholders exercise substantive participating rights
     that enable them to veto or block decisions taken by the subsidiary's
     board. Vivendi Universal consequently consolidates its interest in UCDP and
     Universal Studio Florida by the equity method.

 (4) Vivendi Universal has loans to the Sundance partnership (approximately
     US$49 million), which can be converted to Sundance Channels shares.

 (5) On December 23, 2002, following the exercise by BNP of the put granted by
     Vivendi Universal in July 1997, Vivendi Universal acquired, for a total
     consideration of E 59.3 million, 5.3 million of UGC shares representing 16%
     of share capital. Vivendi Universal's 58% interest in UGC does not provide
     for operational control of the company due to a shareholders' agreement.
     Accordingly, this investment is still accounted for using the equity
     method.

 (6) Vivendi Universal has a direct interest of 15.6% in UGC Cine Cite and an
     indirect interest of 49% through its investment in UGC.

 (7) New entity created through the merger between the Jean-Claude Darmon Group
     and Sport+ in 2001.

 (8) Consolidated from December 31, 2001.

 (9) Please refer to Note 13. Vivendi Universal's share of equity in Elektrim
     Telekomunikacja was written down to zero further to an impairment test
     performed on various assets held for sale.

(10) A majority of Telecom Developpement's board is nominated by SNCF.
     Accordingly, Cegetel Group accounts for this investment by the equity
     method.

(11) Participation sold to Vodafone on August 30, 2002 (See Note 3).

(12) Other investments consist of various entities accounted for under the
     equity method whose proportionate share of equity is under E 50 million at
     December 31, 2002.

                                       F-35


     The following table provides a reconciliation of the change in equity
method investments during the year:



                           PROPORTIONATE     CHANGES IN     PROPORTIONATE                 FOREIGN      PROPORTIONATE
                          SHARE OF EQUITY     SCOPE OF      SHARE OF NET                 CURRENCY     SHARE OF EQUITY
                           DECEMBER 31,     CONSOLIDATION      INCOME       DIVIDENDS   TRANSLATION    DECEMBER 31,
                               2001            & OTHER         (LOSS)       RECEIVED    ADJUSTMENTS        2002
                          ---------------   -------------   -------------   ---------   -----------   ---------------
                                                             (IN MILLIONS OF EUROS)
                                                                                    
Veolia Environnement....      E    --         E    304         E   --        E   --       E   --              304
USANi LLC...............        6,669           (6,415)            44          (141)        (157)              --
UC Development
  Partners..............          364               59             (6)           --          (59)             358
Sundance Channel(1).....          185               (2)            --            --          (27)             156
Universal Studios
  Florida...............          168                2              1            --          (24)             147
Port Aventura...........          101               (6)             1            --          (11)              85
Universal Studios
  Japan.................           85               (3)           (30)           --          (12)              40
UGC(2)..................           83              (15)           (12)           (1)          (8)              47
UGC Cine cite(2)........           69              (26)            --            --          (12)              31
SPORTFIVE(3)............          229               66              2            (3)          --              294
Elektrim Telekomunikacja
  SP(4).................          521             (488)          (115)           --           82               --
Telecom
  Developpement(5)......          281               --              5            --           --              286
Xfera Moviles(6)........           72              (13)           (59)           --           --               --
Societe Financiere de
  Distribution (SFD)....          (74)              74             --            --           --               --
Vizzavi Europe..........         (466)             537            (71)           --           --               --
Other...................          889             (630)           (54)          (34)         (16)             155
                              -------         --------         ------        ------       ------          -------
                              E 9,176         E (6,556)        E (294)       E (179)      E (244)         E 1,903
                              =======         ========         ======        ======       ======          =======


- ---------------

(1) Changes in scope of consolidation reflect the acquisition of 40% interest of
    Sundance Television and SIFO Two for $4 million.

(2) Provisions recorded as at December 31, 2002, total E 220 million, of which
    E 101 million relates to the reduction in shareholding and E119 million to
    the UGC bonds (see Note 4.4).

(3) Changes in scope of consolidation reflect the acquisition of 10.8% interest
    of this entity for E 122 million. Additional goodwill of E 54 million has
    been recorded.

(4) Provisions recorded as at December 31, 2002, total E609 million, of which
    E406 million in reduction in shareholding and E 203 million to an increase
    in the bad debt provision (see Note 3 and 10). Moreover goodwill impairment
    has been recorded for E 32 million.

(5) Impairment has been recorded for E 206 million at December 31, 2002 (see
    Note 3).

(6) Of which E 33 million relates to a provision recorded at December 31, 2002
    (see Note 3).

  SUMMARIZED FINANCIAL INFORMATION FOR EQUITY METHOD INVESTMENTS IS AS FOLLOWS:

     Veolia Environnement was consolidated as an equity method investment at
December 31, 2002. In Vivendi Universal's statement of income, Veolia
Environnement was accounted for on a fully consolidated basis until December 31,
2002. Consequently, only balance sheet information relating to this subsidiary
is mentioned in the tables below.

                                       F-36


     The following summary information relating to companies consolidated by the
equity method is derived from unaudited data.


                                                           DECEMBER 31, 2002
                        ---------------------------------------------------------------------------------------
                                        UNIVERSAL                                          OTHERS       TOTAL
                           TELECOM       STUDIO                            ELEKTRIM       EXCLUDING   EXCLUDING
                        DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA      VE          VE
                        -------------   ---------   -----   ---------   ---------------   ---------   ---------
                                                         (IN MILLION OF EUROS)
                                                                                 
REVENUES..............      1,054           763       527       639            749          3,067       6,799
OPERATING INCOME......         25           (56)       10        31            125           (251)       (116)
NET INCOME............         15           (53)      (32)        4         (1,063)          (825)     (1,954)
Long-term assets......        776         2,059       795       580          2,987          4,169      11,366
Current assets........        324            69       235       464            176          1,897       3,165
                            -----         -----     -----     -----         ------          -----      ------
TOTAL ASSETS..........      1,100         2,128     1,030     1,044          3,163          6,066      14,531
Shareholders'
  Equity..............        464           748       190       633          1,428            700       4,163
Long-term
  liabilities.........          8           137       246        15                           215         621
Current liabilities...        562           284       205       387          1,023          2,800       5,261
Third Party Financial
  Long term Debt......         66           959       389         9            712          2,351       4,486
                            -----         -----     -----     -----         ------          -----      ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............      1,100         2,128     1,030     1,044          3,163          6,066      14,531
                            =====         =====     =====     =====         ======          =====      ======


                          DECEMBER 31, 2002
                        ----------------------

                           VEOLIA
                        ENVIRONNEMENT   TOTAL
                        -------------   ------
                        (IN MILLION OF EUROS)
                                  
REVENUES..............         --        6,799
OPERATING INCOME......         --         (116)
NET INCOME............         --       (1,954)
Long-term assets......     26,568       37,934
Current assets........     15,450       18,615
                           ------       ------
TOTAL ASSETS..........     42,018       56,549
Shareholders'
  Equity..............      8,915       13,078
Long-term
  liabilities.........      4,787        5,408
Current liabilities...     15,403       20,664
Third Party Financial
  Long term Debt......     12,913       17,399
                           ------       ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............     42,018       56,549
                           ======       ======


- ---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (or E 322 million, net of provisions).

(2) Including E 3,796 million short term financial debt.



                                                              DECEMBER 31, 2001
                              ---------------------------------------------------------------------------------
                                              UNIVERSAL
                                 TELECOM       STUDIO                            ELEKTRIM
                              DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA   OTHERS   TOTAL
                              -------------   ---------   -----   ---------   ---------------   ------   ------
                                                           (IN MILLIONS OF EUROS)
                                                                                    
REVENUES....................      1,089           723       516        --             59        10,956   13,343
OPERATING INCOME............         24            29        40        --            (26)        2,180    2,247
NET INCOME..................         11           (93)       14        --            (57)         (645)    (770)
Long-term assets............        818         2,162     1,003       587          3,027        19,539   27,136
Current assets..............        435           137       276       455            559         5,093    6,955
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL ASSETS................      1,253         2,299     1,279     1,042          3,586        24,632   34,091
Shareholders' Equity........        460           737       283       642          2,699        11,337   16,158
Long-term liabilities.......          2           113       240        35            192         3,434    4,016
Current liabilities.........        721           290       215       325            535(1)      7,869    9,955
Third Party Financial Long
  term Debt.................         70         1,159       541        40            160         1,992    3,962
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY......      1,253         2,299     1,279     1,042          3,586        24,632   34,091
                                  =====         =====     =====     =====          =====        ======   ======


- ---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

     In 2000, revenue, operating income and net income generated by companies
consolidated by the equity method accounted for E 2,644, E 181 and E (26)
million, respectively. The following is balance sheet data for these companies
consolidated by the equity method:

     - Long term assets: E 23,202 million,

     - Current assets: E 3,937 million,

     - Total assets: E 27,139 million,

                                       F-37


     - Shareholders' equity: E 13,292 million,

     - Long-term liabilities: E 8,560 million,

     - Current liabilities: E 5,287 million,

     - Total liabilities and Shareholders' equity: E 27,139 million.

4.2 INVESTMENTS ACCOUNTED FOR USING THE COST METHOD

     The following table summarizes information about investments accounted for
using the cost method:



                                                     DECEMBER 31, 2002   DECEMBER 31, 2001
                                                     -----------------   ------------------
                                                     INTEREST    COST    INTEREST    COST
                                                     --------   ------   --------   -------
                                                             (IN MILLIONS OF EUROS)
                                                                        
Sithe Energies Inc.(1).............................      --         --     34.2%        604
Elektrim SA(2).....................................    10.0%        96     10.0%         96
Mauritel...........................................    18.9%        42     18.9%         52
Vodafone Egypt.....................................     7.0%        23      7.0%         23
Other(3)...........................................                672                  872
                                                                ------              -------
                                                                   833                1,647
Valuation allowance................................               (455)                (497)
                                                                ------              -------
                                                                E  378              E 1,150
                                                                ======              =======


- ---------------

(1) On December 19, 2002, Vivendi Universal sold its remaining interest in Sithe
    Energies Inc. for E 319 million generating a loss of E 232 million.

(2) Included in the valuation allowance is a E 91 million provision for Elektrim
    S.A., of which E 21 million was recorded in 2002 (see Note 3). In addition
    to its 10% interest in Elektrim S.A.'s share capital, Vivendi Universal
    exercises 4.99% of Elektrim S.A.'s voting rights following the acquisition
    of a 4.99% interest in Elektrim S.A.'s share capital in February 2003, due
    to the termination of a carrying agreement, upon request of the third party.
    As a result, Vivendi Universal holds 15% of Elektrim S.A.'s voting rights.
    Furthermore, Vivendi Universal appoints two representatives at the
    Supervisory Board of Elektrim S.A.

(3) Other investments consist of various entities accounted for under the cost
    method whose carrying value was under E 60 million at December 31, 2002.

4.3 PORTFOLIO INVESTMENTS -- SECURITIES

     The following table summarizes information about portfolio investments --
securities:



                                                               DECEMBER 31, 2002
                               ---------------------------------------------------------------------------------
                                           FOREIGN                             GROSS        GROSS      ESTIMATED
                                          CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                                COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                               -------   -----------   ---------   -------   ----------   ----------   ---------
                                                            (IN MILLIONS OF EUROS)
                                                                                  
British Sky
  Broadcasting(1)............  E    --     E   --       E   --     E    --     E  --        E   --      E    --
Dupont(2)....................      853        (68)        (173)        612        65            --          677
USA Interactive(3)...........    1,323        (68)          --       1,255       (26)           --        1,229
Softbank Capital.............      230         --         (230)         --        --            --           --
Partners(4)..................
Saint-Gobain(5)..............       --         --           --          --        --            --           --
Other(6).....................       33         (1)          --          32        --            --           32
                               -------     ------       ------     -------     -----        ------      -------
                               E 2,439     E (137)      E (403)    E 1,899     E  39        E   --      E 1,938
                               =======     ======       ======     =======     =====        ======      =======


                                       F-38




                                                         DECEMBER 31, 2001
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
                                                                            
British Sky
  Broadcasting.........  E     1      E --        E   --     E     1     E  15        E   --      E    16
Dupont.................      853        50            --         903        --          (106)         797
USA Interactive........      699        42            --         741       137            --          878
Softbank Capital.......      230        --          (110)        120        --            (7)         113
Partners
  Saint-Gobain.........       14        --            --          14         7            --           21
Other..................       44        --            (9)         35        --             2           37
                         -------      ----        ------     -------     -----        ------      -------
                         E 1,841      E 92        E (119)    E 1,814     E 159        E (111)     E 1,862
                         =======      ====        ======     =======     =====        ======      =======




                                                         DECEMBER 31, 2000
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
                                                                            
British Sky
  Broadcasting.........  E 1,233     E   --        E  --     E 1,233    E 4,946       E  --       E 6,179
Dupont.................      853         --           --         853         --          --           853
USA Interactive........      572         --           --         572         --          --           572
Saint-Gobain...........      124         --           --         124        104          --           228
Facic..................      181         --           --         181          5          --           186
Eillage................       57         --           --          57         --         (17)           40
Other..................      261         --          (17)        244         21         (76)          189
                         -------     ------        -----     -------    -------       -----       -------
                         E 3,281     E   --        E (17)    E 3,264    E 5,076       E (93)      E 8,247
                         =======     ======        =====     =======    =======       =====       =======


- ---------------

(1) In February 2002, these BSkyB shares were sold for cash, which was used in
    part for the redemption of the Pathe exchangeable bonds, which took place in
    March 2002 (see Note 7).

(2) Represents 16,444,062 shares with a book value of $713 million. The quoted
    market price of DuPont as at December 31, 2002 was $42.40 per share. A
    provision of E 173 million was recorded in the accounts at June 30, 2002 in
    order to bring the book value in line with the market value at this date.

(3) Represents 18,181,308 shares of common stock with a book value of $374
    million and 13,430,000 Class B shares with a book value of $276 million, as
    well as 25,000,000 shares acquired through Liberty Media in Vivendi
    Universal's acquisition of the entertainment assets of USA Networks (see
    Note 3). The quoted market price for the common stock of USA Interactive,
    which combines the USA Networks assets not acquired by Vivendi Universal,
    was $22.92 per share as at December 31, 2002.

(4) A provision of E 120 million was recorded in the accounts in 2002.

(5) Sold during the first half of 2002.

(6) Other investments consists of various entities whose cost was under E 22
    million at December 31, 2002.

                                       F-39


4.4 OTHER PORTFOLIO INVESTMENTS

     The following table summarizes information about other portfolio
investments:



                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
                                                                  
Long-term loans(1)..........................................  E 1,250   E 1,586
Other(2)....................................................    1,593     1,231
                                                              -------   -------
                                                                2,843     2,817
Valuation allowance.........................................     (982)     (198)
                                                              -------   -------
                                                              E 1,861   E 2,619
                                                              =======   =======


- ---------------

(1) As of December 31, 2002, comprised of a loan to Elektrim Telekomunikacja
    (E 525 million, provisioned at E 203 million, see Note 3), and a loan to
    Veolia Environnement related to bonds exchangeable for Vinci shares (E 120
    million, see Note 7).

(2) As of December 31, 2002, comprised of USA Interactive warrants (E 929
    million provisioned at E 454 million, see Note 3), and UGC bonded debt
    (E 153 million provisioned at E 119 million).

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Investments accounted for using the proportionate consolidation method
represent companies in which Vivendi Universal and other shareholders have
agreed to exercise joint control over significant financial and operating
policies. They exist in Veolia Environnement only. Due to the deconsolidation of
Veolia Environnement on December 31, 2002, the investments accounted for using
the proportionate consolidation method contribute only to consolidated statement
of income in 2002.

     Summarized financial information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:



                                                                   DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
                                                                       
Revenues..................................................  E 5,570   E 4,293   E 3,055
Operating income..........................................  E   464   E   426   E   354
Net income................................................  E   204   E   128   E   171




                                                                   DECEMBER 31,
                                                             -------------------------
                                                             2002     2001      2000
                                                             ----   --------   -------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Long-term assets...........................................   --    E  8,082   E 5,276
Current assets.............................................   --       4,694     2,180
                                                             ----   --------   -------
Total assets...............................................   --    E 12,776   E 7,456
                                                             ====   ========   =======
Shareholders' equity.......................................   --    E  5,146   E 2,095
Minority interest..........................................   --         163       279
Financial debt.............................................   --       2,852     1,830
Reserves and other liabilities.............................   --       4,615     3,252
                                                             ----   --------   -------
Total liabilities and shareholders' equity.................   --    E 12,776   E 7,456
                                                             ====   ========   =======


     For summarized cash flow information for major subsidiaries consolidated
under the proportionate consolidation method, please refer to Note 17.9.

                                       F-40


NOTE 5 SHAREHOLDERS' EQUITY

5.1 GROUP SHAREHOLDERS' EQUITY

     The number of common shares outstanding was 1,068,558,994 and
1,085,827,519, respectively, as of December 31, 2002, and December 31, 2001.
Each common share, with the exception of treasury shares, has one voting right
which may be registered upon request by the owner. The number of voting rights
outstanding was 1,067,996,619 and 978,216,347, respectively, as at December 31,
2002, and December 31, 2001.

5.1.1 TREASURY SHARES

     As of December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital with an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April 2002, 6,969,865 shares at
       an average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public,

     - sold 55 million shares to two financial institutions on January 7, 2002,
       at a price of E 60 per share,

     - transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi, LLC and USA Networks, Inc and the 27% interest in
       Multithematiques (see Note 3),

     - a further 94,157 shares were sold to employees exercising their stock
       options,

     - cancelled 20,469,967 shares on December 20, 2002, following the decision
       by the Board of Directors on August 13, 2002, based on the authorization
       obtained in General Meeting of Stockholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million call options on Vivendi Universal shares in order
       to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital, which represents a gross amount of E 44 million at an average cost per
share of E 77.9. The majority of these treasury shares are classified under
marketable securities and are held in connection with certain employee stock
option plans of the US company MP3. The remaining balance of 84,360 treasury
shares was recorded as a reduction of shareholders' equity.

     At December 31, 2002, Vivendi Universal had outstanding convertible bonds
and stock options representing approximately 146.3 million common shares,
compared with 64.1 million shares as at December 31, 2001.

5.1.2 STRIPPED SHARES

     8.9 million stripped shares have been deducted from shareholders' equity
compared with 19.7 million at December 31, 2001. These shares were split to
allow for exchange transactions in the context of the Sofiee/Vivendi/Seagram
merger in December 2000. Bare ownership was transferred to Seagram Canadian
shareholders who elected to acquire their Vivendi Universal stock on a deferred
basis. The Board of Directors, at its meetings of January 24, 2002, April 24,
2002, June 25, 2002 and August 13, 2002, duly noted the recombination, and
approved the cancellation of 203,560, 351,988, 3,450,553 and 6,890,538 shares
respectively. At the same time, the Board of Directors noted the creation of the
same number of shares as a result of the redemption of Vivendi Universal
convertible bonds. Because each share that was divided and then recombined was
then cancelled, and because, at the same time, the conversion of each equity
note (ORA) resulted in the creation of a new share, these transactions had no
effect on the number of shares comprising the share capital.
                                       F-41


5.1.3 GOODWILL RECORDED AS A REDUCTION OF SHAREHOLDERS' EQUITY

     Vivendi Universal previously recorded goodwill as a reduction of
shareholders' equity pursuant to rules issued by the COB in 1988 that are no
longer in effect. This was done in particular, in connection with the mergers
with Havas and Pathe in 1998 and 1999, and the acquisition of US Filter and an
additional investment in Canal+ in 1999. As of December 31, 2002, goodwill
recorded as a reduction of shareholders' equity amounts to E 1,983 million after
theoretical straight-line amortization, compared with E 4,333 million at
December 31, 2001, mainly due to the partial disposal of the investment in
Veolia Environnement in 2002. (See Note 3)

     Without adjustments to shareholders' equity, the total write-off of
goodwill at December 31, 2002, would have been E 202 million (on the basis of
straight-line amortization over the normal time period prescribed by the
accounting policies of the Group), of which E 79 million relates to the current
accounting period and after a E 279 million reversal related to the disposal.
This amount excludes an exceptional, notional write-off of E 1.7 billion (of
which E 0.7 billion relates to the current accounting period and after a E 1.3
billion reversal related to the disposal) which would have impacted the initial
goodwill amount accounted for under shareholders' equity. This exceptional
notional write-off has no impact on the Income Statement (see Note 3). Goodwill
recorded as a reduction of shareholders' equity, net of notional aggregate
write-off amounts to approximately E 256 million and mainly concerns the
residual participation held in Veolia Environnement.

5.2 CHANGES IN MINORITY INTERESTS



                                                                  DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
                                                                       
Opening balance.........................................  E 10,208   E  9,787   E 4,052
Changes in consolidation scope(1).......................    (4,229)       411     4,990
TSAR Issue (Redeemable in Veolia Environnement
  shares)(2)............................................        --        300        --
Minority interest in income of consolidated
  subsidiaries..........................................       844        594       625
Dividends paid by consolidated subsidiaries.............      (200)      (981)      (80)
Impact of foreign currency fluctuations on minority
  interest..............................................      (798)        97       190
Other changes...........................................      (328)        --        10
                                                          --------   --------   -------
Closing balance.........................................  E  5,497   E 10,208   E 9,787
                                                          ========   ========   =======


- ---------------

(1) These principally relate to the change of consolidation method for Veolia
    Environnement (application of the equity method since December 31, 2002) and
    the acquisition of the entertainment assets of USA Networks (see Note 3).

(2) In December 2001, Veolia Environnement Financiere de l'Ouest (a holding
    company held at over 99% by Veolia Environnement), issued E 300 million
    "Titres Subordonne Remboursable en Actions Prioritaires" (TSAR, or obligated
    mandatorily redeemable security of subsidiary holding parent debentures)
    maturing at December 28, 2006. As a result of its nature, the TSAR issue was
    recorded as a minority interest in the balance sheet.

5.3 OTHER EQUITY: NOTES MANDATORILY REDEEMABLE FOR NEW SHARES OF VIVENDI
    UNIVERSAL

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion redeemable in Vivendi Universal new shares on November 25,
2005 at a rate of one share for one bond. The bonds bear interest at 8.25% per
annum. The total amount of discounted interest was paid to the bondholders on
November 28, 2002, for an amount of E 233 million. The bondholders can call for
redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 - (annual rate of interest X outstanding bond
lifetime expressed in years). Only new shares can be used for reimbursement, and
the holders would have the same rights as the shareholders if Vivendi Universal
goes into receivership. As a consequence, the notes are classified in other
equity in pursuance of French GAAP.

                                       F-42


NOTE 6 PROVISIONS AND ALLOWANCES

6.1 CHANGES IN PROVISIONS



                         BALANCE AT        CHANGES IN                                              BALANCE AT
                        DECEMBER 31,     CONSOLIDATION                                            DECEMBER 31,
                            2001       SCOPE AND OTHER(1)   ADDITIONS   UTILIZATION   REVERSALS       2002
                        ------------   ------------------   ---------   -----------   ---------   ------------
                                                        (IN MILLIONS OF EUROS)
                                                                                
Litigation............    E   610           E   (395)        E   282     E   (170)     E   (7)      E   320
Warranties and
  customer care.......        311               (299)            142          (75)         (1)           78
Maintenance and repair
  costs accrued in
  advance.............        273               (215)             92          (96)         (1)           53
Reserves related to
  fixed assets........        106                (67)              3           --          (4)           38
Valuation allowance on
  real estate.........        527               (109)             24         (104)         (1)          337
Valuation allowance on
  work in progress and
  losses on long-term
  contracts...........        484               (314)             53         (113)        (41)           69
Closure and post
  closure costs.......        455               (484)             73          (42)         (1)            1
Pensions..............        652               (364)             50          (92)         (6)          240
Restructuring costs...        314                (81)            107         (265)        (18)           57
Losses on investments
  in unconsolidated
  companies...........        320               (154)             74         (146)         (7)           87
Exceptional financial
  provisions..........         --                 --             929           --          --           929
Other financial
  provisions..........        151                 (6)            518          (73)         --           590
Other(2)..............       2128               (961)            537         (892)        (30)          782
                          -------           --------         -------     --------      ------       -------
PROVISIONS............    E 6,331           E (3,449)        E 2,884     E (2,068)     E (117)      E 3,581
                          =======           ========         =======     ========      ======       =======


- ---------------

(1) Changes in the consolidation scope are mainly linked with the
    deconsolidation of Veolia Environnement accounted for by using the equity
    method at December 31, 2002.

(2) At December 31, 2001, E 630 million related to financial depreciation of
    public service contract fixed assets of Veolia Environnement.

6.2  FINANCIAL PROVISIONS

     The Exceptional Financial Provisions consist mainly of provisions related
to the anticipated Telepiu disposal (E 360 million), the amortization of call
options on Vivendi Universal shares granted by BNP (E 226 million),
international telecom assets (E 142 million) and put options on Vivendi
Universal shares (E 104 million).

     The Other Financial Provisions mainly concern the following items:

     - The evolution of the nature of the interest rate swap portfolio and of
       the underlying debt structure do not allow this portfolio to qualify for
       hedge accounting. As a result, a related provision has been recorded for
       E 261 million at December 31, 2002.

                                       F-43


     - Provisions recorded in respect of premium related to bonds exchangeable
       into Veolia Environnement, Vinci and BSkyB shares amounted to E 137.9
       million. These provisions correspond to the premiums due in case of early
       redemption of the bonds exchangeable into Veolia Environnement and Vinci
       shares, in March 2003 and March 2004, respectively, and also cover the
       premium which is expected to be paid in July 2003 to holders of bonds
       exchangeable into BSkyB shares. (See Note 11).

NOTE 7 FINANCIAL DEBT

7.1 FINANCIAL DEBT



                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
                                                                      
Bonds and bank loans(14)...............................  E  3,516   E 15,218   E 15,803
BSkyB 0.5%(1)..........................................        --      3,948         --
Veolia Environnement exchangeable 2%(2)................     1,809      1,809         --
Vivendi Universal convertible 1.25%(3).................     1,699      1,699      1,699
Veolia Environnement convertible 1.5%(4)...............        --      1,535      1,535
BSkyB exchangeable 1%(5)...............................        --      1,440      1,440
VUE "preferred interests" A&B(6).......................     2,507         --         --
Vinci exchangeable 1%(7)...............................       527        527         --
BSkyB exchangeable 3%(8)...............................        --        117        155
Mediaset SpA 3.5%(9)...................................        --         --         52
Seagram remaining debt(10).............................        98        354      2,491
Capital leases(11).....................................       274        997        629
Subordinated securities(12)............................        25        133        150
                                                         --------   --------   --------
Total long-term debt...................................  E 10,455   E 27,777   E 23,954
                                                         --------   --------   --------
Bank overdrafts and other short-term borrowings(13)....     9,177     14,003     14,852
Cash and cash equivalents..............................    (7,295)    (4,725)    (3,271)
                                                         --------   --------   --------
TOTAL FINANCIAL DEBT...................................  E 12,337   E 37,055   E 35,535
                                                         ========   ========   ========


- ---------------

 (1) In October 2001, Vivendi Universal sold approximately 96% of its investment
     in BSkyB to two QSPEs (Qualifying Special Purpose Entities) and,
     concurrently, Vivendi Universal entered into a total return swap with the
     same financial institution that held all of the QSPEs' beneficial
     interests. Under French GAAP, the disposal of the investment in BSkyB was
     not recognized as a sale. Consequently, the BSkyB shares held by the two
     QSPEs, in an amount of E 1.5 billion, and financing for the acquisition of
     these shares, were consolidated by Vivendi Universal at December 31, 2001.
     In December 2001, following issue of 150 million certificates repayable in
     BSkyB shares at 700 pence per share by the financial institution
     controlling the QSPEs, Vivendi Universal and this financial institution
     reduced the nominal amount of the swap by 37%, fixing the value of the 150
     million shares and generating a capital gain of E 647 million after tax and
     charges. In May 2002, the financial institution sold the remaining 250
     million BSkyB shares held by the QSPEs. Vivendi Universal and the financial
     institution then terminated the total return swap concerning these shares.
     This transaction resulted in a reduction of gross debt by E 4 billion.

 (2) In February 2001, Vivendi Universal issued 32,352,941 bonds exchangeable,
     at any time after April 17, 2002, for shares in Veolia Environnement
     (interest 2%; yield to maturity 3.75%; expiring March 2006; nominal value
     E 55.90, or 30% above the average weighted price of Vivendi Universal
     shares the previous day). The redemption price of the bonds at maturity
     will be E 61.17. These bonds may be exchanged at any time if the closing
     price of Veolia Environnement shares for 20 out of 30 consecutive days
     equals or exceeds 125% of the anticipated redemption price. These bonds may
     be redeemed by the

                                       F-44


     bondholder on March 8, 2003 at an exercise unit price of E 57.89. As at
     December 31, 2002, 32,352,941 bonds were outstanding.

 (3) In January 1999, Vivendi issued 6,028,363 bonds at a unit par value of
     E 282 earning interest at 1.25%, with a conversion/ exchange option at a
     rate of one bond for 3,124 existing or new shares. Redemption price is at
     par. Vivendi Universal can redeem these bonds in full at any time between
     January 1, 2002 and December 31, 2003, if the average price of Vivendi
     Universal shares exceeds 115% of the adjusted par value. These bonds will
     be redeemed in full on January 1, 2004 at par. 6,024,329 bonds were
     outstanding as at December 31, 2002.

 (4) In April 1999, Veolia Environnement issued 10,516,606 bonds at a unit par
     value of E 271, earning interest at 1.5%, with a conversion/exchange option
     concerning Vivendi or Veolia Environnement shares. 5,183,704 bonds were
     converted to Veolia Environnement shares in July 2000 when Veolia
     Environnement went public. The balance can now only be converted to Vivendi
     Universal shares, at a rate of one Veolia Environnement bond to 3.124
     shares. Maturity date for the bonds is January 1, 2005, at a redemption
     price of E 288 per bond. In the absence of conversion, exchange or early
     redemption, the bonds earn interest at a yield to maturity rate of 2.54%.
     Vivendi Universal may require Veolia Environnement to exercise its early
     redemption option if the average price of Vivendi Universal shares over a
     specified period exceeds 115% of the adjusted bond redemption value. Veolia
     Environnement called a general meeting of bondholders on August 20, 2002.
     By a 64.8% majority, the bondholders voted to waive their rights to the
     Vivendi Universal guarantee covering this loan, and the liability clause
     applicable in the event of default by Vivendi Universal, as from September
     1, 2002. The nominal interest rate was consequently increased by 0.75%,
     from 1.5% to 2.25%. As at December 31, 2002, due to Veolia Environnement's
     deconsolidation, these bonds are no longer consolidated.

 (5) In July 2000, Vivendi issued 59,455,000 bonds exchangeable for BSkyB shares
     or cash, at a unit par value of E 24.22. Following the Vivendi merger,
     these bonds are now held in the Vivendi Universal balance sheet, earn
     interest at 1% and mature in three years (2000-2003). The conversion rate
     is one BSkyB share (with a par value of 50 pence) for one Vivendi Universal
     bond. Each bond can be exchanged at any time during the term of the loan.
     The bonds are subject to early redemption in full by Vivendi Universal, at
     an early redemption price guaranteeing the bondholder a yield to maturity
     of 1.88%, if the average price of BSkyB shares reaches or exceeds 115% of
     the bond par value. The bonds mature on July 5, 2003, at which point any
     bonds outstanding will be redeemed at a unit price of E 24.87. All BSkyB
     shares corresponding to issued bonds were sold in October 2001. The
     59,455,000 bonds outstanding as at December 31, 2002 are reported as
     short-term borrowings.

 (6) In May 2002, Vivendi Universal acquired the entertainment assets of USA
     Networks Inc. Following this transaction, USA Interactive received VUE
     class A and class B preferred interests, the par value of which was $750
     million and $1.75 billion (the latter being exchangeable for 56.6 million
     common shares in USA Interactive, via put and call options agreed between
     Vivendi Universal and USA Interactive). These preferred interests mature at
     20 years and have the following characteristics (see Note 3):

     - class A preferred interests: PIK interest at 5% per year,

     - class B preferred interests: cash interest at 3.6% and PIK interest at
       1.4% per year.

 (7) In February 2001, Vivendi Universal issued 6,818,695 bonds exchangeable, at
     any time after April 10, 2001, for Vinci shares, for an amount of E 527.4
     million. The bonds bear interest at 1%, with 3.75% yield to maturity, and
     mature on March 1, 2006. The issue price was E 77.35, 30% above the
     previous day closing rates for Vinci shares. This transaction allows
     Vivendi Universal to complete its disengagement from Vinci, by exchanging
     its residual interest of 8.2% as at December 31, 2001. These bonds are
     subject to early redemption by the holders on March 1, 2004 (redemption
     price E 83.97 per bond). Revenue from this loan has been on lent to Veolia
     Environnement in the amount of its capital interest in Vinci (1,552,305
     shares of the 6,818,695 held by the Group) via a mirror loan of E 120
     million (see Note 4.4). The residual interest held by Vivendi Universal was
     placed on the market in 2002. To cover its obligations under the bond,
     Vivendi Universal concomitantly purchased, for E 53 million, 5.3 million
     Vinci share options at a price of E 88.81, corresponding to the bond par
     value as at March 1, 2006, in the absence of early redemption. As at
     December 31, 2002, 6,817,684 bonds were outstanding.

                                       F-45


 (8) During the first half of 2002, Vivendi Universal redeemed the exchangeable
     bonds held in its balance sheet following the acquisition of Pathe in 1999,
     for shares in BSkyB. A total of 14,494,819 BSkyB shares were consequently
     transferred to the bondholders (see Note 4).

 (9) In April 1997, Canal+ issued exchangeable bonds in the total amount of
     E 304.9. These bonds bore interest at 3.5%, and matured on April 1, 2002.
     Each bond was convertible, at the option of the holder, at a rate of one
     bond for 341.74 shares in Mediaset SPA. These bonds were reported under
     short-term borrowings as at December 31, 2001.

(10) Following the merger of Vivendi, Canal+ and Seagram, Vivendi Universal
     reimbursed the majority of the Seagram credit lines in use at the time of
     the merger during the first quarter of 2001. This amount is made up of
     several credit lines with terms up to 2023.

(11) Lease contracts and lease contracts including a purchase option in favor of
     the lessee (French "credit bail" contracts) also include various rental
     guarantees relating to real-estate defeasance transactions.

(12) Subordinated debt principally comprises $70 million of securities repayable
     over 15 years issued by Energy USA on January 29, 1991. As at December 31,
     2001, the total also included a loan of E 244 million to finance a waste
     water treatment plant in Zaragoza, Spain, underwritten by OTV (a subsidiary
     of Veolia Environnement).

(13) Of the total at December 31, 2002, bridge loan of Vivendi Universal
     Entertainment that matures on June 30, 2003 in the amount of $1.6 billion
     and BSkyB exchangeable bonds which mature in July 2003 for E 1,440 million
     (See (5)). For additional information on bank overdrafts and other
     short-term borrowings, please refer to Note 17.9.

(14) For additional information on bonds and bank loans, please refer to Note
     17.9.

     Most financing contracts concluded by Vivendi Universal contain customary
clauses covering events of default provisions and may also contain financial
covenants. These can lead to accelerated redemption of the debt, or
renegotiation or even suspension of financing.

7.2 CHANGE IN FINANCIAL DEBT DURING 2002(1)



                                                           CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
                                                                    
FINANCIAL NET DEBT AT DECEMBER 31, 2001.................                     E  37,055
Net cash flow from operating activities.................  (2,795)               (2,795)
Acquisitions tangible assets net of disposals...........   1,571                 1,571
Dividends paid..........................................   1,120                 1,120
Disposal of 55 million treasury shares..................  (2,856)               (2,856)
Disposal of puts on Vivendi Universal shares............     883                   883
Capital increase........................................     (68)                  (68)
ORA issued by Vivendi Universal in November 2002........    (767)                 (767)
ACQUISITIONS(2)
USA Networks/Multithematiques...........................   1,757     2,538       4,295
Echostar................................................   1,699                 1,699
10.8% interest in Sportfive.............................     122                   122
Other acquisitions......................................     179                   179
DISPOSALS(3)
Veolia Environnement(4).................................  (3,335)       --      (3,335)
  Disposal of 1st part (15.5%)..........................  (1,479)       --      (1,479)
  Disposal of 2nd part (20.4%)(4).......................  (1,856)       --      (1,856)
Termination of the BSkyB total return swap..............     (86)   (3,948)     (4,034)
Echostar(5).............................................  (1,037)       --      (1,037)


                                       F-46




                                                           CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
                                                                    
Houghton Mifflin........................................  (1,195)     (372)     (1,567)
European publishing activities..........................  (1,121)      (17)     (1,138)
BtoB/Health.............................................    (894)      (37)       (931)
Sithe...................................................    (319)       --        (319)
Vinci shares(6).........................................    (291)       --        (291)
Canal+ Digital (50%)....................................    (264)       --        (264)
Vizzavi Europe (50%)....................................    (143)       --        (143)
Other disposals.........................................    (152)       --        (152)
OTHER (of which change in scope impacts)(7).............      --   (14,890)    (14,890)
                                                          ------   -------   ---------
                                                          (7,992)  (16,726)    (24,718)
                                                                             ---------
FINANCIAL NET DEBT AT DECEMBER 31, 2002.................                     E  12,337
                                                                             =========


- ---------------

(1) Flows illustrate the accounting of Veolia Environnement using the equity
    method from January 1, 2002.

(2) Includes cash payment to USA Interactive. (see Note 3)

(3) These disposals include current accounts redemption and fees related to
    operations.

(4) Includes call related to Veolia Environnement for E 173 million. (see Note
    3)

(5) Excluding foreign exchange profit of E 37.1 million.

(6) Includes call related to Vinci for E 53 million. (see Note 11)

(7) Includes deconsolidation of Veolia Environnement debt for E 15.7 billion as
    of January 1, 2002.

7.3 LONG-TERM DEBT DETAILED BY CURRENCY(1)



                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
                                                                      
Euros..................................................  E  7,146   E 18,077   E 20,004
US dollars.............................................     2,933      4,443      3,422
Pounds sterling........................................       288      4,229        180
Other..................................................        88      1,028        348
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========


7.4 LONG-TERM DEBT DETAILED BY MATURITY(1)



                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
                                                                      
Due between one and two years..........................  E  2,878   E  3,434   E  7,325
Due between two and five years.........................     4,013     14,288     12,712
Due after five years...................................     3,564     10,055      3,917
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========


                                       F-47


7.5 LONG-TERM DEBT DETAILED BY NATURE OF INTEREST RATE(1)



                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
                                                                      
Fixed interest rate....................................  E  8,925   E 18,646   E 11,429
Variable interest rate.................................     1,530      9,131     12,525
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========


- ---------------

(1) Excluding financial instruments which are described in Note 8

NOTE 8 FINANCIAL INSTRUMENTS

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

8.1 INTEREST RATE RISK MANAGEMENT

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against

                                       F-48


changes in future cash flows required for interest payments on variable rate
debt. The following table summarizes information about Vivendi Universal's
interest rate risk management instruments:



                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                    
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................   E   626     E  5,868
  Average interest rate paid................................      5.80%        3.36%
  Average interest rate received............................      2.85%        5.01%
  Expiry:
     Due within one year....................................   E   387     E  2,282
     Due between two and five years.........................   E   208     E  1,526
     Due after five years...................................   E    31     E  2,060
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................   E 8,492     E 10,284
  Average interest rate paid................................      4.50%        4.25%
  Average interest rate received............................      2.82%        2.97%
  Expiry:
     Due within one year....................................   E 1,818     E  2,766
     Due between two and five years.........................   E 4,410     E  3,951
     Due after five years...................................   E 2,264     E  3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................   E    --     E  3,392
  Guarantee rate............................................                   4.78%
  Expiry:
     Due within one year....................................   E    --     E    150
     Due between two and five years.........................   E    --     E  1,391
     Due after five years...................................   E    --     E  1,851


- ---------------

(1) These instruments were sold in 2002.

8.2 FOREIGN CURRENCY RISK MANAGEMENT

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese

                                       F-49


yen, British pound and Canadian dollar. The following table summarizes
information about Vivendi Universal's foreign currency risk management
instruments:



                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
                                                                  
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................  E 3,315   E   640
  Purchase against the euro.................................  E    45   E 1,065
  Expiry:
     Due within one year....................................  E 3,360   E 1,705
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................  E 1,437   E 1,027
  Purchase against the euro.................................  E   594   E 1,683
  Expiry:
     Due within one year....................................  E 2,031   E 2,447
     Due between two and five years.........................  E    --   E   263


8.3 EQUITY MARKET RISK MANAGEMENT

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities. During
2002 and 2001, Vivendi Universal hedged certain equity-linked debts using
specialized indexed swaps. These swaps, with notional amounts totaling E 266
million in 2002 versus E 377 million in 2001 will progressively expire over
eight years.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.



                                                               DECEMBER 31,
                                                              ---------------
                                                              2002     2001
                                                              -----   -------
                                                              (IN MILLIONS OF
                                                                  EUROS)
                                                                
Equity-linked swaps:
  Notional amount...........................................  E 266   E   377
  Expiry:
     Due within one year....................................  E 132   E    46
     Due between two and five years.........................  E  11   E   208
     Due after five years...................................  E 123   E   123
Total return swaps:
  Notional amount...........................................  E 788   E 3,511
  Expiry:
     Due within one year....................................  E 788   E    --
     Due between two and five years.........................  E  --   E 3,511


8.4 FAIR VALUE OF FINANCIAL INSTRUMENTS

     At December 31, 2002, and 2001, Vivendi Universal's financial instruments
included cash, cash equivalents, marketable securities, receivables,
investments, accounts payable, borrowings, interest rate, foreign currency and
equity market risk management contracts. The carrying value of cash, cash
equivalents, marketable securities, receivables, accounts payable, short-term
borrowings and current portion of long-term

                                       F-50


debt approximated fair value because of the short-term nature of these
instruments. The estimated fair value of other financial instruments, as set
forth below, has generally been determined by reference to market prices
resulting from trading on a national securities exchange or in an
over-the-counter market. In cases where quoted market prices are not available,
fair value is based on estimates using present value or other valuation
techniques.



                                               DECEMBER 31, 2002     DECEMBER 31, 2001
                                              -------------------   -------------------
                                              CARRYING     FAIR     CARRYING     FAIR
                                               VALUE      VALUE      VALUE      VALUE
                                              --------   --------   --------   --------
                                                       (IN MILLIONS OF EUROS)
                                                                   
Investments(1)..............................  E  4,138   E  4,138   E  7,398   E  7,503
Long-term debt..............................  E 10,455   E 10,622   E 27,777   E 28,128
Foreign currency instruments and interest
  rate agreements:
  Interest rate swaps(2)....................  E     --   E   (256)  E     --   E    219
  Interest caps.............................        --         --         --         44
  Cross currency swaps......................        --         46         --          4
  Forward exchange contracts(2).............        --        115         --        163
  Puts and calls on marketable securities...        --       (104)        --       (214)
                                              --------   --------   --------   --------
                                              E     --   E   (199)  E     --   E    216
                                              ========   ========   ========   ========


- ---------------

(1) Comprised of Other Investments (see Note 4) and treasury shares classified
    in marketable securities, excluding those held for stock option purposes. As
    of December 31, 2002, due to the provisions recognized, the net carrying
    value of the investments corresponds to their fair value.

(2) Provisions were recorded on these elements in respect of potential losses at
    December 31, 2002. (see Note 6)

8.5 CREDIT CONCENTRATIONS AND COUNTER-PARTY RISK

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

                                       F-51


NOTE 9 INCOME TAXES

     The following tables summarize the sources of pre-tax income and the
resulting income tax expense (benefit).

9.1 COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)



                                                             YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001     2000(1)
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
                                                                       
Income tax expense (benefit) applicable to:
  Current
     France...............................................  E   741   E   451   E   383
     US...................................................      133       223        14
     Other jurisdictions..................................       74       526       381
                                                            -------   -------   -------
                                                                948     1,200       778
                                                            -------   -------   -------
  Deferred
     France...............................................      940       290       224
     US...................................................      523        90       (18)
     Other jurisdictions..................................      145        (1)       25
                                                            -------   -------   -------
                                                              1,608       379       231
                                                            -------   -------   -------
Total income tax expense (benefit)........................  E 2,556   E 1,579   E 1,009
                                                            =======   =======   =======


- ---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

9.2 COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Deferred tax assets
  Employee benefits.........................................   E     64     E    142
  Tax credit and net operating loss carryforwards...........      8,383        3,813
  Provisions for risks and liabilities......................        324          542
  Other, net................................................      1,595        1,915
                                                               --------     --------
  Gross deferred tax assets.................................     10,366        6,412
  Deferred tax assets not recorded in the books.............     (8,753)      (2,187)
                                                               --------     --------
Total deferred tax assets...................................      1,613        4,225
                                                               --------     --------
Deferred tax liabilities
  Depreciation..............................................         65          261
  Revaluation of assets.....................................      2,250        2,454
  DuPont share redemption...................................      1,574        1,656
  Spirits and wine sale.....................................      1,711        1,769
  Other, net................................................      2,257        3,837
                                                               --------     --------
Total deferred tax liabilities..............................      7,857        9,977
                                                               --------     --------
Net deferred tax liability..................................   E (6,244)    E (5,752)
                                                               ========     ========


                                       F-52


9.3 TAX CARRYFORWARD EXPIRATION CALENDAR

     The utilization of certain tax carry forwards is subject to limitations
under income tax laws. The tax carry forwards expire in varying amounts as
follows:



                                                                    TAX
                                                               CARRYFORWARDS
                                                              ---------------
                                                              (IN MILLIONS OF
                                                                  EUROS)
                                                           
2003........................................................      E    25
2004........................................................            3
2005........................................................        1,268
2006........................................................          635
2007........................................................        2,160
Thereafter up to 2007.......................................        4,179
Unlimited...................................................          113
                                                                  -------
                                                                  E 8,383


9.4 EFFECTIVE INCOME TAX RATE

     The reconciliation of the differences between the French statutory tax rate
and Vivendi Universal's effective income tax rate is as follows:



                                                                   DECEMBER 31,
                                                              -----------------------
                                                              2002     2001     2000
                                                              -----    -----    -----
                                                                       
French statutory rate.......................................   35.4%    36.4%    37.8%
Non deductible goodwill amortization........................  (35.1)   (48.4)     6.1
Long-term capital gains/losses taxed at lower tax rates.....   (2.4)     4.0     (5.7)
Tax losses..................................................  (13.4)    (3.0)     6.0
Other, net..................................................    3.2     (2.8)   (18.3)
                                                              -----    -----    -----
Effective income tax rate...................................  (12.3)%  (13.8)%   25.9%
                                                              =====    =====    =====


     The years ended December 31, 2000 to December 31, 2002 are subject to tax
audits by the respective tax authorities of the jurisdictions in which Vivendi
Universal has operations. Various taxation authorities have proposed or levied
assessments for additional income taxes of prior years. Management believes that
the settlements will not have a material effect on the results of operations,
financial position or liquidity of Vivendi Universal.

                                       F-53


NOTE 10 ADDITIONAL FINANCIAL STATEMENT INFORMATION

10.1 INCOME STATEMENT DATA



                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
                                                                      
10.1.1 Research and Development Costs..................  E    117   E    237   E    179
10.1.2 Personnel Costs, Including Employee Profit
  Sharing..............................................  E 12,147   E 11,926   E  9,487
10.1.3 Financial Expenses, Provisions and Other
  Financing expenses(1)................................  E (1,333)  E (1,455)  E (1,288)
                                                         --------   --------   --------
  Financial provisions.................................    (2,895)      (482)      (196)
                                                         --------   --------   --------
  Capital gains on sale of portfolio investments(2)....       255        143        702
  Foreign exchange gains (losses)......................        24         51         (7)
  Other(3).............................................      (793)      (185)        27
                                                         --------   --------   --------
                                                         E   (514)  E      9   E    722
                                                         --------   --------   --------


- ---------------

(1) The average cost of debt in 2002 was 4.1% excluding Veolia Environnement.
    This subsidiary, accounted for using the equity method from December 31,
    2002, contributed to financing cost for (E 683) million in 2002.

(2) Of which, as at December 31, 2002, disposal of Vinci shares (E 153 million),
    disposals concluded by Veolia Environnement (E 112 million).

(3) As at December 31, 2002, losses relating to put options on Vivendi Universal
    shares (E 589 million).

     The following schedule shows details of financial provisions as at December
31, 2002:



                                                     IN MILLIONS
                                                      OF EUROS         SEE PARAGRAPH
                                                     -----------       -------------
                                                             
Investment in Elektrim Telekomunikacja.............       (609)    Section 4.1
USA Interactive warrants...........................       (454)    Section 4.4
Interest rate swaps................................       (261)    Note 6
Premiums on call option on Vivendi Universal
  shares...........................................       (226)    Note 6
UGC and UGC Cine Cite shares.......................       (220)    Section 4.1
International telecom assets.......................       (175)    Section 4.2 and Note 6
DuPont shares......................................       (173)    Section 4.3
Provision on premiums on bonded debts..............       (122)    Note 6
Softbank Capital Partners..........................       (120)    Section 4.3
Put options on Vivendi Universal shares............       (104)    Note 6
Other..............................................       (431)
                                                      --------
                                                      E (2,895)
                                                      ========


     For additional information on financial provisions as at December 31, 2001
and 2000, please refer to Note 17.9.

                                       F-54


10.1.4 EXCEPTIONAL ITEMS, NET



                                                                  DECEMBER 31,
                                                          -----------------------------
                                                           2002        2001      2000
                                                          -------     -------   -------
                                                             (IN MILLIONS OF EUROS)
                                                                       
Net capital gains and gains on the dilution of our
  interests in other companies(1).......................  E 1,049     E 2,365   E 3,772
Other...................................................       --          --        40
                                                          -------     -------   -------
                                                          E 1,049(2)  E 2,365   E 3,812
                                                          =======     =======   =======


- ---------------

(1) 2001 consisted mainly of E 1 billion from the disposal of 150 million BSkyB
    shares and E 712 million from the disposal of AOL France.

(2) At December 31, 2002, tax and minority interest related to exceptional items
    amount to E (1,022) and E 211 million.

     The following schedule shows details of capital gains and losses and gains
relating to the dilution of participations in other companies as of December 31,
2002, before tax:



                                                              IN MILLIONS
                                                               OF EUROS     SEE PARAGRAPH
                                                              -----------   -------------
                                                                      
Disposal of 250 million of BSkyB shares.....................      1,588     Section 7.1.1
Disposal of Echostar shares(1)..............................       (674)
Disposals and dilution of Veolia Environnement..............      1,419     Section 3.2.3
Disposal of Houghton Mifflin................................       (822)    Section 3.2.6
Disposal of European publishing activities..................        329     Section 3.2.6
Reserve related to anticipated Telepiu disposal.............       (360)    Section 3.2.7
Disposal of business to business and health divisions.......       (298)    Section 3.2.4
Disposal of Sithe shares....................................       (232)    Section 4.2
Disposal of Vizzavi Europe..................................         90     Section 3.2.5
Disposal of Canal Digital(2)................................        172
Other.......................................................       (163)
                                                                -------
                                                                E 1,049
                                                                =======


- ---------------

(1) On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
    position, 57.6 million Class A common shares, back to EchoStar. Total net
    proceeds of the sale were $1.066 billion. Vivendi Universal held these Class
    A common shares following the conversion of 5.8 million Class D Echostar
    preferred stock in January 2002 for an amount of $1.5 billion.

(2) Canal+ Group sold its whole participation in Canal Digital to Telenor for an
    amount of E 289 million.

                                       F-55


10.1.5 DEPRECIATION AND AMORTIZATION



                                                                  DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
                                                                       
Depreciation of property, plant and equipment...........  E  3,223   E  2,578   E 2,105
Goodwill amortization...................................     1,277      1,688       634
Goodwill impairment(1)..................................    18,442     13,515        --
Amortization of other intangible assets.................     1,098      1,253       904
Other non-financial provisions and allowances, excluding
  financial provisions..................................        --         16       395
                                                          --------   --------   -------
                                                          E 24,040   E 19,050   E 4,038
                                                          ========   ========   =======


- ---------------

(1) See Note 3.3.

10.2 BALANCE SHEET DATA

10.2.1 OTHER INTANGIBLE ASSETS, NET



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Audiovisual and music rights................................   E  5,558     E  7,821
Trademarks, market share, editorial resources...............      2,903        7,984
Film costs, net of amortization.............................      3,367        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        989          680
Deferred charges............................................        542        1,391
Software....................................................        627          703
Fees paid to local authorities..............................         --          568
Other.......................................................        681        1,450
                                                               --------     --------
                                                               E 14,706     E 23,302
                                                               ========     ========




                                                        OTHER                        OTHER
                                                      INTANGIBLE   ACCUMULATED    INTANGIBLE
                                                        ASSETS     AMORTIZATION   ASSETS, NET
                                                      ----------   ------------   -----------
                                                              (IN MILLIONS OF EUROS)
                                                                         
Balance at December 31, 2001........................   E 30,128      E (6,826)     E 23,302
Additions/allocations...............................        116        (1,189)     E (1,073)
Disposals/reversals.................................       (442)           90      E   (352)
Changes in scope of consolidation and other.........     (5,762)          120      E (5,642)
Foreign currency translation adjustments............     (1,872)          343      E (1,529)
                                                       --------      --------      --------
Balance at December 31, 2002........................   E 22,168      E (7,462)     E 14,706
                                                       ========      ========      ========


                                       F-56


10.2.2 PROPERTY PLANT AND EQUIPMENT, NET



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Land........................................................   E   859      E  2,199
Buildings...................................................     1,839         3,941
Machinery and equipment.....................................     3,316         9,138
Construction-in-progress....................................       394         1,030
Other.......................................................     1,261         2,823
                                                               -------      --------
Property, plant and equipment...............................     7,669        19,131
Publicly-owned utility networks.............................        17         4,265
                                                               -------      --------
Property, plant and equipment, net..........................   E 7,686      E 23,396
                                                               =======      ========




                                                       PUBLICLY-                  PROPERTY,
                                           PROPERTY,     OWNED                    PLANT AND
                                           PLANT AND    UTILITY    ACCUMULATED    EQUIPMENT,
                                           EQUIPMENT   NETWORKS    DEPRECIATION      NET
                                           ---------   ---------   ------------   ----------
                                                        (IN MILLIONS OF EUROS)
                                                                      
Balance at December 31, 2001.............  E  32,031   E  6,187     E (14,822)    E  23,396
Additions/allocations....................      3,221        383        (3,308)          296
Disposals/reversals......................       (800)      (104)           85          (819)
Changes in scope of consolidation and
  other..................................    (18,921)    (6,436)       10,611       (14,746)
Foreign currency translation
  adjustments............................       (580)        --           139          (441)
                                           ---------   --------     ---------     ---------
Balance at December 31, 2002.............  E  14,951   E     30     E  (7,295)    E   7,686
                                           =========   ========     =========     =========


10.2.3 INVENTORIES AND WORK-IN-PROGRESS



                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Inventories.................................................   E 1,822      E 4,090
Valuation allowance.........................................      (512)        (927)
                                                               -------      -------
                                                               E 1,310      E 3,163
                                                               =======      =======


10.2.4 ACCOUNTS RECEIVABLE



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Trade accounts receivable(1)................................   E  9,601     E 19,994
Allowance for doubtful accounts.............................     (1,492)      (2,274)
Total trade accounts receivable.............................      8,109       17,720
Other(1)(2).................................................      1,783        3,374
                                                               --------     --------
                                                               E  9,892     E 21,094
                                                               ========     ========


- ---------------

(1) Due within one year.

(2) Of which as of December 2002, premium on VUE class A & B preferred interests
    (E 734 million amortized for E 22 million, see Note 3).

                                       F-57


10.2.5 MARKETABLE SECURITIES



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Treasury shares(1)..........................................   E   38       E 1,840
Listed marketable securities(2).............................       10         1,866
Unlisted marketable securities(3)...........................      168           403
Valuation allowance.........................................     (128)         (336)
                                                               ------       -------
                                                               E   88       E 3,773
                                                               ======       =======


- ---------------

(1) 478,015 shares, with an associated provision of E 12 million.

(2) The drop in value of listed marketable securities is mostly related to the
    sale of shares in BSkyB for E 1.6 billion (See paragraph 7.1.1) and Vinci
    for E 0.2 billion. These Vinci shares were placed on the market in June 2002
    for a total of E 344 million of euros, generating a pre-tax capital gain of
    153 millions of euros.

(3) Unlisted marketable securities consist principally of shares in investment
    companies, with an associated provision of E 116 million. It is comprised of
    the following investments:

     - Non-voting shares in an investment company which has enabled investment
       company Ymer to acquire a 2% interest in Elektrim Telekomunikacja. Please
       refer to Note 13. The carrying value of this investment is E 38 million,
       net of provision of E 66 million.

     - Non-voting shares in an investment company which, by virtue of a carrying
       agreement entered in with a third party financial institution, entitles
       Vivendi Universal to acquire, and the third party may put to Vivendi
       Universal, 4.99% of Elektrim SA's share capital. Please refer to Note
       4.2. The carrying value of this investment is E 7 million, net of
       provision of E 50 million.

10.2.6 OTHER NON-CURRENT LIABILITIES AND ACCRUED EXPENSES



                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Sports rights...............................................   E 1,065      E 1,440
Medium-term vendor credits..................................        --          847
Royalties payable, participations and commitments...........     1,386          911
Accrued compensation and other benefits.....................       184          402
Accrual for exit activities related to the acquisition of
  Seagram...................................................        56          300
Litigation and contingencies................................        57          528
Contingent price adjustment towards Rondor's previous
  shareholders(1)...........................................       223          134
Other(2)....................................................       923        1,126
                                                               -------      -------
                                                               E 3,894      E 5,688
                                                               =======      =======


- ---------------

(1) See Note 11.

(2) As of December 31, 2001, including Veolia Environnement for E 668 million.

                                       F-58


10.2.7 ACCOUNTS PAYABLE



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Trade accounts payable and other............................  E 11,955      E 19,178
Social costs payable........................................     1,318         7,236
                                                              --------      --------
                                                              E 13,273(1)   E 26,414
                                                              ========      ========


- ---------------

(1) Due within one year.

10.3 CASH FLOW STATEMENT DATA

10.3.1 SELECTED CONTRIBUTION DATA AS OF DECEMBER 31, 2002



                                                                  MAROC    VIVENDI UNIVERSAL
                                                    CEGETEL(1)   TELECOM   ENTERTAINMENT(2)
                                                    ----------   -------   -----------------
                                                             (IN MILLIONS OF EUROS)
                                                                  
Net cash provided by operating activities.........      2,120       770            351
Net cash provided by (or used for) investing
  activities......................................       (497)     (225)           308
Net cash provided (or used for) by financing
  activities......................................     (1,056)     (149)          (771)
Effect of foreign currency exchange rate
  changes.........................................         --       (18)           (19)
                                                     --------    ------         ------
Change in cash and cash equivalents...............   E    567    E  378         E (131)
                                                     ========    ======         ======
Dividends paid by these subsidiaries to Vivendi
  Universal.......................................   E     --    E   19         E   --
                                                     ========    ======         ======


- ---------------

(1) At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) Has been consolidated since May 7, 2002.

10.3.2 CASH PAYMENTS



                                                             YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
                                                                       
Interest paid, net........................................  E 1,333   E 1,402   E 1,288
Income taxes paid.........................................  E 1,252   E   684   E   229


10.4 OTHER DATA

10.4.1 NON-CASH INVESTING AND FINANCING ACTIVITIES



                                                             YEARS ENDED DECEMBER 31,
                                                            --------------------------
                                                             2002     2001      2000
                                                            -------   -----   --------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Purchase of affiliates by issuance of common stock........  E 1,219   E 207   E 28,809
Issuance of common stock in settlement of note
  payable(1)..............................................  E    --   E 177   E  1,405


- ---------------

(1) At December 31, 2001 and 2000 only concerned Veolia Environnement.

                                       F-59


10.4.2 AVERAGE NUMBER OF EMPLOYEES (UNAUDITED)



                                                               DECEMBER 31,
                                                              ---------------
                                                              2002      2001
                                                              -----     -----
                                                              (IN THOUSANDS)
                                                                  
Average number of employees(1)..............................   335       321


- ---------------

(1) Of which 50,818 and 47,570 from companies consolidated by using the
    proportionate method at December 31, 2002 and 2001.

10.4.3 COMPENSATION FOR EXECUTIVE OFFICERS, SENIOR MANAGERS AND DIRECTORS

     i) Executive Directors

     Executive Directors' remuneration is determined by the Board of Directors
after hearing the Human Resources Committee report.

     ii) Senior Managers

     Among Senior Managers heading up the Group's Business Units, the ten
highest remunerations (including nine American managers) totalled E 55.24
million in 2002.

     iii) Non-Executive Directors

     Each Non-Executive Director receives E 50,000 in director's fees per year.
This amount is increased by E 11,000 for members of the Human Resources
Committee and E 22,000 for members of the Audit Committee. This amount is
doubled for the Chairman of each Committee.

     Directors' fees are paid "prorata temporis" depending on the appointment or
resignation date, at the end of each quarter.

     Directors' fees paid in 2002 by Vivendi Universal to non-executive
directors amounted to E 0.9 million (total payment of E 1.1 million of which
E 0.2 million to Executive Directors).

NOTE 11 COMMITMENTS AND CONTINGENCIES

11.1 PROCEDURES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, directors, committees of
       the board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or disposals;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments;

     - review of all contracts and agreements.

                                       F-60


11.2 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS GIVEN

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our consolidated financial statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our consolidated financial
statements, but are required to be disclosed. The following table summarizes
Vivendi Universal's significant contractual obligations and commercial
commitments at December 31, 2002:



                                                             PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                 TOTAL      A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                --------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
                                                                        
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455   E     --       E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177      9,177            --              --           --
  Sports rights(2)............     1,065        469           331             265           --
Broadcasting rights(3)........       506        214           140             121           31
Creative talent and employment
  agreements(4)...............       250         55            50              60           85
Other(5)......................       240        223            15               2           --
                                --------   --------       -------         -------      -------
Total.........................  E 21,693   E 10,138       E 3,414         E 4,461      E 3,680
                                ========   ========       =======         =======      =======




                                                             PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                  TOTAL     A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                 -------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
                                                                        
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E   373       E   330         E   655      E   510
Sport rights(2)................    1,440         --           265           1,175           --
Broadcasting rights(3).........    2,690        834           513           1,056          287
Creative talent and employment
  agreements(4)................    1,473        823           296             289           65
Real estate defeasance(7)......      846         --            --              --          846
Other..........................      701        213           121             280           87
                                 -------    -------       -------         -------      -------
Total..........................  E 9,018    E 2,243       E 1,525         E 3,455      E 1,795
                                 =======    =======       =======         =======      =======


- ---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchases option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of football rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

                                       F-61


(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under Contingencies and Note 10.2.6).

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    disposal to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third in April 2000. The annual rental
    expenses approximate E 34.4 million. In December 1996, three buildings in
    Berlin were sold and leased back under ten to thirty year leases at an
    annual rental expense of approximately E 29.6 million. The difference
    between Vivendi Universal's rental obligation under the leases and the
    market rent received by Vivendi Universal is provided for when unfavorable.

11.3 CONTINGENCIES

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. The most significant contingencies at
December 31, 2002 are summarized as follows:

  CEGETEL GROUP

     - In connection with the August 2001 sale of AOL Europe (AOLE) Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOLE preferred shares up to a share of
       66% and 34%, respectively, through a mirror total return swap with
       Vivendi Universal. In December 2002, a portion of the total return swap
       between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continues to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal are obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner (AOLTW) whereby AOLTW will acquire the AOLE preferred shares
      through the exercise of a call option on April 8, 2003 for an amount of
      $812 million, payable in either cash or shares of AOLTW common stock or a
      combination of both. AOLTW must make its election as to cash or shares by
      April 4, 2003. If AOLTW determines to pay in shares, the number of shares
      to be delivered will be based on the average closing price of the regular
      trading session for AOLTW common stock for the fifteen consecutive trading
      days ending on the second business day preceding April 8, 2003. If payment
      for the call option is made in cash, the LineInvest payment to Cegetel is
      due on April 30, 2003 and the payment to Vivendi Universal is due on
      October 30, 2003. If payment for the call option is made in shares, the
      date of payment to Cetegel and Vivendi Universal will be the April 30,
      July 30, October 30, or January 30 following receipt by LineInvest of any
      proceeds of the sale of the AOLTW shares. In the case of Vivendi
      Universal, however, the first such payment by LineInvest could not occur
      until October 30, 2003. In the case of both Vivendi Universal and Cetegel,
      the final date for payment by LineInvest is October 30, 2006.

      If LineInvest receives AOLTW shares in consideration for the sale of the
      AOLE preferred shares to AOLTW, such shares will not be freely tradeable
      in the United States prior to registration with the SEC and are subject to
      certain other restrictions affecting their resale. Since there can be no
      assurance as to the precise timing of the sale of the shares by LineInvest
      or the amount of proceeds it will receive,

                                       F-62


      Vivendi Universal and Cegetel Group retain a contingent liability in
      respect of the difference between the ultimate sales proceeds of the AOLTW
      shares and the notional amount due under the total return swaps.

      The asset representing the preferred shares and the liability representing
      the corresponding debt in LineInvest's financial statements amounts to
      $812 million.

     - The shareholders agreement between Cegetel Groupe and Societe Nationale
       des Chemins de Fer Francais (SNCF) related to their interest in Telecom
       Developpement includes exit conditions for both parties in certain
       specific circumstances at a price still to be determined.

     - In connection with the 3G UMTS license granted to SFR by the French
       government in 2001, we are committed to make future license payments
       equal to 1% of 3G revenues earned when the service commences, currently
       expected to be in 2004.

     - Cegetel has provided miscellaneous guarantees in connection with
       operating activities. The total guarantees approximate E 40 million, of
       which the largest is a guarantee made in relation to a credit agreement
       between Societe Financiere de Distribution, a distribution company in
       which Cegetel has an equity investment, and Credit Mutuel for
       approximately E 24 million, which expires in July 30, 2006.

  UNIVERSAL MUSIC GROUP

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of US$100.3
       million (E 92.6 million). (See Note 16, below)

     - The initial 5-year term of UMG's 50% joint venture in the Roc-a-fella
       record label was to end on February 28, 2002. Instead, the term was
       extended for 3 more years to February 28, 2005. UMG's joint venture
       partner has a put option in its interest that is exercisable on February
       28, 2005, which was valued at E 34 million at the time of the extension.
       At the time of the extension E 19 million was paid as both an advance on
       the option and for a 3-year extension. Based on estimated performance,
       the potential liability if the put is exercised is between zero and E 15
       million.

     - The original 3 year term of UMG's 50% joint venture in the Murder, Inc.
       Records label was extended as of February 10, 2002 for an additional 5
       years until February 10, 2007. On the date 90 days after expiration or
       termination of the term, UMG is obligated to purchase its joint venture
       partner's 50% interest under a formula based on prior performance. It is
       not possible to predict the future performance of the joint venture, but
       based on recent performance being constant through the end of the term,
       the Group estimates the potential obligation at approximately $20
       million.

     - In connection with UMG's 50% equity investment in pressplay, a joint
       venture with Sony Music that offers online access to music tracks, UMG is
       obligated to cover its proportionate share of the amount of shortfall, if
       any, of operating fees. Under the terms of the joint venture agreement,
       each of Sony and UMG has agreed to contribute up to $50,000,000. To date,
       UMG's contributions have amounted to approximately $30,000,000.

  VIVENDI UNIVERSAL ENTERTAINMENT

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USA Interactive, Inc. (USA), USA and Mr. Barry Diller received
       5.44% and 1.50%, respectively, of the common interests in Vivendi
       Universal Entertainment LLLP (VUE), the group formed by combining such
       assets and those

                                       F-63


       of the Universal Studios Group. Vivendi Universal agreed to certain put
       arrangements with respect to the common interests in VUE. Beginning on
       May 7, 2003, Mr. Barry Diller may put his common interests to Universal
       Studios, Inc. for the greater of their fair market value and $275
       million. Beginning on May 7, 2010, USA may put its common interests to
       Universal Studios, Inc. for their fair market value. In each case, these
       amounts may, at Universal Studio Inc's election, be paid in cash or in
       Vivendi Universal shares.

      Under the VUE Partnership Agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USA), including a cap on indebtedness and a restriction
      on asset transfers. Certain of the covenants, including those specified
      above, would cease to apply if an irrevocable letter of credit were issued
      in an amount equal to the accrued value of such interests at maturity
      (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USA for any "tax
      detriment" (defined to mean the present value of the loss of USA's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USA to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USA at the closing.

     - In connection with VUE's equity investment in Universal City Development
       Partners (UCDP), a joint venture that operates Universal Orlando's theme
       parks, Vivendi Universal has two guarantees, each up to $14 million, in
       favor of Fleet National Bank and Wachovia. Following Vivendi Universal's
       debt downgrading in June 30, 2002 and in accordance with the terms of the
       guarantees, cash collateral of $13.5 million was put in place for each
       guarantee, leaving a total residual guarantee of $1 million. The theme
       park venture is currently in the process of raising new financing through
       a $500 million bond offering. The new borrowing will be non-recourse as
       are the other loans already in place. The new funds will be used to pay
       various debt instruments, deferred management fees to VUE and improve the
       parks' liquidity position.

     - In connection with VUE's equity investment in Universal City Florida
       Hotel Venture (UCF-HV), a joint venture that operates Universal Orlando's
       hotels, Vivendi Universal has a commitment to cover its proportionate
       share of the operating expense shortfall, if any, of the hotels. The
       total is capped at $30 million per year, and Vivendi Universal's
       proportionate share is 25% or $7.5 million. To date, no expense shortfall
       has occurred and the guarantee has not been called.

     - In connection with its equity investment in UCI/CIC (United Cinema
       International/Cinema International Corporation), a joint venture that
       operates international movie theatres, VUE has guaranteed lease payments
       for approximately $154 million (VUE's 50% share). To date, none of these
       guarantees have ever been called as the joint venture has been able to
       meet its obligations.

     - In connection with its 20% equity investment in MovieLink, a joint
       venture formed in February 2001 to provide film programming via the
       internet, VUE has committed to make capital contributions up to $30
       million and may be obligated to fund payment obligations of MovieLink
       with respect to certain intellectual property liabilities in excess of
       $30 million. As of December 31, 2002, VUE has contributed $10.5 million
       and expects to contribute the remaining $19.5 million over the next
       several years pursuant to future capital calls that may be made from time
       to time. As MovieLink has only been operating since 2001, there is no
       assurance that the outstanding capital contributions will be sufficient
       to fund future operations.

     - VUE has received an unfavorable legal judgment related to ITC
       Entertainment's "Streetscenes" film property, which it acquired as part
       of Seagram's acquisition of PolyGram. A surety bond of $27.8 million was
       issued in October 2001 in connection with this matter and
       counter-guaranteed by Vivendi Universal. The Court of Appeal reduced
       compensatory damages to $1.2 million, which VUE has paid. However,
       punitive damages have not yet been determined as VUE is awaiting new
       trial court proceedings.

     - In 1987, Universal City, Florida entered into an agreement with a
       creative consultant to supply consulting services for a fee based on its
       gross revenues. The consultant is also entitled to a fee based on
                                       F-64


       the gross revenues of all gated motion picture and/or television themed
       attractions owned or operated, in whole or in part, by (or pursuant to a
       licence from) Universal City, Florida or MCA Inc. (now Universal Studios,
       Inc.), any of their partners or any of their affiliates ("comparable
       projects"), other than at Universal City, California. At present, the
       only theme park which may be a comparable project is VUE's partially
       owned park in Osaka, Japan. It is possible that comparable projects will
       be created in the future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City, Florida for its
      parks were $14.8 million, $16.6 million and $14.7 million, respectively.
      Fees with respect to the park in Japan were $13.2 million for 2001 and
      $10.5 million for 2002. The consultant may also be entitled to participate
      in certain sales of equity by Universal City, Florida's partners and to
      participate in certain real estate development activities of Universal
      City, Florida's partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City, Florida represented under the agreement that the
      consultant's interest in each of its parks and in any comparable projects
      will have priority over the interests of all financiers, lenders and
      others who may have an interest in that park or project. Universal City,
      Florida's obligations under the agreement are guaranteed by Universal
      Studios, Inc. and Universal Studios, Inc.'s obligations under that
      guarantee have in turn been assumed by VUE.

     - In 1995, affiliates of VUE granted an executive officer an option (as
       amended in 2000) to acquire 0.2% of their shares, subject to adjustment
       for certain changes in their capital structure and other extraordinary
       events. This option vests over a 10-year period commencing in 1995 and is
       exercisable by the officer in full for approximately $24.9 million. In
       connection with the acquisition of Seagram by Vivendi Universal on
       December 8, 2000, VUE recorded deferred compensation of $22.9 million,
       which represents the intrinsic value of the unvested portion of the
       option. This deferred compensation is being amortized over the remaining
       vesting period of the option.

  CANAL+ GROUP

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of licence fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

  MAROC TELECOM

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake

                                       F-65


       in Maroc Telecom to guarantee the payment of the above put option, if
       exercised. (see Note 11.5, below).

  VIVENDI TELECOM INTERNATIONAL

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately E 51 million (or the proportionate value of E 51 million if
       less than 29% is sold) and (ii) its residual 16% interest at fair value.
       Between May 26, 2004 and December 31, 2009, Societe Nationale de
       Financement can put its entire 45% interest at fair value. The option may
       be exercised in increments but each exercise must be for not less than
       10% of the shares. The fair value of Monaco Telecom will be independently
       determined by an appraisal procedure.

     - Monaco Telecom International (MTI), subsidiary of Monaco Telecom has
       granted guarantees to the Afghan state related to the Telecom Development
       Company of Afghanistan's (TDCA) performance of its obligations and to the
       Agha Khan Fund for Economic Development, capped at $2.4 million. In
       addition, MTI has committed to fund the Afghan Telecom BV Company, the
       parent of TDCA, up to $10.5 million.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory), which Vivendi
       Universal expects to be reduced to approximately E 146 million following
       publication of the ruling of the Spanish government in April 2003. These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon commercial launch of UMTS services. Given the very
       low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

  CORPORATE AND OTHER

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholders' Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with

                                       F-66


the foregoing, Vivendi Universal must retain at least 30% of the gross assets or
at least 10% of the net assets (values are determined as of December 8, 2000)
until the end of the five year period ending on December 31, 2005. At the
      present time, Vivendi Universal is in compliance with this provision.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's disposal of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as follows:

        - Certain recurring expenses involving network renewal costs in the
          water and energy businesses were originally to be reimbursed by
          Vivendi Universal up to an initial limit of E 15.2 million a year
          indexed over a period of 12 years. This limit has now been raised to
          E 30.4 million indexed starting in the year 2002. The additional
          amount potentially due above the E 15.2 million initial limit will,
          however, be payable only from January 2005 and bear interest at the
          legal rate. If the aggregate amount of replacement costs borne by
          Veolia Environnement were to exceed the initial limit of E 228.6
          million, this excess would be covered by Vivendi Universal up to a
          maximum amount of E 76.2 million.

        - Veolia Environnement's right to claim reimbursement of exceptional
          expenses, provided by the June 2000 agreement, has been removed.

        - Certain matters relating to the implementation process of the counter
          guarantee agreement dated June 20, 2000 pursuant to which Veolia
          Environnement will indemnify Vivendi Universal for any costs, losses
          or expenses in connection with the subsidiary guarantees have been
          detailed.

        - It has been agreed that the current Vivendi Universal interest in the
          company Aguas Argentinas will be retained by Vivendi Universal.
          Guarantees related to this company, which made up an amount of
          approximately $50 million have been retained by Vivendi Universal
          above a first tranche of $5 million assumed by Veolia Environnement.

        - Vivendi Universal has retained stakes in certain operating companies
          in the water sector (notably Genova Acque E 25 million; Societe des
          Eaux et de l'Electricite du Nord E 6.5 million; and VNAC preferred
          shares $10.2 million) for reasons relating to the transferability of
          the concession; these will be sold as soon as practicable and at the
          latest on December 31, 2004.

         Separately, at December 31, 2002, Vivendi Universal continued to
         guarantee commitments made by Veolia Environnement subsidiaries for a
         total amount of approximately E 250 million, including: E 122 million
         related to a perpetual loan issued by OTV, E 58 million related to
         performance guarantees given to local authorities (Council of the shire
         of Noosa, Adelaide, Sydney) and E 41 million of guarantees granted to
         financial institutions lending funds to US operating subsidiaries of
         Vivendi Water. In addition, comfort letters were outstanding in favor
         of Veolia Environnement subsidiaries for a total amount of
         approximately E 20 million. All these commitments are being
         progressively transferred to Veolia Environnement and have been
         counter-guaranteed by the latter.

     - In connection with Vivendi Universal's December 2002 disposal of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favour of
       new investors as well as banks participating in the new E 1 billion Dual
       Currency Revolving Facility, the E 300 million CDC IXIS Credit Facility
       and the existing facilities. Under an arrangement entered into in
       connection with the December 2002 disposal, Vivendi Universal has
       committed to pay an indemnity equal to E 3 per call option to new
       investors in the event that the guarantees related to the new E 1 billion
       Dual

                                       F-67


       Currency Revolving Credit Facility are called or a default of payment
       occurs under specified significant credit facilities or bond issues.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as at December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002, three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     - Vivendi Universal has counter-guaranteed US financial institutions which
       have issued surety bonds in favour of Vivendi Universal operating
       companies for an amount of $47.5 million.

     - The two interest rate and indices swap agreement contracts entered into
       by Vivendi Universal with GenRE in 1997 were terminated in December 2002.
       While Vivendi Universal has retained certain indemnification obligations
       to GenRe regarding the structure of these transactions, the company
       believes that the likelihood that these obligations could materialize is
       remote.

     - Various other miscellaneous guarantees which individually range from
       E 43,000 to E 48 million and together total approximately E 274 million.
       In addition, subsidiaries grant guarantees, including in relation to
       vendor financing, in the ordinary course of business, and Vivendi
       Universal grants guarantees to financial institutions for its
       subsidiaries in their pursuit of their operational activity. In the case
       of vendor guarantees issued in 2002 and prior, to the best of our
       knowledge we have received no material claims to date.

  ASSETS SOLD

     - On December 21, 2001, Vivendi Universal completed the sale of its spirits
       and wine business to Diageo plc and Pernod Ricard S.A. Under the Stock
       and Asset Purchase Agreement relating to that sale, Vivendi Universal
       made certain indemnifications to the purchasers including, among others,
       an indemnity for breaches of representations and warranties to a maximum
       of US$1 billion; however, any individual claim for breach of
       representation and warranty must exceed $10 million to qualify for
       indemnification and the purchasers would only receive indemnification for
       any such qualified claims which exceed $81.5 million in the aggregate.
       Vivendi Universal's obligation to indemnify the purchasers with respect
       to substantially all of these representations and warranties expire on
       June 21, 2003 as to any claim not made prior to such date. To date we
       have not received any material claims and have no knowledge of any
       pending material claims.

                                       F-68


     - The sale agreement relating to the sale of Vivendi Universal Publishing's
       business-to-business and health divisions to Cinven carries a price
       adjustment clause reliant on the accounts of June 30, 2002 and a
       guarantee clause, valid until December 31, 2004, related to liabilities
       up to E 500 million per division.

     - In connection with the sale of VUP's European publishing activities to
       Investima 10, except with respect to claims for indemnification with
       respect to tax matters, the purchaser shall only be indemnified for
       claims which exceed in the aggregate E 15 million and then only to the
       extent of such excess. In no event shall the aggregate indemnification to
       be paid by seller exceed 20% of the adjusted Share Purchase Price (i.e.
       E 240 million), other than with respect to tax matters and losses based
       upon a breach of representations or warranties with respect to
       capitalization, authorization, consents and approvals, non-contravention
       and transfers of real estate since December 31, 2001. Additionally VUP
       and VU specifically indemnify the purchaser for losses based upon (a) a
       breach of representations or warranties with respect to the Ivry
       Distribution Centre, (b) claims under guarantees including in respect to
       shares, equity interests, or real estate previously sold, (c) property
       disposals mentioned in the contract, (d) dormant or in liquidation
       subsidiaries not related to the sold activities when they were active,
       (e) deferred purchase price obligations, (f) liabilities not related to
       the purchased business, (g) clauses of "retour a meilleure fortune", (h)
       VUP transferred employee profit sharing scheme, (i) the purchased assets
       to VUP (other than company stock)", (j) assistance by employees in
       preparation of the consolidated financial statements of Vivendi Universal
       for 2002 and the first quarter of 2003, and (k) certain losses of
       Larousse-Bordas. With respect to clauses (b) and (f) only, the purchaser
       shall only be indemnified for claims which exceed in the aggregate
       E 500,000 and then only to the extent of such excess.

     - Vivendi Universal has jointly granted with Vivendi Communications North
       America (VCNA) a guarantee to Versailles Acquisition Corporation, the
       vehicle which acquired Houghton Mifflin. In the event of a breach of
       representations and warranties, except in respect of tax matters or title
       to shares, no indemnification shall be made unless and until the
       aggregate amount of losses sustained by the purchaser exceeds $20 million
       in which event the seller will be required to pay only the amount of
       losses in excess of $20 million. In no event shall the aggregate
       indemnification exceed 10% of the Purchase price (i.e. $166 million),
       except with respect to due organization or title to shares. In the event
       of a claim for breach of representations and warranties other than in
       respect of title to shares, the amount of losses from such claim covered
       by the indemnification will have to be (or reasonably be expected to be)
       at least $1 million.

     - As part of the sale of the 50% stake held by Vivendi Net UK Ltd in
       Vizzavi Limited and Vizzavi Europe Holding BV to Vodafone, in August
       2002, Vivendi Universal has granted certain standard guarantees to
       Vodafone up to its 50% share.

     - In connection with the sale of Sithe 49.9% to Exelon in December 2000,
       Vivendi Universal has granted guarantees on its own representations and
       those of Sithe. The claims other than those made in relation to foreign
       subsidiaries are capped at $480 million. In addition, they can be made if
       they exceed $15 million, except if they are related to foreign
       subsidiaries and the disposal of some electrical stations to Reliant in
       February 2000. Some of these guarantees will expire December 18, 2005.
       The sale of the remaining stake, excluding Asian subsidiaries occurred in
       December 2002, to Apollo has been covered by a guarantee valid until
       December 18, 2004.

     - As part of the sale of real estate assets in June 2002 to Nexity, Vivendi
       Universal granted two autonomous first demand guarantees, one for E 40
       million and one for E 110 million for the benefit of several subsidiaries
       of Nexity (SAS Nexim 1 to 6). The guarantees are effective until June 30,
       2017. These autonomous guarantees have completed the one issued by Sig
       35, Vivendi Universal's subsidiary, to SAS Nexim 1-6 in connection with
       guarantee contracts dated June 28, 2002. It is effective during 5 years,
       from June 28, 2002, except litigations (valid until the end of
       proceedings), tax, custom, and social liabilities subject to a statute of
       limitation plus 3 months and the decennial guarantee applicable to real
       property works.

                                       F-69


     - In connection with the sale of hotels to the consortium ABC in 1999,
       Vivendi Universal delivered a commercialization guarantee effective until
       December 2004, capped at 80% of the value of each hotel, and guarantees
       related to social and tax liabilities subject to a statute of limitation.

     - In connection with the sale of the La Defense to Unibail in 1999, Vivendi
       Universal granted certain guarantees related to the ownership of real
       estate assets, administrative authorizations, preemption rights and the
       validity of the share capital of companies are still effective as well as
       tax and social ones.

     The following chart summarizes information related to the specific
contingent liabilities discussed above:



TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
- ---------------------------                                ------                   ---------
                                                                              
Disposal of AOL Europe preferred shares   $812 million market risk on AOL share
                                          put price to be determined                     2003
Telecom Developpement buy/sell
  agreement with SNCF 3G UMTS license     1% revenue earned when service commences
                                          (expected to be in 2004)                       2021
Miscellaneous guarantees granted by
  Cegetel                                 E 40 million                              2003/2012
Rondor contingent purchase price          E 223 million                               Settled
Put option on Roc-a-fella record label
  joint venture                           0 to E 15 million                              2005
Put option on Murder Inc. records         0 to $20 million                               2007
Guarantee for operating shortfall of
  pressplay joint venture                 0 to $20 million                                 --
Put option on VUE
  - 1.5% of common interest in VUE to
    Barry Diller from May 7, 2003         Greater of fair market value and $275
                                          million                                          --
  - 5.4% of common interest in VUE to
    USA Interactive from May 2010         At fair value                                    --
Two guarantees in connection with VUE's
  equity investment in UCDP               Residual guarantee of $1 million                 --
Guarantee for operating shortfall of
  Universal City Florida Hotel Venture    $7.5 million                                     --
Guarantee of lease payments in
  connection with UCI/CIC equity
  investment                              0 to $154 million                                --
Capital contributions in connection with
  equity investment in MovieLink          $19.5 million                                    --
Surety bond related to ITC
  Entertainment's "Streetscenes" film
  property                                $27.8 million                                    --
Agreement with creative consultant
  - consulting services                   Fee based on gross revenues                      --
  - additional fee                        Based on gross revenues of themed
                                          attractions at certain parks                     --
  - right of termination                  Fair market value, starting in 2010              --
Executive officer option to acquire 0.2%
  of VUE's affiliate shares               Approximately $24.9 million                    2005
Guarantee provided to English Premier
  League football                         L200 million, 50% of which is
                                          counterguaranteed by the RTL Group             2004
Put option equal to 16% of Maroc Telecom  At fair market value                           2005


                                       F-70




TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
- ---------------------------                                ------                   ---------
                                                                              
Grant of a put option of 45% of Monaco
  Telecom
  - until May 25, 2004                    0 to 29% for a proportionate of 0 to 51
                                          million euros and the residual 16%
                                          interest at fair value                         2004
  - between May 26, 2004 and December
    31, 2009                              45% interest at fair value or in
                                          increments but each exercise must be not
                                          for less than 10%                              2009
Guarantees to Afghan state re:
  performance of obligations of Telecom
  Development Company of Afghanistan and
  to the Agha Khan Fund for Economic
  Development                             Capped at $2.4 million                           --
Commitment to fund Afghan Telecom BV
  Company                                 Up to $10.5 million                              --
Bank guarantee Xfera                      Approximately E 146 million                      --
Bank guarantee provided to Spanish
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera                                   E 48 million                                     --
"Call option" of the Xfera stake held by
  Vodafone                                Subject to arbitration proceedings               --
Shareholders' governance agreement with
  members of the Bronfman family          E 30.4 million indexed starting in the
                                          year 2002 payable from January 2005
                                          subject to legal interest rate                 2005
Disposal of Interest in Veolia
  Environnement
  - Reimbursement of replacement costs    If total amount paid by VE exceeds
                                          E 228.6 million excess would be covered
                                          by VU up to an amount of E 76.2 million          --
  - Guarantees re: Aguas Argentinas       Approximately $50 million with first $5
                                          million assumed by VE                            --
  - Other guarantees re: commitments
    made by VE subsidiaries               Approximately E 250 million                      --
  - Comfort letters issued in favor of
    VE subsidiaries                       Approximately E 20 million                       --
Indemnity to VE share call option
  holders                                 E 3 per call option (approximately E 250
                                          million)                                       2004
Sale of put options on own shares in
  2003                                    3.1 million shares at an exercise price
                                          of E 50.50                                  Settled
Put option on 19.7% of capital stake in
  UGC                                     Currently estimated at E 70 million            2007
Debt premiums potentially due to holders
  of bonds exchangeable into VE and
  Vinci shares                            E 27.6 million                                 2006
Counter-guarantee on surety bonds         $47.5 million                                    --
Pledges and guarantees related to real
  estate operations                       E 274 million                             2002/2020
Sale of Seagram's spirits and wine
  assets                                  0 to $1 billion                                2003
Sale of VUP's B2B and Health divisions    Price adjustment clause and guarantee
                                          clause related to liabilities up to
                                          E 500 million per division                     2004


                                       F-71




TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
- ---------------------------                                ------                   ---------
                                                                              
Sale of VUP's European publishing
  activities                              Guarantees capped at E 240 million               --
Sale of Houghton Mifflin                  Losses in excess of $20 million not to
                                          exceed $166 million                              --
Sale of 50% stake in Vizzavi              Certain standard guarantees up to its
                                          50% share                                        --
Sale of Sithe                             Guarantees capped at $480 million         2004/2005
Guarantees on sale of land and buildings
  businesses                              Guarantees capped at E 150 million             2017
Sale of hotels to the consortium ABC      Commercialization guarantee kept at 80%
                                          of the value of each hotel                     2004


11.4 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS RECEIVED

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

11.5 COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets are
as follows:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004 (see 3.2.3 above);

     - second ranking collateral after that issued in connection with the E 1
       billion loan and the E 300 million loan, and that issued to holders of
       call options on Veolia Environnement shares, allocated in connection with
       the syndicated lines of credit of E 3 billion and E 850 million set up,
       respectively, in March 2002 and March 1999 to Societe Generale in
       connection with two loans of E 490 million in the aggregate, and
       Bayerische Landesbank and LineInvest Limited, in connection with
       financing of the purchase of AOL Europe preferred shares or to an amount
       equal to one-third of the total amount of the transaction (i.e. about
       E 270 million) (see 11.2 above);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million).

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP) (see 11.2 above);

                                       F-72


     - pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract (see 11.2 above);

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom if exercised (see 11.2 above).

11.6 LITIGATION

     Vivendi Universal is subject to various litigation in the normal course of
business. Although it is not possible to predict the outcome of such litigation
with certainty, as determined by the courts of the applicable jurisdiction,
based on the facts known to us and after consultation with counsel, management
believes that such litigation will not have a material adverse effect on our
financial position or results of operations.

  INVESTIGATIONS BY THE FRENCH C.O.B., THE S.E.C. AND THE U.S. ATTORNEY

     The French Commission des Operations de Bourse ("C.O.B.") has commenced an
investigation into certain of Vivendi Universal's financial statements. The
investigation began in July 2002, and is being led by the C.O.B.'s Inspection
Services division. Vivendi Universal has provided the Inspection Services
division with documents it has requested, and has made certain employees
available for interviews. Vivendi Universal is cooperating fully with the
Inspection Services division in its investigation, which is continuing.

     The U.S. Securities and Exchange Commission ("S.E.C.") and the Office of
the US Attorney for the Southern District of NewYork have also commenced
separate investigations into the accuracy of Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002. Vivendi Universal is actively cooperating with both
investigations. It has produced documents for both the S.E.C. and the Office of
the US Attorney, and has made certain directors and employees available for
depositions and interviews. Those investigations are both continuing. Those
investigations could also result in the filing of civil claims or criminal
charges in the United States against Vivendi Universal.

     Vivendi Universal, together with Messrs. Messier and Hannezo (its former
CEO and CFO, respectively) are defendants in a consolidated securities class
action filed in the United States District Court for the Southern District of
New York, In re Vivendi Universal, S.A. Securities Litigation (Master File No.
02 CV 5571 (HB)). The consolidated class action complaint, filed January 7,
2003, alleges violations of the Securities Act of 1933 (concerning allegedly
false and materially misleading statements or omissions in the registration and
proxy statements issued in October 2000) and of the Securities Exchange Act of
1934 (concerning allegedly false and materially misleading statements or
omissions in certain public statements, including financial statements, between
October 30, 2000, and August 14, 2002). Vivendi Universal, as well as Messrs.
Messier and Hannezo, have each filed separate motions to dismiss the
consolidated class action complaint on the grounds that it is not legally
sufficient. A decision on those motions by the Court is not expected before late
June 2003.

     It is not possible at this early stage of the litigation and investigation
to predict the outcome and duration with any certainty or to quantify any
potential damages; the impact of this litigation and investigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of such litigation and investigation. In the
opinion of Vivendi Universal, the plaintiffs' claims lack merit, and Vivendi
Universal intends to defend against such claims vigorously.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND USA INTERACTIVE

     In connection with Vivendi Universal's acquisition of the entertainment
assets of USA Interactive, (USAi) there is a disagreement among the parties
relating to the interpretation of the provision for tax distributions set forth
in the Partnership Agreement.

                                       F-73


     USAi has advised Vivendi Universal that it believes VUE is obligated,
pursuant to the Partnership Agreement, to make cash distributions after the
close of each taxable year with respect to the taxable income of VUE allocated
to USAi's preferred interests for such taxable year. Although USAi has stated
that the actual amounts of cash distributions that it believes are payable with
respect to taxable income allocated to the preferred interests would depend on
several factors, it has estimated that those cash distributions could have a
present value to USAi of up to approximately $620 million.

     Vivendi Universal believes that USAi's position is without merit and has so
advised USAi. Additionally, VUE has informed USAi that it does not intend to
make such distributions for the taxable year ended December 31, 2002. To date
the disagreement remains unresolved.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Vivendi Universal and Elektrim S.A. ("Elektrim") created a holding company,
Elektrim Telekomunikacja Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU
and 70% by Elektrim. Elektrim agreed to contribute to Elektrim Telekomunikacja
its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o ("PTC") plus an
additional 13.9% interest to be acquired from PTC's minority shareholders.
Before such contributions were made, Vivendi Universal and Elektrim signed a
Second Agreement in December 1999 pursuant to which Vivendi Universal increased
its ownership in Elektrim Telekomunikacja to 49% and Elektrim contributed its
48% direct interest in PTC, as well as its 100% shareholding in the Bresnan
Company, to Elektrim Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT has sought a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999 breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective, an order requiring 3.126%
of the PTC shares acquired by Elektrim to be transferred to DT at fair market
value and an order for certain damages. The first arbitration took place in
November 2001 with subsequent hearings in March and May 2002. Although the first
arbitration proceedings have been completed, the arbitrators have not yet
announced their decision.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and the governing
documents of PTC. In this arbitration proceeding, DT sought either a declaration
that the transfer of the PTC shares by Elektrim to Elektrim Telekomunikacja in
December 1999 was ineffective and that the shares remained owned by Elektrim or
an order requiring the transfer of all of the PTC shares currently held by
Elektrim Telekomunikacja to Elektrim. A declaration that Elektrim had violated
the PTC shareholders agreement would allow DT to exercise a call option under
the PTC shareholders' agreement to purchase at net book value the PTC shares
contributed by Elektrim to Elektrim Telekomunikacja. A hearing relating to this
arbitration took place in February 2003 and a further hearing is planned for
September or October 2003. No indication has been given as to when the
arbitration decision in either arbitration will be given.

     Pursuant to the Third Amended and Restated Investment Agreement dated
September 3, 2001, between Vivendi Universal and Elektrim, Vivendi Universal may
be liable for the first $100 million of damages and liable for 50% of any
damages in excess of $100 million awarded to DT against Elektrim.

  TRANSFER OF BROADCASTING RIGHTS FOR PREMIER LEAGUE FOOTBALL MATCHES TO CANAL
  PLUS AND KIOSQUE

     On December 14, 2002, the board of the French Professional Football League
agreed to grant the broadcasting rights for premier league football matches for
the 2004-2007 season, to Canal Plus and Kiosque. By order dated January 23,
2003, the French Competition Board stayed the growth of such rights until such
time as the Board is able to issue a decision on the merits of the growth. On
February 6, 2003, Canal Plus and

                                       F-74


Kiosque sought to have the Court of Appeal in Paris cancel or amend the Board's
order. On February 16, 2003, the Court of Appeal proposed that the parties enter
into a legal mediation procedure and the parties agreed to do so. The Court of
Appeal appointed two mediators on February 25, 2003. In the event that the
parties fail to reach an agreement before April 2003, the matter will be decided
by the Court of Appeal.

11.7 ENVIRONMENTAL MATTERS

     Vivendi Universal's operations are subject to evolving and increasingly
stringent environmental regulations. Vivendi Universal's operations are covered
by insurance policies. At December 31, 2002, there were no significant
environmental losses.

NOTE 12 SEGMENT INFORMATION

12.1 GEOGRAPHIC DATA

     The following table presents by geographic area revenues for 2002, 2001 and
2000 and long-lived assets for 2002 and 2001.



                                                       YEARS ENDED DECEMBER 31,
                                           ------------------------------------------------
                                                2002
                                           ILLUSTRATION VE     2002
                                            EQUITY METHOD     ACTUAL      2001     2001(1)
                                           ---------------   --------   --------   --------
                                             (UNAUDITED)
                                                        (IN MILLIONS OF EUROS)
                                                                       
REVENUES
  France.................................     E 11,707       E 26,391   E 24,285   E 20,933
  United Kingdom.........................        1,404          3,765      4,170      2,992
  Rest of Europe.........................        3,882         11,327     10,456      7,421
  United States of America...............        7,586         10,810     12,654      7,009
  Rest of World..........................        3,533          5,857      5,795      3,225
                                              --------       --------   --------   --------
                                              E 28,112       E 58,150   E 57,360   E 41,580
                                              ========       ========   ========   ========




                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
LONG-LIVED ASSETS
  France....................................................   E 15,356     E 26,402
  United Kingdom............................................        960        2,781
  Rest of Europe............................................      3,127       10,770
  United States of America..................................     17,477       53,522
  Rest of World.............................................     11,575        5,599
                                                               --------     --------
                                                               E 48,495     E 99,074
                                                               ========     ========


- ---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

12.2 BUSINESS SEGMENT DATA

     Each reportable segment is a business unit that offers different products
and services that are marketed through different channels. Segments are managed
separately because of their unique customers, technology, and marketing and
distribution requirements. As at December 31, 2002, main segments are the
following: Cegetel Group, Music, Vivendi Universal Entertainment, Canal+ Group,
Maroc Telecom and Vivendi Universal Games. (See each segment's scope of
consolidation in Note 13). Management evaluates the performance of its segments
and allocates resources to them based on several performance measures. There are
no significant inter-segment revenues; however, corporate headquarters allocates
a portion of its costs to each of the operating segments.

                                       F-75


                                INCOME STATEMENT


                                                                                                                          VTI
                                  UNIVERSAL                                     VIVENDI                   PUBLISHING   EXCLUDING
                        CEGETEL     MUSIC               CANAL+      MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                         GROUP      GROUP      VUE     GROUP(2)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                        -------   ---------   ------   --------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
                                                                                            
DECEMBER 31, 2002
Revenues..............   7,067      6,276      6,270     4,833      1,487         794            --            663        461
Operating expenses
  exc. depreciation...  (4,738)    (5,315)    (5,073)   (4,609)      (701)       (623)         (483)          (638)      (331)
Depreciation and
  amortization........    (865)      (450)      (258)     (490)      (272)       (109)          (57)           (24)       (83)
Other.................     (15)        45       (123)      (59)       (46)          1          (125)             1         (3)
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............   1,449        556        816      (325)       468          63          (665)             2         44
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2001
Revenues..............   6,384      6,560      4,938     4,563      1,013         657            --          3,629        242
Operating expenses
  exc. depreciation...  (4,679)    (5,402)    (4,285)   (4,379)      (473)       (525)         (261)        (2,944)      (180)
Depreciation and
  amortization........    (777)      (439)      (353)     (403)      (153)        (75)          (65)          (194)       (48)
Other.................      --         --         --      (155)        --         (39)           --            (30)         1
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     928        719        300      (374)       387          18          (326)           461         15
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2000(1)
Revenues..............   5,129        495        194     4,054         --         572            --          2,968        141
Operating expenses
  exc. depreciation...  (4,039)      (401)      (198)   (3,524)        --        (511)         (137)        (2,536)      (100)
Depreciation and
  amortization........    (612)        (8)        (9)     (628)        --         (64)          (58)           (84)       (33)
Other.................     (25)        --         --      (243)        --         (38)          (17)          (135)         3
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     453         86        (13)     (341)        --         (41)         (212)           213         11
                        ======     ======     ======    ======      =====        ====          ====         ======       ====



                                                                 TOTAL
                                              ENVIRONMENTAL     VIVENDI
                        INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                        --------   --------   --------------   ---------
                                     (IN MILLIONS OF EUROS)
                                                   
DECEMBER 31, 2002
Revenues..............     174          87        30,038        58,150
Operating expenses
  exc. depreciation...    (301)       (134)
Depreciation and
  amortization........     (41)        (20)
Other.................     (64)       (232)
                          ----      ------
Operating income
  (loss)..............    (232)       (299)        1,911         3,788
                          ====      ======        ======        ======
DECEMBER 31, 2001
Revenues..............     129         151        29,094        57,360
Operating expenses
  exc. depreciation...    (338)       (178)
Depreciation and
  amortization........     (44)         (7)
Other.................     (37)         27
                          ----      ------
Operating income
  (loss)..............    (290)         (7)        1,964         3,795
                          ====      ======        ======        ======
DECEMBER 31, 2000(1)
Revenues..............      48       1,685        26,294        41,580
Operating expenses
  exc. depreciation...    (231)     (1,345)
Depreciation and
  amortization........     (11)        (82)
Other.................      (1)         15
                          ----      ------
Operating income
  (loss)..............    (195)        273         1,589         1,823
                          ====      ======        ======        ======


                                       F-76


                     BALANCE SHEET AND CASH FLOW STATEMENT


                                                                                                                            VTI
                                 UNIVERSAL                                        VIVENDI                   PUBLISHING   EXCLUDING
                       CEGETEL     MUSIC                CANAL+        MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                        GROUP      GROUP      VUE     GROUP(2)(6)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                       -------   ---------   ------   -----------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
                                                                                              
DECEMBER 31, 2002
Goodwill.............     919      5,479      8,637      3,957          793           74            48          104           38
Other intangible
  assets.............   1,205      4,218      5,480      2,895          333          303            64           96           91
Investments accounted
  for using the
  equity method......     316         31        859        320           --           --           382           (5)          --
Total assets.........   7,190     12,581     21,302     11,158        3,509        1,002         9,081          710        1,444
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......     595         92        167        443          257           15            17            9         1,15
                        =====     ======     ======     ======        =====        =====        ======        =====        =====
DECEMBER 31, 2001
Goodwill.............   1,420     12,763      7,472      8,002        1,332          104        (1,353)       2,057          291
Other intangible
  assets.............   1,123      5,926      4,602      4,035            5          418            91        2,534           97
Investments accounted
  for using the
  equity method......     311         30      7,717        271           --           --           132          (13)         588
Total assets.........   7,757     21,907     25,267     17,269        3,569        1,209         9,881        6,200        1,434
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......   1,202        133        217        339          223           84             6          109          109
                        =====     ======     ======     ======        =====        =====        ======        =====        =====



                                                                TOTAL
                                             ENVIRONMENTAL     VIVENDI
                       INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                       --------   --------   --------------   ---------
                                    (IN MILLIONS OF EUROS)
                                                  
DECEMBER 31, 2002
Goodwill.............       8          5             --         20,062
Other intangible
  assets.............      17          4             --         14,706
Investments accounted
  for using the
  equity method......      --         --             --          1,903
Total assets.........     138      1,218             --        69 ,333
                         ----      -----         ------        -------
Capital
  expenditures.......      13          6          2,405          4,134
                         ====      =====         ======        =======
DECEMBER 31, 2001
Goodwill.............     638          3          4,888         37,617
Other intangible
  assets.............      37          7          4,427         23,302
Investments accounted
  for using the
  equity method......    (465)        --            605          9,176
Total assets.........     825      1,792         41,892        139,002
                         ----      -----         ------        -------
Capital
  expenditures.......      20         17          2,879          5,338
                         ====      =====         ======        =======


- ---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(2) In the 2000 and 2001 published financial statements, Canal+ recorded the
    amortization of film costs and allowances related to debtors in depreciation
    and amortization. As of January 1, 2002, and reclassified in the comparable
    period for 2001, the amortization of film costs and allowances related to
    debtors were recorded as operating expenses before depreciation and
    amortization. This reclassification has no impact on operating income.

(3) Company consolidated since April 1, 2001.

(4) Includes Veolia Environnement accounted for by using the equity method since
    December 31, 2002.

(5) The results published by Veolia Environnement may differ from those
    presented by Vivendi Universal where non-material, inter-segment
    transactions impact the financial contribution brought by Veolia
    Environnement to the accounts of Vivendi Universal. Furthermore, the
    definition of operating profit used by Vivendi Universal differs from the
    EBIT figure published by Veolia Environnement, as the latter does not
    include restructuring charges (E 56.5 million as at December 31, 2002).

(6) For additional information on the definition of Holding & Corporate and
    Other segments, please refer to Note 17.9.

                                       F-77


NOTE 13 SIGNIFICANT SUBSIDIARIES



                                                          2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
                                                                                          
CEGETEL GROUP
Cegetel Group(1)........................  Consolidated   59%         44%         Consolidated   59%         44%
  Cegetel...............................  Consolidated       80%         90%     Consolidated       80%         90%
  Societe Francaise du Radiotelephone
    (S.F.R.)............................  Consolidated       80%         80%     Consolidated       80%         80%
  Telecom Developpement(TD)(2)..........  Equity             50%         50%     Equity             50%         50%
MUSIC
Centenary Holding N.V. .................  Consolidated   92%             92%     Consolidated   92%         92%
  Universal Music (UK) Holdings Ltd. ...  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Entertainment GmbH..........  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music K.K. .................  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music S.A.S. ...............  Consolidated      100%        100%     Consolidated      100%        100%
Universal Studios, Inc. ................  Consolidated   92%         92%         Consolidated   92%         92%
  PolyGram Holding, Inc.................  Consolidated      100%        100%     Consolidated      100%        100%
  Interscope Records....................  Consolidated      100%        100%     Consolidated      100%        100%
  UMG Recordings, Inc. .................  Consolidated      100%        100%     Consolidated      100%        100%
VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V. .................................  Consolidated   92%         92%         Consolidated   92%         92%
Universal Studios Inc. .................  Consolidated   92%         92%         Consolidated   92%         92%
  Universal City Studios LLLP(3)........            --        --          --     Consolidated      100%        100%
  USANi LLC(3)..........................            --        --          --     Equity             49%         49%
  Vivendi Universal Entertainment
    LLLP(3).............................  Consolidated       93%         86%               --        --          --
CANAL+ GROUP
Groupe Canal S.A. ......................  Consolidated      100%        100%     Consolidated      100%        100%
  Canal Plus(4).........................  Consolidated       49%         49%     Consolidated       49%         49%
  CanalSatellite........................  Consolidated       66%         66%     Consolidated       66%         66%
  StudioCanal...........................  Consolidated      100%        100%     Consolidated      100%        100%
  Multithematiques......................  Consolidated       64%         64%     Equity             27%         27%
MAROC TELECOM(5)........................  Consolidated       51%         35%     Consolidated       51%         35%
VIVENDI UNIVERSAL GAMES.................  Consolidated       99%         99%     Consolidated       99%         99%
HOLDING & CORPORATE
  Societe d'Investisement pour la
    Telephonie (SIT)(6).................  Consolidated   100%        100%                  --   --          --
  UGC(7)................................  Equity         58%         58%         Equity         39%         39%
VIVENDI TELECOM INTERNATIONAL...........  Consolidated   100%        100%        Consolidated   100%        100%
  Vivendi Telecom Hungary...............  Consolidated      100%        100%     Consolidated      100%        100%
  Kencell...............................  Consolidated       60%         60%     Consolidated       60%         60%
  Monaco Telecom........................  Consolidated       55%         55%     Consolidated       55%         55%
  Elektrim Telekomunikacja(8)...........  Equity             49%         49%     Equity             49%         49%
  Xfera.................................  Equity             26%         26%     Equity             26%         26%


                                       F-78




                                                          2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
                                                                                          
PUBLISHING ACTIVITIES
  EXCL. VU GAMES
Vivendi Universal Publishing............  Consolidated      100%        100%     Consolidated      100%        100%
  Groupe Expansion......................  Consolidated      100%        100%     Consolidated      100%        100%
  Comareg...............................  Consolidated      100%        100%     Consolidated      100%        100%
  Atica.................................  Consolidated       98%         49%     Consolidated       98%         49%
  Houghton Mifflin Company(9)...........            --        --          --     Consolidated      100%        100%
  Editions Robert Laffont(9)............            --        --          --     Consolidated      100%        100%
  Promotec(9)...........................            --        --          --     Consolidated      100%        100%
  Larousse-Bordas(9)....................            --        --          --     Consolidated      100%        100%
VIVENDI UNIVERSAL NET
Vivendi Universal Net...................  Consolidated      100%        100%     Consolidated      100%        100%
  i-France..............................  Consolidated      100%        100%     Consolidated      100%        100%
  Scoot Europe..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Ad-2-One..............................  Consolidated      100%        100%     Consolidated      100%        100%
  CanalNumedia..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Vizzavi Europe(9).....................            --        --          --     Equity             50%         50%
Vivendi Universal Net U.S.A. Group,
  Inc. .................................  Consolidated      100%        100%     Consolidated      100%        100%
  MP3.com, Inc. ........................  Consolidated      100%        100%     Consolidated      100%        100%
  Emusic.com, Inc. .....................  Consolidated      100%        100%     Consolidated      100%        100%
  Flipside, Inc./Uproar, Inc. ..........  Consolidated      100%        100%     Consolidated       83%         83%
VEOLIA ENVIRONNEMENT(10)................  Equity             20%         20%     Consolidated       63%         63%


- ---------------

 (1) Vivendi Universal consolidates Cegetel because following a shareholders'
     agreement, Vivendi Universal has the management control of the company, has
     majority control over the Board of Directors and appoints the Chairman, has
     majority control over the shareholders' general assembly, and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal. Vivendi controls 59% + 1 voting right
     of Cegetel voting rights, 9% of which directly, and 50% + 1 voting right
     indirectly, via the Transtel company, in which Vivendi Universal owns a 70%
     controlling interest. Vivendi Universal and Cegetel consolidate SFR,
     because following a shareholders' agreement, Vivendi Universal has the
     management control of the company, has majority control over the Board of
     Directors and appoints the Chairman, has majority control over the
     shareholders' general assembly (Cegetel holds 80% of SFR) and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal.

 (2) Telecom Developpement's board is by majority nominated by SNCF, thus
     Cegetel Group accounted this investment for by equity method.

 (3) See Note 3 Acquisition of the entertainment assets of USA Networks.

 (4) Consolidated because, through a shareholders' agreement, Vivendi Universal
     has a majority of the shareholder voting rights and no other shareholder or
     groups of shareholders exercise substantive participating rights, which
     would allow them to veto or block decisions taken by Vivendi Universal.

 (5) Vivendi Universal owns a 35% interest in Maroc Telecom, and the Kingdom of
     Morocco holds the remaining 65%. Vivendi Universal consolidates Maroc
     Telecom because under company by-laws and shareholders' agreements, Vivendi
     Universal has majority control over its Supervisory Board and Management
     Board. Under shareholders' agreements, Vivendi Universal appoints 3 of the
     5 members of the Management Board, appoints the Chairman of the Management
     Board, exercises 51% of all voting

                                       F-79


     rights at shareholders' general assemblies, and this grants it, under the
     majority rules set forth in the company's by-laws, control over the
     shareholders' general assembly, as well as over the Supervisory and
     Management Boards of Maroc Telecom. Should Vivendi Universal not acquire
     the shares that would give it the majority of Maroc Telecom's share
     capital, the 16% voting rights granted to Vivendi Universal through
     shareholders' agreements would expire on September 1, 2005, unless the
     Kingdom of Morocco exercises its put option (please refer to Note 11)
     requiring Vivendi Universal to acquire an additional 16% interest in Maroc
     Telecom's share capital prior to that date.

 (6) Special purpose vehicle which became in January 2003 the legal owner of a
     26% stake Cegetel. (See Note 15)

 (7) Due to a shareholders' agreement, Vivendi Universal does not have the
     operational control of this company. Thus, this investment is still
     accounted for using the equity method.

 (8) Since December 1999, Vivendi Universal has held a 49% interest in Elektrim
     Telekomunikacja, with Elektrim SA holding the remaining 51% until September
     3, 2001. An agreement concerning the shareholding and management of
     Elektrim Telekomunikacja was signed by Vivendi Universal and Elektrim on
     September 3, 2001. This agreement had no impact on Vivendi Universal's
     ownership or control interest in Elektrim Telekomunikacja, which is
     unchanged at 49%. Investment company Ymer has since acquired a 2% equity
     interest in Elektrim Telekomunikacja from Elektrim. Ymer is a company
     independent from Vivendi Universal, which does not own it nor control it,
     directly or indirectly. Vivendi Universal has purchased non-voting shares
     in an investment company which enabled Ymer to make its acquisition.
     Vivendi Universal is by no means committed to acquire the shares owned by
     Ymer. Similarly, Ymer has neither a right or obligation to sell those
     shares to Vivendi Universal and is free to sell them to a third-party at
     any time. The value of Vivendi Universal's original investment in the
     investment company has since varied according to the fair value of the
     assets held by Ymer. Agreements between Vivendi Universal and Elektrim
     retain Vivendi Universal's pre-existing rights. Vivendi Universal, Elektrim
     SA and Ymer have 3, 3 and 1 representatives on the Elektrim Telekomunikacja
     Supervisory Board, respectively, and 2, 2 and 2 representatives on the
     Management Board, respectively, all of whom are appointed independently by
     Vivendi Universal, Elektrim, and Ymer. Vivendi Universal consequently
     consolidates its interest in Elektrim Telekomunikacja according to the
     equity method. Finally, as announced at the close of Vivendi Universal's
     Board meeting held September 25, 2002, Vivendi Universal is currently
     negotiating the disposal of this interest.

 (9) Sold in 2002. (See Note 3)

(10) Variation due to disposals and dilution. (See Note 3)

NOTE 14 RELATED PARTY TRANSACTIONS

14.1 RELATED COMPANIES

     During 2002, main companies related to Vivendi Universal are its
subsidiaries accounted for by using the equity method, e.g. Veolia Environnement
(accounted by the equity method as at December 31, 2002), Elektrim
Telecomunikacja and Telecom Development. The main related party transactions and
amounts outstanding by these companies or Vivendi Universal are detailed below:



                                                              DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
                                                           
ASSETS
  Other investments(1)......................................     E  559
  Accounts receivable.......................................        154
  Short-term loans receivable...............................        257
LIABILITIES
  Accounts payable..........................................        116
  Short term borrowings.....................................          9


                                       F-80




                                                              DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
                                                           
PROFIT AND LOSS ACCOUNT
  Revenues..................................................        414
  Operating expenses........................................       (919)
  Financial income..........................................         62
  Financial expenses........................................        (14)
                                                                 ------
                                                                 E (457)
                                                                 ======


- ---------------

(1) of which E 525 million advance granted to Elektrim Telekomunikacja and
    provisioned for E 203 million.

     IN 2002, THE MAIN RELATED COMPANY TRANSACTIONS ARE THE FOLLOWING:

VEOLIA ENVIRONNEMENT

  VIVENDI UNIVERSAL AND VEOLIA ENVIRONNEMENT

     On December 20, Vivendi Universal and Veolia Environnement entered into an
agreement in order to finalize the separation of the two companies, following
Vivendi Universal's disposal of 20.4% of Veolia Environnement's capital stock.
Pursuant to this agreement, guarantee and counter-guarantee agreements
originally established in June 2000 have been modified. This agreement is
described in Note 11.

  VINCI BONDS

     Veolia Environnement took part indirectly in the issuance of the Vivendi
Universal bonds exercisable into Vinci shares or in cash. Vivendi Universal lent
to Veolia Environnement E 120 million against 1,552,305 shares of Vinci held by
Veolia Environnement through Dalkia France. The terms of the loan are similar to
those of the bond issued by Vivendi Universal: a fixed rate of 1% per annum and
maturing on March 1, 2006 (see Note 4.4 and Note 7).

  CEGETEL GROUP

  Telecom Developpement

     Telecom Developpement (TD) owned by Cegetel Group (49.9%) and Societe
Nationale des Chemins de Fer Francais (SNCF) (50.1%), the leading French railway
company is linked by a commercial agreement with Cegetel Group. It gives TD the
exclusive right to carry Cegetel Group's long distance calls.

  Vivendi Universal Entertainment (VUE)

     VUE has equity investments in certain companies that operate theme parks
for which it provides operational management services and pay television
channels for which it licenses film product. VUE earns management fees for
operating the theme parks and license fees for the licensing of its film
product. VUE includes management and license fees in revenues and eliminates
intercompany profit. During the years ended December 31, 2002 and 2001, VUE
included approximately $68.7 million and $84.0 million of these fees in
revenues. In addition, VUE has deferred recognition of management fees earned of
$51.1 million through December 31, 2002 as collection is not reasonably assured.
When the uncertainties regarding collectibility are resolved, VUE could
recognize revenues up to the deferred amount or the portion considered
collectible.

                                       F-81


14.2 RELATED PARTIES

     IN 2002 AND 2001, THE MAIN RELATED PARTY TRANSACTIONS ARE THE FOLLOWING:

  TRANSACTIONS WITH USA INTERACTIVE

     Prior to May 7, 2002, VUE has various arrangements with USA under which VUE
earns fees and incurs costs. These arrangements are summarized below:

     VUE provides certain support services to USA under a Transition Services
agreement. These services include use of pre-production, production and
post-production facilities, information technology services, physical
distribution, contract administration, legal services and office space. VUE
earned $3.2 million and $8.5 million during the period from January 1, 2002 to
May 6, 2002 and the year ended December 31, 2001, respectively, for providing
these services.

     VUE and USA have an International Television Distribution Agreement under
which all programming owned or controlled by USA outside of the United States is
distributed by VUE. VUE earns a 10% distribution fee for these services. VUE and
USA also have a Domestic Television Distribution Agreement under which USA
distributes certain of VUE's programming in the United States. Additionally, VUE
licenses certain television programming to USA to be aired on its cable
channels. VUE earned $9.7 million and $42.9 million during the period from
January 1, 2002 to May 6, 2002 and the year ended December 31, 2001,
respectively, for providing these services. VUE incurred $.5 million and $2.9
million during the period from January 1, 2002 to May 6, 2002 and the year ended
December 31, 2001, respectively, for receiving these services.

     Under an agreement covering approximately 50 of VUE's films, USA earns a
distribution fee for the distribution of these films in the United States. USA
is responsible for the collection and remitting the net amount, after its fee,
to VUE, except for amounts applied against the advance of fees initially given
to VUE. An affiliate of VUE provides certain fulfillment services on behalf of
USA in the United States and Canadian home video markets. Beginning January 1,
2002, VUE replaced the affiliate in providing these services. VUE incurred $6.8
million and $17.0 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE has several other arrangements with USA for the purchase of advertising
time and the licensing of certain properties for merchandising. VUE incurred $.5
million and $3.4 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE had receivables of $61.5 million and payables $159.4 million at
December 31, 2001 with USA.

  EDGAR BRONFMAN, JR.'S EMPLOYMENT ARRANGEMENT

     Pursuant to an employment agreement with Vivendi Universal US Holding Co.
("Vivendi Universal US"), dated September 25, 2002 (the "Agreement"), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal US in connection with the US
entertainment businesses of Vivendi Universal US and its US affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.
                                       F-82


     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US without Cause (other than by reason of death or disability) or by
Mr. Bronfman for Good Reason, Mr. Bronfman will also be entitled to receive his
accrued salary and benefits under the Agreement through the date of termination,
plus a lump-sum payment equal to the total amount of salary that Mr. Bronfman
would have received had his employment under the Agreement continued through
December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal US will reimburse Mr. Bronfman for all legal fees and related expenses
incurred in connection with, or arising out of, any dispute in respect of
severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal US will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal US and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

  CANAL+: NEGOTIATION OF "CLUB EUROPE" MATCH TV RIGHTS VIA JEAN-CLAUDE DARMON
  GROUP

     A contract was signed with the Jean-Claude Darmon Group, which acts as
intermediary between the "Club Europe" member clubs and Canal+, in 1999. The
clubs accorded a priority option to Canal+ for acquisition of TV rights for all
matches for all seasons from 2000/2001 to 2005/2006. The amount of this option
is due to the Jean-Claude Darmon Group and represents a total of E 252 million,
plus an option on derivative rights to an initial amount of E 23 million. As at
December 31, 2002, a total of E165 million was outstanding for payment under the
terms of this contract. This amount has been accrued in full in the Canal+
financial statements. In February 2003, the priority option related to French
competition was terminated, whereas some options on derivative rights are still
underway (E 23 million recognized in reserve and allowances).

  PURCHASE OF VIVENDI UNIVERSAL SHARES FROM THE BRONFMAN FAMILY

     Vivendi Universal purchased 15,400,000 American Depositary Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADS representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share price on the Paris stock market on May 29, 2001, with a 0.9% discount.

NOTE 15 MANAGEMENT'S LIQUIDITY STRATEGY

     Vivendi Universal was formed through the merger of Vivendi S.A. (Vivendi),
the Seagram Company Ltd. and Canal Plus S.A. in December 2000. From its origins
as a water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media, communications and environmental services
company. It continued to expand through acquisitions, notably through the
acquisition of the entertainment assets of USA Networks in May 2002.

     Following a period of significant acquisition-led growth until May 2002,
the associated increase in leverage led to heightened concerns during the first
half of 2002 over the validity of Vivendi Universal's strategy and, eventually,
to the appointment of a new management team. Concerns over Vivendi Universal's
strategy and financial flexibility led Moody's to cut Vivendi Universal's senior
debt rating on July 1, 2002 from Baa3 to Ba1, with the credit remaining on
negative credit watch, Standard & Poor's followed suit the next day, with a
one-notch downgrade to BBB- with a negative outlook. The July downgrades had an
immediate impact on Vivendi Universal's short-term liquidity. In particular
Vivendi Universal lost, to a significant extent,

                                       F-83


access to the capital markets, and most importantly to the commercial paper
market, historically its main source of funding for working capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing, on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view to
putting in place a longer-term solution once the new management had had the
opportunity to better assess the medium term situation. Following their review,
new management revised the previous managements' cash-flow projections for the
period from July 2002 to December 2004 and wrote-off E 11 billion in
acquisition-related goodwill while adding E 3.4 billion in financial provisions.
This resulted in a E 12.3 billion net loss in the first half of 2002, which was
publicly announced on August 14, 2002. At the same time, Vivendi Universal
announced a commitment to reduce debt by divesting assets. Corporate credit
ratings were subsequently cut to Ba2 by Moody'sand BB by Standard & Poor's.
Outstanding bonds at the Vivendi Universal level were downgraded a further two
notches to B1 by Moody's and to B+ by Standard & Poor's in anticipation of the
bonds subordination resulting from the expected creation of security and bank
lending at the group subsidiary level. On October 30, 2002, Moody's downgraded
Vivendi Universal's senior implied rating to Ba3, leaving the senior unsecured
ratings unchanged at B1, under review for possible downgrade.

     During the second half of 2002, Vivendi Universal asset sales for total
consideration of approximately E 6.7 billion, including the assumption by the
acquirors of the assets of approximately E 0.5 billion in debt. At December 31,
2002, Vivendi Universal's net debt was E 12.3 billion compared with E 37.1
billion at December 31, 2001, excluding Veolia Environnement, which was
deconsolidated from Vivendi Universal's balance sheet on December 31, 2002
following the disposal of Vivendi Universal's interest therein, net debt fell by
approximately E 9.0 billion.

     Under the terms of the current outstanding debt, Vivendi Universal and the
subsidiaries part of the cash pooling system have principal repayment
obligations totalling approximately E 4.5 billion due in 2003 (assuming that the
$1.62 billion VUE bridge facility is refinanced) and approximately E 3.5 billion
due in the first quarter of 2004 (including our E 850 million syndicated credit
facility).

     Vivendi Universal is engaged in the following financing transactions:

     - The offering of E 1.0 billion Senior Notes due 2010; and

     - The concurrent establishment of a dual currency E 2.5 billion 3-year
       Senior Secured Credit Facility (the "New Credit Facility"), consisting of
       two tranches as follows:

        - Tranche A: E 1.5 billion revolving facility; and

        - Tranche B: E 1.0 billion term loan facility.

     These refinancing transactions will increase funds available to Vivendi
Universal's by approximately E 0.9 billion upon completion and, extend scheduled
maturity of E 2.5 billion of debt through December 31, 2004.

     Concurrently, VUE is refinancing its $1.62 billion bridge facility.

     To meet its payment obligations in 2003 and the first quarter of 2004,
Vivendi Universal is substantially dependent upon the receipt of proceeds from
asset disposals or new financings. Vivendi Universal has announced a plan to
dispose of E 7 billion of assets in 2003. By March 15, 2003, it had closed
approximately E 700 million of these asset sales and has entered into agreements
to sell another E 1.2 billion of assets in the future, subject to regulatory and
other approvals. Vivendi Universal believes that the improvement in its
liquidity position following the receipt of proceeds from the Notes and the $2.5
billion credit facility will improve its ability to successfully consummate its
E 7 billion asset disposal plan in 2003.

     The current facilities contain negative covenants, which place restrictions
on, among other things, the incurrence of debt, the incurrence of financial
guarantees, the payment of distributions in respect of capital stock,
investments, mergers and acquisitions, asset disposals, intercompany loans and
liens, sale and loan bank transactions and require us to meet various financial
ratios. Pursuant to the facilities, each obligor must ensure that in any
three-month period, the aggregate amount of net cash available plus the
aggregate undrawn
                                       F-84


amount under the facilities is more than E 100 million. The facilities require
Vivendi Universal to maintain various financial ratios, including:

     - maximum ratios of net financial debt to cash EBITDA(2);

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     The facilities place certain limitations on the ability of Vivendi
Universal and certain of its subsidiaries other than VUE and its subsidiaries to
make loans or advances to, and to borrow or receive advances from, VUE and its
subsidiaries.

NOTE 16 SUBSEQUENT EVENTS

16.1 ACQUISITION OF AN ADDITIONAL INVESTMENT INTEREST IN CEGETEL

     Vivendi Universal's Board of Directors has unanimously decided on December
3, 2002, to exercise its pre-emptive rights on BT Group's 26% interest in
Cegetel Group, in order to obtain a 70% interest in the French
telecommunications operator. In January 2003, Vivendi Universal purchased BT
Group's 26% interest in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was realized through
the SIT (Societe d'Investissements pour la Telephonie), as follows:

          a.  Societe d'Investissements pour la Telephonie, owned, controlled
     and consolidated by Vivendi Universal, became the legal owner of the 26%
     shareholding at an acquisition cost of E 4 billion.

          b.  SIT was financed by E 2.7 billion paid in cash by Vivendi
     Universal and by a non-recourse loan of E 1.3 billion which matures in
     2010. Debt service of this loan, which was drawn on January 23, 2003, will
     be provided through dividends paid in respect of its 26% shareholding in
     Cegetel Group.

     As a result, Cegetel will continue to be consolidated by Vivendi Universal,
with a 70% interest (the 26% shareholding acquired from BT Group in addition to
our historical 44% interest). The goodwill recognized as a result of this
transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     The non-recourse E 1.3 billion loan will be integrated in Vivendi Universal
Financial Statements from January 2003 due to the consolidation of SIT.

- ---------------

     2 EBITDA plus dividends from Veolia Environnement, Cegetel Group and Maroc
Telecom.
                                       F-85


     Due to this transaction, the capital structure of Cegetel Group is as
follows:

                               BEFORE PREEMPTION

                                  [FLOWCHART]

16.2 DISPOSAL OF CANAL+ TECHNOLOGIES

     The sale of Vivendi Universal's 89% stake in Canal+ Technologies to Thomson
was closed on January 31, 2003 on the basis of E 190 million in cash, of which
E 90 million was collected in 2002, E 79 million was collected in 2003 and the
remainder is expected to be collected after any post-closing adjustments. (See
Note 3).

16.3 DISPOSAL OF CONSUMER PRESS DIVISION

     The sale of Consumer Press Division (Groupe Express-Expansion-Groupe
l'Etudiant) to the Socpresse Group was finalized on February 4, 2003 (see Note
3) following the authorization by The Economy and finance Ministry in January
2003. The amount collected was E 200 million. The sale of Comareg to France
Antilles is expected to take place at a later time, as approval for the
transaction has to be given by the Monopolies Commission.

                                       F-86


16.4 MR. BERTRAND MEHEUT'S APPOINTMENT

     Mr. Bertrand Meheut was nominated as Member and President of Canal+ Group's
Executive Board, in replacement of Mr. Xavier Couture, who resigned at the
Supervisory board's session of February 7, 2003.

16.5 PARTIAL DISPOSAL OF USA INTERACTIVE WARRANTS

     In February 2003, Vivendi Universal sold 32.19 million warrants of USA
Interactive to a financial institution. These warrants were initially acquired
in connection with the acquisition of the entertainment assets of USA Networks
(see Note 3). Pursuant to this transaction, Vivendi Universal received $276
million, net of fees.

16.6 CASH SETTLEMENT OF VEOLIA ENVIRONNEMENT EXCHANGEABLE NOTES

     Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

16.7 RESTRUCTURING PROJECT OF CANAL+ GROUP

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

16.8 CLOSING OF CONTRACTUAL GUARANTEES TO FORMER RONDOR SHAREHOLDERS

     Vivendi Universal Canada Inc. ("VU Canada"), a company in the Vivendi
Universal group, announced on March 11, 2003, that it had satisfied its
contractual guarantee made on August 1, 2000, to the former shareholders of the
Californian company, Rondor Music International, Inc. ("Rondor") (see Note 11).
The former Rondor shareholders received 8.844 million shares, representing 0.8%
of capital stock and the remainder in cash of US$100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.5 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between
U.S.$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

16.9 RESIGNATION OF CHIEF EXECUTIVE OFFICER OF VUE

     On March 19, 2003, Mr. Barry Diller in full agreement with Vivendi
Universal, announced his resignation from his temporary position as chief
executive officer of VUE. Mr. Diller had been serving in such capacity since the
formation of VUE in May 2002 and was not party to an employment agreement. Mr.
Jean Rene Fourtou has assumed the role of chief executive officer of VUE and is
working with the existing management team. Mr. Diller's resignation has no
effect on the rights and obligations of Vivendi Universal, VUE, USA or Mr.
Diller under the VUE Partnership Agreement. The termination date for USA's and
Mr. Diller's noncompetition agreements with VUE is now November 7, 2003, Mr.
Dillers's put on his common stock remains exercisable beginning on May 7, 2003,
and Universal's call option on Mr. Diller's common interest in VUE is
exercisable beginning on May 7, 2004.
                                       F-87


NOTE 17 SUPPLEMENTAL DISCLOSURES REQUIRED UNDER US GAAP AND SEC REGULATIONS

     The following information has been prepared to present supplemental
disclosures required under US GAAP and Securities Exchange Commission (SEC)
regulations applicable to Vivendi Universal.

17.1 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED
     BY VIVENDI UNIVERSAL AND U.S. GAAP

     Vivendi Universal has prepared its consolidated financial statements in
accordance with French GAAP at December 31, 2002, as discussed in Note 1. French
GAAP differs in certain respects from US GAAP, the principal differences of
which, as they relate to Vivendi Universal, are as follows:

  NEW U.S. ACCOUNTING POLICIES APPLIED BY THE GROUP FROM JANUARY 1, 2002

     In July and August 2001, the FASB (Financial Accounting Standards Board)
issued Statement of Financial Accounting Standard (SFAS) No. 141, Business
Combinations (SFAS 141), SFAS No. 142 Goodwill and Other Intangible Assets (SFAS
142) and SFAS No. 144 Accounting for the Impairment or Disposal of Long-lived
Assets (SFAS 144). SFAS 141 is effective for any business combination completed
after June 30, 2001, and SFAS 142 and 144 are effective for fiscal years
beginning after December 15, 2001. These statements are described below.

  BUSINESS COMBINATIONS AND GOODWILL

     As permitted under French GAAP prior to December 31, 1999, goodwill could
be recorded as a reduction of shareholders' equity when the acquisition was paid
for with equity securities, whereas under US GAAP goodwill is always recognized
as an asset. Additionally, under French GAAP, certain acquisitions, notably
Havas and Pathe, were accounted for as mergers. Under this method, goodwill is
computed as the difference between the consideration paid and the net historical
book value acquired.

     Under US GAAP applied until June 30, 2001, the Havas and Pathe acquisitions
did not meet the criteria for pooling and, therefore, were accounted for as
purchase business combinations. Accordingly, goodwill was computed as the excess
of consideration paid over the fair value of assets acquired and liabilities
assumed. The reconciliation impact is that French GAAP potentially results in a
lower net asset value being assigned to acquisitions, which results in higher
gains on the sales of businesses as compared to US GAAP. Additionally, the
amortization of goodwill charged to earnings is lower under French GAAP than
under US GAAP.

     SFAS 141 requires the use of the purchase method of accounting for all
business combinations completed after June 30, 2001, forbidding the use of
"pooling of interests", and further clarifies the criteria to recognize
intangible assets separately from goodwill. Additionally, it is likely that more
intangible assets will be recognized under SFAS 141 than its predecessor, while
in some instances previously recognized intangibles will be included as part of
goodwill.

     Additionally, for fiscal years beginning after December 15, 2001, SFAS 142
requires that companies stop amortizing goodwill and certain other intangible
assets with indefinite useful lives, including such assets recorded in past
business combinations. Instead, goodwill and other indefinite-lived intangible
assets will be subject to a annual review for impairment (or more frequently if
impairment indicators arise). A two-step impairment test is used. The first step
is a screen for potential impairment, while the second step measures the amount
of the impairment, if any. An impairment that is required to be recognized when
adopting SFAS 142 will be reflected as the cumulative effect of a change in
accounting principle.

     Vivendi Universal adopted SFAS 142 effective January 1, 2002, and in
accordance with its provisions ceased amortizing goodwill (including goodwill
included in the carrying value of certain investments accounted for under the
equity method of accounting) and other indefinite-lived intangible assets.
Additionally, upon adoption of SFAS 142, Vivendi Universal recorded a
non-recurring, non-cash impairment charge of approximately E 17 billion to
reduce the carrying value of its goodwill to its implied fair value. The charge,
which is non operational in nature, was recorded as a cumulative effect of a
change in accounting principle.

                                       F-88


  IMPAIRMENT OF OTHER LONG-LIVED ASSETS

     As required under both French and US GAAP, Vivendi Universal reviews the
carrying value of long-lived assets, including goodwill and other intangible
assets, for impairment at least annually or whenever facts, events or changes in
circumstances, both internally and externally, indicate that the carrying amount
may not be recoverable.

     Under French GAAP, the impairment is measured by comparing the net book
value with the current value of the asset where the current value depends on the
underlying nature of its market value or value in use. The value in use is
generally determined on the basis of discounted cash flows. (See Section 1.2.18)

     Under US GAAP, until December 31, 2001 measurement of any impairment was
based on the provisions of SFAS No. 121, Accounting for the Impairment of
Long-lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121). SFAS
121 required that an impairment loss be recognized whenever the sum of the
undiscounted future cash flows estimated to be generated from the use and
ultimate disposal of an asset were less than the net carrying value of the
asset.

     From January 1, 2002, SFAS 144 replaces SFAS 121 and while it supersedes
APB Opinion 30, Reporting the Results of operations -- Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, it retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, under SFAS 144, discontinued
operations are recorded at the lower of their carrying amount or fair value less
cost to sell, and future operating losses are no longer recognized before they
occur. Under SFAS 144, there is no longer a requirement to allocate goodwill to
long-lived assets to be tested for impairment. It also establishes a probability
weighted cash flow estimation approach to deal with situations in which there is
a range of cash flows that may be generated by the asset being tested for
impairment. SFAS 144 also establishes criteria for determining when an asset
should be treated as held for sale.

     SFAS 144 has been applied since January 1, 2002 and the adoption of SFAS
144 had no material impact on the group's results of operations or on its
financial position.

  INTANGIBLE ASSETS

     Under French GAAP, certain types of advertising costs are capitalized and
amortized over their useful lives. Business trademarks acquired in a purchase
business combination are not required to be amortized. The costs of television
and station rights relating to theatrical movies and other long-term programming
are expensed upon first broadcast or showing of the film. Under US GAAP,
advertising costs are charged to expense in the period they are incurred.
Trademarks acquired are amortized over their estimated useful life. The costs of
television and station rights relating to theatrical movies and other long-term
programming are expensed over the estimated number of times the film or program
is broadcast.

  DERIVATIVE FINANCIAL INSTRUMENTS

     Under French GAAP, the criteria for hedge accounting for derivative
financial instruments does not require documentation of specific designation to
the hedged item, or the documentation of ongoing effectiveness of the hedge
relationship. Derivative financial instruments that meet hedge criteria under
French GAAP are not recorded on the consolidated balance sheet. The impact of
the derivative financial instruments on the statement of income is recorded upon
settlement or the payment or receipt of cash, but potential loss, if any, is
accrued against the financial income.

     Vivendi Universal adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective January 1, 2001. Upon adoption,
all derivative instruments (including certain derivative instruments embedded in
other contracts) were recognized in the balance sheet at their fair values.
Changes in the fair value of derivative instruments are recorded each period in
current earnings or accumulated other comprehensive income, depending on whether
the derivative is used to hedge fair value or cash flow exposures. Changes in
derivative fair values that are designated as fair value hedges are recognized
in earnings as offset to the changes in fair value of related hedged assets,
liabilities or firm commitments. Changes in the derivative
                                       F-89


fair values that are designated as cash flow hedges are deferred and recorded as
a component of accumulated other comprehensive income until the hedged
transactions occur and are recognized in earnings at the same time the hedged
transaction is recognized in earnings. Instruments used as hedges must be
effective at reducing the risk associated with the exposure being hedged and
must be designated as a hedge at the inception of the contract. Accordingly,
changes in market values of hedge instruments must be highly correlated with
changes in market values of underlying hedged items both at inception of the
hedge and over the life of the hedge contract. The ineffective portion of a
hedging derivative's change in fair value is reported in earnings. Derivatives
that are executed for risk management purposes but not designated as hedges
under SFAS 133 are recorded at their fair value and the change in fair value is
recognized in current earnings.

     The financing activities of Vivendi Universal necessarily involve the
management of various market risks, including those related to changes in
interest rates or currency exchange rates. Management uses derivative financial
instruments to mitigate or eliminate certain of those risks. However,
significant part of those derivative instruments do not qualify as hedge
derivatives under the strict hedge criteria of SFAS 133. Since derivative
instruments that do not qualify for hedge accounting are marked to their fair
market value on the balance sheet, and their changes in fair value is recognized
in earnings, this may induce volatility in earnings for the effect of this new
standard.

  EMPLOYEE BENEFIT PLANS

     Under French GAAP, since January 1998 Vivendi Universal has recorded its
pension obligations, covering all eligible employees, using the projected unit
credit method. Under US GAAP, the projected unit credit method was required to
be applied beginning January 1, 1989. The transition obligation or fund excess
determined as of January 1, 1989 is amortized over the average remaining service
period of the population that was covered under the plan at that date. No
minimum liability adjustment is recognized in French GAAP, whereas under US
GAAP, a minimum pension liability is required to be recognized when the
accumulated benefit obligation exceeds the fair value of plan assets by an
amount in excess of any prepaid pension cost.

     Under French GAAP, some postretirement benefits other than pensions are
recorded as expense when amounts are paid. Under US GAAP, an obligation for
amounts to be paid under postretirement plans other than pensions must be
recognized. A postretirement transition obligation may be determined as of
January 1, 1995 and amortized over the average remaining service period of
employees covered by the plan. Current period charges are based on estimated
future payments to expected retirees.

  STOCK BASED COMPENSATION

     Under French GAAP, in case of the issuance of new shares, shareholders'
equity is credited for the cumulative strike price to reflect the issuance of
shares upon the exercise of options. In the other cases, treasury shares held to
fulfill obligations under stock options granted are recorded as marketable
securities and are carried at the lower of their historical cost or their fair
value or the strike price of the stock-options hedged. Vivendi Universal
recognizes any resulting holding gain in the period that the shares are sold to
the plan. Vivendi Universal shares sold to employees through qualified employee
stock purchase plans are reclassified from marketable securities to share
capital. In accordance with French GAAP, Vivendi Universal has not recorded
compensation expense on stock-based plans with a discounted strike price up to
20% from the average market price of Vivendi Universal shares over the last 20
business days prior to the date of authorization by the Board of Directors.

     Under US GAAP plans that sell or grant common shares or stock options to
employees are qualified as compensatory if such plans are not open to
substantially all employees and do not require the employee to make a reasonable
investment in the shares, usually defined as no less than 85% of the market
value at the grant date. If a stock purchase plan is deemed to be compensatory,
compensation arising from such plan is measured based on the intrinsic value of
the shares sold or options granted to employees. If a stock option plan is
deemed to be compensatory, the compensation expense is calculated as the
difference between the fair value of the stock at the grant date and the strike
price. Compensation expense for compensatory stock based compensation plans is
generally recognized over the vesting period.

                                       F-90


     Vivendi Universal accounts for its stock compensation arrangement under the
intrinsic value method in accordance with Accounting Principles Board (APB)
opinion No 25, accounting for stock issued to employees, and FASB interpretation
No 44, Accounting for Certain Transactions Involving Stock Compensation. The
company has adopted the disclosure -- only provisions of FASB Statement No 123,
accounting for stock based compensation. If Vivendi Universal had elected to
recognize compensation expense for the granting of options under stock options
plans based on the fair value of the grant date consistent with the methodology
prescribed by Statement No 123, net income (loss) and net income (loss) per
share would have been reported at the following pro forma amounts.



                                                                YEAR ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                            2002          2001          2000
                                                        ------------   -----------   ----------
                                                        (IN MILLIONS, EXCEPT PER SHARE AMOUNT)
                                                                            
Net income under US GAAP as reported..................   E (44,447)     E (1,172)     E 1,908
Add: Stock-based employee compensation expense
  included in reported net income, net of related tax
  effects.............................................          68            33           96
Deduct: Total stock-based employee compensation
  expense determined under fair value based method for
  all awards, net of related tax effects..............        (524)         (514)        (154)
                                                         ---------      --------      -------
Pro forma net income under US GAAP....................   E (44,903)     E (1,653)     E 1,850
                                                         =========      ========      =======
Earnings per share:
  Basic -- as reported................................   E  (40.89)     E  (1.19)     E  3.24
  Basic -- pro forma..................................   E  (41.31)     E  (1.69)     E  3.14
Earnings per share:
  Diluted -- as reported..............................   E  (40.89)     E  (1.19)     E  3.03
  Diluted -- pro forma................................   E  (41.31)     E  (1.69)     E  2.94


  INVESTMENTS IN DEBT AND EQUITY SECURITIES

     Under French GAAP, investments in debt and non-consolidated equity
securities are recorded at acquisition cost and an allowance is provided if
management deems that there has been an other-than-temporary decline in fair
value. Unrealized gains and temporary unrealized losses are not recognized.
Under US GAAP, investments in debt and equity securities are classified into
three categories and accounted for as follows: debt securities that Vivendi
Universal has the intention and ability to hold to maturity are carried at cost
and classified as "held-to-maturity"; debt and equity securities that are
acquired and held principally for the purpose of sale in the near term are
classified as "trading securities" and are reported at fair value, with
unrealized gains and losses included in earnings; all other investment
securities not otherwise classified as either "held-to-maturity" or "trading"
are classified as "available-for-sale" securities and reported at fair value,
with unrealized gains and losses excluded from earnings and reported in
shareholders' equity, net of deferred income taxes.

  TREASURY SHARES

     Under French GAAP, treasury shares are recorded as a reduction of
shareholders' equity except when the shares have been acquired to stabilize the
market price or in connection with stock options granted to employees, in which
case they are recorded as marketable securities. Gains or losses on the disposal
of treasury shares recorded as marketable securities are recorded in current
period earnings. Under US GAAP, treasury shares are recorded as a reduction of
shareholders' equity. Gains or losses on the disposal of treasury shares are
recognized as an adjustment to shareholders' equity.

                                       F-91


  PRINCIPLES OF CONSOLIDATION

  Use of the Proportionate Consolidation Method

     As discussed in Note 1, under French GAAP, investments in jointly
controlled companies, where Vivendi Universal and outside shareholders have
agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4. This difference in accounting policy
has no effect on either net income or shareholders' equity.

  Special Purpose Entity

     Under French GAAP, a Special Purpose Entity (SPE) is included in the scope
of consolidation whenever one or more controlled enterprises have in substance,
by virtue of contracts, agreements or statutory clauses, control of the entity
and are its shareholders or partners. Where one or more enterprises controlled
by Vivendi Universal have, in substance, control of a SPE but do not hold any
ownership share of this entity, the SPE is not consolidated and the Notes to
Consolidated Financial Statements disclose in detail the assets, liabilities and
profits or losses of the SPE.

     Under US GAAP, a Special Purpose Entity (SPE) where one or more enterprises
controlled by Vivendi Universal have, in substance, control of a SPE but do not
hold any ownership share of this entity, could be consolidated if the
enterprises controlled by Vivendi Universal hold the majority of the risks and
rewards, even if they do not hold any ownership share of the SPE.

  Exceptional Items

     French GAAP defines exceptional items differently from the definition of
extraordinary items under US GAAP, thus items classified as exceptional for
French GAAP purposes are reclassified to the appropriate income statement
captions determined under US GAAP. With the exception of gains and losses on
sales of shares of affiliated companies, exceptional items relating to the
operations of the group have been included in the determination of operating
income. Capital gains or losses on the sale of consolidated entities or equity
affiliates are considered for French GAAP purposes as exceptional income (loss),
whereas they are classified for US GAAP purposes as other income (loss).

  NEW US ACCOUNTING PRONOUNCEMENTS TO BE APPLIED BY THE GROUP FROM JANUARY 1,
  2003

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 requires legal obligations associated with the
retirement of long-lived assets to be recognized at their fair value at the time
that the obligations are incurred. Upon initial recognition of a liability, that
cost should be capitalized as part of the related long-lived asset and allocated
to expense over the useful life of the asset. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 143 will have a material impact on its results of operations or
its financial position.

     In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(SFAS 145). SFAS 145 also amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. SFAS 145 is effective for fiscal years
beginning after May 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 145 will have a material impact on its results of operations or
its financial position.

     In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities (SFAS 146) that nullifies EITF 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring), and changes the
timing of recognition for certain exit costs associated with restructuring
activities. Under
                                       F-92


SFAS 146 certain exit costs, including some employee termination benefits, would
be recognized over the period in which the restructuring activities occur.
Currently, exit costs are recognized when a company commits to a restructuring
plan. SFAS 146 is effective for exit or disposal activities that are initiated
after December 31, 2002. Vivendi Universal does not anticipate that adoption of
SFAS 146 will have a material impact on its results of operations or its
financial position.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock Based
Compensation-Transition and Disclosure (SFAS 148). SFAS 148 addresses financial
accounting and reporting for recording expenses for the fair value of stock
options. It amends the disclosure provisions of SFAS 123 to require prominent
disclosure in the summary of significant account policies of the effects of an
entity's accounting policy with respect to stock-based employee compensation on
reported net income and earnings per share in annual financial statements. The
annual disclosure requirements of SFAS 148 are effective for fiscal years ending
after December 15, 2002. Vivendi Universal does not anticipate that adaption of
SFAS 148 will have a material impact on its results of operations or its
financial position.

     In November 2002, the FASB issued FASB interpretation No. ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the
disclosure requirements of a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also requires a guarantor to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing certain
guarantees. FIN 45 also incorporates, without change, the guidance in FIN 34,
"Disclosure of Indirect Guarantees of Indebtedness of Others," which it
supersedes. The incremental disclosure requirements of FIN 45 are effective for
financial statements of interim or annual periods ending after December 15,
2002. The initial recognition and initial measurement provisions are applicable
to guarantees issued or modified after December 31, 2002. The accounting
followed by a guarantor on prior guarantees may not be changed to conform to the
guidance of FIN 45. Vivendi Universal has adopted the incremental disclosure
requirements of FIN 45. Vivendi Universal is currently in the process of
evaluating the impact of adopting FIN 45 on its consolidated balance sheet and
statements of operations.

     In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities an interpretation of ARB No. 51 ("FIN 46"). FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The disclosure provisions of
FIN 46 are effective for financial statements initially issued after January 31,
2003. Public entities with a variable interest in a variable interest entity
created before February 1, 2003 shall apply the consolidation requirements of
FIN 46 to that entity no later than the beginning of the first annual reporting
period beginning after June 15, 2003. FIN 46 is effective for all new variable
interest entities created or acquired after January 31, 2003. Vivendi Universal
is currently assessing what the impact of FIN 46 will be on its financial
statements.

17.2 SPECIFIC TRANSACTIONS OCCURRED IN 2002 AND 2001

17.2.1 GOODWILL IMPAIRMENT CHARGE

  French GAAP

     At December 31, 2001, following the market decline, particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after E 0.3 billion minority interest concerning Veolia Environnement).
In light of deteriorating economic conditions since this date and the impact of
higher financing cost for the company, management has recorded a complementary
impairment charge of approximately E 18.4 billion as at December 31, 2002.

                                       F-93


  US GAAP

     According to SFAS 121, no impairment was indicated as of December 31, 2001
and, accordingly, the goodwill impairment charge accounted for under French GAAP
was reversed on December 31, 2001. Upon the adoption of SFAS 142 and SFAS 144,
Vivendi Universal recorded on December 31, 2002, an impairment charge of E 38.3
billion.

17.2.2 DISPOSAL OF INVESTMENT IN BSKYB

  The Transaction

     In October 2001, Vivendi Universal sold approximately 96% (400.6 million
shares) of its investment in BSkyB to two British companies for proceeds of
approximately E 4 billion. This transaction was entered into in order to comply
with requirements imposed by the European Commission in October 2000, whereby
approval of the Merger Transactions was conditional on the disposal of the
investment in BSkyB before the end of 2002. Additionally, the sale relieved the
overhang which weighed on the BSkyB share price by allowing for the placement of
the shares on the market over an extended period of time. The sale also resulted
in the irrevocable and definitive loss of all voting rights attached to the
BSkyB shares, which cannot, under any circumstances, revert back to Vivendi
Universal. BSkyB Holding, a Vivendi Universal subsidiary, also irrevocably lost
the directorship held in its name.

     The two British companies were financed by the issuance of bonds
exchangeable into BSkyB shares. The bonds, which mature in October 2005, were
sold to a financial institution to which the BSkyB shares were pledged.
Concurrently, Vivendi Universal and the same financial institution entered into
a total return swap agreement with a nominal value of L2.5 billion or 629 pence
per share (sale price of 616 pence per share plus 13 pence per share for
financing the exchangeable bond). The total return swap agreement results in
Vivendi Universal retaining the financial risk or benefit associated with
BSkyB's market value until no later than October 2005. At inception, the swap
had a notional amount of L2.5 billion and a nil fair market value. The swap
features a resetting mechanism at the end of each calendar quarter or each
trigger date (any date on which the BSkyB share price varies by more than 10%
since the preceding quarter-end or previous trigger date). In the event the
BSkyB share price falls below 629 pence per share, Vivendi Universal will pay
the difference to the financial institution at the end of each calendar quarter
or immediately if the share price falls by more than 10%. In the event the BSkyB
share price increases above 629 pence per share, the difference is posted to a
deferred account until the swap agreement matures. Additionally, at the end of
each calendar quarter Vivendi Universal incurs interest at Libor +0.60% on the
nominal value of the swap. The European Commission designated an independent
expert to verify the legality of the transaction. Based on his findings, the
European Commission concluded that the transaction was compliant with
requirements imposed in October 2000. On behalf of the European Commission, the
independent expert has continued to monitor Vivendi Universal's commitments
related to the transaction until its conclusion.

     In December 2001, the financial institution issued share certificates
exchangeable into 150 million BSkyB shares, representing 37% of the shares held
by the British companies. At the same time, Vivendi Universal and the financial
institution agreed to reduce the nominal value of the total return swap by the
same proportion (37%). This definitively established the value of the 150
million BSkyB shares at 700 pence per share, including a block discount of 11%
(higher than a standard discount due to the characteristics of the financial
instrument placed on the market).

     In May 2002, the financial institution sold the remaining 250 million BSkyB
shares held by the QSPEs, and concurrently, Vivendi Universal and the financial
institution terminated the total rate of return swap on those shares, which were
settled at approximately 670 pence per share, before Vivendi Universal's payment
of related costs.

  French GAAP

     Under French GAAP, the disposal of the investment in BSkyB was not
recognized as a sale in 2001 because, although the beneficial interests of the
two British companies are held by the financial institution,

                                       F-94


Vivendi Universal remains a shareholder of the two companies and retains the
financial exposure relative to their assets through the total return swap
agreement. Accordingly, an asset representing the BSkyB shares held by the
British companies (E 1,547 million) and a liability representing the borrowings
(E 3,948 million) used to acquire them are recorded in Vivendi Universal's
consolidated financial statements. However, the December 2001 capital gain
before tax of E 1.1 billion was recognized as definitive due to the reduction in
the nominal value of the total return swap in connection with the issuance of
150 million exchangeable shares certificates.

     In May 2002, as a result of the termination of the total rate of return
swap on those shares, Vivendi Universal recognized a pre-tax gain of
approximately E 1.6 billion, net of expenses, and was able to reduce gross debt
by approximately E 4 billion.

  US GAAP

     Under US GAAP, the disposal of the BSkyB shares to the two British
companies was recognized as a sale as defined by SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a
replacement of FASB Statement 125, as the British companies met all the criteria
of Qualified Special Purpose Entities (QSPE). Consequently, a E 1.3 billion
pre-tax capital gain was recognized in 2001. The total return swap was accounted
for a derivative instrument under SFAS 133, at fair value with changes in fair
value recognized in current period earnings. It was recognized as income in the
amount of E 523 million at December 31, 2001.

     As a result of the termination of the total return swap in May 2002,
Vivendi Universal recognized a pre-tax loss of E 523 million.

17.2.3 ACCOUNTING FOR VEOLIA ENVIRONNEMENT

  French GAAP

     Note 3.2.3 to the consolidated financial statements describes a series of
transactions that took place during 2002 in connection with the reduction of the
Vivendi Universal's holdings in Veolia Environnement. Under French GAAP, Vivendi
Universal consolidated its investment in Veolia Environnement until December 31,
2002, when Vivendi Universal reduced its ownership interest in Veolia
Environnement from 41% down to 20.4%. Until that date, Vivendi Universal held
more than 40% of Veolia Environnement's outstanding shares and no other
shareholder held, directly or indirectly, a greater proportion of Veolia
Environnement's voting rights than Vivendi Universal.

  US GAAP

     Under US GAAP, the equity method of accounting was applied beginning July
1, 2002, the date at which Vivendi Universal's equity and voting interest was
reduced to 48%. This difference between French GAAP and US GAAP has no impact on
the reconciliation of shareholders' equity, net income and comprehensive income
to US GAAP.

     The following special purpose condensed statement of income and statement
of cash flows have been prepared on the basis of French GAAP, with the use of
the equity method of accounting for the Vivendi Universal's investment in Veolia
Environnement applied beginning July 1, 2002. The statement of income should be
read in conjunction with the reconciliation of net income under French GAAP to
US GAAP included in Note 17.3.2 to the Financial Statements.

                                       F-95


                   CONDENSED SPECIAL PURPOSE INCOME STATEMENT



                                                                    YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
                                                           
REVENUES....................................................        E  43,063
Cost of revenues............................................          (28,754)
Selling, general and administrative expenses................          (10,871)
Other operating expenses, net...............................             (550)
                                                                    ---------
OPERATING INCOME............................................            2,888
Financial expenses, net.....................................             (996)
Financial provisions........................................           (2,839)
Other income (expense)......................................             (696)
                                                                    ---------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST.......           (1,643)
Exceptional items, net......................................            1,694
Income tax (expense) benefit................................           (2,416)
                                                                    ---------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.........................................           (2,365)
Equity in (losses) earnings of disposed businesses..........               17
Equity in (losses) earnings of unconsolidated companies.....             (685)
Goodwill amortization.......................................           (1,129)
Goodwill impairment.........................................          (18,442)
                                                                    ---------
INCOME (LOSS) BEFORE MINORITY INTEREST......................          (22,604)
Minority interest...........................................             (697)
                                                                    ---------
NET INCOME (LOSS)...........................................        E (23,301)
                                                                    =========
EARNINGS (LOSS) PER BASIC SHARE.............................        E  (21.43)
                                                                    =========
ADJUSTMENTS TO CONFORM TO U.S. GAAP:
  Cumulative effect of change in accounting principles,
     after tax, impairment resulting from adoption of FAS
     142....................................................        E (15,540)
  Business combination and goodwill.........................              (36)
  Goodwill impairment charge................................           (4,425)
  Impairment of long-lived assets...........................              113
  Intangible assets.........................................               (5)
  Financial instruments.....................................              854
  Disposal of investment in BSkyB...........................           (2,025)
  Employee benefit plans....................................              (70)
  Other.....................................................              (51)
Tax effect on adjustments...................................            1,509
Adjustments to conform to U.S. GAAP relative to Veolia
  Environnement.............................................           (1,470)
                                                                    ---------
     Sub-total..............................................          (21,146)
                                                                    ---------
U.S. GAAP NET INCOME (LOSS).................................        E (44,447)
                                                                    ---------


                                       F-96


               CONDENSED SPECIAL PURPOSE STATEMENT OF CASH FLOWS



                                                                    YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
                                                           
CASH FLOW FROM OPERATING ACTIVITIES:
  Net income (loss).........................................        E (23,301)
  Reversal of equity in (losses) earnings of sold
     businesses.............................................              (17)
  Adjustments to reconcile net income to net cash provided
     by operating activities:                                              --
     Depreciation and amortization..........................           23,163
     Financial provisions...................................            2,839
     Gain on sale of property and equipment and financial
      assets, net...........................................           (2,119)
     Undistributed earnings from affiliates, net............              840
     Deferred taxes.........................................            1,704
     Minority interest......................................              697
  Changes in assets and liabilities, net of effect of
     acquisitions and dispositions:                                      (517)
                                                                    ---------
       NET CASH PROVIDED BY OPERATING ACTIVITIES............            3,289
CASH FLOW FROM INVESTING ACTIVITIES:
  Purchase of property, plant, equipment and other..........           (2,837)
  Proceeds from sale of property, plant, equipment and
     other..................................................              217
  Purchase of investments...................................           (4,682)
  Sale of investments.......................................            9,714
  Sale of spirits and wine business.........................               --
  Sale (purchase) of portfolio investments..................               --
  Net decrease (increase) in financial receivables..........           (1,626)
  Purchase of treasury shares held as marketable
     securities.............................................               --
  Sales (purchases) of other marketable securities..........              312
                                                                    ---------
       NET CASH PROVIDED BY (USED FOR) INVESTING
        ACTIVITIES..........................................            1,098
CASH FLOW FROM FINANCING ACTIVITIES:
  Net increase (decrease) in short-term borrowings..........           (3,235)
  Notes mandatorily redeemable for new shares of Vivendi
     Universal..............................................              767
  Proceeds from issuance of borrowings and other long-term
     debt...................................................            2,152
  Principal payment on borrowings and other long-term
     liabilities............................................           (1,515)
  Net proceeds from issuance of common shares...............               63
  Sales (purchases) of treasury shares......................            1,973
  Cash dividends paid.......................................           (1,243)
  Cash payment to USA Interactive...........................           (1,757)
                                                                    ---------
       NET CASH (USED FOR) PROVIDED BY FINANCING
        ACTIVITIES..........................................           (2,795)
  Effect of foreign currency exchange rate changes on cash
     and cash equivalents...................................              978
                                                                    ---------
CHANGE IN CASH AND CASH EQUIVALENTS.........................        E   2,570
                                                                    =========
CASH AND CASH EQUIVALENTS:
  Beginning.................................................        E   4,725
                                                                    =========
  Ending....................................................        E   7,295
                                                                    =========


                                       F-97


17.2.4 AMORTIZATION OF ACQUIRED FILM COST

  FRENCH GAAP

     Under French GAAP, Vivendi Universal estimated the fair value of films
acquired in the context of the Seagram Transaction in accordance with the
normalized margin method.

  US GAAP

     Under US GAAP, FAS 142, which became effective in 2002, recommends that the
fair value of films acquired in the context of a business combination should be
based on the discounted cash flow methodology rather than any other methodology.

     This difference between French GAAP and US GAAP has no impact on 2002
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP.

17.3 RECONCILIATION OF SHAREHOLDERS' EQUITY, NET INCOME AND COMPREHENSIVE INCOME
     TO US GAAP

17.3.1 RECONCILIATION OF SHAREHOLDERS' EQUITY TO US GAAP



                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
                                                                           
Shareholders' equity as reported in the Consolidated
  Statement of Shareholders' Equity.........................  E 14,020   E 36,748   E 56,675
  Adjustments to conform to US GAAP:(2)
  Business combinations and goodwill(3).....................     8,171      8,158      8,783
  Goodwill impairment charge................................    (8,861)    12,626         --
  Impairment of long-lived assets(1)........................        23        (90)       (88)
  Intangible assets(4)......................................      (462)      (427)      (329)
  Financial instruments.....................................    (1,241)    (1,492)       823
  Disposal of investment in BSkyB...........................    (1,307)       774         --
  Employee benefit plans....................................      (196)        --        (23)
  Other.....................................................      (208)      (127)       192
Tax effect on adjustments...................................     1,281       (268)    (1,304)
                                                              --------   --------   --------
                                                                11,220     55,902     64,729
                                                              --------   --------   --------
Fees associated with BSkyB swap, after tax..................        --        (37)        --
                                                              --------   --------   --------
                                                                11,220     55,865     64,729
Puts on Vivendi Universal's own shares......................      (155)    (1,597)        --
                                                              --------   --------   --------
US GAAP shareholders' equity................................  E 11,065   E 54,268   E 64,729
                                                              ========   ========   ========


- ---------------

(1) Those provisions relate to real estate assets.

(2) For 2002, 2001, 2000 impacts of those adjustments on French GAAP balance
    sheet are:

     - Business combinations and goodwill: "Goodwill, net"

     - Goodwill impairment charge: "Goodwill, net"

     - Impairment of long lived assets: "Property, plant and equipment, net"

     - Intangible assets: "Other intangible assets, net"

     - Financial instruments: "Other marketable securities" & "Other
       investments"

     - Disposal of investment in BSkyB: "Short-term loans receivable", "Other
       marketable securities" & "Long-term debt"

                                       F-98


     - Employee benefit plans: "Reserves & allowances"

     - Tax effect on adjustments: "Deferred tax assets" & "Deferred taxes"

(3) Adjustments related to business combination and goodwill mainly impact gross
    amount of goodwill due to differences in accounting policy between French
    and US GAAP -- see note 17.1.

(4) Adjustments related to intangible assets mainly impact the accumulated
    amortization line on these assets -- see note 17.1.

17.3.2 RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE TO US GAAP



                                                                 YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2002        2001       2000
                                                              ---------   ---------   -------
                                                                  (IN MILLIONS OF EUROS)
                                                                             
Net income as reported in the Consolidated Statement of
  Income....................................................  E (23,301)  E (13,597)  E 2,299
Adjustments to conform to US GAAP:
  Business combination and goodwill.........................         32        (333)     (263)
  Goodwill impairment charge................................     (4,425)     12,626        --
  Impairment of long-lived assets...........................        113          (1)      (23)
  Intangible assets.........................................        (23)        (62)     (106)
  Financial instruments.....................................        869         377       105
  Disposal of investment in BSkyB...........................     (2,025)        774        --
  Employee benefit plans....................................        (72)        (33)     (108)
  Other(2)..................................................        (83)       (290)      (46)
Tax effect on adjustments...................................      1,530        (557)       50
                                                              ---------   ---------   -------
                                                                (27,385)     (1,096)    1,908
                                                              =========   =========   =======
Fees associated with BSkyB swap, after tax..................         --         (37)       --
                                                              ---------   ---------   -------
     US GAAP net income (loss), before cumulative effect of
       change in accounting principles, after tax...........  E (27,385)  E  (1,133)  E 1,908
                                                              =========   =========   =======
Cumulative effect of change in accounting principles, after
  tax(1)....................................................    (17,062)        (39)       --
                                                              ---------   ---------   -------
US GAAP net income (loss)...................................  E (44,447)  E  (1,172)  E 1,908


- ---------------

(1) Adoption of FAS 142 in 2002 and FAS 133 in 2001.

(2) Other adjustments mainly relate to insignificant adjustments from French
    GAAP to US GAAP net income: lease contracts, public service contracts in
    environment business & reserves not recognized under US GAAP. For 2001 this
    line includes a negative E 262 million adjustment in US GAAP on reserves
    mainly due to decoders replacement at Canal+ level.



                                                                    YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
                                                                      
Net income -- basic.........................................   E (44,447)    E (1,172)
  Dilutive effect of
     Shares issuable on conversion of debt..................          33           27
                                                               ---------     --------
  Net income diluted........................................   E (44,414)    E (1,145)
                                                               =========     ========
  Weighted average number of shares outstanding -- basic
     (millions).............................................     1,086.9        980.9


                                       F-99




                                                                    YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
                                                                      
  Dilutive effect of
     Shares issuable on conversion of debt..................       114.2         34.6
     Shares issuable on exercise of dilution options........         3.0          4.0
     Shares attributable to stock purchase plans............         1.1          4.4
     Shares applicable to warrants..........................         0.0          1.1
     Shares applicable to put options sold..................        19.9          7.2
                                                               ---------     --------
Weighted average number of shares outstanding -- diluted
  (millions)................................................     1,225.1      1,032.2
                                                               =========     ========
Earning per share -- basic..................................   E  (40.89)    E  (1.19)
Earning per share -- diluted................................   E  (40.89)    E  (1.19)
Earning per share before cumulative effect of change in
  accounting principles, after tax-basis....................   E  (25.19)    E  (1.16)
Earnings per share before cumulative effect of change in
  accounting principles after tax and dilution..............   E  (25.19)    E  (1.16)


  GOODWILL AND OTHER INTANGIBLE ASSETS: ADOPTION OF STATEMENT 142



                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                 2002        2001        2000
                                                              ----------   ---------   --------
                                                              (IN MILLIONS OF EUROS, EXCEPT PER
                                                                        SHARE AMOUNT)
                                                                              
Reported US GAAP net income.................................  E (44,447)   E (1,172)   E 1,908
Add back Goodwill amortization..............................         --       1,706        699
                                                              ---------    --------    -------
Adjusted US GAAP net income.................................  E (44,447)   E    534    E 2,607
  Basic earnings per share..................................  E  (40.89)   E   0.54    E  4.43
  Diluted earnings per share................................  E  (40.89)   E   0.54    E  4.13


17.3.3 STATEMENT OF COMPREHENSIVE INCOME (LOSS)

     Under US GAAP, the following information would be presented within the
Consolidated Financial Statements as either a separate statement or as a
component within the Consolidated Statement of Shareholders' Equity:



                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
                                                                            
US GAAP net income..........................................  E (44,447)  E (1,135)  E 1,908
Other comprehensive income, net of tax:.....................         --
  Foreign currency translation adjustments..................     (3,615)     1,470      (700)
  Unrealized gains (losses) on equity securities............       (560)    (3,438)    3,158
  Unrealized gains on cash flow hedges......................         --         13        --
  Minimum pension liabilities adjustment....................        (19)      (164)       (5)
                                                              ---------   --------   -------
US GAAP comprehensive income................................  E (48,641)  E (3,254)  E 4,361
                                                              =========   ========   =======


                                      F-100


17.3.4 CONSOLIDATED STATEMENT OF INCOME

     Under Rule S-03 of Regulation S-X, revenue and related costs would be
presented within the statement of income as follows:



                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                               (FRENCH GAAP, IN BILLIONS OF
                                                                          EUROS)
                                                                           
Product sales, net..........................................  E  19.3    E  20.8    E   8.8
Service revenues(1).........................................     38.8       36.5       32.7
Other revenues..............................................       --         --        0.1
                                                              -------    -------    -------
  Total revenues............................................  E  58.1    E  57.3    E  41.6
                                                              =======    =======    =======
Cost of products sold.......................................  E (12.7)   E (13.0)   E  (5.4)
Cost of service revenues....................................    (27.8)     (26.5)     (24.7)
Expenses applicable to other revenues.......................       --         --       (0.1)
                                                              -------    -------    -------
  Total costs and expenses applicable to sales and
     revenues...............................................  E (40.5)   E (39.5)   E (30.2)
                                                              =======    =======    =======


- ---------------

(1) Includes excise taxes and contributions collected on behalf of local
    authorities in an amount of E 1.7 billion, E 1.8 billion and E 1.7 billion
    in 2002, 2001 and 2000, respectively.

17.3.5 CONSOLIDATED STATEMENT OF CASH FLOWS

     Reconciliation of Summarized Cash Flow Statement Information to US GAAP



                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
                                                                           
Net cash provided by operating activities as reported in the
  Consolidated Statement of Cash Flows......................  E  4,670   E  4,500   E  2,514
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (591)      (449)      (275)
     VE accounted for using the equity method as of July 1,
       2002.................................................      (969)        --         --
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --         (4)
                                                              --------   --------   --------
Net cash provided by operating activities under US GAAP.....  E  3,110   E  4,051   E  2,235
                                                              ========   ========   ========
Net cash provided by (used for) investing activities as
  reported in the Consolidated Statement of Cash Flows......  E    405   E  4,340   E (1,481)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............       850        678        309
     VE accounted for using the equity method as of July 1,
       2002.................................................       190         --         --
     Purchase of treasury shares reclassification...........        --        141      2,456
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --        885
                                                              --------   --------   --------
Net cash provided by investing activities under US GAAP.....  E  1,445   E  5,159   E  2,169
                                                              ========   ========   ========


                                      F-101




                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
                                                                           
Net cash (used for) financing activities as reported in the
  Consolidated Statement of Cash Flows......................  E (3,792)  E (7,469)  E   (631)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (145)      (311)      (202)
     VE accounted for using the equity method as of July 1,
       2002.................................................     1,067         --         --
     Purchase of treasury shares reclassification...........        --       (141)    (2,456)
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --     (1,934)
                                                              --------   --------   --------
Net cash (used for) financing activities under US GAAP......  E (2,870)  E (7,921)  E (5,223)
                                                              ========   ========   ========


     Under US GAAP, changes in assets and liabilities, net of effect of
acquisitions and dispositions would be presented within the consolidated
statement of cash flows as follows:



                                                                2002       2001
                                                              --------   --------
                                                               (FRENCH GAAP, IN
                                                              MILLIONS OF EUROS)
                                                                   
Inventories and work-in-progress............................   E  0.2     E  0.3
Accounts receivable.........................................     (0.4)      (1.4)
Other assets................................................     (0.8)      (0.6)
                                                               ------     ------
  CHANGE IN ASSETS..........................................   E (1.0)    E (1.7)
                                                               ------     ------
Accounts payable............................................   E (1.8)    E (0.6)
Other liabilities and accrued expenses......................      0.9       (0.8)
                                                               ------     ------
  CHANGE IN LIABILITIES.....................................   E (0.9)    E (1.4)
                                                               ------     ------
  CHANGE IN ASSETS AND LIABILITIES, NET OF EFFECT OF
     ACQUISITIONS AND DISPOSITIONS..........................   E (0.1)    E (0.3)


17.4 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions and other post-retirement benefits to eligible
employees, as discussed in Note 1. Disclosures in accordance with SFAS No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits, are
presented below.

     The following tables pertain to Vivendi Universal's defined benefit and
post-retirement plans principally in the US, the UK, Canada, France, Germany and
Japan, and provide reconciliations of the changes in benefit

                                      F-102


obligations, fair value of plan assets and funded status for the two-year period
ending December 31, 2001 and 2002:



                                                                                POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
                                                                             
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year..................  E  2,712   E 2,137   E  274   E  187
Service cost.............................................        54       106        2        1
Interest cost............................................       109       146       17       16
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        19       568       --       53
Disposals................................................    (1,088)     (242)     (65)      (1)
Curtailments.............................................        (2)       (9)      --       (7)
Settlements..............................................      (118)       --       --       --
Transfers................................................        54        --       --       --
Plan modifications.......................................        64        --       --       --
Actuarial loss, net......................................       109        20       38       34
Benefits paid............................................      (139)      (80)     (16)     (12)
Special termination benefits.............................         4         2       --       --
Other (foreign currency transaction).....................      (200)       56      (31)       3
                                                           --------   -------   ------   ------
Benefit obligation at end of year........................  E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
PROJECTED BENEFIT OBLIGATION AT END OF THE YEAR
US companies.............................................       826     1,108      201      257
French companies.........................................        79     1,017       --       --
Other....................................................       675       587       18       17
                                                           --------   -------   ------   ------
                                                           E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year...........     2,049     2,036       --       --
Actual return on plan assets.............................       (85)     (265)      --       --
Employers' contributions.................................        96        44       16       12
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        14       551       --       --
Disposals................................................      (980)     (315)      --       --
Settlements..............................................      (118)       --       --       --
Transfers................................................        75        --       --       --
Benefits paid............................................      (138)      (64)     (16)     (12)
Other (foreign currency translation).....................      (107)       54       --       --
                                                           --------   -------   ------   ------
Fair value of plan assets at end of year.................  E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
US companies.............................................       369       714       --       --
French companies.........................................        25       942       --       --
Other....................................................       414       393       --       --
                                                           --------   -------   ------   ------
                                                           E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======


                                      F-103




                                                                                POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
                                                                             
FUNDED STATUS
Underfunded obligation...................................      (772)     (663)    (219)    (274)
Unrecognized actuarial (gain) loss.......................       424       480       54       37
Unrecognized prior service benefit.......................        39       (70)      (4)      (4)
Unrecognized net transition asset........................        --       (16)      --       --
Write-off of prepaid on multi-employer scheme
  overtime(1)............................................        --       (38)      --       --
                                                           --------   -------   ------   ------
US GAAP net accrued liability............................  E   (309)  E  (307)  E (169)  E (241)
                                                           ========   =======   ======   ======


- ---------------

(1) Prepaid arising from multi-employer plans overtime (activities under lease
    contract) are written off since it is unlikely that they will be recoverable
    through future contribution holidays.

     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were E 1,462 million, E 1,383 million and E 660
million, respectively, as of December 31, 2002 and E 1,864 million, E 1,654
million and E 1,008 million, respectively, as of December 31, 2001. These
amounts are shown in detail in the table below:



                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
                                                                  
U.S. COMPANIES
  Accumulated benefit obligation............................  E   799   E   984
  Projected benefit obligation..............................  E   825   E 1,108
  Plan assets at fair value.................................  E   368   E   714
                                                              -------   -------
UK COMPANIES
  Accumulated benefit obligation............................  E   310   E   216
  Projected benefit obligation..............................  E   336   E   236
  Plan assets at fair value.................................  E   243   E   208
                                                              -------   -------
FRENCH COMPANIES
  Accumulated benefit obligation............................  E    56   E   262
  Projected benefit obligation..............................  E    69   E   318
  Plan assets at fair value.................................  E    10   E    67
                                                              -------   -------
OTHER COMPANIES
  Accumulated benefit obligation............................  E   218   E   192
  Projected benefit obligation..............................  E   232   E   202
  Plan assets at fair value.................................  E    39   E    19
                                                              -------   -------
TOTAL
  Accumulated benefit obligation............................  E 1,383   E 1,654
  Projected benefit obligation..............................  E 1,462   E 1,864
  Plan assets at fair value.................................  E   660   E 1,008
                                                              -------   -------


                                      F-104


     Amounts recognized in the balance sheet at December 31 consist of:



                                                                        POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
                                                                      
Prepaid benefit cost.............................  E   73    E  240    E   --     E   --
Accrued benefit liability........................    (778)     (810)     (169)      (241)
                                                   ------    ------    ------     ------
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Minimum liability adjustment(1)..................     396       263        --         --
                                                   ------    ------    ------     ------
US GAAP net accrued liability recognized.........  E (309)   E (307)   E (169)    E (241)
                                                   ======    ======    ======     ======


- ---------------

(1) US GAAP requires the recognition of a liability when the accumulated benefit
    obligation exceeds the fair value of plan assets by an amount in excess of
    any accrued or prepaid pension cost reported. The additional liability is
    offset by an intangible asset, up to the amount of any unamortized prior
    service cost and the excess, if any, is recorded as a reduction of
    shareholder's equity, net of tax. US GAAP does not permit the recognition of
    an asset if the fair value of the plan assets exceeds the accumulated
    benefit obligation.

Net accruals in the accompanying consolidated balance sheet can be compared with
the balances determined under US GAAP as follows:



                                                                        POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
                                                                      
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Excess funding of plans recognized in income only
  when paid back to Vivendi Universal............      (1)       (2)       --         --
Impacts of transition obligation, prior service
  costs and actuarial gains recognized with a
  different timing under local regulations.......      --       (74)       --         (1)
Minimum liability adjustment.....................     396       263        --         --
                                                   ------    ------    ------     ------
French GAAP net accrued liability in consolidated
  financial statements...........................  E (310)   E (383)   E (169)    E (242)
                                                   ======    ======    ======     ======
Accrued..........................................  E (383)   E (623)   E (169)    E (242)
Prepaid..........................................  E   73    E  240    E   --     E   --


                                      F-105


     Net periodic pension cost and other post-retirement benefit costs under US
GAAP for the years ended December 31 2000, 2001 and 2002 include the following
components:



                                                                       POST-RETIREMENT
                                               PENSION BENEFITS            BENEFITS
                                            ----------------------   --------------------
                                            2002     2001    2000    2002   2001    2000
                                            -----   ------   -----   ----   ----   ------
                                                       (IN MILLIONS OF EUROS)
                                                                 
Service cost..............................  E  54   E  106   E  56   E  2   E  1   E   --
Expected interest cost....................    109      146      66     17     16        1
Expected return on plan assets............    (83)    (171)    (91)    --     --       --
Amortization of prior service costs.......      4       (8)     (9)    (1)    (1)      --
Amortization of actuarial gains...........     32        7     (12)     1     --       --
Amortization of transition asset..........     --       (5)     (2)    --     --       --
Curtailments/settlements..................     85       (3)     (1)    --     (7)      --
Write-off of prepaid on multi-employer
  scheme overtime.........................      3        7      22     --     --       --
                                            -----   ------   -----   ----   ----   ------
US GAAP net benefit cost..................  E 204   E   79   E  31   E 19   E  9   E    1
                                            =====   ======   =====   ====   ====   ======


     Annual cost under French GAAP was E 198 million and E 31 million for the
years ended December 31, 2002 and 2001, respectively. The difference between
these amounts and the annual cost under US GAAP primarily results from the
amortization of the initial transition liability and of actuarial gains and
losses. In addition, certain companies do not recognize the excess funding.

     The weighted-average rates and assumptions utilized in accounting for these
plans for the years ended December 31 2001 and 2002 were:



                                                                             POST-
                                                              PENSION     RETIREMENT
                                                             BENEFITS      BENEFITS
                                                            -----------   -----------
                                                            2002   2001   2002   2001
                                                            ----   ----   ----   ----
                                                             (IN MILLIONS OF EUROS)
                                                                     
Discount rate.............................................   5,7%   6,3%  6,0%    6,9%
Expected return on plan assets............................   7,2%   7,4%  N/A     6,0%
Rate of compensation increase.............................   3,5%   4,3%  3,7%    3,0%
Expected residual active life (in years)..................  12,5   14,5   16,1   13,0


     Expected long-term rates of return for the plan assets have been determined
taking into account, for each country where Vivendi Universal has plan assets,
the structure of the asset portfolio and the expected rates of return for each
of the components. Vivendi Universal mainly has plan assets in the US, the UK
and Canada. In these three countries the expected long-term rates of return for
plan assets were respectively 9% as of December 31, 2002 and 10% as of December
31, 2001 for the US plans, 6.25% as of December 31, 2002 and 6.75% as of
December 31, 2001 for the UK plans and 5% as of December 31, 2002 and 5.75% as
of December 31, 2001 for the Canadian plans.

     For post-retirement benefit measurement purposes, Vivendi Universal assumed
growth in the per capita cost of covered health care benefits (the health care
cost trend rate) would gradually decline from 10% and 12% in the pre-age 65 and
post-age 65 categories, respectively in 2002 to 5.5% and 5.5%, pre-age 65 and
post-age 65, respectively by 2010. In 2002, a one-percentage-point increase in
the annual trend rate would have increased the post-retirement obligation by
E 12 million and the pre-tax expense by E 1 million; conversely, a
one-percentage-point decrease in the annual trend rate would have decreased the
post-retirement benefit obligation by almost E 11 million and the pre-tax
expense by E 1 million.

     Retirement costs of multi-employer plans in France consist of defined
contributions determined in accordance with the French law. Defined
contributions for the French businesses retained at the end of 2002

                                      F-106


amounted to E 73 million in 2002 compared to E 67 million in 2001 for those same
businesses and were expensed during the year in which they were incurred.

17.5 STOCK BASED COMPENSATION

17.5.1 EMPLOYEE STOCK OPTION PLANS

     Since its creation through the Merger Transactions on December 8, 2000,
Vivendi Universal has adopted several stock options plans under which options
may be granted to employees to purchase Vivendi Universal common shares at not
less than the fair market value of the shares on the date of the grant. For the
most common plans, one third of the outstanding options vest annually at the end
of each of three years from the grant date. Two-thirds of the outstanding
options become exercisable at the beginning of the third year from the grant
date, the remaining one third becomes exercisable at the beginning of the fourth
year from the grant date.

     For one exceptional performance-related plan, the "out-performance" plan
granted on December 8, 2000, outstanding options vest after six years, but can
be accelerated after three years based upon the performance of Vivendi Universal
common stock versus a composite of the MSCI and Stoxx Media Indices. Under all
plans, outstanding options expire eight years from the date of the grant. Under
both French and US GAAP, no compensation expense has been recorded in connection
with these plans.

     Prior to the Merger Transactions, both Vivendi and Canal+ Group had adopted
various stock options plans under which options were granted to employees to
purchase common shares at strike prices below the fair market value of the
shares on the dates of the grants. At Vivendi, the strike prices were discounted
12.5% to 20% below the fair market value of the shares on the dates of the
grants, at Canal+ Group, the discounts were between 0% and 10%. Under these
plans, outstanding options vest over a 3 to 5 year period from the date of the
grant, become exercisable over a 3 to 5 year period from the date of the grant
and expire 7 to 10 years from the date of the grant. On December 8, 2000,
outstanding options under the Canal+ Group options plans were converted to or
replaced by Vivendi Universal stock options plans. On this date, the plans were
modified so that the options vest in the same way than the new options of the
most common plans of Vivendi Universal, described above. Under French GAAP, no
compensation expense has been recorded in connection with these stock options
plans. Under US GAAP the compensation cost recorded in connection with these
plans was E (17.8) million and E 29.9 million for the years ended December 31,
2002 and 2001.

     At the end of June 2002, Veolia Environnement was no longer considered as a
subsidiary of Vivendi Universal under US GAAP, which implied a change of status
of its employees, who are thus no longer considered as employees of Vivendi
Universal. Some of these employees were granted stock-options of Vivendi
Universal during the past three years and part of these options were not vested
at that date. Since no specific clause was included in the rules of the stock
options plans that foresees the terms of a change of status of the grantees, the
stock options were neither cancelled nor modified and vest in the same way than
before the change of status.

     Therefore, the compensation cost for stock options plans on Vivendi
Universal shares held by Veolia Environnement employees has to be remeasured
using the fair value method, until these options are definitively vested. The
compensation cost recorded in connection with these stock options plans for the
year ended December 31, 2002 is non significant before the change in status and
E 0.7 million after the change in status.

     In 2001 and 2002, Vivendi Universal granted stock options to the employees
of companies it acquired in order to replace their existing stock-options plans.
The most important companies are USA Networks, MP3.com and StudioCanal. Under
both French and US GAAP, the fair value of the stock options was recorded in
addition to the purchase price; however some compensation cost will be
recognized under US GAAP for the unvested portion of these options until they
are vested to the grantees. The compensation cost recorded in connection with
these plans was E 20.9 million and nil for the years ended December 31, 2002 and
2001.

                                      F-107


     Transactions involving the combined stock options of Vivendi Universal and
CANAL+ are summarized as follows:



                                                                           EXERCISE PRICE OF
                                                           STOCK OPTIONS     STOCK OPTIONS
                                                            OUTSTANDING       OUTSTANDING
                                                           -------------   -----------------
                                                                     
BALANCE, DECEMBER 31, 1999...............................   25,902,867          E 46,2
Granted..................................................   15,131,761          E 85,7
Exercised................................................   (2,329,062)         E 17,3
Cancelled................................................     (126,216)         E 19,2
                                                            ----------          ------
BALANCE, DECEMBER 31, 2000...............................   38,579,350          E 67,0
Granted..................................................    8,827,226          E 48,9
Exercised................................................   (1,630,306)         E 36,8
Cancelled................................................     (180,315)         E 24,4
                                                            ----------          ------
BALANCE, DECEMBER 31, 2001...............................   45,595,955          E 61,0
Granted..................................................    3,186,392          E 19,2
Adjusted.................................................    1,435,325          E 60,8
Exercised................................................     (176,510)         E 20,2
Cancelled................................................   (1,325,335)         E 56,9
                                                            ----------          ------
BALANCE, DECEMBER 31, 2002...............................   48,715,827          E 58,5
                                                            ==========          ======


     On December 8, 2000, 39,999,747 Seagram stock options were converted into
32,061,549 Vivendi Universal stock options on ADS's. Under both French and US
GAAP, no compensation expense has been recorded in connection with the Seagram
stock options plans. Transactions involving the stock options on ADSs are
summarized as follows:



                                                                               WEIGHTED
                                                                               AVERAGE
                                                                            EXERCISE PRICE
                                                                                OF ADS
                                                              ADS OPTIONS      OPTIONS
                                                              OUTSTANDING    OUTSTANDING
                                                              -----------   --------------
                                                                      
BALANCE, DECEMBER 8, 2000...................................  32,061,549        $54,1
Granted.....................................................   6,878,697        $67,9
Exercised...................................................    (116,257)       $45,7
Cancelled...................................................     (29,941)       $56,1
                                                              ----------        -----
BALANCE, DECEMBER 31, 2000..................................  38,794,048        $56,6
Granted.....................................................   7,626,536        $55,9
Exercised...................................................  (3,520,575)       $45,4
Cancelled...................................................  (1,204,118)       $72,9
                                                              ----------        -----
BALANCE, DECEMBER 31, 2001..................................  41,695,891        $56,9
Granted.....................................................  10,096,389        $26,5
Adjusted....................................................   1,128,744        $49,6
Exercised...................................................  (1,212,832)       $34,8
Cancelled...................................................  (3,246,871)       $63,7
                                                              ----------        -----
BALANCE, DECEMBER 31, 2002..................................  48,461,321        $49,0
                                                              ==========        =====


                                      F-108


     The following table summarizes information concerning currently outstanding
and vested stock options and options on ADSs:



                                                          WEIGHTED
                                                           AVERAGE
                                           WEIGHTED       REMAINING                    WEIGHTED
                            NUMBER         AVERAGE       CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES  OUTSTANDING   EXERCISE PRICE      LIFE         VESTED     EXERCISE PRICE
- ------------------------  -----------   --------------   -----------   ----------   --------------
                                                                     
Stock options in euros
Under E 20..............   4,871,516        E 15.8          4.63        2,420,516      E 19.6
E 20 - E 30.............   1,815,018        E 25.5          1.38        1,815,018      E 25.5
E 30 - E 40.............   2,582,226        E 34.1          3.45        2,091,776      E 33.4
E 40 - E 50.............  12,358,814        E 47.5          5.41        6,788,798      E 48.0
E 50 - E 60.............     883,291        E 56.2          6.70          233,877      E 57.6
E 60 - E 70.............   5,452,883        E 62.3          4.52         5,451505      E 62.3
E 70 - E 80.............  14,918,511        E 74.3          5.32       11,829,602      E 73.8
E 80 and more...........   5,833,568        E 94.6          5.65        3,850,155      E 94.6
                          ----------        ------          ----       ----------       -----
                          48,715,827        E 58.5          5.00       34,481,247      E 60.3
                          ==========        ======          ====       ==========       =====
Stock options on ADS's
  in US dollars
Under $20...............   4,261,870         $15.8          7.79        2,418,557       $16.6




                                                       WEIGHTED
                                           WEIGHTED     AVERAGE
                                           AVERAGE     REMAINING                    WEIGHTED
                               NUMBER      EXERCISE   CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES     OUTSTANDING    PRICE        LIFE         VESTED     EXERCISE PRICE
- ------------------------     -----------   --------   -----------   ----------   --------------
                                                                  
$20 - $30..................   3,327,980     $ 23.7       7.96        2,838,375       $ 23.2
$30 - $40..................   5,147,935     $ 35.2       2.40        4,617,155       $ 35.3
$40 - $50..................  17,423,065     $ 44.1       5.43       10,428,106       $ 44.5
$50 - $60..................   3,457,511     $ 57.6       5.73        3,243,688       $ 58.0
$60 - $70..................   7,486,958     $ 65.7       5.86        5,649,250       $ 65.9
$70 - $80..................   7,125,806     $ 73.8       7.02        7,125,806       $ 73.8
Over $80...................     230,196     $268.7       6.95          230,196       $268.7
                             ----------     ------       ----       ----------       ------
                             48,461,321     $ 49.0       5.82       36,551,133       $ 51.5
                             ==========     ======       ====       ==========       ======


     At December 31, 2002, 34,481,247 stock options and 36,551,133 stock options
on ADS's were exercisable at weighted average exercise prices of E 60.3 and
US$51.5, respectively. The options outstanding at December 31, 2002 expire in
various years through 2010.

     The weighted -- average grant-date fair value of options granted during the
year was E 13.49 in 2002, E 23.51 in 2001 and E 32.76 in 2000.

     The fair value of Vivendi Universal options grants is estimated on the date
of grant using the Binomial Option Pricing Model with the following assumptions
for the grants:



                                                                 DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
                                                                   
Expected life (years).......................................   5.5    6.3    7.9
Interest rate...............................................   5.0%   4.9%   4.8%
Volatility..................................................  60.0%  35.0%  35.0%
Dividend yield..............................................     0%     1%     1%


                                      F-109


     In addition to the Vivendi Universal corporate plans described above,
several consolidated subsidiaries maintained stock-based plans for their
employees which are denominated in the subsidiary's stock. However, these plans
are insignificant.

     Under US GAAP, the total compensation cost recorded in connection with
employee stock options plans was E 4 million at December 31, 2002.



                                                                   DECEMBER 31,
                                                              -----------------------
                                                               2002     2001    2000
                                                              ------   ------   -----
                                                              (IN MILLIONS OF EUROS)
                                                                       
Vivendi Universal and Canal+ Group's plan prior to the
  merger of December 8, 2000................................  (17.8)    29.9     8.6
Vivendi Environment's plan..................................    0.7      1.0     1.3


17.5.2 EMPLOYEE STOCK PURCHASE PLANS

     Vivendi Universal maintains savings plans that allow substantially all full
time non-US employees of Vivendi Universal and its subsidiaries to purchase
shares of Vivendi Universal. The shares are sold to employees at a 15% discount
from the lower of the average market price of Vivendi Universal shares over the
last 20 business days prior to the date of authorization by the Board of
Directors and the market price on the date of authorization by the Board of
Directors. Shares purchased by employees under these plans are subject to
certain restrictions over their sale or transfer. The compensation cost recorded
in connection with these plans was E 4.4 million, E 1 million and E 86 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

     Vivendi Universal maintains a leveraged stock purchase plan named Pegasus,
which is available exclusively to the employees of non-French subsidiaries. At
the end of a five-year period, the employees are given assurance that they will
receive the maximum amount of either their personal contribution plus 6 times
the performance of the Vivendi Universal share or their personal contribution
plus interest of 5% per year compounded annually. The risk carried by Vivendi
Universal is hedged through a trustee based in Jersey by Societe Generale. The
compensation cost recorded in connection with Pegasus was E 59.6 million and
E 17 million and E 10 million, respectively, for the years ended December 31,
2002, 2001 and 2000.

     Shares sold to employee stock purchase plans are as follows:



                                                                DECEMBER 31,
                                                      ---------------------------------
                                                        2002        2001        2000
                                                      ---------   ---------   ---------
                                                                     
Number of shares....................................  2,402,142   2,604,670   8,937,889
Proceeds on sales (in millions of euros)............         25         133         555
Average cost if treasury stock sales (in euros).....         10          51          62


     Under US GAAP, the total compensation cost recorded in connection with
employee stock purchase plans was E 64 million, E 18 million and E 96 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

17.6 RESTRUCTURING COSTS

     Under US GAAP, the requirements for recording a reserve for restructuring
include the development of a formal plan, specific identification of operations
and activities to be restructured, approval and commitment of management and
notification to the employees to be terminated. Additionally, restructuring
reserves may only be recorded if the related costs are not associated with or do
not benefit continuing activities of Vivendi Universal and if the plan is
expected to be largely completed within one year of initiation and no
significant

                                      F-110


changes to the plan are likely. The reconciliation between the French and US
GAAP provision for restructuring is as follows:



                                                                DECEMBER 31,
                                                              ----------------
                                                               2002     2001
                                                              ------   -------
                                                              (IN MILLIONS OF
                                                                   EUROS)
                                                                 
French GAAP provision for restructuring:
  Reorganization and restructuring costs(1).................  E  57    E  314
  Accrual for exit activities related to Seagram
     acquisition(2).........................................     56       300
  Other(3)..................................................     --        18
                                                              -----    ------
                                                                113       632
  Adjustments to conform to US GAAP(4)......................     --      (157)
                                                              -----    ------
  US GAAP provision for restructuring.......................  E 113    E  475
                                                              =====    ======


- ---------------

(1) Recorded in provisions and allowances in the consolidated balance sheet (see
    Note 6).

(2) Recorded in other non-current liabilities and accrued expenses in the
    consolidated balance sheet (see Note 10).

(3) Relates to Vivendi Universal Publishing's interactive games operations.
    Recorded in accounts payable in the consolidated balance sheet.

(4) As of December 31, 2001 primarily relates to accruals and reorganization
    costs at Veolia Environnement, which qualify as restructuring costs under
    French GAAP but not under US GAAP (E 120 million at December 31, 2001).
    Certain of the accruals qualified as probable and estimable liabilities
    under SFAS No. 5, Accounting for Contingencies, thus the adjustment is only
    a reclassification with no impact on net income or shareholders' equity.
    Other accruals, recorded in prior years, did not comply with the provisions
    of Issues Task Force (EITF) 94-3, Liability Recognition for Certain Employee
    Termination Benefits and Other Costs to Exit an Activity (including Certain
    Costs Incurred in a Restructuring) and as such their reversal resulted in a
    net income/shareholders' equity adjustment.

     In connection with the Merger Transactions and the integration of several
other significant acquisitions, as discussed in Note 3, Vivendi Universal's
management developed and committed to a variety of formal restructuring programs
that were communicated to employees. The restructuring programs impacted several
business segments and primarily related to the consolidation of facilities and
related reductions in employee headcount. Costs incurred, include amounts
associated with employee termination and early retirement programs, asset
divestitures and costs associated with lease and other contract terminations.
These plans are generally completed within one year of initiation.

     In addition to restructuring programs initiated by Vivendi Universal,
certain of the acquired businesses had initiated and were executing their own
restructuring programs at the time of acquisition. Vivendi Universal evaluated
these programs at the time of acquisition to determine whether they were
consistent with the integration strategy. If consistent, restructuring reserves
were established through purchase accounting and

                                      F-111


are reflected as "Changes in scope of consolidation and purchase accounting
adjustments" in the following summary of reserves for restructuring:



                                                                                         HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
                                                                                             
EMPLOYEE TERMINATION RESERVES
Balance at December 31, 1999...  E  --     E  27        E  --      E  --      E  --       E  43          E  52        E  122
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (4)          --         --         --         (39)            --           (43)
  Additions charged to
    income.....................     --        64           --         --         --          --             --            64
  Utilization..................     --       (10)          --         --         --          (3)           (17)          (30)
  Reversals....................     --        (4)          --         --         --          --             --            (4)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        73           --         --         --           1             35           109
Acquisition of Seagram.........      5        --           --         --         --         118             --           123
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...      5        73           --         --         --         119             35           232
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (5)          --         --         --          --             24            19
  Additions charged to
    income.....................     --        42           --         --         19          --             18            79
  Utilization..................     (5)      (65)          --         --        (12)        (49)           (35)         (166)
  Reversals....................     --        (2)          --         --         --          --             --            (2)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2001...  E  --     E  43        E  --      E  --      E   7       E  70          E  42        E  162
                                 =====     =====        =====      =====      =====       =====          =====        ======
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        11           --         --         (1)         --            (28)          (18)
  Additions charged to
    income.....................     --         4           --         --         56          --             21            81
  Utilization..................     --       (44)          --         --        (33)        (70)           (35)         (182)
  Reversals....................     --       (10)          --         --         (7)         --             --           (17)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   4        E  --      E  --      E  22       E  --          E  --        E   26
                                 =====     =====        =====      =====      =====       =====          =====        ======
OTHER RESTRUCTURING RESERVES
Balance at December 31, 1999...  E  --     E   5        E  --      E  19      E  --       E  --          E  75        E   99
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        --           20          5         --          --             17            42
  Additions charged to
    income.....................     --        12           --         --         --          --             --            12
  Utilization..................     --        (3)          --        (11)        --          --            (43)          (57)
  Reversals....................     --        (1)          --         (4)        --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        13           20          9         --          --             49            91
Acquisition of Seagram.........    140        --           51         --         --          86             --           277
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...    140        13           71          9         --          86             49           368
  Changes in scope of
    consolidation..............     --        --           --         --         --          --             --            --
    and purchase accounting
      adjustments..............     --         4          (20)        --         --          --              2           (14)
  Additions charged to
    income.....................     --        33           24         --         18          --              9            84
  Utilization..................    (23)      (22)         (31)        (9)       (11)         --            (24)         (120)
  Reversals....................     --        (5)          --         --         --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------


                                      F-112




                                                                                         HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
                                                                                             
Balance at December 31, 2001...    117        23           44         --          7          86             36           313
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (8)          79         --          2          --            (34)           39
  Additions charged to
    income.....................     --        --           (8)        --         18          --             20            30
  Utilization..................   (117)       (9)         (54)        --         (8)        (26)           (21)         (235)
  Reversals....................     --        (3)         (48)        --         (8)         --             (1)          (60)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   3        E  13      E  --      E  11       E  60          E  --        E   87
                                 =====     =====        =====      =====      =====       =====          =====        ======
TOTAL RESTRUCTURING RESERVES
  Balance at December 31,
    2002.......................  E  --     E   7        E  13      E  --      E  33       E  60          E  --        E  113
                                 -----     -----        -----      -----      -----       -----          -----        ------


  SEAGRAM ACQUISITION

     In connection with the acquisition and integration of Seagram, Vivendi
Universal management developed a formal exit activity plan that was committed to
by management and communicated to employees at the time the merger was
consummated. The E 400 million accrual for exit activities consists principally
of relocation and severance costs, facility elimination costs, including
leasehold termination payments and incremental facility closure costs and
contract terminations, related to the acquired companies. In 2002 and 2001, cash
payments made on the settlement of exit activities approximated E 244 million.

  MUSIC

     Employee termination reserves of E 5 million and other restructuring
reserves of E 140 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2001, all of the employee termination reserves and E 23 million of the other
restructuring reserves had been utilized. In 2002, the remaining part of the
latter has been utilized.

  PUBLISHING

     Prior to their acquisitions in 1998 by Vivendi Universal, Havas and Grupo
Anaya had initiated and were executing their own restructuring programs,
primarily focused on headcount reduction. Vivendi Universal evaluated these
programs and determined they were consistent with their integration strategy and
thus E 48 million of employee termination reserves were established through
purchase accounting and were reflected as "Changes in scope of consolidation and
purchase accounting adjustments". Concurrent with the acquisitions, Vivendi
Universal determined that certain sales and administrative offices were
redundant. This resulted in the establishment of E 11 million in termination
reserves related to approximately 240 employees of Grupo Anaya (12 management
employees and 228 sales and administrative employees) and E 5 million in
termination reserves to reduce the administrative headcount at Havas. In
addition to the reserves for acquired companies, E 10 million of restructuring
reserves were established related to historical subsidiaries. During 1998, E 35
million of the reserves discussed above were utilized and E 1 million were
reversed, resulting in a E 38 million employee termination reserve at December
31, 1998.

     In connection with the acquisition of Medi-Media in 1999, E 15 million of
employee termination reserves and E 7 million of other restructuring reserves
related to the closure and disposal of several operating facilities were
established through purchase accounting and were reflected as "Changes in scope
of consolidation and purchase accounting adjustments". As part of the
integration, a restructuring plan was implemented to terminate approximately 40
employees. In addition to reserves established due to changes in the scope of
consolidation, E 18 million of additional employee termination reserves were
charged to income in 1999, E 1 million of employee termination reserves were
reversed and E 45 million of reserves were utilized, including E 43 million of
employee termination reserves and E 2 million of other restructuring reserves.

                                      F-113


     During 2000, several divisions within the Publishing business initiated
restructuring plans. The games division implemented a down sizing plan,
reorganization of shared services and a reallocation of business. These plans
resulted in the accrual of E 24 million of employee termination reserves for
approximately 570 employees and E 6 million of other restructuring reserves. The
education division implemented several restructuring plans, including the
downsizing of the French structure, the reorganization of the supply chain in
Brazil and Spain and the closure of a site in Belgium. These plans generated
restructuring reserves totaling E 22 million, including E 18 million allocated
to the termination of approximately 210 employees. The information division
implemented a reorganization of its back office department, primarily through
mutualization and reallocation of services. Restructuring reserves for this plan
totaled E 14 million, resulting in the termination of approximately 220
employees. The services department decided to close down a logistic site,
resulting in an employee termination reserve of E 7 million for 117 employees
and other facility closure reserves of E 1 million. Headquarters also initiated
a restructuring plan that will lead to the termination of 17 employees. The
reserve for this plan totaled E 2 million.

     During 2001, changes in the scope of consolidation and purchase accounting
adjustments at VUP reduced reserves for restructuring by E 1 million, primarily
due to the disposal of France Loisirs. Additional restructuring reserves of E 8
million at Grupo Anaya were recorded due to a change in local legislation, which
increased employee termination costs. Under this plan, 37 employees were
terminated in 2001 at a cost of E 3 million. At the games division restructuring
programs related to logistic reorganization and centralization of shared
services continued throughout the year, resulting in the termination of 887
employees for E 18 million and the utilization of other restructuring reserves
for E 27 million. Additional reserves of E 33 million were recorded for the
closure and downsizing of two studios, including E 13 million for the
termination of 337 employees. At the education division, approximately 100
employees were terminated in 2001 related to the downsizing of corporate
functions and reorganization of logistics in France, Belgium, Brazil and the US
for E 12 million. Additional reserves of E 15 million were recorded in order to
complete the plan. At the information division restructuring reserves of E 6
million were utilized in connection with the centralization of Comareg's
headquarters in Lyon. Additional reserves of E 10 million were recorded for a
new plan initiated for the merger of the consumer press titles. The
restructuring program for the centralization of shared services at the B2B
division was abandoned generating a E 6 million reversal of reserves. The
services division have implemented a new plan to close a logistic site at a cost
of E 8 million, E 5 million of which relate to employee termination reserves for
63 employees. The health division completed the closure of its London
headquarters and other administrative reorganization plans, utilizing E 21
million in employee termination and other restructuring reserves.

     During 2002, most of Vivendi Universal Publishing assets were sold. The
remaining provision for restructuring are mainly related to Games (E 3 million)
and the Express-Expansion group which was sold in February 2003 (E 2 million).

  TV & FILM

     Other restructuring reserves of E 51 million were established as part of
the accrual for exit activities related to the Seagram acquisition discussed
above, of which E 22 million had been utilized by December 31, 2001. The
remaining part of the latter has been utilized in 2002. Additional other
restructuring reserves of E 24 million were established in 2001 by Canal+
Horizons, a subsidiary of Canal+ Group. Of the total, approximately E 9 million
related to their withdrawal from Maghreb and the Middle East (primarily contract
termination fees), of which E 1 million had been utilized by December 31, 2001.
The remaining E 15 million related to antenna restructuring, of which E 8
million in contract termination fees were paid to American Studios in 2001. The
E 20 million restructuring reserve related to the operations of Canal+ Group,
which was established as a result of the Merger Transactions in 2001, was
reclassified to operating liabilities. As at the beginning of 2002, following
purchase of Wizja TV platform to UPC, Canal+ Group's stake in TKP increased
which led to change the consolidation method from Equity Method to Full
integration. This change was responsible for scope entry in the restructuring
provision amounting to E 92.9 million in the consolidated balance-sheet
corresponding to the restructuring of this new platform. The decrease of the
provision during 2002 amounted to E 70.1 million. The currency translation
adjustment amounted to E 13.4 million. It reduced

                                      F-114


therefore the global provision at end of December 2002 to E 9.4 million. By the
end of the period this provision can be detailed as follows: closing of the
British subsidiary amount to E 2.6 million, change of subscribers cards and
loading new software to Wizja decoders to make them ready to work on one
encryption system (E 2.5 million), administrative issues: down-sizing of offices
(E 2.3 million), technical issues amount to E 1.7 million and correspond to
secure encryption systems and set up software for interactive services.

  TELECOMS

     In December 1997, SFR decided to discontinue mobile telephone service
operations utilizing analog technology. In connection with this decision, a
reserve of approximately E 59 million was established related to the phasing out
of the subscriber base and associated technology. The program was essentially
completed by December 31, 2000. The remaining reserves of E 9 million related to
other technological changes accrued during previous years, all of which were
utilized in 2001.

  INTERNET

     As the result of the general dotcom slowdown, Vivendi Universal's Internet
business has made significant changes to its business strategy. In 2001, this
resulted in restructuring programs involving employee reduction and other costs
associated with the reorganization and reallocation of business. In the US,
Flipside finalized a restructuring plan in connection with the acquisition of
Uproar. The total costs of the plan amount to approximately E 15 million,
comprised of E 9 million in severance and employee termination costs and E 6
million in facility exits costs, including assets writedowns, lease terminations
and other exit costs. Additionally, the consolidation of all US Web properties
into a single entity called Vivendi Universal Net USA has resulted in a
restructuring plan in 2001. Costs associated with this plan are expected to
total E 4 million, 95% of which relate to facility and other exit costs. In
Europe, restructuring of education and entertainment activities, horizontal
portals and support and services activities are expected to cost E18 million, of
which employee termination costs account for E 10 million and other
restructuring costs for E 8 million.

     Further to Group refocusing strategy implemented in the mid-2002, the
restructuring process started in 2001 has been accelerated with a comprehensive
plan to either reclassify certain units into other group divisions, or to
dispose off others or to shut down those with no foreseeable earning potential.
The Net loss for year was therefore impacted by this restructuring program
including employee termination, and other exit costs for a total amount of
E 59,2 million.

     In Europe, Scoot's was shut down and this resulted in an E 16,7 million
cost on the year including both employee termination costs and other exit costs
such as contract's termination with various suppliers. Vivendi Universal Net
holding incorporated a E 16,8 million provision as of December 31st connected
with the holding closing process and the risk or costs with other subsidiaries
foreseeable close down.

     In the US, Get Music was shut down and long term liabilities related to
lease agreements were reserved for a total amount of E 8,4 million. Vivendi
Universal Net USA holding company was downsized resulting in E 9,3 million
severance payments to employees.

  HOLDING, CORPORATE & NON-CORE

     Employee termination reserves of E 118 million and other restructuring
reserves of E 86 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2002, the total of the employee termination reserves and E 30 million of the
other restructuring reserves had been utilized.

     Vivendi Universal's withdrawal from its non-core businesses, primarily
construction and real estate, has been an ongoing process over the past few
years. All of the restructuring reserves related to non-core businesses consist
of severance and employee termination costs related to headcount reductions.
During 1996, 1997 and 1998, employee termination reserves totaling E 174 million
were recorded in connection with the termination of 5,611 employees in
construction operations (936 management employees and 4,675 construction
employees) and reserves of E 11 million were recorded in connection with real
estate operations. During

                                      F-115


the same period, E 132 million of the reserves for construction operations were
utilized and 4,263 employees were terminated (801 management employees and 3,462
construction employees). The remaining 1,348 employees, for whom there was a
reserve of E 42 million at December 31, 1998, were terminated in 1999.
Utilization of the real estate operations reserve was E 1 million during the
period, leaving a balance of E 10 million at December 31, 1998.

     During 1999, as a result of a general decline in the demand for
construction in markets serviced by its German subsidiaries, Vivendi Universal
established a new restructuring plan. Additionally, Vivendi Universal
implemented restructuring plans in its civil engineering entities to adapt them
to new technology, including digital technology related to electrical
contracting. These plans resulted in the accrual of a E 44 million reserve in
connection with the termination of 1,460 employees in construction operations
(277 management employees and 1,183 workers), of which E 9 million was utilized
during the year and 288 employees terminated (49 management employees and 239
construction employees). Also during 1999, additional reserves of E 6 million
were recorded for real estate operations, E 6 million were utilized and a
reduction of E 2 million was recorded due to changes in the scope of
consolidation.

     During 2000, the employee termination reserves related to non-core
construction and real estate businesses were reduced to E 1 million primarily
due to the disposal of Vinci. These were utilized in 2001.

  ENVIRONMENTAL SERVICES

     Over the past few years, our former Environmental Services business has
engaged in several plans to restructure its activities, particularly to
rationalize its regional organization. The E 13 million employee termination
reserve at December 31, 1998, primarily related to a restructuring plan,
implemented during 1997, to rationalize the energy division formed through the
merger of Compagnie Generale de Chauffe and EsysMontenay. This plan resulted in
a workforce reduction of 1,271 employees, approximately 10% of which were
executives and was completed in 2000. The E 25 million other restructuring
reserve at December 31, 1998, primarily comprised of lease termination costs and
other costs to exit facilities related to a three-year restructuring plan
associated with the water businesses in France. This plan, also implemented
during 1997, resulted in the closure of approximately 20 regional agencies and
200 local units and was completed in 2000.

     Concurrently with the acquisition of US Filter in April 1999, our
Environmental Services business designed and implemented a restructuring plan to
streamline its manufacturing and production base, redesign its distribution
network, improve its efficiency and enhance its competitiveness. The
restructuring plan focused on two primary activities: (i) the combination of
certain US Filter operating groups outside the United States with OTV and (ii)
the combination and restructuring of the remaining US Filter entities, primarily
in North America, with the operations of PSG, a subsidiary of Aqua Alliance.
These restructuring plans identified certain manufacturing facilities,
distribution sites, sales and administration offices and related assets that
became redundant or non-strategic upon consummation of the transaction. The
original costs associated with these plans totaled E 109 million. Of the total,
E 63 million related to the combination with OTV, consisting of E 45 million in
severance and employee termination costs and E 18 million in facility exit
costs. The remaining E 46 million related to the North American combination,
consisting of E 9 million in severance and employee termination costs and E 37
million in facility exit costs. Facility exit costs include lease termination
costs, relocation costs and other exit costs. These costs are reflected in
"Changes in scope of consolidation and purchase accounting adjustments' in 1999
and were included in the purchase price allocation for US Filter.

     The combination of US Filter International with OTV, to create Vivendi
Water Systems, was achieved through several restructuring plans, the most
significant of which was in Benelux. This plan involved the closure or sale of
three facilities and the significant down-sizing of a fourth and will result in
the severance of 221 employees (including 23 executive employees) for a total
amount of E 29 million. This plan is expected to extend until the beginning of
2002 due to significant legal constraints requiring long termination periods. No
employee had been terminated as of December 31, 2000. During 2001, 17 employees
(including 8 executives) were terminated for a total cost of approximately E 13
million. Facility exit costs associated with this plan originally amounted to
E 2 million, however, additional reserves of E 7 million were recorded in 2000
as adjustments to the cost of US Filter International. They are reflected in
"Changes in scope of consolidation

                                      F-116


and purchase accounting adjustments" and had no impact on net income for the
period. During 2001, E 1 million of these reserves were utilized.

     Plans related to the other locations involved severance costs of E 16
million in connection with the termination of approximately 147 employees and
E 16 million in facility exit costs. During 1999, employee termination costs of
E 10 million were utilized in the termination of 81 employees and facility exit
costs of E 10 million were utilized. During 2000, employee termination costs of
E 4 million were utilized in the termination of 36 employees and the remaining
E 6 million of facility exit costs were also utilized. The remaining employees'
termination reserve of E 2 million was utilized in 2001 with the termination of
5 senior executives included in a total of approximately 30 terminated
employees.

     In the North American restructuring plan, the E 9 million in severance and
employee termination costs related to a reduction in the combined workforce of
443 employees (66 management employees, 111 administrative employees, 234
manufacturing employees and 32 sales employees). The E 37 million of facility
exit costs, consisted of lease termination costs of E 20 million and other
related charges of E 17 million (primarily pension termination accruals). The
restructuring plan involved the closure of four manufacturing facilities in US
Filter's water and wastewater group. Within US Filter's consumer group, the plan
identified the closure of one manufacturing facility, one distribution facility
and numerous company-owned dealerships. In addition, the plan identified two
additional manufacturing sites and several distribution centers for the
remaining US Filter operating groups. During 1999, E 12 million of reserves were
utilized, including E 2 million in severance payments in connection with the
termination of approximately 141 employees. Also in 1999, E 13 million of
preexisting PSG accruals were added to the North American restructuring plan.
They are reflected in "Additions charged to income" as they were recorded by PSG
in their 1999 statement of income. To complete the North American restructuring
plan, additional reserves of E 11 million, including E 4 million of lease
termination costs and E 7 million of other related charges, were recorded in
2000 as adjustments to the cost of US Filter International. They are reflected
in "Changes in scope of consolidation and purchase accounting adjustments" and
had no impact on net income for the period. All additions through "Changes in
scope of consolidation and purchase accounting adjustments" in 2000 result from
the revision of the calculation of liabilities recorded as of December 31, 1999,
which was performed in the first quarter of 2000. No new actions were identified
that would result in additional liabilities. During 2000, E 17 million of
reserves were utilized, including E 6 million in severance payments in
connection with the termination of approximately 250 employees, leaving E 41
million unutilized at December 31, 2000. In 2001, E 23 million of reserves were
utilized, including the remaining E 1 million in severance payments in
connection with the termination of 52 employees. As of December 31, 2001, E 18
million of the original reserves remained, consisting primarily of lease
terminations with extended payment terms and pension termination benefits that
will be paid to participants upon settlement of the related plans. Additionally,
due to the continued decline in North America, US Filter initiated a new
restructuring program in 2001 to reduce headcount and consolidate its
manufacturing capacity. Under this program, restructuring reserves of E 18
million were established in connection with the termination of 696 employees,
including 264 professionals. During 2001, E 4 million of the reserves were
utilized and 142 employees were terminated. Five surface preparation regional
headquarters have been combined into two service centers and five manufactory
facilities and an after-market facility have been closed. Also in response to
the business conditions certain regeneration plants were identified for closure
and the company exited the copper etchant recovery business. At December 31,
2001, E 14 million of the new reserves remained unutilized.

     In connection with the acquisitions of Apa Nova Bucuresti and the
ex-services division of EDF in 2001, restructuring reserves were established
through purchase accounting and were reflected as "Changes in scope of
consolidation and purchase accounting adjustments". As part of the integration
of Apa Nova Bucuresti, a restructuring plan was implemented to terminate
approximately 1,700 employees, of which 85 were professionals. Employee
termination reserves of E 19 million were established, primarily related to
severance, of which E 12 million was utilized in connection with the termination
of 1,200 employees in 2001. As part of the integration of the ex-services
division of EDF with their existing operations, Dalkia implemented a
restructuring plan to terminate 80 employees, of which 42 were professionals.
Employee termination reserves of approximately E 5 million were established,
none of which was unutilized in 2001.

                                      F-117


     In addition to these plans related to acquired companies, our Environmental
Services business implemented less significant restructuring measures in its
historical subsidiaries. In 2001, Onyx, as part of a program to reduce their
overhead costs, implemented a reorganization of their IT (information
technology) services. Restructuring reserves of approximately E 7 million were
established, including E 1 million in severance payments, none of which was
utilized in 2001. In 1999, an E 11 million reserve, consisting of E 6 million in
connection with the closing of Aqua Alliance's headquarters and E 5 million in
connection with the consolidation of facilities in subsidiaries of OTV was
recorded. The reserve, which was related to lease terminations and asset
disposals, was utilized in 2000.

     Following the disposals which occurred in the 2002 financial year, Vivendi
Universal is accounted for using the equity method as at December 31, 2002.
Thus, at that date, restructuring reserves recorded by this subsidiary have been
deconsolidated.

17.7 FILM AND TELEVISION COSTS



                                              DECEMBER 31, 2002            DECEMBER 31, 2001
                                          --------------------------   --------------------------
                                            VUE     CANAL+    TOTAL      VUE     CANAL+    TOTAL
                                          -------   ------   -------   -------   ------   -------
                                                          (IN MILLIONS OF EUROS)
                                                                        
Theatrical film costs:
  Released, less amortization...........  E 1,085   E 350    E 1,435   E 1,376   E 624    E 2,000
  Completed, not released...............        5       8         13        31       8         39
  In production.........................      583      62        645       343       8        351
  In development........................       17      --         17        22      --         22
                                          -------   -----    -------   -------   -----    -------
                                          E 1,690   E 420    E 2,110   E 1,772   E 640    E 2,412
                                          =======   =====    =======   =======   =====    =======
Television costs:
  Released, less amortization...........      483      24        507       300      22        322
  Completed, not released...............       32      --         32         5      --          5
  In production.........................       77      26        103        33      31         64
  In development........................        2      --          2        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              594      50        644       338      53        391
                                          =======   =====    =======   =======   =====    =======
Program costs, less amortization:
  Current...............................      241      --        241        --      --         --
  Non current...........................      303      --        303        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              544      --        544        --      --         --
                                          =======   =====    =======   =======   =====    =======
Total...................................    2,828     470      3,298     2,110     693      2,803
Less current portion....................      241      --        241        --      --         --
                                          -------   -----    -------   -------   -----    -------
Film costs, net of amortization.........  E 2,587   E 470    E 3,057   E 2,110   E 693    E 2,803
                                          =======   =====    =======   =======   =====    =======


     At VUE, based on management's total gross revenue estimates as of December
31, 2002, approximately 59% of completed and unamortized film and television
costs (excluding amounts allocated to acquired libraries) are expected to be
amortized during 2003, and approximately 92% by December 31, 2005. Amortization
of acquired film libraries in 2002 and 2001 was E 43 million and E 45 million,
respectively. As of December 31, 2002, the Company estimated that approximately,
E 619 million of accrued participation and residual liabilities will be payable
in 2003".

     At Canal+, based on management's total gross revenue estimates as of
December 31, 2002, approximately 41% of completed and unamortized film and
television costs (excluding amounts allocated to acquired libraries) are
expected to be amortized during 2003, and approximately 72% by December 31,
2005. An amortization level of 80% will be reached by December 2006.
Amortization of acquired film libraries in 2002

                                      F-118


and 2001 was E 31 million and E 40 million, respectively. As of December 31,
2002, the Company estimated that approximately, E 54 million of accrued
participation and residual liabilities will be payable in 2003.

17.8 SFAS 142

     Vivendi Universal adopted SFAS 142 effective January 1, 2002. The adoption
of SFAS 142 resulted in ceasing amortizing goodwill, and testing goodwill and
indefinite-lived intangible assets for potential impairment, although goodwill
on business combinations consummated after July 1, 2001 had not been amortized.
The total impairment loss resulting from the adoption in the first quarter of
2002 and the implementation in the fourth quarter of SFAS 142 was approximately
E 33.2 billion, of which E 17.1 billion was recorded as a cumulative effect of a
change in accounting principle on January 1, 2002. This loss primarily reflects
the continued deterioration of the economy since December 2001, as well as the
resulting decline in value of some media and telecom assets, which has occurred
since the Vivendi, Seagram and Canal Plus merger was announced in June 2000,
combined with the impact of the increase in the future financing cost due to the
liquidity issues of the Company in 2002. Vivendi Universal has implemented the
following goodwill impairment procedures in 2002:

     - Upon adoption of the new standard, Vivendi Universal completed its
       initial review for impairment, which required the allocation of goodwill
       and other intangible assets to various reporting units. The fair value of
       each reporting unit was compared to its carrying value to determine if
       there was potential impairment. When the fair value of the reporting unit
       was less than its carrying value, an impairment loss was recognized to
       the extent that the fair value of goodwill and other intangibles assets
       within the reporting unit was less than the carrying value. Fair value of
       goodwill and other intangible assets was determined on a discounted cash
       flow approach, supported by a market approach, reviewed by third-party
       appraisers. The total impairment loss resulting from the adoption of SFAS
       142 was approximately E 17.1 billion, which was recorded as a cumulative
       effect of a change in accounting principle in the first quarter of 2002.

     - As of October 1, 2002, Vivendi Universal performed its annual impairment
       review. The total impairment loss resulting from this annual impairment
       review of goodwill in accordance with SFAS 142 was approximately E 16.1
       billion, which was recorded as a charge in reconciliation of net income
       to U.S. GAAP, as presented in note 17.3.2 to the Financial Statements, as
       of December 31, 2002. Fair value of goodwill and other intangible assets
       was determined on a discounted cash flow approach, supported by a market
       approach, reviewed by third-party appraisers. Vivendi Universal will
       perform its annual impairment review during the fourth quarter of each
       year, having commenced in the fourth quarter of 2002.

     - Valuation procedures implemented and assumptions made to assess the fair
       value of reporting units are summarized in note 3.3 to the Financial
       Statements.

     The change in the carrying value of goodwill for the year ended December
31, 2002, is as follows:


                                                    IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
                                                                         
Telecoms(2)..........      2,954               600             (710)          (536)             8
Music................     15,862                --           (3,900)        (5,000)            49
Vivendi Universal
  Entertainment......      9,360                --           (2,660)        (8,044)         7,866
Groupe Canal+........     16,435              (350)          (7,590)        (5,336)           750
Holding &
  Corporate..........      1,368            (1,368)              --             --             --
Internet.............        559               200             (250)          (462)            (4)
Publishing...........      3,888               (31)              --           (130)        (3,432)


                           IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
                               
Telecoms(2)..........         1           2,316
Music................    (1,182)          5,830
Vivendi Universal
  Entertainment......    (1,662)          4,860
Groupe Canal+........        (1)          3,909
Holding &
  Corporate..........        --              --
Internet.............       (43)             --
Publishing...........        (4)            291


                                      F-119



                                                    IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
                                                                         
Environmental
  Services...........      7,499               900           (1,522)            --         (6,485)
Other................          3                --               --             (9)             2
                          ------            ------          -------        -------         ------
Total................     57,927               (49)         (16,632)       (19,517)        (1,246)
                          ======            ======          =======        =======         ======


                           IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
                               
Environmental
  Services...........      (392)             --
Other................        --              (4)
                         ------          ------
Total................    (3,282)         17,202
                         ======          ======


- ---------------

(1) At December 31, 2002, impairment losses not only include E 16,146 million
    relative to the annual impairment review of goodwill prescribed by SFAS 142,
    but also include E 4,486 million relative to various entities held for sale
    (E 2,564 million for Canal Plus, E 462 million for Internet, E 206 million
    for Vivendi Telecom International and E 130 million for Publishing).
    Impairment losses do not include E 430 million (E 300 million for Elektrim
    Telekomunikacja SP and E 130 million for Vizzavi Europe) as of January 1,
    2002 and E 1,115 million (E 503 million for Sportfive, E 374 million for
    Sogecable, E 206 million for Telecom Developpement and E 32 million for
    Elektrim Telekomunikajca SP) at December 31, 2002.

(2) Impairment losses relate entirely to Vivendi Telecom International.

     Vivendi Universal's other intangible assets primarily consist of:



                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Other definite-lived intangible assets:
Audiovisual and music rights................................      5,558        7,840
Trademarks, market share, editorial resources...............         --          711
Film costs, net of amortization.............................      3,599        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        967          680
Software....................................................         50          146
Other.......................................................        367          544
Veolia Environnement........................................         --        1,373
                                                               --------     --------
Total.......................................................   E 10,580     E 13,999
                                                               ========     ========
Other indefinite-lived intangible assets:
Brands, trademarks and other................................      2,298        3,566
Multiple service operator (MSO) agreements..................        669           --
Veolia Environnement........................................         --        2,350
                                                               --------     --------
Total.......................................................   E  2,967     E  5,916
                                                               ========     ========


     In French GAAP, of the E 1,704 million of acquired intangible assets (refer
to Note 3.2.1. Acquisition of the entertainment assets of USA Networks, Inc.,
preliminary allocation of purchase price with an exchange rate euro/dollar as of
May 7, 2002), E 648 million was assigned to film costs that are amortized based
on the ratio of the current period's gross revenues to estimated total gross
revenues from all sources on an individual film forecast basis and E 880 million
was assigned to trademarks and Multiple Service Operator (MSO) agreements for
E 125 million and E 755 million respectively, that are not subject to
amortization. The remaining E 176 million of acquired intangible assets have a
weighted-average useful life of approximately 6 years. The intangible assets
that make up that amount include deferred charges for E 92 million (4-year
weighted-average useful life) and MSO agreements for E 84 million (8-year
weighted-average useful life). In US GAAP, the E 92 million deferred charges
would be classified as other non current assets instead of intangible assets.

                                      F-120


     The Fiscal Year 2001 results on a historical basis do not reflect the
provisions of SFAS 142. The following table presents the impact of SFAS 142 on
net income (loss) and net income (loss) per share had the standard been in
effect for the Fiscal Year 2001:



                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
                                                                            
Reported net loss...........................................  E (44,447)  E (1,172)  E 1,908
Cumulative effect of change in accounting principle(1)......    (17,062)       (39)       --
                                                              ---------   --------   -------
Loss before cumulative effect of change in accounting
  principle.................................................    (27,385)    (1,133)    1,908
Add back amortization of goodwill...........................         --      1,706       699
                                                              ---------   --------   -------
Adjusted US GAAP net income.................................  E (27,385)  E    573   E 2,607
Earning per share -- basic..................................     (25.20)      0.58      4.43
Earning per share -- diluted................................     (25.20)      0.56      4.07
                                                              ---------   --------   -------


- ---------------

(1) Adoption of SFAS 142 in 2002 and SFAS 133 in 2001.

17.9 SUPPLEMENTAL INFORMATION REQUESTED BY US REGULATORS

NOTE 1

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
for product sales with terms FOB shipping point and on delivery for products
sold FOB destination.

  COST OF REVENUES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Music -- Cost of revenues includes manufacturing costs, royalty expense,
copyright expenses, artist costs and recording costs. Included in selling,
general and administrative expenses are marketing and advertising expenses,
selling and distribution costs, provisions for doubtful receivables and obsolete
inventory and overheads.

     TV & Film -- For our TV & Film businesses, cost of revenues includes film
and television costs amortization, participation and residual expenses,
subscriber management and acquisition costs, television distribution expenses,
theatrical print costs, home video inventory costs and theatrical, television
and home video marketing costs. Selling, general and administrative expenses
include salaries and benefits, rent expense, consulting and auditing fees,
insurance expense, travel and entertainment expense, administrative departments
costs (e.g. Finance, Human Resources, Legal, Information Technology,
Head-quarters) and other operating expenses. For our parks, recreation and
retail businesses, included in cost of revenues are cost of food, beverage and
merchandise, inventory damage and obsolescence expenses and duty and freight
costs. Selling, general and administrative expenses include indirect warehouse
expense including receiving and inspection expense.

     Telecoms -- Cost of revenues include purchasing costs, interconnection and
access costs, network costs and equipment costs. Selling, general and
administrative expenses include commercial costs, which consist of marketing
costs, commissions to dealers, customer care, head office and administrative
costs including wages and salary costs for senior management, human resources,
finance, fees, and computer costs.

     Games -- Costs of revenues includes manufacturing costs,
warehousing/logistics costs and royalty expense in cost of revenues.

     We are not aware of any differences under US GAAP, with the exception that
for our games business, cost of revenues includes internal research and
development expense and the amortization of capitalized internal development
under French GAAP. Under US GAAP, research and development expense is not a

                                      F-121


component of cost of revenues. Research & development expense for our games
business was approximately $119 million and $90 million in 2002 and 2001,
respectively.

  SHIPPING AND HANDLING COSTS

     Actual shipping and handling costs are included in the cost of revenues
line item with the following exceptions: at UMG, actual costs for shipping and
handling are reported in selling, general and administrative expenses; at
Cegetel, shipping and handling costs are recorded as selling, general and
administrative expenses; and at VUE, shipping and handling costs, excluding
freight and duty fees are included in selling, general and administrative
expenses. The total of these costs not included in the cost of revenue line item
amounted to E 130 million, E 135 million and E 36 million in 2002, 2001 and
2000, respectively.

     Shipping and handling costs reimbursed by customers for invoice charges
such as postage, freight packing and small order surcharges are netted against
selling expense under French GAAP. Under US GAAP, these amounts were recorded as
revenue. The total of these amounts was less than E 65 million in each of the
last two years.

  SLOTTING FEES AND COOPERATIVE ADVERTISING PROGRAMS

     Slotting fees and cooperative advertising are generally recorded as a
reduction of revenues. However, cooperative advertising at our games business
and placement costs and other price support classified and administered as
cooperative marketing costs at our music business were treated as marketing
expenses under French GAAP. Under US GAAP these expenses would have been treated
as a reduction of sales. In 2002 the impact of this difference was approximately
$94 million.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years. Advertising expense was
approximately E 1.5 billion and E 1.6 billion for the years ending December 31,
2002 and 2001, respectively. For the year ended December 31, 2000, advertising
expense was immaterial, less than E 300 million due to the effect that the
Seagram merger only occurred at the end of the year.

1.2.16 OTHER INTANGIBLE ASSETS

     Catalog -- Other intangible assets includes E 3.8 billion and E 5.4 billion
as of December 31, 2002 and 2001, respectively, for catalogs of recorded music
and music publishing rights. These amounts include acquired intangibles,
primarily those acquired with the acquisition of The Seagram Company Ltd. in
December 2000, which were recorded on the basis of third-party appraisals
obtained at that time and which were subsequently reduced as a result of an
updated appraisal in 2002. The valuations were conducted on the basis of the
discounted expected future cash flows from the entire portfolio of recordings
from artists under contract with the Company at the time of acquisition and
recordings from artists no longer under contract, but for which the Company had
continuing rights. Management believes that the catalogs are long-term assets of
indeterminate (but not indefinite) life and they are being amortized on a
straight line basis over 20 years.

     Recoupable Long-Term Artist Advances -- Other intangible assets includes
E 301 million and E 313 million as of December 31, 2002 and 2001, respectively,
for net long-term advances to artists which are recoupable against future
royalties. Advances are capitalized only in the case of "proven" artists, which
are defined as those whose past performance and current popularity supports
capitalization. Unearned balances are reviewed periodically and if future
performance is no longer assured, the balances are appropriately reserved.

                                      F-122


NOTE 3

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     The following table shows the final allocation of the purchase price of
Canal Plus:



                                                              CANAL+ GROUP
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
                                                           
Fair value of net tangible/intangible assets acquired.......    E     (7)
Goodwill recorded as an asset...............................      12,544
                                                                --------
Purchase price..............................................    E 12,537
                                                                ========


3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. This operation generated a pre-tax gain of E 15 million, which was the
difference between the selling price and the basis of the investment.

     Following the transaction, Exelon is the controlling shareholder of Sithe.
Vivendi Universal retains an interest of approximately 34%. For a period of
three years beginning in December 2002, Vivendi Universal can put to Exelon, or
Exelon can call from Vivendi Universal, Vivendi Universal's remaining interest.
As a result of the transaction, Vivendi Universal ceased to consolidate Sithe's
results of operations for accounting purposes effective December 31, 2000 and
accounted for its investment in Sithe, under French GAAP, under the cost method
from January 1, 2001 until December 19, 2002 when Vivendi Universal sold its
remaining interest.

     In April 2000, Sithe sold 21 independent power production plants to Reliant
Energy Power Generation for E 2.13 billion. This transaction generated a pre-tax
capital gain of E 415 million before E 58 million direct costs incurred in
connection with the disposal of these assets (accounting and other MIS systems
write-off, staff retention accrual, severance costs for terminated employees).

     As of December 31, 2000, total exceptional pre-tax gain related to the sale
of interest in Sithe and the sale of the GPU power plants amounted to E 372
million.

NOTE 4

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Summarized cash flow information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:



                                                             YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                              2002     2001     2000
                                                             ------   ------   ------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Net cash provided by operating activities..................  E  591   E  449   E  275
Net cash used for investing activities.....................  E (850)  E (678)  E (309)
Net cash provided by financing activities..................  E  145   E  311   E  202


NOTE 7

     On May 3, 2002 Moody's downgraded Vivendi Universal's (VU) long-term
unsecured debt rating to Baa3 from Baa2. This first downgrading did not trigger
any event of default under any VU financing arrangement. However, a $750 million
Barclays facility was subject to a mandatory prepayment in the event that VU did
not have a credit rating of at least BBB or Baa2. Despite the downgrading,
Barclays agreed to

                                      F-123


maintain this facility until its maturity date, on June 25, 2002. Given the
short remaining maturity of this facility, the waiver was never documented and
the facility was cancelled on June 25, 2002.

     Following the press release issued by Standard & Poors on May 15, 2002
(entitled "Identifying Ratings Triggers and Other Contingent Calls on
Liquidity -- Part 2") on which VU appeared as one of the companies presenting a
meaningful degree of liquidity risk linked to significant rating triggers in its
credit facilities, VU initiated negotiations with some of its main creditors in
order to remove such rating triggers and replace them with financial covenants
similar to those contained in the E 3 billion syndicated facility dated March
15, 2002.

     The instruments and facilities with significant rating triggers identified
by S&P had an aggregate principal amount of E 5.4 billion and included:

     - the total return swap on BSkyB shares, which was totally unwound on May
       14, 2002 (E 2.5 billion);

     - the preferred shares issued by Home Video Inc and subscribed to by
       Societe Generale for $200 million, which were redeemed, in June 2002 and
       replaced in June by a bilateral loan to VU without a rating trigger. The
       agreement to replace the preferred shares by a new facility and
       concurrently to remove the rating trigger provision was obtained from
       Societe Generale before May 30, 2002;

     - the total return swap on AOL Europe shares ($812 million), for which VU
       received a letter from Bayerische Landesbank on May 30, 2002 agreeing to
       remove the rating trigger;

     - two Bayerische Landesbank facilities (E 1 billion and E 200 million), for
       which VU received a letter agreeing to remove the rating trigger on May
       30, 2002;

     - the preferred shares issued by Universal Music Operations Ltd (L136
       million) and by McDougall Litell ($125 million), respectively subscribed
       to by Credit Lyonnais and BNP Paribas, which contained an early put event
       upon a rating downgrade. Both banks have given their agreement to remove
       the early put event based on a rating trigger before end of May 2002.

     No waivers with respect to any events of default needed to be obtained in
connection with the amendments to the facilities described above, as VU entered
into these negotiations with its creditors voluntarily. VU agreed to pay
approximately E 22 million in fees to various financial institutions in order to
amend the facilities described above to remove and replace the ratings
covenants.

     On July 1, 2002, Moody's downgraded VU's senior debt rating from Baa3 to
Ba1, under review with possible further downgrades and the next day S&P
downgraded VU to BBB- with negative outlook. The Moody's downgrade caused around
E 170 million of credit lines and financial guarantees subject to rating
triggers to be cancelled or replaced:

     - an undrawn Fortis back-up line of E 100 million which expired on October
       22, 2002. The downgrading of VU resulted in a draw stop of such facility;
       the utilization of this facility was lost thereafter;

     - two guarantees of $14 million each provided by VU to financial
       institutions in respect of Universal City Development Partners. The
       guarantees provided that in case of a downgrade of VU below investment
       grade, a cash collateral had to be put in place by VU to secure such
       guarantees. Such cash collateral in an amount of $13.5 million each was
       put in place in July 2002; and

     - a E 40 million lease-back transaction entered into for the financing of
       the movie Fierce Creatures. Joseph Seagram & Sons (JES) had granted a
       guarantee in December 1996 to the bank financing this lease-back. Upon
       the terms of this guarantee, the JES unsecured debt had to be rated at
       least BBB- or Baa3 for the first six years. As this obligation could not
       be met any longer by JES from 2001 because it had stopped preparing
       consolidated accounts due to the acquisition of its parent company by VU,
       the latter had started negotiations in December 2001 in which those
       negotiations were taking place with the lessor to replace the initial
       guarantee by a Vivendi Universal guarantee. Given the context, this
       guarantee, which would have contained a rating trigger provision, could
       not be provided any more. Therefore, this leasing transaction was
       terminated in December 2002.

                                      F-124


     The guarantee granted by VU in July 1998 in connection with the financing
of an incineration plant in UK (Tyseley) contained a rating trigger provision
whereby, in the event of the loss of the investment grade status by Vivendi
Universal, the L18.5 million cash collateral initially put up would be required
to be replaced by another of L42 million or an additional letter of credit.
However, this commitment was subject to a back-to back counter-guarantee by
Veolia Environnement since its inception. This obligation, the transfer of which
was decided on previously has been handed over to Veolia Environnement in
September 2002 and assumed by the latter from then on.

     No waivers were obtained at that time under any of the facilities described
above as a result of the July 1, 2002 downgradings, and there was no
consideration paid in connection with the actions described above that were
taken.

     On August 14, 2002, VU's long term unsecured debt was downgraded to B1 from
Ba1 with possible further downgrade by Moody's and to B+ from BBB- with negative
outlook by S&P. Following this further downgrade, a financial institution,
Lehman Brothers, which entered into an ISDA master agreement with VU in December
2000, accelerated the exercise of put options on Vivendi Universal shares,
entailing the payment of E 150 million in August 2002, which obligations would
have otherwise become due between September and December, at the time of the
maturity of the options. There was no waiver needed with respect to this
agreement at that time and there was no consideration paid to Lehman Brothers.

     Lastly, a guarantee provided by VU in favour of a bank of certain
obligations of Universal Studios Inc. and UCF Hotel Venture provides that the
Consolidated Net Worth of VU must be at least $40 billion. Due to the impairment
provisions recorded by VU, this requirement could not be met any longer after
March 31, 2002. The guarantee contract, which currently amounts to $7.5 million,
is still under negotiation with the bank with a view to lowering the threshold
to E 10 billion which the bank has already agreed to in principle. In the
interim, a waiver of the Consolidated Net Worth covenant has been obtained. VU
did not pay any consideration in order to obtain this waiver.

     There were no other material debt covenants that VU was not in compliance
with other than those described above.

     Bank overdrafts and other short-term borrowings are comprised of numerous
individual items. In 2002, bank overdrafts and other short-term borrowings were
comprised of E 1,501 million in fixed interest rate debt with interest rates
ranging from 1% to 6.5% and E 7,676 million in variable interest rate debt with
interest rates of Euribor +0% and Libor $+5%. In 2001, bank overdrafts and other
short-term borrowings were comprised of E 1,003 million in fixed interest rate
debt ranging with interest rates ranging from 0% to 13.9% and E 13,000 million
in variable interest rate debt with interest rates of ranging from Euribor
- -0.60% to Euribor +4%. Of the total in 2001, E 5,497 million related to Veolia
Environnement. In 2000, bank overdrafts and other short-term borrowings were
comprised of E 79 million in fixed interest rate debt with interest rates
ranging from 3.5% to 13.9% and E 14,773 million in variable interest rate debt
with interest rates ranging from Euribor +0.05% to Euribor 1.8%. Of the total in
2000, E 3,992 million related to Veolia Environnement.

     Bonds and bank loans are comprised of numerous individual items. In 2002,
bonds and bank loans were comprised of E 2,309 million in fixed interest rate
debt with interest rates ranging from 0% to 15%, maturing from 2004 to 2040 and
E 1,207 million in variable interest rate debt with interest rates ranging from
Libor L-.58% to Euribor +3%, maturing from 2004 to 2012. In 2001, bonds and bank
loans were comprised of E 6,832 million in fixed interest rate debt ranging with
interest rates ranging from 0% to 15%, maturing from 2003 to 2040 and E 8,386
million in variable interest rate debt with interest rates of ranging from
Euribor -0.27% to Euribor +8.5%, maturing from 2003 to 2018. Of the total in
2001, E 10,814 million related to Veolia Environnement. In 2000, bonds and bank
loans were comprised of E 4,654 million in fixed interest rate debt ranging with
interest rates ranging from 0.5% to 13.9%, maturing from 2002 to 2021 and
E 11,149 million in variable interest rate debt with interest rates ranging from
Euribor -0.27% to Euribor 6%, maturing from 2002 to 2018. Of the total in 2000,
E 9,409 million related to Veolia Environnement.

     Under French GAAP, proceeds from future receivables sales are accounted as
deferred income and the discounting of receivables are accounted for as a sale.
Under U.S. GAAP, the deferred income is reclassified

                                      F-125


as long-term financial debt since the discounting of receivables does not
qualify as a true sale under the provisions of SFAS 140.

     At December 31, 2001, Veolia Environnement ("VE") securitized through its
water segment accounts receivables for which it received net proceeds in the
amount of E 714 million from a Special Purpose Entity ("SPE"). VE recognized
pretax loss of E 17 million on such securitization and retained subordinate
interests of E 96 million which were recorded at their fair value. At the
closing of the securitization program in May 2002, VE received E 53 million in
cash and received receivables for E 33 million. Under US GAAP, E 322 million was
recorded as short term financial debt at December 31, 2001.

NOTE 10

10.1.3 FINANCIAL EXPENSES, PROVISIONS AND OTHER

     In 2001, financial provisions were primarily comprised of non-cash charges
required to reduce the carrying value of certain publicly traded and privately
held investments that experienced other than temporary declines. In 2000,
financial provisions related mainly to loss provisions on internet and telecom
assets.

NOTE 12

12.2 BUSINESS SEGMENT DATA

  HOLDING AND CORPORATE

     Amounts included in Holding & Corporate line items are not considered fully
allocable to individual business segments. However, certain costs that are
considered directly related to business segments are allocated on a basis
consistent with the historical practices of the Company. In the income
statement, Holding and Corporate operating expenses are primarily comprised of
occupancy costs and compensation & benefits related to corporate employees. In
the balance sheet, assets allocated to Holding & Corporate are those not
considered to be directly related to the operations of our business segments,
including:

     - Non-consolidated investments (e.g. In 2002, Dupont shares and USAi
       warrants. In 2001, Dupont shares, BSkyB remaining investment consolidated
       in French GAAP, Vinci shares, Sithe investment, VU treasury shares)

     - Non operating short-term assets such as deferred income tax

     - Subsidiaries consolidated under equity method (e.g. In 2002, Veolia
       Environnement)

     - Cash equivalents related to proceeds from disposals (In 2002, Publishing
       activities, participation in VE and EchoStar).

  OTHER

     In 2002 and 2001, Other is comprised of Vivendi Valorisation, the holder of
real estate assets that we intend to sell. In 2000, in addition to Vivendi
Valorisation, Oher also included our other real estate business, Nexity, until
its sale in July 2000 and Sithe until December 2000 when we reduced our interest
to approximately 34%.

                                      F-126


SUPPLEMENTARY FINANCIAL DATA

     At the request of the COB (French Securities and Exchange Commission), and
to enable shareholders to clearly assess the impact of the consolidation methods
used, we provide, for strictly guidance purposes, the following supplementary
financial data in condensed form, concerning the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements, together with
financial statements for Elektrim Telekomunikacja and Elektrim SA.

1. FULLY CONSOLIDATED COMPANIES

     The following financial data indicates the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements of Vivendi
Universal. Vivendi Universal fully consolidates these two companies, with
controlling interests of 59% (85% as from January 23, 2003 following acquisition
of an additional 26% interest from the BT Group) and 51% respectively, and
corresponding ownership interests of 44% (70% as from January 23, 2003) and 35%
respectively.

1.1 CONDENSED STATEMENT OF INCOME



                                                   YEAR ENDED             YEAR ENDED
                                                DECEMBER 31, 2002      DECEMBER 31, 2001
                                               -------------------     -----------------
                                               CEGETEL      MAROC      CEGETEL    MAROC
                                                GROUP      TELECOM      GROUP    TELECOM
                                               -------     -------     -------   -------
                                                        (IN MILLIONS OF EUROS)
                                                                     
Revenues.....................................    7,067       1,487       6,384     1,013
Operating Income.............................    1,449         468         928       387
Income before exceptional items, income
  taxes, goodwill amortization, equity
  interest and minority interest.............    1,409         479         799       365
Income before goodwill amortization, equity
  interest and minority interest.............      562(a)      306         867       265
Income (loss) before minority interest
  recorded by Vivendi Universal..............      109(b)     (109)(c)     714      (523)(c)
                                               -------     -------     -------   -------
Net income (loss)............................  E    50     E  (233)    E   319   E  (638)
                                               -------     -------     -------   -------


     As at December 31, 2002, Cegetel Group income includes a corporate income
tax expense of E 846 million (a), and an impairment of goodwill for Telecom
Developpement, consolidated using the equity method, for E 206 million (b).
Income for Maroc Telecom includes goodwill impairment relating to this company,
for an amount of E 300 million at December 31, 2002, and E 700 million at
December 31, 2001 (c).

1.2 CONDENSED BALANCE SHEET



                                                   DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
                                                                     
Long-term assets.................................    4,565     2,352     5,582     2,736
Current assets...................................    2,625     1,157     2,175(d)     833
  including cash and cash-equivalents............      595       575        28       198
                                                   -------   -------   -------   -------
Total assets.....................................  E 7,190   E 3,509   E 7,757   E 3,569
                                                   =======   =======   =======   =======


                                       S-1




                                                   DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
                                                                     
Shareholders' equity.............................    1,214     1,494     1,420     1,765
Minority interests...............................    2,005       936     1,722       804
Long-term debt...................................      692       205       709       259
Other non-current liabilities and accrued
  expenses.......................................      351        12     1,116        14
Bank overdrafts and other short-term
  borrowings.....................................      109        30       290        57
Other short-term liabilities.....................    2,819       832     2,500       670
                                                   -------   -------   -------   -------
Total liabilities and shareholders' equity.......  E 7,190   E 3,509   E 7,757   E 3,569
                                                   -------   -------   -------   -------


- ---------------

(d) After elimination of the loan of E 609 million by the Cegetel Group to
    Vivendi Universal at this date.

1.3 CONDENSED CASH FLOW STATEMENT



                                                     YEAR ENDED           YEAR ENDED
                                                 DECEMBER 31, 2002    DECEMBER 31, 2001
                                                 ------------------   ------------------
                                                 CEGETEL     MAROC    CEGETEL     MAROC
                                                  GROUP     TELECOM    GROUP     TELECOM
                                                 --------   -------   --------   -------
                                                         (IN MILLIONS OF EUROS)
                                                                     
Cash flow from operating activities............     2,120      770       1,678      410
Cash flow from investing activities............      (497)    (225)       (675)    (165)
Cash flow from financing activities............    (1,056)    (149)     (1,002)     (64)
Effect of foreign exchange rate changes........        --      (18)         --       (5)
                                                 --------   ------    --------   ------
Cash and cash-equivalents......................  E    567   E  378    E      1   E  176
                                                 --------   ------    --------   ------


2. COMPANY ACCOUNTED FOR USING THE EQUITY METHOD

     The following financial data summarize the financial statements of Elektrim
Telekomunikacja. Vivendi Universal accounts for this company using the equity
method, with a controlling and ownership interest of 49%. In 2002, Elektrim
Telekomunikacja consolidated PTC using the proportionate method, this company
having previously been accounted for using the equity method, following the
contribution by Elektrim SA of its interest in PTC to Elektrim Telekomunikacja
in September 2001.

     As indicated in note 13 to the consolidated financial statements (footnote
No. 8), Ymer acquired a 2% interest in Elektrim Telekomunikacja in September
2001, after purchasing the corresponding shares from Elektrim. Ymer is a Belgian
company independent from Vivendi Universal.

     Vivendi Universal had previously acquired non-voting shares in an
investment company, operating as a mutual fund, which enabled Ymer to make its
acquisition, for an amount of E 105 million.

     Vivendi Universal is by no means committed to acquire the shares owned by
Ymer. Similarly, Ymer has neither a right or obligation to sell those shares to
Vivendi Universal and is free to sell them to a third-party at any time. Ymer is
consequently not consolidated by Vivendi Universal. However, the economic
exposure is carried by Vivendi Universal, which consequently records valuation
allowances where appropriate, on the basis of quarterly values communicated by
the mutual fund manager.

     The value of the initial investment by Vivendi Universal in the investment
company has been written down. The net carrying value was E 103 million at
December 31, 2001 and E 38 million at December 31, 2002.

                                       S-2


2.1 CONDENSED STATEMENT OF INCOME



                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002           2001
                                                              ---------       -------
                                                              (IN MILLIONS OF EUROS)
                                                                        
Revenues....................................................      749            59
Operating Income............................................      125           (26)
Income before exceptional items, income taxes, goodwill
  amortization, equity interest and minority interest.......     (132)          (55)
Income before goodwill amortization, equity interest and
  minority interest.........................................     (163)          (55)
                                                               ------           ---
Net income (loss)...........................................   (1,063)          (57)
                                                               ------           ---


2.2 CONDENSED BALANCE SHEET



                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Long-term assets............................................     2,987         3,027
Current assets..............................................       176           559
  including cash and cash-equivalents.......................         8             5
                                                               -------       -------
Total assets................................................   E 3,163       E 3,586
                                                               =======       =======
Shareholders' equity........................................     1,428         2,699
Long-term debt..............................................       712           160
Other non-current liabilities and accrued expenses..........        --           192
Bank overdrafts and other short-term borrowings.............       818(a)        485(b)
Other short-term liabilities................................       205            50
                                                               -------       -------
Total liabilities and shareholders' equity..................   E 3,163       E 3,586
                                                               -------       -------


- ---------------

(a) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (E 322 million, net of provision).

(b) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

2.3 CONDENSED CASH FLOW STATEMENT



                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                               2002           2001
                                                              -------       ---------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Cash flow from operating activities.........................     na              71
Cash flow from investing activities.........................     na            (650)
Cash flow from financing activities.........................     na             589
                                                                ---          ------
Cash and cash-equivalents...................................     na          E   10
                                                                ---          ------


- ---------------

na:  Data not available.

3. UNCONSOLIDATED COMPANY

     The following financial data concerning Elektrim SA have been extracted
from the quarterly report on the financial statements for the fourth quarter of
2002 published by this company. As of December 31, 2001, Elektrim SA accounted
for Elektrim Telekomunikacja using the equity method, with a 49% controlling and

                                       S-3


ownership interest. Elektrim SA was declared insolvent in December 2001, and
discharged from receivership in October 2002.

     As indicated in note 4.2 to the consolidated financial statements (footnote
No. 2), in addition to its 10% interest in the share capital of Elektrim SA,
Vivendi Universal entered into a carrying agreement with a third party for an
additional 4.99% interest in Elektrim SA. For this purpose, as indicated in note
10.2.5 to the consolidated financial statements (footnote No. 3), Vivendi
Universal acquired non-voting shares in an investment company operating as a
mutual fund, to an amount of E 58 million. The value of the total investment by
Vivendi Universal in Elektrim SA (direct + carrying agreement) amounts to E 154
million gross, for which valuation allowances have been accrued according to
evolution of the market price of Elektrim SA shares. The net value of this
investment was E 33 million at December 31, 2001, and E 12 million at December
31, 2002. The valuation allowances so accrued have reduced the net carrying
value of the Vivendi Universal investment to an amount not exceeding its share
in the consolidated shareholders' equity of Elektrim SA at these dates. In
accordance with the terms of the carrying agreement set up, and at the request
of the third party, Vivendi Universal acquired the capital and current account
of MMD, holding a 4.99% interest in Elektrim SA at the end of February 2003 for
E 54 million. Vivendi Universal simultaneously collected reimbursement of the
mutual fund shares in which it had invested for an amount of E 58 million. Given
the valuation allowances already accrued, this operation will have no impact on
Vivendi Universal's financial statements in 2003.

3.1 CONDENSED STATEMENT OF INCOME



                                                                   ELEKTRIM SA
                                                              ----------------------
                                                               2002           2001
                                                              -------        -------
                                                              (IN MILLIONS OF EUROS)
                                                                       
Revenues....................................................    618            993
Operating Income............................................    (47)          (131)
Income before tax...........................................   (163)          (146)
                                                               ----           ----
Net income (loss)...........................................   (178)          (126)
                                                               ----           ----


3.2 CONDENSED BALANCE SHEET



                                                                   ELEKTRIM SA
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
                                                                     
Long-term assets............................................     1,202        1,348
Current assets..............................................       535          808
  including cash and cash-equivalents.......................       148          278
                                                               -------      -------
Total assets................................................   E 1,737      E 2,156
                                                               =======      =======
Shareholders' equity........................................       288          569
Long-term debt..............................................       581          156
Short-term liabilities......................................       868        1,431
                                                               -------      -------
Total liabilities and shareholders'equity...................   E 1,737      E 2,156
                                                               -------      -------


                                       S-4


3.3 CONDENSED CASH FLOW STATEMENT



                                                                    ELEKTRIM SA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
                                                                      
Cash flow from operating activities.........................      (14)          214
Cash flow from investing activities.........................      (50)          196
Cash flow from financing activities.........................      (47)         (239)
                                                               ------        ------
Cash and cash-equivalents...................................   E (111)       E  171
                                                               ------        ------


                                       S-5

EX-1.1

EXHIBIT 1.1

“STATUTS”

(Memorandum and

Articles of Association)

Updated January 29, 2003

(harmonized in accordance with the French Economic
Regulation Act of may, 15, 2001)

Public limited company (Société Anonyme) with share capital of 5,888,050,707 euros
Registered Office : 42 Avenue de Friedland – 75008 Paris
Company Registration No. 343 134 763 Paris

TABLE OF CONTENTS

VIVENDI UNIVERSAL RESTATED CORPORATE STATUTS

DUAL CURRENCY TERM AND REVOLVING CREDIT FACILITY

RESTATED CREDIT AGREEMENT

LOAN AGREEMENT

FACILITY AGREEMENT

INDENTURE

LETTER AGREEMENT

EMPLOYMENT AGREEMENT

SUBSIDIARIES

CONSENT OF RSM SALUSTRO REYDEL & BARBIER FRINAULT

CONSENT OF RSM SALUSTRO REYDEL

302 CERTIFICATION

906 CERTIFICATION

2

TABLE OF CONTENTS

Part I:	Legal Form – Purpose – Registered Office	page 3
Part II:	Share Capital – Shares	page 4
Part III:	Board of Directors, General Management and Audit	page 5
Part IV:	Shareholders’ Meetings	page 12
Part V:	Financial Statements – Allocation and Distribution of Net Income	page 15
Part VI:	Dissolution – Extension – Disputes	page 16

3

PART I

LEGAL FORM - PURPOSE - REGISTERED OFFICE

ARTICLE 1 - Legal Form - Corporate Name - Legislation - Term

The Company, which is called Vivendi Universal, is a société anonyme established under French law and formed in Paris by a deed dated 11 December 1987. It is governed by current and future legislative and regulatory provisions as well as by these Corporate Statutes.

The term of the company shall expire on 17 December 2086, except in the event of its early dissolution or extension to be decided by an Extraordinary Shareholders’ Meeting.

ARTICLE 2 - Purpose

The Company’s purpose is, directly and indirectly, in France and in all countries:

- to engage in the following businesses, for individual, business and public sector customers:

– any direct or indirect communications activities, and in particular the Internet, multimedia and audiovisual activities, imaging, cinema, music, advertising, press, publishing and telecommunications, and any interactive services and products related to the foregoing;

– any activities related, directly or indirectly, to the environment, and in particular water, wastewater treatment, energy, transport, waste management and any related products and services, whether or not for collective use;

- the management and acquisition, by way of subscription, purchase, contribution, exchange or through any other means, of shares, bonds and any other securities of companies already existing or to be formed and the right to sell such interests;

- and more generally, any commercial, industrial and financial transactions and any transactions related to movable or immovable property which are directly or indirectly related to the above purpose.

4

ARTICLE 3 - Registered Office

The registered office is at 42, avenue de Friedland, Paris (8th district).

The registered office may be transferred to any other place in accordance with the legislative and regulatory provisions in force.

PART II

SHARE CAPITAL - SHARES

ARTICLE 4 - Share Capital

The share capital is 5,888,050,707 euros divided into 1,070,554,674 shares having a nominal value of 5.50 euros, all of the same class and fully paid up.

The share capital may be increased, reduced, amortized or divided by a decision adopted by the competent Shareholders’ Meeting.

ARTICLE 5 - Shares

1.  Shares may, at the shareholders’ election, be in the form of registered shares or bearer shares, in the absence of legal provisions to the contrary.

2.  The Company may at any time, in accordance with the legal and regulatory provisions in force, request the institution responsible for the settlement of share dealings for information relating to shares of the Company which confer a voting right in its Shareholders’ Meetings, whether immediately or in the future.

Failure by shareholders or intermediaries to comply with their obligation to provide the information referred to above may lead to the suspension or suppression of dividend and/or voting rights; as permitted by law.

3.  Any person, acting alone or in concert, who directly or indirectly holds a fraction of the capital, voting rights or securities subsequently convertible into shares of the Company, which is equal to or in excess of 0.5% or a multiple of this fraction, shall be obliged to notify the Company by registered letter within fifteen days of exceeding any of these thresholds, of the total number of shares, voting rights or securities subsequently convertible into shares, which that person directly or indirectly holds, whether alone or in concert.

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Failure to comply with this provision shall be penalised in accordance with the legal provisions, at the request of one or more Shareholders holding at least 0.5% of the Company’s share capital, recorded in the minutes of the Shareholders’ Meeting.

Any person, acting alone or in concert, shall also be obliged to inform the Company within fifteen days when the percentage of the share capital or voting rights it holds becomes lower than any of the thresholds mentioned in the first sub-paragraph of this paragraph.

ARTICLE 6 - Rights and Obligations Attached to Shares

1.     Each share carries a right of ownership of the Company’s assets and liquidation surplus in proportion to the fraction of the authorised share capital it represents.

2.     Whenever it is required to hold a certain number of shares in order to exercise a right, Shareholders who do not own the said number of shares shall be responsible, if necessary, for grouping the shares corresponding to the required quantity.

3.     The subscription right attached to shares belongs to the beneficial owner.

4.     Ownership of a share implies acceptance of the Company’s Corporate Statutes and of decisions taken by Shareholders’ Meetings and by the Board of Directors acting on powers delegated by the Shareholders’ Meeting.

PART III

BOARD OF DIRECTORS – GENERAL MANAGEMENT AND SUPERVISION

Chapter 1: Board of Directors

ARTICLE 7 - Composition

The Company shall be managed by a Board of Directors, which shall be composed of no less than three and no more than eighteen members, subject to the exception set forth by law in the event of a merger.

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ARTICLE 8 - Directors

1.     The maximum term of office of Directors shall be four years subject to the provisions relating to age limits. This term may be renewed.

2.     The term of office of a Director shall expire at the conclusion of the Shareholders’ Meeting called to approve the accounts for the financial year ended, and which is held during the year in which his term of office expires.

3.     At the conclusion of each Annual Shareholders’ Meeting, the number of Directors who have reached the age of 70 on the closing date of the financial year the accounts of which are approved by the meeting, shall not be more than one fifth of the number of Directors in office. When this limit is exceeded, the oldest Directors shall be deemed to have resigned at the end of said Shareholders’ Meeting.

4.     In any event, a Director’s term of office shall expire at the end of the Shareholders’ Meeting called to approve the accounts for the financial year in which he reaches the age of 75. However, honorary Chairmen appointed by the Board of Directors may continue after that age to attend meetings of the Board of Directors in an advisory capacity.

5.     Provisions regarding the age limit shall be applicable to the permanent representatives of legal persons acting as directors.

6.     In the event of a vacancy of one or more directorships because of death or resignation, the Board of Directors may make provisional appointments between two Shareholders’ Meetings.

7.     Each Director must own at least seven hundred and fifty shares during his term of office. These shares are to be held in a registered account.

8.     By way of remuneration for their work, Directors shall receive a fixed annual amount of directors’ fees. The amount of these directors’ fees shall be fixed by the Shareholders’ Meeting.

The Board shall allocate the amount of these directors’ fees among the Directors, at its discretion. It may allocate a special amount of directors’ fees to Directors who are members of Committees.

It may also grant exceptional remuneration in respect of assignments or powers entrusted to Directors. Such remuneration shall be subject to the legal provisions regarding agreements requiring the prior approval by the Board of Directors.

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ARTICLE 9 – Director Appointed by the Employees

1.     If the percentage of the share capital held by employees and retired employees of the Company and its subsidiaries under the Group Savings Scheme set up by the Company represents more than 3% of the Company’s authorised share capital, a Director shall be appointed from among the employees who are members of the Supervisory Board of the Company’s mutual funds of which at least 90% of the assets comprise Company shares. The Director representing the employee shareholders shall not be taken into account for the purpose of calculating the maximum number of members of the Board of Directors set out in Article 7.

Upon a proposal from the Chairman of the Board of Directors, an employees’ representative may be appointed as a Director by an Ordinary Shareholders’ Meeting, provided that his office will end automatically upon the appointment of a Director pursuant to the previous sub-paragraph.

2.     If for any reason whatsoever, a Director appointed by the Shareholders’ Meeting under the preceding sub-paragraph 1 ceases to be both an employee of the Company or one of its subsidiaries and, as the case may be, a member of a mutual fund defined above, said Director shall be deemed to have resigned upon the expiration of a term of one month from the date on which he ceased to fulfill either of these criteria.

3.     In this case or in case of death or resignation, the Board of Directors may provisionally appoint a Director between two Shareholders’ Meetings provided that the new Director fulfils the two criteria set out above.

4.     Prior to the Ordinary Shareholders’ Meeting called to appoint a Director representing the employee shareholders pursuant to sub-paragraph 1 of paragraph 1 of this Article, said Director shall be nominated in accordance with the following procedure.

• Candidates for this office shall be nominated by the mutual fund’s Supervisory Board and shall be selected from among the Supervisory Board’s members at the request of the Chairman of the Board of Directors.

• The Supervisory Board’s decision shall be recorded in minutes indicating the list of candidates and the number of votes cast in favor of each candidate, as well as the number of candidates validly designated by the Supervisory Board, whose number shall be at least equal to twice the number of Directors to be appointed.

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• The minutes and the list of candidates referred to above shall be attached to the notice convening the Shareholders’ Meeting.

5.     Each Director representing the employee shareholders must hold one share through a mutual fund defined in the present Article, or an equivalent number of units of said fund. If, upon the date of his appointment the Director does not hold one share or an equivalent number of units of the fund, or if during his term of office he ceases to hold one share or an equivalent number of units of the fund, the Director shall be deemed to have resigned notwithstanding the fact that he remains an employee of the Company.

ARTICLE 10 - Meetings - Deliberations of the Board

1.     The Board of Directors shall meet at the registered office or in any other place indicated in the notice of meeting, as often as the interests of the Company require, upon being convened by its Chairman.

2.     It shall also meet when Directors representing at least one third of the Directors or the Chief Executive Officer, request the Chairman to convene a meeting upon a specific agenda, on condition that it has not met for more than two months.

In the event that the Chairman is unable to act, meetings of the Board of Directors may be convened either by at least one third of its members, or, if he is a Director, by the Chief Executive Officer or a Co-Chief Operating Officer.

3.     Resolutions of the Board of Directors may be adopted by way of videoconference or other means of communication, subject to the conditions and limitations provided by the regulations in force. Members who take part in meetings by way of videoconference or by any other means of communication permitted by law shall be deemed to be present for the purposes of calculating the quorum and majority.

In order for decisions to be valid, at least half of the members of the Board must take part in the meeting. Decisions shall be taken by a majority of the members participating or represented. In the event of a tie, the Chairman shall have a casting vote.

4.     Any Director can grant another Director the power to represent him or to vote in his place in the deliberations of the Board, by way of any written or electronic medium. However, a Director may represent only one other Director.

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5.     The Chief Executive Officer shall take part in meetings of the Board.

On the initiative of the Chairman of the Board of Directors, members of the Company’s management, the Statutory Auditors or other persons from outside the Company who have special expertise in relation to the matters appearing on the agenda, may attend all or part of Board meetings.

6.     The Board may appoint a Secretary who is not required to be one of its members.

7.     Minutes of the deliberations shall be prepared and copies or excerpts shall be delivered and certified in accordance with the law.

ARTICLE 11 - Powers and Organization

1.     The Board of Directors shall determine the direction in which the Company’s business shall develop and shall oversee such development. Subject to the powers expressly attributed to Shareholders’ Meetings and subject to the limitations of the Company’s purpose, the Board shall consider any matter affecting the successful running of the Company and shall take decisions to regulate the business affecting it.

2.     The Board of Directors shall elect a Chairman from among its members, who must be a natural person. The Board of Directors shall fix his remuneration and his term of office, which may not exceed his term of office as a Director.

3.     The Chairman shall represent the Board of Directors. He shall organize and direct its operations and shall ensure the smooth functioning of the Company’s governing bodies, and that the Directors are in a position to carry out their tasks.

4.     Upon a proposal from the Chairman, the Board of Directors may decide to appoint a Vice-Chairman. The Board shall fix his term of office, which shall not exceed his term of office as a Director.

5.     In the event of the Chairman’s temporary inability to act or his death, the Board of Directors may delegate the office of Chairman to the Vice-Chairman or to a Director.

In the event of a temporary inability to act, this delegation of powers shall be of limited duration. In the event of death, it shall continue until the election of a new Chairman.

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6.     The Chairman’s term of office shall expire no later than at the close of the Shareholders’ Meeting called to approve the financial statements for the fiscal year in which he reaches the age of 65. However, the Board may decide that his term of office shall expire no later than at the close of the Shareholders’ Meeting called to approve the financial statements for the fiscal year in which he reaches the age of 67.

7.     The Board may also decide to create Committees responsible for reviewing matters referred to them either by the Board of Directors or by the Chairman.

8.     Upon a proposal from the Chairman, the Board of Directors may appoint one or two Independent Advisors.

Independent Advisors shall be called to meetings of the Board of Directors, in which they shall participate in an advisory capacity; however, their absence shall not affect the validity of the deliberations. They shall be appointed for a maximum term of four years and their term of office may be renewed or terminated at any time. They may be chosen from among Shareholders or non-Shareholders and may receive remuneration fixed annually by the Board of Directors.

9.     The Board may grant, to one of its members or to third parties, special powers for one or more specific purposes, with or without the right to sub delegate any such special powers in whole or in part.

Chapter 2: General Management

ARTICLE 12- General Management

1.     The General Management of the Company shall be the responsibility of either the Chairman of the Board of Directors, who shall then have the title of Chairman and Chief Executive Officer, or a natural person appointed by the Board of Directors and having the title of Chief Executive Officer.

The Board of Directors may make this choice only if at least two thirds of its members are present.

The decision of the Board of Directors as to the manner in which Shareholders’ Management shall be exercised shall be taken by a two-thirds majority of the members present or represented.

Shareholders and third parties shall be informed of this choice in the manner set out in the legal provisions in force.

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2.     When the General Management of the Company is exercised by the Chairman of the Board of Directors, the following provisions relating to the Chief Executive Officer shall apply to him.

3.     The Chief Executive Officer shall be invested with the broadest powers to act in all circumstances on behalf of the Company. He shall exercise these powers subject to the limitations of the Company’s purpose and subject to those powers expressly attributed by law to Shareholders’ Meetings and to the Board of Directors. He shall represent the Company in its relations with third parties and in legal proceedings.

The Board of Directors shall fix the remuneration and the term of office of the Chief Executive Officer. This term shall not exceed the term of office of the Chairman nor, if applicable, his term of office as Director.

4.     On a proposal from the Chief Executive Officer, the Board of Directors may, subject to the legal restrictions, appoint one or more natural persons to assist the Chief Executive Officer, who shall have the title of Co-Chief Operating Officer.

The Board of Directors, in agreement with the Chief Executive Officer, shall determine the scope and the duration of the powers conferred upon the Co-Chief Operating Officers, which shall not, if applicable, exceed that of their term of office as Directors. The Board of Directors shall determine their remuneration. Unless decided otherwise, Co-Chief Operating Officers shall have the same powers as regards third parties as the Chief Executive Officer.

The Chief Executive Officer and the Co-Chief Operating Officers shall have the power to delegate their powers in part to as many representatives as they may see fit.

5.     The term of office of the Chief Executive Officer and the Co-Chief Operating Officers shall expire no later than at the close of the Shareholders’ Meeting called to approve financial statements for the fiscal year in which he [or they] reach the age of 65. However, the Board of Directors may decide that their term of office shall end at the latest, at the end of the Shareholders’ Meeting called to approve the accounts for the financial year in which he [or they] reach the age of 67.

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Chapter 3: Audit of the Company

ARTICLE 13 – Statutory Auditors

1.     The Company is audited by Statutory Auditors, who are appointed and carry out their duties in accordance with applicable law.

PART IV. SHAREHOLDERS’ MEETINGS

ARTICLE 14 - Shareholders’ Meetings

1.     Shareholders’ Meetings are convened and deliberate in accordance with applicable law.

2.     Shareholders’ Meetings shall take place at the registered office or in any other location specified in the notice of convocation. The Board may decide, upon issuing the notice, to broadcast the Shareholders’ Meeting publicly in its entirety by videoconference and/or tele-transmission. If applicable, this decision will be indicated in any notices of the meeting.

3.     Two members of the Elected Workers Council appointed by the Elected Workers Council may also take part in Shareholders’ Meetings. At their request, they must be heard during any deliberations requiring a unanimous decision of the Shareholders. The Chief Executive Officer or any other person to whom powers have been granted shall inform the Elected Workers Council by any means of the date and place of Shareholders’ Meetings called.

4.     Regardless of the number of shares a Shareholder owns, he shall have the right, upon proving his identity, to take part in Shareholders’ Meetings, subject to the following conditions:

– holders of registered shares must be included in the register maintained by the Company;

– holders of bearer shares must file a certificate, at the place mentioned in the notice of meeting, of the non-transferability of the shares held in their name until the date of the Shareholders’ Meeting, issued by an authorised financial intermediary,

and, if applicable, the Company must be supplied with all necessary documents to prove his identity in accordance with applicable law.

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These formalities must be completed before 3 p.m. Paris time on the day before the Shareholders’ Meeting, unless a shorter period is specified in the notice of convocation or compulsory legal provisions in force shorten such period.

Express revocation of the member’s registration or of the certificate of non-transferability may only take place in accordance with the compulsory legal provisions in force.

5.     Shareholders’ Meetings shall be chaired by the Chairman of the Board of Directors, or, in his absence, by the Vice-Chairman, or in the absence of both of them, by a Director specially appointed for the purpose by the Board of Directors. Failing such appointment, the Shareholders’ Meeting itself shall elect its Chairman. The role of Scrutineers is performed by the two members of the meeting who are present and accept such appointment holding the greatest number of votes.

6.     The committee shall appoint a Secretary who may or may not be a Shareholder. An attendance register shall be maintained in accordance with the conditions provided by law.

7.     Copies or excerpts of the minutes of Shareholders’ Meetings shall be validly certified by the Chairman of the Board or by a Co-Chief Operating Officer, or by the Secretary of the Shareholders’ Meeting.

ARTICLE 15 - Voting Rights

1.     In all Shareholders’ Meetings, the voting rights attached to shares shall belong to the holder of the bare legal title of the shares.

2.     Shareholders shall be entitled, under the conditions provided by applicable laws and regulations, to send in their proxy and voting forms for any Shareholders’ Meeting by post, whether in paper form or, by resolution of the Board of Directors published in the notice of meeting, by tele-transmission.

The Board of Directors may also decide that shareholders shall be entitled to participate and vote at all Shareholders’ Meetings by videoconference and/or tele-transmission, under the conditions provided by applicable regulations. In this case, shareholders participating in the Shareholders’ Meeting by videoconference or by other means of telecommunication in the manner provided by the applicable regulations shall be deemed to be present for the purposes of calculating the quorum and majority.

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3.     Each shareholder shall have a number of votes equal to the number of shares he owns or represents, subject to the specific provisions of paragraph 4 below.

4.     The number of voting rights held by each shareholder (and where applicable his proxy(ies)) at Shareholders’ Meetings shall be:

(a)     equal to the number of voting rights attached to the shares held up to the limit of 2% of the total number of voting rights existing in the Company,

(b)     calculated for the remainder, on the basis of the number of voting rights present or represented at the Shareholders’ Meeting, through application of the percentage exceeding 2% of said number of voting rights present or represented (and calculated in accordance with the adjustment resulting from this provision).

The calculation to be made during each Shareholders’ Meeting is described in the formula set out in the schedule to these Corporate Statutes. For the purposes of this calculation, each percentage shall be calculated to two decimal points and the number of voting rights obtained shall be rounded up to the nearest whole number.

The voting rights held by each shareholder shall be pooled with those assimilated to his voting rights within the meaning of Article L.233-9 of the French Commercial Code. However, no pooling shall be applied to the voting rights attached to the shares in respect of which a proxy has been given in accordance with the provisions of L.225-106, paragraph 7 of the French Commercial Code.

This provision shall not be applicable to any Shareholders’ Meeting where a quorum of 60% or more is present.

PART V

FINANCIAL STATEMENTS - ALLOCATION AND DISTRIBUTION OF NET INCOME

ARTICLE 16 – Annual Accounts

1.     The Company’s fiscal year shall commence on January 1 and end on December 31.

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2.     At the end of each fiscal year, the Board of Directors shall prepare the inventory and the annual accounts, in the manner provided by law.

ARTICLE 17- Allocation and Distribution of Net Income

1.     The statement of income shows the revenues and expenses for the financial year, and net income for the year is indicated as the difference, after deducting amortization, depreciation and provisions.

Out of profits for the financial year less, where applicable, losses sustained in earlier years, there shall be deducted no less than 5% in order to create the legal reserve fund. This deduction shall cease to be mandatory when the reserve fund reaches 10% of the share capital. Such deduction shall be resumed when, for any reason, the legal reserve shall have become less than one-tenth of the share capital.

The Shareholders’ Meeting may decide that such amounts as the Board of Directors shall see fit, shall be transferred to provident funds or to voluntary, ordinary or extraordinary reserve funds, or to retained earnings, or distributed.

2.     The distributable income is comprised of the net income for the fiscal year less losses sustained in earlier years and amounts that must be allocated to reserves in accordance with the law or the Corporate Statutes, and may be increased by retained earnings.

Dividends shall be deducted on a priority basis from net income for the fiscal year.

Except in case of a reduction in capital, no distribution may be made to Shareholders when Shareholders’ Equity would become, as a result of such distribution, less than the amount of the capital plus reserves, the distribution of which is not permitted by applicable law or these Corporate Statutes.

Revaluation surpluses may not be distributed but may be capitalized in whole or in part.

The Shareholders’ Meeting may decide to distribute amounts deducted from available reserves by indicating expressly the reserve items from which the said amounts shall be deducted.

The terms of payment of dividends shall be determined by the Shareholders’ Meeting, or, failing such determination, by the Board of Directors. Dividends

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must be paid no later than nine months after the end of the fiscal year, unless an extension is granted by court order.

The Annual Shareholders’ Meeting may grant each shareholder the right to choose between payment in cash or in shares, in respect of all or part of the interim or final dividend distributed.

Dividends unclaimed for a term of five years after the declaration date shall no longer be payable.

PART VI

EXTENSION - DISSOLUTION - DISPUTES

ARTICLE 18 - Extension - Dissolution - Liquidation

1.     No later than one year before the end of the term of the Company, the Board of Directors shall convene an Extraordinary Shareholders’ Meeting in order to decide whether the term of the Company is to be extended.

2.     Except in the event of judicial dissolution provided by law, the Company shall be dissolved upon the expiry of the term set forth by the Corporate Statutes or by decision of the Shareholders’ Meeting.

3.     The Shareholders’ Meeting shall determine the mode of liquidation and shall appoint one or more liquidators whose powers it shall determine.

ARTICLE 19 - Disputes

All disputes which may arise during the term of the Company or during its liquidation, whether between the Shareholders and the Company or between the Shareholders themselves in respect of corporate matters, shall be referred to the competent courts.

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Schedule

Application of the provisions of Article 15 of the Corporate Statutes regarding the number of voting rights held by each shareholder at Shareholders’ Meetings:

Where:

T = the total number of voting rights attached to all shares comprising the share capital

Yn = the total number of voting rights attached to the shares of Shareholders present or represented (n), up to 2% of T per shareholder, and therefore not subject to any limitation

a, b, c = the percentage of the voting rights (by reference to T) held by A, B, C, etc. in excess of 2% for each of them

X = the total number of votes which may be cast at a Shareholders’ Meeting taking into account the limitations set forth in the Corporate Statutes.

This rule may be expressed as follows:

     X = Yn + aX + bX + cX

Accordingly, the total number of votes which may be cast during a meeting (X) is equal to:

     X = Yn/(1-a-b-c)

By calculating X it is possible to determine, for each of Shareholders A, B and C, the total number of votes attached to voting rights exceeding 2% (corresponding to percentages a, b, c, etc.). For each of them, it is necessary to add 2% of T, i.e. the votes attached to voting rights not subject to any limitation.

EX-4.7 4 y87781exv4w7.txt DUAL CURRENCY TERM AND REVOLVING CREDIT FACILITY Exhibit 4.7 AGREEMENT DATED 13TH MAY, 2003 E2,500,000,000 DUAL CURRENCY TERM AND REVOLVING CREDIT FACILITY FOR VIVENDI UNIVERSAL S.A. ARRANGED BY BNP PARIBAS CDC FINANCE - CDC IXIS CITIBANK INTERNATIONAL PLC CREDIT AGRICOLE INDOSUEZ CREDIT LYONNAIS GOLDMAN SACHS INTERNATIONAL NATEXIS BANQUES POPULAIRES THE ROYAL BANK OF SCOTLAND PLC SG INVESTMENT BANKING SOCIETE GENERALE as Facility Agent and Security Agent THIS FACILITY AGREEMENT IS TO BE ENTERED INTO WITH THE BENEFIT OF AND SUBJECT TO THE TERMS OF THE SECURITY SHARING AGREEMENT ALLEN & OVERY Paris CONTENTS

CLAUSE PAGE 1. Interpretation.............................................................................. 1 2. Facility.................................................................................... 36 3. Purpose..................................................................................... 37 4. Conditions Precedent........................................................................ 38 5. Drawdown.................................................................................... 39 6. Repayment................................................................................... 40 7. Prepayment and Cancellation................................................................. 41 8. Interest Periods............................................................................ 49 9. Interest.................................................................................... 50 10. Currency of Loans........................................................................... 52 11. Payments.................................................................................... 54 12. Taxes....................................................................................... 55 13. Market Disruption........................................................................... 58 14. Increased Costs............................................................................. 59 15. Illegality.................................................................................. 60 16. Guarantee................................................................................... 61 17. Release of Security and Additional Guarantors............................................... 64 18. Representations and Warranties.............................................................. 67 19. Undertakings................................................................................ 76 20. Financial Covenants......................................................................... 107 21. Default..................................................................................... 112 22. The Agents and the Mandated Lead Arrangers.................................................. 117 23. Fees........................................................................................ 124 24. Expenses.................................................................................... 125 25. Stamp Duties................................................................................ 125 26. Indemnities................................................................................. 125 27. Evidence and Calculations................................................................... 127 28. Amendments and Waivers...................................................................... 127 29. Changes to the Parties...................................................................... 129 30. Disclosure of Information................................................................... 132 31. Set-Off..................................................................................... 133 32. Pro Rata Sharing............................................................................ 133 33. Severability................................................................................ 134 34. Counterparts................................................................................ 134 35. Notices..................................................................................... 135 36. Language.................................................................................... 138 37. Jurisdiction................................................................................ 138 38. Waiver of Immunity.......................................................................... 139 39. Waiver of Jury Trial........................................................................ 140 40. Governing Law............................................................................... 140

THIS AGREEMENT is dated 13th May, 2003 and made BETWEEN: (1) VIVENDI UNIVERSAL S.A. (the COMPANY); (2) THE COMPANY AND ITS SUBSIDIARIES listed in Part 1 of Schedule 1 (Original Parties) as guarantors (in this capacity, each an ORIGINAL GUARANTOR and together the ORIGINAL GUARANTORS); (3) BNP PARIBAS, CDC FINANCE - CDC IXIS, CITIBANK INTERNATIONAL PLC, CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS, GOLDMAN SACHS INTERNATIONAL, NATEXIS BANQUES POPULAIRES, THE ROYAL BANK OF SCOTLAND PLC and SG INVESTMENT BANKING as Mandated Lead Arrangers (in this capacity, each a MANDATED LEAD ARRANGER and together the MANDATED LEAD ARRANGERS); (4) THE FINANCIAL INSTITUTIONS listed in Part 2 of Schedule 1 (Original Parties) as original lenders (the ORIGINAL LENDERS); (5) SOCIETE GENERALE as facility agent (in this capacity the FACILITY AGENT); and (6) SOCIETE GENERALE as security agent and trustee for the Lenders (in this capacity, the SECURITY AGENT). IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS In this Agreement: ACQUIRED SHARES means the shares of Cegetel (being 26 per cent. of the total share capital of Cegetel) acquired directly or indirectly by SIT from BT on 22nd January, 2003. ADDITIONAL GUARANTOR means a member of the Group which becomes a Guarantor in accordance with Clause 17.3 (Additional Guarantors)). AFFECTED FACILITIES means the credit facilities in relation to which any Waiver or Amendment is required and which is identified in Schedule 13 (Affected Facilities). AFFILIATE means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company. AGENT means: (a) the Facility Agent; and/or (b) the Security Agent, in each case, as the context requires. APPLICABLE MARGIN means the percentage rate per annum determined to be the Applicable Margin in accordance with Clause 9.3 (Margin adjustment). 1 ASSETS means each asset of the Group from time to time (a) excluding those assets referred to in the Back-up Original Liquidity Analysis in the section headed "Assets Disposal" (and including, on or after the Maroc Telecom Date, shares representing 51 per cent. of the total share capital of Maroc Telecom held (directly or indirectly) by the Company (unless the Maroc Telecom Acquired Shares have been financed by a Maroc Telecom Excluded Financing)) but (b) including, for the avoidance of doubt, the assets referred to in the definition of Canal + Disposal and the Games Disposal. ASSETS DISPOSAL means a disposal of any Asset (other than a Relevant Intra Group Disposal). AUDITORS means RSM Salustro Reydel, Barbier Frinault & Cie (Reseau Ernst & Young) or any other firm of independent public accountants of international standing which may be appointed as its auditors from time to time by the Company. AVAILABILITY PERIOD means the Tranche A Availability Period or the Tranche B Availability Period, as the context requires. BACK-UP FACILITY AGREEMENT means the E1,000,000,000 revolving credit facility agreement dated 26th November, 2002 in favour of VCNA and VUHIC. BACK-UP ORIGINAL LIQUIDITY ANALYSIS means the liquidity analysis of the Group dated 24th November, 2002 delivered by the Company pursuant to the Back-up Facility Agreement as set out in Part 1 of Schedule 9. BREAK COSTS means the amount (if any) which a Lender is entitled to receive under this Agreement as compensation if any part of a Loan or other due amount is prepaid. BT means British Telecommunications plc. BUSINESS DAY means a day (other than a Saturday or Sunday) on which banks are open for general business in Paris and London and: (a) if on that day a payment in, or purchase of, U.S. Dollars is to be made, New York; and (b) if on that day a payment in, or purchase of, Euro is to be made, a TARGET Day. BUSINESS PLAN means a business plan of the Company approved by its board of directors. CANADA RECEIVABLE means the receivable in a principal amount of Canadian $52,000,000 owed by Universal Studios, Inc. to Universal City Studios LLLP. CANAL + means Canal + S.A. CANAL + DISPOSAL means a disposal of all or any shares in, assets or business of Groupe Canal + and its Subsidiaries before or following any restructuring or reorganisation on a solvent basis (including, without limitation, a restructuring by way of primary or secondary public offering of any share capital or equity instruments). CANAL + DISPOSAL PROCEEDS AMOUNT means, in relation to any Canal + Disposal, proceeds in an aggregate amount not to exceed E2,000,000,000 (or equivalent in other currencies). CASH MANAGEMENT AND IGL ARRANGEMENTS means the cash management and intra group loan arrangements of the Group at the date of this Agreement as described in Schedule 16, as amended from time to time pursuant to Clause 19.19(h). 2 CASH POOLING ACCOUNT means each bank account of: (a) the Company; (b) each Cash Pooling Hub; (c) each other member of the Group with which the Company has a direct lending relationship, but excluding: (i) VUE Borrower Co.; and (ii) prior to the VUE Date, any member of the VUE Group; and (d) each other bank account which is designated as such in writing by the Company and the Facility Agent, but excluding those bank accounts listed in Schedule 12. CASH POOLING HUB means each of: (a) the Company; (b) VUP; (c) Groupe Canal +; (d) UMGT; (e) VUHIC; (f) VTI; (g) VU Canada; (h) on or after the Cegetel Cash Pooling Date, Cegetel; (i) on or after the Maroc Telecom Cash Pooling Date, Maroc Telecom; and (j) any other member of the Group designated as such in writing by the Company and the Facility Agent. CASH POOLING HUB SECURITY means the account pledge agreement or account charge agreement in the agreed form over: (a) each bank account of Vivendi Universal U.S. Holding Co.; and (b) each Cash Pooling Account, but excluding: (i) the Cash Pooling Accounts of UMGT, VU Canada and VUP; and (ii) the Cash Pooling Accounts referred to in paragraph (c) of the definition thereof. 3 CDC IXIS FACILITY AGREEMENT means the E300,000,000 bilateral facility agreement dated 15th January, 2003 between the Company and CDC Finance - CDC IXIS. CEGETEL means Cegetel Groupe S.A. CEGETEL CASH POOLING DATE means the date on which all of the following events occur: (i) there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Cegetel, Transtel or any other member of the Cegetel Group or under the Non Recourse Financing in force at the date of this Agreement which restrict, or which would be triggered upon, the granting of a guarantee and Cash Pooling Hub Security pursuant to this Agreement; (ii) Cegetel has become a Guarantor under this Agreement and has granted Cash Pooling Hub Security; and (iii) Cegetel enters into the Cash Management and IGL Arrangements for the purpose of borrowing money from the Company or any Cash Pooling Hub. CEGETEL DISPOSAL means the disposal of all or any of the shares in, or assets or business of any member of the Cegetel Group. CEGETEL GROUP means Cegetel and each of its Subsidiaries (including, for the avoidance of doubt, SFR). CEGETEL INDEMNITY means the indemnity by the Company in favour of SIT in an amount of E1,300,000,000 in the event that the Company does not comply with its obligations given to SIT in relation to the drag along and/or tag along arrangements with respect to the Existing Cegetel Shares. CEGETEL SHAREHOLDERS AGREEMENT means the shareholders' agreement among the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire, British Telecommunications plc, Mannesmann AG, SBC International, Inc., SBC International - Societe de Radiotelephonie Cellulaire Inc. and Cegetel dated as of 14th May, 1997 as amended from time to time. CENTENARY HOLDING means Centenary Holding N.V. CENTENARY HOLDING SHARE PLEDGE means a share pledge in the agreed form over 92.3 per cent. of the shares in Centenary Holding in favour of the Security Agent for and on behalf of, inter alia, the Finance Parties. CENTENARY HOLDING UK SHARE PLEDGE means a share pledge in the agreed form over approximately (but in any event not more than) 66 per cent. of the shares in Centenary Holding Limited (UK) in favour of the Security Agent for and on behalf of, inter alios, the Finance Parties. CIC means Cinema International Corporation N.V. CHANGE OF CONTROL means the occurrence of any event whereby: (a) any person or group of persons acting in concert acquires more than 50 per cent. of the share capital or voting stock of the Company or control of the Company, including, without limitation, on or following an amalgamation, demerger, merger or reconstruction involving the Company to the extent permitted by Clause 19.18 (Mergers and acquisitions) and for these purposes CONTROL and ACTING IN CONCERT have 4 the meanings given them in Articles L.233-3 and L.233-10, respectively, of the French Commercial Code; or (b) the Company ceases to own, whether directly or indirectly, 100 per cent. of the share capital and voting rights of any Obligor or the Company ceases to have effective control of any Obligor (except, in each case, Vivendi Universal Games, Inc. or Canal + which is disposed of in accordance with the provisions of this Agreement or Centenary Delta BV pursuant to the Music Group Reorganisation); or (c) during any consecutive two-year period, the first day on which a majority of the members of the board of directors of the Company who were members of the board of directors at the beginning of such period are not Continuing Directors; or (d) there is a direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation permitted by and made in accordance with the provisions of this Agreement) in one or a series of related transactions, of all or substantially all of the properties or assets or business of the Company and its Subsidiaries taken as a whole; or (e) the adoption of a plan relating to the liquidation or dissolution of the Company. CODE means the United States Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. COMMITMENT means a Tranche A Commitment or a Tranche B Commitment, as the context requires. COMMITMENT LETTER means the commitment letter dated 25th March, 2003 between the Company and the Mandated Lead Arrangers. CONCENTRATION ACCOUNTS means the Euro-denominated account (number 30003-03175-00020262579/77) and the U.S. dollar-denominated account (number 30003-03175-03020103534/54) of the Company held with, or to be opened with, Societe Generale Agence Paris-Etoile-Entreprises, 33 avenue de Wagram, BP 963, 75017 Paris, France, the sterling-denominated account (number 30588-60001-81504592601/30) held with Barclays, 45 boulevard Haussmann, 75008 Paris and the Canadian Dollar-denominated account (number 30007-99999-043747000CA/04), the Danish Krone-denominated account (number 30007-99999-043747000DK/04), the Yen-denominated account (number 30007-99999-043747000JP/04), the Norwegian Krone-denominated account (number 30007-99999-043747000NO/04), the New Zealand Dollar-denominated account (number 30007-99999-043747000NZ/04), the Swedish Krona-denominated account (number 30007-99999-043747000SE/04), the Singaporean Dollar-denominated account (number 30007-99999-043747000SG/04), the Hong-Kong Dollar-denominated account (number 30007-99999-043747000HK/04), the Swiss Franc-denominated account (number 30007-99999-043747000FS/04), the Australian Dollar-denominated account (number 30007-99999-043747000AU/04), the Mexican Peso-denominated account (number 30007-99999-043747000MX/04), the Czech Koruna-denominated account (number 30007-99999-043747000CZ/04) (each, held with Natexis Banques Populaires, Gestion des flux Entreprises, 10/12, avenue Winston Churchill, Boite Postale 4, 94677 Charenton-le-Pont Cedex). CONCENTRATION ACCOUNTS SECURITY means an account pledge ("nantissement de compte") in the agreed form over the Concentration Accounts. CONTINGENT FINANCIAL LIABILITIES means contingent Financial Indebtedness and includes, without limitation, any financial liabilities under or pursuant to the exercise of any put option. 5 CONTINUING DIRECTORS means, as of any date of determination, any member of the board of directors of the Company who: (a) was a member of such board of directors on the date of this Agreement; or (b) was nominated by election or elected to such board of directors with the approval of a majority of the Continuing Directors who are members of such board of directors at the time of such nomination or election. DEBT ISSUE means any syndicated loan, issue of bonds or notes (including convertible bonds or other equity-linked debt instruments but excluding instruments that are redeemable only in shares and which do not in any circumstances give rise to redemptions or repayments (whether in whole or in part) in cash), debt securities (including issued pursuant to a securitisation programme) or other debt instrument of any kind made or entered into by any member of the Group, whether publicly listed or privately placed but excluding: (a) any Existing Facilities Refinancing; (b) any Product Financing; (c) any Project Finance Indebtedness; (d) any such debt instruments the proceeds of which constitute any of the VUE Retention, VUE Excluded Debt Issue Proceeds and VUE Incremental Indebtedness and the VUE Bridge Refinancing; (e) any Excluded Cegetel Debt Issue Proceeds; (f) commercial paper issued by members of the Group other than members of the Cegetel Group in an aggregate principal amount of up to E50,000,000 (or equivalent in other currencies) (excluding for avoidance of doubt any Intra Group Loan or any VUE Loan); (g) any Local Borrowings; (h) any Intra Group Loan including, without limitation, a VUE Loan; (i) any Excluded Maroc Telecom Debt Issue Proceeds; (j) any Excluded Financial Indebtedness; and (k) the VU/SIT Loan. DEFAULT means an Event of Default or an event which, with the giving of notice, expiry of any applicable grace period, determination of materiality or fulfilment of any other applicable condition (or any combination of the foregoing), would constitute an Event of Default. DESCRIPTION OF NOTES means the terms and conditions of the High Yield Notes as set out in the Offering Circular. DISPOSAL means any Assets Disposal, a Cegetel Disposal, a Maroc Telecom Disposal, a SIT Disposal or a VE Shares Disposal. DISPOSAL CONFIRMATION means the confirmation by the Chairman of the Company that E7,000,000,000 of the Group's assets will be disposed of in 2003 or any later confirmation in 6 respect of the disposal of the Group's assets in addition thereto given or confirmed by the board of directors of the Company. DRAWDOWN DATE means the date of the advance of a Loan. ENVIRONMENT means all, or any of, the following media: the air (including the air within buildings and the air within other natural or man-made structures above or below ground), water (including, without limitation, ground and surface water) and land (including, without limitation, surface and sub-surface soil). ENVIRONMENTAL LAW means any law or regulation relating to the Environment or to emissions, discharges or releases of regulated substances or wastes into the Environment or otherwise relating to the handling of regulated substances or wastes or the clean-up or remediation thereof or any permit, licence, authorisation, consent or other approval required by such law and regulation. EQUITY ISSUE means any issue of rights, shares or equity instruments of any kind (including for the avoidance of doubt debt instruments that are redeemable only in shares and which do not in any circumstances give rise to redemptions or repayments (whether in whole or in part) in cash), made or entered into by any member of the Group (but in relation to any member of the Cegetel Group, Transtel or SIT prior to the SIT Repayment Date in relation to secondary Equity Issues only) but excluding: (a) (without double counting) any such issue, the proceeds of which constitute VUE Excluded Equity Issue Proceeds or the amount of the VUE Retention; (b) (without double counting), any such issue, the proceeds of which constitute the Canal + Disposal Proceeds Amount; (c) (without double counting), any such issue, the proceeds of which constitute the Games Disposal Proceeds Amount; (d) any such issue made or entered into pursuant to a Relevant Intra Group Disposal or entered into pursuant to an employee share purchase plan; (e) any such issue made or entered into by any member of the Maroc Telecom Group, prior to the Maroc Telecom Date; and (f) any such issue which forms part of the VU/SIT Loan. ERISA means the United States Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. ERISA AFFILIATE means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Obligor, or under common control with any Obligor, within the meaning of Section 414 (b) or (c) of the Code or, for purposes of Section 412 of the Code, Section 414 (m) or (o) of the Code. ERISA EVENT means any event specified in Schedule 18. ESCROW AGREEMENT means the Escrow Agreement dated 8th April, 2003 entered into between the Company and the Bank of New York in its capacity as Escrow Agent and as trustee for the High Yield Notes. 7 ESCROW RELEASE CERTIFICATE means the certificate to be delivered by the Company to the Escrow Agent pursuant to the terms of the Escrow Agreement. EURIBOR means for an interest period: (a) the rate per annum which appears on Page EURIBOR 01; or (b) if no such rate is available for the relevant period, the rate (expressed as a percentage) determined by the Facility Agent to be the arithmetic mean of the rates per annum (rounded upwards to four decimal place) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. on the applicable Rate Fixing Day for the offering of deposits in Euro for a period comparable to the Interest Period of the relevant Loan and in this definition PAGE EURIBOR 01 means the display designated as Page EURIBOR 01 on the Reuters Screen (or such other pages as may replace Page EURIBOR 01 on that service or such other service as may be nominated by the Banking Federation of the European Union (including the Reuters Monitor Money Rates Service) as the information vendor for the purposes of displaying Banking Federation of the European Union Interest Settlement Rates for deposits in Euro). EURO or E means the single currency of the Participating Member States. EVENT OF DEFAULT means an event specified as such in Clause 21 (Default). EXCHANGE AND REGISTRATION RIGHTS AGREEMENT means the Exchange and Registration Rights Agreement dated 8th April, 2003 in relation to the High Yield Notes. EXCLUDED CEGETEL DEBT ISSUE PROCEEDS means any Financial Indebtedness permitted to be incurred under this Agreement by any member of the Cegetel Group pursuant to Clause 19.15(m). EXCLUDED FINANCIAL INDEBTEDNESS means the items summarised in Part 2 of Schedule 19. EXCLUDED MAROC TELECOM DEBT ISSUE PROCEEDS means: (a) any Financial Indebtedness incurred by any member of the Maroc Telecom Group prior to the Maroc Telecom Date; and (b) on or after the Maroc Telecom Date, any Financial Indebtedness referred to in paragraph (a) above plus any additional Financial Indebtedness incurred by any member of the Maroc Telecom Group up to an aggregate maximum amount outstanding at any time of E100,000,000 (or equivalent in other currencies). EXCLUDED MUSIC GROUP ENTITY means each of: (a) Centenary Delta BV and all non-U.S. subsidiaries thereof; and (b) UPIH 2 BV, if such entity will become a Foreign Subsidiary or will be held (directly or indirectly) by Universal Studios Holding I Corp, as a result of the Music Group Reorganisation. EXISTING BANK DEBT means Financial Indebtedness outstanding under the Multicurrency Revolving Credit Facility. 8 EXISTING BANK DEBT GUARANTEE means the guarantee dated on or about the date of this Agreement in the agreed form made between the Existing Lenders, the Guarantors (as defined therein), the Company and each Agent as may be amended from time to time. EXISTING CEGETEL CONTINGENT FINANCIAL LIABILITIES means the Contingent Financial Indebtedness of the Cegetel Group as identified in Part 1 of Schedule 10. EXISTING CEGETEL FINANCIAL INDEBTEDNESS means Financial Indebtedness of the Cegetel Group as identified in Part 2 of Schedule 10. EXISTING CEGETEL SECURITY means the Security Interests over the assets of or shares in the Cegetel Group as identified in Part 3 of Schedule 10. EXISTING CEGETEL SHARES means the share capital owned, directly or indirectly, by members of the Group (other than SIT) in Cegetel, at the date of this Agreement representing not less than 43 per cent. of all of Cegetel's share capital. EXISTING CONTINGENT FINANCIAL LIABILITIES means the material Contingent Financial Liabilities of any member of the Group (other than any member of the Cegetel Group and the Maroc Telecom Group) existing at the date hereof as identified in Schedule 17 (Existing Contingent Financial Liabilities). EXISTING FACILITIES means the facilities identified in Schedule 12 (Existing Facilities). EXISTING FACILITIES REFINANCING means any initial or successive refinancing, extension, renewal, replacement or restructuring (but not an increase) of any Existing Facilities by such member of the Group. EXISTING LENDERS means lenders under the Existing Bank Debt. FACILITY means the credit facilities under this Agreement. FACILITY DISCHARGE DATE means the date on which the Facility Agent (acting on the instructions of all the Lenders) notifies the Obligors' Agent in writing that all amounts outstanding under or in connection with the Facility have been irrevocably and unconditionally paid or discharged in full and the Total Commitments have been cancelled in full. FACILITY OFFICE means the office(s) notified by a Lender to the Facility Agent: (a) on or before the date it becomes a Lender; or (b) by not less than five Business Days' prior notice, as the office(s) through which it will perform all or any of its obligations under this Agreement. FEE LETTER means: (a) the letter dated 17th March, 2003 between the Mandated Lead Arrangers and the Company (the ARRANGEMENT FEE LETTER); and (b) the letter dated the date of this Agreement between the Agents and the Company (the AGENCY FEE LETTER), 9 setting out the amount of various fees referred to in Clause 23 (Fees). FINAL MATURITY DATE means the date falling on the third anniversary of the date of this Agreement (or if that day is not a Business Day, the immediately preceding Business Day). FINANCE DOCUMENT means each of: (a) this Agreement; (b) the Commitment Letter; (c) each Fee Letter; (d) a Guarantor Accession Agreement; (e) a Novation Certificate; (f) each Security Document; (g) the Security Sharing Agreement; (h) each Subordination Agreement; (i) the VUE Borrower Co. Release Agreement, and any other document designated as such in writing by the Facility Agent and the Obligors' Agent. FINANCE PARTY means each Agent, each Mandated Lead Arranger and each Lender. FINANCIAL INDEBTEDNESS means any indebtedness in respect of: (a) moneys borrowed; (b) any debenture, bond, note, loan stock or other security; (c) any acceptance credit; (d) receivables sold or discounted (otherwise than on a non-recourse basis); (e) the acquisition cost of any asset to the extent payable after the time of acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; (f) any lease (including, without limitation, an operation de credit-bail) entered into primarily as a method of raising finance or financing the acquisition of the asset leased; (g) any currency swap or interest rate or commodity swap, cap or collar arrangements or any other derivative instrument; (h) any amount raised under any other transaction having as a primary purpose the borrowing or raising of money (excluding, for the avoidance of doubt, trade credit to the extent payable by the person liable 180 calendar days or less after the acquisition or taking of possession of the assets to which such credit relates); or 10 (i) any guarantee, indemnity or similar assurance against financial loss of any person, in each case in respect of indebtedness of a type falling within paragraphs (a) to (h) above, including, for the avoidance of doubt, the Contingent Financial Liabilities (other than the Existing Contingent Financial Liabilities except for the purposes of Clauses 21.5 (Cross-default), 19.12 (Negative pledge) and 19.13 (Transactions similar to security)) and excluding, Equity Issues and Excluded Financial Indebtedness and for the purposes of Clause 21.5 (Cross-default), Intra Group Loans and VUE Loans. FITCH means Fitch IBCA. FOREIGN SUBSIDIARY means any Subsidiary of any U.S. Obligor which is a controlled foreign corporation within the meaning of the Code. FRENCH INTRA GROUP LOANS SECURITY means each delegation or loi dailly assignment, as the case may be, in the agreed form in respect of Secured Intra Group Loans made by an Obligor incorporated in France. GAMES means the games business of Vivendi Universal Games, Inc. and Universal Interactive, Inc. and their respective Subsidiaries. GAMES DISPOSAL means any disposal, sale or transfer of all or any of the shares in, or assets or business of Games and/or its Subsidiaries (including, without limitation, by way of primary or secondary public offering). GAMES DISPOSAL PROCEEDS AMOUNT means, in relation to any Games Disposal, disposal proceeds in an aggregate amount not to exceed (a) E1,000,000,000 (or equivalent in other currencies) and (b) an amount not to exceed 1.5 per cent. of the gross disposal proceeds paid by any purchaser pursuant to the Games Disposal and which amount is payable to MEI Holding Inc. or its affiliates as a result of such party's direct or indirect interest in Games. GAMES IP means the Intellectual Property Rights owned by Games IP Group. GAMES IP GROUP means Vivendi Universal Games, Inc., Davidson & Associates, Inc. Knowledge Adventure, Inc. and Sierra Entertainment, Inc. GAMES REORGANISATION means any series of transactions undertaken by the Company to reorganise the Games group for the purposes of implementing any Games Disposal which, to the extent such transactions are not otherwise permitted by this Agreement, have been approved in writing by the Majority Lenders. GROUP means the Company and its Subsidiaries (but excluding any member of the VE Group). GROUPE CANAL + means Groupe Canal + S.A. GROUPE CANAL + SHARE PLEDGE means the share pledge in the agreed form to be granted by the Company over 100 per cent. of the shares in Groupe Canal +. GUARANTOR means an Original Guarantor or an Additional Guarantor. GUARANTOR ACCESSION AGREEMENT means a deed, substantially in the form of Schedule 6, with such amendments as the Facility Agent may approve or reasonably require. 11 HIGH YIELD NOTE DOCUMENTS means: (a) the Offering Circular; (b) the Indenture and the High Yield Notes; (c) the Purchase Agreement; (d) the Exchange and Registration Rights Agreement; and (e) the Escrow Agreement. HIGH YIELD NOTES means the U.S.$935,000,000 9.25% senior notes due 2010 and the E325,000,000 9.50% senior notes due 2010 issued by the Company on 8th April, 2003 pursuant to the Indenture. HIGH YIELD NOTE PROCEEDS means the proceeds of each issue of the High Yield Notes in the amount of U.S.$935,000,000 and E320,924,500 (i) paid directly to the Company by the initial purchasers pursuant to the Purchase Agreement on the issuance date of the High Yield Notes and (ii) released to the Company by the Escrow Agent pursuant to the Escrow Agreement. HOLDING COMPANY means in relation to a person, an entity of which that person is a Subsidiary. INDENTURE means the indenture dated 8th April, 2003 entered into by the Company with respect to which the High Yield Notes have been issued. INFORMATION PACKAGE means the information package dated April, 2003 prepared in connection with the Facility for the purpose of the bank meeting held on 4th April, 2003 and posted on the intralink website created for the purpose of the syndication of the Facility. INTELLECTUAL PROPERTY RIGHTS means all know-how, patents, trade marks, service marks, designs, business names, topographical or similar rights, copyrights, database or other intellectual property right (in each case, whether registered or not and including all applications for the same). INTEREST PERIOD means each period determined in accordance with Clause 8 (Interest Periods). INTRA GROUP LOAN means: (a) on the date of this Agreement, each loan listed in Parts 1, 2, 3, 4 or 5 of Schedule 15 (Intra Group Loans); and (b) each loan made between members of the Group which is permitted by, and made in accordance with, the provisions of Clause 19.19 (Loans out, Intra Group Loans). INTRA GROUP LOAN AGREEMENT means a loan agreement in the agreed form evidencing an Intra Group Loan. INVESTMENT DOWNGRADING DATE means, at any time, the date on which the Company ceases to have an Investment Grade Rating. INVESTMENT GRADE RATING means a long term unsecured credit rating of Baa3 or better by Moody's and (but not or) BBB- or better by S&P. 12 INVESTMENT GRADE RATING DATE means the date on which the Company obtains an Investment Grade Rating. JOINT VENTURES means all joint venture entities (not being a member of the Group) whether a company, unincorporated firm, undertaking, joint venture, association, partnership or other entity in which any member of the Group has an interest from time to time. LENDER means: (a) an Original Lender; or (b) any person to whom the rights and obligations of an Original Lender are transferred after the date of this Agreement. LIBOR means: (a) the rate per annum which appears on Page LIBOR 01; or (b) if no such rate appears on the Reuters Screen, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. London time on the applicable Rate Fixing Day for the offering of deposits in the currency of the relevant Loan for a period comparable to the relevant Interest Period, and in this definition PAGE LIBOR 01 means the display designated as Page LIBOR 01 on the Reuters Screen (or such other pages as may replace Page LIBOR 01 on that service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purposes of displaying British Bankers' Association Interest Settlement Rates for deposits in that currency). LIQUIDITY ANALYSIS means a forecast for the Group (excluding for these purposes (other than in relation to dividends) any member of the Maroc Telecom Group and the Cegetel Group and SIT) in the agreed form (and provided in excel form) setting out: (a) projections of the Group's cashflows for the period from the date of the forecast to: (i) prior to a Release Condition Date, the Final Maturity Date; and (ii) subject to paragraph (c) below, on or after a Release Condition Date, a date which is one year from the date of such Liquidity Analysis, in each case, as follows: (A) a monthly breakdown of the Group's projected cashflows for a period of six months from the date of the forecast; (B) thereafter a quarterly breakdown of the Group's projected cashflows for the period of the next nine months or for the remaining period of the forecast; and (C) thereafter a semi-annual breakdown of the Group's projected cashflows for the remaining period of the forecast, if any; (b) a reconciliation statement between the actual cashflows of the Group for the period elapsed since the date of the preceding Liquidity Analysis and the projected 13 cashflows of the Group for that period contained in that Liquidity Analysis together with reasons for any deviations (other than deviations of an immaterial nature) demonstrated by such reconciliation statement; and (c) if, on or after a Release Condition Date, an Investment Downgrading Date occurs, paragraph (i) shall automatically be reinstated and shall remain in force from the Investment Downgrading Date until such time as a Release Condition Date occurs again. LLP AGREEMENT means the limited liability partnership agreement establishing VUE Borrower Co. as a Delaware limited liability partnership. LOAN means a Tranche A Loan or a Tranche B Loan as the context requires. LOCAL BORROWINGS means Financial Indebtedness incurred by any member of the Group (other than an Obligor) in the country of its incorporation in the ordinary course of business in an aggregate amount not exceeding E300,000,000 (or equivalent in other currencies) at any time. LOCK-UP ARRANGEMENTS means the lock-up arrangements with respect to the VE Shares under the VE Acquisition and Subscription Agreement. MAJORITY LENDERS means, at any time, Lenders: (a) whose share in the Original Euro Amount of outstanding Loans and whose undrawn Commitments then aggregate 66 2/3 per cent. or more of the aggregate Original Euro Amount of all outstanding Loans and the undrawn Commitments of all the Lenders; (b) if there is no Loan then outstanding, whose undrawn Commitments aggregate 662/3 per cent. or more of the Total Commitments; or (c) if there is no Loan then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 662/3 per cent. or more of the Total Commitments immediately before the reduction. MAJORITY CREDITORS has the meaning given to it in the Security Sharing Agreement. MANDATORY COST means the cost imputed to the Lenders of compliance in relation to this Agreement with: (a) the cash ratio and special deposit requirements of the Bank of England and/or the banking supervision or other costs imposed by the United Kingdom Financial Services Authority, all as determined in accordance with Schedule 7; and (b) any reserve asset requirements of the European Central Bank. MAROC TELECOM means Maroc Telecom S.A. MAROC TELECOM ACQUIRED SHARES means the shares of Maroc Telecom acquired (directly or indirectly) by the Company pursuant to the acquisition permitted under to Clause 19.18 (b)(xi) (being as of the date of this Agreement 16 per cent. of the total share capital of Maroc Telecom). MAROC TELECOM CASH POOLING DATE means the date on which all of the following events occur: 14 (i) there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Maroc Telecom in force at the date of this Agreement or under a Maroc Telecom Excluded Financing which restrict or which would be triggered upon, the granting of a guarantee and Cash Pooling Hub Security pursuant to this Agreement; (ii) Maroc Telecom has become a Guarantor under this Agreement and has granted Cash Pooling Hub Security; and (iii) Maroc Telecom enters into the Cash Management and IGL Arrangements for the purpose of borrowing money from the Company or any Cash Pooling Hub. MAROC TELECOM DATE means the date upon which the Company owns no less than 51 per cent. of the shares in Maroc Telecom pursuant to the acquisition permitted pursuant to Clause 19.18(b)(xi) unless such acquisition is financed by a Maroc Telecom Excluded Financing. MAROC TELECOM DISPOSAL means the disposal of all or any of the shares in, or assets or business of any member of the Maroc Telecom Group other than the shares in, or assets or business of, Maroc Telecom. MAROC TELECOM EXCLUDED FINANCING means a financing of the acquisition of all the Maroc Telecom Acquired Shares by means solely of a Project Finance Indebtedness and, in respect of which, the person to whom such Project Finance Indebtedness is owed has no recourse to any member of the Group for the repayment of, or payment of any sum relating to, that Project Finance Indebtedness other than recourse to any shares held (directly or indirectly) by the Company in Maroc Telecom, provided that recourse to such shares (other than the Maroc Telecom Acquired Shares) shall only be permitted at any time after the Company has prepaid the Non-Recourse Financing in full out of VU/SIT Loan proceeds and cancelled the Non-Recourse Financing in full. MAROC TELECOM GROUP means Maroc Telecom and its Subsidiaries. MAROC TELECOM SHAREHOLDERS AGREEMENT means the "Convention d'actionnaires" among the Company, le Gouvernement du Royaume de Maroc and Itissalat Al-Maghrib executed by the Company on 20th December, 2000 as amended from time to time. MASTER SECURITY AGREEMENT means the pledge and security agreement substantially in the form initialled on or about the date of this Agreement by the Obligors' Agent and the Facility Agent or otherwise in the agreed form between the Grantors (as defined therein) and the Facility Agent. MATERIAL ADVERSE EFFECT means: (a) prior to a Release Condition Date, but subject always to paragraph (c) below, a material adverse effect on: (i) the business, assets, financial condition, operations or prospects of any Obligor, Material Subsidiary or the Group (taken as a whole); (ii) the ability of any Obligor to perform any of its payment obligations or the ability of any Obligor to perform any other of its material obligations under any of the Finance Documents; or 15 (iii) the validity or enforceability of any Finance Document or the effectiveness of any Security Interest purported to be created pursuant to any Security Document or the rights and remedies of any Finance Party; (b) on or after a Release Condition Date but subject always to paragraph (c) below, a material adverse effect on the ability of any Obligor to perform any of its payment obligations or to perform any other of its material obligations under any of the Finance Documents; and (c) if a Release Condition Date occurs, but at any time thereafter an Investment Downgrading Date occurs, paragraph (a) shall be automatically reinstated and remain in force from the Investment Downgrading Date until such time as a Release Condition Date occurs again. MATERIAL SUBSIDIARY means: (a) as at the date of this Agreement, each member of the Group listed in Schedule 21; and (b) thereafter each Subsidiary listed in Part 1 of Schedule 21 and/or pursuant to Clause 19.2(a)(iii), and each other Subsidiary of the Company which is consolidated by way of global integration (integration globale) in the audited consolidated accounts of the Group: (i) whose total assets (consolidated in the case of a Subsidiary which itself has a Subsidiary and for the avoidance of doubt excluding inter-company loans and equity accounts if and to the extent netted out on a consolidation) are E500,000,000 (or equivalent in other currencies) or more; or (ii) whose operating income (consolidated in the case of a Subsidiary which itself has a Subsidiary and as adjusted in accordance with paragraphs (a) to (d) of the definition of Cash EBITDA (as defined in Clause 20.1 (Financial covenant definitions)) represent not less than 5 per cent. of Cash EBITDA (as defined in Clause 20.1)) (as shown in the then latest consolidated accounts of the Group), as calculated from the then latest accounts audited if prepared, of that Subsidiary; and (c) any other Subsidiary of the Company (the RECEIVING SUBSIDIARY) to which after the date of the latest audited consolidated accounts of the Group is transferred either: (i) all or substantially all the assets of another Subsidiary which immediately prior to the transfer was a Material Subsidiary (the DISPOSING SUBSIDIARY); or (ii) sufficient assets such that the receiving Subsidiary would have been a Material Subsidiary had the transfer occurred on or before the date of the latest audited consolidated accounts of the Group; in the case of (i) above, the disposing Subsidiary shall forthwith upon the transfer taking place cease to be a Material Subsidiary; and (d) further: (i) VUE Borrower Co. shall be a Material Subsidiary only for the purposes of the definition of Material Adverse Effect and for the purposes of Clauses 21.5 16 (Cross-default) and Clauses 21.6 (Insolvency) to Clause 21.10 (Analogous proceedings); (ii) Maroc Telecom shall be a Material Subsidiary only for the purposes of the definition of Material Adverse Effect and for the purposes of Clauses 21.6 (Insolvency) to Clause 21.10 (Analogous proceedings) until the Maroc Telecom Date, when, subject to the provisions of Clause 19.1(d), it shall become a Material Subsidiary for all purposes. For the avoidance of doubt, no member of the VE Group shall in any circumstances be a Material Subsidiary. MATSUSHITA SHAREHOLDER AGREEMENTS means: (a) the stockholder's agreement among Centenary Holding, MHI Investment Corporation and Centenary International B.V. (formerly Seagram International B.V.) dated as of 9th December, 1998, as amended from time to time, and (b) the amended and restated stockholders' agreement among Universal Studios Holding I Corp., MEI Holding Inc., VU Canada (formerly known as The Seagram Company Ltd.) and Vivendi Universal Holding IV Corp. (formerly known as Seagram Developments Inc.) dated as of 9th December, 1998, as amended from time to time. MATURITY DATE means the last day of the Interest Period of a Tranche A Loan. MOODY'S means Moody's Investors' Services, Inc. MULTICURRENCY REVOLVING CREDIT FACILITY means the E3,000,000,000 multicurrency revolving credit facility dated 15th March, 2002, by the Company, the Lenders and financial institutions a party thereto and Societe Generale, as Facility Agent, as amended on 6th February, 2003 as the same may be amended from time to time. MULTIEMPLOYER PLAN means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Obligor or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. MULTIPLE EMPLOYER PLAN means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that: (a) is maintained for employees of any Obligor or any ERISA Affiliate and at least one Person other than the Obligors and the ERISA Affiliates; or (b) was so maintained and in respect of which any Obligor or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. MUSIC GROUP means all of the entities under the common ownership of the Company which engage in the acquisition, manufacture, marketing, sale and distribution of recorded music and music publishing. MUSIC GROUP REORGANISATION means one or other series of transactions being undertaken by the Company to organise the Music Group entirely within the U.S. chain of Subsidiaries of the Company substantially in accordance with the Music Overview Memorandum and Music 17 Structure Chart or otherwise any reorganisation of the Music Group which is approved in writing by the Majority Lenders. MUSIC OVERVIEW MEMORANDUM means the memorandum delivered to the Facility Agent on 23rd April, 2003. MUSIC STRUCTURE CHART means the right-hand column in the draft document dated 9th April, 2003 from PriceWaterhouseCoopers and delivered to the Facility Agent. NET ASSETS DISPOSAL PROCEEDS means, in relation to any Assets Disposal (other than in relation to the VE Shares Disposal, any Cegetel Disposal and any SIT Disposal) made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)), the amount of: (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn out provisions) as consideration for a disposal of any Asset including (without double counting) the amount of any Intra Group Loan or VUE Loan (in respect of which a member of the Group being sold pursuant to such disposal is the borrower under that Intra Group Loan or VUE Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered in cash by a member of the Group under any sale and purchase agreement and/or ancillary documents relating to such disposal, in each case, net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; (ii) in the case of a disposal of all or part of the interests held by any member of the Group in VUE or any Subsidiary of VUE or of any other asset of VUE or any Subsidiary of VUE, net of any tax indemnity due and payable by the Company to USAi or payment in lieu thereof pursuant to the arrangements relating thereto in force at the date of this Agreement; and (iii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.15 of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement, but excluding: (a) (without double counting) any VUE Excluded Disposal Proceeds and any VUE Retention; 18 (b) (without double counting) any such proceeds constituting the Canal + Disposal Proceeds Amount; and (c) (without double counting) any such proceeds constituting the Games Disposal Proceeds Amount. For the purposes of the definition of Net Assets Disposal Proceeds, the amount of proceeds actually received by a member of the VUE Group pursuant to any Film Rights Securitization (as defined in the VUE Bridge Extension as in force at the date of this Agreement) shall be equal to the amount of such proceeds as calculated in accordance with the definition of Net Proceeds in the VUE Bridge Extension as in force at the date of this Agreement. For the purposes of the definition of Net Assets Disposal Proceeds and Clause 19.14(b), below, in relation to any disposal of the shares in, assets or business of any member of the VUE Group or the Music Group, up to 35 per cent. of the purchase consideration for such disposal may be in the form of valuable non-cash consideration and on terms that defer its payment. However, for the purposes of any mandatory prepayment, no less than 70 per cent. of the Net Assets Disposal Proceeds for any such disposal of any member of the VUE Group or the Music Group will be deemed to have been paid in cash at the time of such disposal, notwithstanding that less than this amount may actually have then been received. NET CEGETEL DISPOSAL PROCEEDS means, in relation to any Cegetel Disposal made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn-out provisions) as consideration for such disposal including (without double-counting) the amount of any Intra Group Loans (in respect of which a member of the Group being sold pursuant to such disposal is a borrower under that Intra Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered in cash by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal; in each case net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; and (ii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.15 of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement. 19 NET DEBT ISSUE PROCEEDS means, in relation to any Debt Issue made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)) any proceeds received in cash by or for the account of any member of the Group net of any Taxes, fees and expenses payable in connection with that Debt Issue. For the purposes of the definition of Net Debt Issue Proceeds, the amount of proceeds actually received by a member of the VUE Group pursuant to any Film Rights Securitization (as defined in the VUE Bridge Extension as in force at the date of this Agreement) shall be equal to the amount of such proceeds as calculated in accordance with the definition of "Net Proceeds" in the VUE Bridge Extension as in force at the date of this Agreement. NET DIVIDEND PROCEEDS means the amount of any cash dividend (net of any Taxes paid by the Company in relation to such dividend) declared by the Company prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)) on or in respect of its share capital. NET EQUITY ISSUE PROCEEDS means, in relation to an Equity Issue made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)), any proceeds received in cash by or for the account of any member of the Group net of any Taxes, or reasonable third party costs and expenses payable in connection with that Equity Issue. NET MAROC DISPOSAL PROCEEDS means, in relation to any Maroc Telecom Disposal made on or after the Maroc Telecom Date but prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn-out provisions) as consideration for such disposal including (without double-counting) the amount of any Intra Group Loans (in respect of which a member of the Group being sold pursuant to such disposal is a borrower under that Intra Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered in cash by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal; in each case net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; and (ii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.15 of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement. 20 NET MAROC DIVIDEND PROCEEDS means, in relation to the Maroc Telecom Acquired Shares if acquired otherwise than by a Maroc Telecom Excluded Financing, the amount of any ordinary cash dividend (net of any Taxes paid by Maroc Telecom in relation to such dividend) declared by Maroc Telecom on or after the Maroc Telecom Date but prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)) on or in respect of such Maroc Telecom Acquired Shares. NET PROCEEDS means Net Assets Disposal Proceeds, Net Cegetel Disposal Proceeds, Net Debt Issue Proceeds, Net Dividend Proceeds, Net Equity Issue Proceeds, Net Maroc Dividends Proceeds, Net Maroc Disposal Proceeds or Net SIT Disposal Proceeds as the context requires. NET SIT DISPOSAL PROCEEDS means, in relation to any SIT Disposal made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn-out provisions) as consideration for such disposal including (without double-counting) the amount of any Intra Group Loans (in respect of which a member of the Group being sold pursuant to such disposal is the borrower under that Intra-Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered in cash by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal; in each case net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; and (ii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.15 of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement, to the extent such amounts are not used to repay or prepay the Non Recourse Financing in accordance with its terms. NET VE SHARES DISPOSAL PROCEEDS means, in relation to the disposal of VE Shares made prior to an Investment Grade Rating Date (subject always to Clause 7.16(m)): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn out provisions) as consideration for such disposal including without double counting the amount of any Intra Group Loan (in respect of which a member of the Group being sold pursuant to 21 such disposal is the borrower under that Intra-Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; and (b) any other amount actually received or recovered in cash by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal, in each case net of any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery. NEW INVESTORS has the meaning given to it in the VE Share Pledge Arrangements. NON-RECOURSE FINANCING means the E1,300,000,000 facility agreement between SIT and certain Lenders dated 6th December, 2002. NON-U.S. SECURITY DOCUMENTS means each of the documents listed in Parts 1 and 3 of Schedule 4 and any other document designated as such in writing by the Facility Agent and the Obligors' Agent. NON-U.S. SUBORDINATION AGREEMENT means, in relation to an Intra Group Loan between members of the Non-VUE Group, the subordination agreement in the agreed form between the Company, certain members of the Non-VUE Group (as required pursuant to Clause 19.19(d)), the Lenders, the Existing Lenders (as therein defined) and the Security Agent. NON-VUE GROUP means the Group excluding the VUE Group. NOVATION CERTIFICATE has the meaning given to it in Clause 29.3 (Procedure for novations). OBLIGOR means the Company and each Guarantor. OBLIGORS' AGENT means the Company appointed to act on behalf of each Obligor pursuant to Clause 2.5 (Obligors' Agent). OFFERING CIRCULAR means the document dated 3rd April, 2003 in relation to the offer for sale of the High Yield Notes. ORIGINAL EURO AMOUNT in relation to a Loan, means: (a) if that Loan is denominated in Euro, the amount of that Loan; or (b) if that Loan is denominated in U.S. Dollars, the equivalent in Euro of the amount of that Loan at the Spot Rate of Exchange three Business Days before its Drawdown Date. ORIGINAL GROUP ACCOUNTS means the audited annual consolidated accounts of the Group for the 12-month period ending 31st December, 2002. ORIGINAL LIQUIDITY ANALYSIS means the Liquidity Analysis of the Group dated 2nd April, 2003 as set out in Part 2 of Schedule 9. PARTICIPATING MEMBER STATE means a member state of the European Community that adopts or has adopted the Euro as its currency in accordance with legislation of the European Union relating to European Economic and Monetary Union. 22 PARTIES FINANCIERES 3ME has the meaning given to it in the VE Share Pledge Arrangements. PARTY means a party to this Agreement. PBGC means the Pension Benefit Guaranty Corporation (or any successor). PERMITTED JOINT VENTURES means a Joint Venture in which only a member of the VUE Group, a member of the Music Group or Studio Canal has an interest, the primary purpose of which is to acquire Product or interests therein (including distribution rights) in the ordinary course of business and which does not, or could not reasonably be expected to, have a Material Adverse Effect or to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents. PLAN means a Single Employer Plan or a Multiple Employer Plan. PRODUCT FINANCING means any Financial Indebtedness incurred by any member of the Group, solely for the purpose of financing (whether directly or through a partially-owned joint venture) the production, acquisition or development of items of Product (including any Financial Indebtedness assumed in connection with the acquisition of any such items of Product or secured by a Security Interest on any such items of Product prior to the acquisition thereof) where the recourse of a creditor or any group of creditors in respect of that Financial Indebtedness is limited to the items of Product revenues generated by such items of Product or any rights pertaining thereto (or to the extent that any such creditor or group of creditors does have recourse to a member of the Group, where such recourse is limited to an aggregate amount at any time not to exceed E100,000,000 (or equivalent in other currencies)) and where the indebtedness is unsecured save for Security Interests over such items of Product or revenues and such rights, and any extension, renewal, replacement or refinancing of such indebtedness (excluding, for the avoidance of doubt, any Financial Indebtedness raised or secured against Products for any other purposes). PRODUCTS means any music (including mail order music), music copyright, motion picture, television programming, film, videotape, video clubs, DVD manufactured or distributed or any other product produced for theatrical, non-theatrical or television release or for release in any other medium, in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter developed, with respect to which a member of the Group: (a) is an initial copyright owner; or (b) acquires (or will acquire upon delivery) an equity interest or distribution rights. The term "items of Product" shall include the scenario, screenplay or script upon which such Product is based, all of the properties thereof, tangible or intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of any member of the Group, and all rights therein and thereto of every kind and character. PROJECT FINANCE INDEBTEDNESS means any Financial Indebtedness to finance a project incurred by a member of the Group (the RELEVANT GROUP MEMBER) which has no activities or material assets other than those comprised in the project and in respect of which the person to whom that Financial Indebtedness is owed by the relevant Group member has no recourse whatsoever to any member of the Group for the repayment of or payment of any sum relating to that Financial Indebtedness other than: 23 (a) recourse to the relevant Group member for amounts limited to its interest in the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from the project; and/or (b) recourse to the relevant Group member for the purpose only of enabling amounts to be claimed in respect of that Financial Indebtedness on an enforcement of any Security Interest given by the relevant Group member over the assets comprised in that project to secure the Financial Indebtedness; and/or (c) recourse to a shareholder of the relevant Group member for the purpose only of enforcement of any Security Interest given by that shareholder over shares (or the like) of the relevant Group member to secure that Financial Indebtedness. PURCHASE AGREEMENT means the purchase agreement dated 3rd April, 2003 in relation to the High Yield Notes. RATE FIXING DAY means: (a) the second Business Day before the first day of the Interest Period for a Loan; or (b) in the case of a Loan in Euro only, the second TARGET Day before the first day of the Interest Period for that Loan, or, in each case, such other day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in the relevant currency for delivery on the first day of the relevant Interest Period, as determined by the Facility Agent. RECEIPT ACCOUNT means an interest bearing blocked and secured account in France in the name of the Security Agent. RECEIPT ACCOUNT SECURITY means the account security (gage especes) in the agreed form and over the Receipt Account located in France. REFERENCE BANKS means, subject to Clause 29.4 (Reference Banks), the Facility Agent, BNP Paribas and an Affiliate of Citigroup agreed with the Obligors' Agent. RELEASE CONDITION DATE means the date on which the Facility Agent (acting on the instructions of the Majority Lenders (not to be unreasonably delayed)) notifies the Obligors' Agent that each of the following conditions has been fulfilled: (a) the Company has an Investment Grade Rating for a continuous period of 90 calendar days; and (b) the Facility Agent has received a certificate signed by two officers of the Company, one of whom shall be the Chief Executive Officer or the Chief Financial Officer of the Company, confirming that during such continuous period of 90 calendar days referred to in (a) above, no Default has occurred and is continuing. RELEVANT INTRA GROUP DISPOSAL means the disposal of an asset: (a) by an Obligor to another Obligor which could not reasonably be expected to have a Material Adverse Effect or, to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents; (b) by a member of the Group which is not an Obligor to an Obligor; 24 (c) by a member of the Group which is not an Obligor (the TRANSFEROR) to another member of the Group which is not an Obligor (the TRANSFEREE) where the percentage of the share capital of the Transferee owned by the Company (directly or indirectly) is not less than the percentage of the share capital of the Transferor owned by the Company (directly or indirectly); (d) between a member of the Non-VUE Group and any member of the VUE Group, but only (notwithstanding paragraphs (a) to (c) above) for cash management purposes expressly permitted and made in accordance with Clause 19.19 or Clause 19.39 or VUE Excluded Disposals or any disposal of cash inherent in Excluded Financial Indebtedness; (e) by way of a transaction permitted pursuant to subparagraphs (b)(iv) or (v) of Clause 19.18 (Mergers and acquisitions); or (f) pursuant to the Music Group Reorganisation. REPAYABLE FACILITIES means: (a) the Back-up Facility Agreement; (b) the CDC IXIS Facility Agreement; (c) the E850,000,000 revolving credit facility for the Company dated 2nd March, 1999; (d) the E215,000,000 revolving credit facility for the Company dated 6th June, 2002; and (e) the E275,000,000 revolving credit facility for the Company dated 28th June, 2002. REQUEST means a request made by the Obligors' Agent for a Loan, substantially in the form of Schedule 3. ROLLOVER LOAN means, in respect of Tranche A, one or more Loans: (a) made or to be made on the same day that a maturing Loan under Tranche A is due to be repaid; (b) the aggregate amount of which is equal to or less than the maturing Loan under Tranche A; (c) in the same currency as the maturing Loan under Tranche A; and (d) made or to be made to the Company for the purpose of refinancing a maturing Loan. S&P means Standard & Poor's Corporation. SECURED INTRA GROUP LOANS means the loans made by an Obligor to another member of the Group representing no less than 85 per cent. of the aggregate principal amount of all loans made by Obligors to other members of the Group, being on the date of this Agreement the loans referred to in Part 4 of Schedule 15 or as notified to the Facility Agent under and in accordance with the list most recently provided pursuant to Clause 19.6(g) from time to time and which do not fall within paragraph (c)(vii) or (xii) of Clause 19.19. SECURED OBLIGATIONS has the meaning given to it in the Security Sharing Agreement. 25 SECURITY DOCUMENT means: (a) each Non-U.S. Security Documents; and (b) each U.S. Security Document, and any other Security Document designated as such in writing by the Facility Agent and the Obligors' Agent. SECURITY INTEREST means any: (a) hypotheque, nantissement, privilege, cession de creance par bordereau Dailly, "gage-especes" any surete reelle or droit de retention; or (b) other mortgage, pledge, lien, charge (whether fixed or floating), assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security. SECURITY RELEASE CONDITION DATE means the date upon which the Security Agent (acting on the instructions of the Majority Lenders (not to be unreasonably delayed)) notifies the Obligors' Agent and the Facility Agent that each of the following conditions has been fulfilled: (a) the Company has an Investment Grade Rating for a continuous period of 180 calendar days; and (b) the Facility Agent has received a certificate signed by two officers of the Company, one of whom shall be the Chief Executive Officer or the Chief Financial Officer of the Company, confirming that during such continuous period of 180 calendar days referred to in (a) above, no Default has occurred and is continuing. SECURITY SHARING AGREEMENT means the security sharing agreement dated on or about the date of this Agreement between, inter alia, the Company, the Lenders, the Existing Lenders and the Security Agent. SFR means Societe Francaise du Radiotelephone S.A. SFR SHAREHOLDERS AGREEMENT means the shareholders' agreement among the Company, Compagnie Financiere pour le Radiotelephone, Vodafone Europe Holdings B.V., Vodafone France and Vodafone Group plc dated as of 10th October, 1994 as amended from time to time. SINGLE EMPLOYER PLAN means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that: (a) is maintained for employees of any Obligor or any ERISA Affiliate and no Person other than the Obligors and the ERISA Affiliates; or (b) was so maintained and in respect of which any Obligor or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. SIT means Societe d'Investissement pour la Telephonie S.A. SIT DISPOSAL means the disposal of all or any of the shares in, or assets or business of, SIT. 26 SIT REPAYMENT DATE means the date on which the Non Recourse Financing is prepaid and cancelled in full or repaid in full. SPECIAL MANDATORY CANCELLATION DATE means, in the event of a special mandatory cancellation of the High Yield Notes, the date on which the Company is required to promptly instruct the trustee under Clause 3.11 of the Indenture to cancel each series of High Yield Notes. SPOT RATE OF EXCHANGE means the European Central Bank fixing rate for the notional purchase of U.S. Dollars in the European foreign exchange market with Euro at or about 11.00 a.m. on a particular day. STRUCTURE CHART means the organigram describing the capital and share ownership of the Obligors and the Material Subsidiaries. STUDIO CANAL means Studio Canal S.A. SUBORDINATED INTRA GROUP LOANS means: (a) the loans made to an Obligor by another member of the Group representing no less than 85 per cent. of the aggregate principal amount of all loans made to Obligors by other members of the Group, being on the date of this Agreement the loans referred to in Part 5 of Schedule 15 or as notified to the Facility Agent under and in accordance with the list most recently provided pursuant to Clause 19.6(g) from time to time and which do not fall within paragraph (c)(vii) or (xii) of Clause 19.19; (b) the loans made to VUE Borrower Co. by another member of the VUE Group; (c) the loans made to the Company by VUE Borrower Co.; and (d) the loans made to the Company by Cegetel or Maroc Telecom prior to the Cegetel Cash Pooling Date or the Maroc Telecom Cash Pooling Date, respectively. SUBORDINATION AGREEMENT means each of: (a) the Non-U.S. Subordination Agreement; (b) the U.S. Subordination Agreement; (c) the VUE Subordination Agreement; and (d) the VUE Borrower Co. Release Agreement, and any other document designated in writing as such by the Facility Agent and the Obligors' Agent. SUBSIDIARY means a person from time to time of which a person has direct or indirect control (in the case of a company incorporated in France, within the meaning of Article L.233-3 I.1 and I.2 of the Nouveau Code de Commerce (as the same is in force on the date of this Agreement)) or which owns directly or indirectly more than fifty per cent. (50%) of the share capital or similar right of ownership or voting power. SUPER MAJORITY LENDERS means, at any time, Lenders: 27 (a) whose share in the Original Euro Amount of outstanding Loans and whose undrawn Commitments then aggregate 85 per cent. or more of the aggregate of Original Euro Amount of all outstanding Loans and the undrawn Commitments of all the Lenders; (b) if there is no Loan outstanding, whose undrawn Commitments then aggregate 85 per cent. or more of the Total Commitments; or (c) if there is no Loan then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 85 per cent. or more of the Total Commitments immediately before the reduction. SUPER MAJORITY CREDITORS has the meaning given to it in the Security Sharing Agreement. SYNDICATION DATE means the earlier of (a) the date on which the Facility Agent notifies the Obligors' Agent in writing that primary syndication of the Facility has been completed and (b) the date which is three months after the date of this Agreement. TARGET DAY means a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open. TAX means any tax, levy, impost, duty or other charge, deduction or withholding of a similar nature (including any related penalty or interest payable in connection with any failure to pay or delay in paying any of the same). TOTAL COMMITMENTS means the aggregate of the Tranche A Total Commitments and the Tranche B Total Commitments from time to time, being E2,500,000,000 at the date of this Agreement. TRANCHE means Tranche A or Tranche B (as each of those items is identified in Clause 2.1 (Facility)) as the context requires. TRANCHE A AVAILABILITY PERIOD means the period commencing on the date of this Agreement and ending on the date falling one month before the Final Maturity Date (or, if that is not a Business Day, the immediately preceding Business Day). TRANCHE A COMMITMENT means: (a) for an Original Lender, the amount set opposite its name in Part 2 of Schedule 1 (Original Parties) under the heading "Commitments by Tranche" and the amount of any other Tranche A Commitment it acquires; and (b) for any other Lender, the amount of any Tranche A Commitment it acquires, to the extent not cancelled, transferred or reduced under this Agreement. TRANCHE A LOAN means the principal amount of each Loan made to the Company under Tranche A or the principal amount thereof from time to time outstanding. TRANCHE A TOTAL COMMITMENTS means the aggregate of the Tranche A Commitments. TRANCHE B AVAILABILITY PERIOD means the period commencing on the date of this Agreement and ending on the date falling 60 calendar days thereafter (or, if that is not a Business Day, the immediately preceding Business Day). TRANCHE B COMMITMENT means: 28 (a) for an Original Lender, the amount set opposite its name in Part 2 of Schedule 1 (Original Parties) under the heading "Commitments by Tranche " and the amount of any other Tranche B Commitment it acquires; and (b) for any other Lender, the amount of any Tranche B Commitments it acquires, to the extent not cancelled, transferred or reduced under this Agreement. TRANCHE B LOAN means the principal amount of each Loan made to the Company under Tranche B or the principal amount thereof from time to time outstanding. TRANCHE B TOTAL COMMITMENTS means the aggregate of the Tranche B Commitments. TRANSTEL means Transtel S.A. TRANSTEL SHAREHOLDERS AGREEMENT means the shareholders' agreement among the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire, Societe de Radiotelephonie Cellulaire, SBC International Inc., and SBC International - Societe de Radiotelephonie Cellulaire Inc. dated as of 14th May, 1997 as amended from time to time. UCI means United Cinemas International Multiplex B.V. UCI LOAN means the loans in an aggregate principal amount of no more than L87,455,496.77, E98,767,416.98, Yen 1,643,968,000 and E15,545,829.65 made available by the Company to the VUE Group to finance directly or indirectly an investment in UCI and/or CIC. UMGT means Universal Music Group Treasury S.A.S. UMO REFINANCING means the facility agreement dated 31st December, 2002 for an amount of L136,000,000 between Credit Lyonnais and Universal Music Operations Limited. UPIH 2 BV means Universal Pictures International Holdings II B.V. USAI means USA Interactive Inc. U.S. DOLLARS or U.S.$ means the lawful currency for the time being of the United States of America. U.S. SECURITY DOCUMENT means the document listed in Part 2 of Schedule 4 and any other documents designated as such in writing by the Facility Agent and the Obligors' Agent. U.S. SUBORDINATION AGREEMENT means, in relation to an Intra Group Loan between certain members of the Non-VUE Group, a subordination agreement as required by Clause 19.19 between, inter alia, members of the Group party to such Intra Group Loan and the Security Agent. VCNA means Vivendi Communications North America, Inc. VE means Veolia Environnement S.A. (formerly Vivendi Environnement S.A.). VE ACQUISITION AND SUBSCRIPTION AGREEMENT means the acquisition and subscription agreement dated 24th June, 2002 and made between the Company and certain financial institutions named therein in relation to VE Shares, as amended on 24th November, 2002. 29 VE "B" SHARES means each or any of the "Actions B" as defined in the VE Share Pledge Arrangements. VE CALL OPTION ARRANGEMENTS means the call option set out in the VE Acquisition and Subscription Agreement. VE GROUP means VE and its Subsidiaries. VE SHARE PLEDGE ARRANGEMENTS means the escrow and share pledge agreement dated 24th November, 2002 entered into by the Company, VE, the Escrow Agent, Account Holder and Calculation Agent and the New Investors (each as defined therein) and the Existing Lenders as amended on 7th February, 2003 and as the same may be amended further from time to time. VE SHARES means the shares in the issued share capital of VE owned directly or indirectly by the Company being at the date of this Agreement 20.4 per cent. thereof. VE SHARES DISPOSAL means a disposal by the Company of the VE Shares. VTH means Magyar Telecom B.V. VTI means Vivendi Telecom International S.A. VTI SHARE PLEDGE means the share pledge in the agreed form to be granted by the Company over 100 per cent. of the shares in VTI. VU CANADA means Vivendi Universal Canada, Inc. VU NET means Vivendi Universal Net S.A. VU/SIT LOAN means any loan, issue of bonds or notes (including convertible bonds or other equity-linked debt instruments, debt securities or other debt instrument of any kind) raised by VU solely for the purposes of prepaying and cancelling in full all amounts outstanding under the Non Recourse Financing, such loan to be in an amount no less than the amount required to repay and cancel in full the Non Recourse Financing and on terms which provide that it (i) has an original scheduled maturity date falling no earlier than the later of the Final Maturity Date and the original scheduled maturity date under the Multicurrency Revolving Credit Facility and (ii) is unsecured and not guaranteed. VU/VUE PARTNERSHIP OBLIGATIONS means the financial obligations of the Company under the Partnership Agreement and/or the Transaction Agreement listed in Schedule 20. VUE means Vivendi Universal Entertainment LLLP. VUE ASSIGNMENT AGREEMENT means the assignment agreement between the Company, VUE, VUHI and VUE Borrower Co. in the agreed form pursuant to which VUE Loans are transferred or assigned to and from VUE Borrower Co. VUE BORROWER CO. means VU-VUE Holding Partnership LLP, a Delaware limited liability partnership. VUE BORROWER CO. RELEASE AGREEMENT means each release of claims against the Company as general partner of VUE Borrower Co. in the agreed form by each VUE Foreign Lender. 30 VUE BRIDGE EXTENSION means the U.S.$1,620,000,000 amended and restated agreement dated as of 25th November, 2002 granted in favour of VUE as amended, supplemented or otherwise modified. VUE BRIDGE REFINANCING means an issue or issues of debt instruments (including any debt, bank or capital markets issue or securitisation by any member of the VUE Group (or any trust or other entity established for the purposes of a securitisation)) in an aggregate principal amount of no more than U.S.$1,620,000,000 (net of reserves required to be funded with or fees payable with the proceeds thereof), for the purpose of raising finance solely in order to refinance (in full or in part) the VUE Bridge Extension and any refinancing or refinancings thereof. VUE DATE means the date on which the Facility Agent and the Obligors' Agent agree that neither the VUE Bridge Extension nor any VUE Bridge Refinancings nor VUE Incremental Indebtedness restrict any member of the VUE Group from making any distributions in cash or loans or otherwise disposing of assets to a person outside the VUE Group. VUE EXCLUDED DEBT ISSUE PROCEEDS means, prior to the VUE Date, in relation to a VUE debt issue, any proceeds (i) under the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing (ii) which are required to be applied by way of mandatory prepayment or cash collateral to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds the distribution of which is otherwise restricted pursuant to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing but not including any such proceeds required to be so applied on or prior to the VUE Date and not so applied on or prior to the VUE Date or (iii) received pursuant to a transaction described in Part 2 of Schedule 19. VUE EXCLUDED DISPOSAL means any disposal of any asset described in Part 1 of Schedule 19. VUE EXCLUDED DISPOSAL PROCEEDS means, prior to the VUE Date, any proceeds from the disposal of any assets of any member of the VUE Group (i) being the disposal of proceeds under the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing (ii) which are required to be applied by way of mandatory prepayment or cash collateral to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds the distribution of which is otherwise restricted pursuant to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing but not including any such proceeds required to be so applied on or prior to the VUE Date but not so applied on or prior to the VUE Date; or (iii) which are received pursuant to a VUE Excluded Disposal. VUE EXCLUDED EQUITY ISSUE PROCEEDS means, prior to the VUE Date, in relation to a VUE equity issue, any proceeds required to be applied by way of mandatory prepayment or cash collateral of the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds the distribution of which is otherwise restricted pursuant to the VUE Bridge Extension, any VUE Bridge Refinancing or VUE Incremental Indebtedness but not including any such proceeds required to be so applied on or prior to the VUE Date and not so applied on or prior to the VUE Date. VUE EXCLUDED PROCEEDS means any VUE Excluded Disposal Proceeds and VUE Excluded Equity Issue Proceeds and VUE Excluded Debt Issue Proceeds. VUE FOREIGN LENDER means each of Universal Pictures (Australasia) Pty Ltd., Universal Pictures Benelux N.V., Universal Studios Canada Inc., Universal Pictures Switzerland GmbH, Universal Pictures Germany GmbH, Universal Pictures (Denmark) A.S., Universal 31 Pictures Iberia, S.L., Universal Pictures Finland OY, Universal Pictures Video (France) SA, Universal Pictures Production Limited, Universal Studios Holdings (UK) Ltd, Universal Pictures International Operations Limited, Universal Pictures (UK) Limited, Working Title Films Limited, Universal Pictures International Limited, Universal Pictures International B.V., Universal Studios International B.V., Universal Pictures (Italy) S.R.L., Universal Pictures (Japan) Inc., Meteor Film Prod B.V., Universal Pictures Licensing Benelux B.V., Universal Pictures Benelux B.V., Universal Norway AS and Universal Pictures Nordic AB and each other Subsidiary of VUE which becomes a permitted lender to VUE Borrower Co. and, in each case, which is party to the VUE Subordination Agreement and VUE Borrower Co. Release Agreement. VUE GROUP means VUE and each of its Subsidiaries. VUE INCREMENTAL INDEBTEDNESS means debt proceeds raised by VUE or its Subsidiaries up to an aggregate outstanding amount at any time of U.S.$600,000,000 (or equivalent in other currencies) which (i) is without recourse as to security or guarantees from the Company or any other member of the Non-VUE Group, (ii) the terms of which, in respect of the making of any distributions in cash or loans or otherwise disposing of assets by any member of the VUE Group to a person outside the VUE Group is no more restrictive than the terms of the VUE Bridge Extension or VUE Bridge Refinancing and (iii) does not contain any restriction or prohibition which conflict with the Facility Agreement or the VUE Bridge Refinancing. VUE LOAN means: (a) as at the date of this Agreement, each loan listed in Part 3 of Schedule 15 (Intra Group Loans); and (b) each loan made between a member of the Non-VUE Group and a member of the VUE Group which is permitted by, and is made in accordance with, the provisions of Clause 19.19 (Loans out, Intra Group Loans). VUE LOAN AGREEMENT means a loan agreement in the agreed form evidencing a VUE Loan. VUE PARTNERSHIP AGREEMENT means the agreement entered into on as of 7th May, 2002 between the partners of VUE (amended as of 25th November, 2002). VUE RELEVANT RESTRICTION means any restriction on up-streaming of cash from a member of the VUE Group to a member of the Non-VUE Group, whether by way of dividends, distributions, Intra Group Loans or otherwise under the Matsushita Shareholder Agreements, the VUE Partnership Agreement, the VUE Transaction Agreement or the VUE Bridge Extension (in each case existing and in force at the date of this Agreement) or any VUE Bridge Refinancing (provided that, in the case of a VUE Bridge Refinancing, such transaction, is permitted or required pursuant to the terms of the primary refinancing of the VUE Bridge Extension) or any VUE Incremental Indebtedness, including for the avoidance of doubt, any tax indemnity due and payable by the Company to USAi or payment in lieu thereof pursuant to the arrangements relating thereto in force at the date of this Agreement and which would be triggered by the making of a distribution or the payment of a dividend by VUE. VUE RETENTION means at any time in respect of any Debt Issue, Equity Issue or Assets Disposal made by any member of the Group, any amount of the Net Proceeds, as the case may be, which: (a) is required by any of the VUE Partnership Agreement, the VUE Transaction Agreement and the Matsushita Shareholder Agreements to be retained by any 32 member of the VUE Group or the Music Group or paid by any member of the VUE Group or the Music Group to any third party other than a Lender pursuant to this Agreement; (b) prior to the VUE Date, is required by any member of the VUE Group to maintain liquidity in the ordinary course of business; or (c) prior to the VUE Date, is to be applied in the ordinary course of business of any member of the VUE Group up to a maximum aggregate principal amount of U.S.$25,000,000 (or equivalent in other currencies). VUE SIDE LETTER means the letter agreement dated 7th May, 2002 between the parties to the VUE Partnership Agreement (other than Barry Diller). VUE SUBORDINATION AGREEMENT means the subordination agreement in the agreed form between, inter alia, VUE, the VUE Foreign Lenders and VUHIC. VUE TRANSACTION AGREEMENT means the Amended and Restated Transaction Agreement dated as of 16th December, 2001 and entered into between the Company, Universal Studios Inc., USA Networks, Inc., USANi LLC, Liberty Media Corporation and Barry Diller. VUHIC means Vivendi Universal Holding I Corp. VUP means Vivendi Universal Publishing S.A. WAIVERS AND AMENDMENTS means each waiver, amendment and consent: (a) identified in column 2 of Schedule 13 under or in respect of the Affected Facilities; and (b) from any third party or under any other document which is binding on any member of the Group, which is necessary for the entry into and performance by each Obligor of the transactions contemplated by the Finance Documents and the High Yield Note Documents. WITHDRAWAL LIABILITY has the meaning specified in Part I of Subtitle E of Title IV of ERISA. 1.2 CONSTRUCTION (a) In this Agreement, unless the contrary intention appears, a reference to: (i) documents being in the AGREED FORM means documents (A) in a form previously agreed in writing by or on behalf of the Facility Agent and the Company, or (B) in a form substantially as set out in any Schedule to any Finance Document, or (C) (if not falling within (A) or (B) above) in form and substance satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders); an AMENDMENT includes a supplement, novation or re-enactment and AMENDED is to be construed accordingly; ASSETS includes present and future properties, revenues and rights of every description; 33 the AWARENESS or KNOWLEDGE of an Obligor shall be limited to the actual awareness or knowledge of any executive officer or any member of the senior management of that Obligor based upon reasonable enquiry; an AUTHORISATION includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation; a CAPITAL CONTRIBUTION means a share capital contribution or shareholder loan; CONTROL means (unless otherwise stated including as stated in the definition of CHANGE OF CONTROL) the power to direct, or cause the direction of, the management or policies of a person, whether through the ownership of voting capital or securities, by contract or otherwise and in connection with a person incorporated in the United States of America the possession, direct or indirect, of the power to vote more than 50 per cent. of the voting interests of such person; a CREDIT BALANCE on a cash concentration account means the prior day's closing balance value (EN POSITION); a DEFAULT is "continuing" or "outstanding" if it has not been remedied or waived in accordance with the provisions of this Agreement; DISPOSAL means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and DISPOSE will be construed accordingly; the EQUIVALENT IN OTHER CURRENCIES or like terms, unless otherwise agreed or the context otherwise requires, means the equivalent in one currency of an amount in another currency as determined by the Facility Agent by reference to market rates of exchange prevailing at the time; a MONTH is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that: (A) if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that calendar month; or (B) if an Interest Period commences 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 it is to end; For the purposes of the definitions of: (i) NET ASSETS DISPOSAL PROCEEDS, NET CEGETEL DISPOSAL PROCEEDS, NET MAROC DISPOSAL PROCEEDS, NET SIT DISPOSAL PROCEEDS and NET VE SHARES DISPOSAL PROCEEDS, the date on which such Disposal shall be MADE, shall mean the date on which an agreement or contract relating to the relevant Disposal has been executed or signed by the relevant member of the Group (whether or not subject to any conditions to closing or completion); (ii) NET DEBT ISSUE PROCEEDS, the date on which a Debt Issue shall be MADE shall mean the date on which the instrument constituting the Debt Issue has been executed by the relevant member of the Group (whether or not subject to any conditions to closing or completion); and 34 (iii) NET EQUITY ISSUE PROCEEDS, the date on which an Equity Issue shall be MADE shall mean the date on which the instrument constituting the purchase or subscription of such Equity Issue has been executed by the relevant member of the Group and/or the subscriber as the case may be (whether or not subject to any condition to closing or completion); ORDINARY DIVIDENDS means, in relation to any dividend to be applied pursuant to Clause 7, a dividend declared out of net income or operating profit on a rolling annual basis; a PERSON includes any individual, company, corporation, joint stock company, unincorporated association or body of persons (including a partnership, trust, joint venture or consortium), government, state, agency, international organisation or other entity whether or not having separate legal personality; RECONSTRUCTION includes, in relation to any company, any contribution of part of its business in consideration of shares (apport partiel d'actifs) and any demerger (scission) implemented in accordance with Articles L.236-1 to L.236-2 of the French Commercial Code; a REGULATION includes any decret, regulation, rule, official directive, request or guideline (whether or not having the force of law but if not, being of a type with which the person to which the regulation relates is accustomed to complying) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; SG INVESTMENT BANKING is a reference to the investment banking division of Societe Generale and a reference to SG Investment Banking shall include a reference to Societe Generale; and SHARE CAPITAL includes any class of shares, equity securities or other equity instruments carrying a right to vote, or a right to receive dividends, income or other distributions, or any security or instrument which is convertible into, or which confers a right to convert into, such shares, securities or instruments including, without limitation, any depository receipts, depository shares, shares, securities or other instruments issued on or by way of conversion, redemption, bonus, preference, option or otherwise or in respect of any substitution or exchange thereof; (ii) a provision of law is a reference to that provision as amended or re-enacted; (iii) a Clause or a Schedule is a reference to a Clause of or a Schedule to this Agreement; (iv) a person includes its successors, transferees, novatees and assigns; (v) a Finance Document or another document is a reference to that Finance Document or other document as amended; and (vi) a time of day is a reference to Central European time. (b) Unless the contrary intention 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. (c) The index to and the headings in this Agreement are for convenience only and are to be ignored in construing this Agreement. 35 (d) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999. (e) Notwithstanding any term of any Finance Document, the consent of any third party is not required for any variation (including any release or compromise of any liability under) or termination of that Finance Document. (f) This Agreement is to be entered into with the benefit of and subject to the Security Sharing Agreement. (g) Unless expressly provided to the contrary, the obligations of the Obligors in connection with any Finance Document are joint and several. 2. FACILITY 2.1 FACILITY Subject to the terms of this Agreement, the Lenders agree to make available the following credit facilities to the Company: (a) a dual currency revolving credit facility designated as Tranche A under which the Lenders will, when requested by the Obligors' Agent, make loans in Euro or Dollars to or for the account of the Company during the Tranche A Availability Period up to an aggregate principal Original Euro Amount not exceeding the Tranche A Total Commitments; and (b) a dual currency term loan facility designated as Tranche B under which the Lenders will, when requested by the Obligors' Agent, make loans in Euro or Dollars to or for the account of the Company during the Tranche B Availability Period up to an aggregate principal Original Euro Amount not exceeding the Tranche B Total Commitments. 2.2 NO EXCEEDING TOTAL COMMITMENTS (a) The aggregate Original Euro Amount of all outstanding Loans under a Tranche shall not, at any time, exceed the Commitments under that Tranche. (b) No Lender is obliged to lend if it would cause the Original Euro Amount of its participations in the Loans in respect of a Tranche to exceed its Commitment with respect to such Tranche at that time. 2.3 LIMITATIONS (a) Loans must be drawn under Tranche B in priority to Tranche A to the fullest extent of any Tranche B Commitment which is available to be drawn at the date of any Request. (b) No more than 10 Loans may be outstanding at any time. 2.4 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS (a) The obligations of a Finance Party under the Finance Documents are several. Failure of a Finance Party to carry out those obligations does not relieve any other Party of its obligations under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents. 36 (b) The rights of a Finance Party under the Finance Documents are divided rights. A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights. 2.5 OBLIGORS' AGENT (a) Each Obligor by its execution of this Agreement (including by way of execution of a Guarantor Accession Agreement) irrevocably authorizes the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises: (i) the Company on its behalf to supply all information concerning itself, its financial condition and otherwise to the Lenders as contemplated under this Agreement and to give all notices and instructions to be given by such Obligor under the Finance Documents (and the Finance Parties may rely on any Requests or other notices given by the Company on behalf of such Obligor), to execute on its behalf any Finance Document (including, without limitation, any waiver or amendment request) and to enter into any agreement in connection with the Finance Documents notwithstanding that the same may affect such Obligor, without further reference to or the consent of such Obligor; and (ii) each Finance Party to give any notice, demand or other communication to be given to or served on such Obligor pursuant to the Finance Documents to the Company on its behalf, and in each such case such Obligor will be bound thereby as though such Obligor itself had given such notice and instructions, executed such agreement or received any such notice, demand or other communications. (iii) Every act, omission, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Company under this Agreement, or in connection with this Agreement (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under this Agreement) shall be binding for all purposes on all other Obligors as if the other Obligors had expressly made, given or concurred with the same (and irrespective of whether the Company has complied with its obligations under paragraph (b) below). In the event of any conflict between any notices or other communications of the Company and any other Obligor, those of the Company shall prevail. (b) Without prejudice to the foregoing, the Company shall at all times keep each Obligor informed of all such actions taken or notices or instructions given by the Company on behalf of such Obligor and to the extent practicable or desirable consult with and take instructions from such Obligor. 3. PURPOSE (a) The purpose of the Facility is: (i) to provide the Company with a liquidity back-up to the disposal of the assets under its disposal programme; (ii) subject to paragraph (b) below, for general corporate purposes. (b) The Facility may not be drawn to fund, and no Loan shall be permitted to be applied towards: (i) repayment or prepayment of any amounts outstanding under the Repayable Facilities; 37 (ii) any acquisition or investment (other than (A) the acquisition permitted under Clause 19.18(b)(xi)) or (B) any other acquisition or investment made pursuant to the exercise by a third party of a put option existing at the time of this Agreement and disclosed in Schedule 17; (iii) repayment or prepayment of any amounts outstanding under the Multicurrency Revolving Credit Facility; or (iv) repayment, prepayment, redemption, repurchase or defeasance (by way of legal defeasance or covenant defeasance) of any of the High Yield Notes. (c) Without affecting the obligations of the Company in any way, no Finance Party is bound to monitor or verify the application of any Loan. (d) The Company undertakes that no Loan shall be drawn in any way which would be illegal under any provision of any law applicable to the Company or cause the invalidity or unenforceability of any Loan under any applicable law. 4. CONDITIONS PRECEDENT 4.1 INITIAL CONDITIONS PRECEDENT The first Request may not be delivered until the Facility Agent has notified the Obligors' Agent and the Lenders that it has received all of the documents set out in Part 1 of Schedule 2 in the agreed form no later than 60 calendar days from the date of this Agreement. The Facility Agent shall promptly notify the Obligors' Agent and the Lenders promptly on such receipt. 4.2 FURTHER CONDITIONS PRECEDENT The obligation of each Lender to participate in any Loan under Clause 5.3 (Advance of Loan) is subject to the further conditions precedent that: (a) on both the date of the Request and the Drawdown Date: (i) in the case of a Rollover Loan, the representations and warranties in Clause 18 (Representations and Warranties) to be repeated on those dates are correct in all material respects and will be correct in all material respects immediately after the Loan is made and, in any other case the representations and warranties in Clause 18 (Representations and Warranties) to be repeated on those dates are and will be correct in all respects immediately after the Loan is made; (ii) in the case of a Rollover Loan, no Event of Default is outstanding or could reasonably be expected to result from the Loan and, in the case of any other Loan, no Default is outstanding or could reasonably be expected to result from the Loan; and (iii) the Company is in compliance with all provisions of Clause 19.5 (Liquidity). If the Company fails to comply with Clause 19.5 (Liquidity), no Lender will be obliged to participate in any Loan under Clause 5.3 (Advance of Loan) during the grace period provided for under Clause 21.3(b) until such time as the Facility Agent, acting on the instructions of the Majority Lenders, confirms to the Obligors' Agent that it has received an up-to-date Liquidity Analysis demonstrating that the aggregate of net cash available and undrawn 38 facilities (including, for the avoidance of doubt, this Facility (as defined in Clause 19.5(a)) for the period of three months from that date is more than E100,000,000, together with a certificate of the Chief Financial Officer of the Company confirming that the Liquidity Analysis has been prepared in good faith and is based on reasonable assumptions; (b) no event or series or events has occurred since 7th March, 2003 which, in the opinion of the Majority Lenders (acting in good faith), has or could reasonably be expected to have a Material Adverse Effect (other than any event or change that has occurred and has been disclosed in the Original Liquidity Analysis); (c) the making of the Loan would not cause Clause 2 (Facility) to be contravened; and (d) in respect of a Request for a Tranche A Loan prior to a Release Condition Date, the aggregate amount of: (i) the requested Loan mentioned in the Request; and (ii) the credit balance of the Concentration Accounts at the date of the Request, does not, in aggregate, exceed E250,000,000, unless the purpose of the proposed Loan is to meet a cash outflow payment: (A) identified in the Liquidity Analysis most recently delivered to the Facility Agent under this Agreement and falling due no later than two weeks after the proposed Drawdown Date (after taking into account all actual cash inflows and those projected for such period in that Liquidity Analysis); or (B) of no more than E50,000,000 (in aggregate) falling due in the ordinary course of business. 5. DRAWDOWN 5.1 AVAILABILITY PERIOD The Company may borrow a Loan under a Tranche on any Business Day during the Availability Period for that Tranche if the Facility Agent receives from the Obligors' Agent, (in the case of the first Request) not later than 9.00 a.m. two Business Days, and (in the case of any other Request), not later than 11.00 a.m. three Business Days (or four Business Days in the case of a Loan in U.S. Dollars), before the proposed Drawdown Date, a duly completed Request. Each Request is irrevocable. 5.2 COMPLETION OF REQUESTS A Request will not be regarded as having been duly completed unless: (a) it identifies the Tranche to which the Loan applies; (b) it complies with Clause 4.1 (Initial conditions precedent); (c) the Drawdown Date is a Business Day falling during the Tranche A Availability Period (in the case of a Tranche A Loan) or the Tranche B Availability Period (in the case of a Tranche B Loan); 39 (d) the Original Euro Amount of the requested Loan is: (i) (save in the case of a drawing to meet a cash outflow payment under Clause 4.2(d)(ii)(B)) a minimum of E50,000,000 and an integral multiple of E25,000,000; or (ii) the maximum undrawn amount available under this Agreement for Loans under the relevant Tranche on the proposed Drawdown Date; or (iii) such other amount as the Facility Agent (acting on the instructions of the Lenders) and the Obligors' Agent may agree; (e) where the purpose of the proposed Loan pursuant to Clause 4.2(d)(ii)(A) is to meet a cash outflow payment identified in the Liquidity Analysis most recently delivered to the Facility Agent under this Agreement, such outflow payment is identified in the Request; (f) the amount selected under paragraph (e) above does not cause Clause 2 (Facility) to be contravened; (g) the currency selected complies with Clause 10 (Currency of Loans); (h) the Interest Period selected complies with Clause 8 (Interest Periods) and does not extend beyond the Final Maturity Date; and (i) the payment instructions specify an account of the Company in Paris (in the case of Euro) or in New York (in the case of U.S. Dollars). Each Request must specify one Loan only. 5.3 ADVANCE OF LOAN (a) The Facility Agent shall promptly notify each Lender of the details of the requested Loan and the amount of its participation in that Loan. (b) Subject to the terms of this Agreement, each Lender shall make its participation in any Loan available to the Facility Agent for the Company in the currency in which it is to be borrowed on the relevant Drawdown Date. (c) Subject to the terms of this Agreement, the amount of each Lender's participation in each Loan will be the proportion of the Loan which its Tranche A Commitment or Tranche B Commitment bears respectively to the Total Tranche A Commitments or Total Tranche B Commitments on the date of receipt by the Facility Agent of the relevant Request. 6. REPAYMENT 6.1 MATURITY DATES (a) The Company shall repay each Tranche A Loan made to it in full on its Maturity Date to the Facility Agent for the Lenders. (b) The Company shall repay each Tranche B Loan made to it in full on the Final Maturity Date to the Facility Agent for the Lenders. 40 6.2 REBORROWING Subject to the other terms of this Agreement, any amount of a Tranche A Loan repaid under Clause 6.1(a) (Maturity Dates) may be reborrowed but no amount of the Tranche B Loan which is repaid or prepaid may be reborrowed. 7. PREPAYMENT AND CANCELLATION 7.1 AUTOMATIC CANCELLATION (a) The undrawn Tranche A Commitment of each Lender shall be automatically cancelled at the close of business in Paris on the last day of the Tranche A Availability Period. (b) The undrawn Tranche B Commitment of each Lender shall be automatically cancelled at the close of business in Paris on the last day of the Tranche B Availability Period. 7.2 VOLUNTARY PREPAYMENT AND CANCELLATION (a) Subject to Clause 26.3 (Other indemnities), the Company may, by the Obligors' Agent giving not less than three Business Days' prior notice (or such shorter period as the Majority Lenders may agree) to the Facility Agent, prepay any Loan made to it in whole or in part on any day (but, if in part, in a minimum of E10,000,000 and an integral multiple of E5,000,000). Any prepayment of a Loan shall be applied against the participations of the Lenders in that Loan pro rata. (b) The Company may, without penalty or obligation to indemnify, by the Obligors' Agent giving not less than three Business Days' prior notice (or such shorter period as the Majority Lenders may agree) to the Facility Agent, cancel the unutilised portion of the Total Commitments in whole or in part (but, if in part, in a minimum of E10,000,000 and an integral multiple of E5,000,000). Any cancellation shall be applied pro rata against the Commitments under each Tranche (except at any time between a Release Condition Date and the next subsequent Investment Downgrading Date when any cancellation shall be applied in such proportion against Commitments under each Tranche as determined by the Company) and pro rata against each Lender's Commitment in the relevant Tranche. 7.3 RIGHT OF PREPAYMENT If: (a) the Company is required to pay to a Lender any additional amounts under Clause 12 (Taxes); or (b) the Company is required to pay to a Lender any amount under Clause 14 (Increased Costs), then, without prejudice to the obligations of the Company under those Clauses, the Obligors' Agent may, whilst the circumstances continue, give a notice of prepayment and cancellation to that Lender through the Facility Agent. On the date specified in the notice (not being later than 10 Business Days after the date the notice is given) the Company shall prepay that Lender's participation in all the Loans made to it and the Lender's Commitment shall be cancelled. 41 7.4 MANDATORY PREPAYMENT FROM NET DEBT ISSUE PROCEEDS The Company shall ensure that an aggregate amount equal to 33 per cent. of Net Debt Issue Proceeds (which, in relation to any member of the Cegetel Group or the Maroc Telecom Group, is equal to the proportion of the amounts set out in the definition of Net Debt Issue Proceeds which is equal to the percentage of the share capital of the relevant member of the Cegetel Group or the Maroc Telecom Group owned (directly or indirectly) by the Company at the time of the Debt Issue (excluding, prior to the SIT Repayment Date, the percentage, if any, of the share capital of the relevant member of the Cegetel Group which is held (directly or indirectly) by SIT but including such percentage on or after the SIT Repayment Date)) is applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) and pending such prepayment shall ensure that forthwith on receipt of such proceeds by any member of the Group, such an amount is deposited in the Receipt Account in accordance with Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). 7.5 MANDATORY PREPAYMENT FROM NET DIVIDEND PROCEEDS The Company shall ensure that an aggregate amount equal to 50 per cent. of Net Dividend Proceeds is applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). 7.6 MANDATORY PREPAYMENT FROM NET EQUITY ISSUE PROCEEDS The Company shall ensure that an amount equal to 16 2/3 per cent. (or, in relation to any Equity Issue made or entered into on or after the Maroc Telecom Date by any member of the Maroc Telecom Group, 33 per cent.) of Net Equity Issue Proceeds (which, in relation to any member of the Cegetel Group or any member of the Maroc Telecom Group (other than in respect of secondary Equity Issues in respect of Maroc Telecom), is equal to the proportion of the amounts set out in the definition of Net Equity Issue Proceeds which is equal to the percentage of the share capital of the relevant member of the Cegetel Group or the Maroc Telecom Group (owned directly or indirectly) by the Company at the time of the Equity Issue (excluding, prior to the SIT Repayment Date, the percentage, if any, of the share capital of the relevant member of the Cegetel Group which is held (directly or indirectly) by SIT but including such percentage on or after the SIT Repayment Date)) is applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and the Company shall ensure that any such amount due is paid at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) and pending such prepayment the Company shall ensure that forthwith on receipt of such proceeds by any member of the Group, such an amount is deposited in the Receipt Account in accordance with Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). 7.7 MANDATORY PREPAYMENT FROM VE SHARES DISPOSAL The Company shall ensure that an amount equal to 50 per cent. of the Net VE Shares Disposal Proceeds is applied in prepayment and cancellation of Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and the Company shall ensure that any such amount due is paid at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) 42 and pending such prepayment the Company shall ensure that forthwith on receipt of such proceeds by any member of the Group, such an amount is applied in accordance with Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). 7.8 MANDATORY PREPAYMENT FROM ASSETS DISPOSALS (a) Subject to paragraph (b), the Company shall ensure that an amount equal to 16 2/3 per cent. (or in the case of an Assets Disposal in respect of Maroc Telecom, on or after the Maroc Telecom Date, 33 per cent.) of the aggregate amount of all Net Assets Disposal Proceeds, shall be applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and the Company shall ensure that any such amount due is paid at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) and pending such prepayment the Company shall ensure that forthwith on receipt of such proceeds (or, in relation to Net Assets Disposal Proceeds comprised by non cash consideration, forthwith upon the conversion of that consideration into cash) by a member of the Group, such an amount is applied in accordance with Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). (b) This Clause 7.8 shall not apply to a disposal: (i) of an asset where the Net Assets Disposal Proceeds are E30,000,000 or less (or equivalent in other currencies); (ii) in the ordinary course of trading of stock in trade, business inventories, fixtures and fittings, furniture and other office equipment; or (iii) of any Permitted Joint Venture. 7.9 MANDATORY PREPAYMENT - CEGETEL DISPOSAL AND SIT DISPOSAL The Company shall ensure that an amount equal to 25 per cent. of the proportion of the Net Cegetel Disposal Proceeds and the Net SIT Disposal Proceeds which is equal to the percentage of the share capital of SIT or the relevant member of the Cegetel Group (owned directly or indirectly) by the Company at the time of the disposal (excluding, prior to the SIT Repayment Date, the percentage, if any, of the share capital of the relevant member of the Cegetel Group which is held (directly or indirectly) by SIT but including such percentage on or after the SIT Repayment Date)) is applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and the Company shall ensure that any such amount due is paid at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) and pending such payment, the Company shall ensure that forthwith on receipt of such proceeds (or, in relation to Net Cegetel Disposal Proceeds and Net SIT Disposal Proceeds comprised by non-cash consideration forthwith upon the conversion of that consideration into cash) by any member of the Group, such an amount is applied in accordance with Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) provided that such prepayment and cancellation shall not be required to be made to the extent that the Company is unable, by reason of contractual restrictions or obligations in any shareholder agreements or the Non Recourse Financing in force at the date of this Agreement or by law or regulation binding on it, to procure or direct the upstreaming of such proceeds (whether by way of intra company loan or dividend or otherwise). 43 7.10 MANDATORY PREPAYMENT - MAROC TELECOM (a) The Company shall ensure that on or after the Maroc Telecom Date an aggregate amount equal to 100 per cent. of Net Maroc Dividend Proceeds is applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account). (b) The Company shall ensure that on or after the Maroc Telecom Date an amount equal to 33 per cent. of the aggregate amount of all Net Maroc Disposal Proceeds (being an amount equal to the proportion of the amounts set out in the definition of Net Maroc Disposal Proceeds which is equal to the percentage of the share capital of the relevant member of the Maroc Group (owned directly or indirectly) by the Company at the time of the disposal) shall be applied in prepayment and cancellation of the Facility in the proportion and manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) and the Company shall ensure that any such amount due is paid at the time set out in Clause 7.15 (Timing of mandatory prepayments and cancellations and Receipt Account) and pending such prepayment the Company shall ensure that forthwith on receipt of such proceeds (or, in relation to Net Maroc Disposal Proceeds comprised by non cash consideration, forthwith upon the conversion of that consideration into cash) by a member of the Group, such an amount is applied in accordance with Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) provided that such prepayment and cancellation shall not be required to be made to the extent that the Company is unable, by reason of contractual restrictions or obligations in any shareholder agreement in force at the date of this Agreement to procure or direct the upstreaming of such proceeds (whether by way of intra company loan or dividend or otherwise). 7.11 MANDATORY PREPAYMENT - NON COMPLIANCE WITH FINANCIAL COVENANTS (a) If the Company fails to comply with any provision of Clause 20 (Financial Covenants), it shall ensure that the Facility shall be cancelled in full and the Company shall repay each Loan made to it in full to the Facility Agent for the Lenders forthwith and in any event by the date falling 15 Business Days from the date of the failure to comply with the relevant provision of Clause 20 (Financial Covenants), in the manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds). (b) The provisions of this Clause 7.11 shall apply and remain in force at all times throughout the term of this Agreement (notwithstanding, for the avoidance of doubt, the occurrence of a Release Condition Date). 7.12 MANDATORY PREPAYMENT - CHANGE OF CONTROL (a) Upon the occurrence of a Change of Control event (other than under paragraph (a) of that definition), the Company shall ensure that the Facility shall be cancelled in full and the Company shall repay each Loan made to it in full to the Facility Agent for the Lenders forthwith and in any event by the date falling 15 Business Days after the date on which such Change of Control takes effect, in the manner set out in Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds). (b) Upon the occurrence of a Change of Control event under paragraph (a) of that definition: (i) if the relevant Change of Control was not subject to the prior approval or recommendation of the Company's board of directors (conseil d'administration) (a "BOARD APPROVAL") the Total Commitments shall be cancelled in full forthwith and 44 the Company shall repay each Loan made to it in full to the Facility Agent for the Lenders on the date falling 15 Business Days after the date on which such Change of Control becomes legally effective; or (ii) if a Board Approval has been given in respect of the relevant Change of Control, then any Lender may, no later than 30 calendar days following the Change of Control becoming legally effective, notify the Obligors' Agent (through the Facility Agent) that its participation in the Loan is to be prepaid in full and that its Commitment be cancelled. If a Lender delivers a notice under this paragraph (ii): (A) on the date of that notice the Lender's Commitment shall be cancelled; and (B) on the date following 5 Business Days after the date of the notice the Company shall prepay that Lender's participation in the Loans in full. (c) The provisions of this Clause 7.12 shall apply and remain in force at all times throughout the term of this Agreement (notwithstanding, for the avoidance of doubt, the occurrence of a Release Condition Date). 7.13 MANDATORY PREPAYMENT AND CANCELLATION - HIGH YIELD/SIT (a) The Facility will be automatically terminated and the Total Commitments then not cancelled shall be automatically reduced and cancelled at the close of business on the Special Mandatory Cancellation Date. (b) If the relevant member of the Group does not comply with its obligations under the drag along and/or tag along rights granted to SIT in respect of shares in Cegetel and/or the Acquired Shares, then the Total Commitments shall be cancelled in full forthwith and the Company shall forthwith repay each Loan made to it in full to the Facility Agent for the Lenders. (c) The provisions of paragraphs (a) and (b), above, shall apply and remain in force at all times throughout the term of this Agreement (notwithstanding, for the avoidance of doubt, the occurrence of a Release Condition Date). 7.14 MANDATORY PREPAYMENT AND CANCELLATION - APPLICATION OF PROCEEDS (a) All amounts required to be prepaid under Clauses 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) through to 7.13 (Mandatory prepayment and cancellation - High Yield/SIT) shall be applied in prepayment of each of Tranche A Loans and Tranche B Loans then outstanding pro rata in proportion to the outstanding Loans. (b) Where an amount is to be applied in prepayment of any Loans under this Clause 7.14 and either no Loan is outstanding or such amount is greater than the then outstanding amount of Loans, if no Loan is outstanding, such amount or otherwise, an amount equal to the difference between such amount and the amount of Loans actually prepaid shall be applied in cancellation of the undrawn Total Commitments and the remaining cash proceeds (if any) shall be retained by the Company. 7.15 TIMING OF MANDATORY PREPAYMENTS AND CANCELLATIONS AND RECEIPT ACCOUNT (a) Any mandatory prepayment of a Loan due under a Tranche pursuant to Clause 7.4 (Mandatory prepayment from Net Debt Issue Proceeds), Clause 7.6 (Mandatory prepayment from Net Equity Issue Proceeds), Clause 7.7 (Mandatory prepayment from VE Shares Disposal), and Clauses 7.9 (Mandatory Prepayment - Cegetel Disposal and SIT Disposal) and 45 7.8 (Mandatory prepayment from Assets Disposals) and 7.10(b) (Mandatory prepayment - Maroc Telecom) shall be due on and from receipt of the relevant Net Proceeds by the relevant member of the Group party to any such debt issue, equity issue or disposal and shall be paid either: (i) on the earlier of the date falling three months from the receipt of the relevant Net Proceeds and the last day of the Interest Period for that Loan during which the relevant Net Proceeds were received (or, converted into cash in relation to Net Assets Disposal Proceeds comprised by non-cash consideration) by a member of the Group; or (ii) at such earlier time following receipt of such Net Proceeds (or, their conversion into cash in relation to Net Assets Disposal Proceeds comprised by non-cash consideration) by a member of the Group as the Facility Agent (only upon the occurrence of an Event of Default which is continuing), or as the Company, shall direct. (b) Any mandatory prepayment of a Loan due under a Tranche under Clause 7.5 (Mandatory prepayment from Net Dividend Proceeds) and Clause 7.10(a) (Mandatory prepayment - Maroc Telecom)) shall be due on and from the date the dividend is declared and shall be paid on the last day of the Interest Period for that Loan during which the relevant dividend was paid. (c) Any cancellation of Commitments pursuant to Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds) shall be made on the day on which either the relevant Net Proceeds were received (or converted into cash in the case of Net Assets Disposal Proceeds and Net Maroc Disposal Proceeds comprised by non-cash consideration) by a member of the Group or (in the case of Clauses 7.5 and 7.10(a)) on the date the relevant dividend was declared. (d) Pending the application of any amount required to be prepaid under this Facility in accordance with this Clause 7 (Prepayment and Cancellation) any such amount shall be deposited in the Receipt Account. (e) Each Obligor irrevocably authorises and instructs the Security Agent to apply any amount deposited in the Receipt Account towards prepayment of the Loans or (if applicable) payment to the Obligors, as the case may be (in the case of the Loans, at the times referred to in paragraphs (a) (i) and (ii) above or, in the case of payment to the Obligors, promptly following deposit of the same). (f) Amounts standing to the credit of the Receipt Account (and any interest accruing in respect thereof) may not be withdrawn and may only be used (i) in mandatory prepayment of the Loans on the earlier of (A) the last day of the Interest Period for the relevant Loan, (B) such time as the Company shall direct in accordance with Clause 7.15(a)(ii) and (C) on the date falling three months from the receipt thereof and/or (ii) following the occurrence of an Event of Default which is continuing, in payment of any amounts due to the Finance Parties under the Finance Documents and/or (iii) (if applicable) in payment to the Obligors. 7.16 MISCELLANEOUS PROVISIONS (a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable. The Facility Agent shall notify the Lenders promptly of receipt of any such notice. 46 (b) All prepayments under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs pursuant to Clause 26.3 (Other indemnities), without premium or penalty. (c) Any partial prepayment of the Loans under a Tranche will be applied against the Loans comprised in that Tranche pro rata. (d) No prepayment or cancellation is permitted except in accordance with the express terms of this Agreement. (e) No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated. (f) Without prejudice to the rights of the Company to re-borrow under Clause 6.2 (Reborrowing), no amounts of any mandatory payment prepaid by the Company may be reborrowed. Where an amount of any mandatory prepayment is prepaid the corresponding Commitment will be cancelled automatically. (g) Each Obligor shall ensure that none of its Subsidiaries will be under any restriction (other than any restriction or obligation under any VUE Incremental Indebtedness or VUE Bridge Refinancing or any shareholder restriction or obligation existing prior to the date of this Agreement including without limitation under the Matsushita Shareholder Agreements, the Maroc Telecom Shareholder Agreement, the Transtel Shareholder Agreement, the Cegetel Shareholder Agreement, the SFR Shareholder Agreement, the VUE Partnership Agreement, the VUE Transaction Agreement, the VUE Bridge Extension or the Non Recourse Financing in each case existing and in force prior to the date of this Agreement or imposed by law or regulation binding on it) to pay, make or declare any dividends, return on capital, repayment of capital contributions or other distributions (whether in cash or in kind) or make any distribution of assets or other payments whatsoever in respect of share capital or up-stream amounts (whether by Intra Group Loan or otherwise), whether directly or indirectly, in each case, to the extent necessary to meet its payment obligations under Clauses 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.14 (Mandatory prepayment and cancellation - application of proceeds) above and to the fullest extent permitted by law and contractual restrictions (including, without limitation, for the avoidance of doubt, under the Matsushita Shareholder Agreements, VUE Partnership Agreement and the VUE Transaction Agreement) existing at the date of this Agreement and each Obligor shall use its reasonable endeavours to ensure that the same are paid, made or declared. (h) Subject to paragraphs (g) and (i) of this Clause, the Company shall, to the fullest extent permitted by applicable law, procure that all Net Proceeds are made available to it promptly following receipt thereof by the relevant member of the Group. (i) Each Obligor shall use its reasonable endeavours to procure (subject to any contractual restrictions existing on the date of this Agreement or restrictions imposed by law or regulation binding on it) that any member of the Cegetel Group, SIT, any member of the Maroc Telecom Group and/or Transtel upstreams to its shareholders (whether by way of dividend, (subject to any restriction imposed by the Non Recourse Financing on the up-streaming of intercompany loans to be made by Cegetel) intra company loan or otherwise) Net Assets Disposal Proceeds received by it or its Subsidiaries. (j) Until a Release Condition Date occurs, the Company will not make any voluntary prepayment or cancellation under the Existing Bank Debt unless it also makes a voluntary prepayment or cancellation under this Agreement at the same time and in the same amount. If a Release Condition Date occurs but any time thereafter an Investment Downgrading Date occurs the 47 provisions of this paragraph (j) shall be automatically reinstated and remain in force from the Investment Downgrading Date until such time as a Release Condition Date occurs again in which case the provisions of the first sentence of this Clause shall apply. (k) The Company will not amend or vary (or agree to amend or vary) any mandatory prepayment provision of the Existing Bank Debt in any way which results or could reasonably be expected to result, in the opinion of the Majority Lenders, in any such provision becoming more onerous to the Company or otherwise be detrimental or prejudicial to their rights and remedies under the Finance Documents (including, without limitation, any amendment to the relevant mandatory prepayment percentages) than those in force at the date of this Agreement without the prior written consent of the Majority Lenders. (l) (i) If any amount is required to be applied in prepayment and cancellation of the Facility, in respect of any Disposal, Debt Issue or Equity Issue made by any member of the VUE Group (other than any Asset Disposal or secondary Equity Issue by the Company of its interest in VUE or of all or substantially all of the assets of the VUE Group in any one or more related transactions), the Company shall be obliged to use its reasonable endeavours to upstream (subject to any VUE Relevant Restriction) by way of distributions/dividends or Intra Group Loans an amount equal to such amount in order to make any such prepayment and cancellation of the Facility, provided that: (A) to the extent that the Company cannot at any time, due to any VUE Relevant Restriction, so up-stream any such amount in full by way of distributions/dividends and so apply the relevant proceeds in full in prepayment and cancellation of the Facility, the Company shall further use its reasonable endeavours to up-stream an amount equivalent to the shortfall by way of Intra Group Loans; and (B) to the extent that the Company cannot at any time, due to any VUE Relevant Restriction, apply the proceeds of any up-streaming by way of Intra Group Loan in full prepayment and cancellation of the Facility, the Company shall not be required so to apply such proceeds, but shall deposit such proceeds promptly upon receipt of the same in the Concentration Accounts. (ii) For the avoidance of doubt, if any amount is required to be applied in prepayment and cancellation of the Facility, in respect of any Asset Disposal or secondary Equity Issue by the Company of its interest in VUE or of all or substantially all of the assets of the VUE Group in any one or more related transactions, the Company shall be obliged to apply an amount equal to any such amount in prepayment and cancellation of the Facility notwithstanding any VUE Relevant Restriction binding upon the Company or any other member of the Group with regard to the upstreaming orpayment of any such amount (whether by way of dividend or Intra Group Loan) and otherwise in accordance with the terms of this Agreement. (m) (i) The provisions of Clauses 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc Telecom), inclusive, shall apply and remain in force at all times throughout the term of this Agreement unless and until the Company obtains an Investment Grade Rating and for so long as the Company maintains an Investment Grade Rating. If an Investment Grade Rating Date occurs and until the occurrence of an Investment Downgrading Date, then the provisions of Clause 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc Telecom) shall cease to apply except with respect to any Net Proceeds received after the Investment Grade Rating Date in relation to any Disposal, Debt Issue, or Equity Issue made before the Investment Grade Rating Date 48 or any Net Dividend Proceeds declared prior to the Investment Grade Rating Date which shall be applied in accordance with the provisions of Clause 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc Telecom) inclusive, notwithstanding that the Company has an Investment Grade Rating. (ii) If the Company obtains an Investment Grade Rating but at any time thereafter an Investment Downgrading Date occurs, all the provisions of Clauses 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc Telecom), inclusive, shall be automatically reinstated and apply from the Investment Downgrading Date with respect to any Disposal, Debt Issue or Equity Issue made on or after the Investment Downgrading Date or any Net Dividend Proceeds declared on or after the Investment Downgrading Date, in each case, until the Company obtains an Investment Grade Rating in which case the provisions of sub-paragraph (i) above shall then apply. 8. INTEREST PERIODS 8.1 GENERAL (a) Each Tranche A Loan has only one Interest Period. (b) Each Tranche B Loan will have successive Interest Periods. 8.2 DURATION (a) Each Interest Period for a Tranche A Loan will commence on its Drawdown Date. Each Interest Period for a Tranche B Loan will commence on its Drawdown Date or the expiry of its preceding Interest Period. (b) Subject to the following provisions of this Clause 8, each Interest Period will be one, two, three or six months selected by the Obligors' Agent or such shorter period as may be agreed with the Facility Agent. (c) The Obligors' Agent shall select an Interest Period for a Tranche A Loan in the relevant Request. The Obligors' Agent shall select the Interest Period for a Tranche B Loan in the relevant Request, or, if the Tranche B Loan has been borrowed, in a notice received by the Facility Agent no later than 11.00 a.m. three Business Days before the commencement of that Interest Period. (d) If the Obligors' Agent fails to select an Interest Period for a Tranche A Loan or a Tranche B Loan in accordance with paragraph (c) above, that Interest Period will, subject to the other provisions of this Clause 8, be three months. (e) Notwithstanding paragraph (b) above, prior to the Syndication Date each Interest Period shall (subject to the following provisions of this Clause) be one week or such longer period as agreed by the Obligors' Agent and the Facility Agent (after consultation with the Lenders). 8.3 NON-BUSINESS DAYS If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not). 49 8.4 CONSOLIDATION Notwithstanding Clause 8.2 (Duration), the first Interest Period for each Tranche B Loan shall end on the same day as the current Interest Period for any other Tranche B Loan denominated in the same currency as that Tranche B Loan. On the last day of those Interest Periods, those Tranche B Loans shall be treated as one Tranche B Loan. 8.5 NO OVERRUNNING OF THE FINAL MATURITY DATE If an Interest Period for a Loan would otherwise overrun the Final Maturity Date, it shall be shortened so that it ends on the Final Maturity Date. 8.6 OTHER ADJUSTMENTS The Facility Agent (after consultation with the Lenders) and the Company may enter into such other arrangements as they may agree for the adjustment of Interest Periods and the consolidation and/or splitting of Loans. 8.7 NOTIFICATION The Facility Agent shall notify the Lenders and the Obligors' Agent of the duration of each Interest Period promptly after ascertaining its duration. 8.8 EFFECTIVE GLOBAL RATE In order to comply with the provisions of Articles L313-1 and L313-2 of the French consumer Code (Code de la Consommation) the effective global rate (taux effectif global) calculated in accordance with the articles referred to above is as set out in a letter dated the date of this Agreement from the Facility Agent to the Obligor's Agent. 9. INTEREST 9.1 INTEREST RATE (a) (i) The rate of interest on each Loan for its Interest Period is the rate per annum determined by the Facility Agent to be the aggregate of the applicable: (A) Applicable Margin; and (B) EURIBOR in respect of a Loan denominated in Euro, or LIBOR in the case of a Loan in U.S. Dollars. (ii) In addition to interest under sub-paragraph (i), the Company shall also pay to the Facility Agent for each Lender, that Lender's Mandatory Cost (if any). (b) Mandatory Costs due under paragraph (a)(ii) shall be notified by each Lender to the Obligors' Agent through the Facility Agent on an annual basis and, in relation to a Lender which ceases to be a Lender, on or before the date it ceases to be a Lender, and in each case shall be due within five Business Days of the relevant notification. 9.2 DUE DATES Except as otherwise provided in this Agreement, accrued interest on each Loan is payable by the Company on the last day of each Interest Period for that Loan. 50 9.3 MARGIN ADJUSTMENT (a) Subject to the following provisions of this Clause 9.3, the Applicable Margin, in respect of Tranche A and in respect of Tranche B is 2.75 per cent. per annum. (b) The Applicable Margin (expressed as a percentage per annum) in respect of Tranche A Loans only will be adjusted from time to time in accordance with this Clause 9.3 and shall be equal to the percentage rate per annum specified in the table below set opposite the long term unsecured credit ratings assigned by both (but not one of) S&P and Moody's to the Company, as follows:

RATINGS S&P RATINGS MOODY'S TRANCHE A MARGIN (% P.A.) B+ or lower B 1 or lower 2.75% BB- Ba 3 2.00% BB Ba 2 1.75% BB+ Ba 1 1.50% BBB- Baa 3 1.25% BBB or higher Baa 2 or higher 1.00%

(c) If the long term unsecured credit rating assigned to the Company by one of Moody's or S&P is lower than the long term unsecured credit rating of the other so assigned, then the Applicable Margin will be determined on the basis of the lower rating. (d) Notwithstanding any other provision in this Clause 9.3, no reduction to the Applicable Margin in respect of Tranche A shall be available before the date falling six months from the first Drawdown Date. (e) Any adjustment to the Applicable Margin (whether upwards or downwards) in accordance with this Clause 9.3 will take effect immediately upon the later date of official confirmation by S&P and Moody's (in the case of a ratings upgrade) or the date of publication by S&P and Moody's (in the case of a ratings downgrade), in each case of any relevant change to the long term unsecured credit rating assigned by them to the Company. (f) If at any time either Moody's or S&P (the WITHDRAWING RATING AGENCY) for any reason do not, or cease to, assign a long term unsecured credit rating (CREDIT RATING) to the Company by, the Company shall within 15 calendar days of the date on which the credit rating ceases to be assigned (the NON RATING DATE), appoint Fitch, or with the agreement of the Facility Agent acting on the instructions of the Majority Lenders, acting reasonably, another rating agency (each a REPLACEMENT RATING AGENCY). The Facility Agent shall, in consultation with the Company, select the applicable equivalent ratings grid of such replacement rating agency for the purposes of paragraph (b) above which shall, with the prior consent of the Majority Lenders, be binding on all Parties. The replacement rating agency shall assign a credit rating to the Company within 90 calendar days. If (i) the Company fails to appoint a replacement rating agency within 15 calendar days of the non rating date, or (ii) if appointed, the replacement rating agency fails to assign a credit rating to the Company within 90 calendar days of the non rating date, the Applicable Margin in respect of Tranche A shall be 2.75 per cent. per annum. On and after the non rating date, the then Applicable Margin shall continue until the date of official confirmation by the replacement rating agency (in the case of a ratings upgrade) or the date of publication by the replacement rating agency (in the case of a ratings downgrade) (the ADJUSTMENT DATE). If the credit rating assigned to the Company by the replacement rating agency is lower than the last credit rating assigned by the withdrawing rating agency, the Company shall pay to the Facility Agent forthwith on demand the sum determined by the Facility Agent to be the difference between the then Applicable Margin for 51 the period from the non rating date until the adjustment date and the Applicable Margin which would have applied had it been determined by reference to the credit rating assigned by the replacement rating agency for the same period. (g) Promptly upon becoming aware of the same, the Company shall notify the Facility Agent in writing if any change in the long term unsecured credit rating assigned to it by Moody's and/or S&P occurs or the circumstances contemplated in paragraphs (c), (e) or (f) arise. 9.4 DEFAULT INTEREST (a) If an Obligor fails to pay any amount payable by it to a Finance Party under the Finance Documents, it shall, forthwith on demand by the Facility Agent, pay interest on the overdue amount from the due date up to the date of actual payment, as well after as before judgment, at a rate (the DEFAULT RATE) determined by the Facility Agent to be two per cent. per annum above the higher of: (i) the rate on the overdue amount under Clause 9.1 (Interest rate) immediately before the due date (if of principal); and (ii) 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 such successive Interest Periods of such duration (not exceeding three months) as the Facility Agent may determine (each a DESIGNATED INTEREST PERIOD). (b) If the Facility Agent determines that deposits in the currency of the overdue amount are not at the relevant time being made available by the Reference Banks to leading banks in the relevant interbank market, the default rate will be determined by reference to the cost of funds to the Facility Agent from whatever sources it may reasonably select. (c) The default rate will be determined by the Facility Agent on each Business Day or the first day of, or two Business Days before the first day of, the relevant Designated Interest Period, as appropriate. (d) Default interest will be compounded at the end of each Designated Interest Period. (e) For the avoidance of doubt, default interest shall not be payable on any amount due under Clause 7 (Prepayment and Cancellation) for mandatory prepayments which are to be paid on the last day of the relevant Interest Period or any such amount, unless it is not prepaid on such date. 9.5 NOTIFICATION The Facility Agent shall promptly notify each other relevant Party of the determination of a rate of interest under this Agreement. 10. CURRENCY OF LOANS 10.1 SELECTION (a) The Obligors' Agent shall select the currency of a Loan in the relevant Request. (b) The currency of each Loan must be Euro or U.S. Dollars. (c) A Loan may not be denominated in more than one currency. 52 (d) The Facility Agent shall notify each Lender and the Obligors' Agent of the currency and the Original Euro Amount of each Loan to be denominated in U.S. Dollars, and the applicable Spot Rate of Exchange, promptly after they are ascertained. (e) If before 10.30 a.m. (Paris time) on any Rate Fixing Date, the Facility Agent receives notice from a Lender that it is impracticable for that Lender (the AFFECTED LENDER) to fund its participation in the relevant Loan in U.S. Dollars during the Interest Period for that Loan in the ordinary course of business in the relevant interbank market and/or any such Loan might contravene any law or regulation that Loan will not be made in U.S. Dollars but the Affected Lender's participation in the Loan (or if more than one Lender is similarly affected, those Lenders participation in the Loan) shall be treated as a separate Loan denominated in Euros and the Facility Agent shall determine the relevant EURIBOR. 10.2 TRANCHE B LOAN - IN U.S. DOLLARS (a) At the end of each Interest Period for a Tranche B Loan denominated in U.S. Dollars, the Facility Agent shall calculate the difference between the amount of the Tranche B Loan in U.S. Dollars for the current Interest Period and the amount of the Tranche B Loan in U.S. Dollars for the next Interest Period. For these purposes, the amount of the Tranche B Loan in U.S. Dollars for the next Interest Period will be determined by notionally converting into U.S. Dollars the Original Euro Amount of the Tranche B Loan on the basis of the Spot Rate of Exchange one Business Day before the Rate Fixing Day for that new Interest Period. (b) At the end of the current Interest Period (but always subject to paragraph (c)) below if the amount of the Tranche B Loan in U.S. Dollars for the next Interest Period is less than for the preceding Interest Period, the Facility Agent shall promptly notify the Obligors' Agent and the Company shall repay the difference on the last day of the current Interest Period. (c) If the Spot Rate of Exchange for the next Interest Period shows an appreciation or depreciation of U.S. Dollars against Euros of less than 5 per cent. when compared with the Original Exchange Rate, no amounts are payable in respect of the difference. In this Clause 10, ORIGINAL EXCHANGE RATE means the Spot Rate of Exchange used for determining the amount of a Tranche B Loan in U.S. Dollars for the Interest Period which is the later of the following: (i) the first Interest Period of that Tranche B Loan; and (ii) the most recent Interest Period immediately prior to which a difference was required to be paid under this Clause 10.2. 10.3 PREPAYMENTS AND REPAYMENTS If a Tranche B Loan is to be prepaid by reference to an Original Euro Amount, the amount in U.S. Dollars to be repaid or prepaid shall be determined by reference to the Spot Rate of Exchange last used for determining the amount of that Loan in U.S. Dollars under this Clause 10 or, if applicable, the Original Exchange Rate. 10.4 NOTIFICATION The Facility Agent shall notify the Lenders and the Obligors' Agent of any amounts (and the applicable Spot Rate of Exchange) and whether any payment is required to be made under this Clause 10 promptly after they are ascertained. 53 11. PAYMENTS 11.1 PLACE Unless a Finance Document expressly specifies that payments are to be made under it in another manner, all payments by an Obligor or a Lender under the Finance Documents shall be made to the Facility Agent to its account at such office or bank: (a) in the case of U.S. Dollars, New York; or (b) in the case of Euro, in the principal financial centre of a Participating Member State or London, as it may notify to the Obligors' Agent or Lender for this purpose by not less than five Business Days' prior notice. Notwithstanding the above, all payments by the Company or the Obligors' Agent to the Lenders under Clauses 23.1 (Arrangement fees) and Clause 24 (Expenses) shall be made direct to the Facility Agent (for distribution to the Mandated Lead Arrangers). 11.2 FUNDS Payments under the Finance Documents to the Facility Agent shall be made for value on the due date at such times and in such funds as the Facility Agent may specify to the Party concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment. 11.3 DISTRIBUTION (a) Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to paragraphs (b), (c) and (d) below, be made available by the Facility Agent to that Party by payment (on the date and in the currency and funds of receipt) to its account with such office or bank in the principal financial centre of the country of the relevant currency as it may notify to the Facility Agent for this purpose by not less than five Business Days' prior notice. (b) The Facility Agent may apply any amount received by it for an Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under this Agreement or in or towards the purchase of any amount of any currency to be so applied. (c) 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 Party until it has established that it has actually received that sum. The Facility Agent may, however, assume that the sum has been paid to it in accordance with this Agreement, and, in reliance on that assumption, make available to that Party a corresponding amount. If the sum has not been made available but the Facility Agent has paid a corresponding amount to another Party, that Party shall forthwith on demand by the Facility Agent refund the corresponding amount together with interest on that amount from the date of payment to the date of receipt, calculated at a rate determined by the Facility Agent to reflect its cost of funds. 11.4 CURRENCY (a) A repayment or prepayment of a Loan is payable in the currency in which the Loan is denominated on its due date. 54 (b) Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated. (c) Amounts payable in respect of costs, expenses and Taxes and the like are payable in the currency in which they are incurred. (d) Any other amount payable under the Finance Documents is, except as otherwise provided in this Agreement, payable in Euro. 11.5 SET-OFF AND COUNTERCLAIM All payments made by an Obligor to a Finance Party under the Finance Documents shall be made without set-off or counterclaim. 11.6 NON-BUSINESS DAYS (a) Save as otherwise provided by this Agreement, if a payment to a Finance Party under the Finance Documents is due on a day which is not a Business Day or a Target Day, the due date for that payment shall instead be the next Business Day or Target Day in the same calendar month (if there is one) or the preceding Business Day or Target Day (if there is not). (b) During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date. 11.7 PARTIAL PAYMENTS (a) If the Facility Agent receives a payment insufficient to discharge all the amounts then due and payable by the Obligors to the Finance Parties under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of the Obligors under the Finance Documents in the following order: (i) FIRST, in or towards payment pro rata of any unpaid fees, costs and expenses of each Agent under the Finance Documents; (ii) SECONDLY, in or towards payment pro rata of any accrued interest 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 all the Lenders, vary the order set out in sub-paragraphs (a)(ii) to (iv) above. (c) Paragraphs (a) and (b) above will override any appropriation made by an Obligor. 12. TAXES 12.1 TAXES (a) All payments by each Obligor under the Finance Documents shall be made free and clear of and without any deduction for or on account of any Taxes, except to the extent that an Obligor is required by law to make payment subject to any Taxes. Subject to paragraphs (b) 55 and (c) below, if any Taxes or amounts in respect of Taxes must be deducted from any amounts payable or paid by an Obligor, or paid or payable by the Facility Agent to a Lender, under the Finance Documents, the Obligor concerned shall pay such additional amounts as may be necessary to ensure that the relevant Lender receives a net amount equal to the full amount which it would have received had payment not been made subject to any deduction for or on account of any Taxes. (b) If an Obligor is, or becomes obliged, to make any deductions from any amounts paid or payable by that Obligor to a Finance Party and is prevented by applicable law from paying the additional amounts referred to in paragraph (a) above: (i) the Finance Party (if a Lender) may, by notice to the Obligors' Agent through the Facility Agent, require the relevant Obligor to prepay all or part of its participation in the Loan; and (ii) the relevant Obligor shall prepay the participation of that Lender in the Loans made to it on the date falling 20 calendar days after the date of the notice, provided that notwithstanding such prepayment the Obligor concerned shall be obliged to pay the additional amounts to that Lender which it is prevented from paying as soon as it may legally do so and such obligation shall survive any cancellation or termination of this Agreement. (c) No Obligor is obliged to pay any additional amounts for the account of a Finance Party pursuant to paragraph (a) above in respect of any deduction to the extent that the obligation to pay such additional amounts would not have arisen but for the gross negligence or wilful misconduct of such Finance Party or the failure by such Finance Party to provide (within a reasonable period after being requested to do so by the Obligors' Agent or the Facility Agent) any reasonably required form, certificate or other documentation (1) the provision of which would have relieved the relevant Obligor from the relevant withholding obligation or would have reduced the amount of the relevant withholding obligation (but only to the extent of such reduction) and (2) which it is within the power of such Finance Party to provide. (d) Each Obligor shall: (i) pay when due all Taxes required by law to be deducted or withheld by it from any amounts paid or payable to the Finance Parties under the Finance Documents; (ii) within 30 calendar days of the payment being made, deliver to the Facility Agent for the relevant Lender evidence satisfactory to that Lender (including all relevant Tax receipts) that the payment has been duly remitted to the appropriate authority; and (iii) except as provided in paragraph (e) below, on demand (which demand shall be accompanied by a certificate from the Finance Party setting out, in reasonable detail, calculations relating to the amount claimed) indemnify each Finance Party against any loss or liability which that Finance Party determines will be or has been suffered (directly or indirectly) by that Finance Party solely or on account of Tax in relation to a payment received or receivable (or any payment deemed to be receivable) under a Finance Document. (e) Paragraph (d)(iii) above does not apply to: (i) any Tax assessed on a Finance Party under the laws of the jurisdiction in which: 56 (A) that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or (B) that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable or any branch profits Taxes imposed on that Finance Party (but not any sum deemed to be received or receivable); or (ii) any loss or liability for which such Finance Party is compensated by the payment of additional amounts under paragraph (a) above or would have been compensated but for one of the exceptions referred to in paragraph (c). 12.2 TAX CREDIT If, following the payment by an Obligor of any additional amounts under Clause 12.1 above, the Facility Agent or any Lender shall solely determine that it has received or been granted a credit against or remission for any Taxes payable by it allocable by the Facility Agent or such Lender to the relevant deduction or withholding (a TAX CREDIT) and that Lender has retained (including through any applicable Tax Credit) and fully utilised on an affiliated group basis such credit, the Facility Agent or such Lender shall reimburse the Obligor concerned with such amount as the Facility Agent or such Lender shall in its discretion (acting in good faith) certify to be the proportion of such Tax Credit (if any) as will leave the Facility Agent or such Lender (after such reimbursement) in no worse position than it would have been in had the relevant deduction or withholding not been made. Such reimbursement shall be made as soon as reasonably practicable after the Facility Agent or such Lender (as the case may be) shall have made any such determination. Each Lender shall use its reasonable endeavours to determine whether it is entitled to receive a Tax Credit and, if it determines that it is, to obtain the same, unless to do so or attempt to do so might, in the sole opinion of the Lender, be in any way prejudicial to the Lender (provided that where a Lender claims a Tax Credit pursuant to this Clause 12.2, the extent, order and manner in which it does so shall be in the absolute discretion of the Lender (acting in good faith)). 12.3 MITIGATION If circumstances arise in which an Obligor would be required to pay any additional amount to any Lender or any appropriate authority for the account of any Lender pursuant to this Clause 12 then, without in any way limiting, reducing or otherwise qualifying that Obligor's obligations under Clause 12, the relevant Lender shall for a period not exceeding 30 calendar days use it reasonable efforts to change its Facility Office or transfer of its rights and obligations under this Agreement to another institution if to do so would (in the opinion of the Lender) remove such circumstances or eliminate or reduce the additional amounts payable by the Obligor, unless to do so might (in the sole opinion of that Lender) result in the Lender incurring costs or expense that would not be reimbursed or which might otherwise be prejudicial to that Lender. Each Obligor must indemnify each Lender for all costs and expenses reasonably incurred by that Lender as a result of any step taken by it under this Clause 12.3 (Mitigation). 12.4 OTHER (a) Nothing in Clause 12 shall: 57 (i) require the Facility Agent or any Lender to disclose to any Obligor or any other Party any details of its tax affairs or computations; (ii) interfere with the right of the Facility Agent or any Lender to arrange its tax affairs in whatever manner it thinks fit; and (iii) require the Facility Agent or any Lender to claim relief in respect of any payment under Clause 12.2 in priority to any other reliefs, claims or credits available to it. (b) Notwithstanding any provision to the contrary in the Finance Documents, a Finance Party may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Facility and the transactions contemplated by it and all material of any kind (including opinions of other tax analyses) that are provided to any Finance Party relating to any such tax treatment or tax structure other than any information for which non-disclosure is reasonably necessary in order to apply with applicable securities law. 13. MARKET DISRUPTION 13.1 ABSENCE OF QUOTATIONS If EURIBOR or LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply an offered rate by 11.30 a.m. (London time in the case of LIBOR) on the relevant Rate Fixing Day, the applicable EURIBOR or LIBOR shall, subject to Clause 13.2, be determined on the basis of the quotations of the remaining Reference Banks. 13.2 MARKET DISRUPTION If: (a) EURIBOR or LIBOR is to be determined by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 11.30 a.m. (London time in the case of LIBOR) on the relevant Rate Fixing Day or the Facility Agent otherwise determines (acting reasonably) that adequate and fair means do not exist for ascertaining EURIBOR or LIBOR; or (b) the Facility Agent receives notification from Lenders whose participations in a Loan exceed 30 per cent. of that Loan that, in their opinion: (i) matching deposits may not be available to them in the relevant interbank market in the ordinary course of business to fund their participations in that Loan for the relevant Interest Period; or (ii) the cost to them of obtaining matching deposits in the relevant interbank market would be in excess of EURIBOR or LIBOR, as appropriate, for the relevant Interest Period, the Facility Agent shall promptly notify the Obligors' Agent and the Lenders of the fact and that this Clause 13 is in operation. 13.3 SUBSTITUTE BASIS If a notification under Clause 13.2 (Market disruption) applies: 58 (a) (i) in the case of a Loan which has not been made, the relevant Loan shall not be made; and (ii) in the case of a Tranche B Loan which has been made, the Loan shall continue but it shall have an Interest Period of one month and the interest payable on that Loan shall be determined in accordance with this Clause; (b) within five Business Days of receipt of the notification under Clause 13.2 (Market disruption), the Company and the Facility Agent shall enter into negotiations for a period of not more than 30 calendar days with a view to agreeing to a substitute basis for determining the rate of interest and/or funding applicable to that Loan and (to the extent required) any future Loan; (c) any substitute basis agreed under paragraph (b) above shall be, with the prior consent of all the Lenders, binding on all the Parties; (d) if no alternative basis is agreed each Lender shall (through the Agent) certify on or before 10.00 a.m. on the second Business Day before the last day of the Interest Period to which the notification relates an alternative basis for maintaining its participation in that Loan; (e) any alternative basis under paragraph (b) or (d) above may include an alternative method of fixing the interest rate, alternative Interest Periods or optional currencies but it must reflect the cost to each Lender of funding its participation in the Loan from whatever sources it may select in order to provide the Company with funds on as economic a basis as is practicable (having regard to the sources then known to the Lender) plus the Applicable Margin plus any applicable Mandatory Cost; (f) each alternative basis so certified shall be binding on the Obligors and each certifying Lender and treated as part of this Agreement; and (g) the Agent and the Company shall consult in good faith following any significant change in market conditions with a view to returning to the normal provisions of this Agreement. 14. INCREASED COSTS 14.1 INCREASED COSTS (a) Subject to Clause 14.2, each Obligor shall forthwith on demand by a Finance Party pay to that Finance Party the amount of any increased cost incurred by it or any of its Affiliates as a result of: (i) the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or (ii) compliance with any regulation made after the date of this Agreement, including any law or regulation relating to taxation, change in currency of a country or reserve asset, special deposit, cash ratio, liquidity or capital adequacy requirements or any other form of banking or monetary control. (b) In this Agreement INCREASED COST means: 59 (i) an additional cost incurred by a Finance Party or its Holding Company as a result of it having entered into, or performing, maintaining or funding its obligations under, any Finance Document; or (ii) that portion of an additional cost incurred by a Finance Party or its Holding Company in making, funding or maintaining all or any advances comprised in a class of advances formed by or including that Finance Party's participations in the Loans made or to be made under this Agreement as is attributable to that Finance Party making, funding or maintaining those participations; or (iii) a reduction in any amount payable to a Finance Party or the effective return to a Finance Party or its Holding Company under this Agreement or (to the extent that it is attributable to this Agreement) on its capital; or (iv) the amount of any payment made by a Finance Party or its Holding Company, or the amount of any interest or other return foregone by a Finance Party or its Holding Company, calculated by reference to any amount received or receivable by that Finance Party or its Holding Company from any other Party under this Agreement. (c) A Finance Party intending to make a claim under this Clause 14.1 shall notify the Obligors' Agent through the Facility Agent of the event by reason of which it is entitled to do so, setting out in reasonable detail calculations evidencing the relevant increased costs, provided that nothing herein shall require such Finance Party to disclose any confidential information relating to the organisation of its affairs. 14.2 EXCEPTIONS Clause 14.1 does not apply to any increased cost: (a) compensated for by the payment of the Mandatory Cost; (b) compensated for by the operation of Clause 12 (Taxes) (or which would have been compensated but for an exception to that Clause); (c) attributable to any change in the rate of, or change in the basis of calculating, tax on the overall net income of a Lender (or the overall net income of a division or branch of the Lender) imposed in the jurisdiction in which its principal office or Facility Office is situated; or (d) arising from a Finance Party or its Holding Company having failed to comply with any applicable law or regulation, provided that this exception shall not apply to the extent that such law or regulation is applied retrospectively. 15. ILLEGALITY If it is or becomes unlawful in any jurisdiction for a Lender to give effect to any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan, then: (a) that Lender may notify the Obligors' Agent through the Facility Agent accordingly; and (b) (i) the Company shall prepay the participations of that Lender in all the Loans made to it on the earlier of (A) the last day of the Interest Period during which the Obligors' Agent receives the Lender's notification and (B) the date 60 specified in the Lender's notice (being the latest date allowed by the relevant law); and (ii) the Commitment of that Lender shall be cancelled on the date of the Lender's notice. 16. GUARANTEE 16.1 GUARANTEE Each Guarantor irrevocably, unconditionally, jointly and severally and notwithstanding the release of any other Obligor or any person under the terms of any composition or arrangement with any creditors of any member of the Group: (a) as principal obligor (and not merely as surety) guarantees to each Finance Party prompt performance by the Company of all its obligations under the Finance Documents and the payment when due of all sums from time to time payable by each Obligor under the Finance Documents; (b) undertakes with each Finance Party that whenever the Company does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall forthwith on demand by the Facility Agent pay that amount as if that Guarantor instead of the Company were expressed to be the principal obligor; and (c) indemnifies each Finance Party on demand against any loss or liability suffered by it if any obligation guaranteed by that Guarantor is or becomes unenforceable, invalid or illegal. 16.2 CONTINUING GUARANTEE This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable by the Obligors under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. 16.3 REINSTATEMENT (a) Where any discharge (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise without limitation, the liability of each Guarantor under this Clause 16 shall continue as if the discharge or arrangement had not occurred. (b) Each Finance Party may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration. 16.4 WAIVER OF DEFENCES The obligations of each Guarantor under this Clause 16 will not be affected by an act, omission, matter or thing which, but for this provision, would reduce, release or prejudice any of its obligations under this Clause 16 or prejudice or diminish those obligations in whole or in part, including (whether or not known to it or any Finance Party): (a) any time or waiver granted to, or composition with, any Obligor or other person; 61 (b) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditors 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 powers, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; (e) any variation (however fundamental) or replacement of a Finance Document or any other document or security so that references to that Finance Document in this Clause 16 shall include each variation or replacement; (f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security, to the intent that each Guarantor's obligations under this Clause 16 shall remain in full force and its guarantee be construed accordingly, as if there were no unenforceability, illegality or invalidity; or (g) any postponement, discharge, reduction, non-provability or other similar circumstance affecting any obligation of any Obligor under a Finance Document resulting from any insolvency, liquidation or dissolution proceedings or from any law, regulation or order so that each such obligation shall for the purposes of the Guarantor's obligations under this Clause 16 be construed as if there were no such circumstance. 16.5 IMMEDIATE RECOURSE Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee 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 16. 16.6 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 trustee 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 trustee 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 a suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this Clause 16, without liability to pay interest on those moneys. 16.7 NON-COMPETITION Until all amounts which may be or become payable by the Obligors to a Finance Party under or in connection with the Finance Documents have been irrevocably paid in full, no Guarantor 62 shall, after a claim has been made or by virtue of any payment or performance by it under this Clause 16: (a) be subrogated to any rights, security or moneys held, received or receivable by any Finance Party (or any trustee or agent on its behalf) or be entitled to any right of contribution or indemnity in respect of any payment made or moneys received on account of that Guarantor's liability under this Clause 16; (b) claim, rank, prove or vote as a creditor of any Obligor or its estate in competition with any Finance Party (or any trustee or agent on its behalf); or (c) receive, claim or have the benefit of any payment, distribution or security from or on account of any Obligor, or exercise any right of set-off as against any Obligor, unless the Facility Agent otherwise directs. Each Guarantor shall hold in trust for and forthwith pay or transfer to the Facility Agent for the Finance Parties any payment or distribution or benefit of security received by it contrary to this Clause 16.7. 16.8 ADDITIONAL SECURITY This guarantee is in addition to and is not in any way prejudiced by any other security or guarantee now or subsequently held by any Finance Party. 16.9 LIMITATIONS (a) The obligations of any Guarantor which is incorporated under the laws of the Republic of France under this Clause 16 (Guarantee) shall not include any obligation which if incurred would constitute either a misuse of corporate assets as defined under article L.242-6 of the French Commercial Code in the opinion of the board of directors or similar corporate governance body of any such Guarantor (acting on legal advice) and shall be limited, at any time, to the greater of: (i) the aggregate outstanding amount of all Intra Group Loans, made directly or indirectly, to such Guarantor from the Company or any other Obligor (less the net amount of Intra Group Loans made by such Guarantor to Canal Satellite or any other Subsidiary of the Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group); (ii) the aggregate outstanding amount of all Intra Group Loans made by such Guarantor (less the any amount representing cash lent to such Guarantor by Canal Satellite or any other Subsidiary of the Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group); and (iii) the aggregate amount of all cash balances standing to the credit of each of such Guarantor's Cash Pooling Accounts (less the net amount of Intra Group Loans made to such Guarantor by Canal Satellite or any other Subsidiary of the Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group), provided that the obligations of such Guarantor as determined in accordance with paragraph (a) above shall be reduced by: (A) an amount equal to any payment made by such Guarantor to the Finance Parties as debiteur delegue or debiteur cede, as the case may be, under a 63 French Intra Group Loan Security of an Intra Group Loan referred to in paragraph (i) above; (B) an amount equal to any payment made by such Guarantor as delegant to the Finance Parties under a French Intra Group Loan Security of an Intra Group Loan referred to in paragraph (ii) above; and (C) an amount equal to any payment made by such Guarantor to the Finance Parties under the Cash Pooling Hub Security granted by such Guarantor. Where any such prohibition as is referred to in paragraph (a) above exists, each Obligor shall use its reasonable endeavours to procure that the prohibition is lawfully overcome and the Facility Agent may agree in the Guarantor Accession Agreement a limitation on the liability of the Additional Guarantor hereunder in order to avoid the prohibition. Should it be impossible to lawfully avoid or overcome such prohibition, that part of such Obligor's obligations under this Clause 16 (Guarantee) as contravenes such prohibition (and only such part of such Obligor's obligations) shall be deemed null and void. (b) Each Guarantor which is incorporated in the United States of America (a U.S. GUARANTOR): (i) represents, warrants and agrees that (1) it will receive valuable direct or indirect benefits as a result of the transactions financed by the Loans and (2) these benefits will constitute REASONABLY EQUIVALENT VALUE and FAIR CONSIDERATION as those terms are used in the fraudulent transfer laws; and (ii) acknowledges and agrees that each of the Finance Parties has acted in good faith in connection with the guarantee granted under this Clause 16 and the transactions contemplated by this Agreement. (c) This Clause 16 shall be enforceable against each U.S. Guarantor to the maximum extent permitted by the fraudulent transfer laws. (d) Each Guarantor's liability under this Clause 16 shall be limited so that no obligation of, or transfer by, any U.S. Guarantor under this Clause 16 is subject to avoidance and turnover under the fraudulent transfer laws. (e) For purposes of this Clause 16, FRAUDULENT TRANSFER LAWS mean applicable United States of America bankruptcy and United States state fraudulent transfer and conveyance statutes and the related case law. (f) The provisions of this Clause 16 shall apply and remain in force at all times throughout the term of this Agreement (notwithstanding for the avoidance of doubt the occurrence of a Security Release Condition Date). 17. RELEASE OF SECURITY AND ADDITIONAL GUARANTORS 17.1 RELEASE OF SECURITY AND GUARANTEES (a) Subject to the provisions of this Clause and the Security Documents, no Security Interest created by the Security Documents shall be released until the Facility Discharge Date has occurred (and all such Security Interests in respect of the secured obligations under this Facility shall be released as soon as practicable after the Facility Discharge Date has occurred). 64 (b) Subject to Clause 17.1(d): (i) in connection with, and simultaneous to, the closing of any secondary Equity Issue, sale or other disposal to a person or persons outside the Group (and which person or persons will not become a member of the Group on or by reason of such disposal) of all of the shares in the share capital of any Guarantor (or of all the shares in any other member of the Group such that any Guarantor ceases as a result thereof to be a member of the Group); (ii) in connection with, and simultaneous to, the closing of any sale or disposal by any Guarantor of substantially all of its business and assets; or (iii) in such other circumstances (if any) as the Security Agent (acting on the instructions of the Super Majority Lenders may from time to time agree in writing, such Guarantor shall be released from all past, present and future liabilities (both actual and contingent and including, without limitation, any liability to any other Guarantor by way of contribution) hereunder and under the Security Documents to which it is a party (other than, in the case of the Company, liabilities which it has in its capacity as the Company), and the security provided over its assets under such Security Documents shall be released. (c) Subject to Clause 17.1(d), in connection with, and simultaneous to, the closing of any secondary Equity Issue, sale or other disposal to (i) a person or persons outside the Group (and which person or persons will not become a member of the Group on or by reason of such disposal) or (ii) to a person within the Group where such disposal is otherwise permitted by this Agreement and the Security Documents to the extent that such release could not reasonably be expected to have a Material Adverse Effect or to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents or to the extent that similar security and guarantees are granted to the Lenders of any assets owned by an Obligor over which security has been created by the Security Documents to which that Obligor is party, those assets shall be released from such security. (d) The release of the guarantees and security referred to in Clause 17.1(b) and (c) shall only occur (save to the extent otherwise agreed by the Security Agent acting on the instructions of the Super Majority Lenders) if: (i) either (1) such disposal by any member of the Group or Guarantor is permitted by Clause 19.14 and other provisions of this Agreement and will not result in any breach of any of the terms of this Agreement, or (2) such disposal is being effected at the request of the Security Agent in circumstances where any of the security created by the Security Documents has become enforceable, or (3) such disposal is being effected by enforcement of the Security Documents; (ii) if relevant, an amount equal to any Net Proceeds arising out of such disposal which are required to be prepaid pursuant to Clause 7 (Prepayment and Cancellation) (or an amount corresponding thereto) is credited to the Receipt Account in accordance with Clause 7 (Prepayment and Cancellation) at the time of completion of that sale or disposal; and (iii) any assets to be transferred to other members of the Group before completion of such disposal shall have been so transferred and (if so required by the Facility Agent) security over such assets shall have been granted to the Security Agent to the reasonable satisfaction of the Facility Agent (acting on the instructions of the Super Majority Lenders). 65 (e) As soon as reasonably practical after receipt by the Security Agent from the Company of notice of a proposed secondary Equity Issue sale or other disposal as described in paragraph (i) of Clause 17.1(b) or in Clause 17.1(c) of assets over which security has been created by the Security Documents, the Security Agent shall either deliver a confirmation in writing to the Obligors' Agent that the conditions set out in paragraphs (i)(1) and (iii) of Clause 17.1(d) have been met (for the purposes of this Clause 17.1(e), the RELEASE CONFIRMATION) or shall (acting in good faith), provided that no Default has occurred notify the Obligors' Agent of its reasons for considering that such conditions have not been met and shall discuss such reasons with the Obligors' Agent in good faith. If the Release Confirmation is given and so long as no Default has occurred, the Security Agent shall execute all documents and take all steps (to the extent such steps are within its control) which are necessary to ensure the release of all security to which such Release Confirmation relates at the time of completion of such sale or other disposal (or in the case of any sale of shares in Vivendi Universal Games, Inc. prior to the filing with the Securities and Exchange Commission of a report in Form S-1 in relation to the proposed share sale), such that, on such completion or prior to such filing, the relevant assets will be free from any Security Interest. (f) Any security over any of the receivables assigned pursuant to, subject to and in accordance with the VUE Assignment Agreement and any of the assets identified in paragraph (d) of the definition of Relevant Intra Group Disposal shall be released automatically upon the assignment or disposal of such receivable or asset. (g) If any person which is a member of the Group shall cease to be such a member in consequence of the enforcement of any of the Security Documents or in consequence of a disposal of the shares therein or in any Holding Company of it effected at the request of the Facility Agent and the Lenders in circumstances where any of the security created by the Security Documents has become enforceable, any claim which any Obligor may have against such person or any of its Subsidiaries or which that person or any of its Subsidiaries may have against any Obligor in or arising out of this Agreement or any of the Security Documents (including, without limitation, any claim by way of subrogation to the rights of the Agents and the Lenders under the Finance Documents and any claim by way of contribution or indemnity) shall be released automatically and immediately upon such person ceasing to be a member of the Group. (h) Any Security Interest created over the shares of any Excluded Music Group Entity and any guarantee granted by any Excluded Music Group Entity pursuant to the Finance Documents shall, provided no Default has occurred and is continuing, be released immediately prior to and for the purposes of the implementation of the Music Group Reorganisation (i) in the case of any such Security Interest over shares so that no Excluded Music Group Entity which becomes a Foreign Subsidiary shall have more than 66 per cent. of its shares subject to any such Security Interest (ii) in the case of any guarantee granted by any Excluded Music Group Entity to the extent reasonably required to avoid deemed dividends under U.S. tax legislation relating to Foreign Subsidiaries or (iii) in the case of any such Security Interest or guarantee granted by any Excluded Music Group Entity which is held (directly or indirectly) by Universal Studio Holding I Corp., so that no such Excluded Music Group Entity shall have any of its shares subject to any Security Interest or shall grant any guarantee. (i) No release, or agreement to release, given by any of the Finance Parties shall constitute any form of waiver or modification of any Finance Party's rights in relation to any Default. 17.2 COSTS All costs and expenses of the Finance Parties in connection with any release of Security Interest created by the Security Documents shall be borne by the Obligors. 66 17.3 ADDITIONAL GUARANTORS (a) (i) Subject to paragraph (b) below, the Obligors shall procure that any Cash Pooling Hub (except any Cash Pooling Hub which is a Foreign Subsidiary) which is not a Guarantor or a Cash Pooling Hub at the date of this Agreement becomes an Additional Guarantor within 14 calendar days of its being designated a Cash Pooling Hub by the Company and the Facility Agent by delivering to the Facility Agent a Guarantor Accession Agreement, duly executed by that Cash Pooling Hub. For the avoidance of doubt, no member of the VUE Group or VUE Borrower Co. shall be required to become an Additional Guarantor until the later of the VUE Date and such time as any restriction or prohibition on the granting of such guarantees ceases to apply under the terms of the VUE Partnership Agreement, the VUE Transaction Agreement or the Matsushita Shareholder Agreements. (ii) Upon execution and delivery of a Guarantor Accession Agreement, the relevant party will become an Additional Guarantor. (iii) The Obligors shall procure that, at the same time as a Guarantor Accession Agreement is delivered to the Facility Agent, there is also delivered to the Facility Agent all those other documents listed in Part 2 of Schedule 2, in each case in form and substance satisfactory to the Facility Agent. (b) The Parent shall procure that VUP accedes to this Agreement as an Additional Guarantor as soon as reasonably practicable and in any event with 45 calendar days of the date of the Agreement and contemporaneously with such accession, executes and delivers to the Security Agent an account pledge or pledges in the agreed form over each of its Cash Pooling Accounts. (c) If the Obligors' Agent demonstrates to the satisfaction of the Facility Agent (acting on the instructions of the Majority Lenders) that it is illegal for a prospective Additional Guarantor to comply with its obligations under paragraph (a) above or Clause 16 or that to do so would be a fiduciary breach of duty by the directors of the prospective Additional Guarantor, the Facility Agent (acting on the instructions of the Majority Lenders) will agree in the Guarantor Accession Agreement to limit the obligation of the prospective Additional Guarantor to the extent necessary for the guarantee to be lawfully given by the prospective Additional Guarantor. The Obligors will use their reasonable endeavours to lawfully remove or overcome any such prohibition or restriction, provided that an Obligor shall only be obliged to so comply within 14 calendar days after it becomes legal to do so. (d) The execution of a Guarantor Accession Agreement constitutes confirmation by the prospective Additional Guarantor that the representations and warranties set out in Clause 18 (Representations and Warranties) to be made by it on the date of the Guarantor Accession Agreement are correct, as if made with reference to the facts and circumstances then existing. 18. REPRESENTATIONS AND WARRANTIES 18.1 REPRESENTATIONS AND WARRANTIES The Company and each Obligor makes the representations and warranties as set out in this Clause 18 to each Finance Party in respect of itself and the Group (other than prior to the Maroc Telecom Date, any member of the Maroc Telecom Group) and in respect of Clause 18.21 (Ownership), VE and Maroc Telecom. 67 18.2 STATUS (a) It is and each of its Material Subsidiaries is a joint-stock company or limited liability company a limited liability limited partnership, limited partnership or corporation, duly incorporated or organised, validly existing and (in the case of the U.S. Subsidiaries) in good standing under the laws of the jurisdiction of its incorporation; and (b) it is and each of its Material Subsidiaries has the power to own its assets and carry on its business as it is being conducted. 18.3 POWERS AND AUTHORITY It has the power to enter into and perform, and has taken all necessary action to authorise the entry into, performance and delivery of, the Finance Documents to which it is or will be a party and the transactions contemplated by those Finance Documents. 18.4 LEGAL VALIDITY Each Finance Document to which it is or will be a party constitutes, or when executed in accordance with its terms will constitute, its legal, valid and binding obligation enforceable in accordance with its terms and would be so treated in the courts of the jurisdiction of its incorporation or organisation and no limit of restriction on its powers will be exceeded as a result of the borrowings, grant of security or giving of guarantees contemplated by the Finance Documents to which it is a party. 18.5 AUTHORISATIONS All authorisations required: (a) in connection with the entry into, performance, validity and enforceability of the Finance Documents and the transactions contemplated by the Finance Documents; and (b) from any third party or under any document or agreement which is binding on (i) any Obligor or any Material Subsidiary, or (ii) any other member of the Group save to the extent that failure to do so does not have or could not reasonably be expected to have a Material Adverse Effect for the transactions contemplated by the Finance Documents, in each case, have been obtained or effected and are in full force and effect. 18.6 PARI PASSU RANKING Its obligations under the Finance Documents rank at least pari passu with all its other unsecured and unsubordinated obligations, except for obligations mandatorily preferred by law applying to companies generally. 18.7 IMMUNITY (a) The execution by it of each Finance Document to which it is or will be a party constitutes, and its exercise of its rights and performance of its obligations under each Finance Document to which it is or will be a party will constitute, private and commercial acts done and performed for private and commercial purposes; and 68 (b) it will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in the jurisdiction of its incorporation in relation to any Finance Document. 18.8 NON-CONFLICT The entry into and performance by it of, and the transactions contemplated by, each of the Finance Documents do not and will not conflict with: (a) any law or regulation or judicial or official order binding on it or any member of the Group in any material respect; or (b) its constitutional documents or the constitutional documents of any member of the Group (in any material respect in the case of members of the Group which are not Obligors or Material Subsidiaries); or (c) any document or agreement which is binding upon (i) it or any Material Subsidiary or any of their respective assets in any material respect or (ii) any other member of the Group or any of their assets to an extent or in a manner that has, or could reasonably be expected to have, a Material Adverse Effect. 18.9 NO DEFAULT (a) No Event of Default is outstanding or will result from the making of any Loan; and (b) no other event is outstanding which constitutes a default or with the giving of notice, lapse of time, determination of materiality or fulfilment of any other applicable condition, would constitute a default (howsoever described) under any document or agreement (including, without limitation, any Existing Facilities) which is binding on it or any of its assets of any member of the Group (other than an Obligor) to an extent or in a manner that has, or could reasonably be expected to have, a Material Adverse Effect. 18.10 LITIGATION AND SOLVENCY (a) No litigation, arbitration or administrative or regulatory proceedings are current or, to its knowledge, pending or threatened, which if reasonably likely to be adversely determined, could reasonably be expected to have, a Material Adverse Effect. (b) No labour disputes are current or, to its knowledge, threatened which have or could reasonably be expected to have, a Material Adverse Effect. (c) No proceedings of any nature are current or, to its knowledge, pending or threatened, for the winding-up or dissolution (other than a solvent winding up or dissolution) of, or in respect of any insolvency proceeding of any nature relating to any Obligor or any Material Subsidiary. (d) It has not defaulted on any of its payment obligations and (taking into account the amounts available to the Obligors under the Existing Facilities and this Agreement) and in the case of VUE, amounts available or reasonably expected to be available to VUE (i) under the VUE Bridge Extension and any VUE Bridge Refinancing and (ii) from the Non-VUE Group pursuant to VUE Loans permitted by this Agreement) the Obligors and all other Material Subsidiaries are in a position to meet their respective scheduled payments as they fall due. (e) In relation to each Obligor and its Subsidiaries incorporated or organised in the United States of America (on a consolidated basis): 69 (i) the aggregate amount of its debts (including its obligations (if any) under the Finance Documents) is less than the aggregate value (being the lesser of fair present valuation and present fair saleable value) of its assets (which for, avoidance of doubt, include, without limitation, all rights of indemnification, contribution and subrogation); (ii) its capital is not unreasonably small to carry on its business as it is being conducted; (iii) it has not incurred and will not incur debts beyond its ability to pay as they mature; and (iv) it has not made a transfer or incurred any obligation under any Finance Document with the intent to hinder, delay or defraud any of its present or future creditors. Terms used in this paragraph (e) have the meanings given to them in the United States Bankruptcy Code of 1978, as amended, and applicable fraudulent conveyance laws in the United States of America. 18.11 GOVERNING LAW AND JURISDICTION (a) Its: (i) irrevocable submission under Clause 37 (Jurisdiction) to the jurisdiction of the courts of England and any New York State Court or any Federal Court sitting in New York City; (ii) agreement that this Agreement is governed by English law; and (iii) agreement not to claim any immunity to which it may be entitled, are legal, valid and binding under the laws of the jurisdiction of its incorporation. (b) Any judgment obtained in the courts of England or any New York State Court or any Federal Court sitting in New York City in legal proceedings based on or in connection with the Finance Documents will be recognised and enforced by the courts of the jurisdiction of incorporation of each Obligor without re-examination or re-litigation of the matter thereby adjudicated (subject to the provisions of Council Regulation No. 44/2001 of the Council of the European Union on jurisdiction and enforcement of judgments in civil and commercial matters, or other applicable law or convention on the recognition and enforcement of court judgments). 18.12 ACCOUNTS AND LIQUIDITY ANALYSIS (a) The consolidated accounts of the Company most recently delivered to the Facility Agent (which, at the date of this Agreement, are the Original Group Accounts): (i) have been prepared in accordance with accounting principles and practices generally accepted in France or the United States of America (as appropriate), consistently applied; and (ii) fairly represent the consolidated financial condition of the Group as at the date to which they were drawn up. (b) There has been no change (other than any event or change that has occurred and been disclosed in the Original Liquidity Analysis) in the consolidated financial condition of the 70 Group since the date to which the Original Group Accounts were drawn up which has or could reasonably be expected to have a Material Adverse Effect. (c) The accounts of the other Obligors most recently delivered to the Facility Agent are true and fairly represent their financial condition at the date given. (d) The projections and forecasts contained in the Liquidity Analysis most recently delivered to the Facility Agent (which, at the date of this Agreement, is the Original Liquidity Analysis) were made in good faith and based on reasonable assumptions and such Liquidity Analysis does not as at its date omit any projections or forecasts which would make the projections and forecasts actually contained in, or used for the preparation of, that Liquidity Analysis misleading. 18.13 EXISTING INDEBTEDNESS (a) Each of the Existing Facilities of the Company is available for drawing (and has not been cancelled) and the Company has no reason to believe that such facilities will not be available for drawing except to the extent prepaid and cancelled as contemplated by the provisions of Clause 7 (Prepayment and Cancellation). (b) As at the date of this Agreement, no member of the Group has incurred any material Financial Indebtedness which is not identified in Schedule 12 (Existing Facilities) or material Contingent Financial Liabilities which is not identified in Schedule 17 (Existing Contingent Financial Liabilities), save for Intra Group Loans, Excluded Financial Indebtedness and currency and other swaps and other derivative and hedging arrangements, uncommitted facilities, overdrafts, daylight overdrafts, intra-day facilities and facilities used for technical purposes (i.e. credit card programmes) and save, in the case of each member of the Group which is not an Obligor or a Material Subsidiary, to the extent that their non-disclosure does not have, or could not reasonably be expected to have a Material Adverse Effect. 18.14 INFORMATION PACKAGE (a) The factual information contained in the Information Package was accurate in all material respects as at its date; (b) the Information Package did not omit as at its date any information which, if disclosed, could reasonably be expected to adversely affect the decision of a person considering whether to enter into this Agreement; (c) nothing has occurred since the date of the Information Package (other than as disclosed in publicly available information or as otherwise disclosed by the Company to the Lenders in writing) which renders the information contained in it untrue or misleading in any material respect and which, if disclosed, could reasonably be expected to adversely affect the decision of a Lender considering whether to enter into any Finance Document; and (d) all expressions of opinion or intention given by the Company, and all financial projections and forecasts, in the Information Package were made in good faith and based on assumptions that were reasonable as at the date of the Information Package. 18.15 STRUCTURE CHART As at the date of this Agreement, the Structure Chart describes the corporate ownership structure of the Obligors and Material Subsidiaries and is true and correct in all material respects. 71 18.16 INTELLECTUAL PROPERTY RIGHTS (a) It and its Material Subsidiaries, in the case of the Games Group (as far as it is aware on due enquiry) and each other member of the Group (to the best of its knowledge) owns or has licensed to it all Intellectual Property Rights which are material in the context of its business or the business of each member of the Group and which are required by it or by such member of the Group in order to carry on their business and it does not nor does any member of the Group in carrying on its business infringe any Intellectual Property Rights of any third party save in the case of any member of the Group (or than an Obligor or Material Subsidiary) to the extent that failure to do so does not or could not be reasonably expected to have a Material Adverse Effect. (b) It and its Material Subsidiaries and (to the best of its knowledge) each other member of the Group has paid all fees required to maintain in full force and effect any registered Intellectual Property Rights owned by it which are material in the context of its business or the business of such member of the Group which are required by it or by such member of the Group in order for it to carry on its business as it is currently being conducted save in the case of any member of the Group (or than an Obligor or Material Subsidiary) to the extent that failure to do so does not or could not be reasonably expected to have a Material Adverse Effect. 18.17 OWNERSHIP OF ASSETS It and each of member of the Group has good title to, or valid leases or licences of, or is otherwise entitled to use all material assets necessary to conduct its business substantially as it is conducted at the date of this Agreement or reflected in the latest accounts of the Group free from all Security Interests, third party rights, options (other than the VE Call Option Arrangements), claims and competing interests whatsoever save as expressly permitted or created under this Agreement and the other Finance Documents and save, in the case of each member of the Group (other than an Obligor and each Material Subsidiary) to the extent that failure to do so does not have or could not reasonably be expected to have a Material Adverse Effect. 18.18 SECURITY INTERESTS (a) No Security Interests exist (except as permitted by Clause 19.12 (Negative pledge)) on or over the assets of any Obligor or Material Subsidiary and the execution of this Agreement does not require any member of the Group to create any Security Interest over any of its accounts or assets, except pursuant to the Security Documents. (b) It and each member of the Group is the legal and beneficial owner of the property (if any) which it purports to charge pursuant to any of the Security Documents. The property charged pursuant to any Security Documents are not subject to any other Security Interests, third party rights, options other than the VE Call Option Arrangements, claim or similar rights or the Security Interests granted in favour of the Existing Lenders. The shares charged pursuant to any Security Document are all fully paid up. (c) The security constituted by the Security Documents constitutes (and will at all times continue to constitute unless released pursuant to Clause 17 of this Agreement and under the Security Documents) first ranking security in respect of obligations owed to the Finance Parties and the Existing Lenders under the Finance Documents in priority and payment over the assets secured or purported to be secured under the Security Documents. 72 18.19 TAX LIABILITIES (a) No claims are being or are reasonably likely to be asserted against any Obligor or any member of the Group with respect to any Taxes or payment of any Tax which if reasonably likely to be adversely determined, have, or could reasonably be expected to have, a Material Adverse Effect. (b) No Obligor or any member of the Group is overdue in the filing of any tax returns, except to the extent that being so overdue does not have, or could not reasonably be expected to have, a Material Adverse Effect. 18.20 ENVIRONMENTAL MATTERS (a) Each Obligor and each other member of the Group (A) have obtained all environmental permits, licences, authorisations, consents and other approvals required for the carrying on of its business in all material respects as currently conducted and (B) at all times have otherwise complied with all applicable Environmental Laws, except where failure to do so has not had, or could not reasonably be expected to have, a Material Adverse Effect. (b) So far as it is aware there is no current, pending or threatened legal proceedings under or pursuant to any Environmental Law against any member of the Group which has or, if adversely determined, could reasonably be expected to have, a Material Adverse Effect. 18.21 OWNERSHIP (a) The Company owns directly or indirectly no less than 20.4 per cent. of the VE Shares (less any VE Shares disposed of pursuant to the VE Shares Disposal) free of any Security Interest (other than a Security Interest created under a Security Document), option (other than the VE Call Option Arrangements) or third party claim. (b) The Company owns directly or indirectly no less than 70 per cent. of the share capital of Cegetel free of any Security Interest (other than a Security Interest created under a Security Document or under the Non-Recourse Financing at the date of this Agreement), option or third party claim (save as provided for under any shareholders agreement in force at the date of this Agreement). (c) The Company owns directly or indirectly 35 per cent. of the share capital of Maroc Telecom free of any Security Interest, option or third party claim (except as disclosed in writing to the Facility Agent on or before the date of this Agreement or save as provided for under any shareholders agreement in force at the date of this Agreement). (d) No member of the Maroc Telecom Group, the Cegetel Group is a party to the Cash Management and IGL Arrangements or is party to an Intra Group Loan (except for any such loan listed in Part 2 of Schedule 15) or to the extent otherwise permitted under this Agreement. (e) (i) As far as the Company is aware, the list of Existing Cegetel Contingent Financial Liabilities in Part 1 of Schedule 10 sets out all material Contingent Financial Liabilities of each member of the Cegetel Group at the date of this Agreement. (ii) As far as the Company is aware, the list of Existing Cegetel Financial Indebtedness in Part 2 of Schedule 10 sets out all material Financial Indebtedness of the Cegetel Group at the date of this Agreement. 73 (iii) As far as the Company is aware, the list of Existing Cegetel Security in Part 3 of Schedule 10 sets out all material Security Interests of the Cegetel Group at the date of this Agreement. 18.22 INTRA GROUP LOAN/IGL ARRANGEMENTS/BANK ACCOUNTS (a) The list of bank, deposit and investment accounts set out in the exhibit provided to the Facility Agent on the date of this Agreement is complete and correct in all material respects. (b) The list of the Cash Pooling Accounts set out in Schedule 16 (as updated pursuant to Clause 19.6(g)) is complete and correct in all material respects. (c) The list of (i) Intra Group Loans made to or by each Obligor, and (ii) VUE Loans set out in Schedule 15 (as updated pursuant to Clause 19.6(g)) is complete and correct in all material respects as of their respective dates. (d) The aggregate principal amount of the Intra Group Loans identified in Parts 4 or 5 of Schedule 15 (Existing Intra Group Loans) account for 85 per cent. of the aggregate principal amount of all Intra Group Loans between Obligors and members of the Group as at the date of this Agreement or when updated pursuant to Clause 19.6(g) as applicable. 18.23 OBLIGORS None of Vivendi Universal Holdings IV Corp., VUHIC or VCNA: (a) trades or has any material liabilities or commitments (actual or contingent, present or future); (b) save as disclosed to the Facility Agent prior to the date of this Agreement, owns any material assets other than shares in its immediate subsidiaries; or (c) carries on any business other than the holding of shares in its immediate subsidiaries, other than pursuant to the Finance Documents or as a party to any Intra Group Loan or to any VUE Loan or consistent with the activities disclosed to the Facility Agent prior to the date of this Agreement or in the case of Vivendi Universal Holding IV Corp pursuant to the Matsushita Shareholder Agreements. 18.24 DISPOSAL CONFIRMATION It has no reason to believe that: (a) the Disposal Confirmation cannot be implemented in full; and (b) that any authorisation or consent necessary for the disposal of an asset referred to in a Liquidity Analysis will not be forthcoming in time to allow that disposal to take place at the projected time. 18.25 U.S. REPRESENTATIONS AND WARRANTIES (a) Investment Company It is not, and will not be following any disposal pursuant to the Disposal Confirmation of its assets, shares or business, an "investment company" or a company "controlled" by an 74 "investment company", within the meaning of the United States Investment Company Act of 1940, as amended. (b) Public Utility Holding Company Act and Federal Power Act It is not, and will not be following any disposal pursuant to the Disposal Confirmation of its assets, shares or business, a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of, or otherwise subject to regulation under, the United States Public Utility Holding Company Act of 1935, as amended. No Obligor is a "public utility" within the meaning of, or otherwise subject to regulation under, the United States Federal Power Act, as amended. (c) Margin stock (i) The proceeds of the Loans have been and will be used only for the purposes described in Clause 3 (Purpose). (ii) It is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations U and X of the Board of Governors of the United States Federal Reserve System), and no portion of any Loan has been or will be used, directly or indirectly, to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock. (iii) No portion of any Loan will be used to acquire any security in a transaction that is subject to Section 13 or 14 of the United States Securities Exchange Act of 1934, as amended. (d) ERISA (i) No ERISA Event that could reasonably be expected to have a Material Adverse Effect has occurred or is reasonably expected to occur with respect to any Plan. (ii) The present value of the benefit liabilities under each Plan, as determined for the purposes of Schedule B (Actuarial Information) to such Plan's most recently completed annual report (Form 5500 Series) that has been filed with the required United States governmental agencies, which Schedule B is complete and accurate in all material respects, did not, as of the date of such valuation, exceed the fair market value of the assets of such Plan by an amount that, when aggregated with any such excess under any other Plan, could reasonably be expected to have a Material Adverse Effect, and since the date of such valuation there has been no material adverse change in such funding status that, when aggregated with any such change with respect to any other Plan, could reasonably be expected to have a Material Adverse Effect. (iii) Except as could not reasonably be expected to have a Material Adverse Effect, neither it nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan. (iv) Except as could not reasonably be expected to have a Material Adverse Effect, neither it nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganisation or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganisation or to be terminated, within the meaning of Title IV of ERISA. 75 18.26 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES The representations and warranties set out in this Clause 18: (a) (i) in the case of an Obligor which is a Party on the date of this Agreement, are made by that Obligor on the date of this Agreement and the first Drawdown Date; (ii) in the case of an Obligor which becomes a Party after the date of this Agreement, will, (with the exception of paragraphs (b) and (d) of Clause 18.12 (Accounts and Liquidity Analysis), Clause 18.14 (Information Package), Clause 18.15 (Structure Chart), Clause 18.21 (Ownership), Clause 18.22 (Intra Group Loan/IGL Arrangements/bank accounts)) be deemed made by that Obligor in relation to itself and subject to and in accordance with Clause 18.1, its Subsidiaries on the date it executes a Guarantor Accession Agreement; and (iii) are, in the case of paragraph (d) of Clause 18.12 (Accounts and Liquidity Analysis) in relation to each Liquidity Analysis other than the Original Liquidity Analysis, made on the day on which the Liquidity Analysis referred to therein is delivered; (b) are, with the exception of paragraph (b) and (d) of Clause 18.12 (Accounts and Liquidity Analysis), Clause 18.13 (Existing Indebtedness), Clause 18.14 (Information Package), Clause 18.15 (Structure Chart), Clause 18.21 (Ownership) and Clause 18.22 (Intra Group Loan/IGL Arrangements/bank accounts), deemed to be repeated by each Obligor on the date of each Request and the first day of each Interest Period with reference to the facts and circumstances then existing; and (c) are, in the case of Clause 18.22 (Intra Group Loan/IGL Arrangements/bank accounts) deemed to be repeated by the Company on the date and in respect of any update provided to Facility Agent pursuant to Clause 19.6(g). 19. UNDERTAKINGS 19.1 GENERAL (a) Subject to paragraphs (b), (c) (d), (e), (f) and (g) below, each Obligor agrees to be bound by the undertakings set out in this Clause relating to it and to ensure that each member of the Group performs and complies with each undertaking expressed to be binding on it in this Clause 19. (b) The undertakings in this Clause 19 shall apply to each member of the Cegetel Group and SIT provided that other than in respect of Clause 19.26 (Arm's-length terms) each Obligor will only be required to use its reasonable endeavours to ensure that each member of the Cegetel Group or SIT performs and complies with such undertakings. (c) Each Obligor shall only be required to use its reasonable endeavours to ensure that Transtel and/or Canal Satellite performs and complies with the undertakings in this Clause 19 which apply to it. (d) Until the Maroc Telecom Date, the undertakings in this Clause 19 shall not be binding on any member of the Maroc Telecom Group. On or after the Maroc Telecom Date, each Obligor shall only be required to use its reasonable endeavours to ensure that each member of the 76 Maroc Telecom Group performs and complies with the undertakings in this Clause 19 which apply to it. (e) For the purposes of paragraphs (b), (c) and (d) above with respect to the Cegetel Group and the Maroc Telecom Group: (i) REASONABLE ENDEAVOURS shall be construed by reference to an Obligor's effective ability to exercise any voting rights as a shareholder of Transtel and/or Canal Satellite or any member of the Cegetel Group or any member of the Maroc Telecom Group and/or contractual rights in respect of Transtel and/or Canal Satellite and/or SIT or any such member of the Group or any member of the Maroc Telecom Group (subject to any restrictions or obligations binding upon it under any shareholder agreement as the same is in force at the date of this Agreement and any restrictions under the Non-Recourse Financing in respect of SIT and which in each case remains binding on it) and the ability to control the management of any member of the Cegetel Group, the management of Transtel and/or Canal Satellite and/or SIT or any member of the Maroc Telecom Group; and (ii) an Obligor shall be considered to have complied with its undertaking to use "reasonable endeavours" to ensure compliance by any such member of the Group by exercising (i) such voting rights as a shareholder of Transtel and/or Canal Satellite or any member of the Cegetel Group or any member of the Maroc Telecom Group, and (ii) such control over the management of any member of the Cegetel Group, Transtel and/or Canal Satellite and/or SIT or any member of the Maroc Telecom Group, and (iii) such contractual rights, in each case, to the fullest extent permitted by law and regulation to ensure compliance. (f) Prior to the VUE Date, where any member of the Group is a member of the VUE Group, the undertakings expressed to be binding on it in this Clause 19 shall not prohibit any transaction involving any such member which is permitted or required pursuant to the terms of any VUE Bridge Extension or VUE Bridge Refinancing (provided that, in the case of a VUE Bridge Refinancing, such transaction, is permitted or required pursuant to the terms of the primary refinancing of the VUE Bridge Extension). The undertakings expressed to be binding on any member of the Group or a Material Subsidiary in this Clause 19 shall apply to any member of the VUE Group as the case may be subject only to any shareholder or contractual restrictions or obligation under the Matsushita Shareholder Agreements, the VUE Partnership Agreement and the VUE Transaction Agreement in force as at the date of this Agreement. (g) The undertakings in this Clause 19 remain in force from the date of this Agreement for so long as provided for in the relevant Clause or any amount is or may be outstanding under this Agreement or any Commitment is in force provided that the Undertakings set out in Clause 19.5 (Liquidity), Clause 19.15 (Financial Indebtedness), Clause 19.16 (Leasing), Clause 19.17(a) to (d) (inclusive) (Financial guarantees) Clause 19.19 (Loans out, Intra Group Loans) (other than Clause 19.19(d)(iii) (A) which shall remain in force at all times throughout this Agreement notwithstanding the occurrence of a Release Condition Date), Clause 19.32 (Bank Accounts) and 19.39 (a), (b) and (c) (VUE Ring-fencing), shall remain in force throughout the term of this Agreement unless and until a Release Condition Date occurs in which case such Undertakings shall cease to apply. If a Release Condition Date occurs, but any time thereafter an Investment Downgrading Date occurs, all such Undertakings shall be automatically reinstated and remain in force from the Investment Downgrading Date until such time as a Release Condition Date occurs again. 77 19.2 FINANCIAL INFORMATION (a) The Obligors' Agent shall supply the following to the Facility Agent in sufficient copies for all the Lenders: (i) as soon as the same are available (and in any event within 120 calendar days of the end of each of its financial years) the audited consolidated financial statements of the Company and the unaudited financial statements (being the balance sheet and profit and loss account consolidated for this purpose) of each other Obligor for that financial year; (ii) as soon as the same are available (and in any event within 90 calendar days of the end of the relevant period) but, in the case of paragraph (B), only if such financial statements are prepared or if the Obligor is under a legal obligation to prepare them: (A) the quarterly and the semi-annual consolidated financial statements of the Company; and (B) the quarterly and the semi-annual financial statements (audited if prepared) of each other Obligor certified (if required by applicable law) by an officer of the Obligor; (iii) together with (A) prior to a Release Condition Date (or at any time thereafter, if an Investment Downgrading Date occurs, from the Investment Downgrading Date until a Release Condition Date occurs again), each set of financial statements of the Company; and (B) on or following a Release Condition Date, each set of semi-annual financial statements of the Company, a certificate signed by the Chief Financial Officer of the Company and a certificate signed by the Auditors (in the case of annual audited financial statements) setting out in reasonable detail computations establishing compliance with each of the financial covenants in Clause 20 (Financial Covenants) and with the annual financial statements a certificate signed by the Chief Financial Officer of the Company setting out an up to date list of Material Subsidiaries. (b) The Obligor's Agent shall ensure that: (i) each set of financial statements delivered pursuant to paragraph (a) is prepared in accordance with accounting principles and practices generally accepted in the jurisdiction of incorporation of the Obligor concerned, consistently applied (or if not consistently applied accompanied by details of the inconsistencies unless such details appear in the notes to the financial statements), and, in relation to the financial statements of the Company, on the same basis as was used in the preparation of the Original Group Accounts. If any financial statements of the Company referred to in paragraph (a) (the INCONSISTENT ACCOUNTS) are prepared on a basis which is not consistent with the immediately preceding comparable financial statements or in accordance with accounting principles and practices which are not consistent with the immediately preceding comparable financial statements and, in the reasonable opinion of the Obligors' Agent or the Majority Lenders, the result of the calculations made pursuant to the provisions in Clause 20 (Financial Covenants) does not correspond to the commercial intention of such provisions, the following shall apply: (A) either the Obligors' Agent shall notify the Facility Agent or the Facility Agent shall notify the Obligors' Agent accordingly (as appropriate). Any notice given under this sub-paragraph (i) shall contain reasonable details of the 78 differences between the Inconsistent Accounts and the immediately preceding comparable financial statements; and (B) in the event of a notice from the Facility Agent or, in the event of a notice from the Obligors' Agent, if the Majority Lenders agree with the Obligors' Agent opinion, the Obligors' Agent and the Lenders shall negotiate in good faith for a period not exceeding 30 calendar days with a view to the Obligors' Agent and the Majority Lenders agreeing the manner in which the provisions of Clause 20 (Financial Covenants) shall be applied to the Inconsistent Accounts. If no agreement is reached within this period or, if the notice under paragraph (A) above was from the Obligors' Agent, the Majority Lenders do not agree with the Obligors' Agent opinion, the provisions of Clause 20 (Financial Covenants) shall be interpreted with respect to the Inconsistent Accounts as determined by the Facility Agent (acting on the instructions of the Majority Lenders), which interpretation shall prevail; and (ii) each set of financial statements accounts delivered pursuant to paragraph (a) shall (in the case of audited accounts) give a true and fair view of and (in the case of other accounts) shall fairly represent the financial condition of the Obligor to which those financial statements relate (or the consolidated financial condition of the Group in relation to the financial statements of the Company) as at the end of the period to which those financial statements relate and of the results of its operations during that period. 19.3 AUDITORS The Company shall ensure that one of the firms specified in the definition of AUDITORS is at all times appointed to audit the consolidated financial statements of the Group. 19.4 LIQUIDITY ANALYSIS Prior to a Release Condition Date (or at any time thereafter, if an Investment Downgrading Date occurs, from the Investment Downgrading Date until a Release Condition Date occurs again), on the first Business Day of each calendar month and on or following a Release Condition Date, on the first Business Day of each quarter, the Obligors' Agent shall supply to the Facility Agent in sufficient copies for all the Lenders an up-to-date Liquidity Analysis together with (prior to a Release Condition Date (or at any time thereafter, if an Investment Downgrading Date occurs, from the Investment Downgrading Date until a Release Condition Date occurs again)) a certificate from the Chief Financial Officer of the Company confirming that such Liquidity Analysis has been prepared in good faith and is based on reasonable assumptions. 19.5 LIQUIDITY (a) Each Obligor shall ensure that at all times the aggregate of net cash available and undrawn facilities for the period of three months from that time (the RELEVANT PERIOD) (as determined from the line entitled NET CASH AVAILABLE AND UNDRAWN FACILITIES in the then most recently delivered Liquidity Analysis) is more than E100,000,000. (b) Disposal proceeds projected to be received in a Liquidity Analysis by a member of the Group during a Relevant Period will be taken into account in any calculation under paragraph (a) above in the following circumstances: 79 (i) WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF AN ASSET IN RELATION TO WHICH A MEMBER OF THE GROUP HAS A PUT OPTION - if the date for the exercise of that option occurs on or before the end of the Relevant Period; (ii) WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF A MINORITY INTEREST IN A LISTED COMPANY - if there are no contractual restrictions binding on any member of the Group on the disposal of those shares on or before the end of the Relevant Period; (iii) WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF SHARES IN A SUBSIDIARY OF THE COMPANY BY WAY OF ANY ISSUE OF RIGHTS, SHARES OR EQUITY INSTRUMENTS OF ANY KIND (INCLUDING FOR THE AVOIDANCE OF DOUBT DEBT INSTRUMENTS THAT ARE REDEEMABLE ONLY IN SHARES) - if the financial advisors of the Company acting in relation to such initial public offering have confirmed that the launch date for such issue is scheduled to occur on or before the end of the Relevant Period; and (iv) WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO ASSETS AND BUSINESS OF A MEMBER OF THE GROUP, OR THE ENTIRETY OF THE SHARES IN A MEMBER OF THE GROUP - if the vendor has already received formal written offers from potential purchasers or a sale and purchase agreement has been signed and in each case it is reasonably to be expected that the projected disposal proceeds will be received on or before the end of the Relevant Period, and (A) where the disposal proceeds projected to be received in a Liquidity Analysis by a member of the Group during a Relevant Period do not satisfy the above criteria or (B) the disposal proceeds are required, or could reasonably be expected by the Company to be required, to be applied in payment or settlement of any indemnity and/or warranty claim under any sale and purchase agreement and/or ancillary documents related to any disposal which would otherwise be taken into account, any prepayment of the Facility and the Existing Bank Debt and related cash outflow projected to be made in that Liquidity Analysis with those proceeds shall not be taken into account for the purposes of the calculation under paragraph (a) above. 19.6 INFORMATION - MISCELLANEOUS The Obligors' Agent shall supply to the Facility Agent: (a) all documents despatched by (i) the Company to its shareholders (or any class of them) concerning the convening of, agendas for and resolutions to be considered at shareholders meetings or involving or containing reports or information relating to its affairs and activities, or (ii) any Obligor to its creditors generally (or any class of them), in each case at the same time as they are despatched; (b) promptly upon becoming aware of them, details of any material environmental claim, any litigation, arbitration, labour dispute or administrative or regulatory proceedings which are current, threatened or pending against any member of the Group, and which if reasonably likely to be adversely determined, have, or could reasonably be expected to have, a Material Adverse Effect; (c) promptly (subject to the terms of any confidentiality undertakings and restrictions binding on the relevant Finance Party) such further information in the possession or control of any Obligor or any Material Subsidiary regarding its (or Cegetel's) business or financial condition, prospects, assets and operations as the Facility Agent may reasonably request (including, without limitation, with respect to VUE and the VUE Bridge Extension (provided that nothing in this Agreement will require the Obligor's 80 Agent to provide to the Facility Agent information which is proprietary to lenders or potential lenders pursuant to the VUE Bridge Extension or any VUE Bridge Refinancing or in respect of which the Obligor's Agent is subject to any confidentiality undertaking or restriction which prevent such disclosure); (d) promptly when available, information relating to any Business Plan or Disposal Confirmation once it has been approved by the board of directors of the Company; (e) promptly upon request by the Facility Agent, a list of the proceeds and aggregate amount (but without a breakdown) of upfront fees, Taxes, costs and expenses required to calculate or verify the amount of any Net Proceeds; (f) promptly upon being notified of the same, details of all transfers of any class of shares or related rights in the capital of an Obligor and any company over whose shares a Security Interest has been granted, or is to be granted pursuant to this Agreement or the Security Documents, and VUE, the Cegetel Group and Maroc Telecom; (g) as soon as reasonably practicable and without undue delay following request by the Facility Agent, an updated list of any of the items referred to in paragraphs (a) to (c) (inclusive) of Clause 18.22 (Intra Group Loan/IGL Arrangements/bank accounts) and semi-annually after the date of this Agreement, an updated list of the items referred to in paragraph (d) of Clause 18.22 (Intra Group Loan/IGL Arrangements/bank accounts) and any other details relating to any Cash Management and IGL Arrangements reasonably requested by the Facility Agent; (h) promptly upon request by the Facility Agent (but subject to any confidentiality undertakings or disclosure restrictions) reasonable details of any stock exchange or regulatory process or investigation in relation to it or any Material Subsidiary or any other material regulatory process or investigation; (i) promptly upon becoming aware thereof, notification that the restrictions on any member of the VUE Group from making any distribution in cash or loans or otherwise disposing of assets to any person outside the VUE Group existing at the date of this Agreement under the VUE Bridge Extension and/or VUE Bridge Refinancing have been removed; and (j) together with the accounts set out in Clause 19.2(a)(i) and 19.2(a)(ii) (Financial information), a certificate signed by the Chief Financial Officer the Company setting out in reasonable detail the calculation of Subsidiary Debt (as defined in Clause 19.40 (Subsidiary Debt)) as at the date of the certificate, in sufficient copies for all of the Lenders, if the Facility Agent so requests. 19.7 NOTIFICATIONS Unless the Facility Agent has been so notified by another Obligor, each Obligor shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of the facts constituting the Default. 19.8 COMPLIANCE CERTIFICATES The Obligors' Agent shall supply to the Facility Agent: 81 (a) together with the accounts specified in Clause 19.2(a)(i) and 19.2(a)(ii) (Financial information); and (b) promptly at any other time, if the Facility Agent so requests (but such a request may not be made more than twice in any period of twelve consecutive calendar months unless a Default has occurred or the Majority Lenders have instructed the Facility Agent to make such request), a certificate signed by one of the signatories authorised to act on its behalf certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it. 19.9 AUTHORISATIONS Each Obligor shall, and shall procure that each member of the Group shall, (i) promptly: (a) obtain, maintain and comply with the terms of; and (b) supply certified copies to the Facility Agent of, any authorisation, waiver or amendment required under any law or regulation to enable it to perform or comply with its obligations under, or for the validity or enforceability of, any Finance Document and (ii) use reasonable endeavours to procure the same where failure to do so would prevent any asset disposal projected to occur in a Liquidity Analysis taking place at the projected time. 19.10 COMPLIANCE WITH LAWS Each Obligor shall, and shall procure that, each member of the Group shall comply in all material respects with all laws and regulations applicable to it of any governmental authorities whether domestic or foreign having jurisdiction over it or any of its assets save where failure to comply with any such laws or regulations has not, or could not reasonably be expected to have, a Material Adverse Effect. 19.11 PARI PASSU RANKING Each Obligor shall ensure that its obligations under the Finance Documents will rank at least pari passu with all its other present and future unsecured and unsubordinated obligations, except for obligations mandatorily preferred by law applying to companies generally. 19.12 NEGATIVE PLEDGE (a) Except as provided below, no Obligor or Material Subsidiary may create or permit to subsist any Security Interest on any of its assets. (b) Paragraph (a) does not apply to: (i) Security Interests already existing (or agreed to be created) at the date of this Agreement as set out in Schedule 10 (Cegetel) and Schedule 11 (List of Existing Security Interests); (ii) Security Interests created or evidenced by the Security Documents (including in respect of Existing Bank Debt) or as permitted under the VUE Bridge Extension; and 82 (iii) Security Interests which are on or over any assets not intended to be the subject of a Security Interest under the Security Documents and which: (A) arise out of title retention provisions in a supplier's standard conditions of supply of goods acquired in the ordinary course of business; (B) constitute liens arising solely by operation of law and in the ordinary course of its business; (C) are granted over cash or securities in an aggregate amount, or with an aggregate value, not exceeding E300,000,000 (or equivalent in other currencies) at any time and deposited with any bank, financial institution, stock exchange or clearing house with which any member of the Group enters into back-to-back, foreign exchange, swap or derivative transactions and with which cash or securities have had to be deposited in order for such transaction to be entered into; (D) are granted in respect of any Product Financing; (E) secure Local Borrowings (or any guarantee given in respect of Local Borrowings which is permitted by this Agreement), the aggregate amount of which does not exceed E300,000,000 (or equivalent in other currencies) at any time (of which Security Interests, no more than an amount of E50,000,000 (or equivalent in other currencies) at any time, in aggregate, may be in the form of cash collateral); (F) are pledges of goods, of the related documents of title and/or of other related documents arising or created in the ordinary course of its business as security only for Financial Indebtedness to a bank or financial institution directly relating to the goods or documents on or over which that pledge exists; (G) exist at the time of acquisition on or over any assets acquired after the date of this Agreement but only if (1) the Security Interest was not created in contemplation of or in connection with that acquisition and (2) the principal, capital or nominal amount secured by any such Security Interest and outstanding at the time of acquisition may not be increased; (H) are created on any assets acquired after the date of this Agreement for the sole purpose of financing or re-financing that acquisition and securing a principal, capital or nominal amount not exceeding 100 per cent. of the cost of that acquisition; (I) in the case of any company which becomes a Material Subsidiary after the date of this Agreement, any Security Interest existing on or over its assets when it becomes a Material Subsidiary, but only if (1) the Security Interest was not created in contemplation of or in connection with it becoming a Material Subsidiary and (2) the principal, capital or nominal amount secured by any such Security Interest and outstanding when the relevant company becomes a Material Subsidiary may not be increased except by reason of any fluctuation in the amount outstanding under, and within the limits and in accordance with the terms of, facilities which exist and are secured by the relevant Security Interest when it becomes a Material Subsidiary; 83 (J) are given on assets acquired after the date of this Agreement to secure Project Finance Indebtedness provided that the assets which are subject to such Security Interest are assets which are the subject of the applicable project; (K) are created in respect of borrowings from the French Export Credit Corporation (COFACE) or similar governmental agency incurred on concessional terms by any Obligor or Material Subsidiary made to refinance any amount receivable under any export sales contract provided that each such Security Interest consists only of a pledge of such any Obligor or Material Subsidiary claims under such contract against the foreign buyer and of any Security Interest or guarantee of such claims; (L) are created by virtue of the operation of any cash pooling arrangements existing at the date of this Agreement or permitted pursuant to this Agreement for any Obligor or Material Subsidiary with their bankers providing for the setting-off or netting of debit and credit balances on bank accounts of those members of the Group; (M) are granted by any Obligor or Material Subsidiary pursuant to applicable law to any pension fund or managers securing the pension obligations of any Obligor or Material Subsidiary; (N) are created in substitution for any Security Interest referred to in this paragraph (b) so long as the principal, capital or nominal amount secured by such replacement Security Interest does not exceed the amount permitted to be secured under this paragraph (b) by the Security Interest which it replaced; (O) arise out of any order of attachment, sequestration, distress or execution which does not constitute an Event of Default under Clause 21.9 (Creditors' process / final judgment); (P) are created by the transfer of any Security Interest permitted to exist under this paragraph (b) from one person to another, so long as the principal, capital or nominal amount secured by such Security Interest is not increased; (Q) are granted by any member of the VUE Group on any of its assets in respect of or permitted by or required pursuant to the terms of any VUE Bridge Refinancing, any VUE Incremental Indebtedness or the VUE Bridge Extension (as amended from time to time); (R) are granted by Centenary (UK) Limited and its Affiliates in respect of any UMO Refinancing; (S) are granted on or over assets or rights to receive assets in connection with the disposal of Sithe Asia with an aggregate value of no more than U.S.$60,000,000 (or equivalent in other currencies) at any time; and (T) are granted on or over assets with an aggregate value of no more than, and securing Financial Indebtedness, the amount of which (when aggregated with the amount of other Financial Indebtedness which has the benefit of a Security Interest not permitted under the preceding subparagraphs) does not exceed, U.S.$100,000,000 (or equivalent in other currencies) at any time, provided that: 84 I. subject to paragraphs (II) and (III) below, prior to a Release Condition Date, the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under this paragraph (b) (excluding paragraphs (b)(i), (b)(ii) and (b)(iii)(J), (Q) and (R) above), when aggregated with the aggregate value of all assets and receivables sold, transferred or otherwise disposed of pursuant to all Restricted Transactions (as defined in Clause 19.13), (excluding for the avoidance of doubt Security Interests over and Restricted Transactions of any shares in or assets of any member of the VUE Group, the Maroc Telecom Group, the Cegetel Group and VTH) does not at any time exceed E500,000,000 (or equivalent in other currencies); II. on or after a Release Condition Date (but subject to paragraph (III) below), the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under paragraphs (a), (b) and (c) of Clause 19.12 (Negative Pledge) (including for the avoidance of doubt, the Existing Cegetel Security and any other Security Interests granted on or over assets of any member of the Cegetel Group) (but excluding b(iii)(J) and, prior to a Security Release Condition Date, b(ii)), when aggregated with the aggregate value of all assets and receivables sold, transferred or otherwise disposed of pursuant to all Restricted Transactions (as defined in Clause 19.13 (Transactions similar to security), does not at any time exceed 7.5 per cent. of consolidated assets (being the total amount of assets shown in the most recent consolidated balance sheet of the Group). For the avoidance of doubt, following a Release Condition Date (but subject to paragraph (III) below), no maximum amount shall apply to any Security Interest permitted to be created or to subsist pursuant to paragraphs (b)(iii)(C), (E) and (U); and III. if, at any time after a Release Condition Date, an Investment Downgrading Date occurs, the provisions of paragraph (I) above shall be automatically reinstated and remain in force in place of the provisions of paragraph (II) above from the Investment Downgrading Date unless and until such time as a Release Condition Date occurs again in which case the provisions of paragraph (II) shall apply. (c) Paragraph (a) does not apply to: (i) Existing Cegetel Security; and (ii) Security Interests granted on or over assets of any member of the Cegetel Group securing Financial Indebtedness in an amount, which when aggregated with all assets and receivables sold, transferred or otherwise disposed of by any member of the Cegetel Group pursuant to all Restricted Transactions (as defined in Clause 19.13) other than pursuant to a securitisation do not exceed an amount equal to E500,000,000 (or equivalent in other currencies). (d) Notwithstanding any other provision in the Finance Documents, no Obligor shall create or permit to subsist any Security Interest on any of the Games IP. Furthermore, no Security Interest shall be granted over the percentage of shares in Centenary Holding N.V. Centenary Holding Limited or any other Excluded Music Group Entity over which shares no Obligor can create or permit to subsist any Security Interest in favour of the Finance Parties as a result 85 of such Excluded Music Group Entity's being or becoming a Foreign Subsidiary or becoming held (directly or indirectly) by Universal Studios Holding I Corp. (e) Notwithstanding any other provision in the Finance Documents, no Obligor shall create or permit to subsist any Security Interest in respect of the High Yield Notes. (f) The Company will not create or permit to subsist (or agree to create or permit to subsist) any new security from any other member of the Group (other than that granted under the Security Documents at the date of this Agreement) in favour of the Existing Bank Debt unless any such new security effectively secures the Secured Obligations under this Agreement on a pari passu basis with the Existing Bank Debt. (g) Following the Maroc Telecom Date, as soon as reasonably practicable and in any event of within 45 calendar days thereof, the Company and the Facility Agent (on the instructions of the Majority Lenders) shall negotiate in good faith with a view to agreeing the aggregate value of assets of the Maroc Telecom Group over which a Security Interests may be permitted to be created or exist under this Agreement. (h) As soon as practicable following notice by the Kingdom of Maroc of its intention to exercise the put, the Company shall (unless the Company intends to finance any such acquisition by a Maroc Telecom Excluded Financing) use its reasonable endeavours to release any Security Interest over all the shares it holds (directly or indirectly) in Maroc Telecom (other than the Acquired Shares) in favour of the Kingdom of Maroc and to obtain the consent of the Kingdom of Maroc to grant security over all the shares it holds (directly or indirectly) in Maroc Telecom (including, for the avoidance of doubt, the Maroc Telecom Acquired Shares) in favour of the Lenders and the Existing Lenders on a pari passu basis. (i) Where the Company finances the acquisition of the Maroc Telecom Acquired Shares by a Maroc Telecom Excluded Financing, the Company will not create or permit to subsist (or agree to create or permit to subsist) any Security Interest over any of the shares it holds (directly or indirectly) in Maroc Telecom (other than any shares (held directly or indirectly) by the Company in Maroc Telecom permitted to be pledged in favour of the Lenders under the Maroc Telecom Excluded Financing). 19.13 TRANSACTIONS SIMILAR TO SECURITY (a) No Obligor or Material Subsidiary will enter into any Restricted Transaction if as a result the aggregate value of all assets and receivables sold, transferred or otherwise disposed of pursuant to all Restricted Transactions, provided that: (i) prior to a Release Condition Date (but subject to paragraphs (ii) and (iii) below), when aggregated with the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under Clause 19.12(b) (excluding Clause 19.12(b)(i), Clause 19.12(b)(ii) and Clause 19.12(b)(iii)(J), (Q) and (R)) (excluding for the avoidance of doubt Security Interests over and Restricted Transactions of any shares in or assets and receivables of any member of the VUE Group, the Maroc Telecom Group, subject to paragraph (c), the Cegetel Group and VTH) would exceed E500,000,000 (or equivalent in other currencies); (ii) on or after a Release Condition Date (but subject to paragraph (iii) below), when aggregated with the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under paragraphs (a), (b) and (c) of Clause 19.12 (Negative pledge) (including for the avoidance of doubt, the existing Cegetel Security and any other Security Interests granted on or over assets of any 86 member of the Cegetel Group) (but excluding b(iii)(J) and, prior to a Security Release Condition Date, b(ii)) does not at any time exceed 7.5 per cent. of consolidated assets (being the total amount of assets shown in the most recent consolidated balance sheet of the Group). For the avoidance of doubt, following a Release Condition Date (but subject to (iii) below), no maximum amount shall apply to any Security Interest permitted to be created or subsist pursuant to Clause 19.12(b)(iii)(C), (E) and (U); and (iii) if at any time after a Release Condition Date or a Security Release Condition Date, an Investment Downgrading Date occurs, the provisions of paragraph (i) above shall, be automatically reinstated and remain in force in place of the provisions of paragraph (ii) above from the Investment Downgrading Date unless and until such time as a Release Condition Date or a Security Release Condition Date, as the case may be, occurs again, in which case the provisions of paragraph (ii) shall apply. (b) In this Clause 19.13, RESTRICTED TRANSACTION means a sale, transfer or other disposal by any Obligor or any Material Subsidiary of: (i) any of its assets on terms whereby it is or may be leased to or re-acquired or acquired by a member of the Group or any of its related entities; or (ii) any of its receivables on recourse terms (excluding the discounting of bills or notes in the ordinary course of trading), (other than in connection with any Project Finance Indebtedness or Product Financing by that Obligor or Material Subsidiary, any assets or receivables of Centenary (UK) Limited and certain of its Affiliates in connection with the UMO Refinancing or any assets or receivables of any member of the VUE Group in connection with any VUE Bridge Refinancing or VUE Incremental Indebtedness) in circumstances where the transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset, provided that if such a transaction is defeased it shall not thereafter constitute a Restricted Transaction, and for these purposes a Restricted Transaction is DEFEASED if all of the obligations of the Obligor or Material Subsidiary concerned thereunder are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) prepaid or (C) otherwise discharged and extinguished in full, such that no Obligor or Material Subsidiary thereafter has any outstanding Financial Indebtedness with respect to such transaction and provided further that nothing in this Clause 19.13 shall permit any member of the Group to enter into or agree to enter into the covenant defeasance arrangements referred to in Section 5.05(a) of the VUE Partnership Agreement. (c) Paragraph (a) does not apply to any assets and receivables sold, transferred or otherwise disposed of by any member of the Cegetel Group pursuant to any Restricted Transactions, (other than pursuant to a securitisation) which when aggregated with the amount of Financial Indebtedness secured by Security Interests granted on or over assets of any member of the Cegetel Group does not exceed an aggregate amount equal to E500,000,000 (or equivalent in other currencies). 19.14 DISPOSALS (a) Except as provided in paragraph (b) below, no Obligor will, and each Obligor will procure that no member of the Group, either in a single transaction or a series of transactions and whether voluntarily or involuntarily, sell, transfer, grant or lease or otherwise dispose of any of its assets. 87 (b) Paragraph (a) does not apply to: (i) until a Release Condition Date (or at any time thereafter, if an Investment Downgrading Date occurs, from the Investment Downgrading Date until a Release Condition Date occurs again), any disposal of assets (other than the VE Shares referred to in paragraph (viii) below) which is made for full market value and for cash payable at the time of the disposal, where an amount equal to the Net Proceeds of which (if the asset is an Asset) are applied in accordance with and subject to the provisions of the terms of Clause 7 (Prepayment and Cancellation), provided that in the case of any such disposal of an Asset: (A) (other than in the case of any disposal of the shares in, assets or business of any member of the VUE Group or the Music Group) (x) up to 30 per cent. of the purchase consideration for such disposal may be on terms that defer its payment for up to one year from the date of such disposal and/or (y) (other than in the case of the Games Disposal) up to 30 per cent. of the purchase consideration may be in the form of valuable non-cash consideration payable at the time of that disposal and provided further that the aggregate amount of the purchase consideration in respect of such disposals so deferred and/or paid by non-cash consideration does not exceed E350,000,000 throughout the term of this Agreement; and (B) (in the case of any disposal of the shares in, assets or business of any member of the VUE Group or the Music Group) up to 35 per cent. of the purchase consideration for such disposal may be in the form of valuable non-cash consideration and on terms that defer its payment for no more than two years from the date of such disposal, and after a Release Condition Date, any disposal of assets (other than the VE Shares referred to in paragraph (viii) below) which is made in the ordinary course of business of the disposing entity or for full market value and on normal commercial terms; or (ii) a disposal of any asset with a market value of E30,000,000 (or equivalent in other currencies) or less; or (iii) disposal in the ordinary course of business or trading of the disposing entity of stock in trade, business inventories, fixtures and fittings, furniture and other office equipment; or (iv) Relevant Intra Group Disposals or the disposal of any VUE Loan by VCNA, VUHIC or the Company to VUE Borrower Co. permitted under this Agreement or the disposal of any VUE Loans as permitted by the VUE Loan Assignment Agreement; or (v) disposals of surplus, obsolete or redundant plant and equipment; or (vi) the expenditure of cash in the ordinary course of business or trading (other than in connection with a transaction or operation which is prohibited by the terms of this Agreement) or the disposal of permitted cash equivalents for cash or in exchange for other cash equivalents; or (vii) disposals pursuant to Restricted Transactions permitted by Clause 19.13 (Transactions similar to security), leasing transactions permitted by Clause 19.16 88 (Leasing) pursuant to transactions permitted by Clause 19.18 (Mergers and acquisitions), or Clause 19.20 (Dividends and distributions) or Permitted Joint Venture; or (viii) the VE Shares Disposal, the Games Disposal, any Canal + Disposal or (subject to the provisions of Clause 7.7 (Mandatory prepayment from VE Shares Disposal)) the disposal of the VE Shares pursuant to the VE Call Option and for cash payable at the time of the disposal; or (ix) the VUE Excluded Disposals or a disposal by any member of the VUE Group in respect of or permitted by any VUE Bridge Refinancing or VUE Incremental Indebtedness; or (x) disposal of Cegetel Shares to the extent the Company is bound by drag along obligations in respect of the same in favour of the Lenders under the Non Recourse Financing the proceeds of which are prepaid in accordance with the provisions of Clause 7 (Prepayment and Cancellation); or (xi) any disposal by a member of the Group (other than by an Obligor or a Material Subsidiary) where such disposal does not have nor could be reasonably expected to have a Material Adverse Effect or to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents. 19.15 FINANCIAL INDEBTEDNESS No Obligor will, and each Obligor will procure that no Material Subsidiary will, incur or have outstanding any Financial Indebtedness other than: (a) under the Finance Documents or Existing Facilities or the Existing Contingent Financial Liabilities or non-material contingent Financial Liabilities outstanding as at the date of this Agreement or uncommitted facilities, overdrafts, daylight overdrafts, intra-day facilities and facilities used for technical purposes (i.e. credit card programmes) outstanding as at the date of this Agreement; (b) any Financial Indebtedness as permitted by Clause 19.17 (Financial guarantees) or by Clause 19.19 (Loans out, Intra Group Loans); (c) any Project Finance Indebtedness; (d) any Product Financing; (e) any Existing Facilities Refinancings (including, for the avoidance of doubt, any VUE Bridge Refinancing and any UMO Refinancing); (f) VUE Incremental Indebtedness (where an amount of up to U.S.$ 200,000,000 (or equivalent in other currencies) is applied in full forthwith towards repayment of (i) all VUE Loans, if any, made by VUHIC to VUE for working capital purposes to the extent required in accordance with Clause 19.19(j) (Loans out, Intra Group Loans) or (ii) the UCI Loan); (g) any Local Borrowings; (h) any Financial Indebtedness where an amount equal to the Net Proceeds of such indebtedness is applied forthwith in mandatory prepayment and cancellation of the Facility under Clause 7 (Prepayment and Cancellation); 89 (i) any Financial Indebtedness of the type referred to in paragraph (g) of the definition thereof entered into for the purposes of any transaction permitted under Clause 19.28(b); (j) commercial paper issued (other than by a member of the Cegetel Group) in an aggregate principal amount of up to E50,000,000 (or equivalent in other currencies); (k) in respect of which another member of the Group (including for the avoidance of doubt any member of the Cegetel Group) is the creditor as permitted in accordance with the terms of Clause 19.19 (Loans out, Intra Group Loans); (l) an Equity Issue; (m) in respect of any member of the Cegetel Group in an aggregate principal amount not to exceed at any time E3,000,000,000 (or equivalent in other currencies) (including no more than E800,000,000 to finance the acquisition referred to in Clause 19.18(b)(viii) (Mergers and acquisitions) (including no more than E300,000,000 of existing Financial Indebtedness in the entity acquired)); (n) under an intra-day facility entered into for cash management purposes in a maximum aggregate amount not to exceed E100,000,000 (or its equivalent in other currencies); (o) subject to the other provisions of this Agreement, any other new borrowing which is unsecured and not guaranteed and which has an original scheduled maturity date falling no earlier than one year after the later of the Final Maturity Date and the original final maturity date of the Multicurrency Revolving Credit Facility; (p) the VU/SIT Loan; (q) Financial Indebtedness of the VUE Group arising out of TV satellite capital lease existing at the date of this Agreement (the monthly rent under such lease being U.S.$184,660, and the lease expiring in October 2003 with the Company having the option to purchase the transponder for the greater of U.S.$2,671,000 or its fair market value); (r) any reimbursement or indemnification obligations (other than in respect of Financial Indebtedness) arising in the ordinary course of business or indemnification obligations arising in respect of any appeal bond; (s) any Financial Indebtedness arising from the honouring by a bank or other financial institution of a cheque, draft or similar instrument drawn against insufficient funds in the ordinary course of business; and (t) any Financial Indebtedness of the type referred to in paragraph (e) of the definition of Financial Indebtedness to the extent payable within 180 calendar days from the time of acquisition or possession. 19.16 LEASING No Obligor will, and each Obligor will procure that no Material Subsidiary will, enter into any lease or leasing arrangements other than in the ordinary course of business or as disclosed in writing to the Facility Agent prior to a Release Condition Date (subject always to the provisions of 19.1(g)). 90 19.17 FINANCIAL GUARANTEES (a) In this Clause 19.17, a FINANCIAL GUARANTEE means a guarantee, indemnity or similar assurance against financial loss of a person in respect of any indebtedness of a type falling within paragraphs (a) to (h) of the definition of Financial Indebtedness in Clause 1.1 (Definitions) and includes without limitation, each Contingent Financial Liability. (b) No member of the Group will incur or allow to be outstanding any new financial guarantee in respect of any person on or after the date of this Agreement. (c) Paragraph (b) does not apply to: (i) any guarantee arising under, or expressly permitted by, the Finance Documents; (ii) the endorsement of negotiable instruments for the purpose and in the ordinary course of carrying on the relevant entity's trade; (iii) guarantees in favour of a Lender to facilitate the operation of bank accounts of members of the Group maintained with such Lender on a net balance basis; (iv) guarantees by a member of the Group which is not an Obligor in respect of Local Borrowings; (v) Excluded Financial Indebtedness; (vi) for the avoidance of doubt, customary vendor warranties or indemnities given by a member of the Group in a sale and purchase agreement for a disposal by it permitted by Clause 19.14 (Disposals); (vii) guarantees given in favour of fiscal authorities and counter-guarantees given for the purpose of avoiding a requirement by such authorities of payment or collateral on account of a member of the Group's fiscal obligations; (viii) guarantees in respect of new Financial Indebtedness permitted by Clause 19.15 (Financial Indebtedness) not otherwise permitted pursuant to paragraphs (i) to (iv) above in an aggregate amount at any time outstanding for the Group not exceeding E300,000,000 (or equivalent in other currencies); (ix) in respect of any financial guarantee by a member of the Cegetel Group, the Existing Contingent Cegetel Financial Liabilities and other Financial Indebtedness incurred by Cegetel and permitted under Clause 19.15 (Financial Indebtedness) in an aggregate principal amount not to exceed E600,000,000 (or equivalent in other currencies); (x) in respect of the Cegetel Indemnity; (xi) guarantees given by any member of the VUE Group which are permitted by or required pursuant to the terms of any VUE Bridge Refinancing or the VUE Bridge Extension (as amended from time to time) or VUE Incremental Indebtedness or by Centenary (UK) Limited and certain of its Affiliates in connection with the UMO Refinancing; (xii) the guarantee granted by a member of the VUE Group in respect of Shanghai Universal Studios Theme Park Co. Ltd. in an aggregate principal amount not to exceed U.S.$140,750,000; 91 (xiii) renewal or replacement of any existing guarantees; (xiv) any letter of comfort issued by a member of the Group with respect to financial statements of any member of the Group; (xv) for the avoidance of doubt, any performance guarantee granted by any member of the Group in respect of an obligation of another member of the Group in the ordinary course of trading; and (xvi) any guarantee or counter-guarantee granted by any member of the Group in respect of any obligation of another member of the Group under any operating lease where the premises are occupied or sublet by a member of the Group. (d) Each Obligor shall procure that any indemnities and warranties given in any sale and purchase agreement for a disposal contemplated by the Disposal Confirmation to which any member of the Group is party as vendor are customary (in type, amount and duration) for the type of disposal concerned. (e) Notwithstanding any other provision of the Finance Documents, no Obligor shall incur or permit to be outstanding any guarantee in favour of the holders of the High Yield Notes or the trustee under the Indenture. (f) The Company will not incur or allow to be outstanding (or agree to incur or allow to be outstanding) any new financial guarantee from any member of the Group (other than the guarantees incurred under the Existing Bank Debt Guarantee at the date of this Agreement) in favour of the Existing Bank Debt unless any such new financial guarantee effectively guarantees the Secured Obligations under this Agreement on a pari passu basis with the Existing Bank Debt. 19.18 MERGERS AND ACQUISITIONS (a) Except as provided in paragraph (b) below, no Obligor will, and each Obligor will procure that no member of the Group will, enter into any amalgamation, demerger, merger or reconstruction, nor make any acquisitions of, or investments in any business or any shares or other securities. (b) Paragraph (a) does not apply to: (i) the acquisition of any Product or other stock in trade made in the ordinary course of trade or any Permitted Joint Venture; or (ii) the acquisition of Shares in Joint Ventures to the extent permitted by Clause 19.27 (Joint Ventures); or (iii) any other acquisition or investments not exceeding E50,000,000 per annum in aggregate (or equivalent in other currencies) prior to the Facility Discharge Date; or (iv) an amalgamation, demerger, merger or reconstruction, acquisition or investment in any business or any shares or other securities involving only members of the Group which are not Obligors carried out on a solvent basis (including, without limitation, for the purpose of a tax reorganisation or tax restructuring, recapitalisation of subsidiaries, or for the simplification of the Group structure chart, provided that: (A) the Company supplies the Facility Agent as soon as possible prior to such reorganisation with reasonable details thereof; and 92 (B) if any security created pursuant to the Security Documents has been or is likely to be (in the opinion of the Majority Lenders) affected by such reorganisation, the Company shall ensure that the relevant member of the Group shall execute and deliver to the Security Agent such additional Security Documents as the Majority Lenders may reasonably require on substantially the same terms as the Security Documents charging the assets, subject of the affected security; or (v) an amalgamation, demerger, merger or reconstruction, acquisition or investment in any business or any shares or other securities involving any member of the Group (other than an Obligor except Games permitted under this Agreement) carried out on a solvent basis for the purposes of facilitating a disposal permitted by Clause 19.14 (Disposals) which could not reasonably be expected to have a Material Adverse Effect or to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents; or (vi) any such operation or transaction entered into with the prior written consent of the Majority Lenders (and, for the avoidance of doubt, such consent may be withheld, without limitation, if the Majority Lenders are of the opinion that any such amalgamation, merger, de-merger, consolidation, reconstruction or transfer could jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents); or (vii) the exercise of put options listed as Contingent Financial Liabilities or other put options where the exercise price is not payable in cash in each case in respect of put options existing at the date of this Agreement; or (viii) the acquisition by Cegetel of that part of Telecom Developpement SA France not presently beneficially owned by Cegetel for an aggregate total consideration of not more than E800,000,000 (including E300,000,000 of acquired debt); or (ix) investments in VUE Borrower Co. by the Company, the amount of which investments, when aggregated with loans outstanding and permitted to be made to VUE Borrower Co. by the Company pursuant to Clause 19.19 does not exceed at any time an aggregate amount of U.S.$ 200,000,000 (or equivalent in other currencies); or (x) any amalgamation, demerger, merger, reconstruction, acquisition or investment in connection with a Relevant Intra Group Disposals and in relation to the VE separation agreement entered into on 20th December, 2002 as disclosed to the Facility Agent prior to the date of this Agreement; or (xi) the acquisition by the Company of 16 per cent. of the share capital of Maroc Telecom pursuant to the exercise by the Kingdom of Maroc pursuant to the put option set out in the Protocole d'Accord between the Kingdom of Maroc and the Company dated 4th March 2002; or (xii) investments in Shanghai Universal Theme Park Co. Ltd up to an aggregate amount of U.S.$217,000,000 (or equivalent in other currencies) by any member of the VUE Group; or (xiii) any Games Reorganisation; or 93 (xiv) investments made for non-cash consideration, subject always to Clause 19.26, , provided that such investments do not expose any member of the Group to any liability, actual or contingent, for Financial Indebtedness; or (xv) any investment expressly permitted pursuant to this Agreement. 19.19 LOANS OUT, INTRA GROUP LOANS (a) Except as provided in paragraphs (b) and (c) and subject to the provisions of paragraphs (d) to (h) below, no Obligor will, and each Obligor will procure that no member of the Group will, be the creditor in respect of any Financial Indebtedness. (b) Paragraph (a) does not apply to: (i) Financial Indebtedness constituted by any swap or derivative instruments permitted by this Agreement or by any bank accounts permitted by this Agreement; (ii) Financial Indebtedness owing to any member of the Group by any person outside the Group at the date of this Agreement; (iii) trade credit extended (A) by any member of the VUE Group to another member of the VUE Group or (B) by any member of the Non-VUE Group to another member of the Non-VUE Group on normal commercial terms and in the ordinary course of business; (iv) a loan to the Company for the purpose of allowing the Company to comply with the requirements of Clause 7.15(d). (c) Paragraph (a) does not apply to: (i) a loan existing at the date of this Agreement listed in Parts 1, 2, 3, 4 or 5 of Schedule 15 and, if made by or to an Obligor, which in case of a loan listed in Part 4 or 5 complies with paragraph (d)(i) and (ii) below respectively; (ii) a loan made by an Obligor to another member of the Group (but not to SIT or any member of the Cegetel Group except for a loan made by the Company to SIT with the proceeds of the VU/SIT Loan for the purposes of repayment or prepayment in full of the Non-Recourse Financing) which complies with the requirements of paragraph (d)(i) below; (iii) a loan to an Obligor from another member of the Group which complies with the requirements of paragraph (d)(ii) below; (iv) a loan between members of the Group which are not Obligors made in the ordinary course of day-to-day operations of the Group and in accordance and consistent with the Cash Management and IGL Arrangements as such arrangements are in operation as at the date of this Agreement (or as those arrangements may be amended in accordance with the provisions of this Agreement); (v) a loan made between members of the VUE Group; (vi) a loan made by Cegetel to a member of the Group for the purposes of Clause 7.8 (Mandatory prepayment from Assets Disposals) or Clause 19.20 (Dividends and distributions); 94 (vii) Financial Indebtedness arising from any member of the VUE Group's obligation to reimburse the relevant member of the Non-VUE Group for liabilities and/or expenses relating to video sales or Financial Indebtedness arising from a member of the VUE Group's interest in the related payments prior to its receipt thereof, in each case until such time as all payments in respect of video sales are paid directly to an account or accounts of a member or members of the VUE Group in accordance with the VUE Bridge Extension; (viii) such loan complies with the requirements of paragraph (d)(i) or d(ii), as the case may be below; (ix) a loan between a member of the VUE Group and a member of the Non-VUE Group, provided that the aggregate outstanding principal amount of all VUE Loans made by (A) members of the Non-VUE Group (net of the aggregate outstanding principal amount of all VUE Loans made by members of the VUE Group (in each case, inclusive of VUE Loans existing at 7th May, 2002)) and (B) members of the VUE Group, net of the aggregate outstanding principal amount of all VUE Loans made by members of the Non-VUE Group (in each case, inclusive of VUE Loans existing as at 7th May, 2002) in each of cases (A) and (B) shall at no time exceed (i) U.S.$500,000,000 (or equivalent in other currencies) or (ii) from the date on which and for so long as VUE is assigned a long term secured credit rating by S&P of at least BB+ and (but not or) Moodys of at least Ba1, U.S.$700,000,000 (or equivalent in other currencies) (excluding the Canada Receivables and any Excluded Financial Indebtedness), calculated by converting any amounts not denominated in U.S.$ in the same manner as non U.S.$ denominated amounts are converted for purposes of reporting inter company balances (consistent with past practices); (x) a loan made by VUHIC to VUE or a loan made by VU, VUE or any VUE Foreign Lender to VUE Borrower Co. which complies with the requirements of paragraph (i) below; (xi) any indebtedness constituted by deferred purchase consideration permitted by paragraph (b) of Clause 19.14; or (xii) any Excluded Financial Indebtedness. (d) (i) A Secured Intra Group Loan shall not be permitted to be made, incurred or (at any time when it is owing to any Obligor) outstanding, unless it is evidenced by an Intra Group Loan Agreement or a VUE Loan Agreement, as applicable, and, in each case, is the subject of a Security Interest in the agreed form in favour of the Security Agent unless the relevant VUE Loan is assigned or transferred to VUE Borrower Co. in which case it shall cease in accordance with Clause 17 to be the subject of a Security Interest provided that the loans referred to in Part 4 of Schedule 15 shall be so evidenced and be subject to such a Security Interest as soon as reasonably practicable and in any event prior to the first Request. (ii) A Subordinated Intra Group Loan shall not be permitted to be made, incurred or (at any time when it is owing to any Obligor) outstanding, unless it is evidenced by an Intra Group Loan Agreement or a VUE Loan Agreement, as applicable, and, in each case, is the subject of, and is designated a subordinated loan for the purposes of, the relevant Subordination Agreement (unless the relevant loan is made by a Foreign Subsidiary to a member of Non-VUE Group and subordination of that loan could reasonably be expected to give rise to an additional U.S. tax liability in which case it shall not be necessary for such loan to become the subject of the relevant 95 Subordination Agreement) provided that the loans referred to in Part 5 of Schedule 15 shall be subject to the relevant Subordination Agreement as soon as reasonably practicable and in any event prior to the first Request. (iii) For the purposes of this paragraph (d) "relevant Subordination Agreement" shall mean: (A) in the case of a VUE Loan which is a Subordinated Intra Group Loan by a member of the VUE Group to a member of the Non-VUE Group, the VUE Subordination Agreement provided that in the case of a Subordinated Intra Group Loan made by any member of the VUE Group to VUE Borrower Co. the subordination terms shall be limited to no insolvency or court action as set out in the VUE Subordination Agreement; (B) in the case of a Subordinated Intra Group Loan between members of the Non-VUE Group (and one or more of such members of the Non-VUE Group is incorporated or organised outside the United States of America), the Non-U.S. Subordination Agreement; and (C) in the case of a Subordinated Intra Group Loan between members of the Non-VUE Group (and one or more of such members of the Non-VUE Group is incorporated or organised in the United States of America), the U.S. Subordination Agreement. (e) No Obligor shall, and each Obligor shall procure that (i) no member of the Group shall, make any loan to any member of the Maroc Telecom Group, the Cegetel Group or SIT save as set out in Part 2 of Schedule 15 or except by the Company to SIT with the proceeds of the VU/SIT Loan and that (ii) save to the extent of (i), no member of the Maroc Telecom Group, the Cegetel Group or SIT is a party to any Cash Management and IGL Arrangements until the Maroc Telecom Cash Pooling Date or the Cegetel Cash Pooling Date, as the case may be. (f) The Non Recourse Financing may not be repaid or prepaid other than by way of repayment or prepayment in full from a loan by the Company to SIT of the proceeds of the VU/SIT Loan or dividends in respect of the Acquired Shares. (For the avoidance of doubt, the Non Recourse Financing may be refinanced by SIT subject to the terms of Clause 19.28 (Existing Facilities and Treasury Transactions). (g) No Obligor shall, and each Obligor shall procure that no member of the Group shall, amend or vary the form of Intra Group Loan Agreement or the form of VUE Loan Agreement, the commercial terms of any Intra Group Loan or VUE Loan (other than an amendment or variation of an immaterial nature or to permit a repayment of such Intra Group Loan provided no Default has occurred and is continuing or one which is required to be made by law or regulation or a change to the interest rate for an Intra Group Loan or VUE Loan which is required or advisable to comply with applicable transfer pricing principles). (h) The Obligors' Agent may, by giving the Facility Agent no less than 30 calendar days notice in writing, request consent to amend or vary the terms of the Cash Management and IGL Arrangements. Unless the Facility Agent (acting on the instructions of the Majority Lenders) notifies the Obligors' Agent of its agreement to such request, no such amendment or variation shall be made (other than an amendment or variation of an immaterial nature or one which is required to be made by law or regulation). (i) (i) No member of the Non-VUE Group will accept a commitment to lend to a VUE Group member and no member of the VUE Group will accept a commitment to lend 96 to a Non-VUE Group member except in accordance with the provisions of this Clause 19.19 and Clause 19.39. (ii) No member of the Group shall be permitted to make a VUE Loan at any time after the occurrence of an Event of Default which is continuing if the Facility Agent (acting on the instructions of the Majority Lenders) shall have notified the Obligors' Agent thereof provided that this sub-paragraph shall not apply to Excluded Financial Indebtedness. (iii) The aggregate outstanding principal amount of all loans made by VU or VUHIC to VUE Borrower Co. shall at no time be more than U.S.$200,000,000 excluding for the avoidance of doubt, any loans which have been assigned or transferred to VUE Borrower Co. pursuant to and in accordance with the provisions of the VUE Assignment Agreement. (j) (i) The Company shall ensure that the first U.S.$ 200,000,000 (or equivalent in other currencies) of the Net Proceeds (excluding any VUE Excluded Proceeds and any VUE Retention and any proceeds arising from the disposal of UCI (as defined in Schedule 19)) of Debt Issues made by any member of the VUE Group permitted under Clause 19.15 (Financial Indebtedness) and Equity Issues and Assets Disposals made by any member of the VUE Group to a party outside the Group is forthwith applied in repayment of any and all outstanding VUE Loans or UCI Loans, if any, made by VUHIC to VUE for working capital purposes. (ii) Where the aggregate amount of all Net Proceeds (excluding any VUE Excluded Proceeds, any VUE Retention and any proceeds arising from the disposal of UCI (as defined in Schedule 19)) of Debt Issues, Equity Issues and/or Assets Disposals by members of the VUE Group to a party outside the Group exceeds U.S.$ 200,000,000 (or equivalent in other currencies), the aggregate outstanding principal amount of all VUE Loans, if any, made by any member of the Non-VUE Group net of the aggregate principal amount of all VUE Loans made by any member of the VUE Group (in each case inclusive of VUE Loans existing at 7th May, 2002 (excluding the Canada Receivables and any Excluded Financial Indebtedness) shall be reduced forthwith to no more than zero. (iii) Where the aggregate amount of all Net Proceeds (excluding any VUE Excluded Proceeds and any VUE Retention and any proceeds arising from the disposal of UCI (as defined in Schedule 19)) of Debt Issues, Equity Issues and/or Assets Disposals by members of the VUE Group to a party outside the Group does not exceed U.S.$ 200,000,000 (or equivalent in other currencies), the amount set forth in paragraph (i) above shall be reduced by an amount equal to such aggregate amount. (k) Where a member of the Group is disposed of and ceases to remain a member of the Group, all Intra Group Loans to which any such member of the Group is a party under which it is indebted to another member of the Group must be repaid immediately upon it ceasing to be a member of the Group (unless otherwise instructed by the Facility Agent (acting on the instructions of the Majority Lenders)). 19.20 DIVIDENDS AND DISTRIBUTIONS (a) Except as provided in paragraphs (b) and (c) below, no Obligor (other than the Company) will, and each Obligor will procure that no member of the Group may: 97 (i) declare, make or pay a dividend (or interest on any unpaid dividend), charge, fee or other distribution (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital); or (ii) repay or distribute any dividend or share premium reserve, in each case to any person that is not a member of the Group (provided that this Clause 19.20 shall not restrict the payment of dividends to minority shareholders of a member of the Group at the same time as a dividend is being paid to another shareholder which is a member of the Group). (b) Paragraph (a) does not apply to any payment expressly permitted under the Finance Documents or pursuant to any contractual obligation to make a payment under the terms of any shareholder agreement or any such obligation described in Schedule 20 as the same is in force at the date of the Commitment Letter. (c) The Company shall use its reasonable endeavours to ensure that the Cegetel dividend payments projected in the Original Liquidity Analysis for the years 2003 and 2004 is made in the amount and on the date referred to in the Original Liquidity Analysis. 19.21 SHARE CAPITAL (a) Except as provided in paragraph (b) below, no Obligor will and each Obligor will procure that no Material Subsidiary will redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so. (b) Paragraph (a) does not apply: (i) to any transaction expressly permitted under the Finance Documents or entered into pursuant to any contractual obligation under any shareholder agreement (including for the avoidance of doubt, the VUE Partnership Agreement (but excluding the covenant defeasance arrangements referred to in Section 5.05(a) thereof)) or any obligation referred to in Schedule 20 as the same is in force at the date of this Agreement; or (ii) where no cash payment is made or expected to be made for the purposes of such transaction; or (iii) to the purchase of the Company or Material Subsidiary's share capital (whether directly or through call options or similar arrangements) for the purposes of employee stock option plans or schemes; or (iv) to a share purchase programme for the shares in Canal + approved by the shareholders of Canal + pursuant to and in accordance with Article L. 225-209 of the French Commercial Code, provided always that the Company shall not exercise its voting rights in respect of Canal + shares held by the Company in favour of any such share purchase programme, unless a Release Condition Date has occurred in which case, at any time between a Release Condition Date and the next subsequent Investment Downgrading Date, the Company shall not exercise its voting rights in respect of Canal + shares held by the Company in favour of any such share purchase programme whereby Canal + would be permitted to purchase more than 5 per cent. of its total share capital; or 98 (v) where an amount equal to 100 per cent. of any cash payment made to shareholders in connection with such transaction is applied forthwith in mandatory prepayment and cancellation of the Facility. 19.22 INTELLECTUAL PROPERTY RIGHTS Each Obligor shall and shall ensure that each member of the Group shall: (a) make any registration and pay any fee or other amount which is necessary to keep the registered Intellectual Property Rights owned by any member of the Group which are material to the business of a member of the Group in force; (b) take such steps as are (other than in relation to piracy of Intellectual Property Rights regarding Games IP) necessary and (in all cases) commercially reasonable (including the institution of legal proceedings) to prevent third parties infringing those Intellectual Property Rights; and (c) not enter into licence arrangements in respect of those rights save for: (i) licence arrangements entered into with members of the Group for so long as they remain members of the Group; or (ii) licence arrangements entered into on normal commercial terms and in the ordinary course of its business, save to the extent in the case of any member of the Group (other than an Obligor or Material Subsidiary) where failure to do so does not or could not be reasonably expected to have a Material Adverse Effect. 19.23 INSURANCE Each Obligor shall and shall ensure that each member of the Group maintain insurance with financially sound and reputable insurers with respect to its material business and assets of an insurable nature against such risks and in such amounts as are normally maintained by persons carrying on the same or a similar class of business, save in the case of any member of the Group (other than an Obligor or Material Subsidiary) to the extent that failure to do so does not or could not be reasonably expected to have a Material Adverse Effect. 19.24 COMPLIANCE WITH ENVIRONMENTAL LAWS Each Obligor shall and shall ensure that each member of the Group shall: (a) comply with all Environmental Laws applicable to it and any notices served on it where failure to do so would have or could reasonably be likely to have a Material Adverse Effect; (b) make financial provision in respect of any actual or contingent liability it may face arising from any environmental claim which is adequate in light of a reasonable assessment of such liability and which if not made may have or be reasonably likely to have a Material Adverse Effect and notify the Facility Agent of the details of such provision; and (c) indemnify each Finance Party and their respective officers, employees, agents and delegates (together the INDEMNIFIED PARTIES) against any cost or expense suffered or incurred by them (except to the extent caused by their own gross negligence or wilful 99 default or wilful misconduct) which arises by virtue of any legal proceedings under or pursuant to any Environmental Law involving that Finance Party which would not have arisen if that Finance Party had not entered into a Finance Document, or any breach of any applicable Environmental Law by any member of the Group. 19.25 MAINTENANCE OF STATUS Each Obligor shall, and shall ensure that each Material Subsidiary shall: (a) do all such things as are necessary to maintain its corporate existence (subject to any amalgamation, demerger, merger or reconstruction permitted by Clause 19.18 (Mergers and acquisitions)); and (b) ensure that it has the right and is duly qualified to conduct its business as it is conducted in all applicable jurisdictions. 19.26 ARM'S-LENGTH TERMS No Obligor will, and each Obligor will ensure that no member of the Group will, enter into any transaction with any person except on ordinary commercial terms and on the basis of arm's-length arrangements, or enter into any transaction whereby any Obligor or member of the Group might pay more than the ordinary commercial consideration for any purchase or acquisition or might receive less than full commercial consideration for its services or products. 19.27 JOINT VENTURES The Obligors will not, and will procure that no member of the Group will, enter into or acquire any interest in any Joint Venture other than those existing at the date of this Agreement or the Shanghai Universal Studios Theme Park Co. Ltd joint venture other than a Joint Venture in relation to which the following conditions are satisfied: (a) the Majority Lenders have given their prior written consent; or (b) (i) the Joint Venture is within the scope and for the furtherance of the Group's business; (ii) the Joint Venture is an entity incorporated with limited liability and, in any event, the liability or contribution of the relevant member of the Group in relation to the Joint Venture does not in any event exceed E25,000,000 in aggregate (or equivalent in other currencies); (iii) the Joint Venture could not reasonably be expected to jeopardise the guarantees given to the Lenders under the Finance Documents or the Lenders' security under the Security Documents; and (iv) the Joint Venture does not result in a breach of any other provisions of the Finance Documents; or (c) a Permitted Joint Venture. 19.28 EXISTING FACILITIES AND TREASURY TRANSACTIONS (a) No Obligor will and each Obligor will ensure that no member of the Group shall: 100 (i) subject to Clause 7.16(j), make any voluntary prepayment or cancellation of any amount outstanding or drawable under any Existing Facility or any Existing Facilities Refinancing, or under any Existing Cegetel Financial Indebtedness or any refinancing of the same, prior to its originally scheduled maturity date or scheduled expiry date (other than a prepayment of the VUE Bridge Extension, any VUE Bridge Refinancing or otherwise in accordance with the terms of Clause 7 (Prepayment and Cancellation) or in order to carry out an Existing Facilities Refinancing or a payment by the Company of the guarantee under the UMO Financing or the application of proceeds of the VU/SIT Loan in prepayment or repayment in full of the Non-Recourse Financing); or (ii) subject to Clause 7.16(k), make any amendment (or agree to make any amendment) to the terms of any Existing Facility or any Existing Facilities Refinancing, or of any Existing Cegetel Financial Indebtedness or any refinancing of the same, to advance any scheduled maturity date or amend the mandatory prepayment provisions or grant any Security Interests or guarantees thereunder or make (or agree to make) any amendment to the financial covenants pursuant to the Multicurrency Revolving Credit Facility to the extent that equivalent amendments are not made to the RATIOS (as defined in Clause 20.3(c) (Financial Covenants)) at the same time in any way which would be materially detrimental or prejudicial to the interests, rights and remedies of the Finance Parties under this Facility). (b) No Obligor will, and each Obligor will ensure that no member of the Group shall, enter into any currency swap or interest swap, cap or collar arrangements or any other derivative instrument or any similar treasury transaction save where entered into in the ordinary course of business by a member of the Group for non-speculative purposes and which is consistent with the prudent management of its business and for hedging purposes. (c) No member of the Group shall terminate, close out or otherwise cancel any of its swap or derivative instruments unless either (i) the relevant member of the Group (acting reasonably) does so in order to minimise or limit further losses or (ii) the underlying transaction hedged by any such swap or derivative instrument has been cancelled or terminated or (iii) at the date of termination, close out or cancellation by the relevant Obligor or the relevant member of the Group such swap or derivative instrument is in the money. 19.29 SECURITY (a) The Obligors shall at their own expense execute and do all such assurances, acts and things as the Security Agent may reasonably require for perfecting or protecting the security intended to be afforded by the Security Documents (and shall deliver to the Security Agent such directors' and shareholders' resolutions, title documents and other documents as the Security Agent may reasonably require). (b) Prior to a Security Release Condition Date (but subject always to paragraph (c) below), the Company will ensure that the Security Documents in respect of the Existing Cegetel Shares are executed and delivered to the Security Agent in form and substance satisfactory to the Facility Agent forthwith if any of the following events occur: (i) if there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Cegetel Groupe S.A. restricting or which would be triggered upon the granting of such a pledge; (ii) if SIT agrees to grant a share pledge over the Acquired Shares; or 101 (iii) if the Company acquires 100 per cent. of the shares of Cegetel. (c) If a Security Release Condition Date occurs but any time thereafter an Investment Downgrading Date occurs, the provisions of subclause (b) shall be automatically reinstated and remain in force from the Investment Downgrading Date until such time as a Security Release Condition Date occurs again. (d) On or after the Maroc Telecom Date but prior to a Security Release Condition Date (subject always to paragraph (c) above), the Company will ensure that Security Documents in respect of all the shares it holds in Maroc Telecom are executed and delivered to the Security Agent in form and substance satisfactory to the Facility Agent forthwith if any of the following events occur: (i) if the Company holds 51 per cent. of the shares of Maroc Telecom following to the acquisition permitted pursuant to Clause 19.18 (xii); and (ii) if there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Maroc Telecom restricting or which would be triggered upon the granting of such a pledge. (e) The Company shall ensure that VUP shall, contemporaneously with its accession to this Agreement as an Additional Guarantor, pursuant to Clause 17.3(b), execute and deliver to the Security Agent an account pledge or pledges in the agreed form over each of its Cash Pooling Accounts. 19.30 CONCENTRATION ACCOUNTS (a) The Company shall open and maintain the Concentration Accounts and ensure that on a daily basis an amount equal to the aggregate of the actual credit balances standing to each of the Cash Pooling Accounts in excess of E100,000,000 is transferred to the Concentration Accounts. (b) For the purposes of paragraph (a) above and subject to paragraph (d) below, the Company will not be obliged to transfer on a particular day the actual credit balance standing to any Cash Pooling Account to the Concentration Accounts pursuant to paragraph (a) above where: (i) the relevant member of the Group which holds the account is required to retain part or all of any such credit balance in that Cash Pooling Account as a result of a legal or regulatory requirement which is imposed on it after the date of this Agreement; or (ii) that Cash Pooling Account is credited with an amount after 11.00 Paris time on the date on which the relevant calculation is being made on such day; or (iii) any amount is retained in that Cash Pooling Account as a result of an administrative or technical failure by the account bank with which the Cash Pooling Account is held and where any such administrative or technical failure is remedied promptly; or (iv) the relevant member of the Group which holds the account is required to retain in that Cash Pooling Account a de minimis amount as a result of a change after the date of this Agreement in the terms and conditions in relation to that Cash Pooling Account imposed by the financial institution with which such account is held. (c) The Company may make withdrawals from the Concentration Accounts unless an Event of Default has occurred and subject to the other provisions of this Agreement provided that where the withdrawal is to be made for the purposes of making an investment in instruments, 102 securities or investments referred to in paragraph (b) to (e) of the definition of Consolidated Cash and Cash Equivalents and short term negotiable debt (BMTN), the Company shall ensure that any such investments, agreement or rights attaching thereto have become the subject of a Security Interest in the agreed form in favour of the Security Agent. (d) Each relevant member of the Group shall use reasonable commercial efforts to minimise the effect of matters referred to in paragraph (b) above including investigating the possibility of moving the relevant Cash Pooling Account to another bank or financial institution among the Mandated Lead Arrangers or to another jurisdiction, but shall only be required to take any such action if and to the extent this does not interfere with the ordinary course of business of such relevant Group member. (e) The Company shall use reasonable commercial endeavours to ensure that cash in hand and credit balances in bank accounts of members of the Group (other than the VUE Group, SIT and Cegetel for so long as any amount is outstanding under the Non-Recourse Financing) shall be held within the Cash Pooling Accounts to the extent this is consistent with the Cash Management and IGL Arrangements and with applicable legal, administrative and operational constraints. 19.31 RECEIPT ACCOUNT The Obligors shall ensure that the Receipt Account is opened and maintained as soon as reasonably practicable and in any event prior to the date of the first Request and upon receipt of the relevant proceeds required to be paid to any such account are secured over such proceeds in favour of the Security Agent for the purposes of complying with the provisions of Clause 7.14 (Mandatory prepayment and cancellation - application of proceeds). 19.32 BANK ACCOUNTS (a) No Obligor may open or maintain any new account with any branch of any bank or other financial institution providing similar services other than an account maintained with a Finance Party or an Affiliate of a Finance Party or an account which is secured in favour of the Finance Parties. (b) The Company shall procure that the overnight balance of the Euro-denominated bank account with Societe Generale in Poland listed in Schedule 12 (the "EURO ACCOUNT") shall not exceed Euro 50,000 and that the overnight balance of the Zloty-denominated bank account with Societe Generale in Poland listed in Schedule 12 (the "ZLOTY ACCOUNT") shall not exceed PLN 210,000, provided that, for a period of three Polish Business Days following receipt by the Company of any proceeds of any sale by a member of the Group of all or part of its interest in Elektrim Telekomunikajca, the overnight balances of the Euro Account and the Zloty Account may be equal to any amount which will result in the aggregate of the balances of the Euro Account and the Zloty Account being not more than Euro 1,000,000, or the equivalent on any such day in Polish Zloty. For the purposes of this paragraph (c), "POLISH BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which banks are open for general business in Warsaw and Paris. (c) Save as disclosed to the Facility Agent prior to the date of this Agreement, the Company shall procure the closure of the bank accounts listed under the heading "VE accounts" in Schedule 12 on or prior to 2nd May, 2003. 19.33 ACCESS Upon the occurrence of an Event of Default which is continuing, each Obligor and Material Subsidiary must allow any one or more representatives of the Facility Agent and/or 103 accountants or other professional advisers appointed by the Facility Agent (at the Company's risk and expense) to have access during normal business hours to the assets, books and records of that member of the Group and to inspect the same. 19.34 NON-ERISA PENSION SCHEMES (a) Each Obligor shall be, and shall procure that each member of the Group is: (i) in substantial compliance with any laws, contract and accounting principles and practices relating to any of its pension schemes; and (ii) in substantial compliance with its pension schemes obligations. (b) The Obligors' Agent must supply the Facility Agent with a copy of any report in respect of any pension scheme operated by a member of the Group which the Facility Agent may reasonably request. (c) This Clause shall not apply to any pension scheme that is a Plan or Multiemployer Plan that is subject to ERISA. 19.35 TAX Each Obligor shall, and shall procure that each member of the Group will, pay all material Tax due and payable by it within a reasonable time of the relevant due date (after taking into account any extension or grace period extended to it by the relevant tax authorities) and prior to the accrual of any material fine or penalty for late payment save to the extent that: (a) payment of the same is being contested in good faith and adequate reserves are being maintained for that Tax; or (b) such non payment does not have and could not reasonably be expected to have a Material Adverse Effect. 19.36 ERISA REPORTING REQUIREMENTS The following shall be provided to the Facility Agent: (a) (i) promptly and in any event within 10 calendar days after any Obligor or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred that is reasonably expected to have a Material Adverse Effect, a statement of the Chief Financial Officer of the Obligor describing such ERISA Event and the action, if any, that such Obligor or such ERISA Affiliate has taken and proposes to take with respect thereto; and (ii) on the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information; (b) promptly and in any event within five business days after receipt thereof by any Obligor or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan; (c) promptly upon request of the Facility Agent/a Finance Party, copies of each Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) with respect to each Plan; and 104 (d) promptly and in any event within five business days after receipt thereof by any Obligor or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (i) the imposition of Withdrawal Liability by any such Multiemployer Plan that is reasonably expected to have a Material Adverse Effect, (ii) the reorganisation or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan that is reasonably expected to have a Material Adverse Effect or (iii) the amount of liability incurred, or that may be incurred, by such Obligor or any ERISA Affiliate in connection with any event described in Clause (i) or (ii). 19.37 MARGIN REGULATION The Obligors will use the proceeds of the Loans only for the purpose described in Clause 3(a) (Purpose). No Obligor will engage in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations U and X issued by the Board of Governors of the United States Federal Reserve System), and no portion of any Loan will be used, directly or indirectly, to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock. 19.38 VUE BRIDGE REFINANCING The Company shall ensure that the VUE Bridge Extension is refinanced to the extent not already completed at the date of this Agreement. 19.39 VUE RING-FENCING (a) No member of the Non-VUE Group shall make any investment in or payment to any member of the VUE Group or provide any financial assistance or support in respect of VUE or any of its Subsidiaries except for the VU/VUE Partnership Obligations listed in Schedule 20, as permitted by Clause 19.19 (Loans out, Intra Group Loans) and as otherwise set out in Schedule 17 (Existing Contingent Financial Liabilities) and Schedule 19 (VUE Exclusions). (b) No Obligor shall, and each Obligor shall ensure that no member of the Non-VUE Group shall, lend (or give a commitment to lend) to any member of the VUE Group otherwise than in accordance with Clause 19.19 and this Clause 19.39. (c) The Company undertakes that it will not amend or permit the amendment of the VUE Partnership Agreement or VUE Transaction Agreement in any way such that any member of the Non-VUE Group incurs any financial liability thereunder in respect of VUE, other than the VU/VUE Partnership Obligations. (d) For such time as the VUE Borrower Co. may make any VUE Loans pursuant to the VUE Partnership Agreement, the VUE Transaction Agreement and the VUE Side Letter, the Company shall ensure that VUE Borrower Co.: (i) is and remains the "funding entity" (as such term is defined in, and for the purposes of, the VUE Side Letter); (ii) is organised as and remains a limited liability partnership under and solely for the purposes set out in the LLP Agreement; (iii) has not traded and has no material liabilities or commitments (actual or contingent, present or future) and has not traded and will not have any material liabilities or commitments (actual or contingent, present or future); 105 (iv) does not own any material assets and does not carry on any business; (v) complies with the limitations on its activities set out in Section Tenth of the LLP Agreement, other than in relation to (iii) and (iv) as a party to or transferee or assignee of any Intra Group Loan (including, for the avoidance of doubt, any VUE Loan) or in connection with its activities as a funding entity subject to and in accordance with Schedule 16 (Cash Management and IGL Arrangements), the Finance Documents and the LLP Agreement . (e) The Company may use alternative means of making VUE Loans, permitted pursuant to the terms of the VUE Partnership Agreement, the VUE Transaction Agreement and the VUE Side Letter provided that such loans are secured and subordinated pursuant to the Security Documents and the Subordination Agreements to the extent to which they would have been required to have been secured and subordinated had they been a VUE Loan or an Intra Group Loan pursuant to Clause 19.19 (Loans out, Intra Group Loans). (f) The Company shall not consent to any operation under or make any amendment to the LLP Agreement which is inconsistent or in conflict with the terms of the Finance Documents or Schedule 16 (Cash Management and IGL Arrangements) or the operations of VUE Borrower Co as the funding entity. 19.40 SUBSIDIARY DEBT (a) The Company shall procure that part of Net Financial Debt (as defined in Clause 20 (Financial Covenants)) (excluding Project Finance Indebtedness and Financial Indebtedness owing from one member of the Group to another member of the Group) incurred by its Subsidiaries excluding (without double counting) the amount of the VUE Bridge Extension or any VUE Bridge Refinancing (SUBSIDIARY DEBT) shall not at any time exceed in aggregate an amount equal to 30 per cent. of the then Net Financial Debt (as defined in Clause 20 (Financial Covenants)) (excluding Project Finance Indebtedness, Financial Indebtedness owing from one member of the Group to another member of the Group and Financial Indebtedness incurred by VUE). (b) Financial Indebtedness owing under or in connection with this Facility or the Existing Bank Debt Guarantee will not be taken into account for the purposes of paragraph (a). 19.41 HIGH YIELD NOTES (a) The Company will not amend or agree to amend the High Yield Note Documents such that the maturity date of the High Yield Notes is advanced to a date prior to the Final Maturity Date or the final maturity date of the Multicurrency Revolving Credit Facility, the rate of interest or periodicity of interest is increased or made more frequent, or otherwise amend or agree to amend in a way which is or could, in the opinion of the Majority Lenders, be inconsistent with the terms of this Agreement or have a detrimental effect on the rights and remedies of the Finance Parties under this Facility. (b) The Company will not make a repayment or prepayment, redemption, repurchase of or defease (by way of legal defeasance or covenant defeasance) any of the High Yield Notes or make any offers to repay, prepay, redeem, repurchase or defease any of the High Yield Notes. (c) The Company will ensure that the High Yield Notes are and remain at all times until the Facility Discharge Date unsecured and do not benefit from any financial guarantee, directly or indirectly, from any member of the Group or other person. 106 (d) The Company will ensure that no member of the Group purchases any of the High Yield Notes. 19.42 REPAYABLE FACILITIES (a) The Company shall apply 100 per cent. of the High Yield Notes Proceeds to repay (and cancel) the amounts outstanding under the Repayable Facilities. (b) The Company shall apply its available cash to the fullest extent necessary to repay (and cancel) the balance of amounts outstanding under the Repayable Facilities after application of 100 per cent. of the High Yield Notes Proceeds thereto. 19.43 VE "B" SHARES (a) The Company shall use its reasonable endeavours to negotiate with the New Investors the transactions contemplated in the VE Share Pledge Arrangements (as amended on or about the date hereof) in order to obtain the consent of the New Investors to enable the Company to grant a pledge in favour of the Finance Parties over all of the VE "B" Shares ranking pari passu with the pledge of these shares granted by the Company to the Parties Financieres 3ME. (b) Promptly upon the New Investors giving their consent referred to in paragraph (a) above (but not otherwise), the Company shall execute a share pledge in respect of all of the VE "B" Shares substantially in the form set out in Annex F of the VE Share Pledge Arrangements. 20. FINANCIAL COVENANTS 20.1 FINANCIAL COVENANT DEFINITIONS In this Clause 20: ACQUIRED BUSINESS means a member of the Group or business or assets acquired during a Measurement Period. CASH EBITDA means the consolidated operating income of the Group (other than any member of the Maroc Telecom Group and the Cegetel Group) determined in accordance with accounting principles and practices generally accepted in France, consistently applied, for a Measurement Period, adjusted by: (a) adding back depreciation, amortisation and non-cash provisions (to the extent that such depreciation, amortisation and non-cash provisions are deducted in computing the operating income); (b) deducting any gain (or adding back any loss) in connection with any revaluation of an asset or any gain or loss against book value arising on the disposal of an asset (otherwise than in the ordinary course of trading) by a member of the Group during that Measurement Period; (c) adding back net restructuring charges and other one-time items; and (d) adding cash dividends received from VE, any member of the Maroc Telecom Group and the Cegetel Group (other than cash dividends received by SIT in respect of the Acquired Shares prior to the SIT Repayment Date), and including the operating income (as adjusted in accordance with paragraphs (a) to (c) above) of any Acquired Business (provided such acquisition is permitted by the terms of this 107 Agreement) (as determined on a pro forma twelve month basis for the part of the Measurement Period prior to the acquisition of the Acquired Business), provided that the extent of the operating income of the Acquired Business so included will be an amount equal to the percentage of the cashflow of the Acquired Business which the Company demonstrates in reasonable detail it either effectively controls or has access to. CONSOLIDATED CASH AND CASH EQUIVALENTS means, at any time: (a) cash in hand or on deposit with any acceptable bank (excluding any deposit used as cash collateral for the purpose of defeasing indebtedness as described in paragraph (B) of the definition of Total Gross Financial Debt); (b) certificates of deposit, maturing within one year after the relevant date of calculation, issued by a reputable bank; (c) any investment in marketable obligations issued or guaranteed by the government of the United States, Switzerland or the European Union (excluding Greece and any country which becomes a member thereof after the date of this Agreement) or by an instrumentality or agency of the government of the United States, Switzerland or the European Union (excluding Greece and any country which becomes a member thereof after the date of this Agreement) having an equivalent credit rating; (d) open market commercial paper: (i) for which a recognised trading market exists; (ii) issued in Sterling, U.S. Dollars or Euro; (iii) which matures within one year after the relevant date of calculation; and (iv) which has a credit rating of either A-1 by Standard & Poor's Rating Services or IBCA or P-1 by Moody's Investor Services Inc., or, if no rating is available in respect of the commercial paper or indebtedness, the issuer of which has, in respect of its long-term debt obligations, an equivalent rating; and (e) any other instrument, security or investment approved by the Majority Lenders, in each case, to which any member of the Group (other than any member of the Maroc Telecom Group) is beneficially entitled at that time and which is capable of being applied against Total Gross Financial Debt but excluding any cash acquired in connection with the acquisition permitted under Clause 19.18(b)(viii). An ACCEPTABLE BANK for this purpose is a commercial bank or trust company which has a rating of A or higher by Standard & Poor's or FitchIBCA or A2 or higher by Moody's or a comparable rating from a nationally recognised credit rating agency for its long-term debt obligations or has been approved by the Majority Lenders. FINANCIAL INCOME means, in respect of the Group (other than any member of the Maroc Telecom Group and any member of the Cegetel Group, each on a consolidated basis) all interest and other financing income received or receivable by the Group (other than any member of the Maroc Telecom Group and the Cegetel Group) during a Measurement Period. MEASUREMENT PERIOD means a period of 12 months ending on a Testing Date. 108 NET FINANCIAL DEBT means, in respect of the Group (other than any member of the Maroc Telecom Group) at any time Total Gross Financial Debt less Consolidated Cash and Cash Equivalents. NET FINANCING COSTS means, in respect of the Group (other than any member of the Maroc Telecom Group and any member of the Cegetel Group, each on a consolidated basis) Total Financing Costs less Financial Income for the Group during the relevant Measurement Period. RELEVANT PERCENTAGE means the percentage of the cashflow of any Acquired Business which the Company demonstrates in reasonable detail it either controls or has access to. TESTING DATE means 31st March, 30th June, 30th September and 31st December of each year. TOTAL FINANCING COSTS means all interest and financing fees, including the interest element payable under any finance lease and any periodic cash payments in respect of preference shares (other than preference shares issued by VUE prior to the date of this Agreement or issued or accrued as additional shares in respect of shares issued by VUE prior to the date of this Agreement) and excluding any costs incurred in connection with the acquisition permitted under Clause 19.18(b)(viii) (together FINANCING COSTS), (whether, in each case, paid, payable or (subject to the proviso) capitalised) incurred by the Group (other than any member of the Maroc Telecom Group and on a consolidated basis) during a Measurement Period and including the Relevant Percentage of the Financing Costs of any Acquired Business (as determined on a pro forma twelve month basis for the part of the Measurement Period prior to the acquisition of the Acquired Business), provided that capitalised items shall only be included in the calculation of Total Financing Costs for a Measurement Period if the Company confirms in a compliance certificate delivered in relation to the financial covenants for that Measurement Period that they constitute more than 5 per cent. of those Total Financing Costs. For these purposes, in each such compliance certificate, the Company shall either certify that capitalised items for the Measurement Period to which that certificate relates do not exceed 5 per cent. of Total Financing Costs for that period or, if they do, set out the aggregate amount of capitalised items. TOTAL GROSS FINANCIAL DEBT means, in respect of the Group (other than any member of the Maroc Telecom Group on a consolidated basis) at any time the aggregate of the following (without double counting and provided that where any of the following items relates to an Acquired Business, the Relevant Percentage only of the amount of that item shall be included in the calculation of Total Gross Financial Debt): (a) the outstanding principal amount of any moneys borrowed; (b) the outstanding principal amount of any acceptance under any acceptance credit; (c) the outstanding principal amount of any bond, note, debenture, loan stock or other similar instrument; (d) the capitalised element of indebtedness under a finance or capital lease except to the extent that any such lease is defeased (for which purposes, a lease is "DEFEASED" if all of the obligations of the relevant member of the Group thereunder are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) prepaid or (C) otherwise discharged and extinguished in full, such that no member of the Group thereafter has any outstanding indebtedness or liability (contingent or otherwise) with respect to such lease); (e) the outstanding principal amount of all moneys owing in connection with the sale or discounting of receivables (otherwise than on a non-recourse basis); 109 (f) the outstanding principal amount of any indebtedness arising from any deferred payment agreements arranged primarily as a method of raising finance or financing the acquisition of an asset; (g) any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (c) above; (h) the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; (i) the mark to market value of any currency swap or interest swap, cap or collar arrangements or any other derivative instrument to the extent the derivative instruments are not used for hedging purposes; (j) the aggregate face value amount of preference shares (other than preference shares issued by VUE prior to the date of this Agreement or issued or accrued as additional shares in respect of shares issued by VUE prior to the date of this Agreement and preference shares mandatorily convertible into shares in a member of the Group (other than any member of the Maroc Telecom Group) which do not in any circumstances give rise to redemptions or repayments (whether in whole or in part) in cash) in relation to which there is a contractual obligation to pay dividends prior to 91 calendar days after the Final Maturity Date; and (k) the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (j) above which is the subject of a guarantee, indemnity or similar assurance against financial loss given by a member of the Group (other than any member of the Maroc Telecom Group) (excluding (i) the amount of any guarantee obligations of VU which have been assigned to, and assumed by any member of the Maroc Telecom Group or a company which is not a member of the Group and (ii) any guarantee, indemnity or similar assurance against financial loss entered into prior to the date of this Agreement which is the subject of a counter-guarantee given by VE), but excluding any Non Recourse Financing, any Intra Group Loans and Project Finance Indebtedness, any indebtedness incurred in connection with the acquisition permitted under Clause 19.18(b)(viii) or otherwise any indebtedness which has been defeased prior to the date of this Agreement (for which purposes, indebtedness is "DEFEASED" if all of the obligations of the relevant member of the Group in relation thereto are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) cash collateralised in full by blocked deposits, such that no member of the Group thereafter has any outstanding indebtedness or liability (contingent or otherwise) with respect to such indebtedness (including, without limitation, with respect to adjusting the amount of, or making any payment in relation to, any such cash collateral)). 20.2 CALCULATION (a) All the terms used in this Clause 20 are to be calculated in accordance with accounting principles and practices generally accepted in France, consistently applied. (b) If there is a dispute as to any interpretation of any term in this Clause 20, either: (i) the interpretation of the Facility Agent shall prevail (after prior consultation with the Company's Auditors and the Company); or 110 (ii) (if the Company so requests) the Facility Agent will, at the expense of the Company, instruct an independent expert (which shall be an internationally recognised independent qualified firm of auditors) to act as an expert and not as an arbitrator, and the determination of such expert shall be final and binding on the Parties. 20.3 FINANCIAL COVENANTS (a) Before a Release Condition Date (but subject always to paragraphs (c) to (f) inclusive below), the Company shall procure that on each quarterly Testing Date referred to in Column 1 below: (i) the ratio of Net Financial Debt to Cash EBITDA does not exceed that set out in Column 2 below opposite that Testing Date; (ii) the ratio of Cash EBITDA to Net Financing Costs is at least that set out in Column 3 below opposite that Testing Date; and (iii) Total Gross Financial Debt does not exceed the amount set out in Column 4 below opposite that Testing Date. (b) On or after a Release Condition Date (but subject always to paragraphs (c) to (f) inclusive below), the Company shall procure that following such Release Condition Date on each semi-annual Testing Date referred to in Column 1 below: (i) the ratio of Net Financial Debt to Cash EBITDA does not exceed that set out in Column 2 below opposite the Testing Date applicable as at such Release Condition Date; (ii) the ratio of Cash EBITDA to Net Financing Costs is at least that set out in Column 3 below opposite the Testing Date applicable as at such Release Condition Date; and (iii) Total Gross Financial Debt does not exceed the amount set out in Column 4 below opposite the Testing Date applicable as at such Release Condition Date. (c) If, on or after a Release Condition Date, an Investment Downgrading Date occurs, the financial ratios and covenant (the RATIOS) referred to in paragraph (a) above shall, subject to paragraphs (d) to (f) inclusive below, apply and be reinstated from the Investment Downgrading Date unless and until a Release Condition Date occurs again in which case the provisions of paragraph (b) above shall apply. (d) Within 5 calendar days of an Investment Downgrading Date, the Company and the Facility Agent shall enter into negotiations in good faith for a period of no more than 45 calendar days with a view to agreeing any amendments to the ratios set out in columns 2, 3 and 4 below. (e) Any amendments agreed under paragraph (d) shall be, with the prior written consent of the Majority Lenders, binding on all the parties. (f) If and until amendments are agreed by the Company and the Majority Lenders pursuant to paragraphs (d) and (e) above, the applicable ratios, in each case for the period from the Investment Downgrading Date unless and until a Release Condition Date occurs again, will be those set out in columns 2, 3 and 4, as appropriate, opposite the Testing Date which were applicable on the Release Condition Date immediately preceding that Investment Downgrading Date and thereafter the applicable ratios on each successive quarterly Testing Date, will be the next consecutive ratios, each as set out in columns 2, 3 and 4 below. 111

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 TESTING DATE) (MAXIMUM RATIO OF NET (MINIMUM RATIO FOR CASH (MAXIMUM TOTAL GROSS FINANCIAL DEBT TO CASH EBITDA TO NET FINANCING FINANCIAL DEBT (BILLION EBITDA) COSTS) EURO)) 30/06/03 5.8:1 2.4:1 18 30/09/03 5.4:1 2.4:1 15.6 31/12/03 4.4:1 2.7:1 15.6 31/03/04 4.2:1 2.9:1 12.8 30/06/04 4.0:1 3.1:1 12.5 30/09/04 4.0:1 3.2:1 12.3 31/12/04 4.0:1 3.3:1 11.3 31/03/05 3.5:1 3.4:1 10.3 30/06/05 3.5:1 3.4:1 10.3 30/09/05 3.5:1 3.4:1 10.0 31/12/05 3.5:1 3.4:1 10.0 31/03/06 3.0:1 3.5:1 9.2 30/06/06 3.0:1 3.5:1 9.2 30/09/06 3.0:1 3.5:1 9.0 31/12/06 3.0:1 3.5:1 9.0 31/03/07 3.0:1 3.5:1 7.0

21. DEFAULT 21.1 EVENTS OF DEFAULT Each of the events set out in this Clause 21 is an Event of Default (whether or not caused by any reason whatsoever outside the control of an Obligor or any other person). 21.2 NON-PAYMENT An Obligor does not pay on the due date (or within three Business Days of the due date where the failure to pay on the due date is for administrative or technical reasons) any amount payable by it under the Finance Documents at the place at and in the currency in which it is expressed to be payable. 21.3 BREACH OF OTHER OBLIGATIONS (a) An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 21.2 (Non-payment) and in paragraph (b) below) and only where the 112 failure is capable of remedy) such failure to comply continues for 15 calendar days after the earlier of the date on which (a) any Obligor becomes aware of the facts or circumstances giving rise to such failure, and (b) the Facility Agent gives notice of such failure to the Obligors' Agent. (b) An Obligor does not comply with any provision of Clause 19.5 (Liquidity) and (where the failure is capable of remedy) such failure to comply continues for 60 calendar days after the earlier of the date on which (a) any Obligor becomes aware of the facts or circumstances giving rise to such failure and (b) the Facility Agent gives notice of such failure to the Obligors' Agent. (c) The Company repays, prepays, redeems, repurchases or defeases (whether by way of legal defeasance or covenant defeasance) any of the High Yield Notes or makes any offers to repay, prepay, redeem, repurchase or defease any of the High Yield Notes. 21.4 MISREPRESENTATION A representation, warranty or statement made or repeated in or in connection with any Finance Document or in any document delivered by or on behalf of an Obligor under or in connection with any Finance Document is incorrect in any material respect when made or deemed to be made or repeated. 21.5 CROSS-DEFAULT (a) Any Financial Indebtedness of an Obligor or a Material Subsidiary is not paid when due (or where there is a grace period originally applicable to that Financial Indebtedness, within that grace period); or (b) an event of default howsoever described occurs under any document relating to Financial Indebtedness of an Obligor or a Material Subsidiary; or (c) any Financial Indebtedness of an Obligor or a Material Subsidiary becomes prematurely due and payable or is placed on demand as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or (d) any commitment for, or underwriting of, any Financial Indebtedness of an Obligor or a Material Subsidiary is cancelled or suspended as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or (e) any Security Interest securing Financial Indebtedness over any asset of an Obligor or a Material Subsidiary becomes enforceable, provided that there shall only be an Event of Default under this Clause 21.5 if the aggregate amount of Financial Indebtedness which is not so paid and/or in respect of which such event has occurred and/or which becomes prematurely due and payable or is placed on demand and/or in respect of which the commitment or underwriting is cancelled or suspended and/or in respect of which such Security Interest becomes enforceable, exceeds E40,000,000 (or equivalent in other currencies); or (f) an Event of Default occurs under the VUE Bridge Extension or the VUE Bridge Refinancing or under any High Yield Note Document. 113 21.6 INSOLVENCY (a) Any Obligor or any Material Subsidiary is, or is deemed for the purposes of any law to be, unable to pay its debts as they fall due or to be insolvent (including without limitation en etat de cessation des paiements), or admits in writing its inability to pay its debts generally as they fall due; or (b) any Obligor or any Material Subsidiary suspends making payments on all or any class of its debts or announces an intention to do so, or a moratorium is declared in respect of any of its indebtedness; or (c) any Obligor or any Material Subsidiary makes a general assignment for the benefit of creditors or applies for, or is subject to, an amicable settlement or a reglement amiable pursuant to article L.611-2 of the French Commercial Code, or begins negotiations with one or more of its creditors with a view to the readjustment or rescheduling of any of its indebtedness; or (d) any person commences a procedure d'alerte with respect to an Obligor or any Material Subsidiary incorporated in Republic of France which is not of a vexatious or frivolous nature and is not dismissed within 14 calendar days. 21.7 INSOLVENCY PROCEEDINGS (a) Any step (including petition, proposal or convening a meeting) is taken with a view to a composition, assignment or arrangement with any creditors of any Obligor or any Material Subsidiary; or (b) any Obligor or any Material Subsidiary commences a voluntary case or proceeding under the United States Bankruptcy Code of 1978, as amended, or under the United States Federal or State bankruptcy, insolvency or other similar laws (collectively U.S. BANKRUPTCY LAWS) or a meeting of any Obligor or any Material Subsidiary is convened for the purpose of considering any resolution for (or to petition for) its winding-up or for its administration (including without limitation dissolution, liquidation, or redressement judiciaire) or any such resolution is passed; or (c) an involuntary case under any U.S. Bankruptcy Law is commenced against any Obligor or any Material Subsidiary and the petition is not stayed or discharged within 45 calendar days after the commencement of the case or any person presents a petition for the winding-up or for the administration of any Obligor or any Material Subsidiary unless (in the case of a petition being presented by a person other than an Obligor or a Material Subsidiary) the same is stayed or discharged within 21 calendar days in respect of an Obligor or a Material Subsidiary incorporated outside the United States of America or within 45 calendar days in respect of an Obligor or a Material Subsidiary incorporated in the United States of America of being presented or an order for relief is entered in such proceeding; or (d) an order for the winding-up or administration of any Obligor or any Material Subsidiary is made (other than pursuant to an amalgamation, demerger, merger or reconstruction permitted by Clause 19.18(b)(iv) (Mergers and acquisitions)); or (e) a judgment is issued for the judicial liquidation (liquidation judiciaire) or the transfer of the whole of the business (cession de l'entreprise or cession de fonds de commerce) of any Obligor or any Material Subsidiary; or (f) any other step (including petition, proposal or convening a meeting) is taken with a view to the rehabilitation, administration, custodianship, liquidation, winding-up or dissolution of any 114 Obligor or any Material Subsidiary or any other insolvency proceedings involving any Obligor or any Material Subsidiary other than any such step which is frivolous or vexatious and which is dismissed within 21 calendar days in respect of an Obligor or a Material Subsidiary incorporated outside the United States of America or within 45 calendar days in respect of an Obligor or a Material Subsidiary incorporated in the United States of America of it having been taken. 21.8 APPOINTMENT OF RECEIVERS AND MANAGERS Any person makes a request in accordance with any applicable laws for the appointment of a liquidator, trustee, custodian, conservator, receiver, assignee, sequestrator, administrative receiver, administrator, administrateur judiciaire, provisoire mandataire ad hoc, conciliateur or mandataire liquidateur or the like in respect of any Obligor or any Material Subsidiary or any part of its assets or any such appointment is made unless (in the case of a request being made by a person other than any Obligor or a Material Subsidiary) the request for such appointment is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 21 calendar days in respect of an Obligor or a Material Subsidiary incorporated outside the United States of America or within 45 calendar days in respect of an Obligor or a Material Subsidiary incorporated in the United States of America days of the making of such request and in any event prior to the date that any such appointment is made. 21.9 CREDITORS' PROCESS/FINAL JUDGMENT (a) Any attachment, sequestration, distress or execution affects any asset of an aggregate value exceeding E15,000,000 (or equivalent in other currencies) of any Obligor or any Material Subsidiary and is not discharged within 30 calendar days; or (b) a final judgment or court order for the payment of any amount in excess of E15,000,000 is made against any Obligor or any Material Subsidiary and continues unsatisfied for a period of 30 calendar days after the date of judgment or order. 21.10 ANALOGOUS PROCEEDINGS There occurs, in relation to any Obligor or any Material Subsidiary, any event anywhere which, in the opinion of the Majority Lenders (acting on the basis of legal advice), appears to correspond with any of the events mentioned in Clauses 21.6 (Insolvency) to 21.9 (Creditors' process/final judgment) (inclusive). 21.11 CESSATION OF BUSINESS Any Obligor or any Material Subsidiary ceases, or takes clear steps to cease, to carry on all or a substantial part of its business (other than pursuant to a transaction permitted by the Finance Documents). 21.12 EFFECTIVENESS OF FINANCE DOCUMENTS (a) It is or becomes unlawful for any Obligor to perform any of its payment obligations or other material obligations under the Finance Documents. (b) Any Finance Document (including any guarantee of any Obligor in this Agreement) is not effective or is alleged by an Obligor to be ineffective for any reason. (c) Any Security Document does not create the security it purports to create or any Security Document is not effective or ceases to constitute a valid, first ranking (in the case of security 115 in favour of the Finance Parties or any of them) Security Interest of the type purported to be created thereby. (d) An Obligor repudiates (or evidences in writing an intention to repudiate) a Finance Document. 21.13 AUDIT QUALIFICATION The Company's Auditors qualify their report by way of a reserve on any of the audited consolidated accounts of the Company (other than by a qualification of a minor technical nature). 21.14 SUBORDINATION, EXISTING BANK DEBT GUARANTEE OR SECURITY SHARING AGREEMENT (a) (i) Any member of the Group which is party to a Subordination Agreement, the Existing Bank Debt Guarantee or the Security Sharing Agreement, as the case may be, does not perform or fails to comply with any of its obligations in any material respect under the Subordination Agreement or the Security Sharing Agreement, as the case may be and the failure to comply (if capable of remedy) continues for 15 calendar days after the earlier of the date on which the Obligor becomes aware of the facts or circumstances giving rise to such failure and the Facility Agent gives notice of such failure to the Obligors' Agent; or (ii) a representation or warranty given by that party in a Subordination Agreement, the Existing Bank Debt Guarantee or the Security Sharing Agreement, as the case may be, is incorrect in any material respect when made or repeated and if the facts and circumstances causing such misrepresentation are, in the opinion of the Majority Lenders capable of remedy, the same is not remedied within 21 calendar days after the earlier of the date on which the Obligor becomes aware of the facts or circumstances giving rise to such failure and the Facility Agent gives notice of such failure to the Obligors' Agent; (b) the pari passu subordination or pari passu priority of security in respect of Financial Indebtedness under this Agreement and the Multicurrency Revolving Credit Facility created or purported to be created by the Subordination Agreement, the Existing Bank Debt Guarantee or the Security Sharing Agreement is not effective or is alleged in writing by a member of the Group party to it to be ineffective; or (c) any member of the Group which is party to the Subordination Agreement, the Existing Bank Debt Guarantee or the Security Sharing Agreement repudiates (or evidences an intention in writing to repudiate it) the Subordination Agreement or the Security Sharing Agreement, as the case may be. 21.15 ERISA (a) Any ERISA Event shall have occurred with respect to a Plan and the liability that the Obligors and the ERISA Affiliates have incurred or are reasonably expected to incur with respect to such Plan and any and all other Plans with respect to which an ERISA Event shall have occurred and then exist could reasonably be expected to have a Material Adverse Effect. (b) Any Obligor or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Obligors and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), could reasonably be expected to have a Material Adverse Effect. 116 (c) Any Obligor or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganisation or is being terminated, within the meaning of Title IV of ERISA, and such reorganisation or termination could reasonably be expected to have a Material Adverse Effect. 21.16 MATERIAL ADVERSE CHANGE Any event or series of events occurs after the date of this Agreement which, in the opinion of the Majority Lenders (acting in good faith), has, or could reasonably be expected to have, a Material Adverse Effect. 21.17 ACCELERATION On and at any time after the occurrence of an Event of Default and whilst the same is continuing, the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Obligors' Agent: (a) cancel the Total Commitments; and/or (b) demand that all or part of the Loans, together with accrued interest and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or (c) demand that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders. 22. THE AGENTS AND THE MANDATED LEAD ARRANGERS 22.1 APPOINTMENT AND DUTIES OF THE AGENTS (a) Each Finance Party irrevocably appoints each Agent to act as its agent under and in connection with the Finance Documents. (b) Each Party appointing each Agent irrevocably authorises each Agent on its behalf to: (i) perform the duties and to exercise the rights, powers and discretions that are specifically delegated to it under or in connection with the Finance Documents, together with any other incidental rights, powers and discretions; and (ii) execute each Finance Document expressed to be executed by such Agent on that Party's behalf. (c) Each Agent has only those duties which are expressly specified in this Agreement. Those duties are solely of a mechanical and administrative nature. 22.2 ROLE OF THE MANDATED LEAD ARRANGERS Except as specifically provided in this Agreement, no Mandated Lead Arranger has any obligations of any kind to any other Party under or in connection with any Finance Document. 22.3 RELATIONSHIP The relationship between each Agent and the other Finance Parties is that of agent and principal only. Nothing in this Agreement constitutes an Agent (other than the Security Agent 117 as contemplated by the Security Documents) as trustee or fiduciary for any other Party or any other person and except where and to the extent otherwise stated in the Security Agreement, no Agent need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys. 22.4 MAJORITY LENDERS' INSTRUCTIONS (a) An Agent will be fully protected if it acts in accordance with the instructions of the Majority Lenders in connection with the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Lenders will be binding on all the Lenders. In the absence of such instructions, an Agent may act as it considers to be in the best interests of all the Lenders. (b) No Agent is 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. 22.5 DELEGATION An Agent may act under the Finance Documents through its personnel and agents. 22.6 RESPONSIBILITY FOR DOCUMENTATION No Agent nor any Mandated Lead Arranger is responsible to any other Party for: (a) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document; (b) the collectability of amounts payable under any Finance Document; or (c) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document. 22.7 DEFAULT (a) No Agent is obliged to monitor or enquire as to whether or not a Default has occurred. No Agent will be deemed to have knowledge of the occurrence of a Default. However, if an Agent receives notice from a Party referring to this Agreement, describing the Default and stating that the event is a Default, or in the event that an Agent has actual knowledge of a failure to make a payment which constitutes a Default under Clause 21.2 (Non-payment), it shall promptly notify the Lenders or (in the case of the Security Agent) promptly notify the Facility Agent. (b) Each Agent may require the receipt of security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it will or may incur in taking any proceedings or action arising out of or in connection with any Finance Document before it commences those proceedings or takes that action. 22.8 EXONERATION (a) Without limiting paragraph (b) below, no Agent will be liable to any other Party for any action taken or not taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. (b) No Party may take any proceedings against any officer, employee or agent of the Agents in respect of any claim it might have against an Agent or in respect of any act or omission of any 118 kind (including gross negligence or wilful misconduct) by that officer, employee or agent in relation to any Finance Document. Any officer, employee or agent of an Agent may rely on this paragraph (b) and enforce its terms under the Contracts (Rights of Third Parties) Act 1999. 22.9 RELIANCE Each Agent may: (a) rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person; (b) rely on any statement made by a director or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; and (c) engage, pay for and rely on legal or other professional advisers selected by it (including those in agent's employment and those representing a Party other than that agent). 22.10 CREDIT APPROVAL AND APPRAISAL Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms that it: (a) has made its own independent investigation and assessment of the financial condition and affairs of the Obligors and their related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by an Agent or a Mandated Lead Arranger in connection with any Finance Document; and (b) will continue to make its own independent appraisal of the creditworthiness of the Obligors and their related entities while any amount is or may be outstanding under the Finance Documents or any Commitment is in force. 22.11 INFORMATION (a) The Facility Agent shall promptly forward to the person concerned the original or a copy of any document which is delivered to the Facility Agent by a Party for that person. (b) The Facility Agent shall promptly supply a Lender with a copy of each document received by the Facility Agent under Clause 4 (Conditions Precedent) or Clause 17.3 (Additional Guarantors), upon the request and at the expense of that Lender. (c) Except where this Agreement specifically provides otherwise, no Agent is obliged to review or check the accuracy or completeness of any document it forwards to another Party. (d) Except as provided above, no Agent has any duty: (i) either initially or on a continuing basis to provide any Lender with any credit or other information concerning the financial condition or affairs of the Obligors or of their related entities, whether coming into its possession before, on or after the date of this Agreement; or 119 (ii) unless specifically requested to do so by a Lender in accordance with a Finance Document, to request any certificates or other documents from the Obligors' Agent. 22.12 THE AGENTS AND THE MANDATED LEAD ARRANGERS INDIVIDUALLY (a) If it is also a Lender, each Agent and each Mandate Lead Arranger has the same rights and powers under this Agreement and (in the case of the Security Agent) under the Security Documents as any other Lender and may exercise those rights and powers as though it were not an Agent or a Mandated Lead Arranger. (b) Each Agent and each Mandated Lead Arranger may each: (i) carry on any business with the Obligors or their respective related entities; (ii) act as agent or trustee for, or in relation to any financing involving, the Obligors or their related entities; and (iii) retain any profits or remuneration in connection with its activities under this Agreement or in relation to any of the foregoing. (c) In acting as an Agent, the respective agency division of each Agent will be treated as a separate entity from its other divisions and departments. Any information acquired by an Agent which, in its opinion, is acquired by it otherwise than in its capacity as an Agent may be treated as confidential by that Agent and will not be deemed to be information possessed by that Agent in its capacity as such. (d) Each Obligor irrevocably authorises each Agent to disclose to the other Finance Parties any information which, in the opinion of that Agent, is received by it in its capacity as Agent. (e) Each Agent may deduct from any amount received by it for the Lenders pro rata any unpaid fees, costs and expenses of the Agents (or either of them) incurred by them in connection with the Finance Documents. 22.13 INDEMNITIES (a) Without limiting the liability of the Obligors under the Finance Documents, each Lender shall forthwith on demand indemnify each Agent for that Lender's proportion of any duly documented liability or loss incurred by that Agent in any way relating to or arising out of its acting as an Agent, except to the extent that the liability or loss arises directly from that Agent's gross negligence or wilful misconduct. (b) A Lender's proportion of the liability or loss set out in paragraph (a) above will be the proportion which its participation in the Loans (if any) bears to all the Loans on the date of the demand. However, if there are no Loans outstanding on the date of demand, then the proportion will be the proportion which its Commitment bears to the Total Commitments at the date of demand or, if the Total Commitments have then been cancelled, bore to the Total Commitments immediately before being cancelled. 22.14 COMPLIANCE (a) Each Agent may refrain from doing anything which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction. 120 (b) Without limiting paragraph (a) above, no Agent need disclose any information relating to the Obligors or any of their related entities if the disclosure might, in the opinion of that Agent, constitute a breach of any law or regulation or any duty of secrecy or confidentiality or be otherwise actionable at the suit of any person. 22.15 RESIGNATION (a) Notwithstanding its irrevocable appointment, each Agent may resign by giving notice to the Lenders and the Obligors' Agent, in which case such Agent may forthwith appoint one of its Affiliates as successor (a REPLACEMENT) for such Agent or, failing that, the Majority Lenders may appoint a Replacement following consultation with the Obligors' Agent. (b) If the appointment of a Replacement is to be made by the Majority Lenders but they have not, within 30 calendar days after notice of resignation, appointed a Replacement which accepts the appointment, that Agent may appoint a Replacement following consultation with the Obligors' Agent. (c) The resignation of an agent and the appointment of any Replacement will both become effective only upon the Replacement notifying all the Parties that it accepts its appointment. On giving the notification, the Replacement will succeed to the position of the Agent and the term FACILITY AGENT or SECURITY AGENT (as appropriate) will mean the successor Facility Agent or the Successor Security Agent. (d) The retiring Facility Agent or Security Agent, as the case may be, shall make available to the Replacement such documents and records and provide such assistance as the Replacement may reasonably request for the purposes of performing its functions as the Facility Agent or Security Agent, as the case may be, under this Agreement. (e) Upon its resignation becoming effective, this Clause 22 shall continue to benefit the retiring Agent in respect of any action taken or not taken by it under or in connection with the Finance Documents while it was an Agent, and, subject to paragraph (d) above, it shall have no further obligations under any Finance Document. (f) The Majority Lenders may, by notice to an Agent, require it to resign in accordance with paragraph (a) above. In this event, that Agent shall resign in accordance with paragraph (a) above but it shall not be entitled to appoint one of its Affiliates as successor Facility Agent or Security Agent, as the case may be. 22.16 LENDERS (a) The Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days' prior notice from that Lender to the contrary. (b) The Facility Agent may at any time, and shall if requested to do so by the Majority Lenders, convene a meeting of the Lenders. 22.17 EXTRAORDINARY MANAGEMENT TIME AND RESOURCES The Company shall forthwith on demand pay each Agent for the cost of utilising its management time or other resources in connection with: (a) any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of the Obligors and relating to a Finance Document or a document referred to in any Finance Document; or 121 (b) the occurrence of a Default; or (c) the enforcement of, or the preservation of any rights under, any Finance Document. Any amount payable to an Agent under: (i) paragraph (a) above shall be determined by written agreement between the Obligors' Agent and such Agent at the time of the request by or on behalf of the Obligors; and (ii) under paragraphs (b) or (c) above will be calculated on the basis of such reasonable daily or hourly rates as such Agent may notify to the Obligors' Agent, and in each case is in addition to any fee paid or payable to the Facility Agent under Clause 23 (Fees). 22.18 SECURITY AGENT (a) Without prejudice to Clauses 22.6 (Responsibility for documentation) or 22.8 (Exoneration), the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) under any of the Security Documents or otherwise shall not be liable (unless directly caused by its gross negligence or wilful misconduct) for any failure, omission, or defect in perfecting the security constituted by any Security Document or any security created thereby including, without limitation, any failure to (i) register the same in accordance with the provisions of any of the documents of title of the relevant Obligor to any of the property thereby charged, (ii) make any recordings or filings in connection therewith, (iii) effect or procure registration of or otherwise protect the security created by or pursuant to the Security Documents under any registration laws in any jurisdiction, (iv) give notice to any person of the execution of any of the Security Documents or to obtain any licence, consent or other authority for the creation of any security. (b) The Security Agent may accept without enquiry such title as any Obligor may have to the property over which security is intended to be created by any Security Document. (c) Save where the Security Agent holds a mortgage over, or over an interest in, real estate property or shares, the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) or otherwise shall not be under any obligation to hold any title deeds, Security Documents or any other documents in connection with the property charged by any Security Documents or any other such security in its own possession or to take any steps to protect or preserve the same. (d) Save as otherwise provided in the Security Documents, all moneys which are received by the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) or otherwise may be invested in the name of or under the control of the Security Agent in any investments which may be selected by the Security Agent with the consent of the Majority Lenders. Additionally, the same may be placed on deposit in the name of or under the control of the Security Agent at such bank or institution (including any Agent) and upon such terms as the Security Agent may think fit. (e) Each Finance Party hereby confirms its approval of the Security Documents and any security created or to be created pursuant thereto and hereby authorises, empowers and directs the Security Agent (by itself of by such person(s) as it may nominate) to execute and enforce the same as trustee, agent or mandataire (as appropriate) or as otherwise provided (and whether or not expressly in the Finance Party's name) on its behalf, subject always to the terms of this Agreement and the Security Documents. 122 22.19 CO-SECURITY AGENTS (a) The Security Agent may appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate security agent or as a co-security agent jointly with the Security Agent (i) if the Security Agent considers that without such appointment the interests of the Lenders under the Finance Documents would be materially and adversely affected or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act is or acts are to be performed or (iii) for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction of either a judgment already obtained or any of the provisions of the Finance Documents, provided in each case that such separate security agent or co-security agent becomes bound by the terms of this Agreement as if it were the Security Agent. (b) Each separate security agent or co-security agent shall (subject always to the provisions of this Agreement) have such powers, authorities and discretions (not exceeding those conferred on the Security Agent by this Agreement) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. (c) The Security Agent shall have power in like manner to remove any such person. If an Event of Default is continuing, such reasonable remuneration as the Security Agent may pay to any such person, together with any attributable costs, charges and expenses properly incurred by it in performing its function as such separate security agent or co-security agent shall for the purpose of this Agreement be treated as costs, charges and expenses incurred by the Security Agent. 22.20 RELEASE OF SECURITY The Security Agent shall and is hereby authorised by each of the other Finance Parties (and to the extent it may have any interest therein, every other party hereto) to execute on behalf of itself and each of the other Finance Parties and every other party hereto where relevant without the need for any further referral to, or authority from, any Finance Party or other person hereto all such releases of security and guarantees given by Obligors under any Finance Document as the Security Agent is authorised or required to effect by the terms of this Clause 22 (The Agents and the Mandated Lead Arrangers). 22.21 CONFLICT WITH SECURITY DOCUMENTS If there is any conflict between the provisions of this Agreement and any Security Documents with regard to instructions to or the matters affecting the Security Agent, this Agreement will prevail. 22.22 SECURITY AGENT AS JOINT AND SEVERAL CREDITOR (a) Each of the Obligors and each of the Finance Parties agree that the Security Agent shall be the joint and several creditor and as, for Dutch law purposes, a (hoofdelijk crediteur) together with the relevant Finance Party (of each and every obligation of any Obligor owing to or towards each of the Finance Parties under the Finance Documents, and that accordingly the Security Agent will have its own independent right to demand performance by the relevant Obligor of those obligations. However, any discharge of any such obligation to one of the Security Agent or a Finance Party (other than the Security Agent) shall, to that extent, discharge the corresponding obligation owing to the other and a Finance Party shall not by virtue of this clause be entitled to pursue an Obligor concurrently for the same obligation. (b) Without limiting or affecting the Security Agent's rights against any Obligor (whether under this paragraph or under any other provision of the Finance Documents), the Security Agent 123 agrees with each other Finance Party (on a several and divided basis) that, subject as set out in the next sentence, it will not exercise its rights as a joint and several creditor of any and all obligations owing to each Finance Party (other than the Security Agent) except with the consent of the relevant Finance Party. However, for the avoidance of doubt, nothing in the previous sentence shall in any way limit the Security Agent's right to act in the protection or preservation of rights under or to enforce any Security Document as contemplated by this Agreement, and/or the relevant Security Document (or to do any act reasonably incidental to any of the foregoing). 23. FEES 23.1 ARRANGEMENT FEES The Company shall pay the arrangement fee to the Mandated Lead Arrangers in the amounts and at the times agreed in the Arrangement Fee Letter. 23.2 AGENCY FEES The Company shall pay to the Agents for their own respective accounts agency fees in the amount agreed in the Agency Fee Letter. Each such agency fee is payable annually in advance. The first payment of this fee is payable on the date which is five calendar days after the date of this Agreement and each subsequent payment is payable on each anniversary of the date of this Agreement for so long as any amount is or may be outstanding under this Agreement or any Commitment is in force. 23.3 COMMITMENT FEE (a) The Company shall pay to the Facility Agent for each Lender, a commitment fee: (i) in respect of its Tranche A Commitments in Euro computed at an annual rate of 40 per cent. of the then Applicable Margin for Tranche A (not to exceed 1.00 per cent. per annum) of the undrawn, uncancelled amount of that Lender's Commitment under Tranche A; and (ii) in respect of its Tranche B Commitments in Euro, computed at an annual rate of 1.00 per cent. on the undrawn, uncancelled amount of that Lender's Commitment under Tranche B, during the Availability Period for that Tranche. For this purpose Loans are taken at their Original Euro Amount. (b) Accrued commitment fee is payable quarterly in arrear and on the Final Maturity Date. Accrued commitment fee shall also be payable to the Facility Agent for the relevant Lender on the cancelled amount of any of its Commitment at the time the cancellation comes into effect. (c) Commitment fees are payable in Euro. 23.4 VAT Any fee referred to in this Clause 23 is exclusive of any value added tax or any other tax which might be chargeable in connection with that fee. If any value added tax or other tax is so chargeable, it shall be paid by the relevant Obligor at the same time as it pays the relevant fee. 124 24. EXPENSES 24.1 INITIAL AND SPECIAL COSTS (a) The Company shall forthwith on demand pay the Facility Agent and the Security Agent the amount of all duly documented and reasonable costs and expenses (including legal fees) incurred by either of them in connection with: (i) the negotiation, preparation, printing, syndication and execution of: (A) this Agreement and any other documents referred to in this Agreement; and (B) any other Finance Document (other than a Novation Certificate) executed after the date of this Agreement; and (ii) any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of the Obligors and relating to a Finance Document or a document referred to in any Finance Document. (b) The Company shall forthwith on demand pay the Facility Agent and the Security Agent the amount of any duly documented costs and expenses (including legal fees) incurred by either of them in connection with the perfection of any Security Interest purported to be created by any Security Interest. 24.2 ENFORCEMENT COSTS The Company shall forthwith on demand pay to each Finance Party the amount of all duly documented costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Finance Document. 25. STAMP DUTIES The Company shall pay, and forthwith on demand indemnify each Finance Party against any liability it incurs in respect of, any stamp, registration and similar tax which is or becomes payable in connection with the entry into, performance or enforcement of any Finance Document (other than a Novation Certificate). 26. INDEMNITIES 26.1 CURRENCY INDEMNITY (a) If a Finance Party receives an amount in respect of an Obligors' liability under the Finance Documents or if that liability is converted into a claim, proof, judgment or order in a currency other than the currency (the CONTRACTUAL CURRENCY) in which the amount is expressed to be payable under the relevant Finance Document: (i) that Obligor shall indemnify that Finance Party as an independent obligation against any loss or liability arising out of or as a result of the conversion; (ii) if the amount received by that Finance Party, when converted into the contractual currency at a market rate in the usual course of its business is less than the amount owed in the contractual currency, that Obligor shall forthwith on demand pay to that Finance Party an amount in the contractual currency equal to the deficit; and 125 (iii) that Obligor shall forthwith on demand pay to the Finance Party concerned any exchange costs and Taxes payable in connection with any such conversion. (b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable. 26.2 INDEMNITY RELATING TO THE FACILITY (a) The Obligors will indemnify each Finance Party, their respective affiliates officers, directors, advisers, representatives, agents, employees and controlling persons (each an INDEMNIFIED PERSON) from and against any loss, claims, damages or liability which each such Indemnified Person suffers or may incur (including, without limitation, all reasonable fees and disbursements of legal advisers and all reasonable travel and other out-of-pocket expenses incurred in connection with the investigation of, preparation for and defence of any pending or threatened claim and any litigation or other proceeding by or in connection with any shareholder action, class action, bondholder and other financial creditor action, or any stock exchange, regulatory or administrative process or investigation, whether or not in connection with pending or threatened litigation or other proceeding in which any Indemnified Person is a party) as a consequence of or in connection with or arising out of the Facility except and to the extent that any loss, claim, damage or liability is finally judicially determined to have resulted primarily from the gross negligence or wilful misconduct of such Indemnified Person. You agree to co-operate with each Indemnified Person and to give insofar as you are able to procure the giving of all such information and render such assistance to as the Indemnified Person may reasonably request in connection with any action proceeding or investigation. (b) The Obligor will agree that no Indemnified Person shall have any liability (whether direct or indirect, in contract, tort or otherwise) to any member of the Group or any shareholders or creditors of any member of the Group for or in connection with the transactions referred to above, except to the extent such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Person's gross negligence or wilful misconduct. 26.3 OTHER INDEMNITIES (a) Each Obligor shall forthwith on demand indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of: (i) the occurrence of any Event of Default; (ii) the operation of Clause 21.17 (Acceleration) or Clause 32 (Pro Rata Sharing); or (iii) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment or (other than by reason of negligence or default by that Finance Party) a Loan not being made after the Obligors' Agent has delivered a Request. (b) Each Obligors' liability in each case includes any loss of margin or other loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan. (c) The Company shall indemnify each Agent against any loss or liability (including, without limitation, reasonable costs and expenses) incurred by such Facility Agent as a result of: (i) investigating any event which the Facility Agent reasonably believes to be a Default; or 126 (ii) acting or relying on any notice which such Agent reasonably believes to be genuine, correct and appropriately authorised, to the extent that such Agent is not compensated in relation thereto by a payment by the Company under Clause 22.17 (Extraordinary management time and resources). 26.4 BREAK COSTS (a) The Company must pay to each Lender its Break costs. (b) Break Costs are the amount (if any) determined by the relevant Lender by which: (i) the interest that Lender would have received for the period from the date of receipt of any part of its share in a Loan or an overdue amount to the last day of the applicable Interest Period for that Loan or overdue amount if the principal amount or overdue amount received been paid on the last day of that Interest Period; exceeds: (ii) the amount which that Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate interbank market for a period starting on the Business Day following receipt and ending on the last day of the current Interest Period. (c) Each Lender must supply to the Facility Agent for the Company details of the amount of any Break Costs claimed by it under this Subclause. 27. EVIDENCE AND CALCULATIONS 27.1 ACCOUNTS Accounts maintained by a Finance Party in connection with this Agreement are, in the absence of manifest error, evidence of the matters to which they relate. 27.2 CERTIFICATES AND DETERMINATIONS Any certification or determination by a Finance Party of a rate or amount under the Finance Documents is, in the absence of manifest error, conclusive evidence of the matters to which it relates. 27.3 CALCULATIONS Interest (including, if relevant to its calculation, any Mandatory Cost) and the fees payable under Clause 23.3 (Commitment fee) accrue from day to day and are calculated on the basis of the actual number of days elapsed and a year of 360 days or, in the case of interest payable on an amount denominated in Sterling or where market practice otherwise dictates, 365 days. 28. AMENDMENTS AND WAIVERS 28.1 PROCEDURE (a) Subject to Clause 28.2, any term of the Finance Documents may be amended and any breach or prospective breach waived, with the agreement of the Obligors' Agent and the Majority Lenders. Each Agent may effect, on behalf of any Finance Party, an amendment or waiver permitted under this Clause. 127 (b) The Facility Agent shall promptly notify the other Parties of any amendment or waiver effected under paragraph (a) above, and any such amendment or waiver shall be binding on all the Parties. 28.2 EXCEPTIONS (a) An amendment or waiver which relates to any of the following may only be effected if agreed by the Obligors' Agent, the Agents and each of the Lenders: (i) the definition of each of MAJORITY LENDERS and SUPER MAJORITY LENDER and RELEASE CONDITION DATE and SECURITY RELEASE CONDITION DATE in Clause 1.1 (Definitions); (ii) an extension of the date for, or a decrease in an amount or a change in the currency of, any payment to the Lenders under the Finance Documents (including the Applicable Margin and any fees payable under Clause 23.3 (Commitment fee); (iii) an increase in a Lender's Commitment or the extension of the Final Maturity Date; (iv) a term of a Finance Document which expressly requires the consent of the Lenders; (v) Clause 2.4 (Nature of Finance Party's rights and obligations), Clause 29.1 (Transfers by the Obligors), Clause 29.2 (Transfers by Lenders), Clause 32 (Pro Rata Sharing), or this Clause 28; (vi) the release or discharge of any Obligor from its obligations under the Finance Documents other than as expressly agreed pursuant to the Finance Documents; or (vii) any material provision of a Security Document or guarantee or the release of any asset from any Security Interest created by a Security Document other than in accordance with Clause 17 (Release of Security and Additional Guarantors) or the terms of relevant Security Document. (b) An amendment or waiver of any term of the Security Sharing Agreement may only be effected in accordance with Clause 12.1 (Amendments to this Agreement) of the Security Sharing Agreement. (c) An amendment or waiver of any of the terms of the Finance Documents referred to in Clause 12.2 (Amendments to the Finance Documents (other than this Agreement)) of the Security Sharing Agreement may only be effected in accordance with that clause. (d) An amendment or waiver which affects the rights and/or obligations of an Agent may not be effected without the agreement of such Agent. (e) An amendment or waiver which relates to any of the following may only be effected if agreed by the Obligors' Agent, the Agents and the Super Majority Lenders: (i) the definition of ASSETS in Clause 1.1 (Definitions); (ii) Clauses 7.4 (Mandatory prepayment from Net Debt Issue Proceeds) to 7.14(b) (Timing of mandatory prepayments and cancellations and Receipt Account) (inclusive); and (iii) this paragraph and a term of a Finance Document which expressly requires the consent of the Super Majority Lenders. 128 28.3 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, the currency or currency unit of that country designated by the Lender; 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) 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. 28.4 WAIVERS AND REMEDIES CUMULATIVE The rights of each Finance Party under the Finance Documents: (a) may be exercised as often as necessary; (b) are cumulative and not exclusive of its rights under the general law; and (c) may be waived only in writing and specifically. Delay in exercising or non-exercise of any such right is not a waiver of that right. 29. CHANGES TO THE PARTIES 29.1 TRANSFERS BY THE OBLIGORS No Obligor may assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under the Finance Documents. 29.2 TRANSFERS BY LENDERS (a) A Lender (the EXISTING LENDER) may, subject to paragraph (b) below, at any time assign, transfer or novate any of its Commitment under Tranche A and/or Tranche B and/or rights and/or obligations under this Agreement to any third party (the NEW LENDER) in accordance with Clause 29.3 (Procedure for novations). (b) (i) A transfer in part of Commitment or participation in the Loans made under a Tranche must be in a minimum (and an integral multiple) of an Original Euro Amount of E5,000,000; and (ii) the prior consent of the Company is required for any such assignment, transfer or novation unless the New Lender is another Lender or an Affiliate of a Lender, or a bank or financial institution, or a special purpose company or vehicle or entity controlled or managed by one of more banks or financial institutions or their Affiliates and which is incorporated or established for the purposes of a securitisation 129 programme or a collateralised debt obligation or collateralised loan obligation programme, or a Default is outstanding. However the prior consent of the Company (where required) is not to be unreasonably withheld or delayed. (c) A transfer of obligations will be effective only if either: (i) the obligations are novated in accordance with Clause 29.3; or (ii) the New Lender confirms to the Facility Agent and the Obligors' Agent that it undertakes to be bound by the terms of this Agreement as a Lender in form and substance satisfactory to the Facility Agent. On the transfer becoming effective in this manner the Existing Lender shall be relieved of its obligations under this Agreement to the extent that they are transferred to the New Lender. (d) On each occasion an Existing Lender assigns, transfers or novates any of its Commitment and/or rights and/or obligations under this Agreement, the New Lender shall, on the date the assignment, transfer and/or novation takes effect, pay to the Facility Agent for its own account a fee of E1500 (without, for the avoidance of doubt, any right to reimbursement by the Obligors). (e) An Existing Lender is not responsible to a New Lender for: (i) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document; (ii) the collectability of amounts payable under any Finance Document or the value of any security or collateral; or (iii) the accuracy of any statements or information (whether written or oral) made in or in connection with any Finance Document. (f) Each New Lender confirms to the Existing Lender and the other Finance Parties that it: (i) has made its own independent investigation and assessment of the financial condition and affairs of the Obligors and their 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 or any other Finance Party in connection with any Finance Document; (ii) will continue to make its own independent appraisal of the creditworthiness of the Obligors and their related entities while any amount is or may be outstanding under this Agreement or any Commitment is in force; (iii) is a bank or financial institution whose on-going business includes participations in syndications facilities; and (iv) it has made its own investigation of the Lock-up Arrangements and agrees to be bound by the term thereof and to execute such documentation as is reasonably required to accede to those arrangements. (g) Nothing in any Finance Document obliges an Existing Lender to: (i) accept a re-transfer from a New Lender of any of the Commitment and/or rights and/or obligations assigned, transferred or novated under this Clause; or 130 (ii) support any losses incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise. (h) Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement and its Commitment has been cancelled or reduced to nil. (i) In the case of an assignment, the Existing Lender and the New Lender shall ensure that the relevant transfer agreement is notified by bailiff (HUISSIER) to the Company and the Obligors' Agent in accordance with Article 1690 of the French Civil Code. 29.3 PROCEDURE FOR NOVATIONS (a) A novation is effected if: (i) the Existing Lender and the New Lender deliver to the Facility Agent a duly completed certificate, substantially in the form of Schedule 5 (a NOVATION CERTIFICATE); and (ii) the Facility Agent executes it. (b) Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Novation Certificate on its behalf. (c) To the extent that they are expressed to be the subject of the novation in the Novation Certificate: (i) the Existing Lender and the other Parties (the EXISTING PARTIES) will be released from their obligations to each other (the DISCHARGED OBLIGATIONS); (ii) the New Lender and the existing Parties will assume obligations towards each other which differ from the discharged obligations only insofar as they are owed to or assumed by the New Lender instead of the Existing Lender; (iii) the rights of the Existing Lender against the existing Parties and vice versa (the DISCHARGED rights) will be cancelled; and (iv) the New Lender and the existing Parties will acquire rights against each other which differ from the discharged rights only insofar as they are exercisable by or against the New Lender instead of the Existing Lender, all on the date of execution of the Novation Certificate by the Facility Agent or, if later, the date specified in the Novation Certificate. (d) For the avoidance of doubt the Parties agree that any novation effected in accordance with this Clause 29.3 shall constitute a novation within the meaning of Article 1271 et seq, of the French Civil Code and that the guarantee and security are preserved for the benefit of the New Lender. (e) Each Obligor hereby expressly consents to each assignment, transfer and/or novation of any rights and/or obligations permitted under and made in accordance with this Clause 29. Each Guarantor hereby expressly accepts and confirms that, notwithstanding any assignment, transfer and/or novation permitted under and made in accordance with this Clause 29, its Guarantee guarantees all obligations of the Obligors (including, without limitation, all 131 obligations with respect to all rights and/or obligations so assigned, transferred or novated) for the benefit of the Finance Parties, in accordance with the terms of the Finance Documents. 29.4 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 Obligors' Agent) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank. 29.5 REGISTER The Facility Agent shall keep a register of all the Parties and shall supply any other Party (at that Party's expense) with a copy of the register on request. 29.6 VOTING If a Lender transfers any of its Commitment and participations in the Loans to its Affiliate, the Lender shall continue to vote as a Lender in the place of the Affiliate for the purposes of the definition of Majority Lenders. 29.7 ADDITIONAL COSTS If any assignment, transfer, novation after the Syndication Date, or change of Facility Office by a Lender would, at the time thereof, result in additional amounts becoming payable under Clause 12 (Taxes), then, unless the assignment, transfer, novation or change of Facility Office was being effected pursuant to Clause 12.3 (Mitigation), the Obligors shall be required to pay such amounts or additional amounts to or for the account of the assignee, transferee, New Lender or Lender acting through its new Facility Office only to the extent that it would have been required to pay the same had there been no such assignment, transfer, novation or change of Facility Office. 30. DISCLOSURE OF INFORMATION (a) Each Finance Party shall keep confidential any information supplied to it by or on behalf of any Obligor in connection with the Finance Documents. However, a Finance Party is entitled to disclose information: (i) which is publicly available, other than as a result of a breach by that Finance Party of this Clause; (ii) to the extent requested or required by any court of competent jurisdiction in connection with any legal or arbitration proceedings; (iii) to the extent required to do so under any law or regulation; (iv) to a competent governmental, banking, taxation or other regulatory authority if and to the extent required; (v) to its professional advisers; (vi) to the extent allowed under paragraph (b) below; or (vii) with the prior written consent of the relevant Obligor or the Company. 132 (b) A Lender may disclose to one of its Affiliates or any person (including, without limitation, any person mentioned in Clause 29.2 (Transfers by Lenders)) with whom it is proposing to enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement: (i) copy of any Finance Document; and (ii) any information which that Lender has acquired under or in connection with any Finance Document on or after the date of this Agreement, provided that prior to making any such disclosure a Lender shall obtain a written confidentiality undertaking (substantially in the form of Schedule 8) together with such amendments as the Lender shall reasonably consider necessary) with respect to the information to be disclosed. (c) This Clause shall apply to information supplied to a Finance Party by or on behalf of any Obligor in connection with the Finance Documents on or after the date of this Agreement. Any confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party shall continue in full force and effect in accordance with its terms in respect of all information supplied to that Finance Party by or on behalf of any Obligor prior to the date of this Agreement. 31. SET-OFF Following the occurrence of a Default, a Finance Party may set off any matured obligation owed by an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to 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. If a Finance Party's obligation is unliquidated or unascertained, the Finance Party may set off in an amount estimated by it in good faith to be the amount of that obligation. 32. PRO RATA SHARING 32.1 REDISTRIBUTION If any amount owing by an Obligor under the Finance Documents to a Finance Party (the RECOVERING FINANCE PARTY) is discharged by payment, set-off or any other manner other than through the Facility Agent in accordance with Clause 11 (Payments) (a RECOVERY), then: (a) the recovering Finance Party shall, within three Business Days, notify details of the recovery to the Facility Agent; (b) the Facility Agent shall determine whether the recovery is in excess of the amount which the recovering Finance Party would have received had the recovery been received by the Facility Agent and distributed in accordance with Clause 11 (Payments); (c) subject to Clause 32.3, the recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the REDISTRIBUTION) equal to the excess; (d) the Facility Agent shall treat the redistribution as if it were a payment by that Obligor under Clause 11 (Payments) and shall pay the redistribution to the Finance Parties 133 (other than the recovering Finance Party) in accordance with Clause 11.7 (Partial payments); and (e) after payment of the full redistribution, the recovering Finance Party will be subrogated to the portion of the claims paid under paragraph (d) above and that Obligor owes the recovering Finance Party a debt which is equal to the redistribution, immediately payable and of the type originally discharged. 32.2 REVERSAL OF REDISTRIBUTION If under Clause 32.1: (a) a recovering Finance Party must subsequently return a recovery, or an amount measured by reference to a recovery, to an Obligor; and (b) the recovering Finance Party has paid a redistribution in relation to that recovery, each Finance Party shall, within three Business Days of demand by the recovering Finance Party through the Facility Agent, reimburse the recovering Finance Party all or the appropriate portion of the redistribution paid to that Finance Party together with interest on the amount to be returned to the recovering Finance Party for the period whilst it held the re-distribution. Thereupon, the subrogation in Clause 32.1(e) will operate in reverse to the extent of the reimbursement. 32.3 EXCEPTIONS (a) A recovering Finance Party need not pay a redistribution to the extent that it would not, after the payment, have a valid claim against an Obligor in the amount of the redistribution pursuant to Clause 32.1(e). (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 proceedings, if the other Finance Party had an opportunity to participate in those legal proceedings but did not do so or did not take separate legal proceedings. 33. SEVERABILITY If a provision of any Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect: (a) the validity or enforceability in that jurisdiction of any other provision of the Finance Documents; or (b) the validity or enforceability in other jurisdictions of that or any other provision of the Finance Documents. 34. 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. 134 35. NOTICES 35.1 GIVING OF NOTICES All notices or other communications (other than those given under the terms of Clause 35.3 (Website communications) under or in connection with the Finance Documents shall be given in writing by letter or facsimile or (if the relevant Party has specified such address pursuant to Clause 35.2 (Addresses for notices) by e-mail. Any such notice or communication will be deemed to be given as follows: (a) if by letter, when delivered personally or on actual receipt; and (b) if by facsimile or e-mail (including a notification under Clause 35.3), when actually received in legible form. However, a notice given in accordance with the above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place. 35.2 ADDRESSES FOR NOTICES (a) The address and facsimile number and (if so specified) e-mail address (and the department or officer, if any, for whose attention the communication is to be made) of each Party (other than the Obligors' Agent and the Facility Agent) for all notices under or in connection with the Finance Documents are: (i) those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party; or (ii) any other notified by that Party for this purpose to the Facility Agent by not less than five Business Days' notice. (b) The address and facsimile number of the Obligors' Agent are: Vivendi Universal S.A. 42, avenue de Friedland 75008 Paris Fax number: +33 (0) 1 71 71 10 47 Attention: M. Dupont-Lhotelain or such other as the Obligors' Agent may notify to the Facility Agent by not less than five Business Days' notice. (c) The address, facsimile number and email address of the Facility Agent are: Societe Generale Agency and Transaction Management Department OPER/DFI/ATM/COR Tour Societe Generale 17 cours Valmy 92972 Paris-La Defense Cedex France Fax number: +33 (0)1 42 14 60 93 Telephone: +33 (0)1 42 13 53 49 135 E-mail: stephanie.bessadou@socgen.com Attention: Stephanie Bessadou or such other as the Facility Agent may notify to the other Parties by not less than five Business Days' notice. (d) All notices from or to any Obligor shall be sent through the Facility Agent and the Obligor's Agent. (e) The Facility Agent shall, promptly upon request from any Party, give to that Party the address, or facsimile number or e-mail address (where appropriate) of any other Party applicable at the time for the purposes of this Clause. 35.3 WEBSITE COMMUNICATIONS (a) This Clause 35.3 shall apply to: (i) all accounts, certificates, each Liquidity Analysis and other information delivered under Clauses 19.2 (Financial information) and 19.6 (Information - miscellaneous); (ii) any communication (other than one which is intended to form part of a contract) between the Obligors' Agent and the Facility Agent or between the Facility Agent and the Finance Parties (or any of them) in connection with any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of the Obligor and relating to a Finance Document or a document referred to in any Finance Document; and (iii) any other communication between the Obligors' Agent and the Facility Agent or between the Facility Agent and the Finance Parties (or any of them), of a type to which the Facility Agent specifies, in a notice delivered to the Obligors' Agent and the Lenders by letter or facsimile, that this Clause 35.3 shall apply. (b) The Facility Agent will not, without the consent of the Majority Lenders and the Obligors' Agent, specify pursuant to paragraph (a)(iii) above that this Clause 35.3 shall apply to: (i) the delivery of Requests; or (ii) the notification by the Facility Agent of a Lender's participation in a Loan. (c) Any communication to which this Clause 35.3 applies shall be validly given if: (i) the sender places the communication on a website (the DESIGNATED WEBSITE) operated by a website operator which is (at the time the communication is sent) approved by the Facility Agent for this purpose, in accordance with the procedures and requirements of that website operator; (ii) the details and instructions (including any password) necessary in order to access the communication on the Designated Website have been notified to the Facility Agent, the Obligors' Agent and each Lender by letter, fax or e-mail in accordance with this Agreement; (iii) the sender takes such steps as are necessary so that each recipient is sent, by letter or fax in accordance with this Agreement or by electronic mail in accordance with paragraph (d) below, a notice (the NOTIFICATION) of the fact that a communication has been placed on the Designated Website for their attention and giving instructions for 136 gaining access to that communication (to the extent not already notified under paragraph (ii) above); and (iv) in the case of the documents referred to at paragraph (a)(i) above, and in the case of any communication referred to at paragraph (a)(ii) placed by the Obligors' Agent, the communication is placed on the Designated Website in PDF format or any other format acceptable to the Facility Agent and a hard copy is, in any event, provided to the Facility Agent. (d) A Notification sent by electronic mail to a Party shall be sent to the electronic mail address notified by that Party to the Facility Agent (or, if that Party is the Facility Agent, notified by the Facility Agent to the other Parties) in accordance with Clause 35.2. (e) Subject to paragraph (f) below, the Facility Agent may approve a website operator by giving five Business Days' notice (by letter or facsimile) to the Lenders and the Obligors' Agent. The Facility Agent may revoke its approval of a website operator for these purposes at any time immediately upon notice (given by letter or facsimile) to the Lenders and the Obligors' Agent; any such notice will take effect immediately. (f) The Facility Agent shall not approve a website operator for the purposes of this Clause 35.3 unless: (i) it is satisfied that the Facility Agent, the Obligors' Agent and each Finance Party have been provided with any website addresses, user names, passwords and other necessary information, and have entered into any necessary arrangements with the website operator, to enable them to gain access to communications placed on the website for their attention; (ii) it has received assurances satisfactory to it that, communications transmitted to, received from and stored on websites operated by the website operator will be as secure as possible from unauthorised interception, reading and amendment; and (iii) it is satisfied that, promptly upon a communication being placed on any relevant website, the intended recipient will be sent a notification by e-mail of the communication and will, for at least 30 calendar days thereafter, be able to read and retrieve a copy of the communication. (g) Any communication made in accordance with paragraph (c) above will be deemed to be given at the close of business (in the place of receipt) on the Business Day following the day on which the recipient is given the relevant Notification, unless prior to that time either: (i) the sender of the communication becomes aware that the recipient has not received that Notification; or (ii) the recipient of the Notification notifies the sender that it is not possible, for technical or other reasons affecting the operation of the relevant website generally, for the communication to be read or retrieved. (h) The Facility Agent, the Obligors' Agent and each Lender shall comply with any reasonable requirements of any approved website operator relating to the operation and security of the relevant websites. (i) The Facility Agent shall promptly upon becoming aware of its occurrence notify the Lenders and the Obligors' Agent if: 137 (i) any Designated Website cannot be accessed due to technical failure; (ii) the password specifications for any Designated Website change; (iii) the Facility Agent becomes aware that any Designated Website or any information posted onto any Designated Website is or has been infected by any electronic virus or similar software. If the Facility Agent gives a notice under paragraph (i) or (iii) above, all information which would otherwise have been posted on the Designated Website concerned shall be supplied in hard copy unless and until the Facility Agent and each Lender is satisfied that the circumstances giving rise to the notification are no longer continuing. (j) Nothing in this Clause 35.3 shall affect Clause 35.2(d) or prejudice the right of any Party to give any notice or other communication by letter or facsimile in accordance with the terms of this Agreement. 36. LANGUAGE (a) Any notice given under or in connection with any Finance Document shall be in English. (b) All other documents provided under or in connection with any Finance Document shall be: (i) in English; or (ii) if not in English, accompanied by a certified English translation (unless the document is a statutory or other official document). 37. JURISDICTION 37.1 SUBMISSION (a) For the benefit of each Finance Party, each Obligor agrees that the courts of England have jurisdiction to settle any disputes in connection with any Finance Document and accordingly submits to the jurisdiction of the English courts. (b) Without prejudice to paragraph (a) above and for the benefit of each Finance Party, each Obligor agrees that any New York State Court or Federal Court sitting in New York has jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of those courts. 37.2 SERVICE OF PROCESS Without prejudice to any other mode of service, each Obligor: (a) irrevocably appoints: (i) Law Debenture Corporate Services Limited, Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and (ii) Vivendi Universal Holding I Corp., 800 3rd Avenue, Fourth Floor, New York NY10022 as its agent for service of process, where required, in relation 138 to any proceedings before any courts located in the State of New York in connection with this Agreement; agrees to maintain an agent for service of process in England and in the State of New York until all Commitments have been terminated and the Loans and all other amounts payable under the Finance Documents have been finally, irrevocably and indefeasibly repaid in full; (b) agrees that failure by a process agent to notify the Obligors of the process will not invalidate the proceedings concerned; (c) consents to the service of process relating to any such proceedings by prepaid posting of a copy of the process to its address for the time being applying under Clause 35.2 (Addresses for notices); and (d) agrees that if the appointment of any person mentioned in paragraph (a) above ceases to be effective, the Obligors' Agent (on behalf of the Obligors) shall immediately appoint a further person in England or in the State of New York, as the case may be, to accept service of process on its behalf in England or in the State of New York, as the case may be, and, failing such appointment within 15 calendar days, the Facility Agent is entitled to appoint such a person by notice to the Obligors' Agent. 37.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD Each Obligor: (a) waives objection to the English and New York State and Federal courts on grounds of inconvenient forum or otherwise as regards proceedings in connection with a Finance Document; and (b) agrees that in the case of the enforcement of any judgment or order of an English or New York State and Federal court in connection with a Finance Document in any other jurisdiction, it will not assert that such judgment is not conclusive and not binding on it and that it may not be enforced against it in the courts of any other jurisdiction. 37.4 NON-EXCLUSIVITY Nothing in this Clause 37 limits the right of a Finance Party to bring proceedings against any Obligor in connection with any Finance Document: (a) in any other court of competent jurisdiction; or (b) concurrently in more than one jurisdiction. 38. WAIVER OF IMMUNITY Each Obligor irrevocably and unconditionally: (a) agrees that if a Finance Party brings proceedings against it or its assets in relation to a Finance Document, no immunity from those proceedings (including, without limitation, suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) will be claimed by or on behalf of itself or with respect to its assets; 139 (b) waives any such right of immunity which it or its assets now has or may subsequently acquire; and (c) consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in those proceedings. 39. WAIVER OF JURY TRIAL THE OBLIGORS AND THE FINANCE PARTIES WAIVE ANY RIGHTS THEY MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM ANY FINANCE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THE FINANCE DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 40. GOVERNING LAW This Agreement is governed by English law. THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement. 140 EX-4.8 5 y87781exv4w8.txt RESTATED CREDIT AGREEMENT Exhibit 4.8 AMENDMENT AND RESTATEMENT AGREEMENT DATED 13TH MAY, 2003 BETWEEN VIVENDI UNIVERSAL S.A. AND THE BANKS AND FINANCIAL INSTITUTIONS SPECIFIED HEREIN AND SOCIETE GENERALE AS FACILITY AGENT RELATING TO A E 3,000,000,000 CREDIT AGREEMENT DATED 15TH MARCH, 2002 AS AMENDED BY AN AMENDMENT AGREEMENT DATED 6TH FEBRUARY, 2003 ALLEN & OVERY London INDEX

CLAUSE PAGE 1. Interpretation................................................ 1 2. Conditions Precedent.......................................... 2 3. Restatement................................................... 2 4. Conditions Subsequent......................................... 2 5. Representations and Warranties................................ 3 6. Miscellaneous................................................. 4 7. Governing Law................................................. 5 SCHEDULE 1. Conditions precedent documents................................ 6 2. Conditions subsequent documents............................... 9 3. Restated Credit Agreement..................................... 11 SIGNATORIES............................................................ 147

THIS AMENDMENT AND RESTATEMENT AGREEMENT is dated 13th May, 2003 and is made between: (1) VIVENDI UNIVERSAL S.A. (the OBLIGORS' AGENT); (2) THE COMPANIES listed as Guarantors on the signature pages of this Agreement (the GUARANTORS); (3) THE BANKS AND FINANCIAL INSTITUTIONS listed as Banks on the signature pages of this Agreement (the BANKS); (4) SOCIETE GENERALE as facility agent (in this capacity the FACILITY AGENT); and (5) SOCIETE GENERALE as security agent (in this capacity the SECURITY AGENT). BACKGROUND (A) This Agreement is supplemental to and amends a E 3,000,000,000 credit agreement dated 15th March, 2002 made between, among others, the Obligors' Agent and the Facility Agent (as amended by an amendment agreement dated 6th February 2003, the CREDIT AGREEMENT). (B) The Obligors' Agent enters into this agreement on its own behalf and on behalf of the Company. IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS (a) Capitalised terms as to be defined in the Restated Credit Agreement have, except where otherwise defined in this Agreement, the same meaning in this Agreement. (b) EFFECTIVE DATE means the date on which the Facility Agent gives the notification referred to in Clause 2.1 (Notification of satisfaction), or such later date as the Obligors' Agent and the Facility Agent may agree. (c) RESTATED CREDIT AGREEMENT means the Credit Agreement as to be amended and restated in the form set out in Schedule 3 to this Agreement. 1.2 CONSTRUCTION The provisions of clause 1.2 (Construction) of the Restated Credit Agreement apply to this Agreement as though they were set out in full in this Agreement, except that references to the Credit Agreement are to be construed as references to this Agreement. 2 2. CONDITIONS PRECEDENT 2.1 NOTIFICATION OF SATISFACTION The Facility Agent must notify the Obligors' Agent and the Banks promptly on being satisfied that it has received all of the documents and evidence set out in Schedule 1 in form and substance satisfactory to it. 2.2 LAPSE If the Facility Agent fails to give the notification under Clause 2.1 (Notification of satisfaction) above on or before 5th August, 2003 (or such later date as the Obligors' Agent and Facility Agent may agree), the Effective Date will not occur and Clause 3 (Restatement) will be of no effect. 3. RESTATEMENT On and from the Effective Date: (a) the Credit Agreement will be amended and restated so that it reads in the form set out in Schedule 3 (Restated Credit Agreement); and (b) each Guarantor, in its capacity as such, will become a party to the Restated Credit Agreement and will give the guarantee and indemnity set out in Clause 16 (Guarantee and Indemnity) of the Restated Credit Agreement. 4. CONDITIONS SUBSEQUENT 4.1 NOTIFICATION OF SATISFACTION The Facility Agent must notify the Obligors' Agent and the Banks promptly on being satisfied that it has received all of the documents and evidence set out in Part I of Schedule 2 in form and substance satisfactory to it. 4.2 REVERSAL OF AMENDMENTS (a) If the Effective Date has occurred, but the Facility Agent fails to give the notification under Clause 4.1 (Notification of satisfaction) above on or before 5th August, 2003 (or such later date as the Obligors' Agent and Facility Agent may agree) (the CONDITIONS SUBSEQUENT DATE), then on and from the Conditions Subsequent Date: (i) the Restated Credit Agreement will be further amended so that it reads in the form which was in effect immediately prior to the Effective Date; (ii) each Guarantor will be released from its obligations as such under the Restated Credit Agreement (but without prejudice to any obligations it has under the Junior Guarantee (as defined in the Credit Agreement as in force immediately prior to the Effective Date) or any other document under which it gives any guarantee, indemnity or other assurance in respect of the obligations to the Finance Parties under the Junior Guarantee or any other document except the Credit Agreement); 3 (iii) each Party must, at the expense of the Company, execute such documents and take such action which is required by the Company (acting reasonably) to ensure that to the extent possible, the documents referred to in paragraphs 11, 12 and 15 of Schedule 1 (and, if applicable, paragraph 2 of Part II of Schedule 2) cease to be effective; (iv) the documents referred to at paragraphs (b)(ii) to (v) of Clause 6 (Miscellaneous) will cease to be Finance Documents (but for the purposes of the Credit Agreement, this Agreement will continue to be a Finance Document); and (v) each Party must, at the expense of the Company, execute any further documents and take any further action which are required by the Facility Agent or the Obligors' Agent (each acting reasonably) to give effect to paragraphs (i) to (iv) above. (b) Nothing in this Clause will affect any rights or obligations of any Party which have accrued or otherwise come into existence under the Credit Agreement prior to the Conditions Subsequent Date. 4.3 DELIVERY OF FURTHER DOCUMENTS If the notification of satisfaction under Clause 4.1 (Notification of satisfaction) has been provided to the Obligor's Agent, the Obligor's Agent must deliver or procure the delivery of the documents listed in Part II of Schedule 2 as soon as practicable after the date of this Agreement and in any event before the Conditions Subsequent Date. 5. REPRESENTATIONS AND WARRANTIES 5.1 REPRESENTATIONS AND WARRANTIES The Obligors' Agent and each Guarantor make the representations and warranties set out in this Clause to each Finance Party on the date of this Agreement and on the Effective Date. 5.2 POWERS AND AUTHORITY It has the power to enter into and perform, and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and (in the case of the Obligors' Agent) the amendment and restatement of the Credit Agreement contemplated by this Agreement. 5.3 LEGAL VALIDITY This Agreement constitutes its legal, valid and binding obligation enforceable in accordance with its terms subject to any laws affecting creditors' rights generally, and would be so treated in the courts of the jurisdiction of its incorporation. 5.4 AUTHORISATIONS All authorisations required in connection with the entry into, performance, validity and enforceability of this Agreement and the amendment and restatement of the Credit Agreement 4 contemplated by this Agreement, other than those required under Parts I and II of Schedule 2, have been obtained or effected and are in full force and effect. 5.5 NON-CONFLICT The entry into and performance by it of this Agreement, and the amendment and restatement of the Credit Agreement contemplated by this Agreement, do not and will not: (d) conflict in any material respect with any law or regulation or judicial or official order binding on it or any Material Subsidiary; or (e) conflict with its constitutional documents; or (f) conflict in any material respect with any document which is binding upon it or any Material Subsidiary or any asset of it or any Material Subsidiary. 5.6 CREDIT AGREEMENT The representations as to be set out in clause 17 (Representations and Warranties) of the Restated Credit Agreement (other than those set out in clauses 17.3 (Powers and authority), 17.7 (Taxes on payments), 17.8 (Stamp duties), 17.15(c) (Accounts) and 17.16 (Information Memorandum)) are true as if made on the date of this Agreement and the Effective Date with reference to the facts and circumstances then existing, as if references to the Credit Agreement were references to the Restated Credit Agreement and as if references to the Finance Documents included this Agreement. 6. MISCELLANEOUS (a) The Obligors' Agent must pay (or procure that there is paid) to the Facility Agent forthwith upon demand the amount of all reasonable costs and expenses (including legal fees and expenses) incurred by the Facility Agent in connection with this Agreement, any other documents referred to in this Agreement and the transactions contemplated by them. (b) The Facility Agent and the Obligors' Agent designate as Finance Documents: (i) this Agreement; (ii) the Security Sharing Agreement; (iii) each Security Document; and (iv) each Subordination Agreement. (c) Except as expressly stated in this Agreement, no Finance Document, and no rights, powers or privileges of any Finance Party under any Finance Document, will be affected, impaired or waived by: (i) the execution, delivery or performance of this Agreement or any document referred to in it; 5 (ii) the receipt or non-receipt of any of the documents and evidence referred to in Clause 2 (Conditions precedent) or Clause 4 (Conditions Subsequent); (iii) the occurrence or non-occurrence of the Effective Date or the Conditions Subsequent Date; (iv) any action taken or proposed to be taken, any inaction, any statement, representation or indulgence by any Finance Party or any other person in respect of any Default or otherwise; or (v) any failure to exercise or any delay in exercising any right, power or privilege. (d) This Agreement may be executed in any number of counterparts. This has the same effect as if the signatures were on a single copy of this Agreement. (e) With effect from the Effective Date, this Agreement shall be read and construed as one with the Credit Agreement and references in the Credit Agreement to THIS AGREEMENT, HEREOF, HEREUNDER and other similar terms shall be read and construed accordingly. 7. GOVERNING LAW This Agreement is governed by English law. This Agreement has been entered into on the date stated at the beginning of this Agreement. 6 SCHEDULE 1 CONDITIONS PRECEDENT DOCUMENTS 1. A copy of the constitutional documents of each Obligor and, in the case of each French Obligor, an extract of the K-Bis of the Register of Commerce and Companies relating to it, in each case dated no more than one month prior to the date of this Agreement. 2. A certified copy of the resolution of the board of directors of each Obligor approving the terms of, and the transactions contemplated by, the Finance Documents to which it is or is to be a party and resolving that it execute each such Finance Document and authorising an authorised signatory of that Obligor to execute on its behalf each such Finance Document. 3. If necessary in the case of each Obligor, a power of attorney in favour of the person signing on behalf of that Obligor. 4. A copy of: (a) the tax certificate; and (b) the certificate of good standing, in respect of each Obligor incorporated in the United States of America. 5. A specimen of the signature of each person authorised to sign all Finance Documents on behalf of the Obligors' Agent and to sign and/or despatch all documents and notices to be signed and/or despatched by the Obligors' Agent under or in connection with the Finance Documents. 6. A certificate of the Chairman and Chief Executive Officer or other duly authorised signatory of: (a) the Company confirming that utilisation of the credit facility in full would not cause any borrowing limit binding on it to be exceeded; and (b) each Guarantor confirming that the guarantee under this Agreement would not cause any guaranteeing limit binding, if applicable, on that Guarantor. 7. A certificate of an authorised signatory of the Obligors' Agent certifying that each copy document delivered under this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 8. Evidence that: (a) a waiver fee of 0.30 per cent. on the Commitment of each Bank as at the date of this Agreement; and (b) all amounts payable by the Obligors' Agent under Clause 6(a) (Miscellaneous) which have then been invoiced, 7 have been paid or will be paid on or before the Effective Date. 9. An agreed form of account security (gage especes) in relation to the Receipt Account located in France. 10. A conformed or certified copy of the New Facility Agreement. 11. (a) A counterpart of each Security Document (other than the documents referred to in paragraphs 5, 11, 15 and 19 of Part I of Schedule 10 to the Restated Credit Agreement), duly executed by the parties thereto. (b) Evidence satisfactory to the Security Agent that the document referred to in paragraph 19 of Part I of Schedule 10 to the Restated Credit Agreement has been executed. 12. A counterpart of each Subordination Agreement, duly executed by the parties thereto. 13. (a) A certificate from the Auditors of the Company setting out in reasonable detail the calculation of each of the financial covenants set out in Clause 19.3 (Financial covenants) of the Credit Agreement, as at December 31, 2002. (b) A certificate from the Chief Financial Officer of the Company setting out in reasonable detail the calculation of Subsidiary Debt (as defined in Clause 18.16 (Subsidiary Debt) of the Restated Credit Agreement). 14. The Original Liquidity Analysis and the Back-up Original Liquidity Analysis. 15. The Security Sharing Agreement, duly executed by the parties thereto. 16. A copy of each the High Yield Notes Documents, duly executed by the parties thereto. 17. Legal opinions of the following lawyers, addressed to the Finance Parties: (a) Allen & Overy in respect of English law; (b) Cravath, Swaine & Moore LLP in respect of New York law, as to corporate authority only; (c) Shearman & Sterling in respect of New York law; (d) Richards, Layton & Finger, P.A. in respect of Delaware law; (e) Allen & Overy in respect of French law; (f) Orrick in respect of French law, as to corporate authority only; (g) Allen & Overy in respect of Dutch law; (h) Allen & Overy in respect of Belgian law; 8 (i) Bredin Prat, Paris office in respect of French law as to the document referred to in paragraph 11(b) above; (j) in-house counsel to Vivendi Universal S.A. and certain other members of the Group; and (k) in-house counsel to Vivendi Universal Games, Inc. 9 SCHEDULE 2 CONDITIONS SUBSEQUENT DOCUMENTS PART I 1. (a) Evidence that the High Yield Notes have been subscribed for, that the proceeds of the High Yield Notes have been irrevocably released and that the Company has actually and unconditionally received gross cash proceeds in an aggregate amount of not less than E 1,000,000,000. (b) A copy of the Escrow Release Certificate (as defined in the Description of Notes) signed by the Chief Financial Officer of the Company. 2. Evidence satisfactory to the Facility Agent that the Security Interests constituted by the Security Documents (as defined in the Credit Agreement as in force on the date of the date of this Agreement) have been released (other than the Security Interest evidenced by the Declaration de gage B with respect to the VE Shares), and that the Security Interests to be constituted by the Security Documents referred to in paragraph 11 of Schedule 1 have taken effect. 3. A certificate of an authorised signatory of the Obligors' Agent certifying that each copy document delivered under this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 10 PART II 1. Evidence that the Security Agent has received the following: (a) certificates representing the shares pledged pursuant to the U.S. Master Security Document accompanied by undated stock powers executed in blank and instruments evidencing all debt pledged pursuant to that document endorsed in blank; and (b) all notices, registration, filings and consents required for the registration or perfection of all Security Interests under the Security Documents, including, without limitation, financing termination statements which the Security Agent has deemed reasonably necessary in order to register/perfect such Security Interests. 2. A counterpart of the documents referred to in paragraphs 5(a) and 11 of Part I of Schedule 10 to the Restated Credit Agreement. 11 SCHEDULE 3 RESTATED CREDIT AGREEMENT AGREEMENT Dated 15th March, 2002 (and amended by an agreement dated 6th February, 2003, and further amended and restated by an agreement dated 13th, 2003) E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY for VIVENDI UNIVERSAL S.A. GUARANTEED BY THE GUARANTORS ARRANGED BY BARCLAYS CAPITAL BAYERISCHE LANDESBANK GIROZENTRALE BNP PARIBAS CREDIT AGRICOLE INDOSUEZ CREDIT LYONNAIS DEUTSCHE BANK AG SG INVESTMENT BANKING and SUMITOMO MITSUI BANKING CORPORATION with SOCIETE GENERALE as Facility Agent SOCIETE GENERALE as Security Agent ALLEN & OVERY London 12 INDEX

CLAUSE PAGE 1. Interpretation......................................... 14 2. Facility............................................... 45 3. Purpose................................................ 46 4. Conditions Precedent................................... 46 5. Drawdown............................................... 47 6. Repayment.............................................. 48 7. Prepayment and Cancellation............................ 49 8. Interest Periods....................................... 57 9. Interest............................................... 57 10. Optional Currencies.................................... 59 11. Payments............................................... 60 12. Taxes.................................................. 62 13. Market Disruption...................................... 63 14. Increased Costs........................................ 64 15. Illegality............................................. 65 16. Guarantee.............................................. 66 17. Representations and Warranties......................... 70 18. Undertakings........................................... 74 19. Financial Covenants.................................... 84 20. Default................................................ 91 21. The Facility Agent and the Mandated Lead Arrangers..... 95 22. Release of Security.................................... 103 23. Fees................................................... 105 24. Expenses............................................... 107 25. Stamp Duties........................................... 107 26. Indemnities............................................ 107 27. Evidence and Calculations.............................. 108 28. Amendments and Waivers................................. 109 29. Changes to the Parties................................. 111 30. Disclosure of Information.............................. 114 31. Set-Off................................................ 115 32. Pro Rata Sharing....................................... 115 33. Severability........................................... 116 34. Counterparts........................................... 116 35. Notices................................................ 117 36. Language............................................... 120 37. Jurisdiction........................................... 121 38. Waiver of Immunity..................................... 122 39. Waiver of Jury Trial................................... 122 40. Governing Law.......................................... 122

12 SCHEDULES 1. Part 1 - Banks and Commitments.......................................... 123 Part 2 - Original Guarantors............................................ 124 2. Conditions Precedent Documents.......................................... 125 Part 1 - to be delivered before the First Request....................... 125 Part 2 - to be delivered for the accession of a Subsidiary Borrower..... 127 Part 3 - To be delivered for the accession of a Subsidiary Guarantor.... 129 3. Form of Request......................................................... 131 4. Form of Novation Certificate............................................ 132 5. Effective Global Rate Letter............................................ 135 6. Calculation of the Mandatory Cost....................................... 137 7. Form of Confidentiality Undertaking..................................... 139 8. Borrower Accession Deed................................................. 142 9. Guarantor Accession Deed................................................ 143 10. Security Documents...................................................... 144 Part 1 - Non-U.S. Security Documents.................................... 144 Part 2 - U.S. Security Document......................................... 146 14 THIS AGREEMENT is dated 15th March, 2002, was amended by an agreement dated 6th February, 2003, amended and restated by an agreement dated 13th May, 2003 and is made BETWEEN: (1) VIVENDI UNIVERSAL S.A. for itself (in this capacity the "COMPANY") and as agent for the Obligors (in this capacity the "OBLIGORS' AGENT"); (2) THE COMPANIES listed in Part 2 of Schedule 1 (Original Guarantors) (the "ORIGINAL GUARANTORS"); (3) BARCLAYS CAPITAL, BAYERISCHE LANDESBANK GIROZENTRALE, BNP PARIBAS, CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS, DEUTSCHE BANK AG, SG INVESTMENT BANKING and SUMITOMO MITSUI BANKING CORPORATION as mandated lead arrangers (in this capacity, each a "MANDATED LEAD ARRANGER"); (4) THE FINANCIAL INSTITUTIONS listed in Part 1 of Schedule 1 as banks (the "BANKS"); (5) SOCIETE GENERALE as facility agent (in this capacity the "FACILITY AGENT"); and (6) SOCIETE GENERALE as security agent (in this capacity the "SECURITY AGENT"). IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS In this Agreement: "ACCOUNTS CERTIFICATE" means a certificate signed by the auditors of the Company delivered with the consolidated accounts of the Group delivered under Clause 18.2(a)(i) and (b)(i) (Financial information) setting out: (a) the following items, together with a detailed calculation thereof (including, without limitation, the calculation of the adjustments to exclude Vivendi Environnement S.A.): (i) EBITDA, Total Financial Debt, Net Financial Debt and Net Interest Expense (as each of those terms is defined in Clause 19 (Financial Covenants)); and (ii) the operating income (loss) or EBIT of the Group but adjusted to exclude Vivendi Environnement S.A., in each case as determined from those accounts; and (b) (if those accounts are prepared in accordance with accounting principles and practices generally accepted in France and not the U.S.A.) a reconciliation demonstrating the difference between those accounts and the same accounts had they been prepared in 14 accordance with accounting principles and practices generally accepted in the U.S.A., consistently applied. "ACQUIRED SHARES" means the shares of Cegetel (being 26 per cent. of the total share capital of Cegetel) acquired directly or indirectly by SIT from British Telecommunications plc on 22nd January, 2003. "AFFILIATE" means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company. "APPLICABLE MARGIN" means the rate determined as such from time to time in accordance with Clause 9.2 (Determination of Applicable Margin). "ASSETS" means all assets of the Group from time to time (a) excluding those assets referred to in the Back-up Original Liquidity Analysis in the section headed "Assets Disposal" but (b) including, for the avoidance of doubt, the assets referred to in the definition of Canal+ Disposal and the Games Disposal. "ASSETS DISPOSAL" means a disposal of any Asset (other than a Relevant Intra Group Disposal). "BACK-UP ORIGINAL LIQUIDITY ANALYSIS" means the liquidity analysis of the Group dated 24th November, 2002 delivered by the Company under a E1,000,000,000 revolving credit facility agreement dated 26th November, 2002. "BORROWER" means the Company or a Subsidiary Borrower. "BORROWER ACCESSION DEED" means a deed in the form of Schedule 8 with such amendments as the Facility Agent may approve or reasonably require. "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks are open for general business in Paris and London and: 16 (a) if on that day a payment in, or purchase of, a currency other than Euros is to be made, the principal financial centre of the country of that currency; and (b) if on that day a payment in or purchase of Euros is to be made, a TARGET Day. "CANAL+" means Canal+ S.A. "CANAL+ DISPOSAL" AND "CANAL+ DISPOSAL PROCEEDS AMOUNT" have the meanings given to those terms by the New Facility Agreement as in force at its date. "CASH POOLING ACCOUNT" means each bank account of: (a) the Company; (b) each Cash Pooling Hub; (c) each other member of the Group with which the Company has a direct lending relationship, but excluding: (i) VUE Borrower Co.; and (ii) prior to the VUE Date, any member of the VUE Group; and (d) each other bank account which is designated as such in writing by the Company and the Facility Agent, but excluding those bank accounts listed in Schedule 12 to the New Facility Agreement (as in force at its date). "CASH POOLING HUB" means each of: (a) the Company; (b) VUP; (c) Groupe Canal+; (d) UMGT; (e) VUHIC; (f) VTI; 17 (g) VU Canada; (h) on or after the Cegetel Cash Pooling Date, Cegetel; (i) on or after the Maroc Telecom Cash Pooling Date, Maroc Telecom; and (j) any other member of the Group designated as such in writing by the Company and the Facility Agent. "CASH POOLING HUB SECURITY" means the account pledge agreement or account charge agreement over: (a) each bank account of Vivendi Universal U.S. Holding Co.; and (b) each Cash Pooling Account, but excluding: (i) the Cash Pooling Accounts of UMGT, VU Canada and VUP; and (ii) the Cash Pooling Accounts referred to in paragraph (c) of the definition thereof. "CEGETEL" means Cegetel Groupe S.A. "CEGETEL CASH POOLING DATE" means the date on which all of the following events occur: (i) there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Cegetel, Transtel or any other member of the Cegetel Group or under the Non Recourse Financing in force at the date of this Agreement which restrict, or which would be triggered upon, the granting of a guarantee and Cash Pooling Hub Security pursuant to this Agreement; (ii) Cegetel has become a Guarantor under this Agreement and has granted Cash Pooling Hub Security; and (iii) Cegetel enters into the Cash Management and IGL Arrangements (as defined in the New Facility Agreement at its date) for the purpose of borrowing money from the Company or any Cash Pooling Hub. "CEGETEL DISPOSAL" means the disposal of all or any of the shares in, or assets or business of, any member of the Cegetel Group. 18 "CEGETEL GROUP" means Cegetel and each of its Subsidiaries (including, for the avoidance of doubt, SFR). "CEGETEL SHAREHOLDERS' AGREEMENT" means the shareholders' agreement among the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire, British Telecommunications plc, Mannesmann AG, SBC International, Inc., SBC International-Societe de Radiotelephonie Cellulaire Inc. and Cegetel dated as of 14th May, 1997 as amended from time to time. "CODE" means the United States Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "COMMITMENT" means: (a) in relation to a Bank which is a Bank on the date of this Agreement, the amount in Euros set opposite its name in Schedule 1 and the amount of any other Bank's Commitment acquired by it under Clause 29 (Changes to the Parties); and (b) in relation to a Bank which becomes a Bank after the date of this Agreement, the amount of any other Bank's Commitment acquired by it under Clause 29 (Changes to the Parties), to the extent not cancelled, reduced or transferred under this Agreement. "COMMITMENT PERIOD" means the period from the date of this Agreement up to and including the Final Maturity Date. "CONCENTRATION ACCOUNTS" means the Euro-denominated account (number 30003-03175-00020262579/77) and the US dollar-denominated account (number 30003-03175-03020103534/54) of the Company held with, or to be opened with, Societe Generale Agence Paris-Etoile-Entreprises, 33 avenue de Wagram, BP 963, 75017 Paris, France, the sterling-denominated account (number 30588-60001-81504592601/30) held with Barclays, 45 boulevard Haussmann, 75008 Paris and the Canadian Dollar-denominated account (number 30007-99999-043747000CA/04), the Danish Krone-denominated account (number 30007-99999-043747000DK/04), the Yen-denominated account (number 30007-99999-043747000JP/04), the Norwegian Krone-denominated account (number 30007-99999-043747000NO/04), the New Zealand Dollar-denominated account (number 30007-99999-043747000NZ/04), the Swedish Krona-denominated account (number 30007-99999-043747000SE/04), the Singaporean Dollar-denominated account (number 30007-99999-043747000SG/04), the Hong-Kong Dollar-denominated account (number 30007-99999-043747000HK/04), the Swiss Franc-denominated account (number 30007- 19 99999-043747000FS/04), the Australian Dollar-denominated account (number 30007-99999-043747000AU/04), the Mexican Peso-denominated account (number 30007-99999-043747000MX/04), the Czech Koruna-denominated account (number 30007-99999-043747000CZ/04) (each, held with Natexis Banques Populaires, Gestion des flux Entreprises, 10/12, avenue Winston Churchill, Boite Postale 4, 94677 Charenton-le-Pont Cedex). "CONSENTING BANK" means each Bank which gave its consent to either or both of: (a) the waivers and consents set out in the letter dated 19th September, 2002 from the Company to the Facility Agent in connection with this Agreement; or (b) the waivers and consents set out in the letter dated 15th November, 2002 from the Company to the Facility Agent in connection with this Agreement, and, to the extent of the Commitment so acquired, any Bank which acquires a Commitment from a Consenting Bank under Clause 29 (Changes to the Parties). "DEFAULT" means an Event of Default or an event which, with the giving of notice, expiry of any applicable grace period, determination of materiality or fulfilment of any other applicable condition (or any combination of the foregoing), would constitute an Event of Default. "DISPOSAL" means an Assets Disposal, a Cegetel Disposal, a SIT Disposal or a VE Shares Disposal. "DRAWDOWN DATE" means the date of the advance of a Loan. "EFFECTIVE DATE" has the meaning given to it in the Restatement Agreement. "ENVIRONMENT" means all, or any of, the following media: the air (including the air within buildings and the air within other natural or man-made structures above or below ground), water (including, without limitation, ground and surface water) and land (including, without limitation, surface and sub-surface soil). "ENVIRONMENTAL LAW" means any law or regulation relating to the Environment or to emissions, discharges or releases of substances or wastes into the Environment or otherwise relating to the handling of substances or wastes or the clean-up or remediation thereof. 20 "EQUITY ISSUE" means any issue of rights, shares or equity instruments of any kind (including for the avoidance of doubt debt instruments that are redeemable only in shares and which do not in any circumstances give rise to redemptions or repayments (whether in whole or in part) in cash), made or entered into by any member of the Group (but in relation to any member of the Cegetel Group, Transtel, and SIT prior to the SIT Repayment Date in relation to secondary Equity Issues only) but excluding: (a) (without double counting) any such issue, the proceeds of which constitute VUE Excluded Equity Issue Proceeds or the amount of the VUE Retention; (b) (without double counting) any such issue, the proceeds of which constitute the Canal+ Disposal Proceeds Amount; (c) (without double counting) any such issue, the proceeds of which constitute the Games Disposal Proceeds Amount; (d) any such issue made or entered into pursuant to a Relevant Intra Group Disposal or entered into pursuant to an employee share purchase plan; (e) any such issue made or entered into by any member of the Maroc Telecom Group; and (f) any such issue which forms part of the VU/SIT Loan (as defined in the New Facility Agreement as at its date). "EURIBOR" means: (a) the rate per annum which appears on Page EURIBOR 01 on the Reuters Screen; or (b) if no such rate is available for the relevant period, the rate (expressed as a percentage) determined by the Facility Agent to be the arithmetic mean of the rates per annum (rounded upwards to four decimal place) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. on the applicable Rate Fixing Day for the offering of deposits in Euros for a period comparable to the Interest Period of the relevant Loan and in this definition "PAGE EURIBOR 01" means the display designated as Page EURIBOR 01 on the Reuters Screen (or such other pages as may replace Page EURIBOR 01 on that service or such other service as may be nominated by the Banking Federation of the European Union (including the Reuters Monitor Money Rates Service) as the information vendor for the purposes of displaying Banking Federation of the European Union Interest Settlement Rates for deposits in Euro). 21 "EURO" OR "E" means the single currency of the Participating Member States. "EVENT OF DEFAULT" means an event specified as such in Clause 20 (Default). "EXCLUDED MUSIC GROUP ENTITY" means each of: (a) Centenary Delta B.V. and all non-U.S. subsidiaries thereof; and (b) UPIH 2 BV, if such entity will become a Foreign Subsidiary or will be held (directly or indirectly) by Universal Studios Holding I Corp, as a result of the Music Group Reorganisation. "EXISTING CEGETEL SHARES" means the share capital owned, directly or indirectly, by members of the Group (other than SII) in Cegetel at the Effective Date, representing not less than 43 per cent. of all of Cegetel's share capital. "FACILITY" means the credit facility made available under this Agreement. "FACILITY DISCHARGE DATE" means the date on which the Facility Agent (acting on the instructions of all the Lenders) notifies the Obligors' Agent in writing that all amounts outstanding under or in connection with the Facility have been irrevocably and unconditionally paid or discharged in full and the Total Commitments have been cancelled in full. "FACILITY OFFICE" means the office(s) notified by a Bank to the Facility Agent: (a) on or before the date it becomes a Bank; or (b) by not less than five Business Days' prior notice, as the office(s) through which it will perform all or any of its obligations under this Agreement. 22 "FEE LETTER" means each letter dated the date of this Agreement between the Mandated Lead Arrangers and the Company (the "ARRANGEMENT FEE LETTER") and the Facility Agent and the Company (the "AGENCY FEE LETTER") setting out the amount of various fees referred to in Clause 23 (Fees). "FINAL MATURITY DATE" means the date which is the fifth anniversary of the date of this Agreement or, if that is not a Business Day, the immediately preceding Business Day. "FINANCE DOCUMENT" means: (a) this Agreement; (b) a Fee Letter; (c) a Borrower Accession Deed; (d) a Guarantor Accession Deed; (e) a Novation Certificate; or (f) any other document designated as such by the Facility Agent and the Obligors' Agent. "FINANCE PARTY" means a Mandated Lead Arranger, a Bank, the Facility Agent or the Security Agent. "FINANCIAL INDEBTEDNESS" means any indebtedness in respect of: (a) moneys borrowed; (b) any debenture, bond, note, loan stock or other security; (c) any acceptance credit; (d) receivables sold or discounted (otherwise than on a non-recourse basis); (e) the acquisition cost of any asset to the extent payable before or after the time of acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; 23 (f) any lease (including, without limitation, an operation de credit-bail) entered into primarily as a method of raising finance or financing the acquisition of the asset leased; (g) any currency swap or interest swap, cap or collar arrangements or any other derivative instrument; (h) any amount raised under any other transaction having as a primary purpose the borrowing or raising of money; or (i) any guarantee, indemnity or similar assurance against financial loss of any person. "FOREIGN SUBSIDIARY" means any subsidiary of any U.S. Obligor which is a controlled foreign corporation within the meaning of the Code. "GAMES" means the games business of Vivendi Universal Games, Inc. and Universal Interactive, Inc. and their respective Subsidiaries. "GAMES DISPOSAL AND "GAMES DISPOSAL PROCEEDS AMOUNT" have the meanings given to those terms in the New Facility Agreement as in force at its date. "GROUP" means the Company and its Subsidiaries (but, for the avoidance of doubt, while VE is not a Subsidiary of the Company, excluding any member of the VE Group). "GROUPE CANAL+" means Groupe Canal+ S.A. "GUARANTOR" means an Original Guarantor or a Subsidiary Guarantor. "GUARANTOR ACCESSION DEED" means a deed in the form of Schedule 9 with such amendments as the Facility Agent may approve or reasonably require. "HIGH YIELD NOTES" means the US$935,000,000 9.25% senior notes due 2010 and the E325,000,000 9.50% senior notes due 2010 issued by the Company on 8th April, 2003 pursuant to the Indenture. 24 "HOLDING COMPANY" means in relation to a person, an entity of which that person is a Subsidiary. "INDENTURE" means the indenture dated 8th April, 2003 entered into by the Company with respect to which the High Yield Notes have been or are to be issued. "INFORMATION MEMORANDUM" means the Information Memorandum dated January, 2002 and prepared by the Company in connection with this Agreement (as supplemented or amended from time to time). "INTEREST PERIOD" means each period determined in accordance with Clause 8 (Interest Periods). "INTRA GROUP LOAN" means, at any time, an Intra Group Loan for the purposes of the New Facility Agreement, as in force at its date. "INVESTMENT DOWNGRADING DATE" means a date on which the Company ceases to have an Investment Grade Rating. "INVESTMENT GRADE RATING" means each of a long term unsecured credit rating of Baa3 or better by Moody's and a long term unsecured credit rating of BBB- or better by S&P. "INVESTMENT GRADE RATING DATE" means a date on which the Company obtains an Investment Grade Rating. "JOINT VENTURES" means all joint venture entities (not being a member of the Group) whether a company, unincorporated firm, undertaking, joint venture, association, partnership or other entity in which any member of the Group has an interest from time to time. "LIBOR" means: (a) the rate per annum which appears on Page LIBOR 01 on the Reuters Screen; or (b) if no such rate appears on the Reuters Screen, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, 25 quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. London time on the applicable Rate Fixing Day for the offering of deposits in the currency of the relevant Loan for a period comparable to the relevant Interest Period, and in this definition "Page LIBOR 01" means the display designated as Page LIBOR 01 on the Reuters Screen (or such other pages as may replace Page LIBOR 01 on that service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purposes of displaying British Bankers' Association Interest Settlement Rates for deposits in that currency). "LIQUIDITY ANALYSIS" means a forecast for the Group (excluding for the purposes (other than in relation to dividends) any member of the Maroc Telecom Group and the Cegetel Group and SIT) (and provided in excel form) setting out: (a) projections of the Group's cashflows for the period from the date of the forecast to: (i) except during a Release Condition Period, the Final Maturity Date; and (ii) during a Release Condition Period, a date which is one year from the date of such Liquidity Analysis, in each case as follows: (A) a monthly breakdown of the Group's projected cashflows for a period of six months from the date of the forecast; (B) thereafter a quarterly breakdown of the Group's projected cashflows for the period of the next nine months or for the remaining period of the forecast; and (C) thereafter a semi-annual breakdown of the Group's projected cashflows for the remaining period of the forecast, if any; and (b) a reconciliation statement between the actual cashflows of the Group for the period elapsed since the date of the preceding Liquidity Analysis and the projected cashflows of the Group for that period contained in that Liquidity Analysis together with reasons for any deviations (other than deviations of an immaterial nature) demonstrated by such reconciliation statement. "LOAN" means the principal amount of each borrowing by a Borrower under this Agreement or the principal amount thereof from time to time outstanding. "MAJORITY BANKS" means, at any time, Banks: 26 (a) whose participations in the Loans then outstanding and whose undrawn Commtiments then aggregate 66 2/3 per cent. or more of all the Loans then outstanding; or (b) if there are no Loans then outstanding, whose Commitments then aggregate 66 2/3 per cent. or more of the Total Commitments; or (c) if there are no Loans then outstanding and the Total Commitments have been reduced to nil, whose Commitments aggregated 66 2/3 per cent. or more of the Total Commitments immediately before the reduction. "MANDATORY COST" means the cost imputed to the Banks of compliance in relation to this Agreement with: (a) the cash ratio and special deposit requirements of the Bank of England and/or the banking supervision or other costs imposed by the United Kingdom Financial Services Authority, all as determined in accordance with Schedule 6; and (b) any reserve asset requirements of the European Central Bank. "MAROC TELECOM" means Maroc Telecom S.A. "MAROC TELECOM CASH POOLING DATE" means the date on which all of the following events occur: (i) there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders of Maroc Telecom in force at the date of this Agreement or under a Maroc Telecom Excluded Financing which restrict, or which would be triggered upon, the granting of a guarantee and Cash Pooling Hub Security pursuant to this Agreement; (ii) Maroc Telecom has become a Guarantor under this Agreement and has granted Cash Pooling Hub Security; and (iii) Maroc Telecom enters into the Cash Management and IGL Arrangements (as defined in the New Facility Agreement as in force at its date) for the purpose of borrowing money from the Company or any Cash Pooling Hub. "MAROC TELECOM DATE" means the date upon which the Company owns no less than 51 per cent. of the shares in Maroc Telecom pursuant to an acquisition permitted under this Agreement, unless such acquisition is financed by a Maroc Telecom Excluded Financing (as defined in the New Facility Agreement at its date). 27 "MAROC TELECOM GROUP" means Maroc Telecom and its Subsidiaries. "MAROC TELECOM SHAREHOLDERS AGREEMENT" means the Convention d'actionnaires among the Company, Le Gouvernement du Royaume de Maroc and Itissalat Al-Maghrib executed by the Company on 20th December, 2000, as amended from time to time. "MASTER SECURITY AGREEMENT" means the pledge and security agreement substantially in the form initialled on or about the date of the New Facility Agreement by the Obligor's Agent and the Facility Agent or otherwise in the agreed form between the Grantors (as defined therein) and the Facility Agent. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the ability of any Obligor to perform any of its payment obligations or to perform any other of its material obligations under any of the Finance Documents. "MATERIAL SUBSIDIARY" means, at any time: (a) any Subsidiary Borrower or any Subsidiary Guarantor; and (b) any other Subsidiary of the Company which is consolidated by way of global integration (integration globale) in the audited consolidated accounts of the Group: (i) whose total assets (consolidated in the case of a Subsidiary which itself has a Subsidiary) represent not less than 5 per cent. of consolidated total assets of the Group (as shown in the then latest consolidated accounts of the Group); and/or (ii) whose operating profits (after adding back amortisations, depreciation and recoveries limited to ordinary operations) (consolidated in the case of a Subsidiary which itself has a Subsidiary) represent not less than 5 per cent. of EBITDA (as defined in Clause 19.1) (Financial covenant definitions) (as shown in the then latest consolidated accounts of the Group), in the case of a Subsidiary, as calculated from the then latest accounts (consolidated or, as the case may be, unconsolidated), audited if prepared, of that Subsidiary; and (c) any other Subsidiary of the Borrower (the "RECEIVING SUBSIDIARY") to which after the date of the latest audited consolidated accounts of the Group is transferred either: 28 (i) all or substantially all the assets of another Subsidiary which immediately prior to the transfer was a Material Subsidiary (the "DISPOSING SUBSIDIARY"); or (ii) sufficient assets that the receiving Subsidiary would have been a Material Subsidiary had the transfer occurred on or before the date of the latest audited consolidated accounts of the Group; in the case of (i) above the disposing Subsidiary shall forthwith upon the transfer taking place cease to be a Material Subsidiary. "MATSUSHITA SHAREHOLDER AGREEMENTS" MEANS: (a) the stockholder's agreement among Centenary Holding N.V., MHI Investment Corporation and Centenary International B.V. (formerly Seagram International B.V.) dated as of 9th December, 1998, as amended from time to time; and (b) the amended and restated stockholders' agreement among Universal Studios Holding I Corp., MEI Holding Inc., Vivendi Universal Canada Inc. (formerly known as The Seagram Company Ltd.) and Vivendi Universal Holding IV Corp. (formerly known as Seagram Developments Inc.) dated as of 9th December, 1998, as amended from time to time. "MATURITY DATE" means the last day of the Interest Period of a Loan. "MOODY'S" means Moody's Investors' Services, Inc. "MUSIC GROUP" means all of the entities under the common ownership of the Company which engage in the acquisition, manufacture, marketing, sale and distribution of recorded music and music publishing. "MUSIC GROUP REORGANISATION" has the meaning given to that term in the New Facility Agreement as in force at its date. "NET ASSETS DISPOSAL PROCEEDS" means, in relation to any Assets Disposal (other than in relation to the VE Shares Disposal, any Cegetel Disposal and any SIT Disposal) made prior to an Investment Grade Rating Date (subject always to Clause 7.4), the amount of: 29 (g) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn out provisions) as consideration for a disposal of any Asset including (without double counting) the amount of any Intra Group Loan or VUE Loan (in respect of which a member of the Group being sold pursuant to such disposal is the borrower under that Intra Group Loan or VUE Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (h) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (i) any other amount actually received or recovered by a member of the Group in cash under any sale and purchase agreement and/or ancillary documents relating to such disposal, in each case, net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; (ii) in the case of a disposal of all or part of the interests held by any member of the Group in VUE or any Subsidiary of VUE or of any other asset of VUE or any Subsidiary of VUE, net of any tax indemnity due and payable by the Company to USAi or payment in lieu thereof pursuant to the arrangements relating thereto in force at the date of the New Facility Agreement; and (iii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.13 (Timing of mandatory prepayments and cancellations and Receipt Account) of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement, but excluding: (A) (without double counting) any VUE Excluded Disposal Proceeds and any VUE Retention; (B) (without double counting) any such proceeds constituting the Canal+ Disposal Proceeds Amount; and (C) (without double counting) any such proceeds constituting the Games Disposal Proceeds Amount. 30 For the purposes of this definition, the amount of proceeds actually received by a member of the VUE Group pursuant to any Film Rights Securitization (as defined in the VUE Bridge Extension) shall be equal to the amount of such proceeds as calculated in accordance with the definition of Net Proceeds in the VUE Bridge Extension. For the purposes of any mandatory prepayment, no less than 70 per cent. of the Net Assets Disposal Proceeds for any disposal of any member of the VUE Group or the Music Group will be deemed to have been paid in cash at the time of such disposal, notwithstanding that less than this amount may actually have then been received. "NET CEGETEL DISPOSAL PROCEEDS" means, in relation to any Cegetel Disposal made prior to an Investment Grade Rating Date (subject always to Clause 7.4): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn-out provisions) as consideration for such disposal including (without double-counting) the amount of any Intra Group Loans (in respect of which a member of the Group being sold pursuant to such disposal is a borrower under that Intra Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal; in each case net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; and (ii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7.13 of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement. "NET DIVIDEND PROCEEDS" means the amount of any cash dividend (net of any Taxes paid by the Company in relation to such dividend) declared by the Company prior to an Investment Grade Rating Date (subject always to Clause 7.4) on or in respect of its share capital. 31 "NET EQUITY ISSUE PROCEEDS" means, in relation to an Equity Issue made prior to an Investment Grade Rating Date (subject always to Clause 7.4), any proceeds received in cash by or for the account of any member of the Group net of any Taxes, or reasonable third party costs and expenses payable in connection with that Equity Issue. "NET PROCEEDS" means Net Dividend Proceeds, Net Assets Disposal Proceeds, Net VE Shares Disposal Proceeds, Net Cegetel Disposal Proceeds, Net SIT Disposal Proceeds or Net Equity Issue Proceeds, as the context requires. "NET SIT DISPOSAL PROCEEDS" means, in relation to any SIT Disposal made prior to an Investment Grade Rating Date (subject always to Clause 7.4): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn-out provisions) as consideration for such disposal including (without double-counting) the amount of any Intra Group Loans (in respect of which a member of the Group being sold pursuant to such disposal is the borrower under that Intra Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; (b) any non-cash consideration actually received by a member of the Group under any sale and purchase agreement relating to such disposal; and (c) any other amount actually received or recovered by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal; in each case net of: (i) any Taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery; and (ii) the aggregate amount of any indemnity or breach of warranty claims under any sale and purchase agreement and/or ancillary documents related to any disposal actually paid by a member of the Group provided always that the maximum aggregate amount of any such deduction in respect of any disposal shall not exceed 10 per cent. of the aggregate of all amounts referred to in paragraphs (a) to (c) above in respect of all disposals which are made in accordance with this Agreement on or prior to the date for payment pursuant to Clause 7 (Prepayment and Cancellation) of the proceeds which are the subject of such deduction and provided further that no Finance Party shall be under any obligation to repay or reimburse any Net Proceeds (or corresponding amounts) prepaid under this Agreement, 32 to the extent such amounts are not used to repay the Non Recourse Financing in accordance with its terms. "NET VE SHARES DISPOSAL PROCEEDS" means, in relation to the disposal of VE Shares made prior to an Investment Grade Rating Date (subject always to Clause 7.4): (a) the cash proceeds or purchase consideration actually received in cash by a member of the Group (including, without limitation, pursuant to earn out provisions) as consideration for such disposal including without double counting the amount of any Intra Group Loan (in respect of which a member of the Group being sold pursuant to such disposal is the borrower under that Intra Group Loan) which is repaid to continuing members of the Group using funds obtained from outside the Group; and (b) any other amount actually received or recovered by a member of the Group under any sale and purchase agreement and/or ancillary documents related to such disposal, in each case net of any taxes and reasonable third party costs and expenses incidental or fairly attributable to the disposal, receipt or recovery. "NEW FACILITY AGREEMENT" means the E2,500,000,000 credit agreement dated or to be dated on or about the Effective Date and made between the Company, as borrower, Societe Generale as facility agent and others. "NEW INVESTORS" has the meaning given to it in the VE Share Pledge and Escrow Agreement. "NON RECOURSE FINANCING" means the E1,300,000,000 facility agreement between SIT and certain banks dated 6th December, 2002. "NON-VUE GROUP" means the Group excluding the VUE Group. "NOVATION CERTIFICATE" has the meaning given to it in Clause 29.3 (Procedure for novations). "OBLIGOR" means each of the Company, each Borrower and each Guarantor. 33 "OPTIONAL CURRENCY" means Sterling, United States Dollars, Japanese Yen and any other currency (other than Euros) which is for the time being freely transferable and convertible into Euros, deposits of which are readily available in the European interbank market and which has been approved in writing by the Facility Agent (acting on the instructions of all the Banks). "ORIGINAL EURO AMOUNT" in relation to a Loan, means: (a) if that Loan is denominated in Euros, the amount of that Loan; or (b) if that Loan is denominated in an Optional Currency, the equivalent in Euros of the amount of that Loan at the Spot Rate of Exchange three Business Days before its Drawdown Date. "ORIGINAL GROUP ACCOUNTS" means the audited consolidated accounts of the Group for the year ended 31st December, 2000. "ORIGINAL LIQUIDITY ANALYSIS" means a liquidity analysis of the Group dated 2nd April, 2003. "PARTICIPATING MEMBER STATE" means a member state of the European Community that adopts or has adopted the Euro as its currency in accordance with legislation of the European Union relating to European Economic and Monetary Union. "PARTY" means a party to this Agreement. "PERMITTED JOINT VENTURE" means a Joint Venture in which only a member of the VUE Group, a member of the Music Group or Studio Canal has an interest, the primary purpose of which is to acquire Product or interests therein (including distribution rights) in the ordinary course of business and which does not, or could not reasonably be expected to, have a Material Adverse Effect (as defined in the New Facility Agreement at its date) or to jeopardise the guarantees given to the Banks under the Finance Documents or the Banks' security under the Security Documents. "PRODUCTS" means any music (including mail order music), music copyright, motion picture, television programming, film, videotape, video clubs, DVD manufactured or distributed or any other 34 product produced for theatrical, non-theatrical or television release or for release in any other medium, in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter developed, with respect to which a member of the Group: (a) is an initial copyright owner; or (b) acquires (or will acquire upon delivery) an equity interest or distribution rights. "PROJECT FINANCE INDEBTEDNESS" means any Financial Indebtedness to finance a project incurred by a member of the Group (the "RELEVANT GROUP MEMBER") which has no activities or material assets other than those comprised in the project and in respect of which the person to whom that Financial Indebtedness is owed by the relevant Group member has no recourse whatsoever to any member of the Group for the repayment of or payment of any sum relating to that Financial Indebtedness other than: (a) recourse to the relevant Group member for amounts limited to its interest in the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from the project; and/or (b) recourse to the relevant Group member for the purpose only of enabling amounts to be claimed in respect of that Financial Indebtedness on an enforcement of any Security Interest given by the borrower over the assets comprised in that project to secure the Financial Indebtedness; and/or (c) recourse to a shareholder of the relevant Group member for the purpose only of enforcement of any Security Interest given by that shareholder over shares (or the like) of the borrower to secure that Financial Indebtedness. "RATE FIXING DAY" means: (a) the second Business Day before the first day of the Interest Period for a Loan; or (b) in the case of a Loan in Euros only, the second TARGET Day before the first day of the Interest Period for that Loan; or (c) in the case of a Loan in Sterling only, the first day of the Interest Period for that Loan, or, in each case, such other day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in the relevant currency for delivery on the first day of the relevant Interest Period, as determined by the Facility Agent. "RECEIPT ACCOUNT" means an interest bearing blocked and secured account in France in the name of the Security Agent. 35 "REFERENCE BANKS" means, subject to Clause 29.6 (Reference Banks), the Facility Agent, BNP Paribas and Deutsche Bank Luxembourg S.A. "RELEASE CONDITION DATE" means a date on which the Facility Agent (acting on the instructions of the Majority Banks (not to be unreasonably delayed)) notifies the Obligors' Agent that each of the following conditions has been fulfilled: (a) the Company has an Investment Grade Rating for a continuous period of 90 days; and (b) the Facility Agent has received a certificate signed by two officers of the Company, one of whom shall be the Chief Executive Officer or the Chief Financial Officer of the Company, confirming that during such continuous period of 90 days referred to in (a) above, no Default has occurred and is continuing. "RELEASE CONDITION PERIOD" means each period of time: (a) commencing on a Release Condition Date; and (b) ending on the Business Day immediately prior to the next Investment Downgrading Date to occur. "RELEVANT INTRA GROUP DISPOSAL" means the disposal of an asset: (a) by an Obligor to another Obligor which could not reasonably be expected to have a Material Adverse Effect or to jeopardise the guarantees given to the Banks under the Finance Documents or the Banks' security under the Security Documents; (b) by a member of the Group which is not an Obligor to an Obligor; (c) by a member of the Group which is not an Obligor (the "TRANSFEROR") to another member of the Group which is not an Obligor (the "TRANSFEREE") where the percentage of the share capital of the Transferee owned by the Company (directly or indirectly) is not less than the percentage of the share capital of the Transferor owned by the Company (directly or indirectly); (d) between a member of the Non-VUE Group and any member of the VUE Group, but only (notwithstanding paragraphs (a) to (c) above) for cash management purposes in accordance with the New Facility Agreement (so long as it is in force) or VUE Excluded Disposals, or any disposal of cash inherent in Excluded Financial Indebtedness, as defined in the New Facility Agreement at its date; 36 (e) by way of a transaction permitted pursuant to sub-paragraphs (b)(iv) or (v) of clause 19.18 (Mergers and acquisitions) of the New Facility Agreement; or (f) pursuant to the Music Group Reorganisation. "REQUEST" means a request made by the Obligors' Agent for a Loan, substantially in the form of Schedule 3. "RESTATEMENT AGREEMENT" means an amendment and restatement agreement relating to this Agreement, dated 13th May, 2003 and made between the Company, the Facility Agent and others. "S&P" means Standard & Poor's Corporation. "SECURITY AGENT" means Societe Generale as security agent, appointed under the Security Sharing Agreement (including, as the context requires, its permitted successors and assigns). "SECURITY DOCUMENT" means each document listed in Schedule 10 (Security Documents), the security document required under Clause 7.14(m) (Miscellaneous provisions) and any other documents designated as such by the Facility Agent and the Obligors' Agent. "SECURITY INTEREST" means any: (a) hypotheque, nantissement, privilege, cession de creance par bordereau Dailly, "gage-especes" any surete reelle or droit de retention; or (b) other mortgage, pledge, lien, charge (whether fixed or floating), assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security. "SECURITY RELEASE CONDITION DATE" means the date on which the Security Agent (acting on the instructions of the Majority Banks (not to be unreasonably delayed)) notifies the Obligors' Agent and the Facility Agent that each of the following conditions has been fulfilled: (a) the Company has an Investment Grade Rating for a continuous period of 180 days; and 37 (b) the Facility Agent has received a certificate signed by two officers of the Company, one of whom shall be its Chief Executive Officer or the Chief Financial Officer of the Company, confirming that during such continuous period of 180 days referred to in (a) above, no Default has occurred and is continuing. "SECURITY RELEASE CONDITION PERIOD" means each period of time: (a) commencing on a Security Release Condition Date; and (b) ending on the Business Day immediately prior to the next Investment Downgrading Date to occur. "SECURITY SHARING AGREEMENT" means the agreement between, inter alia, the Company, the Banks, the lenders under the New Facility Agreement and the Security Agent, dated on or about the Effective Date. "SFR" means Societe Francaise du Radiotelephone S.A. "SFR SHAREHOLDERS' AGREEMENT" means the shareholders' agreement among the Company, Compagnie Financiere pour le Radiotelephone, Vodafone Europe Holdings B.V., Vodafone France and Vodafone Group plc dated as of 10th October, 1994 as amended from time to time. "SIT" means Societe d'Investissement pour la Telephonie S.A. "SIT DISPOSAL" means the disposal of all or any of the shares in, or assets or business of, SIT. "SIT REPAYMENT DATE" means the date on which the Non Recourse Financing is repaid (or prepaid) and cancelled in full. "SPOT RATE OF EXCHANGE" means the European Central Bank fixing rate for the notional purchase of the relevant Optional Currency with Euros at or about 11.00 a.m. on a particular day (or, if no such rate is available, the Facility Agent's spot rate of exchange for that notional purchase at or about that time). 38 "STERLING" OR "L" means the lawful currency for the time being of the United Kingdom. "STUDIO CANAL" means Studio Canal S.A. "SUBORDINATION AGREEMENT" means each of: (a) a subordination agreement dated on or about the date of the Amendment Agreement, governed by English law and made between the Obligor's Agent, the Security Agent and others; (b) a subordination agreement dated on or about the date of the Amendment Agreement governed by New York law and made between the Obligor's Agent, the Security Agent and others; and (c) any other document which is a Subordination Agreement under and as defined in the New Facility Agreement, and any other document designated in writing as such by the Facility Agent and the Obligors' Agent. "SUBSIDIARY" means a person from time to time of which a person has direct or indirect control (in the case of a company incorporated in France, within the meaning of Article L.233-3 I.1 and I.2 of the Nouveau Code de Commerce (as the same is in force on the date of this Agreement)) or which owns directly or indirectly more than fifty per cent. (50%) of the share capital or similar right of ownership or voting power. "SUBSIDIARY BORROWER" means any direct or indirect Subsidiary of the Company which becomes a Borrower in accordance with Clause 29.4 (Accession of Subsidiary Borrower). "SUBSIDIARY BORROWER LIMIT" means the aggregate principal amount of Loans which a Subsidiary Borrower may at any one time have outstanding, as stated in the Borrower Accession Deed for that Subsidiary Borrower. 39 "SUBSIDIARY GUARANTOR" means any direct or indirect Subsidiary of the Company which becomes a Guarantor in accordance with Clause 29.5 (Accession of Subsidiary Guarantor). "SUPER MAJORITY BANKS" means at any time, Banks: (a) whose share in the Original Euro Amount of outstanding Loans and whose undrawn Commitments then aggregate 85 per cent. or more of the aggregate of Original Euro Amount of all outstanding Loans and the undrawn Commitments of all the Lenders; (b) if there is no Loan outstanding, whose undrawn Commitments then aggregate 85 per cent. or more of the Total Commitments; or (c) if there is no Loan then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 85 per cent. or more of the Total Commitments immediately before the reduction. "TARGET DAY" means a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open. "TAX" means any tax, levy, impost, duty or other charge, deduction or withholding of a similar nature (including any related penalty or interest payable in connection with any failure to pay or delay in paying any of the same). "TOTAL COMMITMENTS" means the aggregate for the time being of the Commitments, being E3,000,000,000 at the date of this Agreement. "TRANSTEL" means Transtel S.A. "TRANSTEL SHAREHOLDERS AGREEMENT" means the shareholders' agreement among the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire, Societe de Radiotelephonie Cellulaire, SBC International Inc., and SBC International - Societe de Radiotelephonie Cellulaire Inc. dated as of May 14, 1997, as amended from time to time. "UMGT" means Universal Music Group Treasury S.A.S. 40 "USAI" means USA Interactive Inc. "UPIH 2BV" means Universal Pictures International Holdings II B.V. "VE" means Veolia Environment S.A. (formerly known as Vivendi Environnement S.A.). "VE B SHARES" means each or any of "Actions B" as defined in the VE Shares Pledge and Escrow Agreement. "VE GROUP" means VE and its Subsidiaries. "VE SHARES" means the shares in the issued share capital of VE owned directly or indirectly by the Company (being, at the Effective Date, 20.4 per cent of those shares less any shares which have, prior to the Effective Date, been the subject of an exercise of a call option under an acquisition and subscription agreement dated 24th June, 2002 and made between the Company and certain financial institutions named therein, as amended from time to time). "VE SHARES DISPOSAL" means a disposal by the Company of any VE Shares. "VE SHARE PLEDGE AND ESCROW AGREEMENT" means the escrow and share pledge agreement dated 24th November, 2002 entered into by the Company, VE and the Escrow Agent, Account Holder and Calculation Agent and New Investors (each as defined therein) with respect to security over the VE Shares, as amended on 7th February, 2003 and as may be further amended from time to time. "VTI" means Vivendi Telecom International S.A. "VU CANADA" means Vivendi Universal Canada, Inc. "VUE" means Vivendi Universal Entertainment LLLP. 41 "VUE BORROWER CO" means VU-VUE Holding Partnership LLP, a Delaware limited liability partnership. "VUE BRIDGE EXTENSION" means the U.S.$1,620,000,000 amended and restated agreement dated as of 25th November, 2002 granted in favour of VUE as amended, supplemented or otherwise modified. "VUE BRIDGE REFINANCING" means an issue or issues of debt instruments (including any debt, bank or capital markets issue or securitisation by any member of the VUE Group (or any trust or other entity established for the purposes of a securitisation)) in an aggregate principal amount of no more than U.S.$1,620,000,000 (net of reserves required to be funded with, or fees payable with, the proceeds thereof), for the purpose of raising finance solely in order to refinance (in full or in part) the VUE Bridge Extension and any refinancing or refinancings thereof. "VUE DATE" has the meaning given to that term in the New Facility Agreement as in force at its date. "VUE EXCLUDED DISPOSAL" has the meaning given to that term in the New Facility Agreement as in force at its date. "VUE EXCLUDED DISPOSAL PROCEEDS" means, prior to the VUE Date, any proceeds from the disposal of any assets of any member of the VUE Group (i) being the disposal of proceeds under the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing; (ii) which are required to be applied by way of mandatory prepayment or cash collateral to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds the distribution of which is otherwise restricted pursuant to the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing but not including any such proceeds required to be so applied on or prior to the VUE Date but not so applied on or prior to the VUE Date; or (iii) which are received pursuant to a VUE Excluded Disposal. "VUE EXCLUDED EQUITY ISSUE PROCEEDS" means, prior to the VUE Date, in relation to a VUE equity issue, any proceeds required to be applied by way of mandatory prepayment or cash collateral of the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds the distribution of which is otherwise restricted pursuant to the VUE Bridge Extension, any VUE Bridge Refinancing, or VUE Incremental Indebtedness but not including any such proceeds required to be so applied on or prior to the VUE Date and not so applied on or prior to the VUE Date. 42 "VUE FOREIGN LENDER" has the meaning given to that term in the New Facility Agreement as in force at its date. "VUE GROUP" means VUE and each of its Subsidiaries. "VUE INCREMENTAL INDEBTEDNESS" means debt proceeds raised by VUE or its Subsidiaries up to an aggregate outstanding amount at any time of U.S.$600,000,000 (or equivalent in other currencies) which (i) is without recourse as to security or guarantees from the Company or any other member of the Non-VUE Group, (ii) the terms of which, in respect of the making of any distributions in cash or loans or otherwise disposing of assets by any member of the VUE Group to a person outside the VUE Group is no more restrictive than the terms of the VUE Bridge Extension or VUE Bridge Refinancing and (iii) does not contain any restriction or prohibition which conflict with this Agreement or the VUE Bridge Refinancing. "VUE LOAN" has the meaning given to that term in the New Facility Agreement as in force at its date. "VUE PARTNERSHIP AGREEMENT" means the agreement entered into as of 7th May, 2002 between the partners of VUE (amended by an agreement dated as of 25th November, 2002). "VUE RETENTION" means at any time in respect of any Equity Issue or Assets Disposal made by any member of the Group, any amount of the Net Proceeds, as the case may be, which: 43 (a) is required by any of the VUE Partnership Agreement, the VUE Transaction Agreement and the Matsushita Shareholder Agreements to be retained by any member of the VUE Group or paid by any member of the VUE Group to any third party other than a Bank pursuant to this Agreement; (b) prior to the VUE Date, is required by any member of the VUE Group to maintain liquidity in the ordinary course of business; or (c) prior to the VUE Date, is to be applied in the ordinary course of business of any member of the VUE Group up to a maximum aggregate principal amount of U.S.$25,000,000 (or equivalent in other currencies). "VUE SUBORDINATION AGREEMENT" means the subordination agreement in the agreed form between, inter alia, VUE, the VUE Foreign Lenders and VUHIC. "VUE TRANSACTION AGREEMENT" means the amended and restated transaction agreement dated as of 16th December, 2001 and entered into between the Company, Universal Studios Inc., USA Networks, Inc., USANi LLC, Liberty Media Corporation and Barry Diller. "VUHIC" means Vivendi Universal Holding I Corp. "VUP" means Vivendi Universal Publishing S.A. 1.2 CONSTRUCTION (a) In this Agreement, unless the contrary intention appears, a reference to: (i) an "AMENDMENT" includes a supplement, novation or re-enactment and "AMENDED" is to be construed accordingly; "ASSETS" includes present and future properties, revenues and rights of every description; an "AUTHORISATION" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation; "BARCLAYS CAPITAL" or "SG INVESTMENT BANKING" is a reference to the investment banking division of Barclays Bank PLC or Societe Generale (respectively) and a reference to Barclays Capital or SG Investment Banking shall include a reference to Barclays Bank PLC or Societe Generale (as appropriate); 44 "CONTROL" means the power to direct the management or policies of a person, whether through the ownership of voting capital, by contract or otherwise; "DISPOSAL" means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and DISPOSE will be construed accordingly; the "EQUIVALENT IN OTHER CURRENCIES" or like terms, unless otherwise agreed or the context otherwise requires, means the equivalent in one currency of an amount in another currency as determined by the Facility Agent by reference to market rates of exchange prevailing at the time. a "MONTH" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that: (1) if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that calendar month; or (2) if an Interest Period commences 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 it is to end; for the purposes of the definitions of: (i) "NET ASSETS DISPOSAL PROCEEDS", "NET CEGETEL DISPOSAL PROCEEDS", "NET SIT DISPOSAL PROCEEDS" and "NET VE SHARES DISPOSAL PROCEEDS", the date on which such Disposal is made shall mean the date on which an agreement or contract relating to the relevant Disposal has been executed or signed by the relevant member of the Group (whether or not subject to any conditions to closing or completion); and (ii) "NET EQUITY ISSUE PROCEEDS", the date on which an Equity Issue is made shall mean the date on which the instrument constituting the purchase or subscription of such Equity Issue has been executed by the relevant member of the Group and/or the subscriber as the case may be (whether or not subject to any condition to closing or completion); a "PERSON" includes any individual, company, unincorporated association or body of persons (including a partnership, trust, joint venture or consortium), government, state, agency, international organisation or other entity; a "REGULATION" includes any decret, regulation, rule, official directive, request or guideline (whether or not having the force of law but if not, being of a type with which the person to which the regulation relates is accustomed to complying) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; (ii) a provision of law is a reference to that provision as amended or re-enacted; 45 (iii) a Clause or a Schedule is a reference to a clause of or a schedule to this Agreement; (iv) a person includes its successors, transferees, novatees and assigns; (v) a Finance Document or another document is a reference to that Finance Document or other document as amended; and (vi) a time of day is a reference to Central European time. (b) Unless the contrary intention 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. (c) The index to and the headings in this Agreement are for convenience only and are to be ignored in construing this Agreement. (d) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999. (e) This Agreement is to be entered into with the benefit of and subject to the Security Sharing Agreement. (f) Where an obligation under this Agreement is to be performed by an Obligor which is not a party to this Agreement, the Company shall ensure that that Obligor performs that obligation. 2. FACILITY 2.1 FACILITY (a) Subject to the terms of this Agreement, the Banks agree to make Loans during the Commitment Period to the Borrowers up to an aggregate principal amount not exceeding the Total Commitments. (b) The aggregate Original Euro Amount of all outstanding Loans shall not, at any time, exceed the Total Commitments. No Bank is obliged to lend if it would cause the Original Euro Amount of its participations in the Loans to exceed its Commitment. 2.2 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS (a) The obligations of a Finance Party under the Finance Documents are several. Failure of a Finance Party to carry out those obligations does not relieve any other Party of its obligations 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 a Finance Party under the Finance Documents are divided rights. A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights. 46 2.3 NATURE OF A BORROWER'S OBLIGATIONS (a) The obligations of a Borrower under the Finance Documents are several. Except as provided in a Finance Document, no Borrower is liable for Loans made to another Borrower or any other obligation of any other Borrower arising under the Finance Documents. (b) Each Borrower and the Company irrevocably appoints the Obligors' Agent to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises: (i) the Obligors' Agent on its behalf to supply all information concerning itself contemplated by the Finance Documents to the Finance Parties and to give all notices and instructions (including Requests) and to make such agreements capable of being given or made by any Borrower or the Company notwithstanding that they may affect such Borrower or the Company, without further reference to or the consent of such Borrower; and (ii) the Facility Agent to give any notice, demand or other communication to such Borrower or the Company pursuant to the Finance Documents to the Obligors' Agent on its behalf (and any notice given to the Obligors' Agent for a Borrower or the Company shall be deemed to have been given to that Borrower or the Company (as appropriate)), and in all cases each Borrower and the Company shall be bound by notices and instructions given by or to the Obligors' Agent on its behalf and by acts done by the Obligors' Agent on its behalf as if the same had been given by or to, or done by, that Borrower or the Company itself. (c) Every act, omission, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Obligors' Agent or given to the Obligors' Agent under this Agreement, or in connection with the Finance Documents (whether or not known to any other Obligor) shall be binding for all purposes on each Obligor concerned as if such Obligor had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Obligors' Agent and any other Obligor, those of the Obligors' Agent shall prevail. 3. PURPOSE Each Borrower shall apply the Loans towards its general corporate purposes. No proceeds of any Loan may be applied in or towards repayment or prepayment of any amounts outstanding under any High Yield Notes. Without affecting the obligations of any Obligor in any way, no Finance Party is bound to monitor or verify the application of any Loan. 4. CONDITIONS PRECEDENT 4.1 DOCUMENTARY CONDITIONS PRECEDENT The first Request may not be delivered until the Facility Agent has notified the Obligors' Agent and the Banks that it has received all of the documents set out in Part 1 of Schedule 2 47 in form and substance satisfactory to the Facility Agent (which the Facility Agent shall do promptly on such receipt). 4.2 FURTHER CONDITIONS PRECEDENT The obligation of each Bank to participate in any Loan under Clause 5.3 (Advance of Loan) is subject to the further conditions precedent that: (a) on both the date of the Request and the Drawdown Date: (i) the representations and warranties in Clause 17 (Representations and Warranties) to be repeated on those dates are correct in all material respects and will be correct in all material respects immediately after the Loan is made; and (ii) no Default is outstanding or could reasonably be expected to result from the Loan; (b) no event or series of events has occurred which, in the reasonable opinion of the Majority Banks (acting in good faith), is likely to have a Material Adverse Effect; and (c) the making of the Loan would not cause Clause 2.1 (Facility) to be contravened. 5. DRAWDOWN 5.1 COMMITMENT PERIOD A Borrower may borrow a Loan on any Business Day during the Commitment Period if the Facility Agent receives from the Obligors' Agent, not later than 11.00 a.m. three Business Days (or four Business Days in the case of a Loan in an Optional Currency) before the proposed Drawdown Date, a duly completed Request. Each Request is irrevocable. 5.2 COMPLETION OF REQUESTS A Request will not be regarded as having been duly completed unless: (a) the Drawdown Date is a Business Day falling at least one month prior to the Final Maturity Date; (b) the Original Euro Amount of the Loan is; (i) a minimum of E50,000,000 and an integral multiple of E25,000,000; or (ii) the balance of the undrawn Total Commitments (as appropriate); or (iii) such other amount as the Facility Agent (acting on the instructions of the Banks) and the Obligors' Agent may agree; (c) the amount selected under paragraph (b) above: 48 (i) does not cause Clause 2.1 (Facility) to be contravened; and (ii) in the case of a Subsidiary Borrower, does not exceed (when aggregated with any outstanding Loans borrowed by that Subsidiary Borrower) the Subsidiary Borrower Limit for that Subsidiary Borrower; (d) in the case of a Loan for the Company, the currency selected complies with Clause 10 (Optional Currencies) and in the case of a Loan for a Subsidiary Borrower the currency is that in which the Subsidiary Borrower Limit for that Borrower is expressed; (e) the Interest Period selected complies with Clause 8 (Interest Periods) and does not extend beyond the Final Maturity Date; and (f) it identifies the Borrower to which the Loan is to be made and the payment instructions specify an account of that Borrower in Paris (in the case of Euros) or in the principal financial centre of the country of the relevant currency (in the case of an Optional Currency). Each Request must specify one Loan only and the Obligors' Agent may not deliver a Request for a Loan with a Drawdown Date which is within five Business Days of the Drawdown Date for another Loan. Unless otherwise agreed by the Facility Agent, no more than ten Loans may be outstanding at any time. 5.3 ADVANCE OF LOAN (a) The Facility Agent shall promptly notify each Bank of the details of the requested Loan and the amount of its participation in that Loan. (b) Subject to the terms of this Agreement, each Bank shall make its participation in the Loan available to the Facility Agent for the relevant Borrower in the currency in which it is to be borrowed on the relevant Drawdown Date. (c) The amount of each Bank's participation in each Loan will be the proportion of the Loan which its Commitment bears to the Total Commitments on the date of receipt by the Facility Agent of the relevant Request. 6. REPAYMENT 6.1 REPAYMENT Each Borrower shall repay each Loan made to it in full on its Maturity Date to the Facility Agent for the Banks. 6.2 RE-BORROWING Subject to the other terms of this Agreement, any amounts repaid under Clause 6.1 may be re-borrowed. 49 7. PREPAYMENT AND CANCELLATION 7.1 AUTOMATIC CANCELLATION The Commitment of each Bank shall be automatically cancelled at the close of business in Paris on the Final Maturity Date. 7.2 VOLUNTARY PREPAYMENT AND CANCELLATION (a) Subject to Clause 26.2(c) (Other indemnities) any Borrower may, by the Obligors' Agent giving not less than 10 days' prior notice (or such shorter period as the Majority Banks may agree) to the Facility Agent, prepay any Loan made to it in whole or in part on any day (but, if in part, in a minimum of E50,000,000 and an integral multiple of E50,000,000). Any prepayment of a Loan in part shall be applied against the participations of the Banks in that Loan pro rata. (b) The Obligors' Agent may, without penalty or obligation to indemnify, by giving not less than 10 days' prior notice (or such shorter period as the Majority Banks may agree) to the Facility Agent, cancel the unutilised portion of the Total Commitments in whole or in part (but, if in part, in a minimum of E50,000,000 and an integral multiple of E50,000,000). Any cancellation in part shall be applied against the Commitment of each Bank pro rata. 7.3 RIGHT OF PREPAYMENT If: (a) a Borrower is required to pay to a Bank any additional amounts under Clause 12 (Taxes); or (b) a Borrower is required to pay to a Bank any amount under Clause 14 (Increased Costs), then, without prejudice to the obligations of any Obligor under those Clauses, the Obligors' Agent may, whilst the circumstances continue, give a notice of prepayment and (at the option of the Obligor's Agent) cancellation to that Bank through the Facility Agent. On the date falling three Business Days after the date the notice is given that Borrower shall prepay that Bank's participation in all the Loans made to it and the Bank's Commitment (if the Obligor's Agent has so requested in the notice) shall be cancelled. 7.4 MANDATORY PREPAYMENT FROM PROCEEDS - GENERAL (a) The provisions of Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.9 (Mandatory Prepayment from Cegetel Disposals and SIT Disposals) (inclusive) and paragraphs (f) to (h) and (j) to (m) (each inclusive) of Clause 7.14 (Miscellaneous provisions) shall apply and remain in force at all times until the Final Maturity Date unless and until the Company obtains an Investment Grade Rating. If an Investment Grade Rating Date occurs and until the occurrence of an Investment Downgrading Date, then those Clauses shall cease to apply, except with respect to any Net Proceeds received after the Investment Grade Rating Date in relation to any Disposal or Equity Issue made before the Investment Grade Rating 50 Date or any Net Dividend Proceeds declared prior to the Investment Grade Rating Date, which shall be applied in accordance with the provisions of this Clause 7 notwithstanding that the Company has an Investment Grade Rating. (b) If the Company obtains an Investment Grade Rating but at any time thereafter an Investment Downgrading Date occurs, Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.9 (Mandatory Prepayment from Cegetel Disposals and SIT Disposals) (inclusive) and paragraphs (f) to (h) and (j) to (m) (each inclusive) of Clause 7.14 (Miscellaneous provisions) shall be automatically reinstated and apply on and from the Investment Downgrading Date with respect to any Disposal or Equity Issue made on or after the Investment Downgrading Date and any Net Dividend Proceeds declared on or after the Investment Downgrading Date, in each case until the Company obtains an Investment Grade Rating, following which paragraph (a) above shall again apply. 7.5 MANDATORY PREPAYMENT FROM NET DIVIDEND PROCEEDS The Company shall ensure that an aggregate amount equal to 50 per cent. of Net Dividend Proceeds is applied in prepayment and cancellation of the Facility. 7.6 MANDATORY PREPAYMENT FROM NET EQUITY ISSUE PROCEEDS (a) Subject to paragraph (b) below, the Company shall ensure that an amount equal to 162/3 per cent. of Net Equity Issue Proceeds is applied in prepayment and cancellation of the Facility. (b) In relation to any member of the Cegetel Group the amount required under paragraph (a) to be applied in prepayment and cancellation of the Facility shall be reduced to the proportion of that amount which is equal to the percentage of the share capital of the relevant member of the Cegetel Group owned (directly or indirectly) by the Company at the time of the Equity Issue (excluding, prior to the SIT Repayment Date, the percentage, if any, of the share capital of the relevant member of the Cegetel Group which is held (directly or indirectly) by SIT but including such percentage on or after the SIT Repayment Date)). 7.7 MANDATORY PREPAYMENT FROM VE SHARES DISPOSAL The Company shall ensure that an amount equal to 50 per cent. of the Net VE Shares Disposal Proceeds is applied in prepayment and cancellation of the Facility. 7.8 MANDATORY PREPAYMENT FROM ASSETS DISPOSALS (a) Subject to paragraph (b), the Company shall ensure that an amount equal to 16 2/3 per cent. of the aggregate amount of all Net Assets Disposal Proceeds shall be applied in prepayment and cancellation of the Facility. (b) Paragraph (a) shall not apply to: (i) an Assets Disposal in respect of the Maroc Telecom Group, on or after the Maroc Telecom Date; (ii) a disposal of an asset where the Net Assets Disposal Proceeds are E30,000,000 or less (or equivalent in other currencies); 51 (iii) a disposal in the ordinary course of trading of stock in trade, business inventories, fixtures and fittings, furniture and other office equipment; or (iv) a disposal of any Permitted Joint Venture. 7.9 MANDATORY PREPAYMENT FROM CEGETEL DISPOSALS AND SIT DISPOSALS (a) Subject to paragraph (b), the Company shall ensure that an amount equal to 25 per cent. of the proportion of the Net Cegetel Disposal Proceeds and the Net SIT Disposal Proceeds which is equal to the percentage of the share capital of SIT or the relevant member of the Cegetel Group (owned directly or indirectly) by the Company at the time of the disposal (excluding, prior to the SIT Repayment Date, the percentage, if any, of the share capital of the relevant member of the Cegetel Group which is held (directly or indirectly) by SIT but including such percentage on or after the SIT Repayment Date)) is applied in prepayment and cancellation of the Facility. (b) No prepayment and cancellation shall be required to be made under paragraph (a) to the extent that the Company is unable, by reason of contractual restrictions or obligations in any shareholder agreements or the Non Recourse Financing in force at the date of this Agreement or by law or regulation binding on it, to procure or direct the upstreaming of such proceeds (whether by way of intra company loan or dividend or otherwise). 7.10 MANDATORY PREPAYMENT - NON COMPLIANCE WITH FINANCIAL COVENANTS (a) If the Company fails to comply with any provision of Clause 19 (Financial Covenants): (i) the Total Commitments shall be cancelled in full forthwith; and (ii) each Borrower shall repay each Loan made to it in full to the Facility Agent for the Banks on or before the date falling 15 Business Days after the date of the failure to comply with that provision. (b) The provisions of this Clause 7.10 shall apply and remain in force at all times while any Loan is outstanding or any Commitment is in force (notwithstanding, for the avoidance of doubt, the occurrence of a Release Condition Date). 7.11 MANDATORY PREPAYMENT - CHANGE OF CONTROL (a) In this Clause: "CHANGE OF CONTROL" means the occurrence of any event whereby: (i) any person or group of persons acting in concert acquires more than 50 per cent. of the share capital or voting stock of the Company or control of the Company, including, without limitation, on or following an amalgamation, demerger, merger or reconstruction involving the Company to the extent permitted by this Agreement) and 52 for these purposes CONTROL and ACTING IN CONCERT have the meanings given them in Articles L.233-3 and L.233-10, respectively, of the French Commercial Code; or (ii) the Company ceases to own, whether directly or indirectly, 100 per cent. of the share capital and voting rights of any Obligor or the Company ceases to have effective control of any Obligor (except, in each case, Vivendi Universal Games, Inc. or Canal + which is disposed of in accordance with the provisions of this Agreement or Centenary Delta BV pursuant to the Music Group Reorganisation); or (iii) a majority of the members of the board of directors of the Company who were members of the board of directors at the beginning of any consecutive two-year period are not Continuing Directors (and the Change of Control shall be deemed to take place on the first day on which this occurs); or (iv) there is a direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation permitted by and made in accordance with the provisions of this Agreement) in one or a series of related transactions, of all or substantially all of the properties or assets or business of the Company and its Subsidiaries taken as a whole; or (v) a plan is adopted relating to the liquidation or dissolution of the Company. "CONTINUING DIRECTOR" means, at any date, any member of the board of directors of the Company who: (i) was a member of that board of directors on the date of the New Facility Agreement; or (ii) was nominated by election or elected to that board of directors with the approval of a majority of the Continuing Directors who are members of that board of directors at the time of that nomination or election. (b) Upon the occurrence of a Change of Control (other than under paragraph (i) of the definition of that term): (i) the Total Commitments shall be cancelled in full forthwith; and (ii) each Borrower shall repay each Loan made to it in full to the Facility Agent for the Banks on or before the date falling 15 Business Days after the date on which the Change of Control takes effect. (c) Upon the occurrence of a Change of Control under paragraph (i) of the definition of that term: (i) if the relevant Change of Control was not subject to the prior approval or recommendation of the Borrower's board of directors (conseil d'administration) (a "BOARD APPROVAL") the Total Commitments shall be cancelled in full forthwith and the Borrower shall repay each Loan made to it in full to the Facility Agent for the Banks on the date falling 15 Business Days after the date on which such Change of Control becomes legally effective; or 53 (ii) if a Board Approval has been given in respect of the relevant Change of Control, then any Bank may, no later than 30 days following the Change of Control becoming legally effective, notify the Company (through the Facility Agent) that its participation in the Loans is to be prepaid in full and that its Commitment is to be cancelled. If a Bank delivers a notice under this paragraph (ii) then: (A) on the date of that notice the Bank's Commitment shall be cancelled; and (B) on the date falling 5 Business Days after the date of that notice, each Borrower shall prepay in full that Bank's participation in the Loans made to that Borrower. (d) The provisions of this Clause 7.11 shall apply and remain in force at all times while any Loan is outstanding or any Commitment is in force (notwithstanding, for the avoidance of doubt, the occurrence of a Release Condition Date). 7.12 MANDATORY PREPAYMENT AND CANCELLATION - APPLICATION OF PROCEEDS (a) Where, in Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.11 (Mandatory prepayment - change of control), an amount is to be applied in "PREPAYMENT AND CANCELLATION OF THE FACILITY", the amount shall be applied in repayment or prepayment of Loans, and in cancellation of the Total Commitments, in the proportion, manner and time set out in this Clause and Clause 7.13 (Timing of mandatory prepayments and cancellations and Receipt Account). (b) Where an amount is to be applied in repayment or prepayment of any Loans under this Clause and either no Loan is outstanding or such amount is greater than the then outstanding amount of Loans, then the remainder of that amount after all Loans have been repaid or prepaid (or, if no Loan is outstanding, the whole amount which would otherwise be applied in repayment or prepayment) shall be retained by the relevant member of the Group. 7.13 TIMING OF MANDATORY PREPAYMENTS AND CANCELLATIONS AND RECEIPT ACCOUNT (a) Any mandatory prepayment of Loans under Clauses 7.6 (Mandatory prepayment from Net Equity Issue Proceeds) to 7.9 (Mandatory prepayment from Cegetel Disposals and SIT Disposals) shall be due on and from receipt of the relevant Net Proceeds by the relevant member of the Group party to such Equity Issue or Disposal and shall be paid either: (i) on the earlier of (A) the date falling three months from the receipt of the relevant Net Proceeds and (B) the last day of the Interest Period of Loans (in order of the dates on which those Loans fall due for repayment) during which the relevant Net Proceeds were received (or, in relation to Net Assets Disposal Proceeds comprised by non-cash consideration, converted into cash) by a member of the Group; or (ii) at such earlier time following receipt of such Net Proceeds (or, in relation to Net Assets Disposal Proceeds comprised by non-cash consideration, their conversion into cash) by a member of the Group as the Facility Agent (only upon the occurrence of an Event of Default which is continuing), or as the Company, shall direct. 54 (b) Any mandatory prepayment of Loans under Clause 7.5 (Mandatory prepayment from Net Dividend Proceeds) shall be due on and from the date the dividend is declared and shall be paid on the last day of the Interest Period of Loans as they fall due. (c) Any cancellation of Commitments pursuant to Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.9 (Mandatory prepayment from Cegetel Disposals and SIT Disposals) shall be made on the day on which either the relevant Net Proceeds were received (or converted into cash in the case of Net Assets Disposal Proceeds comprised by non-cash consideration) by a member of the Group or (in the case of Clause 7.5 (Mandatory prepayment from Net Dividend Proceeds) on the date the relevant dividend was declared. (d) Pending the application of any amount required to be prepaid in accordance with this Clause 7.13, the amount shall be deposited in a Receipt Account in the relevant currency. (e) Each Obligor irrevocably authorises and instructs the Security Agent to apply any amount standing to the credit of a Receipt Account towards repayment or prepayment of the Loans or (if applicable) payment to the Obligors, as the case may be (in the case of the Loans, at the times referred to in paragraphs (a) (i) and (ii) above or, in the case of payment to the Obligors, promptly upon the amount becoming payable), and to effect any currency conversions, at such rates as the Facility Agent reasonably determines are available to it, required for the purposes of that application. (f) Amounts standing to the credit of a Receipt Account (and any interest accruing in respect thereof) may not be withdrawn and may only be used (i) in mandatory prepayment of the Loans at the times specified in this Clause and/or (ii) following the occurrence of an Event of Default which is continuing, in payment of any amounts due to the Finance Parties under the Finance Documents and/or (iii) (when no Loan is outstanding and no Commitment in force) in payment to the Obligors. 7.14 MISCELLANEOUS PROVISIONS (a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable. The Facility Agent shall notify the Banks promptly of receipt of any such notice. (b) All prepayments under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to Clause 26.2 (Other indemnities), without premium or penalty. (c) No prepayment or cancellation is permitted except in accordance with the express terms of this Agreement. (d) No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated. (e) Without prejudice to the rights of a Borrower to re-borrow under Clause 6.2 ( Re-borrowing), no amount of any mandatory payment prepaid by a Borrower may be reborrowed. Where an amount of any mandatory prepayment is prepaid, the corresponding Commitment will be cancelled automatically. 55 (f) Each Obligor shall ensure that none of its Subsidiaries will be under any restriction (other than any restriction or obligation under the VUE Incremental Indebtedness, or VUE Bridge Refinancing or any other shareholder restriction or obligation existing prior to the date of this Agreement including, without limitation, under the Matsushita Shareholder Agreements, the Maroc Telecom Shareholder Agreement, the Transtel Shareholder Agreement, the Cegetel Shareholder Agreement, the SFR Shareholder Agreement, the VUE Partnership Agreement, the VUE Transaction Agreement, the VUE Bridge Extension or the Non Recourse Financing or imposed by law or regulation binding on it) to pay, make or declare any dividends, return on capital, repayment of capital contributions or other distributions (whether in cash or in kind) or make any distribution of assets or other payments whatsoever in respect of share capital or up-stream amounts (whether by Intra Group Loan or otherwise), whether directly or indirectly, in each case, to the extent necessary to meet its payment obligations under Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.13 (Timing of mandatory prepayments and cancellations and Receipt Account) and to the fullest extent permitted by law and contractual restrictions (including, without limitation, for the avoidance of doubt, under the Matsushita Shareholder Agreements, VUE Partnership Agreement and the VUE Transaction Agreement) existing at the date of this Agreement and each Obligor shall use its reasonable endeavours to ensure that the same are paid, made or declared. (g) Subject to paragraphs (f) and (h) of this Clause, the Company shall, to the fullest extent permitted by applicable law, procure that all Net Proceeds are made available to it promptly following receipt thereof by the relevant member of the Group. (h) Each Obligor shall use its reasonable endeavours to procure (subject to any contractual restrictions existing on the date of this Agreement or restrictions imposed by law or regulation binding on it) that any member of the Cegetel Group, SIT, any member of the Maroc Telecom Group and/or Transtel upstreams to its shareholders (whether by way of dividend, (subject to any restriction imposed by the Non Recourse Financing on the up-streaming of intercompany loans to be made by Cegetel) intra company loan or otherwise) Net Assets Disposal Proceeds received by it or its Subsidiaries. (i) Until a Release Condition Date occurs, the Company will not make any voluntary prepayments or cancel any commitments under the New Facility unless it also makes a voluntary prepayment and/or cancels the Total Commitments under this Agreement at the same time and in the same amount. If a Release Condition Date occurs but at any time thereafter an Investment Downgrading Date occurs, the provisions of the foregoing sentence shall be automatically reinstated and remain in force from the Investment Downgrading Date until such time as a Release Condition Date occurs again. (j) The Company will not amend or vary (or agree to amend or vary) any mandatory prepayment provision of the New Facility Agreement in any way which results or could reasonably be expected to result, in the opinion of the Majority Banks, in any such provision becoming more onerous to the Company or otherwise be detrimental or prejudicial to their rights and remedies under the Finance Documents (including, without limitation, any amendment to the relevant mandatory prepayment percentages) than those in force at the date of this Agreement without the prior written consent of the Majority Banks. 56 (k) If any amount is required to be applied in prepayment and cancellation of the Facility, in respect of any Disposal, Debt Issue or Equity Issue made by any member of the VUE Group (other than any Asset Disposal or secondary Equity Issue by the Company of its interest in VUE or of all or substantially all of the assets of the VUE Group in any one or more related transactions), the Company shall be obliged to use its reasonable endeavours to upstream (subject to any VUE Relevant Restriction) by way of distribution/dividends) or Intra Group Loans an amount equal to such amount in order to make any such prepayments and cancelation of the Facility, provided that: (i) to the extent that the Company cannot at any time, due to any VUE Relevant Restriction, so up-stream any such amount in full by way of distributions/dividends and so apply the relevant proceeds in full in prepayment and cancelation of the Facility, the Company shall further use its reasonable endeavours to up-stream an amount equilavent to the shortfall by way of Intra Group Loans; and (ii) to the extent that the Company cannot at any time, due to any VUE Relevant Restriction, apply the proceeds of any up-streaming by way of Intra Group Loan in full prepayment and cancelation of the Facility, the Company shall not be required so to apply such proceeds, but shall deposit such proceeds promptly upon receipt of the same in the Concentration Accounts. (l) For the avoidance of doubt, if any amount is required to be applied in prepayment and cancellation of the Facility, in respect of any Asset Disposal or secondary Equity Issue by the Company of its interest in VUE or of all or substantially all of the assets of the VUE Group in any one or more related transactions, the Company shall be obliged to apply an amount equal to any such amount in prepayment and cancellation of the Facility notwithstanding any VUE Relevant Restriction binding upon the Company or any other member of the Group with regard to the upstreaming or payment of any such amount (whether by dividend or Intra Group Loan) and otherwise in accordance with the terms of this Agreement. (m) The Company must ensure that immediately prior to the first transaction as a result of which a cancellation and prepayment would be required under any of Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds) to 7.13 (Timing of mandatory prepayments and cancellations and Receipt Account), the Company executes and delivers to the Facility Agent an account security (gage espece) substantially in the form referred to in Schedule 1 to the Restatement Agreement. (n) Any amount prepaid by a Borrower in accordance with Clause 7.2(a) (Voluntary prepayment and cancellation), pursuant to Clause 7.3 (Right of prepayment) without a corresponding cancellation of Commitment or pursuant to Clause 12(b) (Taxes) may subsequently be reborrowed, provided that amounts prepaid pursuant to: (i) Clause 7.3 may only be reborrowed pro rata (and for the purposes of this paragraph (e), amounts are borrowed "PRO RATA" when each Bank's participation in the Loan in question, expressed as the percentage which each Bank's Commitment bears to the Total Commitments, is equal); or (ii) Clause 12(b) (Taxes) may only be reborrowed pro rata (as defined in paragraph (i) above) once the relevant additional amounts giving rise to the prepayment in question have been paid in full and may not be reborrowed by the Borrower making the 57 prepayment unless and until that Borrower is either able to make further payments under the Finance Documents without any deduction or withholding or is no longer prevented by applicable law from paying the additional amounts required by Clause 12(a). 8. INTEREST PERIODS 8.1 GENERAL Each Loan shall have one Interest Period only (as determined in accordance with this Clause 8). 8.2 SELECTION (a) The Borrower may select an Interest Period for a Loan in the relevant Request. Each Interest Period for a Loan will commence on its Drawdown Date. (b) Subject to the following provisions of this Clause 8, each Interest Period will be one, two, three or six months or any other period agreed between the Obligors' Agent and the Banks. 8.3 NON-BUSINESS DAYS If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not). 8.4 NO OVERRUNNING OF THE FINAL MATURITY DATE If an Interest Period for a Loan would otherwise overrun the Final Maturity Date, it shall be shortened so that it ends on the Final Maturity Date. 8.5 NOTIFICATION The Facility Agent shall notify each relevant Party of the duration of each Interest Period promptly after ascertaining its duration. 9. INTEREST 9.1 INTEREST RATE (a) (i) The rate of interest on each Loan for its Interest Period is the rate per annum determined by the Facility Agent to be the aggregate of the applicable: (A) Applicable Margin; and (B) EURIBOR or, in the case of a Loan in an Optional Currency, LIBOR. (ii) In addition to interest under sub-paragraph (i), each Borrower shall also pay to the Facility Agent for each Bank, that Bank's Mandatory Cost. 58 (b) MandatoryCosts due under paragraph (a)(ii) shall be notified by each Bank to the Borrower through the Facility Agent on an annual basis and, in relation to a Bank which ceases to be a Bank, on or before the date it ceases to be a Bank, and in each case shall be due within five Business Days of the relevant notification. 9.2 DETERMINATION OF APPLICABLE MARGIN (a) The Applicable Margin shall be: (i) up to and including the first Release Condition Date to occur, 1.50 per cent. per annum; and (ii) thereafter, 1.00 per cent. per annum. (b) Any change in the Applicable Margin will take effect immediately for the purpose of Clause 23.3 (Commitment fee) and otherwise will apply with respect to new Loans only (and not to any Loan which is already outstanding on the date on which the first Release Condition Date occurs). 9.3 DUE DATES Except as otherwise provided in this Agreement, accrued interest on each Loan is payable by the relevant Borrower on its Maturity Date and also, if the Interest Period of the Loan is longer than six months, on the dates falling at six-monthly intervals after the Drawdown Date. 9.4 DEFAULT INTEREST (a) If an Obligor fails to pay any amount payable by it under the Finance Documents, it shall, forthwith on demand by the Facility Agent, pay interest on the overdue amount from the due date up to the date of actual payment, as well after as before judgment, at a rate (the "DEFAULT RATE") determined by the Facility Agent to be two per cent. per annum above the higher of: (i) the rate on the overdue amount under Clause 9.1 immediately before the due date (if of principal); and (ii) 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 such successive Interest Periods of such duration (not exceeding three months) as the Facility Agent may determine (each a "DESIGNATED INTEREST PERIOD"). (b) If the Facility Agent determines that deposits in the currency of the overdue amount are not at the relevant time being made available by the Reference Banks to leading banks in the relevant interbank market, the default rate will be determined by reference to the cost of funds to the Facility Agent from whatever sources it may reasonably select. (c) The default rate will be determined by the Facility Agent on each Business Day or the first day of, or two Business Days before the first day of, the relevant Designated Interest Period, as appropriate. 59 (d) Default interest will be compounded at the end of each Designated Interest Period. 9.5 NOTIFICATION The Facility Agent shall promptly notify each other relevant Party of the determination of a rate of interest under this Agreement. 10. OPTIONAL CURRENCIES 10.1 SELECTION (a) The Obligors' Agent shall select the currency of a Loan in the relevant Request. (b) The currency of each Loan must be Euros or an Optional Currency. In the case of a Subsidiary Borrower, the currency of each Loan to that Borrower must be the currency in which the Subsidiary Borrower Limit for that Borrower is expressed. (c) The Obligors' Agent may not choose a currency if as a result the Loans would be denominated at any one time in more than five currencies and a Loan may not be denominated in more than one currency. (d) The Facility Agent shall notify each Bank and the Obligors' Agent of the currency and the Original Euro Amount of each Loan to be denominated in an Optional Currency, and the applicable Spot Rate of Exchange, promptly after they are ascertained. 10.2 REVOCATION OF CURRENCY If before 9.30 a.m. (London time) on any Rate Fixing Day , the Facility Agent receives notice from a Bank (the "AFFECTED BANK") that: (a) it is impracticable for the affected Bank to fund its participation in the relevant Loan in the relevant Optional Currency during the Interest Period for that loan in the ordinary course of business in the relevant interbank market; and/or (b) the use of the proposed Optional Currency might contravene any law or regulation, the Facility Agent shall give notice to the Obligors' Agent and to the Banks to that effect before 11.00 a.m. (London time) on that Rate Fixing Day. In this event: (i) the Obligors' Agent and the Banks may agree that the drawdown will not be made; or (ii) in the absence of agreement prior to 12.00 noon (London time) on that date and in any other case: (1) the affected Bank's participation in the Loan (or, if more than one Bank is similarly affected, those Banks' participations in the Loan) shall be treated as a separate Loan denominated in Euros; (2) in the definition of "EURIBOR" (insofar as it applies to that Loan) in Clause 1.1 (Definitions): 60 (A) there shall be substituted for the time "11.00 a.m." the time "1.00 p.m."; and (B) paragraph (b) of that definition shall apply. 11. PAYMENTS 11.1 PLACE All payments by an Obligor or a Bank under the Finance Documents shall be made to the Facility Agent to its account at such office or bank: (a) in the principal financial centre of the country of the relevant currency; or (b) in the case of Euros, in the principal financial centre of a Participating Member State or London, as it may notify to the Obligors' Agent or Bank for this purpose by not less than 5 Business Days' prior notice. Notwithstanding the above, all payments by the Company to the Mandated Lead Arrangers under Clauses 23.1 (Arrangement fee) and 24 (Expenses) shall be made direct to the Mandated Lead Arrangers in the manner agreed by the Mandated Lead Arrangers and the Company. 11.2 FUNDS Payments under the Finance Documents to the Facility Agent shall be made for value on the due date at such times and in such funds as the Facility Agent may specify to the Party concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment. 11.3 DISTRIBUTION (a) Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to paragraphs (b) and (c) below, be made available by the Facility Agent to that Party by payment (on the date and in the currency and funds of receipt) to its account with such office or bank in the principal financial centre of the country of the relevant currency as it may notify to the Facility Agent for this purpose by not less than five Business Days' prior notice. (b) The Facility Agent may apply any amount received by it for any Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under this Agreement or in or towards the purchase of any amount of any currency to be so applied. (c) 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 Party until it has established that it has actually received that sum. The Facility Agent may, however, assume that the sum has been paid to it in accordance with this Agreement, and, in reliance on that assumption, make available to that Party a corresponding amount. If the sum has not been made available 61 but the Facility Agent has paid a corresponding amount to another Party, that Party shall forthwith on demand by the Facility Agent refund the corresponding amount together with interest on that amount from the date of payment to the date of receipt, calculated at a rate determined by the Facility Agent to reflect its cost of funds. 11.4 CURRENCY (a) A repayment or prepayment of a Loan is payable in the currency in which the Loan is denominated on its due date. (b) Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated. (c) Amounts payable in respect of costs, expenses and taxes and the like are payable in the currency in which they are incurred. (d) Any other amount payable under the Finance Documents is, except as otherwise provided in this Agreement, payable in Euros. 11.5 SET-OFF AND COUNTERCLAIM All payments made by each Obligor under the Finance Documents shall be made without set-off or counterclaim. 11.6 NON-BUSINESS DAYS (a) If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment shall instead be the next Business Day. (b) During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date. 11.7 PARTIAL PAYMENTS (a) If the Facility Agent receives a payment insufficient to discharge all the amounts then due and payable by any Obligor under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of the Obligors (or any of them) 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 under the Finance Documents; (ii) SECONDLY, in or towards payment pro rata of any accrued interest 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. 62 (b) The Facility Agent shall, if so directed by all the Banks, vary the order set out in sub-paragraphs (a)(ii) to (iv) above. (c) Paragraphs (a) and (b) above will override any appropriation made by any Obligor. 12. TAXES (a) All payments by each Obligor under the Finance Documents shall be made without any deduction and free and clear of and without any deduction for or on account of any Taxes, except to the extent that an Obligor is required by law to make payment subject to any Taxes. Subject to paragraph (b) below, if any Tax or amounts in respect of Tax must be deducted, or any other deductions must be made, from any amounts payable or paid by an Obligor, or paid or payable by the Facility Agent to a Bank, under the Finance Documents, the Obligor concerned shall pay such additional amounts as may be necessary to ensure that the relevant Bank receives a net amount equal to the full amount which it would have received had payment not been made subject to Tax or any other deduction. (b) If an Obligor is, or becomes obliged, to make any deductions from any amounts paid or payable by that Obligor to a Finance Party and is prevented by applicable law from paying the additional amounts referred to in paragraph (a) above: (i) the Finance Party (if a Bank) may, by notice to the Obligors' Agent through the Facility Agent, require the relevant Obligor to prepay all or part of its participation in the Loan; and (ii) the relevant Obligor shall prepay the participation of that Bank in the Loans made to it on the date falling twenty days after the date of the notice, provided that notwithstanding such prepayment the Obligor concerned shall be obliged to pay the additional amounts to that Bank which it is prevented from paying as soon as it may legally do so and such obligation shall survive any cancellation or termination of this Agreement. (c) No Obligor is obliged to pay any additional amounts for the account of a Finance Party pursuant to paragraph (a) above in respect of any deduction to the extent that the obligation to pay such additional amounts would not have arisen but for the gross negligence or wilful misconduct of such Finance Party or the failure by such Finance Party to provide (within a reasonable period after being requested to do so by the Obligors' Agent or the Facility Agent) any form, certificate or other documentation (1) the provision of which would have relieved the relevant Obligor from the relevant withholding obligation and (2) which it is within the power of such Finance Party to provide. (d) Each Obligor shall: (i) pay when due all Taxes required by law to be deducted or withheld by it from any amounts paid or payable under the Finance Documents; 63 (ii) within 15 days of the payment being made, deliver to the Facility Agent for the relevant Bank evidence satisfactory to that Bank (including all relevant Tax receipts) that the payment has been duly remitted to the appropriate authority; and (iii) forthwith on demand indemnify each Finance Party (which demand shall be accompanied by a certificate from the Finance Party setting out, in reasonable detail, calculations relating to the amount claimed) against any loss or liability which that Finance Party incurs as a consequence of the payment or non-payment of those Taxes. (e) If, following the payment by an Obligor of any additional amounts under paragraph (a) above, the Facility Agent or any Bank shall determine that it has received or been granted a credit against or remission for any Taxes payable by it allocable by the Facility Agent or such Bank to the relevant deduction or withholding (a "TAX CREDIT"), the Facility Agent or such Bank shall reimburse the Obligor concerned with such amount as the Facility Agent or such Bank shall in its discretion (acting in good faith) certify to be the proportion of such Tax Credit (if any) as will leave the Facility Agent or such Bank (after such reimbursement) in no worse position than it would have been in had the relevant deduction or withholding not been made. Such reimbursement shall be made as soon as reasonably practicable after the Facility Agent or such Bank (as the case may be) shall have made any such determination. Each Bank shall use its reasonable endeavours to determine whether it is entitled to receive a Tax Credit and, if it determines that it is, to obtain the same, unless to do so or attempt to do so might, in the sole opinion of the Bank, be in any way prejudicial to the Bank (provided that where a Bank claims a Tax Credit pursuant to this paragraph (e), the extent, order and manner in which it does so shall be in the absolute discretion of the Bank (acting in good faith)). No Bank shall be obliged to disclose any information regarding its tax affairs or computations to any other Party. (f) Nothing in paragraphs (c) or (e) above shall: (i) require the Facility Agent or any Bank to disclose to any Obligor any details of its tax affairs; (ii) interfere with the right of the Facility Agent or any Bank to arrange its tax affairs in whatever manner it thinks fit; and (iii) require the Facility Agent or any Bank to claim relief in respect of any payment under paragraph (a) above in priority to any other reliefs, claims or credits available to it. 13. MARKET DISRUPTION 13.1 ABSENCE OF QUOTATIONS If EURIBOR or LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply an offered rate by 11.30 a.m. (London time in the case of LIBOR) on the relevant Rate Fixing Day, the applicable EURIBOR or LIBOR shall, subject to Clause 13.2, be determined on the basis of the quotations of the remaining Reference Banks. 64 13.2 MARKET DISRUPTION If: (a) EURIBOR or LIBOR is to be determined by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 11.30 a.m. (London time in the case of LIBOR) on the relevant Rate Fixing Day or the Facility Agent otherwise determines that adequate and fair means do not exist for ascertaining EURIBOR or LIBOR; or (b) the Facility Agent receives notification from Banks whose participations in a Loan exceed 30 per cent. of that Loan that, in their opinion: (i) matching deposits may not be available to them in the relevant interbank market in the ordinary course of business to fund their participations in that Loan for the relevant Interest Period; or (ii) the cost to them of obtaining matching deposits in the relevant interbank market would be in excess of EURIBOR or LIBOR, as appropriate, for the relevant Interest Period, the Facility Agent shall promptly notify the Obligors' Agent and the Banks of the fact and that this Clause 13 is in operation. 13.3 SUBSTITUTE BASIS After any notification under Clause 13.2 the relevant Loan shall not be made. However, within five Business Days of receipt of the notification, the Obligors' Agent and the Facility Agent shall enter into negotiations for a period of not more than 30 days with a view to agreeing a substitute basis for determining the rate of interest and/or funding applicable to that Loan and (to the extent required) any future Loan. Any substitute basis agreed shall, with the prior consent of all the Banks, be binding on all the Parties. For the avoidance of doubt the relevant Loan shall not be made unless and until a substitute basis is agreed. 14. INCREASED COSTS 14.1 INCREASED COSTS (a) Subject to Clause 14.2, each Obligor shall forthwith on demand by a Finance Party pay to that Finance Party the amount of any increased cost incurred by it or any of its Affiliates as a result of: (i) the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or (ii) compliance with any regulation made after the date of this Agreement, including any law or regulation relating to taxation, change in currency of a country or reserve asset, special deposit, cash ratio, liquidity or capital adequacy requirements or any other form of banking or monetary control. 65 (b) In this Agreement "INCREASED COST" means: (i) an additional cost incurred by a Finance Party or its Holding Company as a result of it having entered into, or performing, maintaining or funding its obligations under, any Finance Document; or (ii) that portion of an additional cost incurred by a Finance Party or its Holding Company in making, funding or maintaining all or any advances comprised in a class of advances formed by or including that Finance Party's participations in the Loans made or to be made under this Agreement as is attributable to that Finance Party making, funding or maintaining those participations; or (iii) a reduction in any amount payable to a Finance Party or the effective return to a Finance Party or its Holding Company under this Agreement or (to the extent that it is attributable to this Agreement) on its capital; or (iv) the amount of any payment made by a Finance Party or its Holding Company, or the amount of any interest or other return foregone by a Finance Party or its Holding Company, calculated by reference to any amount received or receivable by that Finance Party or its Holding Company from any other Party under this Agreement. (c) A Finance Party intending to make a claim under this Clause 14.1 shall notify the Obligors' Agent through the Facility Agent of the event by reason of which it is entitled to do so, setting out in reasonable detail calculations evidencing the relevant increased costs, provided that nothing herein shall require such Finance Party to disclose any confidential information relating to the organisation of its affairs. 14.2 EXCEPTIONS Clause 14.1 does not apply to any increased cost: (a) compensated for by the payment of the Mandatory Cost; (b) compensated for by the operation of Clause 12 (Taxes); (c) attributable to any change in the rate of, or change in the basis of calculating, tax on the overall net income of a Bank (or the overall net income of a division or branch of the Bank) imposed in the jurisdiction in which its principal office or Facility Office is situated; or (d) arising from a Finance Party or its Holding Company having failed to comply with any applicable law or regulation, provided that this exception shall not apply to the extent that such law or regulation is applied retrospectively. 15. ILLEGALITY If it is or becomes unlawful in any jurisdiction for a Bank to give effect to any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan, then: 66 (a) that Bank may notify the Obligors' Agent through the Facility Agent accordingly; and (b) (i) each Borrower shall forthwith prepay the participations of that Bank in all the Loans made to it; and (ii) the Commitment of that Bank shall forthwith be cancelled. 16. GUARANTEE 16.1 GUARANTEE AND INDEMNITY (a) Each Guarantor irrevocably, unconditionally, jointly and severally and notwithstanding the release of any other Obligor or any person under the terms of any composition or arrangement with any creditors of any member of the Group: (i) as principal obligor (and not merely as surety) guarantees to each Finance Party prompt performance by each Borrower of all its obligations under the Finance Documents and the payment when due of all sums from time to time payable by each Obligor under the Finance Documents; (ii) undertakes with each Finance Party that, whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall forthwith on demand by the Facility Agent pay that amount as if that Guarantor instead of the Borrower were expressed to be the principal obligor; and (iii) indemnifies each Finance Party on demand against any loss or liability suffered by it if any obligation guaranteed by the Guarantor is or becomes unenforceable, invalid or illegal. (b) In the case of the Company, this guarantee takes effect on and from the date on which there is a Subsidiary Borrower. 16.2 CONTINUING GUARANTEE This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable by the Obligors under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. 16.3 REINSTATEMENT (a) Where any discharge (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise without limitation, the liability of each Guarantor under this Clause shall continue as if the discharge or arrangement had not occurred. (b) Each Finance Party may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration. 67 16.4 WAIVER OF DEFENCES The obligations of each Guarantor under this Clause will not be affected by any act, omission, matter or thing which, but for this provision, would reduce, release or prejudice any of its obligations under this Clause or prejudice or diminish those obligations in whole or in part, including (whether or not known to it or any Finance Party): (a) any time or waiver 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 creditors 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 any 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 powers, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; (e) any variation (however fundamental), amendment or replacement of a Finance Document or any other document or security so that references to that Finance Document in this Clause shall include each variation, amendment or replacement; or (f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security, to the intent that each Guarantor's obligations under this Clause shall remain in full force and its guarantee be construed accordingly, as if there were no unenforceability, illegality or invalidity; or (g) any postponement, discharge, reduction, non-provability or other similar circumstance affecting any obligation of any Obligor under a Finance Document resulting from any insolvency, liquidation or dissolution proceedings or from any law, regulation or order so that each such obligation shall for the purposes of the Guarantor's obligations under this Clause be construed as if there were no such circumstance. 16.5 IMMEDIATE RECOURSE Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee 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. 16.6 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 trustee or agent on its behalf) may: 68 (a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee 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 a suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this Clause without liability to pay interest on these moneys. 16.7 NON-COMPETITION Until all amounts which may be or become payable by the Obligors to the Finance Parties under or in connection with the Finance Documents have been irrevocably paid in full, no Guarantor shall, after a claim has been made or by virtue of any payment or performance by it under this Clause: (a) be subrogated to any rights, security or moneys held, received or receivable by any Finance Party (or any trustee or agent on its behalf) or be entitled to any right of contribution or indemnity in respect of any payment made or moneys received on account of that Guarantor's liability under this Clause; (b) claim, rank, prove or vote as a creditor of the Company or any Obligor or its estate in competition with any Finance Party (or any trustee or agent on its behalf); or (c) receive, claim or have the benefit of any payment, distribution or security from or on account of any Obligor, or exercise any right of set-off as against any Obligor, unless the Facility Agent otherwise directs. Each Guarantor shall hold in trust for and forthwith pay or transfer to the Facility Agent for the Finance Parties any payment or distribution or benefit of security received by it contrary to this Clause. 16.8 ADDITIONAL SECURITY This guarantee is in addition to and is not in any way prejudiced by any other security or guarantee now or subsequently held by any Finance Party. 16.9 LIMITATIONS (a) The obligations of any Guarantor which is incorporated under the laws of the Republic of France (other than the Company as regards a Subsidiary Borrower (if any)) under this Clause shall not include any obligation which if incurred would constitute either a misuse of corporate assets as defined under article L.242-6 of the French Commercial Code in the opinion of the board of directors or similar corporate governance body of any such Guarantor (acting on legal advice) and shall be limited, at any time, to the greater of: (i) the aggregate outstanding amount of all Intra Group Loans, made directly or indirectly, to such Guarantor from the Company or any other Obligor (less the net amount of Intra Group Loans made by such Guarantor to Canal Satellite S.A. or any 69 other Subsidiary of such Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group); (ii) the aggregate outstanding amount of all Intra Group Loans made by such Guarantor (less any amount representing cash lent to such Guarantor by Canal Satellite S.A. or any other Subsidiary of the Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group); and (iii) the aggregate amount of all cash balances standing to the credit of each of such Guarantor's Cash Pooling Accounts (less the net amount of Intra Group Loans made to such Guarantor by Canal Satellite S.A. or any other Subsidiary of such Guarantor notified to the Facility Agent in writing which is less than 90 per cent. owned by that Guarantor or another member of the Group), provided that the obligations of such Guarantor as determined in accordance with sub-paragraphs (i) to (iii) above shall be reduced by: (A) an amount equal to any payment made by such Guarantor to the Finance Parties as debiteur delegue or debiteur cede, as the case may be, under a French Intra Group Loan Security of an Intra Group Loan referred to in sub-paragraph (i) above; (B) an amount equal to any payment made by such Guarantor as delegant to the Finance Parties under a French Intra Group Loan Security of an Intra Group Loan referred to in sub-paragraph (ii) above; and (C) an amount equal to any payment made by such Guarantor to the Finance Parties under the Cash Pooling Hub Security granted by such Guarantor. (b) Where any such prohibition as is referred to in paragraph (a) above exists, each Obligor shall use its reasonable endeavours to procure that the prohibition is lawfully overcome and the Facility Agent may agree in the applicable Guarantor Accession Deed a limitation on the liability of the Subsidiary Guarantor hereunder in order to avoid the prohibition. Should it be impossible to lawfully avoid or overcome such prohibition, that part of such Obligor's obligations under this Clause 16 as contravene such prohibition (and only such part of such Obligor's obligations) shall be deemed null and void. (c) Each Guarantor which is incorporated in the United States of America (a "U.S. GUARANTOR"): (i) represents, warrants and agrees that (1) it has received and will receive valuable direct or indirect benefits as a result of the transactions financed by the Loans, and (2) these benefits will constitute REASONABLY EQUIVALENT VALUE and FAIR CONSIDERATION as those terms are used in the fraudulent transfer laws; and (ii) acknowledges and agrees that each of the Finance Parties has acted in good faith in connection with the guarantee granted under this Clause and the transactions contemplated by this Agreement. 70 (d) This Clause shall be enforceable against each U.S. Guarantor to the maximum extent permitted by the fraudulent transfer laws. (e) Each Guarantor's liability under this Clause shall be limited so that no obligation of, or transfer by, any U.S. Guarantor under this Clause is subject to avoidance and turnover under the fraudulent transfer laws. (f) For purposes of this Clause "FRAUDULENT TRANSFER LAWS" mean applicable United States of America bankruptcy and United States fraudulent transfer and conveyance statutes and the related case law. (g) The provisions of this Clause 16 shall apply and remain in force at all times throughout the term of this Agreement (notwithstanding for the avoidance of doubt the occurrence of a Security Release Condition Date). 17. REPRESENTATIONS AND WARRANTIES 17.1 REPRESENTATIONS AND WARRANTIES Each Obligor makes the representations and warranties set out in this Clause 17 to each Finance Party. 17.2 STATUS (a) It is a joint-stock company or limited liability company or corporation, duly incorporated or organised and validly existing under and (in the case of the U.S. Subsidiaries) in good standing the laws of the jurisdiction of its incorporation; and (b) each Obligor and each Material Subsidiary has the power to own its assets and carry on its business as it is being conducted. 17.3 POWERS AND AUTHORITY It has the power to enter into and perform, and has taken all necessary action to authorise the entry into, performance and delivery of, the Finance Documents to which it is or will be a party and the transactions contemplated by those Finance Documents. 17.4 LEGAL VALIDITY Each Finance Document to which it is or will be a party constitutes, or when executed in accordance with its terms will constitute, its legal, valid and binding obligation enforceable in accordance with its terms and would be so treated in the courts of the jurisdiction of its incorporation or organisation. 17.5 AUTHORISATIONS All authorisations required in connection with the entry into, performance, validity and enforceability of the Finance Documents and the transactions contemplated by the Finance Documents have been obtained or effected and are in full force and effect. 71 17.6 PARI PASSU RANKING Its obligations under the Finance Documents rank at least pari passu with all its other unsecured and unsubordinated obligations, except for obligations mandatorily preferred by law applying to companies generally. 17.7 TAXES ON PAYMENTS All amounts payable by each Borrower under the Finance Documents may be made free and clear of and without deduction for or on account of any tax. 17.8 STAMP DUTIES No stamp or registration duty or similar taxes or charges are payable in the jurisdiction of its incorporation in respect of any Finance Document. 17.9 IMMUNITY (a) The execution by each Obligor of each Finance Document constitutes, and its exercise of its rights and performance of its obligations under each Finance Document will constitute, private and commercial acts done and performed for private and commercial purposes; and (b) no Obligor will be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in the jurisdiction of its incorporation in relation to any Finance Document. 17.10 NON-CONFLICT The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not: (a) conflict in any material respect with any law or regulation or judicial or official order binding on any Obligor or any Material Subsidiary; or (b) conflict with the constitutional documents of any Obligor; or (c) conflict in any material respect with any document which is binding upon any Obligor or any Material Subsidiary or any asset of any Obligor or any Material Subsidiary. 17.11 NO DEFAULT (a) No Event of Default is outstanding or will result from the making of any Loan; and (b) no other event is outstanding which constitutes a default (howsoever described) under any document which is binding on any Obligor or any asset of any Obligor to an extent or in a manner which might reasonably be expected to have a Material Adverse Effect. 72 17.12 LITIGATION (a) No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a Material Adverse Effect. (b) No proceedings of any nature are current or, to its knowledge, pending or threatened, for the winding-up or dissolution (other than a solvent winding up or dissolution) of, or in respect of any insolvency proceeding of any nature relating to, any Obligor or Material Subsidiary. 17.13 SECURITY (a) No Security Interests exist (except as permitted by this Agreement) on or over assets of any Obligor or Material Subsidiary. (b) It and each member of the Group is the legal and beneficial owner of the property (if any) which it purports to charge pursuant to any of the Security Documents. The property charged pursuant to any Security Documents are not subject to any other Security Interests (except under the Security Documents), third party rights, options (except a call option in favour of the New Investors under and as defined in the VE Share Pledge and Escrow Agreement), claims or similar rights. Any shares charged pursuant to a Security Document are all fully paid up. (c) The security constituted by the Security Documents constitutes (and will at all times continue to constitute, unless released in accordance with the Finance Documents) in respect of obligations owed to the Finance Parties and the lenders under the New Facility Agreement, first ranking security in priority and payment over the assets secured or purported by be secured under the Security Documents. 17.14 GOVERNING LAW AND JURISDICTION (a) Each Obligor's: (i) irrevocable submission under Clause 37 (Jurisdiction) to the jurisdiction of the courts of England and New York; (ii) agreement that this Agreement is governed by English law; and (iii) agreement not to claim any immunity to which it may be entitled, are legal, valid and binding under the laws of the jurisdiction of its incorporation. (b) Any judgement obtained in the courts of England in legal proceedings based on or in connection with the Finance Documents will be recognised and enforced by the courts of the jurisdiction of incorporation of each Obligor without re-examination or re-litigation of the matter thereby adjudicated (subject to the provisions of Council Regulation No. 44/2001 of the Council of the European Union on jurisdiction and enforcement of judgements in civil and commercial matters, or other applicable law or convention on the recognition and enforcement of court judgements). 73 17.15 ACCOUNTS (a) The audited consolidated accounts of the Company most recently delivered to the Facility Agent (which, at the date of this Agreement, are the Original Group Accounts): (i) have been prepared in accordance with accounting principles and practices generally accepted in France or the United States of America (as appropriate), consistently applied; and (ii) fairly represent the consolidated financial condition of the Group as at the date to which they were drawn up, and there has been no change in the consolidated financial condition of the Group since the date to which those accounts were drawn up which has or could reasonably be expected to have a Material Adverse Effect. (b) In the case of each Borrower (other than the Company), its audited accounts most recently delivered to the Agent: (i) have been prepared in accordance with accounting principles and practices generally accepted in the jurisdiction of its incorporation, consistently applied; and (ii) fairly represent its financial condition as at the date to which they were drawn up, and there has been no change in the consolidated financial condition of that Borrower since the date to which those accounts were drawn up which has or could reasonably be expected to have a Material Adverse Effect. (c) There has been no material adverse change in the business or financial condition of the Group taken as a whole since 31st December, 2000. (d) The projections and forecasts contained in the Liquidity Analysis most recently delivered to the Facility Agent (which, at the Effective Date, is the Original Liquidity Analysis) were made in good faith and based on reasonable assumptions and such Liquidity Analysis does not as at its date omit any projections or forecasts which would make the projections and forecasts actually contained in, or used for the preparation of, that Liquidity Analysis misleading. 17.16 INFORMATION MEMORANDUM (a) The information contained in the Information Memorandum was true in all material respects as at its date; (b) the Information Memorandum did not omit as at its date any information which, if disclosed, would adversely affect the decision of a person considering whether to enter into this Agreement; and (c) nothing has occurred since the date of the Information Memorandum which renders the information contained in it untrue or misleading in any respect and which, if disclosed, might adversely affect the decision of a person considering whether to enter into this Agreement. 74 17.17 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES The representations and warranties set out in this Clause 17: (a) are made on the date of this Agreement and the first Drawdown Date; (b) are, with the exception of Clauses 17.3 (Powers and authority), 17.7 (Taxes on payments), 17.8 (Stamp duties), 17.15(c) (Accounts) and 17.16 (Information Memorandum)), deemed to be repeated by each Borrower on the date of each Request and the first day of each Interest Period with reference to the facts and circumstances then existing; (c) are (with the exception of Clauses 17.15(c) and (d) (Accounts) and 17.16 (Information Memorandum) repeated by each Subsidiary Borrower and each Subsidiary Guarantor on the date of a Borrower Accession Deed or Guarantor Accession Deed as appropriate, with reference to the facts and circumstances then subsisting; and (d) are, in the case of Clause 17.15(d) (Accounts), repeated by the Company on each date on which a Liquidity Analysis is delivered to the Facility Agent. 18. UNDERTAKINGS 18.1 DURATION The undertakings in this Clause 18 remain in force from the date of this Agreement for so long as any amount is or may be outstanding under this Agreement or any Commitment is in force. 18.2 FINANCIAL INFORMATION (a) The Company shall supply the following to the Facility Agent in sufficient copies for all the Banks: (i) as soon as the same are available (and in any event within 120 days of the end of each of its financial years) the audited consolidated financial statements of the Company for each financial year, together with an Accounts Certificate; (ii) as soon as the same are available (and in any event within 120 days of the end of each of its financial years) the audited unconsolidated financial statements of each Borrower for each financial year, together with an Accounts Certificate; (iii) as soon as the same are available (and in any event within 90 days of the end of the relevant period) the quarterly and the semi-annual consolidated financial statements of the Company; (iv) together with each set of financial statements of the Company a certificate signed by the Chief Financial Officer of the Company (or the Company's auditors in the case of audited financial statements) setting out in reasonable detail computations establishing compliance with each of the financial covenants in Clause 19 (Financial 75 Covenants) and confirming that as at the end of the relevant period it was in compliance with Clauses 18.8 (Negative pledge) and 18.16 (Subsidiary Debt); (v) except during a Release Condition Period, on the first Business Day of each calendar month, an up-to-date Liquidity Analysis together with a certificate from the Chief Financial Officer of the Company confirming that such Liquidity Analysis has been prepared in good faith and is based on reasonable assumptions; and (vi) during a Release Condition Period, on the first Business Day of each quarter, an up-to-date Liquidity Analysis. (b) The Obligors' Agent shall ensure that: (i) each set of consolidated financial statements delivered pursuant to paragraph (a) is prepared on the same basis as was used in the preparation of the consolidated accounts of the Group for the period of 6 months ending on 30th June, 2002. If any consolidated financial statements of the Company referred to in paragraph (a) (the "INCONSISTENT ACCOUNTS") are prepared on a basis which is not consistent with the immediately preceding comparable financial statements or in accordance with accounting principles and practices which are not consistent with the immediately preceding comparable financial statements and, in the reasonable opinion of the Obligors' Agent or the Majority Banks, the result of the calculations made pursuant to the provisions in Clause 19 (Financial Covenants) does not correspond to the commercial intention of such provisions, the following shall apply: (A) either the Obligors' Agent shall notify the Facility Agent or the Facility Agent shall notify the Obligors' Agent accordingly (as appropriate). Any notice given under this sub-paragraph (A) shall contain reasonable details of the differences between the Inconsistent Accounts and the immediately preceding comparable financial statements; and (B) in the event of a notice from the Facility Agent or, in the event of a notice from the Obligors' Agent, if the Majority Banks agree with the Obligors' Agent's opinion, the Obligors' Agent and the Banks shall negotiate in good faith for a period not exceeding 30 days with a view to the Obligors' Agent and the Majority Banks agreeing the manner in which the provisions of Clause 19 (Financial Covenants) shall be applied to the Inconsistent Accounts. If no agreement is reached within this period or, if the notice under sub-paragraph (A) above was from the Obligors' Agent, the Majority Banks do not agree with the Obligors' Agent's opinion, the provisions of Clause 19 (Financial Covenants) shall be interpreted with respect to the Inconsistent Accounts as determined by the Facility Agent (acting on the instructions of the Majority Banks), which interpretation shall prevail; and (ii) each set of financial statements delivered pursuant to paragraph (a) shall (in the case of audited financial statements) give a true and fair view of and (in the case of other financial statements) shall fairly represent the consolidated financial condition of the Group as at the end of the period to which those financial statements relate and of the results of its operations during that period. 76 18.3 INFORMATION - MISCELLANEOUS The Company shall supply to the Facility Agent: (a) all documents despatched (i) by it to its shareholders (or any class of them) concerning the convening of, agendas for and resolutions to be considered at shareholders meetings or involving or containing reports or information relating to the affairs and activities of the Company, or (ii) by any Borrower to its creditors generally (or any class of them) at the same time as they are despatched; (b) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current or pending, and which would, if adversely determined, reasonably be expected to have a Material Adverse Effect; and (c) promptly, such further information in the possession or control of any Borrower or any Material Subsidiary regarding its financial condition and operations as the Facility Agent may reasonably request, in sufficient copies for all of the Banks, if the Facility Agent so requests. 18.4 NOTIFICATIONS Each Obligor shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of the facts constituting the Default. 18.5 COMPLIANCE CERTIFICATES The Company shall supply to the Facility Agent: (a) together with the accounts specified in Clause 18.2(a)(i) and (ii) (Financial information); and (b) promptly at any other time, if the Facility Agent so requests (but such request may not be made more than twice in any period of twelve consecutive calendar months unless a Default has occurred or the Majority Banks have instructed the Facility Agent to make such a request), a certificate signed by one of the signatories authorised to act on its behalf certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it. 18.6 AUTHORISATIONS Each Obligor shall promptly: (a) obtain, maintain and comply with the terms of; and (b) supply certified copies to the Facility Agent of, 77 any authorisation required under any law or regulation of France to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document. 18.7 PARI PASSU RANKING Each Obligor shall procure that its obligations under the Finance Documents will rank at least pari passu with all its other present and future unsecured and unsubordinated obligations, except for obligations mandatorily preferred by law applying to companies generally. 18.8 NEGATIVE PLEDGE (a) Subject to paragraphs (c) and (d), no Obligor shall, and the Company shall procure that no Material Subsidiary will, create or permit to subsist any Security Interest on any of its assets. (b) Notwithstanding paragraphs (c) and (d), the Company will procure that no member of the Group will create or permit to subsist any Security Interest: (i) over any shares in Centenary Holding N.V. or over any shares in Centenary Holding Limited except, in each case, a Security Interest created under a Security Document; or (ii) securing any amounts arising under, in respect of or in any way relating to the High Yield Notes or in favour of the trustee under the Indenture. (c) Notwithstanding paragraph (d), no Obligor shall, and the Company will procure that no member of the Group will, create or permit to subsist on any of its assets any Security Interest which secures any indebtedness owing under the New Facility Agreement, except to the extent that: (i) the aggregate principal amount so secured does not exceed E2,500,000,000; (ii) all amounts owing under the Finance Documents are secured either by that Security Interest or by a comparable Security Interest over the same asset(s) (in each case subject to the Security Sharing Agreement); and (iii) the Security Interest referred to at sub-paragraph (ii) above ranks (by operation of law or as a result of the Security Sharing Agreement) at least pari passu with the rights of the New Secured Creditors (as defined in the Security Sharing Agreement) in the asset(s) subject to that Security Interest, and in priority to all other rights in the asset(s) subject to that Security Interest other than, in the case of security granted pursuant to the VE Share Pledge and Escrow Agreement, those of the New Investors (as defined in that agreement). (d) Paragraph (a) does not apply to: (i) Security Interests already existing at the date of this Agreement securing Financial Indebtedness in an aggregate amount not exceeding E1,000,000,000 (or the equivalent in other currencies); 78 (ii) liens arising solely by operation of law (or by any deed evidencing the same) in the ordinary course of its business in respect of Financial Indebtedness which either (1) has been due for less than 14 days or (2) is being contested in good faith and by appropriate means; (iii) pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of its business as security only for Financial Indebtedness to a bank or financial institution directly relating to the goods or documents on or over which that pledge exists; (iv) any Security Interest arising out of title retention provisions in a supplier's standard conditions of supply of goods acquired in the ordinary course of business; (v) any Security Interest existing at the time of acquisition on or over any assets acquired after the date of this Agreement but only if (1) the Security Interest was not created in contemplation of or in connection with that acquisition and (2) the principal, capital or nominal amount secured by any such Security Interest and outstanding at the time of acquisition may not be increased; (vi) any Security Interest created on any assets acquired after the date of this Agreement for the sole purpose of financing or re-financing that acquisition and securing a principal, capital or nominal amount not exceeding 100 per cent. of the cost of that acquisition; (vii) in the case of any company which becomes a Material Subsidiary after the date of this Agreement, any Security Interest existing on or over its assets when it becomes a Material Subsidiary, but only if (1) the Security Interest was not created in contemplation of or in connection with it becoming a Material Subsidiary and (2) the principal, capital or nominal amount secured by any such Security Interest and outstanding when the relevant company becomes a Material Subsidiary may not be increased except by reason of any fluctuation in the amount outstanding under, and within the limits and in accordance with the terms of, facilities which exist and are secured by the relevant Security Interest when it becomes a Material Subsidiary; (viii) any Security Interest given on assets acquired after the date of this Agreement to secure Project Finance Indebtedness provided that the assets which are subject to that Security Interest are assets which are the subject of the applicable project; (ix) any Security Interest created in respect of borrowings from the French Export Credit Corporation (COFACE) or similar governmental agency incurred on concessional terms by any Obligor or Material Subsidiary made to refinance any amount receivable under any export sales contract provided that each such Security Interest consists only of a pledge of such member's claims under such contract against the foreign buyer and of any Security Interest or guarantee of such claims; (x) any Security Interest over cash or securities deposited with any bank, financial institution, stock exchange or clearing house with which any Obligor or Material Subsidiary enters into back to back, foreign exchange, swap or derivative transactions 79 and with which cash or securities have had to be deposited in order for such transaction to be entered into; (xi) any Security Interest created by virtue of the operation of any cash pooling arrangements for any Obligor or Material Subsidiary with their bankers providing for the setting-off or netting of debt and credit balances on bank accounts of those members of the Group; (xii) any Security Interest granted by any Obligor or Material Subsidiary to any pension fund or managers securing the pension obligations of any member of the Group; (xiii) any Security Interest (the "REPLACEMENT SECURITY INTEREST") created in substitution for any Security Interest referred to in this paragraph (d) so long as the principal, capital or nominal amount secured by the Replacement Security Interest does not exceed the amount permitted to be secured under this paragraph (d) by the Security Interest which it replaced; (xiv) any Security Interest arising out of orders of attachment, sequestration, distress or execution which does not constitute an Event of Default under Clause 20.9 (Creditors' process); (xv) the transfer of any Security Interest permitted to exist under this paragraph (d) from one person to another, so long as the principal, capital or nominal amount secured by that Security Interest is not increased; (xvi) any Security Interest, granted by any member of the VUE Group over its assets, which secures amounts arising under, or is otherwise permitted or required by, the VUE Bridge Extension (as amended from time to time) or any VUE Bridge Refinancing; (xvii) any Security Interest granted on or over assets or rights to receive assets in connection with the disposal of Sithe Asia with an aggregate value of no more than US$60,000,000 (or equivalent in other currencies) at any time; (xviii) any Security Interest granted under the VE Share Pledge and Escrow Agreement; and (xix) any other Security Interest created on or over assets of any Obligor or any Material Subsidiary, provided that the aggregate outstanding principal, capital or nominal amount secured by all Security Interests created or outstanding under this paragraph on or over assets of any Obligor or any Material Subsidiary must not at any time exceed in aggregate E500,000,000 (or the equivalent in other currencies), provided that the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under this paragraph (d) (excluding paragraphs (viii), and (xvi) and (xviii) above), when aggregated with the aggregate value of all assets and receivables sold, transferred or otherwise disposed of pursuant to all Restricted Transactions (as defined in Clause 18.9 (Transactions similar to security)), does not at any time exceed 7.5 per cent. of consolidated assets (being the total amount of assets shown in the most recent consolidated balance sheet of the Group). 80 18.9 TRANSACTIONS SIMILAR TO SECURITY (a) No Obligor shall, and the Company shall procure that no Material Subsidiary will enter into any Restricted Transaction if as a result the aggregate value of all assets and receivables sold, transferred or otherwise disposed of pursuant to all Restricted Transactions, when aggregated with the aggregate principal amount of Financial Indebtedness secured by all Security Interests created or outstanding under Clause 18.8(d) (excluding paragraph 18.8(d)(viii) above) would exceed 7.5 per cent. of consolidated assets (being the total amount of assets shown in the most recent consolidated balance sheet of the Group). (b) In this Clause 18.9, "RESTRICTED TRANSACTION" means a sale, transfer or other disposal by any Obligor or any Material Subsidiary of: (i) any of its assets on terms whereby it is or may be leased to or re-acquired or acquired by a member of the Group or any of its related entities; or (ii) any of its receivables on recourse terms (excluding the discounting of bills or notes in the ordinary course of trading), in circumstances where the transaction is entered into primarily as a method of raising finance or of financing the acquisition of an asset provided that if such a transaction is defeased it shall not thereafter constitute a Restricted Transaction, and for these purposes a Restricted Transaction is "DEFEASED" if all of the obligations of the Obligor or Material Subsidiary concerned thereunder are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) prepaid or (C) otherwise discharged and extinguished in full, such that no Obligor or Material Subsidiary thereafter has any outstanding Financial Indebtedness with respect to such transaction. 18.10 DISPOSALS (a) No Obligor shall, and the Company shall procure that no Material Subsidiary will, whether voluntarily or involuntarily, sell, transfer, grant or lease or otherwise dispose of any of its assets. (b) Paragraph (a) does not apply to: (i) disposals made in the ordinary course of business of the disposing entity or for full value on normal commercial terms; (ii) disposals by one Material Subsidiary to another or to any Borrower by a Material Subsidiary as long as the percentage ownership of the Company in the receiving Material Subsidiary (whether such ownership is direct or indirect through other Material Subsidiaries) is not significantly less than the Company's percentage ownership (whether direct or indirect as aforesaid) in the disposing Material Subsidiary; (iii) disposals of assets being shares, provided that the company whose shares are the subject of such disposal remains controlled by the Company following such disposal; or 81 (iv) disposals, by VUE or any Subsidiary of VUE, of assets in connection with a securitisation for the purposes of refinancing the VUE Bridge Extension or any VUE Bridge Refinancing provided that the aggregate net investment of the various purchasers (other than any member of the VUE Group) outstanding under such securitisation, together with the aggregate principal amount outstanding under the VUE Bridge Extension and any VUE Bridge Refinancing, does not exceed U.S.$1,620,000,000 at any time. 18.11 CHANGE OF BUSINESS The Company shall procure that no substantial change is made to the general nature or scope of the business of the Company or Group from that carried on at the date of this Agreement (and for the purposes of this Clause 18.11, the general nature or scope of the business of the Company or Group carried on at the date of this Agreement is the media and telecommunications business). 18.12 MERGERS AND ACQUISITIONS No Obligor shall enter into any amalgamation, demerger, merger or reconstruction unless: (a) (i) either the Obligor concerned is the surviving entity and remains responsible for all the obligations of the Obligor concerned under the Finance Documents to which it is a party; or (ii) if the surviving entity is not the Obligor concerned, (A) the Facility Agent has first received legal opinions from external counsel to the Obligor concerned addressed to the Finance Parties, in form and substance satisfactory to the Facility Agent confirming that the surviving entity will accede to the obligations of the Obligor concerned under the Finance Documents in full and (if the Obligor concerned is a Subsidiary Borrower) that the obligations of the Guarantors under this Agreement in respect of the Obligor concerned will remain in full force and effect with respect to the obligations under the Finance Documents assumed by the surviving entity, (B) the surviving entity is incorporated, in the case of an amalgamation, demerger, merger or reconstruction involving the Company, in the U.S.A., France, Belgium or the Netherlands or, in the case of an amalgamation, demerger, merger or reconstruction involving a Subsidiary Borrower, in the U.S.A., France, Belgium or the Netherlands or the jurisdiction of that Subsidiary Borrower, (C) this Agreement is first amended to the extent determined by the Majority Banks (acting on the basis of legal advice) to be necessary in light of the identity and jurisdiction of incorporation of the surviving entity and (D) in the case of an Obligor other than the Company, the surviving entity is a Subsidiary of the Company; and (b) (in the case of an amalgamation, demerger, merger or reconstruction involving the Company) either: 82 (i) the corporate rating of the surviving entity (whether or not the Company) will be at least BBB- as published by S&P (or the equivalent thereof published by any other rating agency); or (ii) if no rating agency publishes a corporate rating in respect of the surviving entity, the credit standing of the surviving entity will (in the opinion of the Majority Banks) be the same as or better than the Company's, in each case immediately prior to the amalgamation, demerger, merger or reconstruction becoming publicly known. 18.13 INSURANCE Each Obligor shall, and the Company shall procure that each other member of the Group will, maintain insurance with financially sound and reputable insurers with respect to its material assets of an insurable nature against such risks and in such amounts as are normally maintained by persons carrying on the same or a similar class of business. 18.14 MAINTENANCE OF STATUS Subject to Clause 18.12 (Mergers and acquisitions), each Obligor shall, and the Company shall procure that each Material Subsidiary will: (a) do all such things as are necessary to maintain its corporate existence; and (b) ensure that it has the right and is duly qualified to conduct its business as it is conducted in all applicable jurisdictions. 18.15 COMPLIANCE WITH ENVIRONMENTAL LAWS Each Obligor will, and the Company will procure that each of its Material Subsidiaries will, comply in all material respects with all applicable Environmental Laws. 18.16 SUBSIDIARY DEBT (a) The Company shall procure that that part of Net Financial Debt (as defined in Clause 19.1) (excluding Project Finance Indebtedness and Financial Indebtedness owing from one member of the Group to another member of the Group) incurred by its Subsidiaries shall not at any time exceed in aggregate an amount equal to 30 per cent. of the then Net Financial Debt (as defined in Clause 19.1 (Financial covenant definitions)) (excluding Project Finance Indebtedness and Financial Indebtedness owing from one member of the Group to another member of the Group). (b) Financial Indebtedness: (i) owing under or in respect of the VUE Bridge Extension or any VUE Bridge Refinancing; or (ii) constituted by the guarantees contained in the New Facility Agreement; or 83 (iii) of a principal amount of up to U.S.$500,000,000 owing by Vivendi Communications North America, Inc. or Vivendi Universal Holding I Corp. as borrower (in place of an equivalent amount owing by the Company as borrower) under the New Facility Agreement. will not be taken into account for the purposes of paragraph (a). 18.17 GUARANTEES (a) No member of the Group may give or be under any obligation in respect of any guarantee, indemnity or other assurance against financial loss in respect of the High Yield Notes or in favour of the trustee under the Indenture. (b) No Obligor may, and the Company shall procure that no member of the Group is, gives or is under any obligation in respect of any guarantee, indemnity or other assurance against financial loss in respect of the indebtedness under New Facility Agreement, unless that Obligor or member of the Group is (or simultaneously becomes) a Guarantor under this Agreement. 18.18 HIGH YIELD NOTES Except during a Release Condition Period: (a) the Company will not amend or agree to amend the High Yield Note Documents: (i) such that the maturity date of the High Yield Notes is advanced to a date prior to the Final Maturity Date; (ii) such that the rate of interest or frequency of payment of interest in respect of any of the High Yield Notes is increased; or (iii) in any other way which is or could be, in each case in the opinion of the Majority Banks, inconsistent with the terms of this Agreement or have a detrimental effect on the rights or remedies of the Finance Parties under the Finance Documents; (b) the Company will not make a repayment or prepayment, redemption, repurchase or defease (by way of legal defeasance or covenant defeasance) any of the High Yield Notes or make any offer to repay, prepay, redeem, repurchase or defease any of the High Yield Notes; and (c) the Company will ensure that no member of the Group purchases any of the High Yield Notes. 18.19 SECURITY AND SUBORDINATION (a) The Obligors shall at their own expense execute and do all such assurances, acts and things as the Security Agent may reasonably require for perfecting or protecting the security intended to be afforded by the Security Documents (and shall deliver to the Security Agent such 84 directors' and shareholders' resolutions, title documents and other documents as the Security Agent may reasonably require). (b) Except during a Security Release Condition Period, the Company will ensure that Security Documents in respect of the Existing Cegetel Shares are executed and delivered to the Security Agent, in form and substance satisfactory to the Facility Agent and together with any other documents, evidence, opinions or assurances reasonably required by the Security Agent in connection with those Security Documents, forthwith if any of the following circumstances subsist: (i) there are no contractual restrictions or provisions (including, without limitation, pre-emption rights) between shareholders or Cegetel Groupe S.A. restricting or which would be triggered upon the granting of such a pledge; (ii) SIT agrees to grant a share pledge over the Acquired Shares; or (iii) the Company acquires 100 per cent. of the shares of Cegetel. (c) Except during a Security Release Condition Period, the Company must ensure that each loan which is owing by a member of the Group to another member of the Group and which is (or the repayment of which is) subordinated to the repayment of the indebtedness under the New Facility Agreement is also subordinated, on the same terms, to the indebtedness owing under the Finance Documents. 18.20 VE B SHARES (a) The Company shall use its reasonable endeavours to negotiate with the New Investors the transactions contemplated in the VE Share Pledge and Escrow Agreement (as amended on or about the date hereof) in order to obtain the consent of the New Investors to enable the Company to grant a pledge in favour of the lenders under the New Facility Agreement over all of the VE B Shares ranking pari passu with the pledge of these shares granted by the Company to the Banks. (b) Promptly upon the New Investors giving their consent referred to in paragraph (a) above (but not otherwise), the Company shall execute a share pledge in respect of all the VE B Shares substantially in the form set out in Annex F of the VE Share Pledge and Escrow Agreement. 19. FINANCIAL COVENANTS 19.1 FINANCIAL COVENANT DEFINITIONS In this Clause 19: "ACQUIRED BUSINESS" means a member of the Group or business or assets acquired during a Measurement Period. "CASH EBITDA" 85 means the consolidated operating income of the Group (other than any member of the Maroc Telecom Group and the Cegetel Group) determined in accordance with accounting principles and practices generally accepted in France, consistently applied, for a Measurement Period, adjusted by: (a) adding back depreciation, amortisation and non-cash provisions (to the extent that such depreciation, amortisation and non-cash provisions are deducted in computing operating income); (b) deducting any gain (or adding back any loss) in connection with any revaluation of an asset or any gain or loss against book value arising on the disposal of an asset (otherwise than in the ordinary course of trading) by a member of the Group during that Measurement Period; (c) adding back net restructuring charges and other one-time items; and (d) adding cash dividends received from VE, any member of the Maroc Telecom Group and the Cegetel Group (other than cash dividends received by SIT in respect of the Acquired Shares prior to the SIT Repayment Date), and including the operating income (as adjusted in accordance with paragraphs (a) to (c) above) of any Acquired Business (provided such acquisition is permitted by the terms of this Agreement) (as determined on a pro forma twelve month basis for the part of the Measurement Period prior to the acquisition of the Acquired Business), provided that the extent of the operating income of the Acquired Business so included will be an amount equal to the percentage of the cashflow of the Acquired Business which the Company demonstrates in reasonable detail it either effectively controls or has access to. "CONSOLIDATED CASH AND CASH EQUIVALENTS" means, at any time: (a) cash in hand or on deposit with any acceptable bank (excluding any deposit used as cash collateral for the purpose of defeasing indebtedness as described in paragraph (B) of the definition of Total Gross Financial Debt); (b) certificates of deposit, maturing within one year after the relevant date of calculation, issued by a reputable bank; (c) any investment in marketable obligations issued or guaranteed by the government of the United States of America, Switzerland or the European Union (excluding Greece and any country which becomes a member thereof after the date of the New Facility Agreement) or by an instrumentality or agency of the government of the United States of America, Switzerland or the European Union (excluding Greece and any country which becomes a member thereof after the date of the New Facility Agreement) having an equivalent credit rating; (d) open market commercial paper: (i) for which a recognised trading market exists; 86 (ii) issued in Sterling, U.S. Dollars or Euro; (iii) which matures within one year after the relevant date of calculation; and (iv) which has a credit rating of either A-1 by S&P or IBCA or P-1 by Moody's, or, if no rating is available in respect of the commercial paper or indebtedness, the issuer of which has, in respect of its long-term debt obligations, an equivalent rating; and (e) any other instrument, security or investment approved by the Majority Banks, in each case, to which any member of the Group (other than any member of the Maroc Telecom Group) is beneficially entitled at that time and which is capable of being applied against Total Gross Financial Debt but excluding any cash acquired in connection with the Fixed Line Acquisition. An "ACCEPTABLE BANK" for this purpose is a commercial bank or trust company which has a rating of A or higher by S&P or FitchIBCA or A2 or higher by Moody's or a comparable rating from a nationally recognised credit rating agency for its long-term debt obligations or has been approved by the Majority Banks. "FINANCIAL INCOME" means, in respect of the Group (other than any member of the Maroc Telecom Group and any member of the Cegetel Group, each on a consolidated basis) all interest and other financing income received or receivable by the Group (other than any member of the Maroc Telecom and the Cegetel Group) during a Measurement Period. "FIXED LINE ACQUISITION" means the acquisition by Cegetel, of a French fixed line telephone business which has a positive EBITDA based on its latest accounts and, at the time of its acquisition, Financial Indebtedness of not more than E300,000,000, for an aggregate total consideration of not more than E800,000,000 (including E300,000,000 of acquired debt). "MEASUREMENT PERIOD" means a period of 12 months ending on a Testing Date. "NET FINANCIAL DEBT" means, in respect of the Group (other than any member of the Maroc Telecom Group) at any time Total Gross Financial Debt less Consolidated Cash and Cash Equivalents. "NET FINANCING COSTS" means, in respect of the Group (other than any member of the Maroc Telecom Group and any member of the Cegetel Group, each on a consolidated basis) Total Financing Costs less Financial Income for the Group during the relevant Measurement Period. 87 "QUARTERLY TESTING DATE" means 31st March, 30th June, 30th September and 31st December of each year. "RELEVANT PERCENTAGE" means the percentage of the cashflow of any Acquired Business which the Company demonstrates in reasonable detail it either controls or has access to. "SEMI-ANNUAL TESTING DATE" means 30th June and 31st December of each year. "TESTING DATE" means a Quarterly Testing Date or a Semi-annual Testing Date. "TOTAL FINANCING COSTS" means all interest and financing fees, including the interest element payable under any finance lease and any periodic cash payments in respect of preference shares (other than preference shares issued by VUE prior to the date of the New Facility Agreement or issued or accrued as additional shares in respect of shares issued by VUE prior to the date of the New Facility Agreement) and excluding any costs incurred in connection with the Fixed Line Acquisition (together "FINANCING Costs") (whether, in each case, paid, payable or (subject to the proviso set out below) capitalised) incurred by the Group (other than any member of the Maroc Telecom Group and on a consolidated basis) during a Measurement Period and including the Relevant Percentage of the Financing Costs of any Acquired Business (as determined on a pro forma twelve month basis for the part of the Measurement Period prior to the acquisition of the Acquired Business), provided that capitalised items shall only be included in the calculation of Total Financing Costs for a Measurement Period if the Company confirms in a compliance certificate delivered in relation to the financial covenants for that Measurement Period that they constitute more than 5 per cent. of those Total Financing Costs. For these purposes, in each such compliance certificate, the Company shall either certify that capitalised items for the Measurement Period to which that certificate relates do not exceed 5 per cent. of Total Financing Costs for that period or, if they do, set out the aggregate amount of capitalised items. "TOTAL GROSS FINANCIAL DEBT" means, in respect of the Group (other than any member of the Maroc Telecom Group on a consolidated basis) at any time the aggregate of the following (without double counting and provided that where any of the following items relates to an Acquired Business, the Relevant Percentage only of the amount of that item shall be included in the calculation of Total Gross Financial Debt): (a) the outstanding principal amount of any moneys borrowed; (b) the outstanding principal amount of any acceptance under any acceptance credit; 88 (c) the outstanding principal amount of any bond, note, debenture, loan stock or other similar instrument; (d) the capitalised element of indebtedness under a finance or capital lease except to the extent that any such lease is defeased (for which purposes, a lease is "defeased" if all of the obligations of the relevant member of the Group thereunder are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) prepaid or (C) otherwise discharged and extinguished in full, such that no member of the Group thereafter has any outstanding indebtedness or liability (contingent or otherwise) with respect to such lease); (e) the outstanding principal amount of all moneys owing in connection with the sale or discounting of receivables (otherwise than on a non-recourse basis); (f) the outstanding principal amount of any indebtedness arising from any deferred payment agreements arranged primarily as a method of raising finance or financing the acquisition of an asset; (g) any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (c) above; (h) the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; (i) the mark to market value of any currency swap or interest swap, cap or collar arrangements or any other derivative instrument to the extent the derivative instruments are not used for hedging purposes; (j) the aggregate face value amount of preference shares (other than preference shares issued by VUE prior to the date of the New Facility Agreement or issued or accrued as additional shares in respect of shares issued by VUE prior to the date of the New Facility Agreement and preference shares mandatorily convertible into shares in a member of the Group (other than any member of the Maroc Telecom Group) which do not in any circumstances give rise to redemptions or repayments (whether in whole or in part) in cash) in relation to which there is a contractual obligation to pay dividends prior to 91 days after the Final Maturity Date; and (k) the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (j) above which is the subject of a guarantee, indemnity or similar assurance against financial loss given by a member of the Group (other than any member of the Maroc Telecom Group) (excluding (i) the amount of any guarantee obligations of the Company which have been assigned to, and assumed by, any member of the Maroc Telecom Group or a company which is not a member of the Group and (ii) any guarantee, indemnity or similar assurance against financial loss entered into prior to the date of the New Facility Agreement which is the subject of a counter-guarantee given by VE), but excluding any Non Recourse Financing, any Intra Group Loans and Project Finance Indebtedness, any indebtedness incurred in connection with the Fixed Line Acquisition or 89 otherwise any indebtedness which has been defeased prior to the Effective Date (for which purposes, indebtedness is "defeased" if all of the obligations of the relevant member of the Group in relation thereto are irrevocably (A) transferred in full to a person that is not a member of the Group or (B) cash collateralised in full by blocked deposits, such that no member of the Group thereafter has any outstanding indebtedness or liability (contingent or otherwise) with respect to such indebtedness (including, without limitation, with respect to adjusting the amount of, or making any payment in relation to, any such cash collateral)). 19.2 CALCULATION (a) All the terms used in this Clause 19 are to be calculated in accordance with accounting principles and practices generally accepted in France, consistently applied. (b) If there is a dispute as to any interpretation of any term in this Clause 19, either: (i) the interpretation of the Facility Agent shall prevail (after prior consultation with the Company's auditors and the Company); or (ii) (if the Company so requests) the Facility Agent will, at the expense of the Company, instruct an independent expert (which shall be an internationally recognised independent qualified firm of auditors) to act as an expert and not as an arbitrator, and the determination of such expert shall be final and binding on the Parties. 19.3 FINANCIAL COVENANTS (a) Before a Release Condition Date (but subject always to paragraphs (c) to (f) inclusive below), the Company shall procure that on each quarterly Testing Date referred to in Column 1 below: (i) the ratio of Net Financial Debt to Cash EBITDA does not exceed that set out in Column 2 below opposite that Testing Date; (ii) the ratio of Cash EBITDA to Net Financing Costs is at least that set out in Column 3 below opposite that Testing Date; and (iii) Total Gross Financial Debt does not exceed the amount set out in Column 4 below opposite that Testing Date. (b) On or after a Release Condition Date (but subject always to paragraphs (c) to (f) inclusive below), the Company shall procure that following such Release Condition Date on each semi-annual Testing Date referred to in Column 1 below: (i) the ratio of Net Financial Debt to Cash EBITDA does not exceed that set out in Column 2 below opposite the Testing Date applicable as at such Release Condition Date; (ii) the ratio of Cash EBITDA to Net Financing Costs is at least that set out in Column 3 below opposite the Testing Date applicable as at such Release Condition Date; and 90 (iii) Total Gross Financial Debt does not exceed the amount set out in Column 4 below opposite the Testing Date applicable as at such Release Condition Date. (c) If, on or after a Release Condition Date, an Investment Downgrading Date occurs, the financial ratios and covenant (the ratios) referred to in paragraph (a) above shall, subject to paragraphs (d) to (f) inclusive below, apply and be reinstated from the Investment Downgrading Date unless and until a Release Condition Date occurs again, in which case the provisions of paragraph (b) above shall apply. (d) Within 5 days of an Investment Downgrading Date, the Company and the Facility Agent shall enter into negotiations in good faith for a period of no more than 45 days with a view to agreeing any amendments to the ratios set out in columns 2, 3 and 4 below. (e) Any amendments agreed under paragraph (d) shall be, with the prior written consent of the Majority Banks, binding on all the parties. (f) If no amendments are agreed by the Company and the Majority Banks under paragraphs (d) and (e) above, the applicable ratios, in each case for the period from the Investment Downgrading Date unless and until the occurrence of a Release Condition Date, will be those set out in columns 2, 3 and 4, as appropriate, opposite the Testing Date which were applicable on the Release Condition Date immediately preceding that Investment Downgrading Date and thereafter the applicable ratios on each successive quarterly Testing Date, will be the next consecutive ratios, each as set out in columns 2, 3 and 4 below.

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 (TESTING DATE) (MAXIMUM RATIO OF NET (MINIMUM RATIO FOR (MAXIMUM TOTAL GROSS FINANCIAL DEBT TO CASH EBITDA TO NET FINANCIAL DEBT CASH EBITDA) FINANCING COSTS) (BILLION EURO)) 30/06/03 5.8:1 2.4:1 18.0 30/09/03 5.4:1 2.4:1 15.6 31/12/03 4.4:1 2.7:1 15.6 31/03/04 4.2:1 2.9:1 12.8 30/06/04 4.0:1 3.1:1 12.5 30/09/04 4.0:1 3.2:1 12.3 31/12/04 4.0:1 3.3:1 11.3 31/03/05 3.5:1 3.4:1 10.3 30/06/05 3.5:1 3.4:1 10.3 30/09/05 3.5:1 3.4:1 10.0 31/12/05 3.5:1 3.4:1 10.0 31/03/06 3.0:1 3.5:1 9.2

91

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 (TESTING DATE) (MAXIMUM RATIO OF NET (MINIMUM RATIO FOR (MAXIMUM TOTAL GROSS FINANCIAL DEBT TO CASH EBITDA TO NET FINANCIAL DEBT CASH EBITDA) FINANCING COSTS) (BILLION EURO)) 30/06/06 3.0:1 3.5:1 9.2 30/09/06 3.0:1 3.5:1 9.0 31/12/06 3.0:1 3.5:1 9.0 and subsequent Testing Dates

20. DEFAULT 20.1 EVENTS OF DEFAULT Each of the events set out in this Clause is an Event of Default (whether or not caused by any reason whatsoever outside the control of any Borrower or any other person). 20.2 NON-PAYMENT An Obligor does not pay on the due date (or within three Business Days of the due date where the failure to pay is for administrative or technical reasons) any amount payable by it under the Finance Documents at the place at and in the currency in which it is expressed to be payable. 20.3 BREACH OF OTHER OBLIGATIONS (a) A member of the Group does not comply with any provision of a Finance Document to which it is a party (other than a provision referred to in Clause 20.2 (Non-payment) or Clause 19 (Financial Covenants)) and (where the failure is capable of remedy) such failure to comply continues for fifteen days after the earlier of the date on which (a) any Obligor becomes aware of the facts or circumstances giving rise to such failure and (b) the Facility Agent gives notice of such failure to the Obligors' Agent. (b) Except during a Release Condition Period, the Company repays, prepays, redeems, repurchases or defeases (whether by way of legal defeasance or covenant defeasance) any of the High Yield Notes or makes any offers to repay, prepay, redeem, repurchase or defease any of the High Yield Notes. 20.4 MISREPRESENTATION A representation, warranty or statement made or repeated in or in connection with any Finance Document or in any document delivered by or on behalf of any Obligor under or in connection with any Finance Document is incorrect in any material respect when made or deemed to be made or repeated. 92 20.5 CROSS-DEFAULT (a) Any Financial Indebtedness of any Obligor or a Material Subsidiary is not paid when due (or where there is a grace period originally applicable to that Financial Indebtedness, within that grace period); or (b) an event of default howsoever described occurs under any document relating to Financial Indebtedness of any Obligor or a Material Subsidiary; or (c) any Financial Indebtedness of any Obligor or a Material Subsidiary becomes prematurely due and payable or is placed on demand as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or (d) any commitment for, or underwriting of, any Financial Indebtedness of any Obligor or a Material Subsidiary is cancelled or suspended as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or (e) any Security Interest securing Financial Indebtedness over any asset of any Obligor or a Material Subsidiary becomes enforceable, provided that there shall only be an Event of Default under this Clause 20.5 if the aggregate amount of Financial Indebtedness which is not so paid and/or in respect of which such event has occurred and/or which becomes prematurely due and payable or is placed on demand and/or in respect of which the commitment or underwriting is cancelled or suspended and/or in respect of which such Security Interest becomes enforceable, exceeds E40,000,000 (or the equivalent in other currencies). 20.6 INSOLVENCY (a) Any Obligor or any Material Subsidiary is, or is deemed for the purposes of any law to be, unable to pay its debts as they fall due or to be insolvent (including without limitation "en etat de cessation des paiements"), or admits inability to pay its debts as they fall due; or (b) any Obligor or any Material Subsidiary suspends making payments on all or any class of its debts or announces an intention to do so, or a moratorium is declared in respect of any of its indebtedness; or (c) any Obligor or any Material Subsidiary, by reason of financial difficulties, applies for, or is subject to, an amicable settlement or a "reglement amiable" pursuant to law 84-148 of 1st March, 1984 of France, or begins negotiations with one or more of its creditors with a view to the readjustment or rescheduling of any of its indebtedness. 20.7 INSOLVENCY PROCEEDINGS (a) Any step (including petition, proposal or convening a meeting) is taken with a view to a composition, assignment or arrangement with any creditors of any Obligor or any Material Subsidiary; or (b) a meeting of any Obligor or any Material Subsidiary is convened for the purpose of considering any resolution for (or to petition for) its winding-up or for its administration 93 (including without limitation "dissolution, liquidation, or redressement judiciaire") or any such resolution is passed; or (c) any person presents a petition for the winding-up or for the administration of any Obligor or any Material Subsidiary unless (in the case of a petition being presented by a person other than an Obligor or a Material Subsidiary) the same is frivolous or vexatious or is otherwise being contested in good faith and on substantial grounds and is stayed or discharged within 21 days of being presented and in any event prior to the date of any substantive hearing of the petition (provided that this exception shall not apply in relation to an administration petition presented in the United Kingdom); or (d) an order for the winding-up or administration of any Obligor or any Material Subsidiary is made; (e) a judgment is issued for the judicial liquidation ("liquidation judiciaire") or the transfer of the whole of the business ("cession de l'entreprise" or "cession de fonds de commerce") of any Obligor or any Material Subsidiary; or (f) any other step (including petition, proposal or convening a meeting) is taken with a view to the rehabilitation, administration, custodianship, liquidation, winding-up or dissolution of any Obligor or any Material Subsidiary or any other insolvency proceedings involving any Obligor or any Material Subsidiary. 20.8 APPOINTMENT OF RECEIVERS AND MANAGERS Any person makes a request in accordance with any applicable laws for the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator, administrateur judiciaire, provisoire mandataire ad hoc, conciliateur or mandataire liquidateur or the like in respect of any Obligor or any Material Subsidiary or any part of its assets or any such appointment is made unless (in the case of a request being made by a person other than an Obligor or a Material Subsidiary) the request for such appointment is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 21 days of the making of such request and in any event prior to the date that any such appointment is made. 20.9 CREDITORS' PROCESS Any attachment, sequestration, distress or execution affects any asset of a value exceeding E15,000,000 (or the equivalent in other currencies) of any Obligor or any Material Subsidiary and is not discharged within 30 days. 20.10 ANALOGOUS PROCEEDINGS There occurs, in relation to any Obligor or any Material Subsidiary, any event anywhere which, in the opinion of the Majority Banks (acting on the basis of legal advice), appears to correspond with any of those mentioned in Clauses 20.6 (Insolvency) to 20.9 (Creditors' process) (inclusive). 94 20.11 CESSATION OF BUSINESS Any Obligor or any Material Subsidiary ceases, or takes clear steps to cease, to carry on all or a substantial part of its business. 20.12 UNLAWFULNESS It is or becomes unlawful for any Obligor to perform any of its obligations under the Finance Documents. 20.13 EFFECTIVENESS OF FINANCE DOCUMENTS (a) Any obligation of an Obligor (including any obligation under Clause 16 (Guarantee) under the Finance Documents is not effective or is alleged by any Obligor to be ineffective for any reason. (b) Any Security Document does not create the security it purports to create or any Security Document is not effective or ceases to constitute a valid, first ranking Security Interest of the type purported to be created thereby. (c) The subordination purported to be effected by the Subordination Agreements or the priority of security purported to be effected by the Security Sharing Agreement (in each case pari passu with the interests of the lenders under the New Facility Agreement) is not effective or is alleged in writing by a member of the Group party to any Subordination Agreement or the Security Sharing Agreement to be ineffective. (d) Any member of the Group which is party to a Subordination Agreement or the Security Sharing Agreement repudiates (or evidences an intention in writing to repudiate it) a Subordination Agreement or the Security Sharing Agreement, as the case may be. 20.14 MATERIAL ADVERSE CHANGE Any event or series of events occurs which, in the reasonable opinion of the Majority Banks (acting in good faith), has a Material Adverse Effect. 20.15 ACCELERATION On and at any time after the occurrence of an Event of Default and whilst the same is continuing, the Facility Agent may, and shall if so directed by the Majority Banks, by notice to the Obligors' Agent: (a) cancel the Total Commitments; and/or (b) demand that all or part of the Loans, together with accrued interest and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or (c) demand that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Banks. 95 21. THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS 21.1 APPOINTMENT AND DUTIES OF THE FACILITY AGENT (a) Each Finance Party irrevocably appoints the Facility Agent to act as its agent under and in connection with the Finance Documents. (b) Each Party appointing the Facility Agent irrevocably authorises the Facility Agent on its behalf to: (i) perform the duties and to exercise the rights, powers and discretions that are specifically delegated to it under or in connection with the Finance Documents, together with any other incidental rights, powers and discretions; and (ii) execute each Finance Document expressed to be executed by the Facility Agent on that Party's behalf. (c) The Facility Agent has only those duties which are expressly specified in this Agreement. Those duties are solely of a mechanical and administrative nature. 21.2 ROLE OF THE MANDATED LEAD ARRANGERS Except as specifically provided in this Agreement, no Mandated Lead Arranger has any obligations of any kind to any other Party under or in connection with any Finance Document. 21.3 RELATIONSHIP The relationship between the Facility Agent and the other Finance Parties is that of agent and principal only. Nothing in this Agreement constitutes the Facility Agent as trustee or fiduciary for any other Party or any other person and the Facility Agent need not hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys. 21.4 MAJORITY BANKS' INSTRUCTIONS (a) The Facility Agent will be fully protected if it acts in accordance with the instructions of the Majority Banks in connection with the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Banks will be binding on all the Banks. In the absence of such instructions, the Facility Agent may act as it considers to be in the best interests of all the Banks. (b) The Facility Agent is not authorised to act on behalf of a Bank (without first obtaining that Bank's consent) in any legal or arbitration proceedings relating to any Finance Document. 21.5 DELEGATION The Facility Agent may act under the Finance Documents through its personnel and agents. 96 21.6 RESPONSIBILITY FOR DOCUMENTATION Neither the Facility Agent nor any Mandated Lead Arranger is responsible to any other Party for: (a) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document; (b) the collectability of amounts payable under any Finance Document; or (c) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document (including the Information Memorandum). 21.7 DEFAULT (a) The Facility Agent is not obliged to monitor or enquire as to whether or not a Default has occurred. The Facility Agent will not be deemed to have knowledge of the occurrence of a Default. However, if the Facility Agent receives notice from a Party referring to this Agreement, describing the Default and stating that the event is a Default, or in the event that the Facility Agent has actual knowledge of a failure to make a payment which constitutes a Default under Clause 20.2 (Non-payment), it shall promptly notify the Banks. (b) The Facility Agent may require the receipt of security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it will or may incur in taking any proceedings or action arising out of or in connection with any Finance Document before it commences those proceedings or takes that action. 21.8 EXONERATION (a) Without limiting paragraph (b) below, the Facility Agent will not be liable to any other Party for any action taken or not taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. (b) No Party may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind (including gross negligence or wilful misconduct) by that officer, employee or agent in relation to any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this paragraph (b) and enforce its terms under the Contracts (Rights of Third Parties) Act 1999. 21.9 RELIANCE The Facility Agent may: (a) rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person; (b) rely on any statement made by a director or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; and 97 (c) engage, pay for and rely on legal or other professional advisers selected by it (including those in the Facility Agent's employment and those representing a Party other than the Facility Agent). 21.10 CREDIT APPROVAL AND APPRAISAL Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Bank confirms that it: (a) has made its own independent investigation and assessment of the financial condition and affairs of the Obligors and their respective related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Facility Agent or a Mandated Lead Arranger in connection with any Finance Document; and (b) will continue to make its own independent appraisal of the creditworthiness of the Obligors and their respective related entities while any amount is or may be outstanding under the Finance Documents or any Commitment is in force. 21.11 INFORMATION (a) The Facility Agent shall promptly forward to the person concerned the original or a copy of any document which is delivered to the Facility Agent by a Party for that person. (b) The Facility Agent shall promptly supply a Bank with a copy of each document received by the Facility Agent under Clause 4 (Conditions precedent), upon the request and at the expense of that Bank. (c) Except where this Agreement specifically provides otherwise, the Facility Agent is not obliged to review or check the accuracy or completeness of any document it forwards to another Party. (d) Except as provided above, the Facility Agent has no duty: (i) either initially or on a continuing basis to provide any Bank with any credit or other information concerning the financial condition or affairs of the Obligors or of their respective related entities, whether coming into its possession before, on or after the date of this Agreement; or (ii) unless specifically requested to do so by a Bank in accordance with a Finance Document, to request any certificates or other documents from any Borrower. 21.12 THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS INDIVIDUALLY (a) If it is also a Bank, the Facility Agent and each Mandated Lead Arranger each has the same rights and powers under this Agreement as any other Bank and may exercise those rights and powers as though it were not the Facility Agent or a Mandated Lead Arranger. (b) The Facility Agent and each Mandated Lead Arranger may each: 98 (i) carry on any business with any Obligor or their respective related entities; (ii) act as agent or trustee for, or in relation to any financing involving, any Obligor or their respective its related entities; and (iii) retain any profits or remuneration in connection with its activities under this Agreement or in relation to any of the foregoing. (c) In acting as the Facility Agent, the agency division of the Facility Agent will be treated as a separate entity from its other divisions and departments. Any information acquired by the Facility Agent which, in its opinion, is acquired by it otherwise than in its capacity as Facility Agent may be treated as confidential by the Facility Agent and will not be deemed to be information possessed by the Facility Agent in its capacity as such. (d) Each Obligor irrevocably authorises the Facility Agent to disclose to the other Finance Parties any information which, in the opinion of the Facility Agent, is received by it in its capacity as Facility Agent. (e) The Facility Agent may deduct from any amount received by it for the Banks pro rata any unpaid fees, costs and expenses of the Facility Agent incurred by it in connection with the Finance Documents. 21.13 INDEMNITIES (a) Without limiting the liability of any Obligor under the Finance Documents, each Bank shall forthwith on demand indemnify the Facility Agent for that Bank's proportion of any duly documented liability or loss incurred by the Facility Agent in any way relating to or arising out of its acting as Facility Agent, except to the extent that the liability or loss arises directly from the Facility Agent's gross negligence or wilful misconduct. (b) A Bank's proportion of the liability or loss set out in paragraph (a) above will be the proportion which its participation in the Loans (if any) bears to all the Loans on the date of the demand. However, if there are no Loans outstanding on the date of demand, then the proportion will be the proportion which its Commitment bears to the Total Commitments at the date of demand or, if the Total Commitments have then been cancelled, bore to the Total Commitments immediately before being cancelled. 21.14 COMPLIANCE (a) The Facility Agent may refrain from doing anything which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction. (b) Without limiting paragraph (a) above, the Facility Agent need not disclose any information relating to any Obligor or any of their respective related entities if the disclosure might, in the opinion of the Facility Agent, constitute a breach of any law or regulation or any duty of secrecy or confidentiality or be otherwise actionable at the suit of any person. 99 21.15 RESIGNATION OF THE FACILITY AGENT (a) Notwithstanding its irrevocable appointment, the Facility Agent may resign by giving notice to the Banks and the Obligors' Agent, in which case the Facility Agent may forthwith appoint one of its Affiliates as successor Facility Agent or, failing that, the Majority Banks may appoint a successor Facility Agent following consultation with the Obligors' Agent. (b) If the appointment of a successor Facility Agent is to be made by the Majority Banks but they have not, within 30 days after notice of resignation, appointed a successor Facility Agent which accepts the appointment, the Facility Agent may appoint a successor Facility Agent following consultation with the Obligors' Agent. (c) The resignation of the Facility Agent and the appointment of any successor Facility Agent will both become effective only upon the successor Facility Agent notifying all the Parties that it accepts its appointment. On giving the notification, the successor Facility Agent will succeed to the position of the Facility Agent and the term "FACILITY AGENT" (as appropriate) will mean the successor Facility Agent. (d) The retiring Facility Agent shall make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as the Facility Agent under this Agreement. (e) Upon its resignation becoming effective, this Clause 21 shall continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it under or in connection with the Finance Documents while it was the Facility Agent, and, subject to paragraph (d) above, it shall have no further obligations under any Finance Document. (f) The Majority Banks may, by notice to the Facility Agent, require it to resign in accordance with paragraph (a) above. In this event, the Facility Agent shall resign in accordance with paragraph (a) above but it shall not be entitled to appoint one of its Affiliates as successor Facility Agent. 21.16 BANKS (a) The Facility Agent may treat each Bank as a Bank, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days' prior notice from that Bank to the contrary. (b) The Facility Agent may at any time, and shall if requested to do so by the Majority Banks, convene a meeting of the Banks. 21.17 EXTRAORDINARY MANAGEMENT TIME AND RESOURCES The Company shall forthwith on demand pay the Facility Agent for the cost of utilising its management time or other resources in connection with: (a) any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of an Obligor and relating to a Finance Document or a document referred to in any Finance Document; or 100 (b) the occurrence of a Default; or (c) the enforcement of, or the preservation of any rights under, any Finance Document. Any amount payable to the Facility Agent under: (i) paragraph (a) above shall be determined by written agreement between the Company and the Facility Agent at the time of the relevant Borrower's request; and (ii) under paragraphs (b) or (c) above will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Company, and in each case is in addition to any fee paid or payable to the Facility Agent under Clause 23 (Fees). 21.18 SECURITY AGENT (a) Without prejudice to Clauses 21.6 (Responsibility for documentation) or 21.8 (Exoneration), the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) under any of the Security Documents or otherwise shall not be liable (unless directly caused by its gross negligence or wilful misconduct) for any failure, omission, or defect in perfecting the security constituted by any Security Document or any security created thereby including, without limitation, any failure to (i) register the same in accordance with the provisions of any of the documents of title of the relevant Obligor to any of the property thereby charged, (ii) make any recordings or filings in connection therewith, (iii) effect or procure registration of or otherwise protect the security created by or pursuant to the Security Documents under any registration laws in any jurisdiction, (iv) give notice to any person of the execution of any of the Security Documents or to obtain any licence, consent or other authority for the creation of any security. (b) The Security Agent may accept without enquiry such title as any Obligor may have to the property over which security is intended to be created by any Security Document. (c) Save where the Security Agent holds a mortgage over, or over an interest in, real estate property or shares, the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) or otherwise shall not be under any obligation to hold any title deeds, Security Documents or any other documents in connection with the property charged by any Security Documents or any other such security in its own possession or to take any steps to protect or preserve the same. (d) Save as otherwise provided in the Security Documents, all moneys which are received by the Security Agent in its capacity as trustee, agent or mandataire (as appropriate) or otherwise may be invested in the name of or under the control of the Security Agent in any investments which may be selected by the Security Agent with the consent of the Majority Banks. Additionally, the same may be placed on deposit in the name of or under the control of the Security Agent at such bank or institution (including any Agent) and upon such terms as the Security Agent may think fit. (e) Each Finance Party hereby confirms its approval of the Security Documents and any security created or to be created pursuant thereto and hereby authorises, empowers and directs the 101 Security Agent (by itself or by such person(s) as it may nominate) to execute and enforce the same as trustee, agent or mandataire (as appropriate) or as otherwise provided (and whether or not expressly in the Finance Party's name) on its behalf, subject always to the terms of this Agreement and the Security Documents. (f) Clauses 21.4 (Majority Banks' instructions), 21.5 (Delegation), 21.6 (Responsibility for documentation), 21.7 (Default), 21.8 (Exoneration), 21.9 (Reliance), 21.12 (The Facility Agent and the Mandated Lead Arrangers individually), 21.13 (Indemnities), 21.14 (Compliance) and 21.15 (Resignation of the Facility Agent) will apply to the Security Agent as if the words "the Facility Agent" in those Clauses referred (in addition) to the Security Agent. (g) If there is any conflict between the provisions of this Agreement and any Security Document with regard to instructions to or matters affecting the Security Agent, this Agreement will prevail. (h) Each Party (other than the Security Agent) irrevocably authorises the Security Agent, with the consent of the Obligors' Agent, to execute on its behalf any documentation which the Security Agent considers appropriate in order for any Bank to become a party to, or to benefit from, any Finance Document. 21.19 CO-SECURITY AGENTS (a) The Security Agent may appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate security agent or as a co-security agent jointly with the Security Agent (i) if the Security Agent considers that without such appointment the interests of the Banks under the Finance Documents would be materially and adversely affected or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act is or acts are to be performed or (iii) for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction of either a judgment already obtained or any of the provisions of the Finance Documents, provided in each case that such separate security agent or co-security agent becomes bound by the terms of this Agreement as if it were the Security Agent. (b) Each separate security agent or co-security agent shall (subject always to the provisions of this Agreement) have such powers, authorities and discretions (not exceeding those conferred on the Security Agent by this Agreement) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. (c) The Security Agent shall have power in like manner to remove any such person. If an Event of Default is continuing, such reasonable remuneration as the Security Agent may pay to any such person, together with any attributable costs, charges and expenses properly incurred by it in performing its function as such separate security agent or co-security agent shall for the purpose of this Agreement be treated as costs, charges and expenses incurred by the Security Agent. 102 21.20 RELEASE OF SECURITY The Security Agent shall and is hereby authorised by each of the other Finance Parties (and to the extent it may have any interest therein, every other party hereto) to execute on behalf of itself and each of the other Finance Parties and every other party hereto where relevant without the need for any further referral to, or authority from, any Finance Party or other person hereto all such releases of security and guarantees given by Obligors under any Finance Document as the Security Agent is authorised or required to effect by the terms of any Finance Document. 21.21 SECURITY AGENT AS JOINT AND SEVERAL CREDITOR (a) Each of the Obligors and each of the Finance Parties agree that the Security Agent shall be the joint and several creditor (hoofdelijk crediteur) together with the relevant Finance Party of each and every obligation of any Obligor owing to or towards each of the Finance Parties under the Finance Documents, and that accordingly the Security Agent will have its own independent right to demand performance by the relevant Obligor of those obligations. However, any discharge of any such obligation to one of the Security Agent or a Finance Party (other than the Security Agent) shall, to that extent, discharge the corresponding obligation owing to the other and a Finance Party shall not by virtue of this Clause be entitled to pursue an Obligor concurrently for the same obligation. (b) Without limiting or affecting the Security Agent's rights against any Obligor (whether under this paragraph or under any other provision of the Finance Documents), the Security Agent agrees with each other Finance Party (on a several and divided basis) that, subject as set out in the next sentence, it will not exercise its rights as a joint and several creditor of any and all obligations owing to each Finance Party (other than the Security Agent) except with the consent of the relevant Finance Party. However, for the avoidance of doubt, nothing in the previous sentence shall in any way limit the Security Agent's right to act in the protection or preservation of rights under or to enforce any Security Document as contemplated by this Agreement, and/or the relevant Security Document (or to do any act reasonably incidental to any of the foregoing). 21.22 VE B SHARES If the New Investors give the consent referred to in Clause 18.20(a) (VE B Shares) the Security Agent shall and is hereby authorised by each of the other Finance Parties to execute without the need for any further refered to, or authority from, any Finance Party a release of the pledge over the VE B Shares of which the Finance Parties have the benefit as at that date in order for the share pledge referred to in Clause 18.20(b) to be given. 103 22. RELEASE OF SECURITY 22.1 RELEASE OF SECURITY AND GUARANTEES (a) Subject to the provisions of this Clause and the Security Documents, no Security Interest created by the Security Documents shall be released until the Facility Discharge Date has occurred (and all such Security Interests in respect of the secured obligations under this Facility shall be released as soon as practicable after the Facility Discharge Date has occurred) [no amounts are or may become outstanding under the Finance Documents and no Commitment is in force.] this does not appear in non-CS&M version (b) Subject to paragraphs (c) and (e) below: (i) in connection with, and simultaneous to, the closing of any secondary Equity Issue, sale or other disposal to a person or persons other than member(s) of the Group (and which person or persons will not become a member of the Group on or by reason of such disposal) of all of the shares in the share capital of any Guarantor (or of all of the shares in any other member of the Group such that any Guarantor ceases as a result thereof to be a member of the Group); (ii) in connection with, and simultaneous to, the closing of sale or disposal by any Guarantor of substantially all of its business and assets; or (iii) in such other circumstances (if any) as the Security Agent (acting on the instructions of the Super Majority Banks) may from time to time agree in writing in relation to a Guarantor, such Guarantor shall cease to be a Guarantor and will be released from all past, present and future liabilities (both actual and contingent and including, without limitation, any liability to any other Guarantor by way of contribution) under this Agreement and under the Security Documents to which it is a party (other than liabilities which it has in its capacity as a Borrower), and the security provided over its assets under such Security Documents shall be released. (c) If a Guarantor is released from its liabilities in accordance with paragraph (b) above, such Guarantor will cease to be a Guarantor when the Facility Agent gives written notification to the Company and the Banks. (d) Subject to paragraph (e) below, in connection with, and simultaneous to, the closing of any secondary Equity Issue, sale or other disposal to (i) a person or persons other than member(s) of the Group (and which person or persons will not become a member of the Group on or by reason of such disposal) or (ii) to a person within the Group where such disposal is otherwise permitted by the Finance Documents and such release could not reasonably be expected to have a Material Adverse Effect or to jeopardise the guarantees given to the Banks under the Finance Documents or the Banks' security under the Security Documents or to the extent that similar guarantees and security are granted to the Banks of any assets owned by an Obligor over which security has been created by a Security Document to which that Obligor is party, those assets shall be released from such security. 104 (e) The release of the guarantees and security referred to in paragraphs (b), (c) and (d) above shall only occur (save to the extent otherwise agreed by the Security Agent acting on the instructions of the Super Majority Banks) if: (i) either (1) such disposal by any member of the Group or Guarantor is permitted by the Finance Documents and will not result in any breach of any of the terms of the Finance Documents, or (2) such disposal is being effected at the request of the Security Agent in circumstances where any of the security created by the Security Documents has become enforceable, or (3) such disposal is being effected by enforcement of the Security Documents; (ii) if relevant, an amount equal to any Net Proceeds arising out of such disposal which are required to be prepaid pursuant to Clause 7 (Prepayment and Cancellation) (or an amount corresponding thereto) is credited to the Receipt Account in accordance with Clause 7 (Prepayment and Cancellation) at the time of completion of that sale or disposal; and (iii) any assets to be transferred to other members of the Group before completion of such disposal shall have been so transferred and (if so required by the Facility Agent) security over such assets shall have been granted to the Security Agent to the reasonable satisfaction of the Facility Agent (acting on the instructions of the Super Majority Banks). (f) As soon as reasonably practical after receipt by the Security Agent from the Company of notice of a proposed secondary Equity Issue sale or other disposal as described in paragraph (i) of Clause 22.1(b) or in Clause 22.1(d) of assets over which security has been created by the Security Documents, the Security Agent shall either deliver a confirmation in writing to the Obligors' Agent that the conditions set out in paragraphs (i) and (iii) of Clause 22.1(e) have been met (for the purposes of this Clause 22.1(f), the RELEASE CONFIRMATION) or shall (acting in good faith), provided that no Default has occurred notify the Obligors' Agent of its reasons for considering that such conditions have not been met and shall discuss such reasons with the Obligors' Agent in good faith. If the Release Confirmation is given and so long as no Default has occurred, the Security Agent shall execute all documents and take all steps (to the extent such steps are within its control) which are necessary to ensure the release of all security to which such Release Confirmation relates at the time of completion of such sale or other disposal (or in the case of any sale of shares in Vivendi Universal Games, Inc. prior to the filing with the Securities and Exchange Commission of a report in Form S-1 in relation to the proposed share sale), such that, on such completion or prior to such filing, the relevant assets will be free from any Security Interest. (g) Any security over any of the receivables assigned pursuant to, subject to and in accordance with the VUE Assignment Agreement and any of the assets identified in paragraph (d) of the definition of Relevant Intra Group Disposal shall be released automatically upon the assignment or disposal of such receivable or asset. (h) If any person which is a member of the Group shall cease to be such a member in consequence of the enforcement of any of the Security Documents or in consequence of a disposal of the shares therein or in any Holding Company of it effected at the 105 request of the Facility Agent and the Banks in circumstances where any of the security created by the Security Documents has become enforceable, any claim which any Obligor may have against such person or any of its Subsidiaries or which that person or any of its Subsidiaries may have against any Obligor in or arising out of this Agreement or any of the Security Documents (including, without limitation, any claim by way of subrogation to the rights of the Agents and the Banks under the Finance Documents and any claim by way of contribution or indemnity) shall be released automatically and immediately upon such person ceasing to be a member of the Group. (i) Any Security Interest created over the shares of any Excluded Music Group Entity and any guarantee granted by any Excluded Music Group Entity pursuant to the Finance Documents shall, provided no Default has occurred and is continuing, be released immediately prior to and for the purposes of the implementation of the Music Group Reorganisation: (i) in the case of any such Security Interest over shares so that no Excluded Music Group Entity which becomes a Foreign Subsidiary shall have more than 66 per cent. of its shares subject to any such Security Interest; (ii) in the case of any guarantee granted by any Excluded Music Group Entity to the extent reasonably required to avoid deemed dividends under U.S. tax legalisation relating to Foreign Subsidiaries; or (iii) in the case of any Security Interest or guarantee granted by any Excluded Music Group Entity which is held (directly or indirectly) by Universal Studio Holding I Corp. so that no such Excluded Music Group Entity shall have any of its shares subject to any Security Interest or shall grant any guarantee. (j) No release, or agreement to release, given by any of the Finance Parties shall constitute any form of waiver or modification of any Finance Party's rights in relation to any Default. 22.2 COSTS All costs and expenses of the Finance Parties in connection with any release of Security Interest created by the Security Documents shall be borne by the Obligors. 23. FEES 23.1 ARRANGEMENT FEE The Company shall on the date which is five days after the date of this Agreement pay to the Mandated Lead Arrangers an arrangement fee in the amount agreed in the Arrangement Fee Letter. This fee shall be distributed by the Mandated Lead Arrangers among the Banks in accordance with the arrangements agreed by the Mandated Lead Arrangers with the Banks prior to the date of this Agreement. 106 23.2 AGENT'S FEE The Company shall pay to the Facility Agent for its own account an agency fee in the amount agreed in the Agency Fee Letter. The agency fee is payable annually in advance. The first payment of this fee is payable on the date which is five days after the date of this Agreement and each subsequent payment is payable on each anniversary of the date of this Agreement for so long as any amount is or may be outstanding under this Agreement or any Commitment is in force. 23.3 COMMITMENT FEE (a) The Company shall pay to the Facility Agent for each Bank a commitment fee in Euro computed at an annual percentage rate which is equal to 50 per cent. of the then Applicable Margin on the undrawn, uncancelled amount of that Bank's Commitment during the Commitment Period. For this purpose Loans are taken at their Original Euro Amount. (b) Accrued commitment fee is payable quarterly in arrear and on the Final Maturity Date. Accrued commitment fee shall also be payable to the Facility Agent for the relevant Bank on the cancelled amount of its Commitment at the time the cancellation comes into effect. 23.4 UTILISATION FEE (a) The Company shall pay to the Facility Agent for the Banks a utilisation fee in Euro calculated on the aggregate amount of all Loans outstanding at a rate of zero point zero five per cent. (0.05%) per annum for each day on which the aggregate of all Loans then outstanding is greater than 50 per cent of the then Total Commitments. (b) For the purpose of this Clause 23.4, Loans are taken at their Original Euro Amount and accrued utilisation fee is payable quarterly in arrear and on the Final Maturity Date. 23.5 WAIVER FEES (a) Except as provided below, on 18th November, 2003 and each anniversary of that date (each such date being a "WAIVER FEE DATE"), the Obligors' Agent shall pay (or procure that there is paid) to the Facility Agent for each Consenting Bank a waiver fee in Euros computed at a rate of 0.20 per cent. per annum on that Consenting Bank's Commitment or, if greater, its participation in the Loans, as at that Waiver Fee Date. (b) No waiver fee shall be payable on any Waiver Fee Date which falls on or after: (i) the Final Maturity Date; or (ii) (if earlier) the First Release Condition Date. (c) The waiver fee payable on the Waiver Fee Date immediately preceding the Final Maturity Date shall be adjusted pro rata according to the period from (and including) that Waiver Fee Date to (and including) the Final Maturity Date. (d) For the avoidance of doubt, no waiver fee will be payable with respect to the waiver requested on 4th April, 2003, except for a single payment as set out in the Restatement Agreement. 107 23.6 VAT Any fee referred to in this Clause 23 is exclusive of any value added tax or any other tax which might be chargeable in connection with that fee. If any value added tax or other tax is so chargeable, it shall be paid by the Company at the same time as it pays the relevant fee. 24. EXPENSES 24.1 INITIAL AND SPECIAL COSTS The Company shall forthwith on demand pay the Facility Agent and the Mandated Lead Arrangers the amount of all duly documented and reasonable costs and expenses (including legal fees) incurred by either of them in connection with: (a) the negotiation, preparation, printing, syndication and execution of: (i) this Agreement and any other documents referred to in this Agreement; and (ii) any other Finance Document (other than a Novation Certificate) executed after the date of this Agreement; and (b) any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of a Borrower and relating to a Finance Document or a document referred to in any Finance Document. 24.2 ENFORCEMENT COSTS The Company shall forthwith on demand pay to each Finance Party the amount of all duly documented costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Finance Document. 25. STAMP DUTIES The Company shall pay, and forthwith on demand indemnify each Finance Party against any liability it incurs in respect of, any stamp, registration and similar tax which is or becomes payable in connection with the entry into, performance or enforcement of any Finance Document (other than a Novation Certificate). 26. INDEMNITIES 26.1 CURRENCY INDEMNITY (a) If a Finance Party receives an amount in respect of an Obligor's liability under the Finance Documents or if that liability is converted into a claim, proof, judgment or order in a currency other than the currency (the "CONTRACTUAL CURRENCY") in which the amount is expressed to be payable under the relevant Finance Document: (i) that Obligor shall indemnify that Finance Party as an independent obligation against any loss or liability arising out of or as a result of the conversion; 108 (ii) if the amount received by that Finance Party, when converted into the contractual currency at a market rate in the usual course of its business is less than the amount owed in the contractual currency, the Obligor concerned shall forthwith on demand pay to that Finance Party an amount in the contractual currency equal to the deficit; and (iii) that Obligor shall forthwith on demand pay to the Finance Party concerned any exchange costs and taxes payable in connection with any such conversion. (b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable. 26.2 OTHER INDEMNITIES The Company shall forthwith on demand indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of: (a) the occurrence of any Event of Default; (b) the operation of Clause 20.15 (Acceleration) or Clause 32 (Pro Rata Sharing); (c) any payment of principal or an overdue amount being received from any source otherwise than on the last day of a relevant Interest Period or Designated Interest Period (as defined in Clause 9.4 (Default interest)) relative to the amount so received; or (d) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment or (other than by reason of negligence or default by that Finance Party) a Loan not being made after the Obligors' Agent has delivered a Request. The Company's liability in each case includes any loss of margin or other loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan. 27. EVIDENCE AND CALCULATIONS 27.1 ACCOUNTS Accounts maintained by a Finance Party in connection with this Agreement are, in the absence of manifest error, prima facie evidence of the matters to which they relate. 27.2 CERTIFICATES AND DETERMINATIONS Any certification or determination by a Finance Party of a rate or amount under the Finance Documents is, in the absence of manifest error, conclusive evidence of the matters to which it relates. 109 27.3 CALCULATIONS Interest (including, if relevant to its calculation, any Mandatory Cost) and the fees payable under Clauses 23.3 (Commitment fee) and 23.4 (Utilisation fee) accrue from day to day and are calculated on the basis of the actual number of days elapsed and a year of 360 days or, in the case of interest payable on an amount denominated in Sterling or where market practice otherwise dictates, 365 days. 27.4 TAUX EFFECTIF GLOBAL In order to comply with the provisions of Articles L313-1 and L313-2 of the French Consumer Code (Code de la Consommation), the effective global rate ("taux effectif global") calculated in accordance with the articles referred to above is as set out in a letter dated the date of this Agreement (or, in relation to a Subsidiary Borrower or a Subsidiary Guarantor incorporated in France, dated on or about the date of the relevant Borrower Accession Deed or Guarantor Accession Deed as appropriate) from the Facility Agent to the Obligors' Agent substantially in the form set out in Schedule 5. 28. AMENDMENTS AND WAIVERS 28.1 PROCEDURE (a) Subject to Clause 28.2, any term of the Finance Documents may be amended and any breach or prospective breach waived, with the agreement of the Obligors' Agent and the Majority Banks. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver permitted under this Clause. (b) The Facility Agent shall promptly notify the other Parties of any amendment or waiver effected under paragraph (a) above, and any such amendment or waiver shall be binding on all the Parties. 28.2 EXCEPTIONS (a) An amendment or waiver which relates to any of the following may only be effected if agreed by the Obligors' Agent, the Facility Agent and each of the Banks: (i) the definition of "MAJORITY BANKS" or "SUPER MAJORITY BANKS" in Clause 1.1 (Definitions); (ii) an extension of the date for, or a decrease in an amount or a change in the currency of, any payment to the Banks under the Finance Documents (including the Applicable Margin and any fees payable under Clauses 23.3 (Commitment fee) and 23.4 (Utilisation fee)); (iii) an increase in a Bank's Commitment or the extension of the Final Maturity Date; (iv) a term of a Finance Document which expressly requires the consent of the Banks; 110 (v) Clause 2.2 (Nature of Finance Party's rights and obligations), Clause 29.1 (Transfers by Obligors), Clause 29.2 (Transfers by Banks), Clause 29.4 (Accession of Subsidiary Borrower), Clause 29.5 (Accession of Subsidiary Guarantor), Clause 32 (Pro Rata Sharing), Schedule 9 or this Clause 28; or (vi) the release or discharge of any Obligor from its obligations under the Finance Documents (other than in accordance with Clause 29.4(c) (Accession of Subsidiary Borrower) or [Clause 29.5(c) (Accession of Subsidiary Guarantor)] or as otherwise expressly agreed pursuant to the Finance Documents). Does not appear on non-CS&M version (b) An amendment or waiver of any term of the Security Sharing Agreement may only be effected in accordance with Clause 12.1 (Amendments to this Agreement) of the Security Sharing Agreement. (c) An amendment or waiver of any of the terms of the Finance Documents referred to in Clause 12.2 (Amendments to the Finance Documents (other than this Agreement)) of the Security Sharing Agreement may only be effected in accordance with that clause. (d) An amendment or waiver which affects the rights and/or obligations of the Facility Agent may not be effected without the agreement of the Facility Agent. 28.3 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, the currency or currency unit of that country designated by the Bank; 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) 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. 28.4 WAIVERS AND REMEDIES CUMULATIVE The rights of each Finance Party under the Finance Documents: (a) may be exercised as often as necessary; (b) are cumulative and not exclusive of its rights under the general law; and (c) may be waived only in writing and specifically. 111 Delay in exercising or non-exercise of any such right is not a waiver of that right. 29. CHANGES TO THE PARTIES 29.1 TRANSFERS BY OBLIGORS No Obligor may assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under the Finance Documents. 29.2 TRANSFERS BY BANKS (a) A Bank (the "EXISTING BANK") may, subject to paragraph (b) below, at any time assign, transfer or novate any of its Commitment and/or rights and/or obligations under this Agreement to any third party (the "NEW BANK") in accordance with Clause 29.3 (Procedure for novations). A transfer of part of a Commitment must be in a minimum amount of at least E5,000,000. (b) A transfer of obligations will be effective only if either: (i) the obligations are novated in accordance with Clause 29.3; or (ii) the New Bank confirms to the Facility Agent and the Obligors' Agent that it undertakes to be bound by the terms of this Agreement as a Bank in form and substance satisfactory to the Facility Agent. On the transfer becoming effective in this manner the Existing Bank shall be relieved of its obligations under this Agreement to the extent that they are transferred to the New Bank. (c) On each occasion an Existing Bank assigns, transfers or novates any of its Commitment and/or rights and/or obligations under this Agreement, the New Bank shall, on the date the assignment, transfer and/or novation takes effect, pay to the Facility Agent for its own account a fee of E1,500 (without, for the avoidance of doubt, any right to reimbursement by any Obligor). (d) An Existing Bank is not responsible to a New Bank for: (i) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document; (ii) the collectability of amounts payable under any Finance Document; or (iii) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document. (e) Each New Bank confirms to the Existing Bank and the other Finance Parties that it: (i) has made its own independent investigation and assessment of the financial condition and affairs of the Obligors and their respective related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Bank in connection with any Finance Document; and 112 (ii) will continue to make its own independent appraisal of the creditworthiness of the Obligors and their respective related entities while any amount is or may be outstanding under this Agreement or any Commitment is in force. (f) Nothing in any Finance Document obliges an Existing Bank to: (i) accept a re-transfer from a New Bank of any of the Commitment and/or rights and/or obligations assigned, transferred or novated under this Clause; or (ii) support any losses incurred by the New Bank by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise. (g) Any reference in this Agreement to a Bank includes a New Bank but excludes a Bank if no amount is or may be owed to or by it under this Agreement and its Commitment has been cancelled or reduced to nil. (h) In the case of an assignment, the Existing Bank and the New Bank shall ensure that the relevant transfer agreement is notified by bailiff ("huissier") to any Obligor incorporated in France in accordance with Article 1690 of the French Civil Code. 29.3 PROCEDURE FOR NOVATIONS (a) A novation is effected if: (i) the Existing Bank and the New Bank deliver to the Facility Agent a duly completed certificate, substantially in the form of Schedule 4 (a "NOVATION CERTIFICATE"); and (ii) the Facility Agent executes it. (b) Each Party (other than the Existing Bank and the New Bank) irrevocably authorises the Facility Agent and the Security Agent to execute any duly completed Novation Certificate on its behalf. (c) To the extent that they are expressed to be the subject of the novation in the Novation Certificate: (i) the Existing Bank and the other Parties (the "EXISTING PARTIES") will be released from their obligations to each other (the "DISCHARGED OBLIGATIONS"); (ii) the New Bank and the existing Parties will assume obligations towards each other which differ from the discharged obligations only insofar as they are owed to or assumed by the New Bank instead of the Existing Bank; (iii) the rights of the Existing Bank against the existing Parties and vice versa (the "DISCHARGED rights") will be cancelled; and (iv) the New Bank and the existing Parties will acquire rights against each other which differ from the discharged rights only insofar as they are exercisable by or against the New Bank instead of the Existing Bank, 113 all on the date of execution of the Novation Certificate by the Facility Agent or, if later, the date specified in the Novation Certificate. (d) For the avoidance of doubt the Parties agree that any novation effected in accordance with this Clause 29.3 shall constitute a novation within the meaning of Article 1271 et seq. of the French Civil Code and that all guarantees and security given under or in connection with the Finance Documents are preserved for the benefit of the New Bank. (e) The Parties agree that notwithstanding any assignment, transfer or novation by a Finance Party under this Clause 29, all the rights of the Finance Parties against the Guarantors under this Agreement (including, without limitation, rights assigned, transferred or novated) shall be maintained and the Guarantors' obligations under this Agreement shall benefit each New Bank. (f) Each New Bank agrees to be bound by the Security Sharing Agreement and the VE Share Pledge and Escrow Agreement (as an "Existing Secured Creditor" and a "Financial Party Y" respectively) and authorises the Facility Agent to deliver any confirmations and/or accession agreements on its behalf under those agreements and to take any other action which it considers appropriate so that the New Bank assumes rights and obligations of the Existing Bank under those agreements which correspond to the rights and obligations the subject of the Novation Certificate. 29.4 ACCESSION OF SUBSIDIARY BORROWER (a) (i) A direct or indirect Subsidiary of the Company approved in writing by the Facility Agent acting on the instructions of all the Banks, may become a Subsidiary Borrower by delivering to the Facility Agent a Borrower Accession Deed, duly executed by that company. (i) Upon execution and delivery of a Borrower Accession Deed and delivery of the documents specified in paragraph (iii) below, that Subsidiary will become a Subsidiary Borrower. (ii) The Company shall procure that, at the same time as the Borrower Accession Deed is delivered to the Facility Agent, there is also delivered to the Facility Agent all those other documents listed in Part 2 of Schedule 2, in each case in form and substance satisfactory to the Facility Agent. (b) The execution of a Borrower Accession Deed constitutes confirmation by the Subsidiary concerned that the representations and warranties set out in Clause 17 (Representations and Warranties) to be made by it on the date of the Borrower Accession Deed are correct, as if made with reference to the facts and circumstances then existing. (c) The Obligors' Agent may, by notice to the Facility Agent, request that any Subsidiary Borrower be discharged from its obligations under the Finance Documents. If the Facility Agent is satisfied that no amounts then are due, or may become due, from that Subsidiary Borrower it shall notify the Obligors' Agent to that effect and on the date of the Facility Agent's notice the Subsidiary Borrower concerned shall cease to be party to this Agreement and shall cease to have any obligations or rights under the Finance Documents. The Facility 114 Agent shall notify the Banks of each Subsidiary Borrower that ceases to be a party to this Agreement pursuant to this paragraph (c). 29.5 ACCESSION OF SUBSIDIARY GUARANTOR (a) (i) A direct or indirect Subsidiary of the Company, which is either (A) approved in writing by the Facility Agent acting on the instructions of all the Banks or (B) required under this Agreement to become a Guarantor, may become a Subsidiary Guarantor by delivering to the Facility Agent a Guarantor Accession Deed, duly executed by that company. (ii) Upon execution and delivery of a Guarantor Accession Deed and delivery of the documents specified in paragraph (iii) below, that Subsidiary will become a Subsidiary Guarantor thereby giving the guarantee and indemnity contained in Clause 16 (Guarantee). (iii) The Company shall procure that, at the same time as the Guarantor Accession Deed is delivered to the Facility Agent, there is also delivered to the Facility Agent all those other documents listed in Part 3 of Schedule 2, in each case in form and substance satisfactory to the Facility Agent. (b) The execution of a Guarantor Accession Deed constitutes confirmation by the Subsidiary concerned that the representations and warranties set out in Clause 17 (Representations and Warranties) to be made by it on the date of the Guarantor Accession Deed are correct, as if made with reference to the facts and circumstances then existing. 29.6 REFERENCE BANKS If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of which it is an Affiliate) ceases to be a Bank, the Facility Agent shall (in consultation with the Obligors' Agent) appoint another Bank or an Affiliate of a Bank to replace that Reference Bank. 29.7 REGISTER The Facility Agent shall keep a register of all the Parties and shall supply any other Party (at that Party's expense) with a copy of the register on request. 30. DISCLOSURE OF INFORMATION A Bank may disclose to one of its Affiliates or any person with whom it is proposing to enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement: (a) a copy of any Finance Document; and (b) any information which that Bank has acquired under or in connection with any Finance Document, 115 provided that prior to making any such disclosure a Bank shall obtain a written confidentiality undertaking (substantially in the form of Schedule 7 together with such amendments as the Bank shall reasonably consider necessary) with respect to the information to be disclosed. 31. SET-OFF Following the occurrence of a Default, a Finance Party may set off any matured obligation owed by an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to 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. If a Finance Party's obligation is unliquidated or unascertained, the Finance Party may set off in an amount estimated by it in good faith to be the amount of that obligation. 32. PRO RATA SHARING 32.1 REDISTRIBUTION If any amount owing by an Obligor under the Finance Documents to a Finance Party (the "RECOVERING FINANCE PARTY") is discharged by payment, set-off or any other manner other than through the Facility Agent in accordance with Clause 11 (Payments) (a "RECOVERY"), then: (a) the recovering Finance Party shall, within three Business Days, notify details of the recovery to the Facility Agent; (b) the Facility Agent shall determine whether the recovery is in excess of the amount which the recovering Finance Party would have received had the recovery been received by the Facility Agent and distributed in accordance with Clause 11 (Payments); (c) subject to Clause 32.3, the recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the "REDISTRIBUTION") equal to the excess; (d) the Facility Agent shall treat the redistribution as if it were a payment by the Obligor concerned under Clause 11 (Payments) and shall pay the redistribution to the Finance Parties (other than the recovering Finance Party) in accordance with Clause 11.7 (Partial payments); and (e) after payment of the full redistribution, the recovering Finance Party will be subrogated to the portion of the claims paid under paragraph (d) above and that Borrower owe the recovering Finance Party a debt which is equal to the redistribution, immediately payable and of the type originally discharged. 116 32.2 REVERSAL OF REDISTRIBUTION If under Clause 32.1: (a) a recovering Finance Party must subsequently return a recovery, or an amount measured by reference to a recovery, to an Obligor; and (b) the recovering Finance Party has paid a redistribution in relation to that recovery, each Finance Party shall, within three Business Days of demand by the recovering Finance Party through the Facility Agent, reimburse the recovering Finance Party all or the appropriate portion of the redistribution paid to that Finance Party together with interest on the amount to be returned to the recovering Finance Party for the period whilst it held the re-distribution. Thereupon, the subrogation in Clause 32.1(e) will operate in reverse to the extent of the reimbursement. 32.3 EXCEPTIONS (a) A recovering Finance Party need not pay a redistribution to the extent that it would not, after the payment, have a valid claim against the Obligor concerned in the amount of the redistribution pursuant to Clause 32.1(e). (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 proceedings, if the other Finance Party had an opportunity to participate in those legal proceedings but did not do so or did not take separate legal proceedings. 33. SEVERABILITY If a provision of any Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect: (a) the validity or enforceability in that jurisdiction of any other provision of the Finance Documents; or (b) the validity or enforceability in other jurisdictions of that or any other provision of the Finance Documents. 34. 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. 117 35. NOTICES 35.1 GIVING OF NOTICES All notices or other communications (other than those given under the terms of Clause 35.3 (Website communications) under or in connection with the Finance Documents shall be given in writing by letter or facsimile or (if the relevant Party has specified such address pursuant to Clause 35.2 (Addresses for notices) by e-mail. Any such notice or communication will be deemed to be given as follows: (a) if by letter, when delivered personally or on actual receipt; and (b) if by facsimile or e-mail (including a Notification under Clause 35.3), when actually received in legible form. However, a notice given in accordance with the above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place. 35.2 ADDRESSES FOR NOTICES (a) The address and facsimile number and (if so specified) e-mail address (and the department or officer, if any, for whose attention the communication is to be made) of each Party (other than the Obligors' Agent and the Facility Agent) for all notices under or in connection with the Finance Documents are: (i) those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party; or (ii) any other notified by that Party for this purpose to the Facility Agent by not less than five Business Days' notice. (b) The address and facsimile number of the Obligors' Agent are: Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France Fax number: +33 (0)1 71 71 10 47 Attention: M. Dupont-Lhotelain or such other as the Obligors' Agent may notify to the Facility Agent by not less than five Business Days' notice. (c) The address, facsimile number and email address of the Facility Agent are: Societe Generale Agency and Transaction Management Department DEFI/ATM/LEV 118 Tour Societe Generale 17 cours Valmy 92972 Paris-La Defense Cedex France Fax number: +33 (0)1 42 14 60 93 Telephone: +33 (0)1 42 13 53 49 E-mail: stephanie.bessadou@socgen.com Attention: Stephanie Bessadou or such other as the Facility Agent may notify to the other Parties by not less than five Business Days' notice. (d) All notices from or to any Obligor shall be sent through the Facility Agent and the Obligors' Agent. (e) The Facility Agent shall, promptly upon request from any Party, give to that Party the address, or facsimile number or e-mail address (where appropriate) of any other Party applicable at the time for the purposes of this Clause. 35.3 WEBSITE COMMUNICATIONS (a) This Clause 35.3 shall apply to: (i) all accounts, certificates and other information delivered under Clauses 18.2 (Financial information) and 18.3 (Information - miscellaneous); (ii) any communication (other than one which is intended to form part of a contract) between an Obligor and the Facility Agent or between the Facility Agent and the Finance Parties (or any of them) in connection with any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of an Obligor and relating to a Finance Document or a document referred to in any Finance Document; and (iii) any other communication between an Obligor and the Facility Agent or between the Facility Agent and the Finance Parties (or any of them), of a type to which the Facility Agent specifies, in a notice delivered to the Obligors' Agent and the Banks by letter or facsimile, that this Clause 35.3 shall apply. (b) The Facility Agent will not, without the consent of the Majority Banks and the Obligors' Agent, specify pursuant to paragraph (a)(iii) above that this Clause 35.3 shall apply to: (i) the delivery of Requests; or (ii) the notification by the Facility Agent of a Bank's participation in a Loan. (c) Any communication to which this Clause 35.3 applies shall be validly given if: (i) the sender places the communication on a website (the "DESIGNATED WEBSITE") operated by a website operator which is (at the time the communication is sent) 119 approved by the Facility Agent for this purpose, in accordance with the procedures and requirements of that website operator; (ii) the details and instructions (including any password) necessary in order to access the communication on the Designated Website have been notified to the Facility Agent, the Obligors' Agent and each Lender by letter, fax or e-mail in accordance with this Agreement; (iii) the sender takes such steps as are necessary so that each recipient is sent, by letter or fax in accordance with this Agreement or by electronic mail in accordance with paragraph (d) below, a notice (the "NOTIFICATION") of the fact that a communication has been placed on the Designated Website for their attention and giving instructions for gaining access to that communication (to the extent not already notified under paragraph (ii) above); and (iv) in the case of the documents referred to at paragraph (a)(i) above, and in the case of any communication referred to at paragraph (a)(ii) placed by an Obligor, the communication is placed on the Designated Website in PDF format or any other format acceptable to the Facility Agent and a hard copy is, in any event, provided to the Facility Agent. (d) A Notification sent by electronic mail to a Party shall be sent to the electronic mail address notified by that Party to the Facility Agent (or, if that Party is the Facility Agent, notified by the Facility Agent to the other Parties) in accordance with Clause 35.2. (e) Subject to paragraph (f) below, the Facility Agent may approve a website operator by giving five Business Days' notice (by letter or facsimile) to the Banks and the Obligors' Agent. The Facility Agent may revoke its approval of a website operator for these purposes at any time immediately upon notice (given by letter or facsimile) to the Banks and the Obligors' Agent; any such notice will take effect immediately. (f) The Facility Agent shall not approve a website operator for the purposes of this Clause 35.3 unless: (i) it is satisfied that the Facility Agent, the Obligors' Agent and each Finance Party have been provided with any website addresses, user names, passwords and other necessary information, and have entered into any necessary arrangements with the website operator, to enable them to gain access to communications placed on the website for their attention; and (ii) it has received assurances satisfactory to it that, communications transmitted to, received from and stored on websites operated by the website operator will be as secure as possible from unauthorised interception, reading and amendment; and (iii) it is satisfied that, promptly upon a communication being placed on any relevant website, the intended recipient will be sent a notification by e-mail of the communication and will, for at least 30 days thereafter, be able to read and retrieve a copy of the communication. 120 (g) Any communication made in accordance with paragraph (c) above will be deemed to be given at the close of business (in the place of receipt) on the Business Day following the day on which the recipient is given the relevant Notification, unless prior to that time either: (i) the sender of the communication becomes aware that the recipient has not received that Notification; or (ii) the recipient of the Notification notifies the sender that it is not possible, for technical or other reasons affecting the operation of the relevant website generally, for the communication to be read or retrieved. (h) The Facility Agent, the Obligors' Agent and each Bank shall comply with any reasonable requirements of any approved website operator relating to the operation and security of the relevant websites. (i) The Facility Agent shall promptly upon becoming aware of its occurrence notify the Banks and the Obligors' Agent if: (i) any Designated Website cannot be accessed due to technical failure; (ii) the password specifications for any Designated Website change; (iii) the Facility Agent becomes aware that any Designated Website or any information posted onto any Designated Website is or has been infected by any electronic virus or similar software. If the Facility Agent gives a notice under paragraph (i) or (iii) above, all information which would otherwise have been posted on the Designated Website concerned shall be supplied in hard copy unless and until the Facility Agent and each Lender is satisfied that the circumstances giving rise to the notification are no longer continuing. (j) Nothing in this Clause 35.3 shall affect Clause 35.2(d) or prejudice the right of any Party to give any notice or other communication by letter or facsimile in accordance with the terms of this Agreement. 36. LANGUAGE (a) Any notice given under or in connection with any Finance Document shall be in English. (b) All other documents provided under or in connection with any Finance Document shall be: (i) in English; or (ii) if not in English, accompanied by a certified English translation (unless the document is a statutory or other official document). 121 37. JURISDICTION 37.1 SUBMISSION (a) For the benefit of each Finance Party, each Obligor agrees that the courts of England have jurisdiction to settle any disputes in connection with any Finance Document and accordingly submits to the jurisdiction of the English courts. (b) Without prejudice to paragraph (a) above and for the benefit of each Finance Party, each Obligor agrees that any New York State Court or Federal Court sitting in New York has jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of these courts. 37.2 SERVICE OF PROCESS Without prejudice to any other mode of service, each Obligor: (a) irrevocably appoints Watson Farley Legal Services of 15 Appold Street, London, EC2A 2HB as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; (b) agrees that failure by a process agent to notify that Obligor of the process will not invalidate the proceedings concerned; (c) consents to the service of process relating to any such proceedings by prepaid posting of a copy of the process to its address for the time being applying under Clause 35.2 (Addresses for notices); and (d) agrees that if the appointment of the person mentioned in paragraph (a) above ceases to be effective, each Obligor shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within 15 days, the Facility Agent is entitled to appoint such a person by notice to the Obligors' Agent. 37.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD Each Obligor: (a) waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings in connection with a Finance Document; and (b) agrees that a judgment or order of an English court in connection with a Finance Document is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction. 37.4 NON-EXCLUSIVITY Nothing in this Clause 37 limits the right of a Finance Party to bring proceedings against any Obligor in connection with any Finance Document: 122 (a) in any other court of competent jurisdiction; or (b) concurrently in more than one jurisdiction. 38. WAIVER OF IMMUNITY Each Obligor irrevocably and unconditionally: (a) agrees that if a Finance Party brings proceedings against it or its assets in relation to a Finance Document, no immunity from those proceedings (including, without limitation, suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) will be claimed by or on behalf of itself or with respect to its assets; (b) waives any such right of immunity which it or its assets now has or may subsequently acquire; and (c) consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with those proceedings, including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in those proceedings. 39. WAIVER OF JURY TRIAL THE OBLIGORS AND THE FINANCE PARTIES WAIVE ANY RIGHTS THEY MAY HAVE TO JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM ANY FINANCE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THE FINANCE DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 40. GOVERNING LAW This Agreement is governed by English law. THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement. 123 SCHEDULE 1 PART 1 BANKS AND COMMITMENTS

BANKS COMMITMENTS (E) Barclays Bank PLC 225,000,000 Bayerische Landesbank Girozentrale 225,000,000 BNP Paribas 225,000,000 Credit Agricole Indosuez 225,000,000 Credit Lyonnais 225,000,000 Deutsche Bank Luxembourg S.A. 225,000,000 Societe Generale 225,000,000 Sumitomo Mitsui Banking Corporation 225,000,000 (Paris branch - E175,000,000, London branch - E50,000,000) ABN AMRO Bank N.V. 150,000,000 BoA Netherlands Cooperatieve U.A. 150,000,000 The Bank of Tokyo-Mitsubishi, Ltd. 150,000,000 Citibank International PLC, Succursale de Paris 150,000,000 Credit Commercial de France 150,000,000 Mizuho Financial Group - The Fuji Bank Limited, Paris Branch 150,000,000 The Royal Bank of Scotland PLC 150,000,000 Fleet Bank (Europe) Limited 50,000,000 Lloyds TSB Bank PLC 50,000,000 Natexis Banques Populaires 50,000,000 ----------- TOTAL COMMITMENTS E3,000,000,000 -----------

124 PART 2 ORIGINAL GUARANTORS NAME OF ORIGINAL GUARANTOR Centenary Delta B.V. Groupe Canal+ S.A. Vivendi Communications North America, Inc. Vivendi Telecom International S.A. Vivendi Universal Publishing Acquisition Company Vivendi Universal Holding I Corp. Vivendi Universal Holding II Corp. Vivendi Universal Holding IV Corp. Vivendi Universal Games, Inc. Vivendi Universal S.A. Vivendi Universal US Holding Co. 125 SCHEDULE 2 PART 1 CONDITIONS PRECEDENT DOCUMENTS TO BE DELIVERED BEFORE THE FIRST REQUEST 1. A copy of the constitutional documents of the Company. 2. An extract of the K-Bis of the Register of Commerce and Companies for the Company dated no more than one month prior to the date of this Agreement. 3. A copy of an extract of a proces-verbal of the conseil d'administration of the Company evidencing the power of the President or Directeur General of the Company to enter into this Agreement on behalf of the Company. 4. If this Agreement was signed on behalf of the Company and the Obligors' Agent by a person other than the President or the Directeur General of the Company and the Obligors' Agent, duly executed powers of attorney in favour of that person evidencing that that person has full authority to sign this Agreement on behalf of the Company and the Obligors' Agent. 5. A specimen of the signature of each person authorised to sign this Agreement on behalf of the Company and the Obligors' Agent and to sign and/or despatch all documents and notices to be signed and/or despatched by the Company and the Obligors' Agent under or in connection with this Agreement. 6. A certificate of the Chief Financial Officer or Deputy Financial Officer of the Company confirming that utilisation of the facility in full would not cause any borrowing limit binding on the Company to be exceeded. 7. A copy of the Original Group Accounts together with a reconciliation certificate signed by the Company's auditors demonstrating the difference between those accounts and the same accounts had they been prepared in accordance with accounting principles and practices generally accepted in the U.S.A., consistently applied and a certificate from an authorised signatory of the Company listing the Material Subsidiaries as at the date of this Agreement. 8. Evidence that the process agent referred to in Clause 37.2 (Service of process) has accepted its appointment for the purposes of that Clause. 9. Payment in full of all fees (including legal fees) due in relation to this Agreement (or authorisation from the Company to the Facility Agent to deduct the amount of all such fees from the proceeds of the first Loan). 10. 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, and the transactions contemplated by, any Finance Document or for the validity and enforceability of any Finance Document. 126 11. A certificate signed by the Chief Executive Officer, the Chief Financial Officer or the Deputy Chief Financial Officer of the Company setting out in reasonable detail computations establishing compliance with the financial covenants in Clauses 19.3 (Interest Cover Ratio) and 19.4 (Debt Payout Ratio) in respect of the financial year of the Company ending 31st December, 2001 and confirming that as at the end of that financial year it was in compliance with Clauses 18.8 (Negative pledge) and 18.16 (Subsidiary Debt). 12. A certificate of an authorised signatory of the Company certifying that each copy document delivered under this Part of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 13. A certificate of the auditors of the Company confirming that the execution by the Company of this Agreement constitutes the entry by the Company into a "convention courante conclue a des conditions normales" for the purposes of Article L225-87 of the French Commercial Code. 14. (a) A legal opinion of the Paris office of legal advisers in France to the Company, addressed to the Finance Parties; and (b) a legal opinion of Allen & Overy, legal advisers as to English law to the Facility Agent, addressed to the Finance Parties. 127 PART 2 TO BE DELIVERED FOR THE ACCESSION OF A SUBSIDIARY BORROWER 1. A Borrower Accession Deed, duly executed by the relevant Subsidiary Borrower. 2. A copy of the memorandum and articles of association and certificate of incorporation (or other equivalent constitutional documents) of the relevant Subsidiary Borrower and the Company (or, in the case of the Company, a certificate signed by an authorised signatory of the Company certifying that the Company's constitutional documents delivered in respect of the Company under Schedule 1 remain in full force and effect and are up to date). 3. An extract of the K-Bis of the Register of Commerce and Companies for the Subsidiary Borrower dated no more than one month prior to the date of the Borrower Accession Deed. 4. If necessary, a copy of a resolution of the board of directors of the relevant Subsidiary Borrower: (i) approving the terms of, and the transactions contemplated by, the Borrower Accession Deed; (ii) authorising a specified person or persons to execute the Borrower Accession Deed on its behalf; and (iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents to be signed and/or despatched by it under or in connection with the Finance Documents. 5. A certificate of the Chief Financial Officer or Deputy Chief Financial Officer of the relevant Subsidiary Borrower certifying that the borrowing of its Subsidiary Borrower Limit in full would not cause any borrowing limit binding on it to be exceeded. 6. A copy of the Subsidiary Borrower's most recent audited accounts. 7. A specimen of the signature of each person authorised by the resolutions referred to in paragraphs 4 above. 8. A certificate of an authorised signatory of the relevant Subsidiary Borrower and the Company certifying that each copy document specified in this Part of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of the Borrower Accession Deed. 9. If the Subsidiary Borrower is incorporated in France, a letter dated on or about the date of the relevant Borrower Accession Deed between the Facility Agent and the Obligor's Agent substantially in the form of Schedule 5. 10. (a) A legal opinion of Allen & Overy, legal advisers as to English law to the Facility Agent, addressed to the Finance Parties; and 128 (b) a legal opinion from the Subsidiary Borrower's external legal advisers in the jurisdiction of its incorporation, addressed to the Finance Parties. 11. A copy of any other authorisation or other document, opinion or assurance which the Facility Agent reasonably considers to be necessary in connection with the entry into and performance of, and the transactions contemplated by, the Borrower Accession Deed or for the validity and enforceability of any Finance Document. 129 PART 3 TO BE DELIVERED FOR THE ACCESSION OF A SUBSIDIARY GUARANTOR 1. A Guarantor Accession Deed, relevant Subordination Agreement, Accession Agreements and Security Documents duly executed by the Subsidiary Guarantor (and, if relevant, any limitation language contained in such Guarantor Accession Deed has been agreed by legal counsel to the Facility Agent). 2. A certified copy of a resolution of the board of directors of each Subsidiary Guarantor approving the terms of, and the transactions contemplated by the Finance Documents to which it is a party and resolving that it execute each such Finance Document and authorising an authorised signatory of such Subsidiary Guarantor to execute respectively on its behalf all the Finance Documents to which it is a party. 3. A copy of a resolution signed by all of the holders of the issued or allotted share capital in each Subsidiary Guarantor approving the term of, and the transactions contemplated by, the Finance Documents. 4. A copy of: (a) the tax certificate; and (b) the certificate of good standing, in respect of each Subsidiary Guarantor incorporated or organised in the United States of America in each case. 5. This Agreement duly executed by the Chairman and Chief Executive Officer or a duly authorised signatory of each Subsidiary Guarantor. 6. A specimen of the signature of each person authorised to sign this Agreement on behalf of each Subsidiary Guarantor to sign and/or despatch all documents and notices to be signed and/or despatched by an Subsidiary Guarantor under or in connection with this Agreement. 7. A certificate of a director of the Subsidiary Guarantor certifying that the guarantee under this Agreement would not cause any guaranteeing limit binding on it to be exceeded. 8. A copy of any other authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, the Guarantor Accession Deed or for the validity and enforceability of any Finance Document. 9. A specimen of the signature of each person authorised by the resolutions referred to in paragraphs (2) and (3) above. 10. If available, a copy of the latest audited accounts of the Subsidiary Guarantor. 130 11. A certificate of an authorised signatory of the Subsidiary Guarantor certifying that each copy document specified in Part 3 of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of the Guarantor Accession Deed. 12. If the Subsidiary Guarantor is incorporated in France, a letter dated on or about the date of the relevant Guarantor Accession Deed between the Facility Agent and the Obligor's Agent substantially in the form of Schedule 5. 13. A legal opinion of the legal advisers to the Subsidiary Guarantor acceptable to and addressed to the Finance Parties. 14. Evidence that all costs and expenses payable by the Company in respect of the Accession Agreement have been paid. 15. Evidence that the Subsidiary Guarantor has appointed an agent for service of process in England and US and that such agent has accepted its appointment. 131 SCHEDULE 3 FORM OF REQUEST To: [SOCIETE GENERALE] as Facility Agent From: VIVENDI UNIVERSAL S.A. Date: [ ] VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY DATED 15TH MARCH, 2002 (AS AMENDED) 1. We request the making of a Loan as follows: (a) Borrower: [ ] (b) Drawdown Date: [ ] (c) Original Euro Amount: E[ ] (d) Currency: [ ](1)+ (e) Interest Period: [ ] (f) Payment instructions: [ ] 2. We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Request and repeat as if set out in this Request, the Representations and Warranties contained in Clause 17 (Representations and Warranties). By: VIVENDI UNIVERSAL S.A. (as Obligors' Agent) Authorised Signatory - --------------- (1) For a Subsidiary Borrower all Loans must be in the currency in which its Subsidiary Borrower Limit is expressed 132 SCHEDULE 4 FORM OF NOVATION CERTIFICATE To: [SOCIETE GENERALE] as Facility Agent From: [THE EXISTING BANK] and [THE NEW BANK] Date:[ ] VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY DATED 15TH MARCH, 2002 (AS AMENDED) We refer to Clause 29.3 (Procedure for novations). 1. We [ ] the ("EXISTING BANK") and [ ] the ("NEW BANK") agree to the Existing Bank and the New Bank novating the Existing Bank's Commitment (or part) and/or rights and obligations referred to in the Schedule in accordance with Clause 29.3 (Procedure for novations). 2. The specified date for the purposes of Clause 29.3(c) (Procedure for novations) is [date of novation]. 3. From this date, the New Bank will: (a) be bound by the Finance Documents as a Bank; (b) become a party to the Security Sharing Agreement as a Secured Creditor thereunder and be bound accordingly; (c) become a party to the Subordination Agreements as an Existing Lender thereunder and be bound accordingly; (d) become a party to the VE Share Pledge and Escrow Agreement, in the capacity or capacities in which the Existing Bank was a party to that agreement, and be bound accordingly; and (e) become a party to each Security Document to which the Existing Bank was a party, in the capacity in which the Existing Bank was a party to that Security Document, and be bound accordingly. 4. The Facility Office, address for notices and payment details of the New Bank for the purposes of Clause 35.2 (Addresses for notices) are set out in the attached Schedule. 5. For the purposes of Article 1278 et seq. of the French Civil Code, the Parties agree that all guarantees and security given under or in connection with the Finance Documents shall be preserved for the benefit of the New Bank. 6. This Novation Certificate is governed by English law. 133 THE SCHEDULE (to the certificate) A. COMMITMENT/RIGHTS AND OBLIGATIONS TO BE NOVATED [Insert relevant details] B. ADMINISTRATIVE DETAILS 1. DOCUMENTATION The legal name of our institution, address for notices, Facility Office and contact details of the individual who will be responsible for the operational aspects of the Facility (e.g., Requests, Drawdowns, interest payments, etc). Name: Address: Facility Office: Attention: Tel no: Fax no: E-mail: 2. CREDIT MATTERS The details of the individual who will be responsible for the credit aspects of the Facility Name: Attention: Address: Tel no: Fax no: E-mail: 3. PAYMENT DETAILS FOR AMOUNTS IN EURO Bank Name: Address: Account Name: Swift Code Account Number: Reference: Contact Name: FOR AMOUNTS IN U.S. DOLLARS Bank Name: Address: Account Name: Swift Code Account Number: 134 Reference: Contact Name: FOR AMOUNTS IN STERLING Bank Name: Address: Account Name: Swift Code Account Number: Reference: Contact Name: FOR AMOUNTS IN JAPANESE YEN Bank Name: Address: Account Name: Swift Code Account Number: Reference: Contact Name: EXECUTION [Existing Bank] By: Date: [New Bank] By: Date: [FACILITY AGENT] [SECURITY AGENT] By: By: Date: Date: 135 SCHEDULE 5 EFFECTIVE GLOBAL RATE LETTER To: Vivendi Universal S.A. (as Obligors' Agent) [Seat, number and address] Date: [ ], 2002 Dear Sirs, SUBJECT: E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY DATED 15TH MARCH, 2002 (AS AMENDED, THE "AGREEMENT") We refer to the Agreement between your company as borrower, guarantor and Obligors' Agent, the Mandated Lead Arrangers and Banks (each as defined in the Agreement) and Societe Generale as Facility Agent. Terms defined in the Agreement shall bear the same meaning in this letter unless otherwise defined in this letter. This letter is signed in connection with [insert name of Subsidiary Borrower/Subsidiary Guarantor]'s accession to the Agreement as a [Subsidiary Borrower/Subsidiary Guarantor].(2)+ We confirm that: 1. this is the letter referred to in Clause 27.4 (Taux Effectif Global) of the Agreement; 2. the applicable effective global rate ("TAUX EFFECTIF GLOBAL") referred to in Clause 27.4 (Taux Effectif Global), calculated on the basis of a 365 day year, is: - for an Interest Period of one month and at EURIBOR rate of [ ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux de periode) of [ ]%); - for an Interest Period of two months and at EURIBOR rate of [ ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux de periode) of [ ]%); - for an Interest Period of three months and at EURIBOR rate of [ ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux de periode) of [ ]%); - for an Interest Period of six months and at EURIBOR rate of [ ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux de periode) of [ ]%). The above rates are given on an indicative basis and for information only, in order to comply with the provisions of article L.313-1 to L.313-6 of the French Code de la Consommation and on the basis (i) that drawdown for the full amount of the facility has been made in Euros on [date], (ii) that the EURIBOR rate, expressed as an annual rate, is as fixed on [DATE], (iii) [that the - --------------------- (2) Include for Subsidiary Borrower/Subsidiary Guarantor incorporated in France 136 Applicable Margin is the [maximum] applicable and (iv) ]of the commissions and various fees payable by you on the terms of the Agreement. Such rates shall not be binding on the Finance Parties. We should be grateful if you would confirm your acceptance of the terms of this letter by signing and returning to us the enclosed copy. This letter is designated a Finance Document. Yours faithfully, ............................................. Societe Generale as Facility Agent We agree to the above. ............................................. Vivendi Universal S.A. (as Obligors' Agent) 137 SCHEDULE 6 CALCULATION OF THE MANDATORY COST (a) For the purpose of paragraph (a) of the definition of Mandatory Cost, the Mandatory Cost for a Bank with respect to its participation in a Loan is the rate calculated in accordance with paragraph (b) below and which is notified by that Bank to the Facility Agent not later than 15 days prior to each anniversary of the date of this Agreement (or immediately prior to the Bank ceasing to be a Bank under this Agreement for any reason or in the event of cancellation of the Total Commitments in full). Mandatory Costs for the last 15 days of a year may be estimated or included in the following year's calculation. (b) For the purpose of paragraph (a) of the definition of Mandatory Cost, the Mandatory Cost for a Bank (if applicable to that Bank) shall be calculated by that Bank in accordance with the following formulae: in relation to a Loan denominated in Sterling: BY +S(Y - Z)+Fx0.01 ____________________% per annum 100-(B+S) in relation to any other Loan: Fx0.01 ______% per annum 300 where on the day of application of the formula: B is the percentage of the Bank's eligible liabilities (in excess of any stated minimum) which the Bank of England requires the Bank to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements; Y is LIBOR at or about 11.00 a.m. (London time) on the first day of the relevant Interest Period; S is the percentage of the Bank's eligible liabilities which the Bank of England requires the Bank to place as a special deposit; Z is the interest rate per annum allowed by the Bank of England on special deposits; and F is the charge payable by the Bank to the Financial Services Authority under the fees rules (but for this purpose calculated by the Facility Agent in a notional basis as being the average of the fee tariffs within fee block Category A1 (Deposit acceptors) of the fees rules, applying any applicable discount and ignoring any minimum fee under the fees rules, expressed in pounds per L1 million of the tariff base of the Bank. (c) For the purposes of this Schedule 6: 138 (i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings given to them at the time of application of the formula by the Bank of England; (ii) "FEES RULES" means the then current rules on periodic fees in the Supervision manual in the FSA Handbook; and (iii) "TARIFF BASE" has the meaning given to it in the fees rules. (d) In the application of the first formula in paragraph (b), B, Y, S and Z are included in the formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as 0.5 x 15. (e) (i) That formula is applied on the first day of the Interest Period of the relevant Loan. (ii) Each rate calculated in accordance with that formula is, if necessary, rounded upward to four decimal places. (f) This element of Mandatory Cost is payable by the relevant Borrower on the fifth Business Day after each relevant notification under paragraph (a) above, or on the date on which a Bank ceases to be a Bank or on which the Total Commitments are cancelled in full, as the case may be. (g) If the Facility Agent determines that a change in circumstances has rendered, or will render, either formula inappropriate, the Facility Agent (after consultation with the Banks) shall notify the Borrower of the manner in which the relevant element of the Mandatory Cost will subsequently be calculated. The manner of calculation so notified by the Facility Agent shall, in the absence of manifest error, be binding on all the Parties. 139 SCHEDULE 7 FORM OF CONFIDENTIALITY UNDERTAKING [Letterhead of Bank] VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY DATED 15TH MARCH, 2002 (AS AMENDED, THE "LOAN AGREEMENT") [DATE] Dear Sirs We refer to the Loan Agreement. Terms defined in the Loan Agreement shall have the same meaning when used in this confidentiality undertaking unless otherwise defined herein. We understand that you are considering acquiring an interest in the Loan Agreement (the "Acquisition"). 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 use the Confidential Information only in relation to deciding whether or not to enter into the Acquisition (the "PERMITTED PURPOSE"), (c) to use all reasonable endeavours to ensure that any person to whom you pass any Confidential Information (unless disclosed under paragraph 2(c) below) acknowledges and complies with the provisions of this letter as if that person were also a party to it, and (d) 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 Acquisition. 2. PERMITTED DISCLOSURE: we agree that you may disclose Confidential Information: (a) to your Holding Company, Subsidiaries and Affiliates (the "PURCHASER 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 Purchaser Group; (b) subject to the requirements of the Loan Agreement, to any person to (or through) whom you assign or transfer (or may potentially assign or transfer) all or any of the rights, benefits and obligations which you may acquire under the Loan Agreement with (or through) whom you enter 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, the Loan Agreement or the Borrower or any member of the Group so long as that person has delivered a letter to you in equivalent form to this letter; and (c) (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 Purchaser Group are listed or (iii) where required by the laws or 140 regulations of any country with jurisdiction over the affairs of any member of the Purchaser Group. 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(c) 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(c) 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 Loan Agreement 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 member of the Group nor any of our or their respective 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 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 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 hereof and damages may not be an adequate remedy; each Relevant Person 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 hereunder will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further 141 exercise thereof or the exercise of any other right, power or privileges hereunder. The terms of this letter and your obligations hereunder 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 Borrower and each other member of the Group. 10. 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. 11. DEFINITIONS: in this confidentiality undertaking, "Confidential Information" means any information relating to the Borrower, the Group, the Loan Agreement and/or the Acquisition 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 thereafter, 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; Please acknowledge your agreement to the above by signing and returning the enclosed copy. Yours faithfully ................................. For and on behalf of [BANK] We acknowledge and agree to the above .................................... For and on behalf of [ ] 142 SCHEDULE 8 BORROWER ACCESSION DEED To: [ ] as Facility Agent From: [SUBSIDIARY BORROWER] Date: [ ] VIVENDI UNIVERSAL - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT AGREEMENT DATED 15TH MARCH, 2002 (AS AMENDED, THE "CREDIT AGREEMENT") We refer to Clause 29.4 (Accession of Subsidiary Borrower). Terms defined in the Credit Agreement have the same meaning in this Deed. We, [name of company] of [Registered Office] (Registered no. [ ]) agree to become a Subsidiary Borrower and to be bound by the terms of the Credit Agreement as a Subsidiary Borrower in accordance with Clause 29.4 (Accession of Subsidiary Borrower). Our Subsidiary Borrower Limit is [ ](3)+. Our address for notices for the purposes of Clause 35.2 (Addresses for notices) is: [ ] This Deed is governed by English law. Executed as a deed by ) Director [SUBSIDIARY BORROWER] ) acting by ) Director/Secretary and ) [OBLIGOR'S AGENT] By: [FACILITY AGENT] By: - ------------------ (3) Currency must be Euro or an Optional Currency. Borrowings for the Subsidiary Borrower are only permitted in the currency stated here. 143 SCHEDULE 9 GUARANTOR ACCESSION DEED To: [ ] as Facility Agent From: [SUBSIDIARY GUARANTOR] Date: [ ] VIVENDI UNIVERSAL - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT AGREEMENT DATED 15TH MARCH, 2002 (AS AMENDED, THE "CREDIT AGREEMENT") We refer to Clause 29.5 (Accession of Subsidiary Guarantor). Terms defined in the Credit Agreement have the same meaning in this Deed. We, [name of company] of [Registered Office] (Registered no. [ ]) agree to become a Subsidiary Guarantor and to be bound by the terms of the Credit Agreement as a Subsidiary Guarantor in accordance with Clause 29.5 (Accession of Subsidiary Guarantor). Our address for notices for the purposes of Clause 35.2 (Addresses for notices) is: [ ] This Deed is governed by English law. Executed as a deed by ) Director [SUBSIDIARY GUARANTOR] ) acting by ) Director/Secretary and ) [OBLIGOR'S AGENT] By: [FACILITY AGENT] By: 144 SCHEDULE 10 SECURITY DOCUMENTS PART 1 NON-U.S. SECURITY DOCUMENTS 1. Vivendi Telecom International S.A. Share Pledge granted by Vivendi Universal S.A. (plus registre des mouvements de titres, the appropriate compte d'actionnaire, Declaration de gage, and Certificate of Pledge). 2. Groupe Canal+ Share Pledge granted by Vivendi Universal S.A. (plus registre des mouvements de titres, the appropriate compte d'actionnaire, Declaration de gage, and Certificate of Pledge). 3. The VE Share Pledge and Escrow Agreement. 4. Amendment Agreement to VE Share Pledge and Escrow Agreement dated on or about 7th February 2003. 5. (a) Declaration de gage A, (b) Declaration de gage B. 6. Cash Pooling Hub Security granted by Groupe Canal+. 7. Cash Pooling Hub Security granted by Vivendi Telecom International S.A. 8. Bank Account Pledge Agreement by Vivendi Universal S.A. with respect to Cash Pooling Hub Security and over Concentration Accounts with Societe Generale. 9. Pledge of Financial Instruments Accounts from Vivendi Universal (and Declarations de gage relating to the accounts held by various banks). 10. Security over secured Intra Group Loans, in the form of a Assignment of Receivables Agreement as required by the New Facility Agreement prior to delivery of the first Request thereunder. 11. Deed of Pledge of Registered Shares Centenary Holding N.V. 12. Charge over cash by Vivendi Universal S.A. (English law). 13. Delegation of Claims Agreement between, inter alias, Group Canal+S.A. as Grantor, Studiocanal S.A. as Delegated Debtor and Societe Generale. 14. Delegation of Claims Agreement between, inter alias, Group Canal + S.A. as Grantor, Canal + Finance S.A. as Delegated Debtor and Societe Generale. 15. Deposit and Cash Collateral Agreement (Gage Especes). 145 16. Charge on Cash from Groupe Canal+ (English law). 17. Mortgage of Shares of Centenary Holding Limited from Vivendi Universal Holding II Corp. (English law). 18. Bank Account Pledge Agreement by Vivendi Universal S.A. with respect to an account with Fortis Financial Markets (Belgian law). 19. Amendment Agreement to VE Share Pledge and Escrow Agreement to be dated on or about 12th May, 2003. 146 PART 2 U.S. SECURITY DOCUMENT The Master Security Agreement (pledge and security agreement between the Grantors (as defined therein) and Societe Generale as Security Agent). 147 SIGNATORIES (TO THE RESTATEMENT AGREEMENT) OBLIGORS' AGENT VIVENDI UNIVERSAL S.A. By: GUARANTORS CENTENARY DELTA B.V. By: GROUPE CANAL+ S.A. By: VIVENDI COMMUNICATIONS NORTH AMERICA, INC. By: VIVENDI TELECOM INTERNATIONAL S.A. By: VIVENDI UNIVERSAL GAMES, INC. By: VIVENDI UNIVERSAL HOLDING I CORP. By: VIVENDI UNIVERSAL HOLDING II CORP. By: 148 VIVENDI UNIVERSAL HOLDING IV CORP. By: VIVENDI UNIVERSAL S.A. By: VIVENDI UNIVERSAL PUBLISHING ACQUISITION COMPANY By: VIVENDI UNIVERSAL US HOLDINGS CO. By: EX-4.9 6 y87781exv4w9.txt LOAN AGREEMENT Exhibit 4.9 EXECUTION COPY ================================================================================ $920,000,000 LOAN AGREEMENT among VIVENDI UNIVERSAL ENTERTAINMENT LLLP, as Borrower, The Several Lenders from Time to Time Parties Hereto, BANK OF AMERICA, N.A. and JPMORGAN CHASE BANK, as Co-Administrative Agents, BARCLAYS BANK PLC, as Syndication Agent, JPMORGAN CHASE BANK, as Collateral Agent and JPMORGAN CHASE BANK, as Paying Agent Dated as of June 24, 2003 ================================================================================ BANC OF AMERICA SECURITIES LLC and J.P. MORGAN SECURITIES INC., as Joint Bookrunners and Lead Arrangers i TABLE OF CONTENTS

Page SECTION 1. DEFINITIONS 1 1.1 Defined Terms ................................................. 1 1.2 Other Definitional Provisions ................................. 22 1.3 Accounting Determinations; GAAP ............................... 23 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 23 2.1 Term Loans .................................................... 23 2.2 Procedure for Borrowing ....................................... 23 2.3 Repayment of Loans ............................................ 23 2.4 Optional Prepayments .......................................... 24 2.5 Mandatory Prepayments ......................................... 24 2.6 Conversion and Continuation Options ........................... 24 2.7 Limitations on Eurodollar Tranches ............................ 25 2.8 Interest Rates and Payment Dates .............................. 25 2.9 Computation of Interest ....................................... 25 2.10 Inability to Determine Interest Rate .......................... 26 2.11 Pro Rata Treatment and Payments ............................... 26 2.12 Requirements of Law ........................................... 27 2.13 Taxes ......................................................... 28 2.14 Indemnity ..................................................... 29 2.15 Change of Lending Office ...................................... 30 2.16 Replacement of Lenders ........................................ 30 SECTION 3. REPRESENTATIONS AND WARRANTIES 30 3.1 Financial Statements .......................................... 31 3.2 No Change ..................................................... 31 3.3 Existence; Compliance with Law ................................ 31 3.4 Power; Authorization; Enforceable Obligations ................. 31 3.5 No Legal Bar .................................................. 32 3.6 Litigation .................................................... 32 3.7 No Default .................................................... 32 3.8 Ownership of Property; Liens .................................. 32 3.9 Intellectual Property ......................................... 32 3.10 Taxes ......................................................... 32 3.11 Federal Regulations ........................................... 32 3.12 Labor Matters ................................................. 33 3.13 ERISA ......................................................... 33 3.14 Investment Company Act; Other Regulations ..................... 33 3.15 Subsidiaries .................................................. 33 3.16 Use of Proceeds ............................................... 33 3.17 Environmental Matters ......................................... 33 3.18 Accuracy of Information, etc .................................. 34 3.19 Security Documents ............................................ 34 SECTION 4. CONDITIONS PRECEDENT 34 4.1 Conditions to Loans ........................................... 34

ii SECTION 5. AFFIRMATIVE COVENANTS 35 5.1 Financial Statements .......................................... 35 5.2 Certificates; Other Information ............................... 36 5.3 Payment of Obligations ........................................ 37 5.4 Maintenance of Existence; Compliance .......................... 37 5.5 Maintenance of Property; Insurance ............................ 37 5.6 Inspection of Property; Books and Records; Discussions ........ 37 5.7 Notices ....................................................... 38 5.8 Separateness Requirements ..................................... 38 5.9 Concerning the Collateral ..................................... 38 5.10 Interest Rate Protection ...................................... 39 SECTION 6. NEGATIVE COVENANTS 40 6.1 Financial Covenants ........................................... 40 6.2 Indebtedness .................................................. 40 6.3 Liens ......................................................... 42 6.4 Fundamental Changes ........................................... 45 6.5 Disposition of Property ....................................... 45 6.6 Restricted Payments ........................................... 46 6.7 Investments ................................................... 47 6.8 Transactions with Affiliates .................................. 49 6.9 Sales and Leasebacks .......................................... 49 6.10 Swap Agreements ............................................... 49 6.11 Changes in Fiscal Periods ..................................... 50 6.12 Negative Pledge Clauses ....................................... 50 6.13 Clauses Restricting Subsidiary Distributions .................. 50 6.14 Lines of Business ............................................. 50 SECTION 7. EVENTS OF DEFAULT 50 SECTION 8. THE AGENTS 52 8.1 Appointment ................................................... 52 8.2 Delegation of Duties .......................................... 53 8.3 Exculpatory Provisions ........................................ 53 8.4 Reliance by Co-Administrative Agents .......................... 53 8.5 Notice of Default ............................................. 54 8.6 Non-Reliance on Agents and Other Lenders ...................... 54 8.7 Indemnification ............................................... 54 8.8 Agent in Its Individual Capacity .............................. 55 8.9 Successor Co-Administrative Agent ............................. 55 8.10 Co-Administrative Agents' and Paying Agent's Fees ............. 55 8.11 Syndication Agent ............................................. 55 SECTION 9. MISCELLANEOUS 55 9.1 Amendments and Waivers ........................................ 55 9.2 Notices ....................................................... 56 9.3 No Waiver; Cumulative Remedies ................................ 57 9.4 Survival of Representations and Warranties .................... 57 9.5 Payment of Expenses ........................................... 58 9.6 Successors and Assigns; Participations and Assignments ........ 58 9.7 Adjustments; Set-off .......................................... 61 iii 9.8 Counterparts .................................................. 61 9.9 Severability .................................................. 61 9.10 Integration ................................................... 62 9.11 GOVERNING LAW ................................................. 62 9.12 Submission To Jurisdiction; Waivers ........................... 62 9.13 Acknowledgements .............................................. 62 9.14 Releases of Guarantees and Liens .............................. 63 9.15 Confidentiality ............................................... 64 9.16 WAIVERS OF JURY TRIAL ......................................... 64 9.17 Delivery of Addenda ........................................... 64 9.18 Non-Recourse to Partners ...................................... 64 9.19 Limitation on Individual Enforcement .......................... 64 9.20 Restatement of Existing Facility .............................. 65 SCHEDULES: 1.1A Commitments 1.1B Mortgaged Property 1.1C Certain Real Properties 3.15 Material Subsidiaries 4.1 Closing Documents 5.8 Separateness Requirements 6.2 Indebtedness 6.8 Transactions with Affiliates 6.9 Permitted Sales and Leasebacks 6.12 Permitted Restrictions EXHIBITS: A Form of Security Agreement B Form of Subordination Agreement C Form of Assignment and Assumption D Form of Lender Addendum E Form of Exemption Certificate SIGNATORIES LOAN AGREEMENT (this "Agreement"), dated as of June 24,2003, among VIVENDI UNIVERSAL ENTERTAINMENT LLLP (the "Borrower"), the several banks and other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), BANK OF AMERICA, N.A. and JPMORGAN CHASE BANK, as co-administrative agents, BARCLAYS BANK PLC, as syndication agent (in such capacity, the "Syndication Agent"), JPMORGAN CHASE BANK, as collateral agent, and JPMORGAN CHASE BANK, as paying agent. The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1. "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/l00 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Paying Agent, as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by the Paying Agent in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change. "ABR Loans": Loans the rate of interest applicable to which is based upon the ABR. "Additional Indebtedness": Indebtedness incurred pursuant to Section 6.2(q). "Affiliate": as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agents": the collective reference to the Co-Administrative Agents, the Syndication Agent, the Collateral Agent and the Paying Agent. "Agreement": as defined in the preamble hereto. "Applicable Margin": for each Type of Loan, the rate per annum set forth under the relevant column heading below: ABR Loans Eurodollar Loans 1.75% 2.75% "Approved Fund": as defined in Section 9.6(b). "Asset Sale": any Disposition of Subject Assets or series of related Dispositions of Subject Assets (excluding any such Disposition permitted by clauses (a)-(g) of Section 6.5) that yields gross proceeds to the Borrower or any Domestic Subsidiary (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $10,000,000. 2 "Assignee": as defined in Section 9.6(b). "Assignment and Assumption": an Assignment and Assumption, substantially in the form of Exhibit C, or in any other form approved by the Paying Agent. "Benefited Lender": as defined in Section 9.7(a). "Board": the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrower": as defined in the preamble hereto. "Business": as defined in Section 3.17(b). "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Canada Preferred Stock": the Preferred Stock, redemption value CAN$l000 per share, of Universal Studios Canada Inc. (or its successors). "Canada Receivable": the receivable which at the date of this Agreement is owing by a member of the Vivendi Group to a member of the Group, the amount which shall at no time exceed CAN$52,000,000. "Capital Lease Obligations": as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Cash Collateral Event": any event that would be a Prepayment Event but for the proviso to the definition of Prepayment Event. "Cash EBITDA": for any period, Consolidated EBITDA for such period adjusted by (i) adding the amount of film and programming amortization costs deducted in the determination thereof and (ii) deducting the amount of cash film and programming production costs paid in such period by the Group and not otherwise deducted in the determination thereof. "Cash Leverage Ratio": at any date, the Leverage Ratio at such date, adjusted by substituting Cash EBITDA for Consolidated EBITDA for the relevant period. "Change in Control": the cessation by Vivendi Universal to own, directly or indirectly, more than 50% of the outstanding issued common Equity Interests of the Borrower (to which is attached more than 50% of the common voting rights of the Borrower) or the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 33 1/3% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in Vivendi Universal. 3 "Class A Preferred Interests": as defined in the Partnership Agreement. "Class B Preferred Interests": as defined in the Partnership Agreement. "Closing Date": the date designated by the Borrower pursuant to Section 2.2 as the date on which the Loans are to be made, which date shall be no later than June 30, 2003. "Co-Administrative Agents": Bank of America, N.A. and JPMorgan Chase Bank, as the co-administrative agents for the Lenders under this Agreement, together with any successors in such capacity. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Collateral": all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document. "Collateral Agent": JPMorgan Chase Bank, in its capacity as administrative agent for the secured parties under the Security Documents, together with any successors in such capacity. "Collateral and Guarantee Requirement": the requirement that: (a) the Collateral Agent shall have received from each Loan Party either (i) a counterpart of the Security Agreement duly executed and delivered on behalf of such Loan Party or (ii) in the case of any Person that becomes a Loan Party after the Closing Date, a supplement to the Security Agreement, in the form specified therein, duly executed and delivered on behalf of such Loan Party; (b) all outstanding Equity Interests of each Subsidiary owned directly by any Loan Party shall have been pledged pursuant to the Security Agreement (except that the Loan Parties shall not be required to pledge more than 66% of the outstanding voting Equity Interests of any Foreign Subsidiary) and the Collateral Agent shall have received all certificates or other instruments representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; (c) all Indebtedness of the Borrower and each Subsidiary that is owing to any Loan Party and that is evidenced by a promissory note shall have been pledged pursuant to the Security Agreement and the Collateral Agent shall have received all such promissory notes, together with instruments of transfer with respect thereto endorsed in blank; (d) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Agreement and the Mortgage and perfect such Liens to the extent required by, and with the priority required by, the Security Agreement and the Mortgage, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; (e) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Mortgaged Property duly executed and delivered by the record 4 owner of such Mortgaged Property, (ii) a policy or policies of title insurance issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a valid first Lien on the Mortgaged Property described therein, free of any Lien which is not a Permitted Encumbrance (as such terms are defined in the Mortgage), together with such endorsements, coinsurance and reinsurance as the Collateral Agent or the Required Lenders may reasonably request and (iii) such surveys, abstracts, appraisals, legal opinions and other documents as the Collateral Agent or the Required Lenders may reasonably request with respect to any such Mortgage or Mortgaged Property; (f) each Loan Party shall have obtained all material consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder; and (g) the Subordination Agreement shall have been executed and delivered by the parties thereto. "Commitment": as to any Lender, the obligation of such Lender to make a Loan to the Borrower in the principal amount set forth under the heading "Commitment" opposite such Lender's name on Schedule 1.1A. The aggregate amount of the Commitments is $920,000,000. "Conduit Lender": any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; and provided further that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.12, 2.13, 2.14 or 9.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment. "Confidential Information Memorandum": the Confidential Information Memorandum dated May 2003 and furnished to certain Lenders. "Consolidated": refers to the consolidation of the accounts of the Borrower and its Subsidiaries in accordance with GAAP. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Copyright Liens": any Liens granted by the Borrower or any Subsidiary on copyrights relating to Product that is subject to contracts entitling the Borrower or such Subsidiary to future payments in respect of such Product, which contractual rights to future payments are to be transferred by the Borrower or such Subsidiary to a special-purpose Subsidiary of the Borrower or such Subsidiary organized for the purpose of monetizing such rights to future payments and which Liens (i) are granted directly or indirectly for the benefit of the special purpose Subsidiary and/or the Persons who purchase such contractual rights to future payments from such special-purpose Subsidiary and (ii) extend only to 5 copyrights for Product subject to such contracts for the purpose of permitting the completion, distribution and exhibition of such Product. "Covenant Defeasance SPV": as defined in the definition of Covenant Defeasance Transaction. "Covenant Defeasance Transaction": any or all of the following transactions, as the context may require: (a) the issuance of additional preferred or common Equity Interests in the Borrower to a member of the Vivendi Group other than a Group Member; (b) a contribution of the proceeds of such issuance (and/or any funds that could be disposed of pursuant to a Dividend at the time in compliance with Section 6.6) to a special purpose entity (which may be a special purpose subsidiary of the Borrower, a trust or similar limited liability entity) formed to facilitate the transactions contemplated by this definition (the "Covenant Defeasance SPV"), which shall have no Investment in any other Group Member (other than Class A Preferred Interests or Class B Preferred Interests); (c) the issuance for the account of the Covenant Defeasance SPV of a letter of credit in the amount required by Section 5.05(a) of the Partnership Agreement as a condition to the inapplicability of certain covenants specified therein; (d) the pledge of the cash proceeds or funds referred to in (b) above (or Investments acquired with such proceeds or funds) to secure the obligations of the Covenant Defeasance SPV in respect of such letter of credit; (e) the posting of such letter of credit in favor of the holder of the Class A Preferred Interests as contemplated by Section 5.05 of the Partnership Agreement; or (F) any other substantially similar transaction for the defeasance of the covenants in the Partnership Agreement that benefit the Class A Preferred Interests and/or the Class B Preferred Interests (including arrangements for the assets of the Covenant Defeasance SPV to effect such defeasance instead of supporting a letter of credit issued for such purpose) which (i) is funded exclusively as contemplated by (a) and (b) above, (ii) involves no Indebtedness of any Group Member except a Covenant Defeasance SPV and (iii) involves no issuance or Disposition of Equity Interests in any Group Member except the Borrower or a Covenant Defeasance SPV. "Default": any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Disposition": with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms "Dispose" and "Disposed of" shall have correlative meanings. The granting of a Lien shall not constitute a Disposition. "Dividends": as defined in Section 6.6. "Dollars" and "$": lawful currency of the United States. "Domestic Subsidiary": any Subsidiary which is not a Foreign Subsidiary. "EBITDA": for any Person for any period, the Operating Income of such Person for such period plus, without duplication and to the extent deducted in determining such Operating Income, all amounts attributable to depreciation, amortization (including deferred compensation in connection with certain stock options), other noncash, nonrecurring gains and losses and noncash write-offs of or impairment charges for goodwill and other assets, and less reversal, if any, when paid, for such period, all determined in accordance with GAAP. "Eligible Subsidiary": a Material Subsidiary which (i) is not a Foreign Subsidiary, (ii) is "disregarded" as an entity separate from the Borrower for U.S. federal income tax purposes, (iii) is not a 6 special purpose entity created to effect a Film Rights Securitization and (iv) is not a Covenant Defeasance SPV. "Environmental Laws": any and all foreign, federal, state, local or municipal laws, statutes and regulations, together with legally enforceable rules, orders, ordinances, codes, decrees and requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect. "Equity Interests": means shares of equity interests, partnership interests, membership interests in limited liability company or limited liability limited partnership and beneficial interests in a trust or other equity ownership interests in a Person and any and all warrants, rights or options to purchase any of the foregoing. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate": any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event": (a) any Reportable Event; (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a Plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member bank of the Federal Reserve System. "Eurodollar Base Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be 7 selected by the Paying Agent or, in the absence of such availability, by reference to the rate at which the Paying Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein. "Eurodollar Loans": Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): Eurodollar Base Rate ---------------------------------------- 1.00 - Eurocurrency Reserve Requirements "Eurodollar Tranche": the collective reference to Eurodollar Loans, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Event of Default": any of the events specified in Section 7; provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Exempt Transaction": any Disposition of rights in items of Product as a method of raising finance or financing the creation, production, development or distribution of such Product in connection with a Governmental Incentive Program, in each case in the ordinary course of business. "Existing Facility": the Amended and Restated Agreement dated as of November 25, 2002 among the Borrower, Banc of America Securities LLC and J.P. Morgan Securities Inc., as mandated lead arrangers, the financial institutions listed on the Schedule 1 thereto and JPMorgan Chase Bank, as administrative agent. "Exposure": with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the amount of such Lender's Commitment at such time and (b) thereafter, the aggregate then unpaid principal amount of such Lender's Loans. "Federal Funds Effective Rate": for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Paying Agent from three federal funds brokers of recognized standing selected by it. "Film Rights Securitization": any securitization transaction with respect to Intellectual Property of a Group Member in which the recourse of the parties providing financing is limited to the related Intellectual Property to an extent substantially similar to the Initial Film Rights Securitization. For avoidance of doubt, a Film Rights Securitization is a continuing transaction involving multiple transfers and payments over a period of time. "Financial Obligations": obligations in respect of Indebtedness or a Swap Agreement. The principal amount of a Financial Obligation in respect of a Swap Agreement at any time is the 8 maximum aggregate amount (giving effect to any legally enforceable netting agreements) that the Group would be required to pay if such Swap Agreement were terminated at such time. "Fixed Charges": for any Person for any period, the sum of, without duplication, (i) the Interest Expense of such Person, (ii) income taxes payable by such Person, (iii) Tax Distributions payable by such Person, (iv) scheduled amortization of Indebtedness of such Person and (v) capital expenditures by such Person. "Foreign Subsidiary": any Subsidiary which is a "controlled foreign corporation" within the meaning of the Code. "Funding Office": the office of the Paying Agent specified in Section 9.2 or such other office as may be specified from time to time by the Paying Agent as its funding office by written notice to the Borrower and the Lenders. "GAAP": generally accepted accounting principles in the United States. "Geographical Territory": any specific geographical area constituting a territory, nation, country, state, governmental entity or any subdivision thereof located anywhere in the universe. "Governmental Authority": any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners). "Governmental Incentive Program": a program or policy (i) enacted, adopted or sponsored by a government of a Geographical Territory other than the United States of America or any part thereof and (ii) having the effect of creating incentives or benefits, including tax and/or financing benefits, in connection with all or a portion of any item of Product. "Group": the collective reference to the Borrower and its Subsidiaries. "Group Member": the Borrower or any of its Subsidiaries. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including any obligation of the guaranteeing 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 (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (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 or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person at any time shall be deemed to be the lower of (a) an amount equal 9 to the stated or determinable amount at such time of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable at such time pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof at such time as determined by the Borrower in good faith; provided, however, that if such guaranteeing person has not assumed such primary obligation, such amount shall be the lesser of the foregoing and the value of the property of such guaranteeing person which is subject to a Lien securing such primary obligation. It is understood that financing structures referred to as "synthetic leases" normally entail a Guarantee Obligation of Indebtedness of the lessee. "Guarantor": each Eligible Subsidiary "High-Yield Debt": any Indebtedness incurred through issuance of unsecured debt securities of the Borrower in a capital markets transaction. "Indebtedness": without duplication, any indebtedness owing by a Person in respect of: (a) moneys borrowed; (b) any debenture, bond, note, loan or other debt security; (c) any acceptance credit; (d) receivables sold or discounted (otherwise than on a non-recourse basis in the ordinary course of business and not as a method of raising finance), including any Film Rights Securitization; (e) the acquisition cost of any asset to the extent payable before or after the time of acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; (f) Capital Lease Obligations; (g) any Guarantee Obligation in respect of Indebtedness of any other Person; (h) any obligation upon which interest charges are customarily paid; (i) any obligation under conditional sale or other title retention agreements relating to property acquired; (j) any Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned by such Person, whether or not the Indebtedness secured thereby has been assumed; and (k) any obligation, contingent or otherwise, in respect of letters of credit and letters of guaranty. 10 The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor or to the extent such Indebtedness is already taken into account with respect to such Person. For avoidance of doubt, the obligations of Affiliates to members of the Group, and the obligations of members of the Group to the relevant Affiliate, in respect of payments received by Affiliates for video sales by members of the Group as contemplated by subpart (b) of Schedule 5.8 constitute Indebtedness of the obligor for purposes of this Agreement. Notwithstanding the foregoing, "Indebtedness" does not include (i) the Class A Preferred Interests or the Class B Preferred Interests (or similar preferred Equity Interests in the Borrower), (ii) any UCI Loan (other than for purposes of the Subordination Agreement), (iii) any Indebtedness of the Borrower arising in connection with any UCI Loan in the form of a guarantee of or pledge of cash collateral securing any Indebtedness of UCI as contemplated by Section 6.7(p), for so long as the related UCI Loan remains outstanding, (iv) the Indebtedness of USJ Co., Ltd. that is secured by a Lien on Equity Interests in USJ Co., Ltd. that are owned by Universal Studios Entertainment Japan Investment Company LLC, (v) amounts owed to any member of the Vivendi Group attributable to the commingling of U.K. music and video receivables or (vi) any of the following which arise in the ordinary course of business of the group: (a) trade accounts payable that are not more than 120 days past due; (b) advances to a Person which give rise to an obligation to be satisfied, in the first instance, otherwise than by repayment of money (including, for the avoidance of doubt, an obligation to provide goods or services such as the production, creation, development, distribution or other exploitation of Product); (c) any liabilities that relate to profit participations, deferments or guild residuals in connection with the production of an item of Product (including those that are held by or accruing in favor of (i) the Screen Actors Guild, the Writers Guild of America, the Directors Guild of America, the International Alliance of Theatrical and Stage Employees, and any other unions, guilds or collective bargaining units who have rights in or control over items of Product, and (ii) any Persons who hold participation or residual interests in items of Product); (d) any claims, interests, rights, participations, liens, encumbrances or security interests (of whatever nature) that are held by or accrue in favor of any completion guarantor, financier or other third person related to production, acquisition or exploitation rights in items of Product; (e) endorsements for collection or deposit; (f) obligations to pay royalties or other participations (whenever accrued); (g) contingent or optional funding commitments relating to Persons in which the Borrower or one of its Subsidiaries has an interest (except for funding commitments that are reasonably likely to come due or be called prior to the final maturity date of the Loans but including the equity funding commitment contemplated by Section 6.7(s)); 11 (h) non-recourse forward sales of rights in items of Product; (i) commitments for production costs or P&A related to items of Product; (j) obligations owing to any government of a Geographical Territory under a Governmental Incentive Program; and (k) obligations in respect of performance bonds, completion bonds, bid bonds, surety bonds or similar obligations which are not themselves a guarantee of, or an indemnity or similar assurance against financial loss in respect of, an obligation that constitutes Indebtedness. "Initial Aggregate Funded Amount": the aggregate principal amount of Loans funded hereunder. "Initial Film Rights Securitization": the securitization transaction consummated pursuant to the Sale and Contribution Agreement dated as of March 31, 2003 between Universal Film Funding LLC, as purchaser, and Universal City Studios Productions LLLP, as Seller, and the notes issued in connection therewith under an Indenture dated as of March 31, 2003 between Universal Film Funding LLC, as issuer, and Wells Fargo Bank Minnesota, National Association, as indenture trustee. "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Interest Expense": for any Person for any period, the sum of, without duplication, (i) the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of such Person in respect of Indebtedness (net of all interest income of such Person) for such period, determined in accordance with GAAP, plus (ii) any interest accrued during such period in respect of Indebtedness of such Person that is required to be capitalized rather than included in interest expense for such period in accordance with GAAP plus (iii) in the case of the Borrower, cash distributions on its Class B Preferred Interests made pursuant to Section 8.01(a) of the Partnership Agreement minus (iv) to the extent otherwise included, amortization of debt issuance expense and similar non-cash items; provided that the Interest Expense for the Group shall be calculated as follows for the indicated period: (i) for the twelve- month period ending September 30, 2003, by multiplying Interest Expense for the fiscal quarter then ended by four; (ii) for the twelve-month period ending December 31, 2003, by multiplying the Interest Expense for the two fiscal quarters then ended by two; and (iii) for the twelve-month period ending March 31, 2004, by multiplying the Interest Expense for the three fiscal quarters then ended by 4/3. "Interest Payment Date": (a) as to any ABR Loan, the last Business Day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any repayment or prepayment made in respect thereof. 12 "Interest Period": as to any Eurodollar Loan: (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six or (subject to the prior approval of all Lenders) any other period of time thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six or (subject to the prior approval of all Lenders) any other period of time thereafter, as selected by the Borrower by irrevocable notice to the Paying Agent not later than 11 :00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (ii) the Borrower may not select an Interest Period that would extend beyond the date final payment is due on the relevant Loans; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (iv) no Interest Period longer than one month may commence prior to 30 days after the Closing Date. "Investment Grade": having credit ratings of at least BBB- as published by S&P and at least Baa3 as published by Moody's (in each case with a stable outlook). "Investments": as defined in Section 6.7. "Lender": each Person that has a Commitment or that holds a Loan. "Lender Addendum": an instrument, substantially in the form of Exhibit D, by which a Lender becomes a party to this Agreement as of the Closing Date. "Leverage Ratio": on any date, the ratio of (a) Consolidated Indebtedness (less (i) the aggregate amount of cash collateral for the Loans held by the Collateral Agent pursuant to Section 5.9(f) or otherwise, (ii) the aggregate amount of Indebtedness of any Affiliate (other than (x) Indebtedness of a Group Member and (y) the Canada Receivable) owing to any Group Member, but not in excess of the aggregate amount of Indebtedness of the Group that is subject to the Subordination Agreement and (iii) to the extent reflected in Consolidated Indebtedness, Indebtedness of a Covenant Defeasance SPV incurred in connection with a Covenant Defeasance Transaction) as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter of the Borrower most recently ended prior to such date); provided that if there shall have been a Material Acquisition or a Material Disposition during such period, Consolidated EBITDA shall be calculated on a pro forma basis giving effect thereto as if such acquisition or disposition had occurred on the first day of such period. For avoidance of doubt, Consolidated Indebtedness referred to above includes (without duplication) any 13 Guarantee Obligation of any Group Member in respect of Indebtedness of any other Person and any other Indebtedness of the type described in clause (k) of the definition of Indebtedness. "Lien": any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing). "Loan": as defined in Section 2.l(a). "Loan Documents": this Agreement, the Security Documents, the Notes, the Subordination Agreement and any amendment, waiver, supplement or other modification to any of the foregoing. "Loan Parties": the Borrower and the Eligible Subsidiaries. "Material Acquisition": any acquisition of property or series of related acquisitions of property that (i) constitutes assets comprising all or substantially all of an operating unit of a business or (ii) constitutes Equity Interests in a Person that becomes a Subsidiary as a result of such acquisition, if such operating unit or Person had EBITDA in excess of $10,000,000 for its most recent fiscal year prior to such acquisition for which such amount is determinable. "Material Adverse Effect": a material adverse effect on (a) the business, assets, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder. "Material Disposition": any Disposition of property or series of related Dispositions of property that (i) constitutes assets comprising all or substantially all of an operating unit of a business or (ii) constitutes Equity Interests in a Person that ceases to be a Subsidiary as a result of such Disposition, if such operating unit or Person had EBITDA in excess of $10,000,000 for its most recent fiscal year prior to such Disposition for which such amount is determinable; provided that the Disposition of Spencer Gifts LLC will not be deemed a Material Disposition. "Material Domestic Subsidiary": any Material Subsidiary which is a Domestic Subsidiary. "Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. Materials of Environmental Concern do not include commercially reasonable amounts of such substances used or stored in the ordinary course of occupancy, use or maintenance; provided that such substances are used or stored in accordance with Environmental Laws. "Material Subsidiary": (a) each Subsidiary so designated on Schedule 3.15, (b) each other Subsidiary having total assets (consolidated in the case of a Subsidiary which itself has one or more subsidiaries) exceeding $50,000,000, (c) each other Subsidiary whose EBITDA (consolidated in the case of a Subsidiary which itself has one or more subsidiaries) represents 5% or more of Consolidated EBITDA for the most recent fiscal year of the Borrower then ended and (d) any other Subsidiary which is the successor by amalgamation, merger, consolidation or the like to, or which is the transferee (other than 14 by reason of transfers made in the ordinary course of business) of sufficient assets that the receiving Subsidiary would have been a Material Subsidiary had the transfer occurred on or before the date of the latest audited consolidated accounts of the Group; in a case of a transfer of all or substantially all the assets of a Material Subsidiary, the disposing Material Subsidiary shall forthwith upon the transfer taking place cease to be a Material Subsidiary. "Moody's": Moody's Investors Service, Inc. "Mortgage": a mortgage, deed of trust, leasehold mortgage, leasehold deed of trust, assignment of leases and rents or other security document granting a Lien on any Mortgaged Property to secure the obligations under the Loan Documents of each Loan Party party to such Mortgage. Each Mortgage shall be reasonably satisfactory in form and substance to the Co-Administrative Agents. "Mortgaged Property": initially, each parcel of real property (or leasehold interest therein) and the improvements thereto owned by a Loan Party and identified on Schedule 1.1B, and includes each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.9. "Multiemployer Plan": a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Proceeds": with respect to any event (a) the cash proceeds received by the Borrower and its Domestic Subsidiaries (and, in the case of a Film Rights Securitization, its Foreign Subsidiaries) in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, if in excess of $1,000,000, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments if in excess of $1,000,000, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower and its Subsidiaries to third parties (other than Affiliates) in connection with such event (including underwriting discounts and commissions, brokerage or other selling commissions, legal, advisory and other fees and expenses, including title and recording fees and expenses and appraisal and environmental fees and expenses), (ii) in the case of an Asset Sale or a Recovery Event, the amount of all payments required to be made by the Borrower and its Subsidiaries as a result of such event to repay Indebtedness (other than Loans) directly or indirectly secured by such asset (or, in the case of a Disposition of a Subsidiary, for which such Subsidiary is liable), (iii) any amounts applied to repay the UCI Loan as permitted by Section 6.6(j) and (iv) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and its Subsidiaries (including for this purpose any Tax Distributions required to be made by the Borrower in respect of such event, but not any other direct or indirect third- party tax indemnity, except any tax indemnity in favor of the purchaser or its Affiliates in connection with a Disposition of assets), and the amount of any reserves established by the Borrower and its Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next two succeeding years and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Borrower). The Net Proceeds of any revolving credit or similar facility shall be the net rather than the gross amount of financing obtained thereunder. The amount of proceeds received by the Borrower and its Subsidiaries pursuant to any Film Rights Securitization shall be deemed to be equal to (A) initially, the initial amount outstanding under any financing provided (other than by a Group Member) to a Subsidiary of the Borrower in connection with such Film Rights Securitization (a "Securitization Financing"), and (B) thereafter, an amount corresponding, at any time, to an increase of the aggregate outstanding amount under the Securitization Financing relating to such Film Rights Securitization to an amount greater than the highest amount outstanding under such Securitization Financing prior to such time, in each case net of (1) amounts described in clause (b) above, to the extent applicable, and (2) reserves required to be funded in connection with such Film Rights Securitization so long as such reserves are required to be maintained. 15 "Non-Excluded Taxes": as defined in Section 2.13(a). "Non-U.S. Lender": as defined in Section 2.13(d). "Notes": the collective reference to any promissory note evidencing Loans. "Obligations": the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to any Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to any Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise. "Operating Income": for any Person for any period, the operating earnings or losses of such Person before interest, income taxes, equity earnings, minority interests and cumulative effects of changes in accounting principles for such period determined in accordance with GAAP. "Other Taxes": any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "P&A": distribution costs for Theatrical Exploitation attributable to (i) costs of advertising, promotion and publicity for an item of Product and (ii) costs for positive prints, internegatives, magnetic and optical sound tracks, trailers and other copies of an item of Product. "Participant": as defined in Section 9.6(c). "Partnership Agreement": as defined in the Transaction Agreement. "Paving Agent": JPMorgan Chase Bank, as the paying agent for the Lenders under this Agreement, together with any successors in such capacity. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor). "Perfection Certificate": as defined in the Security Agreement. "Permitted Debt": Additional Indebtedness incurred in one or more capital market transactions consummated on or prior to December 31, 2003 in an aggregate principal amount up to $500,000,000. "Permitted Hedge": any Swap Agreement permitted by Section 6.10. "Permitted Investments": 16 (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, one of the two highest credit ratings obtainable from S&P and from Moody's (which, as of the date of this Agreement, includes A-2 and P-2); (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any commercial bank organized under the laws of the United States or any State thereof (or, in the case of investments made by Foreign Subsidiaries, England, France or Germany or any political subdivision thereof) which has a combined capital and surplus and undivided profits of not less than $500,000,000 (or the equivalent in other currencies); (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in paragraph (a) above and entered into with a financial institution satisfying the criteria described in paragraph (c) above; (e) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than one year from the date of acquisition thereof and, at the time of acquisition thereof, having one of the two highest credit ratings obtainable from S&P and from Moody's; (f) securities issued by any foreign government or any political subdivision of any foreign government or any public instrumentality thereof having maturities of not more than one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest credit ratings obtainable from S&P and from Moody's; (g) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio assets of at least $5,000,000,000; and (h) demand deposit accounts maintained in the ordinary course of business. "Permitted Lines of Business": the media, tourism and entertainment businesses. "Permitted Refinancing": any extension, renewal, refinancing or replacement of Indebtedness that satisfies the following conditions: (a) the outstanding principal amount thereof is not increased (except to cover reasonable transaction costs); 17 (b) such indebtedness matures no earlier than the earlier of (i) the maturity of the Indebtedness so refinanced and (ii) six months after the maturity of the Loans; and (c) the borrower or issuer in respect of such Indebtedness is not changed, except that (i) the Borrower may be the borrower or issuer in respect of Indebtedness incurred to extend, renew, refinance or replace Indebtedness of a Subsidiary and (ii) a special purpose entity created to effect a Film Rights Securitization may be the obligor in respect of a Film Rights Securitization that extends, renews, refinances or replaces another Film Rights Securitization. "Permitted Restrictions": any of the following: (a) any restrictions imposed by the Loan Documents; (b) the restrictions existing on the date hereof identified on Schedule 6.12 (but not any amendment or modification expanding the scope of any such restriction); (c) customary restrictions contained in agreements relating to the Disposition of a Subsidiary pending consummation of such Disposition, provided such restrictions apply only to the Subsidiary that is to be Disposed of and such Disposition is permitted hereunder; (d) restrictions imposed by any agreement relating to a Lien permitted by this Agreement if such restrictions apply only to the property or assets subject to such Lien; (e) customary restrictions in leases and other contracts restricting the assignment thereof; (f) customary restrictions included in the documentation governing any High-Yield Debt; provided that such restrictions shall not prohibit or limit the ability of any Group Member to create Liens to secure obligations under this Agreement and the other Loan Documents; (g) customary restrictions applicable to a Covenant Defeasance SPV or a special purpose entity created to effect a Film Rights Securitization; (h) customary restrictions contained in a co-production or distribution agreement if such restrictions apply only to the related Product and revenues therefrom; and (i) restrictions applicable to interests in a joint venture or other Investments in a Person that is not a Subsidiary. "Person": an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee pension benefit plan (other than a Multiemployer Plan) that is covered by Title IV of ERISA and in respect of which the Borrower or an 18 ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERlSA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Subsidiary": each Material Domestic Subsidiary which is not an Eligible Subsidiary or a Subsidiary of another Pledge Subsidiary. "Prepayment Event": (a) the incurrence by any Group Member of any Indebtedness permitted solely by either Section 6.2(c) or the parenthetical exclusion to Section 6.2(k); (b) the issuance by the Borrower of any Equity Interests, other than any such issuance to Vivendi Universal or a subsidiary of Vivendi Universal or any then existing holder of Equity Interests in the Borrower; (c) any Asset Sale; or (d) any Recovery Event; provided that no such event in (b), (c) or (d) shall be a Prepayment Event if consummated prior to May 8, 2004 or such later date as in the reasonable judgment of the Borrower is necessary to avoid adverse tax consequences to the Group or its Affiliates. "Product": any live performance, motion picture, television programming, film, video tape, DVD or other product produced for theatrical, non-theatrical or television release or for release in any other medium, in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter developed, with respect to which the Borrower or a Subsidiary (i) is an initial copyright owner or (ii) acquires (or will acquire upon delivery) an equity interest or distribution rights. The term "item of Product" shall include the scenario, screenplay or script upon which such Product is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of the Borrower or any Subsidiary, and all rights therein and thereto of every kind and character. "Projections": as defined in Section 5.2(c). "Properties": as defined in Section 3.17(a). "Recovery Event": any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any Subject Assets (other than in respect of business interruption insurance). "Reduction Percentage": (i) in respect of the incurrence of Indebtedness, l00%, (ii) in respect of the issuance of Equity Interests, 50% and (iii) in respect of an Asset Sale or Recovery Event, 100%. "Register": as defined in Section 9.6(b). "Regulation U": Regulation U of the Board as in effect from time to time. 19 "Reinvestment Deferred Amount": with respect to any Reinvestment Event, the aggregate Net Proceeds received by any Group Member in connection therewith that are not applied to prepay the Loans pursuant to Section 2.5 as a result of the delivery of a Reinvestment Notice. "Reinvestment Event": any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice. "Reinvestment Notice": a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through one or more Subsidiaries) elects to use all or a specified portion of the Net Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its business. "Reinvestment Prepayment Amount": with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower's business. "Reinvestment Prepayment Date": with respect to the Net Proceeds of any Reinvestment Event, the date occurring 270 days after receipt of such Net Proceeds. "Reportable Event": any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived with respect to a Plan. "Required Lenders": at any time, Lenders having Exposures aggregating more than 50% of the Exposures of all Lenders at the time. "Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": the chief executive officer, president, chief financial officer, general counsel and treasurer of the Borrower but in any event, with respect to financial matters, the chief financial officer or the treasurer of the Borrower. "Restricted Payments": as defined in Section 6.6. "SEC: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority. "S&P": Standard & Poor's Ratings Services. "Secured Guarantee": as defined in the Security Agreement. "Security Agreement": the Amended and Restated Guarantee and Security Agreement among the Borrower, the Subsidiaries of the Borrower from time to time party thereto and the Collateral Agent, substantially in the form of Exhibit A. "Security Documents": the collective reference to the Security Agreement, the Mortgages and all other security documents hereafter delivered to the Collateral Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document. 20 "Senior Leverage Ratio": at any date, the Leverage Ratio at such date, adjusted by excluding from Consolidated Indebtedness any Indebtedness which is unsecured or which is by its terms subordinate in right of payment to the Loans. "Special Fee Advance Agreement": Special Fee Advance Agreement dated as of March 28, 2003 among VUE, Universal City Property Management II LLC, Universal City Florida Holding Co. I, Universal City Florida Holding Co. II, Blackstone UTP Capital Partners L.P., Blackstone UTP Capital Partners A L.P., Blackstone UTP Offshore Capital Partners L.P. and Blackstone Family Media Partnership III L.P. "Subject Assets": any property or assets of the Borrower or its Subsidiaries (excluding (i) any receivables and related assets Disposed of in connection with any Film Rights Securitization otherwise permitted, (ii) Spencer Gifts LLC (and its subsidiaries), (iii) the real property and improvements set forth on Schedule 1.1C and (iv) UCI (and its subsidiaries) and the Group's film studios, theme parks and other real estate assets so long as (in the case of this clause (iv)), after giving effect to any Disposition thereof and any related payment of Indebtedness (or collateralization of the Loans), the Cash Leverage Ratio is less than (a) 3.0 to 1.0 for any Disposition consummated prior to the date occurring 18 months following the Closing Date and (b) 2.5 to 1.0 for any such Disposition consummated on or after the date occurring 18 months following the Closing Date). If a Disposition would have constituted a Disposition of Subject Assets but for a related payment (or collateralization) of the Loans, the Net Proceeds of such Disposition shall be deemed Net Proceeds of a Prepayment Event (or Cash Collateral Event) to the extent of such payment (or collateralization). "Subordination Agreement": the Amended and Restated Subordination Agreement entered into as of the Closing Date among the Borrower, certain of the Guarantors, Vivendi Universal Holding I Corp. and Universal Studios Holding III Corp., substantially in the form attached hereto as Exhibit B. "subsidiary": with respect to any Person (the "parent") at any date (i) any corporation, limited liability company, limited liability limited partnership, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as (ii) any other corporation, limited liability company, limited liability limited partnership, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or in the case of a partnership more than 50% of the general partnership interests are, as of such date, owned, controlled or held by the parent. "Subsidiary": any subsidiary of the Borrower. "Swap Agreement": any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a "Swap Agreement". "Syndication Agent": as defined in the preamble hereto. "Tax Distributions": any distributions required to be made by Section 8.2 of the Partnership Agreement as in effect on the date hereof. 21 "Television Assets": assets of the Television Segment (including any Equity Interests in or Indebtedness of a Television Subsidiary). "Television Financial Statements": as defined in Section 3.1(b). "Television Segment": the television production and cable television businesses of the Group. "Television Subsidiary": any Subsidiary which owns any Television Assets (other than Television Assets which are insignificant in relation both to the other assets of such Subsidiary as well as to the assets of the Television Segment). "Theatrical Exploitation": any manner of exploitation, reproduction, distribution, sale, manufacturing, use, performance or other manner of dissemination of items of Product by all means of cinematic (e.g., theatrical, non-theatrical and public video) exhibition, as those terms are commonly understood in the entertainment industry, including exhibition in hotels and on ships and airlines. "Transaction": means collectively, the contributions of assets to the Borrower contemplated by the Transaction Agreement that occurred in connection with the initial closing thereunder. "Transaction Agreement": means the Amended and Restated Transaction Agreement dated as of December 16, 2001, by and among Vivendi Universal, S.A., Universal Studios Inc., USA Networks, Inc., USANi LLC, Liberty Media Corporation and Barry Diller, as in effect on May 7, 2002. "Transferee": any Assignee or Participant. "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan. "United States": the United States of America. "UCI": collectively, United Cinemas International Multiplex B.V. and Cinema International Corporation N.V. "UCI Loan": means a loan or loans by Vivendi Universal or another Affiliate to the Borrower in an amount up to the aggregate of L165,000,000 and E 15,500,000 outstanding at any time (and any related accrued interest) to finance directly or indirectly an Investment by the Borrower in UCI; provided that such loan or loans (i) shall be subject to the Subordination Agreement and (ii) shall by its or their terms require no payments by the Borrower except upon receipt of, and then only to the extent of, distributions from UCI and/or proceeds of any Disposition of UCI. "Vivendi Group": means Vivendi Universal and its subsidiaries. "Vivendi Material Subsidiary": means, at any time, (a) any subsidiary of Vivendi Universal which is consolidated in the consolidated accounts of the Vivendi Group as prepared in accordance with generally accepted accounting principles in France: (i) whose total assets (consolidated in the case of a subsidiary of Vivendi Universal which itself has a subsidiary) represent not less than 5 per cent 22 of consolidated total assets of the Vivendi Group (as shown in the then latest consolidated accounts of the Vivendi Group made publicly available by Vivendi Universal); and/or (ii) whose EBITDA (consolidated in the case of a subsidiary of Vivendi Universal which itself has a subsidiary) represent not less than 5 per cent of EBITDA of the Vivendi Group (as shown in the then latest consolidated accounts of the Vivendi Group made publicly available by Vivendi Universal); and (b) any other subsidiary of Vivendi Universal (the "receiving Vivendi Subsidiary") to which after the date of the latest consolidated accounts of the Vivendi Group is transferred either: (i) all or substantially all the assets of another subsidiary which immediately prior to the transfer was a Vivendi Material Subsidiary (the "disposing Vivendi subsidiary"); or (ii) sufficient assets that the receiving Vivendi subsidiary would have been a Vivendi Material Subsidiary had the transfer occurred on or before the date of the latest audited consolidated accounts of the Vivendi Group; in the case of (i) above the disposing Vivendi subsidiary shall forthwith upon the transfer taking place cease to be a Vivendi Material Subsidiary. "Vivendi Universal": means Vivendi Universal, S.A., a societe anonyme organized under the laws of France. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents. (b) As used herein and in the other Loan Documents, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation", (iii) the word "incur" shall be construed to mean incur, create, issue, assume or become liable in respect of (and the words "incurred" and "incurrence" shall have correlative meanings), (iv) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Equity Interests, securities, revenues, accounts, leasehold interests and contract rights, (v) the words "shall" and "will" shall be construed to have the same meaning and effect, (vi) the word "permit" shall be constructed to mean allow or suffer, whether voluntarily or involuntarily, and (vii) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time. (c) The words "hereof", "herein" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. 23 (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.3 Accounting Determinations; GAAP. (a) To the extent a computation of Consolidated EBITDA, Consolidated Interest Expense or Consolidated Fixed Charges is required to be made for a period of four consecutive fiscal quarters ending prior to June 30,2003, such computation shall be made on a pro forma basis as if the Transaction had occurred on the first day of such period to the extent such period includes any period prior to the date of consummation of the Transaction and on an actual basis thereafter. (b) Any interest income accruing to the Group from Affiliates (other than Group Members) in any period in excess of the interest expense accruing from the Group to Affiliates (other than Group Members) in such period shall not be applied in the calculation of Consolidated Interest Expense or Consolidated Fixed Charges. (c) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Co-Administrative Agents that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Co-Administrative Agents notify the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1 Term Loans. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make a term loan (each, a "Loan") to the Borrower on the Closing Date in the amount of the Commitment of such Lender. The Commitments are not revolving or continuing in nature, and shall terminate at the close of business on the earlier of the Closing Date and June 30, 2003. (b) The Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Paying Agent in accordance with Sections 2.2 and 2.6. 2.2 Procedure for Borrowing. The Borrower shall give the Co-Administrative Agents notice designating the Closing Date (which notice must be received by the Co-Administrative Agents prior to 1:00 P.M., New York City time, one Business Day prior to the designated date and which designated date must be no later than June 30,2003). Any Loans made on the Closing Date shall initially be ABR Loans. Upon receipt of such notice from the Borrower, the Paying Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its Commitment available to the Paying Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Closing Date in funds immediately available to the Paying Agent. Such borrowing will then be made available to the Borrower by the Paying Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Paying Agent by the Lenders and in like funds as received by the Paying Agent. 2.3 Repayment of Loans. The Loans shall mature in 16 consecutive quarterly installments of principal (each due on the last day of each calendar quarter), commencing on September 30, 2004, each of which shall be in an aggregate amount equal to (i) in the case of the first 12 such 24 installments, 0.25% of the Initial Aggregate Funded Amount and (ii) in the case of each of the last four such installments, 24.25% of the Initial Aggregate Funded Amount. 2.4 Optional Prepayments. The Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Paying Agent no later than 1:00 P.M., New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 1:00 P.M., New York City time, on the date thereof, in the case of ABR Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans; provided that a notice of prepayment delivered by the Borrower may state such notice is conditioned upon the effectiveness of other credit facilities or the consummation of another transaction, in which case such notice may be revoked by the Borrower if such condition is not satisfied; and provided further that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, or if a notice of prepayment is revoked in accordance with the preceding proviso, the Borrower shall also pay any amounts owing pursuant to Section 2.14. Upon receipt of any such notice the Paying Agent shall promptly notify each Lender thereof. If any such notice is given (and not revoked in accordance with the proviso above), the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $25,000,000 or a whole multiple thereof. 2.5 Mandatory Prepayments. (a) If on any date any Group Member shall receive Net Proceeds from any Prepayment Event then, unless (in the case of an Asset Sale or a Recovery Event) a Reinvestment Notice shall be delivered in respect thereof, an amount equal to the Reduction Percentage of such Net Proceeds shall be applied within three Business Days after such date toward the prepayment of the Loans. If a Reinvestment Notice shall have been so delivered, then on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Loans. (b) Prepayments pursuant to this Section 2.5 shall be applied to the Loans in accordance with Section 2.1l(a) and (b). In the case of any such prepayment of a Eurodollar Loan on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.14. Each prepayment of the Loans under this Section 2.5 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid. 2.6 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by giving the Paying Agent prior irrevocable notice of such election no later than 1:00 P.M., New York City time, on the Business Day preceding the proposed conversion date. The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the Paying Agent prior irrevocable notice of such election no later than 1:00 P.M., New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor); provided that no ABR Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Required Lenders, or the Paying Agent in the absence of instructions from the Required Lenders, have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Paying Agent shall promptly notify each Lender thereof. (b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Paying Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing and the Required 25 Lenders, or the Paying Agent in the absence of instructions from the Required Lenders, have determined in its or their sole discretion not to permit such continuations and such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period; and provided further that if the Borrower shall fail to give any required notice as described above in this paragraph, the relevant Eurodollar Loans shall then be automatically converted to Eurodollar Loans having a one-month Interest Period on the last day of such then expiring Interest Period. Upon receipt of any such notice the Paying Agent shall promptly notify each Lender thereof. 2.7 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $25,000,000 or a whole multiple of $5,000,000 in excess thereof and (b) no more than seven Eurodollar Tranches shall be outstanding at any one time. 2.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin. (c) (i) If all or a portion of the principal amount of any Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.8 plus 2% and (ii) if all or a portion of any interest payable on any Loan or any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand. 2.9 Computation of Interest. (a) Interest payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Paying Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Paying Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Paying Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of demonstrable error. The Paying Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Paying Agent in determining any interest rate pursuant to Section 2.8(a). 26 2.10 Inability to Determine Interest Rate. If prior to the first day of any Interest Period: (a) the Paying Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Paying Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such interest Period, the Paying Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (2) any outstanding Eurodollar Loans shall be converted, on the last day of the then-current Interest Period, to ABR Loans. Until such notice has been withdrawn by the Paying Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans. 2.11 Pro Rata Treatment and Payments. (a) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Loans shall be made pro rata according to the respective outstanding principal amounts of the Loans then held by the Lenders, and shall be applied to such outstanding Eurodollar Tranches or to the outstanding ABR Loans as the Borrower may designate by notice to the Paying Agent not later than the date of such payment (or failing such notice by the Borrower, as the Paying Agent may designate). The amount of each principal prepayment of the Loans shall be applied to reduce the then remaining installments of the Loans pro rata based upon the respective then remaining principal amounts thereof; provided that at the election of the Borrower, any optional prepayments of principal may be applied to any principal installment due within ten days of such optional prepayment. Amounts prepaid may not be reborrowed. (b) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Paying Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Paying Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension. (c) Unless the Paying Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Paying Agent, the Paying Agent may assume that such Lender is making such amount available to the Paying Agent, and the Paying Agent may, in reliance upon such assumption, 27 make available to the Borrower a corresponding amount. If such amount is not made available to the Paying Agent by the required time on the borrowing date therefor, such Lender shall pay to the Paying Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Paying Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Paying Agent. A certificate of the Paying Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of demonstrable error. If such Lender's share of such borrowing is not made available to the Paying Agent by such Lender within three Business Days after such borrowing date, the Paying Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans, on demand, from the Borrower. Nothing in this paragraph shall be deemed to limit the rights of the Borrower against any Lender. (d) Unless the Paying Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Paying Agent, the Paying Agent may assume that the Borrower is making such payment, and the Paying Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Paying Agent by the Borrower within three Business Days after such due date, the Paying Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Paying Agent or any Lender against the Borrower. 2.12 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or (ii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable within 30 days of receiving such demand. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly provide written notice to the Borrower (with a copy to the Paying Agent) which shall provide sufficient detail (A) to support its right to payment hereunder and (B) in respect of calculations of the amount to be paid hereunder. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or 28 such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Paying Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction within 30 days after demand therefor. (c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Paying Agent) shall be conclusive in the absence of demonstrable error. Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than 180 days prior to the date that such Lender notifies the Borrower of such Lender's intention to claim compensation therefor; provided that if the circumstances giving rise to such claim have a retroactive effect, then such 180 day period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.13 Taxes. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter, imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes, branch profit taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender or any Participant as a result of a present or former connection between such Agent or such Lender or Participant and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be paid by any Agent or a Lender or withheld from any amounts payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender's failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph. (b) The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Paying Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. The Borrower shall indemnify the Agents and the Lenders promptly after receipt of written demand therefor for the amount of Non-Excluded Taxes and Other Taxes and any incremental Non-Excluded Taxes and Other Taxes, interest or penalties thereon paid 29 by any Agent or any Lender; provided that such written demand is accompanied by a certificate of such Agent or Lender setting forth the amount of such payment or liability. (d) Each Lender (or Transferee) that is not a "U.S. Person" as defined in Section 7701(a)(30) of the Code (a "Non-US Lender") shall deliver to the Borrower and the Paying Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a statement substantially in the form of Exhibit E and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver. (e) A Lender (or Transferee) that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Paying Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate; provided that such Lender is legally entitled to complete, execute and deliver such documentation. (f) If any Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid such Other Taxes or paid additional amounts pursuant to this Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or Other Taxes or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of such Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent or such Lender in the event such Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. (g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.14 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans 30 after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of, or conversion from, Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.1 5 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.12 or 2.13(a) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage; and provided further that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.12 or 2.13(a). 2.16 Replacement of Lenders. The Borrower shall be permitted to replace any Lender that requests (or requests on behalf of a Participant) reimbursement for amounts owing pursuant to Section 2.12 or 2.13(a); provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under Section 2.15 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.12 or 2.13(a), (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 2.14 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Paying Agent, (vii) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 9.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.12 or 2.13(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Paying Agent or any other Lender shall have against the replaced Lender. It is understood and agreed that if any Lender replaced hereunder fails to execute an Assignment and Assumption, it shall be deemed to have entered into such Assignment and Assumption. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into this Agreement and the Lenders to make the Loans, the Borrower hereby represents and warrants to each Agent and each Lender that: 31 3.1 Financial Statements. (a) The audited consolidated balance sheet of the Group as at December 31, 2002, and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by and accompanied by an unqualified report from Ernst & Young LLP, present fairly in all material respects the consolidated financial condition of the Borrower as at such date, and the consolidated results of its operations and its consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). No Group Member has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any material long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in such financial statements, except such as have been incurred subsequent to the date of such financial statements and disclosed in the Confidential Information Memorandum. (b) (i) Summary income and cash flow statements for each of the film studios segment and theme park segment, (ii) unaudited balance sheets and capitalization tables of each of the television production and distribution business of the Television Segment and the cable networks business of the Television Segment and (iii) the unaudited separate and combined statements of income and of cash flows of the television production and distribution business of the Television Segment and the cable networks business of the Television Segment (the "Television Financial Statements), copies of which have heretofore been furnished to each Lender, have been prepared based on the best information available to the Borrower as of the date of delivery thereof, and present fairly in all material respects the financial position of the Television Segment as at December 31, 2002 and its results of operations and cash flows for the fiscal year then ended, subject to the elimination of intercompany revenues and expenses. 3.2 No Change. Since December 31, 2002, there has been no development, event or circumstance that has had or could reasonably be expected to have a Material Adverse Effect. 3.3 Existence; Compliance with Law. Each Loan Party and each Material Subsidiary (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate and limited liability company power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified to do business in each jurisdiction where it is required to be so qualified and (d) is in compliance with all Requirements of Law, except in each case to the extent that the failure to comply with the requirements of clauses (b) through (d) could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 3.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the corporate, partnership or limited liability company power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority and no consent of any other Person under any material Contractual Obligation is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) the consents required under the Partnership Agreement, which shall have been obtained not later than the Closing Date, and (ii) the filings contemplated by the Security Documents. Each Loan Document has been (or will when required to be delivered have been) duly executed and delivered on behalf of each Loan Party party thereto. This 32 Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any material Contractual Obligation of any Group Member and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such material Contractual Obligation (other than the Liens created by the Security Documents). 3.6 Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened against any Group Member or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions thereunder or (b) that could reasonably be expected to have a Material Adverse Effect. 3.7 No Default. No Group Member is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 3.8 Ownership of Property; Liens. Each Group Member has good title to, or a valid leasehold interest in, all its property, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted and do not materially impair the value of such property which otherwise has material value. None of such property is subject to any Lien except as permitted by Section 6.3. 3.9 Intellectual Property. Each Group Member owns, or is licensed to use, all material Intellectual Property necessary for the conduct of its business as currently conducted. No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know of any valid basis for any such material claim. The use of Intellectual Property by each Group Member does not infringe on the rights of any Person in any material respect. 3.10 Taxes. Each Group Member has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed by it and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Group Member); no tax lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge, except to the extent that the inaccuracy of any aspect of the foregoing would not in the aggregate reasonably be expected to have a Material Adverse Effect. 3.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used for "buying" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U or for any purpose that violates the provisions of the regulations of the Board. 33 3.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Group Member pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of each Group Member have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from any Group Member on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Group Member. 3.13 ERISA. No ERISA Event that would reasonably be expected to result in a Material Adverse Effect has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan. To the extent that the present value of all accrued benefits under each Plan (based on those assumptions used to fund such Plans) exceeded, as of the last annual valuation date prior to the date on which this representation is made or deemed made, the value of the assets of such Plan allocable to such accrued benefits, the presence of such excess would not reasonably be expected to result in a Material Adverse Effect. 3.14 Investment Company Act; Other Regulations. No Loan Party is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness. 3.15 Subsidiaries. Schedule 3.15 sets forth the name and jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Equity Interests directly or indirectly owned by the Borrower and there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than (i) in connection with Dispositions of 25% of the Equity Interests in Reveille LLC to Ben Silverman and (ii) stock options granted to employees or directors and directors' qualifying shares) of any nature relating to any Equity Interests of any Subsidiary, except as created by the Loan Documents. 3.16 Use of Proceeds. The proceeds of the Loans shall be used to renew any loans outstanding under the Existing Facility. 3.17 Environmental Matters. Except as, in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) the facilities and properties owned, leased or operated by any Group Member (the "Properties") do not contain, and to the knowledge of the Borrower have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or constituted a violation of, or would give rise to liability under, any Environmental Law; (b) no Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by any Group Member (the "Business"), nor does the Borrower have knowledge that any such notice will be received or is being threatened; (c) Materials of Environmental Concern have not been transported or disposed of from or on the Properties in violation of, or in a manner or to a location that would give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that would give rise to liability under, any applicable Environmental Law; 34 (d) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business; (e) there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of any Group Member in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that would give rise to liability under Environmental Laws; (f) the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Properties or the Business; and (g) no Group Member has assumed any liability of any other Person under Environmental Laws. 3.18 Accuracy of Information, etc. No written factual statement or information contained in this Agreement, any other Loan Document or any other written document, certificate or factual statement (excluding any projections or pro forma financial information in such document, certificate or statement) furnished by or on behalf of any Loan Party to any Agent or the Lenders, or any of them (including, to the best of the Borrower's knowledge, the Confidential Information Memorandum), for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (as supplemented by all other information furnished to the Lenders prior to the date of this Agreement) any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein (taken as a whole) not misleading in any material respect. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Agents and the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. 3.19 Security Documents. Each representation and warranty of each Loan Party set forth in the Security Documents is correct. SECTION 4. CONDITIONS PRECEDENT 4.1 Conditions to Loans. The agreement of each Lender to make the Loan to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent: (a) Loan Agreement. The Co-Administrative Agents shall have received this Agreement or, in the case of the Lenders, a Lender Addendum, executed and delivered by the Agents, the Borrower and each Person listed on Schedule 1.1A. (b) Collateral and Guarantee Requirement. The Collateral and Guarantee Requirement shall have been satisfied. 35 (c) Financial Statements. The Lenders shall have received the financial statements referred to in Section 3.1. (d) Financial Projections. The Co-Administrative Agents shall have received financial projections for the Group and for the Television Segment for the years 2003-2008 (including, but not limited to consolidated balance sheets for each such year and the related consolidated statements of income and of cash flows for each such year) in form and substance reasonably satisfactory to the Co-Administrative Agents, which projections shall demonstrate (i) the ability of the Borrower to meet its working capital and other cash needs throughout the period and (ii) the ability of the Borrower to service its Indebtedness. (e) Existing Facility. All loans outstanding under the Existing Facility shall have been renewed hereunder as contemplated by Section 9.20, and all accrued interest thereon and all other amounts payable by the Borrower pursuant to the Existing Facility shall have been paid in full. (f) No Material Adverse Change. No event, development or circumstance shall have occurred or arisen since December 31, 2002 that has had or could reasonably be expected to have a Material Adverse Effect. (g) Fees. The Lenders and the Agents shall have received all fees required to be paid by the Borrower, and all expenses required to be paid or reimbursed by the Borrower, for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date. (h) Closing, Documents. The Co-Administrative Agents shall have received the opinions, certificates and other closing documents set forth in Schedule 4.1. (i) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the Closing Date. (j) No Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date or after giving effect to the Loans to be made on such date. The parties hereto acknowledge that the conditions set forth in Sections 4.l(c) and 4.l(d) have been satisfied prior to the date hereof. SECTION 5. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or any Agent hereunder: 5.1 Financial Statements. The Borrower will furnish to the Paying Agent with sufficient copies for each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Group a copy of the consolidated balance sheet of the Group as at the end of such fiscal year and the related consolidated statements of income and of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, such consolidated statements reported on without a "going concern" or like qualification or exception, 36 or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Group, the unaudited consolidated balance sheet of the Group as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly presented in all material respects (subject to normal year-end audit adjustments); and (c) within the time period required for delivery of annual audited or quarterly unaudited financial statements pursuant to clause (a) or clause (b) above as applicable, (i) summary income and cash flow statements for each of the film studios segment and theme park segment, (ii) unaudited balance sheets and capitalization tables of each of the television production and distribution business of the Television Segment and the cable networks business of the Television Segment and (iii) the unaudited separate and combined statements of income and of cash flows of the television production and distribution business of the Television Segment and the cable networks business of the Television Segment, setting forth in each case in comparative form the figures for the previous year and certified by a Responsible Officer as being fairly stated in all material respects (subject to the elimination of intercompany revenues and expenses and normal year-end audit adjustments). All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except (i) as approved by such accountants or officer, as the case may be, and disclosed therein or (ii) in the case of statements other than consolidated statements of the Group, as expressly contemplated above) consistently throughout the periods reflected therein and with prior periods. 5.2 Certificates; Other Information. The Borrower will furnish to the Paying Agent with sufficient copies for each Lender (or, in the case of clause (g), to the relevant Lender): (a) concurrently with the delivery of the financial statements referred to in Section 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (b) concurrently with the delivery of any financial statements pursuant to Section 5.1, (i) a certificate of a Responsible Officer stating that to his knowledge no Default or Event of Default then exists, except as specified in such certificate, and (ii) a certificate containing all information and calculations necessary for determining compliance by the Borrower with the provisions of Section 6.1 as of the last day of the fiscal quarter or fiscal year, as the case may be; (c) as soon as available, and in any event no later than 90 days after the end of each fiscal year of the Group, detailed budgets for the following fiscal year (including (i) consolidated statements of projected income and of projected cash flows, (ii) projected capital expenditures and a description of the underlying assumptions applicable thereto, (iii) a segment breakdown as to each of (i) and (ii), and (iv) on a quarterly basis, projected capitalization tables and calculations of compliance on a projected basis with Section 6.1 for each fiscal quarter during such fiscal year), and, promptly after they become available, significant revisions, if any, of such budget and projections with respect to such fiscal year (collectively, the "Projections"); 37 (d) promptly upon becoming aware thereof, notice of any change in the rating of any of its Indebtedness or in the outlook therefor by either S&P or Moody's; (e) promptly after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any class of its publicly held debt securities and, promptly after the same are filed, copies of any financial statements and reports that the Borrower may make to, or file with, the SEC; (f) not later than three Business Days prior to the date of consummation of the same, a certificate of a Responsible Officer setting forth a calculation of compliance on a pro forma basis with the provisions of Section 6.1 after giving effect to any Material Acquisition, Material Disposition, incurrence of Additional Indebtedness or making of any Restricted Payment with the proceeds of the foregoing; and (g) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 5.3 Payment of Obligations. Except to the extent that the failure to do so would not, in the aggregate, reasonably be expected to have a Material Adverse Effect, the Borrower will, and will cause each Subsidiary to, pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and any reserves required under GAAP with respect thereto have been provided on the books of the relevant Group Member. 5.4 Maintenance of Existence; Compliance. The Borrower will, and will cause each Subsidiary to, (a) (i) preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 6.4 and except, in the case of clause (ii) above and, with respect to any Subsidiary which is not a Loan Party, in the case of clause (i) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law (including Environmental Laws) except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 5.5 Maintenance of Property; Insurance. The Borrower will, and will cause each Subsidiary to, (a) keep all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies insurance with respect to its material assets of an insurable nature in at least such amounts and against at least such risks as are usually insured against by companies engaged in the same or a similar business; provided that any Group Member may self-insure on a basis consistent with both its past practices and customary industry practices in the relevant line of business. 5.6 Inspection of Property; Books and Records; Discussions. The Borrower will, and will cause each Subsidiary to, (a) keep proper books of records and account in which full, true and correct entries in conformity in all material respects with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit representatives of any Agent and any Lender to visit and inspect (in the case of a Lender, such visit and inspection to be coordinated through the Paying Agent) any of its properties and examine and make abstracts from any of its books and records (but, in the case of each Lender, not more than once during each fiscal quarter unless a Default or an Event of Default has occurred and is continuing), at any reasonable time upon 38 reasonable prior notice and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of any Group Member with officers and employees of such Group Member and (so long as representatives of the Borrower are afforded a reasonable opportunity to be present and to participate) with their independent certified public accountants. It is understood that the provisions of Section 9.15 apply to any information acquired by any Lender in the exercise of its rights under this Section. 5.7 Notices. The Borrower will promptly give notice to the Paying Agent with sufficient copies for each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of any Group Member or (ii) litigation, investigation or proceeding that may exist at any time between any Group Member and any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, would reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding affecting any Group Member (i) which, if adversely determined, could result in liability to a Group Member not covered by insurance in an amount exceeding $50,000,000, (ii) in which injunctive or similar relief is sought unless such relief, if granted, would not reasonably be expected to have a Material Adverse Effect or (iii) which relates to any Loan Document; (d) the following events: (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any ERISA Affiliate or any Multiemployer Plan with respect to the withdrawal from, or the termination of, any Plan or any Multiemployer Plan, as the case may be, which in any event specified in clause (i) or (ii) would reasonably be expected to result in a liability for the Group in excess of $50,000,000; and (e) the occurrence of any development or event that has had or could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto. 5.8 Separateness Requirements. Until the Loans are Investment Grade, the Borrower will, and will cause each Subsidiary to, comply with the requirements set forth in Schedule 5.8. 5.9 Concerning the Collateral. (a) The Borrower will furnish to the Collateral Agent prompt written notice of any change (i) in any Loan Party's legal name or domicile, (ii) in any Loan Party's identity or corporate structure or (iii) in any Loan Party's Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected Lien on all the Collateral to the extent required by the Security Documents are made or delivered to the Collateral Agent for filing. The Borrower also agrees promptly to notify the Collateral Agent if any material portion of the Collateral is damaged or destroyed. 39 (b) The Borrower will, each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.l(a), deliver to the Collateral Agent a certificate of an authorized signatory for the Borrower (i) setting forth the information required pursuant to Section A of the Perfection Certificate or confirming that that there has been no change in such information (except changes specified in such certificate) since the date of the Perfection Certificate delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section 5.9 and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and registrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent contemplated by the Security Documents and necessary to protect and perfect the Liens under the Security Agreement for a period of not less than 18 months after the date of such certificate (except as notified therein with respect to any continuation statements to be filed within such period). (c) If any additional Eligible Subsidiary is formed or acquired, or any Subsidiary becomes an Eligible Subsidiary, after the Closing Date, within ten Business Days after a Responsible Officer obtains knowledge of such event the Borrower will notify the Collateral Agent thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Eligible Subsidiary and with respect to any Equity Interests in or Indebtedness of such Eligible Subsidiary. (d) The Borrower will, and will cause each other Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and the execution and delivery of additional Deposit Account Control Agreements (as defined in the Security Agreement)), which may be required under any applicable law, or which the Collateral Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties. (e) The Borrower will, if any asset or group of related assets having an aggregate book value of $10,000,000 or more (including any real property owned in fee or improvements thereto or any interest therein) are acquired by any Loan Party after the Closing Date (other than assets constituting Collateral under the Security Agreement that become subject to the Liens of the Security Agreement upon acquisition thereof), notify the Collateral Agent thereof, and, if requested by the Collateral Agent or the Required Lenders, cause such assets to be subjected to a Lien securing the obligations of the Borrower or such Loan Party under the Loan Documents and will take, and cause the other Loan Parties to take, such actions as shall be necessary or reasonably requested by the Collateral Agent to grant and perfect such Lien, including actions described in paragraph (d) of this Section, all at the expense of the Loan Parties. (f) In the event a Cash Collateral Event shall occur, the Borrower will cause the Net Proceeds thereof to be deposited in a Cash Collateral Account maintained pursuant to (and as defined in) the Security Agreement at the times and in the amounts (if any) as the Borrower would have been required to prepay the Loans if such Cash Collateral Event were a Prepayment Event. 5.10 Interest Rate Protection. As promptly as practicable, and in any event within 90 days after the Closing Date, the Borrower will enter into, and thereafter maintain in effect, one or more Swap Agreements on such terms and with such parties as shall be reasonably satisfactory to the Co- Administrative Agents, the effect of which shall be to limit the maximum potential interest cost to the Borrower with respect to at least 50% of the outstanding Indebtedness of the Borrower for a period of not less than two years. 40 SECTION 6. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or any Agent hereunder: 6.1 Financial Covenants. The Borrower will not: (a) Permit at any time the Leverage Ratio to exceed (i) 3.25 to 1.0, if at such time the Loans are not Investment Grade or (ii) 3.75 to 1.0, if at such time the Loans are Investment Grade. (b) Permit at any time on or after December 31, 2003 the Cash Leverage Ratio to exceed (i) 3.5 to 1.0, if at such time the Loans are not Investment Grade or (ii) 4.0 to 1.0, if at such time the Loans are Investment Grade. (c) Permit at any time the Senior Leverage Ratio to exceed (i) 3.0 to 1.0, if at such time the Loans are not Investment Grade or (ii) 3.5 to 1.0, if at such time the Loans are Investment Grade. (d) Permit the ratio of Consolidated EBITDA to Consolidated Interest Expense for any period of four consecutive fiscal quarters to be less than (i) 3.5 to 1.O, if on the last day of such period the Loans are not Investment Grade, or (ii) 3.0 to 1.0, if on the last day of such period the Loans are Investment Grade. (e) Permit the ratio of Cash EBITDA to Consolidated Fixed Charges to be less than 1.25 to 1.0 for any period of four consecutive fiscal quarters ending on or after December 31, 2003. 6.2 Indebtedness. The Borrower will not, and will not permit any Subsidiary to, create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except: (a) Indebtedness owing from one Group Member to another Group Member; (b) the Loans; (c) Indebtedness of the Borrower the proceeds of which are directly or indirectly applied to prepay the Loans pursuant to Section 2.5 and Permitted Refinancings of any such Indebtedness; (d) Indebtedness existing on the Closing Date and described on Schedule 6.2 and Permitted Refinancings of any such Indebtedness; (e) Guarantee Obligations of (i) a Foreign Subsidiary in respect of Indebtedness of another Foreign Subsidiary or (ii) a Loan Party in respect of Indebtedness of any other Group Member; provided in each case that the Indebtedness which is the primary obligation is permitted under another clause of this Section 6.2 and complies with any restrictions herein applicable to such Guarantee Obligations; (f) Indebtedness of the Borrower or any Subsidiary incurred solely to finance (directly or through a partially-owned joint venture) the acquisition, construction, development, 41 production or improvement of any assets (including the acquisition, development or production in the ordinary course of business of items of Product), including any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and Permitted Refinancings of any such Indebtedness; provided that the aggregate principal amount of Indebtedness permitted by this paragraph (f) and by paragraph (g) below shall not exceed $200,000,000 (or the equivalent in other currencies) at any one time; and provided further that the aggregate principal amount of such Indebtedness so permitted which is Indebtedness of Television Subsidiaries or secured by Television Assets (without duplication) shall not exceed $100,000,000 (or the equivalent in other currencies) at any one time; (g) Indebtedness of any Person that becomes or is merged or consolidated with or into the Borrower or a Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes or is merged or consolidated with or into the Borrower or a Subsidiary and is not created in contemplation of or in connection with such Person becoming or merging or consolidating with or into the Borrower or a Subsidiary, and Permitted Refinancings of any such Indebtedness; provided further that the aggregate principal amount of Indebtedness permitted by this paragraph (g) and by paragraph (f) above shall not exceed $200,000,000 (or the equivalent in other currencies) at any one time; and provided further that the aggregate principal amount of such Indebtedness so permitted which is Indebtedness of Television Subsidiaries or secured by Television Assets (without duplication) shall not exceed $100,000,000 (or the equivalent in other currencies) at any one time; (h) reimbursement or indemnification obligations (i) arising in the ordinary course of business in respect of letters of credit or (ii) arising in respect of appeal bonds; (i) 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; (j) Indebtedness arising from loans and advances made to any Loan Party or any Foreign Subsidiary by Vivendi Universal or any of its subsidiaries (other than Group Members); provided that: (i) any such Indebtedness incurred by any Loan Party is subordinated to the Loans pursuant to the Subordination Agreement; and (ii) the aggregate outstanding amount of such Indebtedness of Foreign Subsidiaries shall be limited to (A) up to L.100,000,000 of Indebtedness of Universal Pictures Productions Ltd. outstanding on the date hereof and (B) up to $50,000,000 of other Indebtedness; (k) Indebtedness arising under a Film Rights Securitization, including any such Indebtedness which refinances another Film Rights Securitization, so long as after giving effect thereto, and to the application of the proceeds thereof, the aggregate outstanding principal amount of Indebtedness under all Film Rights Securitizations (other than such Indebtedness the Net Proceeds of which are applied to prepay the Loans, or which is a Permitted Refinancing of Indebtedness the Net Proceeds of which were so applied) does not exceed $950,000,000; (l) Indebtedness arising from the guarantee by Universal Studios Holdings Ltd. and/or the Borrower of the obligations of Shanghai Universal Studios Theme Park Co., Ltd. (the "SHANGHAI J.V."), to the lender to the Shanghai J.V. in an amount not to exceed $140,750,000; 42 (m) any Indebtedness of the Borrower arising under the Special Fee Advance Agreement and comprising payments of certain partnership distributions up to $22,500,000 owing to the Blackstone Parties (as defined in the Special Fee Advance Agreement); (n) Indebtedness of a Covenant Defeasance SPV incurred in connection with a Covenant Defeasance Transaction; (o) Indebtedness of Subsidiaries not permitted by the foregoing clauses in an aggregate principal amount at no time exceeding (x) for all Subsidiaries $100,000,000 (or the equivalent in other currencies) and (y) for all Television Subsidiaries, $25,000,000 (or the equivalent in other currencies); (p) Indebtedness in the form of unsecured Guarantee Obligations of the Borrower in respect of Indebtedness of joint ventures in which a Group Member has an Equity Interest; provided that (x) such Indebtedness of the Borrower is not the subject of a Guarantee Obligation of any Subsidiary and (y) the aggregate principal amount of such Guarantee Obligations shall at no time exceed $50,000,000; (q) Indebtedness of the Borrower not permitted by the foregoing clauses, so long as (i) such Indebtedness is unsecured and is not the subject of a Guarantee Obligation of any Subsidiary and (ii) the aggregate outstanding principal amount of such Indebtedness shall at no time exceed an amount equal to (x) $800,000,000 less (y) the sum of (A) the excess at such time of the aggregate outstanding principal amount of Indebtedness under all Film Rights Securitizations (other than such Indebtedness the Net Proceeds of which are applied to prepay the Loans, or which is a Permitted Refinancing of Indebtedness the Net Proceeds of which were so applied) over $750,000,000 and (B) the aggregate outstanding principal amount of Indebtedness of Subsidiaries permitted only by paragraph (o); and (r) so long as at the date of incurrence thereof the senior unsecured Indebtedness of the Borrower is Investment Grade, other unsecured Indebtedness of the Borrower which is not the subject of a Guarantee Obligation of any Subsidiary. 6.3 Liens. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except: (a) Liens already existing at June 16,2003 securing obligations in an aggregate amount of no more than $25,000,000 (or the equivalent in other currencies); (b) Liens arising solely by operation of law (or by any deed evidencing the same) in the ordinary course of its business in respect of any obligations which either (i) have been due for less than 30 days or (ii) are being contested in good faith and by appropriate means; (c) pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of its business as security for Indebtedness or other obligations entered into in the ordinary course of business in respect of acceptances or letters of credit to a bank or financial institution directly relating to the particular goods or documents on or over which that pledge exists; (d) any Lien arising out of title retention provisions in a supplier's standard conditions of supply of goods acquired in the ordinary course of business; 43 (e) any Lien existing at the time of acquisition on or over any assets acquired after May 3, 2002 but only if (i) the Lien was not created in contemplation of or in connection with that acquisition and (ii) the principal, capital or nominal amount secured by any such Lien and outstanding at the time of acquisition may not be increased except by reason of any fluctuation in the amount outstanding under, and within the limits and in accordance with the terms of, facilities which exist and are secured by the relevant Lien at the time of acquisition; (f) any Lien created on any assets acquired after May 3,2002 for the sole purpose of financing that acquisition and securing a principal, capital or nominal amount not exceeding 100% of the cost of that acquisition (including reasonable transaction costs); (g) in the case of any company which becomes a Subsidiary after May 3,2002, any Lien existing on or over its assets when it becomes a Subsidiary, but only if (i) the Lien was not created in contemplation of or in connection with it becoming a Subsidiary and (ii) the principal, capital or nominal amount secured by any such Lien and outstanding when the relevant company becomes a Subsidiary may not be increased except by reason of any fluctuation in the amount outstanding under, and within the limits and in accordance with the terms of, facilities which exist and are secured by the relevant Lien when it becomes a Subsidiary; (h) any Lien that is (i) a contractual right of set-off relating to a depository relationship with a bank not given as security for Indebtedness or (ii) created by virtue of the operation of any cash pooling arrangements for any Group Members with their bankers providing for the setting-off or netting of debt and credit balances on bank accounts of those Group Members; (i) any Lien granted by any Group Member to any pension fund or managers securing the pension obligations of any Group Member; (j) any Lien (the "Replacement Lien") created in substitution for any Lien referred to in paragraphs (a) through (y) of Section 6.3 so long as the principal, capital or nominal amount secured by the Replacement Lien is not increased (except to cover reasonable transaction costs) and is not secured by any additional assets; (k) any Lien arising out of orders of attachment, sequestration, distress or execution which do not constitute an Event of Default under Section 7; (l) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations and pledges and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of obligations under such laws or regulations; (m) any Lien to secure the performance of tenders, bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, completion bonds, letters of credit and other obligations of a like nature, in each case in the ordinary course of business; (n) any Lien in favor of landlords on leasehold improvements in leased premises; (o) any Lien arising from Permitted Investments described in clause (d) of the definition of the term "Permitted Investments"; 44 (p) rights of licensees under access agreements pursuant to which such licensees have access to duplicating material for the purpose of making copies or prints of items of Product licensed to them, and rights of distributors, exhibitors, licensees and other Persons in items of Product created in connection with the distribution or other exploitation of such items of Product in the ordinary course of business and not securing any Indebtedness; (q) any Lien securing an obligation incurred in connection with acquiring rights to items of Product in the ordinary course of business; provided that (i) the obligation secured by such Lien does not constitute Indebtedness of the Borrower or any of its Subsidiaries, (ii) such Liens shall be created substantially simultaneously with the acquisition, production or "pick-up" of such films and (iii) such Liens do not at any time encumber any property other than the items of Product being produced or acquired and the rights pertaining thereto and proceeds thereof; (r) any Lien in an item of Product securing advances to the Borrower or any of its Subsidiaries made by licensees thereof in order to finance the production or distribution thereof; provided that the aggregate principal amount of advances secured thereby shall not exceed (as to the Borrower and all of its Subsidiaries) $50,000,000 (or the equivalent in other currencies) at any time outstanding; (s) any Lien arising in the ordinary course of business that is held by or accrues in favor of (i) the Screen Actors Guild, the Writers Guild of America, the Directors Guild of America, the International Alliance of Theatrical and Stage Employees, and any other unions, guilds or collective bargaining units who have rights in or control over items of Product or (ii) any Persons who hold a participation or a residual interest in items of Product; (t) any Lien arising in the ordinary course of business in an item of Product that is held by or accrues in favor of any completion guarantor, financier or other third person related to production, acquisition or exploitation rights in such item of Product; provided that such Lien is subject to an intercreditor agreement by such completion guarantor, financier or other third person, as the case may be, in favor of the Borrower in which such completion guarantor, financier or other third person agrees not to (i) interfere with or otherwise disturb the exercise or exploitation by the Borrower or its Affiliates of such item of Product or (ii) exploit such item of Product (other than in the case, and to the extent, of any such completion guarantor, financier or other third person acting as a distributor or disseminator of Product, including as a result of foreclosing on such person's Lien); (u) the transfer of any Lien permitted to exist under this Section 6.3 from one Person to another, so long as the principal, capital or nominal amount secured by that Lien is not increased; (v) any Copyright Lien securing obligations specified in the definition thereof; (w) any Lien arising in the ordinary course of business (including in connection with an Exempt Transaction) regarding items of Product that is held by or accrues in favor of any government, administrative agency or other administrator or beneficiary of a Governmental Incentive Program; (x) any Lien created on or over assets of a Foreign Subsidiary which is not a Guarantor pledged to secure obligations of such Subsidiary permitted to be incurred under this Agreement; 45 (y) any Lien created in connection with a Film Rights Securitization, which Film Rights Securitization is permitted under Section 6.2; (z) any Lien created by the Security Documents; (aa) any Lien created upon any cash collateral account of the Borrower that is funded exclusively with any portion of the proceeds of the UCI Loan; (bb) the Lien on Equity Interests in USJ Co., Ltd. contemplated by the definition of Indebtedness; (cc) any Lien created upon any assets of a Covenant Defeasance SPV incurred in connection with a Covenant Defeasance Transaction; and (dd) any other Lien created on or over assets of any Group Member; provided that the aggregate outstanding principal, capital or nominal amount secured by all Liens created or outstanding under this paragraph (dd) must not at any time exceed in aggregate $50,000,000 (or the equivalent in other currencies). 6.4 Fundamental Changes. The Borrower will not, and will not permit any Subsidiary to, enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business, except that: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving entity) or with or into any other Subsidiary (provided, that if either such Subsidiary is a Guarantor, the continuing or surviving entity shall be a Guarantor); (b) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interest of the Borrower and is not materially disadvantageous to the Lenders; provided that a Guarantor may only liquidate or dissolve into the Borrower or another Guarantor; and (c) any Investment permitted by Section 6.7 or any Disposition permitted pursuant to Section 6.5 may be structured as a merger, consolidation or amalgamation and may involve a Disposition of all or substantially all of the assets of one or more Group Members. 6.5 Disposition of Property. The Borrower will not, and will not permit any Subsidiary to, Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any Equity Interests in such Subsidiary to any Person, except: (a) Dispositions made in the ordinary course of business of the Disposing entity, including in connection with any Exempt Transaction; (b) Dispositions to a Group Member; (c) Restricted Payments that are permitted by Section 6.6; (d) leases, including subleases, and licenses entered into in the ordinary course of business; 46 (e) Dispositions made in connection with the liquidation in bankruptcy of any Subsidiary; (f) Dispositions made in connection with a Film Rights Securitization, which Film Rights Securitization is permitted under Section 6.2; (g) Dispositions of 25% of the Equity Interests in Reveille LLC to Ben Silverman; and (h) other Dispositions, so long as (i) the consideration therefor is not less than the fair market value of the related asset, (ii) the Borrower complies with the requirements of Sections 2.5 and 5.9(f) in connection with such Disposition, if applicable, (iii) in the case of any Disposition of Television Assets such consideration is payable solely in cash at closing; provided that the Borrower may accept consideration other than cash in connection with a Disposition of Television Assets so long as the book value of such non-cash consideration does not exceed 15% of the aggregate consideration for all such Dispositions of Television Assets; and (iv) the aggregate book value of Television Assets (other than the Sundance Channel) so Disposed of shall not exceed $50,000,000 during the term of this Agreement. 6.6 Restricted Payments. Unless at the time the Loans are Investment Grade, the Borrower will not, and will not permit any Subsidiary to, (i) declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Equity Interests of any Group Member, whether now or hereafter outstanding (other than an Investment in Equity Interests in a Subsidiary permitted by Section 6.7), or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of any Group Member ("Dividends"), (ii) make any Investment in any member of the Vivendi Group other than a Group Member or (iii) make any payment on account of, or set apart assets for a sinking or another analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Indebtedness owing to any member of the Vivendi Group other than a Group Member (collectively, "Restricted Payments"), except that so long as after giving effect to such Restricted Payment (and any transaction giving rise thereto), no Event of Default shall have occurred and be continuing: (a) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional such Equity Interests; (b) Subsidiaries may declare and make Restricted Payments to the Borrower or other Subsidiaries and declare and pay Dividends ratably with respect to their Equity Interests; (c) the Borrower may declare and pay regularly scheduled cash distributions on its Class B Preferred Interests; (d) the Borrower may, promptly after the close of each taxable year, make Tax Distributions in respect of the income of the Borrower for such taxable year; (e) the Canada Preferred Stock may be redeemed or repurchased at any time after the exercise by the holder thereof of the put rights related thereto; (f) the Borrower may make Restricted Payments from the proceeds of cash from operations so long as, after giving effect thereto, the Cash Leverage Ratio is less than 2.5 to 1.O; 47 (g) the Borrower may make Restricted Payments from the Net Proceeds received from the Disposition of assets other than Subject Assets (whether consummated prior to, on or after the Closing Date) so long as, after giving effect thereto, (x) any Indebtedness associated with such assets has been retired or defeased, (y) the Cash Leverage Ratio is less than (a) 3.0 to 1.0 for any such Disposition consummated prior to the date occurring 18 months following the Closing Date and (b) 2.5 to 1.0 for any such Disposition consummated on or after the date occurring 18 months after the Closing Date and (2) the Loans are rated no less than BB by S&P and Ba2 by Moody's (in each case, with a stable outlook); provided that the condition in clause (y) above shall not apply in the case of a Disposition of Spencer Gifts LLC (and its subsidiaries) or the real property and improvements set forth on Schedule 1.1C; (h) new intercompany loans may be made to Vivendi Universal or its subsidiaries or then-existing intercompany loans owed to Vivendi Universal or its subsidiaries may be repaid from the proceeds of cash from operations, so long as, after giving effect thereto, no more than $600,000,000 of net intercompany loans to Vivendi Universal or its subsidiaries are outstanding (subject to an increase to $700,000,000 at any time upon election of the Borrower, at which time the maximum ratio permitted by clause (i) of Section 6.1(b) shall be reduced to 3.0 to 1.0 to the extent not already at or below such level); provided that the net amount of intercompany loans otherwise permitted to be outstanding under this clause (h) shall be reduced by the amount of any Restricted Payments in the form of Dividends made pursuant to clauses (f) and (g) above); (i) the Borrower may make Restricted Payments in an amount equal to the portion of any proceeds of issuances of Equity Interests not required to be used to prepay the Loans (or to cash collateralize the Loans); provided that, such amount is used to make Restricted Payments substantially concurrently with the receipt of such proceeds and so long as the Cash Leverage Ratio is less than 2.5 to 1.0; (j) UCI Loans may be prepaid with the proceeds of (i) Additional Indebtedness, (ii) any Disposition of UCI or (iii) distributions received from UCI; (k) the Borrower may make Restricted Payments from the proceeds of Permitted Debt; and (l) the Class A Preferred Interests and/or the Class B Preferred Interests may be defeased pursuant to a Covenant Defeasance Transaction; provided that no such Restricted Payment in the form of loans or advances otherwise permitted by the foregoing provisions shall be permitted if as a consequence such loans or advances would in whole or in part be required to be applied as a mandatory prepayment of Indebtedness of a member of the Vivendi Group. 6.7 Investments. The Borrower will not, and will not permit any Subsidiary to, make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Equity Interests, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, "Investments"), except: (a) Permitted Investments; (b) Investments by the Borrower or any Subsidiary existing on June 16, 2003; 48 (c) loans, advances or other Investments made by the Borrower to or in any Subsidiary (including the formation of a new Subsidiary but not the acquisition of a Person having more than $1,000 of total assets not theretofore a Subsidiary) or made by any Subsidiary to or in the Borrower or any other Subsidiary (including the formation of a new Subsidiary but not the acquisition of a Person not theretofore a Subsidiary having more than $1,000 of total assets); (d) Investments constituting part of the Transaction; (e) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers, suppliers or others, in each case in the ordinary course of business, or received in satisfaction of judgments; (f) Investments received as noncash consideration for Dispositions permitted by Section 6.5; (g) extensions of credit in the nature of accounts receivable in the ordinary course of business; (h) loans and advances to employees, directors and officers of the Borrower or any of the Subsidiaries in the ordinary course of business; (i) Investments in the form of Permitted Hedges; (j) Investments resulting from pledges and deposits referred to in Section 6.3; (k) Investments of any Person existing at the time such Person becomes a Subsidiary or at the time such Person merges or consolidates with the Borrower or any of the Subsidiaries, in either case in compliance with the terms of this Agreement, which Investments were not created or acquired in contemplation of such transaction; (l) Investments constituting Restricted Payments permitted by Section 6.6; (m) guarantees constituting Indebtedness permitted by Section 6.2; (n) guarantees made in the ordinary course of business consistent with past practices; (o) acquisitions of Product or interests therein in the ordinary course of business, including by way of forming and/or funding joint ventures; (p) direct or indirect Investments in UCI (including any guarantee of or pledge of cash collateral to secure Indebtedness of UCI) funded exclusively with the proceeds of a UCI Loan; (q) loans and advances arising under the Special Fee Advance Agreement comprising payments of certain partnership distributions up to $22,500,000 owing to the Blackstone Parties (as defined in the Special Fee Advance Agreement); (r) loans to any other Person participating in a Governmental Incentive Program if and only if a Group Member retains control over the distribution rights in the related Product; 49 (s) direct or indirect Investments in Shanghai J.V. in an amount not to exceed $75,700,000, plus such additional Investment not to exceed $140,750,000 as may arise under the Indebtedness permitted pursuant to Section 6.2(1); and (t) Investments in addition to those permitted by clauses (a) through (s) above so long as after giving effect thereto no Event of Default shall have occurred and be continuing. 6.8 Transactions with Affiliates. The Borrower will not, and will not permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except: (a) at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties; (b) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliate; (c) transactions described on Schedule 6.8; (d) loans and advances between the Borrower and its Subsidiaries, on the one hand, and Vivendi Universal and its subsidiaries (other than the Borrower and its subsidiaries), on the other hand, permitted by Sections 6.2(j) and 6.6; (e) other transactions on an arm's-length basis among the Borrower, its Subsidiaries and their Affiliates consistent with past practices (it being understood that a transaction on terms reasonably calculated to reimburse the applicable Group Member for its material costs in connection therewith shall not fail to be an arm's length transaction for this purpose even though such Group Member would not have entered into such a transaction with a Person that was not an Affiliate); (f) any Restricted Payment permitted by Section 6.6; and (g) the borrowing of a UCI Loan and the making of any payment in respect thereof required by the terms thereof (but not any payment which is not required by the terms thereof). 6.9 Sales and Leasebacks. The Borrower will not, and will not permit any Subsidiary to, enter into any arrangement with any Person (other than a Group Member) providing for the leasing by any Group Member of real or personal property that has been or is to be sold or transferred by such Group Member to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Group Member; provided that such an arrangement may be effected (i) within 270 days after the initial acquisition by any Group Member of such real or personal property in order to finance the cost of acquisition thereof or (ii) pursuant to the transactions described on Schedule 6.9. 6.10 Swap Agreements. The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of Equity Interests or High-Yield Debt) and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary. 50 6.11 Changes in Fiscal Periods. The Borrower will not permit its fiscal year to end on a day other than December 31 or change its method of determining fiscal quarters. 6.12 Negative Pledge Clauses. The Borrower will not, and will not permit any Subsidiary to, enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Group Member to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, in each case other than Permitted Restrictions. 6.13 Clauses Restricting Subsidiary Distributions. The Borrower will not, and will not permit any Subsidiary to, enter into or suffer to exist or become effective any consensual restriction on the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, in each case other than Permitted Restrictions. 6.14 Lines of Business. The Borrower will not enter to any material extent into any business, either directly or through any Subsidiary, except for Permitted Lines of Business. SECTION 7. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) a Loan Party does not pay (i) on the due date, any principal of any Loan or (ii) within three Business Days of the due date, any other amount payable by it under the Loan Documents, in each case at the place at and in the currency in which it is expressed to be payable; (b) (i) the Borrower does not comply with any provision of Section 5.7(a), Section 5.9(f) or Section 6; or (ii) a Loan Party does not comply with any provision of the Loan Documents (other than those referred to in Section 7(a) or 7(b)(i)) and the failure to comply (if capable of remedy) continues for 30 days after the Paying Agent gives notice of such failure to the Borrower; (c) a representation, warranty or statement made or repeated in any Loan Document or in any document delivered by or on behalf of any Loan Party under or in connection with any Loan Document is incorrect in any material respect when made or deemed to be made or repeated; (d) (i) any Financial Obligation of any Loan Party, a Material Subsidiary, Vivendi Universal or a Vivendi Material Subsidiary is not paid when due (or where there is a grace period applicable to that Indebtedness, within that grace period); (ii) an event of default howsoever described occurs under any document relating to any Financial Obligation of any Loan Party, a Material Subsidiary, Vivendi Universal or a Vivendi Material Subsidiary; or (iii) any Financial Obligation of any Loan Party, a Material Subsidiary, Vivendi Universal or a Vivendi Material Subsidiary becomes prematurely due and payable as a result of an event of default or is placed on demand as a result of an event of default (howsoever described) under the document relating to that Indebtedness; provided that there shall only be an Event of Default under this Section 7(d) if the aggregate amount of Financial Obligations which is not so paid and/or in respect of which such event has occurred and/or which becomes prematurely due and payable or is placed on demand exceeds $50,000,000 (or the equivalent in other currencies); and provided further that no Default or Event of Default shall arise hereunder if Indebtedness secured by any asset is required 51 to be prepaid by reason of a Disposition of such asset otherwise permitted hereunder, or any Indebtedness of any Subsidiary is required to be prepaid by reason of a Disposition of such Subsidiary otherwise permitted hereunder, so long as such Indebtedness is so prepaid in accordance with such requirements; (e) (i) any Loan Party, any Material Subsidiary or Vivendi Universal is unable to pay its debts as they fall due, or admits in writing inability to pay its debts as they fall due; (ii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking: (A) liquidation, reorganization or other relief in respect of any Loan Party, any Material Subsidiary or Vivendi Universal or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect; or (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party, any Material Subsidiary or Vivendi Universal or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or (iii) any Loan Party, any Material Subsidiary or Vivendi Universal shall: (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect; (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (ii) of this Section; (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Material Subsidiary or for a substantial part of its assets; (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (E) make a general assignment for the benefit of creditors; or (F) take any action for the purpose of effecting any of the foregoing; (f) the Secured Guarantee of any Guarantor is not effective or is alleged by any Loan Party to be ineffective for any reason, except as otherwise provided in Section 5.9 and in the Security Agreement; 52 (g) one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 (exclusive of amounts covered by insurance as to which the insurer has not disputed coverage) shall be rendered against any Loan Party or any Material Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Loan Party or any Material Subsidiary to enforce any such judgment; (h) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect; (i) a Change in Control shall occur; (j) on or after the Closing Date, the Collateral Agent shall not have for the benefit of the Lenders a perfected first priority security interest, directly or indirectly through the pledge of the equity interests in a Group Member which is the direct or indirect owner thereof, in all equity interests owned by any Group Member in any of the Pledge Subsidiaries, except as a result of the Collateral Agent's failure (x) to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Agreement or (y) to file properly (A) Uniform Commercial Code financing statements or comparable filings delivered to it for filing under the Security Documents or (B) Uniform Commercial Code continuation statements or comparable filings necessary to maintain perfection, or any Loan Party shall allege such to be the case; or (k) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral having a value in excess of $5,000,000, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral or such Collateral's becoming subject to a Film Rights Securitization (and released in accordance with Section 9.14) in a transaction permitted under the Loan Documents or (ii) as a result of the Collateral Agent's failure (x) to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Agreement or (y) to file properly (A) Uniform commercial Code financing statements or comparable filings delivered to it for filing under the Security Documents or (B) Uniform Commercial Code continuation statements or comparable filings necessary to maintain perfection; then, and in any such event, the Paying Agent shall, if so directed by the Required Lenders, by notice to the Borrower: (x) demand that all or part of the Loans, together with accrued interest and all other amounts accrued under the Loan Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or (y) demand that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Paying Agent acting on the instructions of the Required Lenders; provided that upon the occurrence of an Event of Default under Section 7(e) with respect to the Borrower, the Loans, together with accrued interest and all other amounts accrued under the Loan Documents, shall become immediately due and payable, without notice or any other action by any Agent or any Lender. SECTION 8. THE AGENTS 8.1 Appointment. Each Lender hereby irrevocably designates and appoints each of the Co-Administrative Agents, the Collateral Agent and the Paying Agent as the agents of such Lender under this Agreement and the other Loan Documents, and irrevocably authorizes each of them, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan 53 Documents and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement and the other Loan Documents (including with respect to the Collateral Agent, to sign and deliver the Security Documents), together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Co-Administrative Agents, the Collateral Agent and the Paying Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any of the Co-Administrative Agents, the Collateral Agent and the Paying Agent. References in this Section 8, other than Sections 8.9 and 8.10 to the Co-Administrative Agents shall be deemed to include a reference to the Collateral Agent and the Paying Agent. 8.2 Delegation of Duties. Each of the Co-Administrative Agents may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Neither of the Co-Administrative Agents shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 8.3 Exculpatory Provisions. Neither any Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by any Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party. 8.4 Reliance by Co-Administrative Agents. Each of the Co-Administrative Agents shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Co-Administrative Agents. Each of the Co-Administrative Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Co-Administrative Agents. Each of the Co-Administrative Agents shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each of the Co-Administrative Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 54 8.5 Notice of Default. No Co-Administrative Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Co-Administrative Agents have received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Co-Administrative Agents receive such a notice, the Co-Administrative Agents shall give notice thereof to the Lenders. The Co-Administrative Agents shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Co-Administrative Agents shall have received such directions, the Co-Administrative Agents may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as they shall deem advisable in the best interests of the Lenders. 8.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Co-Administrative Agents hereunder, the Co-Administrative Agents shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Co-Administrative Agents or any of their officers, directors, employees, agents, attorneys-in-fact or affiliates. 8.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Exposures in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Exposures immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. 55 8.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. 8.9 Successor Co-Administrative Agent. Each of the Co-Administrative Agents may resign as Co-Administrative Agent upon 10 days' notice to the Lenders and the Borrower. If the Co-Administrative Agents shall have both resigned as Co-Administrative Agents under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 7(a) or Section 7(e) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed). Any successor agent shall succeed to the rights, powers and duties of the Co-Administrative Agents, and the term "Co-Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Co-Administrative Agent's rights, powers and duties as Co-Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Co-Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If both Co-Administrative Agents shall have resigned and no successor agent has accepted appointment as Co-Administrative Agent by the date that is 10 days following the last retiring Co-Administrative Agent's notice of resignation, the last retiring Co-Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Co-Administrative Agents hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Co-Administrative Agent's resignation as Co-Administrative Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Co-Administrative Agent under this Agreement and the other Loan Documents. 8.10 Co-Administrative Agents' and Paying Agent's Fees. The Borrower agrees to pay (i) to the Co-Administrative Agents, for their own accounts, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Co-Administrative Agents and (ii) to the Paying Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Paying Agent. 8.11 Syndication Agent. The Syndication Agent shall not have any duties or responsibilities hereunder in its capacity as such. SECTION 9. MISCELLANEOUS 9.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Co-Administrative Agents and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Co-Administrative Agents, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) forgive the principal amount or extend the final 56 scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Loan, reduce the stated rate of any interest payable hereunder (except in connection with the waiver of applicability of any post-default increase in interest rates) or extend the scheduled date of any payment thereof, or provide that payments shall not be allocated pro rata to the Lenders, in each case without the written consent of each Lender directly and adversely affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 9.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release all or substantially all of the Guarantors from their obligations under the Security Agreement, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of Section 8 without the written consent of each Agent affected thereby. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Co-Administrative Agents and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Loans and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders. 9.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower, the Co-Administrative Agents and the Paying Agent, and as set forth in an administrative questionnaire delivered to the Co-Administrative Agents in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto: Borrower: Vivendi Universal Entertainment LLLP Universal Studios 100 Universal City Plaza Universal City, California 91608 Attention: Chief Financial Officer and General Counsel Telecopy: +1 818 866 1567 and +1 818 866 3444 with a copy to: Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris, France Attention: Dominique Gibert Telecopy: + 33 1 71 71 1127 Co-Administrative Agents: Bank of America, N.A. 57 335 Madison Avenue New York, New York 10017 Attention: Thomas Kane Telecopy: +1-212 503 7173 and: JPMorgan Chase Bank Loan and Agency Services Group 1111 Fannin Street, 10th Floor Houston, Texas 77002 Attention: Cynthia Aguirre Telecopy: +1-713 750 2358 with a copy to: JPMorgan Chase Bank 270 Park Avenue New York, New York 10017 Attention: Peter Thauer Telecopy: +l-212 270 4164 Paying Agent: JPMorgan Chase Bank Loan and Agency Services Group 1111 Fannin Street, 10th Floor Houston, Texas 77002 Attention: Cynthia Aguirre Telecopy: +1-713 750 2358 provided that any notice, request or demand to or upon any Agent shall not be effective until received. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Co-Administrative Agents; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Paying Agent and the applicable Lender. The Borrower or any Agent may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. 9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 9.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder. 58 9.5 Payment of Expenses. Upon receipt of reasonable documentation, the Borrower agrees (a) to pay or reimburse the Co-Administrative Agents, the Collateral Agent and the Paying Agent for all their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of a single outside counsel (and any local counsel) to such Agents and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Agent that is owed payment or reimbursement shall deem appropriate, (b) to pay or reimburse each Lender and each Agent for all their reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents but, in the case of the Lenders, only after the occurrence and during the continuance of a Default or an Event of Default, including the fees and disbursements of counsel to each Lender and each Agent, and (c) to pay, indemnify, and hold each Lender and each Agent and their respective officers, directors, trustees, employees, Affiliates, agents and controlling persons (each, an "Indemnitee") harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Group Member or any of the Properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (c), collectively, the "Indemnified Liabilities"); provided that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section 9.5 shall be payable promptly after written demand therefor. The agreements in this Section 9.5 shall survive repayment of the Loans and all other amounts payable hereunder. 9.6 Successors and Assigns: Participations and Assignments. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. (b) (i) Subject to the conditions set forth in paragraph (b)(ii) of this Section, any Lender may assign to one or more assignees (each, an "Assignee") all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of: 59 (A) the Borrower; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under Section 7(a) or 7(e) has occurred and is continuing, any other Person; and (B) the Paying Agent; provided that no consent of the Paying Agent shall be required for an assignment of all or any portion of a Loan to a Lender, an Affiliate of a Lender or an Approved Fund; provided further that no consent of the Paying Agent shall be required for an assignment of all or any portion of a Loan to any Person by Bank of America, N.A. or JPMorgan Chase Bank. (ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Co- Administrative Agents) shall not be less than $1,000,000 unless each of the Borrower and the Paying Agent otherwise consents (such consents not to be unreasonably withheld or delayed); provided that (1) no such consent of the Borrower shall be required if an Event of Default under Section 7(a) or 7(e) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any; (B) the parties to each assignment shall execute and deliver to the Paying Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and (C) the Assignee, if it shall not be a Lender, shall deliver to the Paying Agent an administrative questionnaire. For the purposes of this Section 9.6,the term "Approved Fund" means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12,2.13,2.14 and 9.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section. 60 (iv) The Paying Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"), a copy of which shall be made available to the Borrower upon its request. The entries in the Register shall be conclusive, and the Borrower, the Agents and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Upon the reasonable request of a Lender, the Paying Agent may provide such Lender with a list of the names and Exposures of the other Lenders. (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee's completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b)(ii)(B) of this Section and any written consent to such assignment required by this Section 9.6, the Paying Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (c) (I) Any Lender may, without the consent of the Borrower or Agent, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 9.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12 and 2.13 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.7 as though it were a Lender; provided such Participant shall be subject to Section 9.7(a) as though it were a Lender. (ii) A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. Any Participant that is a Non-US. Lender shall not be entitled to the benefits of Section 2.13 unless such Participant complies with Section 2.13(d). (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto. 61 (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) of this Section. (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or any Agent and without regard to the limitations set forth in Section 9.6(b). The Borrower, each Lender and each Agent hereby confirm that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance. 9.7 Adjustments; Set-off. (a) Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or Lenders, if any Lender (a "Benefited Lender") shall, at any time after the Loans and other amounts payable hereunder shall immediately become due and payable pursuant to Section 7, receive any payment of all or part of the Obligations owing to it, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(e), or otherwise), in a greater proportion than any such payment to or Collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such Collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, during the continuance of an Event of Default and without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Co-Administrative Agents after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. 9.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Co-Administrative Agents. 9.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such 62 prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Agents or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 9.2 or at such other address of which the Co-Administrative Agents shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 9.13 Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) none of the Agents and Lenders has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agents and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 63 (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or between the Borrower and the Lenders. 9.14 Releases of Guarantees and Liens. (a) Notwithstanding the foregoing, and subject, in the case of the Collateral covered by any Mortgage, to the provisions of such Mortgage, Collateral (but not the proceeds thereof) shall be automatically released from the Liens of the Security Documents from time to time as necessary in respect of any Disposition of assets (which assets constitute items of Collateral) permitted by the Loan Documents (other than a Film Rights Securitization, which is addressed in clause (b) below) and made to a Person other than the Borrower and its Subsidiaries and, in the case of a sale outside the ordinary course of business, other than an Affiliate; provided that arrangements reasonably satisfactory to the Collateral Agent shall have been made to apply the Net Proceeds thereof if and as required by the terms of the Loan Documents. The Collateral Agent shall execute and deliver all release documents reasonably requested to evidence such release (without the requirement of consent from any Lender), including if necessary in respect of such disposal the delivery of any security certificates or instruments held by the Collateral Agent and any related stock or note powers or other instruments of transfer. (b) Collateral shall be released from the Liens of the Security Documents to the extent necessary to permit the consummation of any Film Rights Securitization permitted under the Loan Documents. The Collateral Agent shall execute and deliver any release, inter-creditor or similar document reasonably requested of it and reasonably satisfactory to it in connection with such a Film Rights Securitization (without the requirement of consent from any Lender). (c) In the event of any Disposition of Equity Interests directly or indirectly held by the Borrower in any Guarantor which is permitted by the Loan Documents and made to a Person other than the Borrower, a Subsidiary or an Affiliate, if such Disposition results in such Guarantor's ceasing to be a Subsidiary, then such Guarantor shall be automatically released from its obligations as a Guarantor under the Loan Documents. The Collateral Agent shall execute and deliver all release documents reasonably requested to evidence such release (without the requirement of consent from any Lender). (d) In the event of a Disposition of Collateral outside the ordinary course of business to an Affiliate in a transaction expressly permitted hereunder, the Borrower shall be entitled to a release of the Lien of the Security Documents on such Collateral (and, in the case of such a Disposition of a Guarantor, to a release of its Secured Guarantee) upon presentation of evidence reasonably satisfactory to the Collateral Agent that such transaction is expressly permitted hereunder. The Collateral Agent shall execute and deliver all release documents reasonably requested to evidence such release (without the requirement of consent from any Lender). (e) If and to the extent that (i) a Cash Collateral Event occurs (or is deemed to occur) by reason of a Disposition of assets which constitute Subject Assets solely because the requisite pro forma Cash Leverage Ratio specified in the definition of Subject Assets was not achieved at the time of such Disposition (or was achieved only after giving effect to a related collateralization of the Loans), but (ii) such Disposition would not have constituted a Disposition of Subject Assets had such Disposition been consummated as of the date of each of the then two most recent fiscal quarters of the Borrower (determined after giving effect to the release of cash collateral contemplated below), the Borrower shall be entitled to release of the amount of cash collateral deposited in connection with such Disposition (or to release of the appropriate portion thereof which permits the condition specified above to be satisfied). For purposes of Section 6.6, the cash collateral so released shall be deemed Net Proceeds of a Disposition of assets which are not Subject Assets consummated on the date of such release. 64 (f) The Collateral Agent may conclusively rely upon a certificate of the Borrower to the effect that any Disposition or Film Rights Securitization is permitted by the Loan Documents. 9.15 Confidentiality. Each Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party, any Agent or any Lender pursuant to or in connection with this Agreement that is designated by the provider thereof as confidential; provided that nothing herein shall prevent the Agent or any Lender from disclosing any such information (a) to the Agent, any other Lender or any affiliate thereof, (b) subject to an agreement to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty to any Swap Agreement (or any professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, in each case on a confidential basis, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if necessary to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender's investment portfolio in connection with ratings issued with respect to such Lender or (i) in connection with the exercise of any remedy hereunder or under any other Loan Document; provided further that effective from the date of commencement of discussions concerning the transaction contemplated by this Agreement, each of the Loan Parties, each of the Lenders and each of the Agents and each of their employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction contemplated by this Agreement, and all materials of any kind, including opinions or other tax analyses, that have been provided to it by any other party relating to such tax treatment and tax structure. 9.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 9.17 Delivery of Addenda. Each Lender listed in Schedule 1.1A shall become a party to this Agreement by delivering to the Co-Administrative Agents a Lender Addendum duly executed by such Lender. 9.18 Non-Recourse to Partners. No liability, right, remedy or claim shall arise, be asserted or be enforceable at any time as against any parties to the Partnership Agreement, or any of their subsidiaries or Affiliates or any of the respective officers, directors, employees, representatives or agents of any of the foregoing, other than the Borrower and the other Loan Parties, by or on behalf of any Agent or any Lender in respect of the Loans, this Agreement or any other Loan Document, all such liabilities, rights, remedies and claims, if any, being expressly waived. 9.19 Limitation on Individual Enforcement. Each Lender agrees that it shall not take or institute any action or proceeding, judicial or otherwise, for any right or remedy against the Borrower or any other Loan Party under the Loan Documents (including the exercise of any right of setoff, rights on account of any bankers lien or similar claim or other rights of self-help), or institute any action or proceeding, or otherwise commence any remedial procedure, with respect to any Collateral, without the prior written consent of the Co-Administrative Agents and the Required Lenders. The provisions of this Section (i) are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party and (ii) shall not extend to any individual Lender enforcement (or other) rights not otherwise available to an individual Lender under the Loan Documents. 65 9.20 Restatement of Existing Facility. The Loans are intended as a renewal and extension of the outstanding principal amount under the Existing Facility to the extent thereof. The parties hereto (including the Co-Administrative Agents, in their respective capacities as lenders and administrative agent under the Existing Facility) agree that, on the Closing Date and subject to satisfaction of the conditions specified in Section 3.1 hereof, (i) the Co-Administrative Agents, in their respective capacities as lenders under the Existing Facility, hereby assign to the Lenders all of their right, title and interest under the Existing Facility, (ii) the proceeds of the Loans shall be applied on the Closing Date to the payment of all amounts owed by the Borrower under the Existing Facility, (iii) the Indebtedness thereunder shall be deemed to be renewed hereunder with the effect that such Indebtedness shall be deemed not to have been repaid, but shall remain outstanding hereunder as Loans and (iv) the Existing Facility shall be amended and restated in its entirety to read as set forth herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. VIVENDI UNIVERSAL ENTERTAINMENT LLLP By: /s/ Karen Randall ----------------------------------- Name: Karen Randall Title: Executive Vice President and General Counsel CO-ADMINISTRATIVE AGENTS: BANK OF AMERICA, N.A. By: /s/ Thomas J. Kane ----------------------------------- Name: Thomas J. Kane Title: Principal JPMORGAN CHASE BANK By: ----------------------------------- Name: Title: LOAN AGREEMENT CO-ADMINISTRATIVE AGENTS: BANK OF AMERICA, N.A. By: ----------------------------------- Name: Title: JPMORGAN CHASE BANK By: /s/ Bruce Borden ----------------------------------- Name: BRUCE BORDEN Title: VICE PRESIDENT LOAN AGREEMENT SYNDICATION AGENT: BARCLAYS BANK PLC By: /s/ Nicholas A. Bell ----------------------------------- Name: NICHOLAS A. BELL Title: DIRECTOR LOAN TRANSACTION MANAGEMENT LOAN AGREEMENT COLLATERAL AGENT: JPMORGAN CHASE BANK By: /s/ Bruce Borden ----------------------------------- Name: BRUCE BORDEN Title: VICE PRESIDENT LOAN AGREEMENT PAYING AGENT: JPMORGAN CHASE BANK By: /s/ Bruce Borden ----------------------------------- Name: BRUCE BORDEN Title: VICE PRESIDENT LOAN AGREEMENT EX-4.10 7 y87781exv4w10.txt FACILITY AGREEMENT Exhibit 4.10 CHANCE EXECUTION COPY EUR 1,300,000,000 FACILITY AGREEMENT dated 06 December 2002 for SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. as Borrower arranged by BNP PARIBAS CDC FINANCE - CDC IXIS CREDIT AGRICOLE INDOSUEZ CREDIT LYONNAIS CREDIT SUISSE FIRST BOSTON, PARIS BRANCH DEXIA CREDIT LOCAL NATEXIS BANQUES POPULAIRES COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. (RABOBANK INTERNATIONAL, PARIS BRANCH) THE ROYAL BANK OF SCOTLAND PLC SG INVESTMENT BANKING SUMITOMO MITSUI BANKING CORPORATION WEST LB AG, PARIS BRANCH with CREDIT LYONNAIS acting as Agent and THE ROYAL BANK OF SCOTLAND PLC acting as Security Trustee _________________________________ FACILITY AGREEMENT _________________________________ CONTENTS

CLAUSE PAGE 1. Definitions And Interpretation ..................................... 1 2. The Facility ........................................................ 14 3. Purpose ............................................................. 14 4. Conditions Of Utilisation ........................................... 15 5. Utilisation ......................................................... 16 6. Repayment ........................................................... 17 7. Prepayment And Cancellation ......................................... 18 8. Interest ............................................................ 24 9. Interest Periods .................................................... 25 10. Changes To The Calculation Of Interest .............................. 25 11. Fees ................................................................ 26 12. Tax Gross Up And Indemnities ........................................ 27 13. Increased Costs ..................................................... 29 14. Other Indemnities ................................................... 30 15. Mitigation By The Lenders ........................................... 32 16. Costs And Expenses .................................................. 32 17. Representations ..................................................... 34 18. Information Undertakings ............................................ 37 19. Financial Covenants ................................................. 39 20. General Undertakings ................................................ 45 21. Events Of Default ................................................... 55 22. Changes To The Lenders .............................................. 60 23. Changes To The Parent And The Borrower .............................. 63 24. The Agent, The Security Trustee and The Arranger .................... 64 25. Conduct Of Business By The Finance Parties .......................... 76 26. Sharing Among The Finance Parties ................................... 76 27. Payment Mechanics ................................................... 79 28. Set-Off ............................................................. 81 29. Application Of Proceeds ............................................. 81 30. Notices ............................................................. 83 31. Calculations And Certificates ....................................... 85

32. Partial Invalidity .................................................. 85 33. Remedies And Waivers ................................................ 85 34. Amendments And Waivers .............................................. 85 35. Counterparts ........................................................ 86 36. Governing Law ....................................................... 87 37. Enforcement ......................................................... 87 THIS AGREEMENT is dated 06 December 2002 and made between: (1) SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. (the "Borrower"); (2) VIVENDI UNIVERSAL S.A. (the "Parent"); (3) BNP PARIBAS, CDC FINANCE - CDC IXIS, CREDIT AGRICOLE INDOSUEZ, CRED LYONNAIS, CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA CREDIT LOCAL, NATEXIS BANQUES POPULAIRES, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., (RABOBANK INTERNATIONAL, PARIS BRANCH), THE ROYAL BANK OF SCOTLAND PLC, SG INVESTMENT BANKING, SUMITOMO MITSUI BANKING CORPORATION and WEST LB AG, PARIS BRANCH (whether acting individually or together the "Arranger"); (4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 (the Original Lenders) as lenders (the "Original Lenders"); (5) CREDIT LYONNAIS as agent of the other Finance Parties (the "Agent"); and (6) THE ROYAL BANK OF SCOTLAND PLC as security trustee for the Secured Parties (the "Security Trustee"). IT IS AGREED as follows: SECTION 1 INTERPRETATION 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions in this Agreement: "Acquisition" means the acquisition by the Borrower of the Borrower Cegetel Shares on the terms of the Acquisition Agreement. "Acquisition Agreement" means the share purchase agreement relating to the sale and purchase of the Borrower Cegetel Shares to be made between the Borrower and the Vender in the form already existing between the Vendor an Vodafone AG. "Additional Cost Rate" has the meaning given to it in Schedule 9 (Mandatory Cost Formalae). "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. "AOL Swap" means the transaction pursuant to which, under the terms and conditions of the "Convention de Sous-Participation en Risque et en Tresorerie" dated 31 December 2001 between the Parent and Cegetel and the "Convention de Sous- -1- Participation en Risque es en Tresorerie" dated 31 December 2001 between the Parent and SNIC (a subsidiary of Cegetel subsequently merged with Cegetel)(together the "Mirror TRS"), Cegetel sub-participates, up to 66.6667%, to a total return share swap transaction dated 6 August 2001 entered into between the Parent and LineInvest Limited and based on 725,000 preferred E shares issued by AOL Europe (the "Parent TRS") or, as the case may be, following the restructuring of the Parent TRS, the total return share swap transaction to be entered into directly between Cegetel and LineInvest Limited in replacement of the Mirror TRS and based on 483,334 preferred E shares issued by AOL Europe. "Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration. "Availability Period" means the period from and including the date of this Agreement to and including the earlier of (i) the Utilisation Date and (ii) 30 April 2003. "Borrower Cegetel Shares" means the shares representing 26% of the ordinary issued share capital of Cegetel which, on the date of this Agreement, are beneficially owned, directly or indirectly, by the Vendor. "Break Costs" means the amount (if any) by which: (a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or that 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 European 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. "Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London and Paris and any TARGET day. "Business Plan" means the three year 2002-2004 business plan including profit and loss account and cashflow projections in relation to the Cegetel Group presented to the Cegetel board of directors on 13 December 2001, and updated and extended by the Cegetel Group financial department in September 2002 so as to include updated projections for the 2002-2004 medium-term period and long-term projections for the year 2005-2009. "Cegetel" means Cegetel Groupe S.A., a company incorporated under the laws of France with registered number 403 106 537 (RCS Paris). -2- "Cegetel Group" means Cegetel and its Subsidiaries. "Cegetel Shareholders Agreement" means the shareholders agreement dated 14 May 1997, as subsequently amended, and made between the Parent, Compagnie Transatlantique de Telecommunications, British Telecommunications plc, Vodafone AG, SBC International, Inc., SBC International - Societe de Radiotelephone Cellulaire, Inc. and Cegetel. "Closing Date" means the date on which Completion occurs. "Commitment" means: (a) in relation to an Original Lender, the amount set opposite name under heading "Commitment" in Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement; and (b) in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. "Completion" means the completion of the Acquisition in accordance with clause 7 of the Acquisition Agreement. "Compliance Certificate" means a certificate substantially in the form set out in Schedule 5 (Form of Compliance Certificate). "Confidentiality Undertaking" means a confidentiality undertaking substantially in a form agreed between the Borrower and the Agent. "Credit Rating" means, in relation to a corporation, its long-term credit rating from S&P or Moody's. "Default" means an Event of Default or any event or circumstance specified in Clause 21 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing, in each case, under Clause 21 (Events of Default)) be an Event of Default. "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. "EURIBOR" means, in the relation to the Loan: (a) the applicable Screen Rate; or (b) (if no Screen Rate is available for the Interest Period of the Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as -3- supplied to the Agent at its request 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 Loan. "Event of Default" means any event or circumstance specified as such in Clause 21 (Events of Default). "Existing Facilities" means: (a) the EUR 3,000,000,000 syndicated credit facility made available to the Parent under the terms of a credit agreement dated 15 March 2002; (b) the EUR 850,000,000 syndicated credit facility made available to the Parent under the terms of a credit agreement dated 2 March 1999; (c) the EUR 1,000,000,000 syndicated credit facility made available to the Parent under the terms of a credit agreement dated 10 July 2002; (d) the New Facility; (e) the First Demand Guarantee granted by the Parent to Credit Lyonnais Securities in connection with the UMO preferred shares for an amount of L136,000,000 dated 14 February 2002; (f) the ISDA Master Agreement and Confirmation dated 30 May 2002 entered into between the Parent and Deutsche Bank for the Sale and Repurchase Transaction on Vivendi Environnement ordinary shares; (g) the EUR 300,000,0000 overdraft facility made available by CDC IXIS in favour of the Parent dated 12 October 2001 as the same may be refinanced on terms no more restrictive than the facility referred to in paragraph (d) above; (h) the Total Return Swap under ISDA Master Agreement and confirmation entered into between the Parent and LineInvest Limited in connection with the AOL preferred shares dated 6 August 2001; (i) the EUR 215,000,000 facility made available by Societe Generale in favour of the Parent dated 6 June 2002; (j) the EUR 275,000,000 facility made available by Societe Generale in favour of the Parent dated 28 June 2002; and any extension, restructuring or refinancing thereof where the terms thereof are no more restrictive in relation to the matters referred to in Clause 20.17 (b) under the relevant facility which is being extended, restructured or refinanced. -4- "Extension Option" means the option of the Borrower to extend the maturity of the Facility set out in Clause 2.4 (Extension of Facility), the extension being a prorogation by the Lenders. "Facility" means the term loan facility made available under this Agreement as described in Clause 2 (The Facility). "Facility Office" means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement. "Fee Letter" means any letter or letters dated on or about the date of this Agreement between the Arranger and the Borrower (or the Agent and the Borrower or the Security Trustee and the Borrower) setting out any of the fees referred to in Clause 11 (Fees). "Final Maturity Date" means 30 June 2004 or, if the Borrower has exercised the Extension Option, 30 June 2010. "Finance Document" means this Agreement, any Fee Letter, any Transaction Security Document, the Hedging Agreements and any other document designated as such by the Agent and the Borrower. "Finance Party" means the Agent, the Arranger, the Security Trustee or a Lender. "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 by a bill discounting or factoring credit facility; (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 or other agreement which would, in accordance with 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); -5- (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; (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; (k) any arrangement pursuant to which any asset sold or otherwise disposed of by that person may be re-acquired by a member of the Group (whether following the exercise of an option or otherwise); and (l) (without double counting) the amount of any liability in respect of any guarantee or indemnity or similar assurance against financial loss for any of the items referred to in paragraphs (a) to (k) above. "GAAP" means generally accepted accounting principles in France. "Group" means the Borrower and its Subsidiaries for the time being. "Hedging Agreement" means each agreement in agreed form entered into by the Borrower and a Lender for the purpose of hedging interest rate liabilities in relation to the Facility in accordance with the letter between the Borrower and the Agent relating to hedging and delivered to the Agent under Clause 4.1 (Initial Conditions Precedent). "Holding Account" means an account: (a) held in France by the Borrower with the Agent or Security Trustee; (b) identified in a letter between the Borrower and the Agent as a Holding Account (as the same may be redesignated, substituted or replaced from time to time); and (c) subject to Security in favour of the Security Trustee which Security is in form and substance satisfactory to the Agent and Security Trustee. "Holding Company" means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary. "Information Package" means the Business Plan and the documents listed in Schedule 7 (Information Package). "Interest Period" means, in relation to the Loan, each period determined in accordance with Clause 9 (Interest Periods) and in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default Interest). - 6 - "Legal Reservations" means: (a) the principle that equitable remedies may be granted or refused at the discretion of a court, the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors; (b) the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of the UK stamp duty may be void and defences of set-off or counterclaim; and (c) any general principles which are set out in the qualifications as to matters of law in the legal opinions delivered to the Agent pursuant to Clause 4.1 (Initial Conditions Precedent). "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 22 (Changes to the Lenders), which in each case has not ceased to be a Party in accordance with the terms of this Agreement. "Loan" means the 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 is no Loan then outstanding, a Lender or Lenders whose Commitments aggregate more than 66 2/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2/3% of the Total Commitments immediately prior to the reduction); or (b) at any other time, a Lender or Lenders whose participations aggregate more than 66 2/3% of the Loan then outstanding. "Mandatory Cost" means the percentage rate per annum calculated by the Agent in accordance with Schedule 9 (Mandatory Cost Formulae). "Margin" means 4.00 per cent. per annum provided that with effect from the date on which the Parent grants Security in favour of the Security Trustee over its rights to receive dividends in respect of all of the shares it owns directly or indirectly (other than through the Borrower) in the issued share capital of Cegetel, the Margin will be reduced to 2.75 per cent. per annum where the ratio of (i) 69.999 per cent. of the aggregate cash dividends declared by Cegetel in the period of 12 months ending on the 30th June immediately following the date such Security is granted to (ii) Borrower Total - 7 - Funding Costs for such 12 month period is at least 2.75:1 provided that in the event that such Security is released pursuant to the terms of this Agreement, the Margin shall immediately revert to 4.00 per cent. per annum. For the purpose of determining the Margin, Borrower Total Funding Costs shall be determined in accordance with Clause 19.1 (Financial definitions) and Borrower Total Funding Costs shall be calculated on the basis of a Margin of 4.00 per cent. per annum. "Material Adverse Effect" means a material adverse effect on: (a) the business, assets, condition (financial or otherwise); operations or prospects of the Group (taken as a whole); (b) the ability of the Borrower to perform any of its payment obligations or the ability of the Borrower to perform any other of its material obligations under any of the Finance Documents; or (c) the validity or enforceability of any Finance Document or the effectiveness of any Transaction Security purported to be created pursuant to any Transaction Security Document or the rights and remedies of any Finance Party. "Material Company" means, at any time, the Borrower, Cegetel, SFR or any other Subsidiary of Cegetel which: (a) has EBITDA (calculated on the same basis as Cegetel EBITDA, as defined in Clause 19 (Financial covenants)) representing 5 per cent. or more of Cegetel EBITDA; and/or (b) has gross assets representing 5 per cent. or more of the gross assets of the Cegetel Group; and/or (c) has turnover representing 5 per cent. or more of consolidated turnover of the Cegetel Group, in each case calculated on a consolidated basis. Compliance with the conditions set out in paragraphs (a) to (c) shall be determined by reference to the most recent Compliance Certificate supplied by the Borrower. "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; -8- (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. "Moody's" means Moody's Investors Services, Inc. "New Facility" means the EUR1,000,000,000 syndicated credit facility made available to Vivendi Communications North America Inc. and Vivendi Universal Holding I Corp. on 26 November 2002. "Original Financial Statements" means: (a) in relation to the Parent, its consolidated financial statements for its financial year ended 31 December 2001; and (b) in relation to Cegetel, its consolidated audited financial statements for its financial year ended 31 December 2001. "Parent Cegetel Shares" means all of the shares in the share capital of Cegetel beneficially owned by the Parent and its Subsidiaries at the date of this Agreement. "Participating Member State" means any member state of the European community 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. "Proceeds" means all Subscription Proceeds, all Distribution Proceeds and all TD Distribution Proceeds (each as defined in Clause 7.3 (Mandatory Prepayment from Proceeds)). "Quotation Day" means, in relation to any period for which an interest rate is to be determined, two TARGET Days before the first day of that period unless market practice differs in the European interbank market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the European interbank market (and if quotations would normally be given by leading banks in the European interbank market on more than one day, the Quotation Day will be the last of those days). "Reference Banks" means the principal office in Paris or London of Credit Agricole Indosuez, Credit Lyonnais, CDC Ixis and The Royal Bank of Scotland plc or such other banks as may be appointed by the Agent in consultation with the Borrower. -9- "Repayment Date" means each of the dates specified in Clause 6.1 (Repayment of Loan) as Repayment Dates. "Repayment Instalment" means each instalment for repayment of the Loan referred to in Clause 6.1 (Repayment of Loan). "Repeating Representations" means each of the representations set out in Clauses 17.1 (Status) to paragraph (a) of Clause 17.5 (Validity and admissibility in evidence). "Screen Rate" means 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 Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders. "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. "S&P" means Standard and Poors, a division of the McGraw Hill group of companies. "SFR" means Societe Francaise du Radiotelephone (SFR) S.A., a company incorporated under the laws of France with registered number 343 960 720. "Specified Time" means a time determined in accordance with Schedule 6 (Timetables). "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 (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. "Tag Along and Drag Along Rights" means the rights referred to in paragraph 6(g) of Schedule 2. "TARGET" means Trans-European Automated Real-time Gross Settlement Express Transfer payment system. -10- "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). "TD" means Telecom Developpement SA France. "Total Commitments" means the aggregate of the Commitments, being EUR 1,300,000,000 at the date of this Agreement. "Transaction Documents" means the Finance Documents, the Acquisition Agreement and the document evidencing the Tag Along and Drag Along Rights. "Transaction Security" means the Security created or expressed to be created in favour of the Security Trustee pursuant to the Transaction Security Documents. "Transaction Security Documents" means each of the following documents: (a) the charges, pledges and assignments and other security documents in form and substance acceptable to the Security Trustee and the Agent and identified in and delivered to the Agent under Paragraph 4 of Schedule 2 (Conditions Precedent); and (b) any other document entered into by the Parent or any member of the Group creating or expressed to create any Security over all or any part of its assets in respect of the obligations of the Borrower under any of the Finance Documents. "Transfer Certificate" means a certificate substantially in one of the forms set out in Schedule 4 (Form of Transfer Certificates) or any other form agreed between the Agent and the Borrower. "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 Agent executes the Transfer Certificate. "Unpaid Sum" means any sum due and payable but unpaid by the Borrower under the Finance Documents. "Utilisation" means the utilisation of the Facility. "Utilisation Date" means the date of the Utilisation, being the date on which the Loan is to be made. "Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Utilisation Request). -11- "VAT" means value added tax as provided for in the French Code general des impots and in the Value Added Tax Act 1994 and any other tax of a similar nature. "Vendor" means British Telecommunications plc and Cegerel Holdings I B V. 1.2 Construction (a) Unless a contrary indication appears any reference in this Agreement to: (i) the "Agent", the "Arranger", the "Security Trustee", any "Finance Party", any "Lender" or any "Party" shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Security Trustee, any person for the time being appointed as Security Trustee or Security Trustee in accordance with this Agreement; (ii) a document in "agreed form" is a document which is: (A) initialled by or on behalf of the Borrower and the Agent or Arranger; or (B) a document executed on or before the Closing Date by the Borrower and the Arranger or Agent. (iii) "assets" includes present and future properties, revenues and rights of every description; (iv) the "European interbank market" means the interbank market for euro operating in Participating Member States; (v) a "Finance Document" or a "Transaction Document" or any other agreement or instrument is a reference to that Finance Document or Transaction Document or other agreement or instrument as amended or novated (however fundamentally); (vi) "indebtedness" includes any obligation (whether incurred as principal or a surety) for the payment or repayment of money, whether present or future, actual or contingent; (vii) a "participation" of a Lender in the Loan means the amount of such Loan which such Lender has made or is to make available and after the Utilisation Date that part of the Loan which is owed to such Lender; (viii) 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; (ix) 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, -12- department or regulatory, self-regulatory or other authority or organisation; (x) a "financial year" of a company is a reference to each period in respect of which it is required by law to produce annual financial statements; (xi) a provision of law is a reference to that provision as amended or re-enacted; and (xii) a time of day is a reference to Paris 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 (other than an Event of Default) is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been waived. 1.3 Currency Symbols and Definitions "EUR" and "euro" means the single currency unit of the Participating Member States. 1.4 Third party rights (a) Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the "Third Parties Act") to enforce or to enjoy the benefit of any term of any Finance Document. (b) Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary any Finance Document at any time. -13- SECTION 2 THE FACILITY 2. THE FACILITY 2.1 The Facility Subject to the terms of this Agreement, the Lenders make available to the Borrower a euro term 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 the Borrower 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. 2.3 Taux Effectif Global (effective overall rate) For the purposes of Articles L313-1 et seq., R 313-1 and R313-2 of the Code de la Consonunation, the Parties acknowledge that by virtue of certain characteristics of the Facility (and in particular the variable interest rate applicable to Loan) the taux effectif global cannot be calculated at the date of this Agreement. However, the Borrower acknowledges that it has received from the Agent a letter containing an indicative calculation of the taux effectif global, based on figured examples calculated on assumptions as to the taux de periode and duree de periode set out in the letter. The Parties acknowledge that that letter forms part of this Agreement. 2.4 Extension of Facility (a) The Borrower shall have the option to request an extension of the maturity date of the Facility to 30 June 2010, by serving written notice (the "Extension Notice") on the Agent at any time prior to 1 June 2004. Any such extension shall be effective as from the Agent's receipt of the Extension Notice. (b) Promptly upon receipt of the same, the Agent shall forward a copy of the Extension Notice to the Lenders. 3. PURPOSE 3.1 Purpose The Borrower shall apply forthwith all amounts borrowed by it under the Facility towards payment to the Vendor of the purchase price for the Borrower Cegetel Shares under the Acquisition Agreement. -14- 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 The Lenders shall only be obliged to comply with Clause 5.4 (Lenders' participation) in relation to the Utilisation if on or before 30 April 2003 or, if earlier, the Utilisation Date for that Utilisation the Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied. 4.2 Further conditions precedent 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: (a) no Default is continuing or would result from the proposed Loan; and (b) all the representations and warranties in Clause 17 (Representations) are true in all respects. -15- SECTION 3 UTILISATION 5. UTILISATION 5.1 Delivery of Utilisation Request The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time. 5.2 Completion of a Utilisation Request The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless: (a) the proposed Utilisation Date is a Business Day within the Availability Period which is the Closing Date; or (b) the proposed Interest Period complies with Clause 9 (Interest Periods). 5.3 Currency and amount The Loan will be made in euro in one amount of EUR 1,300,000,000. 5.4 Lenders' participation (a) If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office. (b) The amount of each Lender's participation in the Loan will be equal to the proportion borne by its Commitment to the Total Commitments immediately prior to making the Loan. (c) The Agent shall notify each Lender of the amount of the Loan and the amount of its participation in the Loan, in each case by the Specified Time. -16- SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION 6. REPAYMENT 6.1 Repayment of Loan (a) Subject to the exercise of the Extension Option, the Borrower shall repay the Loan in instalments by repaying on each Repayment Date the amount set out below opposite such Repayment Date: Repayment Date Repayment Instalment (euro) 30 June 2003 105,000,000 Final Maturity Date 1,195,000,000 (b) If the Extension Option is exercised by the Borrower, the Borrower shall repay the Loan in instalments by repaying on each Repayment Date the amount set out below opposite such Repayment Date: Repayment Date Repayment Instalment (euro) 30 June 2003 105,000,000 30 June 2004 90,000,000 30 June 2005 145,000,000 30 June 2006 150,000,000 30 June 2007 160,000,000 30 June 2008 195,000,000 30 June 2009 225,000,000 Final Maturity Date 230,000,000 (c) The Borrower may not reborrow any part of the Facility which is repaid. 6.2 Effect of Prepayment and Cancellation of Scheduled Repayments (a) If the Borrower cancels the whole or any part of the Commitments in accordance with Clause 7.6 (Right of repayment and cancellation in relation to a single Lender) or if the Commitment of any Lender is reduced under Clause 7.1 (Illegality) then the amount of the Repayment Instalment for each Repayment Date falling after that cancellation will reduce pro rata by the amount cancelled. -17- (b) If the Borrower cancels the whole or any part of the Commitments in accordance with Clause 7.4 (Voluntary cancellation) then the amount of the Repayment Instalment for each Repayment Date falling after that cancellation will reduce in inverse chronological order by the amount cancelled. (c) If any part of the Loan is prepaid in accordance with Clause 7.6 (Right of repayment and cancellation in relation to a single Lender) or Clause 7.1 (Illegality) then the amount of the Repayment Instalment for each Repayment Date falling after that prepayment will reduce pro rata by the amount of the Loan prepaid. (d) If any part of the Loan is prepaid in accordance with Clause 7.2 (Mandatory Prepayment in Full), Clause 7.3 (Mandatory prepayment from Proceeds) or Clause 7.5 (Voluntary prepayment) then the amount of the Repayment Instalment for each Repayment Date falling after that prepayment will reduce in the case of prepayments made pursuant to Clause 7.3 (Mandatory Prepayment from Proceeds), pro-rata, but otherwise in inverse chronological order, by the amount of the Loan prepaid. 7. PREPAYMENT AND CANCELLATION 7.1 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 the Loan: (a) that Lender shall promptly notify the Agent upon becoming aware of that event; (b) upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and (c) the Borrower shall repay that Lender's participation in the Loan together with accrued interest on and all other amounts owing to that Lender under the Financing Documents on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent such date not to be earlier than 30 Business Days following the date of the notification to the Borrower by the Agent. 7.2 MANDATORY PREPAYMENT IN FULL 7.2.1 If: (a) the Parent ceases to own the entire issued share capital of the Borrower; (b) the Borrower disposes of all or any of the Borrower Cegetel Shares; (c) the Parent and/or any of its Subsidiaries disposes of all or any of the Parent Cegetel Shares, other than pursuant to Clause 20.18(b)(i) or (ii), or the Parent -18- and/or any of its Subsidiaries creates or permits to subsist any Security or Quasi-Security (as defined in Clause 20.8 (Negative Pledge)) over all or any of the Parent Cegetel Shares; (d) Cegetel disposes of all or any of the shares in the issued share capital of SFR or any other of its Subsidiaries which is a Material Company or Cegetel, SFR or any other such Subsidiary disposes of all or substantially all of its business and assets (in any such event, other than to another member of the Cegetel Group but in which case, this paragraph (d) shall apply to any subsequent disposal by the relevant acquiror of the relevant shares, business or assets); (e) the Parent and/or the Borrower is in breach of any of its obligations under Clause 19.2 (Financial condition) and the Agent (acting on behalf of the Majority Lenders) so requires by notice in writing to that effect served on the Borrower; (f) Cegetel does not declare a distribution by 15 June of any calendar year in respect of which the Borrower's entitlement is in excess of the aggregate of: (i) the Repayment Instalment payable on the next succeeding Repayment Date pursuant to Clause 6.1 (Repayment of Loan); and (ii) the interest payable on such date pursuant to Clause 8.2 (Payment of interest); or (g) Cegetel does not pay in full any distribution declared by it by 30 June in the calendar year in which such distribution is declared; then, subject to Clauses 7.2.2 and 7.2.3 below, the Facility will on the Relevant Date (as defined in Clause 7.2.2 below) be cancelled in full and the Loan shall be prepaid in full together with interest thereon and all other amounts accrued and owing under the Finance Documents. 7.2.2 For the purposes of Clause 7.2.1 above, "Relevant Date" means: (1) in the case of an event referred to in paragraphs (a) to (d) inclusive of Clause 7.2.1 above, the date such event occurs; and (ii) in the case of an event referred to in paragraphs (e) to (g) inclusive of Clause 7.2.1 above, the date falling 3 months after the date such event occurs. 7.2.3 If an event occurs under paragraphs (f) or (g) of Clause 7.2.1 above, the Facility shall not be cancelled and the Borrower will be under no obligation in respect of such event to make payments under Clause 7.2.1 if, by the Relevant Date, the Repayment Instalment due on 30 June in the relevant calendar year and all interest due on the Facility on such date have been paid from the net cash proceeds of the subscription for any new equity share capital issued by the Borrower or from a loan granted to the Borrower by the Parent which is subordinated to the Facility on terms satisfactory to the Lenders. -19- 7.3 Mandatory Prepayment from Proceeds (a) For the purposes of Clause 7.2 (Mandatory Prepayment in Full), this Clause 7.3 and Clause 7.7 (Holding Account): "Subscription Proceeds" means the net cash proceeds of the subscription for any new equity share capital issued by the Borrower but not any proceeds which are to be applied in: (A) repayment of the Facility (including, for the avoidance of doubt, pursuant to Clause 7.1 (Illegality) or 7.6 (Right of Repayment and cancellation in relation to a single Lender)); (B) payment of interest on the Facility (including, for the avoidance of doubt, Increased Costs pursuant to Clause 13 (Increased Costs)); (C) payment of administrative expenses incurred by the Borrower to the extent not funded with Distribution Proceeds; or (D) payment of any amount due under the Hedging Agreement. "Distribution Proceeds" means the net proceeds of all dividends or other distribution (or interest on any unpaid dividend or distribution) on or in respect of the Borrower Cegetel Shares (not being TD Distribution Proceeds) to the extent that, at the time such distribution is made, such distribution exceeds the aggregate of: (A) the interest that has accrued and will accrue on the Loan pursuant to Clause 8 (Interest) during the then current Interest Period; (B) the Repayment Instalment payable pursuant to Clause 6.1 (Repayment of Loan) on the Repayment Date which is the last day of such Interest Period; and (C) administrative expenses incurred by the Borrower in an amount not exceeding EUR 150,000 in any financial year of the Borrower to the extent not funded with Subscription Proceeds; and (D) expenses incurred by the Borrower in respect of amounts owed to the Agent and the Security Trustee including but not limited to the fees set out in the Fee Letters referred to in Clause 11.3 (Agency fee) and Clause 11.4 (Security Trustee fee); and "TD Distribution Proceeds" means to the extent that the Borrower is entitled to receive such dividend or distribution, the net proceeds of any Cegetel dividend or distribution made by Cegetel in respect of the cash proceeds of any disposal by Cegetel of its interest in TD, Cegetel S.A., and Reseau Sante Social or a disposal of all or substantially all of their assets. -20- (b) The Borrower shall prepay the Loan in an amount equal to the Subscription Proceeds, the Distribution Proceeds and the TD Distribution Proceeds. (c) Any mandatory prepayment of the Loan pursuant to this Clause 7.3 shall be due on and from receipt of the relevant Proceeds by the Borrower and shall be paid either: (i) on the last day of the Interest Period during which the relevant Proceeds were received by the Borrower; or (ii) at such earlier time following receipt of such Proceeds by the Borrower as the Agent (upon the occurrence of an Event of Default which is continuing) or the Borrower (subject to payment of Break Costs) shall direct. (d) Pending the application of any amount required to be prepaid under this Facility in accordance with this Clause 7.3 any such amount shall be deposited in the Holding Account. 7.4 Voluntary cancellation The Borrower may, if it gives the 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) of the undrawn part of the Facility. Any cancellation under this Clause 7.4 shall reduce the Commitments of the Lenders rateably. 7.5 Voluntary prepayment The Borrower may, if it gives the Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or the part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of EUR 5,000,000). 7.6 Right of repayment and cancellation in relation to a single Lender (a) If: (i) any sum payable to any Lender by the Borrower is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up); or (ii) any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13 (Increased costs); or (iii) any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of Schedule 9 (Mandatory Cost Formulae), the Borrower 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 Agent notice of cancellation of the Commitment of that Lender -21- and its intention to procure the repayment of that Lender's participation in the Loan. (b) On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero. (c) On the last day of each Interest Period which ends after the Borrower has given notice under paragraph (a) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender's participation in the Loan. 7.7 Holding Account (a) The Borrower shall ensure that all Proceeds excluded from Subscription Proceeds pursuant to paragraphs (A) and (B) of the definition of Subscription Proceeds in Clause 7.3 (Mandatory Prepayment from Proceeds) and the proceeds excluded from Distribution Proceeds pursuant to paragraphs (A) and (B) of the definition of Distribution Proceeds in Clause 7.3 (Mandatory Prepayment from Proceeds) are promptly paid into the Holding Account on receipt by the Borrower. (b) The Borrower irrevocably authorises the Agent to apply amounts credited to the Holding Account in repayment of the Facility and in payment of interest on the Facility on the next Repayment Date or, following the occurrence of an Event of Default, on the date on which the Agent serves notice under Clause 21.12 (Acceleration). (c) A Finance Party with which the Holding Account is held acknowledges and agrees that interest shall accrue at normal commercial rates on amounts credited to the Holding Account. 7.8 Restrictions (a) Any notice of cancellation or prepayment given by the Borrower under this Clause 7 (Prepayment and Cancellation) 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, without premium or penalty. (c) The Borrower may not reborrow any part of the Facility which is prepaid. (d) The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement. -22- (e) No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated. (f) If the Agent receives a notice under this Clause 7 (Prepayment and Cancellation) it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate. -23- SECTION 5 COSTS OF UTILISATION 8. INTEREST 8.1 Calculation of interest The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable: (a) Margin; (b) EURIBOR; and (c) Mandatory Cost, if any. 8.2 Payment of interest On the last day of each Interest Period the Borrower shall pay accrued interest on the Loan. 8.3 Default interest (a) If the Borrower 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, been the Loan for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrower on demand by the Agent. (b) If any overdue amount consists of all or part of the 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. 8.4 Notification of rates of interest The Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement. -24- 9. INTEREST PERIODS (a) Interest on the Loan shall be calculated by reference to successive Interest Periods. (b) The first Interest Period for the Loan shall commence on the Utilisation Date and end on 30 June 2003. Each subsequent Interest Period for the Loan shall commence on the last day of its preceding Interest Period and shall be a period of twelve months. (c) An Interest Period for the Loan shall not extend beyond the Final Maturity Date. 10. CHANGES TO THE CALCULATION OF INTEREST 10.1 Absence of quotations Subject to Clause 10.2 (Market disruption), if 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 EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks. 10.2 Market disruption (a) If a Market Disruption Event occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender's participation in the Loan for the Interest Period shall be the rate per annum which is the sum of: (i) the Margin; (ii) the rate notified to the Agent 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 Agent to determine EURIBOR for euro and the relevant Interest Period; or (ii) before close of business in France on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 35 per cent. of the Loan) that the cost to it of obtaining matching deposits in the European interbank market would be in excess of EURIBOR. -25- 10.3 ALTERNATIVE BASIS OF INTEREST OR FUNDING (a) If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower 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 Borrower, be binding on all Parties. 10.4 BREAK COSTS (a) The Borrower shall, within 3 Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or any Unpaid Sum being paid by the 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 Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue. 11. FEES 11.1 COMMITMENT FEE (a) A commitment fee shall accrue during the Availability Period at the rate of 1.50 per cent. per annum on the undrawn part of the Total Commitments for the Availability Period. (b) The accrued commitment fee shall be payable by the Borrower to the Agent (for the account of the Lenders (pro rata to their Commitments) on the last day of the Availability Period and, if the Facility is cancelled in full, on the cancelled amount of the relevant Lender's Commitment at the time the cancellation is effective. 11.2 PARTICIPATION FEE The Borrower shall pay a participation fee to the beneficiaries, in the amount and at the times agreed in a Fee Letter. 11.3 AGENCY FEE The Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. 11.4 SECURITY TRUST FEE The Borrower shall pay to the Security Trustee (for its own account) a security trustee fee in the amount and at the times agreed in a Fee Letter. -26- SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS 12. TAX GROSS UP AND INDEMNITIES 12.1 DEFINITIONS (a) 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 the Borrower to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity). 12.2 TAX GROSS-UP (a) The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law. (b) The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower. (c) If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower 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) If the Borrower is required to make a Tax Deduction, the Borrower 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. (e) Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably -27- satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. 12.3 Tax indemnity (a) The Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines 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; or (ii) to the extent a loss, liability or cost: (A) is compensated for by an increased payment under Clause 12.2 (Tax gross-up); or (B) would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 12.2 (Tax gross-up) applied. (c) A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower. (d) A Protected Party shall, on receiving a payment form the Borrower under this Clause 12.3, notify the Agent. 12.4 Tax Credit If the Borrower makes a Tax Payment and the relevant Finance Party determines that: (a) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and (b) that Finance Party has obtained, utilised and retained that Tax Credit, -28- the Finance Party shall pay an amount to the Borrower 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 Borrower. 12.5 Stamp taxes The Borrower 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. 12.6 Value added tax (a) All consideration expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply made by any Finance Party to any Party in connection with 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. (b) Where a Finance Document requires any 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 that it is not entitled to credit or repayment of the VAT. 13. INCREASED COSTS 13.1 Increased costs (a) Subject to Clause 13.3 (Exceptions) the Borrower shall, within 15 Business Days of a demand by the 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) 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 (other than as a result of generally applicable corporation tax on the profits of such Finance Party); (ii) an additional or increased cost mandatorily incurred by the relevant Finance Party; 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 or any of its Affiliates having - 29 - entered into its Commitment or funding or performing its obligations under any Finance Document. 13.2 INCREASED COST CLAIMS (a) A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower. (b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs. 13.3 EXCEPTIONS (a) Clause 13.1 (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 the Borrower; (ii) compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied); (iii) compensated for by the payment of the Mandatory Cost; or (iv) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.(1) (b) In this Clause 13.3, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 12.1 (Definitions). 14 OTHER INDEMNITIES 14.1 CURRENCY INDEMNITY (a) If any sum due from the Borrower 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 the Borrower; (ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, the Borrower shall as an independent obligation, within 15 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. -30- (b) The Borrower 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. 14.2 Other indemnities The Borrower shall, within 15 Business Days of 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 the Borrower 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 26 (Sharing among the Finance Parties); (c) funding, or making arrangements to fund, its participation in the Loan requested by a Borrower in the 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) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower. 14.3 Indemnity of the Agent The Borrower shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of: (a) (in respect any loss or liability only) 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. 14.4 Indemnity to the Security Trustee (a) The Borrower shall within 15 Business Days of demand indemnify the Security Trustee against any cost, loss or liability incurred by the Security Trustee 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 Trustee by the Finance Documents or by law; and (iii) any default by the Borrower in the performance of any of the obligations expressed to be assumed by it in the Finance Documents in relation to the Transaction Security. provided that, to the extent that any such costs are incurred on or prior to the service of a notice by the Agent pursuant to Clause 21.12 (Acceleration), such costs are reasonable. -31- (b) The Security Trustee may, in priority to any payment to the Secured Parties, indemnify itself out of the property which is subject to the Transaction Security Documents in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it. 15. MITIGATION BY THE LENDERS 15.1 MITIGATION (a) Each Finance Party shall, in consultation with the Borrower, 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 7.1 (Illegality), Clause 12 (Tax gross-up and indemnities), Clause 13 (Increased costs) or paragraph 3 of Schedule 9 (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 the Borrower under the Finance Documents. 15.2 LIMITATION OF LIABILITY (a) The Borrower 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 15.1 (Mitigation). (b) A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. 16. COSTS AND EXPENSES 16.1 TRANSACTION EXPENSES The Borrower shall within 15 Business Days pay the Agent, the Arranger and the Security Trustee the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution, syndication and perfection of: (a) this Agreement and any other documents referred to in this Agreement and the Transaction Security; and (b) any other Finance Documents executed after the date of this Agreement. 16.2 AMENDMENT COSTS If (a) the Parent of the Borrower requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 27.9 (Change of currency), the Borrower shall, within 15 Business Days of demand, reimburse or procure reimbursement of each of the Agent and the Security Trustee for the amount of all costs and expenses -32- (including legal fees) reasonably incurred by the Agent and the Security Trustee in responding to, evaluating, negotiating or complying with that request or requirement. 16.3 Enforcement and preservation costs The Borrower shall, within 15 Business Days of demand, pay (or procure payment) to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with: (a) The preservation of any rights, powers and remedies under any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Trustee as a consequence of taking or holding the Transaction Security; and (b) the enforcement of any rights, powers and remedies under any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Trustee as a consequence of enforcing these rights, powers and remedies, to the extent, in the case of paragraph (a) above, that such costs and expenses have been incurred by the relevant Finance Party acting reasonably. -33- SECTION 7 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT 17. REPRESENTATIONS The Borrower and the Parent each makes the representations set out in this Clause 17 to each Finance Party on the date of this Agreement. On any other date on or before the Closing Date, it is assumed that the Parent and the Borrower have the knowledge of the senior management of Cegetel. 17.1 STATUS (a) Each of the Borrower, the Parent and Cegetel is a limited liability corporation and each of the Parent, the Borrower, Cegetel and each Material Company is, duly incorporated and validly existing under the law of its jurisdiction of incorporation. (b) The Borrower, the Parent, Cegetel and each Material Company has the power to own its assets and carry on its business as it is being conducted. 17.2 BINDING OBLIGATIONS Subject to the Legal Reservations, the obligations expressed to be assumed by the Parent and the Borrower in each Transaction Document are legal, valid, binding and enforceable obligations. 17.3 NON-CONFLICT WITH OTHER OBLIGATIONS The entry into and performance by the Parent and the Borrower of, and the transactions contemplated by, the Transaction Documents and the granting of the Transaction Security do not and will not conflict with: (a) any law or regulation applicable to it or any member of the Cegetel Group; (b) its constitutional documents or the constitutional documents of any member of the Cegetel Group; or (c) any agreement or instrument binding upon it or any member of the Cegetel Group or any of its or any member of the Cegetel Group's assets. 17.4 POWER AND AUTHORITY (a) Each of the Parent and the Borrower 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 Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents. (b) No limit on the powers of the Parent or the Borrower will be exceeded as a result of it entering into the Transaction Documents to which it is a party. -34- 17.5 VALIDITY AND ADMISSIBILITY IN EVIDENCE (a) All Authorisations required or desirable: (i) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and (ii) to make the Transaction Documents to which it is a party admissible in evidence in the Republic of France, have been obtained or effected and are in full force and effect. (b) All Authorisations necessary for the conduct of the business, trade and ordinary activities of members of the Cegetel Group have been obtained or effected and are in full force and effect except to the extent failure to obtain or effect those Authorisations could reasonably be expected not to have a Material Adverse Effect. 17.6 INSOLVENCY No: (a) corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 21.6 (Insolvency proceedings); or (b) creditors process described in Clause 21.7 (Creditors' process), has been taken or, to its knowledge, threatened in relation to the Parent, the Borrower or a member of the Cegetel Group and none of the circumstances described in Clause 21.5 (Insolvency) applies to the Parent, the Borrower or a member of the Cegetel Group. 17.7 NO DEFAULT (a) No Event of Default is continuing or might reasonably be expected to result from the making of the Loan. (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 member of the Cegetel Group or to which its (or any member of the Cegetel Group's) assets are subject which has or could reasonably be expected to have a Material Adverse Effect. 17.8 NO MISLEADING INFORMATION (a) Any factual information relating to the Borrower or the Cegetel Group contained in the Information Package was true and accurate in all material respects as at the date of the relevant report or document containing the information. (b) Any financial projections or forecasts contained in the Information Package have been prepared on the basis of recent historical information and on the basis of reasonable assumptions and were fair (as at the date of the relevant - 35 - report or document containing the projection or forecast) and arrived at after careful consideration. (c) All other written information provided by the Parent and the Borrower in connection with the Facility was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any material respect. 17.9 MATERIAL ADVERSE CHANGE There has been no material adverse change in the business or financial condition of the Borrower, the Parent or the Cegetel Group since the date of the Original Financial Statements other than any event or series of events that have occurred and have been disclosed to the Finance Parties as part of the Information Package or which have been disclosed in official press releases by the Parent or the Cegetel Group or any regulatory authority in each case prior to the date of this Agreement. 17.10 NO PROCEEDINGS PENDING OR THREATENED (a) No litigation, arbitration or administrative proceedings or investigations of or before any court, arbitral body or agency which, if adversely determined, could 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 Cegetel Group. (b) There is no actual or pending dispute or dispute resolution process under paragraph 3.5 of the Cegetel Shareholders' Agreement in relation to any business plan due to have been produced under the terms of the Cegetel Shareholders' Agreement prior to the date of this Agreement. 17.11 COMPLIANCE WITH LAWS None of the Borrower or any member of the Cegetel Group is in breach of any law or regulation in a manner or to an extent which has or could reasonably be expected to have a Material Adverse Effect. 17.12 BORROWER'S ACTIVITIES The Borrower has not engaged in any activities since its incorporation other than the authorisation and execution of the Transaction Documents and the activities referred to in or contemplated by the Transaction Documents and has no liabilities other than under the terms of the Transaction Documents. 17.13 CEGETEL On the Closing Date and immediately prior to Completion the Parent will be the beneficial owner of 43.999 per cent. of the issued share capital of Cegetel. 17.14 TIMES ON WHICH REPRESENTATIONS ARE MADE (a) All the representations and warranties in this Clause 17 are made to each Finance Party on the date of this Agreement. -36- (b) All the representations and warranties in this Clause 17 are deemed to be made by the Parent and the Borrower to each Finance Party on the Closing Date. (c) The Repeating Representations are deemed to be made by the Parent and the Borrower to each Finance Party on the date of the Utilisation Request and on the first day of each Interest Period. (d) Each representation or warranty deemed to be made after the date of this Agreement shall be made by reference to the facts and circumstances existing at the date the representation or warranty is made. 18. INFORMATION UNDERTAKINGS The undertakings in this Clause 18 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. In this Clause 18: "ANNUAL FINANCIAL STATEMENT" means a financial statement for a financial year delivered pursuant to paragraph (a) of Clause 18.1 (Financial statements). "FINANCIAL QUARTER" has the meaning given to that term in Clause 19.1 (Financial definitions). "INTERIM FINANCIAL STATEMENT" means a financial statement delivered pursuant to paragraph (b) of Clause 18.1 (Financial statements). "QUARTERLY FINANCIAL STATEMENT" means a financial statement delivered pursuant to paragraph (c) of Clause 18.1 (Financial statements). 18.1 Financial statements The Borrower shall (and the Parent shall procure that the Borrower shall) supply to the Agent in sufficient copies for all the Lenders: (a) as soon as they are available, but in any event within 120 days after the end of each of its financial years the audited consolidated financial statements for each of the Borrower and Cegetel for that financial year; (b) as soon as they are available, but in any event within 60 days after the end of the first half of each financial year of Cegetel the consolidated financial statements of Cegetel for that financial half year; and (c) as soon as they are available, but in any event within 45 days after the end of each first and third Financial Quarter of any given calendar year: (i) the consolidated financial statements of Cegetel for that Financial Quarter; and -37- (ii) the financial statements of each Subsidiary of Cegetel which is a Material Company for that Financial Quarter. 18.2 Compliance Certificate (a) The Borrower shall (and the Parent shall procure that the Borrower shall) supply a Compliance Certificate to the Agent with each set of its Annual Financial Statements, Interim Financial Statements and Quarterly Financial Statements. (b) Each Compliance Certificate shall: (i) set out (in reasonable detail) computations as to compliance with Clause 19 (Financial Covenants) as at the end of the relevant Financial Quarter; and (ii) confirm no Default has occurred and is continuing or, if a Default has occurred, what Default has occurred and the steps being taken to remedy that Default. (c) Each Compliance Certificate shall be signed by the legal representative of the Borrower. 18.3 Requirements as to financial statements (a) Each set of financial statements delivered pursuant to Clause 18.1 (Financial statements) shall be prepared in accordance with GAAP. (b) Each of the Parent and the Borrower shall procure that each set of Annual Financial Statements shall be audited by an internationally recognised firm of independent auditors licensed to practice in France. 18.4 Information: miscellaneous (a) The Borrower shall (and the Parent shall procure that the Borrower shall) supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): (i) each budget and each long term business plan in respect of the Cegetel Group, as the same may be updated from time to time, in each case, as approved by the board of directors of Cegetel each year; (ii) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, or, to its knowledge, pending against the Borrower or any member of the Cegetel Group, and which might, if adversely determined, involve a potential liability of the Borrower or the Cegetel Group exceeding EUR 30,000,000; and (iii) promptly, such information or projections regarding the financial condition, business, operations or performance of the Parent, the -38- Borrower or any member of the Cegetel Group as the Agent may reasonably request. (b) The Parent shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests), within 3 Business Days of the date on which the Parent becomes (whether directly or indirectly) the beneficial owner of the entire issued share capital of Cegetel, written notice of the occurrence of such event. 18.5 Notification of default The Borrower shall (and the Parent shall procure that the Borrower shall) notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. 19. FINANCIAL COVENANTS 19.1 Financial definitions In this Clause 19: "Borrower Total Funding Costs" means, in relation to any period, the aggregate of: (a) all interest, commissions and other financing charges payable by the Borrower in respect of that period; (b) all scheduled repayments of the Facility to be made in that period; and (c) all amounts payable by the Borrower in respect of that period under the Hedging Agreements (less any amount receivable by the Borrower in respect of that period under the Hedging Agreements), less any interest receivable by the Borrower. "Capital Expenditure" means any expenditure or obligation in respect of expenditure which in accordance with GAAP is treated as capital expenditure, including any expenditure or obligation incurred in connection with a finance or capital lease and excluding any expenditure incurred in making any acquisition permitted under paragraph (b) of Clause 20.5 (Acquisitions). "Cegetel Cashflow" means, in respect of any Period, subject to the provision below, Cegetel EBITDA after adding back: (a) any decrease in the amount of Working Capital; (b) any non-cash item deducted in computing Cegetel EBITDA, and deducting: (a) any amount of Capital Expenditure actually made by any member of the Cegetel Group; (b) any increase in the amount of Working Capital; -39- (c) any non-cash item added in computing Cegetel EBITDA, and so that no amount shall be included or excluded more than once, provided that for the purposes of computing Cegetel Cashflow for any period in relation to SFR and its Subsidiaries, only 80 per cent. of the consolidated cashflow (computed, mutatis mutandis, as Cegetel Cashflow) or such companies for such period shall be taken into account. "Cegetel EBITDA" means, in relation to the Cegetel Group for any period, the aggregate of the amount obtained by adding: (a) consolidated operating income of the Cegetel Group before any financial income, extraordinary items, income tax and goodwill amortisation and impairment; (b) depreciation charged to the consolidated profit and loss account of the Cegetel Group during such period excluding, for the avoidance of doubt, goodwill, amortisation and impairment; (c) amortisation charged to the consolidated profit and loss account of the Cegetel Group during such period; and deducting (a) restructuring charges and net restructuring allowances; (b) other one time operating expense or income; (c) gain and loss on sales of tangible and intangible assets. "Cegetel Total Net Debt" means the aggregate, on a consolidated basis, of: (a) that part of the Financial Indebtedness of members of the Cegetel Group Companies which relates to obligations for the payment or repayment of money in respect of principal incurred in respect of (i) monies borrowed or raised, (ii) any bond, note, loan stock, debenture or similar instrument, or (iii) any acceptance credit, bill discounting, note purchase, factoring or documentary credit facility (including, for the avoidance of doubt, any Financial Indebtedness under this Agreement) and excluding, for the purpose of the testing of the financial covenant referred to in paragraph (b) or Clause 19.2 (Financial Condition) only, any Financial Indebtedness under the AOL Swap; (b) the capital element of all rentals or, as the case may be, other payments payable under any finance lease entered into by any member of the Cegetel Group, less: (i) cash at hand and at bank of members of the Cegetel Group; -40- (ii) bonds, notes and commercial paper beneficially owned by members of the Cegetel Group with a maturity of not more than 6 months and rated at least A-1 by S&P or at least P-1 by Moody's (or an equivalent rating of another agency which the Agent reasonable determines to be comparable); (iii) other cash equivalent instruments (including, for the avoidance of doubt, shares in SICAV or FCP constituted of cash or bonds); (iv) the principal amount of any outstanding loans granted by Cegetel to its shareholders in accordance with the terms of this Agreement; and (v) the principal amount of any outstanding loans granted by Cegetel to TD, up to an aggregate maximum amount of EUR 25,000,000. "Financial Quarter" means the period commencing on the day following one Quarter Date and ending on the next Quarter Date. "Quarter Date" means each of 31 March, 30 June, 30 September and 31 December. "Working Capital" means, in respect of the Cegetel Group, on any date operating current assets less operating current liabilities excluding income tax assets and liabilities. 19.2 Financial condition Each of the Parent and the Borrower shall ensure that: (a) Minimum Cegetel EBITDA: (i) Cegetel EBITDA in respect of each period of 12 months ending on a date set out in Column A below shall not be less than the figure set out in Column B below opposite that date:

Column A Column B Date EUR 31 March 2003 2,100,000,000 30 June 2003 2,180,000,000 30 September 2003 2,270,000,000 31 December 2003 2,400,000,000 31 March 2004 2,450,000,000 30 June 2004 2,600,000,000; and

(ii) if the Extension Option is exercised by the Borrower, Cegetel EBITDA in respect of each period of 12 months ending on a date set out in Column A below shall not be less than the figure set out in Column B below opposite that date: -41-

Column A Column B Date EUR 30 September 2004 2,700,000,000 31 December 2004 2,800,000,000 31 March 2005 2,800,000,000 30 June 2005 2,800,000,000 30 September 2005 2,800,000,000 31 December 2005 2,800,000,000 31 March 2006 2,800,000,000 30 June 2006 2,800,000,000 30 September 2006 2,800,000,000 31 December 2006 2,800,000,000 31 March 2007 2,850,000,000 30 June 2007 2,900,000,000 30 September 2007 2,950,000,000 31 December 2007 3,000,000,000 31 March 2008 3,050,000,000 30 June 2008 3,100,000,000 30 September 2008 3,110,000,000 31 December 2008 3,150,000,000 31 March 2009 3,150,000,000 30 June 2009 3,150,000,000 30 September 2009 3,150,000,000 31 December 2009 3,150,000,000 31 March 2010 3,200,000,000 30 June 2010 3,200,000,000

(b) Leverage: (i) the ratio of Cegetel Total Net Debt on each date referred to in Column A below to Cegetel EBITDA for the period of 12 months ending on such date shall not be greater than the ratio set out in Column B below opposite that date:

Column A Column B Date Ratio 30 June 2003 0.75:1 30 September 2003 0.60:1 31 December 2003 0.50:1 31 March 2004 0.40:1 30 June 2004 0.70:1; and

(ii) if the Extension Option is exercised by the Borrower, the ratio of Cegetel Total Net Debt on each date referred to in Column A below to Cegetel EBITDA for the period of 12 months ending on such date shall -42- not be greater than the ratio set out in Column B below opposite that date: Column A Column B Date Ratio 30 September 2004 0.50:1 31 December 2004 0.40:1 31 March 2005 0.40:1 30 June 2005 0.65:1 30 September 2005 0.50:1 31 December 2005 0.40:1 31 March 2006 0.40:1 30 June 2006 0.60:1 30 September 2006 0.40:1 31 December 2006 0.30:1 31 March 2007 0.30:1 30 June 2007 0.40:1 30 September 2007 0.30:1 31 December 2007 0.30:1 31 March 2008 0.30:1 30 June 2008 0.30:1 30 September 2008 0.30:1 31 December 2008 0.30:1 31 March 2009 0.30:1 30 June 2009 0.30:1 30 September 2009 0.30:1 31 December 2009 0.30:1 31 March 2010 0.30:1 30 June 2010 0.30:1 (c) Cashflow to Borrower Total Funding Costs: (i) the ratio of (i) 26% of Cegetel Cashflow in respect of the period of 12 months ending on each date (the "Measurement Date") referred to in Column A below to (ii) Borrower Total Funding Costs for the period of 12 months ending on, if the Measurement Date is a 31 March or 30 June, the 30 June in the same calendar year or, if the Measurement Date is a 30 September or 31 December, the 30 June in the immediately succeeding calendar year, shall not be less than the ratio set out in Column B below opposite that date: Column A Column B Date Ratio 30 June 2003 1.60:1 30 September 2003 1.65:1 -43-

Column A Column B Date Ratio 31 December 2003 1.70:1 31 March 2004 1.80:1 30 June 2004 1.80:1; and

(ii) if the Extension Option is exercised by the Borrower, the ratio of (i) 26% of Cegetel Cashflow in respect of the period of 12 months ending on each date (the "Measurement Date") referred to in Column A below to (ii) Borrower. Total Funding Costs for the period of 12 months ending on, if the Measurement Date is a 31 March or 30 June, the 30 June in the same calendar year or, if the Measurement Date is a 30 September or 31 December, the 30 June in the immediately succeeding calendar year, shall not be less than the ratio set out in Column B below opposite that date:

Column A Column B Date Ratio 30 September 2004 1.60:1 31 December 2004 1.65:1 31 March 2005 1.70:1 30 June 2005 1.70:1 30 September 2005 1.80:1 31 December 2005 1.80:1 31 March 2006 1.85:1 30 June 2006 1.85:1 30 September 2006 1.90:1 31 December 2006 1.90:1 31 March 2007 1.90:1 30 June 2007 1.95:1 30 September 2007 1.85:1 31 December 2007 1.90:1 31 March 2008 1.90:1 30 June 2008 1.95:1 30 September 2008 1.85:1 31 December 2008 1.90:1 31 March 2009 1.90:1 30 June 2009 1.95:1 30 September 2009 2.00:1 31 December 2009 2.00:1 31 March 2010 2.00:1 30 June 2010 2.00:1

-44- 19.3 Financial testing The financial covenants set out in Clause 19.2 (Financial condition) shall be tested by reference to each of the financial statements and/or each Compliance Certificate delivered pursuant to Clause 18.2 (Compliance Certificate). 20. GENERAL 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 Authorisations Each of the Parent and the Borrower shall procure that the Borrower and each member of the Cegetel Group shall obtain, comply with and do all that is necessary to maintain in full force and effect any Authorisations required under any law or regulation to: (a) enable it to perform its obligations under the Transaction Documents; (b) ensure the legality, validity, enforceability or admissibility in evidence of any Transaction Document; and (c) enable it to own its property and assets and to carry on its business, trade and ordinary activities as currently conducted except to the extent failure to obtain or comply with these Authorisations could reasonably be expected not to have a Material Adverse Effect. 20.2 Compliance with laws Each of the Parent and the Borrower shall procure that the Borrower and each member of the Cegetel Group shall comply in all respects with all laws (including Environmental Law) to which it may be subject, if failure so to comply has, or could reasonably be expected to have, a Material Adverse Effect. 20.3 Merger (a) Except as permitted under paragraph (b) below, each of the Parent and the Borrower shall procure that neither the Borrower nor any member of the Cegetel Group shall enter into any amalgamation, demerger, merger or corporate reconstruction, save insofar as any Subsidiary of Cegetel does so in accordance with the terms of the Cegetel Shareholders' Agreement; (b) Paragraph (a) above shall not apply to: (i) any amalgamation, merger or corporate reconstruction between Cegetel and one of its Subsidiaries where Cegetel is the surviving corporate entity; (ii) any amalgamation, merger or corporate reconstruction of any Subsidiary of Cegetel with any other Subsidiary of Cegetel, and TD; and -45- (iii) any amalgamation, merger or corporate reconstruction involving a member of the Cegetel Group and a company which is not a member of the Cegetel Group where the member of the Cegetel Group is the surviving entity if: (A) the amount of the contribution made to the relevant member of the Cegetel Group when aggregated with the contributions to other members of the Cegetel Group and the acquisition cost of any other companies or businesses acquired by members of the Cegetel Group pursuant to paragraph (b)(iii) of Clause 20.5 (Acquisitions) since the date of this Agreement does not exceed EUR500,000,000; (B) no Default has occurred and is continuing at the time of that acquisition or would occur as a result of that acquisition; and (C) the asset contributed to the relevant member of the Cegetel Group is either: (1) that part of TD that Cegetel presently does not beneficially own; or (2) a company operating predominantly in France whose principal business is similar to or complementary to the fixed telephony business of the Cegetel Group, where in the case of paragraph (2) above the Majority Lenders have given their prior written consent, such consent not to be unreasonably withheld and to be deemed to have been given if not expressly refused within 5 Business Days of the request for such consent. 20.4 Change of business Each of the Parent and the Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or any Material Company from that carried on at the date of this Agreement. 20.5 Acquisitions (a) Each of the Parent and the Borrower shall procure that neither the Borrower nor any member of the Cegetel Group shall acquire a company or acquire (or acquire an interest in) shares or a business. (b) Paragraph (a) above shall not apply to: (i) an acquisition of the Borrower Cegetel Shares by the Borrower under the Acquisition Agreement; (ii) an acquisition by a member of the Cegetel Group permitted pursuant to paragraph (c)(ii) of Clause 20.9 (Disposals); -46- (iii) an acquisition by any member of the Cegetel Group if: (A) the amount of the acquisition cost, when aggregated with the contributions made to members of the Cegetel Group under paragraph (b)(iii) of Clause 20.3 (Merger) and the acquisition cost of any other companies or businesses acquired by members of the Cegetel Group since the date of this Agreement (other than acquisitions permitted pursuant to paragraph (iv) below) does not exceed EUR 500,000,000; (B) no Default has occurred and is continuing at the time of that acquisition or would occur as a result of that acquisition; and (C) the company or business being acquired is either: (1) that part of TD that Cegetel presently does not beneficially own; or (2) a company or business operating predominantly in France whose principal business is similar to or complementary to the fixed telephony business of the Cegetel Group, where in the case of paragraph (2) above the Majority Lenders have given their prior written consent, such consent not to be unreasonably withheld and to be deemed given if not expressly refused within 5 Business Days of the request for such consent; or (iv) any other acquisition by any member of the Cegetel Group for an individual acquisition cost of not more than EUR 20,000,000 provided that (i) the aggregate amount of the acquisition cost of all acquisitions permitted pursuant to this paragraph (iv) made since the date of this Agreement shall not exceed EUR 100,000,000 and (ii) no Default has occurred and is continuing at the time of that acquisition or would occur as a result of that acquisition. 20.6 HOLDING COMPANY The Borrower shall not (and the Parent shall procure that the Borrower shall not) trade, undertake any commercial activity, carry on any business, own any assets or incur any liabilities except for: (a) business as a holding company; (b) ownership of the Borrower Cegetel Shares, credit balances in bank accounts and cash; or (c) any liabilities under the Transaction Documents to which it is a party and professional fees and administration costs in the ordinary course of business as a holding company. -47- 20.7 PARI PASSU RANKING The Borrower shall (and the Parent shall procure that the Borrower shall) ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies. 20.8 NEGATIVE PLEDGE In this Clause 20.8, "Quasi-Security" means a transaction described in paragraph (c) below. Except as permitted under paragraph (d) below: (a) the Borrower shall not (and the Parent shall procure that the Borrower shall not) create or permit to subsist any Security or Quasi-Security over its assets other than under the Finance Documents. (b) each of the Parent and the Borrower shall procure that no member of the Cegetel Group shall create or permit to subsist any Security over any of its assets. (c) each of the Parent and the Borrower shall procure that no member of the Cegetel Group shall: (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 any other member of the Cegetel Group; (ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms; (iii) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or (iv) enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. (d) Paragraphs (b) and (c) above do not apply to: (i) any netting or set-off arrangement entered into by any member of the Cegetel Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Cegetel Group; (ii) any lien arising by operation of law in the ordinary course of trading; -48- (iii) any Security or Quasi-Security over or affecting any asset acquired by a member of the Cegetel 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 Cegetel Group; and (B) the principal amount secured has not been increased in contemplation of, or since the acquisition of that asset by a member of the Cegetel Group. (iv) any Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Cegetel 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 Cegetel Group, if: (A) the Security or Quasi-Security was not created in contemplation of the acquisition of that company; and (B) the principal amount secured has not increased in contemplation of or since the acquisition of that company. (v) any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Cegetel Group in the ordinary course of trading and on the suppliers standard or usual terms; (vi) any sale, transfer or other disposal of an asset by a member of the Cegetel Group on terms it may be leased to or re-acquired by another member of the Cegetel Group; (vii) any Security entered into by any member of the Cegetel Group in accordance with the terms of the Cegetel Shareholders' Agreement as at the date of this Agreement; or (viii) Security or Quasi-Security created after the date of this Agreement over any asset of any member of the Cegetel Group acquired after the date of this Agreement for the purpose of securing Financial Indebtedness incurred for the purpose of acquiring such asset (or any part thereof) and provided the amount secured by such Security or Quasi-Security does not exceed at any time the amount thereby secured as at the date of such acquisition; (ix) any Security or Quasi-Security over receivables or any collection account into which the proceeds of such receivables are paid created by any member of the Cegetel Group to secure Financial Indebtedness -49- incurred pursuant to a securitisation transaction for an aggregate amount not to exceed EUR 500,000,000; (x) Security or Quasi-Security renewing or extending any Security or Quasi-Security permitted pursuant to paragraphs (i) to (ix) above provided that the principal amount secured thereby has not increased and that such Security or Quasi-Security is not extended to other property; and (xi) any Security or Quasi-Security which exists in respect of any asset of any member of the Cegetel Group where the amount of Financial Indebtedness secured by such Security or Quasi-Security (when aggregated with the amount of all Financial Indebtedness of each member of the Cegetel Group secured by Security or Quasi-Security other than that permitted under paragraphs (i) to (x) above) does not exceed EUR 100,000,000. 20.9 Disposals (a) The Borrower shall not (and the Parent shall procure that the Borrower shall not), sell, lease, transfer or otherwise dispose of any asset other than as permitted or required by the terms of the Finance Documents. (b) Except as permitted under paragraph (c) below, each of the Parent and the Borrower shall procure that no member of the Cegetel Group shall enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset. (c) Paragraph (b) above does not apply to any sale, lease, transfer or other disposal: (i) by any member of the Cegetel Group of assets made in the ordinary course of day to day business of the disposing entity; (ii) of any asset by a member of the Cegetel Group to another member of the Cegetel Group; (iii) of obsolete vehicles, plant, machinery or equipment; (iv) of cash where that disposal is not otherwise prohibited by the Finance Documents; (v) of fixed assets where the proceeds of disposal are used within 12 months of that disposal to purchase replacement fixed assets comparable or superior as to type, value and quality; (vi) in accordance with the terms of the Cegetel Shareholders' Agreement as at the date of this Agreement; (vii) otherwise permitted pursuant to Clause 20.8 (Negative Pledge); -50- (viii) of the interest of any member of the Cegetel Group in TD, Cegetel S.A., Reseau Sante Social or all or substantially all of the assets of any such company; or (ix) by any member of the Cegetel Group on arm's length terms of assets where the aggregate net consideration received pursuant to this paragraph (ix) does not exceed EUR 100,000,000 (or its equivalent) in any financial year of Cegetel. 20.10 ARM'S LENGTH BASIS (a) Each of the Parent and the Borrower shall procure that neither the Borrower nor any member of the Cegetel Group will, except as permitted by paragraph (b) below, enter into any transaction with the Parent or any of its Subsidiaries except on arm's length terms. (b) Intra-Group loans permitted under Clause 20.11 (Loans or credit) shall not be a breach of this Clause 20.10. 20.11 LOANS OR CREDIT (a) The Borrower shall not (and the Parent shall ensure that the Borrower shall not) make any loans or grant any credit or make any other financial arrangement having a similar effect, other than pursuant to the terms of paragraph (c)(iii)(B) below. (b) Each of the Parent and the Borrower shall procure that the members of the Cegetel Group shall not make any loans to, grant any credit to or make any other financial arrangement having a similar effect with the Parent or any of its Subsidiaries other than members of the Cegetel Group except as permitted under paragraph (c) below. (c) Paragraph (b) above does not apply to loans made by Cegetel to its shareholders on a pro rata basis provided that: (i) such loans are repayable to Cegetel by its shareholders on a pro rata basis; (ii) no such loan may be advanced, and all such outstanding loans shall be immediately repayable, if the Credit Rating of the Parent with S&P or Moody's is lower than BBB- (or its equivalent); (iii) in respect of any such loan to the Borrower: (A) such loan shall be fully subordinated to the Facility on terms acceptable to the Agent; -51- (B) either: (1) the proceeds of such loan shall be credited to an account (an "Escrow Account") held in France by the Borrower with the Agent or the Security Trustee; or (2) (i) if the Credit Rating of the Parent with S&P or Moody's is not less than A- (or its equivalent); or (ii) if the Credit Rating of the Parent with S&P or Moody's is at least BBB- (or its equivalent) and the relevant loan to the Parent is the subject of a bank guarantee from a prime bank or financial institution with a Credit Rating form S&P or Moody's of at least A- (or its equivalent), the proceeds of that loan may be advanced to the Parent by way of loan on the basis that such loan is repayable on demand; and (C) both the loan made to the Parent and the Escrow Account shall be subject to Security in favour of the Security Trustee, which Security is in form and substance satisfactory to the Agent; (iv) the aggregate amount of all such loans made in any financial year of Cegetel shall not exceed the dividend paid by Cegetel in respect of its previous financial year; and (v) to the extent possible, such loans shall be converted into a dividend payment on Cegetel's next dividend payment date in full or partial settlement of the dividend due for payment on such date. 20.12 Fees The Borrower shall not (and the Parent shall ensure that the Borrower shall not) incur or pay any fees or commissions to any person other than fees incurred under the terms of any Transaction Document and any administrative fees incurred in the ordinary course of its day-to-day business. 20.13 Dividends (a) The Borrower shall not (and the Parent shall procure that the Borrower shall not): (i) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, fee or distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital); (ii) repay or distribute any dividend or share premium reserve; -52- (iii) pay any management, advisory or other fee to or to the order of the Parent; or (iv) redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so. (b) Each of the Parent and the Borrower shall procure that Cegetel shall not pay any dividend in relation to its share capital unless such dividend is paid in cash. (c) Each of the Parent and the Borrower shall procure that neither Cegetel nor SFR shall enter into any agreement or arrangement containing any prohibition, limitation or other restriction on either Cegetel or SFR in respect of the declaration or payment of dividends or other distributions on its issued share capital, save to the extent such restriction is set out under the terms of the Cegetel Shareholders' Agreement as at the date of this Agreement. 20.14 Financial Indebtedness (a) Other than under the Transaction Documents or pursuant to any loan made to it (i) by Cegetel in accordance with paragraph (c) of Clause 20.11 (Loans or Credit) or (ii) by the Parent on a subordinated basis the terms of which shall have been approved by the Lenders, the Borrower shall not (and the Parent shall ensure that the Borrower shall not) incur or allow to remain outstanding any Financial Indebtedness. (b) Each of the Parent and the Borrower shall ensure that no member of the Cegetel Group enters into any guarantee, indemnity or other instrument of suretyship in respect of Financial Indebtedness of the Parent and its Subsidiaries (other than members of the Cegetel Group). 20.15 Amendments The Borrower shall not (and the Parent shall ensure that the Borrower shall not) agree to amend, vary, novate, supplement, supersede, waive or terminate any term of a Transaction Document, the Cegetel Shareholders' Agreement or any other document delivered to the Agent pursuant to Clause 4.1 (Initial Conditions Precedent) (including, without limitation, the dividend policy in respect of Cegetel) except: (a) prior to or on the Closing Date, with the prior written consent of the Majority Lenders; or (b) after the Closing Date, in a way which: (i) could reasonably be expected not to materially and adversely affect the interests of the Lenders; and (ii) would not change the date, amount or method of payment of dividends on the issued share capital of Cegetel, - 53 - provided that, for the avoidance of doubt, a change in the dividend policy of Cegetel which would reduce the dividends payable by Cegetel shall only be made with the prior written consent of the Majority Lenders. 20.16 SALE OF THE BORROWER CEGETEL SHARES If an Event of Default is continuing and if the Agent (on the instructions of the Lenders) so requests, the Borrower shall (and the Parent shall procure that the Borrower shall), subject to the proviso below, sell the Borrower Cegetel Shares as soon as practicable for the best consideration available on arm's length terms, and that the proceeds of such sale are applied in prepayment of the Loan, all accrued interest and all other amounts accrued under the terms of the Finance Documents, provided that, if the agreed net consideration is less than the aggregate of the Loan and all accrued and outstanding interest in respect thereof, the prior written consent of the Lenders shall be obtained before the Borrower agrees to any sale of the Borrower Cegetel Shares. 20.17 CONDITIONS SUBSEQUENT (a) The Borrower shall (and the Parent shall procure that the Borrower shall) as soon as possible, and in any event within 30 Business Days of the date of receipt of a draft pledge agreement from the legal advisers to the Agent, execute first ranking Security in the form of a pledge (nantissement de compte d'instruments financiers) in favour of the Security Trustee over the Borrower Cegetel Shares and carry out any action to protect, perfect or give priority to such Security. (b) The Parent shall, and the Parent shall procure that each of its Subsidiaries (other than the Borrower) shall, as soon as any restriction in respect of the same ceases to have effect, whether under the terms of the Cegetel Shareholders' Agreement and any other relevant shareholder agreement existing at the date of this Agreement or under the terms of the Existing Facilities, execute first ranking Security in the form of a cession de creance in favour of the Lenders over its rights to receive dividends on all of the shares held by it whether directly or indirectly in the issued share capital of Cegetel, provided that such Security shall be released in accordance with the terms of paragraph (b) of Clause 24.24 (Releases). 20.18 PARENT (a) The Parent shall not, and shall procure that none of its Subsidiaries (other than the Borrower) shall, grant Security over any shares in the issued share capital of Cegetel beneficially owned by such company, unless: (i) such shares remain subject to the Tag Along and Drag Along Rights; and (ii) such Security is subject to any Security granted by it pursuant to paragraph (b) of Clause 20.17 (Conditions Subsequent). -54- (b) The Parent shall not, and shall procure that none of its Subsidiaries shall, sell, transfer or otherwise dispose of all or any of the Parent Cegetel Shares beneficially owned by such company unless: (i) (A) such disposal is made to a wholly owned Subsidiary of the Parent; (B) the Subsidiary referred to in paragraph (A) above is incorporated in France; and (C) such shares remain subject to the Tag Along and Drag Along Rights; or (ii) such disposal is made pursuant to the terms of the Tag Along and Drag Along Rights. 20.19 TD, CEGETEL S.A., RESEAU SANTE SOCIAL Each of the Parent and the Borrower shall use all reasonable endeavours, subject to the terms of the Cegetel Shareholders' Agreement, to ensure that on any disposal by Cegetel of its interest in TD, Cegetel S.A. or Reseau Sante Social (or a disposal of all or substantially all of the assets of any such company), Cegetel shall apply the cash proceeds of such disposal in payment of a dividend to its shareholders within 12 months of such disposal. 21. EVENTS OF DEFAULT Each of the events or circumstances set out in this Clause 21 is an Event of Default. 21.1 NON-PAYMENT The Borrower 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 three Business Days of its due date. 21.2 OTHER OBLIGATIONS (a) The Parent or the Borrower does not comply with any provision of the Finance Documents (other than those referred to in Clause 20.18(b) (Parent), Clause 19.2 (Financial condition) or Clause 21.1 (Non-payment)). (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 Agent giving notice to the Parent or the Borrower or the Parent or the Borrower becoming aware of the failure to comply. 21.3 MISREPRESENTATION Any representation or statement made or deemed to be made by the Parent, the Borrower or Cegetel in the Finance Documents or any other document delivered by or -55- on behalf of the Parent, the Borrower or Cegetel under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made. 21.4 Cross Default (a) Any Financial Indebtedness of the Parent, the Borrower or any member of the Cegetel Group is not paid when due (subject to any applicable grace period). (b) Any Financial Indebtedness of the Parent, the Borrower or any member of the Cegetel 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 creditor of the Parent, the Borrower or any member of the Cegetel Group becomes entitled to declare any Financial Indebtedness of the Parent, the Borrower or any member of the Cegetel Group due and payable prior to its specified maturity as a result of an event of default (however described). (d) No Event of Default will occur under this Clause 21.4 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (c) above is less than: (i) in the case of the Parent, if the Credit Rating of the Parent with S&P or Moody's is less than BBB- (or its equivalent), EUR 40,000,000 but otherwise EUR 50,000,000 (or its equivalent in any other currency or currencies); or (ii) in the case of the Cegetel Group, EUR 30,000,000 (or its equivalent to any other currency or currencies). 21.5 Insolvency (a) The Parent, the Borrower or any other Material Company is unable or admits inability to pay its debts as they fall due or is deemed to or declared to be unable to pay its debts under applicable law, 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 all or a class of its indebtedness. (b) The Parent, the Borrower or any other Material Company which conducts business in France is in a state of cessation des paiements, or any Material Company becomes insolvent for the purpose of any insolvency law. (c) A moratorium is declared in respect of all or any class of any indebtedness of the Parent, the Borrower or any other Material Company. -56- 21.6 INSOLVENCY PROCEEDINGS (a) Any corporate action, 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 the Parent, the Borrower or any other Material Company other than a solvent liquidation or reorganisation of any Material Company other than the Borrower or Cegetel; (ii) a composition, assignment or arrangement with all or any class of creditors of the Parent, the Borrower or any other Material Company; (iii) the appointment of a liquidator (other than in respect of a solvent liquidation of any Material Company (other than the Borrower or Cegetel)), receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of the Parent, the Borrower or any other Material Company or any of its assets; or (iv) enforcement of any Security over any assets of the Parent, the Borrower or any other Material Company, or any analogous procedure or step is taken in any jurisdiction. (b) The Parent, the Borrower or any other Material Company commences proceedings for reglement amiable in accordance with articles L.611-3 to L.611-6 of the French Code de Commerce. (c) A judgement for redressement judiciaire, cession totale de l'entreprise or liquidation judiciaire is entered in relation to the Parent, the Borrower or any other Material Company under articles L.620-1 to L.628-3 of the French Code de Commerce. (d) Paragraph (a) shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 30 days of commencement. 21.7 CREDITORS' PROCESS Any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction affects any asset or assets of the Parent, the Borrower or any other Material Company and is not discharged within 30 days. 21.8 UNLAWFULNESS AND INVALIDITY (a) It is or becomes unlawful for the Borrower or the Parent to perform any of its material obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Transaction Security Documents ceases to be effective. -57- (b) Any obligation or obligations of the Borrower or the Parent under any Finance Documents are not or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely effects the interests of the Lenders under the Finance Documents. (c) Any Finance Document ceases to be in full force and effect or any Transaction Security ceases to be legal, valid, binding, enforceable or effective or any subordination created thereunder is alleged by a party to it (other than a Finance Party) to be ineffective. 21.9 REPUDIATION The Borrower or the Parent repudiates a Finance Document or any of the Transaction Security or evidences an intention to repudiate a Finance Document or any Transaction Security. 21.10 CESSATION OF BUSINESS The Parent, the Borrower or any other Material Company ceases (or threatens to cease) to carry on all or substantially all of its business. 21.11 MATERIAL ADVERSE CHANGE Any event or circumstance occurs in respect of (i) the Parent, (ii) the Borrower or (iii) the Cegetel Group (taken as a whole) which has, or could reasonably be expected to have a Material Adverse Effect. 21.12 ACCELERATION On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower: (a) cancel the Total Commitments whereupon they shall immediately be cancelled and any fees payable under the Finance Documents in connection with these Commitments shall be immediately due and payable; (b) declare that all or part of the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or (c) direct the Security Trustee to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents. 21.13 NON-RECOURSE Each Finance Party hereby waives all rights and claims it may have against the Parent as a result of a breach of any undertaking by the Parent under the terms of this Agreement. Such waiver shall be without prejudice to: (a) the occurrence of an Event of Default pursuant to Clause 21.2 (Other obligations) and the rights of the Agent and the Lenders pursuant to Clause 21.12 (Acceleration); and -58- (b) the rights and claims of the Finance Parties pursuant to the enforcement of any of the Transaction Security from time to time, whether such Transaction Security is granted by the Parent or the Borrower. -59- SECTION 8 CHANGES TO PARTIES 22. CHANGES TO THE LENDERS 22.1 Assignments and transfers by the Lenders Subject to this Clause 22, a Lender (the "Existing Lender") may: (a) assign any of its rights and benefits, or (b) transfer by novation any of its rights, benefits and obligations, to another bank or financial institution (the "New Lender") provided that any assignment or transfer of part (but not the whole) of a Lender's Commitment shall be in a minimum aggregate amount of EUR15,000,000. 22.2 Conditions of assignment or transfer (a) The consent of the Borrower is required for an assignment or transfer by a Lender, unless: (i) the assignment or transfer is to another Lender or an Affiliate of a Lender; or (ii) an Event of Default is continuing. (b) The consent of the Parent to an assignment or transfer must not be unreasonably withheld or delayed. The Parent will be deemed to have given its consent five Business Days after the Lender has requested it unless consent is expressly refused by the Parent within that time. (c) The consent of the Borrower 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 receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender. (e) A transfer will only be effective if the procedure set out in Clause 22.5 (Procedure for transfer) is complied with. (f) If: (i) a Lender assigns or transfers any of its rights, benefits 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, the Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under -60- Clause 12 (Tax gross-up and indemnities) of Clause 13 (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. 22.3 ASSIGNMENT OR TRANSFER FEE The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of EUR 1,500. 22.4 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 the Parent, the Borrower or any member of the Cegetel Group; (iii) the performance and observance by the Parent, the Borrower or any member of the Cegetel Group 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 the Parent, the Borrower and the Cegetel Group in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Finance Document or the Transaction Security; and (ii) will continue to make its own independent appraisal of the creditworthiness of the Parent, the Borrower and the Cegetel Group 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 22; or -61- (ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by the Parent, the Borrower or any member of the Cegetel Group of its obligations under the Finance Documents or otherwise. 22.5 PROCEDURE FOR TRANSFER (a) Subject to the conditions set out in Clause 22.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, 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) 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 Parent, the Borrower 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 under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the "Discharged Rights and Obligations"); (ii) each of the Parent and Borrower 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 the Parent, the Borrower and the New Lender have assumed and/or acquired the same in place of the Parent, the Borrower and the Existing Lender; (iii) the Agent, the Arranger, the Security Trustee, 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 Agent, the Arranger, the Security Trustee 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". -62- 22.6 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 the Finance Documents; (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, the Finance Documents; or (c) to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation, any information about the Parent, the Borrower, the Cegetel Group and the Finance Documents as that Lender shall consider appropriate provided that the person to whom the information is to be given has entered into a Confidentiality Undertaking. 23. CHANGES TO THE PARENT AND THE BORROWER Neither the Parent nor the Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents. -63- SECTION 9 THE FINANCE PARTIES 24. THE AGENT, THE SECURITY TRUSTEE AND THE ARRANGER 24.1 APPOINTMENT OF THE AGENT (a) Each other Finance Party appoints the Agent to act as its agent under and in connection with the Finance Documents, including any Transaction Security Documents entered into in favour of the Lenders. (b) Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. 24.2 DECLARATION OF TRUST (a) The Security Trustee declares that it shall hold the Transaction Security created on trust for the Finance Parties on the terms contained in this Agreement. (b) Each party agrees that the Security Trustee shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is a party (and no others shall be implied). (c) The Finance 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 pursuant to the Transaction Security Documents except through the Agent. (d) The rights, powers and discretions conferred upon the Security Trustee by this Agreement shall be supplemental to the Trustee Act 1925 and in addition to any which may be vested in the Security Trustee by general law or otherwise. (e) Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Trustee in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustee Acts 1925 and 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent allowed by law, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act. 24.3 DUTIES OF THE AGENT (a) The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party. (b) If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, then (i) in the case of a notice received by the Agent, the Agent shall promptly -64- notify the Lenders or (ii) in the case of the notice received by the Security Trustee, the Security Trustee shall promptly inform the Agent. (c) The Agent shall promptly notify the Lenders of any Default arising under Clause 21.1 (Non-Payment). (d) The Agent's duties under the Finance Documents are solely mechanical and administrative in nature. 24.4 Role of the Arranger Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document. 24.5 No fiduciary or other duties (a) Nothing in the Finance Documents constitutes the Agent or the Arranger as a trustee or fiduciary of any other person. (b) Neither the Agent nor the Arranger nor the Security Trustee shall be bound to account to any Lender or other Finance Party for any sum or the profit element of any sum received by its for its own account. (c) The Security Trustee shall not have or be deemed to have any duty, obligation or responsibility to, or a relationship of trust or agency with, the Parent, the Borrower, Cegetel or any other member of the Group party to the Finance Documents. 24.6 Business with the Group The Agent, the Arranger and the Security Trustee may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group. 24.7 Rights and discretions of the Agent and Security Trustee (a) Each of the Agent and the Security Trustee may rely on: (i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and (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) Each of the Agent and the Security Trustee may assume, unless it has received actual notice to the contrary in its capacity as Agent for the Lenders (in the case of the Agent) or Security Trustee for the Finance Parties (in the case of the Security Trustee), that: (i) no Default has occurred (unless, in the case of the Agent, it has actual knowledge of a Default arising under Clause 21.1 (Non-Payment)); and - 65 - (ii) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised. (c) Each of the Agent and the Security Trustee may engage, pay for and rely on (whether or not retained by the Agent or Security Trustee) the advice or services of any lawyers, accountants, surveyors or other experts. (d) Each of the Agent and the Security Trustee may act in relation to the Finance Documents through its personnel and agents. (e) The 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 Agent nor the Arranger is 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. (g) The Security Trustee 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. This paragraph (g) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Transaction Security Documents or enforcement of the Transaction Security or Transaction Security Documents. (h) The Security Trustee 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 Finance Party, the Parent, the Borrower or any member of the Group, upon a certificate signed by or on behalf of that person. (i) The Security Trustee may refrain from acting in accordance with the instructions of the 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. 24.8 Agent's Actions (a) Unless a contrary indication appears in a Finance Document, the Agent shall (i) act in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from acting or exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with such an instruction of the Majority Lenders. -66- (b) Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders to the Agent will be binding on all the Finance Parties. (c) The Agent may refrain from acting in accordance with the instructions of by the Majority Lenders (or, if appropriate, the Lenders) until it has received such indemnification and/or 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 Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders. (e) The 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. This sub-clause (e) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Transaction Security Documents or enforcement of the Transaction Security or Transaction Security Documents. 24.9 Security Trustee's Actions The Security Trustee: (a) shall, unless a contrary indication appears in the Finance Documents, act in accordance with any instructions given to it by the Agent and shall be entitled to assume that any instructions received by it from the Agent are (i) duly given by or on behalf of the Majority Lenders or all the Lenders in accordance with the terms of the Finance Documents and all applicable conditions have been satisfied and (ii) have not been revoked unless it has received actual notice of revocation; (b) shall be entitled to request instructions, or clarification of any direction, from the Agent as to whether, and in what manner, it should exercise or refrain from exercising any rights, powers and discretions and the Security Trustee may refrain from acting unless and until those instructions or clarification are received by it; (c) may, in the absence of any instructions to the contrary, take such action in the exercise of any of its duties under the Finance Documents which in its absolute discretion it considers to be for the protection and benefit of all of the Finance Parties; (d) may, and shall if so directed by the Agent, at any time after receipt by the Security Trustee of notice from the Agent directing the Security Trustee to exercise all or any of its rights, remedies, powers or discretions pursuant to Clause 21.12 (Acceleration), take such action as in its sole discretion it thinks fit to enforce the Transaction Security; -67- (e) shall be entitled to carry out all dealings with the Lenders through the Agent, to give to the Agent any notice or other communication required to be given by the Security Trustee to the Lenders and to rely on a certificate from the Agent as to the amount owed to any of the Finance Parties; (f) may place (at the cost of the Borrower) any of the Finance Documents and any other documents relating to the Transaction Security created pursuant to the Transaction Security Documents in any safe custody selected by the Security Trustee or with any financial institution, any company whose business includes the safe custody of documents or any firm of lawyers of good repute and the Security Trustee shall not be responsible for, or required to insure against, any loss incurred in connection with that deposit; (g) may accept without enquiry, and shall not be obliged to investigate, such right and title as the Parent or any member of the Group may have to any of the property subject to or expressed to be subject to Security under a Transaction Security Document and shall not be liable for or bound to require any such person to remedy any defect in its right or title; (h) 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 Trustee may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation; (i) shall promptly inform the Agent of: (i) the contents of any notice or document received by it in its capacity as Security Trustee from the Parent or the Borrower under any Finance Document; and (ii) the occurrence of any Default of which the Security Trustee has received notice from any other party to this Agreement; (j) shall not: (i) be bound to enquire as to the occurrence or otherwise of any Default or the performance, default or any breach by the Parent or the Borrower of its obligations under any of the Finance Documents; (ii) be bound to account to any other Finance Party for any sum or the profit element of any sum received by it for its own account; (iii) be bound to disclose to any other person (including any Finance 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; - 68 - (iv) be under any obligations other than those which are specifically provided for in the Finance Documents; or (v) have or be deemed to have any duty, obligation or responsibility to, or relationship of trust or agency with the Parent, the Borrower or any other person which has entered into a Transaction Security Document; (k) 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 Trustee 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 Trustee 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. 24.10 Responsibility for documentation Neither the Agent nor the Arranger nor the Security Trustee: (a) is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arrangers, the Security Trustee, the Parent, the Borrower or any other person given in or in connection with any Finance Document; 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. 24.11 Exclusion of liability (a) Without limiting sub-clause (b) below, neither the Agent nor the Security Trustee 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 Agent of the Security Trustee (as applicable)) may take any proceedings against any officer, employee or agent of the Agent or the Security Trustee in respect of any claim it might have against the Agent or the Security Trustee 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 Agent or the Security Trustee may rely on this Clause subject to Clause 1.4 (Third Party Rights) and the provisions of the Contracts (Rights of Third Parties) Act 1999. (c) The 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 Agent if the Agent has taken all necessary steps as soon as - 69 - reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose. (d) Neither the Agent nor the Security Trustee will 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 Agent, the Security Trustee, or otherwise. (e) Neither the Agent nor the Security Trustee will 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. 24.12 SECURITY TRUSTEE'S EXCLUSIONS The Security Trustee 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 the Parent or any member of the Group to any of property that is subject to or expressed to be subject to the Transaction Security; (b) obtain any license, 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 under any applicable laws in any jurisdiction or to give notice to any person of the execution of any of the Finance Documents or of the Transaction Security; (d) take, or to require the Parent or the Borrower to take, any steps to perfect its title to any of the property that is subject to or expressed to be subject to the Transaction Security 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 assurance in relation to any of the Transaction Security Documents. 24.13 INSURANCE BY SECURITY TRUSTEE The Security Trustee shall not be under any obligation to insure any of the property subject to or expressed to be subject to the Transaction Security, 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 Trustee shall not be -70- responsible for any loss which may be suffered by any person as a result of the lack of or inadequacy of any such insurance. Where the Security Trustee is named on any insurance policy as an insured party, it shall not be responsible for any loss which may be suffered by reason of, directly or indirectly, its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless any Finance Party shall have requested it to do so in writing and the Security Trustee shall have failed to do so within fourteen days after receipt of that request. 24.14 LENDERS' INDEMNITY TO THE AGENT AND THE SECURITY TRUSTEE 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 the Agent and the Security Trustee, within three Business Days of demand, against any cost, loss or liability incurred by the Agent or the Security Trustee (otherwise than by reason of the Agent's or the Security Trustee's gross negligence or wilful misconduct) in acting as Agent or as Security Trustee under the Finance Documents (unless the Agent or the Security Trustee has been reimbursed by the Borrower pursuant to a Finance Document). 24.15 RESIGNATION (a) Each of the Agent and the Security Trustee may resign and appoint one of its Affiliates as successor by giving notice to the Lenders and the Borrower. (b) Alternatively each of the Agent and the Security Trustee may resign by giving notice to the Lenders and the Borrower, in which case the Majority Lenders (after consultation with the Borrower) may appoint a successor Agent of Security Trustee. (c) If the Majority Lenders have not appointed a successor Agent or Security Trustee in accordance with sub-clause (b) above within 30 days after notice of resignation was given, the Agent or Security Trustee (after consultation with the Borrower) may appoint a successor Agent or Security Trustee. (d) The retiring Agent or Security Trustee shall make available to the successor Agent or Security Trustee such documents and records and provide such assistance as the successor Agent or Security Trustee may reasonably request for the purposes of performing its functions as Agent or Security Trustee under the Finance Documents. (e) The Agent's or Security Trustee's resignation notice shall only take effect upon the appointment of a successor and, in the case of the Security Trustee, upon the transfer of all the Security created pursuant to the Transaction Security Documents to a successor. (f) Upon the appointment of a successor, the retiring Agent or Security Trustee shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 24. Its -71- 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 Borrower, the Majority Lenders may, by notice to the Agent or Security Trustee, require it to resign in accordance with sub-clause (b) above. In this event, the Agent or Security Trustee shall resign in accordance with sub-clause (b) above. 24.16 DELEGATION AND ADDITIONAL SECURITY TRUSTEES The Security Trustee may, at any time: (a) 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 and such delegation may be made upon such terms and conditions (including the power to sub-delegate) and subject to such restrictions as the Security Trustee may think fit in the interest of the Finance 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 such delegate or sub-delegate; and (b) appoint (and subsequently remove) any person to act as a separate Security Trustee or as a co-Security Trustee jointly with it (i) if it considers such appointment to be in the interests of the Finance Parties or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions which the Security Trustee deems to be relevant or (iii) for obtaining or enforcing any judgement in any jurisdiction, and the Security Trustee shall give prior notice to the Borrower and the Agent of any such appointment. Any person so appointed (subject to the terms of this Agreement) shall have such rights, powers and discretions (not exceeding those conferred or imposed on the Security Trustee by this Agreement) and the duties and obligations that are conferred by the instrument of appointment. The remuneration the Security Trustee may pay to any such person, and any costs and expenses incurred by such 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 Trustee. 24.17 CONFIDENTIALITY (a) In acting as agent for the Finance Parties, the Agent and the Security Trustee shall be regarded as acting through its agency 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 Agent or Security Trustee, it may be treated as confidential to that division or department and neither the Agent nor Security Trustee shall be deemed to have notice of it. -72- (c) Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger nor the Security Trustee are obliged to disclose to any other person (including any Finance Party) (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty or otherwise be actionable at the suit of any person. 24.18 Agent's Relationship with the Lenders (a) The 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 Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 9 (Mandatory Cost Formulae). (c) Each Finance Party shall supply the Agent with any information that the Security Trustee may reasonably specify (through the Agent) as being necessary or desirable to enable the Security Trustee to performance its functions as Security Trustee. Each Lender shall deal with the Security Trustee exclusively through the Agent and shall not deal directly with the Security Trustee. 24.19 Credit appraisal by the Lenders Without affecting the responsibility of the Parent or the Borrower for information supplied by it or on its behalf in connection with any Finance Document, each Finance Party confirms to the Agent, the Arranger and the Security Trustee 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 Financed 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, under or executed in anticipation of, under or in connection with any Finance Document; (d) the adequacy, accuracy and/or completeness of any information provided by the Agent, the Security Trustee, any Party or by any other person under or in - 73 - 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 property subject to or expressed to be subject to the Transaction Security, the priority of any of Security or the existence of any Security affecting the property subject to or expressed to be subject to the Transaction Security, and, each Finance Party acknowledges to the Agent, the Arranger and the Security Trustee that it has not relied on and will not rely on the Agent, the Arranger or the Security Trustee in respect of any of these matters. 24.20 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 Agent shall (in consultation with the Borrower) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank. 24.21 Manner of Enforcement Each of the Parent and the Borrower, in so far as it is party to the Transaction Security Documents waives, to the extent permitted under applicable law, all rights it may otherwise have to require that Transaction Security be enforced in any particular order or manner or at any particular time or that any sum received or recovered from any person, or by virtue of the enforcement of the Transaction Security or any other Security, which is capable of being applied in or towards discharge of any of the obligations of the Borrower to the Finance Parties under the Finance Documents is so applied. 24.22 Winding-up of Trust and Perpetuity Period If the Security Trustee, with the approval of the Majority Lenders, determines that (i) all of the obligations of the Borrower to the Finance Parties under the Finance Documents and all other obligations secured by any of the Transaction Security Documents, have been discharged in full and (ii) none of the Finance Parties is under any commitment, obligation or liability (whether actual or contingent) to make the Loan available or provide other financial accommodation to the Borrower pursuant to the Finance Documents, the trusts set out in this Agreement shall be wound up. At that time the Security Trustee shall release, without recourse or warranty, all of the Transaction Security then held by it and the rights of the Security Trustee under each of the Transaction Security Documents, at which time each of the Security Trustee, the Agent, the Finance Parties, the Parent and the Borrower shall be released from its obligations in respect of these trusts and the Security created pursuant to the Transaction Security Documents (save for those which arose prior to such winding-up). The perpetuity period under the rule against perpetuities, if applicable to this Agreement, shall be the period of eight years from the date of this Agreement. -74- 24.23 Deduction from amounts payable by the Agent If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the 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. 24.24 Releases (a) Upon a disposal of any of the property that is subject to or expressed to be subject to the Transaction Security: (i) pursuant to the enforcement of the Transaction Security; or (ii) if that disposal is permitted under the Finance Documents, the Security Trustee shall (at the cost of the Borrower) release that property from the Transaction Security and is authorised to execute, without the need for any further authority from the Finance Parties, any release of the Transaction Security or other claim over that asset that may be required or desirable. (b) The Finance Parties hereby agree that any Security granted pursuant to paragraph (b) of Clause 20.17 (Conditions Subsequent) shall be released by the Security Trustee immediately upon its being notified that a Pledgee of any such shares has enforced its rights under the terms of any Security granted to it by the Parent or any Subsidiary of the Parent (other than the Borrower), as the case may be. For the purpose of this paragraph (b), "Pledgee" means any person in favour of whom the Parent or any of its Subsidiaries (other than the Borrower) has granted Security over any of the shares in the issued share capital of Cegetel pursuant to the terms of the Existing Facilities. 24.25 Covenant to pay the Security Trustee (a) Notwithstanding any other provision of this Agreement, the Borrower hereby irrevocably and unconditionally undertakes to pay to the Security Trustee, as creditor in its own rights and not as representative of the Finance Parties a sum equal to and in the currency of each amount payable by it to the other Finance Parties under the Finance Documents, as and when that amount falls due for payment under the relevant Finance Document. (b) The rights of the Finance Parties to receive payment of amounts payable by the borrower under the Finance Documents are several and are separate and independent from, and without prejudice to, the rights of the Security Trustee to receive payment under this Clause 24.25. (c) The Security Trustee shall have its own independent right to demand payment of the amounts payable by the Borrower under this Clause 24.25, irrespective -75- of any discharge (otherwise than by payment) of the Borrower's obligation to pay those amounts. (d) Any amount due and payable by the Borrower to the Security Trustee under this Clause 24.25 (Covenant to pay the Security Trustee) shall be decreased to the extent that the other Finance Parties have received (and are entitled to retain) payment in full of the corresponding amount under the other provisions of the Finance Documents and any amount payable by the Borrower to the other Finance Parties under those provisions shall be decreased to the extent that the Security Trustee has received (and is entitled to retain) payment in full of the corresponding amount under this Clause 24.25. 25. 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. 26. SHARING AMONG THE FINANCE PARTIES 26.1 Payments to Finance Parties If a Finance Party (a "Recovering Finance Party") receives or recovers any amount from the Borrower other than in accordance with Clause 27 (Payment mechanics) or Clause 29 (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 Agent; (b) the 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 Agent and distributed in accordance with Clause 27 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and (c) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the "Sharing Payment") equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 27.5 (Partial payments). -76- 26.2 Redistribution of payments The Agent shall treat the Sharing Payment as if it had been paid by the party from whom it has been recovered and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 27.5 (Partial payments). 26.3 Recovering Finance Party's rights (a) On a distribution by the Agent under Clause 26.2 (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 party from whom such payment has been recovered shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable. 26.4 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 Lender which has received a share of the relevant Sharing Payment pursuant to Clause 26.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to 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 party from whom such payment has been recovered will be liable to the reimbursing Finance Party for the amount so reimbursed. 26.5 Exceptions (a) This Clause 26 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 party from whom such payment has been recovered. (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 -77- practicable having received notice and did not take separate legal or arbitration proceedings. -78- SECTION 10 ADMINISTRATION 27. PAYMENT MECHANICS 27.1 Payments to the Agent (a) On each date on which the Borrower or a Lender is required to make a payment under a Finance Document, the Borrower or Lender shall make the same available to the 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 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 or London) with such bank as the Agent specifies. 27.2 Distributions by the Agent Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 27.3 (Distributions to the Borrower), Clause 27.4 (Clawback) and Clause 24.23 (Deduction from amounts payable by the Agent) be made available by the 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 Agent by not less than five Business Days' notice with a bank in the principal financial centre of the country of the currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London). 27.3 Distributions to the Borrower The Agent may (with the consent of the Borrower or in accordance with Clause 28 (Set-off)) apply any amount received by it for the Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under the Finance Documents or in or towards purchase of any amount of any currency to be so applied. 27.4 Clawback (a) Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum so 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 Agent pays an amount to another Party and it proves to be the case that the 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 Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds. -79- 27.5 Partial payments (a) If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under the Finance Documents, the Agent shall apply that payment towards the obligations of the Borrower 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 Agent and the Arranger 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) Paragraph (a) above will override any appropriation made by the Borrower. 27.6 No set-off All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 27.7 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. 27.8 Currency of account (a) Subject to paragraphs (b) to (e) below euro is the currency of account and payment for any sum from the Borrower under any Finance Document. (b) A repayment of the Loan or an Unpaid Sum or a part of the Loan or an 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. -80- (e) Any amount expressed to be payable in a currency other than euro shall be paid in that other currency. 27.9 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, the currency or currency unit of that country designated by the Agent (after consultation with the Borrower); 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 Agent (acting reasonably). (b) If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the European interbank market and otherwise to reflect the change in currency. 28. SET-OFF A Finance Party may set off any matured obligation due from the Borrower under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower, 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. 29. APPLICATION OF PROCEEDS 29.1 ORDER OF APPLICATION All monies from time to time received or recovered by the Security Trustee in connection with the realisation or enforcement of all or any part of the Transaction Security shall be held by the Security Trustee on trust to apply them at such times as Security Trustee sees fit, to the extent permitted by applicable law in the following order of priority: (a) in discharging any sums owing to the Security Trustee (in its capacity as Security Trustee); (b) in payment to the Agent, on behalf of the Secured Parties, for application towards the discharge of all sums due and payable by the Borrower under any of the Finance Documents in accordance with Clause 27.5 (Partial payments). -81- (c) if the Borrower is under no further actual or contingent liability under any Finance Document, in payment to any person to whom the Security Trustee is obliged to pay in priority to the Borrower; and (d) the balance, if any, in payment to the Borrower. 29.2 Investment of proceeds Prior to the application of the proceeds of the Transaction Security in accordance with Clause 29.1 (Order of Application) the Security Trustee 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 Trustee or Agent with such financial institution (including itself) for so long as the Security Trustee thinks fit (the interest being credited to the relevant account) pending the application from time to time of those monies at the Security Trustee's discretion in accordance with the provisions of this Clause 29. 29.3 Currency conversion (a) For the purpose of or pending the discharge of any of the obligations owed by the Borrower to the Finance Parties under the Finance Documents the Security Trustee may convert any monies received or recovered by the Security Trustee from one currency to another, at the spot rate at which the Security Trustee is able to purchase the currency in which the such obligations owed by the Borrower are due with the amount received. (b) The obligations of the Borrower to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after the deducting the costs of conversion. 29.4 Permitted deductions The Security Trustee 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 Taxes 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 Taxes which may be assessed against it in respect of any of the property that is subject to or expressed to be subject to the Transaction Security, or as a consequence of performing its duties, or by virtue of its capacity as Security Trustee under any of the Finance Documents or otherwise (except in connection with its remuneration for performing its duties under any Finance Document). 29.5 Discharge of Obligations (a) Any payment to be made in respect of the obligations owed by the Borrower to the Finance Parties under the Finance Documents by the Security Trustee may be made to the Agent on behalf of the Lenders and that payment shall be a good discharge to the extent of that payment, to the Security Trustee. (b) The Security Trustee is under no obligation to make payment to the Agent in the same currency as that in which any Unpaid Sum is denominated. -82- 29.6 Sums received by the Borrower If the Borrower receives any sum which, pursuant to any of the Finance Documents, should have been paid to the Security Trustee, that sum shall promptly be paid to the Security Trustee for application in accordance with this Clause. 30. NOTICES 30.1 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 or letter. 30.2 Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party or any communication or document to be made or delivered under or in connection with the Finance Documents is: (a) in the case of the Parent or the Borrower, that identified with its name below; (b) in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and (c) in the case of the Agent or the Security Trustee, that identified with its name below, or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days' notice. 30.3 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, and, if a particular department or officer is specified as part of its address details provided under Clause 30.2 (Addresses), when addressed to that department or officer. (b) Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent or the Security Trustee and then only if it is expressly marked for the attention of the department or officer identified with the Agent's or the Security Trustee's signature below (or any substitute department or officer as the Agent or the Security Trustee shall specify for this purpose). -83- (c) All notices from or to the Parent or the Borrower shall be sent through the Agent. (d) Any communication or document made or delivered to the Borrower in accordance with this Clause will be deemed to have been made or delivered to the Parent. 30.4 Notification of address and fax number Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 30.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties. 30.5 Electronic communication (a) Any communication to be made between the Agent or the Security Trustee and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent, the Security Trustee and the relevant Lender: (i) agree that, unless and until notified to the contrary, this is to be an accepted form of communication; (ii) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and (iii) notify each other of any change to their address or any other such information supplied by them. (b) Any electronic communication made between the Agent and a Lender or the Security Trustee will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent or the Security Trustee only if it is addressed in such a manner as the Agent or the Security Trustee shall specify for this purpose. 30.6 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 (ii) if not in English, and if so required by the Agent, 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. -84- 31. CALCULATIONS AND CERTIFICATES 31.1 Accounts In any litigation or arbitration proceeding 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. 31.2 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. 31.3 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 year of 360 days or, in any case where the practice in the European interbank market differs, in accordance with the market practice. 32. 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. 33. REMEDIES AND WAIVERS No failure to exercise, nor any delay in exercising, on the part of any Finance Party, 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. 34. AMENDMENTS AND WAIVERS 34.1 Required consents (a) Subject to Clause 34.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Parent and/or the members of the Group party thereto and any such amendment or waiver will be binding on all parties thereto. (b) The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause. 34.2 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); -85- (ii) an extension to the date of payment of any amount under the Finance Documents; (iii) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable (for fees and commissions to the extent payable to all Lenders only); (iv) an increase in or an extension of any Commitment; (v) Clause 23 (Changes to the Parent and the Borrower); (vi) any provision which expressly requires the consent of all the Lenders; (vii) Clause 2.2 (Finance Parties' rights and obligations), Clause 22 (Changes to the Lenders) or this Clause 34; or (viii) the nature or scope of the property that is subject to or expressed to be subject to the Transaction Security 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 Agent, the Security Trustee or the Arranger may not be effected without the consent of the Agent, the Security Trustee or the Arranger. 34.3 Amendments by Security Trustee The Security Trustee may, if authorised by the Lenders, amend the terms of, waive any of the requirements of, or grant consents under, any of the Transaction Security Documents, any such amendment, waiver or consent being binding on all the parties to this Agreement. 35. 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. -86- SECTION 11 GOVERNING LAW AND ENFORCEMENT 36. GOVERNING LAW This Agreement is governed by English law. 37. ENFORCEMENT 37.1 Jurisdiction (a) The courts of England have 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) 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 37.1 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. 37.2 Service of process Without prejudice to any other mode of service allowed under any relevant law, each of the Parent and the Borrower: (a) irrevocably appoints Law Debenture Corporate Services Limited, Fifth Floor, 100 Wood Street, London EC2V 7EX 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 a process agent to notify it 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. - 87 - SCHEDULE 1 THE ORIGINAL LENDERS Lender and Lending Office Address for Notices Commitment CDC Finance - CDC IXIS Credit 141,324,042 26-28 rue Neuve Tolbiac 75658 Paris cedex 13 254 boulevard Saint Germain France 75007 Paris France Contact: Mr Luc Ercheberrigaray Phone: 00 33 1 40 49 96 69 Fax: 00 33 1 40 49 91 62 Loan Administration 26 rue Neuve Tolbiac 75013 Paris France Contact: Nicolas Devaux Phone: 00 33 1 58 55 60 39 Fax: 00 33 1 58 55 60 29 - 88 - Credit Agricole Indosuez Credit 141,324,042 9 Quai du President Paul Doumer 92920 Paris la Defense cedex 9 Quai du President Doumer 92920 Paris la Defense cedex Contact: Stephane Bailly (cc Jacques de Villaines/Dominique Meilhoc) Phone: 00 33 1 4189 1571 / 3892 / 3090 Fax: 00 33 1 4189 2950 / 3953 / 1934 Loan Administration 9 Quai du President Doumer 92920 Paris la Defense cedex Contact: Marie Claire Santoiemma Phone: 00 33 1 4189 0142 Fax: 00 33 1 4189 1964 Credit Lyonnais Credit 141,324,042 90 Quai de Bercy 75613 Paris 1 rue des Italiens Cedex 12 75009 Paris Contact: Thibault Rosset/ Gilles Gantois Phone: 00 33 1 42 95 66 52 / 21 21 Fax: 00 33 1 42 95 03 82 Loan Administration 19 boulevard des Italiens 75002 Paris Contact: Sandrine Miroph Phone: 00 33 1 53 02 56 56 Fax: 00 33 1 53 02 67 23 - 89 - The Royal Bank of Scotland plc Credit 141,324,042 8 rue Lavoisier 75008 Paris 8 rue Lavoisier 75008 Paris Contact: Brian Rowley/ Drifa Ouabmed Phone: 00 33 1 49 24 12 19/12 23 Fax: 00 33 1 49 24 12 20 cc: 135 Bishopsgate London EC2M 3UR Contact: Neil Jones, CIB TMT Phone: 00 44 20 7375 8475 Fax: 00 44 20 7375 8549 Loan Administration 3rd Floor Regents House 42 Islington High Street London N1 8XL Contact: Paul Divall Phone: 00 44 20 7615 7430 Fax: 00 44 20 7220 7370 cc: 8 rue Lavoisier 75008 Paris Contact: Valerie Werdenberg, Middle Office Phone: 00 33 1 49 24 12 08 Fax: 00 33 1 49 24 12 10 -90- BNP Paribas Credit 136,567,944 16, boulevard del Italiens 75009 Paris BFI Structured Finance Corporate Acquisition Finance 37, Place du Marche Saint Honore 75031 Paris Cedex 01 Contact: Sophie Gazel Phone: 00 33 1 43 16 91 66 Fax: 00 33 1 43 16 9029 cc 37 Plce du Marche St Honore 75001 Paris Contact: Patrick d'Herouville Phone: 00 33 1 42 98 43 15 Fax: 00 33 1 43 16 9029 Loan Administration GSCI Gestion des Credits Financieres 150 rue du Faubourg Poissonniere 75010 Paris Contact: Marie-Catherine Hurgues Phone: 00 33 1 40 14 7342 Fax: 00 33 1 40 14 7425 Natexis Banques Populaires Credit 136,567,944 BP 4 75060 Paris cedex 2 BP 4 75060 Paris cedex 2 Contact: Helen Bully/Laurent Gillet Phone: 00 33 1 48 00 78 77/ 00 33 1 48 00 25 47 Fax: 00 33 1 45 55 18 77 Loan Administration Gestion des Credits Bercy 2-8 avenue du General de Gaulle 94 220 Charenton Le Pont Contact: Annie Lecomte Phone: 00 33 1 58 32 63 93 Fax: 00 33 1 58 32 24 90 -91- Societe Generale Credit 136,567,944 Tour Societe Generale 17 cours Valmy Tour Societe Generale 92972 Paris - La Defense 17 cours Valmy Cedex France 92972 Paris - La Defense Cedex France Contact: Alain Gruge Phone: 00 33 1 42 14 80 11 Fax: 00 33 1 42 13 41 69 Loan Administration 5 Place de la Pyramide 92088 Paris - La Defense Cedex France Contact: O Gueguen/G Jacob Phone: 00 33 1 42 13 07 52/ 00 33 1 42 14 80 91 Fax: 00 33 1 42 14 06 18/ 00 33 1 42 13 43 20 WestLB AG, Paris Branch Credit 100,000,000 15 Avenue de Friedland 75008 Paris 15 Avenue de Friedland 75008 Paris Contact: Nadine Veldung/Frederick Beaumelou Tel: 00 33 1 40 75 76 37 Fax: 00 33 1 45 63 15 72 Loan Administration 6, rue Lamennais 75008 Paris Contact: Catherine Ritter Tel: 00 33 1 40 75 76 02 Fax: 00 33 1 45 61 42 22 -92- Dexia Credit Local Credit 75,000,000 76, rue de la Victoire 75320 Paris Cedex 09 76, rue de la Victoire France 75320 Paris Cedex 09 France Contact: Christophe Boucher Phone: 00 33 1 43 92 72 64 Fax: 00 33 1 43 92 74 25 Loan Administration Room 806 7-11 Quai Andre Citroen BP 1002 75901 Paris Cedex 15 Contact: Thierry Plantelin/Christelle Pautrot Phone: 00 33 1 43 92 79 37 Fax: 00 33 1 43 92 71 50 Cooperatieve Centrale Raiffeisen- Credit 50,000,000 Boerenleenbank B.A., (Rabobank International, Paris Branch) 69 Boulevard Haussmann 69 Boulevard Haussmann 75008 Paris 75008 Paris France France Contact: Fabrice Vidal/ Benjamin Guerini Phone: 00 33 1 44 71 82 47/82 26 Fax: 00 33 1 44 71 00 60/81 26 Loan Administration 69 Boulevard Haussmann 75008 Paris France Contact: Patrick Tinchant Phone: 00 33 1 44 71 82 17 Fax: 00 33 1 44 71 82 61 -93- Credit Suisse First Boston, Paris Credit 50,000,000 Branch 21 Boulevard de la Madeleine 1 Cabot Square Paris F-75038 London E14 4QJ Cedex 01 France United Kingdom Contact: Peter Oien/ Tarek Abuzayyad Phone: 00 44 20 7888 7135/ 00 44 20 7883 3490 Fax: 00 44 20 7943 7394/ 00 44 20 7943 7490 Loan Administration 21 Boulevard de la Madeleine Paris F-75038 Cedex 01 France Contact: Jean-Francois Cressot Phone: 00 33 1 40 76 57 18 Fax: 00 33 1 40 76 57 26 Sumitomo Mitsui Banking Credit 50,000,000 Corporation Temple Court Temple Court 11 Queen Victoria Street 11 Queen Victoria Street London EC4N 4TA London EC4N 4TA Contact: Layth Irani/Vinay Rustagi Tel: 00 44 20 7786 1757/ 00 44 20 7786 1883 Fax: 00 44 20 7786 1131/ 00 44 20 7786 1227 Loan Administration Temple Court 11 Queen Victoria Street London EC4N 4TA Contact: IFDE Operations Tel: 00 44 20 7786 1014/1588/ 1063 Fax: 00 44 20 7786 1569 - 94 - SCHEDULE 2 CONDITIONS PRECEDENT 1. Corporate documentation (a) A copy of the statuts of each of the Parent, the Borrower and Cegetel. (b) A copy of a resolution of the board of directors of the Borrower and of appropriate corporate authority of the Parent: (i) approving the terms of, and the transactions contemplated by, the Transaction Documents to which it is a party and resolving that it execute the Transaction Documents to which it is a party; (ii) authorising a specified person or persons to execute the Transaction Documents to which it is a party on its behalf; (iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, the 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 or corporate authority referred to in paragraph (b) above in relation to the Finance Documents. (d) A certificate of each of the Parent and the Borrower (signed by an authorised signatory) confirming that borrowing or securing, as appropriate, the Total Commitments would not cause any borrowing, security or similar limit binding on it to be exceeded. (e) A certificate of an authorised signatory of each of the Parent and the Borrower certifying that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 2. Transaction Documents (a) A copy of the Acquisition Agreement and all documentation relating thereto executed by the parties to those documents. (b) A certificate of an authorised signatory of the Borrower certifying that each of the conditions for completion of the Acquisition under the terms of the Acquisition Agreement has been satisfied or waived (other than payment of the purchase price under the terms of the Acquisition Agreement which will be satisfied immediately following utilisation of the Facility). -95- (c) A certificate of an authorised signatory of the Borrower certifying each copy document specified in this paragraph 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 3. Finance Documents (a) The Fee Letters executed by the Borrower. (b) A letter between the Agent and the Borrower in the agreed form dated on or before the date of this Agreement (and executed by the Borrower) in which the Borrower describes its interest rate hedging policy and undertakes not to change such policy without the prior written consent of the Agent. 4. Transaction Security Documents First ranking security over all the assets of the Borrower other than the Borrower Cegetel Shares, to include, without limitation, an assignment (in the form of a cession de creance) of all of the Borrower's rights, title, benefit and interest in: (a) all cash dividends payable in respect of the Borrower Cegetel Shares; (b) the Acquisition Agreement; (c) any right the Borrower may at any time have to the reimbursement of all or any part of the consideration paid by the Borrower to the Vendor in respect of the Borrower Cegetel Shares; (d) the indemnity from the Parent in respect of any breach of the Tag Along and Drag Along Rights by the Parent, in a fixed amount of EUR 1,300,000,000; and (e) any amounts payable to the Borrower in consequence of the termination of the Hedging Agreements. 5. Legal Opinions The following legal opinions, each addressed to the Finance Parties: (a) A legal opinion of Clifford Chance Limited Liability Partnership, legal advisers to the Arranger and the Agent in England, as to English law substantially in the form distributed to the Original Lenders prior to signing this Agreement. (b) a legal opinion of Clifford Chance Limited Liability Partnership, legal advisers to the Arranger and the Agent in France, as to French law, substantially in the form distributed in the Original Lenders prior to signing this Agreement. -96- 6. Other Documents and Evidence (a) Evidence that any process agent referred to in Clause 37.2 (Service of process), has accepted its appointment. (b) Evidence that the fees, costs and expenses then due pursuant to Clause 11 (Fees), Clause 16 (Costs and Expenses) and Clause 12.5 (Stamp Taxes) have been paid or will be paid by the Utilisation Date. (c) The Business Plan (d) A Certificate of the Borrower (signed by an authorised signatory) certifying that the Parent has subscribed in cash for ordinary shares in the Borrower, those ordinary shares subscribed for have been issued fully paid and as a result of the above subscription the Company has a sum of at least EUR 2,700,000,000 available to it which has been applied or will, simultaneously with utilisation under this Agreement, be applied for the same purpose as the proceeds of the Facility. (e) A letter from the Parent to the Agent specifying the Holding Account including details of each account name, account number and the name and address of the bank where each account is held. (f) Evidence that all relevant governmental and regulatory approvals, consents and authorisations, filings, notarisations and registrations (if any) for the transactions contemplated by the Transaction Documents, including the approval of the European Commission in respect of the Acquisition, have been obtained and are in full force and effect. (g) Evidence that the Borrower Cegetel Shares benefit from tag along and drag along rights in relation to the share capital of Cegetel owned by the Parent (which, as at the date of this Agreement, represent not less than 43.999% of all of the share capital of Cegetel) which rights: (i) are for the sole benefit of the Borrower (and, in the event of enforcement of the Transaction Security providing Security in respect thereof, the Security Trustee and the Secured Parties); (ii) apply to a sale of all or part of the share capital of Cegetel owned by the Parent (in the manner contemplated in the letter from the Parent to the Borrower relating to the Tag Along and Drag Along Rights); and (iii) benefit from an indemnity from the Parent to the Borrower in respect of a breach by the Parent of its obligations under such rights in a fixed amount of EUR 1,300,000,000. (h) A list including all contingent liabilities of the Cegetel Group as of the Utilisation Date, which shall not be materially different from the list attached -97- hereto as Schedule 8, save for new miscellaneous guarantees which shall not exceed an aggregate amount of EUR 50,000,000. (i) An update of the initial Cegetel Total Net Debt forecast included in the Information Package evidencing that Cegetel will have funds available to it which are sufficient to pay the dividend proposed to be paid by Cegetel in June 2003 in accordance with the Business Plan. (j) A solvency certificate in respect of the Parent, signed by the Chairman and the Chief Executive Officer of the Parent. (k) A certificate of the Borrower (signed by an authorised signatory) certifying that there are no contractual restrictions on Cegetel or SFR in respect of the declaration and payment of dividends on the issued share capital of each such company, save as set out in the Cegetel Shareholders' Agreement. (l) The letter from the Agent to the Borrower referred to in Clause 2.3 (Taux Effectif Global). (m) Hedging Agreements duly executed by the Borrower on or before 31 December 2002 in accordance with the hedging policy set out in the letter referred to in paragraph 3(b) above. (n) A certificate of the Borrower (signed by an authorised signatory) certifying that the copy of the Cegetel Shareholders' Agreement publicly available on the website of the Parent is true, accurate and complete as at the date of this Agreement. -98- SCHEDULE 3 UTILISATION REQUEST From: [Borrower] To: [Agent] Dated: Dear Sirs [Borrower] - EUR 1,300,000,000 Facility Agreement dated [ ] (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 the Loan on the following terms: Proposed Utilisation Date: [ ] (or, if that is not a Business Day, the next Business Day) Amount: EUR [ ] 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 [name of Borrower] -99- SCHEDULE 4 FORM OF TRANSFER CERTIFICATES Part I To: [ ] as Agent From: [The Existing Lender] (the "Existing Lender") and [The New Lender] (the "New Lender") Dated: [Borrower] - EUR 1,300,000,000 Facility Agreement dated [ ] 2002 (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 22.5 (Procedure for transfer): (a) The Existing Lender and the New Lender agree to the Existing Lender and the New Lender transferring by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the Schedule in accordance with Clause 22.5 (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 30.2 (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 22.4 (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,] -100- [Existing Lender] [New Lender] By: By: This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed at [ ]. [Agent] By: -101- Part II LMA Transfer Certificate(Par) BANK: Date: TRANSFEREE: This Transfer Certificate is entered into pursuant to (i) the agreement (the "Sale Agreement") evidenced by the Confirmation dated between the Bank and the Transferee (acting directly or through their respective agents) and (ii) the Credit Agreement. On the Transfer Date, the transfer by way of novation from the Bank to the Transferee on the terms set out herein and in the Credit Agreement shall become effective subject to: (a) the Sale Agreement and the terms and conditions incorporated in the Sale Agreement; (b) the terms and conditions annexed hereto; and (c) the schedule annexed hereto, all of which are incorporated herein by reference. The Bank The Transferee [ ] [ ] By: By: -102- The Schedule Credit Agreement Details: Borrower(s): ________________________________________ Credit Agreement Dated ________________________________________ Guarantor(s): ________________________________________ Agent Bank: ________________________________________ Security: / / No / / Yes (specify) ___________ Total Facility Amount: ________________________________________ Governing Law: ________________________________________ Additional Information: ________________________________________ Transfer Details: Name of Tranche Facility: ________________ _________________ Nature (Revolving, Term, Acceptances Guarantee/Letter of Credit, Other): ________________ _________________ Final Maturity: ________________ _________________ Participation Transferred Commitment transferred(1) ________________ _________________ Drawn Amount (details below):(1) ________________ _________________ Undrawn Amount:(1) ________________ _________________ Statement Date: ________________ Details of outstanding Credits(1) Specify in respect of each Credit: ________________ Transferred Portion (amount): ________________ Tranche/Facility: ________________ Nature: / / Term / / Revolver / / Acceptance / / Guarantee/Letter of Credit / / Other (specify) _____________ / / Details of other Credits are set out on the attached sheet Administration Details Bank's Receiving Account: ______________________ Transferee's Receiving Account: ______________________ Addresses Bank Transferee [ ] [ ] Address: Address: Telephone: Telephone: Facsimile: Facsimile: Telex: Telex: Attn/Ref: Attn/Ref: (1) As at the date of the Transfer Certificate - 103 - TERMS AND CONDITIONS These are the Terms and Conditions applicable to the transfer certificate including the Schedule thereto (the "Transfer Certificate") to which they are annexed. 1. Interpretation In these Terms and Conditions words and expressions shall (unless otherwise expressly defined herein) bear the meaning given to them in the Transfer Certificate, the Credit Agreement or the Sale Agreement. 2. Transfer The Bank requests the Transferee to accept and procure the transfer by novation of all or a part (as applicable) of such participation of the Bank under the Credit Agreement as set out in the relevant part of the Transfer Certificate under the heading "Participation Transferred" (the "Purchased Assets") by counter-signing and delivering the Transfer Certificate to the Agent at its address for the service of notice specified in the Credit Agreement. On the Transfer Date the Transferee shall pay to the Bank the Settlement Amount as specified in the pricing letter between the Bank and the Transferee dated the date of the Transfer Certificate (adjusted, if applicable, in accordance with the Sale Agreement) and completion of the transfer will take place. 3. Effectiveness of Transfer The Transferee hereby requests the Agent to accept the Transfer Certificate as being delivered to the Agent pursuant to and for the purposes of the Credit Agreement so as to take effect in accordance with the terms of the Credit Agreement on the Transfer Date or on such later date as may be determined in accordance with the terms thereof. 4. Transferee's Undertaking The Transferee hereby undertakes with the Agent and the Bank and each of the other parties to the Credit Documentation that it will perform in accordance with its terms all those obligations which by the terms thereof will be assumed by it after delivery of the Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which the Transfer Certificate is to take effect. 5. Payments 5.1 Place All payments by either party to the other under the Transfer Certificate shall be made to the Receiving Account of that other party. Each party may designate a different account as its Receiving Account for payment by giving the other not less than five Business Days notice before the due date for payment. - 104 - 5.2 Funds Payments under the Transfer Certificate shall be made in the currency in which the amount is denominated for value on the due date at such times and in such funds as are customary at the time for settlement of transactions in that currency. 6. The Agent The Agent shall not be required to concern itself with the Sale Agreement and may rely on the Transfer Certificate without taking account of the provisions of such agreement. 7. Assignment of Rights The Transfer Certificate shall be binding upon and ensure to the benefit of each party and its successors and permitted assigns provided that neither party may assign or transfer its rights thereunder without the prior written consent of the other party. 8. Counterparts 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. 9. Governing Law and Jurisdiction The Transfer Certificate (including, without limitation, these Terms and Conditions) 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. Each party irrevocably appoints the person described as process agent (if any) specified in the Sale Agreement to receive on its behalf service of any action, suit or other proceedings in connection with the Transfer Certificate. If any person appointed as process agent ceases to act for any reason the appointing party shall notify the other party and shall promptly appoint another person incorporated within England and Wales to act as its process agent. - 105 - SCHEDULE 5 FORM OF COMPLIANCE CERTIFICATE To: [ ] as Agent From: [Borrower] Dated: Dear Sirs [Borrower] - EUR 1,300,000,000 Facility Agreement dated [ ] (the "Agreement") 1. We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning in this Compliance Certificate unless given a different meaning in this Compliance Certificate. 2. We confirm that: (a) Cegetel EBITDA for the twelve month period ending on [-] was [-]. Therefore the covenant contained in paragraph (a) of Clause 19.2 (Financial condition) [has/has not] been complied with; (b) on the last day of the twelve month period ending on [-] Cegetal Total Net Debt was [-] and Cegetel EBITDA for the twelve month period ending on such date was [-]. Therefore Cegetel Total Net Debt at such time [did/did not] exceed [-] times Cegetel EBITDA for such twelve month period and the covenant contained in paragraph (b) of Clause 19.2 (Financial condition) [has/has not] been complied with; (c) In respect of the twelve month period ending on [-] 26% of Cegetel Cashflow for such period was [-] and Borrower Total Funding Costs for such period were [-]. Therefore 26% of Cegetel Cashflow for such period was [-] times Borrower Total Funding Costs for the relevant period and the covenant contained in paragraph (c) of Clause 19.2 (Financial condition) [has/has not] been complied with. 3. We confirm that the following companies constitute Material Companies for the purposes of the Facility Agreement: [-].] 4. [We confirm that no Default is continuing.]* * 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. - 106 - Signed: --------------------------- ----------------------------------- Director Director of Of [Borrower] [Borrower] -107- SCHEDULE 6 TIMETABLES Delivery of a duly completed U-3 Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)) 10.30am Agent notifies the Lenders of the Loan U-3 in accordance with Clause 5.4 4.00pm (Lenders' participation) EURIBOR is fixed Quotation Day as of 11:00 a.m. Brussels time "U" = date of utilisation "U - X" = X Business Days prior to date of utilisation -108- SCHEDULE 7 INFORMATION PACKAGE 1. Cegetel Group consolidated financial statements for the financial years ended 31 December 2000 and 31 December 2001, Cegetel Group, SFR, and Cegetal SA financial statements for the financial year ended 31 December 2000 and 31 December 2001, 2. Cegetel group dividends scheme including dividends assumptions and projected calculations for fiscal years 2002 to 2010, dated 19 November 2002, 3. Presentation of SFR Business Plan (SFR Financial Model) by the Parent, dated 19 November 2002, 4. Cegetel projected consolidated Net Debt after dividend payment as of 30 June 2003. SCHEDULE 8 CONTINGENT LIABILITIES OF THE CEGETEL GROUP 1. Liability for the AOL Swap, in which Cegetel will owe the difference between E541,335,413.34 and the amount recovered from LineInvest from the sale of the AOL Europe Preferred E Shares. 2. Guarantee given by Cegetel with respect to the credit agreement between Societe Financiere de Distribution and Credit Mutuel for an amount of FRF 200,000,000 (now FRF 160,000,000) (EUR24,400,000). 3. Guarantee given by Cegetel with respect to the lease between SFR2 and Mairie de Toulouse dated 30 September 1998 (amount of liability estimated to be EUR 1,200,000). 4. First Demand Guarantee given by Cegetel for the benefit of Societe Nationale des Chemins de Fers Francais (SNCF) for an amount of EUR 1,000,000. 5. All indemnities (including guarantees) given by SFR with respect to 5-Box Qualified Technology Equipment Leases with US equity investors for technology equipment and peripherals. 6. Miscellaneous guarantees given by the Cegetel Groupe in the aggregate amount of EUR12,100,000. -110- SCHEDULE 9 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 Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank. 2. On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum. 3. The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office. 4. The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows: E x 0.01 -------- per cent per annum 300 Where: E is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 6 below and expressed in pounds per L1,000,000. 5. For the purposes of this Schedule: (a) "Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; (b) "Fee Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits; (c) "Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated -111- fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and (d) "Tariff Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Rules. 6. If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per L1,000,000 of the Tariff Base of that Reference Bank. 7. Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender: (a) the jurisdiction of its Facility Office; and (b) any other information that the Agent may reasonably require for such purpose. Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph. 8. The rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraphs 6 and 7 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office. 9. The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 6 and 7 above is true and correct in all respects. 10. The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 6 and 7 above. 11. Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties. 12. The Agent may from time to time, after consultation with the Parent and the Lenders, determine and notify to all Parties any amendments which are required to be made to -112- this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties. -113- SIGNATURES THE BORROWER SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. By: -------------------------------- Address: c/o Vivendi Universal 42, avenue de Friedland 75008 Paris Fax: 00 33 1 71 71 10 47 Attention: Hubert Dupont Lhotelain THE PARENT VIVENDI UNIVERSAL S.A. By: ------------------------------- Address: 42, avenue de Friedland 75008 Paris Fax: 00 33 1 71 71 10 47 Attention: Hubert Dupont Lhotelain [CREDIT LYONNAIS LETTERHEAD] DEBT, PRODUCTS & INSTRUMENTS DIVISION -- D.P.I.D. STRUCTURED & ACQUISITION FINANCE DEPARTMENT AGENCY & BUSINESS SUPPORT Jean Herve Carlou [telephone graphic] 33 1 42 95 22 62 Fax: 33 1 42 95 41 07 [e-mail graphic] jean-herve.carlou@credit1yonnais.fr Societe d'Investissement pour is Telephonie S.A. c/o Vivendi Universal 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain Vivendi Universal S.A. 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain 20 January 2003 Dear Sirs, Credit Agreement dated 6 December 2002 between Societe d'Investissement pour la Telephonie S.A. as Borrower (1), Vivendi Universal S.A. as Parent (2), BNP Paribas, CDC Finance-CDC Ixis, Credit Agricole Indosnez, Credit Lyonnais, Credit Suisse First Boston, Paris Branch, Dexia Credit Local, Natexis Banques Populaires, Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., (Rabobank International, Paris Branch), The Royal Bank of Scotland plc, SG Investment Banking, Sumitomo Mitsui Banking Corporation and West LB AG, Paris Branch as Arrangers (3), the Original Lenders named therein (4), Credit Lyonnais as Agent (5) and The Royal Bank of Scotland plc as Security Trustee (6) (the "Credit Agreement") We refer to the Credit Agreement. In this letter, words and expressions defined in the Credit Agreement shall have the same meaning where used herein. We hereby agree, as Agent on behalf of all the Lenders in accordance with Clause 34.1 (Required consents) of the Credit Agreement: (i) that Clause 7.3 (Mandatory Prepayment from Proceeds) of the Credit Agreement shall be amended by the addition of the following words at the end of the definition of "Distribution Proceeds": "(E) payment of any amount due under the Hedging Agreement; and (ii) that paragraph 6(e) of Schedule 2 (Conditions Precedent) of the Credit Agreement shall be amended by substituting the word "Borrower" for "Parent"; and Subject to the amendment set out above, the Credit Agreement shall remain in full force and effect in accordance with its terms. This letter may be executed by fax and in any number of counterparts, all of which taken together shal constitute one and the same instrument. [Illegible] This letter is governed by and shall be construed in accordance with English law. The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this letter (including a dispute regarding the existence or validity of this letter) (a "DISPUTE"). The signatories to this letter agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no such party will argue to the contrary. This paragraph is for the benefit of the Agent only. As a result, the Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Agent may take concurrent proceedings in any number of jurisdictions. Please sign and return the enclosed duplicate of this letter to confirm your agreement to its terms. Yours faithfully, /s/ Michel Anastassiados /s/ Jean Herve Cariou - ----------------------------------- ----------------------------------- Name: Michel Anastassiados Jean Herve Cariou Position: Global Head of Structured Head of Agency & Business Support & Acquisition Finance For and on behalf of CREDIT LYONNAIS AS AGENT Accepted and agreed /s/ Jacques Espinasse - ----------------------------------- Name: Jacques Espinasse Position: Director Financier Groupe For and on behalf of SOCIETE D'INVESTISSIMENT POUR LA TELEPHONIE S.A. /s/ Jacques Espinasse - ----------------------------------- Name: Jacques Espinasse Position: Director Financier Groupe For and on behalf of VIVENDI UNIVERSAL S.A. [CREDIT LYONNAIS LETTERHEAD] - ------------------------------------------------------------------------------- DEBT, PRODUCTS & INSTRUMENTS DIVISION - D.P.I.D. STRUCTURED & ACQUISITION FINANCE DEPARTMENT AGENCY & BUSINESS SUPPORT Jean Herve Cariou [TELEPHONE GRAPHIC] 33 1 42 95 22 62 FAX 33 1 42 95 41 07 E-MAIL jean-herve.cariou@creditlyonnais.fr Societe d'Investissement pour la Telephonie S.A. c/o Vivendi Universal 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain Vivendi Universal S.A. 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain 21 January 2003 Dear Sirs, CREDIT AGREEMENT DATED 6 DECEMBER 2002 AND AMENDED BY AN AMENDMENT LETTER DATED 20 JANUARY 2003 BETWEEN SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. AS BORROWER (1), VIVENDI UNIVERSAL S.A. AS PARENT (2), BNP PARIBAS, CDC FINANCE-CDC IXIS, CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS, CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA CREDIT LOCAL, NATEXIS BANQUES POPULAIRES, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., (RABOBANK INTERNATIONAL, PARIS BRANCH), THE ROYAL BANK OF SCOTLAND PLC, SG INVESTMENT BANKING, SUMITOMO MITSUI BANKING CORPORATION AND WEST LB AG, PARIS BRANCH AS ARRANGERS (3), THE ORIGINAL LENDERS NAMED THEREIN (4), CREDIT LYONNAIS AS AGENT (5), AND THE ROYAL BANK OF SCOTLAND PLC AS SECURITY TRUSTEE (6) (THE "CREDIT AGREEMENT") We refer to the Credit Agreement. In this letter, words and expressions defined in the Credit Agreement shall have the same meaning where used herein. We hereby agree, as Agent on behalf of all the Lenders in accordance with Clause 34.1 (Required consents) of the Credit Agreement, that the Credit Agreement shall be amended as follows: 1. In Clause 1.1 (Definitions), the definition of "ACQUISITION" shall be deleted and replaced with the following: ""ACQUISITION" means the acquisition by the Borrower of the Borrower Cegetel Shares pursuant to the Acquisition Agreement,"; 2. in Clause 1.1 (Definitions), the definition of "ACQUISITION AGREEMENT" shall be deleted and replaced with the following: ""ACQUISITION AGREEMENT" means the contract between the Borrower and the Vendor relating to the Borrower Cegetel Shares, evidenced by the execution by the Vendor of the transfer forms (ordres de mouvements) relating to the Borrower Cegetel Shares and the payment by the Borrower of the purchase price of the Borrower Cegetel Shares."; [ILLEGIBLE] 3. in Clause 1.1 (Definitions), the definition of "COMPLETION" shall be deleted and replaced with the following: ""COMPLETION" means the completion of the Acquisition upon execution of the Acquisition Agreement by the Vendor and payment of the purchase price for the Borrower Cegetel Shares by the Borrower to the Vendor."; 4. in Clause 1.1 (Definitions), the definition of "PROCEEDS" shall be deleted and replaced with the following: ""PROCEEDS" means all Subscription Proceeds, all Distribution Proceeds, all TD Distribution Proceeds and all Swap Proceeds (each as defined in Clause 7.3 (Mandatory Prepayment from Proceeds))."; 5. Clause 3.1 (Purpose) shall be amended by the deletion of the words "under the Acquisition Agreement" at the end of that clause; 6. in paragraph (a) of Clause 7.3 (Mandatory Prepayment from Proceeds), the following new definition shall be added at the end of that clause: ""SWAP PROCEEDS" means all, if any, net proceeds payable to the Borrower on termination of the Hedging Agreement."; 7. paragraph (b) of Clause 7.3 (Mandatory Prepayment from Proceeds) shall be deleted and replaced with the following: "(b) The Borrower shall prepay the Loan in an amount equal to the Subscription Proceeds, the Distribution Proceeds, the TD Distribution Proceeds and (on termination of the Hedging Agreement) the Swap Proceeds."; 8. paragraph (c) of Clause 7.7 (Holding Account) of the Credit Agreement be deleted and replaced with the following: (a) "The Borrower shall be entitled, notwithstanding the Security over the Holding Account, to invest the credit balance of the account in financial instruments acceptable to the Agent, on condition that Security in favour of the Security Trustee is created over the financial instruments so acquired, in form and substance satisfactory to the Agent and Security Trustee."; and 9. Schedule 2 (Conditions Precedent) shall be amended as follows: (i) paragraph 2(b) of Schedule 2 (Conditions Precedent) shall be deleted; (ii) paragraph 2(c) of Schedule 2 shall be renumbered as paragraph 2(b); (iii) paragraph 4(b) of Schedule 2 (Conditions Precedent) shall be deleted; (iv) paragraph 4(c) of Schedule 2 shall be renumbered as paragraph 4(b); (v) paragraph 4(d) of Schedule 2 shall be renumbered as paragraph 4(c); (vi) paragraph 4(e) of Schedule 2 shall be renumbered as paragraph 4(d). Subject to the amendments set out above, the Credit Agreement shall remain in full force and effect in accordance with its terms. This letter may be executed by fax and in any number of counterparts, all of which taken together shall constitute one and the same instrument. This letter is governed by and shall be construed in accordance with English law. The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this letter (including a dispute regarding the existence or validity of this letter) (a "DISPUTE"). The signatories to this letter agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no such party will argue to the contrary. This paragraph is for the benefit of the Agent only. As a result, the Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Agent may take concurrent proceedings in any number of jurisdictions. Please sign and return the enclosed duplicate of this letter to confirm your agreement to its terms. Yours faithfully, /s/ Michel Anastassiades /s/ Jean Herve Cariou - ----------------------------------- --------------------------------- Name: Michel Anastassiades Jean Herve Cariou Position: Global Head of Structured Head of Agency & Business Support & Acquisition Finance For and on behalf of CREDIT LYONNAIS AS AGENT Accepted and agreed [illegible] - ----------------------------------- Name: Position: For and on behalf of SOCIETE D'INVESTISSMENT POUR LA TELEPHONIE S.A. /s/ Jacques Espinasse - ----------------------------------- Name: Position: For and on behalf of VIVENDI UNIVERSAL S.A. [CREDIT LYONNAIS LETTERHEAD] DEBT, PRODUCTS & INSTRUMENTS DIVISION - D.P.I.D. STRUCTURED & ACQUISITION FINANCE DEPARTMENT AGENCY & BUSINESS SUPPORT Jean Herve Cariou [TELEPHONE GRAPHIC] 33 1 42 95 22 62 Fax 33 1 42 95 41 07 E[ENVELOPE GRAPHIC] jean-herve.cariou@creditiyonnals.fr Societe d'Investissement pour la Telephonie S.A. c/o Vivendi Universal 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain Vivendi Universal S.A. 42, avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain 31st March 2003 Dear Sirs, Credit Agreement dated 6 December 2002 between Societe d'Investissement pour la Telephonie S.A. as borrower (1), Vivendi Universal S.A. as parent (2), BNP Paribas CDC Finance - CDC Ixis, Credit Agricole Indosuez, Credit Lyonnais, Credit Suisse First Boston, Paris Branch, Dexia Credit Local, Natexis Banques Populaires, Cooperatieve Centrale Ralffeisen-Boerenleenbank B.A., (Rabobank International, Paris Branch), the Royal Bank of Scotland PLC, SG Investment Banking, Sumitomo Mitsui Banking Corporation and West LB AG, Paris Branch as arrangers (3), the original lenders named therein (4), Credit Lyonnais as agent (5) and the Royal Bank of Scotland PLC as security trustee (6) (the "Credit Agreement") (as amended by an amendment letter dated 20 January 2003 and by a second Amendment Letter dated 21 January 2003). We refer to the Credit Agreement. In this letter, words and expressions defined in the Credit Agreement shall have the same meaning where used herein. We hereby agree, as Agent on behalf of all the Lenders in accordance with Clause 34.1 (Required consents) of the Credit Agreement, that Clause 7.3 (Mandatory Prepayment from Proceeds) of the Credit Agreement shall be amended as follows: 1. paragraph (A) of the definition of "DISTRIBUTION PROCEEDS" shall be deleted and replaced with the following: "(A) interest payable on the Loan pursuant to Clause 8 (Interest) plus amounts payable by the Borrower under the Hedging Agreement during the then current Interest Period, minus amounts receivable by the Borrower under the Hedging Agreement during the then current Interest Period; and"; and 2. paragraph (E) of the definition of "DISTRIBUTION PROCEEDS" shall be deleted. Subject to the amendments set out above, the Credit Agreement shall remain in full force and effect in accordance with its terms. This letter may be executed by fax and in any number of counterparts, all of which taken together shall constitute one and the same instrument. This letter is governed by and shall be construed in accordance with English law. The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this letter (including a dispute regarding the existence or validity of this letter) (a "DISPUTE"). The signatories to this letter agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no such party will argue to the contrary. This paragraph is for the benefit of the Agent only. As a result, the Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Agent may take concurrent proceedings in any number of jurisdictions. Please sign and return the enclosed duplicate of this letter to confirm your agreement to its terms. Yours faithfully, /s/ Alain Lecrivain /s/ Jean Herve Cariou - ------------------------------------- --------------------------------- Name: Alain Lecrivain Jean Herve Cariou Position: Senior Vice-President Position: Head of Agency & Business Co-ordination & Development Support For and on behalf of CREDIT LYONNAIS AS AGENT Accepted and agreed /s/ Sean Bennard Levy - ----------------------------------- Name: Sean Bennard Levy Position: President For and on behalf of SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. /s/ Jacques Espinasse - ----------------------------------- Name: Jacques Espinasse Position: Directeur financier Group For and on behalf of VIVENDI UNIVERSAL S.A. - -------------------------------------------------------------------------------- [LOGO] CREDIT LYONNAIS - -------------------------------------------------------------------------------- DEBT, PRODUCTS & INSTRUMENTS DIVISION -- D.P.I.D. STRUCTURED & ACQUISITION FINANCE DEPARTMENT AGENCY & BUSINESS SUPPORT Jean Herve Cariou [PHONE GRAPHIC] 33 1 42 95 22 62 Fax 33 1 42 95 41 07 E[MAIL GRAPHIC] jean-herve.cariou@creditlyonnais.fr Societe d'Investissement pour la Telephonie S.A. c/o Vivendi Universal 42 avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France Attention: Hubert Dupont Lhotelain 25th June 2003 Dear Sirs, CREDIT AGREEMENT DATED 6 DECEMBER 2002 BETWEEN SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. AS BORROWER (1), VIVENDI UNIVERSAL S.A. AS PARENT (2), BNP PARIBAS, CDC FINANCE-CDC IXIS, CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS, CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA CREDIT LOCAL, NATEXIS BANQUES POPULAIRES, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., (RABOBANK INTERNATIONAL, PARIS BRANCH), THE ROYAL BANK OF SCOTLAND PLC, SG INVESTMENT BANKING, SUMITOMO MITSUI BANKING CORPORATION AND WEST LB AG, PARIS BRANCH AS ARRANGERS (3), THE ORIGINAL LENDERS NAMED THEREIN (4), CREDIT LYONNAIS AS AGENT (5) AND THE ROYAL BANK OF SCOTLAND PLC AS SECURITY TRUSTEE (6) (THE "CREDIT AGREEMENT") (AS AMENDED BY AN AMENDMENT LETTER DATED 20 JANUARY 2003, BY A SECOND AMENDMENT LETTER DATED 21 JANUARY 2003 AND BY A THIRD AMENDMENT LETTER DATED 31 MARCH 2003). We refer to the Credit Agreement. In this letter, words and expressions defined in the Credit Agreement shall have the same meaning where used herein. We hereby agree, as Agent, on behalf of all the Lenders in accordance with Clauses 34.1 (Required consents) and 34.2 (Exceptions) of the Credit Agreement, that in Clause 1.1 (Definitions), the definition of "BREAK COSTS" shall be deleted and replaced with the following: ""BREAK COSTS" means the amount (if any) by which: (a) that part of the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or that Unpaid Sum, had the principal Address: 81, rue de Richelieu -- 75002 PARIS (France) -- TEL. : 33 (0)1 42 95 70 00 -- FAX: 33 (0)1 42 95 41 07 - -------------------------------------------------------------------------------- Credit Lyonnais -- S.A. with registered capital of 1,808,394,053 Euro -- SIREN 954 509 741 RCS Lyon 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 European 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." Subject to the amendment set out above, the Credit Agreement shall remain in full force and effect in accordance with its terms. This letter may be executed by fax and in any number of counterparts, all of which taken together shall constitute one and the same instrument. This letter is governed by and shall be construed in accordance with English law. The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this letter (including a dispute regarding the existence or validity of this letter) (a "Dispute"). The signatories to this letter agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no such party will argue to the contrary. This paragraph is for the benefit of the Agent only. As a result, the Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Agent may take concurrent proceedings in any number of jurisdictions. Please sign and return the enclosed duplicate of this letter to confirm your agreement to its terms. Yours faithfully, /s/ MICHEL ANASTASSIADES /s/ JEAN HERVE CARIOU - ----------------------------------- ----------------------------------- Name: Michel Anastassiades Name: Jean Herve Cariou Position: Global Head of Structured Position: Head of Agency & Business & Acquisition Finance Support For an on behalf of CREDIT LYONNAIS as Agent Accepted and agreed /s/ REGIS TURRINI - ---------------------------------- Name: Position: President Directeur General For an on behalf of SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. /s/ JACQUES ESPINASSE - ---------------------------------- Name: Jacques Espinasse Position: Directeur financier Groupe For and on behalf of VIVENDI UNIVERSAL S.A. EX-4.11 8 y87781exv4w11.txt INDENTURE Exhibit 4.11 Vivendi Universal S.A. Issuer 9.25% SENIOR NOTES DUE 2010 9.50% SENIOR NOTES DUE 2010 INDENTURE Dated as of April 8, 2003 The Bank of New York Trustee CROSS-REFERENCE TABLE*

Trust Indenture Indenture Section Act Section 310 (a)(1)................................................................. 7.10 (a)(2)................................................................. 7.10 (a)(3)................................................................. N.A. (a)(4)................................................................. N.A. (a)(5)................................................................. 7.10 (b).................................................................... 7.10 (c).................................................................... N.A. 311 (a).................................................................... 7.11 (b).................................................................... 7.11 (c).................................................................... N.A. 312 (a).................................................................... 2.05 (b).................................................................... 11.03 (c).................................................................... 11.03 313 (a).................................................................... 7.06 (b)(1)................................................................. N.A. (b)(2)................................................................. 7.06; 7.07 (c).................................................................... 7.06; 11.02 (d).................................................................... 7.06 314 (a).................................................................... 4.03; 11.02; 11.05 (b).................................................................... N.A. (c)(1)................................................................. 11.04 (c)(2)................................................................. 11.04 (c)(3)................................................................. N.A. (d).................................................................... N.A. (e).................................................................... 11.05 (f).................................................................... N.A. 315 (a).................................................................... 7.01 (b).................................................................... 7.05; 11.02 (c).................................................................... 7.01 (d).................................................................... 7.01 (e).................................................................... 6.11 316 (a)(last sentence)..................................................... 2.09 (a)(1)(A).............................................................. 6.05 (a)(1)(B).............................................................. 6.04 (a)(2)................................................................. N.A. (b).................................................................... 6.07 (c).................................................................... 2.12 317 (a)(1)................................................................. 6.08 (a)(2)................................................................. 6.09 (b).................................................................... 2.04 318 (a).................................................................... 11.01 (b).................................................................... N.A. (c).................................................................... 11.01

N.A. means not applicable. * This Cross Reference Table is not part of the Indenture. TABLE OF CONTENTS

Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions................................................................................. 1 Section 1.02 Other Definitions........................................................................... 26 Section 1.03 Incorporation by Reference of Trust Indenture Act........................................... 27 Section 1.04 Rules of Construction....................................................................... 27 ARTICLE 2. THE NOTES Section 2.01 Form and Dating............................................................................. 28 Section 2.02 Execution and Authentication................................................................ 29 Section 2.03 Registrar and Paying Agent.................................................................. 29 Section 2.04 Paying Agent to Hold Money in Trust......................................................... 30 Section 2.05 Holder Lists................................................................................ 30 Section 2.06 Transfer and Exchange....................................................................... 30 Section 2.07 Replacement Notes........................................................................... 42 Section 2.08 Outstanding Notes........................................................................... 42 Section 2.09 Treasury Notes.............................................................................. 43 Section 2.10 Temporary Notes............................................................................. 43 Section 2.11 Cancellation................................................................................ 44 Section 2.12 Defaulted Interest.......................................................................... 44 Section 2.13 Additional Amounts.......................................................................... 44 ARTICLE 3. REDEMPTION AND PREPAYMENT; MANDATORY CANCELLATION Section 3.01 Notices to Trustee.......................................................................... 46 Section 3.02 Selection of Notes to Be Redeemed or Purchased.............................................. 47 Section 3.03 Notice of Redemption........................................................................ 47 Section 3.04 Effect of Notice of Redemption.............................................................. 48 Section 3.05 Deposit of Redemption or Purchase Price..................................................... 48 Section 3.06 Notes Redeemed or Purchased in Part......................................................... 48 Section 3.07 Optional Redemption......................................................................... 49 Section 3.08 Mandatory Redemption........................................................................ 49 Section 3.09 Offer to Purchase by Application of Excess Proceeds......................................... 49 Section 3.10 Redemption of Notes for Changes in Withholding Taxes........................................ 51 Section 3.11 Mandatory Cancellation...................................................................... 52 ARTICLE 4. COVENANTS Section 4.01 Payment of Notes............................................................................ 53 Section 4.02 Maintenance of Office or Agency............................................................. 53 Section 4.03 Reports..................................................................................... 54 Section 4.04 Compliance Certificate...................................................................... 55 Section 4.05 Taxes....................................................................................... 55

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Section 4.06 Stay, Extension and Usury Laws.............................................................. 55 Section 4.07 Restricted Payments......................................................................... 56 Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.............................. 58 Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.................................. 61 Section 4.10 Asset Sales................................................................................. 66 Section 4.11 Transactions with Affiliates................................................................ 68 Section 4.12 Liens....................................................................................... 69 Section 4.13 Business Activities......................................................................... 69 Section 4.14 Corporate Existence......................................................................... 69 Section 4.15 Offer to Repurchase Upon Change of Control.................................................. 69 Section 4.16 Limitation on Sale and Leaseback Transactions............................................... 71 Section 4.17 Payments for Consent........................................................................ 71 Section 4.18 Designation of Restricted and Unrestricted Subsidiaries..................................... 72 Section 4.19 Limitation on Guarantees of Indebtedness by Restricted Subsidiaries......................... 72 Section 4.20 Anti Layering............................................................................... 73 Section 4.21 Escrow of Proceeds.......................................................................... 74 Section 4.22 Changes in Covenants when Notes Rated Investment Grade...................................... 74 ARTICLE 5. SUCCESSORS Section 5.01 Merger, Consolidation, or Sale of Assets.................................................... 74 Section 5.02 Successor Corporation Substituted........................................................... 75 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default........................................................................... 75 Section 6.02 Acceleration................................................................................ 77 Section 6.03 Other Remedies.............................................................................. 77 Section 6.04 Waiver of Past Defaults..................................................................... 77 Section 6.05 Control by Majority......................................................................... 77 Section 6.06 Limitation on Suits......................................................................... 78 Section 6.07 Rights of Holders of Notes to Receive Payment............................................... 78 Section 6.08 Collection Suit by Trustee.................................................................. 78 Section 6.09 Trustee May File Proofs of Claim............................................................ 78 Section 6.10 Priorities.................................................................................. 79 Section 6.11 Undertaking for Costs....................................................................... 79 ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee........................................................................... 80 Section 7.02 Rights of Trustee........................................................................... 81 Section 7.03 Individual Rights of Trustee................................................................ 82 Section 7.04 Trustee's Disclaimer........................................................................ 82 Section 7.05 Notice of Defaults.......................................................................... 82 Section 7.06 Reports by Trustee to Holders of the Notes.................................................. 82 Section 7.07 Compensation and Indemnity.................................................................. 83 Section 7.08 Replacement of Trustee...................................................................... 83 Section 7.09 Successor Trustee by Merger, etc............................................................ 84 Section 7.10 Eligibility; Disqualification............................................................... 84 Section 7.11 Preferential Collection of Claims Against Company........................................... 85

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ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.................................... 85 Section 8.02 Legal Defeasance and Discharge.............................................................. 85 Section 8.03 Covenant Defeasance......................................................................... 86 Section 8.04 Conditions to Legal or Covenant Defeasance.................................................. 86 Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...................................................... 87 Section 8.06 Repayment to Company........................................................................ 88 Section 8.07 Reinstatement............................................................................... 88 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes......................................................... 88 Section 9.02 With Consent of Holders of Notes............................................................ 89 Section 9.03 Compliance with Trust Indenture Act......................................................... 90 Section 9.04 Revocation and Effect of Consents........................................................... 90 Section 9.05 Notation on or Exchange of Notes............................................................ 90 Section 9.06 Trustee to Sign Amendments, etc............................................................. 91 ARTICLE 10. SATISFACTION AND DISCHARGE Section 10.01 Satisfaction and Discharge.................................................................. 91 Section 10.02 Application of Trust Money.................................................................. 92 ARTICLE 11. MISCELLANEOUS Section 11.01 Trust Indenture Act Controls................................................................ 92 Section 11.02 Notices..................................................................................... 92 Section 11.03 Communication by Holders of Notes with Other Holders of Notes............................... 94 Section 11.04 Certificate and Opinion as to Conditions Precedent.......................................... 94 Section 11.05 Statements Required in Certificate or Opinion............................................... 94 Section 11.06 Rules by Trustee and Agents................................................................. 94 Section 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders.................... 94 Section 11.08 Governing Law............................................................................... 95 Section 11.09 No Adverse Interpretation of Other Agreements............................................... 95 Section 11.10 Successors.................................................................................. 95 Section 11.11 Severability................................................................................ 95 Section 11.12 Counterpart Originals....................................................................... 95 Section 11.13 Table of Contents, Headings, etc............................................................ 95 Section 11.14 Submission to Jurisdiction; Appointment of Agent............................................ 95

iii EXHIBITS Exhibit A FORM OF NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF ESCROW AGREEMENT iv INDENTURE dated as of April 8, 2003 between Vivendi Universal S.A., a French societe anonyme (the "Company"), and The Bank of New York, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of the U.S. dollar-denominated 9.25% Senior Notes due 2010 (the "Dollar Notes") and the euro-denominated 9.50% Senior Notes due 2010 (the "Euro Notes"). The Euro Notes and the Dollar Notes are referred to herein as the "Notes". ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "144A Global Note" means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the respective Depositary therefor or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Dollar Notes or Euro Notes, as the case may be, sold in reliance on Rule 144A. "Acquired Debt" 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 Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person, but excluding Indebtedness of such other Person that is extinguished, retired or repaid concurrently with such other Person becoming a Restricted Subsidiary of, or at the time it is merged into or consolidates with, such specified Person. "Additional Credit Facility" means any Credit Facility (including the New Credit Facility) entered into by the Company or any Restricted Subsidiary (other than Cegetel or any of its Subsidiaries) after the date of this Indenture, and any amendment, restatement, refunding, renewal, replacement or refinancing of an Existing Credit Facility (including in a manner that results in an increase in the amount borrowed thereunder). The extent to which a Additional Credit Facility may benefit from Liens or Subsidiary guarantees is described under Sections 4.12 and 4.19 hereof. "Additional Notes" means additional notes (other than the Initial Notes) issued from time to time under this Indenture in accordance with Sections 2.02 and 4.09 hereof. "Adjusted Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, where: (1) "Comparable Treasury Issue" means the U. S. Treasury security selected by the Quotation Agent as having a fixed maturity most nearly equal to the period from such redemption 1 date to April 15, 2007, and that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of U.S. dollar denominated corporate debt securities in a principal amount approximately equal to the then outstanding principal amount of the Dollar Notes and of a majority most nearly equal to April 15, 2007; provided, however, that, if the period from such redemption date to the maturity date of the relevant series of Dollar Notes is less than one year, a fixed maturity of one year shall be used; (2) "Comparable Treasury Price" means, with respect to any redemption date: (a) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for US Government Securities"; or (b) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (a) the average of the Reference Treasury Dealer Quotations for such redemption date (which in any event, must include at least two such quotations), after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (b) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. (3) "Reference Treasury Dealer" means any primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer") appointed by the Company in consultation with the Trustee. (4) "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and offered prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. (5) "Quotation Agent" means the Reference Treasury Dealer appointed by the Company to act as the Quotation Agent after consultation with the Trustee. "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," as used with respect to any Person, means 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 definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment in connection with a Receivables Program shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such Investment. "Agent" means any Registrar, co-registrar, Paying Agent or additional paying agent. "Applicable Premium" means with respect to any Note on any redemption date the greater of: (1) 1% of the principal amount of such Note; or 2 (2) the excess (to the extent positive) of: (a) the present value at such redemption date of (i) the redemption price of such Note on April 15, 2007 (such redemption price expressed as a percentage of principal amount) being set forth in the relevant table under Section 3.07 hereof plus (ii) all required interest payments due on such Notes to and including April 15, 2007 (excluding accrued but unpaid interest) computed using a discount rate equal to the Bund Rate as of such redemption date (in the case of Euro Notes) or the Adjusted Treasury Rate as of such redemption date (in the case of Dollar Notes), in each case, plus 50 basis points; over (b) the principal amount of such Note. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary with respect thereto that apply to such transfer or exchange. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by the provisions of Section 4.15 hereof and/or the provisions of Section 5.01 hereof and not by the provisions of Section 4.10 hereof; and (2) the issuance of Equity Interests by any of the Company's Restricted Subsidiaries. In any VUE Asset Sale in which the transferee assumes the outstanding Class B Preferred Stock of Vivendi Universal Entertainment LLLP, either directly or through the acquisition of Vivendi Universal Entertainment LLLP, the transfer of the common shares of USA Interactive owned by the Company as of the date of this Indenture to such transferee in connection with the assumption of obligations by that transferee under such Class B Preferred Stock will not be regarded as a separate Asset Sale. Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale. (1) any single transaction or series of related transactions that involves Equity Interests or assets having a fair market value of less than E20 million; (2) a transfer of assets between or among the Company and one or more of its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary in connection with such transaction); (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (4) the sale or lease of inventory or accounts receivable in the ordinary course of business; (5) any sale or other disposition of Receivables and Related Assets pursuant to or in connection with a Receivables Program; 3 (6) any sale, lease or other disposition in the ordinary course of business of obsolete, worn out or damaged equipment no longer being used by the Company or its Restricted Subsidiaries; (7) any sale or disposition deemed to occur in connection with creating or granting any Permitted Lien; (8) the sale or other disposition of cash or Cash Equivalents; and (9) a Restricted Payment or Permitted Investment that is permitted by Section 4.07 hereof. "Attributable Debt" in respect of a Sale and Leaseback Transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such lease, determined in accordance with GAAP. "Bankruptcy Law" means (i) with respect to the Company, Section six (livre sixieme) of the French commercial code (Code de commerce) and any implementation decree mentioned in such Section and (ii) with respect to any other Person, title 11, U.S. Code or any similar U.S. federal or state law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the passage of time or occurrence of a subsequent condition within the control of that person. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation or, except in the context of the definitions of "Change of Control" and "Continuing Directors," any committee thereof; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. "Broker-dealer" has the meaning set forth in the Registration Rights Agreement. "Bund Rate" means, with respect to any redemption date, the rate per annum equal to the equivalent yield to maturity as of such date of the Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its principal amount) equal to the Comparable German Bund Price for such redemption date, where: 4 (1) "Comparable German Bund Issue" means the German Bundesanleihe security selected by any Reference German Bund Dealer as having a fixed maturity most nearly equal to the period from such redemption date to April 15, 2007, and that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of Euro denominated corporate debt securities in a principal amount approximately equal to the then outstanding principal amount of the Euro Notes and of a maturity most nearly equal to April 15, 2007; provided, however, that, if the period from such redemption date to the maturity date of the Euro Notes is less than one year, a fixed maturity of one year shall be used; (2) "Comparable German Bund Price" means, with respect to any redemption date, the average of all Reference German Bund Dealer Quotations for such date (which, in any event, must include at least two such quotations), after excluding the highest and lowest such Reference German Bund Dealer Quotations, or if the Company obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations; (3) "Reference German Bund Dealer" means any dealer of German Bundesanleihe securities appointed by the Company in consultation with the Trustee; and (4) "Reference German Bund Dealer Quotations" means, with respect to each Reference German Bund Dealer and any relevant date, the average as determined by the Company, of the bid and offered prices for the Comparable German Bund Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference German Bund Dealer at 3.30 p.m. Frankfurt, Germany time on the third Business Day preceding such redemption date. "Business Day" means each day other than a Saturday, a Sunday or a day on which commercial banking institutions are authorized or required by law to close in New York City, London, England or Paris, France. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) 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, but excluding any debt securities convertible into such equity securities. 5 "Cash Equivalents" means: (1) U.S. dollars, euros and any other currency that is freely convertible into U.S. dollars or euros without legal restrictions and which is used by the Company or any of the Restricted Subsidiaries holding such other currency in the ordinary course of its business; (2) securities issued or directly and fully guaranteed or insured by the government of France, Germany, the United Kingdom or the United States or any agency or instrumentality of such government (provided that the full faith and credit of such government is pledged in support of those securities) having maturities of not more than one year from the date of acquisition; (3) certificates of deposit and euro and dollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any commercial bank having capital and surplus in excess of $500 million and a Thomson Bank Watch Rating (or the successor thereto) of "B" or better; (4) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having the highest rating obtainable from Moody's or S&P and in each case maturing within one year after the date of acquisition; and (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition. "Cegetel" means Cegetel Groupe S.A., a French societe anonyme. "Cegetel Minority Interest Percentage" means at any time the proportion of Capital Stock of Cegetel, held by Persons who are not Affiliates of the Company at any time. "Cegetel Shareholders Agreement" means the Shareholders Agreement, dated May 14, 1997, among the shareholders of Cegetel, as amended, novated or replaced from time to time. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the adoption of a plan relating to the liquidation or dissolution of the Company; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) or series of related transactions the result of which is that any "person" (as that term is used in Section 13(d)(3) of the Exchange Act), becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares; or 6 (4) during any consecutive two-year period, the first day on which a majority of the members of the Board of Directors of the Company who were members of the Board of Directors at the beginning of such period are not Continuing Directors. "Clearstream" means Clearstream Banking, S.A. "Common Depositary" means The Bank of New York as common depositary for Euroclear and Clearstream with respect to the Euro Global Notes, and any successor entity thereto. "Company" means Vivendi Universal S.A., a French societe anonyme, and any and all successors thereto. "Consolidated Adjusted EBITDA" means, with respect to any specified Person for any period, the aggregate of the EBITDA of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided that: (1) the EBITDA of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash (or to the extent converted into cash) to or by the specified Person or a Restricted Subsidiary of the Person; (2) the EBITDA of any Restricted Subsidiary for the relevant period will be excluded to the extent that the declaration or payment of dividends or similar distributions (including by intercompany loan) by that Restricted Subsidiary in respect of that EBITDA is at the date of determination not permitted, in each case (a) without any prior governmental approval (that has not been obtained) or (b) directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its shareholders, whether as a result of the need for a third-party approval (that has not been obtained) or otherwise (including, for the avoidance of doubt, the terms of the Cegetel Shareholders Agreement and the Maroc Shareholders Agreement, in each case as in effect on the date of this Indenture); provided that the terms of the Vivendi Universal Entertainment LLLP Term Loan Facility, or any refinancing of such facility containing similar restrictions on dividends and intercompany loans, shall not result in the exclusion of the EBITDA of any member of the VUE Group if on the date of determination at least $50 million in dividends or similar distributions (including by intercompany loans) to the Company would be permitted; (3) the cumulative effect of a change in accounting principles will be excluded; and (4) the EBITDA of any Unrestricted Subsidiary will be included to the extent distributed or otherwise paid in cash (or to the extent converted into cash) to the specified Person or one of its Restricted Subsidiaries. "Consolidated Financial Debt" means Indebtedness of the Company and its Subsidiaries on a consolidated basis reported as "Financial Debt" or under a similar heading in its financial statements, plus to the extent not included in "Financial Debt" the amount of any preferred stock or Capital Lease Obligation, in each case calculated in accordance with GAAP applied on a basis consistent with past practice. "Consolidated Interest Expense" means, for any period, the total interest expense of a Person and its consolidated Restricted Subsidiaries, including any periodic cash payments in respect of 7 preference shares, determined on a consolidated basis in accordance with GAAP, net of any interest income, plus, to the extent not included in such total interest expense and to the extent incurred by such Person or its Restricted Subsidiaries and included in Consolidated Net Income, without duplication: (1) interest expense attributable to Capital Lease Obligations and imputed interest with respect to Attributable Debt; (2) amortization of debt discount; (3) capitalized interest; (4) non-cash interest expense; (5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financings; (6) net costs associated with interest rate swap, cap or collar agreements and other agreements designed to protect such Person against fluctuations in interest rates; (7) the interest component of any deferred payment obligations; and (8) any premiums, fees, discounts, expenses and losses on the sale of Receivables and Related Assets (and any amortization thereof) payable in connection with a Receivables Program, less, (a) in the case of Consolidated Interest Expense incurred by Cegetel, Maroc Telecom or their respective Restricted Subsidiaries only, during such period and for so long as the Cegetel Shareholders Agreement or the Maroc Shareholders Agreement (or any amendment, novation or replacement thereof), as applicable, contains a restriction on dividend payments or intercompany loans that results in less than all the EBITDA of Cegetel or Maroc Telecom and their respective Restricted Subsidiaries being included in Consolidated Adjusted EBITDA of the Company for that period, an amount equal to such Consolidated Interest Expense; and (b) in the case of Consolidated Interest Expense incurred by the VUE Group during a period when some or all of the Consolidated Adjusted EBITDA of the VUE Group was excluded from the calculation of the Company's Consolidated Adjusted EBITDA because of restrictions in place on intercompany loans, dividends or other distributions under the terms of agreements or instruments binding on the VUE Group, the amount of Consolidated Interest Expense incurred by the VUE Group during such period. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash (or to the extent converted into cash) to or by the specified Person or a Restricted Subsidiary of the Person; 8 (2) the Net Income of any Restricted Subsidiary for the relevant period shall be excluded to the extent that the declaration or payment of dividends or similar distributions (including by intercompany loan) by that Restricted Subsidiary in respect of that Net Income is at the date of determination not permitted, in each case (a) without any prior governmental approval (that has not been obtained) or, (b) directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its shareholders, whether as a result of the need for a third-party approval (that has not been obtained) or otherwise (including, for the avoidance of doubt, the terms of the Cegetel Shareholders Agreement and the Maroc Shareholders Agreement, in each case as in effect on the date of this Indenture); provided that the terms of the Vivendi Universal Entertainment LLLP Term Loan Facility or any refinancing of such facility containing similar restrictions on dividends and intercompany loans shall not result in the exclusion of the Net Income of any member of the VUE Group if on the date of determination, at least $50 million in dividends or similar distributions (including by intercompany loans) to the Company would be permitted; (3) the cumulative effect of a change in accounting principles shall be excluded; and (4) the Net Income of any Unrestricted Subsidiary shall be included to the extent distributed or otherwise paid in cash (or to the extent converted into cash) to the specified Person or one of its Restricted Subsidiaries. "Consolidated Total Assets" means the total assets after deducting therefrom (1) any item representing investments in Unrestricted Subsidiaries and (2) all goodwill recorded in relation to such assets, in each case as set forth on the most recent balance sheet of the Company and its consolidated Restricted Subsidiaries and computed in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (1) was a member of such Board of Directors on the date of this Indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company in accordance with Section 11.02. "Credit Facilities" means one or more debt facilities or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans or letters of credit, in each case, as amended, restated, refunded, renewed, replaced or refinanced (including by increasing the amount borrowed thereunder) in whole or in part from time to time. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values. "Custodian" means 9 (a) in the case of any Global Note held through DTC, the Trustee, as custodian for DTC with respect to such Global Note, and (b) in the case of any Global Note held through Euroclear or Clearstream, The Bank of New York, as common depositary for Euroclear and Clearstream with respect to such Global Note, or any successor entity thereto. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to any Global Note, the Person specified in Section 2.03 hereof as the Depositary with respect to such Global Note and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Designated Amount" means as of the date of this Indenture an amount equal to E2,100 million, which amount shall be reduced from time to time by the sum, without duplication, of (i) the aggregate amount of all Net Proceeds of Asset Sales applied pursuant to mandatory prepayment provisions of Tranche A of the New Credit Facility or Additional Credit Facilities to repay any term indebtedness under any such Additional Credit Facility, or to repay revolving credit indebtedness under any such Additional Credit Facility and to correspondingly reduce commitments thereunder, in each case to the extent such Indebtedness was incurred under clause (B) or (C) of Section 4.09(b)(1) hereof and (ii) the aggregate amount of any undrawn and available capacity under any such Additional Credit Facility that is cancelled pursuant to mandatory prepayment or cancellation provisions as a result of any Asset Sale or the application of proceeds therefrom; provided that the Designated Amount shall not be reduced below E1,000 million. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable (other than redeemable only for Capital Stock that is not itself Disqualified Stock), pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. "Dollar Global Note" means a Global Note representing Dollar Notes. "Dollar Note" has the meaning assigned to it in the preamble to this Indenture. 10 "EBITDA" means, with respect to any specified Person for any period, the operating income (loss) of such Person for such period, determined in accordance with GAAP, adjusted by: (1) deducting any gain and adding back any loss, together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale or (b) the extinguishments of any Indebtedness of such Person or any of its Restricted Subsidiaries; (2) deducting any exceptional or non-recurring gain and adding back any exceptional or non-recurring loss, including any restructuring charges, together with any related provision for taxes on such exceptional or non-recurring gain (but not loss); and (3) adding back depreciation of fixed assets and amortization of goodwill and acquired intangible assets and other non-cash expenses or charges (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person for such period to the extent that such depreciation, amortization and other non-cash expenses or charges were deducted in computing such operating income. "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 primary private or public offering of Equity Interests of the Company (other than Disqualified Stock) to Persons who are not Subsidiaries of the Company other than (1) public offerings with respect to the Company's common stock registered on Form S-8 and (2) issuances upon exercise of options by employees of the Company or any of its Restricted Subsidiaries. "Escrow Funds" has the meaning assigned thereto in the Escrow Agreement. "Euroclear" means Euroclear Bank S.A./N.V. "Euro Equivalent" means with respect to any monetary amount in a currency other than euros, at any time of determination thereof, the amount of euros obtained by converting such foreign currency involved in such computation into euros at the average of the spot rates for the purchase and sale of euros with the applicable foreign currency as published in The Financial Times on the date two Business Days prior to such determination. Except as described under Section 4.09 hereof, whenever it is necessary to determine whether the Company has complied with any covenant in this Indenture or a Default has occurred and an amount is expressed in a currency other than euros, such amount shall be treated as the Euro Equivalent determined as of the date such amount is initially determined in such currency. "Euro Global Note" means a Global Note representing Euro Notes. "Euro Note" has the meaning assigned to it in the preamble to this Indenture. "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof and any Private Exchange Notes issued in a Private Exchange. References to the "Notes" in this Indenture shall include any Exchange Notes issued hereunder. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. 11 "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Credit Facility" means any Credit Facility of the Company or its Restricted Subsidiaries in effect on the date of this Indenture. The Company will provide to the Trustee on or prior to the date of this Indenture a list of all such Credit Facilities and the amounts outstanding thereunder. "Existing Indebtedness" means (i) any Indebtedness of the Company and its Restricted Subsidiaries in existence or committed to be incurred on the date of this Indenture, until such amounts are repaid, and (ii) in the case of a revolving Credit Facility, the borrowing of Indebtedness up to the amount outstanding under such revolving Credit Facility at the date of this Indenture pursuant to commitments in effect under such revolving Credit Facility at the date of this Indenture, unless such commitments are cancelled as a result of any repayment. For purposes of Section 4.09(b)(2) hereof, the only Indebtedness of the Company or its Restricted Subsidiaries committed to be incurred on the date of this Indenture is (i) the agreement between certain members of the VUE Group and the Blackstone Group that the Blackstone Group will lend to certain members of the VUE Group up to approximately $22.5 million in respect of its share of certain distributions from the Universal City Development Partners, Ltd. joint venture between the Blackstone Group and certain members of the VUE Group, and (ii) the obligation of a subsidiary of Vivendi Universal Entertainment LLLP under the Shanghai Theme Park Joint Venture Agreement to provide a project completion guarantee in respect of the Shanghai theme park joint venture on a pro rata basis based on its 25% interest in the joint venture. "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period; plus (2) any interest expense on Indebtedness of any Person other than such Person or any of its Restricted Subsidiaries to the extent such Indebtedness is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (3) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and estimated in a manner consistent with GAAP. "Fixed Charge Coverage Ratio" means, for any four-quarter period, the ratio of the Consolidated Adjusted EBITDA of the Company and its Restricted Subsidiaries for such period to the Fixed Charges of the Company and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio (and its 12 components) shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions or dispositions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers, consolidations or Investments and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date (including any acquisitions or dispositions made during such reference period or subsequent to such reference period and on or prior to the Calculation Date by any Person that became a Restricted Subsidiary or was merged with and into the Company or any of its Restricted Subsidiaries on or prior to such Calculation Date) shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Adjusted EBITDA for such reference period shall be calculated on a pro forma basis consistent with Regulation S-X under the Securities Act; (2) interest on Capital Lease Obligations and Attributable Debt shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capital Lease Obligation or Attributable Debt in accordance with GAAP; (3) the consolidated interest expense attributable to interest on (a) any Indebtedness computed on a pro forma basis that was not outstanding during the period for which the computation is being made but which bears, at the option of such Person, a fixed or floating rate of interest, shall be computed by applying, at the option of such Person, either the fixed or floating rate and (b) borrowings under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such borrowings during the applicable period; (4) the interest rate on any Indebtedness that bears a floating rate of interest shall be calculated as if the weighted average interest rate that would have been applicable to such Indebtedness over the latest 12-month period ending on the last calendar month immediately prior to the Calculation Date had been the applicable rate on such Indebtedness for the entire reference period, taking into account any Hedging Obligation designed to protect such Person or any of its Restricted Subsidiaries against fluctuations in interest rates (including any agreement that exchanges a fixed rate interest obligation for a floating rate interest obligation) applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of the shorter of (i) the remaining term of such Indebtedness or (ii) 12 months; (5) the Consolidated Adjusted EBITDA attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded; and (6) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the Company or any of its Restricted Subsidiaries following the Calculation Date. 13 "GAAP" means generally accepted accounting principles as in effect in France from time to time, consistently applied; provided that all ratios and computations contained or referred to in this Indenture shall be computed in conformity with GAAP as in effect on the date of this Indenture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(2), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States or France and the payment for which any such government pledges its full faith and credit. "Guarantee" means a direct or indirect guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), provided in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) 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 (2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent and without duplication: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of bankers' acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable, or similar obligations to trade creditors; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, but without duplication, the term "Indebtedness" includes all Indebtedness of others 14 secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount of the Indebtedness, in the case of any other Indebtedness. Notwithstanding the foregoing, "Indebtedness" shall not include (a) advance payments by customers, vendors or distributors in the ordinary course of business for services or products to be provided or delivered in the future or (b) deferred taxes. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Notes" means the $935 million aggregate principal amount of Dollar Notes or the E325 million aggregate principal amount of Euro Notes, as the case may be, issued under this Indenture on the date hereof. "Investment Grade Rating" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating categories of Moody's) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) (or, in each case, if such Rating Agency ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any Rating Agency selected by the Company as a replacement Rating Agency). "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for value of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted 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 Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.07(c) hereof; provided that, in lieu thereof and with respect to a VUE Asset Sale only, the Company may elect by notice to the Trustee delivered at the date of completion of such sale or disposition to treat a disposition of Equity Interests in a member of the VUE Group as a sale of all (and not less than all) of the Company's Equity Interests in that member of the VUE Group, the consideration for which, for purposes of Section 4.10 hereof, shall be deemed to include (a) the Company's retained Equity Interests in such entity (which shall be deemed to be consideration other than cash or Cash Equivalents unless converted into cash in accordance with the terms of that Section) and (b) any other consideration received by the Company in connection with such transaction. "Investments" shall exclude extensions of trade credit by the Company or any of its Restricted Subsidiaries in the ordinary course of business. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. 15 "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. "LineInvest Total Return Swap" means the total return swap entered into by the Company, certain of its Restricted Subsidiaries and LineInvest Limited, as described in Note 11.3 to the Company's consolidated financial statements included in the Offering Circular, dated April 3, 2003, in respect of the Notes. "Maroc Minority Interest Percentage" means at any time the proportion of Capital Stock of Maroc Telecom held by Persons who are not Affiliates of the Company at that time. "Maroc Telecom" means Maroc Telecom S.A., a Moroccan societe anonyme. "Maroc Shareholders Agreement" means the Shareholders Agreement, dated December 19, 2000, among the shareholders of Maroc Telecom, as amended, novated or replaced from time to time. "Moody's" means Moody's Investors Service, Inc. and its successors. "Multicurrency Revolving Credit Facility" means the E3,000 million multicurrency revolving credit facility dated March 15, 2002, as amended on February 6, 2003, among the Company, certain of its Subsidiaries and a syndicate of banks, as amended, restated, refunded, renewed, replaced or refinanced in whole or in part from time to time; provided that for the purposes of Section 4.12 and 4.19 hereof, references to the Multicurrency Revolving Credit Facility shall only include amounts under such facility in excess of E3,000 million to the extent such amounts were incurred under clause 1(C) of Section 4.09(b) hereof. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain or loss, together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale; or (b) the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any exceptional or non-recurring gain or loss, including restructuring charges, together with any related provision for taxes on such exceptional or non-recurring gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of: (1) costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, appraisal fees and any relocation expenses incurred as a result of the Asset Sale and taxes paid or payable as a result of the Asset Sale, 16 (2) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale; (3) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company or any of its Restricted Subsidiaries 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; and (4) all distributions or other payments made to minority interest holders or joint ventures required in connection with the Asset Sale. "New Credit Facility" means the senior secured credit facility to be entered into by the Company and certain of its subsidiaries pursuant to the term sheet agreed by the Company and a syndicate of banks on March 17, 2003, as such facility is thereafter amended, restated, refunded, renewed, replaced or refinanced (including by increasing the amount borrowed thereunder) in whole or in part from time to time. "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise or (c) constitutes the lender; and (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of such other Indebtedness of the Company or any of its Restricted Subsidiaries to be accelerated or payable prior to its Stated Maturity. "Non-Recourse Product Financing" means any Indebtedness incurred by the Company or any Restricted Subsidiary solely for the purpose of financing (whether directly or through a partially-owned joint venture) the production, acquisition or development of items of Product (including any Indebtedness assumed in connection with the acquisition of any such items of Product or secured by a Lien on any such items of Product prior to the acquisition thereof) where the recourse of the creditor in respect of that Indebtedness is limited to Product revenues generated by such items of Product or any rights pertaining thereto and where the Indebtedness is unsecured save for Liens over such items of Product or revenues and such rights, and any extension, renewal, replacement or refinancing of such Indebtedness. "Product Financing" excludes, for the avoidance of doubt, any Indebtedness raised or secured against Products where the proceeds are used for any other purposes. "Non-Recourse Project Finance Indebtedness" means any Indebtedness to finance a project incurred by the Company or any Restricted Subsidiary (the "relevant Group member") which has no activity or assets other than those comprised in the project and acquired, constructed or developed with the proceeds of such Indebtedness and in respect of which the person to whom that Indebtedness is owed by the Company or any 17 Restricted Subsidiary has no recourse whatsoever to the Company or any Restricted Subsidiary for the repayment of or payment of any sum relating to that Indebtedness other than: (1) recourse to the Company or such Restricted Subsidiary for amounts limited to its interest in the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from the project; and/or (2) recourse to the Company or such Restricted Subsidiary for the purpose only of enabling amounts to be claimed in respect of that Indebtedness on an enforcement of any Lien given by the Company or such Restricted Subsidiary over the assets comprised in that project to secure the Indebtedness; and/or (3) recourse to a shareholder of the Company or such Restricted Subsidiary for the purpose only of enforcement of any Lien given by that shareholder over shares (or the like) of the Company or such Restricted Subsidiary to secure that Indebtedness. "Non-U.S. Person" means a Person who is not a U.S. Person. "Notes" has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, except as described under Article 9 hereof, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes. "Obligations" means any principal, interest, penalties, fees, taxes, costs, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing, securing or relating to any Indebtedness, whether or not a claim in respect thereof has been asserted. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company. "Participant" means, with respect to any Depositary, a Person who is a participant of or has an account with such Depositary, respectively (and, with respect to DTC, shall include Euroclear and Clearstream). "Permitted Business" means any business conducted by the Company or any of its Restricted Subsidiaries on the date of this Indenture, any reasonable extension thereof, and any additional business reasonably related, incidental, ancillary or complementary thereto. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company; 18 (2) any Investment in Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof; (5) any Investment made solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (6) any Investments received in compromise of obligations of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; (7) Hedging Obligations permitted to be incurred under Section 4.09 hereof; (8) Investments constituting loans, advances or extensions of credit (including indemnity arrangements) to employees, officers and directors made in the ordinary course of business; (9) Investments in existence on the date of this Indenture and an Investment in any Person to the extent such Investment replaces or refinances an Investment in such Person existing on the date of this Indenture in an amount not exceeding the amount of the Investment being replaced or refinanced; provided, however, that the new Investment is on terms and conditions no less favorable to the Company than the Investment being renewed or replaced; (10) an Investment in a trust, limited liability company, special purpose entity or other similar entity in connection with a Receivables Program; provided, however, that the only assets transferred to such trust, limited liability company, special purpose entity or other similar entity consist of Receivables and Related Assets of such Receivables Subsidiary; (11) Investments in any of the Notes or the exchange Notes to be issued pursuant to the Registration Rights Agreement; (12) Guarantees of Indebtedness of the Company or any of its Restricted Subsidiaries issued in accordance with Sections 4.09 and 4.19 hereof; (13) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; 19 (14) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (15) Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers' compensation, performance and other similar deposits, in each case made in the ordinary course of business by the Company or any Restricted Subsidiary; and (16) Any Investment made to acquire Product or interests therein in the ordinary course of business consistent with past practice, including by way of forming and/or funding joint ventures, provided that this clause will only apply to the Company's film, television and music businesses; and (17) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (17) since the date of this Indenture not to exceed E40 million. "Permitted Liens" means: (1) Liens securing Indebtedness and other Obligations incurred under (i) clause (1)(A), (B) or (C) of Section 4.09(b) hereof or (ii) the Multicurrency Revolving Credit Facility; (2) Liens in favor of the Company or a Restricted Subsidiary; (3) Liens on property or shares of Capital Stock of a Person existing at the time such Person is merged with or into or consolidated with or becomes a Subsidiary of the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; (4) Liens on assets existing at the time of acquisition of the assets by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (6) Liens (i) to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.09(b)(4) hereof covering only the assets acquired with such Indebtedness or (ii) in respect of Attributable Debt permitted under Section 4.16 hereof; (7) Liens (i) existing or required to be granted under the terms of Indebtedness or under the LineInvest Total Return Swap, in each case as in effect on the date of this Indenture, or (ii) granted in respect of such Indebtedness or the LineInvest Total Return Swap that replace any such liens referred to in this subclause (i); provided that such replacement Liens cover only the assets subject to the Liens being replaced; 20 (8) Liens 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 concluded, provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (9) Liens on Receivables and Related Assets to reflect sales of receivables pursuant to a Receivables Program permitted by Section 4.09(b)(12) hereof covering only the Receivables and Related Assets sold under such Receivables Program; (10) Liens in favor of issuers of tender, bid, surety, appeal or performance bonds or letters of credit or bankers' acceptances issued pursuant to the request of and for the account of the Company or any Restricted Subsidiary in the ordinary course of its business; (11) Liens on assets of a Restricted Subsidiary securing Indebtedness of that Restricted Subsidiary; (12) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed E15 million at any one time outstanding; (13) Liens securing Permitted Refinancing Indebtedness incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus assets or property affixed or appurtenant thereto or proceeds in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien; (14) Liens securing Non-Recourse Product Financing or Non-Recourse Project Finance Indebtedness; (15) Liens securing Hedging Obligations so long as such Hedging Obligations are permitted to be incurred under this Indenture; and (16) Liens on assets or shares of Capital Stock of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; 21 (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or, if a Restricted Subsidiary is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, by that Restricted Subsidiary or its Subsidiaries. The Company shall not be entitled to guarantee any Permitted Refinancing Indebtedness incurred by a Restricted Subsidiary unless the Indebtedness being refinanced was originally guaranteed by the Company. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Private Placement Legend" means the legend set forth in Section 2.06(g)(1) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Product" means any music (including mail order music), music copyright, motion picture, television programming, film, videotape, video clubs, DVD manufactured or distributed or any other product produced for theatrical, non-theatrical or television release or for release in any other medium, in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter developed, with respect to which the Company or any Restricted Subsidiary: (1) is an initial copyright owner; or (2) acquires (or shall acquire upon delivery) an equity interest or distribution rights; and the term "items of Product" shall include the scenario, screenplay or script upon which such Product is based, all of the properties thereof, tangible or intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of the Company or any Restricted Subsidiary, and all rights therein and thereto of every kind and character. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Rating Agency" means (1) each of Moody's and S&P and (2) if Moody's or S&P ceases to rate the Notes for reasons outside of the control of the Company, a "nationally recognized statistical rating organization" within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a replacement agency for Moody's or S&P, as the case may be. "Receivables and Related Assets" means accounts receivable, instruments, chattel paper, obligations, general intangibles and other similar assets, including interests in merchandise or goods, the sale or lease of which give rise to the foregoing, related contractual rights, guarantees, insurance proceeds, collections, other related assets and proceeds of all the foregoing. "Receivables Program" means, with respect to any Person, any accounts receivable securitization program pursuant to which such Person pledges, sells or otherwise transfers or encumbers its accounts receivable, including a trust, limited liability company, special purpose entity or other similar entity. 22 "Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company or a Restricted Subsidiary of the Company (or another Person in which the Company or any Restricted Subsidiary of the Company makes an Investment and to which the Company or any Restricted Subsidiary of the Company transfers Receivables and Related Assets) which engages in no activities other than in connection with the financing of Receivables and Related Assets and which is designated by the Board of Directors of the Company as a Receivables Subsidiary. "Registration Rights Agreement" means the Exchange and Registration Rights Agreement, dated as of April 8, 2003, among the Company and the other parties named on the signature pages thereof, relating to the Notes, as such agreement may be amended, modified or supplemented from time to time, and, with respect to any Additional Notes, one or more registration rights agreements among the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Global Note bearing the Private Placement Legend and deposited with or on behalf of the respective Depositary (or the common depositary) therefor and registered in the name of the respective Depositary (or the common depositary) therefor or its nominee, issued in a denomination equal to the outstanding principal amount of the Dollar Notes or the Euro Notes, as the case may be, initially sold in reliance on Rule 903 of Regulation S. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of that Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 902" means Rule 902 promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "S&P" means Standard & Poor's Ratings Service, a division of The McGraw Hill Companies, and its successors. 23 "Sale and Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any properties or assets of the Company and/or such Restricted Subsidiary (except for leases between the Company and any Restricted Subsidiary, between any Restricted Subsidiary and the Company or between Restricted Subsidiaries), which properties or assets have been or are to be sold or transferred by the Company or such Subsidiary to such Person with the intention of taking back a lease of such properties or assets. "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the U.S. Securities Act of 1933, as amended. "Shanghai Theme Park Joint Venture Agreement" means the Joint Venture Agreement, dated February 10, 2003, among Universal Studios Holding, Ltd., Shanghai Waigaoqiao (Group) Co., Ltd. and Jinjiang Holdings Co., Ltd. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary other than an Unrestricted 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 of this Indenture. "Special Interest" means interest payable on the Notes in the event of a registration default, the amount of which shall be determined as provided in the Registration Rights Agreement. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid (including with respect to sinking fund obligations) in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business 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 of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "TIA" means the U.S. Trust Indenture Act of 1939 (15 U.S.C.Sections77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. 24 "Unrestricted Global Note" means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary therefor or its nominee, representing a series of Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means each Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that each such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time in a comparable transaction from Persons who are not Affiliates of the Company; (3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of Section 4.09. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of the outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. GAAP" means generally accepted accounting principles in the United States as in effect from time to time. "U.S. Person" means a U.S. Person as defined in Rule 902 under the Securities Act. 25 "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. "VUE Group" means Vivendi Universal Entertainment LLLP and its Subsidiaries, and any Restricted Subsidiary the assets of which consist solely of holding, directly or indirectly, Capital Stock of Vivendi Universal Entertainment LLLP and any assets that are immaterial and incidental. "VUE Partnership Agreement" means the amended and restated limited liability limited partnership agreement of Vivendi Universal Entertainment LLLP, dated as of May 7, 2002, as amended, novated or replaced from time to time. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that shall elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any specified Person means a Subsidiary of such Person all 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 and/or by one or more Wholly Owned Subsidiaries of such Person. Section 1.02 Other Definitions.

Defined in Term Section ---- ------- "Additional Amounts"................................................................ 2.13 "Affiliate Transaction"............................................................. 4.11 "Asset Sale Offer".................................................................. 3.09 "Authentication Order".............................................................. 2.02 "Change of Control Offer"........................................................... 4.15 "Change of Control Payment"......................................................... 4.15 "Change of Control Payment Date".................................................... 4.15 "Covenant Defeasance"............................................................... 8.03 "DTC"............................................................................... 2.03 "Escrow Accounts"................................................................... 4.21 "Escrow Agent"...................................................................... 4.21 "Escrow Agreement".................................................................. 4.21 "Escrow Release Certificate"........................................................ 4.21 "Event of Default".................................................................. 6.01 "Excess Proceeds"................................................................... 4.10 "Fall Away Event"................................................................... 4.22 "Final Escrow Date"................................................................. 3.11 "incur"............................................................................. 4.09 "Legal Defeasance".................................................................. 8.02 "Liquidating Distributions" ........................................................ 4.08

26

Defined in Term Section ---- ------- "Offer Amount"...................................................................... 3.09 "Offer Period"...................................................................... 3.09 "Paying Agent"...................................................................... 2.03 "Payment Default"................................................................... 6.01 "Permitted Debt".................................................................... 4.09 "Prior Capital Expenditures"........................................................ 4.10 "Private Exchange" ................................................................. 2.06 "Private Exchange Notes" ........................................................... 2.06 "Purchase Date"..................................................................... 3.09 "Registrar"......................................................................... 2.03 "Restricted Payments"............................................................... 4.07 "Special Mandatory Cancellation".................................................... 3.11 "Special Mandatory Cancellation Date"............................................... 3.11 "Special Mandatory Cancellation Notice"............................................. 3.11 "Special Mandatory Cancellation Price".............................................. 3.11 "Successor Company" ................................................................ 5.01 "Taxes"............................................................................. 2.13 "Taxing Jurisdiction"............................................................... 2.13 "VUE Asset Sale".................................................................... 4.10

Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; 27 (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) "will" shall be interpreted to express a command; (6) provisions apply to successive events and transactions; and (7) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES Section 2.01 Form and Dating. (a) General. The Notes shall be issued in series of fixed rate senior unsecured notes consisting of U.S. dollar-denominated 9.25% Senior Notes due 2010 and euro-denominated 9.50% Senior Notes due 2010. Each series of Notes and the Trustee's certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof, or of E1,000 and integral multiples thereof, as the case may be. The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. Notes issued in global form will be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note will represent such of the outstanding Notes of such series as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian therefor, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream will be applicable to transfers of beneficial interests in the Global Notes that are held by Participants through Euroclear or Clearstream. 28 Section 2.02 Execution and Authentication. An Officer must sign the Notes for the Company by manual or facsimile signature. If the Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid. A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture. On the date of this Indenture, the Trustee shall, upon receipt of a written order of the Company signed by an Officer (an "Authentication Order"), authenticate the Initial Notes for original issue up to $935,000,000 in aggregate principal amount of 9.25% Senior Notes due 2010 and E325,000,000 in aggregate principal amount of 9.50% Senior Notes due 2010, as the case may be, and, upon delivery of any Authentication Order at any time and from time to time thereafter, the Trustee shall authenticate Additional Notes and Exchange Notes for original issue in an aggregate principal amount specified in such Authentication Order. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03 Registrar and Paying Agent. The Company will maintain offices or agencies where Notes may be presented for registration of transfer or for exchange (each, a "Registrar") and offices or agencies where Notes may be presented for payment (each, a "Paying Agent"). Offices or agencies of the Registrar and Paying Agent (a) for the Dollar Notes, will be maintained in the Borough of Manhattan, the City of New York, and, for so long as the Dollar Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, and (b) for the Euro Notes, will be maintained in the Borough of Manhattan, the City of New York, in London, England, and, for so long as the Euro Notes are listed on the Luxembourg Stock Exchange, in Luxembourg. The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Paying Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Dollar Global Notes and Euroclear and Clearstream to act as Depositaries with respect to the Euro Global Notes. The Bank of New York will act as Common Depositary for the Euro Global Notes on behalf of Euroclear and Clearstream. The Company initially appoints the Trustee to act as the Registrar and Paying Agent in New York and London and to act as Custodian with respect to the Global Notes, and initially appoints The Bank of New York (Luxembourg) S.A. as Registrar and Paying Agent in Luxembourg. 29 Section 2.04 Paying Agent to Hold Money in Trust. The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Special Interest, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. During the period that funds are held in escrow pursuant to Section 4.21 hereof and upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee and the Bank of New York (Luxembourg) S.A. will serve as Paying Agents for the Notes. Section 2.05 Holder Lists. The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a). Section 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the applicable Depositary to a nominee of the applicable Depositary, by a nominee of the applicable Depositary to the applicable Depositary or to another nominee of the applicable Depositary, or by the applicable Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes of a series will be exchanged by the Company for Definitive Notes if: (1) in the case of a Dollar Global Note, the Company delivers to the Trustee notice from the applicable Depositary that it is unwilling or unable to continue to act as Depositary, that it is no longer a clearing agency registered under the Exchange Act or that it is unwilling or unable to continue as clearing agency and, in each case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary; (2) in the case of a Euro Global Note, the Company delivers to the Trustee notice (i) from Euroclear and Clearstream that they are unwilling or unable to continue as clearing agencies or (ii) from the Common Depositary that it is unwilling or unable to continue to act as Common Depositary, and a successor Depositary or Common Depositary is not appointed by the Company within 120 days after the date of such notice from the Euroclear and Clearstream or the Common Depositary, as the case may be; (3) in the case of a Euro Global Note, Euroclear or Clearstream is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention to cease business permanently; or 30 (4) there has occurred and is continuing an Event of Default with respect to the Notes. Upon the occurrence of any of the events listed in the preceding clauses (1) to (4) of this Section 2.06(a), or if the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definite Notes under this Indenture, the Company shall execute, and the Trustee shall, upon receipt of an Authentication Order, authenticate and deliver Definitive Notes of the series and in an aggregate principal amount equal to the principal amount of the applicable Global Note in exchange therefor. The Company will, at the cost of the Company (but against such indemnity as the Registrar or any relevant Agent may require in respect of any tax or other duty of whatever nature which may be levied or imposed in connection with such exchange), cause sufficient Definitive Notes to be executed and delivered to the Trustee for authentication and the Registrar for registration of the exchange and dispatch to the relevant Holders within 30 days of the relevant event. The Trustee or the Registrar shall, at the cost of the Company, deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Definitive Notes issued in exchange for beneficial interests in Global Notes pursuant to this Section 2.06(a) shall be registered in such names and in such authorized denominations as the applicable Depositary, pursuant to instructions from its direct or indirect Participants or otherwise, shall instruct the Trustee. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will be effected through the applicable Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person prior to the expiration of the 40-day "Distribution Compliance Period" under Regulation S, unless such person is a "Distributor" as defined in Rule 902. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1). (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar both (i) a written order from a Participant or an Indirect Participant given to the applicable Depositary in accordance with the Applicable Procedures directing the applicable Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged, and (ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase. 31 Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (3) `Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global 32 Note, a certificate from such holder in the form of Exhibit B hereto, including the appropriate certifications in item (3) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. If any one of the events listed in clauses (1) to (4) of this Section 2.06(a) has occurred or the Company has elected pursuant to Section 2.06(a) to cause the issuance of Definitive Notes, transfers or exchanges of beneficial interests in a Global Note for a Definitive Note shall be effected, subject to the satisfaction of the conditions set forth in the applicable subclauses of this Section 2.06(c). (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4) thereof. the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and upon receipt of an Authentication Order the Trustee shall authenticate and deliver to the Person designated in the 33 instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) such transfer is effected by a Broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (F) the Registrar receives the following: (i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the appropriate certifications in item (3) thereof; and, in each such case set forth in this subparagraph (F), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably 34 acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company will execute and upon receipt of an Authentication Order the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the applicable Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4) thereof, the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) or (D) above, the Regulation S Global Note. 35 (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) such transfer is effected by a Broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (F) the Registrar receives the following: (i) if the Holder of such Restricted Definitive Note proposes to exchange such Restricted Definitive Note for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (ii) if the Holder of such Restricted Definitive Note proposes to transfer such Restricted Definitive Note to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the appropriate certifications in item (3) thereof; and, in each such case set forth in this subparagraph (F), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Note and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. 36 (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof. (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-dealer, (ii) a Person participating in the distribution 37 of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (i) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (ii) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the appropriate certifications in item (3) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate: (1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered into the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not Broker-dealers, (B) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company; and (2) Unrestricted Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee will cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company will execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount. If, upon consummation of the Exchange Offer, any Holder holds Initial Notes, the Company may thereafter issue 38 and deliver to such Holder, in exchange (a "Private Exchange") for the Initial Notes held by such Holder, a like principal amount of debt securities of the Company issued under this Indenture and identical in all material respects to the Initial Notes (the "Private Exchange Notes"); provided that the Company shall have obtained certifications and other evidence reasonably satisfactory to the Company that any such Holder may receive Private Exchange Notes in such Private Exchange in compliance with applicable securities laws. The Exchange Notes issued in the Exchange Offer and the Private Exchange Notes shall be issued in the same series under this Indenture and shall have the same CUSIP, Common Code, ISIN and/or other identification numbers. (g) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (1) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (5) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES". (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend. (2) Global Dollar Note Legend. Each Dollar Global Note will bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS 39 GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN". (3) Global Euro Note Legend. Each Euro Global Note will bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE COMMON DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE COMMON DEPOSITARY TO A NOMINEE OF THE COMMON DEPOSITARY OR BY A NOMINEE OF THE COMMON DEPOSITARY TO THE COMMON DEPOSITARY OR ANOTHER NOMINEE OF THE COMMON DEPOSITARY OR BY THE COMMON DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR COMMON DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR COMMON DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON 40 DEPOSITARY (WHICH SHALL INITIALLY BE THE BANK OF NEW YORK, 101 BARCLAY STREET, FLOOR 21W, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY (AND ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY, HAS AN INTEREST HEREIN". (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (1) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar's request. (2) No service charge will be made to a Holder of a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (3) The Registrar will not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (5) The Company will not be required: (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of 41 Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection; (B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. If, after the delivery of such replacement Note, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment or registration such original Note, the Trustee shall be entitled to recover such replacement Note from the Person to whom it was delivered or any Person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company, the Trustee, any Agent and any authenticating agent in connection therewith. Subject to the provisions of the final sentence of the preceding paragraph of this Section 2.07, every replacement Note is an obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the 42 Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser. If the entire principal amount and premium, if any, of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest. For purposes of determining whether the Holders of the requisite principal amount of Notes have taken any action as herein described, the principal amount of Dollar Notes shall be deemed to be the Euro Equivalent of such principal amount of Dollar Notes as of (i) if a record date has been set with respect to the taking of such action, such date or (ii) if no such record date has been set, the date the taking of such action by the Holders of such requisite principal amount is certified to the Trustee by the Company. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an Agent duly appointed in writing or may be embodied in or evidenced by an electronic transmissions which identifies the documents containing the proposal on which such consent is requested and certifies such Holders' consent thereto and agreement to be bound thereby; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and where it is hereby expressly required, to the Company. Section 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned will be so disregarded. Section 2.10 Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes will be entitled to all of the benefits of this Indenture. 43 Section 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of such canceled Notes (subject to the record retention requirements of the Exchange Act) in its customary manner unless the Company directs the Trustee to deliver canceled Notes to the Company. The Company may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation. Section 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date, provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. Section 2.13 Additional Amounts. (a) All payments made by the Company under or with respect to the Notes will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (hereinafter, "Taxes") imposed or levied by or on behalf of the government of France or any other jurisdiction in which the Company is organized or is a resident for tax purposes or within or through which payment is made or any political subdivision or taxing authority or agency thereof or therein (any of the aforementioned being a "Taxing Jurisdiction"), unless the Company is required to withhold or deduct any such Taxes by law or by the interpretation or administration thereof. (b) If the Company is so required to withhold or deduct any amount for or on account of Taxes from any payment made under or with respect to a Note, the Company will, to the extent permitted by applicable law, pay such additional amounts ("Additional Amounts") as may be necessary so that the net amount received by the Holder of such Note (including Additional Amounts) after such withholding or deduction of such Taxes will not be less than the amount such Holder would have received if such Taxes had not been required to be withheld or deducted; provided, however, that notwithstanding the foregoing, Additional Amounts will not be paid with respect to: (1) any Taxes that would not have been so imposed, deducted or withheld but for the existence of any present or former connection between the Holder or beneficial owner of such Note (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over, the Holder or beneficial owner of such Note, if the Holder or beneficial owner is an estate, nominee, trust, partnership or corporation) and the relevant Taxing Jurisdiction (other than the mere receipt of such payment or the ownership or holding of or the execution, delivery, registration or enforcement of such Note); 44 (2) subject to Section 2.13(f) hereof, any estate, inheritance, gift, sales, excise, transfer or personal property tax or similar tax, assessment or governmental charge; (3) any Taxes payable otherwise than by deduction or withholding from payments under or with respect to such Note; (4) any Taxes that would not have been so imposed, deducted or withheld if the Holder or beneficial owner of such Note or beneficial owner of any payment on such Note had (i) made a declaration of non-residence, or any other claim or filing for exemption, to which it is entitled or (ii) complied with any certification, identification, information, documentation or other reporting requirement concerning the nationality, residence, identity or connection with the relevant Taxing Jurisdiction of such Holder or beneficial owner of such Note or any payment on such Note (provided that such declaration of non-residence or other claim or filing for exemption or such compliance is required by the applicable law of the relevant Taxing Jurisdiction as a precondition to exemption from, or reduction in the rate of the imposition, deduction or withholding of, such Taxes, and at least 30 days prior to the first payment date with respect to which such declaration of non-residence or other claim or filing for exemption or such compliance is required under the applicable law of the Taxing Jurisdiction, the relevant Holder at that time has been notified by the Company, or any other person through whom payment may be made that a declaration of non-residence or other claim or filing for exemption or such compliance is required to be made); (5) any Taxes that would not have been so imposed, deducted or withheld if the beneficiary of the payment had presented such Note for payment within 30 days after the date on which such payment or such Note became due and payable or the date on which payment thereof is duly provided for, whichever is later (except to the extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period); (6) any payment under or with respect to a Note to any Holder that is a fiduciary or partnership or any person other than the sole beneficial owner of such payment or Note, to the extent that a beneficiary or settlor with respect to such fiduciary, a member or such a partnership or the beneficial owner of such payment or Note would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the actual Holder of such Note; (7) any withholding or deduction imposed on a payment that is required to be made pursuant to any European Union Directive on the taxation of savings implementing the draft directive agreed upon by the European Council of Economic and Finance Ministers (ECOFIN) on January 21, 2003, or any law implementing or complying with, or introduced in order to conform to, such Directive; (8) any withholding or deduction that is imposed on a Note that is presented for payment by or on behalf of a Holder that would have been able to avoid such withholding or deduction by presenting such Note to another paying agent in a member state of the European Union for Holders of Notes who are resident in the European Union, and in the United States for Holders of Notes who are resident in the United States; or (9) any combination of items (1) through (8) above. 45 The foregoing provisions shall survive any termination or discharge of this Indenture and shall apply mutatis mutandis to any Taxing Jurisdiction with respect to any successor Person to the Company. (c) The Company will also make any applicable withholding or deduction and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Company will furnish to the Trustee certified copies or tax receipts or, if such tax receipts are not reasonably available to the Company, such other documentation that provides reasonable evidence of such payment by the Company. Copies of such receipts or other documentation will be made available to the Holders or the Paying Agents, as applicable, upon request. (d) At least 30 days prior to each date on which any payment under or with respect to any Note is due and payable, unless such obligation to pay Additional Amounts arises after the 30th day prior to such date, in which case it shall be promptly paid thereafter, if the Company will be obligated to pay Additional Amounts with respect to such payment, the Company will deliver to the Trustee and the Paying Agent an Officers' Certificate stating the fact that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the Trustee and Paying Agent to pay such Additional Amounts to Holders of such Note on the payment date. Each Officers' Certificate shall be relied upon until receipt of a further Officers' Certificate addressing such matters. (e) Whenever in this Indenture there is mentioned, in any context, the payment of principal, premium, if any, interest or any other amount payable under or with respect to any Note, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. (f) The Company will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery, enforcement or registration of the Notes, this Indenture or any other document or instrument in relation thereto; provided, however, that no such payments will be made in respect of any taxes, charges or similar levies imposed by any jurisdiction outside any jurisdiction in which the Company or any successor Person is organized or resident for tax purposes, or any jurisdiction in which a Paying Agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the Notes or any other document or instrument following the occurrence of an Event of Default with respect to the Notes, and the Company agrees to indemnify the Holders of the Notes for any such non-excluded taxes paid by such Holders. ARTICLE 3. REDEMPTION AND PREPAYMENT; MANDATORY CANCELLATION Section 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth: (1) the clause of this Indenture pursuant to which the redemption shall occur; (2) the redemption date; (3) the principal amount of each series of Notes to be redeemed; and 46 (4) the redemption price. Section 3.02 Selection of Notes to Be Redeemed or Purchased. If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Notes for redemption or purchase as follows: (1) if the applicable Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which they are listed; or (2) if the applicable Notes are not listed on any national securities exchange or the relevant national securities exchange does not have any applicable requirements, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase. The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000, or of E1,000 or whole multiples of E1,000, as the case may be; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000 or of E1,000, as the case may be, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase. Section 3.03 Notice of Redemption. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article 8 or 10 of this Indenture. Notices of redemption shall not be conditional. So long as any series of the Notes is listed on the Luxembourg Stock Exchange and if required by the rules of the Luxembourg Stock Exchange, notice will be given to the Luxembourg Stock Exchange and published in Luxembourg in a daily leading newspaper with general circulation in Luxembourg. The notice will identify the Notes to be redeemed and will state: (1) the redemption date; (2) the redemption price; (3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note; 47 (4) the name and address of the Paying Agent; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (8) that no representation is made as to the correctness or accuracy of the CUSIP, ISIN or Common Code number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee will give the notice of redemption in the Company's name and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Section 3.05 Deposit of Redemption or Purchase Price. No later than one Business Day prior to the redemption or purchase price date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest and Special Interest, if any, on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest and Special Interest, if any, on, all Notes to be redeemed or purchased. If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06 Notes Redeemed or Purchased in Part. Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered. 48 Section 3.07 Optional Redemption. (a) At any time prior to April 15, 2007, the Company may at its option redeem all or part of the Notes upon not less than 30 nor more than 60 days' prior notice at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus the Applicable Premium plus accrued and unpaid interest and Special Interest, if any, to the applicable redemption date. (b) At any time prior to April 15, 2006, the Company may at its option on any one or more occasions redeem up to 35% of the aggregate principal amount of each series of the Notes issued under this Indenture at a redemption price equal to 109.25% of the principal amount for the Dollar Notes and 109.50% of the principal amount for the Euro Notes, plus in each case accrued and unpaid interest and Special Interest, if any, to the redemption date, with the net cash proceeds of an Equity Offering; provided that: (1) The Company received at least E50 million in gross proceeds from such Equity Offering; (2) at least 65% of the initial aggregate principal amount of Notes issued under this Indenture remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and (3) the redemption occurs within 120 days of the date of the closing of such Equity Offering. (c) On or after April 15, 2007, the Company may redeem all or a part of the Dollar Notes, or all of a part of the Euro Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

DOLLAR NOTE EURO NOTE YEAR PERCENTAGE PERCENTAGE ---- ---------- ---------- 2007................. 104.625% 104.750% 2008................. 102.313% 102.375% 2009 and thereafter.. 100.000% 100.000%

(d) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08 Mandatory Redemption. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. Section 3.09 Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall be made to all Holders of Notes. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 49 Business Days, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than three Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall apply all Excess Proceeds (the "Offer Amount") to the purchase of Notes or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, and Special Interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state: (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open; (2) the Offer Amount, the purchase price and the Purchase Date; (3) that any Note not tendered or accepted for payment will continue to accrue interest; (4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date; (5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 or of E1,000 only, as the case may be; (6) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" attached to the Note completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (7) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (8) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company will select the Notes to be purchased on a pro rata basis based on the principal amount of Notes surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000 or integral multiples thereof, or of E1,000 or integral multiples thereof, as the case may be, will be purchased); and 50 (9) that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. Section 3.10 Redemption of Notes for Changes in Withholding Taxes. The Company may, at its option, redeem all, but not less than all, of the then outstanding Notes of a series at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to the redemption date. This redemption applies only if as a result of any amendment to, or change in, the laws or treaties (including any rulings or regulations promulgated thereunder) of France or any other jurisdiction in which the Company is organized or is a resident for tax purposes or within or through which payment is made or any political subdivision or taxing authority or agency thereof or therein (or, in the case of Additional Amounts payable by a successor Person to the Company, of the jurisdiction in which such successor Person is organized or is a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein) or any amendment to or change in any official position concerning the interpretation, administration or application of such laws, treaties, rulings or regulations (including a holding by a court of competent jurisdiction), which amendment or change is effective on or after the date of this Indenture (or, in the case of Additional Amounts payable by a successor Person to the Company, the date on which such successor Person became such pursuant to applicable provisions of this Indenture), that the Company has become or will become obligated to pay Additional Amounts (as described in Section 2.13 hereof) on the next date on which any amount would be payable with respect to such Notes and the Company determines in good faith that such obligation cannot be avoided (including, without limitation, by changing the jurisdiction from which or through which payment is made) by the use of reasonable measures available to the Company. No such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such Additional Amounts were a payment in respect of the such Notes then due or later than 180 days after such amendment or change referred to in the preceding paragraph. At the time such notice of redemption is given, such obligation to pay such Additional Amounts must remain in effect. Immediately prior to the mailing of any notice of redemption described above, the Company shall deliver to the Trustee (i) a certificate stating that the Company is entitled to elect to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to elect to redeem have occurred and (ii) an Opinion of Counsel qualified 51 under the laws of the relevant jurisdiction to the effect that the Company or such successor Person, as the case may be, has or will become obligated to pay such Additional Amounts as a result of such amendment or change. Section 3.11 Mandatory Cancellation If (a) in accordance with the terms of the Escrow Agreement, the Escrow Release Certificate is not delivered by the Company by 11:59 p.m. New York City time on the date that is 120 days from the date hereof (or, if such 120th day is not a Business Day, the first Business Day after such day) (the "Final Escrow Date") or (b) on an earlier date the Company notifies the Escrow Agent that it reasonably believes it will not be possible for the Company to deliver the Escrow Release Certificate by the Final Escrow Date, upon the date that is the earlier of the Final Escrow Date and the date that is five Business Days from the date of such notification, as the case may be, the Company shall promptly instruct the Trustee to cancel each series of Notes (the "Special Mandatory Cancellation") on a date that is not more than 10 Business Days after such instruction (the "Special Mandatory Cancellation Date"). Promptly following receipt of instructions from the Company to cancel the Notes in accordance with the previous sentence, or if no such instructions have been received, on the Final Escrow Date, the Trustee shall mail by first class mail notice of the Special Mandatory Cancellation (the "Special Mandatory Cancellation Notice") to each Holder of the Notes at its registered address, to the Escrow Agent and, so long as any series of the Notes is listed on the Luxembourg Stock Exchange and if required by the rules of the Luxembourg Stock Exchange, notice will be published in Luxembourg as set forth in Section 3.03 hereof. As provided in the Escrow Agreement, upon receipt of the Special Mandatory Cancellation Notice or, if the Escrow Agent shall not have received an Escrow Release Certificate on or before the Final Escrow Date, on the next following Business Day, the Escrow Agent will liquidate all Escrow Funds held by it and the Escrow Agent will deliver such proceeds to the relevant Paying Agent for pro rata distribution to the Holders of the Notes. On the Special Mandatory Cancellation Date, the Company will pay to the relevant Paying Agent for payment to each Holder of Notes an aggregate amount equal to the difference between (a) 101% of the aggregate principal amount of the Notes plus interest that would have accrued on the Notes if the proceeds of the offering of the Notes had been released to the Company on the date of issuance of the Notes from such date to the Special Mandatory Cancellation Date (the "Special Mandatory Cancellation Price") and (b) the proceeds from the liquidation of the Escrow Funds, such that each holder of the Notes shall receive the Special Mandatory Cancellation Price upon surrender and cancellation of its Notes. The Special Mandatory Cancellation Notice will state: (1) the Special Mandatory Cancellation Date; (2) the Special Mandatory Cancellation Price; (3) the name and address of the Paying Agent; (4) that the Notes must be surrendered to the Paying Agent to be cancelled to collect the Special Mandatory Cancellation Price; and (5) that, unless the Company defaults on paying the portion of the Special Mandatory Cancellation Price to be paid by it, no interest on the Notes shall accrue on and after the Special Mandatory Cancellation Date. 52 Once the Special Mandatory Cancellation Notice has been mailed, the Notes will become irrevocably due and payable on the Special Mandatory Cancellation Date at the Special Mandatory Cancellation Price. All Notes surrendered by a Holder to the Trustee for cancellation shall be irrevocably cancelled after payment to that Holder of the Special Mandatory Cancellation Price. If the Notes are not cancelled because of a failure of the Company to pay the portion of the Special Mandatory Cancellation Price to be paid by it, the interest will be deemed to accrue for purposes of calculation of the Special Mandatory Cancellation Price and the Special Mandatory Cancellation Price shall be adjusted accordingly until the date such amount is paid to the relevant Paying Agent. Pending delivery of the Escrow Release Certificate, the Company will not have and will not be deemed to have any rights, title or interest in the Escrow Funds, and any contingent or other rights the Company may have in respect of the Escrow Funds under the Escrow Agreement will be extinguished with respect to the Escrow Funds that are required to be released for payment to the Holders of the Notes in the circumstances described above. ARTICLE 4. COVENANTS Section 4.01 Payment of Notes. The Company shall pay or cause to be paid the principal of, premium, if any, and interest and Special Interest, if any, on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest and Special Interest, if any will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. New York Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company will pay all Special Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Special Interest (without regard to any applicable grace period) at the same rate. If a Paying Agent pays out on or after the due date therefor, or becomes liable to pay out funds on the assumption that the corresponding payment by the Company has been or will be made and such payment has in fact not been so made by the Company, then the Company shall on demand reimburse the Paying Agent for the relevant amount, and pay interest to the Paying Agent on such amount from the date on which it is paid out to the date of reimbursement at a rate per annum equal to the cost to the Paying Agent of funding the amount paid out, as certified by the Paying Agent and expressed as a rate per annum. Section 4.02 Maintenance of Office or Agency. The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) (a) for the Dollar Notes, in the Borough of Manhattan, the City of New York, and, for so long as the Dollar Notes are listed on the Luxembourg Stock Exchange, 53 in Luxembourg, and (b) for the Euro Notes, in New York, in London, and, for so long as the Euro Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, where (i) Notes may be surrendered for registration of transfer or for exchange and (ii) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served, provided that in the case of clause (ii) above as it applies to the Euro Notes, such office may be maintained in Paris, France. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York and London, England for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof. Section 4.03 Reports. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Trustee and Holders of Notes: (1) within the time periods specified by the SEC's rules and regulations, all financial information that would be required to be contained in a filing with the SEC on Form 20-F if the Company were required to file such Form, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and a report on the Company's annual financial statements by the Company's certified independent accountants; (2) within 90 days after the end of each of the first three fiscal quarters of each fiscal year, (a) quarterly financial statements (including a consolidated statement of income, consolidated balance sheet and consolidated statement of cash flows) of the Company prepared in accordance with generally accepted accounting principles in France as in effect at the time of such financial statements with a reconciliation to U.S. GAAP of net income, interest expense, EBIT and net debt and (b) a statement of management regarding the Company's financial position and results of operations, in each case (except for the U.S. GAAP information) that is substantially similar in scope and detail to the information publicly released by the Company in respect of its financial results for the first six months of each fiscal year; and (3) within the time periods specified by the SEC's rules and regulations, all current reports that would be required to be filed with the SEC on Form 6-K if the Company were required to file such reports. To the extent GAAP in effect from time to time differs in any material respect from GAAP in effect on the date of this Indenture, the Company will separately prepare and deliver to the Trustee and Holders of the Notes with its annual financial statements a reasonably detailed reconciliation to GAAP as in effect on the date of this Indenture with respect to the financial items necessary to ascertain compliance with the covenants set forth in this Indenture. 54 In addition, following the consummation of the Exchange Offer contemplated by the Registration Rights Agreement, whether or not required by the SEC, the Company will file or furnish a copy of all of the information and reports referred to in clauses (1), (2) and (3) above with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request and through publication on its internet website or similar means of electronic dissemination. The Company will at all times comply with TIA Section 314(a). (b) For so long as any Notes remain outstanding, the Company will furnish to the Trustee and Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 4.04 Compliance Certificate. (a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as any of the Notes are outstanding, the Company will deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05 Taxes. The Company shall pay, and shall cause each of its Restricted Subsidiaries to pay, prior to delinquency, all Taxes except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenant that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. 55 Section 4.07 Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution on account of the Company's Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company's Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes, except a payment of interest or principal at the Stated Maturity thereof (other than Indebtedness permitted under clauses (2) or (7) of Section 4.09(b) hereof and the purchase, repurchase or other acquisition of subordinated Indebtedness with a Stated Maturity earlier than the maturity of the Notes purchased in anticipation of satisfying a payment of principal at the Stated Maturity thereof, within one year of such Stated Maturity; 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 and after giving effect to such Restricted Payment: (a) no Default or Event of Default has occurred and is continuing or would occur as a consequence thereof; (b) the Company could incur at least E1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof; and (c) with respect to a Restricted Payment of the type described in clause (1) or (2) of the definition of Restricted Payments above, a period of not less than 365 days has elapsed since the date of this Indenture; and (d) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (3), (4), (5), (6), (7) or (10) of Section 4.07(b) hereof), is less than the sum, without duplication, of: (A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Notes are issued to the end of the Company's most recently ended fiscal quarter for which financial statements are publicly available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus 56 (B) 100% of the aggregate net cash proceeds received by the Company since the date of this Indenture (i) as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or (ii) from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company upon conversion into or exchange for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company), plus (C) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment, plus (D) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of this Indenture, the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation (or, if such redesignation occurs within one year of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary, the lesser of (i) such fair market value and (ii) the fair market value of such Subsidiary as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary). (b) The provisions of Section 4.07(a) will not prohibit: (1) the payment of any dividend or distribution on, or any redemption of, Equity Interests, within 60 days after the date of declaration or notice thereof, if at the date of declaration or notice the dividend payment, distribution or redemption would have complied with the provisions of this Indenture; (2) Investments that the Company or its Restricted Subsidiaries are required to make as the result of the exercise of rights by persons that are not Affiliates of the Company pursuant to contracts or agreements in effect as of the date of this Indenture that are referred to in Note 11.3 to the Company's consolidated financial statements included in the Offering Circular, dated April 3, 2003, relating to the Notes. (3) the purchase, repayment, prepayment, redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Restricted Subsidiary or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such purchase, repayment, prepayment, redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from Section 4.07(a)(i)(B) hereof; (4) the purchase, repayment, prepayment, redemption, repurchase, retirement, defeasance or other acquisition of subordinated Indebtedness of the Company or any Restricted Subsidiary (a) with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or (b) from Net Proceeds from any Asset Sale to the extent permitted under clause (3) of Section 4.10 hereof; (5) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, repurchase or other acquisition or retirement for value of any Equity 57 Interests of the Company from employees, former employees, directors or former directors of the Company or any of its Subsidiaries or their authorized representatives pursuant to any management equity plan, share option plan or any other management or employee benefit plan or agreement with respect to the management, directors or employees of the Company and its Subsidiaries; provided that the aggregate price paid for all such purchased, redeemed, repurchased, acquired or retired Equity Interests may not exceed E3 million in any twelve-month period; (6) repurchases of Equity Interests deemed to occur upon (a) the exercise of stock options, warrants or convertible securities issued as compensation if such Equity Interests represent a portion of the exercise price thereof and (b) the withholding of a portion of the Equity Interests granted or awarded to an employee to pay taxes associated therewith; (7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock or preferred stock of the Company issued in accordance with Section 4.09 hereof to the extent such dividends are included in the definition of Fixed Charges; (8) in connection with a VUE Asset Sale, the purchase of a letter of credit for the purpose of defeasing the outstanding Class A Preferred Stock of Vivendi Universal Entertainment LLLP in accordance with the VUE Partnership Agreement; (9) equity contributions to the joint venture formed for the purpose of developing a theme park in Shanghai, People's Republic of China, pursuant to the Shanghai Theme Park Joint Venture Agreement in aggregate amounts of up to E80 million; and (10) so long as no Default or Event of Default shall have occurred and be continuing, other Restricted Payments in an aggregate amount, when taken together with all other Restricted Payments made pursuant to this clause (10), not to exceed E15 million. (c) The amount of all Restricted Payments (other than cash) will be the fair market value on the date of the Restricted Payment of the assets or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.07 will be determined in good faith (a) in the case of assets or securities valued at E40 million or less, by a senior financial officer of the Company and set forth in an Officers' Certificate to the Trustee, and (b) in the case of assets or securities valued at more than E40 million, by the Company's Board of Directors and set forth in an Officers' Certificate delivered to the Trustee. Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries; (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. 58 (b) The restrictions in Section 4.08(a) shall not apply to encumbrances or restrictions existing under or by reason of: (1) the New Credit Facility or agreements or instruments in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, supplements, replacements or refinancings of the New Credit Facility or those agreements or instruments, provided that the encumbrances or restrictions contained in the New Credit Facility or any such amendments, modifications, restatements, renewals, supplements, replacements or refinancings taken as a whole, are not materially less favorable to the Holders of the Notes than the encumbrances or restrictions contained in agreements or instruments in place on the date of this Indenture; (2) this Indenture, the Notes and the exchange Notes to be issued pursuant to the registration rights agreement; (3) any applicable law, rule, regulation or order; (4) any agreement or instrument relating to Indebtedness or Capital Stock of a Person acquired by, or merged, consolidated or otherwise combined with or into the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the property or assets of the Person so acquired, and any amendments, modifications, restatements, renewals, supplements, replacements or refinancings of those instruments, provided that the encumbrances or restrictions contained in any such amendments, modifications, restatements, renewals, supplements, replacements or refinancings, taken as a whole, are not materially less favorable to the Holders of the Notes than the encumbrances or restrictions contained in agreements or instruments in effect on the date of acquisition; (5) customary non-assignment provisions in leases or other agreements entered into in the ordinary course of business; (6) an agreement or instrument relating to any Indebtedness, Disqualified Stock or preferred stock of a Restricted Subsidiary permitted to be incurred or issued subsequent to the date of this Indenture pursuant to the provisions of Section 4.09 hereof if (i) the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favorable to the Holders of the Notes than the encumbrances and restrictions contained in the agreements relating to Indebtedness, Disqualified Stock or preferred stock, as appropriate, of that Restricted Subsidiary in effect on the date of this Indenture, or (ii) in the event such Restricted Subsidiary did not have any Indebtedness, Disqualified Stock or preferred stock outstanding on the date of this Indenture, such encumbrance or restriction will not impair the ability of the Company to make payments of principal, interest and other amounts on the Notes in any material respect; (7) the terms of any preferred stock issued by any Restricted Subsidiary of the Company; provided, however, that the terms of such preferred stock do not impose any consensual encumbrance or restriction on the ability of the Restricted Subsidiary to pay dividends or make distributions on its Capital Stock except in a manner that is no more restrictive than the following, as determined in good faith by the Board of Directors of the Company and evidenced by a resolution adopted by such Board of Directors: 59 (A) dividends and distributions on Capital Stock of the Restricted Subsidiary may not be declared or paid or set apart for payment at any time when the Restricted Subsidiary has not declared and paid any dividends or distributions on such preferred stock which are required to be declared and paid as a precondition to dividends or distributions on other Capital Stock of the Restricted Subsidiary; (B) distributions upon the liquidation, dissolution or winding up of the Restricted Subsidiary, whether voluntary or involuntary ("Liquidating Distributions"), may not be made on the Capital Stock of the Restricted Subsidiary at any time when such preferred stock is entitled to receive Liquidating Distributions which have not been paid; and (C) dividends and distributions on Capital Stock of the Restricted Subsidiary may not be declared or paid or set apart for payment at any time when such preferred stock is required to be, but has not been, redeemed pursuant to mandatory redemption provisions that do not require such preferred stock to be redeemed prior to the Stated Maturity of the Notes; (8) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on that property of the nature described in Section 4.08(a)(3) hereof; (9) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness, taken as a whole, are not materially more restrictive than those contained in the agreements governing the Indebtedness being refinanced; (11) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of Section 4.12 or 4.16 hereof that limit the right of the debtor to dispose of the assets subject to such Liens; (12) customary provisions in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business that will not impair the ability of the Company to make payments of principal, interest and other amounts on the Notes in any material respect; (13) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business; and (14) with respect to a Receivables Subsidiary, encumbrances and restrictions that are imposed pursuant to a Receivables Program of such Receivables Subsidiary; provided that such encumbrances and restrictions are customarily required by the institutional sponsor or arranger at the time of entering into such Receivables Program in similar types of documents relating to the purchase of similar receivables in connection with the financing thereof. 60 Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and its Restricted Subsidiaries may incur Acquired Debt (and not any other Indebtedness), if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements are publicly 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 3.0 to 1, 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 preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) The provisions of Section 4.09(a) shall not prohibit the incurrence of any of the following items of Indebtedness, Disqualified Stock or preferred stock, as applicable (collectively, "Permitted Debt"): (1) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and the Restricted Subsidiaries thereunder) under (A) Tranche B of the New Credit Facility in an aggregate principal amount of up to E1,000 million; (B) Tranche A of the New Credit Facility in an aggregate principal amount of up to E1,500 million that is committed or outstanding at any time; and (C) one or more other Additional Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (C), when taken together with (i) the aggregate principal amount of all Indebtedness that is committed or outstanding under Tranche A of the New Credit Facility and under clause (12) of this Section 4.09(b) and (ii) all Permitted Refinancing Indebtedness incurred pursuant to Tranche A of the New Credit Facility, this clause (C) or clause 12 of this Section 4.09(b), not to exceed the Designated Amount, provided that prior to or concurrently with the incurrence of any Indebtedness under Tranche B of the New Credit Facility or under clause (C) above, at least E1,540 million of Existing Indebtedness shall have been repaid by the Company since the date of this Indenture (and to the extent such repayments have been applied to revolving credit Indebtedness, the commitments in respect of such Indebtedness have been correspondingly reduced); (2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; 61 (3) the incurrence by the Company of Indebtedness represented by (A) the Notes to be issued on the date of this Indenture, and (B) the Exchange Notes to be issued pursuant to the Registration Rights Agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital 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, lease or cost of construction or improvement of property (real or personal), plant or equipment (whether through the direct purchase of assets or through the purchase of the Capital Stock of any Person owning such assets) used in a Permitted Business, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred under clause (5) of this Section 4.09(b) to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed 1.4% of the Consolidated Total Assets of the Company and its Restricted Subsidiaries less any Attributable Debt outstanding with Respect to Sale and Leaseback Transactions entered into in compliance with Section 4.16 hereof; (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) or clause (1), (2), (3), (4), (5) or (12) of this Section 4.09(b); (6) the incurrence by the Company or any of its Restricted Subsidiaries of obligations with respect to letters of credit securing obligations entered into in the ordinary course of business to the extent such letters of credit are not drawn upon or, if drawn upon, such drawing is reimbursed within five Business Days following receipt of a demand for reimbursement; (7) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company is the obligor on such Indebtedness and such Indebtedness is held by a Restricted Subsidiary, such Indebtedness (other than Indebtedness incurred with a principal amount outstanding of E5 million or less, up to an aggregate of E30 million of any such Indebtedness at any time outstanding held by Restricted Subsidiaries) must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes to the extent permissible under law without subjecting the directors or officers of the obligee or obligor under any such Indebtedness in their reasonable judgment to any penalty or civil or criminal liability in connection with the subordination of such Indebtedness; and (B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (7); (8) the issuance of shares of preferred stock by a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of 62 any Capital Stock or any other event which, in either case, results in any Restricted Subsidiary holding such preferred stock ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock that was not permitted by this clause (8); (9) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes; (10) Indebtedness of the Company or any of its Restricted Subsidiaries in respect of performance bonds, bankers' acceptances, workers' compensation claims, surety or appeal bonds, payment obligations in connection with self-insurance or similar obligations, and bank overdrafts (and letters of credit in respect thereof) in the ordinary course of business; (11) Indebtedness of the Company or any Restricted Subsidiary owed to (including obligations in respect of letters of credit for the benefit of) any Person in connection with worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Company or such Restricted Subsidiary pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business and consistent with past practices; (12) the incurrence by any Receivables Subsidiary of Indebtedness pursuant to a Receivables Program; provided, however, that the aggregate principal amount of Indebtedness incurred pursuant to this clause (12) at any one time outstanding, when taken together with the aggregate principal amount of all Indebtedness committed under Tranche A of the New Credit Facility and all then-outstanding Indebtedness incurred pursuant to clauses (1)(B) and (C) of Section 4.09(b) hereof, does not exceed the Designated Amount; (13) the incurrence by the Company or a Restricted Subsidiary of Indebtedness to the extent the net proceeds thereof are promptly deposited to defease all outstanding Notes as described in Article 8 hereof; (14) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar institution inadvertently drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within ten days of occurrence; (15) the incurrence of Indebtedness by Cegetel or any Restricted Subsidiary thereof, provided that the terms of such Indebtedness do not restrict the ability of Cegetel or such Restricted Subsidiary to distribute cash (by dividend or otherwise) to the Company and (A) if, at the time such Indebtedness is incurred, the outstanding senior unsecured Indebtedness of Cegetel has Investment Grade Ratings from both of the Rating Agencies, to the extent the proceeds of such Indebtedness are distributed to the Company, such proceeds must be used to repay outstanding Indebtedness of the Company or its Restricted Subsidiaries of the type described in clause (1), (2) or (3) of the second paragraph under Section 4.10 hereof; and (B) if, at the time such Indebtedness is incurred, the outstanding senior unsecured Indebtedness of Cegetel does not have Investment Grade Ratings from both of the Rating Agencies, either (i) all the net proceeds (net of amounts distributed to minority 63 shareholders) of such Indebtedness must be distributed to the Company and used for the purpose of repaying outstanding Indebtedness and other Obligations of Societe d'Investissement pour la Telephonie S.A. or under any other Credit Facility that constitutes outstanding senior secured bank debt of the Company or any Restricted Subsidiary or, if no such Indebtedness is outstanding, any Indebtedness of the Company or any Restricted Subsidiary that is not subordinated in right of payment to the Notes, (ii) such Indebtedness must be used to finance the acquisition of a French fixed line telephone business which has positive EBITDA based on its latest financial accounts and Indebtedness of not more than E300 million (any such Indebtedness incurred under this clause (ii) not to exceed E500 million plus E300 million of Acquired Debt), (iii) such Indebtedness must be used to finance the payment of any liabilities of Cegetel or any of its Restricted Subsidiaries that accrue to LineInvest Limited under the terms of the LineInvest Total Return Swap, or (iv) any combination of (i), (ii) and (iii); (16) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness solely to finance the purchase of Capital Stock of Maroc Telecom as a result of the exercise by the Kingdom of Morocco of its put right in respect of such Capital Stock, provided that the recourse of any lenders of such Indebtedness shall be limited solely to the Capital Stock of Maroc Telecom held directly or indirectly by the Company, dividends and distributions in respect thereof, and the assets of Maroc Telecom; (17) the incurrence of Indebtedness by (a) Restricted Subsidiaries of the Company to fund working capital requirements in an aggregate principal amount outstanding at any time not to exceed E300 million and (b) by Maroc Telecom in an aggregate principal amount outstanding at any one time not to exceed E500 million for the purpose of financing capital expenditures and the acquisition of assets related to its business; (18) Indebtedness of the Company or a Restricted Subsidiary arising from agreements of the Company or a Restricted Subsidiary 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 Restricted Subsidiary of the Company in accordance with the terms of this Indenture, other than guarantees by the Company or any Restricted Subsidiary of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary of the Company for the purpose of financing such acquisition; provided that (a) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary at the time of such agreement or disposition (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet at such time will not be deemed to be reflected on such balance sheet for purposes of this clause 18(a)); and (b) the maximum aggregate liability in respect of all such Indebtedness may at no time exceed the gross proceeds, including the fair market value of non-cash proceeds (such fair market value being measured at the time such non-cash proceeds are received and without giving effect to any subsequent changes in value), actually received by the Company and the Restricted Subsidiaries in connection with such disposition; (19) the incurrence of Non-Recourse Project Financing or Non-Recourse Product Financing; and (20) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness or the issuance of Disqualified Stock by the Company or any Restricted Subsidiary or preferred stock by any Restricted Subsidiary in an aggregate principal amount or liquidation preference (or accreted value, as applicable) at any time outstanding, including all Permitted 64 Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (20), not to exceed E100 million. (c) For purposes of determining compliance with this Section 4.09: (1) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (20) of Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09; (2) the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted; (3) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock (in each case where payment of dividends is not part of a financing transaction) will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued; (4) the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in clauses (1) through (20) of Section 4.09(b) hereof; and (5) the maximum amount of Indebtedness that the Company or a Restricted Subsidiary may incur pursuant to this Section 4.09 will not be deemed to be exceeded, with respect to any outstanding Indebtedness, due solely to the result of fluctuations in the exchange rates of currencies. For purposes of determining compliance with any euro denominated restriction on the incurrence of Indebtedness where the Indebtedness incurred is denominated in a different currency, the amount of such Indebtedness will be the Euro Equivalent, as the case may be, determined on the date of the incurrence of such Indebtedness; provided, however, that if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to euros covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in euros will be as provided in such Currency Agreement. The principal amount of any Permitted Refinancing Indebtedness incurred in the same currency as the Indebtedness being refinanced will be the Euro Equivalent of the Indebtedness refinanced, except to the extent that (1) such Euro Equivalent was determined based on a Currency Agreement, in which case the Permitted Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (2) the principal amount of the Permitted Refinancing Indebtedness exceeds the principal amount of the Indebtedness being refinanced, in which case the Euro Equivalent of such excess, as appropriate, will be determined on the date such Permitted Refinancing Indebtedness is incurred. 65 Section 4.10 Asset Sales. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of, with such fair market value being determined in good faith (a) in the case of Asset Sales for aggregate consideration equal to or less than E50 million, by a senior financial officer of the Company and set forth in an Officers' Certificate to the Trustee; and (b) in the case of Asset Sales for aggregate consideration in excess of E50 million, by the Company's Board of Directors and set forth in an Officers' Certificate delivered to the Trustee; and (2) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents, or a combination thereof. For purposes of this provision, each of the following will be deemed to be cash: (A) any liabilities, as shown on the Company's most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets pursuant to an agreement that fully releases the Company or such Restricted Subsidiary from further liability; and (B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion, within 180 days after receipt; provided that in the case of an Asset Sale of the Capital Stock of any member of the VUE Group or any assets or rights held by any member of the VUE Group (a "VUE Asset Sale"), if as of the date of the balance sheet included in the most recent financial statements publicly released by the Company before such VUE Asset Sale and giving pro forma effect to any assumption, incurrence, repayment, repurchase or redemption of Indebtedness since such date and to the application of the Net Proceeds from such VUE Asset Sale, the Consolidated Financial Debt of the Company and its Restricted Subsidiaries has been reduced through the application of Net Proceeds from Asset Sales by E3,250 million or more since the date of this Indenture, the reference in the foregoing clause (2) to 75% shall instead be 50% with respect to such VUE Asset Sale, and the reference in the foregoing sub-clause (2)(B) to 180 days shall instead be 365 days with respect to such VUE Asset Sale. Within 365 days after the receipt of any Net Proceeds from an Asset Sale (or, in the case of a VUE Asset Sale where securities, notes or other obligations are converted into cash in compliance with this Section 4.10, within 180 days of receipt of cash upon such conversion, if later) the Company or any Restricted Subsidiary may apply such Net Proceeds: (1) to repay or prepay Indebtedness and other Obligations under any Credit Facility that is not subordinated in right of payment to the Notes; (2) to repay or prepay (or repurchase) any Indebtedness of a Restricted Subsidiary or repay, prepay, repurchase or defease preferred stock issued by a Restricted Subsidiary; 66 (3) to repay or prepay (or repurchase) any Indebtedness with a final Stated Maturity that is prior or equal to the final Stated Maturity of the Notes; (4) to acquire (or enter into a binding agreement to acquire, which acquisition must be consummated within 180 days after the end of the 365-day period following receipt of any Net Proceeds) all or substantially all of the assets of, or a majority of the Voting Stock of, a Permitted Business (including by means of a merger, consolidation or other business combination permitted under this Indenture) or all or a portion of any minority interest in a Restricted Subsidiary of the Company; (5) to make a capital expenditure; or (6) to acquire (or enter into a binding agreement to acquire, which acquisition must be consummated within 180 days after the end of the 365-day period following receipt of any Net Proceeds) other long-term assets that are used or useful in a Permitted Business. Capital expenditures made in the 365 days prior to the date of any Net Proceeds from an Asset Sale ("Prior Capital Expenditures") may be counted towards compliance with this Section 4.10; provided that the 365-day period during which the Net Proceeds from such Asset Sale may be applied for capital expenditures or other purposes permitted under this Section 4.10 after the date of receipt of such Net Proceeds (or the 180-day period following receipt of cash upon conversion of securities, notes or other obligations in a VUE Asset Sale, if applicable) will be reduced by one day for every day before the date of receipt of such Net Proceeds that such Prior Capital Expenditures were made. Pending the final application of any such Net Proceeds, the Company and any Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraphs will constitute "Excess Proceeds"; provided, however, that cash received by any member of the VUE Group in a VUE Asset Sale shall not constitute Excess Proceeds to the extent and for so long as such cash is held in a segregated bank account and not commingled with any other funds and, upon any withdrawal of such funds, such funds are used for one or more of the purposes described above. Any cash placed in such account may be invested in Cash Equivalents pending application in accordance with this Section 4.10. When the aggregate amount of Excess Proceeds exceeds E20 million, the Company shall, within 30 days, make an Offer to all Holders of Notes, in accordance with Section 3.09 hereof, to purchase the maximum principal amount of Notes that may be purchased with such Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes being repurchased plus accrued and unpaid interest and Special Interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, such funds will no longer constitute Excess Proceeds and may be used for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Sections 3.09 or 4.10 of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under those provisions of this Indenture by virtue of such conflict. 67 Section 4.11 Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries 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, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (1) the Affiliate Transaction is on terms, when taken as a whole, that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person; and (2) the Company delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of E15 million, an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of E40 million, (i) a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (ii) an opinion as to the fairness to the Company of such Affiliate Transaction from a financial point of view issued by an internationally recognized accounting, appraisal or investment banking firm. (b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a): (1) any employment, compensation, benefit or indemnification agreement or arrangement (and any payments or other transactions pursuant thereto) entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business with an officer, employee or director and any transactions pursuant to stock option plans, stock ownership plans and employee benefit plans or arrangements; (2) transactions between or among the Company and/or its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of any such transaction); (3) transactions with a Person that is an Affiliate of the Company solely because the Company owns an Equity Interest in, or controls, such Person; (4) payment of reasonable fees to directors; (5) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the Company; (6) Restricted Payments that are permitted by Section 4.07 hereof; 68 (7) loans, advances or extensions of credit (including indemnity arrangements) to employees, directors or consultants in the ordinary course of business; (8) transactions between a Receivables Subsidiary and any Person in which the Receivables Subsidiary has an Investment or any other transactions in connection with a Receivables Program of the Company or a Restricted Subsidiary; and (9) transactions pursuant to or contemplated by any agreement of the Company or any Restricted Subsidiary as in effect as of the date of this Indenture or any amendment thereto or any replacement agreement so long as any such amendment or replacement agreement, taken as a whole, is not materially more disadvantageous to the Holders than the original agreement as in effect on the date of this Indenture. Section 4.12 Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien securing Indebtedness or Attributable Debt (other than Permitted Liens) on any asset now owned or hereafter acquired, or upon any income or profits therefrom or assign any rights to receive income therefrom unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with (or prior to) the obligations so secured until such time as such obligations are no longer secured by a Lien. Section 4.13 Business Activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Section 4.14 Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect: (1) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary; and (2) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole. Section 4.15 Offer to Repurchase Upon Change of Control. (a) Upon the occurrence at any time of a Change of Control, unless the Company has exercised its right to redeem the Notes as described in Section 3.07 hereof, the Company will be required to make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000, or to E1,000 or an integral multiple of E1,000, as the case may be) of each Holder's Notes at a repurchase price in cash equal to 101% of the aggregate principal amount 69 thereof plus accrued and unpaid interest and Special Interest, if any, on the Notes repurchased to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating: (1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company 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 after the Change of Control Payment Date; (5) that 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" attached to the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the 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 $1,000 in principal amount or an integral multiple thereof, or to E1,000 in principal amount or an integral multiple thereof, as the case may be. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 4.15 of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.15 by virtue of such conflict. (b) On the Change of Control Payment Date, the Company will, to the extent lawful: (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (2) deposit with the relevant Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and 70 (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. The relevant Paying Agent will promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $1,000 or an integral multiple thereof, or of E1,000 in principal amount or an integral multiple thereof, as the case may be. If, at the time of the Change of Control, any series of the Notes is listed on the Luxembourg Stock Exchange and if required by the rules of the Luxembourg Stock Exchange, notice will be published in Luxembourg as set forth in Section 3.03 hereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. If any series of the Notes is listed on the Luxembourg Stock Exchange and if required by the rules of the Luxembourg Stock Exchange notice will be published in Luxembourg as set forth in Section 3.03 hereof. (c) Notwithstanding anything to the contrary in this Section 4.15, the Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer. Section 4.16 Limitation on Sale and Leaseback Transactions. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if: (1) after giving effect to the incurrence of the Attributable Debt relating to such Sale and Leaseback Transaction, the Company or that Restricted Subsidiary, as applicable, could have incurred at least E1.00 in additional Indebtedness under Section 4.09(b)(4) hereof; (2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the fair market value of the property that is the subject of the Sale and Leaseback Transaction, as determined in good faith (a) in the case of a Sale and Leaseback Transaction valued at E40 million or less, by a senior financial officer of the Company and set forth in an Officers' Certificate delivered to the Trustee, and (b) in the case of a Sale and Leaseback Transaction valued at more than E40 million, by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee; and (3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, Section 4.10 hereof. Section 4.17 Payments for Consent. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as 71 an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid to all Holders of the Notes and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.18 Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07(a) hereof or Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default. Section 4.19 Limitation on Guarantees of Indebtedness by Restricted Subsidiaries The Company will not permit any Restricted Subsidiary to guarantee any Indebtedness of the Company or another Restricted Subsidiary unless: (1) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a guarantee by it of payment of the Notes; provided that: (A) if the Indebtedness is pari passu in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall rank pari passu in right of payment to its guarantee of the Notes; and (B) if the Indebtedness is subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to the guarantee of the Notes substantially to the same extent as such Indebtedness is subordinated in right of payment to the Notes; (2) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its guarantee; and (3) such Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the effect that: (A) such guarantee has been duly executed and authorized; and (B) such guarantee constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by insolvency, bankruptcy, liquidation, reorganization, administration, moratorium, receivership or similar laws (including all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; 72 except, in each case, for (A) guarantees by a Restricted Subsidiary to the extent required under any Existing Credit Facility or under the LineInvest Total Return Swap, in each case as in effect at the date of this Indenture; (B) guarantees by a Restricted Subsidiary of Indebtedness incurred under (i) clause (1) (A), (B) or (C) of Section 4.09(b) hereof or (ii) the Multicurrency Revolving Credit Facility; (C) guarantees by a Restricted Subsidiary under any Permitted Refinancing Indebtedness refinancing any Existing Indebtedness, to the extent such Restricted Subsidiary provided a guarantee in respect of the Existing Indebtedness being refinanced; and (D) guarantees by a Restricted Subsidiary of Acquired Debt that is incurred under Section 4.09(a) hereof to the extent existing under, or required under the terms of, such Acquired Debt; provided that the guarantee or any requirement to provide such guarantees was in existence prior to the contemplation of the merger, consolidation or acquisition that resulted in the incurrence of such Acquired Debt; and (E) guarantees by a Restricted Subsidiary of Indebtedness of any Subsidiary of such Restricted Subsidiary. Notwithstanding the foregoing and the other provisions of this Indenture, any guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged: (1) upon the unconditional release or discharge of the guarantee by such Restricted Subsidiary which resulted in the creation of such guarantee, except a discharge or release by or as a result of payment under such guarantee; (2) upon the full and final payment of all amounts payable by the Company under this Indenture and the Notes; (3) subject to Section 5.01 hereof, if all of the Voting Stock of a Subsidiary guarantor (or any company holding, directly or indirectly, all the Voting Stock of such guarantor) is sold or otherwise disposed of (and any proceeds therefrom are applied) to a person which is not an Affiliate in compliance with Section 4.10 hereof; (4) upon the Legal Defeasance or discharge of the Notes in accordance with Section 8.04 hereof. (5) upon the designation, in accordance with this Indenture, of the Subsidiary guarantor as an Unrestricted Subsidiary. Section 4.20 Anti Layering The Company will not, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) which is subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is subordinated at least to the same extent to the Notes; provided, however that (i) no 73 Indebtedness of the Company shall be deemed to be subordinated in right of payment to other Indebtedness of the Company solely by virtue of being unsecured, and (ii) the Company shall be entitled to subordinate, through intercreditor arrangements or otherwise, senior secured bank debt to other senior secured bank debt. Section 4.21 Escrow of Proceeds At the date of this Indenture, the Trustee, the Company and The Bank of New York, as escrow agent (the "Escrow Agent"), shall enter into an escrow agreement (the "Escrow Agreement") substantially in the form attached as Exhibit D hereto. The gross proceeds from the offering of the Notes (less a E1 or $1 initial payment in respect of each series of Notes) will be paid into escrow accounts (the "Escrow Accounts") by the initial purchasers of the Notes and held in the name of the Trustee on behalf of the Holders under the terms of the Escrow Agreement. In accordance with the terms of the Escrow Agreement, the Escrow Funds will be released to the Company upon delivery to the Escrow Agent and the Trustee of a certificate of the company signed by two officers, one of whom must be the Chief Executive Officer or Chief Financial Officer of the Company (the "Escrow Release Certificate"), in the form attached to the Escrow Agreement. The Company agrees for the benefit of the Holders to comply with the terms and conditions of the Escrow Agreement and shall use its reasonable best efforts to satisfy the conditions precedent to availability of the New Credit Facility, deliver the Escrow Release Certificate and receive the gross proceeds from the offering and sale of the Notes as provided in the Escrow Agreement, as soon as practicable following the date hereof. Section 4.22 Changes in Covenants when Notes Rated Investment Grade If, on any date following the date of this Indenture, the Notes have an Investment Grade Rating from both of the Rating Agencies and no Default or Event of Default has occurred and is continuing (a "Fall Away Event") then, beginning on that day and continuing at all times thereafter regardless of any subsequent changes in the rating of those Notes, Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.15, 4.19, 4.20, clauses (1) and (3) of Section 4.16 and Section 5.01(a)(4) hereof will no longer be applicable to the Notes. ARTICLE 5. SUCCESSORS Section 5.01 Merger, Consolidation, or Sale of Assets. (a) The Company shall not, directly or indirectly: (i) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (ii) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless: (1) either: (A) the Company is the surviving corporation; or (B) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made is a corporation organized and existing under the laws 74 of a member state of the European Union (as it exists on the date of this Indenture), the United States, any state thereof or the District of Columbia. (2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance, lease or other disposition shall have been made assumes all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (3) immediately after such transaction, no Default or Event of Default exists; and (4) either (i) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made (the "Successor Company") will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least E1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof or (ii) giving such pro forma effect to any such transaction, the Fixed Charge Coverage Ratio of the Successor Company would exceed the Fixed Charge Coverage Ratio of the Company immediately prior to giving effect to such transaction. (b) Notwithstanding Section 5.01(a)(4) hereof, if any Restricted Subsidiary consolidates with, merges into or transfers all or part of its properties and assets to the Company or to any other Restricted Subsidiary of the Company, then no violation of this Section 5.01 shall be deemed to have occurred, as long as the requirements of clauses (1), (2) and (3) of Section 5.01(a) are satisfied. Section 5.02 Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default. (a) Each of the following is an "Event of Default": (1) the Company defaults for 30 days in the payment when due of interest on, or Special Interest with respect to, the Notes; 75 (2) the Company defaults in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on the Notes; (3) the Company or any of its Restricted Subsidiaries fails to comply with the provisions of Section 4.10, 4.15 or 5.01 hereof; (4) the Company or any of its Restricted Subsidiaries fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture 60 days after receipt of notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes outstanding; (5) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default: (A) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (B) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates E40 million or more and has not been discharged in full or such acceleration rescinded or annulled within 20 days of such Payment Default or acceleration; (6) failure by the Company or any of its Restricted Subsidiaries to pay final, non-appealable judgments aggregating in excess of E25 million, which judgments are not paid, discharged or stayed for a period of 60 days; and (7) the Company or any of its Significant Subsidiaries pursuant to or within the meaning of Bankruptcy Law: (A) files an application for the appointment of a conciliator (conciliateur); (B) enters into an amicable settlement (accord amiable) with its creditors; (C) is in a state of a mandatory suspension of payments (cessation de paiements), is made the object of bankruptcy proceedings (procedure collective ou de faillite), or agrees to a forfeiture of assets in favor of its preferential creditors or concludes a settlement in bankruptcy with them; (D) passes a resolution for the winding-up or the dissolution of the Company or any of its Significant Subsidiaries; or (8) a court or other authority of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 76 (A) orders the judicial liquidation (liquidation judiciaire) of the Company or any of its Significant Subsidiaries or orders the transfer of the whole of the Company's business (cession totale de l'entreprise); (B) orders the dissolution or the winding-up of the Company or any of its Significant Subsidiaries. (b) Upon becoming aware of any Default or Event of Default, the Company is required to deliver to the Trustee a statement specifying such Default or Event of Default. Section 6.02 Acceleration. In the case of an Event of Default specified in clause (7) or (8) of Section 6.01(a) hereof, with respect to the Company or any of its Restricted Subsidiaries, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest, Special Interest or premium that has become due solely because of the acceleration) have been cured or waived. Section 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal, premium and Special Interest, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law. Section 6.04 Waiver of Past Defaults. Subject to Section 6.07 and Section 9.02 hereof, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences hereunder except a continuing Default or Event of Default in the payment of interest or the premium and Special Interest on, or the principal of the Notes (including in connection with an offer to purchase). 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 Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05 Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or 77 exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that the Trustee believes conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 6.06 Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of such indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07 Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Special Interest, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a)(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Special Interest, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, overdue interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the 78 Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Special Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Special Interest, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. 79 ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, with respect to certificates or opinions specifically required to be furnished to it hereunder, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holders have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 80 Section 7.02 Rights of Trustee. (a) The Trustee may conclusively rely upon any document (whether in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any attorney or agent appointed with due care. (d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company. (f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) The Trustee will have no duty to inquire as to the Company's performance of the covenants in Article 4 hereof. In addition, the Trustee will not be deemed to have knowledge of any Default or Event of Default except: (1) any Event of Default occurring pursuant to Section 6.01(a) or 6.01(b) hereof; or (2) any Default or Event of Default of which a Responsible Officer of the Trustee has received written notification or obtained actual knowledge. (h) The Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Indenture. (i) In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders of Notes, each representing less than a majority in aggregate principal amount of the Notes then outstanding, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, will be taken. (j) The permissive right of the Trustee to take the actions permitted by this Indenture will not be construed as an obligation or duty to do so. (k) Delivery of reports, information and documents to the Trustee under Section 4.03 is for informational purposes only and the Trustee's receipt of the foregoing will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). 81 (l) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and will be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder. (m) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. Section 7.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Paying Agent or Registrar may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04 Trustee's Disclaimer. The Trustee shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium or Special Interest, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06 Reports by Trustee to Holders of the Notes. (a) Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA Section 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA Section 313(c). (b) A copy of each report at the time of its mailing to the Holders of Notes will be mailed by the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange or delisted therefrom. 82 Section 7.07 Compensation and Indemnity. (a) The Company will pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time to time agree in writing. The Trustee's compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (b) The Company will indemnify the Trustee against any and all losses, claims, damages, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company of its obligations hereunder. At the Trustee's sole discretion, the Company will defend the claim and the Trustee will provide reasonable cooperation and may participate at the Company's expense in the defense. Alternatively, the Trustee may at its option have separate counsel of its own choosing and the Company will pay the reasonable fees and expenses of such counsel; provided that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense, there is, in the reasonable opinion of the Trustee, no conflict of interest between the Company and the Trustee in connection with such defense as reasonably determined by the Trustee and no Default or Event of Default has occurred and is continuing. The Company need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. (c) The obligations of the Company under this Section 7.07 and any lien arising hereunder will survive the resignation or removal of the Trustee, the discharge of the Company's obligations pursuant to Article 10 or the termination of this Indenture. (d) To secure the Company's payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes and the Escrow Funds. Such Lien will survive the satisfaction and discharge of this Indenture. (e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. (f) The Trustee will comply with the provisions of TIA Section 313(b)(2) to the extent applicable. Section 7.08 Replacement of Trustee. (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. 83 (b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10 hereof; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee. Section 7.09 Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee. Section 7.10 Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by U.S. federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. 84 This Indenture will always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). Section 7.11 Preferential Collection of Claims Against Company. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which will thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all its other obligations under such Notes, and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Special Interest, if any, on such Notes when such payments are due from the trust referred to in Section 8.04 hereof; (2) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith; and (4) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. 85 Section 8.03 Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of its obligations under the covenants contained in Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.18, 4.19, 4.20 and Section 5.01(a)(4) hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes will thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes will be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(a)(3) through 6.01(a)(6) and Section 6.01(a)(8) (as it relates to Significant Subsidiaries) hereof will not constitute Events of Default. Section 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof: (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars in the case of Dollar Notes, cash in euros in the case of Euro Notes, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of an internationally recognized firm of independent public accountants, to pay the principal of, premium and Special Interest, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (2) in the case of an election under Section 8.02 hereof, the Company has delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that: (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or (B) since the date of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; 86 (3) in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; (6) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes being defeased over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; and (7) the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and Special Interest, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company will pay and indemnify the Trustee against any Taxes imposed or levied on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such Taxes which by law is for the account of the Holders of the outstanding Notes. Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of an internationally recognized firm of independent public accountants, expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 87 Section 8.06 Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium or Special Interest, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium or Special Interest, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Financial Times, notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars, euros or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium or Special Interest, if any, or interest on any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes. Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (1) to cure any ambiguity, defect, omission or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (3) to provide for the assumption of the Company's obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 hereof; (4) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect in any material respect the legal rights under this Indenture of any Holder of the Notes; (5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; 88 (6) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the date hereof; or (7) to add guarantors or guarantees with respect to the Notes or to grant Liens in favor of the Notes. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02 With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including, without limitation, Sections 3.09, 4.10 and 4.15 hereof) and the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes) and, subject to this Indenture and the Notes, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium or Special Interest, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes); provided, however, that if any amendment, waiver or other modification would only affect the Dollar Notes or Euro Notes, only the consent of the Holders of at least a majority in principal amount of the then outstanding notes of the affected series (and not the consent of the Holders of any other series of Notes) shall be required. Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture. It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it is sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any 89 provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (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 fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (3) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (4) waive a Default or Event of Default in the payment of principal of or premium or Special Interest, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium or Special Interest, if any, on the Notes; (7) change the ranking of the Notes; or (8) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions in this Section 9.02. Section 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes will be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. 90 Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver. Section 9.06 Trustee to Sign Amendments, etc. The Trustee will sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee will be provided with and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental Indenture is authorized or permitted by this Indenture. ARTICLE 10. SATISFACTION AND DISCHARGE Section 10.01 Satisfaction and Discharge. This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when: (1) either: (a) all the Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company in accordance with this Indenture) have been delivered to the Trustee for cancellation; or (b) all the Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars in the case of Notes denominated in U.S. dollars, or euros in the case of Notes denominated in euros, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Special Interest, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company is a party or by which the Company is bound; (3) the Company has paid or caused to be paid all sums payable by it under this Indenture; and (4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. 91 In addition, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions of Section 10.02 and Section 8.06 will survive. In addition, nothing in this Section 10.01 will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture. Section 10.02 Application of Trust Money. Subject to the provisions of Section 8.06, all money deposited with the Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 10.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 11. MISCELLANEOUS Section 11.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties will control. Section 11.02 Notices. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France Telecopier No. +33 6 1104 3118 Attention: Corporate Secretary 92 With a copy to: Cravath, Swaine & Moore LLP CityPoint One Ropemaker Street London EC2Y 9HR United Kingdom Telecopier No. +44 20 7860 1150 Attention: W. P. Rogers, Jr. If to the Trustee: The Bank of New York 101 Barclay Street, Floor 21W New York, New York 10286 United States Telecopier No. +1 212 815 5802 Attention: Corporate Trust Administration with a copy to: The Bank of New York One Canada Square London E14 5AL United Kingdom Telecopier No. +44 20 7964 6399 Attention: Corporate Trust Administration The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. In addition, notices to the Holders of the applicable series of Euro Notes shall be given by publishing such notices, as long as such series of Euro Notes are listed on the Luxembourg Stock Exchange and the rules of such Exchange so require, in a leading daily newspaper of general circulation in Luxembourg. All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication will also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. 93 If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time. Section 11.03 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 11.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 11.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) must comply with the provisions of TIA Section 314(e) and must include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 11.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes or this Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. 94 Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under U.S. federal securities laws. Section 11.08 Governing Law. THIS INDENTURE AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 11.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.10 Successors. All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. Section 11.11 Severability. In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Section 11.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. Section 11.13 Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof. Section 11.14 Submission to Jurisdiction; Appointment of Agent. The Company irrevocably submits to the non-exclusive jurisdiction of any New York state or U.S. federal court located in the Borough of Manhattan in the City and State of New York over any suit, action or proceeding arising out of or relating to this Indenture. The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may have, pursuant to New York law or otherwise, to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in any inconvenient forum. In furtherance of the foregoing, the Company hereby irrevocably designates and appoints Vivendi Universal US Holding Co., 800 Third Avenue, Fifth Floor, New York, New York, 10022, United States, as its agent to receive service of all process brought against it with respect to any such suit, action or proceeding in any such court in the City and State of New York, such service being hereby acknowledged by it to be effective and binding service in every respect. Copies of any such process so served shall also 95 be given to the Company in accordance with Section 3.01 hereof, but the failure of the Company to receive such copies shall not affect in any way the service of such process as aforesaid. Nothing in this Section shall limit the right of the Trustee or any Holder to bring proceedings against the Company in the courts of any other jurisdiction or to serve process in any other manner permitted by law. [Signatures on following page] 96 SIGNATURES Dated as of April 8, 2003 VIVENDI UNIVERSAL S.A. By: ------------------------------------ Name: Title: Attest: By: -------------------------------- Name: Title: THE BANK OF NEW YORK As Trustee By: ------------------------------------ Name: Title: 97 EXHIBIT A [Face of Note] - -------------------------------------------------------------------------------- CUSIP/ISIN ------------ [9.25% Senior Notes due 2010/ 9.50% Senior Notes due 2010] No. [$ /E ] VIVENDI UNIVERSAL S.A. promises to pay to [CEDE & CO.]/[THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED] or registered assigns, the principal sum of ----------------------------------------------------------- U.S. Dollars/Euros on April 15, 2010. Interest Payment Dates: April 15 and October 15 Record Dates: April 1 and October 1 Dated: April 8, 2003 VIVENDI UNIVERSAL S.A. By: ------------------------------------- Name: Title: This is one of the [9.25%/9.50%] Senior Notes due 2010 referred to in the within-mentioned Indenture: THE BANK OF NEW YORK, as Trustee By: -------------------------------- Authorized Signatory Date of authentication: [ ] - -------------------------------------------------------------------------------- A-1 [Back of Note] [9.25% Senior Notes due 2010/] [9.50% Senior Notes due 2010] [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture] [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture] Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. (A) Vivendi Universal S.A., a French societe anonyme (the "Company"), promises to pay interest on the principal amount of this Note at [9.25%]/[9.50%] per annum from April 8, 2003 (subject to subparagraph (1)(B) below) until maturity and shall pay the Special Interest, if any, payable pursuant to the Registration Rights Agreement referred to below. The Company will pay interest and Special Interest, if any, semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a day other than a Saturday, a Sunday or a day on which commercial banking institutions are authorized or required by law to close in New York City, London, England or Paris, France (a "Business Day"), on the next succeeding Business Day (each, an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be October 15, 2003. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, and on overdue installments of interest and Special Interest, if any (without regard to any applicable grace periods), from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (B) The gross proceeds of the offering and sale of the Notes (less $1 or E1, as appropriate) will be placed in escrow accounts as provided in Section (9) below. In the event the Escrow Funds are released to the Company as provided in such Section, on the first Interest Payment Date, the Company will pay interest accrued since the date of such release plus an amount equal to the amount of interest on the Notes from April 8, 2003 to the date of release of the Escrow Funds to the Company calculated as if all the proceeds of the Notes had been released to the Company on April 8, 2003. (2) METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Special Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the April 1 or October 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Special Interest, if any, and interest at the A-2 office or agency of the Company maintained for such purpose as provided in the Indenture, or, at the option of the Company, payment of interest and Special Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Special Interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States/the European Union as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as Paying Agent and Registrar and The Bank of New York (Luxembourg) S.A. will act as Paying Agent in Luxembourg. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of April 8, 2003 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company. (5) OPTIONAL REDEMPTION. (a) On or after April 15, 2007, the Company may redeem [all or a part of the Dollar Notes/all or a part of the Euro Notes], upon not less than 30 nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

DOLLAR NOTE EURO NOTE YEAR PERCENTAGE PERCENTAGE - ------------------------- ---------- ---------- 2007...................... 104.625% 104.750% 2008...................... 102.313% 102.375% 2009 and thereafter....... 100.000% 100.000%

(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to April 15, 2006, the Company may at its option on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of an Equity Offering at a redemption price equal to [109.25% of the principal amount for the Dollar Notes/109.50% of the principal amount for the Euro Notes], plus accrued and unpaid interest and Special Interest, if any, to the redemption date; provided that the Company received at least E50 million in gross proceeds from such Equity Offering; at least 65% in initial aggregate principal amount of the Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and such redemption occurs within 120 days of the date of the closing of such Equity Offering. (c) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to April 15, 2007, the Company may at its option redeem all or part of the Notes upon not less than 30 nor more than 60 days' prior notice at a redemption price equal to 100% of the principal amount A-3 of the Notes being redeemed plus the Applicable Premium plus accrued and unpaid interest and Special Interest, if any, to the applicable redemption date. (6) MANDATORY REDEMPTION. The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Notes. (7) REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence at any time of a Change of Control, unless the Company has exercised its right to redeem the Notes as described in Section 3.07 of the Indenture, the Company will be required to make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part ([equal to $1,000 or an integral multiple thereof/ E1,000 or an integral multiple thereof]) of each Holder's Notes at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Special Interest, if any, on the Notes repurchased to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or any Restricted Subsidiary consummates any Asset Sales, within 30 days of each date on which the aggregate amount of Excess Proceeds exceeds E20 million, the Company will commence an offer to all Holders of Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes 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 and Special Interest, if any, to the date fixed for the closing of such offer in accordance with the procedures set forth in the Indenture. If any Excess Proceeds remain after consummation of an Asset Sale Offer, such funds will no longer constitute Excess Proceeds and may be used for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" attached to this Note. (8) NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than [$1,000 / E1,000], may be redeemed in part but only in whole multiples of [$1,000 / E1,000], unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (9) ESCROW OF PROCEEDS; SPECIAL MANDATORY CANCELLATION. (a) At the date of the Indenture, the Trustee, the Company and The Bank of New York, as escrow agent (the "Escrow Agent") shall enter into an escrow agreement (the "Escrow Agreement") substantially in the form attached as Exhibit D to the Indenture. The gross proceeds from the offering of the Notes (less a [E1 / $1] initial payment in respect of the [Dollar] [Euro] Notes) will be paid into escrow accounts (the "Escrow Accounts") by the initial purchasers of the Notes and held in the name of the Trustee on behalf of the Holders under the terms of the Escrow Agreement. In accordance with the terms of the Escrow Agreement, the Escrow Funds A-4 will be released to the Company upon delivery to the Escrow Agent and the Trustee of a certificate of the company signed by two officers, one of whom must be the Chief Executive Officer or Chief Financial Officer of the Company (the "Escrow Release Certificate"), in the form attached to the Escrow Agreement. The Company has agreed in the Indenture for the benefit of the Holders to comply with the terms and conditions of the Escrow Agreement and shall use its reasonable best efforts to satisfy the conditions precedent to availability of the New Credit Facility, deliver the Escrow Release Certificate and receive the gross proceeds from the offering and sale of the Notes as provided in the Escrow Agreement, as soon as practicable following the date hereof. (b) If (i) in accordance with the terms of the Escrow Agreement, the Escrow Release Certificate is not delivered by the Company by 11.59 p.m. New York City time on the date that is 120 days from the date of the Indenture (or, if such 120th day is not a Business Day, the first Business Day after such day) (the "Final Escrow Date") or (ii) on an earlier date the Company notifies the Escrow Agent that it reasonably believes it will not be possible for the Company to deliver the Escrow Release Certificate by the Final Escrow Date, upon the date that is the earlier of the Final Escrow Date and the date that is five Business Days from the date of such notification, as the case may be, the Company shall promptly instruct the Trustee to cancel each series of Notes (the "Special Mandatory Cancellation") on a date that is not more than 10 Business Days after such instruction (the "Special Mandatory Cancellation Date"). Promptly following receipt of instructions from the Company to cancel the Notes in accordance with the previous sentence, or if no such instructions have been received, on the Final Escrow Date, the Trustee shall mail by first class mail notice of the Special Mandatory Cancellation (the "Special Mandatory Cancellation Notice") to each Holder of the Notes at its registered address, to the Escrow Agent, and, so long as any series of the Notes is listed on the Luxembourg Stock Exchange and if required by the rules of the Luxembourg Stock Exchange, notice will be published in Luxembourg in a daily leading newspaper with general circulation in Luxembourg. As provided in the Escrow Agreement, upon receipt of the Special Mandatory Cancellation Notice or, if the Escrow Agent shall not have received an Escrow Release Certificate on or before the Final Escrow Date, on the next following Business Day, the Escrow Agent will liquidate all Escrow Funds held by it and the Escrow Agent will deliver such proceeds to the relevant Paying Agent for pro rata distribution to the Holders of the Notes. On the Special Mandatory Cancellation Date, the Company will pay to the relevant Paying Agent for payment to each Holder of Notes an aggregate amount equal to the difference between (i) 101% of the aggregate principal amount of the Notes plus interest that would have accrued on the Notes if the proceeds of the offering of the Notes had been released to the Company on the date of issuance of the Notes from such date to the Special Mandatory Cancellation Date (the "Special Mandatory Cancellation Price") and (ii) the proceeds from the liquidation of the Escrow Funds, such that each holder of the Notes shall receive the Special Mandatory Cancellation Price upon surrender and cancellation of its Notes. Once the Special Mandatory Cancellation Notice has been mailed, the Notes will become irrevocably due and payable on the Special Mandatory Cancellation Date at the Special Mandatory Cancellation Price. All Notes surrendered by a Holder to the Trustee for cancellation shall be irrevocably cancelled after payment to that Holder of the Special Mandatory Cancellation Price. If the Notes are not cancelled because of a failure of the Company to pay the portion of the Special Mandatory Cancellation Price to be paid by it, the interest will be deemed to accrue for purposes of calculation of the Special Mandatory Cancellation Price and the Special Mandatory Cancellation Price shall be adjusted accordingly until the date such amount is paid to the relevant Paying Agent. Pending delivery of the Escrow Release Certificate, the Company will not have and will not be deemed to have any rights, title or interest in the Escrow Funds, and any contingent or other rights the Company may have in respect of the Escrow Funds under the Escrow Agreement will be extinguished with respect to the Escrow Funds that are A-5 required to be released for payment to the Holders of the Notes in the circumstances described above. (10) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of [$1,000 / E1,000], and integral multiples of [$1,000 / E1,000]. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may not require a Holder to pay any taxes and fees, except as otherwise set forth in the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. (11) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (12) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes and Additional Notes, if any, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes, if any. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect, omission or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture or to add guarantors or guarantees with respect to the Notes or to grant Liens in favor of the Notes. (13) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Special Interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after receipt of notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding to observe or perform any covenant, representation, warranty or other agreement in the Indenture; (v) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, if that default (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (b) results in the acceleration A-6 of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates E40 million or more and has not been discharged in full or such acceleration rescinded or annulled within 20 days of such Payment Default or acceleration; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; and (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium and Special Interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. (14) TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. (15) NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, will not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. (16) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (17) 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). (18) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set forth in the Registration Rights Agreement dated as of April 8, 2003, among the Company and the other parties named on the signature pages thereof or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will have the rights set forth in one or more registration rights agreements, if any, among the Company and the other A-7 parties thereto, relating to rights given by the Company to the purchasers of any Additional Notes (collectively, the "Registration Rights Agreement"). (19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France Attention: Corporate Secretary A-8 EXHIBIT A ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to: ----------------------------------- (Insert assignee's legal name) - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ----------------- Your Signature: ---------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: --------------------------- * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-1 EXHIBIT A OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: / Section 4.10 / Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: [$/E] --------------- 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-1 EXHIBIT A SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made: Principal Amount Signature of authorized Amount of decrease in Amount of increase in of this Global Note officer of Trustee or Principal Amount of Principal Amount of following such decrease [Custodian][Common Date of Exchange this Global Note this Global Note (or increase) Depositary] - ---------------- ---------------- ---------------- ------------- ----------- A-1 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France The Bank of New York 101 Barclay Street, Floor 21W New York, New York 10286 United States Re: [9.25% Senior Notes due 2010/ 9.50% Senior Notes due 2010] Reference is hereby made to the Indenture, dated as of April 8, 2003 (the "Indenture"), between Vivendi Universal S.A., as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "Transferor") owns and proposes to transfer the Note[s] or beneficial interest in such Note[s] specified in Annex A hereto, in the principal amount of [$/E]___________ (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the 40-day "Distribution Compliance Period" under Regulation S, the transfer is not being made to a U.S. Person or B-1 for the account or benefit of a U.S. Person (other than a "Distributor" as defined in Rule 902 of Regulation S). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note. (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT. The Transfer is being effected in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act. (d) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. 4. [ ] CHECK IF TRANSFER IS TO THE COMPANY OR ANY OF ITS SUBSIDIARIES. The transfer is being effected in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. B-2 ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: ------------------------- B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________) (b) [ ] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] Unrestricted Global Note (CUSIP _________); or (b) [ ] a Restricted Definitive Note; or (c) [ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-1 FORM OF CERTIFICATE OF EXCHANGE Vivendi Universal S.A. 42 avenue de Friedland 75008 Paris France The Bank of New York 101 Barclay Street, Floor 21W New York, New York 10286 United States Re: [9.25% Senior Notes due 2010/9.50% Senior Notes due 2010] (CUSIP ____________) Reference is hereby made to the Indenture, dated as of April 8, 2003 (the "Indenture"), between Vivendi Universal S.A., as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Note[s] or beneficial interest in such Note[s] specified herein, in the principal amount of [$/E]____________ (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is D-2 being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. E-2 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: ------------------------- E-3 EX-4.12 9 y87781exv4w12.txt LETTER AGREEMENT Exhibit 4.12 Date Dec 17, 2001 PRIVILEGED & CONFIDENTIAL Edgar M. Bronfman Vivendi Universal 375 Park Avenue New York, New York 10152 Dear Edgar, I am writing to set out our agreement regarding your retirement from Vivendi Universal (the "Company") and its affiliates. 1. It is understood that you will retire from all of your current positions with the Company and its affiliates, effective December 31, 2001. Until that date, you will continue as an employee of the Company at your current salary of $825,000 per year and your current benefit levels. It is further understood that you will continue to be a member of the Company's Board of Directors and act as the Chairman of the Board's Human Resources Committee after December 31, 2001. 2. You will receive a Management Incentive Award for the Stub fiscal year ending December 31, 2001 based upon the actual award paid to the Corporate Division. Your MIP award will be paid at the time such awards are paid to employees generally. All previously deferred compensation will be paid out in accordance with the terms of the applicable plans. 3. Under the current provisions of the Pension Plan for the Employees of Joseph E. Seagram & Sons, Inc. and Affiliates and the Benefits Equalization Plan, you will be eligible for a retirement benefit based upon your continuous service through December 31, 2001. In the event of your death, your spouse will receive two-thirds of your pension benefit. Your spousal designation cannot be changed after your retirement. An estimate of your total annual benefit, including the spousal death benefit payable to your spouse upon your death, is attached to this letter as Exhibit A. You will receive additional details concerning your pension benefits from the Benefits Department under separate cover. 4. The Company will continue to make minimum distributions to you of your accrual account balances in The Seagram 401(k) Plan after December 31, 2001 unless you elect to have your account balance paid to you. After December 31, you will not be permitted to make any additional contributions to your account although you may continue to direct the investment of your accounts. 5. Commencing on January 1, 2002, you and your spouse shall be eligible to receive the Senior Executive Retirement Benefits listed in Exhibit B, as the same may be changed from time to time, until your respective deaths. You will continue to be covered under the indemnification provisions of the by-laws and Directors and Officers insurance policies of the Company and its affiliates, in accordance with their terms. 6. In accordance with the terms of the Retiree Salary Continuation Program, you will receive a payment of $374,500 per annum for the period from January 2002 until December 2011 (the "Continuation Period"), payable on a monthly basis beginning January, 2002. 7. During the Continuation Period, (or, if earlier, until your date of death) the Company will provide you with the following additional benefits and services: a) Office space for you and an assistant on the 6th floor at 375 Park Avenue at the Company's expense. So long as you have office space on the 6th floor of 375 Park Avenue, the Company will provide you with ongoing office support and maintenance, including computer services, telephone services, communications and mail room services ("Support Services") In the event that you select office space other than as described in this section voluntarily or as the result of the Company's determination to relocate its offices from 375 Park Avenue, the Company will reimburse you for the cost of such alternative office space up to $60,000 per year; b) The services of one assistant who will be an employee of the Company and who will receive benefits comparable to those provided by the Company generally to employees of the same level. In the event you choose to employ an assistant other than as described in this subparagraph, the Company will reimburse you for the cost of such assistant's salary and benefits up to $100,000 per year; c) The services of one driver who shall be an employee of the Company and who will receive benefits comparable to those provided by the Company generally to employees of the same level. Such employee will be provided with space with the Company's other drivers, so long as the Company's offices are located at 375 Park Avenue, New York. In the event you choose to employ a driver other that as described in this subparagraph, the Company will reimburse you for the cost of such driver's salary and benefits up to $75,000 per year; d) Reimbursement for the cost of renting a luxury automobile. Such automobile will be garaged at the Company's expense at 375 Park Avenue, New York, so long as the Company maintains offices there, and the Company will pay or reimburse you for insurance and operating expenses for such automobile. 7. You may continue to use the Executive Dining Room on the 5th floor at 375 Park Avenue. 8. You may continue to use the exercise room on the 2nd floor at 375 Park Avenue. If you have any questions concerning any of the above terms, please do not hesitate to contact me. Sincerely, /s/ John Borgia EVP - HR Vivendi Universal Accepted and Agreed: /s/ Edgar M. Bronfman - ------------------------ Edgar M. Bronfman EXHIBIT A For example, commencing upon January 1, 2002, the combined total pension benefit payable to you will be $1,073,177.50 per annum, payable monthly ($89,431.46). In the event you predecease your spouse, she would be paid an annual amount of $715,451.64, payable monthly ($59,620.97). This amount is two-thirds of your total pension amount. Should you elect to receive the portion of your retirement benefit payable from the Pension Plan for Employees of Joseph E. Seagram & Sons, Inc. and Affiliates (the "Qualified Plan") in a lump sum, which is permitted pursuant to the Qualified Plan, that lump sum amount is $1,406,880. This election would reduce your overall monthly pension payment from the BEP to $76,534.79. In the event you predecease your spouse after your receipt of the lump sum, she would be paid an annual amount of $599,381.64, payable monthly ($49,948.47). This amount is two-thirds of your BEP pension amount. EXHIBIT B SENIOR EXECUTIVE RETIREMENT BENEFITS (EFFECTIVE 1/1/02) In addition to retiree medical insurance, you are eligible for the following benefits: - - Retired Senior Executive Dental Insurance* - - Executive Personal accident Insurance* (benefit ceases upon retiree's death) - - Excess Liability Insurance* - - Executive Financial Counseling* - - Income Tax Services (up to $4,000 per year) - - Vivendi Universal Product Allowance* (up to $250.00 per year) - - Retired Executive Matching Gifts Program* (double match up to $7,500 in contributions per year) - - Retirement Salary Continuation Effective January 2002, you will begin receiving Retirement Salary Continuation payments in the amount of $374,500 per year for 10 years ($31,208.34 per month) through December 2011. If your death should occur during this period, your beneficiary will receive a lump sum payment of the remaining Retirement Salary Continuation. - - Subject to any modifications or termination of these benefits by the Company and any payments required under the terms of these benefits. EX-4.13 10 y87781exv4w13.txt EMPLOYMENT AGREEMENT Exhibit 4.13 EXECUTION COPY EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT (the "Agreement"), dated September 25, 2002, by and between Vivendi Universal U.S. Holding Co. (the "Company") and Mr. Edgar Bronfman, Jr. (the "Executive"). WHEREAS, the Company desires to employ Executive in order to assist the Company and its U.S. affiliates in the definition and implementation of the strategy regarding their U.S. entertainment businesses, among other things, and to enter into an agreement embodying the terms of such employment; WHEREAS, Executive desires to accept such employment and enter into such an employment agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein and for other good and valuable consideration, the parties agree as follows: 1. Term of Employment. Subject to the provisions of Section 6 of this Agreement, Executive shall be employed by the Company for a period commencing on September 25, 2002 and ending on December 31, 2004 (the "Employment Term") on the terms and subject to the conditions set forth in this Agreement. 2. Position/Location a. During the Employment Term, Executive shall serve as an executive employee of the Company. In such position, Executive shall render services to the Company, and shall perform such duties commensurate with such office as he shall reasonably be directed by the Chief Executive Officer of the Company, Mr. Jean-Rene Fourtou (the "CEO"). Without limiting the generality of the foregoing, Executive shall use his experience in, and knowledge of, the entertainment business in the U.S. to advise the CEO in connection with the Company's and its U.S. affiliates' entertainment businesses in the U.S. more specifically, including but not limited to the following matters: - definition and implementation of the strategy concerning the Company's and its U.S. affiliates' entertainment businesses in the U.S.; - definition and implementation of the synergies between the Company's and its U.S. affiliates' music business and the Company's and its U.S. affiliates' other entertainment businesses (e.g., theme parks); - maintenance and development of the relationships between the Company's and its U.S. affiliates' new management team and the Company's and its U.S. affiliates' U.S. businesses. b. During the Employment Term, Executive will be required to devote a substantial time commitment to the performance of his duties under this Agreement, but he will not be precluded or prohibited from securing one or more additional part time employment or consulting positions. Executive agrees to render the services described above in a diligent and businesslike manner. Executive's principal place of business will be located 1 EXECUTION COPY in the Borough of Manhattan, New York City, subject to reasonable travel requirements on behalf of the Company. 3. Salary. During the Employment Term, the Company shall pay Executive a salary (the "Salary") at the annual rate of US$ 1,000,000, payable in regular installments in accordance with the Company's usual payment practices applicable to senior executives. 4. Employee Benefits. During the Employment Term, Executive shall be entitled to participate in the Company's employee benefit plans (including, without limitation, pension, welfare, flexible perquisites, matching gifts, and fringe benefit plans) (collectively, "Employee Benefits") at the levels afforded to other senior executives of the Company. Notwithstanding any terms or provisions of this Agreement to the contrary, the Company acknowledges and agrees that (a) Executive has earned certain benefits, including, without limitation, pension benefits, in connection with his prior relationship in any and all capacities with Vivendi Universal S.A., its affiliates, including, without limitation, the Company, and their respective predecessors, and (b) nothing in this Agreement shall result in any cessation of or reduction in any pension benefits or other benefits payable to Executive as a result of such prior service or his retirement therefrom; provided, however, that the parties hereto acknowledge and agree that, during the Employment Term, Executive will not accrue any benefits under the Company's Benefit Equalization Plan in addition to those he was entitled to receive as of the first day of the Employment Term. 5. Business Expenses and Perquisites. During the Employment Term, all business expenses reasonably incurred by Executive in the performance of Executive's duties hereunder shall be reimbursed by the Company in accordance with the Company's policies applicable to senior executives. In addition, during the Employment Term, the Company shall provide Executive in connection with the performance of his obligations hereunder; (i) appropriate office space in the Borough of Manhattan, New York City; (ii) the services of an assistant; and (iii) such other facilities as may be necessary or appropriate, in accordance with the Company's policies, for the performance by Executive of his services under this Agreement (collectively, the "Perquisites"). 6. Termination. The Employment Term and Executive's employment hereunder may be terminated by the Company or Executive at any time and for any reason. a. By the Company for Cause or by Executive's Resignation Without Good Reason. (i) The Employment Term and Executive's employment hereunder may be terminated by the Company for Cause (as defined below) and shall terminate automatically upon Executive's resignation without Good Reason (as defined in Section 6(c)(ii)). (ii) For purposes of this Agreement, "Cause" shall mean (A) conviction of a felony under the laws of the United States or any state thereof, (B) Executive's willful malfeasance or willful misconduct in connection with Executive's duties hereunder, or Executive's repeated willful refusal to perform Executive's duties which, in each case, results in demonstrable harm to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates or (C) Executive engages in or provides services to a business that is a material competitor of Vivendi Universal S.A., the Company or any of their respective affiliates; provided, however, that the circumstances described in Section 6(a)(ii)(C) above shall not constitute Cause unless Executive fails to cure such circumstances 2 EXECUTION COPY ______________ within twenty days following receipt by Executive of written notice from the Company describing such competitive activity in reasonable detail. (iii) If Executive's employment is terminated by the Company for Cause, or if Executive resigns without Good Reason, Executive shall be entitled to receive; (A) the Salary and Perquisites through the date of termination; (B) reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with the Company's policy prior to the date of Executive's termination; and (C) such Employee Benefits, if any, to which Executive may be entitled (the amounts described in clauses (A) through (C) hereof being referred to as the "Accrued Rights"). Following such termination of Executive's employment by the Company for Cause or resignation by Executive without Good Reason, except as set forth in this Section 6(a)(iii), as well as Sections 7, 9(j) and 9(k), Executive shall have no further rights to any compensation or any other benefits under this Agreement. b. Disability or Death. (i) The Employment Term and Executive's employment hereunder shall terminate upon Executive's death and may be terminated by the Company upon Executive's inability, by reason of any physical or mental impairment, to substantially perform the significant aspects of his regular duties, which inability has lasted for six consecutive months and is reasonably expected to be permanent (such incapacity is hereinafter referred to as "Disability"). Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of this Agreement. (ii) Upon termination of Executive's employment hereunder for either Disability or death, Executive or Executive's estate (as the case may be) shall be entitled to receive the Accrued Rights. Following Executive's termination of employment due to death or Disability, except as set forth in this Section 6(b)(ii), as well as Sections 7, 9(j) and 9(k). Executive shall have no further rights to any compensation or any other benefits under this Agreement. c. By the Company without Cause or Resignation by Executive for Good Reason. (i) The Employment Term and Executive's employment hereunder may be terminated by the Company without Cause (other than by reason of death or Disability) or by Executive's resignation for Good Reason. 3 (ii) For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following without Executive's express written approval, other than due to Executive's death or Disability: (A) any decrease in the Salary, (B) any diminution in Executive's title or reporting relationship, or substantial diminution in duties or responsibilities, (C) any relocation of Executive's principal place of business outside of the Borough of Manhattan, New York City, other than reasonable travel and travel to and from Paris as required to perform Executive's duties hereunder, provided, however, that Executive shall have six months from the time Executive first becomes aware of the existence of Good Reason to give notice of his resignation for Good Reason. (iii) If Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled to receive the following payments and benefits: (A) the Accrued Rights; (B) a lump-sum payment equal to the total amount of Salary that Executive would have received had the Employment Term continued through December 31, 2004. Following Executive's termination of employment by the Company without Cause (other than by reason of Executive's death or Disability) or by Executive's resignation for Good Reason, except as set forth in this Section 6(c)(iii), as well as Sections 7, 9(j) and 9(k), Executive shall have no further rights to any compensation or any other benefits under this Agreement. d. Timing of Payment. All lump sum payments provided in this Section 6 shall be made within fifteen days after the termination of Executive's employment. e. Notice of Termination. Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9(i) hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 7. Gross-Up a. In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Company, any of its affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise)(a "Payment") is subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest or penalties, hereinafter collectively referred to as the "Excise Tax"), Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 4 EXECUTION COPY b. All determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive within ten business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company and Executive; provided that for purposes of determining the amount of any Gross-Up Payment, Executive shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of Executive's residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the Company to Executive (or to the appropriate taxing authority on Executive's behalf) when due. If the Accounting Firm determined that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) Executive was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to Section 7(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive. c. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty day period following the day on which he gives notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 7(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or 5 forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, further, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest and penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance: provided further, that if Executive is required to extend the statute of limitations to enable the Company to contest such claim, Executive may limit this extension solely to such contested amount. The Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. d. If, after the receipt by Executive of an amount paid or advanced by the Company pursuant to this Section 7, Executive becomes entitled to receive a refund with respect to a Gross-Up Payment, Executive shall (subject to the Company's complying with the requirements of Section 7(c)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 7(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid. 8. Confidentiality. a. Executive acknowledges that Executive's employment by the Company (which, for purposes of this Section 8, shall include its affiliates, including Vivendi, Universal S.A.) will, throughout the Employment Term, bring Executive into close contact with many confidential affairs of the Company, including information about costs, profits, markets, sales, products, key personnel and other information not readily available to the public, and plans for future development. b. In recognition of the foregoing, Executive covenants and agrees to keep secret all confidential matters of the Company and to not intentionally disclose such matters to anyone outside of the Company, either during or after the Employment Term, except with the Company's prior written consent or in the performance of Executive's duties to the Company; provided that (A) Executive shall have no such obligation to the extent such matters are or become publicly known other than as a result of Executive's breach of Executive's obligations hereunder, (B) Executive may, after giving prior notice to the Company to the extent reasonably practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory processes and (C) Executive may disclose information with regard to the terms of this Agreement to his lawyers, financial advisors and immediate family members, and, if he does so, will instruct them to abode by this confidentiality covenant. In the event of his termination of employment, Executive shall use reasonable beet efforts to provide the 6 EXECUTION COPY Company, upon the Company's reasonable request, a limited number of specifically identified confidential Company documents that he alone possesses. 9. Miscellaneous. a. Governing Law/Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof, and all actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any federal or state court of competent jurisdiction, located in the Borough of Manhattan, New York. b. Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company and its affiliates during the Employment Term. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. c. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. d. Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. e. Assignment. This Agreement shall not be assignable by Executive. This Agreement shall be assigned, if Executive consents, by the Company to a person or entity which is an affiliate or a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity. f. No Set Off/No Mitigation. The Company's obligation to pay Executive the amounts provide and to make the arrangements provided hereunder shall not be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company or its affiliates. Executive shall not be required to mitigate any payments or benefits made or provided to Executive in connection with the termination of his employment by seeking alternative employment, nor shall the Company's obligations to Executive be reduced by any compensation payable to Executive following his termination of employment with the Company. g. Authorization of Agreement. All corporate action has been taken on the part of the Company's or its affiliates' directors and shareholders necessary for the authorization of, execution of, delivery of, and the performance of all obligations of the Company under, the Agreement. The Agreement, when executed and delivered by the Company, and assuming the due execution and delivery by Executive, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms. Employee represents and warrants that entering into this Agreement does not, and that his performance under this Agreement will not, violate the provisions of any employment, severance, consulting, termination, resignation, non-competition, non-solicitation, assignment of inventions or other intellectual property, or confidentiality agreement or instrument to 7 EXECUTION COPY which Employee is a party, or any decree, judgment or order to which Employee is subject, and that this Agreement constitutes a valid and binding obligation of Employee in accordance with its terms. h. Successors/Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. i. Notices. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid (or similar method outside of the U.S.), addressed to the respective addresses set forth below, or to such other address as either party may have provided to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. If to Vivendi Universal U.S. Holding Co.: Vivendi Universal U.S. Holding Co. 375 Park Avenue New York, New York 10152 Attention: Daniel J. Losito, Esquire If to Executive: To the most recent address of Executive set forth in the personnel record of the Company. j. D&O Indemnification. The Company shall indemnify Executive to the fullest extent permitted by applicable law against damages in connection with his status or performance of duties as an officer of the Company and shall maintain and cover Executive under customary and appropriate directors and officers liability insurance during the Employment Term and throughout the period of any applicable statute of limitations. k. Legal Fees and Expenses. The Company will reimburse Executive for all legal fees and related expenses incurred in connection with, or arising out of, any dispute in respect of severance following his termination of employment, so long as either Executive and the Company agree on the basis for such termination being, or Executive prevails as to such termination being, other than for Cause or for Good Reason. l. Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state and local and foreign taxes as may be required to be withheld pursuant to any applicable law or regulation. m. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. [remainder of this page intentionally left blank] 8 EXECUTION COPY IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of September 25, 2002. VIVENDI UNIVERSAL U.S. HOLDING CO. By: /s/ Jean-Rene Fourtou ___________________________ Name: Jean-Rene Fourtou Title: Chief Executive Officer By: /s/ Edgar Bronfman, Jr. ___________________________ EDGAR BRONFMAN, JR. 9 EX-8.1 11 y87781exv8w1.txt SUBSIDIARIES EXHIBIT 8.1 LIST OF SUBSIDIARIES OF VIVENDI UNIVERSAL Vivendi Universal maintains over 1,000 subsidiaries. Set forth below are the names of certain of its subsidiaries which carry on a substantial portion of Vivendi Universal's lines of business. The names of various subsidiaries, including subsidiaries conducting operating activities of Vivendi Universal's various businesses domestically and internationally, have been omitted. None of the foregoing omitted subsidiaries are considered to be material in relation to Vivendi Universal's balance sheet and operations.

COUNTRY OF NAME INCORPORATION ---- ------------- CEGETEL GROUP Cegetel Groupe S.A. France Cegetel S.A. France Societe Francaise du Radiotelephone S.A. France Telecom Developpement France MUSIC Centenary Holding N.V. Netherlands Universal Music (UK) Holdings Ltd UK Universal Entertainment GmbH Germany Universal Music K.K. Japan Universal Music S.A.S. France Universal Studios, Inc. USA PolyGram Holding, Inc. USA Interscope Records USA UMG Recordings, Inc. USA VIVENDI UNIVERSAL ENTERTAINMENT Universal Pictures International B.V. Netherlands Universal Studios, Inc. USA Vivendi Universal Entertainment LLLP USA CANAL+ GROUP Groupe Canal+ S.A. France Canal Plus S.A. France CanalSatellite S.A. France StudioCanal S.A. France Multithematiques France MAROC TELECOM S.A. Morocco VIVENDI UNIVERSAL GAMES, INC. USA HOLDING & CORPORATE Societe d'Investisement pour la Telephonie France UGC France VIVENDI TELECOM INTERNATIONAL S.A. France Vivendi Telecom Hungary Hungary Kencell S.A. Kenya Monaco Telecom S.A.M. Monaco Elektrim Telekomunikacja S.A. Poland Xfera Moviles S.A. Spain PUBLISHING ACTIVITIES EXCL. VIVENDI UNIVERSAL GAMES Vivendi Universal Publishing S.A. France Groupe Express-Expansion S.A. France Comareg S.A. France Atica Brazil VIVENDI UNIVERSAL NET

COUNTRY OF NAME INCORPORATION ---- ------------- Vivendi Universal Net S.A. France i-France S.A. France Scoot Europe N.V. Belgium Ad-2-One S.A. France CanalNumedia S.A. France Vivendi Universal Net U.S.A. Group, Inc. USA MP3.com, Inc. USA Emusic.com, Inc. USA Flipside, Inc./Uproar, Inc. USA VEOLIA ENVIRONNEMENT S.A. France

EX-11.1 12 y87781exv11w1.txt CONSENT OF RSM SALUSTRO REYDEL & BARBIER FRINAULT Exhibit 11.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Vivendi Universal S.A. ("Vivendi Universal") listed below of our report dated April 2, 2003 (except with respect to the matters discussed in Note 17, as to which the date is June 27, 2003), with respect to the consolidated financial statements of Vivendi Universal and subsidiaries, which is included in Vivendi Universal's Annual Report on Form 20-F for the year ended December 31, 2002, filed with the Securities and Exchange Commission:

SEC Form Filing Date Registration Number -------- ----------- ------------------- S-8 06/06/02 333-72270 S-8 06/04/02 333-89744 S-8 06/04/02 333-89754 S-8 05/06/02 333-87622 S-8 01/31/02 333-81830 S-8 10/26/01 333-72270 S-8 08/29/01 333-64754 S-8 12/11/00 333-51654 S-8 12/11/00 333-48966 S-8 10/05/00 333-47440 F-3/A 06/03/02 333-81578 F-3 01/29/02 333-81578

Paris, France June 27, 2003 /s/ RSM Salustro Reydel /s/ Barbier Frinault & Cie - ----------------------- -------------------------------------------- RSM Salustro Reydel Barbier Frinault & Cie A member firm of Ernst & Young International EX-11.2 13 y87781exv11w2.txt CONSENT OF RSM SALUSTRO REYDEL Exhibit 11.2 CONSENT OF INDEPENDENT AUDITOR We consent to the incorporation by reference in the following Registration Statements of Vivendi Universal S.A.:

REGISTRATION SEC FORM FILING DATE NUMBER -------- ----------- ------------ S-8 06/06/02 33372270 S-8 06/04/02 33389744 S-8 06/04/02 33389754 S-8 05/06/02 33387622 S-8 01/31/02 33381830 S-8 10/26/01 33372270 S-8 08/29/01 33364754 S-8 12/11/00 33351654 S-8 12/11/00 33348966 F-3/A 06/03/02 33381578 F-3 01/29/02 33381578 S-8 10/05/00 33347440

of our report dated March 28, 2002 (except with respect to the matters discussed in Note 14 as to which date is May 24, 2002) with respect to the consolidated balance sheets of Vivendi Universal and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2001, included in this Annual Report on Form 20-F for the year ended December 31, 2002. This report is a copy of the joint audit report previously issued by Barbier Frinault & Cie, a member of Andersen Worldwide and RSM Salustro Reydel. Paris, France June 27, 2003 /s/ RSM Salustro Reydel - ----------------------- RSM Salustro Reydel EX-11.3 14 y87781exv11w3.txt 302 CERTIFICATION EXHIBIT 11.3 CERTIFICATION I, Jean-Rene Fourtou, certify that: 1. I have reviewed this annual report on Form 20-F of Vivendi Universal; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 30, 2003 /s/ Jean-Rene Fourtou ---------------------------- Jean-Rene Fourtou Chief Executive Officer CERTIFICATION I, Jacques Espinasse, certify that: 1. I have reviewed this annual report on Form 20-F of Vivendi Universal; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 30, 2003 /s/ Jacques Espinasse ---------------------------- Jacques Espinasse Chief Financial Officer EX-11.4 15 y87781exv11w4.txt 906 CERTIFICATION EXHIBIT 11.4 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002* In connection with the Annual Report on Form 20-F of Vivendi Universal, a societe anonyme organized under the laws of France (the "Company"), for the period ending December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to such officer's knowledge, that: 1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: June 30, 2003 /s/ Jean-Rene Fourtou ---------------------------- Jean-Rene Fourtou Chief Executive Officer Dated: June 30, 2003 /s/ Jacques Espinasse ---------------------------- Jacques Espinasse Chief Financial Officer *The foregoing certification is incorporated solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not intended to be used for any other purpose. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 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EX-4.7

                                                                     Exhibit 4.7

                                    AGREEMENT

                              DATED 13TH MAY, 2003

                                 E2,500,000,000

                DUAL CURRENCY TERM AND REVOLVING CREDIT FACILITY

                                       FOR

                             VIVENDI UNIVERSAL S.A.

                                   ARRANGED BY

                                   BNP PARIBAS
                             CDC FINANCE - CDC IXIS
                           CITIBANK INTERNATIONAL PLC
                            CREDIT AGRICOLE INDOSUEZ
                                 CREDIT LYONNAIS
                           GOLDMAN SACHS INTERNATIONAL
                           NATEXIS BANQUES POPULAIRES
                         THE ROYAL BANK OF SCOTLAND PLC
                              SG INVESTMENT BANKING

                                SOCIETE GENERALE
                      as Facility Agent and Security Agent

  THIS FACILITY AGREEMENT IS TO BE ENTERED INTO WITH THE BENEFIT OF AND SUBJECT
                 TO THE TERMS OF THE SECURITY SHARING AGREEMENT


                                 ALLEN & OVERY
                                     Paris

                                    CONTENTS



CLAUSE                                                                                               PAGE

                                                                                               
1.    Interpretation..............................................................................     1
2.    Facility....................................................................................    36
3.    Purpose.....................................................................................    37
4.    Conditions Precedent........................................................................    38
5.    Drawdown....................................................................................    39
6.    Repayment...................................................................................    40
7.    Prepayment and Cancellation.................................................................    41
8.    Interest Periods............................................................................    49
9.    Interest....................................................................................    50
10.   Currency of Loans...........................................................................    52
11.   Payments....................................................................................    54
12.   Taxes.......................................................................................    55
13.   Market Disruption...........................................................................    58
14.   Increased Costs.............................................................................    59
15.   Illegality..................................................................................    60
16.   Guarantee...................................................................................    61
17.   Release of Security and Additional Guarantors...............................................    64
18.   Representations and Warranties..............................................................    67
19.   Undertakings................................................................................    76
20.   Financial Covenants.........................................................................   107
21.   Default.....................................................................................   112
22.   The Agents and the Mandated Lead Arrangers..................................................   117
23.   Fees........................................................................................   124
24.   Expenses....................................................................................   125
25.   Stamp Duties................................................................................   125
26.   Indemnities.................................................................................   125
27.   Evidence and Calculations...................................................................   127
28.   Amendments and Waivers......................................................................   127
29.   Changes to the Parties......................................................................   129
30.   Disclosure of Information...................................................................   132
31.   Set-Off.....................................................................................   133
32.   Pro Rata Sharing............................................................................   133
33.   Severability................................................................................   134
34.   Counterparts................................................................................   134
35.   Notices.....................................................................................   135
36.   Language....................................................................................   138
37.   Jurisdiction................................................................................   138
38.   Waiver of Immunity..........................................................................   139
39.   Waiver of Jury Trial........................................................................   140
40.   Governing Law...............................................................................   140


THIS AGREEMENT is dated 13th May, 2003 and made BETWEEN:

(1)      VIVENDI UNIVERSAL S.A. (the COMPANY);

(2)      THE COMPANY AND ITS SUBSIDIARIES listed in Part 1 of Schedule 1
         (Original Parties) as guarantors (in this capacity, each an ORIGINAL
         GUARANTOR and together the ORIGINAL GUARANTORS);

(3)      BNP PARIBAS, CDC FINANCE - CDC IXIS, CITIBANK INTERNATIONAL PLC, CREDIT
         AGRICOLE INDOSUEZ, CREDIT LYONNAIS, GOLDMAN SACHS INTERNATIONAL,
         NATEXIS BANQUES POPULAIRES, THE ROYAL BANK OF SCOTLAND PLC and SG
         INVESTMENT BANKING as Mandated Lead Arrangers (in this capacity, each a
         MANDATED LEAD ARRANGER and together the MANDATED LEAD ARRANGERS);

(4)      THE FINANCIAL INSTITUTIONS listed in Part 2 of Schedule 1 (Original
         Parties) as original lenders (the ORIGINAL LENDERS);

(5)      SOCIETE GENERALE as facility agent (in this capacity the FACILITY
         AGENT); and

(6)      SOCIETE GENERALE as security agent and trustee for the Lenders (in this
         capacity, the SECURITY AGENT).

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         ACQUIRED SHARES means the shares of Cegetel (being 26 per cent. of the
         total share capital of Cegetel) acquired directly or indirectly by SIT
         from BT on 22nd January, 2003.

         ADDITIONAL GUARANTOR means a member of the Group which becomes a
         Guarantor in accordance with Clause 17.3 (Additional Guarantors)).

         AFFECTED FACILITIES means the credit facilities in relation to which
         any Waiver or Amendment is required and which is identified in Schedule
         13 (Affected Facilities).

         AFFILIATE means a Subsidiary or a Holding Company of a person or any
         other Subsidiary of that Holding Company.

         AGENT means:

         (a)      the Facility Agent; and/or

         (b)      the Security Agent,

         in each case, as the context requires.

         APPLICABLE MARGIN means the percentage rate per annum determined to be
         the Applicable Margin in accordance with Clause 9.3 (Margin
         adjustment).


                                       1

         ASSETS means each asset of the Group from time to time (a) excluding
         those assets referred to in the Back-up Original Liquidity Analysis in
         the section headed "Assets Disposal" (and including, on or after the
         Maroc Telecom Date, shares representing 51 per cent. of the total share
         capital of Maroc Telecom held (directly or indirectly) by the Company
         (unless the Maroc Telecom Acquired Shares have been financed by a Maroc
         Telecom Excluded Financing)) but (b) including, for the avoidance of
         doubt, the assets referred to in the definition of Canal + Disposal and
         the Games Disposal.

         ASSETS DISPOSAL means a disposal of any Asset (other than a Relevant
         Intra Group Disposal).

         AUDITORS means RSM Salustro Reydel, Barbier Frinault & Cie (Reseau
         Ernst & Young) or any other firm of independent public accountants of
         international standing which may be appointed as its auditors from time
         to time by the Company.

         AVAILABILITY PERIOD means the Tranche A Availability Period or the
         Tranche B Availability Period, as the context requires.

         BACK-UP FACILITY AGREEMENT means the E1,000,000,000 revolving credit
         facility agreement dated 26th November, 2002 in favour of VCNA and
         VUHIC.

         BACK-UP ORIGINAL LIQUIDITY ANALYSIS means the liquidity analysis of the
         Group dated 24th November, 2002 delivered by the Company pursuant to
         the Back-up Facility Agreement as set out in Part 1 of Schedule 9.

         BREAK COSTS means the amount (if any) which a Lender is entitled to
         receive under this Agreement as compensation if any part of a Loan or
         other due amount is prepaid.

         BT means British Telecommunications plc.

         BUSINESS DAY means a day (other than a Saturday or Sunday) on which
         banks are open for general business in Paris and London and:

         (a)      if on that day a payment in, or purchase of, U.S. Dollars is
                  to be made, New York; and

         (b)      if on that day a payment in, or purchase of, Euro is to be
                  made, a TARGET Day.

         BUSINESS PLAN means a business plan of the Company approved by its
         board of directors.

         CANADA RECEIVABLE means the receivable in a principal amount of
         Canadian $52,000,000 owed by Universal Studios, Inc. to Universal City
         Studios LLLP.

         CANAL + means Canal + S.A.

         CANAL + DISPOSAL means a disposal of all or any shares in, assets or
         business of Groupe Canal + and its Subsidiaries before or following any
         restructuring or reorganisation on a solvent basis (including, without
         limitation, a restructuring by way of primary or secondary public
         offering of any share capital or equity instruments).

         CANAL + DISPOSAL PROCEEDS AMOUNT means, in relation to any Canal +
         Disposal, proceeds in an aggregate amount not to exceed E2,000,000,000
         (or equivalent in other currencies).

         CASH MANAGEMENT AND IGL ARRANGEMENTS means the cash management and
         intra group loan arrangements of the Group at the date of this
         Agreement as described in Schedule 16, as amended from time to time
         pursuant to Clause 19.19(h).


                                       2

         CASH POOLING ACCOUNT means each bank account of:

         (a)      the Company;

         (b)      each Cash Pooling Hub;

         (c)      each other member of the Group with which the Company has a
                  direct lending relationship, but excluding:

                  (i)      VUE Borrower Co.; and

                  (ii)     prior to the VUE Date, any member of the VUE Group;
                           and

         (d)      each other bank account which is designated as such in writing
                  by the Company and the Facility Agent,

         but excluding those bank accounts listed in Schedule 12.

         CASH POOLING HUB means each of:

         (a)      the Company;

         (b)      VUP;

         (c)      Groupe Canal +;

         (d)      UMGT;

         (e)      VUHIC;

         (f)      VTI;

         (g)      VU Canada;

         (h)      on or after the Cegetel Cash Pooling Date, Cegetel;

         (i)      on or after the Maroc Telecom Cash Pooling Date, Maroc
                  Telecom; and

         (j)      any other member of the Group designated as such in writing by
                  the Company and the Facility Agent.

         CASH POOLING HUB SECURITY means the account pledge agreement or account
         charge agreement in the agreed form over:

         (a) each bank account of Vivendi Universal U.S. Holding Co.; and

         (b) each Cash Pooling Account,

         but excluding:

                  (i)      the Cash Pooling Accounts of UMGT, VU Canada and VUP;
                           and

                  (ii)     the Cash Pooling Accounts referred to in paragraph
                           (c) of the definition thereof.


                                       3

         CDC IXIS FACILITY AGREEMENT means the E300,000,000 bilateral facility
         agreement dated 15th January, 2003 between the Company and CDC Finance
         - CDC IXIS.

         CEGETEL means Cegetel Groupe S.A.

         CEGETEL CASH POOLING DATE means the date on which all of the following
         events occur:

         (i)      there are no contractual restrictions or provisions
                  (including, without limitation, pre-emption rights) between
                  shareholders of Cegetel, Transtel or any other member of the
                  Cegetel Group or under the Non Recourse Financing in force at
                  the date of this Agreement which restrict, or which would be
                  triggered upon, the granting of a guarantee and Cash Pooling
                  Hub Security pursuant to this Agreement;

         (ii)     Cegetel has become a Guarantor under this Agreement and has
                  granted Cash Pooling Hub Security; and

         (iii)    Cegetel enters into the Cash Management and IGL Arrangements
                  for the purpose of borrowing money from the Company or any
                  Cash Pooling Hub.

         CEGETEL DISPOSAL means the disposal of all or any of the shares in, or
         assets or business of any member of the Cegetel Group.

         CEGETEL GROUP means Cegetel and each of its Subsidiaries (including,
         for the avoidance of doubt, SFR).

         CEGETEL INDEMNITY means the indemnity by the Company in favour of SIT
         in an amount of E1,300,000,000 in the event that the Company does not
         comply with its obligations given to SIT in relation to the drag along
         and/or tag along arrangements with respect to the Existing Cegetel
         Shares.

         CEGETEL SHAREHOLDERS AGREEMENT means the shareholders' agreement among
         the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire,
         British Telecommunications plc, Mannesmann AG, SBC International, Inc.,
         SBC International - Societe de Radiotelephonie Cellulaire Inc. and
         Cegetel dated as of 14th May, 1997 as amended from time to time.

         CENTENARY HOLDING means Centenary Holding N.V.

         CENTENARY HOLDING SHARE PLEDGE means a share pledge in the agreed form
         over 92.3 per cent. of the shares in Centenary Holding in favour of the
         Security Agent for and on behalf of, inter alia, the Finance Parties.

         CENTENARY HOLDING UK SHARE PLEDGE means a share pledge in the agreed
         form over approximately (but in any event not more than) 66 per cent.
         of the shares in Centenary Holding Limited (UK) in favour of the
         Security Agent for and on behalf of, inter alios, the Finance Parties.

         CIC means Cinema International Corporation N.V.

         CHANGE OF CONTROL means the occurrence of any event whereby:

         (a)      any person or group of persons acting in concert acquires more
                  than 50 per cent. of the share capital or voting stock of the
                  Company or control of the Company, including, without
                  limitation, on or following an amalgamation, demerger, merger
                  or reconstruction involving the Company to the extent
                  permitted by Clause 19.18 (Mergers and acquisitions) and for
                  these purposes CONTROL and ACTING IN CONCERT have


                                       4

                  the meanings given them in Articles L.233-3 and L.233-10,
                  respectively, of the French Commercial Code; or

         (b)      the Company ceases to own, whether directly or indirectly, 100
                  per cent. of the share capital and voting rights of any
                  Obligor or the Company ceases to have effective control of any
                  Obligor (except, in each case, Vivendi Universal Games, Inc.
                  or Canal + which is disposed of in accordance with the
                  provisions of this Agreement or Centenary Delta BV pursuant to
                  the Music Group Reorganisation); or

         (c)      during any consecutive two-year period, the first day on which
                  a majority of the members of the board of directors of the
                  Company who were members of the board of directors at the
                  beginning of such period are not Continuing Directors; or

         (d)      there is a direct or indirect sale, transfer, conveyance or
                  other disposition (other than by way of merger or
                  consolidation permitted by and made in accordance with the
                  provisions of this Agreement) in one or a series of related
                  transactions, of all or substantially all of the properties or
                  assets or business of the Company and its Subsidiaries taken
                  as a whole; or

         (e)      the adoption of a plan relating to the liquidation or
                  dissolution of the Company.

         CODE means the United States Internal Revenue Code of 1986, as amended
         from time to time, and the regulations promulgated and rulings issued
         thereunder.

         COMMITMENT means a Tranche A Commitment or a Tranche B Commitment, as
         the context requires.

         COMMITMENT LETTER means the commitment letter dated 25th March, 2003
         between the Company and the Mandated Lead Arrangers.

         CONCENTRATION ACCOUNTS means the Euro-denominated account (number
         30003-03175-00020262579/77) and the U.S. dollar-denominated account
         (number 30003-03175-03020103534/54) of the Company held with, or to be
         opened with, Societe Generale Agence Paris-Etoile-Entreprises, 33
         avenue de Wagram, BP 963, 75017 Paris, France, the sterling-denominated
         account (number 30588-60001-81504592601/30) held with Barclays, 45
         boulevard Haussmann, 75008 Paris and the Canadian Dollar-denominated
         account (number 30007-99999-043747000CA/04), the Danish
         Krone-denominated account (number 30007-99999-043747000DK/04), the
         Yen-denominated account (number 30007-99999-043747000JP/04), the
         Norwegian Krone-denominated account (number
         30007-99999-043747000NO/04), the New Zealand Dollar-denominated account
         (number 30007-99999-043747000NZ/04), the Swedish Krona-denominated
         account (number 30007-99999-043747000SE/04), the Singaporean
         Dollar-denominated account (number 30007-99999-043747000SG/04), the
         Hong-Kong Dollar-denominated account (number
         30007-99999-043747000HK/04), the Swiss Franc-denominated account
         (number 30007-99999-043747000FS/04), the Australian Dollar-denominated
         account (number 30007-99999-043747000AU/04), the Mexican
         Peso-denominated account (number 30007-99999-043747000MX/04), the Czech
         Koruna-denominated account (number 30007-99999-043747000CZ/04) (each,
         held with Natexis Banques Populaires, Gestion des flux Entreprises,
         10/12, avenue Winston Churchill, Boite Postale 4, 94677
         Charenton-le-Pont Cedex).

         CONCENTRATION ACCOUNTS SECURITY means an account pledge ("nantissement
         de compte") in the agreed form over the Concentration Accounts.

         CONTINGENT FINANCIAL LIABILITIES means contingent Financial
         Indebtedness and includes, without limitation, any financial
         liabilities under or pursuant to the exercise of any put option.


                                       5

         CONTINUING DIRECTORS means, as of any date of determination, any member
         of the board of directors of the Company who:

         (a)      was a member of such board of directors on the date of this
                  Agreement; or

         (b)      was nominated by election or elected to such board of
                  directors with the approval of a majority of the Continuing
                  Directors who are members of such board of directors at the
                  time of such nomination or election.

         DEBT ISSUE means any syndicated loan, issue of bonds or notes
         (including convertible bonds or other equity-linked debt instruments
         but excluding instruments that are redeemable only in shares and which
         do not in any circumstances give rise to redemptions or repayments
         (whether in whole or in part) in cash), debt securities (including
         issued pursuant to a securitisation programme) or other debt instrument
         of any kind made or entered into by any member of the Group, whether
         publicly listed or privately placed but excluding:

         (a)      any Existing Facilities Refinancing;

         (b)      any Product Financing;

         (c)      any Project Finance Indebtedness;

         (d)      any such debt instruments the proceeds of which constitute any
                  of the VUE Retention, VUE Excluded Debt Issue Proceeds and VUE
                  Incremental Indebtedness and the VUE Bridge Refinancing;

         (e)      any Excluded Cegetel Debt Issue Proceeds;

         (f)      commercial paper issued by members of the Group other than
                  members of the Cegetel Group in an aggregate principal amount
                  of up to E50,000,000 (or equivalent in other currencies)
                  (excluding for avoidance of doubt any Intra Group Loan or any
                  VUE Loan);

         (g)      any Local Borrowings;

         (h)      any Intra Group Loan including, without limitation, a VUE
                  Loan;

         (i)      any Excluded Maroc Telecom Debt Issue Proceeds;

         (j)      any Excluded Financial Indebtedness; and

         (k)      the VU/SIT Loan.

         DEFAULT means an Event of Default or an event which, with the giving of
         notice, expiry of any applicable grace period, determination of
         materiality or fulfilment of any other applicable condition (or any
         combination of the foregoing), would constitute an Event of Default.

         DESCRIPTION OF NOTES means the terms and conditions of the High Yield
         Notes as set out in the Offering Circular.

         DISPOSAL means any Assets Disposal, a Cegetel Disposal, a Maroc Telecom
         Disposal, a SIT Disposal or a VE Shares Disposal.

         DISPOSAL CONFIRMATION means the confirmation by the Chairman of the
         Company that E7,000,000,000 of the Group's assets will be disposed of
         in 2003 or any later confirmation in


                                       6

         respect of the disposal of the Group's assets in addition thereto given
         or confirmed by the board of directors of the Company.

         DRAWDOWN DATE means the date of the advance of a Loan.

         ENVIRONMENT means all, or any of, the following media: the air
         (including the air within buildings and the air within other natural or
         man-made structures above or below ground), water (including, without
         limitation, ground and surface water) and land (including, without
         limitation, surface and sub-surface soil).

         ENVIRONMENTAL LAW means any law or regulation relating to the
         Environment or to emissions, discharges or releases of regulated
         substances or wastes into the Environment or otherwise relating to the
         handling of regulated substances or wastes or the clean-up or
         remediation thereof or any permit, licence, authorisation, consent or
         other approval required by such law and regulation.

         EQUITY ISSUE means any issue of rights, shares or equity instruments of
         any kind (including for the avoidance of doubt debt instruments that
         are redeemable only in shares and which do not in any circumstances
         give rise to redemptions or repayments (whether in whole or in part) in
         cash), made or entered into by any member of the Group (but in relation
         to any member of the Cegetel Group, Transtel or SIT prior to the SIT
         Repayment Date in relation to secondary Equity Issues only) but
         excluding:

         (a)      (without double counting) any such issue, the proceeds of
                  which constitute VUE Excluded Equity Issue Proceeds or the
                  amount of the VUE Retention;

         (b)      (without double counting), any such issue, the proceeds of
                  which constitute the Canal + Disposal Proceeds Amount;

         (c)      (without double counting), any such issue, the proceeds of
                  which constitute the Games Disposal Proceeds Amount;

         (d)      any such issue made or entered into pursuant to a Relevant
                  Intra Group Disposal or entered into pursuant to an employee
                  share purchase plan;

         (e)      any such issue made or entered into by any member of the Maroc
                  Telecom Group, prior to the Maroc Telecom Date; and

         (f)      any such issue which forms part of the VU/SIT Loan.

         ERISA means the United States Employee Retirement Income Security Act
         of 1974, as amended from time to time, and the regulations promulgated
         and rulings issued thereunder.

         ERISA AFFILIATE means any Person that for purposes of Title IV of ERISA
         is a member of the controlled group of any Obligor, or under common
         control with any Obligor, within the meaning of Section 414 (b) or (c)
         of the Code or, for purposes of Section 412 of the Code, Section 414
         (m) or (o) of the Code.

         ERISA EVENT means any event specified in Schedule 18.

         ESCROW AGREEMENT means the Escrow Agreement dated 8th April, 2003
         entered into between the Company and the Bank of New York in its
         capacity as Escrow Agent and as trustee for the High Yield Notes.


                                       7

         ESCROW RELEASE CERTIFICATE means the certificate to be delivered by the
         Company to the Escrow Agent pursuant to the terms of the Escrow
         Agreement.

         EURIBOR means for an interest period:

         (a)      the rate per annum which appears on Page EURIBOR 01; or

         (b)      if no such rate is available for the relevant period, the rate
                  (expressed as a percentage) determined by the Facility Agent
                  to be the arithmetic mean of the rates per annum (rounded
                  upwards to four decimal place) as supplied to the Facility
                  Agent at its request quoted by the Reference Banks to leading
                  banks in the European interbank market,

         at or about 11.00 a.m. on the applicable Rate Fixing Day for the
         offering of deposits in Euro for a period comparable to the Interest
         Period of the relevant Loan and in this definition PAGE EURIBOR 01
         means the display designated as Page EURIBOR 01 on the Reuters Screen
         (or such other pages as may replace Page EURIBOR 01 on that service or
         such other service as may be nominated by the Banking Federation of the
         European Union (including the Reuters Monitor Money Rates Service) as
         the information vendor for the purposes of displaying Banking
         Federation of the European Union Interest Settlement Rates for deposits
         in Euro).

         EURO or E means the single currency of the Participating Member States.

         EVENT OF DEFAULT means an event specified as such in Clause 21
         (Default).

         EXCHANGE AND REGISTRATION RIGHTS AGREEMENT means the Exchange and
         Registration Rights Agreement dated 8th April, 2003 in relation to the
         High Yield Notes.

         EXCLUDED CEGETEL DEBT ISSUE PROCEEDS means any Financial Indebtedness
         permitted to be incurred under this Agreement by any member of the
         Cegetel Group pursuant to Clause 19.15(m).

         EXCLUDED FINANCIAL INDEBTEDNESS means the items summarised in Part 2 of
         Schedule 19.

         EXCLUDED MAROC TELECOM DEBT ISSUE PROCEEDS means:

         (a)      any Financial Indebtedness incurred by any member of the Maroc
                  Telecom Group prior to the Maroc Telecom Date; and

         (b)      on or after the Maroc Telecom Date, any Financial Indebtedness
                  referred to in paragraph (a) above plus any additional
                  Financial Indebtedness incurred by any member of the Maroc
                  Telecom Group up to an aggregate maximum amount outstanding at
                  any time of E100,000,000 (or equivalent in other currencies).

         EXCLUDED MUSIC GROUP ENTITY means each of:

         (a)      Centenary Delta BV and all non-U.S. subsidiaries thereof; and

         (b)      UPIH 2 BV,

         if such entity will become a Foreign Subsidiary or will be held
         (directly or indirectly) by Universal Studios Holding I Corp, as a
         result of the Music Group Reorganisation.

         EXISTING BANK DEBT means Financial Indebtedness outstanding under the
         Multicurrency Revolving Credit Facility.


                                       8

         EXISTING BANK DEBT GUARANTEE means the guarantee dated on or about the
         date of this Agreement in the agreed form made between the Existing
         Lenders, the Guarantors (as defined therein), the Company and each
         Agent as may be amended from time to time.

         EXISTING CEGETEL CONTINGENT FINANCIAL LIABILITIES means the Contingent
         Financial Indebtedness of the Cegetel Group as identified in Part 1 of
         Schedule 10.

         EXISTING CEGETEL FINANCIAL INDEBTEDNESS means Financial Indebtedness of
         the Cegetel Group as identified in Part 2 of Schedule 10.

         EXISTING CEGETEL SECURITY means the Security Interests over the assets
         of or shares in the Cegetel Group as identified in Part 3 of Schedule
         10.

         EXISTING CEGETEL SHARES means the share capital owned, directly or
         indirectly, by members of the Group (other than SIT) in Cegetel, at the
         date of this Agreement representing not less than 43 per cent. of all
         of Cegetel's share capital.

         EXISTING CONTINGENT FINANCIAL LIABILITIES means the material Contingent
         Financial Liabilities of any member of the Group (other than any member
         of the Cegetel Group and the Maroc Telecom Group) existing at the date
         hereof as identified in Schedule 17 (Existing Contingent Financial
         Liabilities).

         EXISTING FACILITIES means the facilities identified in Schedule 12
         (Existing Facilities).

         EXISTING FACILITIES REFINANCING means any initial or successive
         refinancing, extension, renewal, replacement or restructuring (but not
         an increase) of any Existing Facilities by such member of the Group.

         EXISTING LENDERS means lenders under the Existing Bank Debt.

         FACILITY means the credit facilities under this Agreement.

         FACILITY DISCHARGE DATE means the date on which the Facility Agent
         (acting on the instructions of all the Lenders) notifies the Obligors'
         Agent in writing that all amounts outstanding under or in connection
         with the Facility have been irrevocably and unconditionally paid or
         discharged in full and the Total Commitments have been cancelled in
         full.

         FACILITY OFFICE means the office(s) notified by a Lender to the
         Facility Agent:

         (a)      on or before the date it becomes a Lender; or

         (b)      by not less than five Business Days' prior notice,

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

         FEE LETTER means:

         (a)      the letter dated 17th March, 2003 between the Mandated Lead
                  Arrangers and the Company (the ARRANGEMENT FEE LETTER); and

         (b)      the letter dated the date of this Agreement between the Agents
                  and the Company (the AGENCY FEE LETTER),


                                       9






      setting out the amount of various fees referred to in Clause 23 (Fees).

      FINAL MATURITY DATE means the date falling on the third anniversary of the
      date of this Agreement (or if that day is not a Business Day, the
      immediately preceding Business Day).

      FINANCE DOCUMENT means each of:

      (a)   this Agreement;

      (b)   the Commitment Letter;

      (c)   each Fee Letter;

      (d)   a Guarantor Accession Agreement;

      (e)   a Novation Certificate;

      (f)   each Security Document;

      (g)   the Security Sharing Agreement;

      (h)   each Subordination Agreement;

      (i)   the VUE Borrower Co. Release Agreement,

      and any other document designated as such in writing by the Facility Agent
      and the Obligors' Agent.

      FINANCE PARTY means each Agent, each Mandated Lead Arranger and each
      Lender.

      FINANCIAL INDEBTEDNESS means any indebtedness in respect of:

      (a) moneys borrowed;

      (b) any debenture, bond, note, loan stock or other security;

      (c) any acceptance credit;

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

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

      (f) any lease (including, without limitation, an operation de credit-bail)
      entered into primarily as a method of raising finance or financing the
      acquisition of the asset leased;

      (g) any currency swap or interest rate or commodity swap, cap or collar
      arrangements or any other derivative instrument;

      (h) any amount raised under any other transaction having as a primary
      purpose the borrowing or raising of money (excluding, for the avoidance of
      doubt, trade credit to the extent payable by the person liable 180
      calendar days or less after the acquisition or taking of possession of the
      assets to which such credit relates); or

                                       10

      (i)   any guarantee, indemnity or similar assurance against financial loss
            of any person, in each case in respect of indebtedness of a type
            falling within paragraphs (a) to (h) above,

      including, for the avoidance of doubt, the Contingent Financial
      Liabilities (other than the Existing Contingent Financial Liabilities
      except for the purposes of Clauses 21.5 (Cross-default), 19.12 (Negative
      pledge) and 19.13 (Transactions similar to security)) and excluding,
      Equity Issues and Excluded Financial Indebtedness and for the purposes of
      Clause 21.5 (Cross-default), Intra Group Loans and VUE Loans.

      FITCH means Fitch IBCA.

      FOREIGN SUBSIDIARY means any Subsidiary of any U.S. Obligor which is a
      controlled foreign corporation within the meaning of the Code.

      FRENCH INTRA GROUP LOANS SECURITY means each delegation or loi dailly
      assignment, as the case may be, in the agreed form in respect of Secured
      Intra Group Loans made by an Obligor incorporated in France.

      GAMES means the games business of Vivendi Universal Games, Inc. and
      Universal Interactive, Inc. and their respective Subsidiaries.

      GAMES DISPOSAL means any disposal, sale or transfer of all or any of the
      shares in, or assets or business of Games and/or its Subsidiaries
      (including, without limitation, by way of primary or secondary public
      offering).

      GAMES DISPOSAL PROCEEDS AMOUNT means, in relation to any Games Disposal,
      disposal proceeds in an aggregate amount not to exceed (a) E1,000,000,000
      (or equivalent in other currencies) and (b) an amount not to exceed 1.5
      per cent. of the gross disposal proceeds paid by any purchaser pursuant to
      the Games Disposal and which amount is payable to MEI Holding Inc. or its
      affiliates as a result of such party's direct or indirect interest in
      Games.

      GAMES IP means the Intellectual Property Rights owned by Games IP Group.

      GAMES IP GROUP means Vivendi Universal Games, Inc., Davidson & Associates,
      Inc. Knowledge Adventure, Inc. and Sierra Entertainment, Inc.

      GAMES REORGANISATION means any series of transactions undertaken by the
      Company to reorganise the Games group for the purposes of implementing any
      Games Disposal which, to the extent such transactions are not otherwise
      permitted by this Agreement, have been approved in writing by the Majority
      Lenders.

      GROUP means the Company and its Subsidiaries (but excluding any member of
      the VE Group).

      GROUPE CANAL + means Groupe Canal + S.A.

      GROUPE CANAL + SHARE PLEDGE means the share pledge in the agreed form to
      be granted by the Company over 100 per cent. of the shares in Groupe Canal
      +.

      GUARANTOR means an Original Guarantor or an Additional Guarantor.

      GUARANTOR ACCESSION AGREEMENT means a deed, substantially in the form of
      Schedule 6, with such amendments as the Facility Agent may approve or
      reasonably require.

                                       11

      HIGH YIELD NOTE DOCUMENTS means:

      (a)   the Offering Circular;

      (b)   the Indenture and the High Yield Notes;

      (c)   the Purchase Agreement;

      (d)   the Exchange and Registration Rights Agreement; and

      (e)   the Escrow Agreement.

      HIGH YIELD NOTES means the U.S.$935,000,000 9.25% senior notes due 2010
      and the E325,000,000 9.50% senior notes due 2010 issued by the Company on
      8th April, 2003 pursuant to the Indenture.

      HIGH YIELD NOTE PROCEEDS means the proceeds of each issue of the High
      Yield Notes in the amount of U.S.$935,000,000 and E320,924,500 (i) paid
      directly to the Company by the initial purchasers pursuant to the Purchase
      Agreement on the issuance date of the High Yield Notes and (ii) released
      to the Company by the Escrow Agent pursuant to the Escrow Agreement.

      HOLDING COMPANY means in relation to a person, an entity of which that
      person is a Subsidiary.

      INDENTURE means the indenture dated 8th April, 2003 entered into by the
      Company with respect to which the High Yield Notes have been issued.

      INFORMATION PACKAGE means the information package dated April, 2003
      prepared in connection with the Facility for the purpose of the bank
      meeting held on 4th April, 2003 and posted on the intralink website
      created for the purpose of the syndication of the Facility.

      INTELLECTUAL PROPERTY RIGHTS means all know-how, patents, trade marks,
      service marks, designs, business names, topographical or similar rights,
      copyrights, database or other intellectual property right (in each case,
      whether registered or not and including all applications for the same).

      INTEREST PERIOD means each period determined in accordance with Clause 8
      (Interest Periods).

      INTRA GROUP LOAN means:

      (a)   on the date of this Agreement, each loan listed in Parts 1, 2, 3, 4
            or 5 of Schedule 15 (Intra Group Loans); and

      (b)   each loan made between members of the Group which is permitted by,
            and made in accordance with, the provisions of Clause 19.19 (Loans
            out, Intra Group Loans).

      INTRA GROUP LOAN AGREEMENT means a loan agreement in the agreed form
      evidencing an Intra Group Loan.

      INVESTMENT DOWNGRADING DATE means, at any time, the date on which the
      Company ceases to have an Investment Grade Rating.

      INVESTMENT GRADE RATING means a long term unsecured credit rating of Baa3
      or better by Moody's and (but not or) BBB- or better by S&P.

                                       12

      INVESTMENT GRADE RATING DATE means the date on which the Company obtains
      an Investment Grade Rating.

      JOINT VENTURES means all joint venture entities (not being a member of the
      Group) whether a company, unincorporated firm, undertaking, joint venture,
      association, partnership or other entity in which any member of the Group
      has an interest from time to time.

      LENDER means:

      (a)   an Original Lender; or

      (b)   any person to whom the rights and obligations of an Original Lender
            are transferred after the date of this Agreement.

      LIBOR means:

      (a)   the rate per annum which appears on Page LIBOR 01; or

      (b)   if no such rate appears on the Reuters Screen, the arithmetic mean
            (rounded upward to four decimal places) of the rates, as supplied to
            the Facility Agent at its request, quoted by the Reference Banks to
            leading banks in the European interbank market,

      at or about 11.00 a.m. London time on the applicable Rate Fixing Day for
      the offering of deposits in the currency of the relevant Loan for a period
      comparable to the relevant Interest Period, and in this definition PAGE
      LIBOR 01 means the display designated as Page LIBOR 01 on the Reuters
      Screen (or such other pages as may replace Page LIBOR 01 on that service
      or such other service as may be nominated by the British Bankers'
      Association as the information vendor for the purposes of displaying
      British Bankers' Association Interest Settlement Rates for deposits in
      that currency).

      LIQUIDITY ANALYSIS means a forecast for the Group (excluding for these
      purposes (other than in relation to dividends) any member of the Maroc
      Telecom Group and the Cegetel Group and SIT) in the agreed form (and
      provided in excel form) setting out:

      (a)   projections of the Group's cashflows for the period from the date of
            the forecast to:

            (i)   prior to a Release Condition Date, the Final Maturity Date;
                  and

            (ii)  subject to paragraph (c) below, on or after a Release
                  Condition Date, a date which is one year from the date of such
                  Liquidity Analysis,

                  in each case, as follows:

                  (A)   a monthly breakdown of the Group's projected cashflows
                        for a period of six months from the date of the
                        forecast;

                  (B)   thereafter a quarterly breakdown of the Group's
                        projected cashflows for the period of the next nine
                        months or for the remaining period of the forecast; and

                  (C)   thereafter a semi-annual breakdown of the Group's
                        projected cashflows for the remaining period of the
                        forecast, if any;

      (b)   a reconciliation statement between the actual cashflows of the Group
            for the period elapsed since the date of the preceding Liquidity
            Analysis and the projected


                                       13

            cashflows of the Group for that period contained in that Liquidity
            Analysis together with reasons for any deviations (other than
            deviations of an immaterial nature) demonstrated by such
            reconciliation statement; and

      (c)   if, on or after a Release Condition Date, an Investment Downgrading
            Date occurs, paragraph (i) shall automatically be reinstated and
            shall remain in force from the Investment Downgrading Date until
            such time as a Release Condition Date occurs again.

      LLP AGREEMENT means the limited liability partnership agreement
      establishing VUE Borrower Co. as a Delaware limited liability partnership.

      LOAN means a Tranche A Loan or a Tranche B Loan as the context requires.

      LOCAL BORROWINGS means Financial Indebtedness incurred by any member of
      the Group (other than an Obligor) in the country of its incorporation in
      the ordinary course of business in an aggregate amount not exceeding
      E300,000,000 (or equivalent in other currencies) at any time.

      LOCK-UP ARRANGEMENTS means the lock-up arrangements with respect to the VE
      Shares under the VE Acquisition and Subscription Agreement.

      MAJORITY LENDERS means, at any time, Lenders:

      (a)   whose share in the Original Euro Amount of outstanding Loans and
            whose undrawn Commitments then aggregate 66 2/3 per cent. or more of
            the aggregate Original Euro Amount of all outstanding Loans and the
            undrawn Commitments of all the Lenders;

      (b)   if there is no Loan then outstanding, whose undrawn Commitments
            aggregate 662/3 per cent. or more of the Total Commitments; or

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

      MAJORITY CREDITORS has the meaning given to it in the Security Sharing
      Agreement.

      MANDATORY COST means the cost imputed to the Lenders of compliance in
      relation to this Agreement with:

      (a)   the cash ratio and special deposit requirements of the Bank of
            England and/or the banking supervision or other costs imposed by the
            United Kingdom Financial Services Authority, all as determined in
            accordance with Schedule 7; and

      (b)   any reserve asset requirements of the European Central Bank.

      MAROC TELECOM means Maroc Telecom S.A.

      MAROC TELECOM ACQUIRED SHARES means the shares of Maroc Telecom acquired
      (directly or indirectly) by the Company pursuant to the acquisition
      permitted under to Clause 19.18 (b)(xi) (being as of the date of this
      Agreement 16 per cent. of the total share capital of Maroc Telecom).

      MAROC TELECOM CASH POOLING DATE means the date on which all of the
      following events occur:

                                       14

      (i)   there are no contractual restrictions or provisions (including,
            without limitation, pre-emption rights) between shareholders of
            Maroc Telecom in force at the date of this Agreement or under a
            Maroc Telecom Excluded Financing which restrict or which would be
            triggered upon, the granting of a guarantee and Cash Pooling Hub
            Security pursuant to this Agreement;

      (ii)  Maroc Telecom has become a Guarantor under this Agreement and has
            granted Cash Pooling Hub Security; and

      (iii) Maroc Telecom enters into the Cash Management and IGL Arrangements
            for the purpose of borrowing money from the Company or any Cash
            Pooling Hub.

      MAROC TELECOM DATE means the date upon which the Company owns no less than
      51 per cent. of the shares in Maroc Telecom pursuant to the acquisition
      permitted pursuant to Clause 19.18(b)(xi) unless such acquisition is
      financed by a Maroc Telecom Excluded Financing.

      MAROC TELECOM DISPOSAL means the disposal of all or any of the shares in,
      or assets or business of any member of the Maroc Telecom Group other than
      the shares in, or assets or business of, Maroc Telecom.

      MAROC TELECOM EXCLUDED FINANCING means a financing of the acquisition of
      all the Maroc Telecom Acquired Shares by means solely of a Project Finance
      Indebtedness and, in respect of which, the person to whom such Project
      Finance Indebtedness is owed has no recourse to any member of the Group
      for the repayment of, or payment of any sum relating to, that Project
      Finance Indebtedness other than recourse to any shares held (directly or
      indirectly) by the Company in Maroc Telecom, provided that recourse to
      such shares (other than the Maroc Telecom Acquired Shares) shall only be
      permitted at any time after the Company has prepaid the Non-Recourse
      Financing in full out of VU/SIT Loan proceeds and cancelled the
      Non-Recourse Financing in full.

      MAROC TELECOM GROUP means Maroc Telecom and its Subsidiaries.

      MAROC TELECOM SHAREHOLDERS AGREEMENT means the "Convention d'actionnaires"
      among the Company, le Gouvernement du Royaume de Maroc and Itissalat
      Al-Maghrib executed by the Company on 20th December, 2000 as amended from
      time to time.

      MASTER SECURITY AGREEMENT means the pledge and security agreement
      substantially in the form initialled on or about the date of this
      Agreement by the Obligors' Agent and the Facility Agent or otherwise in
      the agreed form between the Grantors (as defined therein) and the Facility
      Agent.

      MATERIAL ADVERSE EFFECT means:

      (a)   prior to a Release Condition Date, but subject always to paragraph
            (c) below, a material adverse effect on:

            (i)   the business, assets, financial condition, operations or
                  prospects of any Obligor, Material Subsidiary or the Group
                  (taken as a whole);

            (ii)  the ability of any Obligor to perform any of its payment
                  obligations or the ability of any Obligor to perform any other
                  of its material obligations under any of the Finance
                  Documents; or

                                       15

            (iii) the validity or enforceability of any Finance Document or the
                  effectiveness of any Security Interest purported to be created
                  pursuant to any Security Document or the rights and remedies
                  of any Finance Party;

      (b)   on or after a Release Condition Date but subject always to paragraph
            (c) below, a material adverse effect on the ability of any Obligor
            to perform any of its payment obligations or to perform any other of
            its material obligations under any of the Finance Documents; and

      (c)   if a Release Condition Date occurs, but at any time thereafter an
            Investment Downgrading Date occurs, paragraph (a) shall be
            automatically reinstated and remain in force from the Investment
            Downgrading Date until such time as a Release Condition Date occurs
            again.

      MATERIAL SUBSIDIARY means:

      (a)   as at the date of this Agreement, each member of the Group listed in
            Schedule 21; and

      (b)   thereafter each Subsidiary listed in Part 1 of Schedule 21 and/or
            pursuant to Clause 19.2(a)(iii), and each other Subsidiary of the
            Company which is consolidated by way of global integration
            (integration globale) in the audited consolidated accounts of the
            Group:

            (i)   whose total assets (consolidated in the case of a Subsidiary
                  which itself has a Subsidiary and for the avoidance of doubt
                  excluding inter-company loans and equity accounts if and to
                  the extent netted out on a consolidation) are E500,000,000 (or
                  equivalent in other currencies) or more; or

            (ii)  whose operating income (consolidated in the case of a
                  Subsidiary which itself has a Subsidiary and as adjusted in
                  accordance with paragraphs (a) to (d) of the definition of
                  Cash EBITDA (as defined in Clause 20.1 (Financial covenant
                  definitions)) represent not less than 5 per cent. of Cash
                  EBITDA (as defined in Clause 20.1)) (as shown in the then
                  latest consolidated accounts of the Group),

            as calculated from the then latest accounts audited if prepared, of
            that Subsidiary; and

      (c)   any other Subsidiary of the Company (the RECEIVING SUBSIDIARY) to
            which after the date of the latest audited consolidated accounts of
            the Group is transferred either:

            (i)   all or substantially all the assets of another Subsidiary
                  which immediately prior to the transfer was a Material
                  Subsidiary (the DISPOSING SUBSIDIARY); or

            (ii)  sufficient assets such that the receiving Subsidiary would
                  have been a Material Subsidiary had the transfer occurred on
                  or before the date of the latest audited consolidated accounts
                  of the Group;

            in the case of (i) above, the disposing Subsidiary shall forthwith
            upon the transfer taking place cease to be a Material Subsidiary;
            and

      (d)   further:

            (i)   VUE Borrower Co. shall be a Material Subsidiary only for the
                  purposes of the definition of Material Adverse Effect and for
                  the purposes of Clauses 21.5


                                       16

                  (Cross-default) and Clauses 21.6 (Insolvency) to Clause 21.10
                  (Analogous proceedings);

            (ii)  Maroc Telecom shall be a Material Subsidiary only for the
                  purposes of the definition of Material Adverse Effect and for
                  the purposes of Clauses 21.6 (Insolvency) to Clause 21.10
                  (Analogous proceedings) until the Maroc Telecom Date, when,
                  subject to the provisions of Clause 19.1(d), it shall become a
                  Material Subsidiary for all purposes.

            For the avoidance of doubt, no member of the VE Group shall in any
            circumstances be a Material Subsidiary.

      MATSUSHITA SHAREHOLDER AGREEMENTS means:

      (a)   the stockholder's agreement among Centenary Holding, MHI Investment
            Corporation and Centenary International B.V. (formerly Seagram
            International B.V.) dated as of 9th December, 1998, as amended from
            time to time, and

      (b)   the amended and restated stockholders' agreement among Universal
            Studios Holding I Corp., MEI Holding Inc., VU Canada (formerly known
            as The Seagram Company Ltd.) and Vivendi Universal Holding IV Corp.
            (formerly known as Seagram Developments Inc.) dated as of 9th
            December, 1998, as amended from time to time.

      MATURITY DATE means the last day of the Interest Period of a Tranche A
      Loan.

      MOODY'S means Moody's Investors' Services, Inc.

      MULTICURRENCY REVOLVING CREDIT FACILITY means the E3,000,000,000
      multicurrency revolving credit facility dated 15th March, 2002, by the
      Company, the Lenders and financial institutions a party thereto and
      Societe Generale, as Facility Agent, as amended on 6th February, 2003 as
      the same may be amended from time to time.

      MULTIEMPLOYER PLAN means a multiemployer plan, as defined in Section
      4001(a)(3) of ERISA, to which any Obligor or any ERISA Affiliate is making
      or accruing an obligation to make contributions, or has within any of the
      preceding five plan years made or accrued an obligation to make
      contributions.

      MULTIPLE EMPLOYER PLAN means a single employer plan, as defined in Section
      4001(a)(15) of ERISA, that:

      (a)   is maintained for employees of any Obligor or any ERISA Affiliate
            and at least one Person other than the Obligors and the ERISA
            Affiliates; or

      (b)   was so maintained and in respect of which any Obligor or any ERISA
            Affiliate could have liability under Section 4064 or 4069 of ERISA
            in the event such plan has been or were to be terminated.

      MUSIC GROUP means all of the entities under the common ownership of the
      Company which engage in the acquisition, manufacture, marketing, sale and
      distribution of recorded music and music publishing.

      MUSIC GROUP REORGANISATION means one or other series of transactions being
      undertaken by the Company to organise the Music Group entirely within the
      U.S. chain of Subsidiaries of the Company substantially in accordance with
      the Music Overview Memorandum and Music


                                       17

      Structure Chart or otherwise any reorganisation of the Music Group which
      is approved in writing by the Majority Lenders.

      MUSIC OVERVIEW MEMORANDUM means the memorandum delivered to the Facility
      Agent on 23rd April, 2003.

      MUSIC STRUCTURE CHART means the right-hand column in the draft document
      dated 9th April, 2003 from PriceWaterhouseCoopers and delivered to the
      Facility Agent.

      NET ASSETS DISPOSAL PROCEEDS means, in relation to any Assets Disposal
      (other than in relation to the VE Shares Disposal, any Cegetel Disposal
      and any SIT Disposal) made prior to an Investment Grade Rating Date
      (subject always to Clause 7.16(m)), the amount of:

      (a)   the cash proceeds or purchase consideration actually received in
            cash by a member of the Group (including, without limitation,
            pursuant to earn out provisions) as consideration for a disposal of
            any Asset including (without double counting) the amount of any
            Intra Group Loan or VUE Loan (in respect of which a member of the
            Group being sold pursuant to such disposal is the borrower under
            that Intra Group Loan or VUE Loan) which is repaid to continuing
            members of the Group using funds obtained from outside the Group;

      (b)   any non-cash consideration actually received by a member of the
            Group under any sale and purchase agreement relating to such
            disposal; and

      (c)   any other amount actually received or recovered in cash by a member
            of the Group under any sale and purchase agreement and/or ancillary
            documents relating to such disposal,

      in each case, net of:

      (i)   any Taxes and reasonable third party costs and expenses incidental
            or fairly attributable to the disposal, receipt or recovery;

      (ii)  in the case of a disposal of all or part of the interests held by
            any member of the Group in VUE or any Subsidiary of VUE or of any
            other asset of VUE or any Subsidiary of VUE, net of any tax
            indemnity due and payable by the Company to USAi or payment in lieu
            thereof pursuant to the arrangements relating thereto in force at
            the date of this Agreement; and

      (iii) the aggregate amount of any indemnity or breach of warranty claims
            under any sale and purchase agreement and/or ancillary documents
            related to any disposal actually paid by a member of the Group
            provided always that the maximum aggregate amount of any such
            deduction in respect of any disposal shall not exceed 10 per cent.
            of the aggregate of all amounts referred to in paragraphs (a) to (c)
            above in respect of all disposals which are made in accordance with
            this Agreement on or prior to the date for payment pursuant to
            Clause 7.15 of the proceeds which are the subject of such deduction
            and provided further that no Finance Party shall be under any
            obligation to repay or reimburse any Net Proceeds (or corresponding
            amounts) prepaid under this Agreement,

      but excluding:

      (a)   (without double counting) any VUE Excluded Disposal Proceeds and any
            VUE Retention;

                                       18

      (b)   (without double counting) any such proceeds constituting the Canal +
            Disposal Proceeds Amount; and

      (c)   (without double counting) any such proceeds constituting the Games
            Disposal Proceeds Amount.

      For the purposes of the definition of Net Assets Disposal Proceeds, the
      amount of proceeds actually received by a member of the VUE Group pursuant
      to any Film Rights Securitization (as defined in the VUE Bridge Extension
      as in force at the date of this Agreement) shall be equal to the amount of
      such proceeds as calculated in accordance with the definition of Net
      Proceeds in the VUE Bridge Extension as in force at the date of this
      Agreement.

      For the purposes of the definition of Net Assets Disposal Proceeds and
      Clause 19.14(b), below, in relation to any disposal of the shares in,
      assets or business of any member of the VUE Group or the Music Group, up
      to 35 per cent. of the purchase consideration for such disposal may be in
      the form of valuable non-cash consideration and on terms that defer its
      payment. However, for the purposes of any mandatory prepayment, no less
      than 70 per cent. of the Net Assets Disposal Proceeds for any such
      disposal of any member of the VUE Group or the Music Group will be deemed
      to have been paid in cash at the time of such disposal, notwithstanding
      that less than this amount may actually have then been received.

      NET CEGETEL DISPOSAL PROCEEDS means, in relation to any Cegetel Disposal
      made prior to an Investment Grade Rating Date (subject always to Clause
      7.16(m)):

      (a)   the cash proceeds or purchase consideration actually received in
            cash by a member of the Group (including, without limitation,
            pursuant to earn-out provisions) as consideration for such disposal
            including (without double-counting) the amount of any Intra Group
            Loans (in respect of which a member of the Group being sold pursuant
            to such disposal is a borrower under that Intra Group Loan) which is
            repaid to continuing members of the Group using funds obtained from
            outside the Group;

      (b)   any non-cash consideration actually received by a member of the
            Group under any sale and purchase agreement relating to such
            disposal; and

      (c)   any other amount actually received or recovered in cash by a member
            of the Group under any sale and purchase agreement and/or ancillary
            documents related to such disposal;

      in each case net of:

      (i)   any Taxes and reasonable third party costs and expenses incidental
            or fairly attributable to the disposal, receipt or recovery; and

      (ii)  the aggregate amount of any indemnity or breach of warranty claims
            under any sale and purchase agreement and/or ancillary documents
            related to any disposal actually paid by a member of the Group
            provided always that the maximum aggregate amount of any such
            deduction in respect of any disposal shall not exceed 10 per cent.
            of the aggregate of all amounts referred to in paragraphs (a) to (c)
            above in respect of all disposals which are made in accordance with
            this Agreement on or prior to the date for payment pursuant to
            Clause 7.15 of the proceeds which are the subject of such deduction
            and provided further that no Finance Party shall be under any
            obligation to repay or reimburse any Net Proceeds (or corresponding
            amounts) prepaid under this Agreement.

                                       19

      NET DEBT ISSUE PROCEEDS means, in relation to any Debt Issue made prior to
      an Investment Grade Rating Date (subject always to Clause 7.16(m)) any
      proceeds received in cash by or for the account of any member of the Group
      net of any Taxes, fees and expenses payable in connection with that Debt
      Issue.

      For the purposes of the definition of Net Debt Issue Proceeds, the amount
      of proceeds actually received by a member of the VUE Group pursuant to any
      Film Rights Securitization (as defined in the VUE Bridge Extension as in
      force at the date of this Agreement) shall be equal to the amount of such
      proceeds as calculated in accordance with the definition of "Net Proceeds"
      in the VUE Bridge Extension as in force at the date of this Agreement.

      NET DIVIDEND PROCEEDS means the amount of any cash dividend (net of any
      Taxes paid by the Company in relation to such dividend) declared by the
      Company prior to an Investment Grade Rating Date (subject always to Clause
      7.16(m)) on or in respect of its share capital.

      NET EQUITY ISSUE PROCEEDS means, in relation to an Equity Issue made prior
      to an Investment Grade Rating Date (subject always to Clause 7.16(m)), any
      proceeds received in cash by or for the account of any member of the Group
      net of any Taxes, or reasonable third party costs and expenses payable in
      connection with that Equity Issue.

      NET MAROC DISPOSAL PROCEEDS means, in relation to any Maroc Telecom
      Disposal made on or after the Maroc Telecom Date but prior to an
      Investment Grade Rating Date (subject always to Clause 7.16(m)):

      (a)   the cash proceeds or purchase consideration actually received in
            cash by a member of the Group (including, without limitation,
            pursuant to earn-out provisions) as consideration for such disposal
            including (without double-counting) the amount of any Intra Group
            Loans (in respect of which a member of the Group being sold pursuant
            to such disposal is a borrower under that Intra Group Loan) which is
            repaid to continuing members of the Group using funds obtained from
            outside the Group;

      (b)   any non-cash consideration actually received by a member of the
            Group under any sale and purchase agreement relating to such
            disposal; and

      (c)   any other amount actually received or recovered in cash by a member
            of the Group under any sale and purchase agreement and/or ancillary
            documents related to such disposal;

      in each case net of:

      (i)   any Taxes and reasonable third party costs and expenses incidental
            or fairly attributable to the disposal, receipt or recovery; and

      (ii)  the aggregate amount of any indemnity or breach of warranty claims
            under any sale and purchase agreement and/or ancillary documents
            related to any disposal actually paid by a member of the Group
            provided always that the maximum aggregate amount of any such
            deduction in respect of any disposal shall not exceed 10 per cent.
            of the aggregate of all amounts referred to in paragraphs (a) to (c)
            above in respect of all disposals which are made in accordance with
            this Agreement on or prior to the date for payment pursuant to
            Clause 7.15 of the proceeds which are the subject of such deduction
            and provided further that no Finance Party shall be under any
            obligation to repay or reimburse any Net Proceeds (or corresponding
            amounts) prepaid under this Agreement.

                                       20

      NET MAROC DIVIDEND PROCEEDS means, in relation to the Maroc Telecom
      Acquired Shares if acquired otherwise than by a Maroc Telecom Excluded
      Financing, the amount of any ordinary cash dividend (net of any Taxes paid
      by Maroc Telecom in relation to such dividend) declared by Maroc Telecom
      on or after the Maroc Telecom Date but prior to an Investment Grade Rating
      Date (subject always to Clause 7.16(m)) on or in respect of such Maroc
      Telecom Acquired Shares.

      NET PROCEEDS means Net Assets Disposal Proceeds, Net Cegetel Disposal
      Proceeds, Net Debt Issue Proceeds, Net Dividend Proceeds, Net Equity Issue
      Proceeds, Net Maroc Dividends Proceeds, Net Maroc Disposal Proceeds or Net
      SIT Disposal Proceeds as the context requires.

      NET SIT DISPOSAL PROCEEDS means, in relation to any SIT Disposal made
      prior to an Investment Grade Rating Date (subject always to Clause
      7.16(m)):

      (a)   the cash proceeds or purchase consideration actually received in
            cash by a member of the Group (including, without limitation,
            pursuant to earn-out provisions) as consideration for such disposal
            including (without double-counting) the amount of any Intra Group
            Loans (in respect of which a member of the Group being sold pursuant
            to such disposal is the borrower under that Intra-Group Loan) which
            is repaid to continuing members of the Group using funds obtained
            from outside the Group;

      (b)   any non-cash consideration actually received by a member of the
            Group under any sale and purchase agreement relating to such
            disposal; and

      (c)   any other amount actually received or recovered in cash by a member
            of the Group under any sale and purchase agreement and/or ancillary
            documents related to such disposal;

      in each case net of:

      (i)   any Taxes and reasonable third party costs and expenses incidental
            or fairly attributable to the disposal, receipt or recovery; and

      (ii)  the aggregate amount of any indemnity or breach of warranty claims
            under any sale and purchase agreement and/or ancillary documents
            related to any disposal actually paid by a member of the Group
            provided always that the maximum aggregate amount of any such
            deduction in respect of any disposal shall not exceed 10 per cent.
            of the aggregate of all amounts referred to in paragraphs (a) to (c)
            above in respect of all disposals which are made in accordance with
            this Agreement on or prior to the date for payment pursuant to
            Clause 7.15 of the proceeds which are the subject of such deduction
            and provided further that no Finance Party shall be under any
            obligation to repay or reimburse any Net Proceeds (or corresponding
            amounts) prepaid under this Agreement,

      to the extent such amounts are not used to repay or prepay the Non
      Recourse Financing in accordance with its terms.

      NET VE SHARES DISPOSAL PROCEEDS means, in relation to the disposal of VE
      Shares made prior to an Investment Grade Rating Date (subject always to
      Clause 7.16(m)):

      (a)   the cash proceeds or purchase consideration actually received in
            cash by a member of the Group (including, without limitation,
            pursuant to earn out provisions) as consideration for such disposal
            including without double counting the amount of any Intra Group Loan
            (in respect of which a member of the Group being sold pursuant to

                                       21

            such disposal is the borrower under that Intra-Group Loan) which is
            repaid to continuing members of the Group using funds obtained from
            outside the Group; and

      (b)   any other amount actually received or recovered in cash by a member
            of the Group under any sale and purchase agreement and/or ancillary
            documents related to such disposal,

      in each case net of any Taxes and reasonable third party costs and
      expenses incidental or fairly attributable to the disposal, receipt or
      recovery.

      NEW INVESTORS has the meaning given to it in the VE Share Pledge
      Arrangements.

      NON-RECOURSE FINANCING means the E1,300,000,000 facility agreement between
      SIT and certain Lenders dated 6th December, 2002.

      NON-U.S. SECURITY DOCUMENTS means each of the documents listed in Parts 1
      and 3 of Schedule 4 and any other document designated as such in writing
      by the Facility Agent and the Obligors' Agent.

      NON-U.S. SUBORDINATION AGREEMENT means, in relation to an Intra Group Loan
      between members of the Non-VUE Group, the subordination agreement in the
      agreed form between the Company, certain members of the Non-VUE Group (as
      required pursuant to Clause 19.19(d)), the Lenders, the Existing Lenders
      (as therein defined) and the Security Agent.

      NON-VUE GROUP means the Group excluding the VUE Group.

      NOVATION CERTIFICATE has the meaning given to it in Clause 29.3 (Procedure
      for novations).

      OBLIGOR means the Company and each Guarantor.

      OBLIGORS' AGENT means the Company appointed to act on behalf of each
      Obligor pursuant to Clause 2.5 (Obligors' Agent).

      OFFERING CIRCULAR means the document dated 3rd April, 2003 in relation to
      the offer for sale of the High Yield Notes.

      ORIGINAL EURO AMOUNT in relation to a Loan, means:

      (a)   if that Loan is denominated in Euro, the amount of that Loan; or

      (b)   if that Loan is denominated in U.S. Dollars, the equivalent in Euro
            of the amount of that Loan at the Spot Rate of Exchange three
            Business Days before its Drawdown Date.

      ORIGINAL GROUP ACCOUNTS means the audited annual consolidated accounts of
      the Group for the 12-month period ending 31st December, 2002.

      ORIGINAL LIQUIDITY ANALYSIS means the Liquidity Analysis of the Group
      dated 2nd April, 2003 as set out in Part 2 of Schedule 9.

      PARTICIPATING MEMBER STATE means a member state of the European Community
      that adopts or has adopted the Euro as its currency in accordance with
      legislation of the European Union relating to European Economic and
      Monetary Union.

                                       22

      PARTIES FINANCIERES 3ME has the meaning given to it in the VE Share Pledge
      Arrangements.

      PARTY means a party to this Agreement.

      PBGC means the Pension Benefit Guaranty Corporation (or any successor).

      PERMITTED JOINT VENTURES means a Joint Venture in which only a member of
      the VUE Group, a member of the Music Group or Studio Canal has an
      interest, the primary purpose of which is to acquire Product or interests
      therein (including distribution rights) in the ordinary course of business
      and which does not, or could not reasonably be expected to, have a
      Material Adverse Effect or to jeopardise the guarantees given to the
      Lenders under the Finance Documents or the Lenders' security under the
      Security Documents.

      PLAN means a Single Employer Plan or a Multiple Employer Plan.

      PRODUCT FINANCING means any Financial Indebtedness incurred by any member
      of the Group, solely for the purpose of financing (whether directly or
      through a partially-owned joint venture) the production, acquisition or
      development of items of Product (including any Financial Indebtedness
      assumed in connection with the acquisition of any such items of Product or
      secured by a Security Interest on any such items of Product prior to the
      acquisition thereof) where the recourse of a creditor or any group of
      creditors in respect of that Financial Indebtedness is limited to the
      items of Product revenues generated by such items of Product or any rights
      pertaining thereto (or to the extent that any such creditor or group of
      creditors does have recourse to a member of the Group, where such recourse
      is limited to an aggregate amount at any time not to exceed E100,000,000
      (or equivalent in other currencies)) and where the indebtedness is
      unsecured save for Security Interests over such items of Product or
      revenues and such rights, and any extension, renewal, replacement or
      refinancing of such indebtedness (excluding, for the avoidance of doubt,
      any Financial Indebtedness raised or secured against Products for any
      other purposes).

      PRODUCTS means any music (including mail order music), music copyright,
      motion picture, television programming, film, videotape, video clubs, DVD
      manufactured or distributed or any other product produced for theatrical,
      non-theatrical or television release or for release in any other medium,
      in each case whether recorded on film, videotape, cassette, cartridge,
      disc or on or by any other means, method, process or device whether now
      known or hereafter developed, with respect to which a member of the Group:

      (a)   is an initial copyright owner; or

      (b)   acquires (or will acquire upon delivery) an equity interest or
            distribution rights.

      The term "items of Product" shall include the scenario, screenplay or
      script upon which such Product is based, all of the properties thereof,
      tangible or intangible, and whether now in existence or hereafter to be
      made or produced, whether or not in possession of any member of the Group,
      and all rights therein and thereto of every kind and character.

      PROJECT FINANCE INDEBTEDNESS means any Financial Indebtedness to finance a
      project incurred by a member of the Group (the RELEVANT GROUP MEMBER)
      which has no activities or material assets other than those comprised in
      the project and in respect of which the person to whom that Financial
      Indebtedness is owed by the relevant Group member has no recourse
      whatsoever to any member of the Group for the repayment of or payment of
      any sum relating to that Financial Indebtedness other than:

                                       23



         (a)      recourse to the relevant Group member for amounts limited to
                  its interest in the aggregate cash flow or net cash flow
                  (other than historic cash flow or historic net cash flow) from
                  the project; and/or

         (b)      recourse to the relevant Group member for the purpose only of
                  enabling amounts to be claimed in respect of that Financial
                  Indebtedness on an enforcement of any Security Interest given
                  by the relevant Group member over the assets comprised in that
                  project to secure the Financial Indebtedness; and/or

         (c)      recourse to a shareholder of the relevant Group member for the
                  purpose only of enforcement of any Security Interest given by
                  that shareholder over shares (or the like) of the relevant
                  Group member to secure that Financial Indebtedness.

         PURCHASE AGREEMENT means the purchase agreement dated 3rd April, 2003
         in relation to the High Yield Notes.

         RATE FIXING DAY means:

         (a)      the second Business Day before the first day of the Interest
                  Period for a Loan; or

         (b)      in the case of a Loan in Euro only, the second TARGET Day
                  before the first day of the Interest Period for that Loan,

         or, in each case, such other day on which it is market practice in the
         relevant interbank market for prime banks to give quotations for
         deposits in the relevant currency for delivery on the first day of the
         relevant Interest Period, as determined by the Facility Agent.

         RECEIPT ACCOUNT means an interest bearing blocked and secured account
         in France in the name of the Security Agent.

         RECEIPT ACCOUNT SECURITY means the account security (gage especes) in
         the agreed form and over the Receipt Account located in France.

         REFERENCE BANKS means, subject to Clause 29.4 (Reference Banks), the
         Facility Agent, BNP Paribas and an Affiliate of Citigroup agreed with
         the Obligors' Agent.

         RELEASE CONDITION DATE means the date on which the Facility Agent
         (acting on the instructions of the Majority Lenders (not to be
         unreasonably delayed)) notifies the Obligors' Agent that each of the
         following conditions has been fulfilled:

         (a)      the Company has an Investment Grade Rating for a continuous
                  period of 90 calendar days; and

         (b)      the Facility Agent has received a certificate signed by two
                  officers of the Company, one of whom shall be the Chief
                  Executive Officer or the Chief Financial Officer of the
                  Company, confirming that during such continuous period of 90
                  calendar days referred to in (a) above, no Default has
                  occurred and is continuing.

         RELEVANT INTRA GROUP DISPOSAL means the disposal of an asset:

         (a)      by an Obligor to another Obligor which could not reasonably be
                  expected to have a Material Adverse Effect or, to jeopardise
                  the guarantees given to the Lenders under the Finance
                  Documents or the Lenders' security under the Security
                  Documents;

         (b)      by a member of the Group which is not an Obligor to an
                  Obligor;

                                       24

         (c)      by a member of the Group which is not an Obligor (the
                  TRANSFEROR) to another member of the Group which is not an
                  Obligor (the TRANSFEREE) where the percentage of the share
                  capital of the Transferee owned by the Company (directly or
                  indirectly) is not less than the percentage of the share
                  capital of the Transferor owned by the Company (directly or
                  indirectly);

         (d)      between a member of the Non-VUE Group and any member of the
                  VUE Group, but only (notwithstanding paragraphs (a) to (c)
                  above) for cash management purposes expressly permitted and
                  made in accordance with Clause 19.19 or Clause 19.39 or VUE
                  Excluded Disposals or any disposal of cash inherent in
                  Excluded Financial Indebtedness;

         (e)      by way of a transaction permitted pursuant to subparagraphs
                  (b)(iv) or (v) of Clause 19.18 (Mergers and acquisitions); or

         (f)      pursuant to the Music Group Reorganisation.

         REPAYABLE FACILITIES means:

         (a)      the Back-up Facility Agreement;

         (b)      the CDC IXIS Facility Agreement;

         (c)      the E850,000,000 revolving credit facility for the
                  Company dated 2nd March, 1999;

         (d)      the E215,000,000 revolving credit facility for the
                  Company dated 6th June, 2002; and

         (e)      the E275,000,000 revolving credit facility for the
                  Company dated 28th June, 2002.

         REQUEST means a request made by the Obligors' Agent for a Loan,
         substantially in the form of Schedule 3.

         ROLLOVER LOAN means, in respect of Tranche A, one or more Loans:

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

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

         (c)      in the same currency as the maturing Loan under Tranche A; and

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

         S&P means Standard & Poor's Corporation.

         SECURED INTRA GROUP LOANS means the loans made by an Obligor to another
         member of the Group representing no less than 85 per cent. of the
         aggregate principal amount of all loans made by Obligors to other
         members of the Group, being on the date of this Agreement the loans
         referred to in Part 4 of Schedule 15 or as notified to the Facility
         Agent under and in accordance with the list most recently provided
         pursuant to Clause 19.6(g) from time to time and which do not fall
         within paragraph (c)(vii) or (xii) of Clause 19.19.

         SECURED OBLIGATIONS has the meaning given to it in the Security Sharing
         Agreement.

                                       25

         SECURITY DOCUMENT means:

         (a)      each Non-U.S. Security Documents; and

         (b)      each U.S. Security Document,

         and any other Security Document designated as such in writing by the
         Facility Agent and the Obligors' Agent.

         SECURITY INTEREST means any:

         (a)      hypotheque, nantissement, privilege, cession de creance par
                  bordereau Dailly, "gage-especes" any surete reelle or droit de
                  retention; or

         (b)      other mortgage, pledge, lien, charge (whether fixed or
                  floating), assignment, hypothecation or security interest or
                  any other agreement or arrangement having the effect of
                  conferring security.

         SECURITY RELEASE CONDITION DATE means the date upon which the Security
         Agent (acting on the instructions of the Majority Lenders (not to be
         unreasonably delayed)) notifies the Obligors' Agent and the Facility
         Agent that each of the following conditions has been fulfilled:

         (a)      the Company has an Investment Grade Rating for a continuous
                  period of 180 calendar days; and

         (b)      the Facility Agent has received a certificate signed by two
                  officers of the Company, one of whom shall be the Chief
                  Executive Officer or the Chief Financial Officer of the
                  Company, confirming that during such continuous period of 180
                  calendar days referred to in (a) above, no Default has
                  occurred and is continuing.

         SECURITY SHARING AGREEMENT means the security sharing agreement dated
         on or about the date of this Agreement between, inter alia, the
         Company, the Lenders, the Existing Lenders and the Security Agent.

         SFR means Societe Francaise du Radiotelephone S.A.

         SFR SHAREHOLDERS AGREEMENT means the shareholders' agreement among the
         Company, Compagnie Financiere pour le Radiotelephone, Vodafone Europe
         Holdings B.V., Vodafone France and Vodafone Group plc dated as of 10th
         October, 1994 as amended from time to time.

         SINGLE EMPLOYER PLAN means a single employer plan, as defined in
         Section 4001(a)(15) of ERISA, that:

         (a)      is maintained for employees of any Obligor or any ERISA
                  Affiliate and no Person other than the Obligors and the ERISA
                  Affiliates; or

         (b)      was so maintained and in respect of which any Obligor or any
                  ERISA Affiliate could have liability under Section 4069 of
                  ERISA in the event such plan has been or were to be
                  terminated.

         SIT means Societe d'Investissement pour la Telephonie S.A.

         SIT DISPOSAL means the disposal of all or any of the shares in, or
         assets or business of, SIT.

                                       26

         SIT REPAYMENT DATE means the date on which the Non Recourse Financing
         is prepaid and cancelled in full or repaid in full.

         SPECIAL MANDATORY CANCELLATION DATE means, in the event of a special
         mandatory cancellation of the High Yield Notes, the date on which the
         Company is required to promptly instruct the trustee under Clause 3.11
         of the Indenture to cancel each series of High Yield Notes.

         SPOT RATE OF EXCHANGE means the European Central Bank fixing rate for
         the notional purchase of U.S. Dollars in the European foreign exchange
         market with Euro at or about 11.00 a.m. on a particular day.

         STRUCTURE CHART means the organigram describing the capital and share
         ownership of the Obligors and the Material Subsidiaries.

         STUDIO CANAL means Studio Canal S.A.

         SUBORDINATED INTRA GROUP LOANS means:

         (a)      the loans made to an Obligor by another member of the Group
                  representing no less than 85 per cent. of the aggregate
                  principal amount of all loans made to Obligors by other
                  members of the Group, being on the date of this Agreement the
                  loans referred to in Part 5 of Schedule 15 or as notified to
                  the Facility Agent under and in accordance with the list most
                  recently provided pursuant to Clause 19.6(g) from time to time
                  and which do not fall within paragraph (c)(vii) or (xii) of
                  Clause 19.19;

         (b)      the loans made to VUE Borrower Co. by another member of the
                  VUE Group;

         (c)      the loans made to the Company by VUE Borrower Co.; and

         (d)      the loans made to the Company by Cegetel or Maroc Telecom
                  prior to the Cegetel Cash Pooling Date or the Maroc Telecom
                  Cash Pooling Date, respectively.

         SUBORDINATION AGREEMENT means each of:

         (a)      the Non-U.S. Subordination Agreement;

         (b)      the U.S. Subordination Agreement;

         (c)      the VUE Subordination Agreement; and

         (d)      the VUE Borrower Co. Release Agreement,

         and any other document designated in writing as such by the Facility
         Agent and the Obligors' Agent.

         SUBSIDIARY means a person from time to time of which a person has
         direct or indirect control (in the case of a company incorporated in
         France, within the meaning of Article L.233-3 I.1 and I.2 of the
         Nouveau Code de Commerce (as the same is in force on the date of this
         Agreement)) or which owns directly or indirectly more than fifty per
         cent. (50%) of the share capital or similar right of ownership or
         voting power.

         SUPER MAJORITY LENDERS means, at any time, Lenders:

                                       27

         (a)      whose share in the Original Euro Amount of outstanding Loans
                  and whose undrawn Commitments then aggregate 85 per cent. or
                  more of the aggregate of Original Euro Amount of all
                  outstanding Loans and the undrawn Commitments of all the
                  Lenders;

         (b)      if there is no Loan outstanding, whose undrawn Commitments
                  then aggregate 85 per cent. or more of the Total Commitments;
                  or

         (c)      if there is no Loan then outstanding and the Total Commitments
                  have been reduced to zero, whose Commitments aggregated 85 per
                  cent. or more of the Total Commitments immediately before the
                  reduction.

         SUPER MAJORITY CREDITORS has the meaning given to it in the Security
         Sharing Agreement.

         SYNDICATION DATE means the earlier of (a) the date on which the
         Facility Agent notifies the Obligors' Agent in writing that primary
         syndication of the Facility has been completed and (b) the date which
         is three months after the date of this Agreement.

         TARGET DAY means a day on which the Trans-European Automated Real-Time
         Gross Settlement Express Transfer (TARGET) System is open.

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

         TOTAL COMMITMENTS means the aggregate of the Tranche A Total
         Commitments and the Tranche B Total Commitments from time to time,
         being E2,500,000,000 at the date of this Agreement.

         TRANCHE means Tranche A or Tranche B (as each of those items is
         identified in Clause 2.1 (Facility)) as the context requires.

         TRANCHE A AVAILABILITY PERIOD means the period commencing on the date
         of this Agreement and ending on the date falling one month before the
         Final Maturity Date (or, if that is not a Business Day, the immediately
         preceding Business Day).

         TRANCHE A COMMITMENT means:

         (a)      for an Original Lender, the amount set opposite its name in
                  Part 2 of Schedule 1 (Original Parties) under the heading
                  "Commitments by Tranche" and the amount of any other Tranche A
                  Commitment it acquires; and

         (b)      for any other Lender, the amount of any Tranche A Commitment
                  it acquires,

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

         TRANCHE A LOAN means the principal amount of each Loan made to the
         Company under Tranche A or the principal amount thereof from time to
         time outstanding.

         TRANCHE A TOTAL COMMITMENTS means the aggregate of the Tranche A
         Commitments.

         TRANCHE B AVAILABILITY PERIOD means the period commencing on the date
         of this Agreement and ending on the date falling 60 calendar days
         thereafter (or, if that is not a Business Day, the immediately
         preceding Business Day).

         TRANCHE B COMMITMENT means:

                                       28

         (a)      for an Original Lender, the amount set opposite its name in
                  Part 2 of Schedule 1 (Original Parties) under the heading
                  "Commitments by Tranche " and the amount of any other Tranche
                  B Commitment it acquires; and

         (b)      for any other Lender, the amount of any Tranche B Commitments
                  it acquires,

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

         TRANCHE B LOAN means the principal amount of each Loan made to the
         Company under Tranche B or the principal amount thereof from time to
         time outstanding.

         TRANCHE B TOTAL COMMITMENTS means the aggregate of the Tranche B
         Commitments.

         TRANSTEL means Transtel S.A.

         TRANSTEL SHAREHOLDERS AGREEMENT means the shareholders' agreement among
         the Company, Compagnie Transatlantique de Radiotelephonie Cellulaire,
         Societe de Radiotelephonie Cellulaire, SBC International Inc., and SBC
         International - Societe de Radiotelephonie Cellulaire Inc. dated as of
         14th May, 1997 as amended from time to time.

         UCI means United Cinemas International Multiplex B.V.

         UCI LOAN means the loans in an aggregate principal amount of no more
         than L87,455,496.77, E98,767,416.98, Yen 1,643,968,000 and
         E15,545,829.65 made available by the Company to the VUE Group to
         finance directly or indirectly an investment in UCI and/or CIC.

         UMGT means Universal Music Group Treasury S.A.S.

         UMO REFINANCING means the facility agreement dated 31st December, 2002
         for an amount of L136,000,000 between Credit Lyonnais and Universal
         Music Operations Limited.

         UPIH 2 BV means Universal Pictures International Holdings II B.V.

         USAI means USA Interactive Inc.

         U.S. DOLLARS or U.S.$ means the lawful currency for the time being of
         the United States of America.

         U.S. SECURITY DOCUMENT means the document listed in Part 2 of Schedule
         4 and any other documents designated as such in writing by the Facility
         Agent and the Obligors' Agent.

         U.S. SUBORDINATION AGREEMENT means, in relation to an Intra Group Loan
         between certain members of the Non-VUE Group, a subordination agreement
         as required by Clause 19.19 between, inter alia, members of the Group
         party to such Intra Group Loan and the Security Agent.

         VCNA means Vivendi Communications North America, Inc.

         VE means Veolia Environnement S.A. (formerly Vivendi Environnement
         S.A.).

         VE ACQUISITION AND SUBSCRIPTION AGREEMENT means the acquisition and
         subscription agreement dated 24th June, 2002 and made between the
         Company and certain financial institutions named therein in relation to
         VE Shares, as amended on 24th November, 2002.

                                       29

         VE "B" SHARES means each or any of the "Actions B" as defined in the VE
         Share Pledge Arrangements.

         VE CALL OPTION ARRANGEMENTS means the call option set out in the VE
         Acquisition and Subscription Agreement.

         VE GROUP means VE and its Subsidiaries.

         VE SHARE PLEDGE ARRANGEMENTS means the escrow and share pledge
         agreement dated 24th November, 2002 entered into by the Company, VE,
         the Escrow Agent, Account Holder and Calculation Agent and the New
         Investors (each as defined therein) and the Existing Lenders as amended
         on 7th February, 2003 and as the same may be amended further from time
         to time.

         VE SHARES means the shares in the issued share capital of VE owned
         directly or indirectly by the Company being at the date of this
         Agreement 20.4 per cent. thereof.

         VE SHARES DISPOSAL means a disposal by the Company of the VE Shares.

         VTH means Magyar Telecom B.V.

         VTI means Vivendi Telecom International S.A.

         VTI SHARE PLEDGE means the share pledge in the agreed form to be
         granted by the Company over 100 per cent. of the shares in VTI.

         VU CANADA means Vivendi Universal Canada, Inc.

         VU NET means Vivendi Universal Net S.A.

         VU/SIT LOAN means any loan, issue of bonds or notes (including
         convertible bonds or other equity-linked debt instruments, debt
         securities or other debt instrument of any kind) raised by VU solely
         for the purposes of prepaying and cancelling in full all amounts
         outstanding under the Non Recourse Financing, such loan to be in an
         amount no less than the amount required to repay and cancel in full the
         Non Recourse Financing and on terms which provide that it (i) has an
         original scheduled maturity date falling no earlier than the later of
         the Final Maturity Date and the original scheduled maturity date under
         the Multicurrency Revolving Credit Facility and (ii) is unsecured and
         not guaranteed.

         VU/VUE PARTNERSHIP OBLIGATIONS means the financial obligations of the
         Company under the Partnership Agreement and/or the Transaction
         Agreement listed in Schedule 20.

         VUE means Vivendi Universal Entertainment LLLP.

         VUE ASSIGNMENT AGREEMENT means the assignment agreement between the
         Company, VUE, VUHI and VUE Borrower Co. in the agreed form pursuant to
         which VUE Loans are transferred or assigned to and from VUE Borrower
         Co.

         VUE BORROWER CO. means VU-VUE Holding Partnership LLP, a Delaware
         limited liability partnership.

         VUE BORROWER CO. RELEASE AGREEMENT means each release of claims against
         the Company as general partner of VUE Borrower Co. in the agreed form
         by each VUE Foreign Lender.

                                       30

         VUE BRIDGE EXTENSION means the U.S.$1,620,000,000 amended and restated
         agreement dated as of 25th November, 2002 granted in favour of VUE as
         amended, supplemented or otherwise modified.

         VUE BRIDGE REFINANCING means an issue or issues of debt instruments
         (including any debt, bank or capital markets issue or securitisation by
         any member of the VUE Group (or any trust or other entity established
         for the purposes of a securitisation)) in an aggregate principal amount
         of no more than U.S.$1,620,000,000 (net of reserves required to be
         funded with or fees payable with the proceeds thereof), for the purpose
         of raising finance solely in order to refinance (in full or in part)
         the VUE Bridge Extension and any refinancing or refinancings thereof.

         VUE DATE means the date on which the Facility Agent and the Obligors'
         Agent agree that neither the VUE Bridge Extension nor any VUE Bridge
         Refinancings nor VUE Incremental Indebtedness restrict any member of
         the VUE Group from making any distributions in cash or loans or
         otherwise disposing of assets to a person outside the VUE Group.

         VUE EXCLUDED DEBT ISSUE PROCEEDS means, prior to the VUE Date, in
         relation to a VUE debt issue, any proceeds (i) under the VUE Bridge
         Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing
         (ii) which are required to be applied by way of mandatory prepayment or
         cash collateral to the VUE Bridge Extension, VUE Incremental
         Indebtedness or any VUE Bridge Refinancing and any proceeds the
         distribution of which is otherwise restricted pursuant to the VUE
         Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge
         Refinancing but not including any such proceeds required to be so
         applied on or prior to the VUE Date and not so applied on or prior to
         the VUE Date or (iii) received pursuant to a transaction described in
         Part 2 of Schedule 19.

         VUE EXCLUDED DISPOSAL means any disposal of any asset described in Part
         1 of Schedule 19.

         VUE EXCLUDED DISPOSAL PROCEEDS means, prior to the VUE Date, any
         proceeds from the disposal of any assets of any member of the VUE Group
         (i) being the disposal of proceeds under the VUE Bridge Extension, VUE
         Incremental Indebtedness or any VUE Bridge Refinancing (ii) which are
         required to be applied by way of mandatory prepayment or cash
         collateral to the VUE Bridge Extension, VUE Incremental Indebtedness or
         any VUE Bridge Refinancing and any proceeds the distribution of which
         is otherwise restricted pursuant to the VUE Bridge Extension, VUE
         Incremental Indebtedness or any VUE Bridge Refinancing but not
         including any such proceeds required to be so applied on or prior to
         the VUE Date but not so applied on or prior to the VUE Date; or (iii)
         which are received pursuant to a VUE Excluded Disposal.

         VUE EXCLUDED EQUITY ISSUE PROCEEDS means, prior to the VUE Date, in
         relation to a VUE equity issue, any proceeds required to be applied by
         way of mandatory prepayment or cash collateral of the VUE Bridge
         Extension, VUE Incremental Indebtedness or any VUE Bridge Refinancing
         and any proceeds the distribution of which is otherwise restricted
         pursuant to the VUE Bridge Extension, any VUE Bridge Refinancing or VUE
         Incremental Indebtedness but not including any such proceeds required
         to be so applied on or prior to the VUE Date and not so applied on or
         prior to the VUE Date.

         VUE EXCLUDED PROCEEDS means any VUE Excluded Disposal Proceeds and VUE
         Excluded Equity Issue Proceeds and VUE Excluded Debt Issue Proceeds.

         VUE FOREIGN LENDER means each of Universal Pictures (Australasia) Pty
         Ltd., Universal Pictures Benelux N.V., Universal Studios Canada Inc.,
         Universal Pictures Switzerland GmbH, Universal Pictures Germany GmbH,
         Universal Pictures (Denmark) A.S., Universal


                                       31

         Pictures Iberia, S.L., Universal Pictures Finland OY, Universal
         Pictures Video (France) SA, Universal Pictures Production Limited,
         Universal Studios Holdings (UK) Ltd, Universal Pictures International
         Operations Limited, Universal Pictures (UK) Limited, Working Title
         Films Limited, Universal Pictures International Limited, Universal
         Pictures International B.V., Universal Studios International B.V.,
         Universal Pictures (Italy) S.R.L., Universal Pictures (Japan) Inc.,
         Meteor Film Prod B.V., Universal Pictures Licensing Benelux B.V.,
         Universal Pictures Benelux B.V., Universal Norway AS and Universal
         Pictures Nordic AB and each other Subsidiary of VUE which becomes a
         permitted lender to VUE Borrower Co. and, in each case, which is party
         to the VUE Subordination Agreement and VUE Borrower Co. Release
         Agreement.

         VUE GROUP means VUE and each of its Subsidiaries.

         VUE INCREMENTAL INDEBTEDNESS means debt proceeds raised by VUE or its
         Subsidiaries up to an aggregate outstanding amount at any time of
         U.S.$600,000,000 (or equivalent in other currencies) which (i) is
         without recourse as to security or guarantees from the Company or any
         other member of the Non-VUE Group, (ii) the terms of which, in respect
         of the making of any distributions in cash or loans or otherwise
         disposing of assets by any member of the VUE Group to a person outside
         the VUE Group is no more restrictive than the terms of the VUE Bridge
         Extension or VUE Bridge Refinancing and (iii) does not contain any
         restriction or prohibition which conflict with the Facility Agreement
         or the VUE Bridge Refinancing.

         VUE LOAN means:

         (a)      as at the date of this Agreement, each loan listed in Part 3
                  of Schedule 15 (Intra Group Loans); and

         (b)      each loan made between a member of the Non-VUE Group and a
                  member of the VUE Group which is permitted by, and is made in
                  accordance with, the provisions of Clause 19.19 (Loans out,
                  Intra Group Loans).

         VUE LOAN AGREEMENT means a loan agreement in the agreed form evidencing
         a VUE Loan.

         VUE PARTNERSHIP AGREEMENT means the agreement entered into on as of 7th
         May, 2002 between the partners of VUE (amended as of 25th November,
         2002).

         VUE RELEVANT RESTRICTION means any restriction on up-streaming of cash
         from a member of the VUE Group to a member of the Non-VUE Group,
         whether by way of dividends, distributions, Intra Group Loans or
         otherwise under the Matsushita Shareholder Agreements, the VUE
         Partnership Agreement, the VUE Transaction Agreement or the VUE Bridge
         Extension (in each case existing and in force at the date of this
         Agreement) or any VUE Bridge Refinancing (provided that, in the case of
         a VUE Bridge Refinancing, such transaction, is permitted or required
         pursuant to the terms of the primary refinancing of the VUE Bridge
         Extension) or any VUE Incremental Indebtedness, including for the
         avoidance of doubt, any tax indemnity due and payable by the Company to
         USAi or payment in lieu thereof pursuant to the arrangements relating
         thereto in force at the date of this Agreement and which would be
         triggered by the making of a distribution or the payment of a dividend
         by VUE.

         VUE RETENTION means at any time in respect of any Debt Issue, Equity
         Issue or Assets Disposal made by any member of the Group, any amount of
         the Net Proceeds, as the case may be, which:

         (a)      is required by any of the VUE Partnership Agreement, the VUE
                  Transaction Agreement and the Matsushita Shareholder
                  Agreements to be retained by any


                                       32

                  member of the VUE Group or the Music Group or paid by any
                  member of the VUE Group or the Music Group to any third party
                  other than a Lender pursuant to this Agreement;

         (b)      prior to the VUE Date, is required by any member of the VUE
                  Group to maintain liquidity in the ordinary course of
                  business; or

         (c)      prior to the VUE Date, is to be applied in the ordinary course
                  of business of any member of the VUE Group up to a maximum
                  aggregate principal amount of U.S.$25,000,000 (or equivalent
                  in other currencies).

         VUE SIDE LETTER means the letter agreement dated 7th May, 2002 between
         the parties to the VUE Partnership Agreement (other than Barry Diller).

         VUE SUBORDINATION AGREEMENT means the subordination agreement in the
         agreed form between, inter alia, VUE, the VUE Foreign Lenders and
         VUHIC.

         VUE TRANSACTION AGREEMENT means the Amended and Restated Transaction
         Agreement dated as of 16th December, 2001 and entered into between the
         Company, Universal Studios Inc., USA Networks, Inc., USANi LLC, Liberty
         Media Corporation and Barry Diller.

         VUHIC means Vivendi Universal Holding I Corp.

         VUP means Vivendi Universal Publishing S.A.

         WAIVERS AND AMENDMENTS means each waiver, amendment and consent:

         (a)      identified in column 2 of Schedule 13 under or in respect of
                  the Affected Facilities; and

         (b)      from any third party or under any other document which is
                  binding on any member of the Group,

         which is necessary for the entry into and performance by each Obligor
         of the transactions contemplated by the Finance Documents and the High
         Yield Note Documents.

         WITHDRAWAL LIABILITY has the meaning specified in Part I of Subtitle E
         of Title IV of ERISA.

1.2      CONSTRUCTION

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

         (i)      documents being in the AGREED FORM means documents (A) in a
                  form previously agreed in writing by or on behalf of the
                  Facility Agent and the Company, or (B) in a form substantially
                  as set out in any Schedule to any Finance Document, or (C) (if
                  not falling within (A) or (B) above) in form and substance
                  satisfactory to the Facility Agent (acting on the instructions
                  of the Majority Lenders);

                  an AMENDMENT includes a supplement, novation or re-enactment
                  and AMENDED is to be construed accordingly;

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

                                       33

                  the AWARENESS or KNOWLEDGE of an Obligor shall be limited to
                  the actual awareness or knowledge of any executive officer or
                  any member of the senior management of that Obligor based upon
                  reasonable enquiry;

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

                  a CAPITAL CONTRIBUTION means a share capital contribution or
                  shareholder loan;

                  CONTROL means (unless otherwise stated including as stated in
                  the definition of CHANGE OF CONTROL) the power to direct, or
                  cause the direction of, the management or policies of a
                  person, whether through the ownership of voting capital or
                  securities, by contract or otherwise and in connection with a
                  person incorporated in the United States of America the
                  possession, direct or indirect, of the power to vote more than
                  50 per cent. of the voting interests of such person;

                  a CREDIT BALANCE on a cash concentration account means the
                  prior day's closing balance value (EN POSITION);

                  a DEFAULT is "continuing" or "outstanding" if it has not been
                  remedied or waived in accordance with the provisions of this
                  Agreement;

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

                  the EQUIVALENT IN OTHER CURRENCIES or like terms, unless
                  otherwise agreed or the context otherwise requires, means the
                  equivalent in one currency of an amount in another currency as
                  determined by the Facility Agent by reference to market rates
                  of exchange prevailing at the time;

                  a MONTH is a reference to a period starting on one day in a
                  calendar month and ending on the numerically corresponding day
                  in the next calendar month, except that:

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

                  (B)      if an Interest Period commences 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 it is to end;

                  For the purposes of the definitions of:

                  (i)      NET ASSETS DISPOSAL PROCEEDS, NET CEGETEL DISPOSAL
                           PROCEEDS, NET MAROC DISPOSAL PROCEEDS, NET SIT
                           DISPOSAL PROCEEDS and NET VE SHARES DISPOSAL
                           PROCEEDS, the date on which such Disposal shall be
                           MADE, shall mean the date on which an agreement or
                           contract relating to the relevant Disposal has been
                           executed or signed by the relevant member of the
                           Group (whether or not subject to any conditions to
                           closing or completion);

                  (ii)     NET DEBT ISSUE PROCEEDS, the date on which a Debt
                           Issue shall be MADE shall mean the date on which the
                           instrument constituting the Debt Issue has been
                           executed by the relevant member of the Group (whether
                           or not subject to any conditions to closing or
                           completion); and

                                       34

                  (iii)    NET EQUITY ISSUE PROCEEDS, the date on which an
                           Equity Issue shall be MADE shall mean the date on
                           which the instrument constituting the purchase or
                           subscription of such Equity Issue has been executed
                           by the relevant member of the Group and/or the
                           subscriber as the case may be (whether or not subject
                           to any condition to closing or completion);

                  ORDINARY DIVIDENDS means, in relation to any dividend to be
                  applied pursuant to Clause 7, a dividend declared out of net
                  income or operating profit on a rolling annual basis;

                  a PERSON includes any individual, company, corporation, joint
                  stock company, unincorporated association or body of persons
                  (including a partnership, trust, joint venture or consortium),
                  government, state, agency, international organisation or other
                  entity whether or not having separate legal personality;

                  RECONSTRUCTION includes, in relation to any company, any
                  contribution of part of its business in consideration of
                  shares (apport partiel d'actifs) and any demerger (scission)
                  implemented in accordance with Articles L.236-1 to L.236-2 of
                  the French Commercial Code;

                  a REGULATION includes any decret, regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law but if not, being of a type with which the person
                  to which the regulation relates is accustomed to complying) of
                  any governmental, intergovernmental or supranational body,
                  agency, department or regulatory, self-regulatory or other
                  authority or organisation;

                  SG INVESTMENT BANKING is a reference to the investment banking
                  division of Societe Generale and a reference to SG Investment
                  Banking shall include a reference to Societe Generale; and

                  SHARE CAPITAL includes any class of shares, equity securities
                  or other equity instruments carrying a right to vote, or a
                  right to receive dividends, income or other distributions, or
                  any security or instrument which is convertible into, or which
                  confers a right to convert into, such shares, securities or
                  instruments including, without limitation, any depository
                  receipts, depository shares, shares, securities or other
                  instruments issued on or by way of conversion, redemption,
                  bonus, preference, option or otherwise or in respect of any
                  substitution or exchange thereof;

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

         (iii)    a Clause or a Schedule is a reference to a Clause of or a
                  Schedule to this Agreement;

         (iv)     a person includes its successors, transferees, novatees and
                  assigns;

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

         (vi)     a time of day is a reference to Central European time.

(b)      Unless the contrary intention 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.

(c)      The index to and the headings in this Agreement are for convenience
         only and are to be ignored in construing this Agreement.


                                       35

(d)      Unless expressly provided to the contrary in a Finance Document, a
         person who is not a party to a Finance Document may not enforce any of
         its terms under the Contracts (Rights of Third Parties) Act 1999.

(e)      Notwithstanding any term of any Finance Document, the consent of any
         third party is not required for any variation (including any release or
         compromise of any liability under) or termination of that Finance
         Document.

(f)      This Agreement is to be entered into with the benefit of and subject to
         the Security Sharing Agreement.

(g)      Unless expressly provided to the contrary, the obligations of the
         Obligors in connection with any Finance Document are joint and several.

2.       FACILITY

2.1      FACILITY

         Subject to the terms of this Agreement, the Lenders agree to make
         available the following credit facilities to the Company:

         (a)      a dual currency revolving credit facility designated as
                  Tranche A under which the Lenders will, when requested by the
                  Obligors' Agent, make loans in Euro or Dollars to or for the
                  account of the Company during the Tranche A Availability
                  Period up to an aggregate principal Original Euro Amount not
                  exceeding the Tranche A Total Commitments; and

         (b)      a dual currency term loan facility designated as Tranche B
                  under which the Lenders will, when requested by the Obligors'
                  Agent, make loans in Euro or Dollars to or for the account of
                  the Company during the Tranche B Availability Period up to an
                  aggregate principal Original Euro Amount not exceeding the
                  Tranche B Total Commitments.

2.2      NO EXCEEDING TOTAL COMMITMENTS

(a)      The aggregate Original Euro Amount of all outstanding Loans under a
         Tranche shall not, at any time, exceed the Commitments under that
         Tranche.

(b)      No Lender is obliged to lend if it would cause the Original Euro Amount
         of its participations in the Loans in respect of a Tranche to exceed
         its Commitment with respect to such Tranche at that time.

2.3      LIMITATIONS

(a)      Loans must be drawn under Tranche B in priority to Tranche A to the
         fullest extent of any Tranche B Commitment which is available to be
         drawn at the date of any Request.

(b)      No more than 10 Loans may be outstanding at any time.

2.4      NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS

(a)      The obligations of a Finance Party under the Finance Documents are
         several. Failure of a Finance Party to carry out those obligations does
         not relieve any other Party of its obligations under the Finance
         Documents. No Finance Party is responsible for the obligations of any
         other Finance Party under the Finance Documents.


                                       36

(b)      The rights of a Finance Party under the Finance Documents are divided
         rights. A Finance Party may, except as otherwise stated in the Finance
         Documents, separately enforce those rights.

2.5      OBLIGORS' AGENT

(a)      Each Obligor by its execution of this Agreement (including by way of
         execution of a Guarantor Accession Agreement) irrevocably authorizes
         the Company to act on its behalf as its agent in relation to the
         Finance Documents and irrevocably authorises:

         (i)      the Company on its behalf to supply all information concerning
                  itself, its financial condition and otherwise to the Lenders
                  as contemplated under this Agreement and to give all notices
                  and instructions to be given by such Obligor under the Finance
                  Documents (and the Finance Parties may rely on any Requests or
                  other notices given by the Company on behalf of such Obligor),
                  to execute on its behalf any Finance Document (including,
                  without limitation, any waiver or amendment request) and to
                  enter into any agreement in connection with the Finance
                  Documents notwithstanding that the same may affect such
                  Obligor, without further reference to or the consent of such
                  Obligor; and

         (ii)     each Finance Party to give any notice, demand or other
                  communication to be given to or served on such Obligor
                  pursuant to the Finance Documents to the Company on its
                  behalf, and in each such case such Obligor will be bound
                  thereby as though such Obligor itself had given such notice
                  and instructions, executed such agreement or received any such
                  notice, demand or other communications.

         (iii)    Every act, omission, agreement, undertaking, settlement,
                  waiver, notice or other communication given or made by the
                  Company under this Agreement, or in connection with this
                  Agreement (whether or not known to any other Obligor and
                  whether occurring before or after such other Obligor became an
                  Obligor under this Agreement) shall be binding for all
                  purposes on all other Obligors as if the other Obligors had
                  expressly made, given or concurred with the same (and
                  irrespective of whether the Company has complied with its
                  obligations under paragraph (b) below). In the event of any
                  conflict between any notices or other communications of the
                  Company and any other Obligor, those of the Company shall
                  prevail.

(b)      Without prejudice to the foregoing, the Company shall at all times keep
         each Obligor informed of all such actions taken or notices or
         instructions given by the Company on behalf of such Obligor and to the
         extent practicable or desirable consult with and take instructions from
         such Obligor.

3.       PURPOSE

(a)      The purpose of the Facility is:

         (i)      to provide the Company with a liquidity back-up to the
                  disposal of the assets under its disposal programme;

         (ii)     subject to paragraph (b) below, for general corporate
                  purposes.

(b)      The Facility may not be drawn to fund, and no Loan shall be permitted
         to be applied towards:

         (i)      repayment or prepayment of any amounts outstanding under the
                  Repayable Facilities;


                                       37

         (ii)     any acquisition or investment (other than (A) the acquisition
                  permitted under Clause 19.18(b)(xi)) or (B) any other
                  acquisition or investment made pursuant to the exercise by a
                  third party of a put option existing at the time of this
                  Agreement and disclosed in Schedule 17;

         (iii)    repayment or prepayment of any amounts outstanding under the
                  Multicurrency Revolving Credit Facility; or

         (iv)     repayment, prepayment, redemption, repurchase or defeasance
                  (by way of legal defeasance or covenant defeasance) of any of
                  the High Yield Notes.

(c)      Without affecting the obligations of the Company in any way, no Finance
         Party is bound to monitor or verify the application of any Loan.

(d)      The Company undertakes that no Loan shall be drawn in any way which
         would be illegal under any provision of any law applicable to the
         Company or cause the invalidity or unenforceability of any Loan under
         any applicable law.

4.       CONDITIONS PRECEDENT

4.1      INITIAL CONDITIONS PRECEDENT

         The first Request may not be delivered until the Facility Agent has
         notified the Obligors' Agent and the Lenders that it has received all
         of the documents set out in Part 1 of Schedule 2 in the agreed form no
         later than 60 calendar days from the date of this Agreement. The
         Facility Agent shall promptly notify the Obligors' Agent and the
         Lenders promptly on such receipt.

4.2      FURTHER CONDITIONS PRECEDENT

         The obligation of each Lender to participate in any Loan under Clause
         5.3 (Advance of Loan) is subject to the further conditions precedent
         that:

         (a)      on both the date of the Request and the Drawdown Date:

                  (i)     in the case of a Rollover Loan, the representations
                          and warranties in Clause 18 (Representations and
                          Warranties) to be repeated on those dates are correct
                          in all material respects and will be correct in all
                          material respects immediately after the Loan is made
                          and, in any other case the representations and
                          warranties in Clause 18 (Representations and
                          Warranties) to be repeated on those dates are and will
                          be correct in all respects immediately after the Loan
                          is made;

                  (ii)    in the case of a Rollover Loan, no Event of Default
                          is outstanding or could reasonably be expected to
                          result from the Loan and, in the case of any other
                          Loan, no Default is outstanding or could reasonably be
                          expected to result from the Loan; and

                  (iii)   the Company is in compliance with all provisions of
                          Clause 19.5 (Liquidity). If the Company fails to
                          comply with Clause 19.5 (Liquidity), no Lender will be
                          obliged to participate in any Loan under Clause 5.3
                          (Advance of Loan) during the grace period provided for
                          under Clause 21.3(b) until such time as the Facility
                          Agent, acting on the instructions of the Majority
                          Lenders, confirms to the Obligors' Agent that it has
                          received an up-to-date Liquidity Analysis
                          demonstrating that the aggregate of net cash available
                          and undrawn


                                       38

                  facilities (including, for the avoidance of doubt, this
                  Facility (as defined in Clause 19.5(a)) for the period of
                  three months from that date is more than E100,000,000,
                  together with a certificate of the Chief Financial Officer of
                  the Company confirming that the Liquidity Analysis has been
                  prepared in good faith and is based on reasonable assumptions;

(b)      no event or series or events has occurred since 7th March, 2003 which,
         in the opinion of the Majority Lenders (acting in good faith), has or
         could reasonably be expected to have a Material Adverse Effect (other
         than any event or change that has occurred and has been disclosed in
         the Original Liquidity Analysis);

(c)      the making of the Loan would not cause Clause 2 (Facility) to be
         contravened; and

(d)      in respect of a Request for a Tranche A Loan prior to a Release
         Condition Date, the aggregate amount of:

         (i)      the requested Loan mentioned in the Request; and

         (ii)     the credit balance of the Concentration Accounts at the date
                  of the Request, does not, in aggregate, exceed E250,000,000,
                  unless the purpose of the proposed Loan is to meet a cash
                  outflow payment:

                  (A)      identified in the Liquidity Analysis most recently
                           delivered to the Facility Agent under this Agreement
                           and falling due no later than two weeks after the
                           proposed Drawdown Date (after taking into account all
                           actual cash inflows and those projected for such
                           period in that Liquidity Analysis); or

                  (B)      of no more than E50,000,000 (in aggregate) falling
                           due in the ordinary course of business.

5.       DRAWDOWN

5.1      AVAILABILITY PERIOD

         The Company may borrow a Loan under a Tranche on any Business Day
         during the Availability Period for that Tranche if the Facility Agent
         receives from the Obligors' Agent, (in the case of the first Request)
         not later than 9.00 a.m. two Business Days, and (in the case of any
         other Request), not later than 11.00 a.m. three Business Days (or four
         Business Days in the case of a Loan in U.S. Dollars), before the
         proposed Drawdown Date, a duly completed Request. Each Request is
         irrevocable.

5.2      COMPLETION OF REQUESTS

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

         (a)      it identifies the Tranche to which the Loan applies;

         (b)      it complies with Clause 4.1 (Initial conditions precedent);

         (c)      the Drawdown Date is a Business Day falling during the Tranche
                  A Availability Period (in the case of a Tranche A Loan) or the
                  Tranche B Availability Period (in the case of a Tranche B
                  Loan);


                                       39

         (d)      the Original Euro Amount of the requested Loan is:

                  (i)      (save in the case of a drawing to meet a cash outflow
                           payment under Clause 4.2(d)(ii)(B)) a minimum of
                           E50,000,000 and an integral multiple of E25,000,000;
                           or

                  (ii)     the maximum undrawn amount available under this
                           Agreement for Loans under the relevant Tranche on the
                           proposed Drawdown Date; or

                  (iii)    such other amount as the Facility Agent (acting on
                           the instructions of the Lenders) and the Obligors'
                           Agent may agree;

         (e)      where the purpose of the proposed Loan pursuant to Clause
                  4.2(d)(ii)(A) is to meet a cash outflow payment identified in
                  the Liquidity Analysis most recently delivered to the Facility
                  Agent under this Agreement, such outflow payment is identified
                  in the Request;

         (f)      the amount selected under paragraph (e) above does not cause
                  Clause 2 (Facility) to be contravened;

         (g)      the currency selected complies with Clause 10 (Currency of
                  Loans);

         (h)      the Interest Period selected complies with Clause 8 (Interest
                  Periods) and does not extend beyond the Final Maturity Date;
                  and

         (i)      the payment instructions specify an account of the Company in
                  Paris (in the case of Euro) or in New York (in the case of
                  U.S. Dollars).

                  Each Request must specify one Loan only.

5.3      ADVANCE OF LOAN

(a)      The Facility Agent shall promptly notify each Lender of the details of
         the requested Loan and the amount of its participation in that Loan.

(b)      Subject to the terms of this Agreement, each Lender shall make its
         participation in any Loan available to the Facility Agent for the
         Company in the currency in which it is to be borrowed on the relevant
         Drawdown Date.

(c)      Subject to the terms of this Agreement, the amount of each Lender's
         participation in each Loan will be the proportion of the Loan which its
         Tranche A Commitment or Tranche B Commitment bears respectively to the
         Total Tranche A Commitments or Total Tranche B Commitments on the date
         of receipt by the Facility Agent of the relevant Request.

6.       REPAYMENT

6.1      MATURITY DATES

(a)      The Company shall repay each Tranche A Loan made to it in full on its
         Maturity Date to the Facility Agent for the Lenders.

(b)      The Company shall repay each Tranche B Loan made to it in full on the
         Final Maturity Date to the Facility Agent for the Lenders.


                                       40

6.2      REBORROWING

         Subject to the other terms of this Agreement, any amount of a Tranche A
         Loan repaid under Clause 6.1(a) (Maturity Dates) may be reborrowed but
         no amount of the Tranche B Loan which is repaid or prepaid may be
         reborrowed.

7.       PREPAYMENT AND CANCELLATION

7.1      AUTOMATIC CANCELLATION

(a)      The undrawn Tranche A Commitment of each Lender shall be automatically
         cancelled at the close of business in Paris on the last day of the
         Tranche A Availability Period.

(b)      The undrawn Tranche B Commitment of each Lender shall be automatically
         cancelled at the close of business in Paris on the last day of the
         Tranche B Availability Period.

7.2      VOLUNTARY PREPAYMENT AND CANCELLATION

(a)      Subject to Clause 26.3 (Other indemnities), the Company may, by the
         Obligors' Agent giving not less than three Business Days' prior notice
         (or such shorter period as the Majority Lenders may agree) to the
         Facility Agent, prepay any Loan made to it in whole or in part on any
         day (but, if in part, in a minimum of E10,000,000 and an integral
         multiple of E5,000,000). Any prepayment of a Loan shall be applied
         against the participations of the Lenders in that Loan pro rata.

(b)      The Company may, without penalty or obligation to indemnify, by the
         Obligors' Agent giving not less than three Business Days' prior notice
         (or such shorter period as the Majority Lenders may agree) to the
         Facility Agent, cancel the unutilised portion of the Total Commitments
         in whole or in part (but, if in part, in a minimum of E10,000,000 and
         an integral multiple of E5,000,000). Any cancellation shall be applied
         pro rata against the Commitments under each Tranche (except at any time
         between a Release Condition Date and the next subsequent Investment
         Downgrading Date when any cancellation shall be applied in such
         proportion against Commitments under each Tranche as determined by the
         Company) and pro rata against each Lender's Commitment in the relevant
         Tranche.

7.3      RIGHT OF PREPAYMENT

         If:

         (a)      the Company is required to pay to a Lender any additional
                  amounts under Clause 12 (Taxes); or

         (b)      the Company is required to pay to a Lender any amount under
                  Clause 14 (Increased Costs),

         then, without prejudice to the obligations of the Company under those
         Clauses, the Obligors' Agent may, whilst the circumstances continue,
         give a notice of prepayment and cancellation to that Lender through the
         Facility Agent. On the date specified in the notice (not being later
         than 10 Business Days after the date the notice is given) the Company
         shall prepay that Lender's participation in all the Loans made to it
         and the Lender's Commitment shall be cancelled.


                                       41

7.4      MANDATORY PREPAYMENT FROM NET DEBT ISSUE PROCEEDS

         The Company shall ensure that an aggregate amount equal to 33 per cent.
         of Net Debt Issue Proceeds (which, in relation to any member of the
         Cegetel Group or the Maroc Telecom Group, is equal to the proportion of
         the amounts set out in the definition of Net Debt Issue Proceeds which
         is equal to the percentage of the share capital of the relevant member
         of the Cegetel Group or the Maroc Telecom Group owned (directly or
         indirectly) by the Company at the time of the Debt Issue (excluding,
         prior to the SIT Repayment Date, the percentage, if any, of the share
         capital of the relevant member of the Cegetel Group which is held
         (directly or indirectly) by SIT but including such percentage on or
         after the SIT Repayment Date)) is applied in prepayment and
         cancellation of the Facility in the proportion and manner set out in
         Clause 7.14 (Mandatory prepayment and cancellation - application of
         proceeds) and at the time set out in Clause 7.15 (Timing of mandatory
         prepayments and cancellations and Receipt Account) and pending such
         prepayment shall ensure that forthwith on receipt of such proceeds by
         any member of the Group, such an amount is deposited in the Receipt
         Account in accordance with Clause 7.15 (Timing of mandatory prepayments
         and cancellations and Receipt Account).

7.5      MANDATORY PREPAYMENT FROM NET DIVIDEND PROCEEDS

         The Company shall ensure that an aggregate amount equal to 50 per cent.
         of Net Dividend Proceeds is applied in prepayment and cancellation of
         the Facility in the proportion and manner set out in Clause 7.14
         (Mandatory prepayment and cancellation - application of proceeds) and
         at the time set out in Clause 7.15 (Timing of mandatory prepayments and
         cancellations and Receipt Account).

7.6      MANDATORY PREPAYMENT FROM NET EQUITY ISSUE PROCEEDS

         The Company shall ensure that an amount equal to 16 2/3 per cent. (or,
         in relation to any Equity Issue made or entered into on or after the
         Maroc Telecom Date by any member of the Maroc Telecom Group, 33 per
         cent.) of Net Equity Issue Proceeds (which, in relation to any member
         of the Cegetel Group or any member of the Maroc Telecom Group (other
         than in respect of secondary Equity Issues in respect of Maroc
         Telecom), is equal to the proportion of the amounts set out in the
         definition of Net Equity Issue Proceeds which is equal to the
         percentage of the share capital of the relevant member of the Cegetel
         Group or the Maroc Telecom Group (owned directly or indirectly) by the
         Company at the time of the Equity Issue (excluding, prior to the SIT
         Repayment Date, the percentage, if any, of the share capital of the
         relevant member of the Cegetel Group which is held (directly or
         indirectly) by SIT but including such percentage on or after the SIT
         Repayment Date)) is applied in prepayment and cancellation of the
         Facility in the proportion and manner set out in Clause 7.14 (Mandatory
         prepayment and cancellation - application of proceeds) and the Company
         shall ensure that any such amount due is paid at the time set out in
         Clause 7.15 (Timing of mandatory prepayments and cancellations and
         Receipt Account) and pending such prepayment the Company shall ensure
         that forthwith on receipt of such proceeds by any member of the Group,
         such an amount is deposited in the Receipt Account in accordance with
         Clause 7.15 (Timing of mandatory prepayments and cancellations and
         Receipt Account).

7.7      MANDATORY PREPAYMENT FROM VE SHARES DISPOSAL

         The Company shall ensure that an amount equal to 50 per cent. of the
         Net VE Shares Disposal Proceeds is applied in prepayment and
         cancellation of Facility in the proportion and manner set out in Clause
         7.14 (Mandatory prepayment and cancellation - application of proceeds)
         and the Company shall ensure that any such amount due is paid at the
         time set out in Clause 7.15 (Timing of mandatory prepayments and
         cancellations and Receipt Account)


                                       42

         and pending such prepayment the Company shall ensure that forthwith on
         receipt of such proceeds by any member of the Group, such an amount is
         applied in accordance with Clause 7.15 (Timing of mandatory prepayments
         and cancellations and Receipt Account).

7.8      MANDATORY PREPAYMENT FROM ASSETS DISPOSALS

(a)      Subject to paragraph (b), the Company shall ensure that an amount equal
         to 16 2/3 per cent. (or in the case of an Assets Disposal in respect of
         Maroc Telecom, on or after the Maroc Telecom Date, 33 per cent.) of the
         aggregate amount of all Net Assets Disposal Proceeds, shall be applied
         in prepayment and cancellation of the Facility in the proportion and
         manner set out in Clause 7.14 (Mandatory prepayment and cancellation -
         application of proceeds) and the Company shall ensure that any such
         amount due is paid at the time set out in Clause 7.15 (Timing of
         mandatory prepayments and cancellations and Receipt Account) and
         pending such prepayment the Company shall ensure that forthwith on
         receipt of such proceeds (or, in relation to Net Assets Disposal
         Proceeds comprised by non cash consideration, forthwith upon the
         conversion of that consideration into cash) by a member of the Group,
         such an amount is applied in accordance with Clause 7.15 (Timing of
         mandatory prepayments and cancellations and Receipt Account).

(b)      This Clause 7.8 shall not apply to a disposal:

         (i)      of an asset where the Net Assets Disposal Proceeds are
                  E30,000,000 or less (or equivalent in other currencies);

         (ii)     in the ordinary course of trading of stock in trade, business
                  inventories, fixtures and fittings, furniture and other office
                  equipment; or

         (iii)    of any Permitted Joint Venture.

7.9      MANDATORY PREPAYMENT - CEGETEL DISPOSAL AND SIT DISPOSAL

         The Company shall ensure that an amount equal to 25 per cent. of the
         proportion of the Net Cegetel Disposal Proceeds and the Net SIT
         Disposal Proceeds which is equal to the percentage of the share capital
         of SIT or the relevant member of the Cegetel Group (owned directly or
         indirectly) by the Company at the time of the disposal (excluding,
         prior to the SIT Repayment Date, the percentage, if any, of the share
         capital of the relevant member of the Cegetel Group which is held
         (directly or indirectly) by SIT but including such percentage on or
         after the SIT Repayment Date)) is applied in prepayment and
         cancellation of the Facility in the proportion and manner set out in
         Clause 7.14 (Mandatory prepayment and cancellation - application of
         proceeds) and the Company shall ensure that any such amount due is paid
         at the time set out in Clause 7.15 (Timing of mandatory prepayments and
         cancellations and Receipt Account) and pending such payment, the
         Company shall ensure that forthwith on receipt of such proceeds (or, in
         relation to Net Cegetel Disposal Proceeds and Net SIT Disposal Proceeds
         comprised by non-cash consideration forthwith upon the conversion of
         that consideration into cash) by any member of the Group, such an
         amount is applied in accordance with Clause 7.14 (Mandatory prepayment
         and cancellation - application of proceeds) provided that such
         prepayment and cancellation shall not be required to be made to the
         extent that the Company is unable, by reason of contractual
         restrictions or obligations in any shareholder agreements or the Non
         Recourse Financing in force at the date of this Agreement or by law or
         regulation binding on it, to procure or direct the upstreaming of such
         proceeds (whether by way of intra company loan or dividend or
         otherwise).


                                       43

7.10     MANDATORY PREPAYMENT - MAROC TELECOM

(a)      The Company shall ensure that on or after the Maroc Telecom Date an
         aggregate amount equal to 100 per cent. of Net Maroc Dividend Proceeds
         is applied in prepayment and cancellation of the Facility in the
         proportion and manner set out in Clause 7.14 (Mandatory prepayment and
         cancellation - application of proceeds) and at the time set out in
         Clause 7.15 (Timing of mandatory prepayments and cancellations and
         Receipt Account).

(b)      The Company shall ensure that on or after the Maroc Telecom Date an
         amount equal to 33 per cent. of the aggregate amount of all Net Maroc
         Disposal Proceeds (being an amount equal to the proportion of the
         amounts set out in the definition of Net Maroc Disposal Proceeds which
         is equal to the percentage of the share capital of the relevant member
         of the Maroc Group (owned directly or indirectly) by the Company at the
         time of the disposal) shall be applied in prepayment and cancellation
         of the Facility in the proportion and manner set out in Clause 7.14
         (Mandatory prepayment and cancellation - application of proceeds) and
         the Company shall ensure that any such amount due is paid at the time
         set out in Clause 7.15 (Timing of mandatory prepayments and
         cancellations and Receipt Account) and pending such prepayment the
         Company shall ensure that forthwith on receipt of such proceeds (or, in
         relation to Net Maroc Disposal Proceeds comprised by non cash
         consideration, forthwith upon the conversion of that consideration into
         cash) by a member of the Group, such an amount is applied in accordance
         with Clause 7.14 (Mandatory prepayment and cancellation - application
         of proceeds) provided that such prepayment and cancellation shall not
         be required to be made to the extent that the Company is unable, by
         reason of contractual restrictions or obligations in any shareholder
         agreement in force at the date of this Agreement to procure or direct
         the upstreaming of such proceeds (whether by way of intra company loan
         or dividend or otherwise).

7.11     MANDATORY PREPAYMENT - NON COMPLIANCE WITH FINANCIAL COVENANTS

(a)      If the Company fails to comply with any provision of Clause 20
         (Financial Covenants), it shall ensure that the Facility shall be
         cancelled in full and the Company shall repay each Loan made to it in
         full to the Facility Agent for the Lenders forthwith and in any event
         by the date falling 15 Business Days from the date of the failure to
         comply with the relevant provision of Clause 20 (Financial Covenants),
         in the manner set out in Clause 7.14 (Mandatory prepayment and
         cancellation - application of proceeds).

(b)      The provisions of this Clause 7.11 shall apply and remain in force at
         all times throughout the term of this Agreement (notwithstanding, for
         the avoidance of doubt, the occurrence of a Release Condition Date).

7.12     MANDATORY PREPAYMENT - CHANGE OF CONTROL

(a)      Upon the occurrence of a Change of Control event (other than under
         paragraph (a) of that definition), the Company shall ensure that the
         Facility shall be cancelled in full and the Company shall repay each
         Loan made to it in full to the Facility Agent for the Lenders forthwith
         and in any event by the date falling 15 Business Days after the date on
         which such Change of Control takes effect, in the manner set out in
         Clause 7.14 (Mandatory prepayment and cancellation - application of
         proceeds).

(b)      Upon the occurrence of a Change of Control event under paragraph (a) of
         that definition:

         (i)      if the relevant Change of Control was not subject to the prior
                  approval or recommendation of the Company's board of directors
                  (conseil d'administration) (a "BOARD APPROVAL") the Total
                  Commitments shall be cancelled in full forthwith and


                                       44

                  the Company shall repay each Loan made to it in full to the
                  Facility Agent for the Lenders on the date falling 15 Business
                  Days after the date on which such Change of Control becomes
                  legally effective; or

         (ii)     if a Board Approval has been given in respect of the relevant
                  Change of Control, then any Lender may, no later than 30
                  calendar days following the Change of Control becoming legally
                  effective, notify the Obligors' Agent (through the Facility
                  Agent) that its participation in the Loan is to be prepaid in
                  full and that its Commitment be cancelled. If a Lender
                  delivers a notice under this paragraph (ii):

                  (A)      on the date of that notice the Lender's Commitment
                           shall be cancelled; and

                  (B)      on the date following 5 Business Days after the date
                           of the notice the Company shall prepay that Lender's
                           participation in the Loans in full.

(c)      The provisions of this Clause 7.12 shall apply and remain in force at
         all times throughout the term of this Agreement (notwithstanding, for
         the avoidance of doubt, the occurrence of a Release Condition Date).

7.13     MANDATORY PREPAYMENT AND CANCELLATION - HIGH YIELD/SIT

(a)      The Facility will be automatically terminated and the Total Commitments
         then not cancelled shall be automatically reduced and cancelled at the
         close of business on the Special Mandatory Cancellation Date.

(b)      If the relevant member of the Group does not comply with its
         obligations under the drag along and/or tag along rights granted to SIT
         in respect of shares in Cegetel and/or the Acquired Shares, then the
         Total Commitments shall be cancelled in full forthwith and the Company
         shall forthwith repay each Loan made to it in full to the Facility
         Agent for the Lenders.

(c)      The provisions of paragraphs (a) and (b), above, shall apply and remain
         in force at all times throughout the term of this Agreement
         (notwithstanding, for the avoidance of doubt, the occurrence of a
         Release Condition Date).

7.14     MANDATORY PREPAYMENT AND CANCELLATION - APPLICATION OF PROCEEDS

(a)      All amounts required to be prepaid under Clauses 7.4 (Mandatory
         prepayment from Net Debt Issue Proceeds) through to 7.13 (Mandatory
         prepayment and cancellation - High Yield/SIT) shall be applied in
         prepayment of each of Tranche A Loans and Tranche B Loans then
         outstanding pro rata in proportion to the outstanding Loans.

(b)      Where an amount is to be applied in prepayment of any Loans under this
         Clause 7.14 and either no Loan is outstanding or such amount is greater
         than the then outstanding amount of Loans, if no Loan is outstanding,
         such amount or otherwise, an amount equal to the difference between
         such amount and the amount of Loans actually prepaid shall be applied
         in cancellation of the undrawn Total Commitments and the remaining cash
         proceeds (if any) shall be retained by the Company.

7.15     TIMING OF MANDATORY PREPAYMENTS AND CANCELLATIONS AND RECEIPT ACCOUNT

(a)      Any mandatory prepayment of a Loan due under a Tranche pursuant to
         Clause 7.4 (Mandatory prepayment from Net Debt Issue Proceeds), Clause
         7.6 (Mandatory prepayment from Net Equity Issue Proceeds), Clause 7.7
         (Mandatory prepayment from VE Shares Disposal), and Clauses 7.9
         (Mandatory Prepayment - Cegetel Disposal and SIT Disposal) and


                                       45

         7.8 (Mandatory prepayment from Assets Disposals) and 7.10(b) (Mandatory
         prepayment - Maroc Telecom) shall be due on and from receipt of the
         relevant Net Proceeds by the relevant member of the Group party to any
         such debt issue, equity issue or disposal and shall be paid either:

         (i)      on the earlier of the date falling three months from the
                  receipt of the relevant Net Proceeds and the last day of the
                  Interest Period for that Loan during which the relevant Net
                  Proceeds were received (or, converted into cash in relation to
                  Net Assets Disposal Proceeds comprised by non-cash
                  consideration) by a member of the Group; or

         (ii)     at such earlier time following receipt of such Net Proceeds
                  (or, their conversion into cash in relation to Net Assets
                  Disposal Proceeds comprised by non-cash consideration) by a
                  member of the Group as the Facility Agent (only upon the
                  occurrence of an Event of Default which is continuing), or as
                  the Company, shall direct.

(b)      Any mandatory prepayment of a Loan due under a Tranche under Clause 7.5
         (Mandatory prepayment from Net Dividend Proceeds) and Clause 7.10(a)
         (Mandatory prepayment - Maroc Telecom)) shall be due on and from the
         date the dividend is declared and shall be paid on the last day of the
         Interest Period for that Loan during which the relevant dividend was
         paid.

(c)      Any cancellation of Commitments pursuant to Clause 7.14 (Mandatory
         prepayment and cancellation - application of proceeds) shall be made on
         the day on which either the relevant Net Proceeds were received (or
         converted into cash in the case of Net Assets Disposal Proceeds and Net
         Maroc Disposal Proceeds comprised by non-cash consideration) by a
         member of the Group or (in the case of Clauses 7.5 and 7.10(a)) on the
         date the relevant dividend was declared.

(d)      Pending the application of any amount required to be prepaid under this
         Facility in accordance with this Clause 7 (Prepayment and Cancellation)
         any such amount shall be deposited in the Receipt Account.

(e)      Each Obligor irrevocably authorises and instructs the Security Agent to
         apply any amount deposited in the Receipt Account towards prepayment of
         the Loans or (if applicable) payment to the Obligors, as the case may
         be (in the case of the Loans, at the times referred to in paragraphs
         (a) (i) and (ii) above or, in the case of payment to the Obligors,
         promptly following deposit of the same).

(f)      Amounts standing to the credit of the Receipt Account (and any interest
         accruing in respect thereof) may not be withdrawn and may only be used
         (i) in mandatory prepayment of the Loans on the earlier of (A) the last
         day of the Interest Period for the relevant Loan, (B) such time as the
         Company shall direct in accordance with Clause 7.15(a)(ii) and (C) on
         the date falling three months from the receipt thereof and/or (ii)
         following the occurrence of an Event of Default which is continuing, in
         payment of any amounts due to the Finance Parties under the Finance
         Documents and/or (iii) (if applicable) in payment to the Obligors.

7.16     MISCELLANEOUS PROVISIONS

(a)      Any notice of prepayment and/or cancellation under this Agreement is
         irrevocable. The Facility Agent shall notify the Lenders promptly of
         receipt of any such notice.


                                       46

(b)      All prepayments under this Agreement shall be made together with
         accrued interest on the amount prepaid and, subject to any Break Costs
         pursuant to Clause 26.3 (Other indemnities), without premium or
         penalty.

(c)      Any partial prepayment of the Loans under a Tranche will be applied
         against the Loans comprised in that Tranche pro rata.

(d)      No prepayment or cancellation is permitted except in accordance with
         the express terms of this Agreement.

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

(f)      Without prejudice to the rights of the Company to re-borrow under
         Clause 6.2 (Reborrowing), no amounts of any mandatory payment prepaid
         by the Company may be reborrowed. Where an amount of any mandatory
         prepayment is prepaid the corresponding Commitment will be cancelled
         automatically.

(g)      Each Obligor shall ensure that none of its Subsidiaries will be under
         any restriction (other than any restriction or obligation under any VUE
         Incremental Indebtedness or VUE Bridge Refinancing or any shareholder
         restriction or obligation existing prior to the date of this Agreement
         including without limitation under the Matsushita Shareholder
         Agreements, the Maroc Telecom Shareholder Agreement, the Transtel
         Shareholder Agreement, the Cegetel Shareholder Agreement, the SFR
         Shareholder Agreement, the VUE Partnership Agreement, the VUE
         Transaction Agreement, the VUE Bridge Extension or the Non Recourse
         Financing in each case existing and in force prior to the date of this
         Agreement or imposed by law or regulation binding on it) to pay, make
         or declare any dividends, return on capital, repayment of capital
         contributions or other distributions (whether in cash or in kind) or
         make any distribution of assets or other payments whatsoever in respect
         of share capital or up-stream amounts (whether by Intra Group Loan or
         otherwise), whether directly or indirectly, in each case, to the extent
         necessary to meet its payment obligations under Clauses 7.4 (Mandatory
         prepayment from Net Debt Issue Proceeds) to 7.14 (Mandatory prepayment
         and cancellation - application of proceeds) above and to the fullest
         extent permitted by law and contractual restrictions (including,
         without limitation, for the avoidance of doubt, under the Matsushita
         Shareholder Agreements, VUE Partnership Agreement and the VUE
         Transaction Agreement) existing at the date of this Agreement and each
         Obligor shall use its reasonable endeavours to ensure that the same are
         paid, made or declared.

(h)      Subject to paragraphs (g) and (i) of this Clause, the Company shall, to
         the fullest extent permitted by applicable law, procure that all Net
         Proceeds are made available to it promptly following receipt thereof by
         the relevant member of the Group.

(i)      Each Obligor shall use its reasonable endeavours to procure (subject to
         any contractual restrictions existing on the date of this Agreement or
         restrictions imposed by law or regulation binding on it) that any
         member of the Cegetel Group, SIT, any member of the Maroc Telecom Group
         and/or Transtel upstreams to its shareholders (whether by way of
         dividend, (subject to any restriction imposed by the Non Recourse
         Financing on the up-streaming of intercompany loans to be made by
         Cegetel) intra company loan or otherwise) Net Assets Disposal Proceeds
         received by it or its Subsidiaries.

(j)      Until a Release Condition Date occurs, the Company will not make any
         voluntary prepayment or cancellation under the Existing Bank Debt
         unless it also makes a voluntary prepayment or cancellation under this
         Agreement at the same time and in the same amount. If a Release
         Condition Date occurs but any time thereafter an Investment Downgrading
         Date occurs the


                                       47

         provisions of this paragraph (j) shall be automatically reinstated and
         remain in force from the Investment Downgrading Date until such time as
         a Release Condition Date occurs again in which case the provisions of
         the first sentence of this Clause shall apply.

(k)      The Company will not amend or vary (or agree to amend or vary) any
         mandatory prepayment provision of the Existing Bank Debt in any way
         which results or could reasonably be expected to result, in the opinion
         of the Majority Lenders, in any such provision becoming more onerous to
         the Company or otherwise be detrimental or prejudicial to their rights
         and remedies under the Finance Documents (including, without
         limitation, any amendment to the relevant mandatory prepayment
         percentages) than those in force at the date of this Agreement without
         the prior written consent of the Majority Lenders.

(l)      (i)      If any amount is required to be applied in prepayment and
                  cancellation of the Facility, in respect of any Disposal, Debt
                  Issue or Equity Issue made by any member of the VUE Group
                  (other than any Asset Disposal or secondary Equity Issue by
                  the Company of its interest in VUE or of all or substantially
                  all of the assets of the VUE Group in any one or more related
                  transactions), the Company shall be obliged to use its
                  reasonable endeavours to upstream (subject to any VUE Relevant
                  Restriction) by way of distributions/dividends or Intra Group
                  Loans an amount equal to such amount in order to make any such
                  prepayment and cancellation of the Facility, provided that:

                  (A)      to the extent that the Company cannot at any time,
                           due to any VUE Relevant Restriction, so up-stream any
                           such amount in full by way of distributions/dividends
                           and so apply the relevant proceeds in full in
                           prepayment and cancellation of the Facility, the
                           Company shall further use its reasonable endeavours
                           to up-stream an amount equivalent to the shortfall by
                           way of Intra Group Loans; and

                  (B)      to the extent that the Company cannot at any time,
                           due to any VUE Relevant Restriction, apply the
                           proceeds of any up-streaming by way of Intra Group
                           Loan in full prepayment and cancellation of the
                           Facility, the Company shall not be required so to
                           apply such proceeds, but shall deposit such proceeds
                           promptly upon receipt of the same in the
                           Concentration Accounts.

         (ii)     For the avoidance of doubt, if any amount is required to be
                  applied in prepayment and cancellation of the Facility, in
                  respect of any Asset Disposal or secondary Equity Issue by the
                  Company of its interest in VUE or of all or substantially all
                  of the assets of the VUE Group in any one or more related
                  transactions, the Company shall be obliged to apply an amount
                  equal to any such amount in prepayment and cancellation of the
                  Facility notwithstanding any VUE Relevant Restriction binding
                  upon the Company or any other member of the Group with regard
                  to the upstreaming orpayment of any such amount (whether by
                  way of dividend or Intra Group Loan) and otherwise in
                  accordance with the terms of this Agreement.

(m)      (i)      The provisions of Clauses 7.4 (Mandatory prepayment from
                  Net Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc
                  Telecom), inclusive, shall apply and remain in force at all
                  times throughout the term of this Agreement unless and until
                  the Company obtains an Investment Grade Rating and for so long
                  as the Company maintains an Investment Grade Rating. If an
                  Investment Grade Rating Date occurs and until the occurrence
                  of an Investment Downgrading Date, then the provisions of
                  Clause 7.4 (Mandatory prepayment from Net Debt Issue Proceeds)
                  to 7.10 (Mandatory prepayment - Maroc Telecom) shall cease to
                  apply except with respect to any Net Proceeds received after
                  the Investment Grade Rating Date in relation to any Disposal,
                  Debt Issue, or Equity Issue made before the Investment Grade
                  Rating Date


                                       48

                  or any Net Dividend Proceeds declared prior to the Investment
                  Grade Rating Date which shall be applied in accordance with
                  the provisions of Clause 7.4 (Mandatory prepayment from Net
                  Debt Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc
                  Telecom) inclusive, notwithstanding that the Company has an
                  Investment Grade Rating.

         (ii)     If the Company obtains an Investment Grade Rating but at any
                  time thereafter an Investment Downgrading Date occurs, all the
                  provisions of Clauses 7.4 (Mandatory prepayment from Net Debt
                  Issue Proceeds) to 7.10 (Mandatory prepayment - Maroc
                  Telecom), inclusive, shall be automatically reinstated and
                  apply from the Investment Downgrading Date with respect to any
                  Disposal, Debt Issue or Equity Issue made on or after the
                  Investment Downgrading Date or any Net Dividend Proceeds
                  declared on or after the Investment Downgrading Date, in each
                  case, until the Company obtains an Investment Grade Rating in
                  which case the provisions of sub-paragraph (i) above shall
                  then apply.

8.       INTEREST PERIODS

8.1      GENERAL

(a)      Each Tranche A Loan has only one Interest Period.

(b)      Each Tranche B Loan will have successive Interest Periods.

8.2      DURATION

(a)      Each Interest Period for a Tranche A Loan will commence on its Drawdown
         Date. Each Interest Period for a Tranche B Loan will commence on its
         Drawdown Date or the expiry of its preceding Interest Period.

(b)      Subject to the following provisions of this Clause 8, each Interest
         Period will be one, two, three or six months selected by the Obligors'
         Agent or such shorter period as may be agreed with the Facility Agent.

(c)      The Obligors' Agent shall select an Interest Period for a Tranche A
         Loan in the relevant Request. The Obligors' Agent shall select the
         Interest Period for a Tranche B Loan in the relevant Request, or, if
         the Tranche B Loan has been borrowed, in a notice received by the
         Facility Agent no later than 11.00 a.m. three Business Days before the
         commencement of that Interest Period.

(d)      If the Obligors' Agent fails to select an Interest Period for a Tranche
         A Loan or a Tranche B Loan in accordance with paragraph (c) above, that
         Interest Period will, subject to the other provisions of this Clause 8,
         be three months.

(e)      Notwithstanding paragraph (b) above, prior to the Syndication Date each
         Interest Period shall (subject to the following provisions of this
         Clause) be one week or such longer period as agreed by the Obligors'
         Agent and the Facility Agent (after consultation with the Lenders).

8.3      NON-BUSINESS DAYS

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


                                       49

8.4      CONSOLIDATION

         Notwithstanding Clause 8.2 (Duration), the first Interest Period for
         each Tranche B Loan shall end on the same day as the current Interest
         Period for any other Tranche B Loan denominated in the same currency as
         that Tranche B Loan. On the last day of those Interest Periods, those
         Tranche B Loans shall be treated as one Tranche B Loan.

8.5      NO OVERRUNNING OF THE FINAL MATURITY DATE

         If an Interest Period for a Loan would otherwise overrun the Final
         Maturity Date, it shall be shortened so that it ends on the Final
         Maturity Date.

8.6      OTHER ADJUSTMENTS

         The Facility Agent (after consultation with the Lenders) and the
         Company may enter into such other arrangements as they may agree for
         the adjustment of Interest Periods and the consolidation and/or
         splitting of Loans.

8.7      NOTIFICATION

         The Facility Agent shall notify the Lenders and the Obligors' Agent of
         the duration of each Interest Period promptly after ascertaining its
         duration.

8.8      EFFECTIVE GLOBAL RATE

         In order to comply with the provisions of Articles L313-1 and L313-2 of
         the French consumer Code (Code de la Consommation) the effective global
         rate (taux effectif global) calculated in accordance with the articles
         referred to above is as set out in a letter dated the date of this
         Agreement from the Facility Agent to the Obligor's Agent.

9.       INTEREST

9.1      INTEREST RATE

(a)      (i)      The rate of interest on each Loan for its Interest Period
                  is the rate per annum determined by the Facility Agent to be
                  the aggregate of the applicable:

                  (A)      Applicable Margin; and

                  (B)      EURIBOR in respect of a Loan denominated in Euro, or
                           LIBOR in the case of a Loan in U.S. Dollars.

         (ii)     In addition to interest under sub-paragraph (i), the Company
                  shall also pay to the Facility Agent for each Lender, that
                  Lender's Mandatory Cost (if any).

(b)      Mandatory Costs due under paragraph (a)(ii) shall be notified by each
         Lender to the Obligors' Agent through the Facility Agent on an annual
         basis and, in relation to a Lender which ceases to be a Lender, on or
         before the date it ceases to be a Lender, and in each case shall be due
         within five Business Days of the relevant notification.

9.2      DUE DATES

         Except as otherwise provided in this Agreement, accrued interest on
         each Loan is payable by the Company on the last day of each Interest
         Period for that Loan.


                                       50

9.3      MARGIN ADJUSTMENT

(a)      Subject to the following provisions of this Clause 9.3, the Applicable
         Margin, in respect of Tranche A and in respect of Tranche B is 2.75 per
         cent. per annum.

(b)      The Applicable Margin (expressed as a percentage per annum) in respect
         of Tranche A Loans only will be adjusted from time to time in
         accordance with this Clause 9.3 and shall be equal to the percentage
         rate per annum specified in the table below set opposite the long term
         unsecured credit ratings assigned by both (but not one of) S&P and
         Moody's to the Company, as follows:



                  RATINGS S&P                    RATINGS MOODY'S                     TRANCHE A MARGIN
                                                                                         (% P.A.)
                                                                               
                  B+ or lower                      B 1 or lower                           2.75%
                      BB-                              Ba 3                               2.00%
                       BB                              Ba 2                               1.75%
                      BB+                              Ba 1                               1.50%
                      BBB-                            Baa 3                               1.25%
                 BBB or higher                   Baa 2 or higher                          1.00%


(c)      If the long term unsecured credit rating assigned to the Company by one
         of Moody's or S&P is lower than the long term unsecured credit rating
         of the other so assigned, then the Applicable Margin will be determined
         on the basis of the lower rating.

(d)      Notwithstanding any other provision in this Clause 9.3, no reduction to
         the Applicable Margin in respect of Tranche A shall be available before
         the date falling six months from the first Drawdown Date.

(e)      Any adjustment to the Applicable Margin (whether upwards or downwards)
         in accordance with this Clause 9.3 will take effect immediately upon
         the later date of official confirmation by S&P and Moody's (in the case
         of a ratings upgrade) or the date of publication by S&P and Moody's (in
         the case of a ratings downgrade), in each case of any relevant change
         to the long term unsecured credit rating assigned by them to the
         Company.

(f)      If at any time either Moody's or S&P (the WITHDRAWING RATING AGENCY)
         for any reason do not, or cease to, assign a long term unsecured credit
         rating (CREDIT RATING) to the Company by, the Company shall within 15
         calendar days of the date on which the credit rating ceases to be
         assigned (the NON RATING DATE), appoint Fitch, or with the agreement of
         the Facility Agent acting on the instructions of the Majority Lenders,
         acting reasonably, another rating agency (each a REPLACEMENT RATING
         AGENCY). The Facility Agent shall, in consultation with the Company,
         select the applicable equivalent ratings grid of such replacement
         rating agency for the purposes of paragraph (b) above which shall, with
         the prior consent of the Majority Lenders, be binding on all Parties.
         The replacement rating agency shall assign a credit rating to the
         Company within 90 calendar days. If (i) the Company fails to appoint a
         replacement rating agency within 15 calendar days of the non rating
         date, or (ii) if appointed, the replacement rating agency fails to
         assign a credit rating to the Company within 90 calendar days of the
         non rating date, the Applicable Margin in respect of Tranche A shall be
         2.75 per cent. per annum. On and after the non rating date, the then
         Applicable Margin shall continue until the date of official
         confirmation by the replacement rating agency (in the case of a ratings
         upgrade) or the date of publication by the replacement rating agency
         (in the case of a ratings downgrade) (the ADJUSTMENT DATE). If the
         credit rating assigned to the Company by the replacement rating agency
         is lower than the last credit rating assigned by the withdrawing rating
         agency, the Company shall pay to the Facility Agent forthwith on demand
         the sum determined by the Facility Agent to be the difference between
         the then Applicable Margin for


                                       51

         the period from the non rating date until the adjustment date and the
         Applicable Margin which would have applied had it been determined by
         reference to the credit rating assigned by the replacement rating
         agency for the same period. (g) Promptly upon becoming aware of the
         same, the Company shall notify the Facility Agent in writing if any
         change in the long term unsecured credit rating assigned to it by
         Moody's and/or S&P occurs or the circumstances contemplated in
         paragraphs (c), (e) or (f) arise.

9.4      DEFAULT INTEREST

(a)      If an Obligor fails to pay any amount payable by it to a Finance Party
         under the Finance Documents, it shall, forthwith on demand by the
         Facility Agent, pay interest on the overdue amount from the due date up
         to the date of actual payment, as well after as before judgment, at a
         rate (the DEFAULT RATE) determined by the Facility Agent to be two per
         cent. per annum above the higher of:

         (i)      the rate on the overdue amount under Clause 9.1 (Interest
                  rate) immediately before the due date (if of principal); and

         (ii)     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 such successive
                  Interest Periods of such duration (not exceeding three months)
                  as the Facility Agent may determine (each a DESIGNATED
                  INTEREST PERIOD).

(b)      If the Facility Agent determines that deposits in the currency of the
         overdue amount are not at the relevant time being made available by the
         Reference Banks to leading banks in the relevant interbank market, the
         default rate will be determined by reference to the cost of funds to
         the Facility Agent from whatever sources it may reasonably select.

(c)      The default rate will be determined by the Facility Agent on each
         Business Day or the first day of, or two Business Days before the first
         day of, the relevant Designated Interest Period, as appropriate.

(d)      Default interest will be compounded at the end of each Designated
         Interest Period.

(e)      For the avoidance of doubt, default interest shall not be payable on
         any amount due under Clause 7 (Prepayment and Cancellation) for
         mandatory prepayments which are to be paid on the last day of the
         relevant Interest Period or any such amount, unless it is not prepaid
         on such date.

9.5      NOTIFICATION

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

10.      CURRENCY OF LOANS

10.1     SELECTION

(a)      The Obligors' Agent shall select the currency of a Loan in the relevant
         Request.

(b)      The currency of each Loan must be Euro or U.S. Dollars.

(c)      A Loan may not be denominated in more than one currency.


                                       52

(d)      The Facility Agent shall notify each Lender and the Obligors' Agent of
         the currency and the Original Euro Amount of each Loan to be
         denominated in U.S. Dollars, and the applicable Spot Rate of Exchange,
         promptly after they are ascertained.

(e)      If before 10.30 a.m. (Paris time) on any Rate Fixing Date, the Facility
         Agent receives notice from a Lender that it is impracticable for that
         Lender (the AFFECTED LENDER) to fund its participation in the relevant
         Loan in U.S. Dollars during the Interest Period for that Loan in the
         ordinary course of business in the relevant interbank market and/or any
         such Loan might contravene any law or regulation that Loan will not be
         made in U.S. Dollars but the Affected Lender's participation in the
         Loan (or if more than one Lender is similarly affected, those Lenders
         participation in the Loan) shall be treated as a separate Loan
         denominated in Euros and the Facility Agent shall determine the
         relevant EURIBOR.

10.2     TRANCHE B LOAN - IN U.S. DOLLARS

(a)      At the end of each Interest Period for a Tranche B Loan denominated in
         U.S. Dollars, the Facility Agent shall calculate the difference between
         the amount of the Tranche B Loan in U.S. Dollars for the current
         Interest Period and the amount of the Tranche B Loan in U.S. Dollars
         for the next Interest Period. For these purposes, the amount of the
         Tranche B Loan in U.S. Dollars for the next Interest Period will be
         determined by notionally converting into U.S. Dollars the Original Euro
         Amount of the Tranche B Loan on the basis of the Spot Rate of Exchange
         one Business Day before the Rate Fixing Day for that new Interest
         Period.

(b)      At the end of the current Interest Period (but always subject to
         paragraph (c)) below if the amount of the Tranche B Loan in U.S.
         Dollars for the next Interest Period is less than for the preceding
         Interest Period, the Facility Agent shall promptly notify the Obligors'
         Agent and the Company shall repay the difference on the last day of the
         current Interest Period.

(c)      If the Spot Rate of Exchange for the next Interest Period shows an
         appreciation or depreciation of U.S. Dollars against Euros of less than
         5 per cent. when compared with the Original Exchange Rate, no amounts
         are payable in respect of the difference. In this Clause 10, ORIGINAL
         EXCHANGE RATE means the Spot Rate of Exchange used for determining the
         amount of a Tranche B Loan in U.S. Dollars for the Interest Period
         which is the later of the following:

         (i)      the first Interest Period of that Tranche B Loan; and

         (ii)     the most recent Interest Period immediately prior to which a
                  difference was required to be paid under this Clause 10.2.

10.3     PREPAYMENTS AND REPAYMENTS

         If a Tranche B Loan is to be prepaid by reference to an Original Euro
         Amount, the amount in U.S. Dollars to be repaid or prepaid shall be
         determined by reference to the Spot Rate of Exchange last used for
         determining the amount of that Loan in U.S. Dollars under this Clause
         10 or, if applicable, the Original Exchange Rate.

10.4     NOTIFICATION

         The Facility Agent shall notify the Lenders and the Obligors' Agent of
         any amounts (and the applicable Spot Rate of Exchange) and whether any
         payment is required to be made under this Clause 10 promptly after they
         are ascertained.


                                       53

11.      PAYMENTS

11.1     PLACE

         Unless a Finance Document expressly specifies that payments are to be
         made under it in another manner, all payments by an Obligor or a Lender
         under the Finance Documents shall be made to the Facility Agent to its
         account at such office or bank:

         (a)      in the case of U.S. Dollars, New York; or

         (b)      in the case of Euro, in the principal financial centre of a
                  Participating Member State or London,

         as it may notify to the Obligors' Agent or Lender for this purpose by
         not less than five Business Days' prior notice. Notwithstanding the
         above, all payments by the Company or the Obligors' Agent to the
         Lenders under Clauses 23.1 (Arrangement fees) and Clause 24 (Expenses)
         shall be made direct to the Facility Agent (for distribution to the
         Mandated Lead Arrangers).

11.2     FUNDS

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

11.3     DISTRIBUTION

(a)      Each payment received by the Facility Agent under the Finance Documents
         for another Party shall, subject to paragraphs (b), (c) and (d) below,
         be made available by the Facility Agent to that Party by payment (on
         the date and in the currency and funds of receipt) to its account with
         such office or bank in the principal financial centre of the country of
         the relevant currency as it may notify to the Facility Agent for this
         purpose by not less than five Business Days' prior notice.

(b)      The Facility Agent may apply any amount received by it for an Obligor
         in or towards payment (on the date and in the currency and funds of
         receipt) of any amount due from that Obligor under this Agreement or in
         or towards the purchase of any amount of any currency to be so applied.

(c)      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 Party until it has established that it has actually
         received that sum. The Facility Agent may, however, assume that the sum
         has been paid to it in accordance with this Agreement, and, in reliance
         on that assumption, make available to that Party a corresponding
         amount. If the sum has not been made available but the Facility Agent
         has paid a corresponding amount to another Party, that Party shall
         forthwith on demand by the Facility Agent refund the corresponding
         amount together with interest on that amount from the date of payment
         to the date of receipt, calculated at a rate determined by the Facility
         Agent to reflect its cost of funds.

11.4     CURRENCY

(a)      A repayment or prepayment of a Loan is payable in the currency in which
         the Loan is denominated on its due date.


                                       54

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

(c)      Amounts payable in respect of costs, expenses and Taxes and the like
         are payable in the currency in which they are incurred.

(d)      Any other amount payable under the Finance Documents is, except as
         otherwise provided in this Agreement, payable in Euro.

11.5     SET-OFF AND COUNTERCLAIM

         All payments made by an Obligor to a Finance Party under the Finance
         Documents shall be made without set-off or counterclaim.

11.6     NON-BUSINESS DAYS

(a)      Save as otherwise provided by this Agreement, if a payment to a Finance
         Party under the Finance Documents is due on a day which is not a
         Business Day or a Target Day, the due date for that payment shall
         instead be the next Business Day or Target Day in the same calendar
         month (if there is one) or the preceding Business Day or Target Day (if
         there is not).

(b)      During any extension of the due date for payment of any principal under
         this Agreement interest is payable on that principal at the rate
         payable on the original due date.

11.7     PARTIAL PAYMENTS

(a)      If the Facility Agent receives a payment insufficient to discharge all
         the amounts then due and payable by the Obligors to the Finance Parties
         under the Finance Documents, the Facility Agent shall apply that
         payment towards the obligations of the Obligors under the Finance
         Documents in the following order:

         (i)      FIRST, in or towards payment pro rata of any unpaid fees,
                  costs and expenses of each Agent under the Finance Documents;

         (ii)     SECONDLY, in or towards payment pro rata of any accrued
                  interest 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 all the Lenders, vary the
         order set out in sub-paragraphs (a)(ii) to (iv) above.

(c)      Paragraphs (a) and (b) above will override any appropriation made by an
         Obligor.

12.      TAXES

12.1     TAXES

(a)      All payments by each Obligor under the Finance Documents shall be made
         free and clear of and without any deduction for or on account of any
         Taxes, except to the extent that an Obligor is required by law to make
         payment subject to any Taxes. Subject to paragraphs (b)


                                       55

         and (c) below, if any Taxes or amounts in respect of Taxes must be
         deducted from any amounts payable or paid by an Obligor, or paid or
         payable by the Facility Agent to a Lender, under the Finance Documents,
         the Obligor concerned shall pay such additional amounts as may be
         necessary to ensure that the relevant Lender receives a net amount
         equal to the full amount which it would have received had payment not
         been made subject to any deduction for or on account of any Taxes.

(b)      If an Obligor is, or becomes obliged, to make any deductions from any
         amounts paid or payable by that Obligor to a Finance Party and is
         prevented by applicable law from paying the additional amounts referred
         to in paragraph (a) above:

         (i)      the Finance Party (if a Lender) may, by notice to the
                  Obligors' Agent through the Facility Agent, require the
                  relevant Obligor to prepay all or part of its participation in
                  the Loan; and

         (ii)     the relevant Obligor shall prepay the participation of that
                  Lender in the Loans made to it on the date falling 20 calendar
                  days after the date of the notice,

         provided that notwithstanding such prepayment the Obligor concerned
         shall be obliged to pay the additional amounts to that Lender which it
         is prevented from paying as soon as it may legally do so and such
         obligation shall survive any cancellation or termination of this
         Agreement.

(c)      No Obligor is obliged to pay any additional amounts for the account of
         a Finance Party pursuant to paragraph (a) above in respect of any
         deduction to the extent that the obligation to pay such additional
         amounts would not have arisen but for the gross negligence or wilful
         misconduct of such Finance Party or the failure by such Finance Party
         to provide (within a reasonable period after being requested to do so
         by the Obligors' Agent or the Facility Agent) any reasonably required
         form, certificate or other documentation (1) the provision of which
         would have relieved the relevant Obligor from the relevant withholding
         obligation or would have reduced the amount of the relevant withholding
         obligation (but only to the extent of such reduction) and (2) which it
         is within the power of such Finance Party to provide.

(d)      Each Obligor shall:

         (i)      pay when due all Taxes required by law to be deducted or
                  withheld by it from any amounts paid or payable to the Finance
                  Parties under the Finance Documents;

         (ii)     within 30 calendar days of the payment being made, deliver to
                  the Facility Agent for the relevant Lender evidence
                  satisfactory to that Lender (including all relevant Tax
                  receipts) that the payment has been duly remitted to the
                  appropriate authority; and

         (iii)    except as provided in paragraph (e) below, on demand (which
                  demand shall be accompanied by a certificate from the Finance
                  Party setting out, in reasonable detail, calculations relating
                  to the amount claimed) indemnify each Finance Party against
                  any loss or liability which that Finance Party determines will
                  be or has been suffered (directly or indirectly) by that
                  Finance Party solely or on account of Tax in relation to a
                  payment received or receivable (or any payment deemed to be
                  receivable) under a Finance Document.

(e)      Paragraph (d)(iii) above does not apply to:

         (i)      any Tax assessed on a Finance Party under the laws of the
                  jurisdiction in which:


                                       56


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

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

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

      (ii)  any loss or liability for which such Finance Party is compensated by
            the payment of additional amounts under paragraph (a) above or would
            have been compensated but for one of the exceptions referred to in
            paragraph (c).

12.2  TAX CREDIT

      If, following the payment by an Obligor of any additional amounts under
      Clause 12.1 above, the Facility Agent or any Lender shall solely determine
      that it has received or been granted a credit against or remission for any
      Taxes payable by it allocable by the Facility Agent or such Lender to the
      relevant deduction or withholding (a TAX CREDIT) and that Lender has
      retained (including through any applicable Tax Credit) and fully utilised
      on an affiliated group basis such credit, the Facility Agent or such
      Lender shall reimburse the Obligor concerned with such amount as the
      Facility Agent or such Lender shall in its discretion (acting in good
      faith) certify to be the proportion of such Tax Credit (if any) as will
      leave the Facility Agent or such Lender (after such reimbursement) in no
      worse position than it would have been in had the relevant deduction or
      withholding not been made. Such reimbursement shall be made as soon as
      reasonably practicable after the Facility Agent or such Lender (as the
      case may be) shall have made any such determination. Each Lender shall use
      its reasonable endeavours to determine whether it is entitled to receive a
      Tax Credit and, if it determines that it is, to obtain the same, unless to
      do so or attempt to do so might, in the sole opinion of the Lender, be in
      any way prejudicial to the Lender (provided that where a Lender claims a
      Tax Credit pursuant to this Clause 12.2, the extent, order and manner in
      which it does so shall be in the absolute discretion of the Lender (acting
      in good faith)).

12.3  MITIGATION

      If circumstances arise in which an Obligor would be required to pay any
      additional amount to any Lender or any appropriate authority for the
      account of any Lender pursuant to this Clause 12 then, without in any way
      limiting, reducing or otherwise qualifying that Obligor's obligations
      under Clause 12, the relevant Lender shall for a period not exceeding 30
      calendar days use it reasonable efforts to change its Facility Office or
      transfer of its rights and obligations under this Agreement to another
      institution if to do so would (in the opinion of the Lender) remove such
      circumstances or eliminate or reduce the additional amounts payable by the
      Obligor, unless to do so might (in the sole opinion of that Lender) result
      in the Lender incurring costs or expense that would not be reimbursed or
      which might otherwise be prejudicial to that Lender. Each Obligor must
      indemnify each Lender for all costs and expenses reasonably incurred by
      that Lender as a result of any step taken by it under this Clause 12.3
      (Mitigation).

12.4  OTHER

(a)   Nothing in Clause 12 shall:

                                       57

      (i)   require the Facility Agent or any Lender to disclose to any Obligor
            or any other Party any details of its tax affairs or computations;

      (ii)  interfere with the right of the Facility Agent or any Lender to
            arrange its tax affairs in whatever manner it thinks fit; and

      (iii) require the Facility Agent or any Lender to claim relief in respect
            of any payment under Clause 12.2 in priority to any other reliefs,
            claims or credits available to it.

(b)   Notwithstanding any provision to the contrary in the Finance Documents, a
      Finance Party may disclose to any and all persons, without limitation of
      any kind, the tax treatment and tax structure of the Facility and the
      transactions contemplated by it and all material of any kind (including
      opinions of other tax analyses) that are provided to any Finance Party
      relating to any such tax treatment or tax structure other than any
      information for which non-disclosure is reasonably necessary in order to
      apply with applicable securities law.

13.   MARKET DISRUPTION

13.1  ABSENCE OF QUOTATIONS

      If EURIBOR or LIBOR is to be determined by reference to the Reference
      Banks but a Reference Bank does not supply an offered rate by 11.30 a.m.
      (London time in the case of LIBOR) on the relevant Rate Fixing Day, the
      applicable EURIBOR or LIBOR shall, subject to Clause 13.2, be determined
      on the basis of the quotations of the remaining Reference Banks.

13.2  MARKET DISRUPTION

      If:

      (a)   EURIBOR or LIBOR is to be determined by reference to the Reference
            Banks but no, or only one, Reference Bank supplies a rate by 11.30
            a.m. (London time in the case of LIBOR) on the relevant Rate Fixing
            Day or the Facility Agent otherwise determines (acting reasonably)
            that adequate and fair means do not exist for ascertaining EURIBOR
            or LIBOR; or

      (b)   the Facility Agent receives notification from Lenders whose
            participations in a Loan exceed 30 per cent. of that Loan that, in
            their opinion:

            (i)   matching deposits may not be available to them in the relevant
                  interbank market in the ordinary course of business to fund
                  their participations in that Loan for the relevant Interest
                  Period; or

            (ii)  the cost to them of obtaining matching deposits in the
                  relevant interbank market would be in excess of EURIBOR or
                  LIBOR, as appropriate, for the relevant Interest Period,

            the Facility Agent shall promptly notify the Obligors' Agent and the
            Lenders of the fact and that this Clause 13 is in operation.

13.3  SUBSTITUTE BASIS

      If a notification under Clause 13.2 (Market disruption) applies:

                                       58

      (a)   (i)   in the case of a Loan which has not been made, the relevant
                  Loan shall not be made; and

            (ii)  in the case of a Tranche B Loan which has been made, the Loan
                  shall continue but it shall have an Interest Period of one
                  month and the interest payable on that Loan shall be
                  determined in accordance with this Clause;

      (b)   within five Business Days of receipt of the notification under
            Clause 13.2 (Market disruption), the Company and the Facility Agent
            shall enter into negotiations for a period of not more than 30
            calendar days with a view to agreeing to a substitute basis for
            determining the rate of interest and/or funding applicable to that
            Loan and (to the extent required) any future Loan;

      (c)   any substitute basis agreed under paragraph (b) above shall be, with
            the prior consent of all the Lenders, binding on all the Parties;

      (d)   if no alternative basis is agreed each Lender shall (through the
            Agent) certify on or before 10.00 a.m. on the second Business Day
            before the last day of the Interest Period to which the notification
            relates an alternative basis for maintaining its participation in
            that Loan;

      (e)   any alternative basis under paragraph (b) or (d) above may include
            an alternative method of fixing the interest rate, alternative
            Interest Periods or optional currencies but it must reflect the cost
            to each Lender of funding its participation in the Loan from
            whatever sources it may select in order to provide the Company with
            funds on as economic a basis as is practicable (having regard to the
            sources then known to the Lender) plus the Applicable Margin plus
            any applicable Mandatory Cost;

      (f)   each alternative basis so certified shall be binding on the Obligors
            and each certifying Lender and treated as part of this Agreement;
            and

      (g)   the Agent and the Company shall consult in good faith following any
            significant change in market conditions with a view to returning to
            the normal provisions of this Agreement.

14.   INCREASED COSTS

14.1  INCREASED COSTS

(a)   Subject to Clause 14.2, each Obligor shall forthwith on demand by a
      Finance Party pay to that Finance Party the amount of any increased cost
      incurred by it or any of its Affiliates as a result of:

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

      (ii)  compliance with any regulation made after the date of this
            Agreement,

      including any law or regulation relating to taxation, change in currency
      of a country or reserve asset, special deposit, cash ratio, liquidity or
      capital adequacy requirements or any other form of banking or monetary
      control.

(b)   In this Agreement INCREASED COST means:

                                       59

      (i)   an additional cost incurred by a Finance Party or its Holding
            Company as a result of it having entered into, or performing,
            maintaining or funding its obligations under, any Finance Document;
            or

      (ii)  that portion of an additional cost incurred by a Finance Party or
            its Holding Company in making, funding or maintaining all or any
            advances comprised in a class of advances formed by or including
            that Finance Party's participations in the Loans made or to be made
            under this Agreement as is attributable to that Finance Party
            making, funding or maintaining those participations; or

      (iii) a reduction in any amount payable to a Finance Party or the
            effective return to a Finance Party or its Holding Company under
            this Agreement or (to the extent that it is attributable to this
            Agreement) on its capital; or

      (iv)  the amount of any payment made by a Finance Party or its Holding
            Company, or the amount of any interest or other return foregone by a
            Finance Party or its Holding Company, calculated by reference to any
            amount received or receivable by that Finance Party or its Holding
            Company from any other Party under this Agreement.

(c)   A Finance Party intending to make a claim under this Clause 14.1 shall
      notify the Obligors' Agent through the Facility Agent of the event by
      reason of which it is entitled to do so, setting out in reasonable detail
      calculations evidencing the relevant increased costs, provided that
      nothing herein shall require such Finance Party to disclose any
      confidential information relating to the organisation of its affairs.

14.2  EXCEPTIONS

      Clause 14.1 does not apply to any increased cost:

      (a)   compensated for by the payment of the Mandatory Cost;

      (b)   compensated for by the operation of Clause 12 (Taxes) (or which
            would have been compensated but for an exception to that Clause);

      (c)   attributable to any change in the rate of, or change in the basis of
            calculating, tax on the overall net income of a Lender (or the
            overall net income of a division or branch of the Lender) imposed in
            the jurisdiction in which its principal office or Facility Office is
            situated; or

      (d)   arising from a Finance Party or its Holding Company having failed to
            comply with any applicable law or regulation, provided that this
            exception shall not apply to the extent that such law or regulation
            is applied retrospectively.

15.   ILLEGALITY

      If it is or becomes unlawful in any jurisdiction for a Lender to give
      effect to any of its obligations as contemplated by this Agreement or to
      fund or maintain its participation in any Loan, then:

      (a)   that Lender may notify the Obligors' Agent through the Facility
            Agent accordingly; and

      (b)   (i)   the Company shall prepay the participations of that Lender in
                  all the Loans made to it on the earlier of (A) the last day of
                  the Interest Period during which the Obligors' Agent receives
                  the Lender's notification and (B) the date


                                       60

                  specified in the Lender's notice (being the latest date
                  allowed by the relevant law); and

            (ii)  the Commitment of that Lender shall be cancelled on the date
                  of the Lender's notice.

16.   GUARANTEE

16.1  GUARANTEE

      Each Guarantor irrevocably, unconditionally, jointly and severally and
      notwithstanding the release of any other Obligor or any person under the
      terms of any composition or arrangement with any creditors of any member
      of the Group:

      (a)   as principal obligor (and not merely as surety) guarantees to each
            Finance Party prompt performance by the Company of all its
            obligations under the Finance Documents and the payment when due of
            all sums from time to time payable by each Obligor under the Finance
            Documents;

      (b)   undertakes with each Finance Party that whenever the Company does
            not pay any amount when due under or in connection with any Finance
            Document, that Guarantor shall forthwith on demand by the Facility
            Agent pay that amount as if that Guarantor instead of the Company
            were expressed to be the principal obligor; and

      (c)   indemnifies each Finance Party on demand against any loss or
            liability suffered by it if any obligation guaranteed by that
            Guarantor is or becomes unenforceable, invalid or illegal.

16.2  CONTINUING GUARANTEE

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

16.3  REINSTATEMENT

(a)   Where any discharge (whether in respect of the obligations of any Obligor
      or any security for those obligations or otherwise) is made in whole or in
      part or any arrangement is made on the faith of any payment, security or
      other disposition which is avoided or must be restored on insolvency,
      liquidation or otherwise without limitation, the liability of each
      Guarantor under this Clause 16 shall continue as if the discharge or
      arrangement had not occurred.

(b)   Each Finance Party may concede or compromise any claim that any payment,
      security or other disposition is liable to avoidance or restoration.

16.4  WAIVER OF DEFENCES

      The obligations of each Guarantor under this Clause 16 will not be
      affected by an act, omission, matter or thing which, but for this
      provision, would reduce, release or prejudice any of its obligations under
      this Clause 16 or prejudice or diminish those obligations in whole or in
      part, including (whether or not known to it or any Finance Party):

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

                                       61

      (b)   the release of any other Obligor or any other person under the terms
            of any composition or arrangement with any creditors 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 powers, authority or legal personality of
            or dissolution or change in the members or status of an Obligor or
            any other person;

      (e)   any variation (however fundamental) or replacement of a Finance
            Document or any other document or security so that references to
            that Finance Document in this Clause 16 shall include each variation
            or replacement;

      (f)   any unenforceability, illegality or invalidity of any obligation of
            any person under any Finance Document or any other document or
            security, to the intent that each Guarantor's obligations under this
            Clause 16 shall remain in full force and its guarantee be construed
            accordingly, as if there were no unenforceability, illegality or
            invalidity; or

      (g)   any postponement, discharge, reduction, non-provability or other
            similar circumstance affecting any obligation of any Obligor under a
            Finance Document resulting from any insolvency, liquidation or
            dissolution proceedings or from any law, regulation or order so that
            each such obligation shall for the purposes of the Guarantor's
            obligations under this Clause 16 be construed as if there were no
            such circumstance.

16.5  IMMEDIATE RECOURSE

      Each Guarantor waives any right it may have of first requiring any Finance
      Party (or any trustee 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 16.

16.6  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 trustee 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 trustee 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 a suspense account any moneys received from any Guarantor or
            on account of any Guarantor's liability under this Clause 16,
            without liability to pay interest on those moneys.

16.7  NON-COMPETITION

      Until all amounts which may be or become payable by the Obligors to a
      Finance Party under or in connection with the Finance Documents have been
      irrevocably paid in full, no Guarantor


                                       62

      shall, after a claim has been made or by virtue of any payment or
      performance by it under this Clause 16:

      (a)   be subrogated to any rights, security or moneys held, received or
            receivable by any Finance Party (or any trustee or agent on its
            behalf) or be entitled to any right of contribution or indemnity in
            respect of any payment made or moneys received on account of that
            Guarantor's liability under this Clause 16;

      (b)   claim, rank, prove or vote as a creditor of any Obligor or its
            estate in competition with any Finance Party (or any trustee or
            agent on its behalf); or

      (c)   receive, claim or have the benefit of any payment, distribution or
            security from or on account of any Obligor, or exercise any right of
            set-off as against any Obligor,

      unless the Facility Agent otherwise directs. Each Guarantor shall hold in
      trust for and forthwith pay or transfer to the Facility Agent for the
      Finance Parties any payment or distribution or benefit of security
      received by it contrary to this Clause 16.7.

16.8  ADDITIONAL SECURITY

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

16.9  LIMITATIONS

(a)   The obligations of any Guarantor which is incorporated under the laws of
      the Republic of France under this Clause 16 (Guarantee) shall not include
      any obligation which if incurred would constitute either a misuse of
      corporate assets as defined under article L.242-6 of the French Commercial
      Code in the opinion of the board of directors or similar corporate
      governance body of any such Guarantor (acting on legal advice) and shall
      be limited, at any time, to the greater of:

      (i)   the aggregate outstanding amount of all Intra Group Loans, made
            directly or indirectly, to such Guarantor from the Company or any
            other Obligor (less the net amount of Intra Group Loans made by such
            Guarantor to Canal Satellite or any other Subsidiary of the
            Guarantor notified to the Facility Agent in writing which is less
            than 90 per cent. owned by that Guarantor or another member of the
            Group);

      (ii)  the aggregate outstanding amount of all Intra Group Loans made by
            such Guarantor (less the any amount representing cash lent to such
            Guarantor by Canal Satellite or any other Subsidiary of the
            Guarantor notified to the Facility Agent in writing which is less
            than 90 per cent. owned by that Guarantor or another member of the
            Group); and

      (iii) the aggregate amount of all cash balances standing to the credit of
            each of such Guarantor's Cash Pooling Accounts (less the net amount
            of Intra Group Loans made to such Guarantor by Canal Satellite or
            any other Subsidiary of the Guarantor notified to the Facility Agent
            in writing which is less than 90 per cent. owned by that Guarantor
            or another member of the Group),

            provided that the obligations of such Guarantor as determined in
            accordance with paragraph (a) above shall be reduced by:

            (A)   an amount equal to any payment made by such Guarantor to the
                  Finance Parties as debiteur delegue or debiteur cede, as the
                  case may be, under a


                                       63

                  French Intra Group Loan Security of an Intra Group Loan
                  referred to in paragraph (i) above;

            (B)   an amount equal to any payment made by such Guarantor as
                  delegant to the Finance Parties under a French Intra Group
                  Loan Security of an Intra Group Loan referred to in paragraph
                  (ii) above; and

            (C)   an amount equal to any payment made by such Guarantor to the
                  Finance Parties under the Cash Pooling Hub Security granted by
                  such Guarantor.

            Where any such prohibition as is referred to in paragraph (a) above
            exists, each Obligor shall use its reasonable endeavours to procure
            that the prohibition is lawfully overcome and the Facility Agent may
            agree in the Guarantor Accession Agreement a limitation on the
            liability of the Additional Guarantor hereunder in order to avoid
            the prohibition. Should it be impossible to lawfully avoid or
            overcome such prohibition, that part of such Obligor's obligations
            under this Clause 16 (Guarantee) as contravenes such prohibition
            (and only such part of such Obligor's obligations) shall be deemed
            null and void.

(b)   Each Guarantor which is incorporated in the United States of America (a
      U.S. GUARANTOR):

      (i)   represents, warrants and agrees that (1) it will receive valuable
            direct or indirect benefits as a result of the transactions financed
            by the Loans and (2) these benefits will constitute REASONABLY
            EQUIVALENT VALUE and FAIR CONSIDERATION as those terms are used in
            the fraudulent transfer laws; and

      (ii)  acknowledges and agrees that each of the Finance Parties has acted
            in good faith in connection with the guarantee granted under this
            Clause 16 and the transactions contemplated by this Agreement.

(c)   This Clause 16 shall be enforceable against each U.S. Guarantor to the
      maximum extent permitted by the fraudulent transfer laws.

(d)   Each Guarantor's liability under this Clause 16 shall be limited so that
      no obligation of, or transfer by, any U.S. Guarantor under this Clause 16
      is subject to avoidance and turnover under the fraudulent transfer laws.

(e)   For purposes of this Clause 16, FRAUDULENT TRANSFER LAWS mean applicable
      United States of America bankruptcy and United States state fraudulent
      transfer and conveyance statutes and the related case law.

(f)   The provisions of this Clause 16 shall apply and remain in force at all
      times throughout the term of this Agreement (notwithstanding for the
      avoidance of doubt the occurrence of a Security Release Condition Date).

17.   RELEASE OF SECURITY AND ADDITIONAL GUARANTORS

17.1  RELEASE OF SECURITY AND GUARANTEES

(a)   Subject to the provisions of this Clause and the Security Documents, no
      Security Interest created by the Security Documents shall be released
      until the Facility Discharge Date has occurred (and all such Security
      Interests in respect of the secured obligations under this Facility shall
      be released as soon as practicable after the Facility Discharge Date has
      occurred).

                                       64

(b)   Subject to Clause 17.1(d):

      (i)   in connection with, and simultaneous to, the closing of any
            secondary Equity Issue, sale or other disposal to a person or
            persons outside the Group (and which person or persons will not
            become a member of the Group on or by reason of such disposal) of
            all of the shares in the share capital of any Guarantor (or of all
            the shares in any other member of the Group such that any Guarantor
            ceases as a result thereof to be a member of the Group);

      (ii)  in connection with, and simultaneous to, the closing of any sale or
            disposal by any Guarantor of substantially all of its business and
            assets; or

      (iii) in such other circumstances (if any) as the Security Agent (acting
            on the instructions of the Super Majority Lenders may from time to
            time agree in writing,

      such Guarantor shall be released from all past, present and future
      liabilities (both actual and contingent and including, without limitation,
      any liability to any other Guarantor by way of contribution) hereunder and
      under the Security Documents to which it is a party (other than, in the
      case of the Company, liabilities which it has in its capacity as the
      Company), and the security provided over its assets under such Security
      Documents shall be released.

(c)   Subject to Clause 17.1(d), in connection with, and simultaneous to, the
      closing of any secondary Equity Issue, sale or other disposal to (i) a
      person or persons outside the Group (and which person or persons will not
      become a member of the Group on or by reason of such disposal) or (ii) to
      a person within the Group where such disposal is otherwise permitted by
      this Agreement and the Security Documents to the extent that such release
      could not reasonably be expected to have a Material Adverse Effect or to
      jeopardise the guarantees given to the Lenders under the Finance Documents
      or the Lenders' security under the Security Documents or to the extent
      that similar security and guarantees are granted to the Lenders of any
      assets owned by an Obligor over which security has been created by the
      Security Documents to which that Obligor is party, those assets shall be
      released from such security.

(d)   The release of the guarantees and security referred to in Clause 17.1(b)
      and (c) shall only occur (save to the extent otherwise agreed by the
      Security Agent acting on the instructions of the Super Majority Lenders)
      if:

      (i)   either (1) such disposal by any member of the Group or Guarantor is
            permitted by Clause 19.14 and other provisions of this Agreement and
            will not result in any breach of any of the terms of this Agreement,
            or (2) such disposal is being effected at the request of the
            Security Agent in circumstances where any of the security created by
            the Security Documents has become enforceable, or (3) such disposal
            is being effected by enforcement of the Security Documents;

      (ii)  if relevant, an amount equal to any Net Proceeds arising out of such
            disposal which are required to be prepaid pursuant to Clause 7
            (Prepayment and Cancellation) (or an amount corresponding thereto)
            is credited to the Receipt Account in accordance with Clause 7
            (Prepayment and Cancellation) at the time of completion of that sale
            or disposal; and

      (iii) any assets to be transferred to other members of the Group before
            completion of such disposal shall have been so transferred and (if
            so required by the Facility Agent) security over such assets shall
            have been granted to the Security Agent to the reasonable
            satisfaction of the Facility Agent (acting on the instructions of
            the Super Majority Lenders).

                                       65

(e)   As soon as reasonably practical after receipt by the Security Agent from
      the Company of notice of a proposed secondary Equity Issue sale or other
      disposal as described in paragraph (i) of Clause 17.1(b) or in Clause
      17.1(c) of assets over which security has been created by the Security
      Documents, the Security Agent shall either deliver a confirmation in
      writing to the Obligors' Agent that the conditions set out in paragraphs
      (i)(1) and (iii) of Clause 17.1(d) have been met (for the purposes of this
      Clause 17.1(e), the RELEASE CONFIRMATION) or shall (acting in good faith),
      provided that no Default has occurred notify the Obligors' Agent of its
      reasons for considering that such conditions have not been met and shall
      discuss such reasons with the Obligors' Agent in good faith. If the
      Release Confirmation is given and so long as no Default has occurred, the
      Security Agent shall execute all documents and take all steps (to the
      extent such steps are within its control) which are necessary to ensure
      the release of all security to which such Release Confirmation relates at
      the time of completion of such sale or other disposal (or in the case of
      any sale of shares in Vivendi Universal Games, Inc. prior to the filing
      with the Securities and Exchange Commission of a report in Form S-1 in
      relation to the proposed share sale), such that, on such completion or
      prior to such filing, the relevant assets will be free from any Security
      Interest.

(f)   Any security over any of the receivables assigned pursuant to, subject to
      and in accordance with the VUE Assignment Agreement and any of the assets
      identified in paragraph (d) of the definition of Relevant Intra Group
      Disposal shall be released automatically upon the assignment or disposal
      of such receivable or asset.

(g)   If any person which is a member of the Group shall cease to be such a
      member in consequence of the enforcement of any of the Security Documents
      or in consequence of a disposal of the shares therein or in any Holding
      Company of it effected at the request of the Facility Agent and the
      Lenders in circumstances where any of the security created by the Security
      Documents has become enforceable, any claim which any Obligor may have
      against such person or any of its Subsidiaries or which that person or any
      of its Subsidiaries may have against any Obligor in or arising out of this
      Agreement or any of the Security Documents (including, without limitation,
      any claim by way of subrogation to the rights of the Agents and the
      Lenders under the Finance Documents and any claim by way of contribution
      or indemnity) shall be released automatically and immediately upon such
      person ceasing to be a member of the Group.

(h)   Any Security Interest created over the shares of any Excluded Music Group
      Entity and any guarantee granted by any Excluded Music Group Entity
      pursuant to the Finance Documents shall, provided no Default has occurred
      and is continuing, be released immediately prior to and for the purposes
      of the implementation of the Music Group Reorganisation (i) in the case of
      any such Security Interest over shares so that no Excluded Music Group
      Entity which becomes a Foreign Subsidiary shall have more than 66 per
      cent. of its shares subject to any such Security Interest (ii) in the case
      of any guarantee granted by any Excluded Music Group Entity to the extent
      reasonably required to avoid deemed dividends under U.S. tax legislation
      relating to Foreign Subsidiaries or (iii) in the case of any such Security
      Interest or guarantee granted by any Excluded Music Group Entity which is
      held (directly or indirectly) by Universal Studio Holding I Corp., so that
      no such Excluded Music Group Entity shall have any of its shares subject
      to any Security Interest or shall grant any guarantee.

(i)   No release, or agreement to release, given by any of the Finance Parties
      shall constitute any form of waiver or modification of any Finance Party's
      rights in relation to any Default.

17.2  COSTS

      All costs and expenses of the Finance Parties in connection with any
      release of Security Interest created by the Security Documents shall be
      borne by the Obligors.

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17.3  ADDITIONAL GUARANTORS

(a)   (i)   Subject to paragraph (b) below, the Obligors shall procure that any
            Cash Pooling Hub (except any Cash Pooling Hub which is a Foreign
            Subsidiary) which is not a Guarantor or a Cash Pooling Hub at the
            date of this Agreement becomes an Additional Guarantor within 14
            calendar days of its being designated a Cash Pooling Hub by the
            Company and the Facility Agent by delivering to the Facility Agent a
            Guarantor Accession Agreement, duly executed by that Cash Pooling
            Hub. For the avoidance of doubt, no member of the VUE Group or VUE
            Borrower Co. shall be required to become an Additional Guarantor
            until the later of the VUE Date and such time as any restriction or
            prohibition on the granting of such guarantees ceases to apply under
            the terms of the VUE Partnership Agreement, the VUE Transaction
            Agreement or the Matsushita Shareholder Agreements.

      (ii)  Upon execution and delivery of a Guarantor Accession Agreement, the
            relevant party will become an Additional Guarantor.

      (iii) The Obligors shall procure that, at the same time as a Guarantor
            Accession Agreement is delivered to the Facility Agent, there is
            also delivered to the Facility Agent all those other documents
            listed in Part 2 of Schedule 2, in each case in form and substance
            satisfactory to the Facility Agent.

(b)   The Parent shall procure that VUP accedes to this Agreement as an
      Additional Guarantor as soon as reasonably practicable and in any event
      with 45 calendar days of the date of the Agreement and contemporaneously
      with such accession, executes and delivers to the Security Agent an
      account pledge or pledges in the agreed form over each of its Cash Pooling
      Accounts.

(c)   If the Obligors' Agent demonstrates to the satisfaction of the Facility
      Agent (acting on the instructions of the Majority Lenders) that it is
      illegal for a prospective Additional Guarantor to comply with its
      obligations under paragraph (a) above or Clause 16 or that to do so would
      be a fiduciary breach of duty by the directors of the prospective
      Additional Guarantor, the Facility Agent (acting on the instructions of
      the Majority Lenders) will agree in the Guarantor Accession Agreement to
      limit the obligation of the prospective Additional Guarantor to the extent
      necessary for the guarantee to be lawfully given by the prospective
      Additional Guarantor. The Obligors will use their reasonable endeavours to
      lawfully remove or overcome any such prohibition or restriction, provided
      that an Obligor shall only be obliged to so comply within 14 calendar days
      after it becomes legal to do so.

(d)   The execution of a Guarantor Accession Agreement constitutes confirmation
      by the prospective Additional Guarantor that the representations and
      warranties set out in Clause 18 (Representations and Warranties) to be
      made by it on the date of the Guarantor Accession Agreement are correct,
      as if made with reference to the facts and circumstances then existing.

18.   REPRESENTATIONS AND WARRANTIES

18.1  REPRESENTATIONS AND WARRANTIES

      The Company and each Obligor makes the representations and warranties as
      set out in this Clause 18 to each Finance Party in respect of itself and
      the Group (other than prior to the Maroc Telecom Date, any member of the
      Maroc Telecom Group) and in respect of Clause 18.21 (Ownership), VE and
      Maroc Telecom.

                                       67

18.2  STATUS

(a)   It is and each of its Material Subsidiaries is a joint-stock company or
      limited liability company a limited liability limited partnership, limited
      partnership or corporation, duly incorporated or organised, validly
      existing and (in the case of the U.S. Subsidiaries) in good standing under
      the laws of the jurisdiction of its incorporation; and

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

18.3  POWERS AND AUTHORITY

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

18.4  LEGAL VALIDITY

      Each Finance Document to which it is or will be a party constitutes, or
      when executed in accordance with its terms will constitute, its legal,
      valid and binding obligation enforceable in accordance with its terms and
      would be so treated in the courts of the jurisdiction of its incorporation
      or organisation and no limit of restriction on its powers will be exceeded
      as a result of the borrowings, grant of security or giving of guarantees
      contemplated by the Finance Documents to which it is a party.

18.5  AUTHORISATIONS

      All authorisations required:

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

      (b)   from any third party or under any document or agreement which is
            binding on (i) any Obligor or any Material Subsidiary, or (ii) any
            other member of the Group save to the extent that failure to do so
            does not have or could not reasonably be expected to have a Material
            Adverse Effect for the transactions contemplated by the Finance
            Documents,

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

18.6  PARI PASSU RANKING

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

18.7  IMMUNITY

(a)   The execution by it of each Finance Document to which it is or will be a
      party constitutes, and its exercise of its rights and performance of its
      obligations under each Finance Document to which it is or will be a party
      will constitute, private and commercial acts done and performed for
      private and commercial purposes; and

                                       68

(b)   it will not be entitled to claim immunity from suit, execution, attachment
      or other legal process in any proceedings taken in the jurisdiction of its
      incorporation in relation to any Finance Document.

18.8  NON-CONFLICT

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

      (a)   any law or regulation or judicial or official order binding on it or
            any member of the Group in any material respect; or

      (b)   its constitutional documents or the constitutional documents of any
            member of the Group (in any material respect in the case of members
            of the Group which are not Obligors or Material Subsidiaries); or

      (c)   any document or agreement which is binding upon (i) it or any
            Material Subsidiary or any of their respective assets in any
            material respect or (ii) any other member of the Group or any of
            their assets to an extent or in a manner that has, or could
            reasonably be expected to have, a Material Adverse Effect.

18.9  NO DEFAULT

(a)   No Event of Default is outstanding or will result from the making of any
      Loan; and

(b)   no other event is outstanding which constitutes a default or with the
      giving of notice, lapse of time, determination of materiality or
      fulfilment of any other applicable condition, would constitute a default
      (howsoever described) under any document or agreement (including, without
      limitation, any Existing Facilities) which is binding on it or any of its
      assets of any member of the Group (other than an Obligor) to an extent or
      in a manner that has, or could reasonably be expected to have, a Material
      Adverse Effect.

18.10 LITIGATION AND SOLVENCY

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

(b)   No labour disputes are current or, to its knowledge, threatened which have
      or could reasonably be expected to have, a Material Adverse Effect.

(c)   No proceedings of any nature are current or, to its knowledge, pending or
      threatened, for the winding-up or dissolution (other than a solvent
      winding up or dissolution) of, or in respect of any insolvency proceeding
      of any nature relating to any Obligor or any Material Subsidiary.

(d)   It has not defaulted on any of its payment obligations and (taking into
      account the amounts available to the Obligors under the Existing
      Facilities and this Agreement) and in the case of VUE, amounts available
      or reasonably expected to be available to VUE (i) under the VUE Bridge
      Extension and any VUE Bridge Refinancing and (ii) from the Non-VUE Group
      pursuant to VUE Loans permitted by this Agreement) the Obligors and all
      other Material Subsidiaries are in a position to meet their respective
      scheduled payments as they fall due.

(e)   In relation to each Obligor and its Subsidiaries incorporated or organised
      in the United States of America (on a consolidated basis):

                                       69

      (i)   the aggregate amount of its debts (including its obligations (if
            any) under the Finance Documents) is less than the aggregate value
            (being the lesser of fair present valuation and present fair
            saleable value) of its assets (which for, avoidance of doubt,
            include, without limitation, all rights of indemnification,
            contribution and subrogation);

      (ii)  its capital is not unreasonably small to carry on its business as it
            is being conducted;

      (iii) it has not incurred and will not incur debts beyond its ability to
            pay as they mature; and

      (iv)  it has not made a transfer or incurred any obligation under any
            Finance Document with the intent to hinder, delay or defraud any of
            its present or future creditors.

      Terms used in this paragraph (e) have the meanings given to them in the
      United States Bankruptcy Code of 1978, as amended, and applicable
      fraudulent conveyance laws in the United States of America.

18.11 GOVERNING LAW AND JURISDICTION

(a)   Its:

      (i)   irrevocable submission under Clause 37 (Jurisdiction) to the
            jurisdiction of the courts of England and any New York State Court
            or any Federal Court sitting in New York City;

      (ii)  agreement that this Agreement is governed by English law; and

      (iii) agreement not to claim any immunity to which it may be entitled,

      are legal, valid and binding under the laws of the jurisdiction of its
      incorporation.

(b)   Any judgment obtained in the courts of England or any New York State Court
      or any Federal Court sitting in New York City in legal proceedings based
      on or in connection with the Finance Documents will be recognised and
      enforced by the courts of the jurisdiction of incorporation of each
      Obligor without re-examination or re-litigation of the matter thereby
      adjudicated (subject to the provisions of Council Regulation No. 44/2001
      of the Council of the European Union on jurisdiction and enforcement of
      judgments in civil and commercial matters, or other applicable law or
      convention on the recognition and enforcement of court judgments).

18.12 ACCOUNTS AND LIQUIDITY ANALYSIS

(a)   The consolidated accounts of the Company most recently delivered to the
      Facility Agent (which, at the date of this Agreement, are the Original
      Group Accounts):

      (i)   have been prepared in accordance with accounting principles and
            practices generally accepted in France or the United States of
            America (as appropriate), consistently applied; and

      (ii)  fairly represent the consolidated financial condition of the Group
            as at the date to which they were drawn up.

(b)   There has been no change (other than any event or change that has occurred
      and been disclosed in the Original Liquidity Analysis) in the consolidated
      financial condition of the


                                       70

      Group since the date to which the Original Group Accounts were drawn up
      which has or could reasonably be expected to have a Material Adverse
      Effect.

(c)   The accounts of the other Obligors most recently delivered to the Facility
      Agent are true and fairly represent their financial condition at the date
      given.

(d)   The projections and forecasts contained in the Liquidity Analysis most
      recently delivered to the Facility Agent (which, at the date of this
      Agreement, is the Original Liquidity Analysis) were made in good faith and
      based on reasonable assumptions and such Liquidity Analysis does not as at
      its date omit any projections or forecasts which would make the
      projections and forecasts actually contained in, or used for the
      preparation of, that Liquidity Analysis misleading.

18.13 EXISTING INDEBTEDNESS

(a)   Each of the Existing Facilities of the Company is available for drawing
      (and has not been cancelled) and the Company has no reason to believe that
      such facilities will not be available for drawing except to the extent
      prepaid and cancelled as contemplated by the provisions of Clause 7
      (Prepayment and Cancellation).

(b)   As at the date of this Agreement, no member of the Group has incurred any
      material Financial Indebtedness which is not identified in Schedule 12
      (Existing Facilities) or material Contingent Financial Liabilities which
      is not identified in Schedule 17 (Existing Contingent Financial
      Liabilities), save for Intra Group Loans, Excluded Financial Indebtedness
      and currency and other swaps and other derivative and hedging
      arrangements, uncommitted facilities, overdrafts, daylight overdrafts,
      intra-day facilities and facilities used for technical purposes (i.e.
      credit card programmes) and save, in the case of each member of the Group
      which is not an Obligor or a Material Subsidiary, to the extent that their
      non-disclosure does not have, or could not reasonably be expected to have
      a Material Adverse Effect.

18.14 INFORMATION PACKAGE

(a)   The factual information contained in the Information Package was accurate
      in all material respects as at its date;

(b)   the Information Package did not omit as at its date any information which,
      if disclosed, could reasonably be expected to adversely affect the
      decision of a person considering whether to enter into this Agreement;

(c)   nothing has occurred since the date of the Information Package (other than
      as disclosed in publicly available information or as otherwise disclosed
      by the Company to the Lenders in writing) which renders the information
      contained in it untrue or misleading in any material respect and which, if
      disclosed, could reasonably be expected to adversely affect the decision
      of a Lender considering whether to enter into any Finance Document; and

(d)   all expressions of opinion or intention given by the Company, and all
      financial projections and forecasts, in the Information Package were made
      in good faith and based on assumptions that were reasonable as at the date
      of the Information Package.

18.15 STRUCTURE CHART

      As at the date of this Agreement, the Structure Chart describes the
      corporate ownership structure of the Obligors and Material Subsidiaries
      and is true and correct in all material respects.

                                       71

18.16 INTELLECTUAL PROPERTY RIGHTS

(a)   It and its Material Subsidiaries, in the case of the Games Group (as far
      as it is aware on due enquiry) and each other member of the Group (to the
      best of its knowledge) owns or has licensed to it all Intellectual
      Property Rights which are material in the context of its business or the
      business of each member of the Group and which are required by it or by
      such member of the Group in order to carry on their business and it does
      not nor does any member of the Group in carrying on its business infringe
      any Intellectual Property Rights of any third party save in the case of
      any member of the Group (or than an Obligor or Material Subsidiary) to the
      extent that failure to do so does not or could not be reasonably expected
      to have a Material Adverse Effect.

(b)   It and its Material Subsidiaries and (to the best of its knowledge) each
      other member of the Group has paid all fees required to maintain in full
      force and effect any registered Intellectual Property Rights owned by it
      which are material in the context of its business or the business of such
      member of the Group which are required by it or by such member of the
      Group in order for it to carry on its business as it is currently being
      conducted save in the case of any member of the Group (or than an Obligor
      or Material Subsidiary) to the extent that failure to do so does not or
      could not be reasonably expected to have a Material Adverse Effect.

18.17 OWNERSHIP OF ASSETS

      It and each of member of the Group has good title to, or valid leases or
      licences of, or is otherwise entitled to use all material assets necessary
      to conduct its business substantially as it is conducted at the date of
      this Agreement or reflected in the latest accounts of the Group free from
      all Security Interests, third party rights, options (other than the VE
      Call Option Arrangements), claims and competing interests whatsoever save
      as expressly permitted or created under this Agreement and the other
      Finance Documents and save, in the case of each member of the Group (other
      than an Obligor and each Material Subsidiary) to the extent that failure
      to do so does not have or could not reasonably be expected to have a
      Material Adverse Effect.

18.18 SECURITY INTERESTS

(a)   No Security Interests exist (except as permitted by Clause 19.12 (Negative
      pledge)) on or over the assets of any Obligor or Material Subsidiary and
      the execution of this Agreement does not require any member of the Group
      to create any Security Interest over any of its accounts or assets, except
      pursuant to the Security Documents.

(b)   It and each member of the Group is the legal and beneficial owner of the
      property (if any) which it purports to charge pursuant to any of the
      Security Documents. The property charged pursuant to any Security
      Documents are not subject to any other Security Interests, third party
      rights, options other than the VE Call Option Arrangements, claim or
      similar rights or the Security Interests granted in favour of the Existing
      Lenders. The shares charged pursuant to any Security Document are all
      fully paid up.

(c)   The security constituted by the Security Documents constitutes (and will
      at all times continue to constitute unless released pursuant to Clause 17
      of this Agreement and under the Security Documents) first ranking security
      in respect of obligations owed to the Finance Parties and the Existing
      Lenders under the Finance Documents in priority and payment over the
      assets secured or purported to be secured under the Security Documents.

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18.19 TAX LIABILITIES

(a)   No claims are being or are reasonably likely to be asserted against any
      Obligor or any member of the Group with respect to any Taxes or payment of
      any Tax which if reasonably likely to be adversely determined, have, or
      could reasonably be expected to have, a Material Adverse Effect.

(b)   No Obligor or any member of the Group is overdue in the filing of any tax
      returns, except to the extent that being so overdue does not have, or
      could not reasonably be expected to have, a Material Adverse Effect.

18.20 ENVIRONMENTAL MATTERS

(a)   Each Obligor and each other member of the Group (A) have obtained all
      environmental permits, licences, authorisations, consents and other
      approvals required for the carrying on of its business in all material
      respects as currently conducted and (B) at all times have otherwise
      complied with all applicable Environmental Laws, except where failure to
      do so has not had, or could not reasonably be expected to have, a Material
      Adverse Effect.

(b)   So far as it is aware there is no current, pending or threatened legal
      proceedings under or pursuant to any Environmental Law against any member
      of the Group which has or, if adversely determined, could reasonably be
      expected to have, a Material Adverse Effect.

18.21 OWNERSHIP

(a)   The Company owns directly or indirectly no less than 20.4 per cent. of the
      VE Shares (less any VE Shares disposed of pursuant to the VE Shares
      Disposal) free of any Security Interest (other than a Security Interest
      created under a Security Document), option (other than the VE Call Option
      Arrangements) or third party claim.

(b)   The Company owns directly or indirectly no less than 70 per cent. of the
      share capital of Cegetel free of any Security Interest (other than a
      Security Interest created under a Security Document or under the
      Non-Recourse Financing at the date of this Agreement), option or third
      party claim (save as provided for under any shareholders agreement in
      force at the date of this Agreement).

(c)   The Company owns directly or indirectly 35 per cent. of the share capital
      of Maroc Telecom free of any Security Interest, option or third party
      claim (except as disclosed in writing to the Facility Agent on or before
      the date of this Agreement or save as provided for under any shareholders
      agreement in force at the date of this Agreement).

(d)   No member of the Maroc Telecom Group, the Cegetel Group is a party to the
      Cash Management and IGL Arrangements or is party to an Intra Group Loan
      (except for any such loan listed in Part 2 of Schedule 15) or to the
      extent otherwise permitted under this Agreement.

(e)   (i)   As far as the Company is aware, the list of Existing Cegetel
            Contingent Financial Liabilities in Part 1 of Schedule 10 sets out
            all material Contingent Financial Liabilities of each member of the
            Cegetel Group at the date of this Agreement.

      (ii)  As far as the Company is aware, the list of Existing Cegetel
            Financial Indebtedness in Part 2 of Schedule 10 sets out all
            material Financial Indebtedness of the Cegetel Group at the date of
            this Agreement.

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      (iii) As far as the Company is aware, the list of Existing Cegetel
            Security in Part 3 of Schedule 10 sets out all material Security
            Interests of the Cegetel Group at the date of this Agreement.

18.22 INTRA GROUP LOAN/IGL ARRANGEMENTS/BANK ACCOUNTS

(a)   The list of bank, deposit and investment accounts set out in the exhibit
      provided to the Facility Agent on the date of this Agreement is complete
      and correct in all material respects.

(b)   The list of the Cash Pooling Accounts set out in Schedule 16 (as updated
      pursuant to Clause 19.6(g)) is complete and correct in all material
      respects.

(c)   The list of (i) Intra Group Loans made to or by each Obligor, and (ii) VUE
      Loans set out in Schedule 15 (as updated pursuant to Clause 19.6(g)) is
      complete and correct in all material respects as of their respective
      dates.

(d)   The aggregate principal amount of the Intra Group Loans identified in
      Parts 4 or 5 of Schedule 15 (Existing Intra Group Loans) account for 85
      per cent. of the aggregate principal amount of all Intra Group Loans
      between Obligors and members of the Group as at the date of this Agreement
      or when updated pursuant to Clause 19.6(g) as applicable.

18.23 OBLIGORS

      None of Vivendi Universal Holdings IV Corp., VUHIC or VCNA:

      (a)   trades or has any material liabilities or commitments (actual or
            contingent, present or future);

      (b)   save as disclosed to the Facility Agent prior to the date of this
            Agreement, owns any material assets other than shares in its
            immediate subsidiaries; or

      (c)   carries on any business other than the holding of shares in its
            immediate subsidiaries,

      other than pursuant to the Finance Documents or as a party to any Intra
      Group Loan or to any VUE Loan or consistent with the activities disclosed
      to the Facility Agent prior to the date of this Agreement or in the case
      of Vivendi Universal Holding IV Corp pursuant to the Matsushita
      Shareholder Agreements.

18.24 DISPOSAL CONFIRMATION

      It has no reason to believe that:

      (a)   the Disposal Confirmation cannot be implemented in full; and

      (b)   that any authorisation or consent necessary for the disposal of an
            asset referred to in a Liquidity Analysis will not be forthcoming in
            time to allow that disposal to take place at the projected time.

18.25 U.S. REPRESENTATIONS AND WARRANTIES

(a)   Investment Company

      It is not, and will not be following any disposal pursuant to the Disposal
      Confirmation of its assets, shares or business, an "investment company" or
      a company "controlled" by an


                                       74

      "investment company", within the meaning of the United States Investment
      Company Act of 1940, as amended.

(b)   Public Utility Holding Company Act and Federal Power Act

      It is not, and will not be following any disposal pursuant to the Disposal
      Confirmation of its assets, shares or business, a "holding company", or an
      "affiliate" of a "holding company" or a "subsidiary company" of a "holding
      company", within the meaning of, or otherwise subject to regulation under,
      the United States Public Utility Holding Company Act of 1935, as amended.
      No Obligor is a "public utility" within the meaning of, or otherwise
      subject to regulation under, the United States Federal Power Act, as
      amended.

(c)   Margin stock

      (i)   The proceeds of the Loans have been and will be used only for the
            purposes described in Clause 3 (Purpose).

      (ii)  It is not engaged in the business of extending credit for the
            purpose of purchasing or carrying margin stock (within the meaning
            of Regulations U and X of the Board of Governors of the United
            States Federal Reserve System), and no portion of any Loan has been
            or will be used, directly or indirectly, to purchase or carry margin
            stock or to extend credit to others for the purpose of purchasing or
            carrying margin stock.

      (iii) No portion of any Loan will be used to acquire any security in a
            transaction that is subject to Section 13 or 14 of the United States
            Securities Exchange Act of 1934, as amended.

(d)   ERISA

      (i)   No ERISA Event that could reasonably be expected to have a Material
            Adverse Effect has occurred or is reasonably expected to occur with
            respect to any Plan.

      (ii)  The present value of the benefit liabilities under each Plan, as
            determined for the purposes of Schedule B (Actuarial Information) to
            such Plan's most recently completed annual report (Form 5500 Series)
            that has been filed with the required United States governmental
            agencies, which Schedule B is complete and accurate in all material
            respects, did not, as of the date of such valuation, exceed the fair
            market value of the assets of such Plan by an amount that, when
            aggregated with any such excess under any other Plan, could
            reasonably be expected to have a Material Adverse Effect, and since
            the date of such valuation there has been no material adverse change
            in such funding status that, when aggregated with any such change
            with respect to any other Plan, could reasonably be expected to have
            a Material Adverse Effect.

      (iii) Except as could not reasonably be expected to have a Material
            Adverse Effect, neither it nor any ERISA Affiliate has incurred or
            is reasonably expected to incur any Withdrawal Liability to any
            Multiemployer Plan.

      (iv)  Except as could not reasonably be expected to have a Material
            Adverse Effect, neither it nor any ERISA Affiliate has been notified
            by the sponsor of a Multiemployer Plan that such Multiemployer Plan
            is in reorganisation or has been terminated, within the meaning of
            Title IV of ERISA, and no such Multiemployer Plan is reasonably
            expected to be in reorganisation or to be terminated, within the
            meaning of Title IV of ERISA.

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18.26 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES

      The representations and warranties set out in this Clause 18:

      (a)   (i)   in the case of an Obligor which is a Party on the date of this
                  Agreement, are made by that Obligor on the date of this
                  Agreement and the first Drawdown Date;

            (ii)  in the case of an Obligor which becomes a Party after the date
                  of this Agreement, will, (with the exception of paragraphs (b)
                  and (d) of Clause 18.12 (Accounts and Liquidity Analysis),
                  Clause 18.14 (Information Package), Clause 18.15 (Structure
                  Chart), Clause 18.21 (Ownership), Clause 18.22 (Intra Group
                  Loan/IGL Arrangements/bank accounts)) be deemed made by that
                  Obligor in relation to itself and subject to and in accordance
                  with Clause 18.1, its Subsidiaries on the date it executes a
                  Guarantor Accession Agreement; and

            (iii) are, in the case of paragraph (d) of Clause 18.12 (Accounts
                  and Liquidity Analysis) in relation to each Liquidity Analysis
                  other than the Original Liquidity Analysis, made on the day on
                  which the Liquidity Analysis referred to therein is delivered;

      (b)   are, with the exception of paragraph (b) and (d) of Clause 18.12
            (Accounts and Liquidity Analysis), Clause 18.13 (Existing
            Indebtedness), Clause 18.14 (Information Package), Clause 18.15
            (Structure Chart), Clause 18.21 (Ownership) and Clause 18.22 (Intra
            Group Loan/IGL Arrangements/bank accounts), deemed to be repeated by
            each Obligor on the date of each Request and the first day of each
            Interest Period with reference to the facts and circumstances then
            existing; and

      (c)   are, in the case of Clause 18.22 (Intra Group Loan/IGL
            Arrangements/bank accounts) deemed to be repeated by the Company on
            the date and in respect of any update provided to Facility Agent
            pursuant to Clause 19.6(g).

19.   UNDERTAKINGS

19.1  GENERAL

(a)   Subject to paragraphs (b), (c) (d), (e), (f) and (g) below, each Obligor
      agrees to be bound by the undertakings set out in this Clause relating to
      it and to ensure that each member of the Group performs and complies with
      each undertaking expressed to be binding on it in this Clause 19.

(b)   The undertakings in this Clause 19 shall apply to each member of the
      Cegetel Group and SIT provided that other than in respect of Clause 19.26
      (Arm's-length terms) each Obligor will only be required to use its
      reasonable endeavours to ensure that each member of the Cegetel Group or
      SIT performs and complies with such undertakings.

(c)   Each Obligor shall only be required to use its reasonable endeavours to
      ensure that Transtel and/or Canal Satellite performs and complies with the
      undertakings in this Clause 19 which apply to it.

(d)   Until the Maroc Telecom Date, the undertakings in this Clause 19 shall not
      be binding on any member of the Maroc Telecom Group. On or after the Maroc
      Telecom Date, each Obligor shall only be required to use its reasonable
      endeavours to ensure that each member of the


                                       76

      Maroc Telecom Group performs and complies with the undertakings in this
      Clause 19 which apply to it.

(e)   For the purposes of paragraphs (b), (c) and (d) above with respect to the
      Cegetel Group and the Maroc Telecom Group:

      (i)   REASONABLE ENDEAVOURS shall be construed by reference to an
            Obligor's effective ability to exercise any voting rights as a
            shareholder of Transtel and/or Canal Satellite or any member of the
            Cegetel Group or any member of the Maroc Telecom Group and/or
            contractual rights in respect of Transtel and/or Canal Satellite
            and/or SIT or any such member of the Group or any member of the
            Maroc Telecom Group (subject to any restrictions or obligations
            binding upon it under any shareholder agreement as the same is in
            force at the date of this Agreement and any restrictions under the
            Non-Recourse Financing in respect of SIT and which in each case
            remains binding on it) and the ability to control the management of
            any member of the Cegetel Group, the management of Transtel and/or
            Canal Satellite and/or SIT or any member of the Maroc Telecom Group;
            and

      (ii)  an Obligor shall be considered to have complied with its undertaking
            to use "reasonable endeavours" to ensure compliance by any such
            member of the Group by exercising (i) such voting rights as a
            shareholder of Transtel and/or Canal Satellite or any member of the
            Cegetel Group or any member of the Maroc Telecom Group, and (ii)
            such control over the management of any member of the Cegetel Group,
            Transtel and/or Canal Satellite and/or SIT or any member of the
            Maroc Telecom Group, and (iii) such contractual rights, in each
            case, to the fullest extent permitted by law and regulation to
            ensure compliance.

(f)   Prior to the VUE Date, where any member of the Group is a member of the
      VUE Group, the undertakings expressed to be binding on it in this Clause
      19 shall not prohibit any transaction involving any such member which is
      permitted or required pursuant to the terms of any VUE Bridge Extension or
      VUE Bridge Refinancing (provided that, in the case of a VUE Bridge
      Refinancing, such transaction, is permitted or required pursuant to the
      terms of the primary refinancing of the VUE Bridge Extension). The
      undertakings expressed to be binding on any member of the Group or a
      Material Subsidiary in this Clause 19 shall apply to any member of the VUE
      Group as the case may be subject only to any shareholder or contractual
      restrictions or obligation under the Matsushita Shareholder Agreements,
      the VUE Partnership Agreement and the VUE Transaction Agreement in force
      as at the date of this Agreement.

(g)   The undertakings in this Clause 19 remain in force from the date of this
      Agreement for so long as provided for in the relevant Clause or any amount
      is or may be outstanding under this Agreement or any Commitment is in
      force provided that the Undertakings set out in Clause 19.5 (Liquidity),
      Clause 19.15 (Financial Indebtedness), Clause 19.16 (Leasing), Clause
      19.17(a) to (d) (inclusive) (Financial guarantees) Clause 19.19 (Loans
      out, Intra Group Loans) (other than Clause 19.19(d)(iii) (A) which shall
      remain in force at all times throughout this Agreement notwithstanding the
      occurrence of a Release Condition Date), Clause 19.32 (Bank Accounts) and
      19.39 (a), (b) and (c) (VUE Ring-fencing), shall remain in force
      throughout the term of this Agreement unless and until a Release Condition
      Date occurs in which case such Undertakings shall cease to apply. If a
      Release Condition Date occurs, but any time thereafter an Investment
      Downgrading Date occurs, all such Undertakings shall be automatically
      reinstated and remain in force from the Investment Downgrading Date until
      such time as a Release Condition Date occurs again.

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19.2  FINANCIAL INFORMATION

(a)   The Obligors' Agent shall supply the following to the Facility Agent in
      sufficient copies for all the Lenders:

      (i)   as soon as the same are available (and in any event within 120
            calendar days of the end of each of its financial years) the audited
            consolidated financial statements of the Company and the unaudited
            financial statements (being the balance sheet and profit and loss
            account consolidated for this purpose) of each other Obligor for
            that financial year;

      (ii)  as soon as the same are available (and in any event within 90
            calendar days of the end of the relevant period) but, in the case of
            paragraph (B), only if such financial statements are prepared or if
            the Obligor is under a legal obligation to prepare them:

            (A)   the quarterly and the semi-annual consolidated financial
                  statements of the Company; and

            (B)   the quarterly and the semi-annual financial statements
                  (audited if prepared) of each other Obligor certified (if
                  required by applicable law) by an officer of the Obligor;

      (iii) together with (A) prior to a Release Condition Date (or at any time
            thereafter, if an Investment Downgrading Date occurs, from the
            Investment Downgrading Date until a Release Condition Date occurs
            again), each set of financial statements of the Company; and (B) on
            or following a Release Condition Date, each set of semi-annual
            financial statements of the Company, a certificate signed by the
            Chief Financial Officer of the Company and a certificate signed by
            the Auditors (in the case of annual audited financial statements)
            setting out in reasonable detail computations establishing
            compliance with each of the financial covenants in Clause 20
            (Financial Covenants) and with the annual financial statements a
            certificate signed by the Chief Financial Officer of the Company
            setting out an up to date list of Material Subsidiaries.

(b)   The Obligor's Agent shall ensure that:

      (i)   each set of financial statements delivered pursuant to paragraph (a)
            is prepared in accordance with accounting principles and practices
            generally accepted in the jurisdiction of incorporation of the
            Obligor concerned, consistently applied (or if not consistently
            applied accompanied by details of the inconsistencies unless such
            details appear in the notes to the financial statements), and, in
            relation to the financial statements of the Company, on the same
            basis as was used in the preparation of the Original Group Accounts.
            If any financial statements of the Company referred to in paragraph
            (a) (the INCONSISTENT ACCOUNTS) are prepared on a basis which is not
            consistent with the immediately preceding comparable financial
            statements or in accordance with accounting principles and practices
            which are not consistent with the immediately preceding comparable
            financial statements and, in the reasonable opinion of the Obligors'
            Agent or the Majority Lenders, the result of the calculations made
            pursuant to the provisions in Clause 20 (Financial Covenants) does
            not correspond to the commercial intention of such provisions, the
            following shall apply:

            (A)   either the Obligors' Agent shall notify the Facility Agent or
                  the Facility Agent shall notify the Obligors' Agent
                  accordingly (as appropriate). Any notice given under this
                  sub-paragraph (i) shall contain reasonable details of the

                                       78


                  differences between the Inconsistent Accounts and the
                  immediately preceding comparable financial statements; and

            (B)   in the event of a notice from the Facility Agent or, in the
                  event of a notice from the Obligors' Agent, if the Majority
                  Lenders agree with the Obligors' Agent opinion, the Obligors'
                  Agent and the Lenders shall negotiate in good faith for a
                  period not exceeding 30 calendar days with a view to the
                  Obligors' Agent and the Majority Lenders agreeing the manner
                  in which the provisions of Clause 20 (Financial Covenants)
                  shall be applied to the Inconsistent Accounts. If no agreement
                  is reached within this period or, if the notice under
                  paragraph (A) above was from the Obligors' Agent, the Majority
                  Lenders do not agree with the Obligors' Agent opinion, the
                  provisions of Clause 20 (Financial Covenants) shall be
                  interpreted with respect to the Inconsistent Accounts as
                  determined by the Facility Agent (acting on the instructions
                  of the Majority Lenders), which interpretation shall prevail;
                  and

      (ii)  each set of financial statements accounts delivered pursuant to
            paragraph (a) shall (in the case of audited accounts) give a true
            and fair view of and (in the case of other accounts) shall fairly
            represent the financial condition of the Obligor to which those
            financial statements relate (or the consolidated financial condition
            of the Group in relation to the financial statements of the Company)
            as at the end of the period to which those financial statements
            relate and of the results of its operations during that period.

19.3  AUDITORS

      The Company shall ensure that one of the firms specified in the definition
      of AUDITORS is at all times appointed to audit the consolidated financial
      statements of the Group.

19.4  LIQUIDITY ANALYSIS

      Prior to a Release Condition Date (or at any time thereafter, if an
      Investment Downgrading Date occurs, from the Investment Downgrading Date
      until a Release Condition Date occurs again), on the first Business Day of
      each calendar month and on or following a Release Condition Date, on the
      first Business Day of each quarter, the Obligors' Agent shall supply to
      the Facility Agent in sufficient copies for all the Lenders an up-to-date
      Liquidity Analysis together with (prior to a Release Condition Date (or at
      any time thereafter, if an Investment Downgrading Date occurs, from the
      Investment Downgrading Date until a Release Condition Date occurs again))
      a certificate from the Chief Financial Officer of the Company confirming
      that such Liquidity Analysis has been prepared in good faith and is based
      on reasonable assumptions.

19.5  LIQUIDITY

(a)   Each Obligor shall ensure that at all times the aggregate of net cash
      available and undrawn facilities for the period of three months from that
      time (the RELEVANT PERIOD) (as determined from the line entitled NET CASH
      AVAILABLE AND UNDRAWN FACILITIES in the then most recently delivered
      Liquidity Analysis) is more than E100,000,000.

(b)   Disposal proceeds projected to be received in a Liquidity Analysis by a
      member of the Group during a Relevant Period will be taken into account in
      any calculation under paragraph (a) above in the following circumstances:


                                       79

      (i)   WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF AN
            ASSET IN RELATION TO WHICH A MEMBER OF THE GROUP HAS A PUT OPTION -
            if the date for the exercise of that option occurs on or before the
            end of the Relevant Period;

      (ii)  WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF A
            MINORITY INTEREST IN A LISTED COMPANY - if there are no contractual
            restrictions binding on any member of the Group on the disposal of
            those shares on or before the end of the Relevant Period;

      (iii) WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO THE DISPOSAL OF
            SHARES IN A SUBSIDIARY OF THE COMPANY BY WAY OF ANY ISSUE OF RIGHTS,
            SHARES OR EQUITY INSTRUMENTS OF ANY KIND (INCLUDING FOR THE
            AVOIDANCE OF DOUBT DEBT INSTRUMENTS THAT ARE REDEEMABLE ONLY IN
            SHARES) - if the financial advisors of the Company acting in
            relation to such initial public offering have confirmed that the
            launch date for such issue is scheduled to occur on or before the
            end of the Relevant Period; and

      (iv)  WHERE THE PROJECTED DISPOSAL PROCEEDS RELATE TO ASSETS AND BUSINESS
            OF A MEMBER OF THE GROUP, OR THE ENTIRETY OF THE SHARES IN A MEMBER
            OF THE GROUP - if the vendor has already received formal written
            offers from potential purchasers or a sale and purchase agreement
            has been signed and in each case it is reasonably to be expected
            that the projected disposal proceeds will be received on or before
            the end of the Relevant Period,

      and (A) where the disposal proceeds projected to be received in a
      Liquidity Analysis by a member of the Group during a Relevant Period do
      not satisfy the above criteria or (B) the disposal proceeds are required,
      or could reasonably be expected by the Company to be required, to be
      applied in payment or settlement of any indemnity and/or warranty claim
      under any sale and purchase agreement and/or ancillary documents related
      to any disposal which would otherwise be taken into account, any
      prepayment of the Facility and the Existing Bank Debt and related cash
      outflow projected to be made in that Liquidity Analysis with those
      proceeds shall not be taken into account for the purposes of the
      calculation under paragraph (a) above.

19.6  INFORMATION - MISCELLANEOUS

      The Obligors' Agent shall supply to the Facility Agent:

      (a)   all documents despatched by (i) the Company to its shareholders (or
            any class of them) concerning the convening of, agendas for and
            resolutions to be considered at shareholders meetings or involving
            or containing reports or information relating to its affairs and
            activities, or (ii) any Obligor to its creditors generally (or any
            class of them), in each case at the same time as they are
            despatched;

      (b)   promptly upon becoming aware of them, details of any material
            environmental claim, any litigation, arbitration, labour dispute or
            administrative or regulatory proceedings which are current,
            threatened or pending against any member of the Group, and which if
            reasonably likely to be adversely determined, have, or could
            reasonably be expected to have, a Material Adverse Effect;

      (c)   promptly (subject to the terms of any confidentiality undertakings
            and restrictions binding on the relevant Finance Party) such further
            information in the possession or control of any Obligor or any
            Material Subsidiary regarding its (or Cegetel's) business or
            financial condition, prospects, assets and operations as the
            Facility Agent may reasonably request (including, without
            limitation, with respect to VUE and the VUE Bridge Extension
            (provided that nothing in this Agreement will require the Obligor's


                                       80

            Agent to provide to the Facility Agent information which is
            proprietary to lenders or potential lenders pursuant to the VUE
            Bridge Extension or any VUE Bridge Refinancing or in respect of
            which the Obligor's Agent is subject to any confidentiality
            undertaking or restriction which prevent such disclosure);

      (d)   promptly when available, information relating to any Business Plan
            or Disposal Confirmation once it has been approved by the board of
            directors of the Company;

      (e)   promptly upon request by the Facility Agent, a list of the proceeds
            and aggregate amount (but without a breakdown) of upfront fees,
            Taxes, costs and expenses required to calculate or verify the amount
            of any Net Proceeds;

      (f)   promptly upon being notified of the same, details of all transfers
            of any class of shares or related rights in the capital of an
            Obligor and any company over whose shares a Security Interest has
            been granted, or is to be granted pursuant to this Agreement or the
            Security Documents, and VUE, the Cegetel Group and Maroc Telecom;

      (g)   as soon as reasonably practicable and without undue delay following
            request by the Facility Agent, an updated list of any of the items
            referred to in paragraphs (a) to (c) (inclusive) of Clause 18.22
            (Intra Group Loan/IGL Arrangements/bank accounts) and semi-annually
            after the date of this Agreement, an updated list of the items
            referred to in paragraph (d) of Clause 18.22 (Intra Group Loan/IGL
            Arrangements/bank accounts) and any other details relating to any
            Cash Management and IGL Arrangements reasonably requested by the
            Facility Agent;

      (h)   promptly upon request by the Facility Agent (but subject to any
            confidentiality undertakings or disclosure restrictions) reasonable
            details of any stock exchange or regulatory process or investigation
            in relation to it or any Material Subsidiary or any other material
            regulatory process or investigation;

      (i)   promptly upon becoming aware thereof, notification that the
            restrictions on any member of the VUE Group from making any
            distribution in cash or loans or otherwise disposing of assets to
            any person outside the VUE Group existing at the date of this
            Agreement under the VUE Bridge Extension and/or VUE Bridge
            Refinancing have been removed; and

      (j)   together with the accounts set out in Clause 19.2(a)(i) and
            19.2(a)(ii) (Financial information), a certificate signed by the
            Chief Financial Officer the Company setting out in reasonable detail
            the calculation of Subsidiary Debt (as defined in Clause 19.40
            (Subsidiary Debt)) as at the date of the certificate,

      in sufficient copies for all of the Lenders, if the Facility Agent so
      requests.

19.7  NOTIFICATIONS

      Unless the Facility Agent has been so notified by another Obligor, each
      Obligor shall notify the Facility Agent of any Default (and the steps, if
      any, being taken to remedy it) promptly upon becoming aware of the facts
      constituting the Default.

19.8  COMPLIANCE CERTIFICATES

      The Obligors' Agent shall supply to the Facility Agent:


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      (a)   together with the accounts specified in Clause 19.2(a)(i) and
            19.2(a)(ii) (Financial information); and

      (b)   promptly at any other time, if the Facility Agent so requests (but
            such a request may not be made more than twice in any period of
            twelve consecutive calendar months unless a Default has occurred or
            the Majority Lenders have instructed the Facility Agent to make such
            request),

      a certificate signed by one of the signatories authorised to act on its
      behalf certifying that no Default is outstanding or, if a Default is
      outstanding, specifying the Default and the steps, if any, being taken to
      remedy it.

19.9  AUTHORISATIONS

      Each Obligor shall, and shall procure that each member of the Group shall,
      (i) promptly:

      (a)   obtain, maintain and comply with the terms of; and

      (b)   supply certified copies to the Facility Agent of,

      any authorisation, waiver or amendment required under any law or
      regulation to enable it to perform or comply with its obligations under,
      or for the validity or enforceability of, any Finance Document and (ii)
      use reasonable endeavours to procure the same where failure to do so would
      prevent any asset disposal projected to occur in a Liquidity Analysis
      taking place at the projected time.

19.10 COMPLIANCE WITH LAWS

      Each Obligor shall, and shall procure that, each member of the Group shall
      comply in all material respects with all laws and regulations applicable
      to it of any governmental authorities whether domestic or foreign having
      jurisdiction over it or any of its assets save where failure to comply
      with any such laws or regulations has not, or could not reasonably be
      expected to have, a Material Adverse Effect.

19.11 PARI PASSU RANKING

      Each Obligor shall ensure that its obligations under the Finance Documents
      will rank at least pari passu with all its other present and future
      unsecured and unsubordinated obligations, except for obligations
      mandatorily preferred by law applying to companies generally.

19.12    NEGATIVE PLEDGE

(a)   Except as provided below, no Obligor or Material Subsidiary may create or
      permit to subsist any Security Interest on any of its assets.

(b)   Paragraph (a) does not apply to:

      (i)   Security Interests already existing (or agreed to be created) at the
            date of this Agreement as set out in Schedule 10 (Cegetel) and
            Schedule 11 (List of Existing Security Interests);

      (ii)  Security Interests created or evidenced by the Security Documents
            (including in respect of Existing Bank Debt) or as permitted under
            the VUE Bridge Extension; and


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      (iii) Security Interests which are on or over any assets not intended to
            be the subject of a Security Interest under the Security Documents
            and which:

            (A)   arise out of title retention provisions in a supplier's
                  standard conditions of supply of goods acquired in the
                  ordinary course of business;

            (B)   constitute liens arising solely by operation of law and in the
                  ordinary course of its business;

            (C)   are granted over cash or securities in an aggregate amount, or
                  with an aggregate value, not exceeding E300,000,000 (or
                  equivalent in other currencies) at any time and deposited with
                  any bank, financial institution, stock exchange or clearing
                  house with which any member of the Group enters into
                  back-to-back, foreign exchange, swap or derivative
                  transactions and with which cash or securities have had to be
                  deposited in order for such transaction to be entered into;

            (D)   are granted in respect of any Product Financing;

            (E)   secure Local Borrowings (or any guarantee given in respect of
                  Local Borrowings which is permitted by this Agreement), the
                  aggregate amount of which does not exceed E300,000,000 (or
                  equivalent in other currencies) at any time (of which Security
                  Interests, no more than an amount of E50,000,000 (or
                  equivalent in other currencies) at any time, in aggregate, may
                  be in the form of cash collateral);

            (F)   are pledges of goods, of the related documents of title and/or
                  of other related documents arising or created in the ordinary
                  course of its business as security only for Financial
                  Indebtedness to a bank or financial institution directly
                  relating to the goods or documents on or over which that
                  pledge exists;

            (G)   exist at the time of acquisition on or over any assets
                  acquired after the date of this Agreement but only if (1) the
                  Security Interest was not created in contemplation of or in
                  connection with that acquisition and (2) the principal,
                  capital or nominal amount secured by any such Security
                  Interest and outstanding at the time of acquisition may not be
                  increased;

            (H)   are created on any assets acquired after the date of this
                  Agreement for the sole purpose of financing or re-financing
                  that acquisition and securing a principal, capital or nominal
                  amount not exceeding 100 per cent. of the cost of that
                  acquisition;

            (I)   in the case of any company which becomes a Material Subsidiary
                  after the date of this Agreement, any Security Interest
                  existing on or over its assets when it becomes a Material
                  Subsidiary, but only if (1) the Security Interest was not
                  created in contemplation of or in connection with it becoming
                  a Material Subsidiary and (2) the principal, capital or
                  nominal amount secured by any such Security Interest and
                  outstanding when the relevant company becomes a Material
                  Subsidiary may not be increased except by reason of any
                  fluctuation in the amount outstanding under, and within the
                  limits and in accordance with the terms of, facilities which
                  exist and are secured by the relevant Security Interest when
                  it becomes a Material Subsidiary;


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            (J)   are given on assets acquired after the date of this Agreement
                  to secure Project Finance Indebtedness provided that the
                  assets which are subject to such Security Interest are assets
                  which are the subject of the applicable project;

            (K)   are created in respect of borrowings from the French Export
                  Credit Corporation (COFACE) or similar governmental agency
                  incurred on concessional terms by any Obligor or Material
                  Subsidiary made to refinance any amount receivable under any
                  export sales contract provided that each such Security
                  Interest consists only of a pledge of such any Obligor or
                  Material Subsidiary claims under such contract against the
                  foreign buyer and of any Security Interest or guarantee of
                  such claims;

            (L)   are created by virtue of the operation of any cash pooling
                  arrangements existing at the date of this Agreement or
                  permitted pursuant to this Agreement for any Obligor or
                  Material Subsidiary with their bankers providing for the
                  setting-off or netting of debit and credit balances on bank
                  accounts of those members of the Group;

            (M)   are granted by any Obligor or Material Subsidiary pursuant to
                  applicable law to any pension fund or managers securing the
                  pension obligations of any Obligor or Material Subsidiary;

            (N)   are created in substitution for any Security Interest referred
                  to in this paragraph (b) so long as the principal, capital or
                  nominal amount secured by such replacement Security Interest
                  does not exceed the amount permitted to be secured under this
                  paragraph (b) by the Security Interest which it replaced;

            (O)   arise out of any order of attachment, sequestration, distress
                  or execution which does not constitute an Event of Default
                  under Clause 21.9 (Creditors' process / final judgment);

            (P)   are created by the transfer of any Security Interest permitted
                  to exist under this paragraph (b) from one person to another,
                  so long as the principal, capital or nominal amount secured by
                  such Security Interest is not increased;

            (Q)   are granted by any member of the VUE Group on any of its
                  assets in respect of or permitted by or required pursuant to
                  the terms of any VUE Bridge Refinancing, any VUE Incremental
                  Indebtedness or the VUE Bridge Extension (as amended from time
                  to time);

            (R)   are granted by Centenary (UK) Limited and its Affiliates in
                  respect of any UMO Refinancing;

            (S)   are granted on or over assets or rights to receive assets in
                  connection with the disposal of Sithe Asia with an aggregate
                  value of no more than U.S.$60,000,000 (or equivalent in other
                  currencies) at any time; and

            (T)   are granted on or over assets with an aggregate value of no
                  more than, and securing Financial Indebtedness, the amount of
                  which (when aggregated with the amount of other Financial
                  Indebtedness which has the benefit of a Security Interest not
                  permitted under the preceding subparagraphs) does not exceed,
                  U.S.$100,000,000 (or equivalent in other currencies) at any
                  time,

            provided that:


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                  I.    subject to paragraphs (II) and (III) below, prior to a
                        Release Condition Date, the aggregate principal amount
                        of Financial Indebtedness secured by all Security
                        Interests created or outstanding under this paragraph
                        (b) (excluding paragraphs (b)(i), (b)(ii) and
                        (b)(iii)(J), (Q) and (R) above), when aggregated with
                        the aggregate value of all assets and receivables sold,
                        transferred or otherwise disposed of pursuant to all
                        Restricted Transactions (as defined in Clause 19.13),
                        (excluding for the avoidance of doubt Security Interests
                        over and Restricted Transactions of any shares in or
                        assets of any member of the VUE Group, the Maroc Telecom
                        Group, the Cegetel Group and VTH) does not at any time
                        exceed E500,000,000 (or equivalent in other currencies);

                  II.   on or after a Release Condition Date (but subject to
                        paragraph (III) below), the aggregate principal amount
                        of Financial Indebtedness secured by all Security
                        Interests created or outstanding under paragraphs (a),
                        (b) and (c) of Clause 19.12 (Negative Pledge) (including
                        for the avoidance of doubt, the Existing Cegetel
                        Security and any other Security Interests granted on or
                        over assets of any member of the Cegetel Group) (but
                        excluding b(iii)(J) and, prior to a Security Release
                        Condition Date, b(ii)), when aggregated with the
                        aggregate value of all assets and receivables sold,
                        transferred or otherwise disposed of pursuant to all
                        Restricted Transactions (as defined in Clause 19.13
                        (Transactions similar to security), does not at any time
                        exceed 7.5 per cent. of consolidated assets (being the
                        total amount of assets shown in the most recent
                        consolidated balance sheet of the Group). For the
                        avoidance of doubt, following a Release Condition Date
                        (but subject to paragraph (III) below), no maximum
                        amount shall apply to any Security Interest permitted to
                        be created or to subsist pursuant to paragraphs
                        (b)(iii)(C), (E) and (U); and

                  III.  if, at any time after a Release Condition Date, an
                        Investment Downgrading Date occurs, the provisions of
                        paragraph (I) above shall be automatically reinstated
                        and remain in force in place of the provisions of
                        paragraph (II) above from the Investment Downgrading
                        Date unless and until such time as a Release Condition
                        Date occurs again in which case the provisions of
                        paragraph (II) shall apply.

(c)   Paragraph (a) does not apply to:

      (i)   Existing Cegetel Security; and

      (ii)  Security Interests granted on or over assets of any member of the
            Cegetel Group securing Financial Indebtedness in an amount, which
            when aggregated with all assets and receivables sold, transferred or
            otherwise disposed of by any member of the Cegetel Group pursuant to
            all Restricted Transactions (as defined in Clause 19.13) other than
            pursuant to a securitisation do not exceed an amount equal to
            E500,000,000 (or equivalent in other currencies).

(d)   Notwithstanding any other provision in the Finance Documents, no Obligor
      shall create or permit to subsist any Security Interest on any of the
      Games IP. Furthermore, no Security Interest shall be granted over the
      percentage of shares in Centenary Holding N.V. Centenary Holding Limited
      or any other Excluded Music Group Entity over which shares no Obligor can
      create or permit to subsist any Security Interest in favour of the Finance
      Parties as a result


                                       85

      of such Excluded Music Group Entity's being or becoming a Foreign
      Subsidiary or becoming held (directly or indirectly) by Universal Studios
      Holding I Corp.

(e)   Notwithstanding any other provision in the Finance Documents, no Obligor
      shall create or permit to subsist any Security Interest in respect of the
      High Yield Notes.

(f)   The Company will not create or permit to subsist (or agree to create or
      permit to subsist) any new security from any other member of the Group
      (other than that granted under the Security Documents at the date of this
      Agreement) in favour of the Existing Bank Debt unless any such new
      security effectively secures the Secured Obligations under this Agreement
      on a pari passu basis with the Existing Bank Debt.

(g)   Following the Maroc Telecom Date, as soon as reasonably practicable and in
      any event of within 45 calendar days thereof, the Company and the Facility
      Agent (on the instructions of the Majority Lenders) shall negotiate in
      good faith with a view to agreeing the aggregate value of assets of the
      Maroc Telecom Group over which a Security Interests may be permitted to be
      created or exist under this Agreement.

(h)   As soon as practicable following notice by the Kingdom of Maroc of its
      intention to exercise the put, the Company shall (unless the Company
      intends to finance any such acquisition by a Maroc Telecom Excluded
      Financing) use its reasonable endeavours to release any Security Interest
      over all the shares it holds (directly or indirectly) in Maroc Telecom
      (other than the Acquired Shares) in favour of the Kingdom of Maroc and to
      obtain the consent of the Kingdom of Maroc to grant security over all the
      shares it holds (directly or indirectly) in Maroc Telecom (including, for
      the avoidance of doubt, the Maroc Telecom Acquired Shares) in favour of
      the Lenders and the Existing Lenders on a pari passu basis.

(i)   Where the Company finances the acquisition of the Maroc Telecom Acquired
      Shares by a Maroc Telecom Excluded Financing, the Company will not create
      or permit to subsist (or agree to create or permit to subsist) any
      Security Interest over any of the shares it holds (directly or indirectly)
      in Maroc Telecom (other than any shares (held directly or indirectly) by
      the Company in Maroc Telecom permitted to be pledged in favour of the
      Lenders under the Maroc Telecom Excluded Financing).

19.13 TRANSACTIONS SIMILAR TO SECURITY

(a)   No Obligor or Material Subsidiary will enter into any Restricted
      Transaction if as a result the aggregate value of all assets and
      receivables sold, transferred or otherwise disposed of pursuant to all
      Restricted Transactions, provided that:

      (i)   prior to a Release Condition Date (but subject to paragraphs (ii)
            and (iii) below), when aggregated with the aggregate principal
            amount of Financial Indebtedness secured by all Security Interests
            created or outstanding under Clause 19.12(b) (excluding Clause
            19.12(b)(i), Clause 19.12(b)(ii) and Clause 19.12(b)(iii)(J), (Q)
            and (R)) (excluding for the avoidance of doubt Security Interests
            over and Restricted Transactions of any shares in or assets and
            receivables of any member of the VUE Group, the Maroc Telecom Group,
            subject to paragraph (c), the Cegetel Group and VTH) would exceed
            E500,000,000 (or equivalent in other currencies);

      (ii)  on or after a Release Condition Date (but subject to paragraph (iii)
            below), when aggregated with the aggregate principal amount of
            Financial Indebtedness secured by all Security Interests created or
            outstanding under paragraphs (a), (b) and (c) of Clause 19.12
            (Negative pledge) (including for the avoidance of doubt, the
            existing Cegetel Security and any other Security Interests granted
            on or over assets of any


                                       86

            member of the Cegetel Group) (but excluding b(iii)(J) and, prior to
            a Security Release Condition Date, b(ii)) does not at any time
            exceed 7.5 per cent. of consolidated assets (being the total amount
            of assets shown in the most recent consolidated balance sheet of the
            Group). For the avoidance of doubt, following a Release Condition
            Date (but subject to (iii) below), no maximum amount shall apply to
            any Security Interest permitted to be created or subsist pursuant to
            Clause 19.12(b)(iii)(C), (E) and (U); and

      (iii) if at any time after a Release Condition Date or a Security Release
            Condition Date, an Investment Downgrading Date occurs, the
            provisions of paragraph (i) above shall, be automatically reinstated
            and remain in force in place of the provisions of paragraph (ii)
            above from the Investment Downgrading Date unless and until such
            time as a Release Condition Date or a Security Release Condition
            Date, as the case may be, occurs again, in which case the provisions
            of paragraph (ii) shall apply.

(b)   In this Clause 19.13, RESTRICTED TRANSACTION means a sale, transfer or
      other disposal by any Obligor or any Material Subsidiary of:

      (i)   any of its assets on terms whereby it is or may be leased to or
            re-acquired or acquired by a member of the Group or any of its
            related entities; or

      (ii)  any of its receivables on recourse terms (excluding the discounting
            of bills or notes in the ordinary course of trading),

      (other than in connection with any Project Finance Indebtedness or Product
      Financing by that Obligor or Material Subsidiary, any assets or
      receivables of Centenary (UK) Limited and certain of its Affiliates in
      connection with the UMO Refinancing or any assets or receivables of any
      member of the VUE Group in connection with any VUE Bridge Refinancing or
      VUE Incremental Indebtedness) in circumstances where the transaction is
      entered into primarily as a method of raising Financial Indebtedness or of
      financing the acquisition of an asset, provided that if such a transaction
      is defeased it shall not thereafter constitute a Restricted Transaction,
      and for these purposes a Restricted Transaction is DEFEASED if all of the
      obligations of the Obligor or Material Subsidiary concerned thereunder are
      irrevocably (A) transferred in full to a person that is not a member of
      the Group or (B) prepaid or (C) otherwise discharged and extinguished in
      full, such that no Obligor or Material Subsidiary thereafter has any
      outstanding Financial Indebtedness with respect to such transaction and
      provided further that nothing in this Clause 19.13 shall permit any member
      of the Group to enter into or agree to enter into the covenant defeasance
      arrangements referred to in Section 5.05(a) of the VUE Partnership
      Agreement.

(c)   Paragraph (a) does not apply to any assets and receivables sold,
      transferred or otherwise disposed of by any member of the Cegetel Group
      pursuant to any Restricted Transactions, (other than pursuant to a
      securitisation) which when aggregated with the amount of Financial
      Indebtedness secured by Security Interests granted on or over assets of
      any member of the Cegetel Group does not exceed an aggregate amount equal
      to E500,000,000 (or equivalent in other currencies).

19.14 DISPOSALS

(a)   Except as provided in paragraph (b) below, no Obligor will, and each
      Obligor will procure that no member of the Group, either in a single
      transaction or a series of transactions and whether voluntarily or
      involuntarily, sell, transfer, grant or lease or otherwise dispose of any
      of its assets.


                                       87

(b)   Paragraph (a) does not apply to:

      (i)   until a Release Condition Date (or at any time thereafter, if an
            Investment Downgrading Date occurs, from the Investment Downgrading
            Date until a Release Condition Date occurs again), any disposal of
            assets (other than the VE Shares referred to in paragraph (viii)
            below) which is made for full market value and for cash payable at
            the time of the disposal, where an amount equal to the Net Proceeds
            of which (if the asset is an Asset) are applied in accordance with
            and subject to the provisions of the terms of Clause 7 (Prepayment
            and Cancellation), provided that in the case of any such disposal of
            an Asset:

            (A)   (other than in the case of any disposal of the shares in,
                  assets or business of any member of the VUE Group or the Music
                  Group) (x) up to 30 per cent. of the purchase consideration
                  for such disposal may be on terms that defer its payment for
                  up to one year from the date of such disposal and/or (y)
                  (other than in the case of the Games Disposal) up to 30 per
                  cent. of the purchase consideration may be in the form of
                  valuable non-cash consideration payable at the time of that
                  disposal and provided further that the aggregate amount of the
                  purchase consideration in respect of such disposals so
                  deferred and/or paid by non-cash consideration does not exceed
                  E350,000,000 throughout the term of this Agreement; and

            (B)   (in the case of any disposal of the shares in, assets or
                  business of any member of the VUE Group or the Music Group) up
                  to 35 per cent. of the purchase consideration for such
                  disposal may be in the form of valuable non-cash consideration
                  and on terms that defer its payment for no more than two years
                  from the date of such disposal,

            and after a Release Condition Date, any disposal of assets (other
            than the VE Shares referred to in paragraph (viii) below) which is
            made in the ordinary course of business of the disposing entity or
            for full market value and on normal commercial terms; or

      (ii)  a disposal of any asset with a market value of E30,000,000 (or
            equivalent in other currencies) or less; or

      (iii) disposal in the ordinary course of business or trading of the
            disposing entity of stock in trade, business inventories, fixtures
            and fittings, furniture and other office equipment; or

      (iv)  Relevant Intra Group Disposals or the disposal of any VUE Loan by
            VCNA, VUHIC or the Company to VUE Borrower Co. permitted under this
            Agreement or the disposal of any VUE Loans as permitted by the VUE
            Loan Assignment Agreement; or

      (v)   disposals of surplus, obsolete or redundant plant and equipment; or

      (vi)  the expenditure of cash in the ordinary course of business or
            trading (other than in connection with a transaction or operation
            which is prohibited by the terms of this Agreement) or the disposal
            of permitted cash equivalents for cash or in exchange for other cash
            equivalents; or

      (vii) disposals pursuant to Restricted Transactions permitted by Clause
            19.13 (Transactions similar to security), leasing transactions
            permitted by Clause 19.16


                                       88

            (Leasing) pursuant to transactions permitted by Clause 19.18
            (Mergers and acquisitions), or Clause 19.20 (Dividends and
            distributions) or Permitted Joint Venture; or

      (viii) the VE Shares Disposal, the Games Disposal, any Canal + Disposal or
            (subject to the provisions of Clause 7.7 (Mandatory prepayment from
            VE Shares Disposal)) the disposal of the VE Shares pursuant to the
            VE Call Option and for cash payable at the time of the disposal; or

      (ix)  the VUE Excluded Disposals or a disposal by any member of the VUE
            Group in respect of or permitted by any VUE Bridge Refinancing or
            VUE Incremental Indebtedness; or

      (x)   disposal of Cegetel Shares to the extent the Company is bound by
            drag along obligations in respect of the same in favour of the
            Lenders under the Non Recourse Financing the proceeds of which are
            prepaid in accordance with the provisions of Clause 7 (Prepayment
            and Cancellation); or

      (xi)  any disposal by a member of the Group (other than by an Obligor or a
            Material Subsidiary) where such disposal does not have nor could be
            reasonably expected to have a Material Adverse Effect or to
            jeopardise the guarantees given to the Lenders under the Finance
            Documents or the Lenders' security under the Security Documents.


19.15 FINANCIAL INDEBTEDNESS

      No Obligor will, and each Obligor will procure that no Material Subsidiary
      will, incur or have outstanding any Financial Indebtedness other than:

      (a)   under the Finance Documents or Existing Facilities or the Existing
            Contingent Financial Liabilities or non-material contingent
            Financial Liabilities outstanding as at the date of this Agreement
            or uncommitted facilities, overdrafts, daylight overdrafts,
            intra-day facilities and facilities used for technical purposes
            (i.e. credit card programmes) outstanding as at the date of this
            Agreement;

      (b)   any Financial Indebtedness as permitted by Clause 19.17 (Financial
            guarantees) or by Clause 19.19 (Loans out, Intra Group Loans);

      (c)   any Project Finance Indebtedness;

      (d)   any Product Financing;

      (e)   any Existing Facilities Refinancings (including, for the avoidance
            of doubt, any VUE Bridge Refinancing and any UMO Refinancing);

      (f)   VUE Incremental Indebtedness (where an amount of up to U.S.$
            200,000,000 (or equivalent in other currencies) is applied in full
            forthwith towards repayment of (i) all VUE Loans, if any, made by
            VUHIC to VUE for working capital purposes to the extent required in
            accordance with Clause 19.19(j) (Loans out, Intra Group Loans) or
            (ii) the UCI Loan);

      (g)   any Local Borrowings;

      (h)   any Financial Indebtedness where an amount equal to the Net Proceeds
            of such indebtedness is applied forthwith in mandatory prepayment
            and cancellation of the Facility under Clause 7 (Prepayment and
            Cancellation);


                                       89

      (i)   any Financial Indebtedness of the type referred to in paragraph (g)
            of the definition thereof entered into for the purposes of any
            transaction permitted under Clause 19.28(b);

      (j)   commercial paper issued (other than by a member of the Cegetel
            Group) in an aggregate principal amount of up to E50,000,000 (or
            equivalent in other currencies);

      (k)   in respect of which another member of the Group (including for the
            avoidance of doubt any member of the Cegetel Group) is the creditor
            as permitted in accordance with the terms of Clause 19.19 (Loans
            out, Intra Group Loans);

      (l)   an Equity Issue;

      (m)   in respect of any member of the Cegetel Group in an aggregate
            principal amount not to exceed at any time E3,000,000,000 (or
            equivalent in other currencies) (including no more than E800,000,000
            to finance the acquisition referred to in Clause 19.18(b)(viii)
            (Mergers and acquisitions) (including no more than E300,000,000 of
            existing Financial Indebtedness in the entity acquired));

      (n)   under an intra-day facility entered into for cash management
            purposes in a maximum aggregate amount not to exceed E100,000,000
            (or its equivalent in other currencies);

      (o)   subject to the other provisions of this Agreement, any other new
            borrowing which is unsecured and not guaranteed and which has an
            original scheduled maturity date falling no earlier than one year
            after the later of the Final Maturity Date and the original final
            maturity date of the Multicurrency Revolving Credit Facility;

      (p)   the VU/SIT Loan;

      (q)   Financial Indebtedness of the VUE Group arising out of TV satellite
            capital lease existing at the date of this Agreement (the monthly
            rent under such lease being U.S.$184,660, and the lease expiring in
            October 2003 with the Company having the option to purchase the
            transponder for the greater of U.S.$2,671,000 or its fair market
            value);

      (r)   any reimbursement or indemnification obligations (other than in
            respect of Financial Indebtedness) arising in the ordinary course of
            business or indemnification obligations arising in respect of any
            appeal bond;

      (s)   any Financial Indebtedness arising from the honouring by a bank or
            other financial institution of a cheque, draft or similar instrument
            drawn against insufficient funds in the ordinary course of business;
            and

      (t)   any Financial Indebtedness of the type referred to in paragraph (e)
            of the definition of Financial Indebtedness to the extent payable
            within 180 calendar days from the time of acquisition or possession.

19.16 LEASING

      No Obligor will, and each Obligor will procure that no Material Subsidiary
      will, enter into any lease or leasing arrangements other than in the
      ordinary course of business or as disclosed in writing to the Facility
      Agent prior to a Release Condition Date (subject always to the provisions
      of 19.1(g)).


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19.17 FINANCIAL GUARANTEES

(a)   In this Clause 19.17, a FINANCIAL GUARANTEE means a guarantee, indemnity
      or similar assurance against financial loss of a person in respect of any
      indebtedness of a type falling within paragraphs (a) to (h) of the
      definition of Financial Indebtedness in Clause 1.1 (Definitions) and
      includes without limitation, each Contingent Financial Liability.

(b)   No member of the Group will incur or allow to be outstanding any new
      financial guarantee in respect of any person on or after the date of this
      Agreement.

(c)   Paragraph (b) does not apply to:

      (i)   any guarantee arising under, or expressly permitted by, the Finance
            Documents;

      (ii)  the endorsement of negotiable instruments for the purpose and in the
            ordinary course of carrying on the relevant entity's trade;

      (iii) guarantees in favour of a Lender to facilitate the operation of bank
            accounts of members of the Group maintained with such Lender on a
            net balance basis;

      (iv)  guarantees by a member of the Group which is not an Obligor in
            respect of Local Borrowings;

      (v)   Excluded Financial Indebtedness;

      (vi)  for the avoidance of doubt, customary vendor warranties or
            indemnities given by a member of the Group in a sale and purchase
            agreement for a disposal by it permitted by Clause 19.14
            (Disposals);

      (vii) guarantees given in favour of fiscal authorities and
            counter-guarantees given for the purpose of avoiding a requirement
            by such authorities of payment or collateral on account of a member
            of the Group's fiscal obligations;

      (viii) guarantees in respect of new Financial Indebtedness permitted by
            Clause 19.15 (Financial Indebtedness) not otherwise permitted
            pursuant to paragraphs (i) to (iv) above in an aggregate amount at
            any time outstanding for the Group not exceeding E300,000,000 (or
            equivalent in other currencies);

      (ix)  in respect of any financial guarantee by a member of the Cegetel
            Group, the Existing Contingent Cegetel Financial Liabilities and
            other Financial Indebtedness incurred by Cegetel and permitted under
            Clause 19.15 (Financial Indebtedness) in an aggregate principal
            amount not to exceed E600,000,000 (or equivalent in other
            currencies);

      (x)   in respect of the Cegetel Indemnity;

      (xi)  guarantees given by any member of the VUE Group which are permitted
            by or required pursuant to the terms of any VUE Bridge Refinancing
            or the VUE Bridge Extension (as amended from time to time) or VUE
            Incremental Indebtedness or by Centenary (UK) Limited and certain of
            its Affiliates in connection with the UMO Refinancing;

      (xii) the guarantee granted by a member of the VUE Group in respect of
            Shanghai Universal Studios Theme Park Co. Ltd. in an aggregate
            principal amount not to exceed U.S.$140,750,000;


                                       91

      (xiii) renewal or replacement of any existing guarantees;

      (xiv) any letter of comfort issued by a member of the Group with respect
            to financial statements of any member of the Group;

      (xv)  for the avoidance of doubt, any performance guarantee granted by any
            member of the Group in respect of an obligation of another member of
            the Group in the ordinary course of trading; and

      (xvi) any guarantee or counter-guarantee granted by any member of the
            Group in respect of any obligation of another member of the Group
            under any operating lease where the premises are occupied or sublet
            by a member of the Group.

(d)   Each Obligor shall procure that any indemnities and warranties given in
      any sale and purchase agreement for a disposal contemplated by the
      Disposal Confirmation to which any member of the Group is party as vendor
      are customary (in type, amount and duration) for the type of disposal
      concerned.

(e)   Notwithstanding any other provision of the Finance Documents, no Obligor
      shall incur or permit to be outstanding any guarantee in favour of the
      holders of the High Yield Notes or the trustee under the Indenture.

(f)   The Company will not incur or allow to be outstanding (or agree to incur
      or allow to be outstanding) any new financial guarantee from any member of
      the Group (other than the guarantees incurred under the Existing Bank Debt
      Guarantee at the date of this Agreement) in favour of the Existing Bank
      Debt unless any such new financial guarantee effectively guarantees the
      Secured Obligations under this Agreement on a pari passu basis with the
      Existing Bank Debt.

19.18 MERGERS AND ACQUISITIONS

(a)   Except as provided in paragraph (b) below, no Obligor will, and each
      Obligor will procure that no member of the Group will, enter into any
      amalgamation, demerger, merger or reconstruction, nor make any
      acquisitions of, or investments in any business or any shares or other
      securities.

(b)   Paragraph (a) does not apply to:

      (i)   the acquisition of any Product or other stock in trade made in the
            ordinary course of trade or any Permitted Joint Venture; or

      (ii)  the acquisition of Shares in Joint Ventures to the extent permitted
            by Clause 19.27 (Joint Ventures); or

      (iii) any other acquisition or investments not exceeding E50,000,000 per
            annum in aggregate (or equivalent in other currencies) prior to the
            Facility Discharge Date; or

      (iv)  an amalgamation, demerger, merger or reconstruction, acquisition or
            investment in any business or any shares or other securities
            involving only members of the Group which are not Obligors carried
            out on a solvent basis (including, without limitation, for the
            purpose of a tax reorganisation or tax restructuring,
            recapitalisation of subsidiaries, or for the simplification of the
            Group structure chart, provided that:

            (A)   the Company supplies the Facility Agent as soon as possible
                  prior to such reorganisation with reasonable details thereof;
                  and


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            (B)   if any security created pursuant to the Security Documents has
                  been or is likely to be (in the opinion of the Majority
                  Lenders) affected by such reorganisation, the Company shall
                  ensure that the relevant member of the Group shall execute and
                  deliver to the Security Agent such additional Security
                  Documents as the Majority Lenders may reasonably require on
                  substantially the same terms as the Security Documents
                  charging the assets, subject of the affected security; or

      (v)   an amalgamation, demerger, merger or reconstruction, acquisition or
            investment in any business or any shares or other securities
            involving any member of the Group (other than an Obligor except
            Games permitted under this Agreement) carried out on a solvent basis
            for the purposes of facilitating a disposal permitted by Clause
            19.14 (Disposals) which could not reasonably be expected to have a
            Material Adverse Effect or to jeopardise the guarantees given to the
            Lenders under the Finance Documents or the Lenders' security under
            the Security Documents; or

      (vi)  any such operation or transaction entered into with the prior
            written consent of the Majority Lenders (and, for the avoidance of
            doubt, such consent may be withheld, without limitation, if the
            Majority Lenders are of the opinion that any such amalgamation,
            merger, de-merger, consolidation, reconstruction or transfer could
            jeopardise the guarantees given to the Lenders under the Finance
            Documents or the Lenders' security under the Security Documents); or

      (vii) the exercise of put options listed as Contingent Financial
            Liabilities or other put options where the exercise price is not
            payable in cash in each case in respect of put options existing at
            the date of this Agreement; or

      (viii) the acquisition by Cegetel of that part of Telecom Developpement SA
            France not presently beneficially owned by Cegetel for an aggregate
            total consideration of not more than E800,000,000 (including
            E300,000,000 of acquired debt); or

      (ix)  investments in VUE Borrower Co. by the Company, the amount of which
            investments, when aggregated with loans outstanding and permitted to
            be made to VUE Borrower Co. by the Company pursuant to Clause 19.19
            does not exceed at any time an aggregate amount of U.S.$ 200,000,000
            (or equivalent in other currencies); or

      (x)   any amalgamation, demerger, merger, reconstruction, acquisition or
            investment in connection with a Relevant Intra Group Disposals and
            in relation to the VE separation agreement entered into on 20th
            December, 2002 as disclosed to the Facility Agent prior to the date
            of this Agreement; or

      (xi)  the acquisition by the Company of 16 per cent. of the share capital
            of Maroc Telecom pursuant to the exercise by the Kingdom of Maroc
            pursuant to the put option set out in the Protocole d'Accord between
            the Kingdom of Maroc and the Company dated 4th March 2002; or

      (xii) investments in Shanghai Universal Theme Park Co. Ltd up to an
            aggregate amount of U.S.$217,000,000 (or equivalent in other
            currencies) by any member of the VUE Group; or

      (xiii) any Games Reorganisation; or


                                       93

      (xiv) investments made for non-cash consideration, subject always to
            Clause 19.26, , provided that such investments do not expose any
            member of the Group to any liability, actual or contingent, for
            Financial Indebtedness; or

      (xv)  any investment expressly permitted pursuant to this Agreement.

19.19 LOANS OUT, INTRA GROUP LOANS

(a)   Except as provided in paragraphs (b) and (c) and subject to the provisions
      of paragraphs (d) to (h) below, no Obligor will, and each Obligor will
      procure that no member of the Group will, be the creditor in respect of
      any Financial Indebtedness.

(b)   Paragraph (a) does not apply to:

      (i)   Financial Indebtedness constituted by any swap or derivative
            instruments permitted by this Agreement or by any bank accounts
            permitted by this Agreement;

      (ii)  Financial Indebtedness owing to any member of the Group by any
            person outside the Group at the date of this Agreement;

      (iii) trade credit extended (A) by any member of the VUE Group to another
            member of the VUE Group or (B) by any member of the Non-VUE Group to
            another member of the Non-VUE Group on normal commercial terms and
            in the ordinary course of business;

      (iv)  a loan to the Company for the purpose of allowing the Company to
            comply with the requirements of Clause 7.15(d).

(c)   Paragraph (a) does not apply to:

      (i)   a loan existing at the date of this Agreement listed in Parts 1, 2,
            3, 4 or 5 of Schedule 15 and, if made by or to an Obligor, which in
            case of a loan listed in Part 4 or 5 complies with paragraph (d)(i)
            and (ii) below respectively;

      (ii)  a loan made by an Obligor to another member of the Group (but not to
            SIT or any member of the Cegetel Group except for a loan made by the
            Company to SIT with the proceeds of the VU/SIT Loan for the purposes
            of repayment or prepayment in full of the Non-Recourse Financing)
            which complies with the requirements of paragraph (d)(i) below;

      (iii) a loan to an Obligor from another member of the Group which complies
            with the requirements of paragraph (d)(ii) below;

      (iv)  a loan between members of the Group which are not Obligors made in
            the ordinary course of day-to-day operations of the Group and in
            accordance and consistent with the Cash Management and IGL
            Arrangements as such arrangements are in operation as at the date of
            this Agreement (or as those arrangements may be amended in
            accordance with the provisions of this Agreement);

      (v)   a loan made between members of the VUE Group;

      (vi)  a loan made by Cegetel to a member of the Group for the purposes of
            Clause 7.8 (Mandatory prepayment from Assets Disposals) or Clause
            19.20 (Dividends and distributions);


                                       94

      (vii) Financial Indebtedness arising from any member of the VUE Group's
            obligation to reimburse the relevant member of the Non-VUE Group for
            liabilities and/or expenses relating to video sales or Financial
            Indebtedness arising from a member of the VUE Group's interest in
            the related payments prior to its receipt thereof, in each case
            until such time as all payments in respect of video sales are paid
            directly to an account or accounts of a member or members of the VUE
            Group in accordance with the VUE Bridge Extension;

      (viii) such loan complies with the requirements of paragraph (d)(i) or
            d(ii), as the case may be below;

      (ix)  a loan between a member of the VUE Group and a member of the Non-VUE
            Group, provided that the aggregate outstanding principal amount of
            all VUE Loans made by (A) members of the Non-VUE Group (net of the
            aggregate outstanding principal amount of all VUE Loans made by
            members of the VUE Group (in each case, inclusive of VUE Loans
            existing at 7th May, 2002)) and (B) members of the VUE Group, net of
            the aggregate outstanding principal amount of all VUE Loans made by
            members of the Non-VUE Group (in each case, inclusive of VUE Loans
            existing as at 7th May, 2002) in each of cases (A) and (B) shall at
            no time exceed (i) U.S.$500,000,000 (or equivalent in other
            currencies) or (ii) from the date on which and for so long as VUE is
            assigned a long term secured credit rating by S&P of at least BB+
            and (but not or) Moodys of at least Ba1, U.S.$700,000,000 (or
            equivalent in other currencies) (excluding the Canada Receivables
            and any Excluded Financial Indebtedness), calculated by converting
            any amounts not denominated in U.S.$ in the same manner as non U.S.$
            denominated amounts are converted for purposes of reporting inter
            company balances (consistent with past practices);

      (x)   a loan made by VUHIC to VUE or a loan made by VU, VUE or any VUE
            Foreign Lender to VUE Borrower Co. which complies with the
            requirements of paragraph (i) below;

      (xi)  any indebtedness constituted by deferred purchase consideration
            permitted by paragraph (b) of Clause 19.14; or

      (xii) any Excluded Financial Indebtedness.

(d)   (i)   A Secured Intra Group Loan shall not be permitted to be made,
            incurred or (at any time when it is owing to any Obligor)
            outstanding, unless it is evidenced by an Intra Group Loan Agreement
            or a VUE Loan Agreement, as applicable, and, in each case, is the
            subject of a Security Interest in the agreed form in favour of the
            Security Agent unless the relevant VUE Loan is assigned or
            transferred to VUE Borrower Co. in which case it shall cease in
            accordance with Clause 17 to be the subject of a Security Interest
            provided that the loans referred to in Part 4 of Schedule 15 shall
            be so evidenced and be subject to such a Security Interest as soon
            as reasonably practicable and in any event prior to the first
            Request.

      (ii)  A Subordinated Intra Group Loan shall not be permitted to be made,
            incurred or (at any time when it is owing to any Obligor)
            outstanding, unless it is evidenced by an Intra Group Loan Agreement
            or a VUE Loan Agreement, as applicable, and, in each case, is the
            subject of, and is designated a subordinated loan for the purposes
            of, the relevant Subordination Agreement (unless the relevant loan
            is made by a Foreign Subsidiary to a member of Non-VUE Group and
            subordination of that loan could reasonably be expected to give rise
            to an additional U.S. tax liability in which case it shall not be
            necessary for such loan to become the subject of the relevant


                                       95

            Subordination Agreement) provided that the loans referred to in Part
            5 of Schedule 15 shall be subject to the relevant Subordination
            Agreement as soon as reasonably practicable and in any event prior
            to the first Request.

      (iii) For the purposes of this paragraph (d) "relevant Subordination
            Agreement" shall mean:

            (A)   in the case of a VUE Loan which is a Subordinated Intra Group
                  Loan by a member of the VUE Group to a member of the Non-VUE
                  Group, the VUE Subordination Agreement provided that in the
                  case of a Subordinated Intra Group Loan made by any member of
                  the VUE Group to VUE Borrower Co. the subordination terms
                  shall be limited to no insolvency or court action as set out
                  in the VUE Subordination Agreement;

            (B)   in the case of a Subordinated Intra Group Loan between members
                  of the Non-VUE Group (and one or more of such members of the
                  Non-VUE Group is incorporated or organised outside the United
                  States of America), the Non-U.S. Subordination Agreement; and

            (C)   in the case of a Subordinated Intra Group Loan between members
                  of the Non-VUE Group (and one or more of such members of the
                  Non-VUE Group is incorporated or organised in the United
                  States of America), the U.S. Subordination Agreement.

(e)   No Obligor shall, and each Obligor shall procure that (i) no member of the
      Group shall, make any loan to any member of the Maroc Telecom Group, the
      Cegetel Group or SIT save as set out in Part 2 of Schedule 15 or except by
      the Company to SIT with the proceeds of the VU/SIT Loan and that (ii) save
      to the extent of (i), no member of the Maroc Telecom Group, the Cegetel
      Group or SIT is a party to any Cash Management and IGL Arrangements until
      the Maroc Telecom Cash Pooling Date or the Cegetel Cash Pooling Date, as
      the case may be.

(f)   The Non Recourse Financing may not be repaid or prepaid other than by way
      of repayment or prepayment in full from a loan by the Company to SIT of
      the proceeds of the VU/SIT Loan or dividends in respect of the Acquired
      Shares. (For the avoidance of doubt, the Non Recourse Financing may be
      refinanced by SIT subject to the terms of Clause 19.28 (Existing
      Facilities and Treasury Transactions).

(g)   No Obligor shall, and each Obligor shall procure that no member of the
      Group shall, amend or vary the form of Intra Group Loan Agreement or the
      form of VUE Loan Agreement, the commercial terms of any Intra Group Loan
      or VUE Loan (other than an amendment or variation of an immaterial nature
      or to permit a repayment of such Intra Group Loan provided no Default has
      occurred and is continuing or one which is required to be made by law or
      regulation or a change to the interest rate for an Intra Group Loan or VUE
      Loan which is required or advisable to comply with applicable transfer
      pricing principles).

(h)   The Obligors' Agent may, by giving the Facility Agent no less than 30
      calendar days notice in writing, request consent to amend or vary the
      terms of the Cash Management and IGL Arrangements. Unless the Facility
      Agent (acting on the instructions of the Majority Lenders) notifies the
      Obligors' Agent of its agreement to such request, no such amendment or
      variation shall be made (other than an amendment or variation of an
      immaterial nature or one which is required to be made by law or
      regulation).

(i)   (i)   No member of the Non-VUE Group will accept a commitment to lend
            to a VUE Group member and no member of the VUE Group will accept a
            commitment to lend


                                       96

            to a Non-VUE Group member except in accordance with the provisions
            of this Clause 19.19 and Clause 19.39.

      (ii)  No member of the Group shall be permitted to make a VUE Loan at any
            time after the occurrence of an Event of Default which is continuing
            if the Facility Agent (acting on the instructions of the Majority
            Lenders) shall have notified the Obligors' Agent thereof provided
            that this sub-paragraph shall not apply to Excluded Financial
            Indebtedness.

      (iii) The aggregate outstanding principal amount of all loans made by VU
            or VUHIC to VUE Borrower Co. shall at no time be more than
            U.S.$200,000,000 excluding for the avoidance of doubt, any loans
            which have been assigned or transferred to VUE Borrower Co. pursuant
            to and in accordance with the provisions of the VUE Assignment
            Agreement.

(j)   (i)   The Company shall ensure that the first U.S.$ 200,000,000 (or
            equivalent in other currencies) of the Net Proceeds (excluding any
            VUE Excluded Proceeds and any VUE Retention and any proceeds arising
            from the disposal of UCI (as defined in Schedule 19)) of Debt Issues
            made by any member of the VUE Group permitted under Clause 19.15
            (Financial Indebtedness) and Equity Issues and Assets Disposals made
            by any member of the VUE Group to a party outside the Group is
            forthwith applied in repayment of any and all outstanding VUE Loans
            or UCI Loans, if any, made by VUHIC to VUE for working capital
            purposes.

      (ii)  Where the aggregate amount of all Net Proceeds (excluding any VUE
            Excluded Proceeds, any VUE Retention and any proceeds arising from
            the disposal of UCI (as defined in Schedule 19)) of Debt Issues,
            Equity Issues and/or Assets Disposals by members of the VUE Group to
            a party outside the Group exceeds U.S.$ 200,000,000 (or equivalent
            in other currencies), the aggregate outstanding principal amount of
            all VUE Loans, if any, made by any member of the Non-VUE Group net
            of the aggregate principal amount of all VUE Loans made by any
            member of the VUE Group (in each case inclusive of VUE Loans
            existing at 7th May, 2002 (excluding the Canada Receivables and any
            Excluded Financial Indebtedness) shall be reduced forthwith to no
            more than zero.

      (iii) Where the aggregate amount of all Net Proceeds (excluding any VUE
            Excluded Proceeds and any VUE Retention and any proceeds arising
            from the disposal of UCI (as defined in Schedule 19)) of Debt
            Issues, Equity Issues and/or Assets Disposals by members of the VUE
            Group to a party outside the Group does not exceed U.S.$ 200,000,000
            (or equivalent in other currencies), the amount set forth in
            paragraph (i) above shall be reduced by an amount equal to such
            aggregate amount.

(k)   Where a member of the Group is disposed of and ceases to remain a member
      of the Group, all Intra Group Loans to which any such member of the Group
      is a party under which it is indebted to another member of the Group must
      be repaid immediately upon it ceasing to be a member of the Group (unless
      otherwise instructed by the Facility Agent (acting on the instructions of
      the Majority Lenders)).

19.20 DIVIDENDS AND DISTRIBUTIONS

(a)   Except as provided in paragraphs (b) and (c) below, no Obligor (other than
      the Company) will, and each Obligor will procure that no member of the
      Group may:


                                       97

      (i)   declare, make or pay a dividend (or interest on any unpaid
            dividend), charge, fee or other distribution (whether in cash or in
            kind) on or in respect of its share capital (or any class of its
            share capital); or

      (ii)  repay or distribute any dividend or share premium reserve,

      in each case to any person that is not a member of the Group (provided
      that this Clause 19.20 shall not restrict the payment of dividends to
      minority shareholders of a member of the Group at the same time as a
      dividend is being paid to another shareholder which is a member of the
      Group).

(b)   Paragraph (a) does not apply to any payment expressly permitted under the
      Finance Documents or pursuant to any contractual obligation to make a
      payment under the terms of any shareholder agreement or any such
      obligation described in Schedule 20 as the same is in force at the date of
      the Commitment Letter.

(c)   The Company shall use its reasonable endeavours to ensure that the Cegetel
      dividend payments projected in the Original Liquidity Analysis for the
      years 2003 and 2004 is made in the amount and on the date referred to in
      the Original Liquidity Analysis.

19.21 SHARE CAPITAL

(a)   Except as provided in paragraph (b) below, no Obligor will and each
      Obligor will procure that no Material Subsidiary will redeem, repurchase,
      defease, retire or repay any of its share capital or resolve to do so.

(b)   Paragraph (a) does not apply:

      (i)   to any transaction expressly permitted under the Finance Documents
            or entered into pursuant to any contractual obligation under any
            shareholder agreement (including for the avoidance of doubt, the VUE
            Partnership Agreement (but excluding the covenant defeasance
            arrangements referred to in Section 5.05(a) thereof)) or any
            obligation referred to in Schedule 20 as the same is in force at the
            date of this Agreement; or

      (ii)  where no cash payment is made or expected to be made for the
            purposes of such transaction; or

      (iii) to the purchase of the Company or Material Subsidiary's share
            capital (whether directly or through call options or similar
            arrangements) for the purposes of employee stock option plans or
            schemes; or

      (iv)  to a share purchase programme for the shares in Canal + approved by
            the shareholders of Canal + pursuant to and in accordance with
            Article L. 225-209 of the French Commercial Code, provided always
            that the Company shall not exercise its voting rights in respect of
            Canal + shares held by the Company in favour of any such share
            purchase programme, unless a Release Condition Date has occurred in
            which case, at any time between a Release Condition Date and the
            next subsequent Investment Downgrading Date, the Company shall not
            exercise its voting rights in respect of Canal + shares held by the
            Company in favour of any such share purchase programme whereby Canal
            + would be permitted to purchase more than 5 per cent. of its total
            share capital; or


                                       98


         (v)      where an amount equal to 100 per cent. of any cash payment
                  made to shareholders in connection with such transaction is
                  applied forthwith in mandatory prepayment and cancellation of
                  the Facility.

19.22    INTELLECTUAL PROPERTY RIGHTS

         Each Obligor shall and shall ensure that each member of the Group
         shall:

         (a)      make any registration and pay any fee or other amount which is
                  necessary to keep the registered Intellectual Property Rights
                  owned by any member of the Group which are material to the
                  business of a member of the Group in force;

         (b)      take such steps as are (other than in relation to piracy of
                  Intellectual Property Rights regarding Games IP) necessary and
                  (in all cases) commercially reasonable (including the
                  institution of legal proceedings) to prevent third parties
                  infringing those Intellectual Property Rights; and

         (c)      not enter into licence arrangements in respect of those rights
                  save for:

                  (i)      licence arrangements entered into with members of the
                           Group for so long as they remain members of the
                           Group; or

                  (ii)     licence arrangements entered into on normal
                           commercial terms and in the ordinary course of its
                           business,

         save to the extent in the case of any member of the Group (other than
         an Obligor or Material Subsidiary) where failure to do so does not or
         could not be reasonably expected to have a Material Adverse Effect.

19.23    INSURANCE

         Each Obligor shall and shall ensure that each member of the Group
         maintain insurance with financially sound and reputable insurers with
         respect to its material business and assets of an insurable nature
         against such risks and in such amounts as are normally maintained by
         persons carrying on the same or a similar class of business, save in
         the case of any member of the Group (other than an Obligor or Material
         Subsidiary) to the extent that failure to do so does not or could not
         be reasonably expected to have a Material Adverse Effect.

19.24   COMPLIANCE WITH ENVIRONMENTAL LAWS

         Each Obligor shall and shall ensure that each member of the Group
         shall:

         (a)      comply with all Environmental Laws applicable to it and any
                  notices served on it where failure to do so would have or
                  could reasonably be likely to have a Material Adverse Effect;

         (b)      make financial provision in respect of any actual or
                  contingent liability it may face arising from any
                  environmental claim which is adequate in light of a reasonable
                  assessment of such liability and which if not made may have or
                  be reasonably likely to have a Material Adverse Effect and
                  notify the Facility Agent of the details of such provision;
                  and

         (c)      indemnify each Finance Party and their respective officers,
                  employees, agents and delegates (together the INDEMNIFIED
                  PARTIES) against any cost or expense suffered or incurred by
                  them (except to the extent caused by their own gross
                  negligence or wilful


                                       99

                  default or wilful misconduct) which arises by virtue of any
                  legal proceedings under or pursuant to any Environmental Law
                  involving that Finance Party which would not have arisen if
                  that Finance Party had not entered into a Finance Document, or
                  any breach of any applicable Environmental Law by any member
                  of the Group.

19.25    MAINTENANCE OF STATUS

         Each Obligor shall, and shall ensure that each Material Subsidiary
         shall:

         (a)      do all such things as are necessary to maintain its corporate
                  existence (subject to any amalgamation, demerger, merger or
                  reconstruction permitted by Clause 19.18 (Mergers and
                  acquisitions)); and

         (b)      ensure that it has the right and is duly qualified to conduct
                  its business as it is conducted in all applicable
                  jurisdictions.

19.26    ARM'S-LENGTH TERMS

         No Obligor will, and each Obligor will ensure that no member of the
         Group will, enter into any transaction with any person except on
         ordinary commercial terms and on the basis of arm's-length
         arrangements, or enter into any transaction whereby any Obligor or
         member of the Group might pay more than the ordinary commercial
         consideration for any purchase or acquisition or might receive less
         than full commercial consideration for its services or products.

19.27    JOINT VENTURES

         The Obligors will not, and will procure that no member of the Group
         will, enter into or acquire any interest in any Joint Venture other
         than those existing at the date of this Agreement or the Shanghai
         Universal Studios Theme Park Co. Ltd joint venture other than a Joint
         Venture in relation to which the following conditions are satisfied:

         (a)      the Majority Lenders have given their prior written consent;
                  or

         (b)      (i)      the Joint Venture is within the scope and for the
                           furtherance of the Group's business;

                  (ii)     the Joint Venture is an entity incorporated with
                           limited liability and, in any event, the liability or
                           contribution of the relevant member of the Group in
                           relation to the Joint Venture does not in any event
                           exceed E25,000,000 in aggregate (or equivalent in
                           other currencies);

                  (iii)    the Joint Venture could not reasonably be expected to
                           jeopardise the guarantees given to the Lenders under
                           the Finance Documents or the Lenders' security under
                           the Security Documents; and

                  (iv)     the Joint Venture does not result in a breach of any
                           other provisions of the Finance Documents; or

         (c)      a Permitted Joint Venture.

19.28    EXISTING FACILITIES AND TREASURY TRANSACTIONS

(a)      No Obligor will and each Obligor will ensure that no member of the
         Group shall:

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         (i)      subject to Clause 7.16(j), make any voluntary prepayment or
                  cancellation of any amount outstanding or drawable under any
                  Existing Facility or any Existing Facilities Refinancing, or
                  under any Existing Cegetel Financial Indebtedness or any
                  refinancing of the same, prior to its originally scheduled
                  maturity date or scheduled expiry date (other than a
                  prepayment of the VUE Bridge Extension, any VUE Bridge
                  Refinancing or otherwise in accordance with the terms of
                  Clause 7 (Prepayment and Cancellation) or in order to carry
                  out an Existing Facilities Refinancing or a payment by the
                  Company of the guarantee under the UMO Financing or the
                  application of proceeds of the VU/SIT Loan in prepayment or
                  repayment in full of the Non-Recourse Financing); or

         (ii)     subject to Clause 7.16(k), make any amendment (or agree to
                  make any amendment) to the terms of any Existing Facility or
                  any Existing Facilities Refinancing, or of any Existing
                  Cegetel Financial Indebtedness or any refinancing of the same,
                  to advance any scheduled maturity date or amend the mandatory
                  prepayment provisions or grant any Security Interests or
                  guarantees thereunder or make (or agree to make) any amendment
                  to the financial covenants pursuant to the Multicurrency
                  Revolving Credit Facility to the extent that equivalent
                  amendments are not made to the RATIOS (as defined in Clause
                  20.3(c) (Financial Covenants)) at the same time in any way
                  which would be materially detrimental or prejudicial to the
                  interests, rights and remedies of the Finance Parties under
                  this Facility).

(b)      No Obligor will, and each Obligor will ensure that no member of the
         Group shall, enter into any currency swap or interest swap, cap or
         collar arrangements or any other derivative instrument or any similar
         treasury transaction save where entered into in the ordinary course of
         business by a member of the Group for non-speculative purposes and
         which is consistent with the prudent management of its business and for
         hedging purposes.

(c)      No member of the Group shall terminate, close out or otherwise cancel
         any of its swap or derivative instruments unless either (i) the
         relevant member of the Group (acting reasonably) does so in order to
         minimise or limit further losses or (ii) the underlying transaction
         hedged by any such swap or derivative instrument has been cancelled or
         terminated or (iii) at the date of termination, close out or
         cancellation by the relevant Obligor or the relevant member of the
         Group such swap or derivative instrument is in the money.

19.29    SECURITY

(a)      The Obligors shall at their own expense execute and do all such
         assurances, acts and things as the Security Agent may reasonably
         require for perfecting or protecting the security intended to be
         afforded by the Security Documents (and shall deliver to the Security
         Agent such directors' and shareholders' resolutions, title documents
         and other documents as the Security Agent may reasonably require).

(b)      Prior to a Security Release Condition Date (but subject always to
         paragraph (c) below), the Company will ensure that the Security
         Documents in respect of the Existing Cegetel Shares are executed and
         delivered to the Security Agent in form and substance satisfactory to
         the Facility Agent forthwith if any of the following events occur:

         (i)      if there are no contractual restrictions or provisions
                  (including, without limitation, pre-emption rights) between
                  shareholders of Cegetel Groupe S.A. restricting or which would
                  be triggered upon the granting of such a pledge;

         (ii)     if SIT agrees to grant a share pledge over the Acquired
                  Shares; or

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         (iii)    if the Company acquires 100 per cent. of the shares of
                  Cegetel.

(c)      If a Security Release Condition Date occurs but any time thereafter an
         Investment Downgrading Date occurs, the provisions of subclause (b)
         shall be automatically reinstated and remain in force from the
         Investment Downgrading Date until such time as a Security Release
         Condition Date occurs again.

(d)      On or after the Maroc Telecom Date but prior to a Security Release
         Condition Date (subject always to paragraph (c) above), the Company
         will ensure that Security Documents in respect of all the shares it
         holds in Maroc Telecom are executed and delivered to the Security Agent
         in form and substance satisfactory to the Facility Agent forthwith if
         any of the following events occur:

         (i)      if the Company holds 51 per cent. of the shares of Maroc
                  Telecom following to the acquisition permitted pursuant to
                  Clause 19.18 (xii); and

         (ii)     if there are no contractual restrictions or provisions
                  (including, without limitation, pre-emption rights) between
                  shareholders of Maroc Telecom restricting or which would be
                  triggered upon the granting of such a pledge.

(e)      The Company shall ensure that VUP shall, contemporaneously with its
         accession to this Agreement as an Additional Guarantor, pursuant to
         Clause 17.3(b), execute and deliver to the Security Agent an account
         pledge or pledges in the agreed form over each of its Cash Pooling
         Accounts.

19.30    CONCENTRATION ACCOUNTS

(a)      The Company shall open and maintain the Concentration Accounts and
         ensure that on a daily basis an amount equal to the aggregate of the
         actual credit balances standing to each of the Cash Pooling Accounts in
         excess of E100,000,000 is transferred to the Concentration Accounts.

(b)      For the purposes of paragraph (a) above and subject to paragraph (d)
         below, the Company will not be obliged to transfer on a particular day
         the actual credit balance standing to any Cash Pooling Account to the
         Concentration Accounts pursuant to paragraph (a) above where:

         (i)      the relevant member of the Group which holds the account is
                  required to retain part or all of any such credit balance in
                  that Cash Pooling Account as a result of a legal or regulatory
                  requirement which is imposed on it after the date of this
                  Agreement; or

         (ii)     that Cash Pooling Account is credited with an amount after
                  11.00 Paris time on the date on which the relevant calculation
                  is being made on such day; or

         (iii)    any amount is retained in that Cash Pooling Account as a
                  result of an administrative or technical failure by the
                  account bank with which the Cash Pooling Account is held and
                  where any such administrative or technical failure is remedied
                  promptly; or

         (iv)     the relevant member of the Group which holds the account is
                  required to retain in that Cash Pooling Account a de minimis
                  amount as a result of a change after the date of this
                  Agreement in the terms and conditions in relation to that Cash
                  Pooling Account imposed by the financial institution with
                  which such account is held.

(c)      The Company may make withdrawals from the Concentration Accounts unless
         an Event of Default has occurred and subject to the other provisions of
         this Agreement provided that where the withdrawal is to be made for the
         purposes of making an investment in instruments,


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         securities or investments referred to in paragraph (b) to (e) of the
         definition of Consolidated Cash and Cash Equivalents and short term
         negotiable debt (BMTN), the Company shall ensure that any such
         investments, agreement or rights attaching thereto have become the
         subject of a Security Interest in the agreed form in favour of the
         Security Agent.

(d)      Each relevant member of the Group shall use reasonable commercial
         efforts to minimise the effect of matters referred to in paragraph (b)
         above including investigating the possibility of moving the relevant
         Cash Pooling Account to another bank or financial institution among the
         Mandated Lead Arrangers or to another jurisdiction, but shall only be
         required to take any such action if and to the extent this does not
         interfere with the ordinary course of business of such relevant Group
         member.

(e)      The Company shall use reasonable commercial endeavours to ensure that
         cash in hand and credit balances in bank accounts of members of the
         Group (other than the VUE Group, SIT and Cegetel for so long as any
         amount is outstanding under the Non-Recourse Financing) shall be held
         within the Cash Pooling Accounts to the extent this is consistent with
         the Cash Management and IGL Arrangements and with applicable legal,
         administrative and operational constraints.

19.31    RECEIPT ACCOUNT

         The Obligors shall ensure that the Receipt Account is opened and
         maintained as soon as reasonably practicable and in any event prior to
         the date of the first Request and upon receipt of the relevant proceeds
         required to be paid to any such account are secured over such proceeds
         in favour of the Security Agent for the purposes of complying with the
         provisions of Clause 7.14 (Mandatory prepayment and cancellation -
         application of proceeds).

19.32    BANK ACCOUNTS

(a)      No Obligor may open or maintain any new account with any branch of any
         bank or other financial institution providing similar services other
         than an account maintained with a Finance Party or an Affiliate of a
         Finance Party or an account which is secured in favour of the Finance
         Parties.

(b)      The Company shall procure that the overnight balance of the
         Euro-denominated bank account with Societe Generale in Poland listed in
         Schedule 12 (the "EURO ACCOUNT") shall not exceed Euro 50,000 and that
         the overnight balance of the Zloty-denominated bank account with
         Societe Generale in Poland listed in Schedule 12 (the "ZLOTY ACCOUNT")
         shall not exceed PLN 210,000, provided that, for a period of three
         Polish Business Days following receipt by the Company of any proceeds
         of any sale by a member of the Group of all or part of its interest in
         Elektrim Telekomunikajca, the overnight balances of the Euro Account
         and the Zloty Account may be equal to any amount which will result in
         the aggregate of the balances of the Euro Account and the Zloty Account
         being not more than Euro 1,000,000, or the equivalent on any such day
         in Polish Zloty. For the purposes of this paragraph (c), "POLISH
         BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
         banks are open for general business in Warsaw and Paris.

(c)      Save as disclosed to the Facility Agent prior to the date of this
         Agreement, the Company shall procure the closure of the bank accounts
         listed under the heading "VE accounts" in Schedule 12 on or prior to
         2nd May, 2003.

19.33    ACCESS

         Upon the occurrence of an Event of Default which is continuing, each
         Obligor and Material Subsidiary must allow any one or more
         representatives of the Facility Agent and/or


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         accountants or other professional advisers appointed by the Facility
         Agent (at the Company's risk and expense) to have access during normal
         business hours to the assets, books and records of that member of the
         Group and to inspect the same.

19.34    NON-ERISA PENSION SCHEMES

(a)      Each Obligor shall be, and shall procure that each member of the Group
         is:

         (i)      in substantial compliance with any laws, contract and
                  accounting principles and practices relating to any of its
                  pension schemes; and

         (ii)     in substantial compliance with its pension schemes
                  obligations.

(b)      The Obligors' Agent must supply the Facility Agent with a copy of any
         report in respect of any pension scheme operated by a member of the
         Group which the Facility Agent may reasonably request.

(c)      This Clause shall not apply to any pension scheme that is a Plan or
         Multiemployer Plan that is subject to ERISA.

19.35    TAX

         Each Obligor shall, and shall procure that each member of the Group
         will, pay all material Tax due and payable by it within a reasonable
         time of the relevant due date (after taking into account any extension
         or grace period extended to it by the relevant tax authorities) and
         prior to the accrual of any material fine or penalty for late payment
         save to the extent that:

         (a)      payment of the same is being contested in good faith and
                  adequate reserves are being maintained for that Tax; or

         (b)      such non payment does not have and could not reasonably be
                  expected to have a Material Adverse Effect.

19.36    ERISA REPORTING REQUIREMENTS

         The following shall be provided to the Facility Agent:

         (a)      (i)      promptly and in any event within 10 calendar days
                           after any Obligor or any ERISA Affiliate knows or has
                           reason to know that any ERISA Event has occurred that
                           is reasonably expected to have a Material Adverse
                           Effect, a statement of the Chief Financial Officer of
                           the Obligor describing such ERISA Event and the
                           action, if any, that such Obligor or such ERISA
                           Affiliate has taken and proposes to take with respect
                           thereto; and

                  (ii)     on the date any records, documents or other
                           information must be furnished to the PBGC with
                           respect to any Plan pursuant to Section 4010 of
                           ERISA, a copy of such records, documents and
                           information;

         (b)      promptly and in any event within five business days after
                  receipt thereof by any Obligor or any ERISA Affiliate, copies
                  of each notice from the PBGC stating its intention to
                  terminate any Plan or to have a trustee appointed to
                  administer any Plan;

         (c)      promptly upon request of the Facility Agent/a Finance Party,
                  copies of each Schedule B (Actuarial Information) to the most
                  recent annual report (Form 5500 Series) with respect to each
                  Plan; and

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         (d)      promptly and in any event within five business days after
                  receipt thereof by any Obligor or any ERISA Affiliate from the
                  sponsor of a Multiemployer Plan, copies of each notice
                  concerning (i) the imposition of Withdrawal Liability by any
                  such Multiemployer Plan that is reasonably expected to have a
                  Material Adverse Effect, (ii) the reorganisation or
                  termination, within the meaning of Title IV of ERISA, of any
                  such Multiemployer Plan that is reasonably expected to have a
                  Material Adverse Effect or (iii) the amount of liability
                  incurred, or that may be incurred, by such Obligor or any
                  ERISA Affiliate in connection with any event described in
                  Clause (i) or (ii).

19.37    MARGIN REGULATION

         The Obligors will use the proceeds of the Loans only for the purpose
         described in Clause 3(a) (Purpose). No Obligor will engage in the
         business of extending credit for the purpose of purchasing or carrying
         margin stock (within the meaning of Regulations U and X issued by the
         Board of Governors of the United States Federal Reserve System), and no
         portion of any Loan will be used, directly or indirectly, to purchase
         or carry margin stock or to extend credit to others for the purpose of
         purchasing or carrying margin stock.

19.38    VUE BRIDGE REFINANCING

         The Company shall ensure that the VUE Bridge Extension is refinanced to
         the extent not already completed at the date of this Agreement.

19.39    VUE RING-FENCING

(a)      No member of the Non-VUE Group shall make any investment in or payment
         to any member of the VUE Group or provide any financial assistance or
         support in respect of VUE or any of its Subsidiaries except for the
         VU/VUE Partnership Obligations listed in Schedule 20, as permitted by
         Clause 19.19 (Loans out, Intra Group Loans) and as otherwise set out in
         Schedule 17 (Existing Contingent Financial Liabilities) and Schedule 19
         (VUE Exclusions).

(b)      No Obligor shall, and each Obligor shall ensure that no member of the
         Non-VUE Group shall, lend (or give a commitment to lend) to any member
         of the VUE Group otherwise than in accordance with Clause 19.19 and
         this Clause 19.39.

(c)      The Company undertakes that it will not amend or permit the amendment
         of the VUE Partnership Agreement or VUE Transaction Agreement in any
         way such that any member of the Non-VUE Group incurs any financial
         liability thereunder in respect of VUE, other than the VU/VUE
         Partnership Obligations.

(d)      For such time as the VUE Borrower Co. may make any VUE Loans pursuant
         to the VUE Partnership Agreement, the VUE Transaction Agreement and the
         VUE Side Letter, the Company shall ensure that VUE Borrower Co.:

         (i)      is and remains the "funding entity" (as such term is defined
                  in, and for the purposes of, the VUE Side Letter);

         (ii)     is organised as and remains a limited liability partnership
                  under and solely for the purposes set out in the LLP
                  Agreement;

         (iii)    has not traded and has no material liabilities or commitments
                  (actual or contingent, present or future) and has not traded
                  and will not have any material liabilities or commitments
                  (actual or contingent, present or future);

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         (iv)     does not own any material assets and does not carry on any
                  business;

         (v)      complies with the limitations on its activities set out in
                  Section Tenth of the LLP Agreement,

         other than in relation to (iii) and (iv) as a party to or transferee or
         assignee of any Intra Group Loan (including, for the avoidance of
         doubt, any VUE Loan) or in connection with its activities as a funding
         entity subject to and in accordance with Schedule 16 (Cash Management
         and IGL Arrangements), the Finance Documents and the LLP Agreement .

(e)      The Company may use alternative means of making VUE Loans, permitted
         pursuant to the terms of the VUE Partnership Agreement, the VUE
         Transaction Agreement and the VUE Side Letter provided that such loans
         are secured and subordinated pursuant to the Security Documents and the
         Subordination Agreements to the extent to which they would have been
         required to have been secured and subordinated had they been a VUE Loan
         or an Intra Group Loan pursuant to Clause 19.19 (Loans out, Intra Group
         Loans).

(f)      The Company shall not consent to any operation under or make any
         amendment to the LLP Agreement which is inconsistent or in conflict
         with the terms of the Finance Documents or Schedule 16 (Cash Management
         and IGL Arrangements) or the operations of VUE Borrower Co as the
         funding entity.

19.40    SUBSIDIARY DEBT

(a)      The Company shall procure that part of Net Financial Debt (as defined
         in Clause 20 (Financial Covenants)) (excluding Project Finance
         Indebtedness and Financial Indebtedness owing from one member of the
         Group to another member of the Group) incurred by its Subsidiaries
         excluding (without double counting) the amount of the VUE Bridge
         Extension or any VUE Bridge Refinancing (SUBSIDIARY DEBT) shall not at
         any time exceed in aggregate an amount equal to 30 per cent. of the
         then Net Financial Debt (as defined in Clause 20 (Financial Covenants))
         (excluding Project Finance Indebtedness, Financial Indebtedness owing
         from one member of the Group to another member of the Group and
         Financial Indebtedness incurred by VUE).

(b)      Financial Indebtedness owing under or in connection with this Facility
         or the Existing Bank Debt Guarantee will not be taken into account for
         the purposes of paragraph (a).

19.41    HIGH YIELD NOTES

(a)      The Company will not amend or agree to amend the High Yield Note
         Documents such that the maturity date of the High Yield Notes is
         advanced to a date prior to the Final Maturity Date or the final
         maturity date of the Multicurrency Revolving Credit Facility, the rate
         of interest or periodicity of interest is increased or made more
         frequent, or otherwise amend or agree to amend in a way which is or
         could, in the opinion of the Majority Lenders, be inconsistent with the
         terms of this Agreement or have a detrimental effect on the rights and
         remedies of the Finance Parties under this Facility.

(b)      The Company will not make a repayment or prepayment, redemption,
         repurchase of or defease (by way of legal defeasance or covenant
         defeasance) any of the High Yield Notes or make any offers to repay,
         prepay, redeem, repurchase or defease any of the High Yield Notes.

(c)      The Company will ensure that the High Yield Notes are and remain at all
         times until the Facility Discharge Date unsecured and do not benefit
         from any financial guarantee, directly or indirectly, from any member
         of the Group or other person.

                                      106

(d)      The Company will ensure that no member of the Group purchases any of
         the High Yield Notes.

19.42    REPAYABLE FACILITIES

(a)      The Company shall apply 100 per cent. of the High Yield Notes Proceeds
         to repay (and cancel) the amounts outstanding under the Repayable
         Facilities.

(b)      The Company shall apply its available cash to the fullest extent
         necessary to repay (and cancel) the balance of amounts outstanding
         under the Repayable Facilities after application of 100 per cent. of
         the High Yield Notes Proceeds thereto.

19.43    VE "B" SHARES

(a)      The Company shall use its reasonable endeavours to negotiate with the
         New Investors the transactions contemplated in the VE Share Pledge
         Arrangements (as amended on or about the date hereof) in order to
         obtain the consent of the New Investors to enable the Company to grant
         a pledge in favour of the Finance Parties over all of the VE "B" Shares
         ranking pari passu with the pledge of these shares granted by the
         Company to the Parties Financieres 3ME.

(b)      Promptly upon the New Investors giving their consent referred to in
         paragraph (a) above (but not otherwise), the Company shall execute a
         share pledge in respect of all of the VE "B" Shares substantially in
         the form set out in Annex F of the VE Share Pledge Arrangements.

20.      FINANCIAL COVENANTS

20.1     FINANCIAL COVENANT DEFINITIONS

         In this Clause 20:

         ACQUIRED BUSINESS means a member of the Group or business or assets
         acquired during a Measurement Period.

         CASH EBITDA means the consolidated operating income of the Group (other
         than any member of the Maroc Telecom Group and the Cegetel Group)
         determined in accordance with accounting principles and practices
         generally accepted in France, consistently applied, for a Measurement
         Period, adjusted by:

         (a)      adding back depreciation, amortisation and non-cash provisions
                  (to the extent that such depreciation, amortisation and
                  non-cash provisions are deducted in computing the operating
                  income);

         (b)      deducting any gain (or adding back any loss) in connection
                  with any revaluation of an asset or any gain or loss against
                  book value arising on the disposal of an asset (otherwise than
                  in the ordinary course of trading) by a member of the Group
                  during that Measurement Period;

         (c)      adding back net restructuring charges and other one-time
                  items; and

         (d)      adding cash dividends received from VE, any member of the
                  Maroc Telecom Group and the Cegetel Group (other than cash
                  dividends received by SIT in respect of the Acquired Shares
                  prior to the SIT Repayment Date),

         and including the operating income (as adjusted in accordance with
         paragraphs (a) to (c) above) of any Acquired Business (provided such
         acquisition is permitted by the terms of this


                                      107

         Agreement) (as determined on a pro forma twelve month basis for the
         part of the Measurement Period prior to the acquisition of the Acquired
         Business), provided that the extent of the operating income of the
         Acquired Business so included will be an amount equal to the percentage
         of the cashflow of the Acquired Business which the Company demonstrates
         in reasonable detail it either effectively controls or has access to.

         CONSOLIDATED CASH AND CASH EQUIVALENTS means, at any time:

         (a)      cash in hand or on deposit with any acceptable bank (excluding
                  any deposit used as cash collateral for the purpose of
                  defeasing indebtedness as described in paragraph (B) of the
                  definition of Total Gross Financial Debt);

         (b)      certificates of deposit, maturing within one year after the
                  relevant date of calculation, issued by a reputable bank;

         (c)      any investment in marketable obligations issued or guaranteed
                  by the government of the United States, Switzerland or the
                  European Union (excluding Greece and any country which becomes
                  a member thereof after the date of this Agreement) or by an
                  instrumentality or agency of the government of the United
                  States, Switzerland or the European Union (excluding Greece
                  and any country which becomes a member thereof after the date
                  of this Agreement) having an equivalent credit rating;

         (d)      open market commercial paper:

                  (i)      for which a recognised trading market exists;

                  (ii)     issued in Sterling, U.S. Dollars or Euro;

                  (iii)    which matures within one year after the relevant date
                           of calculation; and

                  (iv)     which has a credit rating of either A-1 by Standard &
                           Poor's Rating Services or IBCA or P-1 by Moody's
                           Investor Services Inc., or, if no rating is available
                           in respect of the commercial paper or indebtedness,
                           the issuer of which has, in respect of its long-term
                           debt obligations, an equivalent rating; and

         (e)      any other instrument, security or investment approved by the
                  Majority Lenders,

         in each case, to which any member of the Group (other than any member
         of the Maroc Telecom Group) is beneficially entitled at that time and
         which is capable of being applied against Total Gross Financial Debt
         but excluding any cash acquired in connection with the acquisition
         permitted under Clause 19.18(b)(viii). An ACCEPTABLE BANK for this
         purpose is a commercial bank or trust company which has a rating of A
         or higher by Standard & Poor's or FitchIBCA or A2 or higher by Moody's
         or a comparable rating from a nationally recognised credit rating
         agency for its long-term debt obligations or has been approved by the
         Majority Lenders.

         FINANCIAL INCOME means, in respect of the Group (other than any member
         of the Maroc Telecom Group and any member of the Cegetel Group, each on
         a consolidated basis) all interest and other financing income received
         or receivable by the Group (other than any member of the Maroc Telecom
         Group and the Cegetel Group) during a Measurement Period.

         MEASUREMENT PERIOD means a period of 12 months ending on a Testing
         Date.

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         NET FINANCIAL DEBT means, in respect of the Group (other than any
         member of the Maroc Telecom Group) at any time Total Gross Financial
         Debt less Consolidated Cash and Cash Equivalents.

         NET FINANCING COSTS means, in respect of the Group (other than any
         member of the Maroc Telecom Group and any member of the Cegetel Group,
         each on a consolidated basis) Total Financing Costs less Financial
         Income for the Group during the relevant Measurement Period.

         RELEVANT PERCENTAGE means the percentage of the cashflow of any
         Acquired Business which the Company demonstrates in reasonable detail
         it either controls or has access to.

         TESTING DATE means 31st March, 30th June, 30th September and 31st
         December of each year.

         TOTAL FINANCING COSTS means all interest and financing fees, including
         the interest element payable under any finance lease and any periodic
         cash payments in respect of preference shares (other than preference
         shares issued by VUE prior to the date of this Agreement or issued or
         accrued as additional shares in respect of shares issued by VUE prior
         to the date of this Agreement) and excluding any costs incurred in
         connection with the acquisition permitted under Clause 19.18(b)(viii)
         (together FINANCING COSTS), (whether, in each case, paid, payable or
         (subject to the proviso) capitalised) incurred by the Group (other than
         any member of the Maroc Telecom Group and on a consolidated basis)
         during a Measurement Period and including the Relevant Percentage of
         the Financing Costs of any Acquired Business (as determined on a pro
         forma twelve month basis for the part of the Measurement Period prior
         to the acquisition of the Acquired Business), provided that capitalised
         items shall only be included in the calculation of Total Financing
         Costs for a Measurement Period if the Company confirms in a compliance
         certificate delivered in relation to the financial covenants for that
         Measurement Period that they constitute more than 5 per cent. of those
         Total Financing Costs. For these purposes, in each such compliance
         certificate, the Company shall either certify that capitalised items
         for the Measurement Period to which that certificate relates do not
         exceed 5 per cent. of Total Financing Costs for that period or, if they
         do, set out the aggregate amount of capitalised items.

         TOTAL GROSS FINANCIAL DEBT means, in respect of the Group (other than
         any member of the Maroc Telecom Group on a consolidated basis) at any
         time the aggregate of the following (without double counting and
         provided that where any of the following items relates to an Acquired
         Business, the Relevant Percentage only of the amount of that item shall
         be included in the calculation of Total Gross Financial Debt):

         (a)      the outstanding principal amount of any moneys borrowed;

         (b)      the outstanding principal amount of any acceptance under any
                  acceptance credit;

         (c)      the outstanding principal amount of any bond, note, debenture,
                  loan stock or other similar instrument;

         (d)      the capitalised element of indebtedness under a finance or
                  capital lease except to the extent that any such lease is
                  defeased (for which purposes, a lease is "DEFEASED" if all of
                  the obligations of the relevant member of the Group thereunder
                  are irrevocably (A) transferred in full to a person that is
                  not a member of the Group or (B) prepaid or (C) otherwise
                  discharged and extinguished in full, such that no member of
                  the Group thereafter has any outstanding indebtedness or
                  liability (contingent or otherwise) with respect to such
                  lease);

         (e)      the outstanding principal amount of all moneys owing in
                  connection with the sale or discounting of receivables
                  (otherwise than on a non-recourse basis);

                                      109

         (f)      the outstanding principal amount of any indebtedness arising
                  from any deferred payment agreements arranged primarily as a
                  method of raising finance or financing the acquisition of an
                  asset;

         (g)      any fixed or minimum premium payable on the repayment or
                  redemption of any instrument referred to in paragraph (c)
                  above;

         (h)      the outstanding principal amount of any indebtedness arising
                  in connection with any other transaction (including any
                  forward sale or purchase agreement) which has the commercial
                  effect of a borrowing;

         (i)      the mark to market value of any currency swap or interest
                  swap, cap or collar arrangements or any other derivative
                  instrument to the extent the derivative instruments are not
                  used for hedging purposes;

         (j)      the aggregate face value amount of preference shares (other
                  than preference shares issued by VUE prior to the date of this
                  Agreement or issued or accrued as additional shares in respect
                  of shares issued by VUE prior to the date of this Agreement
                  and preference shares mandatorily convertible into shares in a
                  member of the Group (other than any member of the Maroc
                  Telecom Group) which do not in any circumstances give rise to
                  redemptions or repayments (whether in whole or in part) in
                  cash) in relation to which there is a contractual obligation
                  to pay dividends prior to 91 calendar days after the Final
                  Maturity Date; and

         (k)      the outstanding principal amount of any indebtedness of any
                  person of a type referred to in paragraphs (a) - (j) above
                  which is the subject of a guarantee, indemnity or similar
                  assurance against financial loss given by a member of the
                  Group (other than any member of the Maroc Telecom Group)
                  (excluding (i) the amount of any guarantee obligations of VU
                  which have been assigned to, and assumed by any member of the
                  Maroc Telecom Group or a company which is not a member of the
                  Group and (ii) any guarantee, indemnity or similar assurance
                  against financial loss entered into prior to the date of this
                  Agreement which is the subject of a counter-guarantee given by
                  VE),

         but excluding any Non Recourse Financing, any Intra Group Loans and
         Project Finance Indebtedness, any indebtedness incurred in connection
         with the acquisition permitted under Clause 19.18(b)(viii) or otherwise
         any indebtedness which has been defeased prior to the date of this
         Agreement (for which purposes, indebtedness is "DEFEASED" if all of the
         obligations of the relevant member of the Group in relation thereto are
         irrevocably (A) transferred in full to a person that is not a member of
         the Group or (B) cash collateralised in full by blocked deposits, such
         that no member of the Group thereafter has any outstanding indebtedness
         or liability (contingent or otherwise) with respect to such
         indebtedness (including, without limitation, with respect to adjusting
         the amount of, or making any payment in relation to, any such cash
         collateral)).

20.2     CALCULATION

(a)      All the terms used in this Clause 20 are to be calculated in accordance
         with accounting principles and practices generally accepted in France,
         consistently applied.

(b)      If there is a dispute as to any interpretation of any term in this
         Clause 20, either:

         (i)      the interpretation of the Facility Agent shall prevail (after
                  prior consultation with the Company's Auditors and the
                  Company); or

                                      110

         (ii)     (if the Company so requests) the Facility Agent will, at the
                  expense of the Company, instruct an independent expert (which
                  shall be an internationally recognised independent qualified
                  firm of auditors) to act as an expert and not as an
                  arbitrator, and the determination of such expert shall be
                  final and binding on the Parties.

20.3     FINANCIAL COVENANTS

(a)      Before a Release Condition Date (but subject always to paragraphs (c)
         to (f) inclusive below), the Company shall procure that on each
         quarterly Testing Date referred to in Column 1 below:

         (i)      the ratio of Net Financial Debt to Cash EBITDA does not exceed
                  that set out in Column 2 below opposite that Testing Date;

         (ii)     the ratio of Cash EBITDA to Net Financing Costs is at least
                  that set out in Column 3 below opposite that Testing Date; and

         (iii)    Total Gross Financial Debt does not exceed the amount set out
                  in Column 4 below opposite that Testing Date.

(b)      On or after a Release Condition Date (but subject always to paragraphs
         (c) to (f) inclusive below), the Company shall procure that following
         such Release Condition Date on each semi-annual Testing Date referred
         to in Column 1 below:

         (i)      the ratio of Net Financial Debt to Cash EBITDA does not exceed
                  that set out in Column 2 below opposite the Testing Date
                  applicable as at such Release Condition Date;

         (ii)     the ratio of Cash EBITDA to Net Financing Costs is at least
                  that set out in Column 3 below opposite the Testing Date
                  applicable as at such Release Condition Date; and

         (iii)    Total Gross Financial Debt does not exceed the amount set out
                  in Column 4 below opposite the Testing Date applicable as at
                  such Release Condition Date.

(c)      If, on or after a Release Condition Date, an Investment Downgrading
         Date occurs, the financial ratios and covenant (the RATIOS) referred to
         in paragraph (a) above shall, subject to paragraphs (d) to (f)
         inclusive below, apply and be reinstated from the Investment
         Downgrading Date unless and until a Release Condition Date occurs again
         in which case the provisions of paragraph (b) above shall apply.

(d)      Within 5 calendar days of an Investment Downgrading Date, the Company
         and the Facility Agent shall enter into negotiations in good faith for
         a period of no more than 45 calendar days with a view to agreeing any
         amendments to the ratios set out in columns 2, 3 and 4 below.

(e)      Any amendments agreed under paragraph (d) shall be, with the prior
         written consent of the Majority Lenders, binding on all the parties.

(f)      If and until amendments are agreed by the Company and the Majority
         Lenders pursuant to paragraphs (d) and (e) above, the applicable
         ratios, in each case for the period from the Investment Downgrading
         Date unless and until a Release Condition Date occurs again, will be
         those set out in columns 2, 3 and 4, as appropriate, opposite the
         Testing Date which were applicable on the Release Condition Date
         immediately preceding that Investment Downgrading Date and thereafter
         the applicable ratios on each successive quarterly Testing Date, will
         be the next consecutive ratios, each as set out in columns 2, 3 and 4
         below.

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             COLUMN 1                 COLUMN 2                     COLUMN 3                    COLUMN 4
           TESTING DATE)       (MAXIMUM RATIO OF NET       (MINIMUM RATIO FOR CASH       (MAXIMUM TOTAL GROSS
                               FINANCIAL DEBT TO CASH      EBITDA TO NET FINANCING     FINANCIAL DEBT (BILLION
                                      EBITDA)                       COSTS)                      EURO))
                                                                              
             30/06/03                  5.8:1                        2.4:1                         18

             30/09/03                  5.4:1                        2.4:1                        15.6

             31/12/03                  4.4:1                        2.7:1                        15.6

             31/03/04                  4.2:1                        2.9:1                        12.8

             30/06/04                  4.0:1                        3.1:1                        12.5

             30/09/04                  4.0:1                        3.2:1                        12.3

             31/12/04                  4.0:1                        3.3:1                        11.3

             31/03/05                  3.5:1                        3.4:1                        10.3

             30/06/05                  3.5:1                        3.4:1                        10.3

             30/09/05                  3.5:1                        3.4:1                        10.0

             31/12/05                  3.5:1                        3.4:1                        10.0

             31/03/06                  3.0:1                        3.5:1                        9.2

             30/06/06                  3.0:1                        3.5:1                        9.2

             30/09/06                  3.0:1                        3.5:1                        9.0

             31/12/06                  3.0:1                        3.5:1                        9.0

             31/03/07                  3.0:1                        3.5:1                        7.0


21.      DEFAULT

21.1     EVENTS OF DEFAULT

         Each of the events set out in this Clause 21 is an Event of Default
         (whether or not caused by any reason whatsoever outside the control of
         an Obligor or any other person).

21.2     NON-PAYMENT

         An Obligor does not pay on the due date (or within three Business Days
         of the due date where the failure to pay on the due date is for
         administrative or technical reasons) any amount payable by it under the
         Finance Documents at the place at and in the currency in which it is
         expressed to be payable.

21.3     BREACH OF OTHER OBLIGATIONS

(a)      An Obligor does not comply with any provision of the Finance Documents
         (other than those referred to in Clause 21.2 (Non-payment) and in
         paragraph (b) below) and only where the


                                      112

         failure is capable of remedy) such failure to comply continues for 15
         calendar days after the earlier of the date on which (a) any Obligor
         becomes aware of the facts or circumstances giving rise to such
         failure, and (b) the Facility Agent gives notice of such failure to the
         Obligors' Agent.

(b)      An Obligor does not comply with any provision of Clause 19.5
         (Liquidity) and (where the failure is capable of remedy) such failure
         to comply continues for 60 calendar days after the earlier of the date
         on which (a) any Obligor becomes aware of the facts or circumstances
         giving rise to such failure and (b) the Facility Agent gives notice of
         such failure to the Obligors' Agent.

(c)      The Company repays, prepays, redeems, repurchases or defeases (whether
         by way of legal defeasance or covenant defeasance) any of the High
         Yield Notes or makes any offers to repay, prepay, redeem, repurchase or
         defease any of the High Yield Notes.

21.4     MISREPRESENTATION

         A representation, warranty or statement made or repeated in or in
         connection with any Finance Document or in any document delivered by or
         on behalf of an Obligor under or in connection with any Finance
         Document is incorrect in any material respect when made or deemed to be
         made or repeated.

21.5     CROSS-DEFAULT

(a)      Any Financial Indebtedness of an Obligor or a Material Subsidiary is
         not paid when due (or where there is a grace period originally
         applicable to that Financial Indebtedness, within that grace period);
         or

(b)      an event of default howsoever described occurs under any document
         relating to Financial Indebtedness of an Obligor or a Material
         Subsidiary; or

(c)      any Financial Indebtedness of an Obligor or a Material Subsidiary
         becomes prematurely due and payable or is placed on demand as a result
         of an event of default (howsoever described) under the document
         relating to that Financial Indebtedness; or

(d)      any commitment for, or underwriting of, any Financial Indebtedness of
         an Obligor or a Material Subsidiary is cancelled or suspended as a
         result of an event of default (howsoever described) under the document
         relating to that Financial Indebtedness; or

(e)      any Security Interest securing Financial Indebtedness over any asset of
         an Obligor or a Material Subsidiary becomes enforceable,

         provided that there shall only be an Event of Default under this Clause
         21.5 if the aggregate amount of Financial Indebtedness which is not so
         paid and/or in respect of which such event has occurred and/or which
         becomes prematurely due and payable or is placed on demand and/or in
         respect of which the commitment or underwriting is cancelled or
         suspended and/or in respect of which such Security Interest becomes
         enforceable, exceeds E40,000,000 (or equivalent in other currencies);
         or

(f)      an Event of Default occurs under the VUE Bridge Extension or the VUE
         Bridge Refinancing or under any High Yield Note Document.


                                      113

21.6     INSOLVENCY

(a)      Any Obligor or any Material Subsidiary is, or is deemed for the
         purposes of any law to be, unable to pay its debts as they fall due or
         to be insolvent (including without limitation en etat de cessation des
         paiements), or admits in writing its inability to pay its debts
         generally as they fall due; or

(b)      any Obligor or any Material Subsidiary suspends making payments on all
         or any class of its debts or announces an intention to do so, or a
         moratorium is declared in respect of any of its indebtedness; or

(c)      any Obligor or any Material Subsidiary makes a general assignment for
         the benefit of creditors or applies for, or is subject to, an amicable
         settlement or a reglement amiable pursuant to article L.611-2 of the
         French Commercial Code, or begins negotiations with one or more of its
         creditors with a view to the readjustment or rescheduling of any of its
         indebtedness; or

(d)      any person commences a procedure d'alerte with respect to an Obligor or
         any Material Subsidiary incorporated in Republic of France which is not
         of a vexatious or frivolous nature and is not dismissed within 14
         calendar days.

21.7     INSOLVENCY PROCEEDINGS

(a)      Any step (including petition, proposal or convening a meeting) is taken
         with a view to a composition, assignment or arrangement with any
         creditors of any Obligor or any Material Subsidiary; or

(b)      any Obligor or any Material Subsidiary commences a voluntary case or
         proceeding under the United States Bankruptcy Code of 1978, as amended,
         or under the United States Federal or State bankruptcy, insolvency or
         other similar laws (collectively U.S. BANKRUPTCY LAWS) or a meeting of
         any Obligor or any Material Subsidiary is convened for the purpose of
         considering any resolution for (or to petition for) its winding-up or
         for its administration (including without limitation dissolution,
         liquidation, or redressement judiciaire) or any such resolution is
         passed; or

(c)      an involuntary case under any U.S. Bankruptcy Law is commenced against
         any Obligor or any Material Subsidiary and the petition is not stayed
         or discharged within 45 calendar days after the commencement of the
         case or any person presents a petition for the winding-up or for the
         administration of any Obligor or any Material Subsidiary unless (in the
         case of a petition being presented by a person other than an Obligor or
         a Material Subsidiary) the same is stayed or discharged within 21
         calendar days in respect of an Obligor or a Material Subsidiary
         incorporated outside the United States of America or within 45 calendar
         days in respect of an Obligor or a Material Subsidiary incorporated in
         the United States of America of being presented or an order for relief
         is entered in such proceeding; or

(d)      an order for the winding-up or administration of any Obligor or any
         Material Subsidiary is made (other than pursuant to an amalgamation,
         demerger, merger or reconstruction permitted by Clause 19.18(b)(iv)
         (Mergers and acquisitions)); or

(e)      a judgment is issued for the judicial liquidation (liquidation
         judiciaire) or the transfer of the whole of the business (cession de
         l'entreprise or cession de fonds de commerce) of any Obligor or any
         Material Subsidiary; or

(f)      any other step (including petition, proposal or convening a meeting) is
         taken with a view to the rehabilitation, administration, custodianship,
         liquidation, winding-up or dissolution of any


                                      114

         Obligor or any Material Subsidiary or any other insolvency proceedings
         involving any Obligor or any Material Subsidiary other than any such
         step which is frivolous or vexatious and which is dismissed within 21
         calendar days in respect of an Obligor or a Material Subsidiary
         incorporated outside the United States of America or within 45 calendar
         days in respect of an Obligor or a Material Subsidiary incorporated in
         the United States of America of it having been taken.

21.8     APPOINTMENT OF RECEIVERS AND MANAGERS

         Any person makes a request in accordance with any applicable laws for
         the appointment of a liquidator, trustee, custodian, conservator,
         receiver, assignee, sequestrator, administrative receiver,
         administrator, administrateur judiciaire, provisoire mandataire ad hoc,
         conciliateur or mandataire liquidateur or the like in respect of any
         Obligor or any Material Subsidiary or any part of its assets or any
         such appointment is made unless (in the case of a request being made by
         a person other than any Obligor or a Material Subsidiary) the request
         for such appointment is being contested in good faith and on
         substantial grounds and is dismissed or withdrawn within 21 calendar
         days in respect of an Obligor or a Material Subsidiary incorporated
         outside the United States of America or within 45 calendar days in
         respect of an Obligor or a Material Subsidiary incorporated in the
         United States of America days of the making of such request and in any
         event prior to the date that any such appointment is made.

21.9     CREDITORS' PROCESS/FINAL JUDGMENT

(a)      Any attachment, sequestration, distress or execution affects any asset
         of an aggregate value exceeding E15,000,000 (or equivalent in
         other currencies) of any Obligor or any Material Subsidiary and is not
         discharged within 30 calendar days; or

(b)      a final judgment or court order for the payment of any amount in excess
         of E15,000,000 is made against any Obligor or any Material
         Subsidiary and continues unsatisfied for a period of 30 calendar days
         after the date of judgment or order.

21.10    ANALOGOUS PROCEEDINGS

         There occurs, in relation to any Obligor or any Material Subsidiary,
         any event anywhere which, in the opinion of the Majority Lenders
         (acting on the basis of legal advice), appears to correspond with any
         of the events mentioned in Clauses 21.6 (Insolvency) to 21.9
         (Creditors' process/final judgment) (inclusive).

21.11    CESSATION OF BUSINESS

         Any Obligor or any Material Subsidiary ceases, or takes clear steps to
         cease, to carry on all or a substantial part of its business (other
         than pursuant to a transaction permitted by the Finance Documents).

21.12    EFFECTIVENESS OF FINANCE DOCUMENTS

(a)      It is or becomes unlawful for any Obligor to perform any of its payment
         obligations or other material obligations under the Finance Documents.

(b)      Any Finance Document (including any guarantee of any Obligor in this
         Agreement) is not effective or is alleged by an Obligor to be
         ineffective for any reason.

(c)      Any Security Document does not create the security it purports to
         create or any Security Document is not effective or ceases to
         constitute a valid, first ranking (in the case of security


                                      115

         in favour of the Finance Parties or any of them) Security Interest of
         the type purported to be created thereby.

(d)      An Obligor repudiates (or evidences in writing an intention to
         repudiate) a Finance Document.

21.13    AUDIT QUALIFICATION

         The Company's Auditors qualify their report by way of a reserve on any
         of the audited consolidated accounts of the Company (other than by a
         qualification of a minor technical nature).

21.14    SUBORDINATION, EXISTING BANK DEBT GUARANTEE OR SECURITY SHARING
         AGREEMENT

(a)      (i)      Any member of the Group which is party to a Subordination
                  Agreement, the Existing Bank Debt Guarantee or the Security
                  Sharing Agreement, as the case may be, does not perform or
                  fails to comply with any of its obligations in any material
                  respect under the Subordination Agreement or the Security
                  Sharing Agreement, as the case may be and the failure to
                  comply (if capable of remedy) continues for 15 calendar days
                  after the earlier of the date on which the Obligor becomes
                  aware of the facts or circumstances giving rise to such
                  failure and the Facility Agent gives notice of such failure to
                  the Obligors' Agent; or

         (ii)     a representation or warranty given by that party in a
                  Subordination Agreement, the Existing Bank Debt Guarantee or
                  the Security Sharing Agreement, as the case may be, is
                  incorrect in any material respect when made or repeated and if
                  the facts and circumstances causing such misrepresentation
                  are, in the opinion of the Majority Lenders capable of remedy,
                  the same is not remedied within 21 calendar days after the
                  earlier of the date on which the Obligor becomes aware of the
                  facts or circumstances giving rise to such failure and the
                  Facility Agent gives notice of such failure to the Obligors'
                  Agent;

(b)      the pari passu subordination or pari passu priority of security in
         respect of Financial Indebtedness under this Agreement and the
         Multicurrency Revolving Credit Facility created or purported to be
         created by the Subordination Agreement, the Existing Bank Debt
         Guarantee or the Security Sharing Agreement is not effective or is
         alleged in writing by a member of the Group party to it to be
         ineffective; or

(c)      any member of the Group which is party to the Subordination Agreement,
         the Existing Bank Debt Guarantee or the Security Sharing Agreement
         repudiates (or evidences an intention in writing to repudiate it) the
         Subordination Agreement or the Security Sharing Agreement, as the case
         may be.

21.15    ERISA

(a)      Any ERISA Event shall have occurred with respect to a Plan and the
         liability that the Obligors and the ERISA Affiliates have incurred or
         are reasonably expected to incur with respect to such Plan and any and
         all other Plans with respect to which an ERISA Event shall have
         occurred and then exist could reasonably be expected to have a Material
         Adverse Effect.

(b)      Any Obligor or any ERISA Affiliate shall have been notified by the
         sponsor of a Multiemployer Plan that it has incurred Withdrawal
         Liability to such Multiemployer Plan in an amount that, when aggregated
         with all other amounts required to be paid to Multiemployer Plans by
         the Obligors and the ERISA Affiliates as Withdrawal Liability
         (determined as of the date of such notification), could reasonably be
         expected to have a Material Adverse Effect.


                                      116

(c)      Any Obligor or any ERISA Affiliate shall have been notified by the
         sponsor of a Multiemployer Plan that such Multiemployer Plan is in
         reorganisation or is being terminated, within the meaning of Title IV
         of ERISA, and such reorganisation or termination could reasonably be
         expected to have a Material Adverse Effect.

21.16    MATERIAL ADVERSE CHANGE

         Any event or series of events occurs after the date of this Agreement
         which, in the opinion of the Majority Lenders (acting in good faith),
         has, or could reasonably be expected to have, a Material Adverse
         Effect.

21.17    ACCELERATION

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

         (a)      cancel the Total Commitments; and/or

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

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

22.      THE AGENTS AND THE MANDATED LEAD ARRANGERS

22.1     APPOINTMENT AND DUTIES OF THE AGENTS

(a)      Each Finance Party irrevocably appoints each Agent to act as its agent
         under and in connection with the Finance Documents.

(b)      Each Party appointing each Agent irrevocably authorises each Agent on
         its behalf to:

         (i)      perform the duties and to exercise the rights, powers and
                  discretions that are specifically delegated to it under or in
                  connection with the Finance Documents, together with any other
                  incidental rights, powers and discretions; and

         (ii)     execute each Finance Document expressed to be executed by such
                  Agent on that Party's behalf.

(c)      Each Agent has only those duties which are expressly specified in this
         Agreement. Those duties are solely of a mechanical and administrative
         nature.

22.2     ROLE OF THE MANDATED LEAD ARRANGERS

         Except as specifically provided in this Agreement, no Mandated Lead
         Arranger has any obligations of any kind to any other Party under or in
         connection with any Finance Document.

22.3     RELATIONSHIP

         The relationship between each Agent and the other Finance Parties is
         that of agent and principal only. Nothing in this Agreement constitutes
         an Agent (other than the Security Agent


                                      117

         as contemplated by the Security Documents) as trustee or fiduciary for
         any other Party or any other person and except where and to the extent
         otherwise stated in the Security Agreement, no Agent need hold in trust
         any moneys paid to it for a Party or be liable to account for interest
         on those moneys.

22.4     MAJORITY LENDERS' INSTRUCTIONS

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

(b)      No Agent is 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.

22.5     DELEGATION

         An Agent may act under the Finance Documents through its personnel and
         agents.

22.6     RESPONSIBILITY FOR DOCUMENTATION

         No Agent nor any Mandated Lead Arranger is responsible to any other
         Party for:

         (a)      the execution, genuineness, validity, enforceability or
                  sufficiency of any Finance Document or any other document;

         (b)      the collectability of amounts payable under any Finance
                  Document; or

         (c)      the accuracy of any statements (whether written or oral) made
                  in or in connection with any Finance Document.

22.7     DEFAULT

(a)      No Agent is obliged to monitor or enquire as to whether or not a
         Default has occurred. No Agent will be deemed to have knowledge of the
         occurrence of a Default. However, if an Agent receives notice from a
         Party referring to this Agreement, describing the Default and stating
         that the event is a Default, or in the event that an Agent has actual
         knowledge of a failure to make a payment which constitutes a Default
         under Clause 21.2 (Non-payment), it shall promptly notify the Lenders
         or (in the case of the Security Agent) promptly notify the Facility
         Agent.

(b)      Each Agent may require the receipt of security satisfactory to it,
         whether by way of payment in advance or otherwise, against any
         liability or loss which it will or may incur in taking any proceedings
         or action arising out of or in connection with any Finance Document
         before it commences those proceedings or takes that action.

22.8     EXONERATION

(a)      Without limiting paragraph (b) below, no Agent will be liable to any
         other Party for any action taken or not taken by it under or in
         connection with any Finance Document, unless directly caused by its
         gross negligence or wilful misconduct.

(b)      No Party may take any proceedings against any officer, employee or
         agent of the Agents in respect of any claim it might have against an
         Agent or in respect of any act or omission of any


                                      118

         kind (including gross negligence or wilful misconduct) by that officer,
         employee or agent in relation to any Finance Document. Any officer,
         employee or agent of an Agent may rely on this paragraph (b) and
         enforce its terms under the Contracts (Rights of Third Parties) Act
         1999.

22.9     RELIANCE

         Each Agent may:

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

         (b)      rely on any statement made by a director or employee of any
                  person regarding any matters which may reasonably be assumed
                  to be within his knowledge or within his power to verify; and

         (c)      engage, pay for and rely on legal or other professional
                  advisers selected by it (including those in agent's employment
                  and those representing a Party other than that agent).

22.10    CREDIT APPROVAL AND APPRAISAL

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

         (a)      has made its own independent investigation and assessment of
                  the financial condition and affairs of the Obligors and their
                  related entities in connection with its participation in this
                  Agreement and has not relied exclusively on any information
                  provided to it by an Agent or a Mandated Lead Arranger in
                  connection with any Finance Document; and

         (b)      will continue to make its own independent appraisal of the
                  creditworthiness of the Obligors and their related entities
                  while any amount is or may be outstanding under the Finance
                  Documents or any Commitment is in force.

22.11    INFORMATION

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

(b)      The Facility Agent shall promptly supply a Lender with a copy of each
         document received by the Facility Agent under Clause 4 (Conditions
         Precedent) or Clause 17.3 (Additional Guarantors), upon the request and
         at the expense of that Lender.

(c)      Except where this Agreement specifically provides otherwise, no Agent
         is obliged to review or check the accuracy or completeness of any
         document it forwards to another Party.

(d)      Except as provided above, no Agent has any duty:

         (i)      either initially or on a continuing basis to provide any
                  Lender with any credit or other information concerning the
                  financial condition or affairs of the Obligors or of their
                  related entities, whether coming into its possession before,
                  on or after the date of this Agreement; or


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         (ii)     unless specifically requested to do so by a Lender in
                  accordance with a Finance Document, to request any
                  certificates or other documents from the Obligors' Agent.

22.12    THE AGENTS AND THE MANDATED LEAD ARRANGERS INDIVIDUALLY

(a)      If it is also a Lender, each Agent and each Mandate Lead Arranger has
         the same rights and powers under this Agreement and (in the case of the
         Security Agent) under the Security Documents as any other Lender and
         may exercise those rights and powers as though it were not an Agent or
         a Mandated Lead Arranger.

(b)      Each Agent and each Mandated Lead Arranger may each:

         (i)      carry on any business with the Obligors or their respective
                  related entities;

         (ii)     act as agent or trustee for, or in relation to any financing
                  involving, the Obligors or their related entities; and

         (iii)    retain any profits or remuneration in connection with its
                  activities under this Agreement or in relation to any of the
                  foregoing.

(c)      In acting as an Agent, the respective agency division of each Agent
         will be treated as a separate entity from its other divisions and
         departments. Any information acquired by an Agent which, in its
         opinion, is acquired by it otherwise than in its capacity as an Agent
         may be treated as confidential by that Agent and will not be deemed to
         be information possessed by that Agent in its capacity as such.

(d)      Each Obligor irrevocably authorises each Agent to disclose to the other
         Finance Parties any information which, in the opinion of that Agent, is
         received by it in its capacity as Agent.

(e)      Each Agent may deduct from any amount received by it for the Lenders
         pro rata any unpaid fees, costs and expenses of the Agents (or either
         of them) incurred by them in connection with the Finance Documents.

22.13    INDEMNITIES

(a)      Without limiting the liability of the Obligors under the Finance
         Documents, each Lender shall forthwith on demand indemnify each Agent
         for that Lender's proportion of any duly documented liability or loss
         incurred by that Agent in any way relating to or arising out of its
         acting as an Agent, except to the extent that the liability or loss
         arises directly from that Agent's gross negligence or wilful
         misconduct.

(b)      A Lender's proportion of the liability or loss set out in paragraph (a)
         above will be the proportion which its participation in the Loans (if
         any) bears to all the Loans on the date of the demand. However, if
         there are no Loans outstanding on the date of demand, then the
         proportion will be the proportion which its Commitment bears to the
         Total Commitments at the date of demand or, if the Total Commitments
         have then been cancelled, bore to the Total Commitments immediately
         before being cancelled.

22.14    COMPLIANCE

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


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(b)      Without limiting paragraph (a) above, no Agent need disclose any
         information relating to the Obligors or any of their related entities
         if the disclosure might, in the opinion of that Agent, constitute a
         breach of any law or regulation or any duty of secrecy or
         confidentiality or be otherwise actionable at the suit of any person.

22.15    RESIGNATION

(a)      Notwithstanding its irrevocable appointment, each Agent may resign by
         giving notice to the Lenders and the Obligors' Agent, in which case
         such Agent may forthwith appoint one of its Affiliates as successor (a
         REPLACEMENT) for such Agent or, failing that, the Majority Lenders may
         appoint a Replacement following consultation with the Obligors' Agent.

(b)      If the appointment of a Replacement is to be made by the Majority
         Lenders but they have not, within 30 calendar days after notice of
         resignation, appointed a Replacement which accepts the appointment,
         that Agent may appoint a Replacement following consultation with the
         Obligors' Agent.

(c)      The resignation of an agent and the appointment of any Replacement will
         both become effective only upon the Replacement notifying all the
         Parties that it accepts its appointment. On giving the notification,
         the Replacement will succeed to the position of the Agent and the term
         FACILITY AGENT or SECURITY AGENT (as appropriate) will mean the
         successor Facility Agent or the Successor Security Agent.

(d)      The retiring Facility Agent or Security Agent, as the case may be,
         shall make available to the Replacement such documents and records and
         provide such assistance as the Replacement may reasonably request for
         the purposes of performing its functions as the Facility Agent or
         Security Agent, as the case may be, under this Agreement.

(e)      Upon its resignation becoming effective, this Clause 22 shall continue
         to benefit the retiring Agent in respect of any action taken or not
         taken by it under or in connection with the Finance Documents while it
         was an Agent, and, subject to paragraph (d) above, it shall have no
         further obligations under any Finance Document.

(f)      The Majority Lenders may, by notice to an Agent, require it to resign
         in accordance with paragraph (a) above. In this event, that Agent shall
         resign in accordance with paragraph (a) above but it shall not be
         entitled to appoint one of its Affiliates as successor Facility Agent
         or Security Agent, as the case may be.

22.16    LENDERS

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

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

22.17    EXTRAORDINARY MANAGEMENT TIME AND RESOURCES

         The Company shall forthwith on demand pay each Agent for the cost of
         utilising its management time or other resources in connection with:

         (a)      any amendment, waiver, consent or suspension of rights (or any
                  proposal for any of the foregoing) requested by or on behalf
                  of the Obligors and relating to a Finance Document or a
                  document referred to in any Finance Document; or


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         (b)      the occurrence of a Default; or

         (c)      the enforcement of, or the preservation of any rights under,
                  any Finance Document.

         Any amount payable to an Agent under:

         (i)      paragraph (a) above shall be determined by written agreement
                  between the Obligors' Agent and such Agent at the time of the
                  request by or on behalf of the Obligors; and

         (ii)     under paragraphs (b) or (c) above will be calculated on the
                  basis of such reasonable daily or hourly rates as such Agent
                  may notify to the Obligors' Agent,

         and in each case is in addition to any fee paid or payable to the
         Facility Agent under Clause 23 (Fees).

22.18    SECURITY AGENT

(a)      Without prejudice to Clauses 22.6 (Responsibility for documentation) or
         22.8 (Exoneration), the Security Agent in its capacity as trustee,
         agent or mandataire (as appropriate) under any of the Security
         Documents or otherwise shall not be liable (unless directly caused by
         its gross negligence or wilful misconduct) for any failure, omission,
         or defect in perfecting the security constituted by any Security
         Document or any security created thereby including, without limitation,
         any failure to (i) register the same in accordance with the provisions
         of any of the documents of title of the relevant Obligor to any of the
         property thereby charged, (ii) make any recordings or filings in
         connection therewith, (iii) effect or procure registration of or
         otherwise protect the security created by or pursuant to the Security
         Documents under any registration laws in any jurisdiction, (iv) give
         notice to any person of the execution of any of the Security Documents
         or to obtain any licence, consent or other authority for the creation
         of any security.

(b)      The Security Agent may accept without enquiry such title as any Obligor
         may have to the property over which security is intended to be created
         by any Security Document.

(c)      Save where the Security Agent holds a mortgage over, or over an
         interest in, real estate property or shares, the Security Agent in its
         capacity as trustee, agent or mandataire (as appropriate) or otherwise
         shall not be under any obligation to hold any title deeds, Security
         Documents or any other documents in connection with the property
         charged by any Security Documents or any other such security in its own
         possession or to take any steps to protect or preserve the same.

(d)      Save as otherwise provided in the Security Documents, all moneys which
         are received by the Security Agent in its capacity as trustee, agent or
         mandataire (as appropriate) or otherwise may be invested in the name of
         or under the control of the Security Agent in any investments which may
         be selected by the Security Agent with the consent of the Majority
         Lenders. Additionally, the same may be placed on deposit in the name of
         or under the control of the Security Agent at such bank or institution
         (including any Agent) and upon such terms as the Security Agent may
         think fit.

(e)      Each Finance Party hereby confirms its approval of the Security
         Documents and any security created or to be created pursuant thereto
         and hereby authorises, empowers and directs the Security Agent (by
         itself of by such person(s) as it may nominate) to execute and enforce
         the same as trustee, agent or mandataire (as appropriate) or as
         otherwise provided (and whether or not expressly in the Finance Party's
         name) on its behalf, subject always to the terms of this Agreement and
         the Security Documents.


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22.19    CO-SECURITY AGENTS

(a)      The Security Agent may appoint any person established or resident in
         any jurisdiction (whether a trust corporation or not) to act either as
         a separate security agent or as a co-security agent jointly with the
         Security Agent (i) if the Security Agent considers that without such
         appointment the interests of the Lenders under the Finance Documents
         would be materially and adversely affected or (ii) for the purposes of
         conforming to any legal requirements, restrictions or conditions in any
         jurisdiction in which any particular act is or acts are to be performed
         or (iii) for the purposes of obtaining a judgment in any jurisdiction
         or the enforcement in any jurisdiction of either a judgment already
         obtained or any of the provisions of the Finance Documents, provided in
         each case that such separate security agent or co-security agent
         becomes bound by the terms of this Agreement as if it were the Security
         Agent.

(b)      Each separate security agent or co-security agent shall (subject always
         to the provisions of this Agreement) have such powers, authorities and
         discretions (not exceeding those conferred on the Security Agent by
         this Agreement) and such duties and obligations as shall be conferred
         or imposed by the instrument of appointment.

(c)      The Security Agent shall have power in like manner to remove any such
         person. If an Event of Default is continuing, such reasonable
         remuneration as the Security Agent may pay to any such person, together
         with any attributable costs, charges and expenses properly incurred by
         it in performing its function as such separate security agent or
         co-security agent shall for the purpose of this Agreement be treated as
         costs, charges and expenses incurred by the Security Agent.

22.20    RELEASE OF SECURITY

         The Security Agent shall and is hereby authorised by each of the other
         Finance Parties (and to the extent it may have any interest therein,
         every other party hereto) to execute on behalf of itself and each of
         the other Finance Parties and every other party hereto where relevant
         without the need for any further referral to, or authority from, any
         Finance Party or other person hereto all such releases of security and
         guarantees given by Obligors under any Finance Document as the Security
         Agent is authorised or required to effect by the terms of this Clause
         22 (The Agents and the Mandated Lead Arrangers).

22.21    CONFLICT WITH SECURITY DOCUMENTS

         If there is any conflict between the provisions of this Agreement and
         any Security Documents with regard to instructions to or the matters
         affecting the Security Agent, this Agreement will prevail.

22.22    SECURITY AGENT AS JOINT AND SEVERAL CREDITOR

(a)      Each of the Obligors and each of the Finance Parties agree that the
         Security Agent shall be the joint and several creditor and as, for
         Dutch law purposes, a (hoofdelijk crediteur) together with the relevant
         Finance Party (of each and every obligation of any Obligor owing to or
         towards each of the Finance Parties under the Finance Documents, and
         that accordingly the Security Agent will have its own independent right
         to demand performance by the relevant Obligor of those obligations.
         However, any discharge of any such obligation to one of the Security
         Agent or a Finance Party (other than the Security Agent) shall, to that
         extent, discharge the corresponding obligation owing to the other and a
         Finance Party shall not by virtue of this clause be entitled to pursue
         an Obligor concurrently for the same obligation.

(b)      Without limiting or affecting the Security Agent's rights against any
         Obligor (whether under this paragraph or under any other provision of
         the Finance Documents), the Security Agent


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         agrees with each other Finance Party (on a several and divided basis)
         that, subject as set out in the next sentence, it will not exercise its
         rights as a joint and several creditor of any and all obligations owing
         to each Finance Party (other than the Security Agent) except with the
         consent of the relevant Finance Party. However, for the avoidance of
         doubt, nothing in the previous sentence shall in any way limit the
         Security Agent's right to act in the protection or preservation of
         rights under or to enforce any Security Document as contemplated by
         this Agreement, and/or the relevant Security Document (or to do any act
         reasonably incidental to any of the foregoing).

23.      FEES

23.1     ARRANGEMENT FEES

         The Company shall pay the arrangement fee to the Mandated Lead
         Arrangers in the amounts and at the times agreed in the Arrangement Fee
         Letter.

23.2     AGENCY FEES

         The Company shall pay to the Agents for their own respective accounts
         agency fees in the amount agreed in the Agency Fee Letter. Each such
         agency fee is payable annually in advance. The first payment of this
         fee is payable on the date which is five calendar days after the date
         of this Agreement and each subsequent payment is payable on each
         anniversary of the date of this Agreement for so long as any amount is
         or may be outstanding under this Agreement or any Commitment is in
         force.

23.3     COMMITMENT FEE

(a)      The Company shall pay to the Facility Agent for each Lender, a
         commitment fee:

         (i)      in respect of its Tranche A Commitments in Euro computed at an
                  annual rate of 40 per cent. of the then Applicable Margin for
                  Tranche A (not to exceed 1.00 per cent. per annum) of the
                  undrawn, uncancelled amount of that Lender's Commitment under
                  Tranche A; and

         (ii)     in respect of its Tranche B Commitments in Euro, computed at
                  an annual rate of 1.00 per cent. on the undrawn, uncancelled
                  amount of that Lender's Commitment under Tranche B, during the
                  Availability Period for that Tranche.

         For this purpose Loans are taken at their Original Euro Amount.

(b)      Accrued commitment fee is payable quarterly in arrear and on the Final
         Maturity Date. Accrued commitment fee shall also be payable to the
         Facility Agent for the relevant Lender on the cancelled amount of any
         of its Commitment at the time the cancellation comes into effect.

(c)      Commitment fees are payable in Euro.

23.4     VAT

         Any fee referred to in this Clause 23 is exclusive of any value added
         tax or any other tax which might be chargeable in connection with that
         fee. If any value added tax or other tax is so chargeable, it shall be
         paid by the relevant Obligor at the same time as it pays the relevant
         fee.


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24.      EXPENSES

24.1     INITIAL AND SPECIAL COSTS

(a)      The Company shall forthwith on demand pay the Facility Agent and the
         Security Agent the amount of all duly documented and reasonable costs
         and expenses (including legal fees) incurred by either of them in
         connection with:

         (i)      the negotiation, preparation, printing, syndication and
                  execution of:

                  (A)      this Agreement and any other documents referred to in
                           this Agreement; and

                  (B)      any other Finance Document (other than a Novation
                           Certificate) executed after the date of this
                           Agreement; and

         (ii)     any amendment, waiver, consent or suspension of rights (or any
                  proposal for any of the foregoing) requested by or on behalf
                  of the Obligors and relating to a Finance Document or a
                  document referred to in any Finance Document.

(b)      The Company shall forthwith on demand pay the Facility Agent and the
         Security Agent the amount of any duly documented costs and expenses
         (including legal fees) incurred by either of them in connection with
         the perfection of any Security Interest purported to be created by any
         Security Interest.

24.2     ENFORCEMENT COSTS

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

25.      STAMP DUTIES

         The Company shall pay, and forthwith on demand indemnify each Finance
         Party against any liability it incurs in respect of, any stamp,
         registration and similar tax which is or becomes payable in connection
         with the entry into, performance or enforcement of any Finance Document
         (other than a Novation Certificate).

26.      INDEMNITIES

26.1     CURRENCY INDEMNITY

(a)      If a Finance Party receives an amount in respect of an Obligors'
         liability under the Finance Documents or if that liability is converted
         into a claim, proof, judgment or order in a currency other than the
         currency (the CONTRACTUAL CURRENCY) in which the amount is expressed to
         be payable under the relevant Finance Document:

         (i)      that Obligor shall indemnify that Finance Party as an
                  independent obligation against any loss or liability arising
                  out of or as a result of the conversion;

         (ii)     if the amount received by that Finance Party, when converted
                  into the contractual currency at a market rate in the usual
                  course of its business is less than the amount owed in the
                  contractual currency, that Obligor shall forthwith on demand
                  pay to that Finance Party an amount in the contractual
                  currency equal to the deficit; and


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         (iii)    that Obligor shall forthwith on demand pay to the Finance
                  Party concerned any exchange costs and Taxes payable in
                  connection with any such conversion.

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

26.2     INDEMNITY RELATING TO THE FACILITY

(a)      The Obligors will indemnify each Finance Party, their respective
         affiliates officers, directors, advisers, representatives, agents,
         employees and controlling persons (each an INDEMNIFIED PERSON) from and
         against any loss, claims, damages or liability which each such
         Indemnified Person suffers or may incur (including, without limitation,
         all reasonable fees and disbursements of legal advisers and all
         reasonable travel and other out-of-pocket expenses incurred in
         connection with the investigation of, preparation for and defence of
         any pending or threatened claim and any litigation or other proceeding
         by or in connection with any shareholder action, class action,
         bondholder and other financial creditor action, or any stock exchange,
         regulatory or administrative process or investigation, whether or not
         in connection with pending or threatened litigation or other proceeding
         in which any Indemnified Person is a party) as a consequence of or in
         connection with or arising out of the Facility except and to the extent
         that any loss, claim, damage or liability is finally judicially
         determined to have resulted primarily from the gross negligence or
         wilful misconduct of such Indemnified Person. You agree to co-operate
         with each Indemnified Person and to give insofar as you are able to
         procure the giving of all such information and render such assistance
         to as the Indemnified Person may reasonably request in connection with
         any action proceeding or investigation.

(b)      The Obligor will agree that no Indemnified Person shall have any
         liability (whether direct or indirect, in contract, tort or otherwise)
         to any member of the Group or any shareholders or creditors of any
         member of the Group for or in connection with the transactions referred
         to above, except to the extent such liability is found in a final
         non-appealable judgment by a court of competent jurisdiction to have
         resulted from such Indemnified Person's gross negligence or wilful
         misconduct.

26.3     OTHER INDEMNITIES

(a)      Each Obligor shall forthwith on demand indemnify each Finance Party
         against any loss or liability which that Finance Party incurs as a
         consequence of:

         (i)      the occurrence of any Event of Default;

         (ii)     the operation of Clause 21.17 (Acceleration) or Clause 32 (Pro
                  Rata Sharing); or

         (iii)    a Loan (or part of a Loan) not being prepaid in accordance
                  with a notice of prepayment or (other than by reason of
                  negligence or default by that Finance Party) a Loan not being
                  made after the Obligors' Agent has delivered a Request.

(b)      Each Obligors' liability in each case includes any loss of margin or
         other loss or expense on account of funds borrowed, contracted for or
         utilised to fund any amount payable under any Finance Document, any
         amount repaid or prepaid or any Loan.

(c)      The Company shall indemnify each Agent against any loss or liability
         (including, without limitation, reasonable costs and expenses) incurred
         by such Facility Agent as a result of:

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


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         (ii)     acting or relying on any notice which such Agent reasonably
                  believes to be genuine, correct and appropriately authorised,

         to the extent that such Agent is not compensated in relation thereto by
         a payment by the Company under Clause 22.17 (Extraordinary management
         time and resources).

26.4     BREAK COSTS

(a)      The Company must pay to each Lender its Break costs.

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

         (i)      the interest that Lender would have received for the period
                  from the date of receipt of any part of its share in a Loan or
                  an overdue amount to the last day of the applicable Interest
                  Period for that Loan or overdue amount if the principal amount
                  or overdue amount received been paid on the last day of that
                  Interest Period;

         exceeds:

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

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

27.      EVIDENCE AND CALCULATIONS

27.1     ACCOUNTS

         Accounts maintained by a Finance Party in connection with this
         Agreement are, in the absence of manifest error, evidence of the
         matters to which they relate.

27.2     CERTIFICATES AND DETERMINATIONS

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

27.3     CALCULATIONS

         Interest (including, if relevant to its calculation, any Mandatory
         Cost) and the fees payable under Clause 23.3 (Commitment fee) accrue
         from day to day and are calculated on the basis of the actual number of
         days elapsed and a year of 360 days or, in the case of interest payable
         on an amount denominated in Sterling or where market practice otherwise
         dictates, 365 days.

28.      AMENDMENTS AND WAIVERS

28.1     PROCEDURE

(a)      Subject to Clause 28.2, any term of the Finance Documents may be
         amended and any breach or prospective breach waived, with the agreement
         of the Obligors' Agent and the Majority Lenders. Each Agent may effect,
         on behalf of any Finance Party, an amendment or waiver permitted under
         this Clause.


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(b)      The Facility Agent shall promptly notify the other Parties of any
         amendment or waiver effected under paragraph (a) above, and any such
         amendment or waiver shall be binding on all the Parties.

28.2     EXCEPTIONS

(a)      An amendment or waiver which relates to any of the following may only
         be effected if agreed by the Obligors' Agent, the Agents and each of
         the Lenders:

         (i)      the definition of each of MAJORITY LENDERS and SUPER MAJORITY
                  LENDER and RELEASE CONDITION DATE and SECURITY RELEASE
                  CONDITION DATE in Clause 1.1 (Definitions);

         (ii)     an extension of the date for, or a decrease in an amount or a
                  change in the currency of, any payment to the Lenders under
                  the Finance Documents (including the Applicable Margin and any
                  fees payable under Clause 23.3 (Commitment fee);

         (iii)    an increase in a Lender's Commitment or the extension of the
                  Final Maturity Date;

         (iv)     a term of a Finance Document which expressly requires the
                  consent of the Lenders;

         (v)      Clause 2.4 (Nature of Finance Party's rights and obligations),
                  Clause 29.1 (Transfers by the Obligors), Clause 29.2
                  (Transfers by Lenders), Clause 32 (Pro Rata Sharing), or this
                  Clause 28;

         (vi)     the release or discharge of any Obligor from its obligations
                  under the Finance Documents other than as expressly agreed
                  pursuant to the Finance Documents; or

         (vii)    any material provision of a Security Document or guarantee or
                  the release of any asset from any Security Interest created by
                  a Security Document other than in accordance with Clause 17
                  (Release of Security and Additional Guarantors) or the terms
                  of relevant Security Document.

(b)      An amendment or waiver of any term of the Security Sharing Agreement
         may only be effected in accordance with Clause 12.1 (Amendments to this
         Agreement) of the Security Sharing Agreement.

(c)      An amendment or waiver of any of the terms of the Finance Documents
         referred to in Clause 12.2 (Amendments to the Finance Documents (other
         than this Agreement)) of the Security Sharing Agreement may only be
         effected in accordance with that clause.

(d)      An amendment or waiver which affects the rights and/or obligations of
         an Agent may not be effected without the agreement of such Agent.

(e)      An amendment or waiver which relates to any of the following may only
         be effected if agreed by the Obligors' Agent, the Agents and the Super
         Majority Lenders:

         (i)      the definition of ASSETS in Clause 1.1 (Definitions);

         (ii)     Clauses 7.4 (Mandatory prepayment from Net Debt Issue
                  Proceeds) to 7.14(b) (Timing of mandatory prepayments and
                  cancellations and Receipt Account) (inclusive); and

         (iii)    this paragraph and a term of a Finance Document which
                  expressly requires the consent of the Super Majority Lenders.


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28.3     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, the currency or
                  currency unit of that country designated by the Lender; 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) 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.

28.4     WAIVERS AND REMEDIES CUMULATIVE

         The rights of each Finance Party under the Finance Documents:

         (a)      may be exercised as often as necessary;

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

         (c)      may be waived only in writing and specifically.

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

29.      CHANGES TO THE PARTIES

29.1     TRANSFERS BY THE OBLIGORS

         No Obligor may assign, transfer, novate or dispose of any of, or any
         interest in, its rights and/or obligations under the Finance Documents.

29.2     TRANSFERS BY LENDERS

(a)      A Lender (the EXISTING LENDER) may, subject to paragraph (b) below, at
         any time assign, transfer or novate any of its Commitment under Tranche
         A and/or Tranche B and/or rights and/or obligations under this
         Agreement to any third party (the NEW LENDER) in accordance with Clause
         29.3 (Procedure for novations).

(b)      (i)      A transfer in part of Commitment or participation in the
                  Loans made under a Tranche must be in a minimum (and an
                  integral multiple) of an Original Euro Amount of E5,000,000;
                  and

         (ii)     the prior consent of the Company is required for any such
                  assignment, transfer or novation unless the New Lender is
                  another Lender or an Affiliate of a Lender, or a bank or
                  financial institution, or a special purpose company or vehicle
                  or entity controlled or managed by one of more banks or
                  financial institutions or their Affiliates and which is
                  incorporated or established for the purposes of a
                  securitisation


                                      129

                  programme or a collateralised debt obligation or
                  collateralised loan obligation programme, or a Default is
                  outstanding. However the prior consent of the Company (where
                  required) is not to be unreasonably withheld or delayed.

(c)      A transfer of obligations will be effective only if either:

         (i)      the obligations are novated in accordance with Clause 29.3; or

         (ii)     the New Lender confirms to the Facility Agent and the
                  Obligors' Agent that it undertakes to be bound by the terms of
                  this Agreement as a Lender in form and substance satisfactory
                  to the Facility Agent. On the transfer becoming effective in
                  this manner the Existing Lender shall be relieved of its
                  obligations under this Agreement to the extent that they are
                  transferred to the New Lender.

(d)      On each occasion an Existing Lender assigns, transfers or novates any
         of its Commitment and/or rights and/or obligations under this
         Agreement, the New Lender shall, on the date the assignment, transfer
         and/or novation takes effect, pay to the Facility Agent for its own
         account a fee of E1500 (without, for the avoidance of doubt, any
         right to reimbursement by the Obligors).

(e)      An Existing Lender is not responsible to a New Lender for:

         (i)      the execution, genuineness, validity, enforceability or
                  sufficiency of any Finance Document or any other document;

         (ii)     the collectability of amounts payable under any Finance
                  Document or the value of any security or collateral; or

         (iii)    the accuracy of any statements or information (whether written
                  or oral) made in or in connection with any Finance Document.

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

         (i)      has made its own independent investigation and assessment of
                  the financial condition and affairs of the Obligors and their
                  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 or any other Finance
                  Party in connection with any Finance Document;

         (ii)     will continue to make its own independent appraisal of the
                  creditworthiness of the Obligors and their related entities
                  while any amount is or may be outstanding under this Agreement
                  or any Commitment is in force;

         (iii)    is a bank or financial institution whose on-going business
                  includes participations in syndications facilities; and

         (iv)     it has made its own investigation of the Lock-up Arrangements
                  and agrees to be bound by the term thereof and to execute such
                  documentation as is reasonably required to accede to those
                  arrangements.

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

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


                                      130

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

(h)      Any reference in this Agreement to a Lender includes a New Lender but
         excludes a Lender if no amount is or may be owed to or by it under this
         Agreement and its Commitment has been cancelled or reduced to nil.

(i)      In the case of an assignment, the Existing Lender and the New Lender
         shall ensure that the relevant transfer agreement is notified by
         bailiff (HUISSIER) to the Company and the Obligors' Agent in accordance
         with Article 1690 of the French Civil Code.

29.3     PROCEDURE FOR NOVATIONS

(a)      A novation is effected if:

         (i)      the Existing Lender and the New Lender deliver to the Facility
                  Agent a duly completed certificate, substantially in the form
                  of Schedule 5 (a NOVATION CERTIFICATE); and

         (ii)     the Facility Agent executes it.

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

(c)      To the extent that they are expressed to be the subject of the novation
         in the Novation Certificate:

         (i)      the Existing Lender and the other Parties (the EXISTING
                  PARTIES) will be released from their obligations to each other
                  (the DISCHARGED OBLIGATIONS);

         (ii)     the New Lender and the existing Parties will assume
                  obligations towards each other which differ from the
                  discharged obligations only insofar as they are owed to or
                  assumed by the New Lender instead of the Existing Lender;

         (iii)    the rights of the Existing Lender against the existing Parties
                  and vice versa (the DISCHARGED rights) will be cancelled; and

         (iv)     the New Lender and the existing Parties will acquire rights
                  against each other which differ from the discharged rights
                  only insofar as they are exercisable by or against the New
                  Lender instead of the Existing Lender,

         all on the date of execution of the Novation Certificate by the
         Facility Agent or, if later, the date specified in the Novation
         Certificate.

(d)      For the avoidance of doubt the Parties agree that any novation effected
         in accordance with this Clause 29.3 shall constitute a novation within
         the meaning of Article 1271 et seq, of the French Civil Code and that
         the guarantee and security are preserved for the benefit of the New
         Lender.

(e)      Each Obligor hereby expressly consents to each assignment, transfer
         and/or novation of any rights and/or obligations permitted under and
         made in accordance with this Clause 29. Each Guarantor hereby expressly
         accepts and confirms that, notwithstanding any assignment, transfer
         and/or novation permitted under and made in accordance with this Clause
         29, its Guarantee guarantees all obligations of the Obligors
         (including, without limitation, all


                                      131

         obligations with respect to all rights and/or obligations so assigned,
         transferred or novated) for the benefit of the Finance Parties, in
         accordance with the terms of the Finance Documents.

29.4     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 Obligors' Agent) appoint another
         Lender or an Affiliate of a Lender to replace that Reference Bank.

29.5     REGISTER

         The Facility Agent shall keep a register of all the Parties and shall
         supply any other Party (at that Party's expense) with a copy of the
         register on request.

29.6     VOTING

         If a Lender transfers any of its Commitment and participations in the
         Loans to its Affiliate, the Lender shall continue to vote as a Lender
         in the place of the Affiliate for the purposes of the definition of
         Majority Lenders.

29.7     ADDITIONAL COSTS

         If any assignment, transfer, novation after the Syndication Date, or
         change of Facility Office by a Lender would, at the time thereof,
         result in additional amounts becoming payable under Clause 12 (Taxes),
         then, unless the assignment, transfer, novation or change of Facility
         Office was being effected pursuant to Clause 12.3 (Mitigation), the
         Obligors shall be required to pay such amounts or additional amounts to
         or for the account of the assignee, transferee, New Lender or Lender
         acting through its new Facility Office only to the extent that it would
         have been required to pay the same had there been no such assignment,
         transfer, novation or change of Facility Office.

30.      DISCLOSURE OF INFORMATION

(a)      Each Finance Party shall keep confidential any information supplied to
         it by or on behalf of any Obligor in connection with the Finance
         Documents. However, a Finance Party is entitled to disclose
         information:

         (i)      which is publicly available, other than as a result of a
                  breach by that Finance Party of this Clause;

         (ii)     to the extent requested or required by any court of competent
                  jurisdiction in connection with any
                  legal or arbitration proceedings;

         (iii)    to the extent required to do so under any law or regulation;

         (iv)     to a competent governmental, banking, taxation or other
                  regulatory authority if and to the extent required;

         (v)      to its professional advisers;

         (vi)     to the extent allowed under paragraph (b) below; or

         (vii)    with the prior written consent of the relevant Obligor or the
                  Company.


                                      132

(b)      A Lender may disclose to one of its Affiliates or any person
         (including, without limitation, any person mentioned in Clause 29.2
         (Transfers by Lenders)) with whom it is proposing to enter, or has
         entered into, any kind of transfer, participation or other agreement in
         relation to this Agreement:

         (i)      copy of any Finance Document; and

         (ii)     any information which that Lender has acquired under or in
                  connection with any Finance Document on or after the date of
                  this Agreement,

         provided that prior to making any such disclosure a Lender shall obtain
         a written confidentiality undertaking (substantially in the form of
         Schedule 8) together with such amendments as the Lender shall
         reasonably consider necessary) with respect to the information to be
         disclosed.

(c)      This Clause shall apply to information supplied to a Finance Party by
         or on behalf of any Obligor in connection with the Finance Documents on
         or after the date of this Agreement. Any confidentiality undertaking
         given by a Finance Party in connection with this Agreement prior to it
         becoming a Party shall continue in full force and effect in accordance
         with its terms in respect of all information supplied to that Finance
         Party by or on behalf of any Obligor prior to the date of this
         Agreement.

31.      SET-OFF

         Following the occurrence of a Default, a Finance Party may set off any
         matured obligation owed by an Obligor under the Finance Documents (to
         the extent beneficially owned by that Finance Party) against any
         obligation (whether or not matured) owed by that Finance Party to 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. If a Finance Party's obligation is unliquidated or
         unascertained, the Finance Party may set off in an amount estimated by
         it in good faith to be the amount of that obligation.

32.      PRO RATA SHARING

32.1     REDISTRIBUTION

         If any amount owing by an Obligor under the Finance Documents to a
         Finance Party (the RECOVERING FINANCE PARTY) is discharged by payment,
         set-off or any other manner other than through the Facility Agent in
         accordance with Clause 11 (Payments) (a RECOVERY), then:

         (a)      the recovering Finance Party shall, within three Business
                  Days, notify details of the recovery to the Facility Agent;

         (b)      the Facility Agent shall determine whether the recovery is in
                  excess of the amount which the recovering Finance Party would
                  have received had the recovery been received by the Facility
                  Agent and distributed in accordance with Clause 11 (Payments);

         (c)      subject to Clause 32.3, the recovering Finance Party shall,
                  within three Business Days of demand by the Facility Agent,
                  pay to the Facility Agent an amount (the REDISTRIBUTION) equal
                  to the excess;

         (d)      the Facility Agent shall treat the redistribution as if it
                  were a payment by that Obligor under Clause 11 (Payments) and
                  shall pay the redistribution to the Finance Parties


                                      133

                  (other than the recovering Finance Party) in accordance with
                  Clause 11.7 (Partial payments); and

         (e)      after payment of the full redistribution, the recovering
                  Finance Party will be subrogated to the portion of the claims
                  paid under paragraph (d) above and that Obligor owes the
                  recovering Finance Party a debt which is equal to the
                  redistribution, immediately payable and of the type originally
                  discharged.

32.2     REVERSAL OF REDISTRIBUTION

         If under Clause 32.1:

         (a)      a recovering Finance Party must subsequently return a
                  recovery, or an amount measured by reference to a recovery, to
                  an Obligor; and

         (b)      the recovering Finance Party has paid a redistribution in
                  relation to that recovery,

         each Finance Party shall, within three Business Days of demand by the
         recovering Finance Party through the Facility Agent, reimburse the
         recovering Finance Party all or the appropriate portion of the
         redistribution paid to that Finance Party together with interest on the
         amount to be returned to the recovering Finance Party for the period
         whilst it held the re-distribution. Thereupon, the subrogation in
         Clause 32.1(e) will operate in reverse to the extent of the
         reimbursement.

32.3     EXCEPTIONS

(a)      A recovering Finance Party need not pay a redistribution to the extent
         that it would not, after the payment, have a valid claim against an
         Obligor in the amount of the redistribution pursuant to Clause 32.1(e).

(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 proceedings, if the
         other Finance Party had an opportunity to participate in those legal
         proceedings but did not do so or did not take separate legal
         proceedings.

33.      SEVERABILITY

         If a provision of any Finance Document is or becomes illegal, invalid
         or unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of the Finance Documents; or

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of the Finance Documents.

34.      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.


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35.      NOTICES

35.1     GIVING OF NOTICES

         All notices or other communications (other than those given under the
         terms of Clause 35.3 (Website communications) under or in connection
         with the Finance Documents shall be given in writing by letter or
         facsimile or (if the relevant Party has specified such address pursuant
         to Clause 35.2 (Addresses for notices) by e-mail. Any such notice or
         communication will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile or e-mail (including a notification under
                  Clause 35.3), when actually received in legible form.

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

35.2     ADDRESSES FOR NOTICES

(a)      The address and facsimile number and (if so specified) e-mail address
         (and the department or officer, if any, for whose attention the
         communication is to be made) of each Party (other than the Obligors'
         Agent and the Facility Agent) for all notices under or in connection
         with the Finance Documents are:

         (i)      those notified by that Party for this purpose to the Facility
                  Agent on or before the date it becomes a Party; or

         (ii)     any other notified by that Party for this purpose to the
                  Facility Agent by not less than five Business Days' notice.

(b)      The address and facsimile number of the Obligors' Agent are:

         Vivendi Universal S.A.
         42, avenue de Friedland
         75008 Paris
         Fax number: +33 (0) 1 71 71 10 47
         Attention:  M. Dupont-Lhotelain

         or such other as the Obligors' Agent may notify to the Facility Agent
         by not less than five Business Days' notice.

(c)      The address, facsimile number and email address of the Facility Agent
         are:

         Societe Generale
         Agency and Transaction Management Department
         OPER/DFI/ATM/COR
         Tour Societe Generale
         17 cours Valmy
         92972 Paris-La Defense Cedex
         France

         Fax number:       +33 (0)1 42 14 60 93
         Telephone:        +33 (0)1 42 13 53 49


                                      135

         E-mail:           stephanie.bessadou@socgen.com
         Attention:        Stephanie Bessadou

         or such other as the Facility Agent may notify to the other Parties by
         not less than five Business Days' notice.

(d)      All notices from or to any Obligor shall be sent through the Facility
         Agent and the Obligor's Agent.

(e)      The Facility Agent shall, promptly upon request from any Party, give to
         that Party the address, or facsimile number or e-mail address (where
         appropriate) of any other Party applicable at the time for the purposes
         of this Clause.

35.3     WEBSITE COMMUNICATIONS

(a)      This Clause 35.3 shall apply to:

         (i)      all accounts, certificates, each Liquidity Analysis and other
                  information delivered under Clauses 19.2 (Financial
                  information) and 19.6 (Information - miscellaneous);

         (ii)     any communication (other than one which is intended to form
                  part of a contract) between the Obligors' Agent and the
                  Facility Agent or between the Facility Agent and the Finance
                  Parties (or any of them) in connection with any amendment,
                  waiver, consent or suspension of rights (or any proposal for
                  any of the foregoing) requested by or on behalf of the Obligor
                  and relating to a Finance Document or a document referred to
                  in any Finance Document; and

         (iii)    any other communication between the Obligors' Agent and the
                  Facility Agent or between the Facility Agent and the Finance
                  Parties (or any of them), of a type to which the Facility
                  Agent specifies, in a notice delivered to the Obligors' Agent
                  and the Lenders by letter or facsimile, that this Clause 35.3
                  shall apply.

(b)      The Facility Agent will not, without the consent of the Majority
         Lenders and the Obligors' Agent, specify pursuant to paragraph (a)(iii)
         above that this Clause 35.3 shall apply to:

         (i)      the delivery of Requests; or

         (ii)     the notification by the Facility Agent of a Lender's
                  participation in a Loan.

(c)      Any communication to which this Clause 35.3 applies shall be validly
         given if:

         (i)      the sender places the communication on a website (the
                  DESIGNATED WEBSITE) operated by a website operator which is
                  (at the time the communication is sent) approved by the
                  Facility Agent for this purpose, in accordance with the
                  procedures and requirements of that website operator;

         (ii)     the details and instructions (including any password)
                  necessary in order to access the communication on the
                  Designated Website have been notified to the Facility Agent,
                  the Obligors' Agent and each Lender by letter, fax or e-mail
                  in accordance with this Agreement;

         (iii)    the sender takes such steps as are necessary so that each
                  recipient is sent, by letter or fax in accordance with this
                  Agreement or by electronic mail in accordance with paragraph
                  (d) below, a notice (the NOTIFICATION) of the fact that a
                  communication has been placed on the Designated Website for
                  their attention and giving instructions for


                                      136

                  gaining access to that communication (to the extent not
                  already notified under paragraph (ii) above); and

         (iv)     in the case of the documents referred to at paragraph (a)(i)
                  above, and in the case of any communication referred to at
                  paragraph (a)(ii) placed by the Obligors' Agent, the
                  communication is placed on the Designated Website in PDF
                  format or any other format acceptable to the Facility Agent
                  and a hard copy is, in any event, provided to the Facility
                  Agent.

(d)      A Notification sent by electronic mail to a Party shall be sent to the
         electronic mail address notified by that Party to the Facility Agent
         (or, if that Party is the Facility Agent, notified by the Facility
         Agent to the other Parties) in accordance with Clause 35.2.

(e)      Subject to paragraph (f) below, the Facility Agent may approve a
         website operator by giving five Business Days' notice (by letter or
         facsimile) to the Lenders and the Obligors' Agent. The Facility Agent
         may revoke its approval of a website operator for these purposes at any
         time immediately upon notice (given by letter or facsimile) to the
         Lenders and the Obligors' Agent; any such notice will take effect
         immediately.

(f)      The Facility Agent shall not approve a website operator for the
         purposes of this Clause 35.3 unless:

         (i)      it is satisfied that the Facility Agent, the Obligors' Agent
                  and each Finance Party have been provided with any website
                  addresses, user names, passwords and other necessary
                  information, and have entered into any necessary arrangements
                  with the website operator, to enable them to gain access to
                  communications placed on the website for their attention;

         (ii)     it has received assurances satisfactory to it that,
                  communications transmitted to, received from and stored on
                  websites operated by the website operator will be as secure as
                  possible from unauthorised interception, reading and
                  amendment; and

         (iii)    it is satisfied that, promptly upon a communication being
                  placed on any relevant website, the intended recipient will be
                  sent a notification by e-mail of the communication and will,
                  for at least 30 calendar days thereafter, be able to read and
                  retrieve a copy of the communication.

(g)      Any communication made in accordance with paragraph (c) above will be
         deemed to be given at the close of business (in the place of receipt)
         on the Business Day following the day on which the recipient is given
         the relevant Notification, unless prior to that time either:

         (i)      the sender of the communication becomes aware that the
                  recipient has not received that Notification; or

         (ii)     the recipient of the Notification notifies the sender that it
                  is not possible, for technical or other reasons affecting the
                  operation of the relevant website generally, for the
                  communication to be read or retrieved.

(h)      The Facility Agent, the Obligors' Agent and each Lender shall comply
         with any reasonable requirements of any approved website operator
         relating to the operation and security of the relevant websites.

(i)      The Facility Agent shall promptly upon becoming aware of its occurrence
         notify the Lenders and the Obligors' Agent if:


                                      137

         (i)      any Designated Website cannot be accessed due to technical
                  failure;

         (ii)     the password specifications for any Designated Website change;

         (iii)    the Facility Agent becomes aware that any Designated Website
                  or any information posted onto any Designated Website is or
                  has been infected by any electronic virus or similar software.

         If the Facility Agent gives a notice under paragraph (i) or (iii)
         above, all information which would otherwise have been posted on the
         Designated Website concerned shall be supplied in hard copy unless and
         until the Facility Agent and each Lender is satisfied that the
         circumstances giving rise to the notification are no longer continuing.

(j)      Nothing in this Clause 35.3 shall affect Clause 35.2(d) or prejudice
         the right of any Party to give any notice or other communication by
         letter or facsimile in accordance with the terms of this Agreement.

36.      LANGUAGE

(a)      Any notice given under or in connection with any Finance Document shall
         be in English.

(b)      All other documents provided under or in connection with any Finance
         Document shall be:

         (i)      in English; or

         (ii)     if not in English, accompanied by a certified English
                  translation (unless the document is a statutory or other
                  official document).

37.      JURISDICTION

37.1     SUBMISSION

(a)      For the benefit of each Finance Party, each Obligor agrees that the
         courts of England have jurisdiction to settle any disputes in
         connection with any Finance Document and accordingly submits to the
         jurisdiction of the English courts.

(b)      Without prejudice to paragraph (a) above and for the benefit of each
         Finance Party, each Obligor agrees that any New York State Court or
         Federal Court sitting in New York has jurisdiction to settle any
         disputes in connection with this Agreement and accordingly submits to
         the jurisdiction of those courts.

37.2     SERVICE OF PROCESS

         Without prejudice to any other mode of service, each Obligor:

         (a)      irrevocably appoints:

                  (i)      Law Debenture Corporate Services Limited, Fifth
                           Floor, 100 Wood Street, London EC2V 7EX as its agent
                           for service of process in relation to any proceedings
                           before the English courts in connection with any
                           Finance Document; and

                  (ii)     Vivendi Universal Holding I Corp., 800 3rd Avenue,
                           Fourth Floor, New York NY10022 as its agent for
                           service of process, where required, in relation


                                      138

                           to any proceedings before any courts located in the
                           State of New York in connection with this Agreement;

                  agrees to maintain an agent for service of process in England
                  and in the State of New York until all Commitments have been
                  terminated and the Loans and all other amounts payable under
                  the Finance Documents have been finally, irrevocably and
                  indefeasibly repaid in full;

         (b)      agrees that failure by a process agent to notify the Obligors
                  of the process will not invalidate the proceedings concerned;

         (c)      consents to the service of process relating to any such
                  proceedings by prepaid posting of a copy of the process to its
                  address for the time being applying under Clause 35.2
                  (Addresses for notices); and

         (d)      agrees that if the appointment of any person mentioned in
                  paragraph (a) above ceases to be effective, the Obligors'
                  Agent (on behalf of the Obligors) shall immediately appoint a
                  further person in England or in the State of New York, as the
                  case may be, to accept service of process on its behalf in
                  England or in the State of New York, as the case may be, and,
                  failing such appointment within 15 calendar days, the Facility
                  Agent is entitled to appoint such a person by notice to the
                  Obligors' Agent.

37.3     FORUM CONVENIENCE AND ENFORCEMENT ABROAD

         Each Obligor:

         (a)      waives objection to the English and New York State and Federal
                  courts on grounds of inconvenient forum or otherwise as
                  regards proceedings in connection with a Finance Document; and

         (b)      agrees that in the case of the enforcement of any judgment or
                  order of an English or New York State and Federal court in
                  connection with a Finance Document in any other jurisdiction,
                  it will not assert that such judgment is not conclusive and
                  not binding on it and that it may not be enforced against it
                  in the courts of any other jurisdiction.

37.4     NON-EXCLUSIVITY

         Nothing in this Clause 37 limits the right of a Finance Party to bring
         proceedings against any Obligor in connection with any Finance
         Document:

         (a)      in any other court of competent jurisdiction; or

         (b)      concurrently in more than one jurisdiction.

38.      WAIVER OF IMMUNITY

         Each Obligor irrevocably and unconditionally:

         (a)      agrees that if a Finance Party brings proceedings against it
                  or its assets in relation to a Finance Document, no immunity
                  from those proceedings (including, without limitation, suit,
                  attachment prior to judgment, other attachment, the obtaining
                  of judgment, execution or other enforcement) will be claimed
                  by or on behalf of itself or with respect to its assets;


                                      139

         (b)      waives any such right of immunity which it or its assets now
                  has or may subsequently acquire; and

         (c)      consents generally in respect of any such proceedings to the
                  giving of any relief or the issue of any process in connection
                  with those proceedings, including, without limitation, the
                  making, enforcement or execution against any assets whatsoever
                  (irrespective of its use or intended use) of any order or
                  judgment which may be made or given in those proceedings.

39.      WAIVER OF JURY TRIAL

         THE OBLIGORS AND THE FINANCE PARTIES WAIVE ANY RIGHTS THEY MAY HAVE TO
         A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM
         ANY FINANCE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THE FINANCE
         DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
         WRITTEN CONSENT TO A TRIAL BY THE COURT.

40.      GOVERNING LAW

         This Agreement is governed by English law.

THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.


                                      140

EX-4.8

                                                                     Exhibit 4.8

                       AMENDMENT AND RESTATEMENT AGREEMENT


                                      DATED

                                 13TH MAY, 2003


                                     BETWEEN


                             VIVENDI UNIVERSAL S.A.

                                       AND

                      THE BANKS AND FINANCIAL INSTITUTIONS
                                SPECIFIED HEREIN

                                       AND

                                SOCIETE GENERALE
                                AS FACILITY AGENT


                                  RELATING TO A

                        E 3,000,000,000 CREDIT AGREEMENT

                             DATED 15TH MARCH, 2002


                      AS AMENDED BY AN AMENDMENT AGREEMENT
                            DATED 6TH FEBRUARY, 2003





                                  ALLEN & OVERY
                                     London

                                      INDEX



CLAUSE                                                                     PAGE
                                                                        
1.       Interpretation................................................      1
2.       Conditions Precedent..........................................      2
3.       Restatement...................................................      2
4.       Conditions Subsequent.........................................      2
5.       Representations and Warranties................................      3
6.       Miscellaneous.................................................      4
7.       Governing Law.................................................      5

SCHEDULE

1.       Conditions precedent documents................................      6

2.       Conditions subsequent documents...............................      9

3.       Restated Credit Agreement.....................................     11

SIGNATORIES............................................................    147


THIS AMENDMENT AND RESTATEMENT AGREEMENT is dated 13th May, 2003 and is made
between:

(1)      VIVENDI UNIVERSAL S.A. (the OBLIGORS' AGENT);

(2)      THE COMPANIES listed as Guarantors on the signature pages of this
         Agreement (the GUARANTORS);

(3)      THE BANKS AND FINANCIAL INSTITUTIONS listed as Banks on the signature
         pages of this Agreement (the BANKS);

(4)      SOCIETE GENERALE as facility agent (in this capacity the FACILITY
         AGENT); and

(5)      SOCIETE GENERALE as security agent (in this capacity the SECURITY
         AGENT).

BACKGROUND

(A)      This Agreement is supplemental to and amends a E 3,000,000,000 credit
         agreement dated 15th March, 2002 made between, among others, the
         Obligors' Agent and the Facility Agent (as amended by an amendment
         agreement dated 6th February 2003, the CREDIT AGREEMENT).

(B)      The Obligors' Agent enters into this agreement on its own behalf and on
         behalf of the Company.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         (a)      Capitalised terms as to be defined in the Restated Credit
                  Agreement have, except where otherwise defined in this
                  Agreement, the same meaning in this Agreement.

         (b)      EFFECTIVE DATE means the date on which the Facility Agent
                  gives the notification referred to in Clause 2.1 (Notification
                  of satisfaction), or such later date as the Obligors' Agent
                  and the Facility Agent may agree.

         (c)      RESTATED CREDIT AGREEMENT means the Credit Agreement as to be
                  amended and restated in the form set out in Schedule 3 to this
                  Agreement.

1.2      CONSTRUCTION

         The provisions of clause 1.2 (Construction) of the Restated Credit
         Agreement apply to this Agreement as though they were set out in full
         in this Agreement, except that references to the Credit Agreement are
         to be construed as references to this Agreement.

                                       2



2.       CONDITIONS PRECEDENT

2.1      NOTIFICATION OF SATISFACTION

         The Facility Agent must notify the Obligors' Agent and the Banks
         promptly on being satisfied that it has received all of the documents
         and evidence set out in Schedule 1 in form and substance satisfactory
         to it.

2.2      LAPSE

         If the Facility Agent fails to give the notification under Clause 2.1
         (Notification of satisfaction) above on or before 5th August, 2003 (or
         such later date as the Obligors' Agent and Facility Agent may agree),
         the Effective Date will not occur and Clause 3 (Restatement) will be of
         no effect.

3.       RESTATEMENT

         On and from the Effective Date:

         (a)      the Credit Agreement will be amended and restated so that it
                  reads in the form set out in Schedule 3 (Restated Credit
                  Agreement); and

         (b)      each Guarantor, in its capacity as such, will become a party
                  to the Restated Credit Agreement and will give the guarantee
                  and indemnity set out in Clause 16 (Guarantee and Indemnity)
                  of the Restated Credit Agreement.

4.       CONDITIONS SUBSEQUENT

4.1      NOTIFICATION OF SATISFACTION

         The Facility Agent must notify the Obligors' Agent and the Banks
         promptly on being satisfied that it has received all of the documents
         and evidence set out in Part I of Schedule 2 in form and substance
         satisfactory to it.

4.2      REVERSAL OF AMENDMENTS

         (a)      If the Effective Date has occurred, but the Facility Agent
                  fails to give the notification under Clause 4.1 (Notification
                  of satisfaction) above on or before 5th August, 2003 (or such
                  later date as the Obligors' Agent and Facility Agent may
                  agree) (the CONDITIONS SUBSEQUENT DATE), then on and from the
                  Conditions Subsequent Date:

                  (i)      the Restated Credit Agreement will be further amended
                           so that it reads in the form which was in effect
                           immediately prior to the Effective Date;

                  (ii)     each Guarantor will be released from its obligations
                           as such under the Restated Credit Agreement (but
                           without prejudice to any obligations it has under the
                           Junior Guarantee (as defined in the Credit Agreement
                           as in force immediately prior to the Effective Date)
                           or any other document under which it gives any
                           guarantee, indemnity or other assurance in respect of
                           the obligations to the Finance Parties under the
                           Junior Guarantee or any other document except the
                           Credit Agreement);

                                       3




                  (iii)    each Party must, at the expense of the Company,
                           execute such documents and take such action which is
                           required by the Company (acting reasonably) to ensure
                           that to the extent possible, the documents referred
                           to in paragraphs 11, 12 and 15 of Schedule 1 (and, if
                           applicable, paragraph 2 of Part II of Schedule 2)
                           cease to be effective;

                  (iv)     the documents referred to at paragraphs (b)(ii) to
                           (v) of Clause 6 (Miscellaneous) will cease to be
                           Finance Documents (but for the purposes of the Credit
                           Agreement, this Agreement will continue to be a
                           Finance Document); and

                  (v)      each Party must, at the expense of the Company,
                           execute any further documents and take any further
                           action which are required by the Facility Agent or
                           the Obligors' Agent (each acting reasonably) to give
                           effect to paragraphs (i) to (iv) above.

         (b)      Nothing in this Clause will affect any rights or obligations
                  of any Party which have accrued or otherwise come into
                  existence under the Credit Agreement prior to the Conditions
                  Subsequent Date.

4.3      DELIVERY OF FURTHER DOCUMENTS

         If the notification of satisfaction under Clause 4.1 (Notification of
         satisfaction) has been provided to the Obligor's Agent, the Obligor's
         Agent must deliver or procure the delivery of the documents listed in
         Part II of Schedule 2 as soon as practicable after the date of this
         Agreement and in any event before the Conditions Subsequent Date.

5.       REPRESENTATIONS AND WARRANTIES

5.1      REPRESENTATIONS AND WARRANTIES

         The Obligors' Agent and each Guarantor make the representations and
         warranties set out in this Clause to each Finance Party on the date of
         this Agreement and on the Effective Date.

5.2      POWERS AND AUTHORITY

         It has the power to enter into and perform, and has taken all necessary
         action to authorise the entry into, performance and delivery of this
         Agreement and (in the case of the Obligors' Agent) the amendment and
         restatement of the Credit Agreement contemplated by this Agreement.

5.3      LEGAL VALIDITY

         This Agreement constitutes its legal, valid and binding obligation
         enforceable in accordance with its terms subject to any laws affecting
         creditors' rights generally, and would be so treated in the courts of
         the jurisdiction of its incorporation.

5.4      AUTHORISATIONS

         All authorisations required in connection with the entry into,
         performance, validity and enforceability of this Agreement and the
         amendment and restatement of the Credit Agreement

                                       4


         contemplated by this Agreement, other than those required under Parts I
         and II of Schedule 2, have been obtained or effected and are in full
         force and effect.

5.5      NON-CONFLICT

         The entry into and performance by it of this Agreement, and the
         amendment and restatement of the Credit Agreement contemplated by this
         Agreement, do not and will not:

         (d)      conflict in any material respect with any law or regulation or
                  judicial or official order binding on it or any Material
                  Subsidiary; or

         (e)      conflict with its constitutional documents; or

         (f)      conflict in any material respect with any document which is
                  binding upon it or any Material Subsidiary or any asset of it
                  or any Material Subsidiary.

5.6      CREDIT AGREEMENT

         The representations as to be set out in clause 17 (Representations and
         Warranties) of the Restated Credit Agreement (other than those set out
         in clauses 17.3 (Powers and authority), 17.7 (Taxes on payments), 17.8
         (Stamp duties), 17.15(c) (Accounts) and 17.16 (Information Memorandum))
         are true as if made on the date of this Agreement and the Effective
         Date with reference to the facts and circumstances then existing, as if
         references to the Credit Agreement were references to the Restated
         Credit Agreement and as if references to the Finance Documents included
         this Agreement.

6.       MISCELLANEOUS

(a)      The Obligors' Agent must pay (or procure that there is paid) to the
         Facility Agent forthwith upon demand the amount of all reasonable costs
         and expenses (including legal fees and expenses) incurred by the
         Facility Agent in connection with this Agreement, any other documents
         referred to in this Agreement and the transactions contemplated by
         them.

(b)      The Facility Agent and the Obligors' Agent designate as Finance
         Documents:

         (i)      this Agreement;

         (ii)     the Security Sharing Agreement;

         (iii)    each Security Document; and

         (iv)     each Subordination Agreement.

(c)      Except as expressly stated in this Agreement, no Finance Document, and
         no rights, powers or privileges of any Finance Party under any Finance
         Document, will be affected, impaired or waived by:

         (i)      the execution, delivery or performance of this Agreement or
                  any document referred to in it;

                                       5


         (ii)     the receipt or non-receipt of any of the documents and
                  evidence referred to in Clause 2 (Conditions precedent) or
                  Clause 4 (Conditions Subsequent);

         (iii)    the occurrence or non-occurrence of the Effective Date or the
                  Conditions Subsequent Date;

         (iv)     any action taken or proposed to be taken, any inaction, any
                  statement, representation or indulgence by any Finance Party
                  or any other person in respect of any Default or otherwise; or

         (v)      any failure to exercise or any delay in exercising any right,
                  power or privilege.

(d)      This Agreement may be executed in any number of counterparts. This has
         the same effect as if the signatures were on a single copy of this
         Agreement.

(e)      With effect from the Effective Date, this Agreement shall be read and
         construed as one with the Credit Agreement and references in the Credit
         Agreement to THIS AGREEMENT, HEREOF, HEREUNDER and other similar terms
         shall be read and construed accordingly.

7.       GOVERNING LAW

         This Agreement is governed by English law.

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

                                       6


                                   SCHEDULE 1

                         CONDITIONS PRECEDENT DOCUMENTS

1.       A copy of the constitutional documents of each Obligor and, in the case
         of each French Obligor, an extract of the K-Bis of the Register of
         Commerce and Companies relating to it, in each case dated no more than
         one month prior to the date of this Agreement.

2.       A certified copy of the resolution of the board of directors of each
         Obligor approving the terms of, and the transactions contemplated by,
         the Finance Documents to which it is or is to be a party and resolving
         that it execute each such Finance Document and authorising an
         authorised signatory of that Obligor to execute on its behalf each such
         Finance Document.

3.       If necessary in the case of each Obligor, a power of attorney in favour
         of the person signing on behalf of that Obligor.

4.       A copy of:

         (a)      the tax certificate; and

         (b)      the certificate of good standing,

         in respect of each Obligor incorporated in the United States of
         America.

5.       A specimen of the signature of each person authorised to sign all
         Finance Documents on behalf of the Obligors' Agent and to sign and/or
         despatch all documents and notices to be signed and/or despatched by
         the Obligors' Agent under or in connection with the Finance Documents.

6.       A certificate of the Chairman and Chief Executive Officer or other duly
         authorised signatory of:

         (a)      the Company confirming that utilisation of the credit facility
                  in full would not cause any borrowing limit binding on it to
                  be exceeded; and

         (b)      each Guarantor confirming that the guarantee under this
                  Agreement would not cause any guaranteeing limit binding, if
                  applicable, on that Guarantor.

7.       A certificate of an authorised signatory of the Obligors' Agent
         certifying that each copy document delivered under this Schedule is
         correct, complete and in full force and effect as at a date no earlier
         than the date of this Agreement.

8.       Evidence that:

         (a)      a waiver fee of 0.30 per cent. on the Commitment of each Bank
                  as at the date of this Agreement; and

         (b)      all amounts payable by the Obligors' Agent under Clause 6(a)
                  (Miscellaneous) which have then been invoiced,

                                       7



         have been paid or will be paid on or before the Effective Date.

9.       An agreed form of account security (gage especes) in relation to the
         Receipt Account located in France.

10.      A conformed or certified copy of the New Facility Agreement.

11.      (a)      A counterpart of each Security Document (other than the
                  documents referred to in paragraphs 5, 11, 15 and 19 of Part I
                  of Schedule 10 to the Restated Credit Agreement), duly
                  executed by the parties thereto.

         (b)      Evidence satisfactory to the Security Agent that the document
                  referred to in paragraph 19 of Part I of Schedule 10 to the
                  Restated Credit Agreement has been executed.

12.      A counterpart of each Subordination Agreement, duly executed by the
         parties thereto.

13.      (a)      A certificate from the Auditors of the Company setting out in
                  reasonable detail the calculation of each of the financial
                  covenants set out in Clause 19.3 (Financial covenants) of the
                  Credit Agreement, as at December 31, 2002.

         (b)      A certificate from the Chief Financial Officer of the Company
                  setting out in reasonable detail the calculation of Subsidiary
                  Debt (as defined in Clause 18.16 (Subsidiary Debt) of the
                  Restated Credit Agreement).

14.      The Original Liquidity Analysis and the Back-up Original Liquidity
         Analysis.

15.      The Security Sharing Agreement, duly executed by the parties thereto.

16.      A copy of each the High Yield Notes Documents, duly executed by the
         parties thereto.

17.      Legal opinions of the following lawyers, addressed to the Finance
         Parties:

         (a)      Allen & Overy in respect of English law;

         (b)      Cravath, Swaine & Moore LLP in respect of New York law, as to
                  corporate authority only;

         (c)      Shearman & Sterling in respect of New York law;

         (d)      Richards, Layton & Finger, P.A. in respect of Delaware law;

         (e)      Allen & Overy in respect of French law;

         (f)      Orrick in respect of French law, as to corporate authority
                  only;

         (g)      Allen & Overy in respect of Dutch law;

         (h)      Allen & Overy in respect of Belgian law;

                                       8


         (i)      Bredin Prat, Paris office in respect of French law as to the
                  document referred to in paragraph 11(b) above;

         (j)      in-house counsel to Vivendi Universal S.A. and certain other
                  members of the Group; and

         (k)      in-house counsel to Vivendi Universal Games, Inc.

                                       9


                                   SCHEDULE 2

                         CONDITIONS SUBSEQUENT DOCUMENTS


                                     PART I

1.       (a)      Evidence that the High Yield Notes have been subscribed for,
                  that the proceeds of the High Yield Notes have been
                  irrevocably released and that the Company has actually and
                  unconditionally received gross cash proceeds in an aggregate
                  amount of not less than E 1,000,000,000.

         (b)      A copy of the Escrow Release Certificate (as defined in the
                  Description of Notes) signed by the Chief Financial Officer of
                  the Company.

2.       Evidence satisfactory to the Facility Agent that the Security Interests
         constituted by the Security Documents (as defined in the Credit
         Agreement as in force on the date of the date of this Agreement) have
         been released (other than the Security Interest evidenced by the
         Declaration de gage B with respect to the VE Shares), and that the
         Security Interests to be constituted by the Security Documents referred
         to in paragraph 11 of Schedule 1 have taken effect.

3.       A certificate of an authorised signatory of the Obligors' Agent
         certifying that each copy document delivered under this Schedule is
         correct, complete and in full force and effect as at a date no earlier
         than the date of this Agreement.

                                       10

                                     PART II

1.       Evidence that the Security Agent has received the following:

         (a)      certificates representing the shares pledged pursuant to the
                  U.S. Master Security Document accompanied by undated stock
                  powers executed in blank and instruments evidencing all debt
                  pledged pursuant to that document endorsed in blank; and

         (b)      all notices, registration, filings and consents required for
                  the registration or perfection of all Security Interests under
                  the Security Documents, including, without limitation,
                  financing termination statements which the Security Agent has
                  deemed reasonably necessary in order to register/perfect such
                  Security Interests.

2.       A counterpart of the documents referred to in paragraphs 5(a) and 11 of
         Part I of Schedule 10 to the Restated Credit Agreement.

                                       11





                                   SCHEDULE 3

                            RESTATED CREDIT AGREEMENT


                                    AGREEMENT

  Dated 15th March, 2002 (and amended by an agreement dated 6th February, 2003,
       and further amended and restated by an agreement dated 13th, 2003)

                                 E3,000,000,000

                     MULTICURRENCY REVOLVING CREDIT FACILITY

                                       for

                             VIVENDI UNIVERSAL S.A.

                                  GUARANTEED BY

                                 THE GUARANTORS

                                   ARRANGED BY

                                BARCLAYS CAPITAL
                       BAYERISCHE LANDESBANK GIROZENTRALE
                                   BNP PARIBAS
                            CREDIT AGRICOLE INDOSUEZ
                                 CREDIT LYONNAIS
                                DEUTSCHE BANK AG
                              SG INVESTMENT BANKING
                                       and
                       SUMITOMO MITSUI BANKING CORPORATION
                                      with

                                SOCIETE GENERALE

                                as Facility Agent

                                SOCIETE GENERALE
                                as Security Agent

                                 ALLEN & OVERY
                                     London

                                       12

                                      INDEX



CLAUSE                                                                     PAGE
                                                                     
1.       Interpretation.........................................             14
2.       Facility...............................................             45
3.       Purpose................................................             46
4.       Conditions Precedent...................................             46
5.       Drawdown...............................................             47
6.       Repayment..............................................             48
7.       Prepayment and Cancellation............................             49
8.       Interest Periods.......................................             57
9.       Interest...............................................             57
10.      Optional Currencies....................................             59
11.      Payments...............................................             60
12.      Taxes..................................................             62
13.      Market Disruption......................................             63
14.      Increased Costs........................................             64
15.      Illegality.............................................             65
16.      Guarantee..............................................             66
17.      Representations and Warranties.........................             70
18.      Undertakings...........................................             74
19.      Financial Covenants....................................             84
20.      Default................................................             91
21.      The Facility Agent and the Mandated Lead Arrangers.....             95
22.      Release of Security....................................            103
23.      Fees...................................................            105
24.      Expenses...............................................            107
25.      Stamp Duties...........................................            107
26.      Indemnities............................................            107
27.      Evidence and Calculations..............................            108
28.      Amendments and Waivers.................................            109
29.      Changes to the Parties.................................            111
30.      Disclosure of Information..............................            114
31.      Set-Off................................................            115
32.      Pro Rata Sharing.......................................            115
33.      Severability...........................................            116
34.      Counterparts...........................................            116
35.      Notices................................................            117
36.      Language...............................................            120
37.      Jurisdiction...........................................            121
38.      Waiver of Immunity.....................................            122
39.      Waiver of Jury Trial...................................            122
40.      Governing Law..........................................            122


                                       12


SCHEDULES

                                                                                
1.       Part 1 - Banks and Commitments..........................................     123

         Part 2 - Original Guarantors............................................     124

2.       Conditions Precedent Documents..........................................     125

         Part 1 - to be delivered before the First Request.......................     125

         Part 2 - to be delivered for the accession of a Subsidiary Borrower.....     127

         Part 3 - To be delivered for the accession of a Subsidiary Guarantor....     129

3.       Form of Request.........................................................     131

4.       Form of Novation Certificate............................................     132

5.       Effective Global Rate Letter............................................     135

6.       Calculation of the Mandatory Cost.......................................     137

7.       Form of Confidentiality Undertaking.....................................     139

8.       Borrower Accession Deed.................................................     142

9.       Guarantor Accession Deed................................................     143

10.      Security Documents......................................................     144

         Part 1 - Non-U.S. Security Documents....................................     144

         Part 2 - U.S. Security Document.........................................     146



                                       14


THIS AGREEMENT is dated 15th March, 2002, was amended by an agreement dated 6th
February, 2003, amended and restated by an agreement dated 13th May, 2003 and is
made BETWEEN:

(1)      VIVENDI UNIVERSAL S.A. for itself (in this capacity the "COMPANY") and
         as agent for the Obligors (in this capacity the "OBLIGORS' AGENT");

(2)      THE COMPANIES listed in Part 2 of Schedule 1 (Original Guarantors) (the
         "ORIGINAL GUARANTORS");

(3)      BARCLAYS CAPITAL, BAYERISCHE LANDESBANK GIROZENTRALE, BNP PARIBAS,
         CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS, DEUTSCHE BANK AG, SG
         INVESTMENT BANKING and SUMITOMO MITSUI BANKING CORPORATION as mandated
         lead arrangers (in this capacity, each a "MANDATED LEAD ARRANGER");

(4)      THE FINANCIAL INSTITUTIONS listed in Part 1 of Schedule 1 as banks (the
         "BANKS");

(5)      SOCIETE GENERALE as facility agent (in this capacity the "FACILITY
         AGENT"); and

(6)      SOCIETE GENERALE as security agent (in this capacity the "SECURITY
         AGENT").

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

          "ACCOUNTS CERTIFICATE"

         means a certificate signed by the auditors of the Company delivered
         with the consolidated accounts of the Group delivered under Clause
         18.2(a)(i) and (b)(i) (Financial information) setting out:

         (a)      the following items, together with a detailed calculation
                  thereof (including, without limitation, the calculation of the
                  adjustments to exclude Vivendi Environnement S.A.):

                  (i)      EBITDA, Total Financial Debt, Net Financial Debt and
                           Net Interest Expense (as each of those terms is
                           defined in Clause 19 (Financial Covenants)); and

                  (ii)     the operating income (loss) or EBIT of the Group but
                           adjusted to exclude Vivendi Environnement S.A.,

                  in each case as determined from those accounts; and

         (b)      (if those accounts are prepared in accordance with accounting
                  principles and practices generally accepted in France and not
                  the U.S.A.) a reconciliation demonstrating the difference
                  between those accounts and the same accounts had they been
                  prepared in

                                       14


                  accordance with accounting principles and practices generally
                  accepted in the U.S.A., consistently applied.

         "ACQUIRED SHARES"

         means the shares of Cegetel (being 26 per cent. of the total share
         capital of Cegetel) acquired directly or indirectly by SIT from British
         Telecommunications plc on 22nd January, 2003.

         "AFFILIATE"

         means a Subsidiary or a Holding Company of a person or any other
         Subsidiary of that Holding Company.

         "APPLICABLE MARGIN"

         means the rate determined as such from time to time in accordance with
         Clause 9.2 (Determination of Applicable Margin).

         "ASSETS"

         means all assets of the Group from time to time (a) excluding those
         assets referred to in the Back-up Original Liquidity Analysis in the
         section headed "Assets Disposal" but (b) including, for the avoidance
         of doubt, the assets referred to in the definition of Canal+ Disposal
         and the Games Disposal.

         "ASSETS DISPOSAL"

         means a disposal of any Asset (other than a Relevant Intra Group
         Disposal).

         "BACK-UP ORIGINAL LIQUIDITY ANALYSIS"

         means the liquidity analysis of the Group dated 24th November, 2002
         delivered by the Company under a E1,000,000,000 revolving credit
         facility agreement dated 26th November, 2002.

         "BORROWER"

         means the Company or a Subsidiary Borrower.

         "BORROWER ACCESSION DEED"

         means a deed in the form of Schedule 8 with such amendments as the
         Facility Agent may approve or reasonably require.

         "BUSINESS DAY"

         means a day (other than a Saturday or Sunday) on which banks are open
         for general business in Paris and London and:

                                       16



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

         (b)      if on that day a payment in or purchase of Euros is to be
                  made, a TARGET Day.

         "CANAL+"

         means Canal+ S.A.

         "CANAL+ DISPOSAL" AND "CANAL+ DISPOSAL PROCEEDS AMOUNT"

         have the meanings given to those terms by the New Facility Agreement as
         in force at its date.

         "CASH POOLING ACCOUNT"

         means each bank account of:

         (a)      the Company;

         (b)      each Cash Pooling Hub;

         (c)      each other member of the Group with which the Company has a
                  direct lending relationship, but excluding:

                  (i)      VUE Borrower Co.; and

                  (ii)     prior to the VUE Date, any member of the VUE Group;
                           and

         (d)      each other bank account which is designated as such in writing
                  by the Company and the Facility Agent,

         but excluding those bank accounts listed in Schedule 12 to the New
         Facility Agreement (as in force at its date).

         "CASH POOLING HUB"

         means each of:

         (a)      the Company;

         (b)      VUP;

         (c)      Groupe Canal+;

         (d)      UMGT;

         (e)      VUHIC;

         (f)      VTI;

                                       17




         (g)      VU Canada;

         (h)      on or after the Cegetel Cash Pooling Date, Cegetel;

         (i)      on or after the Maroc Telecom Cash Pooling Date, Maroc
                  Telecom; and

         (j)      any other member of the Group designated as such in writing by
                  the Company and the Facility Agent.

         "CASH POOLING HUB SECURITY"

         means the account pledge agreement or account charge agreement over:

         (a)      each bank account of Vivendi Universal U.S. Holding Co.; and

         (b)      each Cash Pooling Account,

         but excluding:

         (i)      the Cash Pooling Accounts of UMGT, VU Canada and VUP; and

         (ii)     the Cash Pooling Accounts referred to in paragraph (c) of the
                  definition thereof.

         "CEGETEL"

         means Cegetel Groupe S.A.

         "CEGETEL CASH POOLING DATE"

         means the date on which all of the following events occur:

         (i)      there are no contractual restrictions or provisions
                  (including, without limitation, pre-emption rights) between
                  shareholders of Cegetel, Transtel or any other member of the
                  Cegetel Group or under the Non Recourse Financing in force at
                  the date of this Agreement which restrict, or which would be
                  triggered upon, the granting of a guarantee and Cash Pooling
                  Hub Security pursuant to this Agreement;

         (ii)     Cegetel has become a Guarantor under this Agreement and has
                  granted Cash Pooling Hub Security; and

         (iii)    Cegetel enters into the Cash Management and IGL Arrangements
                  (as defined in the New Facility Agreement at its date) for the
                  purpose of borrowing money from the Company or any Cash
                  Pooling Hub.

         "CEGETEL DISPOSAL"

         means the disposal of all or any of the shares in, or assets or
         business of, any member of the Cegetel Group.

                                       18


         "CEGETEL GROUP"

         means Cegetel and each of its Subsidiaries (including, for the
         avoidance of doubt, SFR).

         "CEGETEL SHAREHOLDERS' AGREEMENT"

         means the shareholders' agreement among the Company, Compagnie
         Transatlantique de Radiotelephonie Cellulaire, British
         Telecommunications plc, Mannesmann AG, SBC International, Inc., SBC
         International-Societe de Radiotelephonie Cellulaire Inc. and Cegetel
         dated as of 14th May, 1997 as amended from time to time.

         "CODE"

         means the United States Internal Revenue Code of 1986, as amended from
         time to time, and the regulations promulgated and rulings issued
         thereunder.

         "COMMITMENT"

         means:

         (a)      in relation to a Bank which is a Bank on the date of this
                  Agreement, the amount in Euros set opposite its name in
                  Schedule 1 and the amount of any other Bank's Commitment
                  acquired by it under Clause 29 (Changes to the Parties); and

         (b)      in relation to a Bank which becomes a Bank after the date of
                  this Agreement, the amount of any other Bank's Commitment
                  acquired by it under Clause 29 (Changes to the Parties),

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

         "COMMITMENT PERIOD"

         means the period from the date of this Agreement up to and including
         the Final Maturity Date.

         "CONCENTRATION ACCOUNTS"

         means the Euro-denominated account (number 30003-03175-00020262579/77)
         and the US dollar-denominated account (number
         30003-03175-03020103534/54) of the Company held with, or to be opened
         with, Societe Generale Agence Paris-Etoile-Entreprises, 33 avenue de
         Wagram, BP 963, 75017 Paris, France, the sterling-denominated account
         (number 30588-60001-81504592601/30) held with Barclays, 45 boulevard
         Haussmann, 75008 Paris and the Canadian Dollar-denominated account
         (number 30007-99999-043747000CA/04), the Danish Krone-denominated
         account (number 30007-99999-043747000DK/04), the Yen-denominated
         account (number 30007-99999-043747000JP/04), the Norwegian
         Krone-denominated account (number 30007-99999-043747000NO/04), the New
         Zealand Dollar-denominated account (number 30007-99999-043747000NZ/04),
         the Swedish Krona-denominated account (number
         30007-99999-043747000SE/04), the Singaporean Dollar-denominated account
         (number 30007-99999-043747000SG/04), the Hong-Kong Dollar-denominated
         account (number 30007-99999-043747000HK/04), the Swiss
         Franc-denominated account (number 30007-

                                       19


         99999-043747000FS/04), the Australian Dollar-denominated account
         (number 30007-99999-043747000AU/04), the Mexican Peso-denominated
         account (number 30007-99999-043747000MX/04), the Czech
         Koruna-denominated account (number 30007-99999-043747000CZ/04) (each,
         held with Natexis Banques Populaires, Gestion des flux Entreprises,
         10/12, avenue Winston Churchill, Boite Postale 4, 94677
         Charenton-le-Pont Cedex).

         "CONSENTING BANK"

         means each Bank which gave its consent to either or both of:

         (a)      the waivers and consents set out in the letter dated 19th
                  September, 2002 from the Company to the Facility Agent in
                  connection with this Agreement; or

         (b)      the waivers and consents set out in the letter dated 15th
                  November, 2002 from the Company to the Facility Agent in
                  connection with this Agreement,

         and, to the extent of the Commitment so acquired, any Bank which
         acquires a Commitment from a Consenting Bank under Clause 29 (Changes
         to the Parties).

         "DEFAULT"

         means an Event of Default or an event which, with the giving of notice,
         expiry of any applicable grace period, determination of materiality or
         fulfilment of any other applicable condition (or any combination of the
         foregoing), would constitute an Event of Default.

         "DISPOSAL"

         means an Assets Disposal, a Cegetel Disposal, a SIT Disposal or a VE
         Shares Disposal.

         "DRAWDOWN DATE"

         means the date of the advance of a Loan.

         "EFFECTIVE DATE"

         has the meaning given to it in the Restatement Agreement.

         "ENVIRONMENT"

         means all, or any of, the following media: the air (including the air
         within buildings and the air within other natural or man-made
         structures above or below ground), water (including, without
         limitation, ground and surface water) and land (including, without
         limitation, surface and sub-surface soil).

         "ENVIRONMENTAL LAW"

         means any law or regulation relating to the Environment or to
         emissions, discharges or releases of substances or wastes into the
         Environment or otherwise relating to the handling of substances or
         wastes or the clean-up or remediation thereof.



                                       20
"EQUITY ISSUE"

means any issue of rights, shares or equity instruments of any kind (including
for the avoidance of doubt debt instruments that are redeemable only in shares
and which do not in any circumstances give rise to redemptions or repayments
(whether in whole or in part) in cash), made or entered into by any member of
the Group (but in relation to any member of the Cegetel Group, Transtel, and SIT
prior to the SIT Repayment Date in relation to secondary Equity Issues only) but
excluding:

(a)    (without double counting) any such issue, the proceeds of which
       constitute VUE Excluded Equity Issue Proceeds or the amount of the VUE
       Retention;

(b)    (without double counting) any such issue, the proceeds of which
       constitute the Canal+ Disposal Proceeds Amount;

(c)    (without double counting) any such issue, the proceeds of which
       constitute the Games Disposal Proceeds Amount;

(d)    any such issue made or entered into pursuant to a Relevant Intra Group
       Disposal or entered into pursuant to an employee share purchase plan;

(e)    any such issue made or entered into by any member of the Maroc Telecom
       Group; and

(f)    any such issue which forms part of the VU/SIT Loan (as defined in the New
       Facility Agreement as at its date).

"EURIBOR"

means:

(a)    the rate per annum which appears on Page EURIBOR 01 on the Reuters
       Screen; or

(b)    if no such rate is available for the relevant period, the rate (expressed
       as a percentage) determined by the Facility Agent to be the arithmetic
       mean of the rates per annum (rounded upwards to four decimal place) as
       supplied to the Facility Agent at its request quoted by the Reference
       Banks to leading banks in the European interbank market,

at or about 11.00 a.m. on the applicable Rate Fixing Day for the offering of
deposits in Euros for a period comparable to the Interest Period of the relevant
Loan and in this definition "PAGE EURIBOR 01" means the display designated as
Page EURIBOR 01 on the Reuters Screen (or such other pages as may replace Page
EURIBOR 01 on that service or such other service as may be nominated by the
Banking Federation of the European Union (including the Reuters Monitor Money
Rates Service) as the information vendor for the purposes of displaying Banking
Federation of the European Union Interest Settlement Rates for deposits in
Euro).

                                       21

        "EURO" OR "E"

        means the single currency of the Participating Member States.

        "EVENT OF DEFAULT"

        means an event specified as such in Clause 20 (Default).

        "EXCLUDED MUSIC GROUP ENTITY"

        means each of:

        (a)    Centenary Delta B.V. and all non-U.S. subsidiaries thereof; and

        (b)    UPIH 2 BV,

        if such entity will become a Foreign Subsidiary or will be held
        (directly or indirectly) by Universal Studios Holding I Corp, as a
        result of the Music Group Reorganisation.

        "EXISTING CEGETEL SHARES"

        means the share capital owned, directly or indirectly, by members of the
        Group (other than SII) in Cegetel at the Effective Date, representing
        not less than 43 per cent. of all of Cegetel's share capital.

        "FACILITY"

        means the credit facility made available under this Agreement.

        "FACILITY DISCHARGE DATE"

        means the date on which the Facility Agent (acting on the instructions
        of all the Lenders) notifies the Obligors' Agent in writing that all
        amounts outstanding under or in connection with the Facility have been
        irrevocably and unconditionally paid or discharged in full and the Total
        Commitments have been cancelled in full.

        "FACILITY OFFICE"

        means the office(s) notified by a Bank to the Facility Agent:

        (a)    on or before the date it becomes a Bank; or

        (b)    by not less than five Business Days' prior notice,

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

                                       22

        "FEE LETTER"

        means each letter dated the date of this Agreement between the Mandated
        Lead Arrangers and the Company (the "ARRANGEMENT FEE LETTER") and the
        Facility Agent and the Company (the "AGENCY FEE LETTER") setting out the
        amount of various fees referred to in Clause 23 (Fees).

        "FINAL MATURITY DATE"

        means the date which is the fifth anniversary of the date of this
        Agreement or, if that is not a Business Day, the immediately preceding
        Business Day.

        "FINANCE DOCUMENT"

        means:

        (a)    this Agreement;

        (b)    a Fee Letter;

        (c)    a Borrower Accession Deed;

        (d)    a Guarantor Accession Deed;

        (e)    a Novation Certificate; or

        (f)     any other document designated as such by the Facility Agent and
                the Obligors' Agent.

        "FINANCE PARTY"

        means a Mandated Lead Arranger, a Bank, the Facility Agent or the
        Security Agent.

        "FINANCIAL INDEBTEDNESS"

        means any indebtedness in respect of:

        (a)    moneys borrowed;

        (b)    any debenture, bond, note, loan stock or other security;

        (c)    any acceptance credit;

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

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

                                       23


        (f)    any lease (including, without limitation, an operation de
               credit-bail) entered into primarily as a method of raising
               finance or financing the acquisition of the asset leased;

        (g)     any currency swap or interest swap, cap or collar arrangements
                or any other derivative instrument;

        (h)     any amount raised under any other transaction having as a
                primary purpose the borrowing or raising of money; or

        (i)     any guarantee, indemnity or similar assurance against financial
                loss of any person.

        "FOREIGN SUBSIDIARY"

        means any subsidiary of any U.S. Obligor which is a controlled foreign
        corporation within the meaning of the Code.

        "GAMES"

        means the games business of Vivendi Universal Games, Inc. and Universal
        Interactive, Inc. and their respective Subsidiaries.

        "GAMES DISPOSAL AND "GAMES DISPOSAL PROCEEDS AMOUNT"

        have the meanings given to those terms in the New Facility Agreement as
        in force at its date.

        "GROUP"

        means the Company and its Subsidiaries (but, for the avoidance of doubt,
        while VE is not a Subsidiary of the Company, excluding any member of the
        VE Group).

        "GROUPE CANAL+"

        means Groupe Canal+ S.A.

        "GUARANTOR"

        means an Original Guarantor or a Subsidiary Guarantor.

        "GUARANTOR ACCESSION DEED"

        means a deed in the form of Schedule 9 with such amendments as the
        Facility Agent may approve or reasonably require.

        "HIGH YIELD NOTES"

        means the US$935,000,000 9.25% senior notes due 2010 and the
        E325,000,000 9.50% senior notes due 2010 issued by the Company on 8th
        April, 2003 pursuant to the Indenture.

                                       24

        "HOLDING COMPANY"

        means in relation to a person, an entity of which that person is a
        Subsidiary.

        "INDENTURE"

        means the indenture dated 8th April, 2003 entered into by the Company
        with respect to which the High Yield Notes have been or are to be
        issued.

        "INFORMATION MEMORANDUM"

        means the Information Memorandum dated January, 2002 and prepared by the
        Company in connection with this Agreement (as supplemented or amended
        from time to time).

        "INTEREST PERIOD"

        means each period determined in accordance with Clause 8 (Interest
        Periods).

        "INTRA GROUP LOAN"

        means, at any time, an Intra Group Loan for the purposes of the New
        Facility Agreement, as in force at its date.

        "INVESTMENT DOWNGRADING DATE"

        means a date on which the Company ceases to have an Investment Grade
        Rating.

        "INVESTMENT GRADE RATING"

        means each of a long term unsecured credit rating of Baa3 or better by
        Moody's and a long term unsecured credit rating of BBB- or better by
        S&P.

        "INVESTMENT GRADE RATING DATE"

        means a date on which the Company obtains an Investment Grade Rating.

        "JOINT VENTURES"

        means all joint venture entities (not being a member of the Group)
        whether a company, unincorporated firm, undertaking, joint venture,
        association, partnership or other entity in which any member of the
        Group has an interest from time to time.

        "LIBOR"

        means:

        (a)     the rate per annum which appears on Page LIBOR 01 on the Reuters
                Screen; or

        (b)     if no such rate appears on the Reuters Screen, the arithmetic
                mean (rounded upward to four decimal places) of the rates, as
                supplied to the Facility Agent at its request,

                                       25

        quoted by the Reference Banks to leading banks in the European interbank
        market,

        at or about 11.00 a.m. London time on the applicable Rate Fixing Day for
        the offering of deposits in the currency of the relevant Loan for a
        period comparable to the relevant Interest Period, and in this
        definition "Page LIBOR 01" means the display designated as Page LIBOR 01
        on the Reuters Screen (or such other pages as may replace Page LIBOR 01
        on that service or such other service as may be nominated by the British
        Bankers' Association as the information vendor for the purposes of
        displaying British Bankers' Association Interest Settlement Rates for
        deposits in that currency).

        "LIQUIDITY ANALYSIS"

        means a forecast for the Group (excluding for the purposes (other than
        in relation to dividends) any member of the Maroc Telecom Group and the
        Cegetel Group and SIT) (and provided in excel form) setting out:

        (a)     projections of the Group's cashflows for the period from the
                date of the forecast to:

               (i)   except during a Release Condition Period, the Final
                     Maturity Date; and

               (ii)  during a Release Condition Period, a date which is one year
                     from the date of such Liquidity Analysis,

               in each case as follows:

               (A)    a monthly breakdown of the Group's projected cashflows for
                      a period of six months from the date of the forecast;

               (B)    thereafter a quarterly breakdown of the Group's projected
                      cashflows for the period of the next nine months or for
                      the remaining period of the forecast; and

               (C)    thereafter a semi-annual breakdown of the Group's
                      projected cashflows for the remaining period of the
                      forecast, if any; and

        (b)    a reconciliation statement between the actual cashflows of the
               Group for the period elapsed since the date of the preceding
               Liquidity Analysis and the projected cashflows of the Group for
               that period contained in that Liquidity Analysis together with
               reasons for any deviations (other than deviations of an
               immaterial nature) demonstrated by such reconciliation statement.

        "LOAN"

        means the principal amount of each borrowing by a Borrower under this
        Agreement or the principal amount thereof from time to time outstanding.

        "MAJORITY BANKS"

        means, at any time, Banks:

                                       26


        (a)    whose participations in the Loans then outstanding and whose
               undrawn Commtiments then aggregate 66 2/3 per cent. or more of
               all the Loans then outstanding; or

        (b)    if there are no Loans then outstanding, whose Commitments then
               aggregate 66 2/3 per cent. or more of the Total Commitments; or

        (c)    if there are no Loans then outstanding and the Total Commitments
               have been reduced to nil, whose Commitments aggregated 66 2/3 per
               cent. or more of the Total Commitments immediately before the
               reduction.

        "MANDATORY COST"

        means the cost imputed to the Banks of compliance in relation to this
        Agreement with:

        (a)    the cash ratio and special deposit requirements of the Bank of
               England and/or the banking supervision or other costs imposed by
               the United Kingdom Financial Services Authority, all as
               determined in accordance with Schedule 6; and

        (b)    any reserve asset requirements of the European Central Bank.

        "MAROC TELECOM"

        means Maroc Telecom S.A.

        "MAROC TELECOM CASH POOLING DATE"

        means the date on which all of the following events occur:

        (i)    there are no contractual restrictions or provisions (including,
               without limitation, pre-emption rights) between shareholders of
               Maroc Telecom in force at the date of this Agreement or under a
               Maroc Telecom Excluded Financing which restrict, or which would
               be triggered upon, the granting of a guarantee and Cash Pooling
               Hub Security pursuant to this Agreement;

        (ii)   Maroc Telecom has become a Guarantor under this Agreement and has
               granted Cash Pooling Hub Security; and

        (iii)  Maroc Telecom enters into the Cash Management and IGL
               Arrangements (as defined in the New Facility Agreement as in
               force at its date) for the purpose of borrowing money from the
               Company or any Cash Pooling Hub.

        "MAROC TELECOM DATE"

        means the date upon which the Company owns no less than 51 per cent. of
        the shares in Maroc Telecom pursuant to an acquisition permitted under
        this Agreement, unless such acquisition is financed by a Maroc Telecom
        Excluded Financing (as defined in the New Facility Agreement at its
        date).

                                       27


        "MAROC TELECOM GROUP"

        means Maroc Telecom and its Subsidiaries.

        "MAROC TELECOM SHAREHOLDERS AGREEMENT"

        means the Convention d'actionnaires among the Company, Le Gouvernement
        du Royaume de Maroc and Itissalat Al-Maghrib executed by the Company on
        20th December, 2000, as amended from time to time.

        "MASTER SECURITY AGREEMENT"

        means the pledge and security agreement substantially in the form
        initialled on or about the date of the New Facility Agreement by the
        Obligor's Agent and the Facility Agent or otherwise in the agreed form
        between the Grantors (as defined therein) and the Facility Agent.

        "MATERIAL ADVERSE EFFECT"

        means a material adverse effect on the ability of any Obligor to perform
        any of its payment obligations or to perform any other of its material
        obligations under any of the Finance Documents.

        "MATERIAL SUBSIDIARY"

        means, at any time:

        (a)    any Subsidiary Borrower or any Subsidiary Guarantor; and

        (b)    any other Subsidiary of the Company which is consolidated by way
               of global integration (integration globale) in the audited
               consolidated accounts of the Group:

               (i)    whose total assets (consolidated in the case of a
                      Subsidiary which itself has a Subsidiary) represent not
                      less than 5 per cent. of consolidated total assets of the
                      Group (as shown in the then latest consolidated accounts
                      of the Group); and/or

               (ii)   whose operating profits (after adding back amortisations,
                      depreciation and recoveries limited to ordinary
                      operations) (consolidated in the case of a Subsidiary
                      which itself has a Subsidiary) represent not less than 5
                      per cent. of EBITDA (as defined in Clause 19.1) (Financial
                      covenant definitions) (as shown in the then latest
                      consolidated accounts of the Group),

               in the case of a Subsidiary, as calculated from the then latest
               accounts (consolidated or, as the case may be, unconsolidated),
               audited if prepared, of that Subsidiary; and

        (c)    any other Subsidiary of the Borrower (the "RECEIVING SUBSIDIARY")
               to which after the date of the latest audited consolidated
               accounts of the Group is transferred either:

                                       28


               (i)   all or substantially all the assets of another Subsidiary
                     which immediately prior to the transfer was a Material
                     Subsidiary (the "DISPOSING SUBSIDIARY"); or

               (ii)  sufficient assets that the receiving Subsidiary would have
                     been a Material Subsidiary had the transfer occurred on or
                     before the date of the latest audited consolidated accounts
                     of the Group;

               in the case of (i) above the disposing Subsidiary shall forthwith
               upon the transfer taking place cease to be a Material Subsidiary.

        "MATSUSHITA SHAREHOLDER AGREEMENTS" MEANS:

        (a)    the stockholder's agreement among Centenary Holding N.V., MHI
               Investment Corporation and Centenary International B.V. (formerly
               Seagram International B.V.) dated as of 9th December, 1998, as
               amended from time to time; and

        (b)    the amended and restated stockholders' agreement among Universal
               Studios Holding I Corp., MEI Holding Inc., Vivendi Universal
               Canada Inc. (formerly known as The Seagram Company Ltd.) and
               Vivendi Universal Holding IV Corp. (formerly known as Seagram
               Developments Inc.) dated as of 9th December, 1998, as amended
               from time to time.

        "MATURITY DATE"

        means the last day of the Interest Period of a Loan.

        "MOODY'S"

        means Moody's Investors' Services, Inc.

        "MUSIC GROUP"

        means all of the entities under the common ownership of the Company
        which engage in the acquisition, manufacture, marketing, sale and
        distribution of recorded music and music publishing.

        "MUSIC GROUP REORGANISATION"

        has the meaning given to that term in the New Facility Agreement as in
        force at its date.

        "NET ASSETS DISPOSAL PROCEEDS"

        means, in relation to any Assets Disposal (other than in relation to the
        VE Shares Disposal, any Cegetel Disposal and any SIT Disposal) made
        prior to an Investment Grade Rating Date (subject always to Clause 7.4),
        the amount of:

                                       29


        (g)    the cash proceeds or purchase consideration actually received in
               cash by a member of the Group (including, without limitation,
               pursuant to earn out provisions) as consideration for a disposal
               of any Asset including (without double counting) the amount of
               any Intra Group Loan or VUE Loan (in respect of which a member of
               the Group being sold pursuant to such disposal is the borrower
               under that Intra Group Loan or VUE Loan) which is repaid to
               continuing members of the Group using funds obtained from outside
               the Group;

        (h)    any non-cash consideration actually received by a member of the
               Group under any sale and purchase agreement relating to such
               disposal; and

        (i)    any other amount actually received or recovered by a member of
               the Group in cash under any sale and purchase agreement and/or
               ancillary documents relating to such disposal,

        in each case, net of:

        (i)    any Taxes and reasonable third party costs and expenses
               incidental or fairly attributable to the disposal, receipt or
               recovery;

        (ii)   in the case of a disposal of all or part of the interests held by
               any member of the Group in VUE or any Subsidiary of VUE or of any
               other asset of VUE or any Subsidiary of VUE, net of any tax
               indemnity due and payable by the Company to USAi or payment in
               lieu thereof pursuant to the arrangements relating thereto in
               force at the date of the New Facility Agreement; and

        (iii)  the aggregate amount of any indemnity or breach of warranty
               claims under any sale and purchase agreement and/or ancillary
               documents related to any disposal actually paid by a member of
               the Group provided always that the maximum aggregate amount of
               any such deduction in respect of any disposal shall not exceed 10
               per cent. of the aggregate of all amounts referred to in
               paragraphs (a) to (c) above in respect of all disposals which are
               made in accordance with this Agreement on or prior to the date
               for payment pursuant to Clause 7.13 (Timing of mandatory
               prepayments and cancellations and Receipt Account) of the
               proceeds which are the subject of such deduction and provided
               further that no Finance Party shall be under any obligation to
               repay or reimburse any Net Proceeds (or corresponding amounts)
               prepaid under this Agreement,

        but excluding:

        (A)    (without double counting) any VUE Excluded Disposal Proceeds and
               any VUE Retention;

        (B)    (without double counting) any such proceeds constituting the
               Canal+ Disposal Proceeds Amount; and

        (C)    (without double counting) any such proceeds constituting the
               Games Disposal Proceeds Amount.

                                       30


        For the purposes of this definition, the amount of proceeds actually
        received by a member of the VUE Group pursuant to any Film Rights
        Securitization (as defined in the VUE Bridge Extension) shall be equal
        to the amount of such proceeds as calculated in accordance with the
        definition of Net Proceeds in the VUE Bridge Extension.

        For the purposes of any mandatory prepayment, no less than 70 per cent.
        of the Net Assets Disposal Proceeds for any disposal of any member of
        the VUE Group or the Music Group will be deemed to have been paid in
        cash at the time of such disposal, notwithstanding that less than this
        amount may actually have then been received.

        "NET CEGETEL DISPOSAL PROCEEDS"

        means, in relation to any Cegetel Disposal made prior to an Investment
        Grade Rating Date (subject always to Clause 7.4):

        (a)    the cash proceeds or purchase consideration actually received in
               cash by a member of the Group (including, without limitation,
               pursuant to earn-out provisions) as consideration for such
               disposal including (without double-counting) the amount of any
               Intra Group Loans (in respect of which a member of the Group
               being sold pursuant to such disposal is a borrower under that
               Intra Group Loan) which is repaid to continuing members of the
               Group using funds obtained from outside the Group;

        (b)    any non-cash consideration actually received by a member of the
               Group under any sale and purchase agreement relating to such
               disposal; and

        (c)    any other amount actually received or recovered by a member of
               the Group under any sale and purchase agreement and/or ancillary
               documents related to such disposal;

        in each case net of:

        (i)    any Taxes and reasonable third party costs and expenses
               incidental or fairly attributable to the disposal, receipt or
               recovery; and

        (ii)   the aggregate amount of any indemnity or breach of warranty
               claims under any sale and purchase agreement and/or ancillary
               documents related to any disposal actually paid by a member of
               the Group provided always that the maximum aggregate amount of
               any such deduction in respect of any disposal shall not exceed 10
               per cent. of the aggregate of all amounts referred to in
               paragraphs (a) to (c) above in respect of all disposals which are
               made in accordance with this Agreement on or prior to the date
               for payment pursuant to Clause 7.13 of the proceeds which are the
               subject of such deduction and provided further that no Finance
               Party shall be under any obligation to repay or reimburse any Net
               Proceeds (or corresponding amounts) prepaid under this Agreement.

        "NET DIVIDEND PROCEEDS"

        means the amount of any cash dividend (net of any Taxes paid by the
        Company in relation to such dividend) declared by the Company prior to
        an Investment Grade Rating Date (subject always to Clause 7.4) on or in
        respect of its share capital.

                                       31

        "NET EQUITY ISSUE PROCEEDS"

        means, in relation to an Equity Issue made prior to an Investment Grade
        Rating Date (subject always to Clause 7.4), any proceeds received in
        cash by or for the account of any member of the Group net of any Taxes,
        or reasonable third party costs and expenses payable in connection with
        that Equity Issue.

        "NET PROCEEDS"

        means Net Dividend Proceeds, Net Assets Disposal Proceeds, Net VE Shares
        Disposal Proceeds, Net Cegetel Disposal Proceeds, Net SIT Disposal
        Proceeds or Net Equity Issue Proceeds, as the context requires.

        "NET SIT DISPOSAL PROCEEDS"

        means, in relation to any SIT Disposal made prior to an Investment Grade
        Rating Date (subject always to Clause 7.4):

        (a)    the cash proceeds or purchase consideration actually received in
               cash by a member of the Group (including, without limitation,
               pursuant to earn-out provisions) as consideration for such
               disposal including (without double-counting) the amount of any
               Intra Group Loans (in respect of which a member of the Group
               being sold pursuant to such disposal is the borrower under that
               Intra Group Loan) which is repaid to continuing members of the
               Group using funds obtained from outside the Group;

        (b)    any non-cash consideration actually received by a member of the
               Group under any sale and purchase agreement relating to such
               disposal; and

        (c)    any other amount actually received or recovered by a member of
               the Group under any sale and purchase agreement and/or ancillary
               documents related to such disposal;

        in each case net of:

        (i)    any Taxes and reasonable third party costs and expenses
               incidental or fairly attributable to the disposal, receipt or
               recovery; and

        (ii)   the aggregate amount of any indemnity or breach of warranty
               claims under any sale and purchase agreement and/or ancillary
               documents related to any disposal actually paid by a member of
               the Group provided always that the maximum aggregate amount of
               any such deduction in respect of any disposal shall not exceed 10
               per cent. of the aggregate of all amounts referred to in
               paragraphs (a) to (c) above in respect of all disposals which are
               made in accordance with this Agreement on or prior to the date
               for payment pursuant to Clause 7 (Prepayment and Cancellation) of
               the proceeds which are the subject of such deduction and provided
               further that no Finance Party shall be under any obligation to
               repay or reimburse any Net Proceeds (or corresponding amounts)
               prepaid under this Agreement,

                                       32

        to the extent such amounts are not used to repay the Non Recourse
        Financing in accordance with its terms.

        "NET VE SHARES DISPOSAL PROCEEDS"

        means, in relation to the disposal of VE Shares made prior to an
        Investment Grade Rating Date (subject always to Clause 7.4):

        (a)    the cash proceeds or purchase consideration actually received in
               cash by a member of the Group (including, without limitation,
               pursuant to earn out provisions) as consideration for such
               disposal including without double counting the amount of any
               Intra Group Loan (in respect of which a member of the Group being
               sold pursuant to such disposal is the borrower under that Intra
               Group Loan) which is repaid to continuing members of the Group
               using funds obtained from outside the Group; and

        (b)    any other amount actually received or recovered by a member of
               the Group under any sale and purchase agreement and/or ancillary
               documents related to such disposal,

        in each case net of any taxes and reasonable third party costs and
        expenses incidental or fairly attributable to the disposal, receipt or
        recovery.

        "NEW FACILITY AGREEMENT"

        means the E2,500,000,000 credit agreement dated or to be dated on or
        about the Effective Date and made between the Company, as borrower,
        Societe Generale as facility agent and others.

        "NEW INVESTORS"

        has the meaning given to it in the VE Share Pledge and Escrow Agreement.

        "NON RECOURSE FINANCING"

        means the E1,300,000,000 facility agreement between SIT and certain
        banks dated 6th December, 2002.

        "NON-VUE GROUP"

        means the Group excluding the VUE Group.

        "NOVATION CERTIFICATE"

        has the meaning given to it in Clause 29.3 (Procedure for novations).

        "OBLIGOR"

        means each of the Company, each Borrower and each Guarantor.

                                       33


        "OPTIONAL CURRENCY"

        means Sterling, United States Dollars, Japanese Yen and any other
        currency (other than Euros) which is for the time being freely
        transferable and convertible into Euros, deposits of which are readily
        available in the European interbank market and which has been approved
        in writing by the Facility Agent (acting on the instructions of all the
        Banks).

        "ORIGINAL EURO AMOUNT"

        in relation to a Loan, means:

        (a)    if that Loan is denominated in Euros, the amount of that Loan; or

        (b)    if that Loan is denominated in an Optional Currency, the
               equivalent in Euros of the amount of that Loan at the Spot Rate
               of Exchange three Business Days before its Drawdown Date.

        "ORIGINAL GROUP ACCOUNTS"

        means the audited consolidated accounts of the Group for the year ended
        31st December, 2000.

        "ORIGINAL LIQUIDITY ANALYSIS"

        means a liquidity analysis of the Group dated 2nd April, 2003.

        "PARTICIPATING MEMBER STATE"

        means a member state of the European Community that adopts or has
        adopted the Euro as its currency in accordance with legislation of the
        European Union relating to European Economic and Monetary Union.

        "PARTY"

        means a party to this Agreement.

        "PERMITTED JOINT VENTURE"

        means a Joint Venture in which only a member of the VUE Group, a member
        of the Music Group or Studio Canal has an interest, the primary purpose
        of which is to acquire Product or interests therein (including
        distribution rights) in the ordinary course of business and which does
        not, or could not reasonably be expected to, have a Material Adverse
        Effect (as defined in the New Facility Agreement at its date) or to
        jeopardise the guarantees given to the Banks under the Finance Documents
        or the Banks' security under the Security Documents.

        "PRODUCTS"

        means any music (including mail order music), music copyright, motion
        picture, television programming, film, videotape, video clubs, DVD
        manufactured or distributed or any other

                                       34


        product produced for theatrical, non-theatrical or television release or
        for release in any other medium, in each case whether recorded on film,
        videotape, cassette, cartridge, disc or on or by any other means,
        method, process or device whether now known or hereafter developed, with
        respect to which a member of the Group:

        (a)    is an initial copyright owner; or

        (b)    acquires (or will acquire upon delivery) an equity interest or
               distribution rights.

        "PROJECT FINANCE INDEBTEDNESS"

        means any Financial Indebtedness to finance a project incurred by a
        member of the Group (the "RELEVANT GROUP MEMBER") which has no
        activities or material assets other than those comprised in the project
        and in respect of which the person to whom that Financial Indebtedness
        is owed by the relevant Group member has no recourse whatsoever to any
        member of the Group for the repayment of or payment of any sum relating
        to that Financial Indebtedness other than:

        (a)    recourse to the relevant Group member for amounts limited to its
               interest in the aggregate cash flow or net cash flow (other than
               historic cash flow or historic net cash flow) from the project;
               and/or

        (b)    recourse to the relevant Group member for the purpose only of
               enabling amounts to be claimed in respect of that Financial
               Indebtedness on an enforcement of any Security Interest given by
               the borrower over the assets comprised in that project to secure
               the Financial Indebtedness; and/or

        (c)    recourse to a shareholder of the relevant Group member for the
               purpose only of enforcement of any Security Interest given by
               that shareholder over shares (or the like) of the borrower to
               secure that Financial Indebtedness.

        "RATE FIXING DAY"

        means:

        (a)    the second Business Day before the first day of the Interest
               Period for a Loan; or

        (b)    in the case of a Loan in Euros only, the second TARGET Day before
               the first day of the Interest Period for that Loan; or

        (c)    in the case of a Loan in Sterling only, the first day of the
               Interest Period for that Loan,

        or, in each case, such other day on which it is market practice in the
        relevant interbank market for prime banks to give quotations for
        deposits in the relevant currency for delivery on the first day of the
        relevant Interest Period, as determined by the Facility Agent.

        "RECEIPT ACCOUNT"

        means an interest bearing blocked and secured account in France in the
        name of the Security Agent.

                                       35

        "REFERENCE BANKS"

        means, subject to Clause 29.6 (Reference Banks), the Facility Agent, BNP
        Paribas and Deutsche Bank Luxembourg S.A.

        "RELEASE CONDITION DATE"

        means a date on which the Facility Agent (acting on the instructions of
        the Majority Banks (not to be unreasonably delayed)) notifies the
        Obligors' Agent that each of the following conditions has been
        fulfilled:

        (a)    the Company has an Investment Grade Rating for a continuous
               period of 90 days; and

        (b)    the Facility Agent has received a certificate signed by two
               officers of the Company, one of whom shall be the Chief Executive
               Officer or the Chief Financial Officer of the Company, confirming
               that during such continuous period of 90 days referred to in (a)
               above, no Default has occurred and is continuing.

        "RELEASE CONDITION PERIOD"

        means each period of time:

        (a)    commencing on a Release Condition Date; and

        (b)    ending on the Business Day immediately prior to the next
               Investment Downgrading Date to occur.

        "RELEVANT INTRA GROUP DISPOSAL"

        means the disposal of an asset:

        (a)    by an Obligor to another Obligor which could not reasonably be
               expected to have a Material Adverse Effect or to jeopardise the
               guarantees given to the Banks under the Finance Documents or the
               Banks' security under the Security Documents;

        (b)    by a member of the Group which is not an Obligor to an Obligor;

        (c)    by a member of the Group which is not an Obligor (the
               "TRANSFEROR") to another member of the Group which is not an
               Obligor (the "TRANSFEREE") where the percentage of the share
               capital of the Transferee owned by the Company (directly or
               indirectly) is not less than the percentage of the share capital
               of the Transferor owned by the Company (directly or indirectly);

        (d)    between a member of the Non-VUE Group and any member of the VUE
               Group, but only (notwithstanding paragraphs (a) to (c) above) for
               cash management purposes in accordance with the New Facility
               Agreement (so long as it is in force) or VUE Excluded Disposals,
               or any disposal of cash inherent in Excluded Financial
               Indebtedness, as defined in the New Facility Agreement at its
               date;

                                       36


        (e)    by way of a transaction permitted pursuant to sub-paragraphs
               (b)(iv) or (v) of clause 19.18 (Mergers and acquisitions) of the
               New Facility Agreement; or

        (f)    pursuant to the Music Group Reorganisation.

        "REQUEST"

        means a request made by the Obligors' Agent for a Loan, substantially in
        the form of Schedule 3.

        "RESTATEMENT AGREEMENT"

        means an amendment and restatement agreement relating to this Agreement,
        dated 13th May, 2003 and made between the Company, the Facility Agent
        and others.

        "S&P"

        means Standard & Poor's Corporation.

        "SECURITY AGENT"

        means Societe Generale as security agent, appointed under the Security
        Sharing Agreement (including, as the context requires, its permitted
        successors and assigns).

        "SECURITY DOCUMENT"

        means each document listed in Schedule 10 (Security Documents), the
        security document required under Clause 7.14(m) (Miscellaneous
        provisions) and any other documents designated as such by the Facility
        Agent and the Obligors' Agent.

        "SECURITY INTEREST"

        means any:

        (a)    hypotheque, nantissement, privilege, cession de creance par
               bordereau Dailly, "gage-especes" any surete reelle or droit de
               retention; or

        (b)    other mortgage, pledge, lien, charge (whether fixed or floating),
               assignment, hypothecation or security interest or any other
               agreement or arrangement having the effect of conferring
               security.

        "SECURITY RELEASE CONDITION DATE"

        means the date on which the Security Agent (acting on the instructions
        of the Majority Banks (not to be unreasonably delayed)) notifies the
        Obligors' Agent and the Facility Agent that each of the following
        conditions has been fulfilled:

        (a)    the Company has an Investment Grade Rating for a continuous
               period of 180 days; and

                                       37


        (b)    the Facility Agent has received a certificate signed by two
               officers of the Company, one of whom shall be its Chief Executive
               Officer or the Chief Financial Officer of the Company, confirming
               that during such continuous period of 180 days referred to in (a)
               above, no Default has occurred and is continuing.

        "SECURITY RELEASE CONDITION PERIOD"

        means each period of time:

        (a)    commencing on a Security Release Condition Date; and

        (b)    ending on the Business Day immediately prior to the next
               Investment Downgrading Date to occur.

        "SECURITY SHARING AGREEMENT"

        means the agreement between, inter alia, the Company, the Banks, the
        lenders under the New Facility Agreement and the Security Agent, dated
        on or about the Effective Date.

        "SFR"

        means Societe Francaise du Radiotelephone S.A.

        "SFR SHAREHOLDERS' AGREEMENT"

        means the shareholders' agreement among the Company, Compagnie
        Financiere pour le Radiotelephone, Vodafone Europe Holdings B.V.,
        Vodafone France and Vodafone Group plc dated as of 10th October, 1994 as
        amended from time to time.

        "SIT"

        means Societe d'Investissement pour la Telephonie S.A.

        "SIT DISPOSAL"

        means the disposal of all or any of the shares in, or assets or business
        of, SIT.

        "SIT REPAYMENT DATE"

        means the date on which the Non Recourse Financing is repaid (or
        prepaid) and cancelled in full.

        "SPOT RATE OF EXCHANGE"

        means the European Central Bank fixing rate for the notional purchase of
        the relevant Optional Currency with Euros at or about 11.00 a.m. on a
        particular day (or, if no such rate is available, the Facility Agent's
        spot rate of exchange for that notional purchase at or about that time).

                                       38


        "STERLING" OR "L"

        means the lawful currency for the time being of the United Kingdom.

        "STUDIO CANAL"

        means Studio Canal S.A.

        "SUBORDINATION AGREEMENT"

        means each of:

        (a)    a subordination agreement dated on or about the date of the
               Amendment Agreement, governed by English law and made between the
               Obligor's Agent, the Security Agent and others;

        (b)    a subordination agreement dated on or about the date of the
               Amendment Agreement governed by New York law and made between the
               Obligor's Agent, the Security Agent and others; and

        (c)    any other document which is a Subordination Agreement under and
               as defined in the New Facility Agreement,

        and any other document designated in writing as such by the Facility
        Agent and the Obligors' Agent.

        "SUBSIDIARY"

        means a person from time to time of which a person has direct or
        indirect control (in the case of a company incorporated in France,
        within the meaning of Article L.233-3 I.1 and I.2 of the Nouveau Code de
        Commerce (as the same is in force on the date of this Agreement)) or
        which owns directly or indirectly more than fifty per cent. (50%) of the
        share capital or similar right of ownership or voting power.

        "SUBSIDIARY BORROWER"

        means any direct or indirect Subsidiary of the Company which becomes a
        Borrower in accordance with Clause 29.4 (Accession of Subsidiary
        Borrower).

        "SUBSIDIARY BORROWER LIMIT"

        means the aggregate principal amount of Loans which a Subsidiary
        Borrower may at any one time have outstanding, as stated in the Borrower
        Accession Deed for that Subsidiary Borrower.

                                       39


        "SUBSIDIARY GUARANTOR"

        means any direct or indirect Subsidiary of the Company which becomes a
        Guarantor in accordance with Clause 29.5 (Accession of Subsidiary
        Guarantor).

        "SUPER MAJORITY BANKS"

        means at any time, Banks:

        (a)    whose share in the Original Euro Amount of outstanding Loans and
               whose undrawn Commitments then aggregate 85 per cent. or more of
               the aggregate of Original Euro Amount of all outstanding Loans
               and the undrawn Commitments of all the Lenders;

        (b)    if there is no Loan outstanding, whose undrawn Commitments then
               aggregate 85 per cent. or more of the Total Commitments; or

        (c)    if there is no Loan then outstanding and the Total Commitments
               have been reduced to zero, whose Commitments aggregated 85 per
               cent. or more of the Total Commitments immediately before the
               reduction.

        "TARGET DAY"

        means a day on which the Trans-European Automated Real-Time Gross
        Settlement Express Transfer (TARGET) System is open.

        "TAX"

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

        "TOTAL COMMITMENTS"

        means the aggregate for the time being of the Commitments, being
        E3,000,000,000 at the date of this Agreement.

        "TRANSTEL"

        means Transtel S.A.

        "TRANSTEL SHAREHOLDERS AGREEMENT"

        means the shareholders' agreement among the Company, Compagnie
        Transatlantique de Radiotelephonie Cellulaire, Societe de
        Radiotelephonie Cellulaire, SBC International Inc., and SBC
        International - Societe de Radiotelephonie Cellulaire Inc. dated as of
        May 14, 1997, as amended from time to time.

        "UMGT"

        means Universal Music Group Treasury S.A.S.

                                       40


        "USAI"

        means USA Interactive Inc.

        "UPIH 2BV"

        means Universal Pictures International Holdings II B.V.

        "VE"

        means Veolia Environment S.A. (formerly known as Vivendi Environnement
        S.A.).

        "VE B SHARES"

        means each or any of "Actions B" as defined in the VE Shares Pledge and
        Escrow Agreement.

        "VE GROUP"

        means VE and its Subsidiaries.

        "VE SHARES"

        means the shares in the issued share capital of VE owned directly or
        indirectly by the Company (being, at the Effective Date, 20.4 per cent
        of those shares less any shares which have, prior to the Effective Date,
        been the subject of an exercise of a call option under an acquisition
        and subscription agreement dated 24th June, 2002 and made between the
        Company and certain financial institutions named therein, as amended
        from time to time).

        "VE SHARES DISPOSAL"

        means a disposal by the Company of any VE Shares.

        "VE SHARE PLEDGE AND ESCROW AGREEMENT"

        means the escrow and share pledge agreement dated 24th November, 2002
        entered into by the Company, VE and the Escrow Agent, Account Holder and
        Calculation Agent and New Investors (each as defined therein) with
        respect to security over the VE Shares, as amended on 7th February, 2003
        and as may be further amended from time to time.

        "VTI"

        means Vivendi Telecom International S.A.

        "VU CANADA"

        means Vivendi Universal Canada, Inc.

        "VUE"

        means Vivendi Universal Entertainment LLLP.

                                       41


        "VUE BORROWER CO"

        means VU-VUE Holding Partnership LLP, a Delaware limited liability
        partnership.

        "VUE BRIDGE EXTENSION"

        means the U.S.$1,620,000,000 amended and restated agreement dated as of
        25th November, 2002 granted in favour of VUE as amended, supplemented or
        otherwise modified.

        "VUE BRIDGE REFINANCING"

        means an issue or issues of debt instruments (including any debt, bank
        or capital markets issue or securitisation by any member of the VUE
        Group (or any trust or other entity established for the purposes of a
        securitisation)) in an aggregate principal amount of no more than
        U.S.$1,620,000,000 (net of reserves required to be funded with, or fees
        payable with, the proceeds thereof), for the purpose of raising finance
        solely in order to refinance (in full or in part) the VUE Bridge
        Extension and any refinancing or refinancings thereof.

        "VUE DATE"

        has the meaning given to that term in the New Facility Agreement as in
        force at its date.

        "VUE EXCLUDED DISPOSAL"

        has the meaning given to that term in the New Facility Agreement as in
        force at its date.

        "VUE EXCLUDED DISPOSAL PROCEEDS"

        means, prior to the VUE Date, any proceeds from the disposal of any
        assets of any member of the VUE Group (i) being the disposal of proceeds
        under the VUE Bridge Extension, VUE Incremental Indebtedness or any VUE
        Bridge Refinancing; (ii) which are required to be applied by way of
        mandatory prepayment or cash collateral to the VUE Bridge Extension, VUE
        Incremental Indebtedness or any VUE Bridge Refinancing and any proceeds
        the distribution of which is otherwise restricted pursuant to the VUE
        Bridge Extension, VUE Incremental Indebtedness or any VUE Bridge
        Refinancing but not including any such proceeds required to be so
        applied on or prior to the VUE Date but not so applied on or prior to
        the VUE Date; or (iii) which are received pursuant to a VUE Excluded
        Disposal.

        "VUE EXCLUDED EQUITY ISSUE PROCEEDS"

        means, prior to the VUE Date, in relation to a VUE equity issue, any
        proceeds required to be applied by way of mandatory prepayment or cash
        collateral of the VUE Bridge Extension, VUE Incremental Indebtedness or
        any VUE Bridge Refinancing and any proceeds the distribution of which is
        otherwise restricted pursuant to the VUE Bridge Extension, any VUE
        Bridge Refinancing, or VUE Incremental Indebtedness but not including
        any such proceeds required to be so applied on or prior to the VUE Date
        and not so applied on or prior to the VUE Date.

                                       42


        "VUE FOREIGN LENDER"

        has the meaning given to that term in the New Facility Agreement as in
        force at its date.

        "VUE GROUP"

        means VUE and each of its Subsidiaries.

        "VUE INCREMENTAL INDEBTEDNESS"

        means debt proceeds raised by VUE or its Subsidiaries up to an aggregate
        outstanding amount at any time of U.S.$600,000,000 (or equivalent in
        other currencies) which (i) is without recourse as to security or
        guarantees from the Company or any other member of the Non-VUE Group,
        (ii) the terms of which, in respect of the making of any distributions
        in cash or loans or otherwise disposing of assets by any member of the
        VUE Group to a person outside the VUE Group is no more restrictive than
        the terms of the VUE Bridge Extension or VUE Bridge Refinancing and
        (iii) does not contain any restriction or prohibition which conflict
        with this Agreement or the VUE Bridge Refinancing.

        "VUE LOAN"

        has the meaning given to that term in the New Facility Agreement as in
        force at its date.

        "VUE PARTNERSHIP AGREEMENT"

        means the agreement entered into as of 7th May, 2002 between the
        partners of VUE (amended by an agreement dated as of 25th November,
        2002).

        "VUE RETENTION"

        means at any time in respect of any Equity Issue or Assets Disposal made
        by any member of the Group, any amount of the Net Proceeds, as the case
        may be, which:



                                       43


         (a)      is required by any of the VUE Partnership Agreement, the VUE
                  Transaction Agreement and the Matsushita Shareholder
                  Agreements to be retained by any member of the VUE Group or
                  paid by any member of the VUE Group to any third party other
                  than a Bank pursuant to this Agreement;

         (b)      prior to the VUE Date, is required by any member of the VUE
                  Group to maintain liquidity in the ordinary course of
                  business; or

         (c)      prior to the VUE Date, is to be applied in the ordinary course
                  of business of any member of the VUE Group up to a maximum
                  aggregate principal amount of U.S.$25,000,000 (or equivalent
                  in other currencies).

         "VUE SUBORDINATION AGREEMENT"

         means the subordination agreement in the agreed form between, inter
         alia, VUE, the VUE Foreign Lenders and VUHIC.

         "VUE TRANSACTION AGREEMENT"

         means the amended and restated transaction agreement dated as of 16th
         December, 2001 and entered into between the Company, Universal Studios
         Inc., USA Networks, Inc., USANi LLC, Liberty Media Corporation and
         Barry Diller.

         "VUHIC"

         means Vivendi Universal Holding I Corp.

         "VUP"

         means Vivendi Universal Publishing S.A.

1.2      CONSTRUCTION

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

         (i)      an "AMENDMENT" includes a supplement, novation or re-enactment
                  and "AMENDED" is to be construed accordingly;

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

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

                  "BARCLAYS CAPITAL" or "SG INVESTMENT BANKING" is a reference
                  to the investment banking division of Barclays Bank PLC or
                  Societe Generale (respectively) and a reference to Barclays
                  Capital or SG Investment Banking shall include a reference to
                  Barclays Bank PLC or Societe Generale (as appropriate);

                                       44



                  "CONTROL" means the power to direct the management or policies
                  of a person, whether through the ownership of voting capital,
                  by contract or otherwise;

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

                  the "EQUIVALENT IN OTHER CURRENCIES" or like terms, unless
                  otherwise agreed or the context otherwise requires, means the
                  equivalent in one currency of an amount in another currency as
                  determined by the Facility Agent by reference to market rates
                  of exchange prevailing at the time.

                  a "MONTH" is a reference to a period starting on one day in a
                  calendar month and ending on the numerically corresponding day
                  in the next calendar month, except that:

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

                  (2)      if an Interest Period commences 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 it is to end;

                  for the purposes of the definitions of:

                  (i)      "NET ASSETS DISPOSAL PROCEEDS", "NET CEGETEL DISPOSAL
                           PROCEEDS", "NET SIT DISPOSAL PROCEEDS" and "NET VE
                           SHARES DISPOSAL PROCEEDS", the date on which such
                           Disposal is made shall mean the date on which an
                           agreement or contract relating to the relevant
                           Disposal has been executed or signed by the relevant
                           member of the Group (whether or not subject to any
                           conditions to closing or completion); and

                  (ii)     "NET EQUITY ISSUE PROCEEDS", the date on which an
                           Equity Issue is made shall mean the date on which the
                           instrument constituting the purchase or subscription
                           of such Equity Issue has been executed by the
                           relevant member of the Group and/or the subscriber as
                           the case may be (whether or not subject to any
                           condition to closing or completion);

                  a "PERSON" includes any individual, company, unincorporated
                  association or body of persons (including a partnership,
                  trust, joint venture or consortium), government, state,
                  agency, international organisation or other entity;

                  a "REGULATION" includes any decret, regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law but if not, being of a type with which the person
                  to which the regulation relates is accustomed to complying) of
                  any governmental, intergovernmental or supranational body,
                  agency, department or regulatory, self-regulatory or other
                  authority or organisation;

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

                                       45



         (iii)    a Clause or a Schedule is a reference to a clause of or a
                  schedule to this Agreement;

         (iv)     a person includes its successors, transferees, novatees and
                  assigns;

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

         (vi)     a time of day is a reference to Central European time.

(b)      Unless the contrary intention 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.

(c)      The index to and the headings in this Agreement are for convenience
         only and are to be ignored in construing this Agreement.

(d)      Unless expressly provided to the contrary in a Finance Document, a
         person who is not a party to a Finance Document may not enforce any of
         its terms under the Contracts (Rights of Third Parties) Act 1999.

(e)      This Agreement is to be entered into with the benefit of and subject to
         the Security Sharing Agreement.

(f)      Where an obligation under this Agreement is to be performed by an
         Obligor which is not a party to this Agreement, the Company shall
         ensure that that Obligor performs that obligation.

2.       FACILITY

2.1      FACILITY

(a)      Subject to the terms of this Agreement, the Banks agree to make Loans
         during the Commitment Period to the Borrowers up to an aggregate
         principal amount not exceeding the Total Commitments.

(b)      The aggregate Original Euro Amount of all outstanding Loans shall not,
         at any time, exceed the Total Commitments. No Bank is obliged to lend
         if it would cause the Original Euro Amount of its participations in the
         Loans to exceed its Commitment.

2.2      NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS

(a)      The obligations of a Finance Party under the Finance Documents are
         several. Failure of a Finance Party to carry out those obligations does
         not relieve any other Party of its obligations 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 a Finance Party under the Finance Documents are divided
         rights. A Finance Party may, except as otherwise stated in the Finance
         Documents, separately enforce those rights.

                                       46


2.3      NATURE OF A BORROWER'S OBLIGATIONS

(a)      The obligations of a Borrower under the Finance Documents are several.
         Except as provided in a Finance Document, no Borrower is liable for
         Loans made to another Borrower or any other obligation of any other
         Borrower arising under the Finance Documents.

(b)      Each Borrower and the Company irrevocably appoints the Obligors' Agent
         to act on its behalf as its agent in relation to the Finance Documents
         and irrevocably authorises:

         (i)      the Obligors' Agent on its behalf to supply all information
                  concerning itself contemplated by the Finance Documents to the
                  Finance Parties and to give all notices and instructions
                  (including Requests) and to make such agreements capable of
                  being given or made by any Borrower or the Company
                  notwithstanding that they may affect such Borrower or the
                  Company, without further reference to or the consent of such
                  Borrower; and

         (ii)     the Facility Agent to give any notice, demand or other
                  communication to such Borrower or the Company pursuant to the
                  Finance Documents to the Obligors' Agent on its behalf (and
                  any notice given to the Obligors' Agent for a Borrower or the
                  Company shall be deemed to have been given to that Borrower or
                  the Company (as appropriate)),

         and in all cases each Borrower and the Company shall be bound by
         notices and instructions given by or to the Obligors' Agent on its
         behalf and by acts done by the Obligors' Agent on its behalf as if the
         same had been given by or to, or done by, that Borrower or the Company
         itself.

(c)      Every act, omission, agreement, undertaking, settlement, waiver, notice
         or other communication given or made by the Obligors' Agent or given to
         the Obligors' Agent under this Agreement, or in connection with the
         Finance Documents (whether or not known to any other Obligor) shall be
         binding for all purposes on each Obligor concerned as if such Obligor
         had expressly made, given or concurred with the same. In the event of
         any conflict between any notices or other communications of the
         Obligors' Agent and any other Obligor, those of the Obligors' Agent
         shall prevail.

3.       PURPOSE

         Each Borrower shall apply the Loans towards its general corporate
         purposes. No proceeds of any Loan may be applied in or towards
         repayment or prepayment of any amounts outstanding under any High Yield
         Notes. Without affecting the obligations of any Obligor in any way, no
         Finance Party is bound to monitor or verify the application of any
         Loan.

4.       CONDITIONS PRECEDENT

4.1      DOCUMENTARY CONDITIONS PRECEDENT

         The first Request may not be delivered until the Facility Agent has
         notified the Obligors' Agent and the Banks that it has received all of
         the documents set out in Part 1 of Schedule 2

                                       47


         in form and substance satisfactory to the Facility Agent (which the
         Facility Agent shall do promptly on such receipt).

4.2      FURTHER CONDITIONS PRECEDENT

         The obligation of each Bank to participate in any Loan under Clause 5.3
         (Advance of Loan) is subject to the further conditions precedent that:

         (a)      on both the date of the Request and the Drawdown Date:

                  (i)      the representations and warranties in Clause 17
                           (Representations and Warranties) to be repeated on
                           those dates are correct in all material respects and
                           will be correct in all material respects immediately
                           after the Loan is made; and

                  (ii)     no Default is outstanding or could reasonably be
                           expected to result from the Loan;

         (b)      no event or series of events has occurred which, in the
                  reasonable opinion of the Majority Banks (acting in good
                  faith), is likely to have a Material Adverse Effect; and

         (c)      the making of the Loan would not cause Clause 2.1 (Facility)
                  to be contravened.

5.       DRAWDOWN

5.1      COMMITMENT PERIOD

         A Borrower may borrow a Loan on any Business Day during the Commitment
         Period if the Facility Agent receives from the Obligors' Agent, not
         later than 11.00 a.m. three Business Days (or four Business Days in the
         case of a Loan in an Optional Currency) before the proposed Drawdown
         Date, a duly completed Request. Each Request is irrevocable.

5.2      COMPLETION OF REQUESTS

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

         (a)      the Drawdown Date is a Business Day falling at least one month
                  prior to the Final Maturity Date;

         (b)      the Original Euro Amount of the Loan is;

                  (i)      a minimum of E50,000,000 and an integral multiple of
                           E25,000,000; or

                  (ii)     the balance of the undrawn Total Commitments (as
                           appropriate); or

                  (iii)    such other amount as the Facility Agent (acting on
                           the instructions of the Banks) and the Obligors'
                           Agent may agree;

         (c)      the amount selected under paragraph (b) above:

                                       48


                  (i)      does not cause Clause 2.1 (Facility) to be
                           contravened; and

                  (ii)     in the case of a Subsidiary Borrower, does not exceed
                           (when aggregated with any outstanding Loans borrowed
                           by that Subsidiary Borrower) the Subsidiary Borrower
                           Limit for that Subsidiary Borrower;

         (d)      in the case of a Loan for the Company, the currency selected
                  complies with Clause 10 (Optional Currencies) and in the case
                  of a Loan for a Subsidiary Borrower the currency is that in
                  which the Subsidiary Borrower Limit for that Borrower is
                  expressed;

         (e)      the Interest Period selected complies with Clause 8 (Interest
                  Periods) and does not extend beyond the Final Maturity Date;
                  and

         (f)      it identifies the Borrower to which the Loan is to be made and
                  the payment instructions specify an account of that Borrower
                  in Paris (in the case of Euros) or in the principal financial
                  centre of the country of the relevant currency (in the case of
                  an Optional Currency).

         Each Request must specify one Loan only and the Obligors' Agent may not
         deliver a Request for a Loan with a Drawdown Date which is within five
         Business Days of the Drawdown Date for another Loan. Unless otherwise
         agreed by the Facility Agent, no more than ten Loans may be outstanding
         at any time.

5.3      ADVANCE OF LOAN

         (a)      The Facility Agent shall promptly notify each Bank of the
                  details of the requested Loan and the amount of its
                  participation in that Loan.

         (b)      Subject to the terms of this Agreement, each Bank shall make
                  its participation in the Loan available to the Facility Agent
                  for the relevant Borrower in the currency in which it is to be
                  borrowed on the relevant Drawdown Date.

         (c)      The amount of each Bank's participation in each Loan will be
                  the proportion of the Loan which its Commitment bears to the
                  Total Commitments on the date of receipt by the Facility Agent
                  of the relevant Request.

6.       REPAYMENT

6.1      REPAYMENT

         Each Borrower shall repay each Loan made to it in full on its Maturity
         Date to the Facility Agent for the Banks.

6.2      RE-BORROWING

         Subject to the other terms of this Agreement, any amounts repaid under
         Clause 6.1 may be re-borrowed.

                                       49



7.       PREPAYMENT AND CANCELLATION

7.1      AUTOMATIC CANCELLATION

         The Commitment of each Bank shall be automatically cancelled at the
         close of business in Paris on the Final Maturity Date.

7.2      VOLUNTARY PREPAYMENT AND CANCELLATION

(a)      Subject to Clause 26.2(c) (Other indemnities) any Borrower may, by the
         Obligors' Agent giving not less than 10 days' prior notice (or such
         shorter period as the Majority Banks may agree) to the Facility Agent,
         prepay any Loan made to it in whole or in part on any day (but, if in
         part, in a minimum of E50,000,000 and an integral multiple of
         E50,000,000). Any prepayment of a Loan in part shall be applied against
         the participations of the Banks in that Loan pro rata.

(b)      The Obligors' Agent may, without penalty or obligation to indemnify, by
         giving not less than 10 days' prior notice (or such shorter period as
         the Majority Banks may agree) to the Facility Agent, cancel the
         unutilised portion of the Total Commitments in whole or in part (but,
         if in part, in a minimum of E50,000,000 and an integral multiple of
         E50,000,000). Any cancellation in part shall be applied against the
         Commitment of each Bank pro rata.

7.3      RIGHT OF PREPAYMENT

         If:

(a)      a Borrower is required to pay to a Bank any additional amounts under
         Clause 12 (Taxes); or

(b)      a Borrower is required to pay to a Bank any amount under Clause 14
         (Increased Costs),

         then, without prejudice to the obligations of any Obligor under those
         Clauses, the Obligors' Agent may, whilst the circumstances continue,
         give a notice of prepayment and (at the option of the Obligor's Agent)
         cancellation to that Bank through the Facility Agent. On the date
         falling three Business Days after the date the notice is given that
         Borrower shall prepay that Bank's participation in all the Loans made
         to it and the Bank's Commitment (if the Obligor's Agent has so
         requested in the notice) shall be cancelled.

7.4      MANDATORY PREPAYMENT FROM PROCEEDS - GENERAL

(a)      The provisions of Clauses 7.5 (Mandatory prepayment from Net Dividend
         Proceeds) to 7.9 (Mandatory Prepayment from Cegetel Disposals and SIT
         Disposals) (inclusive) and paragraphs (f) to (h) and (j) to (m) (each
         inclusive) of Clause 7.14 (Miscellaneous provisions) shall apply and
         remain in force at all times until the Final Maturity Date unless and
         until the Company obtains an Investment Grade Rating. If an Investment
         Grade Rating Date occurs and until the occurrence of an Investment
         Downgrading Date, then those Clauses shall cease to apply, except with
         respect to any Net Proceeds received after the Investment Grade Rating
         Date in relation to any Disposal or Equity Issue made before the
         Investment Grade Rating

                                       50



         Date or any Net Dividend Proceeds declared prior to the Investment
         Grade Rating Date, which shall be applied in accordance with the
         provisions of this Clause 7 notwithstanding that the Company has an
         Investment Grade Rating.

(b)      If the Company obtains an Investment Grade Rating but at any time
         thereafter an Investment Downgrading Date occurs, Clauses 7.5
         (Mandatory prepayment from Net Dividend Proceeds) to 7.9 (Mandatory
         Prepayment from Cegetel Disposals and SIT Disposals) (inclusive) and
         paragraphs (f) to (h) and (j) to (m) (each inclusive) of Clause 7.14
         (Miscellaneous provisions) shall be automatically reinstated and apply
         on and from the Investment Downgrading Date with respect to any
         Disposal or Equity Issue made on or after the Investment Downgrading
         Date and any Net Dividend Proceeds declared on or after the Investment
         Downgrading Date, in each case until the Company obtains an Investment
         Grade Rating, following which paragraph (a) above shall again apply.

7.5      MANDATORY PREPAYMENT FROM NET DIVIDEND PROCEEDS

         The Company shall ensure that an aggregate amount equal to 50 per cent.
         of Net Dividend Proceeds is applied in prepayment and cancellation of
         the Facility.

7.6      MANDATORY PREPAYMENT FROM NET EQUITY ISSUE PROCEEDS

(a)      Subject to paragraph (b) below, the Company shall ensure that an amount
         equal to 162/3 per cent. of Net Equity Issue Proceeds is applied in
         prepayment and cancellation of the Facility.

(b)      In relation to any member of the Cegetel Group the amount required
         under paragraph (a) to be applied in prepayment and cancellation of the
         Facility shall be reduced to the proportion of that amount which is
         equal to the percentage of the share capital of the relevant member of
         the Cegetel Group owned (directly or indirectly) by the Company at the
         time of the Equity Issue (excluding, prior to the SIT Repayment Date,
         the percentage, if any, of the share capital of the relevant member of
         the Cegetel Group which is held (directly or indirectly) by SIT but
         including such percentage on or after the SIT Repayment Date)).

7.7      MANDATORY PREPAYMENT FROM VE SHARES DISPOSAL

         The Company shall ensure that an amount equal to 50 per cent. of the
         Net VE Shares Disposal Proceeds is applied in prepayment and
         cancellation of the Facility.

7.8      MANDATORY PREPAYMENT FROM ASSETS DISPOSALS

(a)      Subject to paragraph (b), the Company shall ensure that an amount equal
         to 16 2/3 per cent. of the aggregate amount of all Net Assets Disposal
         Proceeds shall be applied in prepayment and cancellation of the
         Facility.

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

         (i)      an Assets Disposal in respect of the Maroc Telecom Group, on
                  or after the Maroc Telecom Date;

         (ii)     a disposal of an asset where the Net Assets Disposal Proceeds
                  are E30,000,000 or less (or equivalent in other currencies);

                                       51


         (iii)    a disposal in the ordinary course of trading of stock in
                  trade, business inventories, fixtures and fittings, furniture
                  and other office equipment; or

         (iv)     a disposal of any Permitted Joint Venture.

7.9      MANDATORY PREPAYMENT FROM CEGETEL DISPOSALS AND SIT DISPOSALS

(a)      Subject to paragraph (b), the Company shall ensure that an amount equal
         to 25 per cent. of the proportion of the Net Cegetel Disposal Proceeds
         and the Net SIT Disposal Proceeds which is equal to the percentage of
         the share capital of SIT or the relevant member of the Cegetel Group
         (owned directly or indirectly) by the Company at the time of the
         disposal (excluding, prior to the SIT Repayment Date, the percentage,
         if any, of the share capital of the relevant member of the Cegetel
         Group which is held (directly or indirectly) by SIT but including such
         percentage on or after the SIT Repayment Date)) is applied in
         prepayment and cancellation of the Facility.

(b)      No prepayment and cancellation shall be required to be made under
         paragraph (a) to the extent that the Company is unable, by reason of
         contractual restrictions or obligations in any shareholder agreements
         or the Non Recourse Financing in force at the date of this Agreement or
         by law or regulation binding on it, to procure or direct the
         upstreaming of such proceeds (whether by way of intra company loan or
         dividend or otherwise).

7.10     MANDATORY PREPAYMENT - NON COMPLIANCE WITH FINANCIAL COVENANTS

(a)      If the Company fails to comply with any provision of Clause 19
         (Financial Covenants):

         (i)      the Total Commitments shall be cancelled in full forthwith;
                  and

         (ii)     each Borrower shall repay each Loan made to it in full to the
                  Facility Agent for the Banks on or before the date falling 15
                  Business Days after the date of the failure to comply with
                  that provision.

(b)      The provisions of this Clause 7.10 shall apply and remain in force at
         all times while any Loan is outstanding or any Commitment is in force
         (notwithstanding, for the avoidance of doubt, the occurrence of a
         Release Condition Date).

7.11     MANDATORY PREPAYMENT - CHANGE OF CONTROL

(a)      In this Clause:

         "CHANGE OF CONTROL"

         means the occurrence of any event whereby:

         (i)      any person or group of persons acting in concert acquires more
                  than 50 per cent. of the share capital or voting stock of the
                  Company or control of the Company, including, without
                  limitation, on or following an amalgamation, demerger, merger
                  or reconstruction involving the Company to the extent
                  permitted by this Agreement) and

                                       52


                  for these purposes CONTROL and ACTING IN CONCERT have the
                  meanings given them in Articles L.233-3 and L.233-10,
                  respectively, of the French Commercial Code; or

         (ii)     the Company ceases to own, whether directly or indirectly, 100
                  per cent. of the share capital and voting rights of any
                  Obligor or the Company ceases to have effective control of any
                  Obligor (except, in each case, Vivendi Universal Games, Inc.
                  or Canal + which is disposed of in accordance with the
                  provisions of this Agreement or Centenary Delta BV pursuant to
                  the Music Group Reorganisation); or

         (iii)    a majority of the members of the board of directors of the
                  Company who were members of the board of directors at the
                  beginning of any consecutive two-year period are not
                  Continuing Directors (and the Change of Control shall be
                  deemed to take place on the first day on which this occurs);
                  or

         (iv)     there is a direct or indirect sale, transfer, conveyance or
                  other disposition (other than by way of merger or
                  consolidation permitted by and made in accordance with the
                  provisions of this Agreement) in one or a series of related
                  transactions, of all or substantially all of the properties or
                  assets or business of the Company and its Subsidiaries taken
                  as a whole; or

         (v)      a plan is adopted relating to the liquidation or dissolution
                  of the Company.

         "CONTINUING DIRECTOR"

         means, at any date, any member of the board of directors of the Company
         who:

         (i)      was a member of that board of directors on the date of the New
                  Facility Agreement; or

         (ii)     was nominated by election or elected to that board of
                  directors with the approval of a majority of the Continuing
                  Directors who are members of that board of directors at the
                  time of that nomination or election.

(b)      Upon the occurrence of a Change of Control (other than under paragraph
         (i) of the definition of that term):

         (i)      the Total Commitments shall be cancelled in full forthwith;
                  and

         (ii)     each Borrower shall repay each Loan made to it in full to the
                  Facility Agent for the Banks on or before the date falling 15
                  Business Days after the date on which the Change of Control
                  takes effect.

(c)      Upon the occurrence of a Change of Control under paragraph (i) of the
         definition of that term:

         (i)      if the relevant Change of Control was not subject to the prior
                  approval or recommendation of the Borrower's board of
                  directors (conseil d'administration) (a "BOARD APPROVAL") the
                  Total Commitments shall be cancelled in full forthwith and the
                  Borrower shall repay each Loan made to it in full to the
                  Facility Agent for the Banks on the date falling 15 Business
                  Days after the date on which such Change of Control becomes
                  legally effective; or

                                       53


         (ii)     if a Board Approval has been given in respect of the relevant
                  Change of Control, then any Bank may, no later than 30 days
                  following the Change of Control becoming legally effective,
                  notify the Company (through the Facility Agent) that its
                  participation in the Loans is to be prepaid in full and that
                  its Commitment is to be cancelled. If a Bank delivers a notice
                  under this paragraph (ii) then:

                  (A)      on the date of that notice the Bank's Commitment
                           shall be cancelled; and

                  (B)      on the date falling 5 Business Days after the date of
                           that notice, each Borrower shall prepay in full that
                           Bank's participation in the Loans made to that
                           Borrower.

(d)      The provisions of this Clause 7.11 shall apply and remain in force at
         all times while any Loan is outstanding or any Commitment is in force
         (notwithstanding, for the avoidance of doubt, the occurrence of a
         Release Condition Date).

7.12     MANDATORY PREPAYMENT AND CANCELLATION - APPLICATION OF PROCEEDS

(a)      Where, in Clauses 7.5 (Mandatory prepayment from Net Dividend Proceeds)
         to 7.11 (Mandatory prepayment - change of control), an amount is to be
         applied in "PREPAYMENT AND CANCELLATION OF THE FACILITY", the amount
         shall be applied in repayment or prepayment of Loans, and in
         cancellation of the Total Commitments, in the proportion, manner and
         time set out in this Clause and Clause 7.13 (Timing of mandatory
         prepayments and cancellations and Receipt Account).

(b)      Where an amount is to be applied in repayment or prepayment of any
         Loans under this Clause and either no Loan is outstanding or such
         amount is greater than the then outstanding amount of Loans, then the
         remainder of that amount after all Loans have been repaid or prepaid
         (or, if no Loan is outstanding, the whole amount which would otherwise
         be applied in repayment or prepayment) shall be retained by the
         relevant member of the Group.

7.13     TIMING OF MANDATORY PREPAYMENTS AND CANCELLATIONS AND RECEIPT ACCOUNT

(a)      Any mandatory prepayment of Loans under Clauses 7.6 (Mandatory
         prepayment from Net Equity Issue Proceeds) to 7.9 (Mandatory prepayment
         from Cegetel Disposals and SIT Disposals) shall be due on and from
         receipt of the relevant Net Proceeds by the relevant member of the
         Group party to such Equity Issue or Disposal and shall be paid either:

         (i)      on the earlier of (A) the date falling three months from the
                  receipt of the relevant Net Proceeds and (B) the last day of
                  the Interest Period of Loans (in order of the dates on which
                  those Loans fall due for repayment) during which the relevant
                  Net Proceeds were received (or, in relation to Net Assets
                  Disposal Proceeds comprised by non-cash consideration,
                  converted into cash) by a member of the Group; or

         (ii)     at such earlier time following receipt of such Net Proceeds
                  (or, in relation to Net Assets Disposal Proceeds comprised by
                  non-cash consideration, their conversion into cash) by a
                  member of the Group as the Facility Agent (only upon the
                  occurrence of an Event of Default which is continuing), or as
                  the Company, shall direct.

                                       54


(b)      Any mandatory prepayment of Loans under Clause 7.5 (Mandatory
         prepayment from Net Dividend Proceeds) shall be due on and from the
         date the dividend is declared and shall be paid on the last day of the
         Interest Period of Loans as they fall due.

(c)      Any cancellation of Commitments pursuant to Clauses 7.5 (Mandatory
         prepayment from Net Dividend Proceeds) to 7.9 (Mandatory prepayment
         from Cegetel Disposals and SIT Disposals) shall be made on the day on
         which either the relevant Net Proceeds were received (or converted into
         cash in the case of Net Assets Disposal Proceeds comprised by non-cash
         consideration) by a member of the Group or (in the case of Clause 7.5
         (Mandatory prepayment from Net Dividend Proceeds) on the date the
         relevant dividend was declared.

(d)      Pending the application of any amount required to be prepaid in
         accordance with this Clause 7.13, the amount shall be deposited in a
         Receipt Account in the relevant currency.

(e)      Each Obligor irrevocably authorises and instructs the Security Agent to
         apply any amount standing to the credit of a Receipt Account towards
         repayment or prepayment of the Loans or (if applicable) payment to the
         Obligors, as the case may be (in the case of the Loans, at the times
         referred to in paragraphs (a) (i) and (ii) above or, in the case of
         payment to the Obligors, promptly upon the amount becoming payable),
         and to effect any currency conversions, at such rates as the Facility
         Agent reasonably determines are available to it, required for the
         purposes of that application.

(f)      Amounts standing to the credit of a Receipt Account (and any interest
         accruing in respect thereof) may not be withdrawn and may only be used
         (i) in mandatory prepayment of the Loans at the times specified in this
         Clause and/or (ii) following the occurrence of an Event of Default
         which is continuing, in payment of any amounts due to the Finance
         Parties under the Finance Documents and/or (iii) (when no Loan is
         outstanding and no Commitment in force) in payment to the Obligors.

7.14     MISCELLANEOUS PROVISIONS

(a)      Any notice of prepayment and/or cancellation under this Agreement is
         irrevocable. The Facility Agent shall notify the Banks promptly of
         receipt of any such notice.

(b)      All prepayments under this Agreement shall be made together with
         accrued interest on the amount prepaid and, subject to Clause 26.2
         (Other indemnities), without premium or penalty.

(c)      No prepayment or cancellation is permitted except in accordance with
         the express terms of this Agreement.

(d)      No amount of the Total Commitments cancelled under this Agreement may
         subsequently be reinstated.

(e)      Without prejudice to the rights of a Borrower to re-borrow under Clause
         6.2 ( Re-borrowing), no amount of any mandatory payment prepaid by a
         Borrower may be reborrowed. Where an amount of any mandatory prepayment
         is prepaid, the corresponding Commitment will be cancelled
         automatically.

                                       55



(f)      Each Obligor shall ensure that none of its Subsidiaries will be under
         any restriction (other than any restriction or obligation under the VUE
         Incremental Indebtedness, or VUE Bridge Refinancing or any other
         shareholder restriction or obligation existing prior to the date of
         this Agreement including, without limitation, under the Matsushita
         Shareholder Agreements, the Maroc Telecom Shareholder Agreement, the
         Transtel Shareholder Agreement, the Cegetel Shareholder Agreement, the
         SFR Shareholder Agreement, the VUE Partnership Agreement, the VUE
         Transaction Agreement, the VUE Bridge Extension or the Non Recourse
         Financing or imposed by law or regulation binding on it) to pay, make
         or declare any dividends, return on capital, repayment of capital
         contributions or other distributions (whether in cash or in kind) or
         make any distribution of assets or other payments whatsoever in respect
         of share capital or up-stream amounts (whether by Intra Group Loan or
         otherwise), whether directly or indirectly, in each case, to the extent
         necessary to meet its payment obligations under Clauses 7.5 (Mandatory
         prepayment from Net Dividend Proceeds) to 7.13 (Timing of mandatory
         prepayments and cancellations and Receipt Account) and to the fullest
         extent permitted by law and contractual restrictions (including,
         without limitation, for the avoidance of doubt, under the Matsushita
         Shareholder Agreements, VUE Partnership Agreement and the VUE
         Transaction Agreement) existing at the date of this Agreement and each
         Obligor shall use its reasonable endeavours to ensure that the same are
         paid, made or declared.

(g)      Subject to paragraphs (f) and (h) of this Clause, the Company shall, to
         the fullest extent permitted by applicable law, procure that all Net
         Proceeds are made available to it promptly following receipt thereof by
         the relevant member of the Group.

(h)      Each Obligor shall use its reasonable endeavours to procure (subject to
         any contractual restrictions existing on the date of this Agreement or
         restrictions imposed by law or regulation binding on it) that any
         member of the Cegetel Group, SIT, any member of the Maroc Telecom Group
         and/or Transtel upstreams to its shareholders (whether by way of
         dividend, (subject to any restriction imposed by the Non Recourse
         Financing on the up-streaming of intercompany loans to be made by
         Cegetel) intra company loan or otherwise) Net Assets Disposal Proceeds
         received by it or its Subsidiaries.

(i)      Until a Release Condition Date occurs, the Company will not make any
         voluntary prepayments or cancel any commitments under the New Facility
         unless it also makes a voluntary prepayment and/or cancels the Total
         Commitments under this Agreement at the same time and in the same
         amount. If a Release Condition Date occurs but at any time thereafter
         an Investment Downgrading Date occurs, the provisions of the foregoing
         sentence shall be automatically reinstated and remain in force from the
         Investment Downgrading Date until such time as a Release Condition Date
         occurs again.

(j)      The Company will not amend or vary (or agree to amend or vary) any
         mandatory prepayment provision of the New Facility Agreement in any way
         which results or could reasonably be expected to result, in the opinion
         of the Majority Banks, in any such provision becoming more onerous to
         the Company or otherwise be detrimental or prejudicial to their rights
         and remedies under the Finance Documents (including, without
         limitation, any amendment to the relevant mandatory prepayment
         percentages) than those in force at the date of this Agreement without
         the prior written consent of the Majority Banks.

                                       56


(k)      If any amount is required to be applied in prepayment and cancellation
         of the Facility, in respect of any Disposal, Debt Issue or Equity Issue
         made by any member of the VUE Group (other than any Asset Disposal or
         secondary Equity Issue by the Company of its interest in VUE or of all
         or substantially all of the assets of the VUE Group in any one or more
         related transactions), the Company shall be obliged to use its
         reasonable endeavours to upstream (subject to any VUE Relevant
         Restriction) by way of distribution/dividends) or Intra Group Loans an
         amount equal to such amount in order to make any such prepayments and
         cancelation of the Facility, provided that:

         (i)      to the extent that the Company cannot at any time, due to any
                  VUE Relevant Restriction, so up-stream any such amount in full
                  by way of distributions/dividends and so apply the relevant
                  proceeds in full in prepayment and cancelation of the
                  Facility, the Company shall further use its reasonable
                  endeavours to up-stream an amount equilavent to the shortfall
                  by way of Intra Group Loans; and

         (ii)     to the extent that the Company cannot at any time, due to any
                  VUE Relevant Restriction, apply the proceeds of any
                  up-streaming by way of Intra Group Loan in full prepayment and
                  cancelation of the Facility, the Company shall not be required
                  so to apply such proceeds, but shall deposit such proceeds
                  promptly upon receipt of the same in the Concentration
                  Accounts.

(l)      For the avoidance of doubt, if any amount is required to be applied in
         prepayment and cancellation of the Facility, in respect of any Asset
         Disposal or secondary Equity Issue by the Company of its interest in
         VUE or of all or substantially all of the assets of the VUE Group in
         any one or more related transactions, the Company shall be obliged to
         apply an amount equal to any such amount in prepayment and cancellation
         of the Facility notwithstanding any VUE Relevant Restriction binding
         upon the Company or any other member of the Group with regard to the
         upstreaming or payment of any such amount (whether by dividend or Intra
         Group Loan) and otherwise in accordance with the terms of this
         Agreement.

(m)      The Company must ensure that immediately prior to the first transaction
         as a result of which a cancellation and prepayment would be required
         under any of Clauses 7.5 (Mandatory prepayment from Net Dividend
         Proceeds) to 7.13 (Timing of mandatory prepayments and cancellations
         and Receipt Account), the Company executes and delivers to the Facility
         Agent an account security (gage espece) substantially in the form
         referred to in Schedule 1 to the Restatement Agreement.

(n)      Any amount prepaid by a Borrower in accordance with Clause 7.2(a)
         (Voluntary prepayment and cancellation), pursuant to Clause 7.3 (Right
         of prepayment) without a corresponding cancellation of Commitment or
         pursuant to Clause 12(b) (Taxes) may subsequently be reborrowed,
         provided that amounts prepaid pursuant to:

         (i)      Clause 7.3 may only be reborrowed pro rata (and for the
                  purposes of this paragraph (e), amounts are borrowed "PRO
                  RATA" when each Bank's participation in the Loan in question,
                  expressed as the percentage which each Bank's Commitment bears
                  to the Total Commitments, is equal); or

         (ii)     Clause 12(b) (Taxes) may only be reborrowed pro rata (as
                  defined in paragraph (i) above) once the relevant additional
                  amounts giving rise to the prepayment in question have been
                  paid in full and may not be reborrowed by the Borrower making
                  the

                                       57


                  prepayment unless and until that Borrower is either able to
                  make further payments under the Finance Documents without any
                  deduction or withholding or is no longer prevented by
                  applicable law from paying the additional amounts required by
                  Clause 12(a).

8.       INTEREST PERIODS

8.1      GENERAL

         Each Loan shall have one Interest Period only (as determined in
         accordance with this Clause 8).

8.2      SELECTION

(a)      The Borrower may select an Interest Period for a Loan in the relevant
         Request. Each Interest Period for a Loan will commence on its Drawdown
         Date.

(b)      Subject to the following provisions of this Clause 8, each Interest
         Period will be one, two, three or six months or any other period agreed
         between the Obligors' Agent and the Banks.

8.3      NON-BUSINESS DAYS

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

8.4      NO OVERRUNNING OF THE FINAL MATURITY DATE

         If an Interest Period for a Loan would otherwise overrun the Final
         Maturity Date, it shall be shortened so that it ends on the Final
         Maturity Date.

8.5      NOTIFICATION

         The Facility Agent shall notify each relevant Party of the duration of
         each Interest Period promptly after ascertaining its duration.

9.       INTEREST

9.1      INTEREST RATE

(a)      (i)      The rate of interest on each Loan for its Interest Period is
                  the rate per annum determined by the Facility Agent to be the
                  aggregate of the applicable:

                  (A)      Applicable Margin; and

                  (B)      EURIBOR or, in the case of a Loan in an Optional
                           Currency, LIBOR.

         (ii)     In addition to interest under sub-paragraph (i), each Borrower
                  shall also pay to the Facility Agent for each Bank, that
                  Bank's Mandatory Cost.

                                       58


(b)      MandatoryCosts due under paragraph (a)(ii) shall be notified by each
         Bank to the Borrower through the Facility Agent on an annual basis and,
         in relation to a Bank which ceases to be a Bank, on or before the date
         it ceases to be a Bank, and in each case shall be due within five
         Business Days of the relevant notification.

9.2      DETERMINATION OF APPLICABLE MARGIN

(a)      The Applicable Margin shall be:

         (i)      up to and including the first Release Condition Date to occur,
                  1.50 per cent. per annum; and

         (ii)     thereafter, 1.00 per cent. per annum.

(b)      Any change in the Applicable Margin will take effect immediately for
         the purpose of Clause 23.3 (Commitment fee) and otherwise will apply
         with respect to new Loans only (and not to any Loan which is already
         outstanding on the date on which the first Release Condition Date
         occurs).

9.3      DUE DATES

         Except as otherwise provided in this Agreement, accrued interest on
         each Loan is payable by the relevant Borrower on its Maturity Date and
         also, if the Interest Period of the Loan is longer than six months, on
         the dates falling at six-monthly intervals after the Drawdown Date.

9.4      DEFAULT INTEREST

(a)      If an Obligor fails to pay any amount payable by it under the Finance
         Documents, it shall, forthwith on demand by the Facility Agent, pay
         interest on the overdue amount from the due date up to the date of
         actual payment, as well after as before judgment, at a rate (the
         "DEFAULT RATE") determined by the Facility Agent to be two per cent.
         per annum above the higher of:

         (i)      the rate on the overdue amount under Clause 9.1 immediately
                  before the due date (if of principal); and

         (ii)     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 such successive
                  Interest Periods of such duration (not exceeding three months)
                  as the Facility Agent may determine (each a "DESIGNATED
                  INTEREST PERIOD").

(b)      If the Facility Agent determines that deposits in the currency of the
         overdue amount are not at the relevant time being made available by the
         Reference Banks to leading banks in the relevant interbank market, the
         default rate will be determined by reference to the cost of funds to
         the Facility Agent from whatever sources it may reasonably select.

(c)      The default rate will be determined by the Facility Agent on each
         Business Day or the first day of, or two Business Days before the first
         day of, the relevant Designated Interest Period, as appropriate.

                                       59


(d)      Default interest will be compounded at the end of each Designated
         Interest Period.

9.5      NOTIFICATION

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

10.      OPTIONAL CURRENCIES

10.1     SELECTION

(a)      The Obligors' Agent shall select the currency of a Loan in the relevant
         Request.

(b)      The currency of each Loan must be Euros or an Optional Currency. In the
         case of a Subsidiary Borrower, the currency of each Loan to that
         Borrower must be the currency in which the Subsidiary Borrower Limit
         for that Borrower is expressed.

(c)      The Obligors' Agent may not choose a currency if as a result the Loans
         would be denominated at any one time in more than five currencies and a
         Loan may not be denominated in more than one currency.

(d)      The Facility Agent shall notify each Bank and the Obligors' Agent of
         the currency and the Original Euro Amount of each Loan to be
         denominated in an Optional Currency, and the applicable Spot Rate of
         Exchange, promptly after they are ascertained.

10.2     REVOCATION OF CURRENCY

         If before 9.30 a.m. (London time) on any Rate Fixing Day , the Facility
         Agent receives notice from a Bank (the "AFFECTED BANK") that:

(a)      it is impracticable for the affected Bank to fund its participation in
         the relevant Loan in the relevant Optional Currency during the Interest
         Period for that loan in the ordinary course of business in the relevant
         interbank market; and/or

(b)      the use of the proposed Optional Currency might contravene any law or
         regulation,

         the Facility Agent shall give notice to the Obligors' Agent and to the
         Banks to that effect before 11.00 a.m. (London time) on that Rate
         Fixing Day. In this event:

         (i)      the Obligors' Agent and the Banks may agree that the drawdown
                  will not be made; or

         (ii)     in the absence of agreement prior to 12.00 noon (London time)
                  on that date and in any other case:

                  (1)      the affected Bank's participation in the Loan (or, if
                           more than one Bank is similarly affected, those
                           Banks' participations in the Loan) shall be treated
                           as a separate Loan denominated in Euros;

                  (2)      in the definition of "EURIBOR" (insofar as it applies
                           to that Loan) in Clause 1.1 (Definitions):

                                       60


                           (A)      there shall be substituted for the time
                                    "11.00 a.m." the time "1.00 p.m."; and

                           (B)      paragraph (b) of that definition shall
                                    apply.

11.      PAYMENTS

11.1     PLACE

         All payments by an Obligor or a Bank under the Finance Documents shall
         be made to the Facility Agent to its account at such office or bank:

(a)      in the principal financial centre of the country of the relevant
         currency; or

(b)      in the case of Euros, in the principal financial centre of a
         Participating Member State or London,

         as it may notify to the Obligors' Agent or Bank for this purpose by not
         less than 5 Business Days' prior notice. Notwithstanding the above, all
         payments by the Company to the Mandated Lead Arrangers under Clauses
         23.1 (Arrangement fee) and 24 (Expenses) shall be made direct to the
         Mandated Lead Arrangers in the manner agreed by the Mandated Lead
         Arrangers and the Company.

11.2     FUNDS

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

11.3     DISTRIBUTION

(a)      Each payment received by the Facility Agent under the Finance Documents
         for another Party shall, subject to paragraphs (b) and (c) below, be
         made available by the Facility Agent to that Party by payment (on the
         date and in the currency and funds of receipt) to its account with such
         office or bank in the principal financial centre of the country of the
         relevant currency as it may notify to the Facility Agent for this
         purpose by not less than five Business Days' prior notice.

(b)      The Facility Agent may apply any amount received by it for any Obligor
         in or towards payment (on the date and in the currency and funds of
         receipt) of any amount due from that Obligor under this Agreement or in
         or towards the purchase of any amount of any currency to be so applied.

(c)      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 Party until it has established that it has actually
         received that sum. The Facility Agent may, however, assume that the sum
         has been paid to it in accordance with this Agreement, and, in reliance
         on that assumption, make available to that Party a corresponding
         amount. If the sum has not been made available

                                       61


         but the Facility Agent has paid a corresponding amount to another
         Party, that Party shall forthwith on demand by the Facility Agent
         refund the corresponding amount together with interest on that amount
         from the date of payment to the date of receipt, calculated at a rate
         determined by the Facility Agent to reflect its cost of funds.

11.4     CURRENCY

(a)      A repayment or prepayment of a Loan is payable in the currency in which
         the Loan is denominated on its due date.

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

(c)      Amounts payable in respect of costs, expenses and taxes and the like
         are payable in the currency in which they are incurred.

(d)      Any other amount payable under the Finance Documents is, except as
         otherwise provided in this Agreement, payable in Euros.

11.5     SET-OFF AND COUNTERCLAIM

         All payments made by each Obligor under the Finance Documents shall be
         made without set-off or counterclaim.

11.6     NON-BUSINESS DAYS

(a)      If a payment under the Finance Documents is due on a day which is not a
         Business Day, the due date for that payment shall instead be the next
         Business Day.

(b)      During any extension of the due date for payment of any principal under
         this Agreement interest is payable on that principal at the rate
         payable on the original due date.

11.7     PARTIAL PAYMENTS

(a)      If the Facility Agent receives a payment insufficient to discharge all
         the amounts then due and payable by any Obligor under the Finance
         Documents, the Facility Agent shall apply that payment towards the
         obligations of the Obligors (or any of them) 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 under the Finance
                  Documents;

         (ii)     SECONDLY, in or towards payment pro rata of any accrued
                  interest 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.

                                       62


(b)      The Facility Agent shall, if so directed by all the Banks, vary the
         order set out in sub-paragraphs (a)(ii) to (iv) above.

(c)      Paragraphs (a) and (b) above will override any appropriation made by
         any Obligor.

12.      TAXES

(a)      All payments by each Obligor under the Finance Documents shall be made
         without any deduction and free and clear of and without any deduction
         for or on account of any Taxes, except to the extent that an Obligor is
         required by law to make payment subject to any Taxes. Subject to
         paragraph (b) below, if any Tax or amounts in respect of Tax must be
         deducted, or any other deductions must be made, from any amounts
         payable or paid by an Obligor, or paid or payable by the Facility Agent
         to a Bank, under the Finance Documents, the Obligor concerned shall pay
         such additional amounts as may be necessary to ensure that the relevant
         Bank receives a net amount equal to the full amount which it would have
         received had payment not been made subject to Tax or any other
         deduction.

(b)      If an Obligor is, or becomes obliged, to make any deductions from any
         amounts paid or payable by that Obligor to a Finance Party and is
         prevented by applicable law from paying the additional amounts referred
         to in paragraph (a) above:

         (i)      the Finance Party (if a Bank) may, by notice to the Obligors'
                  Agent through the Facility Agent, require the relevant Obligor
                  to prepay all or part of its participation in the Loan; and

         (ii)     the relevant Obligor shall prepay the participation of that
                  Bank in the Loans made to it on the date falling twenty days
                  after the date of the notice,

         provided that notwithstanding such prepayment the Obligor concerned
         shall be obliged to pay the additional amounts to that Bank which it is
         prevented from paying as soon as it may legally do so and such
         obligation shall survive any cancellation or termination of this
         Agreement.

(c)      No Obligor is obliged to pay any additional amounts for the account of
         a Finance Party pursuant to paragraph (a) above in respect of any
         deduction to the extent that the obligation to pay such additional
         amounts would not have arisen but for the gross negligence or wilful
         misconduct of such Finance Party or the failure by such Finance Party
         to provide (within a reasonable period after being requested to do so
         by the Obligors' Agent or the Facility Agent) any form, certificate or
         other documentation (1) the provision of which would have relieved the
         relevant Obligor from the relevant withholding obligation and (2) which
         it is within the power of such Finance Party to provide.

(d)      Each Obligor shall:

         (i)      pay when due all Taxes required by law to be deducted or
                  withheld by it from any amounts paid or payable under the
                  Finance Documents;


                                       63



         (ii)     within 15 days of the payment being made, deliver to the
                  Facility Agent for the relevant Bank evidence satisfactory to
                  that Bank (including all relevant Tax receipts) that the
                  payment has been duly remitted to the appropriate authority;
                  and

         (iii)    forthwith on demand indemnify each Finance Party (which demand
                  shall be accompanied by a certificate from the Finance Party
                  setting out, in reasonable detail, calculations relating to
                  the amount claimed) against any loss or liability which that
                  Finance Party incurs as a consequence of the payment or
                  non-payment of those Taxes.

(e)      If, following the payment by an Obligor of any additional amounts under
         paragraph (a) above, the Facility Agent or any Bank shall determine
         that it has received or been granted a credit against or remission for
         any Taxes payable by it allocable by the Facility Agent or such Bank to
         the relevant deduction or withholding (a "TAX CREDIT"), the Facility
         Agent or such Bank shall reimburse the Obligor concerned with such
         amount as the Facility Agent or such Bank shall in its discretion
         (acting in good faith) certify to be the proportion of such Tax Credit
         (if any) as will leave the Facility Agent or such Bank (after such
         reimbursement) in no worse position than it would have been in had the
         relevant deduction or withholding not been made. Such reimbursement
         shall be made as soon as reasonably practicable after the Facility
         Agent or such Bank (as the case may be) shall have made any such
         determination. Each Bank shall use its reasonable endeavours to
         determine whether it is entitled to receive a Tax Credit and, if it
         determines that it is, to obtain the same, unless to do so or attempt
         to do so might, in the sole opinion of the Bank, be in any way
         prejudicial to the Bank (provided that where a Bank claims a Tax Credit
         pursuant to this paragraph (e), the extent, order and manner in which
         it does so shall be in the absolute discretion of the Bank (acting in
         good faith)). No Bank shall be obliged to disclose any information
         regarding its tax affairs or computations to any other Party.

(f)      Nothing in paragraphs (c) or (e) above shall:

         (i)      require the Facility Agent or any Bank to disclose to any
                  Obligor any details of its tax affairs;

         (ii)     interfere with the right of the Facility Agent or any Bank to
                  arrange its tax affairs in whatever manner it thinks fit; and

         (iii)    require the Facility Agent or any Bank to claim relief in
                  respect of any payment under paragraph (a) above in priority
                  to any other reliefs, claims or credits available to it.

13.      MARKET DISRUPTION

13.1     ABSENCE OF QUOTATIONS

         If EURIBOR or LIBOR is to be determined by reference to the Reference
         Banks but a Reference Bank does not supply an offered rate by 11.30
         a.m. (London time in the case of LIBOR) on the relevant Rate Fixing
         Day, the applicable EURIBOR or LIBOR shall, subject to Clause 13.2, be
         determined on the basis of the quotations of the remaining Reference
         Banks.

                                       64


13.2     MARKET DISRUPTION

         If:

         (a)      EURIBOR or LIBOR is to be determined by reference to the
                  Reference Banks but no, or only one, Reference Bank supplies a
                  rate by 11.30 a.m. (London time in the case of LIBOR) on the
                  relevant Rate Fixing Day or the Facility Agent otherwise
                  determines that adequate and fair means do not exist for
                  ascertaining EURIBOR or LIBOR; or

         (b)      the Facility Agent receives notification from Banks whose
                  participations in a Loan exceed 30 per cent. of that Loan
                  that, in their opinion:

                  (i)      matching deposits may not be available to them in the
                           relevant interbank market in the ordinary course of
                           business to fund their participations in that Loan
                           for the relevant Interest Period; or

                  (ii)     the cost to them of obtaining matching deposits in
                           the relevant interbank market would be in excess of
                           EURIBOR or LIBOR, as appropriate, for the relevant
                           Interest Period,

         the Facility Agent shall promptly notify the Obligors' Agent and the
         Banks of the fact and that this Clause 13 is in operation.

13.3     SUBSTITUTE BASIS

         After any notification under Clause 13.2 the relevant Loan shall not be
         made. However, within five Business Days of receipt of the
         notification, the Obligors' Agent and the Facility Agent shall enter
         into negotiations for a period of not more than 30 days with a view to
         agreeing a substitute basis for determining the rate of interest and/or
         funding applicable to that Loan and (to the extent required) any future
         Loan. Any substitute basis agreed shall, with the prior consent of all
         the Banks, be binding on all the Parties. For the avoidance of doubt
         the relevant Loan shall not be made unless and until a substitute basis
         is agreed.

14.      INCREASED COSTS

14.1     INCREASED COSTS

(a)      Subject to Clause 14.2, each Obligor shall forthwith on demand by a
         Finance Party pay to that Finance Party the amount of any increased
         cost incurred by it or any of its Affiliates as a result of:

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

         (ii)     compliance with any regulation made after the date of this
                  Agreement,

         including any law or regulation relating to taxation, change in
         currency of a country or reserve asset, special deposit, cash ratio,
         liquidity or capital adequacy requirements or any other form of banking
         or monetary control.

                                       65


         (b)      In this Agreement "INCREASED COST" means:

                  (i)      an additional cost incurred by a Finance Party or its
                           Holding Company as a result of it having entered
                           into, or performing, maintaining or funding its
                           obligations under, any Finance Document; or

                  (ii)     that portion of an additional cost incurred by a
                           Finance Party or its Holding Company in making,
                           funding or maintaining all or any advances comprised
                           in a class of advances formed by or including that
                           Finance Party's participations in the Loans made or
                           to be made under this Agreement as is attributable to
                           that Finance Party making, funding or maintaining
                           those participations; or

                  (iii)    a reduction in any amount payable to a Finance Party
                           or the effective return to a Finance Party or its
                           Holding Company under this Agreement or (to the
                           extent that it is attributable to this Agreement) on
                           its capital; or

                  (iv)     the amount of any payment made by a Finance Party or
                           its Holding Company, or the amount of any interest or
                           other return foregone by a Finance Party or its
                           Holding Company, calculated by reference to any
                           amount received or receivable by that Finance Party
                           or its Holding Company from any other Party under
                           this Agreement.

(c)      A Finance Party intending to make a claim under this Clause 14.1 shall
         notify the Obligors' Agent through the Facility Agent of the event by
         reason of which it is entitled to do so, setting out in reasonable
         detail calculations evidencing the relevant increased costs, provided
         that nothing herein shall require such Finance Party to disclose any
         confidential information relating to the organisation of its affairs.

14.2     EXCEPTIONS

         Clause 14.1 does not apply to any increased cost:

(a)      compensated for by the payment of the Mandatory Cost;

(b)      compensated for by the operation of Clause 12 (Taxes);

(c)      attributable to any change in the rate of, or change in the basis of
         calculating, tax on the overall net income of a Bank (or the overall
         net income of a division or branch of the Bank) imposed in the
         jurisdiction in which its principal office or Facility Office is
         situated; or

(d)      arising from a Finance Party or its Holding Company having failed to
         comply with any applicable law or regulation, provided that this
         exception shall not apply to the extent that such law or regulation is
         applied retrospectively.

15.      ILLEGALITY

         If it is or becomes unlawful in any jurisdiction for a Bank to give
         effect to any of its obligations as contemplated by this Agreement or
         to fund or maintain its participation in any Loan, then:

                                       66


(a)      that Bank may notify the Obligors' Agent through the Facility Agent
         accordingly; and

(b)      (i)      each Borrower shall forthwith prepay the participations of
                  that Bank in all the Loans made to it; and

         (ii)     the Commitment of that Bank shall forthwith be cancelled.

16.      GUARANTEE

16.1     GUARANTEE AND INDEMNITY

(a)      Each Guarantor irrevocably, unconditionally, jointly and severally and
         notwithstanding the release of any other Obligor or any person under
         the terms of any composition or arrangement with any creditors of any
         member of the Group:

         (i)      as principal obligor (and not merely as surety) guarantees to
                  each Finance Party prompt performance by each Borrower of all
                  its obligations under the Finance Documents and the payment
                  when due of all sums from time to time payable by each Obligor
                  under the Finance Documents;

         (ii)     undertakes with each Finance Party that, whenever a Borrower
                  does not pay any amount when due under or in connection with
                  any Finance Document, that Guarantor shall forthwith on demand
                  by the Facility Agent pay that amount as if that Guarantor
                  instead of the Borrower were expressed to be the principal
                  obligor; and

         (iii)    indemnifies each Finance Party on demand against any loss or
                  liability suffered by it if any obligation guaranteed by the
                  Guarantor is or becomes unenforceable, invalid or illegal.

(b)      In the case of the Company, this guarantee takes effect on and from the
         date on which there is a Subsidiary Borrower.

16.2     CONTINUING GUARANTEE

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

16.3     REINSTATEMENT

(a)      Where any discharge (whether in respect of the obligations of any
         Obligor or any security for those obligations or otherwise) is made in
         whole or in part or any arrangement is made on the faith of any
         payment, security or other disposition which is avoided or must be
         restored on insolvency, liquidation or otherwise without limitation,
         the liability of each Guarantor under this Clause shall continue as if
         the discharge or arrangement had not occurred.

(b)      Each Finance Party may concede or compromise any claim that any
         payment, security or other disposition is liable to avoidance or
         restoration.

                                       67


16.4     WAIVER OF DEFENCES

         The obligations of each Guarantor under this Clause will not be
         affected by any act, omission, matter or thing which, but for this
         provision, would reduce, release or prejudice any of its obligations
         under this Clause or prejudice or diminish those obligations in whole
         or in part, including (whether or not known to it or any Finance
         Party):

         (a)      any time or waiver 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 creditors 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 any 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 powers, authority or legal
                  personality of or dissolution or change in the members or
                  status of an Obligor or any other person;

         (e)      any variation (however fundamental), amendment or replacement
                  of a Finance Document or any other document or security so
                  that references to that Finance Document in this Clause shall
                  include each variation, amendment or replacement; or

         (f)      any unenforceability, illegality or invalidity of any
                  obligation of any person under any Finance Document or any
                  other document or security, to the intent that each
                  Guarantor's obligations under this Clause shall remain in full
                  force and its guarantee be construed accordingly, as if there
                  were no unenforceability, illegality or invalidity; or

         (g)      any postponement, discharge, reduction, non-provability or
                  other similar circumstance affecting any obligation of any
                  Obligor under a Finance Document resulting from any
                  insolvency, liquidation or dissolution proceedings or from any
                  law, regulation or order so that each such obligation shall
                  for the purposes of the Guarantor's obligations under this
                  Clause be construed as if there were no such circumstance.

16.5     IMMEDIATE RECOURSE

         Each Guarantor waives any right it may have of first requiring any
         Finance Party (or any trustee 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.

16.6     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 trustee or agent on its behalf)
         may:

                                       68


         (a)      refrain from applying or enforcing any other moneys, security
                  or rights held or received by that Finance Party (or any
                  trustee 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 a suspense account any moneys received from any
                  Guarantor or on account of any Guarantor's liability under
                  this Clause without liability to pay interest on these moneys.

16.7     NON-COMPETITION

         Until all amounts which may be or become payable by the Obligors to the
         Finance Parties under or in connection with the Finance Documents have
         been irrevocably paid in full, no Guarantor shall, after a claim has
         been made or by virtue of any payment or performance by it under this
         Clause:

         (a)      be subrogated to any rights, security or moneys held, received
                  or receivable by any Finance Party (or any trustee or agent on
                  its behalf) or be entitled to any right of contribution or
                  indemnity in respect of any payment made or moneys received on
                  account of that Guarantor's liability under this Clause;

         (b)      claim, rank, prove or vote as a creditor of the Company or any
                  Obligor or its estate in competition with any Finance Party
                  (or any trustee or agent on its behalf); or

         (c)      receive, claim or have the benefit of any payment,
                  distribution or security from or on account of any Obligor, or
                  exercise any right of set-off as against any Obligor,

         unless the Facility Agent otherwise directs. Each Guarantor shall hold
         in trust for and forthwith pay or transfer to the Facility Agent for
         the Finance Parties any payment or distribution or benefit of security
         received by it contrary to this Clause.

16.8     ADDITIONAL SECURITY

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

16.9     LIMITATIONS

(a)      The obligations of any Guarantor which is incorporated under the laws
         of the Republic of France (other than the Company as regards a
         Subsidiary Borrower (if any)) under this Clause shall not include any
         obligation which if incurred would constitute either a misuse of
         corporate assets as defined under article L.242-6 of the French
         Commercial Code in the opinion of the board of directors or similar
         corporate governance body of any such Guarantor (acting on legal
         advice) and shall be limited, at any time, to the greater of:

         (i)      the aggregate outstanding amount of all Intra Group Loans,
                  made directly or indirectly, to such Guarantor from the
                  Company or any other Obligor (less the net amount of Intra
                  Group Loans made by such Guarantor to Canal Satellite S.A. or
                  any

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                  other Subsidiary of such Guarantor notified to the Facility
                  Agent in writing which is less than 90 per cent. owned by that
                  Guarantor or another member of the Group);

         (ii)     the aggregate outstanding amount of all Intra Group Loans made
                  by such Guarantor (less any amount representing cash lent to
                  such Guarantor by Canal Satellite S.A. or any other Subsidiary
                  of the Guarantor notified to the Facility Agent in writing
                  which is less than 90 per cent. owned by that Guarantor or
                  another member of the Group); and

         (iii)    the aggregate amount of all cash balances standing to the
                  credit of each of such Guarantor's Cash Pooling Accounts (less
                  the net amount of Intra Group Loans made to such Guarantor by
                  Canal Satellite S.A. or any other Subsidiary of such Guarantor
                  notified to the Facility Agent in writing which is less than
                  90 per cent. owned by that Guarantor or another member of the
                  Group),

         provided that the obligations of such Guarantor as determined in
         accordance with sub-paragraphs (i) to (iii) above shall be reduced by:

         (A)      an amount equal to any payment made by such Guarantor to the
                  Finance Parties as debiteur delegue or debiteur cede, as the
                  case may be, under a French Intra Group Loan Security of an
                  Intra Group Loan referred to in sub-paragraph (i) above;

         (B)      an amount equal to any payment made by such Guarantor as
                  delegant to the Finance Parties under a French Intra Group
                  Loan Security of an Intra Group Loan referred to in
                  sub-paragraph (ii) above; and

         (C)      an amount equal to any payment made by such Guarantor to the
                  Finance Parties under the Cash Pooling Hub Security granted by
                  such Guarantor.

(b)      Where any such prohibition as is referred to in paragraph (a) above
         exists, each Obligor shall use its reasonable endeavours to procure
         that the prohibition is lawfully overcome and the Facility Agent may
         agree in the applicable Guarantor Accession Deed a limitation on the
         liability of the Subsidiary Guarantor hereunder in order to avoid the
         prohibition. Should it be impossible to lawfully avoid or overcome such
         prohibition, that part of such Obligor's obligations under this Clause
         16 as contravene such prohibition (and only such part of such Obligor's
         obligations) shall be deemed null and void.

(c)      Each Guarantor which is incorporated in the United States of America (a
         "U.S. GUARANTOR"):

         (i)      represents, warrants and agrees that (1) it has received and
                  will receive valuable direct or indirect benefits as a result
                  of the transactions financed by the Loans, and (2) these
                  benefits will constitute REASONABLY EQUIVALENT VALUE and FAIR
                  CONSIDERATION as those terms are used in the fraudulent
                  transfer laws; and

         (ii)     acknowledges and agrees that each of the Finance Parties has
                  acted in good faith in connection with the guarantee granted
                  under this Clause and the transactions contemplated by this
                  Agreement.

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(d)      This Clause shall be enforceable against each U.S. Guarantor to the
         maximum extent permitted by the fraudulent transfer laws.

(e)      Each Guarantor's liability under this Clause shall be limited so that
         no obligation of, or transfer by, any U.S. Guarantor under this Clause
         is subject to avoidance and turnover under the fraudulent transfer
         laws.

(f)      For purposes of this Clause "FRAUDULENT TRANSFER LAWS" mean applicable
         United States of America bankruptcy and United States fraudulent
         transfer and conveyance statutes and the related case law.

(g)      The provisions of this Clause 16 shall apply and remain in force at all
         times throughout the term of this Agreement (notwithstanding for the
         avoidance of doubt the occurrence of a Security Release Condition
         Date).

17.      REPRESENTATIONS AND WARRANTIES

17.1     REPRESENTATIONS AND WARRANTIES

         Each Obligor makes the representations and warranties set out in this
         Clause 17 to each Finance Party.

17.2     STATUS

(a)      It is a joint-stock company or limited liability company or
         corporation, duly incorporated or organised and validly existing under
         and (in the case of the U.S. Subsidiaries) in good standing the laws of
         the jurisdiction of its incorporation; and

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

17.3     POWERS AND AUTHORITY

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

17.4     LEGAL VALIDITY

         Each Finance Document to which it is or will be a party constitutes, or
         when executed in accordance with its terms will constitute, its legal,
         valid and binding obligation enforceable in accordance with its terms
         and would be so treated in the courts of the jurisdiction of its
         incorporation or organisation.

17.5     AUTHORISATIONS

         All authorisations required in connection with the entry into,
         performance, validity and enforceability of the Finance Documents and
         the transactions contemplated by the Finance Documents have been
         obtained or effected and are in full force and effect.

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17.6     PARI PASSU RANKING

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

17.7     TAXES ON PAYMENTS

         All amounts payable by each Borrower under the Finance Documents may be
         made free and clear of and without deduction for or on account of any
         tax.

17.8     STAMP DUTIES

         No stamp or registration duty or similar taxes or charges are payable
         in the jurisdiction of its incorporation in respect of any Finance
         Document.

17.9     IMMUNITY

(a)      The execution by each Obligor of each Finance Document constitutes, and
         its exercise of its rights and performance of its obligations under
         each Finance Document will constitute, private and commercial acts done
         and performed for private and commercial purposes; and

(b)      no Obligor will be entitled to claim immunity from suit, execution,
         attachment or other legal process in any proceedings taken in the
         jurisdiction of its incorporation in relation to any Finance Document.

17.10    NON-CONFLICT

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

(a)      conflict in any material respect with any law or regulation or judicial
         or official order binding on any Obligor or any Material Subsidiary; or

(b)      conflict with the constitutional documents of any Obligor; or

(c)      conflict in any material respect with any document which is binding
         upon any Obligor or any Material Subsidiary or any asset of any Obligor
         or any Material Subsidiary.

17.11    NO DEFAULT

(a)      No Event of Default is outstanding or will result from the making of
         any Loan; and

(b)      no other event is outstanding which constitutes a default (howsoever
         described) under any document which is binding on any Obligor or any
         asset of any Obligor to an extent or in a manner which might reasonably
         be expected to have a Material Adverse Effect.

                                       72


17.12    LITIGATION

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

(b)      No proceedings of any nature are current or, to its knowledge, pending
         or threatened, for the winding-up or dissolution (other than a solvent
         winding up or dissolution) of, or in respect of any insolvency
         proceeding of any nature relating to, any Obligor or Material
         Subsidiary.

17.13    SECURITY

(a)      No Security Interests exist (except as permitted by this Agreement) on
         or over assets of any Obligor or Material Subsidiary.

(b)      It and each member of the Group is the legal and beneficial owner of
         the property (if any) which it purports to charge pursuant to any of
         the Security Documents. The property charged pursuant to any Security
         Documents are not subject to any other Security Interests (except under
         the Security Documents), third party rights, options (except a call
         option in favour of the New Investors under and as defined in the VE
         Share Pledge and Escrow Agreement), claims or similar rights. Any
         shares charged pursuant to a Security Document are all fully paid up.

(c)      The security constituted by the Security Documents constitutes (and
         will at all times continue to constitute, unless released in accordance
         with the Finance Documents) in respect of obligations owed to the
         Finance Parties and the lenders under the New Facility Agreement, first
         ranking security in priority and payment over the assets secured or
         purported by be secured under the Security Documents.

17.14    GOVERNING LAW AND JURISDICTION

(a)      Each Obligor's:

         (i)      irrevocable submission under Clause 37 (Jurisdiction) to the
                  jurisdiction of the courts of England and New York;

         (ii)     agreement that this Agreement is governed by English law; and

         (iii)    agreement not to claim any immunity to which it may be
                  entitled,

         are legal, valid and binding under the laws of the jurisdiction of its
         incorporation.

(b)      Any judgement obtained in the courts of England in legal proceedings
         based on or in connection with the Finance Documents will be recognised
         and enforced by the courts of the jurisdiction of incorporation of each
         Obligor without re-examination or re-litigation of the matter thereby
         adjudicated (subject to the provisions of Council Regulation No.
         44/2001 of the Council of the European Union on jurisdiction and
         enforcement of judgements in civil and commercial matters, or other
         applicable law or convention on the recognition and enforcement of
         court judgements).

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17.15    ACCOUNTS

(a)      The audited consolidated accounts of the Company most recently
         delivered to the Facility Agent (which, at the date of this Agreement,
         are the Original Group Accounts):

         (i)      have been prepared in accordance with accounting principles
                  and practices generally accepted in France or the United
                  States of America (as appropriate), consistently applied; and

         (ii)     fairly represent the consolidated financial condition of the
                  Group as at the date to which they were drawn up,

         and there has been no change in the consolidated financial condition of
         the Group since the date to which those accounts were drawn up which
         has or could reasonably be expected to have a Material Adverse Effect.

(b)      In the case of each Borrower (other than the Company), its audited
         accounts most recently delivered to the Agent:

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

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

         and there has been no change in the consolidated financial condition of
         that Borrower since the date to which those accounts were drawn up
         which has or could reasonably be expected to have a Material Adverse
         Effect.

(c)      There has been no material adverse change in the business or financial
         condition of the Group taken as a whole since 31st December, 2000.

(d)      The projections and forecasts contained in the Liquidity Analysis most
         recently delivered to the Facility Agent (which, at the Effective Date,
         is the Original Liquidity Analysis) were made in good faith and based
         on reasonable assumptions and such Liquidity Analysis does not as at
         its date omit any projections or forecasts which would make the
         projections and forecasts actually contained in, or used for the
         preparation of, that Liquidity Analysis misleading.

17.16    INFORMATION MEMORANDUM

(a)      The information contained in the Information Memorandum was true in all
         material respects as at its date;

(b)      the Information Memorandum did not omit as at its date any information
         which, if disclosed, would adversely affect the decision of a person
         considering whether to enter into this Agreement; and

(c)      nothing has occurred since the date of the Information Memorandum which
         renders the information contained in it untrue or misleading in any
         respect and which, if disclosed, might adversely affect the decision of
         a person considering whether to enter into this Agreement.

                                       74


17.17    TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES

         The representations and warranties set out in this Clause 17:

         (a)      are made on the date of this Agreement and the first Drawdown
                  Date;

         (b)      are, with the exception of Clauses 17.3 (Powers and
                  authority), 17.7 (Taxes on payments), 17.8 (Stamp duties),
                  17.15(c) (Accounts) and 17.16 (Information Memorandum)),
                  deemed to be repeated by each Borrower on the date of each
                  Request and the first day of each Interest Period with
                  reference to the facts and circumstances then existing;

         (c)      are (with the exception of Clauses 17.15(c) and (d) (Accounts)
                  and 17.16 (Information Memorandum) repeated by each Subsidiary
                  Borrower and each Subsidiary Guarantor on the date of a
                  Borrower Accession Deed or Guarantor Accession Deed as
                  appropriate, with reference to the facts and circumstances
                  then subsisting; and

         (d)      are, in the case of Clause 17.15(d) (Accounts), repeated by
                  the Company on each date on which a Liquidity Analysis is
                  delivered to the Facility Agent.

18.      UNDERTAKINGS

18.1     DURATION

         The undertakings in this Clause 18 remain in force from the date of
         this Agreement for so long as any amount is or may be outstanding under
         this Agreement or any Commitment is in force.

18.2     FINANCIAL INFORMATION

(a)      The Company shall supply the following to the Facility Agent in
         sufficient copies for all the Banks:

         (i)      as soon as the same are available (and in any event within 120
                  days of the end of each of its financial years) the audited
                  consolidated financial statements of the Company for each
                  financial year, together with an Accounts Certificate;

         (ii)     as soon as the same are available (and in any event within 120
                  days of the end of each of its financial years) the audited
                  unconsolidated financial statements of each Borrower for each
                  financial year, together with an Accounts Certificate;

         (iii)    as soon as the same are available (and in any event within 90
                  days of the end of the relevant period) the quarterly and the
                  semi-annual consolidated financial statements of the Company;

         (iv)     together with each set of financial statements of the Company
                  a certificate signed by the Chief Financial Officer of the
                  Company (or the Company's auditors in the case of audited
                  financial statements) setting out in reasonable detail
                  computations establishing compliance with each of the
                  financial covenants in Clause 19 (Financial

                                       75


                  Covenants) and confirming that as at the end of the relevant
                  period it was in compliance with Clauses 18.8 (Negative
                  pledge) and 18.16 (Subsidiary Debt);

         (v)      except during a Release Condition Period, on the first
                  Business Day of each calendar month, an up-to-date Liquidity
                  Analysis together with a certificate from the Chief Financial
                  Officer of the Company confirming that such Liquidity Analysis
                  has been prepared in good faith and is based on reasonable
                  assumptions; and

         (vi)     during a Release Condition Period, on the first Business Day
                  of each quarter, an up-to-date Liquidity Analysis.

(b)      The Obligors' Agent shall ensure that:

         (i)      each set of consolidated financial statements delivered
                  pursuant to paragraph (a) is prepared on the same basis as was
                  used in the preparation of the consolidated accounts of the
                  Group for the period of 6 months ending on 30th June, 2002. If
                  any consolidated financial statements of the Company referred
                  to in paragraph (a) (the "INCONSISTENT ACCOUNTS") are prepared
                  on a basis which is not consistent with the immediately
                  preceding comparable financial statements or in accordance
                  with accounting principles and practices which are not
                  consistent with the immediately preceding comparable financial
                  statements and, in the reasonable opinion of the Obligors'
                  Agent or the Majority Banks, the result of the calculations
                  made pursuant to the provisions in Clause 19 (Financial
                  Covenants) does not correspond to the commercial intention of
                  such provisions, the following shall apply:

                  (A)      either the Obligors' Agent shall notify the Facility
                           Agent or the Facility Agent shall notify the
                           Obligors' Agent accordingly (as appropriate). Any
                           notice given under this sub-paragraph (A) shall
                           contain reasonable details of the differences between
                           the Inconsistent Accounts and the immediately
                           preceding comparable financial statements; and

                  (B)      in the event of a notice from the Facility Agent or,
                           in the event of a notice from the Obligors' Agent, if
                           the Majority Banks agree with the Obligors' Agent's
                           opinion, the Obligors' Agent and the Banks shall
                           negotiate in good faith for a period not exceeding 30
                           days with a view to the Obligors' Agent and the
                           Majority Banks agreeing the manner in which the
                           provisions of Clause 19 (Financial Covenants) shall
                           be applied to the Inconsistent Accounts. If no
                           agreement is reached within this period or, if the
                           notice under sub-paragraph (A) above was from the
                           Obligors' Agent, the Majority Banks do not agree with
                           the Obligors' Agent's opinion, the provisions of
                           Clause 19 (Financial Covenants) shall be interpreted
                           with respect to the Inconsistent Accounts as
                           determined by the Facility Agent (acting on the
                           instructions of the Majority Banks), which
                           interpretation shall prevail; and

         (ii)     each set of financial statements delivered pursuant to
                  paragraph (a) shall (in the case of audited financial
                  statements) give a true and fair view of and (in the case of
                  other financial statements) shall fairly represent the
                  consolidated financial condition of the Group as at the end of
                  the period to which those financial statements relate and of
                  the results of its operations during that period.

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18.3     INFORMATION - MISCELLANEOUS

         The Company shall supply to the Facility Agent:

         (a)      all documents despatched (i) by it to its shareholders (or any
                  class of them) concerning the convening of, agendas for and
                  resolutions to be considered at shareholders meetings or
                  involving or containing reports or information relating to the
                  affairs and activities of the Company, or (ii) by any Borrower
                  to its creditors generally (or any class of them) at the same
                  time as they are despatched;

         (b)      promptly upon becoming aware of them, details of any
                  litigation, arbitration or administrative proceedings which
                  are current or pending, and which would, if adversely
                  determined, reasonably be expected to have a Material Adverse
                  Effect; and

         (c)      promptly, such further information in the possession or
                  control of any Borrower or any Material Subsidiary regarding
                  its financial condition and operations as the Facility Agent
                  may reasonably request,

         in sufficient copies for all of the Banks, if the Facility Agent so
         requests.

18.4     NOTIFICATIONS

         Each Obligor shall notify the Facility Agent of any Default (and the
         steps, if any, being taken to remedy it) promptly upon becoming aware
         of the facts constituting the Default.

18.5     COMPLIANCE CERTIFICATES

         The Company shall supply to the Facility Agent:

         (a)      together with the accounts specified in Clause 18.2(a)(i) and
                  (ii) (Financial information); and

         (b)      promptly at any other time, if the Facility Agent so requests
                  (but such request may not be made more than twice in any
                  period of twelve consecutive calendar months unless a Default
                  has occurred or the Majority Banks have instructed the
                  Facility Agent to make such a request),

         a certificate signed by one of the signatories authorised to act on its
         behalf certifying that no Default is outstanding or, if a Default is
         outstanding, specifying the Default and the steps, if any, being taken
         to remedy it.

18.6     AUTHORISATIONS

         Each Obligor shall promptly:

(a)      obtain, maintain and comply with the terms of; and

(b)      supply certified copies to the Facility Agent of,

                                       77


         any authorisation required under any law or regulation of France to
         enable it to perform its obligations under, or for the validity or
         enforceability of, any Finance Document.

18.7     PARI PASSU RANKING

         Each Obligor shall procure that its obligations under the Finance
         Documents will rank at least pari passu with all its other present and
         future unsecured and unsubordinated obligations, except for obligations
         mandatorily preferred by law applying to companies generally.

18.8     NEGATIVE PLEDGE

(a)      Subject to paragraphs (c) and (d), no Obligor shall, and the Company
         shall procure that no Material Subsidiary will, create or permit to
         subsist any Security Interest on any of its assets.

(b)      Notwithstanding paragraphs (c) and (d), the Company will procure that
         no member of the Group will create or permit to subsist any Security
         Interest:

         (i)      over any shares in Centenary Holding N.V. or over any shares
                  in Centenary Holding Limited except, in each case, a Security
                  Interest created under a Security Document; or

         (ii)     securing any amounts arising under, in respect of or in any
                  way relating to the High Yield Notes or in favour of the
                  trustee under the Indenture.

(c)      Notwithstanding paragraph (d), no Obligor shall, and the Company will
         procure that no member of the Group will, create or permit to subsist
         on any of its assets any Security Interest which secures any
         indebtedness owing under the New Facility Agreement, except to the
         extent that:

         (i)      the aggregate principal amount so secured does not exceed
                  E2,500,000,000;

         (ii)     all amounts owing under the Finance Documents are secured
                  either by that Security Interest or by a comparable Security
                  Interest over the same asset(s) (in each case subject to the
                  Security Sharing Agreement); and

         (iii)    the Security Interest referred to at sub-paragraph (ii) above
                  ranks (by operation of law or as a result of the Security
                  Sharing Agreement) at least pari passu with the rights of the
                  New Secured Creditors (as defined in the Security Sharing
                  Agreement) in the asset(s) subject to that Security Interest,
                  and in priority to all other rights in the asset(s) subject to
                  that Security Interest other than, in the case of security
                  granted pursuant to the VE Share Pledge and Escrow Agreement,
                  those of the New Investors (as defined in that agreement).

(d)      Paragraph (a) does not apply to:

         (i)      Security Interests already existing at the date of this
                  Agreement securing Financial Indebtedness in an aggregate
                  amount not exceeding E1,000,000,000 (or the equivalent in
                  other currencies);

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         (ii)     liens arising solely by operation of law (or by any deed
                  evidencing the same) in the ordinary course of its business in
                  respect of Financial Indebtedness which either (1) has been
                  due for less than 14 days or (2) is being contested in good
                  faith and by appropriate means;

         (iii)    pledges of goods, the related documents of title and/or other
                  related documents arising or created in the ordinary course of
                  its business as security only for Financial Indebtedness to a
                  bank or financial institution directly relating to the goods
                  or documents on or over which that pledge exists;

         (iv)     any Security Interest arising out of title retention
                  provisions in a supplier's standard conditions of supply of
                  goods acquired in the ordinary course of business;

         (v)      any Security Interest existing at the time of acquisition on
                  or over any assets acquired after the date of this Agreement
                  but only if (1) the Security Interest was not created in
                  contemplation of or in connection with that acquisition and
                  (2) the principal, capital or nominal amount secured by any
                  such Security Interest and outstanding at the time of
                  acquisition may not be increased;

         (vi)     any Security Interest created on any assets acquired after the
                  date of this Agreement for the sole purpose of financing or
                  re-financing that acquisition and securing a principal,
                  capital or nominal amount not exceeding 100 per cent. of the
                  cost of that acquisition;

         (vii)    in the case of any company which becomes a Material Subsidiary
                  after the date of this Agreement, any Security Interest
                  existing on or over its assets when it becomes a Material
                  Subsidiary, but only if (1) the Security Interest was not
                  created in contemplation of or in connection with it becoming
                  a Material Subsidiary and (2) the principal, capital or
                  nominal amount secured by any such Security Interest and
                  outstanding when the relevant company becomes a Material
                  Subsidiary may not be increased except by reason of any
                  fluctuation in the amount outstanding under, and within the
                  limits and in accordance with the terms of, facilities which
                  exist and are secured by the relevant Security Interest when
                  it becomes a Material Subsidiary;

         (viii)   any Security Interest given on assets acquired after the date
                  of this Agreement to secure Project Finance Indebtedness
                  provided that the assets which are subject to that Security
                  Interest are assets which are the subject of the applicable
                  project;

         (ix)     any Security Interest created in respect of borrowings from
                  the French Export Credit Corporation (COFACE) or similar
                  governmental agency incurred on concessional terms by any
                  Obligor or Material Subsidiary made to refinance any amount
                  receivable under any export sales contract provided that each
                  such Security Interest consists only of a pledge of such
                  member's claims under such contract against the foreign buyer
                  and of any Security Interest or guarantee of such claims;

         (x)      any Security Interest over cash or securities deposited with
                  any bank, financial institution, stock exchange or clearing
                  house with which any Obligor or Material Subsidiary enters
                  into back to back, foreign exchange, swap or derivative
                  transactions

                                       79


                  and with which cash or securities have had to be deposited in
                  order for such transaction to be entered into;

         (xi)     any Security Interest created by virtue of the operation of
                  any cash pooling arrangements for any Obligor or Material
                  Subsidiary with their bankers providing for the setting-off or
                  netting of debt and credit balances on bank accounts of those
                  members of the Group;

         (xii)    any Security Interest granted by any Obligor or Material
                  Subsidiary to any pension fund or managers securing the
                  pension obligations of any member of the Group;

         (xiii)   any Security Interest (the "REPLACEMENT SECURITY INTEREST")
                  created in substitution for any Security Interest referred to
                  in this paragraph (d) so long as the principal, capital or
                  nominal amount secured by the Replacement Security Interest
                  does not exceed the amount permitted to be secured under this
                  paragraph (d) by the Security Interest which it replaced;

         (xiv)    any Security Interest arising out of orders of attachment,
                  sequestration, distress or execution which does not constitute
                  an Event of Default under Clause 20.9 (Creditors' process);

         (xv)     the transfer of any Security Interest permitted to exist under
                  this paragraph (d) from one person to another, so long as the
                  principal, capital or nominal amount secured by that Security
                  Interest is not increased;

         (xvi)    any Security Interest, granted by any member of the VUE Group
                  over its assets, which secures amounts arising under, or is
                  otherwise permitted or required by, the VUE Bridge Extension
                  (as amended from time to time) or any VUE Bridge Refinancing;

         (xvii)   any Security Interest granted on or over assets or rights to
                  receive assets in connection with the disposal of Sithe Asia
                  with an aggregate value of no more than US$60,000,000 (or
                  equivalent in other currencies) at any time;

         (xviii)  any Security Interest granted under the VE Share Pledge and
                  Escrow Agreement; and

         (xix)    any other Security Interest created on or over assets of any
                  Obligor or any Material Subsidiary, provided that the
                  aggregate outstanding principal, capital or nominal amount
                  secured by all Security Interests created or outstanding under
                  this paragraph on or over assets of any Obligor or any
                  Material Subsidiary must not at any time exceed in aggregate
                  E500,000,000 (or the equivalent in other currencies),

         provided that the aggregate principal amount of Financial Indebtedness
         secured by all Security Interests created or outstanding under this
         paragraph (d) (excluding paragraphs (viii), and (xvi) and (xviii)
         above), when aggregated with the aggregate value of all assets and
         receivables sold, transferred or otherwise disposed of pursuant to all
         Restricted Transactions (as defined in Clause 18.9 (Transactions
         similar to security)), does not at any time exceed 7.5 per cent. of
         consolidated assets (being the total amount of assets shown in the most
         recent consolidated balance sheet of the Group).

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18.9     TRANSACTIONS SIMILAR TO SECURITY

(a)      No Obligor shall, and the Company shall procure that no Material
         Subsidiary will enter into any Restricted Transaction if as a result
         the aggregate value of all assets and receivables sold, transferred or
         otherwise disposed of pursuant to all Restricted Transactions, when
         aggregated with the aggregate principal amount of Financial
         Indebtedness secured by all Security Interests created or outstanding
         under Clause 18.8(d) (excluding paragraph 18.8(d)(viii) above) would
         exceed 7.5 per cent. of consolidated assets (being the total amount of
         assets shown in the most recent consolidated balance sheet of the
         Group).

(b)      In this Clause 18.9, "RESTRICTED TRANSACTION" means a sale, transfer or
         other disposal by any Obligor or any Material Subsidiary of:

         (i)      any of its assets on terms whereby it is or may be leased to
                  or re-acquired or acquired by a member of the Group or any of
                  its related entities; or

         (ii)     any of its receivables on recourse terms (excluding the
                  discounting of bills or notes in the ordinary course of
                  trading),

         in circumstances where the transaction is entered into primarily as a
         method of raising finance or of financing the acquisition of an asset
         provided that if such a transaction is defeased it shall not thereafter
         constitute a Restricted Transaction, and for these purposes a
         Restricted Transaction is "DEFEASED" if all of the obligations of the
         Obligor or Material Subsidiary concerned thereunder are irrevocably (A)
         transferred in full to a person that is not a member of the Group or
         (B) prepaid or (C) otherwise discharged and extinguished in full, such
         that no Obligor or Material Subsidiary thereafter has any outstanding
         Financial Indebtedness with respect to such transaction.

18.10    DISPOSALS

(a)      No Obligor shall, and the Company shall procure that no Material
         Subsidiary will, whether voluntarily or involuntarily, sell, transfer,
         grant or lease or otherwise dispose of any of its assets.

(b)      Paragraph (a) does not apply to:

         (i)      disposals made in the ordinary course of business of the
                  disposing entity or for full value on normal commercial terms;

         (ii)     disposals by one Material Subsidiary to another or to any
                  Borrower by a Material Subsidiary as long as the percentage
                  ownership of the Company in the receiving Material Subsidiary
                  (whether such ownership is direct or indirect through other
                  Material Subsidiaries) is not significantly less than the
                  Company's percentage ownership (whether direct or indirect as
                  aforesaid) in the disposing Material Subsidiary;

         (iii)    disposals of assets being shares, provided that the company
                  whose shares are the subject of such disposal remains
                  controlled by the Company following such disposal; or

                                       81


         (iv)     disposals, by VUE or any Subsidiary of VUE, of assets in
                  connection with a securitisation for the purposes of
                  refinancing the VUE Bridge Extension or any VUE Bridge
                  Refinancing provided that the aggregate net investment of the
                  various purchasers (other than any member of the VUE Group)
                  outstanding under such securitisation, together with the
                  aggregate principal amount outstanding under the VUE Bridge
                  Extension and any VUE Bridge Refinancing, does not exceed
                  U.S.$1,620,000,000 at any time.

18.11    CHANGE OF BUSINESS

         The Company shall procure that no substantial change is made to the
         general nature or scope of the business of the Company or Group from
         that carried on at the date of this Agreement (and for the purposes of
         this Clause 18.11, the general nature or scope of the business of the
         Company or Group carried on at the date of this Agreement is the media
         and telecommunications business).

18.12    MERGERS AND ACQUISITIONS

                  No Obligor shall enter into any amalgamation, demerger, merger
                  or reconstruction unless:

(a)      (i)      either the Obligor concerned is the surviving entity and
                  remains responsible for all the obligations of the Obligor
                  concerned under the Finance Documents to which it is a party;
                  or

         (ii)     if the surviving entity is not the Obligor concerned, (A) the
                  Facility Agent has first received legal opinions from external
                  counsel to the Obligor concerned addressed to the Finance
                  Parties, in form and substance satisfactory to the Facility
                  Agent confirming that the surviving entity will accede to the
                  obligations of the Obligor concerned under the Finance
                  Documents in full and (if the Obligor concerned is a
                  Subsidiary Borrower) that the obligations of the Guarantors
                  under this Agreement in respect of the Obligor concerned will
                  remain in full force and effect with respect to the
                  obligations under the Finance Documents assumed by the
                  surviving entity, (B) the surviving entity is incorporated, in
                  the case of an amalgamation, demerger, merger or
                  reconstruction involving the Company, in the U.S.A., France,
                  Belgium or the Netherlands or, in the case of an amalgamation,
                  demerger, merger or reconstruction involving a Subsidiary
                  Borrower, in the U.S.A., France, Belgium or the Netherlands or
                  the jurisdiction of that Subsidiary Borrower, (C) this
                  Agreement is first amended to the extent determined by the
                  Majority Banks (acting on the basis of legal advice) to be
                  necessary in light of the identity and jurisdiction of
                  incorporation of the surviving entity and (D) in the case of
                  an Obligor other than the Company, the surviving entity is a
                  Subsidiary of the Company; and

(b)      (in the case of an amalgamation, demerger, merger or reconstruction
         involving the Company) either:

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         (i)      the corporate rating of the surviving entity (whether or not
                  the Company) will be at least BBB- as published by S&P (or the
                  equivalent thereof published by any other rating agency); or

         (ii)     if no rating agency publishes a corporate rating in respect of
                  the surviving entity, the credit standing of the surviving
                  entity will (in the opinion of the Majority Banks) be the same
                  as or better than the Company's,

                  in each case immediately prior to the amalgamation, demerger,
                  merger or reconstruction becoming publicly known.

18.13    INSURANCE

         Each Obligor shall, and the Company shall procure that each other
         member of the Group will, maintain insurance with financially sound and
         reputable insurers with respect to its material assets of an insurable
         nature against such risks and in such amounts as are normally
         maintained by persons carrying on the same or a similar class of
         business.

18.14    MAINTENANCE OF STATUS

         Subject to Clause 18.12 (Mergers and acquisitions), each Obligor shall,
         and the Company shall procure that each Material Subsidiary will:

(a)      do all such things as are necessary to maintain its corporate
         existence; and

(b)      ensure that it has the right and is duly qualified to conduct its
         business as it is conducted in all applicable jurisdictions.

18.15    COMPLIANCE WITH ENVIRONMENTAL LAWS

         Each Obligor will, and the Company will procure that each of its
         Material Subsidiaries will, comply in all material respects with all
         applicable Environmental Laws.

18.16    SUBSIDIARY DEBT

(a)      The Company shall procure that that part of Net Financial Debt (as
         defined in Clause 19.1) (excluding Project Finance Indebtedness and
         Financial Indebtedness owing from one member of the Group to another
         member of the Group) incurred by its Subsidiaries shall not at any time
         exceed in aggregate an amount equal to 30 per cent. of the then Net
         Financial Debt (as defined in Clause 19.1 (Financial covenant
         definitions)) (excluding Project Finance Indebtedness and Financial
         Indebtedness owing from one member of the Group to another member of
         the Group).

(b)      Financial Indebtedness:

         (i)      owing under or in respect of the VUE Bridge Extension or any
                  VUE Bridge Refinancing; or

         (ii)     constituted by the guarantees contained in the New Facility
                  Agreement; or

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         (iii)    of a principal amount of up to U.S.$500,000,000 owing by
                  Vivendi Communications North America, Inc. or Vivendi
                  Universal Holding I Corp. as borrower (in place of an
                  equivalent amount owing by the Company as borrower) under the
                  New Facility Agreement.

         will not be taken into account for the purposes of paragraph (a).

18.17    GUARANTEES

(a)      No member of the Group may give or be under any obligation in respect
         of any guarantee, indemnity or other assurance against financial loss
         in respect of the High Yield Notes or in favour of the trustee under
         the Indenture.

(b)      No Obligor may, and the Company shall procure that no member of the
         Group is, gives or is under any obligation in respect of any guarantee,
         indemnity or other assurance against financial loss in respect of the
         indebtedness under New Facility Agreement, unless that Obligor or
         member of the Group is (or simultaneously becomes) a Guarantor under
         this Agreement.

18.18    HIGH YIELD NOTES

         Except during a Release Condition Period:

         (a)      the Company will not amend or agree to amend the High Yield
                  Note Documents:

                  (i)      such that the maturity date of the High Yield Notes
                           is advanced to a date prior to the Final Maturity
                           Date;

                  (ii)     such that the rate of interest or frequency of
                           payment of interest in respect of any of the High
                           Yield Notes is increased; or

                  (iii)    in any other way which is or could be, in each case
                           in the opinion of the Majority Banks, inconsistent
                           with the terms of this Agreement or have a
                           detrimental effect on the rights or remedies of the
                           Finance Parties under the Finance Documents;

         (b)      the Company will not make a repayment or prepayment,
                  redemption, repurchase or defease (by way of legal defeasance
                  or covenant defeasance) any of the High Yield Notes or make
                  any offer to repay, prepay, redeem, repurchase or defease any
                  of the High Yield Notes; and

         (c)      the Company will ensure that no member of the Group purchases
                  any of the High Yield Notes.

18.19    SECURITY AND SUBORDINATION

(a)      The Obligors shall at their own expense execute and do all such
         assurances, acts and things as the Security Agent may reasonably
         require for perfecting or protecting the security intended to be
         afforded by the Security Documents (and shall deliver to the Security
         Agent such

                                       84


         directors' and shareholders' resolutions, title documents and other
         documents as the Security Agent may reasonably require).

(b)      Except during a Security Release Condition Period, the Company will
         ensure that Security Documents in respect of the Existing Cegetel
         Shares are executed and delivered to the Security Agent, in form and
         substance satisfactory to the Facility Agent and together with any
         other documents, evidence, opinions or assurances reasonably required
         by the Security Agent in connection with those Security Documents,
         forthwith if any of the following circumstances subsist:

         (i)      there are no contractual restrictions or provisions
                  (including, without limitation, pre-emption rights) between
                  shareholders or Cegetel Groupe S.A. restricting or which would
                  be triggered upon the granting of such a pledge;

         (ii)     SIT agrees to grant a share pledge over the Acquired Shares;
                  or

         (iii)    the Company acquires 100 per cent. of the shares of Cegetel.

(c)      Except during a Security Release Condition Period, the Company must
         ensure that each loan which is owing by a member of the Group to
         another member of the Group and which is (or the repayment of which is)
         subordinated to the repayment of the indebtedness under the New
         Facility Agreement is also subordinated, on the same terms, to the
         indebtedness owing under the Finance Documents.

18.20    VE B SHARES

(a)      The Company shall use its reasonable endeavours to negotiate with the
         New Investors the transactions contemplated in the VE Share Pledge and
         Escrow Agreement (as amended on or about the date hereof) in order to
         obtain the consent of the New Investors to enable the Company to grant
         a pledge in favour of the lenders under the New Facility Agreement over
         all of the VE B Shares ranking pari passu with the pledge of these
         shares granted by the Company to the Banks.

(b)      Promptly upon the New Investors giving their consent referred to in
         paragraph (a) above (but not otherwise), the Company shall execute a
         share pledge in respect of all the VE B Shares substantially in the
         form set out in Annex F of the VE Share Pledge and Escrow Agreement.

19.      FINANCIAL COVENANTS

19.1     FINANCIAL COVENANT DEFINITIONS

         In this Clause 19:

         "ACQUIRED BUSINESS"

         means a member of the Group or business or assets acquired during a
         Measurement Period.

         "CASH EBITDA"

                                       85


         means the consolidated operating income of the Group (other than any
         member of the Maroc Telecom Group and the Cegetel Group) determined in
         accordance with accounting principles and practices generally accepted
         in France, consistently applied, for a Measurement Period, adjusted by:

         (a)      adding back depreciation, amortisation and non-cash provisions
                  (to the extent that such depreciation, amortisation and
                  non-cash provisions are deducted in computing operating
                  income);

         (b)      deducting any gain (or adding back any loss) in connection
                  with any revaluation of an asset or any gain or loss against
                  book value arising on the disposal of an asset (otherwise than
                  in the ordinary course of trading) by a member of the Group
                  during that Measurement Period;

         (c)      adding back net restructuring charges and other one-time
                  items; and

         (d)      adding cash dividends received from VE, any member of the
                  Maroc Telecom Group and the Cegetel Group (other than cash
                  dividends received by SIT in respect of the Acquired Shares
                  prior to the SIT Repayment Date),

         and including the operating income (as adjusted in accordance with
         paragraphs (a) to (c) above) of any Acquired Business (provided such
         acquisition is permitted by the terms of this Agreement) (as determined
         on a pro forma twelve month basis for the part of the Measurement
         Period prior to the acquisition of the Acquired Business), provided
         that the extent of the operating income of the Acquired Business so
         included will be an amount equal to the percentage of the cashflow of
         the Acquired Business which the Company demonstrates in reasonable
         detail it either effectively controls or has access to.

         "CONSOLIDATED CASH AND CASH EQUIVALENTS"

         means, at any time:

         (a)      cash in hand or on deposit with any acceptable bank (excluding
                  any deposit used as cash collateral for the purpose of
                  defeasing indebtedness as described in paragraph (B) of the
                  definition of Total Gross Financial Debt);

         (b)      certificates of deposit, maturing within one year after the
                  relevant date of calculation, issued by a reputable bank;

         (c)      any investment in marketable obligations issued or guaranteed
                  by the government of the United States of America, Switzerland
                  or the European Union (excluding Greece and any country which
                  becomes a member thereof after the date of the New Facility
                  Agreement) or by an instrumentality or agency of the
                  government of the United States of America, Switzerland or the
                  European Union (excluding Greece and any country which becomes
                  a member thereof after the date of the New Facility Agreement)
                  having an equivalent credit rating;

         (d)      open market commercial paper:

                  (i)      for which a recognised trading market exists;

                                       86


                  (ii)     issued in Sterling, U.S. Dollars or Euro;

                  (iii)    which matures within one year after the relevant date
                           of calculation; and

                  (iv)     which has a credit rating of either A-1 by S&P or
                           IBCA or P-1 by Moody's, or, if no rating is available
                           in respect of the commercial paper or indebtedness,
                           the issuer of which has, in respect of its long-term
                           debt obligations, an equivalent rating; and

         (e)      any other instrument, security or investment approved by the
                  Majority Banks,

         in each case, to which any member of the Group (other than any member
         of the Maroc Telecom Group) is beneficially entitled at that time and
         which is capable of being applied against Total Gross Financial Debt
         but excluding any cash acquired in connection with the Fixed Line
         Acquisition. An "ACCEPTABLE BANK" for this purpose is a commercial bank
         or trust company which has a rating of A or higher by S&P or FitchIBCA
         or A2 or higher by Moody's or a comparable rating from a nationally
         recognised credit rating agency for its long-term debt obligations or
         has been approved by the Majority Banks.

         "FINANCIAL INCOME"

         means, in respect of the Group (other than any member of the Maroc
         Telecom Group and any member of the Cegetel Group, each on a
         consolidated basis) all interest and other financing income received or
         receivable by the Group (other than any member of the Maroc Telecom and
         the Cegetel Group) during a Measurement Period.

         "FIXED LINE ACQUISITION"

         means the acquisition by Cegetel, of a French fixed line telephone
         business which has a positive EBITDA based on its latest accounts and,
         at the time of its acquisition, Financial Indebtedness of not more than
         E300,000,000, for an aggregate total consideration of not more than
         E800,000,000 (including E300,000,000 of acquired debt).

         "MEASUREMENT PERIOD"

         means a period of 12 months ending on a Testing Date.

         "NET FINANCIAL DEBT"

         means, in respect of the Group (other than any member of the Maroc
         Telecom Group) at any time Total Gross Financial Debt less Consolidated
         Cash and Cash Equivalents.

         "NET FINANCING COSTS"

         means, in respect of the Group (other than any member of the Maroc
         Telecom Group and any member of the Cegetel Group, each on a
         consolidated basis) Total Financing Costs less Financial Income for the
         Group during the relevant Measurement Period.

                                       87



         "QUARTERLY TESTING DATE"

         means 31st March, 30th June, 30th September and 31st December of each
         year.

         "RELEVANT PERCENTAGE"

         means the percentage of the cashflow of any Acquired Business which the
         Company demonstrates in reasonable detail it either controls or has
         access to.

         "SEMI-ANNUAL TESTING DATE"

         means 30th June and 31st December of each year.

         "TESTING DATE"

         means a Quarterly Testing Date or a Semi-annual Testing Date.

         "TOTAL FINANCING COSTS"

         means all interest and financing fees, including the interest element
         payable under any finance lease and any periodic cash payments in
         respect of preference shares (other than preference shares issued by
         VUE prior to the date of the New Facility Agreement or issued or
         accrued as additional shares in respect of shares issued by VUE prior
         to the date of the New Facility Agreement) and excluding any costs
         incurred in connection with the Fixed Line Acquisition (together
         "FINANCING Costs") (whether, in each case, paid, payable or (subject to
         the proviso set out below) capitalised) incurred by the Group (other
         than any member of the Maroc Telecom Group and on a consolidated basis)
         during a Measurement Period and including the Relevant Percentage of
         the Financing Costs of any Acquired Business (as determined on a pro
         forma twelve month basis for the part of the Measurement Period prior
         to the acquisition of the Acquired Business), provided that capitalised
         items shall only be included in the calculation of Total Financing
         Costs for a Measurement Period if the Company confirms in a compliance
         certificate delivered in relation to the financial covenants for that
         Measurement Period that they constitute more than 5 per cent. of those
         Total Financing Costs. For these purposes, in each such compliance
         certificate, the Company shall either certify that capitalised items
         for the Measurement Period to which that certificate relates do not
         exceed 5 per cent. of Total Financing Costs for that period or, if they
         do, set out the aggregate amount of capitalised items.

         "TOTAL GROSS FINANCIAL DEBT"

         means, in respect of the Group (other than any member of the Maroc
         Telecom Group on a consolidated basis) at any time the aggregate of the
         following (without double counting and provided that where any of the
         following items relates to an Acquired Business, the Relevant
         Percentage only of the amount of that item shall be included in the
         calculation of Total Gross Financial Debt):

         (a)      the outstanding principal amount of any moneys borrowed;

         (b)      the outstanding principal amount of any acceptance under any
                  acceptance credit;

                                       88



         (c)      the outstanding principal amount of any bond, note, debenture,
                  loan stock or other similar instrument;

         (d)      the capitalised element of indebtedness under a finance or
                  capital lease except to the extent that any such lease is
                  defeased (for which purposes, a lease is "defeased" if all of
                  the obligations of the relevant member of the Group thereunder
                  are irrevocably (A) transferred in full to a person that is
                  not a member of the Group or (B) prepaid or (C) otherwise
                  discharged and extinguished in full, such that no member of
                  the Group thereafter has any outstanding indebtedness or
                  liability (contingent or otherwise) with respect to such
                  lease);

         (e)      the outstanding principal amount of all moneys owing in
                  connection with the sale or discounting of receivables
                  (otherwise than on a non-recourse basis);

         (f)      the outstanding principal amount of any indebtedness arising
                  from any deferred payment agreements arranged primarily as a
                  method of raising finance or financing the acquisition of an
                  asset;

         (g)      any fixed or minimum premium payable on the repayment or
                  redemption of any instrument referred to in paragraph (c)
                  above;

         (h)      the outstanding principal amount of any indebtedness arising
                  in connection with any other transaction (including any
                  forward sale or purchase agreement) which has the commercial
                  effect of a borrowing;

         (i)      the mark to market value of any currency swap or interest
                  swap, cap or collar arrangements or any other derivative
                  instrument to the extent the derivative instruments are not
                  used for hedging purposes;

         (j)      the aggregate face value amount of preference shares (other
                  than preference shares issued by VUE prior to the date of the
                  New Facility Agreement or issued or accrued as additional
                  shares in respect of shares issued by VUE prior to the date of
                  the New Facility Agreement and preference shares mandatorily
                  convertible into shares in a member of the Group (other than
                  any member of the Maroc Telecom Group) which do not in any
                  circumstances give rise to redemptions or repayments (whether
                  in whole or in part) in cash) in relation to which there is a
                  contractual obligation to pay dividends prior to 91 days after
                  the Final Maturity Date; and

         (k)      the outstanding principal amount of any indebtedness of any
                  person of a type referred to in paragraphs (a) - (j) above
                  which is the subject of a guarantee, indemnity or similar
                  assurance against financial loss given by a member of the
                  Group (other than any member of the Maroc Telecom Group)
                  (excluding (i) the amount of any guarantee obligations of the
                  Company which have been assigned to, and assumed by, any
                  member of the Maroc Telecom Group or a company which is not a
                  member of the Group and (ii) any guarantee, indemnity or
                  similar assurance against financial loss entered into prior to
                  the date of the New Facility Agreement which is the subject of
                  a counter-guarantee given by VE),

         but excluding any Non Recourse Financing, any Intra Group Loans and
         Project Finance Indebtedness, any indebtedness incurred in connection
         with the Fixed Line Acquisition or

                                       89


         otherwise any indebtedness which has been defeased prior to the
         Effective Date (for which purposes, indebtedness is "defeased" if all
         of the obligations of the relevant member of the Group in relation
         thereto are irrevocably (A) transferred in full to a person that is not
         a member of the Group or (B) cash collateralised in full by blocked
         deposits, such that no member of the Group thereafter has any
         outstanding indebtedness or liability (contingent or otherwise) with
         respect to such indebtedness (including, without limitation, with
         respect to adjusting the amount of, or making any payment in relation
         to, any such cash collateral)).

19.2     CALCULATION

(a)      All the terms used in this Clause 19 are to be calculated in accordance
         with accounting principles and practices generally accepted in France,
         consistently applied.

(b)      If there is a dispute as to any interpretation of any term in this
         Clause 19, either:

         (i)      the interpretation of the Facility Agent shall prevail (after
                  prior consultation with the Company's auditors and the
                  Company); or

         (ii)     (if the Company so requests) the Facility Agent will, at the
                  expense of the Company, instruct an independent expert (which
                  shall be an internationally recognised independent qualified
                  firm of auditors) to act as an expert and not as an
                  arbitrator, and the determination of such expert shall be
                  final and binding on the Parties.

19.3     FINANCIAL COVENANTS

(a)      Before a Release Condition Date (but subject always to paragraphs (c)
         to (f) inclusive below), the Company shall procure that on each
         quarterly Testing Date referred to in Column 1 below:

         (i)      the ratio of Net Financial Debt to Cash EBITDA does not exceed
                  that set out in Column 2 below opposite that Testing Date;

         (ii)     the ratio of Cash EBITDA to Net Financing Costs is at least
                  that set out in Column 3 below opposite that Testing Date; and

         (iii)    Total Gross Financial Debt does not exceed the amount set out
                  in Column 4 below opposite that Testing Date.

(b)      On or after a Release Condition Date (but subject always to paragraphs
         (c) to (f) inclusive below), the Company shall procure that following
         such Release Condition Date on each semi-annual Testing Date referred
         to in Column 1 below:

         (i)      the ratio of Net Financial Debt to Cash EBITDA does not exceed
                  that set out in Column 2 below opposite the Testing Date
                  applicable as at such Release Condition Date;

         (ii)     the ratio of Cash EBITDA to Net Financing Costs is at least
                  that set out in Column 3 below opposite the Testing Date
                  applicable as at such Release Condition Date; and

                                       90


         (iii)    Total Gross Financial Debt does not exceed the amount set out
                  in Column 4 below opposite the Testing Date applicable as at
                  such Release Condition Date.

(c)      If, on or after a Release Condition Date, an Investment Downgrading
         Date occurs, the financial ratios and covenant (the ratios) referred to
         in paragraph (a) above shall, subject to paragraphs (d) to (f)
         inclusive below, apply and be reinstated from the Investment
         Downgrading Date unless and until a Release Condition Date occurs
         again, in which case the provisions of paragraph (b) above shall apply.

(d)      Within 5 days of an Investment Downgrading Date, the Company and the
         Facility Agent shall enter into negotiations in good faith for a period
         of no more than 45 days with a view to agreeing any amendments to the
         ratios set out in columns 2, 3 and 4 below.

(e)      Any amendments agreed under paragraph (d) shall be, with the prior
         written consent of the Majority Banks, binding on all the parties.

(f)      If no amendments are agreed by the Company and the Majority Banks under
         paragraphs (d) and (e) above, the applicable ratios, in each case for
         the period from the Investment Downgrading Date unless and until the
         occurrence of a Release Condition Date, will be those set out in
         columns 2, 3 and 4, as appropriate, opposite the Testing Date which
         were applicable on the Release Condition Date immediately preceding
         that Investment Downgrading Date and thereafter the applicable ratios
         on each successive quarterly Testing Date, will be the next consecutive
         ratios, each as set out in columns 2, 3 and 4 below.



                         COLUMN 1                 COLUMN 2               COLUMN 3                COLUMN 4
                      (TESTING DATE)       (MAXIMUM RATIO OF NET    (MINIMUM RATIO FOR     (MAXIMUM TOTAL GROSS
                                             FINANCIAL DEBT TO      CASH EBITDA TO NET        FINANCIAL DEBT
                                                CASH EBITDA)         FINANCING COSTS)        (BILLION EURO))
                                                                                  
                         30/06/03                  5.8:1                   2.4:1                   18.0
                         30/09/03                  5.4:1                   2.4:1                   15.6
                         31/12/03                  4.4:1                   2.7:1                   15.6
                         31/03/04                  4.2:1                   2.9:1                   12.8
                         30/06/04                  4.0:1                   3.1:1                   12.5
                         30/09/04                  4.0:1                   3.2:1                   12.3
                         31/12/04                  4.0:1                   3.3:1                   11.3
                         31/03/05                  3.5:1                   3.4:1                   10.3
                         30/06/05                  3.5:1                   3.4:1                   10.3
                         30/09/05                  3.5:1                   3.4:1                   10.0
                         31/12/05                  3.5:1                   3.4:1                   10.0
                         31/03/06                  3.0:1                   3.5:1                   9.2


                                       91




                         COLUMN 1                 COLUMN 2               COLUMN 3                COLUMN 4
                      (TESTING DATE)       (MAXIMUM RATIO OF NET    (MINIMUM RATIO FOR     (MAXIMUM TOTAL GROSS
                                             FINANCIAL DEBT TO      CASH EBITDA TO NET        FINANCIAL DEBT
                                                CASH EBITDA)         FINANCING COSTS)        (BILLION EURO))
                                                                                  
                         30/06/06                  3.0:1                   3.5:1                   9.2
                         30/09/06                  3.0:1                   3.5:1                   9.0
                         31/12/06                  3.0:1                   3.5:1                   9.0
                  and subsequent Testing
                           Dates


20.      DEFAULT

20.1     EVENTS OF DEFAULT

         Each of the events set out in this Clause is an Event of Default
         (whether or not caused by any reason whatsoever outside the control of
         any Borrower or any other person).

20.2     NON-PAYMENT

         An Obligor does not pay on the due date (or within three Business Days
         of the due date where the failure to pay is for administrative or
         technical reasons) any amount payable by it under the Finance Documents
         at the place at and in the currency in which it is expressed to be
         payable.

20.3     BREACH OF OTHER OBLIGATIONS

(a)      A member of the Group does not comply with any provision of a Finance
         Document to which it is a party (other than a provision referred to in
         Clause 20.2 (Non-payment) or Clause 19 (Financial Covenants)) and
         (where the failure is capable of remedy) such failure to comply
         continues for fifteen days after the earlier of the date on which (a)
         any Obligor becomes aware of the facts or circumstances giving rise to
         such failure and (b) the Facility Agent gives notice of such failure to
         the Obligors' Agent.

(b)      Except during a Release Condition Period, the Company repays, prepays,
         redeems, repurchases or defeases (whether by way of legal defeasance or
         covenant defeasance) any of the High Yield Notes or makes any offers to
         repay, prepay, redeem, repurchase or defease any of the High Yield
         Notes.

20.4     MISREPRESENTATION

         A representation, warranty or statement made or repeated in or in
         connection with any Finance Document or in any document delivered by or
         on behalf of any Obligor under or in connection with any Finance
         Document is incorrect in any material respect when made or deemed to be
         made or repeated.

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20.5     CROSS-DEFAULT

(a)      Any Financial Indebtedness of any Obligor or a Material Subsidiary is
         not paid when due (or where there is a grace period originally
         applicable to that Financial Indebtedness, within that grace period);
         or

(b)      an event of default howsoever described occurs under any document
         relating to Financial Indebtedness of any Obligor or a Material
         Subsidiary; or

(c)      any Financial Indebtedness of any Obligor or a Material Subsidiary
         becomes prematurely due and payable or is placed on demand as a result
         of an event of default (howsoever described) under the document
         relating to that Financial Indebtedness; or

(d)      any commitment for, or underwriting of, any Financial Indebtedness of
         any Obligor or a Material Subsidiary is cancelled or suspended as a
         result of an event of default (howsoever described) under the document
         relating to that Financial Indebtedness; or

(e)      any Security Interest securing Financial Indebtedness over any asset of
         any Obligor or a Material Subsidiary becomes enforceable,

         provided that there shall only be an Event of Default under this Clause
         20.5 if the aggregate amount of Financial Indebtedness which is not so
         paid and/or in respect of which such event has occurred and/or which
         becomes prematurely due and payable or is placed on demand and/or in
         respect of which the commitment or underwriting is cancelled or
         suspended and/or in respect of which such Security Interest becomes
         enforceable, exceeds E40,000,000 (or the equivalent in other
         currencies).

20.6     INSOLVENCY

(a)      Any Obligor or any Material Subsidiary is, or is deemed for the
         purposes of any law to be, unable to pay its debts as they fall due or
         to be insolvent (including without limitation "en etat de cessation des
         paiements"), or admits inability to pay its debts as they fall due; or

(b)      any Obligor or any Material Subsidiary suspends making payments on all
         or any class of its debts or announces an intention to do so, or a
         moratorium is declared in respect of any of its indebtedness; or

(c)      any Obligor or any Material Subsidiary, by reason of financial
         difficulties, applies for, or is subject to, an amicable settlement or
         a "reglement amiable" pursuant to law 84-148 of 1st March, 1984 of
         France, or begins negotiations with one or more of its creditors with a
         view to the readjustment or rescheduling of any of its indebtedness.

20.7     INSOLVENCY PROCEEDINGS

(a)      Any step (including petition, proposal or convening a meeting) is taken
         with a view to a composition, assignment or arrangement with any
         creditors of any Obligor or any Material Subsidiary; or

(b)      a meeting of any Obligor or any Material Subsidiary is convened for the
         purpose of considering any resolution for (or to petition for) its
         winding-up or for its administration

                                       93


         (including without limitation "dissolution, liquidation, or
         redressement judiciaire") or any such resolution is passed; or

(c)      any person presents a petition for the winding-up or for the
         administration of any Obligor or any Material Subsidiary unless (in the
         case of a petition being presented by a person other than an Obligor or
         a Material Subsidiary) the same is frivolous or vexatious or is
         otherwise being contested in good faith and on substantial grounds and
         is stayed or discharged within 21 days of being presented and in any
         event prior to the date of any substantive hearing of the petition
         (provided that this exception shall not apply in relation to an
         administration petition presented in the United Kingdom); or

(d)      an order for the winding-up or administration of any Obligor or any
         Material Subsidiary is made;

(e)      a judgment is issued for the judicial liquidation ("liquidation
         judiciaire") or the transfer of the whole of the business ("cession de
         l'entreprise" or "cession de fonds de commerce") of any Obligor or any
         Material Subsidiary; or

(f)      any other step (including petition, proposal or convening a meeting) is
         taken with a view to the rehabilitation, administration, custodianship,
         liquidation, winding-up or dissolution of any Obligor or any Material
         Subsidiary or any other insolvency proceedings involving any Obligor or
         any Material Subsidiary.

20.8     APPOINTMENT OF RECEIVERS AND MANAGERS

         Any person makes a request in accordance with any applicable laws for
         the appointment of a liquidator, trustee in bankruptcy, judicial
         custodian, compulsory manager, receiver, administrative receiver,
         administrator, administrateur judiciaire, provisoire mandataire ad hoc,
         conciliateur or mandataire liquidateur or the like in respect of any
         Obligor or any Material Subsidiary or any part of its assets or any
         such appointment is made unless (in the case of a request being made by
         a person other than an Obligor or a Material Subsidiary) the request
         for such appointment is being contested in good faith and on
         substantial grounds and is dismissed or withdrawn within 21 days of the
         making of such request and in any event prior to the date that any such
         appointment is made.

20.9     CREDITORS' PROCESS

         Any attachment, sequestration, distress or execution affects any asset
         of a value exceeding E15,000,000 (or the equivalent in other
         currencies) of any Obligor or any Material Subsidiary and is not
         discharged within 30 days.

20.10    ANALOGOUS PROCEEDINGS

         There occurs, in relation to any Obligor or any Material Subsidiary,
         any event anywhere which, in the opinion of the Majority Banks (acting
         on the basis of legal advice), appears to correspond with any of those
         mentioned in Clauses 20.6 (Insolvency) to 20.9 (Creditors' process)
         (inclusive).

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20.11    CESSATION OF BUSINESS

         Any Obligor or any Material Subsidiary ceases, or takes clear steps to
         cease, to carry on all or a substantial part of its business.

20.12    UNLAWFULNESS

         It is or becomes unlawful for any Obligor to perform any of its
         obligations under the Finance Documents.

20.13    EFFECTIVENESS OF FINANCE DOCUMENTS

(a)      Any obligation of an Obligor (including any obligation under Clause 16
         (Guarantee) under the Finance Documents is not effective or is alleged
         by any Obligor to be ineffective for any reason.

(b)      Any Security Document does not create the security it purports to
         create or any Security Document is not effective or ceases to
         constitute a valid, first ranking Security Interest of the type
         purported to be created thereby.

(c)      The subordination purported to be effected by the Subordination
         Agreements or the priority of security purported to be effected by the
         Security Sharing Agreement (in each case pari passu with the interests
         of the lenders under the New Facility Agreement) is not effective or is
         alleged in writing by a member of the Group party to any Subordination
         Agreement or the Security Sharing Agreement to be ineffective.

(d)      Any member of the Group which is party to a Subordination Agreement or
         the Security Sharing Agreement repudiates (or evidences an intention in
         writing to repudiate it) a Subordination Agreement or the Security
         Sharing Agreement, as the case may be.

20.14    MATERIAL ADVERSE CHANGE

         Any event or series of events occurs which, in the reasonable opinion
         of the Majority Banks (acting in good faith), has a Material Adverse
         Effect.

20.15    ACCELERATION

         On and at any time after the occurrence of an Event of Default and
         whilst the same is continuing, the Facility Agent may, and shall if so
         directed by the Majority Banks, by notice to the Obligors' Agent:

         (a)      cancel the Total Commitments; and/or

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

         (c)      demand that all or part of the Loans be payable on demand,
                  whereupon they shall immediately become payable on demand by
                  the Facility Agent acting on the instructions of the Majority
                  Banks.

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21.      THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS

21.1     APPOINTMENT AND DUTIES OF THE FACILITY AGENT

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

(b)      Each Party appointing the Facility Agent irrevocably authorises the
         Facility Agent on its behalf to:

         (i)      perform the duties and to exercise the rights, powers and
                  discretions that are specifically delegated to it under or in
                  connection with the Finance Documents, together with any other
                  incidental rights, powers and discretions; and

         (ii)     execute each Finance Document expressed to be executed by the
                  Facility Agent on that Party's behalf.

(c)      The Facility Agent has only those duties which are expressly specified
         in this Agreement. Those duties are solely of a mechanical and
         administrative nature.

21.2     ROLE OF THE MANDATED LEAD ARRANGERS

         Except as specifically provided in this Agreement, no Mandated Lead
         Arranger has any obligations of any kind to any other Party under or in
         connection with any Finance Document.

21.3     RELATIONSHIP

         The relationship between the Facility Agent and the other Finance
         Parties is that of agent and principal only. Nothing in this Agreement
         constitutes the Facility Agent as trustee or fiduciary for any other
         Party or any other person and the Facility Agent need not hold in trust
         any moneys paid to it for a Party or be liable to account for interest
         on those moneys.

21.4     MAJORITY BANKS' INSTRUCTIONS

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

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

21.5     DELEGATION

         The Facility Agent may act under the Finance Documents through its
         personnel and agents.

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21.6     RESPONSIBILITY FOR DOCUMENTATION

         Neither the Facility Agent nor any Mandated Lead Arranger is
         responsible to any other Party for:

         (a)      the execution, genuineness, validity, enforceability or
                  sufficiency of any Finance Document or any other document;

         (b)      the collectability of amounts payable under any Finance
                  Document; or

         (c)      the accuracy of any statements (whether written or oral) made
                  in or in connection with any Finance Document (including the
                  Information Memorandum).

21.7     DEFAULT

(a)      The Facility Agent is not obliged to monitor or enquire as to whether
         or not a Default has occurred. The Facility Agent will not be deemed to
         have knowledge of the occurrence of a Default. However, if the Facility
         Agent receives notice from a Party referring to this Agreement,
         describing the Default and stating that the event is a Default, or in
         the event that the Facility Agent has actual knowledge of a failure to
         make a payment which constitutes a Default under Clause 20.2
         (Non-payment), it shall promptly notify the Banks.

(b)      The Facility Agent may require the receipt of security satisfactory to
         it, whether by way of payment in advance or otherwise, against any
         liability or loss which it will or may incur in taking any proceedings
         or action arising out of or in connection with any Finance Document
         before it commences those proceedings or takes that action.

21.8     EXONERATION

(a)      Without limiting paragraph (b) below, the Facility Agent will not be
         liable to any other Party for any action taken or not taken by it under
         or in connection with any Finance Document, unless directly caused by
         its gross negligence or wilful misconduct.

(b)      No Party may take any proceedings against any officer, employee or
         agent of the Facility Agent in respect of any claim it might have
         against the Facility Agent or in respect of any act or omission of any
         kind (including gross negligence or wilful misconduct) by that officer,
         employee or agent in relation to any Finance Document. Any officer,
         employee or agent of the Facility Agent may rely on this paragraph (b)
         and enforce its terms under the Contracts (Rights of Third Parties) Act
         1999.

21.9     RELIANCE

         The Facility Agent may:

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

(b)      rely on any statement made by a director or employee of any person
         regarding any matters which may reasonably be assumed to be within his
         knowledge or within his power to verify; and

                                       97


(c)      engage, pay for and rely on legal or other professional advisers
         selected by it (including those in the Facility Agent's employment and
         those representing a Party other than the Facility Agent).

21.10    CREDIT APPROVAL AND APPRAISAL

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

(a)      has made its own independent investigation and assessment of the
         financial condition and affairs of the Obligors and their respective
         related entities in connection with its participation in this Agreement
         and has not relied exclusively on any information provided to it by the
         Facility Agent or a Mandated Lead Arranger in connection with any
         Finance Document; and

(b)      will continue to make its own independent appraisal of the
         creditworthiness of the Obligors and their respective related entities
         while any amount is or may be outstanding under the Finance Documents
         or any Commitment is in force.

21.11    INFORMATION

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

(b)      The Facility Agent shall promptly supply a Bank with a copy of each
         document received by the Facility Agent under Clause 4 (Conditions
         precedent), upon the request and at the expense of that Bank.

(c)      Except where this Agreement specifically provides otherwise, the
         Facility Agent is not obliged to review or check the accuracy or
         completeness of any document it forwards to another Party.

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

         (i)      either initially or on a continuing basis to provide any Bank
                  with any credit or other information concerning the financial
                  condition or affairs of the Obligors or of their respective
                  related entities, whether coming into its possession before,
                  on or after the date of this Agreement; or

         (ii)     unless specifically requested to do so by a Bank in accordance
                  with a Finance Document, to request any certificates or other
                  documents from any Borrower.

21.12    THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS INDIVIDUALLY

(a)      If it is also a Bank, the Facility Agent and each Mandated Lead
         Arranger each has the same rights and powers under this Agreement as
         any other Bank and may exercise those rights and powers as though it
         were not the Facility Agent or a Mandated Lead Arranger.

(b)      The Facility Agent and each Mandated Lead Arranger may each:

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         (i)      carry on any business with any Obligor or their respective
                  related entities;

         (ii)     act as agent or trustee for, or in relation to any financing
                  involving, any Obligor or their respective its related
                  entities; and

         (iii)    retain any profits or remuneration in connection with its
                  activities under this Agreement or in relation to any of the
                  foregoing.

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

(d)      Each Obligor irrevocably authorises the Facility Agent to disclose to
         the other Finance Parties any information which, in the opinion of the
         Facility Agent, is received by it in its capacity as Facility Agent.

(e)      The Facility Agent may deduct from any amount received by it for the
         Banks pro rata any unpaid fees, costs and expenses of the Facility
         Agent incurred by it in connection with the Finance Documents.

21.13    INDEMNITIES

(a)      Without limiting the liability of any Obligor under the Finance
         Documents, each Bank shall forthwith on demand indemnify the Facility
         Agent for that Bank's proportion of any duly documented liability or
         loss incurred by the Facility Agent in any way relating to or arising
         out of its acting as Facility Agent, except to the extent that the
         liability or loss arises directly from the Facility Agent's gross
         negligence or wilful misconduct.

(b)      A Bank's proportion of the liability or loss set out in paragraph (a)
         above will be the proportion which its participation in the Loans (if
         any) bears to all the Loans on the date of the demand. However, if
         there are no Loans outstanding on the date of demand, then the
         proportion will be the proportion which its Commitment bears to the
         Total Commitments at the date of demand or, if the Total Commitments
         have then been cancelled, bore to the Total Commitments immediately
         before being cancelled.

21.14    COMPLIANCE

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

(b)      Without limiting paragraph (a) above, the Facility Agent need not
         disclose any information relating to any Obligor or any of their
         respective related entities if the disclosure might, in the opinion of
         the Facility Agent, constitute a breach of any law or regulation or any
         duty of secrecy or confidentiality or be otherwise actionable at the
         suit of any person.

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21.15    RESIGNATION OF THE FACILITY AGENT

(a)      Notwithstanding its irrevocable appointment, the Facility Agent may
         resign by giving notice to the Banks and the Obligors' Agent, in which
         case the Facility Agent may forthwith appoint one of its Affiliates as
         successor Facility Agent or, failing that, the Majority Banks may
         appoint a successor Facility Agent following consultation with the
         Obligors' Agent.

(b)      If the appointment of a successor Facility Agent is to be made by the
         Majority Banks but they have not, within 30 days after notice of
         resignation, appointed a successor Facility Agent which accepts the
         appointment, the Facility Agent may appoint a successor Facility Agent
         following consultation with the Obligors' Agent.

(c)      The resignation of the Facility Agent and the appointment of any
         successor Facility Agent will both become effective only upon the
         successor Facility Agent notifying all the Parties that it accepts its
         appointment. On giving the notification, the successor Facility Agent
         will succeed to the position of the Facility Agent and the term
         "FACILITY AGENT" (as appropriate) will mean the successor Facility
         Agent.

(d)      The retiring Facility Agent shall make available to the successor
         Facility Agent such documents and records and provide such assistance
         as the successor Facility Agent may reasonably request for the purposes
         of performing its functions as the Facility Agent under this Agreement.

(e)      Upon its resignation becoming effective, this Clause 21 shall continue
         to benefit the retiring Facility Agent in respect of any action taken
         or not taken by it under or in connection with the Finance Documents
         while it was the Facility Agent, and, subject to paragraph (d) above,
         it shall have no further obligations under any Finance Document.

(f)      The Majority Banks may, by notice to the Facility Agent, require it to
         resign in accordance with paragraph (a) above. In this event, the
         Facility Agent shall resign in accordance with paragraph (a) above but
         it shall not be entitled to appoint one of its Affiliates as successor
         Facility Agent.

21.16    BANKS

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

(b)      The Facility Agent may at any time, and shall if requested to do so by
         the Majority Banks, convene a meeting of the Banks.

21.17    EXTRAORDINARY MANAGEMENT TIME AND RESOURCES

         The Company shall forthwith on demand pay the Facility Agent for the
         cost of utilising its management time or other resources in connection
         with:

         (a)      any amendment, waiver, consent or suspension of rights (or any
                  proposal for any of the foregoing) requested by or on behalf
                  of an Obligor and relating to a Finance Document or a document
                  referred to in any Finance Document; or

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         (b)      the occurrence of a Default; or

         (c)      the enforcement of, or the preservation of any rights under,
                  any Finance Document.

         Any amount payable to the Facility Agent under:

         (i)      paragraph (a) above shall be determined by written agreement
                  between the Company and the Facility Agent at the time of the
                  relevant Borrower's request; and

         (ii)     under paragraphs (b) or (c) above will be calculated on the
                  basis of such reasonable daily or hourly rates as the Facility
                  Agent may notify to the Company,

         and in each case is in addition to any fee paid or payable to the
         Facility Agent under Clause 23 (Fees).

21.18    SECURITY AGENT

(a)      Without prejudice to Clauses 21.6 (Responsibility for documentation) or
         21.8 (Exoneration), the Security Agent in its capacity as trustee,
         agent or mandataire (as appropriate) under any of the Security
         Documents or otherwise shall not be liable (unless directly caused by
         its gross negligence or wilful misconduct) for any failure, omission,
         or defect in perfecting the security constituted by any Security
         Document or any security created thereby including, without limitation,
         any failure to (i) register the same in accordance with the provisions
         of any of the documents of title of the relevant Obligor to any of the
         property thereby charged, (ii) make any recordings or filings in
         connection therewith, (iii) effect or procure registration of or
         otherwise protect the security created by or pursuant to the Security
         Documents under any registration laws in any jurisdiction, (iv) give
         notice to any person of the execution of any of the Security Documents
         or to obtain any licence, consent or other authority for the creation
         of any security.

(b)      The Security Agent may accept without enquiry such title as any Obligor
         may have to the property over which security is intended to be created
         by any Security Document.

(c)      Save where the Security Agent holds a mortgage over, or over an
         interest in, real estate property or shares, the Security Agent in its
         capacity as trustee, agent or mandataire (as appropriate) or otherwise
         shall not be under any obligation to hold any title deeds, Security
         Documents or any other documents in connection with the property
         charged by any Security Documents or any other such security in its own
         possession or to take any steps to protect or preserve the same.

(d)      Save as otherwise provided in the Security Documents, all moneys which
         are received by the Security Agent in its capacity as trustee, agent or
         mandataire (as appropriate) or otherwise may be invested in the name of
         or under the control of the Security Agent in any investments which may
         be selected by the Security Agent with the consent of the Majority
         Banks. Additionally, the same may be placed on deposit in the name of
         or under the control of the Security Agent at such bank or institution
         (including any Agent) and upon such terms as the Security Agent may
         think fit.

(e)      Each Finance Party hereby confirms its approval of the Security
         Documents and any security created or to be created pursuant thereto
         and hereby authorises, empowers and directs the

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         Security Agent (by itself or by such person(s) as it may nominate) to
         execute and enforce the same as trustee, agent or mandataire (as
         appropriate) or as otherwise provided (and whether or not expressly in
         the Finance Party's name) on its behalf, subject always to the terms of
         this Agreement and the Security Documents.

(f)      Clauses 21.4 (Majority Banks' instructions), 21.5 (Delegation), 21.6
         (Responsibility for documentation), 21.7 (Default), 21.8 (Exoneration),
         21.9 (Reliance), 21.12 (The Facility Agent and the Mandated Lead
         Arrangers individually), 21.13 (Indemnities), 21.14 (Compliance) and
         21.15 (Resignation of the Facility Agent) will apply to the Security
         Agent as if the words "the Facility Agent" in those Clauses referred
         (in addition) to the Security Agent.

(g)      If there is any conflict between the provisions of this Agreement and
         any Security Document with regard to instructions to or matters
         affecting the Security Agent, this Agreement will prevail.

(h)      Each Party (other than the Security Agent) irrevocably authorises the
         Security Agent, with the consent of the Obligors' Agent, to execute on
         its behalf any documentation which the Security Agent considers
         appropriate in order for any Bank to become a party to, or to benefit
         from, any Finance Document.

21.19    CO-SECURITY AGENTS

(a)      The Security Agent may appoint any person established or resident in
         any jurisdiction (whether a trust corporation or not) to act either as
         a separate security agent or as a co-security agent jointly with the
         Security Agent (i) if the Security Agent considers that without such
         appointment the interests of the Banks under the Finance Documents
         would be materially and adversely affected or (ii) for the purposes of
         conforming to any legal requirements, restrictions or conditions in any
         jurisdiction in which any particular act is or acts are to be performed
         or (iii) for the purposes of obtaining a judgment in any jurisdiction
         or the enforcement in any jurisdiction of either a judgment already
         obtained or any of the provisions of the Finance Documents, provided in
         each case that such separate security agent or co-security agent
         becomes bound by the terms of this Agreement as if it were the Security
         Agent.

(b)      Each separate security agent or co-security agent shall (subject always
         to the provisions of this Agreement) have such powers, authorities and
         discretions (not exceeding those conferred on the Security Agent by
         this Agreement) and such duties and obligations as shall be conferred
         or imposed by the instrument of appointment.

(c)      The Security Agent shall have power in like manner to remove any such
         person. If an Event of Default is continuing, such reasonable
         remuneration as the Security Agent may pay to any such person, together
         with any attributable costs, charges and expenses properly incurred by
         it in performing its function as such separate security agent or
         co-security agent shall for the purpose of this Agreement be treated as
         costs, charges and expenses incurred by the Security Agent.

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21.20    RELEASE OF SECURITY

         The Security Agent shall and is hereby authorised by each of the other
         Finance Parties (and to the extent it may have any interest therein,
         every other party hereto) to execute on behalf of itself and each of
         the other Finance Parties and every other party hereto where relevant
         without the need for any further referral to, or authority from, any
         Finance Party or other person hereto all such releases of security and
         guarantees given by Obligors under any Finance Document as the Security
         Agent is authorised or required to effect by the terms of any Finance
         Document.

21.21    SECURITY AGENT AS JOINT AND SEVERAL CREDITOR

(a)      Each of the Obligors and each of the Finance Parties agree that the
         Security Agent shall be the joint and several creditor (hoofdelijk
         crediteur) together with the relevant Finance Party of each and every
         obligation of any Obligor owing to or towards each of the Finance
         Parties under the Finance Documents, and that accordingly the Security
         Agent will have its own independent right to demand performance by the
         relevant Obligor of those obligations. However, any discharge of any
         such obligation to one of the Security Agent or a Finance Party (other
         than the Security Agent) shall, to that extent, discharge the
         corresponding obligation owing to the other and a Finance Party shall
         not by virtue of this Clause be entitled to pursue an Obligor
         concurrently for the same obligation.

(b)      Without limiting or affecting the Security Agent's rights against any
         Obligor (whether under this paragraph or under any other provision of
         the Finance Documents), the Security Agent agrees with each other
         Finance Party (on a several and divided basis) that, subject as set out
         in the next sentence, it will not exercise its rights as a joint and
         several creditor of any and all obligations owing to each Finance Party
         (other than the Security Agent) except with the consent of the relevant
         Finance Party. However, for the avoidance of doubt, nothing in the
         previous sentence shall in any way limit the Security Agent's right to
         act in the protection or preservation of rights under or to enforce any
         Security Document as contemplated by this Agreement, and/or the
         relevant Security Document (or to do any act reasonably incidental to
         any of the foregoing).

21.22    VE B SHARES

         If the New Investors give the consent referred to in Clause 18.20(a)
         (VE B Shares) the Security Agent shall and is hereby authorised by each
         of the other Finance Parties to execute without the need for any
         further refered to, or authority from, any Finance Party a release of
         the pledge over the VE B Shares of which the Finance Parties have the
         benefit as at that date in order for the share pledge referred to in
         Clause 18.20(b) to be given.



                                      103


22.      RELEASE OF SECURITY

22.1     RELEASE OF SECURITY AND GUARANTEES

(a)      Subject to the provisions of this Clause and the Security Documents, no
         Security Interest created by the Security Documents shall be released
         until the Facility Discharge Date has occurred (and all such Security
         Interests in respect of the secured obligations under this Facility
         shall be released as soon as practicable after the Facility Discharge
         Date has occurred) [no amounts are or may become outstanding under the
         Finance Documents and no Commitment is in force.] this does not appear
         in non-CS&M version

(b)      Subject to paragraphs (c) and (e) below:

         (i)      in connection with, and simultaneous to, the closing of any
                  secondary Equity Issue, sale or other disposal to a person or
                  persons other than member(s) of the Group (and which person or
                  persons will not become a member of the Group on or by reason
                  of such disposal) of all of the shares in the share capital of
                  any Guarantor (or of all of the shares in any other member of
                  the Group such that any Guarantor ceases as a result thereof
                  to be a member of the Group);

         (ii)     in connection with, and simultaneous to, the closing of sale
                  or disposal by any Guarantor of substantially all of its
                  business and assets; or

         (iii)    in such other circumstances (if any) as the Security Agent
                  (acting on the instructions of the Super Majority Banks) may
                  from time to time agree in writing in relation to a Guarantor,

         such Guarantor shall cease to be a Guarantor and will be released from
         all past, present and future liabilities (both actual and contingent
         and including, without limitation, any liability to any other Guarantor
         by way of contribution) under this Agreement and under the Security
         Documents to which it is a party (other than liabilities which it has
         in its capacity as a Borrower), and the security provided over its
         assets under such Security Documents shall be released.

(c)      If a Guarantor is released from its liabilities in accordance with
         paragraph (b) above, such Guarantor will cease to be a Guarantor when
         the Facility Agent gives written notification to the Company and the
         Banks.

(d)      Subject to paragraph (e) below, in connection with, and simultaneous
         to, the closing of any secondary Equity Issue, sale or other disposal
         to (i) a person or persons other than member(s) of the Group (and which
         person or persons will not become a member of the Group on or by reason
         of such disposal) or (ii) to a person within the Group where such
         disposal is otherwise permitted by the Finance Documents and such
         release could not reasonably be expected to have a Material Adverse
         Effect or to jeopardise the guarantees given to the Banks under the
         Finance Documents or the Banks' security under the Security Documents
         or to the extent that similar guarantees and security are granted to
         the Banks of any assets owned by an Obligor over which security has
         been created by a Security Document to which that Obligor is party,
         those assets shall be released from such security.

                                      104


(e)      The release of the guarantees and security referred to in paragraphs
         (b), (c) and (d) above shall only occur (save to the extent otherwise
         agreed by the Security Agent acting on the instructions of the Super
         Majority Banks) if:

         (i)      either (1) such disposal by any member of the Group or
                  Guarantor is permitted by the Finance Documents and will not
                  result in any breach of any of the terms of the Finance
                  Documents, or (2) such disposal is being effected at the
                  request of the Security Agent in circumstances where any of
                  the security created by the Security Documents has become
                  enforceable, or (3) such disposal is being effected by
                  enforcement of the Security Documents;

         (ii)     if relevant, an amount equal to any Net Proceeds arising out
                  of such disposal which are required to be prepaid pursuant to
                  Clause 7 (Prepayment and Cancellation) (or an amount
                  corresponding thereto) is credited to the Receipt Account in
                  accordance with Clause 7 (Prepayment and Cancellation) at the
                  time of completion of that sale or disposal; and

         (iii)    any assets to be transferred to other members of the Group
                  before completion of such disposal shall have been so
                  transferred and (if so required by the Facility Agent)
                  security over such assets shall have been granted to the
                  Security Agent to the reasonable satisfaction of the Facility
                  Agent (acting on the instructions of the Super Majority
                  Banks).

(f)      As soon as reasonably practical after receipt by the Security Agent
         from the Company of notice of a proposed secondary Equity Issue sale or
         other disposal as described in paragraph (i) of Clause 22.1(b) or in
         Clause 22.1(d) of assets over which security has been created by the
         Security Documents, the Security Agent shall either deliver a
         confirmation in writing to the Obligors' Agent that the conditions set
         out in paragraphs (i) and (iii) of Clause 22.1(e) have been met (for
         the purposes of this Clause 22.1(f), the RELEASE CONFIRMATION) or shall
         (acting in good faith), provided that no Default has occurred notify
         the Obligors' Agent of its reasons for considering that such conditions
         have not been met and shall discuss such reasons with the Obligors'
         Agent in good faith. If the Release Confirmation is given and so long
         as no Default has occurred, the Security Agent shall execute all
         documents and take all steps (to the extent such steps are within its
         control) which are necessary to ensure the release of all security to
         which such Release Confirmation relates at the time of completion of
         such sale or other disposal (or in the case of any sale of shares in
         Vivendi Universal Games, Inc. prior to the filing with the Securities
         and Exchange Commission of a report in Form S-1 in relation to the
         proposed share sale), such that, on such completion or prior to such
         filing, the relevant assets will be free from any Security Interest.

(g)      Any security over any of the receivables assigned pursuant to, subject
         to and in accordance with the VUE Assignment Agreement and any of the
         assets identified in paragraph (d) of the definition of Relevant Intra
         Group Disposal shall be released automatically upon the assignment or
         disposal of such receivable or asset.

(h)      If any person which is a member of the Group shall cease to be such a
         member in consequence of the enforcement of any of the Security
         Documents or in consequence of a disposal of the shares therein or in
         any Holding Company of it effected at the

                                      105


         request of the Facility Agent and the Banks in circumstances where any
         of the security created by the Security Documents has become
         enforceable, any claim which any Obligor may have against such person
         or any of its Subsidiaries or which that person or any of its
         Subsidiaries may have against any Obligor in or arising out of this
         Agreement or any of the Security Documents (including, without
         limitation, any claim by way of subrogation to the rights of the Agents
         and the Banks under the Finance Documents and any claim by way of
         contribution or indemnity) shall be released automatically and
         immediately upon such person ceasing to be a member of the Group.

(i)      Any Security Interest created over the shares of any Excluded Music
         Group Entity and any guarantee granted by any Excluded Music Group
         Entity pursuant to the Finance Documents shall, provided no Default has
         occurred and is continuing, be released immediately prior to and for
         the purposes of the implementation of the Music Group Reorganisation:

         (i)      in the case of any such Security Interest over shares so that
                  no Excluded Music Group Entity which becomes a Foreign
                  Subsidiary shall have more than 66 per cent. of its shares
                  subject to any such Security Interest;

         (ii)     in the case of any guarantee granted by any Excluded Music
                  Group Entity to the extent reasonably required to avoid deemed
                  dividends under U.S. tax legalisation relating to Foreign
                  Subsidiaries; or

         (iii)    in the case of any Security Interest or guarantee granted by
                  any Excluded Music Group Entity which is held (directly or
                  indirectly) by Universal Studio Holding I Corp. so that no
                  such Excluded Music Group Entity shall have any of its shares
                  subject to any Security Interest or shall grant any guarantee.

(j)      No release, or agreement to release, given by any of the Finance
         Parties shall constitute any form of waiver or modification of any
         Finance Party's rights in relation to any Default.

22.2     COSTS

         All costs and expenses of the Finance Parties in connection with any
         release of Security Interest created by the Security Documents shall be
         borne by the Obligors.

23.      FEES

23.1     ARRANGEMENT FEE

         The Company shall on the date which is five days after the date of this
         Agreement pay to the Mandated Lead Arrangers an arrangement fee in the
         amount agreed in the Arrangement Fee Letter. This fee shall be
         distributed by the Mandated Lead Arrangers among the Banks in
         accordance with the arrangements agreed by the Mandated Lead Arrangers
         with the Banks prior to the date of this Agreement.

                                      106


23.2     AGENT'S FEE

         The Company shall pay to the Facility Agent for its own account an
         agency fee in the amount agreed in the Agency Fee Letter. The agency
         fee is payable annually in advance. The first payment of this fee is
         payable on the date which is five days after the date of this Agreement
         and each subsequent payment is payable on each anniversary of the date
         of this Agreement for so long as any amount is or may be outstanding
         under this Agreement or any Commitment is in force.

23.3     COMMITMENT FEE

(a)      The Company shall pay to the Facility Agent for each Bank a commitment
         fee in Euro computed at an annual percentage rate which is equal to 50
         per cent. of the then Applicable Margin on the undrawn, uncancelled
         amount of that Bank's Commitment during the Commitment Period. For this
         purpose Loans are taken at their Original Euro Amount.

(b)      Accrued commitment fee is payable quarterly in arrear and on the Final
         Maturity Date. Accrued commitment fee shall also be payable to the
         Facility Agent for the relevant Bank on the cancelled amount of its
         Commitment at the time the cancellation comes into effect.

23.4     UTILISATION FEE

(a)      The Company shall pay to the Facility Agent for the Banks a utilisation
         fee in Euro calculated on the aggregate amount of all Loans outstanding
         at a rate of zero point zero five per cent. (0.05%) per annum for each
         day on which the aggregate of all Loans then outstanding is greater
         than 50 per cent of the then Total Commitments.

(b)      For the purpose of this Clause 23.4, Loans are taken at their Original
         Euro Amount and accrued utilisation fee is payable quarterly in arrear
         and on the Final Maturity Date.

23.5     WAIVER FEES

(a)      Except as provided below, on 18th November, 2003 and each anniversary
         of that date (each such date being a "WAIVER FEE DATE"), the Obligors'
         Agent shall pay (or procure that there is paid) to the Facility Agent
         for each Consenting Bank a waiver fee in Euros computed at a rate of
         0.20 per cent. per annum on that Consenting Bank's Commitment or, if
         greater, its participation in the Loans, as at that Waiver Fee Date.

(b)      No waiver fee shall be payable on any Waiver Fee Date which falls on or
         after:

         (i)      the Final Maturity Date; or

         (ii)     (if earlier) the First Release Condition Date.

(c)      The waiver fee payable on the Waiver Fee Date immediately preceding the
         Final Maturity Date shall be adjusted pro rata according to the period
         from (and including) that Waiver Fee Date to (and including) the Final
         Maturity Date.

(d)      For the avoidance of doubt, no waiver fee will be payable with respect
         to the waiver requested on 4th April, 2003, except for a single payment
         as set out in the Restatement Agreement.

                                      107


23.6     VAT

         Any fee referred to in this Clause 23 is exclusive of any value added
         tax or any other tax which might be chargeable in connection with that
         fee. If any value added tax or other tax is so chargeable, it shall be
         paid by the Company at the same time as it pays the relevant fee.

24.      EXPENSES

24.1     INITIAL AND SPECIAL COSTS

         The Company shall forthwith on demand pay the Facility Agent and the
         Mandated Lead Arrangers the amount of all duly documented and
         reasonable costs and expenses (including legal fees) incurred by either
         of them in connection with:

(a)      the negotiation, preparation, printing, syndication and execution of:

         (i)      this Agreement and any other documents referred to in this
                  Agreement; and

         (ii)     any other Finance Document (other than a Novation Certificate)
                  executed after the date of this Agreement; and

(b)      any amendment, waiver, consent or suspension of rights (or any proposal
         for any of the foregoing) requested by or on behalf of a Borrower and
         relating to a Finance Document or a document referred to in any Finance
         Document.

24.2     ENFORCEMENT COSTS

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

25.      STAMP DUTIES

         The Company shall pay, and forthwith on demand indemnify each Finance
         Party against any liability it incurs in respect of, any stamp,
         registration and similar tax which is or becomes payable in connection
         with the entry into, performance or enforcement of any Finance Document
         (other than a Novation Certificate).

26.      INDEMNITIES

26.1     CURRENCY INDEMNITY

(a)      If a Finance Party receives an amount in respect of an Obligor's
         liability under the Finance Documents or if that liability is converted
         into a claim, proof, judgment or order in a currency other than the
         currency (the "CONTRACTUAL CURRENCY") in which the amount is expressed
         to be payable under the relevant Finance Document:

         (i)      that Obligor shall indemnify that Finance Party as an
                  independent obligation against any loss or liability arising
                  out of or as a result of the conversion;

                                      108


         (ii)     if the amount received by that Finance Party, when converted
                  into the contractual currency at a market rate in the usual
                  course of its business is less than the amount owed in the
                  contractual currency, the Obligor concerned shall forthwith on
                  demand pay to that Finance Party an amount in the contractual
                  currency equal to the deficit; and

         (iii)    that Obligor shall forthwith on demand pay to the Finance
                  Party concerned any exchange costs and taxes payable in
                  connection with any such conversion.

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

26.2     OTHER INDEMNITIES

         The Company shall forthwith on demand indemnify each Finance Party
         against any loss or liability which that Finance Party incurs as a
         consequence of:

(a)      the occurrence of any Event of Default;

(b)      the operation of Clause 20.15 (Acceleration) or Clause 32 (Pro Rata
         Sharing);

(c)      any payment of principal or an overdue amount being received from any
         source otherwise than on the last day of a relevant Interest Period or
         Designated Interest Period (as defined in Clause 9.4 (Default
         interest)) relative to the amount so received; or

(d)      a Loan (or part of a Loan) not being prepaid in accordance with a
         notice of prepayment or (other than by reason of negligence or default
         by that Finance Party) a Loan not being made after the Obligors' Agent
         has delivered a Request.

         The Company's liability in each case includes any loss of margin or
         other loss or expense on account of funds borrowed, contracted for or
         utilised to fund any amount payable under any Finance Document, any
         amount repaid or prepaid or any Loan.

27.      EVIDENCE AND CALCULATIONS

27.1     ACCOUNTS

         Accounts maintained by a Finance Party in connection with this
         Agreement are, in the absence of manifest error, prima facie evidence
         of the matters to which they relate.

27.2     CERTIFICATES AND DETERMINATIONS

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

                                      109


27.3     CALCULATIONS

         Interest (including, if relevant to its calculation, any Mandatory
         Cost) and the fees payable under Clauses 23.3 (Commitment fee) and 23.4
         (Utilisation fee) accrue from day to day and are calculated on the
         basis of the actual number of days elapsed and a year of 360 days or,
         in the case of interest payable on an amount denominated in Sterling or
         where market practice otherwise dictates, 365 days.

27.4     TAUX EFFECTIF GLOBAL

         In order to comply with the provisions of Articles L313-1 and L313-2 of
         the French Consumer Code (Code de la Consommation), the effective
         global rate ("taux effectif global") calculated in accordance with the
         articles referred to above is as set out in a letter dated the date of
         this Agreement (or, in relation to a Subsidiary Borrower or a
         Subsidiary Guarantor incorporated in France, dated on or about the date
         of the relevant Borrower Accession Deed or Guarantor Accession Deed as
         appropriate) from the Facility Agent to the Obligors' Agent
         substantially in the form set out in Schedule 5.

28.      AMENDMENTS AND WAIVERS

28.1     PROCEDURE

(a)      Subject to Clause 28.2, any term of the Finance Documents may be
         amended and any breach or prospective breach waived, with the agreement
         of the Obligors' Agent and the Majority Banks. The Facility Agent may
         effect, on behalf of any Finance Party, an amendment or waiver
         permitted under this Clause.

(b)      The Facility Agent shall promptly notify the other Parties of any
         amendment or waiver effected under paragraph (a) above, and any such
         amendment or waiver shall be binding on all the Parties.

28.2     EXCEPTIONS

(a)      An amendment or waiver which relates to any of the following may only
         be effected if agreed by the Obligors' Agent, the Facility Agent and
         each of the Banks:

         (i)      the definition of "MAJORITY BANKS" or "SUPER MAJORITY BANKS"
                  in Clause 1.1 (Definitions);

         (ii)     an extension of the date for, or a decrease in an amount or a
                  change in the currency of, any payment to the Banks under the
                  Finance Documents (including the Applicable Margin and any
                  fees payable under Clauses 23.3 (Commitment fee) and 23.4
                  (Utilisation fee));

         (iii)    an increase in a Bank's Commitment or the extension of the
                  Final Maturity Date;

         (iv)     a term of a Finance Document which expressly requires the
                  consent of the Banks;

                                      110


         (v)      Clause 2.2 (Nature of Finance Party's rights and obligations),
                  Clause 29.1 (Transfers by Obligors), Clause 29.2 (Transfers by
                  Banks), Clause 29.4 (Accession of Subsidiary Borrower), Clause
                  29.5 (Accession of Subsidiary Guarantor), Clause 32 (Pro Rata
                  Sharing), Schedule 9 or this Clause 28; or

         (vi)     the release or discharge of any Obligor from its obligations
                  under the Finance Documents (other than in accordance with
                  Clause 29.4(c) (Accession of Subsidiary Borrower) or [Clause
                  29.5(c) (Accession of Subsidiary Guarantor)] or as otherwise
                  expressly agreed pursuant to the Finance Documents). Does not
                  appear on non-CS&M version

(b)      An amendment or waiver of any term of the Security Sharing Agreement
         may only be effected in accordance with Clause 12.1 (Amendments to this
         Agreement) of the Security Sharing Agreement.

(c)      An amendment or waiver of any of the terms of the Finance Documents
         referred to in Clause 12.2 (Amendments to the Finance Documents (other
         than this Agreement)) of the Security Sharing Agreement may only be
         effected in accordance with that clause.

(d)      An amendment or waiver which affects the rights and/or obligations of
         the Facility Agent may not be effected without the agreement of the
         Facility Agent.

28.3     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, the currency or
                  currency unit of that country designated by the Bank; 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) 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.

28.4     WAIVERS AND REMEDIES CUMULATIVE

         The rights of each Finance Party under the Finance Documents:

(a)      may be exercised as often as necessary;

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

(c)      may be waived only in writing and specifically.

                                      111



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

29.      CHANGES TO THE PARTIES

29.1     TRANSFERS BY OBLIGORS

         No Obligor may assign, transfer, novate or dispose of any of, or any
         interest in, its rights and/or obligations under the Finance Documents.

29.2     TRANSFERS BY BANKS

(a)      A Bank (the "EXISTING BANK") may, subject to paragraph (b) below, at
         any time assign, transfer or novate any of its Commitment and/or rights
         and/or obligations under this Agreement to any third party (the "NEW
         BANK") in accordance with Clause 29.3 (Procedure for novations). A
         transfer of part of a Commitment must be in a minimum amount of at
         least E5,000,000.

(b)      A transfer of obligations will be effective only if either:

         (i)      the obligations are novated in accordance with Clause 29.3; or

         (ii)     the New Bank confirms to the Facility Agent and the Obligors'
                  Agent that it undertakes to be bound by the terms of this
                  Agreement as a Bank in form and substance satisfactory to the
                  Facility Agent. On the transfer becoming effective in this
                  manner the Existing Bank shall be relieved of its obligations
                  under this Agreement to the extent that they are transferred
                  to the New Bank.

(c)      On each occasion an Existing Bank assigns, transfers or novates any of
         its Commitment and/or rights and/or obligations under this Agreement,
         the New Bank shall, on the date the assignment, transfer and/or
         novation takes effect, pay to the Facility Agent for its own account a
         fee of E1,500 (without, for the avoidance of doubt, any right to
         reimbursement by any Obligor).

(d)      An Existing Bank is not responsible to a New Bank for:

         (i)      the execution, genuineness, validity, enforceability or
                  sufficiency of any Finance Document or any other document;

         (ii)     the collectability of amounts payable under any Finance
                  Document; or

         (iii)    the accuracy of any statements (whether written or oral) made
                  in or in connection with any Finance Document.

(e)      Each New Bank confirms to the Existing Bank and the other Finance
         Parties that it:

         (i)      has made its own independent investigation and assessment of
                  the financial condition and affairs of the Obligors and their
                  respective related entities in connection with its
                  participation in this Agreement and has not relied exclusively
                  on any information provided to it by the Existing Bank in
                  connection with any Finance Document; and

                                      112


         (ii)     will continue to make its own independent appraisal of the
                  creditworthiness of the Obligors and their respective related
                  entities while any amount is or may be outstanding under this
                  Agreement or any Commitment is in force.

(f)      Nothing in any Finance Document obliges an Existing Bank to:

         (i)      accept a re-transfer from a New Bank of any of the Commitment
                  and/or rights and/or obligations assigned, transferred or
                  novated under this Clause; or

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

(g)      Any reference in this Agreement to a Bank includes a New Bank but
         excludes a Bank if no amount is or may be owed to or by it under this
         Agreement and its Commitment has been cancelled or reduced to nil.

(h)      In the case of an assignment, the Existing Bank and the New Bank shall
         ensure that the relevant transfer agreement is notified by bailiff
         ("huissier") to any Obligor incorporated in France in accordance with
         Article 1690 of the French Civil Code.

29.3     PROCEDURE FOR NOVATIONS

(a)      A novation is effected if:

         (i)      the Existing Bank and the New Bank deliver to the Facility
                  Agent a duly completed certificate, substantially in the form
                  of Schedule 4 (a "NOVATION CERTIFICATE"); and

         (ii)     the Facility Agent executes it.

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

(c)      To the extent that they are expressed to be the subject of the novation
         in the Novation Certificate:

         (i)      the Existing Bank and the other Parties (the "EXISTING
                  PARTIES") will be released from their obligations to each
                  other (the "DISCHARGED OBLIGATIONS");

         (ii)     the New Bank and the existing Parties will assume obligations
                  towards each other which differ from the discharged
                  obligations only insofar as they are owed to or assumed by the
                  New Bank instead of the Existing Bank;

         (iii)    the rights of the Existing Bank against the existing Parties
                  and vice versa (the "DISCHARGED rights") will be cancelled;
                  and

         (iv)     the New Bank and the existing Parties will acquire rights
                  against each other which differ from the discharged rights
                  only insofar as they are exercisable by or against the New
                  Bank instead of the Existing Bank,

                                      113

         all on the date of execution of the Novation Certificate by the
         Facility Agent or, if later, the date specified in the Novation
         Certificate.

(d)      For the avoidance of doubt the Parties agree that any novation effected
         in accordance with this Clause 29.3 shall constitute a novation within
         the meaning of Article 1271 et seq. of the French Civil Code and that
         all guarantees and security given under or in connection with the
         Finance Documents are preserved for the benefit of the New Bank.

(e)      The Parties agree that notwithstanding any assignment, transfer or
         novation by a Finance Party under this Clause 29, all the rights of the
         Finance Parties against the Guarantors under this Agreement (including,
         without limitation, rights assigned, transferred or novated) shall be
         maintained and the Guarantors' obligations under this Agreement shall
         benefit each New Bank.

(f)      Each New Bank agrees to be bound by the Security Sharing Agreement and
         the VE Share Pledge and Escrow Agreement (as an "Existing Secured
         Creditor" and a "Financial Party Y" respectively) and authorises the
         Facility Agent to deliver any confirmations and/or accession agreements
         on its behalf under those agreements and to take any other action which
         it considers appropriate so that the New Bank assumes rights and
         obligations of the Existing Bank under those agreements which
         correspond to the rights and obligations the subject of the Novation
         Certificate.

29.4     ACCESSION OF SUBSIDIARY BORROWER

(a)      (i)      A direct or indirect Subsidiary of the Company approved in
                  writing by the Facility Agent acting on the instructions of
                  all the Banks, may become a Subsidiary Borrower by delivering
                  to the Facility Agent a Borrower Accession Deed, duly executed
                  by that company.

         (i)      Upon execution and delivery of a Borrower Accession Deed and
                  delivery of the documents specified in paragraph (iii) below,
                  that Subsidiary will become a Subsidiary Borrower.

         (ii)     The Company shall procure that, at the same time as the
                  Borrower Accession Deed is delivered to the Facility Agent,
                  there is also delivered to the Facility Agent all those other
                  documents listed in Part 2 of Schedule 2, in each case in form
                  and substance satisfactory to the Facility Agent.

(b)      The execution of a Borrower Accession Deed constitutes confirmation by
         the Subsidiary concerned that the representations and warranties set
         out in Clause 17 (Representations and Warranties) to be made by it on
         the date of the Borrower Accession Deed are correct, as if made with
         reference to the facts and circumstances then existing.

(c)      The Obligors' Agent may, by notice to the Facility Agent, request that
         any Subsidiary Borrower be discharged from its obligations under the
         Finance Documents. If the Facility Agent is satisfied that no amounts
         then are due, or may become due, from that Subsidiary Borrower it shall
         notify the Obligors' Agent to that effect and on the date of the
         Facility Agent's notice the Subsidiary Borrower concerned shall cease
         to be party to this Agreement and shall cease to have any obligations
         or rights under the Finance Documents. The Facility

                                      114



         Agent shall notify the Banks of each Subsidiary Borrower that ceases to
         be a party to this Agreement pursuant to this paragraph (c).

29.5     ACCESSION OF SUBSIDIARY GUARANTOR

(a)      (i)      A direct or indirect Subsidiary of the Company, which is
                  either (A) approved in writing by the Facility Agent acting on
                  the instructions of all the Banks or (B) required under this
                  Agreement to become a Guarantor, may become a Subsidiary
                  Guarantor by delivering to the Facility Agent a Guarantor
                  Accession Deed, duly executed by that company.

         (ii)     Upon execution and delivery of a Guarantor Accession Deed and
                  delivery of the documents specified in paragraph (iii) below,
                  that Subsidiary will become a Subsidiary Guarantor thereby
                  giving the guarantee and indemnity contained in Clause 16
                  (Guarantee).

         (iii)    The Company shall procure that, at the same time as the
                  Guarantor Accession Deed is delivered to the Facility Agent,
                  there is also delivered to the Facility Agent all those other
                  documents listed in Part 3 of Schedule 2, in each case in form
                  and substance satisfactory to the Facility Agent.

(b)      The execution of a Guarantor Accession Deed constitutes confirmation by
         the Subsidiary concerned that the representations and warranties set
         out in Clause 17 (Representations and Warranties) to be made by it on
         the date of the Guarantor Accession Deed are correct, as if made with
         reference to the facts and circumstances then existing.

29.6     REFERENCE BANKS

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

29.7     REGISTER

         The Facility Agent shall keep a register of all the Parties and shall
         supply any other Party (at that Party's expense) with a copy of the
         register on request.

30.      DISCLOSURE OF INFORMATION

         A Bank may disclose to one of its Affiliates or any person with whom it
         is proposing to enter, or has entered into, any kind of transfer,
         participation or other agreement in relation to this Agreement:

(a)      a copy of any Finance Document; and

(b)      any information which that Bank has acquired under or in connection
         with any Finance Document,

                                      115



         provided that prior to making any such disclosure a Bank shall obtain a
         written confidentiality undertaking (substantially in the form of
         Schedule 7 together with such amendments as the Bank shall reasonably
         consider necessary) with respect to the information to be disclosed.

31.      SET-OFF

         Following the occurrence of a Default, a Finance Party may set off any
         matured obligation owed by an Obligor under the Finance Documents (to
         the extent beneficially owned by that Finance Party) against any
         obligation (whether or not matured) owed by that Finance Party to 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. If a Finance Party's obligation is unliquidated or
         unascertained, the Finance Party may set off in an amount estimated by
         it in good faith to be the amount of that obligation.

32.      PRO RATA SHARING

32.1     REDISTRIBUTION

         If any amount owing by an Obligor under the Finance Documents to a
         Finance Party (the "RECOVERING FINANCE PARTY") is discharged by
         payment, set-off or any other manner other than through the Facility
         Agent in accordance with Clause 11 (Payments) (a "RECOVERY"), then:

         (a)      the recovering Finance Party shall, within three Business
                  Days, notify details of the recovery to the Facility Agent;

         (b)      the Facility Agent shall determine whether the recovery is in
                  excess of the amount which the recovering Finance Party would
                  have received had the recovery been received by the Facility
                  Agent and distributed in accordance with Clause 11 (Payments);

         (c)      subject to Clause 32.3, the recovering Finance Party shall,
                  within three Business Days of demand by the Facility Agent,
                  pay to the Facility Agent an amount (the "REDISTRIBUTION")
                  equal to the excess;

         (d)      the Facility Agent shall treat the redistribution as if it
                  were a payment by the Obligor concerned under Clause 11
                  (Payments) and shall pay the redistribution to the Finance
                  Parties (other than the recovering Finance Party) in
                  accordance with Clause 11.7 (Partial payments); and

         (e)      after payment of the full redistribution, the recovering
                  Finance Party will be subrogated to the portion of the claims
                  paid under paragraph (d) above and that Borrower owe the
                  recovering Finance Party a debt which is equal to the
                  redistribution, immediately payable and of the type originally
                  discharged.

                                      116


32.2     REVERSAL OF REDISTRIBUTION

         If under Clause 32.1:

         (a)      a recovering Finance Party must subsequently return a
                  recovery, or an amount measured by reference to a recovery, to
                  an Obligor; and

         (b)      the recovering Finance Party has paid a redistribution in
                  relation to that recovery,

         each Finance Party shall, within three Business Days of demand by the
         recovering Finance Party through the Facility Agent, reimburse the
         recovering Finance Party all or the appropriate portion of the
         redistribution paid to that Finance Party together with interest on the
         amount to be returned to the recovering Finance Party for the period
         whilst it held the re-distribution. Thereupon, the subrogation in
         Clause 32.1(e) will operate in reverse to the extent of the
         reimbursement.

32.3     EXCEPTIONS

(a)      A recovering Finance Party need not pay a redistribution to the extent
         that it would not, after the payment, have a valid claim against the
         Obligor concerned in the amount of the redistribution pursuant to
         Clause 32.1(e).

(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 proceedings, if the
         other Finance Party had an opportunity to participate in those legal
         proceedings but did not do so or did not take separate legal
         proceedings.

33.      SEVERABILITY

         If a provision of any Finance Document is or becomes illegal, invalid
         or unenforceable in any jurisdiction, that shall not affect:

         (a)      the validity or enforceability in that jurisdiction of any
                  other provision of the Finance Documents; or

         (b)      the validity or enforceability in other jurisdictions of that
                  or any other provision of the Finance Documents.

34.      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.

                                      117


35.      NOTICES

35.1     GIVING OF NOTICES

         All notices or other communications (other than those given under the
         terms of Clause 35.3 (Website communications) under or in connection
         with the Finance Documents shall be given in writing by letter or
         facsimile or (if the relevant Party has specified such address pursuant
         to Clause 35.2 (Addresses for notices) by e-mail. Any such notice or
         communication will be deemed to be given as follows:

         (a)      if by letter, when delivered personally or on actual receipt;
                  and

         (b)      if by facsimile or e-mail (including a Notification under
                  Clause 35.3), when actually received in legible form.

         However, a notice given in accordance with the above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

35.2     ADDRESSES FOR NOTICES

(a)      The address and facsimile number and (if so specified) e-mail address
         (and the department or officer, if any, for whose attention the
         communication is to be made) of each Party (other than the Obligors'
         Agent and the Facility Agent) for all notices under or in connection
         with the Finance Documents are:

         (i)      those notified by that Party for this purpose to the Facility
                  Agent on or before the date it becomes a Party; or

         (ii)     any other notified by that Party for this purpose to the
                  Facility Agent by not less than five Business Days' notice.

(b)      The address and facsimile number of the Obligors' Agent are:

         Vivendi Universal S.A.
         42 avenue de Friedland
         75008 Paris
         France

         Fax number:       +33 (0)1 71 71 10 47
         Attention:        M. Dupont-Lhotelain

         or such other as the Obligors' Agent may notify to the Facility Agent
         by not less than five Business Days' notice.

(c)      The address, facsimile number and email address of the Facility Agent
         are:

         Societe Generale
         Agency and Transaction Management Department
         DEFI/ATM/LEV

                                      118


         Tour Societe Generale
         17 cours Valmy
         92972 Paris-La Defense Cedex
         France

         Fax number:       +33 (0)1 42 14 60 93
         Telephone:        +33 (0)1 42 13 53 49
         E-mail:           stephanie.bessadou@socgen.com
         Attention:        Stephanie Bessadou

         or such other as the Facility Agent may notify to the other Parties by
         not less than five Business Days' notice.

(d)      All notices from or to any Obligor shall be sent through the Facility
         Agent and the Obligors' Agent.

(e)      The Facility Agent shall, promptly upon request from any Party, give to
         that Party the address, or facsimile number or e-mail address (where
         appropriate) of any other Party applicable at the time for the purposes
         of this Clause.

35.3     WEBSITE COMMUNICATIONS

(a)      This Clause 35.3 shall apply to:

         (i)      all accounts, certificates and other information delivered
                  under Clauses 18.2 (Financial information) and 18.3
                  (Information - miscellaneous);

         (ii)     any communication (other than one which is intended to form
                  part of a contract) between an Obligor and the Facility Agent
                  or between the Facility Agent and the Finance Parties (or any
                  of them) in connection with any amendment, waiver, consent or
                  suspension of rights (or any proposal for any of the
                  foregoing) requested by or on behalf of an Obligor and
                  relating to a Finance Document or a document referred to in
                  any Finance Document; and

         (iii)    any other communication between an Obligor and the Facility
                  Agent or between the Facility Agent and the Finance Parties
                  (or any of them), of a type to which the Facility Agent
                  specifies, in a notice delivered to the Obligors' Agent and
                  the Banks by letter or facsimile, that this Clause 35.3 shall
                  apply.

(b)      The Facility Agent will not, without the consent of the Majority Banks
         and the Obligors' Agent, specify pursuant to paragraph (a)(iii) above
         that this Clause 35.3 shall apply to:

         (i)      the delivery of Requests; or

         (ii)     the notification by the Facility Agent of a Bank's
                  participation in a Loan.

(c)      Any communication to which this Clause 35.3 applies shall be validly
         given if:

         (i)      the sender places the communication on a website (the
                  "DESIGNATED WEBSITE") operated by a website operator which is
                  (at the time the communication is sent)

                                      119



                  approved by the Facility Agent for this purpose, in accordance
                  with the procedures and requirements of that website operator;

         (ii)     the details and instructions (including any password)
                  necessary in order to access the communication on the
                  Designated Website have been notified to the Facility Agent,
                  the Obligors' Agent and each Lender by letter, fax or e-mail
                  in accordance with this Agreement;

         (iii)    the sender takes such steps as are necessary so that each
                  recipient is sent, by letter or fax in accordance with this
                  Agreement or by electronic mail in accordance with paragraph
                  (d) below, a notice (the "NOTIFICATION") of the fact that a
                  communication has been placed on the Designated Website for
                  their attention and giving instructions for gaining access to
                  that communication (to the extent not already notified under
                  paragraph (ii) above); and

         (iv)     in the case of the documents referred to at paragraph (a)(i)
                  above, and in the case of any communication referred to at
                  paragraph (a)(ii) placed by an Obligor, the communication is
                  placed on the Designated Website in PDF format or any other
                  format acceptable to the Facility Agent and a hard copy is, in
                  any event, provided to the Facility Agent.

(d)      A Notification sent by electronic mail to a Party shall be sent to the
         electronic mail address notified by that Party to the Facility Agent
         (or, if that Party is the Facility Agent, notified by the Facility
         Agent to the other Parties) in accordance with Clause 35.2.

(e)      Subject to paragraph (f) below, the Facility Agent may approve a
         website operator by giving five Business Days' notice (by letter or
         facsimile) to the Banks and the Obligors' Agent. The Facility Agent may
         revoke its approval of a website operator for these purposes at any
         time immediately upon notice (given by letter or facsimile) to the
         Banks and the Obligors' Agent; any such notice will take effect
         immediately.

(f)      The Facility Agent shall not approve a website operator for the
         purposes of this Clause 35.3 unless:

         (i)      it is satisfied that the Facility Agent, the Obligors' Agent
                  and each Finance Party have been provided with any website
                  addresses, user names, passwords and other necessary
                  information, and have entered into any necessary arrangements
                  with the website operator, to enable them to gain access to
                  communications placed on the website for their attention; and

         (ii)     it has received assurances satisfactory to it that,
                  communications transmitted to, received from and stored on
                  websites operated by the website operator will be as secure as
                  possible from unauthorised interception, reading and
                  amendment; and

         (iii)    it is satisfied that, promptly upon a communication being
                  placed on any relevant website, the intended recipient will be
                  sent a notification by e-mail of the communication and will,
                  for at least 30 days thereafter, be able to read and retrieve
                  a copy of the communication.

                                      120


(g)      Any communication made in accordance with paragraph (c) above will be
         deemed to be given at the close of business (in the place of receipt)
         on the Business Day following the day on which the recipient is given
         the relevant Notification, unless prior to that time either:

         (i)      the sender of the communication becomes aware that the
                  recipient has not received that Notification; or

         (ii)     the recipient of the Notification notifies the sender that it
                  is not possible, for technical or other reasons affecting the
                  operation of the relevant website generally, for the
                  communication to be read or retrieved.

(h)      The Facility Agent, the Obligors' Agent and each Bank shall comply with
         any reasonable requirements of any approved website operator relating
         to the operation and security of the relevant websites.

(i)      The Facility Agent shall promptly upon becoming aware of its occurrence
         notify the Banks and the Obligors' Agent if:

         (i)      any Designated Website cannot be accessed due to technical
                  failure;

         (ii)     the password specifications for any Designated Website change;

         (iii)    the Facility Agent becomes aware that any Designated Website
                  or any information posted onto any Designated Website is or
                  has been infected by any electronic virus or similar software.

         If the Facility Agent gives a notice under paragraph (i) or (iii)
         above, all information which would otherwise have been posted on the
         Designated Website concerned shall be supplied in hard copy unless and
         until the Facility Agent and each Lender is satisfied that the
         circumstances giving rise to the notification are no longer continuing.

(j)      Nothing in this Clause 35.3 shall affect Clause 35.2(d) or prejudice
         the right of any Party to give any notice or other communication by
         letter or facsimile in accordance with the terms of this Agreement.

36.      LANGUAGE

(a)      Any notice given under or in connection with any Finance Document shall
         be in English.

(b)      All other documents provided under or in connection with any Finance
         Document shall be:

         (i)      in English; or

         (ii)     if not in English, accompanied by a certified English
                  translation (unless the document is a statutory or other
                  official document).

                                      121


37.      JURISDICTION

37.1     SUBMISSION

(a)      For the benefit of each Finance Party, each Obligor agrees that the
         courts of England have jurisdiction to settle any disputes in
         connection with any Finance Document and accordingly submits to the
         jurisdiction of the English courts.

(b)      Without prejudice to paragraph (a) above and for the benefit of each
         Finance Party, each Obligor agrees that any New York State Court or
         Federal Court sitting in New York has jurisdiction to settle any
         disputes in connection with this Agreement and accordingly submits to
         the jurisdiction of these courts.

37.2     SERVICE OF PROCESS

         Without prejudice to any other mode of service, each Obligor:

         (a)      irrevocably appoints Watson Farley Legal Services of 15 Appold
                  Street, London, EC2A 2HB as its agent for service of process
                  in relation to any proceedings before the English courts in
                  connection with any Finance Document;

         (b)      agrees that failure by a process agent to notify that Obligor
                  of the process will not invalidate the proceedings concerned;

         (c)      consents to the service of process relating to any such
                  proceedings by prepaid posting of a copy of the process to its
                  address for the time being applying under Clause 35.2
                  (Addresses for notices); and

         (d)      agrees that if the appointment of the person mentioned in
                  paragraph (a) above ceases to be effective, each Obligor shall
                  immediately appoint a further person in England to accept
                  service of process on its behalf in England and, failing such
                  appointment within 15 days, the Facility Agent is entitled to
                  appoint such a person by notice to the Obligors' Agent.

37.3     FORUM CONVENIENCE AND ENFORCEMENT ABROAD

         Each Obligor:

         (a)      waives objection to the English courts on grounds of
                  inconvenient forum or otherwise as regards proceedings in
                  connection with a Finance Document; and

         (b)      agrees that a judgment or order of an English court in
                  connection with a Finance Document is conclusive and binding
                  on it and may be enforced against it in the courts of any
                  other jurisdiction.

37.4     NON-EXCLUSIVITY

         Nothing in this Clause 37 limits the right of a Finance Party to bring
         proceedings against any Obligor in connection with any Finance
         Document:

                                      122


         (a)      in any other court of competent jurisdiction; or

         (b)      concurrently in more than one jurisdiction.

38.      WAIVER OF IMMUNITY

         Each Obligor irrevocably and unconditionally:

         (a)      agrees that if a Finance Party brings proceedings against it
                  or its assets in relation to a Finance Document, no immunity
                  from those proceedings (including, without limitation, suit,
                  attachment prior to judgment, other attachment, the obtaining
                  of judgment, execution or other enforcement) will be claimed
                  by or on behalf of itself or with respect to its assets;

         (b)      waives any such right of immunity which it or its assets now
                  has or may subsequently acquire; and

         (c)      consents generally in respect of any such proceedings to the
                  giving of any relief or the issue of any process in connection
                  with those proceedings, including, without limitation, the
                  making, enforcement or execution against any assets whatsoever
                  (irrespective of its use or intended use) of any order or
                  judgment which may be made or given in those proceedings.

39.      WAIVER OF JURY TRIAL

         THE OBLIGORS AND THE FINANCE PARTIES WAIVE ANY RIGHTS THEY MAY HAVE TO
         JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM ANY
         FINANCE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THE FINANCE
         DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
         WRITTEN CONSENT TO A TRIAL BY THE COURT.

40.      GOVERNING LAW

         This Agreement is governed by English law.

THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.

                                      123



                                   SCHEDULE 1

                                     PART 1

                              BANKS AND COMMITMENTS



BANKS                                                                                       COMMITMENTS
                                                                                                (E)
                                                                                         
Barclays Bank PLC                                                                           225,000,000
Bayerische Landesbank Girozentrale                                                          225,000,000
BNP Paribas                                                                                 225,000,000
Credit Agricole Indosuez                                                                    225,000,000
Credit Lyonnais                                                                             225,000,000
Deutsche Bank Luxembourg S.A.                                                               225,000,000
Societe Generale                                                                            225,000,000
Sumitomo Mitsui Banking Corporation                                                         225,000,000
(Paris branch - E175,000,000, London branch - E50,000,000)
ABN AMRO Bank N.V.                                                                          150,000,000
BoA Netherlands Cooperatieve U.A.                                                           150,000,000
The Bank of Tokyo-Mitsubishi, Ltd.                                                          150,000,000
Citibank International PLC, Succursale de Paris                                             150,000,000
Credit Commercial de France                                                                 150,000,000
Mizuho Financial Group - The Fuji Bank Limited, Paris Branch                                150,000,000
The Royal Bank of Scotland PLC                                                              150,000,000
Fleet Bank (Europe) Limited                                                                  50,000,000
Lloyds TSB Bank PLC                                                                          50,000,000
Natexis Banques Populaires                                                                   50,000,000
                                                                                            -----------
TOTAL COMMITMENTS                                                                          E3,000,000,000
                                                                                            -----------


                                      124



                                     PART 2

                               ORIGINAL GUARANTORS

NAME OF ORIGINAL GUARANTOR

Centenary Delta B.V.
Groupe Canal+ S.A.
Vivendi Communications North America, Inc.
Vivendi Telecom International S.A.
Vivendi Universal Publishing Acquisition Company
Vivendi Universal Holding I Corp.
Vivendi Universal Holding II Corp.
Vivendi Universal Holding IV Corp.
Vivendi Universal Games, Inc.
Vivendi Universal S.A.
Vivendi Universal US Holding Co.

                                      125


                                   SCHEDULE 2

                                     PART 1

                         CONDITIONS PRECEDENT DOCUMENTS

                    TO BE DELIVERED BEFORE THE FIRST REQUEST

1.       A copy of the constitutional documents of the Company.

2.       An extract of the K-Bis of the Register of Commerce and Companies for
         the Company dated no more than one month prior to the date of this
         Agreement.

3.       A copy of an extract of a proces-verbal of the conseil d'administration
         of the Company evidencing the power of the President or Directeur
         General of the Company to enter into this Agreement on behalf of the
         Company.

4.       If this Agreement was signed on behalf of the Company and the Obligors'
         Agent by a person other than the President or the Directeur General of
         the Company and the Obligors' Agent, duly executed powers of attorney
         in favour of that person evidencing that that person has full authority
         to sign this Agreement on behalf of the Company and the Obligors'
         Agent.

5.       A specimen of the signature of each person authorised to sign this
         Agreement on behalf of the Company and the Obligors' Agent and to sign
         and/or despatch all documents and notices to be signed and/or
         despatched by the Company and the Obligors' Agent under or in
         connection with this Agreement.

6.       A certificate of the Chief Financial Officer or Deputy Financial
         Officer of the Company confirming that utilisation of the facility in
         full would not cause any borrowing limit binding on the Company to be
         exceeded.

7.       A copy of the Original Group Accounts together with a reconciliation
         certificate signed by the Company's auditors demonstrating the
         difference between those accounts and the same accounts had they been
         prepared in accordance with accounting principles and practices
         generally accepted in the U.S.A., consistently applied and a
         certificate from an authorised signatory of the Company listing the
         Material Subsidiaries as at the date of this Agreement.

8.       Evidence that the process agent referred to in Clause 37.2 (Service of
         process) has accepted its appointment for the purposes of that Clause.

9.       Payment in full of all fees (including legal fees) due in relation to
         this Agreement (or authorisation from the Company to the Facility Agent
         to deduct the amount of all such fees from the proceeds of the first
         Loan).

10.      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, and the
         transactions contemplated by, any Finance Document or for the validity
         and enforceability of any Finance Document.

                                      126


11.      A certificate signed by the Chief Executive Officer, the Chief
         Financial Officer or the Deputy Chief Financial Officer of the Company
         setting out in reasonable detail computations establishing compliance
         with the financial covenants in Clauses 19.3 (Interest Cover Ratio) and
         19.4 (Debt Payout Ratio) in respect of the financial year of the
         Company ending 31st December, 2001 and confirming that as at the end of
         that financial year it was in compliance with Clauses 18.8 (Negative
         pledge) and 18.16 (Subsidiary Debt).

12.      A certificate of an authorised signatory of the Company certifying that
         each copy document delivered under this Part of this Schedule is
         correct, complete and in full force and effect as at a date no earlier
         than the date of this Agreement.

13.      A certificate of the auditors of the Company confirming that the
         execution by the Company of this Agreement constitutes the entry by the
         Company into a "convention courante conclue a des conditions normales"
         for the purposes of Article L225-87 of the French Commercial Code.

14.      (a)      A legal opinion of the Paris office of legal advisers in
                  France to the Company, addressed to the Finance Parties; and

         (b)      a legal opinion of Allen & Overy, legal advisers as to English
                  law to the Facility Agent, addressed to the Finance Parties.

                                      127

                                     PART 2

           TO BE DELIVERED FOR THE ACCESSION OF A SUBSIDIARY BORROWER

1.       A Borrower Accession Deed, duly executed by the relevant Subsidiary
         Borrower.

2.       A copy of the memorandum and articles of association and certificate of
         incorporation (or other equivalent constitutional documents) of the
         relevant Subsidiary Borrower and the Company (or, in the case of the
         Company, a certificate signed by an authorised signatory of the Company
         certifying that the Company's constitutional documents delivered in
         respect of the Company under Schedule 1 remain in full force and effect
         and are up to date).

3.       An extract of the K-Bis of the Register of Commerce and Companies for
         the Subsidiary Borrower dated no more than one month prior to the date
         of the Borrower Accession Deed.

4.       If necessary, a copy of a resolution of the board of directors of the
         relevant Subsidiary Borrower:

         (i)      approving the terms of, and the transactions contemplated by,
                  the Borrower Accession Deed;

         (ii)     authorising a specified person or persons to execute the
                  Borrower Accession Deed on its behalf; and

         (iii)    authorising a specified person or persons, on its behalf, to
                  sign and/or despatch all documents to be signed and/or
                  despatched by it under or in connection with the Finance
                  Documents.

5.       A certificate of the Chief Financial Officer or Deputy Chief Financial
         Officer of the relevant Subsidiary Borrower certifying that the
         borrowing of its Subsidiary Borrower Limit in full would not cause any
         borrowing limit binding on it to be exceeded.

6.       A copy of the Subsidiary Borrower's most recent audited accounts.

7.       A specimen of the signature of each person authorised by the
         resolutions referred to in paragraphs 4 above.

8.       A certificate of an authorised signatory of the relevant Subsidiary
         Borrower and the Company certifying that each copy document specified
         in this Part of this Schedule is correct, complete and in full force
         and effect as at a date no earlier than the date of the Borrower
         Accession Deed.

9.       If the Subsidiary Borrower is incorporated in France, a letter dated on
         or about the date of the relevant Borrower Accession Deed between the
         Facility Agent and the Obligor's Agent substantially in the form of
         Schedule 5.

10.      (a)      A legal opinion of Allen & Overy, legal advisers as to English
                  law to the Facility Agent, addressed to the Finance Parties;
                  and

                                      128


         (b)      a legal opinion from the Subsidiary Borrower's external legal
                  advisers in the jurisdiction of its incorporation, addressed
                  to the Finance Parties.

11.      A copy of any other authorisation or other document, opinion or
         assurance which the Facility Agent reasonably considers to be necessary
         in connection with the entry into and performance of, and the
         transactions contemplated by, the Borrower Accession Deed or for the
         validity and enforceability of any Finance Document.



                                      129



                                     PART 3

           TO BE DELIVERED FOR THE ACCESSION OF A SUBSIDIARY GUARANTOR

1.       A Guarantor Accession Deed, relevant Subordination Agreement, Accession
         Agreements and Security Documents duly executed by the Subsidiary
         Guarantor (and, if relevant, any limitation language contained in such
         Guarantor Accession Deed has been agreed by legal counsel to the
         Facility Agent).

2.       A certified copy of a resolution of the board of directors of each
         Subsidiary Guarantor approving the terms of, and the transactions
         contemplated by the Finance Documents to which it is a party and
         resolving that it execute each such Finance Document and authorising an
         authorised signatory of such Subsidiary Guarantor to execute
         respectively on its behalf all the Finance Documents to which it is a
         party.

3.       A copy of a resolution signed by all of the holders of the issued or
         allotted share capital in each Subsidiary Guarantor approving the term
         of, and the transactions contemplated by, the Finance Documents.

4.       A copy of:

         (a)      the tax certificate; and

         (b)      the certificate of good standing,

         in respect of each Subsidiary Guarantor incorporated or organised in
         the United States of America in each case.

5.       This Agreement duly executed by the Chairman and Chief Executive
         Officer or a duly authorised signatory of each Subsidiary Guarantor.

6.       A specimen of the signature of each person authorised to sign this
         Agreement on behalf of each Subsidiary Guarantor to sign and/or
         despatch all documents and notices to be signed and/or despatched by an
         Subsidiary Guarantor under or in connection with this Agreement.

7.       A certificate of a director of the Subsidiary Guarantor certifying that
         the guarantee under this Agreement would not cause any guaranteeing
         limit binding on it to be exceeded.

8.       A copy of any other authorisation or other document, opinion or
         assurance which the Agent considers to be necessary or desirable in
         connection with the entry into and performance of, and the transactions
         contemplated by, the Guarantor Accession Deed or for the validity and
         enforceability of any Finance Document.

9.       A specimen of the signature of each person authorised by the
         resolutions referred to in paragraphs (2) and (3) above.

10.      If available, a copy of the latest audited accounts of the Subsidiary
         Guarantor.

                                      130


11.      A certificate of an authorised signatory of the Subsidiary Guarantor
         certifying that each copy document specified in Part 3 of this Schedule
         2 is correct, complete and in full force and effect as at a date no
         earlier than the date of the Guarantor Accession Deed.

12.      If the Subsidiary Guarantor is incorporated in France, a letter dated
         on or about the date of the relevant Guarantor Accession Deed between
         the Facility Agent and the Obligor's Agent substantially in the form of
         Schedule 5.

13.      A legal opinion of the legal advisers to the Subsidiary Guarantor
         acceptable to and addressed to the Finance Parties.

14.      Evidence that all costs and expenses payable by the Company in respect
         of the Accession Agreement have been paid.

15.      Evidence that the Subsidiary Guarantor has appointed an agent for
         service of process in England and US and that such agent has accepted
         its appointment.

                                      131

                                   SCHEDULE 3

                                 FORM OF REQUEST

To:      [SOCIETE GENERALE] as Facility Agent

From:    VIVENDI UNIVERSAL S.A.

                                                               Date: [      ]


     VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT
                  FACILITY DATED 15TH MARCH, 2002 (AS AMENDED)

1.       We request the making of a Loan as follows:

         (a)      Borrower:         [                         ]

         (b)      Drawdown Date: [                              ]

         (c)      Original Euro Amount: E[                              ]

         (d)      Currency: [                                ](1)+

         (e)      Interest Period: [                             ]

         (f)      Payment instructions: [                               ]

2.       We confirm that each condition specified in Clause 4.2 (Further
         conditions precedent) is satisfied on the date of this Request and
         repeat as if set out in this Request, the Representations and
         Warranties contained in Clause 17 (Representations and Warranties).

By:

VIVENDI UNIVERSAL S.A. (as Obligors' Agent)
Authorised Signatory



- ---------------

         (1)      For a Subsidiary Borrower all Loans must be in the currency in
                  which its Subsidiary Borrower Limit is expressed

                                      132


                                   SCHEDULE 4

                          FORM OF NOVATION CERTIFICATE

To:      [SOCIETE GENERALE] as Facility Agent

From:    [THE EXISTING BANK] and [THE NEW BANK]                     Date:[  ]

VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY
                      DATED 15TH MARCH, 2002 (AS AMENDED)

We refer to Clause 29.3 (Procedure for novations).

1.       We [ ] the ("EXISTING BANK") and [ ] the ("NEW BANK") agree to the
         Existing Bank and the New Bank novating the Existing Bank's Commitment
         (or part) and/or rights and obligations referred to in the Schedule in
         accordance with Clause 29.3 (Procedure for novations).

2.       The specified date for the purposes of Clause 29.3(c) (Procedure for
         novations) is [date of novation].

3.       From this date, the New Bank will:

         (a)      be bound by the Finance Documents as a Bank;

         (b)      become a party to the Security Sharing Agreement as a Secured
                  Creditor thereunder and be bound accordingly;

         (c)      become a party to the Subordination Agreements as an Existing
                  Lender thereunder and be bound accordingly;

         (d)      become a party to the VE Share Pledge and Escrow Agreement, in
                  the capacity or capacities in which the Existing Bank was a
                  party to that agreement, and be bound accordingly; and

         (e)      become a party to each Security Document to which the Existing
                  Bank was a party, in the capacity in which the Existing Bank
                  was a party to that Security Document, and be bound
                  accordingly.

4.       The Facility Office, address for notices and payment details of the New
         Bank for the purposes of Clause 35.2 (Addresses for notices) are set
         out in the attached Schedule.

5.       For the purposes of Article 1278 et seq. of the French Civil Code, the
         Parties agree that all guarantees and security given under or in
         connection with the Finance Documents shall be preserved for the
         benefit of the New Bank.

6.       This Novation Certificate is governed by English law.

                                      133


                                  THE SCHEDULE
                              (to the certificate)


A.       COMMITMENT/RIGHTS AND OBLIGATIONS TO BE NOVATED

         [Insert relevant details]

B.       ADMINISTRATIVE DETAILS

1.       DOCUMENTATION

The legal name of our institution, address for notices, Facility Office and
contact details of the individual who will be responsible for the operational
aspects of the Facility (e.g., Requests, Drawdowns, interest payments, etc).

Name:
Address:
Facility Office:
Attention:
Tel no:
Fax no:
E-mail:

2.       CREDIT MATTERS

The details of the individual who will be responsible for the credit aspects of
the Facility

Name:
Attention:
Address:
Tel no:
Fax no:
E-mail:

3.       PAYMENT DETAILS

FOR AMOUNTS IN EURO

Bank Name:
Address:
Account Name:
Swift Code
Account Number:
Reference:
Contact Name:

FOR AMOUNTS IN U.S. DOLLARS

Bank Name:
Address:
Account Name:
Swift Code
Account Number:

                                      134


Reference:
Contact Name:

FOR AMOUNTS IN STERLING

Bank Name:
Address:
Account Name:
Swift Code
Account Number:
Reference:
Contact Name:

FOR AMOUNTS IN JAPANESE YEN

Bank Name:
Address:
Account Name:
Swift Code
Account Number:
Reference:
Contact Name:

EXECUTION

[Existing Bank]

By:

Date:

[New Bank]

By:

Date:

[FACILITY AGENT]                                     [SECURITY AGENT]

By:                                                  By:

Date:                                                Date:

                                      135

                                   SCHEDULE 5

                          EFFECTIVE GLOBAL RATE LETTER

To:      Vivendi Universal S.A. (as Obligors' Agent)
         [Seat, number and address]

Date:    [              ], 2002


Dear Sirs,

SUBJECT: E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY DATED 15TH
MARCH, 2002 (AS AMENDED, THE "AGREEMENT")

We refer to the Agreement between your company as borrower, guarantor and
Obligors' Agent, the Mandated Lead Arrangers and Banks (each as defined in the
Agreement) and Societe Generale as Facility Agent.

Terms defined in the Agreement shall bear the same meaning in this letter unless
otherwise defined in this letter.

This letter is signed in connection with [insert name of Subsidiary
Borrower/Subsidiary Guarantor]'s accession to the Agreement as a [Subsidiary
Borrower/Subsidiary Guarantor].(2)+

We confirm that:

1.       this is the letter referred to in Clause 27.4 (Taux Effectif Global) of
         the Agreement;

2.       the applicable effective global rate ("TAUX EFFECTIF GLOBAL") referred
         to in Clause 27.4 (Taux Effectif Global), calculated on the basis of a
         365 day year, is:

         -        for an Interest Period of one month and at EURIBOR rate of [
                  ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux
                  de periode) of [ ]%);

         -        for an Interest Period of two months and at EURIBOR rate of [
                  ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux
                  de periode) of [ ]%);

         -        for an Interest Period of three months and at EURIBOR rate of
                  [ ]% per annum, [ ]% (i.e. a rate for such Interest Period
                  (taux de periode) of [ ]%);

         -        for an Interest Period of six months and at EURIBOR rate of [
                  ]% per annum, [ ]% (i.e. a rate for such Interest Period (taux
                  de periode) of [ ]%).

         The above rates are given on an indicative basis and for information
         only, in order to comply with the provisions of article L.313-1 to
         L.313-6 of the French Code de la Consommation and on the basis (i) that
         drawdown for the full amount of the facility has been made in Euros on
         [date], (ii) that the EURIBOR rate, expressed as an annual rate, is as
         fixed on [DATE], (iii) [that the


- ---------------------

         (2)      Include for Subsidiary Borrower/Subsidiary Guarantor
                  incorporated in France

                                      136

         Applicable Margin is the [maximum] applicable and (iv) ]of the
         commissions and various fees payable by you on the terms of the
         Agreement. Such rates shall not be binding on the Finance Parties.

We should be grateful if you would confirm your acceptance of the terms of this
letter by signing and returning to us the enclosed copy.

This letter is designated a Finance Document.

Yours faithfully,



.............................................
Societe Generale
as Facility Agent

We agree to the above.



.............................................
Vivendi Universal S.A. (as Obligors' Agent)

                                      137

                                   SCHEDULE 6

                        CALCULATION OF THE MANDATORY COST

(a)      For the purpose of paragraph (a) of the definition of Mandatory Cost,
         the Mandatory Cost for a Bank with respect to its participation in a
         Loan is the rate calculated in accordance with paragraph (b) below and
         which is notified by that Bank to the Facility Agent not later than 15
         days prior to each anniversary of the date of this Agreement (or
         immediately prior to the Bank ceasing to be a Bank under this Agreement
         for any reason or in the event of cancellation of the Total Commitments
         in full). Mandatory Costs for the last 15 days of a year may be
         estimated or included in the following year's calculation.

(b)      For the purpose of paragraph (a) of the definition of Mandatory Cost,
         the Mandatory Cost for a Bank (if applicable to that Bank) shall be
         calculated by that Bank in accordance with the following formulae:

         in relation to a Loan denominated in Sterling:

                                   BY +S(Y - Z)+Fx0.01
                                   ____________________% per annum
                                          100-(B+S)

         in relation to any other Loan:

                                             Fx0.01
                                             ______% per annum
                                              300

         where on the day of application of the formula:

         B        is the percentage of the Bank's eligible liabilities (in
                  excess of any stated minimum) which the Bank of England
                  requires the Bank to hold on a non-interest-bearing deposit
                  account in accordance with its cash ratio requirements;

         Y        is LIBOR at or about 11.00 a.m. (London time) on the first day
                  of the relevant Interest Period;

         S        is the percentage of the Bank's eligible liabilities which the
                  Bank of England requires the Bank to place as a special
                  deposit;

         Z        is the interest rate per annum allowed by the Bank of England
                  on special deposits; and

         F        is the charge payable by the Bank to the Financial Services
                  Authority under the fees rules (but for this purpose
                  calculated by the Facility Agent in a notional basis as being
                  the average of the fee tariffs within fee block Category A1
                  (Deposit acceptors) of the fees rules, applying any applicable
                  discount and ignoring any minimum fee under the fees rules,
                  expressed in pounds per L1 million of the tariff base of the
                  Bank.

(c)      For the purposes of this Schedule 6:

                                      138

         (i)      "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them at the time of application of the
                  formula by the Bank of England;

         (ii)     "FEES RULES" means the then current rules on periodic fees in
                  the Supervision manual in the FSA Handbook; and

         (iii)    "TARIFF BASE" has the meaning given to it in the fees rules.

(d)      In the application of the first formula in paragraph (b), B, Y, S and Z
         are included in the formula as figures and not as percentages, e.g. if
         B = 0.5% and Y = 15%, BY is calculated as 0.5 x 15.

(e)     (i)      That formula is applied on the first day of the Interest
                 Period of the relevant Loan.

         (ii)    Each rate calculated in accordance with that formula is, if
                 necessary, rounded upward to four decimal places.

(f)      This element of Mandatory Cost is payable by the relevant Borrower on
         the fifth Business Day after each relevant notification under paragraph
         (a) above, or on the date on which a Bank ceases to be a Bank or on
         which the Total Commitments are cancelled in full, as the case may be.

(g)      If the Facility Agent determines that a change in circumstances has
         rendered, or will render, either formula inappropriate, the Facility
         Agent (after consultation with the Banks) shall notify the Borrower of
         the manner in which the relevant element of the Mandatory Cost will
         subsequently be calculated. The manner of calculation so notified by
         the Facility Agent shall, in the absence of manifest error, be binding
         on all the Parties.

                                      139

                                   SCHEDULE 7

                       FORM OF CONFIDENTIALITY UNDERTAKING

                              [Letterhead of Bank]

VIVENDI UNIVERSAL S.A. - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT FACILITY
           DATED 15TH MARCH, 2002 (AS AMENDED, THE "LOAN AGREEMENT")

                                                                          [DATE]

Dear Sirs

We refer to the Loan Agreement. Terms defined in the Loan Agreement shall have
the same meaning when used in this confidentiality undertaking unless otherwise
defined herein.

We understand that you are considering acquiring an interest in the Loan
Agreement (the "Acquisition"). 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 use the
         Confidential Information only in relation to deciding whether or not to
         enter into the Acquisition (the "PERMITTED PURPOSE"), (c) to use all
         reasonable endeavours to ensure that any person to whom you pass any
         Confidential Information (unless disclosed under paragraph 2(c) below)
         acknowledges and complies with the provisions of this letter as if that
         person were also a party to it, and (d) 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
         Acquisition.

2.       PERMITTED DISCLOSURE: we agree that you may disclose Confidential
         Information:

         (a)      to your Holding Company, Subsidiaries and Affiliates (the
                  "PURCHASER 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
                  Purchaser Group;

         (b)      subject to the requirements of the Loan Agreement, to any
                  person to (or through) whom you assign or transfer (or may
                  potentially assign or transfer) all or any of the rights,
                  benefits and obligations which you may acquire under the Loan
                  Agreement with (or through) whom you enter 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, the Loan Agreement or the Borrower or any
                  member of the Group so long as that person has delivered a
                  letter to you in equivalent form to this letter; and

         (c)      (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 Purchaser Group are listed or
                  (iii) where required by the laws or

                                      140

                  regulations of any country with jurisdiction over the affairs
                  of any member of the Purchaser Group.

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(c) 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(c) 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 Loan Agreement 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 member of the Group nor any of our or
                  their respective 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 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 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 hereof and damages may not be an adequate
                  remedy; each Relevant Person 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 hereunder will operate as a
         waiver thereof nor will any single or partial exercise of any right,
         power or privilege preclude any further

                                      141

         exercise thereof or the exercise of any other right, power or
         privileges hereunder. The terms of this letter and your obligations
         hereunder 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 Borrower and each other
         member of the Group.

10.      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.

11.      DEFINITIONS: in this confidentiality undertaking, "Confidential
         Information" means any information relating to the Borrower, the Group,
         the Loan Agreement and/or the Acquisition 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 thereafter, 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;

Please acknowledge your agreement to the above by signing and returning the
enclosed copy. Yours faithfully


.................................
For and on behalf of
[BANK]

We acknowledge and agree to the above


....................................
For and on behalf of
[                 ]

                                      142


                                   SCHEDULE 8

                             BORROWER ACCESSION DEED

To:      [                    ] as Facility Agent

From:    [SUBSIDIARY BORROWER]

                                                              Date: [         ]

VIVENDI UNIVERSAL - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT AGREEMENT
DATED 15TH MARCH, 2002 (AS AMENDED, THE "CREDIT AGREEMENT")


We refer to Clause 29.4 (Accession of Subsidiary Borrower). Terms defined in the
Credit Agreement have the same meaning in this Deed.

We, [name of company] of [Registered Office] (Registered no. [         ]) agree
to become a Subsidiary Borrower and to be bound by the terms of the Credit
Agreement as a Subsidiary Borrower in accordance with Clause 29.4 (Accession of
Subsidiary Borrower).

Our Subsidiary Borrower Limit is [          ](3)+.

Our address for notices for the purposes of Clause 35.2 (Addresses for notices)
is:

[

                                           ]

This Deed is governed by English law.

Executed as a deed by                        )   Director
[SUBSIDIARY BORROWER]                        )
acting by                                    )   Director/Secretary
and                                          )



[OBLIGOR'S AGENT]

By:

[FACILITY AGENT]

By:


- ------------------


         (3)      Currency must be Euro or an Optional Currency. Borrowings for
the Subsidiary Borrower are only permitted in the currency stated here.

                                      143

                                   SCHEDULE 9

                            GUARANTOR ACCESSION DEED

To:      [                    ] as Facility Agent

From:    [SUBSIDIARY GUARANTOR]

                                                               Date: [         ]

VIVENDI UNIVERSAL - E3,000,000,000 MULTICURRENCY REVOLVING CREDIT AGREEMENT
DATED 15TH MARCH, 2002 (AS AMENDED, THE "CREDIT AGREEMENT")


We refer to Clause 29.5 (Accession of Subsidiary Guarantor). Terms defined in
the Credit Agreement have the same meaning in this Deed.

We, [name of company] of [Registered Office] (Registered no. [          ]) agree
to become a Subsidiary Guarantor and to be bound by the terms of the Credit
Agreement as a Subsidiary Guarantor in accordance with Clause 29.5 (Accession of
Subsidiary Guarantor).

Our address for notices for the purposes of Clause 35.2 (Addresses for notices)
is:

[

                                           ]

This Deed is governed by English law.

Executed as a deed by                        )   Director
[SUBSIDIARY GUARANTOR]                       )
acting by                                    )   Director/Secretary
and                                          )



[OBLIGOR'S AGENT]

By:

[FACILITY AGENT]

By:

                                      144

                                   SCHEDULE 10

                               SECURITY DOCUMENTS

                                     PART 1

                           NON-U.S. SECURITY DOCUMENTS


1.       Vivendi Telecom International S.A. Share Pledge granted by Vivendi
         Universal S.A. (plus registre des mouvements de titres, the appropriate
         compte d'actionnaire, Declaration de gage, and Certificate of Pledge).

2.       Groupe Canal+ Share Pledge granted by Vivendi Universal S.A. (plus
         registre des mouvements de titres, the appropriate compte
         d'actionnaire, Declaration de gage, and Certificate of Pledge).

3.       The VE Share Pledge and Escrow Agreement.

4.       Amendment Agreement to VE Share Pledge and Escrow Agreement dated on or
         about 7th February 2003.

5.       (a) Declaration de gage A,

         (b) Declaration de gage B.

6.       Cash Pooling Hub Security granted by Groupe Canal+.

7.       Cash Pooling Hub Security granted by Vivendi Telecom International S.A.

8.       Bank Account Pledge Agreement by Vivendi Universal S.A. with respect to
         Cash Pooling Hub Security and over Concentration Accounts with Societe
         Generale.

9.       Pledge of Financial Instruments Accounts from Vivendi Universal (and
         Declarations de gage relating to the accounts held by various banks).

10.      Security over secured Intra Group Loans, in the form of a Assignment of
         Receivables Agreement as required by the New Facility Agreement prior
         to delivery of the first Request thereunder.

11.      Deed of Pledge of Registered Shares Centenary Holding N.V.

12.      Charge over cash by Vivendi Universal S.A. (English law).

13.      Delegation of Claims Agreement between, inter alias, Group Canal+S.A.
         as Grantor, Studiocanal S.A. as Delegated Debtor and Societe Generale.

14.      Delegation of Claims Agreement between, inter alias, Group Canal + S.A.
         as Grantor, Canal + Finance S.A. as Delegated Debtor and Societe
         Generale.

15.      Deposit and Cash Collateral Agreement (Gage Especes).

                                      145

16.      Charge on Cash from Groupe Canal+ (English law).

17.      Mortgage of Shares of Centenary Holding Limited from Vivendi Universal
         Holding II Corp. (English law).

18.      Bank Account Pledge Agreement by Vivendi Universal S.A. with respect to
         an account with Fortis Financial Markets (Belgian law).

19.      Amendment Agreement to VE Share Pledge and Escrow Agreement to be dated
         on or about 12th May, 2003.

                                      146

                                     PART 2

                             U.S. SECURITY DOCUMENT

The Master Security Agreement (pledge and security agreement between the
Grantors (as defined therein) and Societe Generale as Security Agent).

                                      147

                                   SIGNATORIES
                         (TO THE RESTATEMENT AGREEMENT)

OBLIGORS' AGENT

VIVENDI UNIVERSAL S.A.

By:

GUARANTORS

CENTENARY DELTA B.V.

By:


GROUPE CANAL+ S.A.

By:


VIVENDI COMMUNICATIONS NORTH AMERICA, INC.

By:

VIVENDI TELECOM INTERNATIONAL S.A.

By:


VIVENDI UNIVERSAL GAMES, INC.

By:


VIVENDI UNIVERSAL HOLDING I CORP.

By:


VIVENDI UNIVERSAL HOLDING II CORP.

By:

                                      148


VIVENDI UNIVERSAL HOLDING IV CORP.

By:


VIVENDI UNIVERSAL S.A.

By:

VIVENDI UNIVERSAL PUBLISHING ACQUISITION COMPANY

By:



VIVENDI UNIVERSAL US HOLDINGS CO.

By:

EX-4.9

                                                                     Exhibit 4.9


                                                                  EXECUTION COPY

================================================================================

                                  $920,000,000

                                 LOAN AGREEMENT

                                      among

                      VIVENDI UNIVERSAL ENTERTAINMENT LLLP,
                                  as Borrower,

              The Several Lenders from Time to Time Parties Hereto,

                 BANK OF AMERICA, N.A. and JPMORGAN CHASE BANK,
                          as Co-Administrative Agents,

                               BARCLAYS BANK PLC,
                              as Syndication Agent,

                              JPMORGAN CHASE BANK,
                               as Collateral Agent

                                       and

                              JPMORGAN CHASE BANK,
                                 as Paying Agent

                           Dated as of June 24, 2003

================================================================================


        BANC OF AMERICA SECURITIES LLC and J.P. MORGAN SECURITIES INC.,
                     as Joint Bookrunners and Lead Arrangers

                                                                               i

                               TABLE OF CONTENTS



                                                                                  Page
                                                                            
SECTION 1.         DEFINITIONS                                                       1
     1.1           Defined Terms .................................................   1
     1.2           Other Definitional Provisions .................................  22
     1.3           Accounting Determinations; GAAP ...............................  23

SECTION 2.         AMOUNT AND TERMS OF COMMITMENTS                                  23
     2.1           Term Loans ....................................................  23
     2.2           Procedure for Borrowing .......................................  23
     2.3           Repayment of Loans ............................................  23
     2.4           Optional Prepayments ..........................................  24
     2.5           Mandatory Prepayments .........................................  24
     2.6           Conversion and Continuation Options ...........................  24
     2.7           Limitations on Eurodollar Tranches ............................  25
     2.8           Interest Rates and Payment Dates ..............................  25
     2.9           Computation of Interest .......................................  25
     2.10          Inability to Determine Interest Rate ..........................  26
     2.11          Pro Rata Treatment and Payments ...............................  26
     2.12          Requirements of Law ...........................................  27
     2.13          Taxes .........................................................  28
     2.14          Indemnity .....................................................  29
     2.15          Change of Lending Office ......................................  30
     2.16          Replacement of Lenders ........................................  30

SECTION 3.         REPRESENTATIONS AND WARRANTIES                                   30
     3.1           Financial Statements ..........................................  31
     3.2           No Change .....................................................  31
     3.3           Existence; Compliance with Law ................................  31
     3.4           Power; Authorization; Enforceable Obligations .................  31
     3.5           No Legal Bar ..................................................  32
     3.6           Litigation ....................................................  32
     3.7           No Default ....................................................  32
     3.8           Ownership of Property; Liens ..................................  32
     3.9           Intellectual Property .........................................  32
     3.10          Taxes .........................................................  32
     3.11          Federal Regulations ...........................................  32
     3.12          Labor Matters .................................................  33
     3.13          ERISA .........................................................  33
     3.14          Investment Company Act; Other Regulations .....................  33
     3.15          Subsidiaries ..................................................  33
     3.16          Use of Proceeds ...............................................  33
     3.17          Environmental Matters .........................................  33
     3.18          Accuracy of Information, etc ..................................  34
     3.19          Security Documents ............................................  34

SECTION 4.         CONDITIONS PRECEDENT                                             34
     4.1           Conditions to Loans ...........................................  34


                                                                              ii

                                                                            
SECTION 5.         AFFIRMATIVE COVENANTS                                            35
     5.1           Financial Statements ..........................................  35
     5.2           Certificates; Other Information ...............................  36
     5.3           Payment of Obligations ........................................  37
     5.4           Maintenance of Existence; Compliance ..........................  37
     5.5           Maintenance of Property; Insurance ............................  37
     5.6           Inspection of Property; Books and Records; Discussions ........  37
     5.7           Notices .......................................................  38
     5.8           Separateness Requirements .....................................  38
     5.9           Concerning the Collateral .....................................  38
     5.10          Interest Rate Protection ......................................  39

SECTION 6.         NEGATIVE COVENANTS                                               40
     6.1           Financial Covenants ...........................................  40
     6.2           Indebtedness ..................................................  40
     6.3           Liens .........................................................  42
     6.4           Fundamental Changes ...........................................  45
     6.5           Disposition of Property .......................................  45
     6.6           Restricted Payments ...........................................  46
     6.7           Investments ...................................................  47
     6.8           Transactions with Affiliates ..................................  49
     6.9           Sales and Leasebacks ..........................................  49
     6.10          Swap Agreements ...............................................  49
     6.11          Changes in Fiscal Periods .....................................  50
     6.12          Negative Pledge Clauses .......................................  50
     6.13          Clauses Restricting Subsidiary Distributions ..................  50
     6.14          Lines of Business .............................................  50

SECTION 7.         EVENTS OF DEFAULT                                                50

SECTION 8.         THE AGENTS                                                       52
     8.1           Appointment ...................................................  52
     8.2           Delegation of Duties ..........................................  53
     8.3           Exculpatory Provisions ........................................  53
     8.4           Reliance by Co-Administrative Agents ..........................  53
     8.5           Notice of Default .............................................  54
     8.6           Non-Reliance on Agents and Other Lenders ......................  54
     8.7           Indemnification ...............................................  54
     8.8           Agent in Its Individual Capacity ..............................  55
     8.9           Successor Co-Administrative Agent .............................  55
     8.10          Co-Administrative Agents' and Paying Agent's Fees .............  55
     8.11          Syndication Agent .............................................  55

SECTION 9.         MISCELLANEOUS                                                    55
     9.1           Amendments and Waivers ........................................  55
     9.2           Notices .......................................................  56
     9.3           No Waiver; Cumulative Remedies ................................  57
     9.4           Survival of Representations and Warranties ....................  57
     9.5           Payment of Expenses ...........................................  58
     9.6           Successors and Assigns; Participations and Assignments ........  58
     9.7           Adjustments; Set-off ..........................................  61



                                                                             iii

                                                                            
     9.8           Counterparts ..................................................  61
     9.9           Severability ..................................................  61
     9.10          Integration ...................................................  62
     9.11          GOVERNING LAW .................................................  62
     9.12          Submission To Jurisdiction; Waivers ...........................  62
     9.13          Acknowledgements ..............................................  62
     9.14          Releases of Guarantees and Liens ..............................  63
     9.15          Confidentiality ...............................................  64
     9.16          WAIVERS OF JURY TRIAL .........................................  64
     9.17          Delivery of Addenda ...........................................  64
     9.18          Non-Recourse to Partners ......................................  64
     9.19          Limitation on Individual Enforcement ..........................  64
     9.20          Restatement of Existing Facility ..............................  65



SCHEDULES:

1.1A    Commitments
1.1B    Mortgaged Property
1.1C    Certain Real Properties
3.15    Material Subsidiaries
4.1     Closing Documents
5.8     Separateness Requirements
6.2     Indebtedness
6.8     Transactions with Affiliates
6.9     Permitted Sales and Leasebacks
6.12    Permitted Restrictions

EXHIBITS:

A       Form of Security Agreement
B       Form of Subordination Agreement
C       Form of Assignment and Assumption
D       Form of Lender Addendum
E       Form of Exemption Certificate


SIGNATORIES

         LOAN AGREEMENT (this "Agreement"), dated as of June 24,2003, among
VIVENDI UNIVERSAL ENTERTAINMENT LLLP (the "Borrower"), the several banks and
other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), BANK OF AMERICA, N.A. and JPMORGAN CHASE BANK, as
co-administrative agents, BARCLAYS BANK PLC, as syndication agent (in such
capacity, the "Syndication Agent"), JPMORGAN CHASE BANK, as collateral agent,
and JPMORGAN CHASE BANK, as paying agent.

         The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS

         1.1      Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.

         "ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/l00 of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Paying Agent, as its prime
rate in effect at its principal office in New York City (the Prime Rate not
being intended to be the lowest rate of interest charged by the Paying Agent in
connection with extensions of credit to debtors). Any change in the ABR due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
as of the opening of business on the effective day of such change.


         "ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.

         "Additional Indebtedness": Indebtedness incurred pursuant to Section
6.2(q).

         "Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

         "Agents": the collective reference to the Co-Administrative Agents, the
Syndication Agent, the Collateral Agent and the Paying Agent.

         "Agreement": as defined in the preamble hereto.

         "Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:

                        ABR Loans                   Eurodollar Loans
                          1.75%                          2.75%

         "Approved Fund": as defined in Section 9.6(b).

         "Asset Sale": any Disposition of Subject Assets or series of related
Dispositions of Subject Assets (excluding any such Disposition permitted by
clauses (a)-(g) of Section 6.5) that yields gross proceeds to the Borrower or
any Domestic Subsidiary (valued at the initial principal amount thereof in the
case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$10,000,000.

                                                                               2

         "Assignee": as defined in Section 9.6(b).

         "Assignment and Assumption": an Assignment and Assumption,
substantially in the form of Exhibit C, or in any other form approved by the
Paying Agent.

         "Benefited Lender": as defined in Section 9.7(a).

         "Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).

         "Borrower": as defined in the preamble hereto.

         "Business": as defined in Section 3.17(b).

         "Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close; provided that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the London
interbank market.

         "Canada Preferred Stock": the Preferred Stock, redemption value
CAN$l000 per share, of Universal Studios Canada Inc. (or its successors).

         "Canada Receivable": the receivable which at the date of this Agreement
is owing by a member of the Vivendi Group to a member of the Group, the amount
which shall at no time exceed CAN$52,000,000.

         "Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.

         "Cash Collateral Event": any event that would be a Prepayment Event but
for the proviso to the definition of Prepayment Event.

         "Cash EBITDA": for any period, Consolidated EBITDA for such period
adjusted by (i) adding the amount of film and programming amortization costs
deducted in the determination thereof and (ii) deducting the amount of cash film
and programming production costs paid in such period by the Group and not
otherwise deducted in the determination thereof.

         "Cash Leverage Ratio": at any date, the Leverage Ratio at such date,
adjusted by substituting Cash EBITDA for Consolidated EBITDA for the relevant
period.

         "Change in Control": the cessation by Vivendi Universal to own,
directly or indirectly, more than 50% of the outstanding issued common Equity
Interests of the Borrower (to which is attached more than 50% of the common
voting rights of the Borrower) or the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) of Equity Interests representing
more than 33 1/3% of either the aggregate ordinary voting power or the aggregate
equity value represented by the issued and outstanding Equity Interests in
Vivendi Universal.

                                                                               3

         "Class A Preferred Interests": as defined in the Partnership Agreement.

         "Class B Preferred Interests": as defined in the Partnership Agreement.

         "Closing Date": the date designated by the Borrower pursuant to Section
2.2 as the date on which the Loans are to be made, which date shall be no later
than June 30, 2003.

         "Co-Administrative Agents": Bank of America, N.A. and JPMorgan Chase
Bank, as the co-administrative agents for the Lenders under this Agreement,
together with any successors in such capacity.

         "Code": the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.

         "Collateral Agent": JPMorgan Chase Bank, in its capacity as
administrative agent for the secured parties under the Security Documents,
together with any successors in such capacity.

         "Collateral and Guarantee Requirement": the requirement that:

         (a)      the Collateral Agent shall have received from each Loan Party
                  either (i) a counterpart of the Security Agreement duly
                  executed and delivered on behalf of such Loan Party or (ii) in
                  the case of any Person that becomes a Loan Party after the
                  Closing Date, a supplement to the Security Agreement, in the
                  form specified therein, duly executed and delivered on behalf
                  of such Loan Party;

         (b)      all outstanding Equity Interests of each Subsidiary owned
                  directly by any Loan Party shall have been pledged pursuant to
                  the Security Agreement (except that the Loan Parties shall not
                  be required to pledge more than 66% of the outstanding voting
                  Equity Interests of any Foreign Subsidiary) and the Collateral
                  Agent shall have received all certificates or other
                  instruments representing such Equity Interests, together with
                  stock powers or other instruments of transfer with respect
                  thereto endorsed in blank;

         (c)      all Indebtedness of the Borrower and each Subsidiary that is
                  owing to any Loan Party and that is evidenced by a promissory
                  note shall have been pledged pursuant to the Security
                  Agreement and the Collateral Agent shall have received all
                  such promissory notes, together with instruments of transfer
                  with respect thereto endorsed in blank;

         (d)      all documents and instruments, including Uniform Commercial
                  Code financing statements, required by law or reasonably
                  requested by the Collateral Agent to be filed, registered or
                  recorded to create the Liens intended to be created by the
                  Security Agreement and the Mortgage and perfect such Liens to
                  the extent required by, and with the priority required by, the
                  Security Agreement and the Mortgage, shall have been filed,
                  registered or recorded or delivered to the Collateral Agent
                  for filing, registration or recording;

         (e)      the Collateral Agent shall have received (i) counterparts of a
                  Mortgage with respect to each Mortgaged Property duly executed
                  and delivered by the record

                                                                               4

                  owner of such Mortgaged Property, (ii) a policy or policies of
                  title insurance issued by a nationally recognized title
                  insurance company insuring the Lien of each such Mortgage as a
                  valid first Lien on the Mortgaged Property described therein,
                  free of any Lien which is not a Permitted Encumbrance (as such
                  terms are defined in the Mortgage), together with such
                  endorsements, coinsurance and reinsurance as the Collateral
                  Agent or the Required Lenders may reasonably request and (iii)
                  such surveys, abstracts, appraisals, legal opinions and other
                  documents as the Collateral Agent or the Required Lenders may
                  reasonably request with respect to any such Mortgage or
                  Mortgaged Property;

         (f)      each Loan Party shall have obtained all material consents and
                  approvals required to be obtained by it in connection with the
                  execution and delivery of all Security Documents to which it
                  is a party, the performance of its obligations thereunder and
                  the granting by it of the Liens thereunder; and

         (g)      the Subordination Agreement shall have been executed and
                  delivered by the parties thereto.

         "Commitment": as to any Lender, the obligation of such Lender to make a
Loan to the Borrower in the principal amount set forth under the heading
"Commitment" opposite such Lender's name on Schedule 1.1A. The aggregate amount
of the Commitments is $920,000,000.

         "Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender; and provided
further that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 2.12, 2.13, 2.14 or 9.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.

         "Confidential Information Memorandum": the Confidential Information
Memorandum dated May 2003 and furnished to certain Lenders.

         "Consolidated": refers to the consolidation of the accounts of the
Borrower and its Subsidiaries in accordance with GAAP.

         "Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Copyright Liens": any Liens granted by the Borrower or any Subsidiary
on copyrights relating to Product that is subject to contracts entitling the
Borrower or such Subsidiary to future payments in respect of such Product, which
contractual rights to future payments are to be transferred by the Borrower or
such Subsidiary to a special-purpose Subsidiary of the Borrower or such
Subsidiary organized for the purpose of monetizing such rights to future
payments and which Liens (i) are granted directly or indirectly for the benefit
of the special purpose Subsidiary and/or the Persons who purchase such
contractual rights to future payments from such special-purpose Subsidiary and
(ii) extend only to

                                                                               5

copyrights for Product subject to such contracts for the purpose of permitting
the completion, distribution and exhibition of such Product.

         "Covenant Defeasance SPV": as defined in the definition of Covenant
Defeasance Transaction.

         "Covenant Defeasance Transaction": any or all of the following
transactions, as the context may require: (a) the issuance of additional
preferred or common Equity Interests in the Borrower to a member of the Vivendi
Group other than a Group Member; (b) a contribution of the proceeds of such
issuance (and/or any funds that could be disposed of pursuant to a Dividend at
the time in compliance with Section 6.6) to a special purpose entity (which may
be a special purpose subsidiary of the Borrower, a trust or similar limited
liability entity) formed to facilitate the transactions contemplated by this
definition (the "Covenant Defeasance SPV"), which shall have no Investment in
any other Group Member (other than Class A Preferred Interests or Class B
Preferred Interests); (c) the issuance for the account of the Covenant
Defeasance SPV of a letter of credit in the amount required by Section 5.05(a)
of the Partnership Agreement as a condition to the inapplicability of certain
covenants specified therein; (d) the pledge of the cash proceeds or funds
referred to in (b) above (or Investments acquired with such proceeds or funds)
to secure the obligations of the Covenant Defeasance SPV in respect of such
letter of credit; (e) the posting of such letter of credit in favor of the
holder of the Class A Preferred Interests as contemplated by Section 5.05 of the
Partnership Agreement; or (F) any other substantially similar transaction for
the defeasance of the covenants in the Partnership Agreement that benefit the
Class A Preferred Interests and/or the Class B Preferred Interests (including
arrangements for the assets of the Covenant Defeasance SPV to effect such
defeasance instead of supporting a letter of credit issued for such purpose)
which (i) is funded exclusively as contemplated by (a) and (b) above, (ii)
involves no Indebtedness of any Group Member except a Covenant Defeasance SPV
and (iii) involves no issuance or Disposition of Equity Interests in any Group
Member except the Borrower or a Covenant Defeasance SPV.

         "Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

         "Disposition": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings. The granting
of a Lien shall not constitute a Disposition.

         "Dividends": as defined in Section 6.6.

         "Dollars" and "$": lawful currency of the United States.

         "Domestic Subsidiary": any Subsidiary which is not a Foreign
Subsidiary.

         "EBITDA": for any Person for any period, the Operating Income of such
Person for such period plus, without duplication and to the extent deducted in
determining such Operating Income, all amounts attributable to depreciation,
amortization (including deferred compensation in connection with certain stock
options), other noncash, nonrecurring gains and losses and noncash write-offs of
or impairment charges for goodwill and other assets, and less reversal, if any,
when paid, for such period, all determined in accordance with GAAP.

         "Eligible Subsidiary": a Material Subsidiary which (i) is not a Foreign
Subsidiary, (ii) is "disregarded" as an entity separate from the Borrower for
U.S. federal income tax purposes, (iii) is not a

                                                                               6

special purpose entity created to effect a Film Rights Securitization and (iv)
is not a Covenant Defeasance SPV.

         "Environmental Laws": any and all foreign, federal, state, local or
municipal laws, statutes and regulations, together with legally enforceable
rules, orders, ordinances, codes, decrees and requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning protection
of human health or the environment, as now or may at any time hereafter be in
effect.

         "Equity Interests": means shares of equity interests, partnership
interests, membership interests in limited liability company or limited
liability limited partnership and beneficial interests in a trust or other
equity ownership interests in a Person and any and all warrants, rights or
options to purchase any of the foregoing.

         "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate": any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

         "ERISA Event": (a) any Reportable Event; (b) the existence with respect
to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (c) the filing
pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a Plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of withdrawal liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

         "Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "Eurodollar Base Rate" shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be

                                                                               7

selected by the Paying Agent or, in the absence of such availability, by
reference to the rate at which the Paying Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.

         "Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.

         "Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

                              Eurodollar Base Rate
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

         "Eurodollar Tranche": the collective reference to Eurodollar Loans, the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).

         "Event of Default": any of the events specified in Section 7; provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.

         "Exempt Transaction": any Disposition of rights in items of Product as
a method of raising finance or financing the creation, production, development
or distribution of such Product in connection with a Governmental Incentive
Program, in each case in the ordinary course of business.

         "Existing Facility": the Amended and Restated Agreement dated as of
November 25, 2002 among the Borrower, Banc of America Securities LLC and J.P.
Morgan Securities Inc., as mandated lead arrangers, the financial institutions
listed on the Schedule 1 thereto and JPMorgan Chase Bank, as administrative
agent.

         "Exposure": with respect to any Lender at any time, an amount equal to
(a) until the Closing Date, the amount of such Lender's Commitment at such time
and (b) thereafter, the aggregate then unpaid principal amount of such Lender's
Loans.

         "Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Paying Agent from
three federal funds brokers of recognized standing selected by it.

         "Film Rights Securitization": any securitization transaction with
respect to Intellectual Property of a Group Member in which the recourse of the
parties providing financing is limited to the related Intellectual Property to
an extent substantially similar to the Initial Film Rights Securitization. For
avoidance of doubt, a Film Rights Securitization is a continuing transaction
involving multiple transfers and payments over a period of time.

         "Financial Obligations": obligations in respect of Indebtedness or a
Swap Agreement. The principal amount of a Financial Obligation in respect of a
Swap Agreement at any time is the

                                                                               8

maximum aggregate amount (giving effect to any legally enforceable netting
agreements) that the Group would be required to pay if such Swap Agreement were
terminated at such time.

         "Fixed Charges": for any Person for any period, the sum of, without
duplication, (i) the Interest Expense of such Person, (ii) income taxes payable
by such Person, (iii) Tax Distributions payable by such Person, (iv) scheduled
amortization of Indebtedness of such Person and (v) capital expenditures by such
Person.

         "Foreign Subsidiary": any Subsidiary which is a "controlled foreign
corporation" within the meaning of the Code.

         "Funding Office": the office of the Paying Agent specified in Section
9.2 or such other office as may be specified from time to time by the Paying
Agent as its funding office by written notice to the Borrower and the Lenders.

         "GAAP": generally accepted accounting principles in the United States.

         "Geographical Territory": any specific geographical area constituting a
territory, nation, country, state, governmental entity or any subdivision
thereof located anywhere in the universe.

         "Governmental Authority": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

         "Governmental Incentive Program": a program or policy (i) enacted,
adopted or sponsored by a government of a Geographical Territory other than the
United States of America or any part thereof and (ii) having the effect of
creating incentives or benefits, including tax and/or financing benefits, in
connection with all or a portion of any item of Product.

         "Group": the collective reference to the Borrower and its Subsidiaries.

         "Group Member": the Borrower or any of its Subsidiaries.

         "Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation, including a reimbursement, counterindemnity or similar
obligation, of the guaranteeing person that guarantees or in effect guarantees,
or which is given to induce the creation of a separate obligation by another
Person (including any bank under any letter of credit) that guarantees or in
effect guarantees, any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing 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 (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (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 or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person at any time shall be deemed to be the
lower of (a) an amount equal

                                                                               9

to the stated or determinable amount at such time of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable at such time pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof at such time as determined by the
Borrower in good faith; provided, however, that if such guaranteeing person has
not assumed such primary obligation, such amount shall be the lesser of the
foregoing and the value of the property of such guaranteeing person which is
subject to a Lien securing such primary obligation. It is understood that
financing structures referred to as "synthetic leases" normally entail a
Guarantee Obligation of Indebtedness of the lessee.

         "Guarantor": each Eligible Subsidiary

         "High-Yield Debt": any Indebtedness incurred through issuance of
unsecured debt securities of the Borrower in a capital markets transaction.

         "Indebtedness": without duplication, any indebtedness owing by a Person
in respect of:

         (a)      moneys borrowed;

         (b)      any debenture, bond, note, loan or other debt security;

         (c)      any acceptance credit;

         (d)      receivables sold or discounted (otherwise than on a
                  non-recourse basis in the ordinary course of business and not
                  as a method of raising finance), including any Film Rights
                  Securitization;

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

         (f)      Capital Lease Obligations;

         (g)      any Guarantee Obligation in respect of Indebtedness of any
                  other Person;

         (h)      any obligation upon which interest charges are customarily
                  paid;

         (i)      any obligation under conditional sale or other title retention
                  agreements relating to property acquired;

         (j)      any Indebtedness of others secured by (or for which the holder
                  of such Indebtedness has an existing right, contingent or
                  otherwise, to be secured by) any Lien on property owned by
                  such Person, whether or not the Indebtedness secured thereby
                  has been assumed; and

         (k)      any obligation, contingent or otherwise, in respect of letters
                  of credit and letters of guaranty.




                                                                              10

         The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor or to the extent such Indebtedness is already taken into account with
respect to such Person. For avoidance of doubt, the obligations of Affiliates to
members of the Group, and the obligations of members of the Group to the
relevant Affiliate, in respect of payments received by Affiliates for video
sales by members of the Group as contemplated by subpart (b) of Schedule 5.8
constitute Indebtedness of the obligor for purposes of this Agreement.

         Notwithstanding the foregoing, "Indebtedness" does not include (i) the
Class A Preferred Interests or the Class B Preferred Interests (or similar
preferred Equity Interests in the Borrower), (ii) any UCI Loan (other than for
purposes of the Subordination Agreement), (iii) any Indebtedness of the Borrower
arising in connection with any UCI Loan in the form of a guarantee of or pledge
of cash collateral securing any Indebtedness of UCI as contemplated by Section
6.7(p), for so long as the related UCI Loan remains outstanding, (iv) the
Indebtedness of USJ Co., Ltd. that is secured by a Lien on Equity Interests in
USJ Co., Ltd. that are owned by Universal Studios Entertainment Japan Investment
Company LLC, (v) amounts owed to any member of the Vivendi Group attributable to
the commingling of U.K. music and video receivables or (vi) any of the following
which arise in the ordinary course of business of the group:

         (a)      trade accounts payable that are not more than 120 days past
                  due;

         (b)      advances to a Person which give rise to an obligation to be
                  satisfied, in the first instance, otherwise than by repayment
                  of money (including, for the avoidance of doubt, an obligation
                  to provide goods or services such as the production, creation,
                  development, distribution or other exploitation of Product);

         (c)      any liabilities that relate to profit participations,
                  deferments or guild residuals in connection with the
                  production of an item of Product (including those that are
                  held by or accruing in favor of (i) the Screen Actors Guild,
                  the Writers Guild of America, the Directors Guild of America,
                  the International Alliance of Theatrical and Stage Employees,
                  and any other unions, guilds or collective bargaining units
                  who have rights in or control over items of Product, and (ii)
                  any Persons who hold participation or residual interests in
                  items of Product);

         (d)      any claims, interests, rights, participations, liens,
                  encumbrances or security interests (of whatever nature) that
                  are held by or accrue in favor of any completion guarantor,
                  financier or other third person related to production,
                  acquisition or exploitation rights in items of Product;

         (e)      endorsements for collection or deposit;

         (f)      obligations to pay royalties or other participations (whenever
                  accrued);

         (g)      contingent or optional funding commitments relating to Persons
                  in which the Borrower or one of its Subsidiaries has an
                  interest (except for funding commitments that are reasonably
                  likely to come due or be called prior to the final maturity
                  date of the Loans but including the equity funding commitment
                  contemplated by Section 6.7(s));

                                                                              11


         (h)      non-recourse forward sales of rights in items of Product;

         (i)      commitments for production costs or P&A related to items of
                  Product;

         (j)      obligations owing to any government of a Geographical
                  Territory under a Governmental Incentive Program; and

         (k)      obligations in respect of performance bonds, completion bonds,
                  bid bonds, surety bonds or similar obligations which are not
                  themselves a guarantee of, or an indemnity or similar
                  assurance against financial loss in respect of, an obligation
                  that constitutes Indebtedness.

         "Initial Aggregate Funded Amount": the aggregate principal amount of
Loans funded hereunder.

         "Initial Film Rights Securitization": the securitization transaction
consummated pursuant to the Sale and Contribution Agreement dated as of March
31, 2003 between Universal Film Funding LLC, as purchaser, and Universal City
Studios Productions LLLP, as Seller, and the notes issued in connection
therewith under an Indenture dated as of March 31, 2003 between Universal Film
Funding LLC, as issuer, and Wells Fargo Bank Minnesota, National Association, as
indenture trustee.

         "Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

         "Interest Expense": for any Person for any period, the sum of, without
duplication, (i) the interest expense (including imputed interest expense in
respect of Capital Lease Obligations) of such Person in respect of Indebtedness
(net of all interest income of such Person) for such period, determined in
accordance with GAAP, plus (ii) any interest accrued during such period in
respect of Indebtedness of such Person that is required to be capitalized rather
than included in interest expense for such period in accordance with GAAP plus
(iii) in the case of the Borrower, cash distributions on its Class B Preferred
Interests made pursuant to Section 8.01(a) of the Partnership Agreement minus
(iv) to the extent otherwise included, amortization of debt issuance expense and
similar non-cash items; provided that the Interest Expense for the Group shall
be calculated as follows for the indicated period: (i) for the twelve- month
period ending September 30, 2003, by multiplying Interest Expense for the fiscal
quarter then ended by four; (ii) for the twelve-month period ending December 31,
2003, by multiplying the Interest Expense for the two fiscal quarters then
ended by two; and (iii) for the twelve-month period ending March 31, 2004, by
multiplying the Interest Expense for the three fiscal quarters then ended by
4/3.

         "Interest Payment Date": (a) as to any ABR Loan, the last Business Day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan, the date of any repayment or prepayment made in
respect thereof.

                                                                              12


         "Interest Period": as to any Eurodollar Loan: (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six or (subject to the
prior approval of all Lenders) any other period of time thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as the case
may be, given with respect thereto; and (b) thereafter, each period commencing
on the last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six or (subject to the prior
approval of all Lenders) any other period of time thereafter, as selected by the
Borrower by irrevocable notice to the Paying Agent not later than 11 :00 A.M.,
New York City time, on the date that is three Business Days prior to the last
day of the then current Interest Period with respect thereto; provided that all
of the foregoing provisions relating to Interest Periods are subject to the
following:

         (i)      if any Interest Period would otherwise end on a day that is
                  not a Business Day, such Interest Period shall be extended to
                  the next succeeding Business Day unless the result of such
                  extension would be to carry such Interest Period into another
                  calendar month in which event such Interest Period shall end
                  on the immediately preceding Business Day;

         (ii)     the Borrower may not select an Interest Period that would
                  extend beyond the date final payment is due on the relevant
                  Loans;

         (iii)    any Interest Period that begins on the last Business Day of a
                  calendar month (or on a day for which there is no numerically
                  corresponding day in the calendar month at the end of such
                  Interest Period) shall end on the last Business Day of a
                  calendar month; and

         (iv)     no Interest Period longer than one month may commence prior to
                  30 days after the Closing Date.

         "Investment Grade": having credit ratings of at least BBB- as published
by S&P and at least Baa3 as published by Moody's (in each case with a stable
outlook).

         "Investments": as defined in Section 6.7.

         "Lender": each Person that has a Commitment or that holds a Loan.

         "Lender Addendum": an instrument, substantially in the form of Exhibit
D, by which a Lender becomes a party to this Agreement as of the Closing Date.

         "Leverage Ratio": on any date, the ratio of (a) Consolidated
Indebtedness (less (i) the aggregate amount of cash collateral for the Loans
held by the Collateral Agent pursuant to Section 5.9(f) or otherwise, (ii) the
aggregate amount of Indebtedness of any Affiliate (other than (x) Indebtedness
of a Group Member and (y) the Canada Receivable) owing to any Group Member, but
not in excess of the aggregate amount of Indebtedness of the Group that is
subject to the Subordination Agreement and (iii) to the extent reflected in
Consolidated Indebtedness, Indebtedness of a Covenant Defeasance SPV incurred in
connection with a Covenant Defeasance Transaction) as of such date to (b)
Consolidated EBITDA for the period of four consecutive fiscal quarters of the
Borrower ended on such date (or, if such date is not the last day of a fiscal
quarter, ended on the last day of the fiscal quarter of the Borrower most
recently ended prior to such date); provided that if there shall have been a
Material Acquisition or a Material Disposition during such period, Consolidated
EBITDA shall be calculated on a pro forma basis giving effect thereto as if such
acquisition or disposition had occurred on the first day of such period. For
avoidance of doubt, Consolidated Indebtedness referred to above includes
(without duplication) any

                                                                              13


Guarantee Obligation of any Group Member in respect of Indebtedness of any other
Person and any other Indebtedness of the type described in clause (k) of the
definition of Indebtedness.

         "Lien": any mortgage, pledge, hypothecation, encumbrance, lien
(statutory or other), charge or other security interest of any kind or nature
whatsoever (including any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any of
the foregoing).

         "Loan": as defined in Section 2.l(a).

         "Loan Documents": this Agreement, the Security Documents, the Notes,
the Subordination Agreement and any amendment, waiver, supplement or other
modification to any of the foregoing.

         "Loan Parties": the Borrower and the Eligible Subsidiaries.

         "Material Acquisition": any acquisition of property or series of
related acquisitions of property that (i) constitutes assets comprising all or
substantially all of an operating unit of a business or (ii) constitutes Equity
Interests in a Person that becomes a Subsidiary as a result of such acquisition,
if such operating unit or Person had EBITDA in excess of $10,000,000 for its
most recent fiscal year prior to such acquisition for which such amount is
determinable.

         "Material Adverse Effect": a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agents or the Lenders hereunder or thereunder.

         "Material Disposition": any Disposition of property or series of
related Dispositions of property that (i) constitutes assets comprising all or
substantially all of an operating unit of a business or (ii) constitutes Equity
Interests in a Person that ceases to be a Subsidiary as a result of such
Disposition, if such operating unit or Person had EBITDA in excess of
$10,000,000 for its most recent fiscal year prior to such Disposition for which
such amount is determinable; provided that the Disposition of Spencer Gifts LLC
will not be deemed a Material Disposition.

         "Material Domestic Subsidiary": any Material Subsidiary which is a
Domestic Subsidiary.

         "Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation. Materials of Environmental Concern do not
include commercially reasonable amounts of such substances used or stored in the
ordinary course of occupancy, use or maintenance; provided that such substances
are used or stored in accordance with Environmental Laws.

         "Material Subsidiary": (a) each Subsidiary so designated on Schedule
3.15, (b) each other Subsidiary having total assets (consolidated in the case of
a Subsidiary which itself has one or more subsidiaries) exceeding $50,000,000,
(c) each other Subsidiary whose EBITDA (consolidated in the case of a Subsidiary
which itself has one or more subsidiaries) represents 5% or more of Consolidated
EBITDA for the most recent fiscal year of the Borrower then ended and (d) any
other Subsidiary which is the successor by amalgamation, merger, consolidation
or the like to, or which is the transferee (other than

                                                                              14


by reason of transfers made in the ordinary course of business) of sufficient
assets that the receiving Subsidiary would have been a Material Subsidiary had
the transfer occurred on or before the date of the latest audited consolidated
accounts of the Group; in a case of a transfer of all or substantially all the
assets of a Material Subsidiary, the disposing Material Subsidiary shall
forthwith upon the transfer taking place cease to be a Material Subsidiary.

         "Moody's": Moody's Investors Service, Inc.

         "Mortgage": a mortgage, deed of trust, leasehold mortgage, leasehold
deed of trust, assignment of leases and rents or other security document
granting a Lien on any Mortgaged Property to secure the obligations under the
Loan Documents of each Loan Party party to such Mortgage. Each Mortgage shall be
reasonably satisfactory in form and substance to the Co-Administrative Agents.

         "Mortgaged Property": initially, each parcel of real property (or
leasehold interest therein) and the improvements thereto owned by a Loan Party
and identified on Schedule 1.1B, and includes each other parcel of real property
and improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.9.

         "Multiemployer Plan": a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "Net Proceeds": with respect to any event (a) the cash proceeds
received by the Borrower and its Domestic Subsidiaries (and, in the case of a
Film Rights Securitization, its Foreign Subsidiaries) in respect of such event
including (i) any cash received in respect of any non-cash proceeds, but only as
and when received, (ii) in the case of a casualty, insurance proceeds, if in
excess of $1,000,000, and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments if in excess of $1,000,000, net of (b)
the sum of (i) all reasonable fees and out-of-pocket expenses paid by the
Borrower and its Subsidiaries to third parties (other than Affiliates) in
connection with such event (including underwriting discounts and commissions,
brokerage or other selling commissions, legal, advisory and other fees and
expenses, including title and recording fees and expenses and appraisal and
environmental fees and expenses), (ii) in the case of an Asset Sale or a
Recovery Event, the amount of all payments required to be made by the Borrower
and its Subsidiaries as a result of such event to repay Indebtedness (other than
Loans) directly or indirectly secured by such asset (or, in the case of a
Disposition of a Subsidiary, for which such Subsidiary is liable), (iii) any
amounts applied to repay the UCI Loan as permitted by Section 6.6(j) and (iv)
the amount of all taxes paid (or reasonably estimated to be payable) by the
Borrower and its Subsidiaries (including for this purpose any Tax Distributions
required to be made by the Borrower in respect of such event, but not any other
direct or indirect third- party tax indemnity, except any tax indemnity in favor
of the purchaser or its Affiliates in connection with a Disposition of assets),
and the amount of any reserves established by the Borrower and its Subsidiaries
to fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next two succeeding years and
that are directly attributable to such event (as determined reasonably and in
good faith by the chief financial officer of the Borrower). The Net Proceeds of
any revolving credit or similar facility shall be the net rather than the gross
amount of financing obtained thereunder. The amount of proceeds received by the
Borrower and its Subsidiaries pursuant to any Film Rights Securitization shall
be deemed to be equal to (A) initially, the initial amount outstanding under any
financing provided (other than by a Group Member) to a Subsidiary of the
Borrower in connection with such Film Rights Securitization (a "Securitization
Financing"), and (B) thereafter, an amount corresponding, at any time, to an
increase of the aggregate outstanding amount under the Securitization Financing
relating to such Film Rights Securitization to an amount greater than the
highest amount outstanding under such Securitization Financing prior to such
time, in each case net of (1) amounts described in clause (b) above, to the
extent applicable, and (2) reserves required to be funded in connection with
such Film Rights Securitization so long as such reserves are required to be
maintained.

                                                                              15


         "Non-Excluded Taxes": as defined in Section 2.13(a).

         "Non-U.S. Lender": as defined in Section 2.13(d).

         "Notes": the collective reference to any promissory note evidencing
Loans.

         "Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans and all other obligations and liabilities of the Borrower to any Agent
or to any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to any
Agent or to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise.

         "Operating Income": for any Person for any period, the operating
earnings or losses of such Person before interest, income taxes, equity
earnings, minority interests and cumulative effects of changes in accounting
principles for such period determined in accordance with GAAP.

         "Other Taxes": any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.

         "P&A": distribution costs for Theatrical Exploitation attributable to
(i) costs of advertising, promotion and publicity for an item of Product and
(ii) costs for positive prints, internegatives, magnetic and optical sound
tracks, trailers and other copies of an item of Product.

         "Participant": as defined in Section 9.6(c).

         "Partnership Agreement": as defined in the Transaction Agreement.

         "Paving Agent": JPMorgan Chase Bank, as the paying agent for the
Lenders under this Agreement, together with any successors in such capacity.

         "PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).

         "Perfection Certificate": as defined in the Security Agreement.

         "Permitted Debt": Additional Indebtedness incurred in one or more
capital market transactions consummated on or prior to December 31, 2003 in an
aggregate principal amount up to $500,000,000.

         "Permitted Hedge": any Swap Agreement permitted by Section 6.10.

         "Permitted Investments":

                                                                              16


         (a)      direct obligations of, or obligations the principal of and
                  interest on which are unconditionally guaranteed by, the
                  United States of America (or by any agency thereof to the
                  extent such obligations are backed by the full faith and
                  credit of the United States of America), in each case maturing
                  within one year from the date of acquisition thereof;

         (b)      investments in commercial paper maturing within one year from
                  the date of acquisition thereof and having, at such date of
                  acquisition, one of the two highest credit ratings obtainable
                  from S&P and from Moody's (which, as of the date of this
                  Agreement, includes A-2 and P-2);

         (c)      investments in certificates of deposit, banker's acceptances
                  and time deposits maturing within 180 days from the date of
                  acquisition thereof issued or guaranteed by or placed with,
                  and money market deposit accounts issued or offered by, any
                  commercial bank organized under the laws of the United States
                  or any State thereof (or, in the case of investments made by
                  Foreign Subsidiaries, England, France or Germany or any
                  political subdivision thereof) which has a combined capital
                  and surplus and undivided profits of not less than
                  $500,000,000 (or the equivalent in other currencies);

         (d)      fully collateralized repurchase agreements with a term of not
                  more than 30 days for securities described in paragraph (a)
                  above and entered into with a financial institution satisfying
                  the criteria described in paragraph (c) above;

         (e)      securities issued by any state of the United States or any
                  political subdivision of any such state or any public
                  instrumentality thereof having maturities of not more than one
                  year from the date of acquisition thereof and, at the time of
                  acquisition thereof, having one of the two highest credit
                  ratings obtainable from S&P and from Moody's;

         (f)      securities issued by any foreign government or any political
                  subdivision of any foreign government or any public
                  instrumentality thereof having maturities of not more than one
                  year from the date of acquisition thereof and, at the time of
                  acquisition, having one of the two highest credit ratings
                  obtainable from S&P and from Moody's;

         (g)      money market funds that (i) comply with the criteria set forth
                  in SEC Rule 2a-7 under the Investment Company Act of 1940,
                  (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have
                  portfolio assets of at least $5,000,000,000; and

         (h)      demand deposit accounts maintained in the ordinary course of
                  business.

         "Permitted Lines of Business": the media, tourism and entertainment
businesses.

         "Permitted Refinancing": any extension, renewal, refinancing or
replacement of Indebtedness that satisfies the following conditions:

         (a)      the outstanding principal amount thereof is not increased
                  (except to cover reasonable transaction costs);

                                                                              17


         (b)      such indebtedness matures no earlier than the earlier of (i)
                  the maturity of the Indebtedness so refinanced and (ii) six
                  months after the maturity of the Loans; and

         (c)      the borrower or issuer in respect of such Indebtedness is not
                  changed, except that (i) the Borrower may be the borrower or
                  issuer in respect of Indebtedness incurred to extend, renew,
                  refinance or replace Indebtedness of a Subsidiary and (ii) a
                  special purpose entity created to effect a Film Rights
                  Securitization may be the obligor in respect of a Film Rights
                  Securitization that extends, renews, refinances or replaces
                  another Film Rights Securitization.

         "Permitted Restrictions": any of the following:

         (a)      any restrictions imposed by the Loan Documents;

         (b)      the restrictions existing on the date hereof identified on
                  Schedule 6.12 (but not any amendment or modification expanding
                  the scope of any such restriction);

         (c)      customary restrictions contained in agreements relating to the
                  Disposition of a Subsidiary pending consummation of such
                  Disposition, provided such restrictions apply only to the
                  Subsidiary that is to be Disposed of and such Disposition is
                  permitted hereunder;

         (d)      restrictions imposed by any agreement relating to a Lien
                  permitted by this Agreement if such restrictions apply only to
                  the property or assets subject to such Lien;

         (e)      customary restrictions in leases and other contracts
                  restricting the assignment thereof;

         (f)      customary restrictions included in the documentation governing
                  any High-Yield Debt; provided that such restrictions shall
                  not prohibit or limit the ability of any Group Member to
                  create Liens to secure obligations under this Agreement and
                  the other Loan Documents;

         (g)      customary restrictions applicable to a Covenant Defeasance SPV
                  or a special purpose entity created to effect a Film Rights
                  Securitization;

         (h)      customary restrictions contained in a co-production or
                  distribution agreement if such restrictions apply only to the
                  related Product and revenues therefrom; and

         (i)      restrictions applicable to interests in a joint venture or
                  other Investments in a Person that is not a Subsidiary.

         "Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

         "Plan": at a particular time, any employee pension benefit plan (other
than a Multiemployer Plan) that is covered by Title IV of ERISA and in respect
of which the Borrower or an

                                                                              18


ERISA Affiliate is (or, if such plan were terminated at such time, would under
Section 4069 of ERlSA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.

         "Pledge Subsidiary": each Material Domestic Subsidiary which is not an
Eligible Subsidiary or a Subsidiary of another Pledge Subsidiary.

         "Prepayment Event":

         (a)      the incurrence by any Group Member of any Indebtedness
                  permitted solely by either Section 6.2(c) or the parenthetical
                  exclusion to Section 6.2(k);

         (b)      the issuance by the Borrower of any Equity Interests, other
                  than any such issuance to Vivendi Universal or a subsidiary of
                  Vivendi Universal or any then existing holder of Equity
                  Interests in the Borrower;

         (c)      any Asset Sale; or

         (d)      any Recovery Event;

provided that no such event in (b), (c) or (d) shall be a Prepayment Event if
consummated prior to May 8, 2004 or such later date as in the reasonable
judgment of the Borrower is necessary to avoid adverse tax consequences to the
Group or its Affiliates.

         "Product": any live performance, motion picture, television
programming, film, video tape, DVD or other product produced for theatrical,
non-theatrical or television release or for release in any other medium, in each
case whether recorded on film, videotape, cassette, cartridge, disc or on or by
any other means, method, process or device whether now known or hereafter
developed, with respect to which the Borrower or a Subsidiary (i) is an initial
copyright owner or (ii) acquires (or will acquire upon delivery) an equity
interest or distribution rights. The term "item of Product" shall include the
scenario, screenplay or script upon which such Product is based, all of the
properties thereof, tangible and intangible, and whether now in existence or
hereafter to be made or produced, whether or not in possession of the Borrower
or any Subsidiary, and all rights therein and thereto of every kind and
character.

         "Projections": as defined in Section 5.2(c).

         "Properties": as defined in Section 3.17(a).

         "Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any Subject Assets (other than in respect of business interruption insurance).

         "Reduction Percentage": (i) in respect of the incurrence of
Indebtedness, l00%, (ii) in respect of the issuance of Equity Interests, 50% and
(iii) in respect of an Asset Sale or Recovery Event, 100%.

         "Register": as defined in Section 9.6(b).

         "Regulation U": Regulation U of the Board as in effect from time to
time.

                                                                              19


         "Reinvestment Deferred Amount": with respect to any Reinvestment Event,
the aggregate Net Proceeds received by any Group Member in connection therewith
that are not applied to prepay the Loans pursuant to Section 2.5 as a result of
the delivery of a Reinvestment Notice.

         "Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.

         "Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through one or more Subsidiaries) elects to
use all or a specified portion of the Net Proceeds of an Asset Sale or Recovery
Event to acquire or repair assets useful in its business.

         "Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
assets useful in the Borrower's business.

         "Reinvestment Prepayment Date": with respect to the Net Proceeds of any
Reinvestment Event, the date occurring 270 days after receipt of such Net
Proceeds.

         "Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived with respect to a Plan.

         "Required Lenders": at any time, Lenders having Exposures aggregating
more than 50% of the Exposures of all Lenders at the time.

         "Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of any
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

         "Responsible Officer": the chief executive officer, president, chief
financial officer, general counsel and treasurer of the Borrower but in any
event, with respect to financial matters, the chief financial officer or the
treasurer of the Borrower.

         "Restricted Payments": as defined in Section 6.6.

         "SEC: the Securities and Exchange Commission, any successor thereto and
any analogous Governmental Authority.

         "S&P": Standard & Poor's Ratings Services.

         "Secured Guarantee": as defined in the Security Agreement.

         "Security Agreement": the Amended and Restated Guarantee and Security
Agreement among the Borrower, the Subsidiaries of the Borrower from time to time
party thereto and the Collateral Agent, substantially in the form of Exhibit A.

         "Security Documents": the collective reference to the Security
Agreement, the Mortgages and all other security documents hereafter delivered to
the Collateral Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.

                                                                              20

         "Senior Leverage Ratio": at any date, the Leverage Ratio at such date,
adjusted by excluding from Consolidated Indebtedness any Indebtedness which is
unsecured or which is by its terms subordinate in right of payment to the Loans.

         "Special Fee Advance Agreement": Special Fee Advance Agreement dated as
of March 28, 2003 among VUE, Universal City Property Management II LLC,
Universal City Florida Holding Co. I, Universal City Florida Holding Co. II,
Blackstone UTP Capital Partners L.P., Blackstone UTP Capital Partners A L.P.,
Blackstone UTP Offshore Capital Partners L.P. and Blackstone Family Media
Partnership III L.P.

         "Subject Assets": any property or assets of the Borrower or its
Subsidiaries (excluding (i) any receivables and related assets Disposed of in
connection with any Film Rights Securitization otherwise permitted, (ii) Spencer
Gifts LLC (and its subsidiaries), (iii) the real property and improvements set
forth on Schedule 1.1C and (iv) UCI (and its subsidiaries) and the Group's film
studios, theme parks and other real estate assets so long as (in the case of
this clause (iv)), after giving effect to any Disposition thereof and any
related payment of Indebtedness (or collateralization of the Loans), the Cash
Leverage Ratio is less than (a) 3.0 to 1.0 for any Disposition consummated prior
to the date occurring 18 months following the Closing Date and (b) 2.5 to 1.0
for any such Disposition consummated on or after the date occurring 18 months
following the Closing Date). If a Disposition would have constituted a
Disposition of Subject Assets but for a related payment (or collateralization)
of the Loans, the Net Proceeds of such Disposition shall be deemed Net Proceeds
of a Prepayment Event (or Cash Collateral Event) to the extent of such payment
(or collateralization).

         "Subordination Agreement": the Amended and Restated Subordination
Agreement entered into as of the Closing Date among the Borrower, certain of the
Guarantors, Vivendi Universal Holding I Corp. and Universal Studios Holding III
Corp., substantially in the form attached hereto as Exhibit B.

         "subsidiary": with respect to any Person (the "parent") at any date (i)
any corporation, limited liability company, limited liability limited
partnership, partnership, association or other entity the accounts of which
would be consolidated with those of the parent in the parent's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP as of such date, as well as (ii) any other corporation, limited
liability company, limited liability limited partnership, partnership,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or in the case of a partnership more than 50% of the general partnership
interests are, as of such date, owned, controlled or held by the parent.

         "Subsidiary": any subsidiary of the Borrower.

         "Swap Agreement": any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or any of its Subsidiaries shall be a "Swap Agreement".

         "Syndication Agent": as defined in the preamble hereto.

         "Tax Distributions": any distributions required to be made by Section
8.2 of the Partnership Agreement as in effect on the date hereof.

                                                                              21


         "Television Assets": assets of the Television Segment (including any
Equity Interests in or Indebtedness of a Television Subsidiary).

         "Television Financial Statements": as defined in Section 3.1(b).

         "Television Segment": the television production and cable television
businesses of the Group.

         "Television Subsidiary": any Subsidiary which owns any Television
Assets (other than Television Assets which are insignificant in relation both to
the other assets of such Subsidiary as well as to the assets of the Television
Segment).

         "Theatrical Exploitation": any manner of exploitation, reproduction,
distribution, sale, manufacturing, use, performance or other manner of
dissemination of items of Product by all means of cinematic (e.g., theatrical,
non-theatrical and public video) exhibition, as those terms are commonly
understood in the entertainment industry, including exhibition in hotels and on
ships and airlines.

         "Transaction": means collectively, the contributions of assets to the
Borrower contemplated by the Transaction Agreement that occurred in connection
with the initial closing thereunder.

         "Transaction Agreement": means the Amended and Restated Transaction
Agreement dated as of December 16, 2001, by and among Vivendi Universal, S.A.,
Universal Studios Inc., USA Networks, Inc., USANi LLC, Liberty Media Corporation
and Barry Diller, as in effect on May 7, 2002.

         "Transferee": any Assignee or Participant.

         "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

         "United States": the United States of America.

         "UCI": collectively, United Cinemas International Multiplex B.V. and
Cinema International Corporation N.V.

         "UCI Loan": means a loan or loans by Vivendi Universal or another
Affiliate to the Borrower in an amount up to the aggregate of L165,000,000 and
E 15,500,000 outstanding at any time (and any related accrued interest) to
finance directly or indirectly an Investment by the Borrower in UCI; provided
that such loan or loans (i) shall be subject to the Subordination Agreement and
(ii) shall by its or their terms require no payments by the Borrower except upon
receipt of, and then only to the extent of, distributions from UCI and/or
proceeds of any Disposition of UCI.

         "Vivendi Group": means Vivendi Universal and its subsidiaries.

         "Vivendi Material Subsidiary": means, at any time,

         (a)      any subsidiary of Vivendi Universal which is consolidated in
                  the consolidated accounts of the Vivendi Group as prepared in
                  accordance with generally accepted accounting principles in
                  France:

                  (i)      whose total assets (consolidated in the case of a
                           subsidiary of Vivendi Universal which itself has a
                           subsidiary) represent not less than 5 per cent

                                                                              22


                           of consolidated total assets of the Vivendi Group (as
                           shown in the then latest consolidated accounts of the
                           Vivendi Group made publicly available by Vivendi
                           Universal); and/or

                  (ii)     whose EBITDA (consolidated in the case of a
                           subsidiary of Vivendi Universal which itself has a
                           subsidiary) represent not less than 5 per cent of
                           EBITDA of the Vivendi Group (as shown in the then
                           latest consolidated accounts of the Vivendi Group
                           made publicly available by Vivendi Universal); and

         (b)      any other subsidiary of Vivendi Universal (the "receiving
                  Vivendi Subsidiary") to which after the date of the latest
                  consolidated accounts of the Vivendi Group is transferred
                  either:

                  (i)      all or substantially all the assets of another
                           subsidiary which immediately prior to the transfer
                           was a Vivendi Material Subsidiary (the "disposing
                           Vivendi subsidiary"); or

                  (ii)     sufficient assets that the receiving Vivendi
                           subsidiary would have been a Vivendi Material
                           Subsidiary had the transfer occurred on or before the
                           date of the latest audited consolidated accounts of
                           the Vivendi Group;

                  in the case of (i) above the disposing Vivendi subsidiary
                  shall forthwith upon the transfer taking place cease to be a
                  Vivendi Material Subsidiary.

                  "Vivendi Universal": means Vivendi Universal, S.A., a societe
anonyme organized under the laws of France.

                  1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents.

                  (b) As used herein and in the other Loan Documents, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume or become liable in respect of (and the words "incurred" and
"incurrence" shall have correlative meanings), (iv) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
Equity Interests, securities, revenues, accounts, leasehold interests and
contract rights, (v) the words "shall" and "will" shall be construed to have the
same meaning and effect, (vi) the word "permit" shall be constructed to mean
allow or suffer, whether voluntarily or involuntarily, and (vii) references to
agreements or other Contractual Obligations shall, unless otherwise specified,
be deemed to refer to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.

                  (c) The words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

                                                                              23


         (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

         1.3 Accounting Determinations; GAAP. (a) To the extent a computation of
Consolidated EBITDA, Consolidated Interest Expense or Consolidated Fixed Charges
is required to be made for a period of four consecutive fiscal quarters ending
prior to June 30,2003, such computation shall be made on a pro forma basis as if
the Transaction had occurred on the first day of such period to the extent such
period includes any period prior to the date of consummation of the Transaction
and on an actual basis thereafter.

         (b) Any interest income accruing to the Group from Affiliates (other
than Group Members) in any period in excess of the interest expense accruing
from the Group to Affiliates (other than Group Members) in such period shall not
be applied in the calculation of Consolidated Interest Expense or Consolidated
Fixed Charges.

         (c) Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the
Co-Administrative Agents that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Co-Administrative Agents notify the Borrower that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.

                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

         2.1 Term Loans. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make a term loan (each, a "Loan") to the Borrower on
the Closing Date in the amount of the Commitment of such Lender. The Commitments
are not revolving or continuing in nature, and shall terminate at the close of
business on the earlier of the Closing Date and June 30, 2003.

         (b) The Loans may from time to time be Eurodollar Loans or ABR Loans,
as determined by the Borrower and notified to the Paying Agent in accordance
with Sections 2.2 and 2.6.

         2.2 Procedure for Borrowing. The Borrower shall give the
Co-Administrative Agents notice designating the Closing Date (which notice must
be received by the Co-Administrative Agents prior to 1:00 P.M., New York City
time, one Business Day prior to the designated date and which designated date
must be no later than June 30,2003). Any Loans made on the Closing Date shall
initially be ABR Loans. Upon receipt of such notice from the Borrower, the
Paying Agent shall promptly notify each Lender thereof. Each Lender will make
the amount of its Commitment available to the Paying Agent for the account of
the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on
the Closing Date in funds immediately available to the Paying Agent. Such
borrowing will then be made available to the Borrower by the Paying Agent
crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Paying Agent by the Lenders and
in like funds as received by the Paying Agent.

         2.3 Repayment of Loans. The Loans shall mature in 16 consecutive
quarterly installments of principal (each due on the last day of each calendar
quarter), commencing on September 30, 2004, each of which shall be in an
aggregate amount equal to (i) in the case of the first 12 such

                                                                              24


installments, 0.25% of the Initial Aggregate Funded Amount and (ii) in the case
of each of the last four such installments, 24.25% of the Initial Aggregate
Funded Amount.

         2.4 Optional Prepayments. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Paying Agent no later than 1:00 P.M., New
York City time, three Business Days prior thereto, in the case of Eurodollar
Loans, and no later than 1:00 P.M., New York City time, on the date thereof, in
the case of ABR Loans, which notice shall specify the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans;
provided that a notice of prepayment delivered by the Borrower may state such
notice is conditioned upon the effectiveness of other credit facilities or the
consummation of another transaction, in which case such notice may be revoked by
the Borrower if such condition is not satisfied; and provided further that if a
Eurodollar Loan is prepaid on any day other than the last day of the Interest
Period applicable thereto, or if a notice of prepayment is revoked in accordance
with the preceding proviso, the Borrower shall also pay any amounts owing
pursuant to Section 2.14. Upon receipt of any such notice the Paying Agent shall
promptly notify each Lender thereof. If any such notice is given (and not
revoked in accordance with the proviso above), the amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid. Partial prepayments shall
be in an aggregate principal amount of $25,000,000 or a whole multiple thereof.

         2.5 Mandatory Prepayments. (a) If on any date any Group Member shall
receive Net Proceeds from any Prepayment Event then, unless (in the case of an
Asset Sale or a Recovery Event) a Reinvestment Notice shall be delivered in
respect thereof, an amount equal to the Reduction Percentage of such Net
Proceeds shall be applied within three Business Days after such date toward the
prepayment of the Loans. If a Reinvestment Notice shall have been so delivered,
then on each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be
applied toward the prepayment of the Loans.

         (b) Prepayments pursuant to this Section 2.5 shall be applied to the
Loans in accordance with Section 2.1l(a) and (b). In the case of any such
prepayment of a Eurodollar Loan on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any amounts
owing pursuant to Section 2.14. Each prepayment of the Loans under this Section
2.5 shall be accompanied by accrued interest to the date of such prepayment on
the amount prepaid.

         2.6 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the Paying
Agent prior irrevocable notice of such election no later than 1:00 P.M., New
York City time, on the Business Day preceding the proposed conversion date. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by
giving the Paying Agent prior irrevocable notice of such election no later than
1:00 P.M., New York City time, on the third Business Day preceding the proposed
conversion date (which notice shall specify the length of the initial Interest
Period therefor); provided that no ABR Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the Required
Lenders, or the Paying Agent in the absence of instructions from the Required
Lenders, have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Paying Agent shall promptly
notify each Lender thereof.

         (b) Any Eurodollar Loan may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Paying Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the length
of the next Interest Period to be applicable to such Loans; provided that no
Eurodollar Loan may be continued as such when any Event of Default has occurred
and is continuing and the Required

                                                                              25


Lenders, or the Paying Agent in the absence of instructions from the Required
Lenders, have determined in its or their sole discretion not to permit such
continuations and such Loans shall be automatically converted to ABR Loans on
the last day of such then expiring Interest Period; and provided further that if
the Borrower shall fail to give any required notice as described above in this
paragraph, the relevant Eurodollar Loans shall then be automatically converted
to Eurodollar Loans having a one-month Interest Period on the last day of such
then expiring Interest Period. Upon receipt of any such notice the Paying Agent
shall promptly notify each Lender thereof.

         2.7 Limitations on Eurodollar Tranches. Notwithstanding anything to the
contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans and all selections of Interest Periods shall be in such amounts
and be made pursuant to such elections so that, (a) after giving effect thereto,
the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $25,000,000 or a whole multiple of
$5,000,000 in excess thereof and (b) no more than seven Eurodollar Tranches
shall be outstanding at any one time.

         2.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

         (b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.

         (c) (i) If all or a portion of the principal amount of any Loan shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 2.8 plus 2% and (ii) if all or a portion of any
interest payable on any Loan or any other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to ABR Loans plus 2%, in each case, with respect to clauses (i)
and (ii) above, from the date of such non-payment until such amount is paid in
full (as well after as before judgment).

         (d) Interest shall be payable in arrears on each Interest Payment Date;
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.

         2.9 Computation of Interest. (a) Interest payable pursuant hereto shall
be calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to ABR Loans the rate of interest on which is calculated on
the basis of the Prime Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Paying Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Paying Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.

         (b) Each determination of an interest rate by the Paying Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of demonstrable error. The Paying Agent
shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Paying Agent in determining any interest rate
pursuant to Section 2.8(a).

                                                                              26


                  2.10 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:

                  (a) the Paying Agent shall have determined (which
         determination shall be conclusive and binding upon the Borrower) that,
         by reason of circumstances affecting the relevant market, adequate and
         reasonable means do not exist for ascertaining the Eurodollar Rate for
         such Interest Period, or

                  (b) the Paying Agent shall have received notice from the
         Required Lenders that the Eurodollar Rate determined or to be
         determined for such Interest Period will not adequately and fairly
         reflect the cost to such Lenders (as conclusively certified by such
         Lenders) of making or maintaining their affected Loans during such
         interest Period,

the Paying Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (2) any outstanding Eurodollar Loans shall be
converted, on the last day of the then-current Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Paying Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower have the right
to convert Loans to Eurodollar Loans.

                  2.11 Pro Rata Treatment and Payments. (a) Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts of the Loans then held by the Lenders, and shall
be applied to such outstanding Eurodollar Tranches or to the outstanding ABR
Loans as the Borrower may designate by notice to the Paying Agent not later than
the date of such payment (or failing such notice by the Borrower, as the Paying
Agent may designate). The amount of each principal prepayment of the Loans shall
be applied to reduce the then remaining installments of the Loans pro rata based
upon the respective then remaining principal amounts thereof; provided that at
the election of the Borrower, any optional prepayments of principal may be
applied to any principal installment due within ten days of such optional
prepayment. Amounts prepaid may not be reborrowed.

                  (b) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 1:00 P.M., New York City time, on the due date thereof to the Paying Agent,
for the account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Paying Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.

                  (c) Unless the Paying Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the Paying
Agent, the Paying Agent may assume that such Lender is making such amount
available to the Paying Agent, and the Paying Agent may, in reliance upon such
assumption,

                                                                              27


make available to the Borrower a corresponding amount. If such amount is not
made available to the Paying Agent by the required time on the borrowing date
therefor, such Lender shall pay to the Paying Agent, on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds
Effective Rate and (ii) a rate determined by the Paying Agent in accordance with
banking industry rules on interbank compensation, for the period until such
Lender makes such amount immediately available to the Paying Agent. A
certificate of the Paying Agent submitted to any Lender with respect to any
amounts owing under this paragraph shall be conclusive in the absence of
demonstrable error. If such Lender's share of such borrowing is not made
available to the Paying Agent by such Lender within three Business Days after
such borrowing date, the Paying Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans, on
demand, from the Borrower. Nothing in this paragraph shall be deemed to limit
the rights of the Borrower against any Lender.

                  (d) Unless the Paying Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the Paying
Agent, the Paying Agent may assume that the Borrower is making such payment, and
the Paying Agent may, but shall not be required to, in reliance upon such
assumption, make available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Paying Agent by the
Borrower within three Business Days after such due date, the Paying Agent shall
be entitled to recover, on demand, from each Lender to which any amount which
was made available pursuant to the preceding sentence, such amount with interest
thereon at the rate per annum equal to the daily average Federal Funds Effective
Rate. Nothing herein shall be deemed to limit the rights of the Paying Agent or
any Lender against the Borrower.

                  2.12 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

                  (i) shall impose, modify or hold applicable any reserve,
         special deposit, compulsory loan or similar requirement against assets
         held by, deposits or other liabilities in or for the account of,
         advances, loans or other extensions of credit by, or any other
         acquisition of funds by, any office of such Lender that is not
         otherwise included in the determination of the Eurodollar Rate; or

                  (ii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable within 30 days
of receiving such demand. If any Lender becomes entitled to claim any additional
amounts pursuant to this paragraph, it shall promptly provide written notice to
the Borrower (with a copy to the Paying Agent) which shall provide sufficient
detail (A) to support its right to payment hereunder and (B) in respect of
calculations of the amount to be paid hereunder.

                  (b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or

                                                                              28


such corporation's capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Paying Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such corporation for such reduction
within 30 days after demand therefor.

         (c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the Paying
Agent) shall be conclusive in the absence of demonstrable error. Notwithstanding
anything to the contrary in this Section, the Borrower shall not be required to
compensate a Lender pursuant to this Section for any amounts incurred more than
180 days prior to the date that such Lender notifies the Borrower of such
Lender's intention to claim compensation therefor; provided that if the
circumstances giving rise to such claim have a retroactive effect, then such 180
day period shall be extended to include the period of such retroactive effect.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

         2.13 Taxes. (a) All payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter, imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes, branch profit taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender or any Participant as a
result of a present or former connection between such Agent or such Lender or
Participant and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from such Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be paid by any Agent or a Lender or
withheld from any amounts payable to any Agent or any Lender hereunder, the
amounts so payable to such Agent or such Lender shall be increased to the extent
necessary to yield to such Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement; provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

         (b) The Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

         (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Paying Agent for its own account or for the account of the relevant Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. The Borrower shall indemnify the Agents
and the Lenders promptly after receipt of written demand therefor for the amount
of Non-Excluded Taxes and Other Taxes and any incremental Non-Excluded Taxes and
Other Taxes, interest or penalties thereon paid

                                                                              29


by any Agent or any Lender; provided that such written demand is accompanied by
a certificate of such Agent or Lender setting forth the amount of such payment
or liability.

         (d) Each Lender (or Transferee) that is not a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (a "Non-US Lender") shall deliver to the
Borrower and the Paying Agent (or, in the case of a Participant, to the Lender
from which the related participation shall have been purchased) two copies of
either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a statement substantially in the form of Exhibit E and a Form W-8BEN,
or any subsequent versions thereof or successors thereto, properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.

         (e) A Lender (or Transferee) that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Paying Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate; provided that such Lender
is legally entitled to complete, execute and deliver such documentation.

         (f) If any Agent or any Lender determines, in its sole discretion, that
it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it
has been indemnified by the Borrower or with respect to which the Borrower has
paid such Other Taxes or paid additional amounts pursuant to this Section 2.13,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or Other Taxes or additional amounts paid, by the
Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of such
Agent or such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided that the
Borrower, upon the request of such Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Agent or such Lender in
the event such Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require any
Agent or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

         (g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.

         2.14 Indemnity. The Borrower agrees to indemnify each Lender for, and
to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans

                                                                              30


after the Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of, or conversion from, Eurodollar Loans on a day that is
not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.

         2.1 5 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.12 or 2.13(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage; and provided further that nothing in this Section shall affect or
postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 2.12 or 2.13(a).

         2.16 Replacement of Lenders. The Borrower shall be permitted to replace
any Lender that requests (or requests on behalf of a Participant) reimbursement
for amounts owing pursuant to Section 2.12 or 2.13(a); provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.15 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 2.12 or 2.13(a), (iv) the replacement financial
institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (v) the Borrower shall
be liable to such replaced Lender under Section 2.14 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Paying Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 9.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) until such time as such replacement shall be consummated,
the Borrower shall pay all additional amounts (if any) required pursuant to
Section 2.12 or 2.13(a), as the case may be, and (ix) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Paying Agent
or any other Lender shall have against the replaced Lender. It is understood and
agreed that if any Lender replaced hereunder fails to execute an Assignment and
Assumption, it shall be deemed to have entered into such Assignment and
Assumption.

                    SECTION 3. REPRESENTATIONS AND WARRANTIES

         To induce the Agents and the Lenders to enter into this Agreement and
the Lenders to make the Loans, the Borrower hereby represents and warrants to
each Agent and each Lender that:

                                                                              31

            3.1 Financial Statements. (a) The audited consolidated balance sheet
of the Group as at December 31, 2002, and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
and accompanied by an unqualified report from Ernst & Young LLP, present fairly
in all material respects the consolidated financial condition of the Borrower as
at such date, and the consolidated results of its operations and its
consolidated cash flows for the fiscal year then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and
disclosed therein). No Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any material long-term
leases or unusual forward or long-term commitments, including any interest rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, that are not reflected in such financial statements, except such
as have been incurred subsequent to the date of such financial statements and
disclosed in the Confidential Information Memorandum.

            (b) (i) Summary income and cash flow statements for each of the film
studios segment and theme park segment, (ii) unaudited balance sheets and
capitalization tables of each of the television production and distribution
business of the Television Segment and the cable networks business of the
Television Segment and (iii) the unaudited separate and combined statements of
income and of cash flows of the television production and distribution business
of the Television Segment and the cable networks business of the Television
Segment (the "Television Financial Statements), copies of which have heretofore
been furnished to each Lender, have been prepared based on the best information
available to the Borrower as of the date of delivery thereof, and present fairly
in all material respects the financial position of the Television Segment as at
December 31, 2002 and its results of operations and cash flows for the fiscal
year then ended, subject to the elimination of intercompany revenues and
expenses.

            3.2 No Change. Since December 31, 2002, there has been no
development, event or circumstance that has had or could reasonably be expected
to have a Material Adverse Effect.

            3.3 Existence; Compliance with Law. Each Loan Party and each
Material Subsidiary (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
and limited liability company power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified to
do business in each jurisdiction where it is required to be so qualified and (d)
is in compliance with all Requirements of Law, except in each case to the extent
that the failure to comply with the requirements of clauses (b) through (d)
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

            3.4 Power; Authorization; Enforceable Obligations. Each Loan Party
has the corporate, partnership or limited liability company power and authority,
and the legal right, to make, deliver and perform the Loan Documents to which it
is a party and, in the case of the Borrower, to obtain extensions of credit
hereunder. Each Loan Party has taken all necessary organizational action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party and, in the case of the Borrower, to authorize the extensions of
credit on the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority and no consent of any other Person under any material
Contractual Obligation is required in connection with the extensions of credit
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i) the
consents required under the Partnership Agreement, which shall have been
obtained not later than the Closing Date, and (ii) the filings contemplated by
the Security Documents. Each Loan Document has been (or will when required to be
delivered have been) duly executed and delivered on behalf of each Loan Party
party thereto. This

                                                                              32

 Agreement constitutes, and each other Loan Document upon execution will
 constitute, a legal, valid and binding obligation of each Loan Party party
 thereto, enforceable against each such Loan Party in accordance with its terms,
 except as enforceability may be limited by applicable bankruptcy, insolvency,
 reorganization, moratorium or similar laws affecting the enforcement of
 creditors' rights generally and by general equitable principles (whether
 enforcement is sought by proceedings in equity or at law).

            3.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or any material
Contractual Obligation of any Group Member and will not result in, or require,
the creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such material Contractual
Obligation (other than the Liens created by the Security Documents).

            3.6 Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened against any Group Member or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions thereunder or (b) that could reasonably be expected
to have a Material Adverse Effect.

            3.7 No Default. No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.

            3.8 Ownership of Property; Liens. Each Group Member has good title
to, or a valid leasehold interest in, all its property, except for minor defects
in title that do not interfere with its ability to conduct its business as
currently conducted and do not materially impair the value of such property
which otherwise has material value. None of such property is subject to any Lien
except as permitted by Section 6.3.

            3.9 Intellectual Property. Each Group Member owns, or is licensed to
use, all material Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such material claim. The use of
Intellectual Property by each Group Member does not infringe on the rights of
any Person in any material respect.

            3.10 Taxes. Each Group Member has filed or caused to be filed all
Federal, state and other material tax returns that are required to be filed by
it and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other material taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the relevant
Group Member); no tax lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge, except to the extent that the inaccuracy of any aspect of the foregoing
would not in the aggregate reasonably be expected to have a Material Adverse
Effect.

            3.11 Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U or for any purpose that violates the provisions of the
regulations of the Board.

                                                                              33

            3.12 Labor Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.

            3.13 ERISA. No ERISA Event that would reasonably be expected to
result in a Material Adverse Effect has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan. To the extent that the present value of all accrued
benefits under each Plan (based on those assumptions used to fund such Plans)
exceeded, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, the value of the assets of such Plan
allocable to such accrued benefits, the presence of such excess would not
reasonably be expected to result in a Material Adverse Effect.

            3.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.

            3.15 Subsidiaries. Schedule 3.15 sets forth the name and
jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the
percentage of each class of Equity Interests directly or indirectly owned by the
Borrower and there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than (i) in connection with
Dispositions of 25% of the Equity Interests in Reveille LLC to Ben Silverman and
(ii) stock options granted to employees or directors and directors' qualifying
shares) of any nature relating to any Equity Interests of any Subsidiary, except
as created by the Loan Documents.

            3.16 Use of Proceeds. The proceeds of the Loans shall be used to
renew any loans outstanding under the Existing Facility.

            3.17 Environmental Matters. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:

            (a) the facilities and properties owned, leased or operated by any
Group Member (the "Properties") do not contain, and to the knowledge of the
Borrower have not previously contained, any Materials of Environmental Concern
in amounts or concentrations or under circumstances that constitute or
constituted a violation of, or would give rise to liability under, any
Environmental Law;

            (b) no Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "Business"), nor does the Borrower have knowledge that any such notice will
be received or is being threatened;

            (c) Materials of Environmental Concern have not been transported or
disposed of from or on the Properties in violation of, or in a manner or to a
location that would give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that would give rise to liability under, any applicable Environmental
Law;

                                                                              34

            (d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business;

            (e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that would give rise to liability under Environmental Laws;

            (f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no violation of any Environmental
Law with respect to the Properties or the Business; and

            (g) no Group Member has assumed any liability of any other Person
under Environmental Laws.

            3.18 Accuracy of Information, etc. No written factual statement or
information contained in this Agreement, any other Loan Document or any other
written document, certificate or factual statement (excluding any projections or
pro forma financial information in such document, certificate or statement)
furnished by or on behalf of any Loan Party to any Agent or the Lenders, or any
of them (including, to the best of the Borrower's knowledge, the Confidential
Information Memorandum), for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished (as
supplemented by all other information furnished to the Lenders prior to the date
of this Agreement) any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein
(taken as a whole) not misleading in any material respect. The projections and
pro forma financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Agents
and the Lenders that such financial information as it relates to future events
is not to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein by a material amount.

            3.19 Security Documents. Each representation and warranty of each
Loan Party set forth in the Security Documents is correct.

                         SECTION 4. CONDITIONS PRECEDENT

            4.1 Conditions to Loans. The agreement of each Lender to make the
Loan to be made by it is subject to the satisfaction, prior to or concurrently
with the making of such extension of credit on the Closing Date, of the
following conditions precedent:

            (a) Loan Agreement. The Co-Administrative Agents shall have received
      this Agreement or, in the case of the Lenders, a Lender Addendum, executed
      and delivered by the Agents, the Borrower and each Person listed on
      Schedule 1.1A.

            (b) Collateral and Guarantee Requirement. The Collateral and
      Guarantee Requirement shall have been satisfied.

                                                                              35

            (c) Financial Statements. The Lenders shall have received the
      financial statements referred to in Section 3.1.

            (d) Financial Projections. The Co-Administrative Agents shall have
      received financial projections for the Group and for the Television
      Segment for the years 2003-2008 (including, but not limited to
      consolidated balance sheets for each such year and the related
      consolidated statements of income and of cash flows for each such year) in
      form and substance reasonably satisfactory to the Co-Administrative
      Agents, which projections shall demonstrate (i) the ability of the
      Borrower to meet its working capital and other cash needs throughout the
      period and (ii) the ability of the Borrower to service its Indebtedness.

            (e) Existing Facility. All loans outstanding under the Existing
      Facility shall have been renewed hereunder as contemplated by Section
      9.20, and all accrued interest thereon and all other amounts payable by
      the Borrower pursuant to the Existing Facility shall have been paid in
      full.

            (f) No Material Adverse Change. No event, development or
      circumstance shall have occurred or arisen since December 31, 2002 that
      has had or could reasonably be expected to have a Material Adverse Effect.

            (g) Fees. The Lenders and the Agents shall have received all fees
      required to be paid by the Borrower, and all expenses required to be paid
      or reimbursed by the Borrower, for which invoices have been presented
      (including the reasonable fees and expenses of legal counsel), on or
      before the Closing Date.

            (h) Closing, Documents. The Co-Administrative Agents shall have
      received the opinions, certificates and other closing documents set forth
      in Schedule 4.1.

            (i) Representations and Warranties. Each of the representations and
      warranties made by any Loan Party in or pursuant to the Loan Documents
      shall be true and correct in all material respects on and as of the
      Closing Date.

            (j) No Default. No Default or Event of Default shall have occurred
      and be continuing on the Closing Date or after giving effect to the Loans
      to be made on such date.

            The parties hereto acknowledge that the conditions set forth in
Sections 4.l(c) and 4.l(d) have been satisfied prior to the date hereof.

                        SECTION 5. AFFIRMATIVE COVENANTS

            The Borrower hereby agrees that, so long as the Commitments remain
in effect or any Loan or other amount is owing to any Lender or any Agent
hereunder:

            5.1 Financial Statements. The Borrower will furnish to the Paying
Agent with sufficient copies for each Lender:

            (a) as soon as available, but in any event within 90 days after the
      end of each fiscal year of the Group a copy of the consolidated balance
      sheet of the Group as at the end of such fiscal year and the related
      consolidated statements of income and of cash flows for such fiscal year,
      setting forth in each case in comparative form the figures for the
      previous fiscal year, such consolidated statements reported on without a
      "going concern" or like qualification or exception,

                                                                              36

      or qualification arising out of the scope of the audit, by
      PricewaterhouseCoopers LLP or other independent certified public
      accountants of nationally recognized standing;

            (b) as soon as available, but in any event not later than 45 days
      after the end of each of the first three quarterly periods of each fiscal
      year of the Group, the unaudited consolidated balance sheet of the Group
      as at the end of such quarter and the related unaudited consolidated
      statements of income and of cash flows for such quarter, setting forth in
      each case in comparative form the figures for the previous year, certified
      by a Responsible Officer as being fairly presented in all material
      respects (subject to normal year-end audit adjustments); and

            (c) within the time period required for delivery of annual audited
      or quarterly unaudited financial statements pursuant to clause (a) or
      clause (b) above as applicable, (i) summary income and cash flow
      statements for each of the film studios segment and theme park segment,
      (ii) unaudited balance sheets and capitalization tables of each of the
      television production and distribution business of the Television Segment
      and the cable networks business of the Television Segment and (iii) the
      unaudited separate and combined statements of income and of cash flows of
      the television production and distribution business of the Television
      Segment and the cable networks business of the Television Segment, setting
      forth in each case in comparative form the figures for the previous year
      and certified by a Responsible Officer as being fairly stated in all
      material respects (subject to the elimination of intercompany revenues and
      expenses and normal year-end audit adjustments).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied (except (i) as approved by such accountants or officer, as the case may
be, and disclosed therein or (ii) in the case of statements other than
consolidated statements of the Group, as expressly contemplated above)
consistently throughout the periods reflected therein and with prior periods.

            5.2 Certificates; Other Information. The Borrower will furnish to
the Paying Agent with sufficient copies for each Lender (or, in the case of
clause (g), to the relevant Lender):

            (a) concurrently with the delivery of the financial statements
      referred to in Section 5.1(a), a certificate of the independent certified
      public accountants reporting on such financial statements stating that in
      making the examination necessary therefor no knowledge was obtained of any
      Default or Event of Default, except as specified in such certificate;

            (b) concurrently with the delivery of any financial statements
      pursuant to Section 5.1, (i) a certificate of a Responsible Officer
      stating that to his knowledge no Default or Event of Default then exists,
      except as specified in such certificate, and (ii) a certificate containing
      all information and calculations necessary for determining compliance by
      the Borrower with the provisions of Section 6.1 as of the last day of the
      fiscal quarter or fiscal year, as the case may be;

            (c) as soon as available, and in any event no later than 90 days
      after the end of each fiscal year of the Group, detailed budgets for the
      following fiscal year (including (i) consolidated statements of projected
      income and of projected cash flows, (ii) projected capital expenditures
      and a description of the underlying assumptions applicable thereto, (iii)
      a segment breakdown as to each of (i) and (ii), and (iv) on a quarterly
      basis, projected capitalization tables and calculations of compliance on a
      projected basis with Section 6.1 for each fiscal quarter during such
      fiscal year), and, promptly after they become available, significant
      revisions, if any, of such budget and projections with respect to such
      fiscal year (collectively, the "Projections");

                                                                              37

            (d) promptly upon becoming aware thereof, notice of any change in
      the rating of any of its Indebtedness or in the outlook therefor by either
      S&P or Moody's;

            (e) promptly after the same are sent, copies of all financial
      statements and reports that the Borrower sends to the holders of any class
      of its publicly held debt securities and, promptly after the same are
      filed, copies of any financial statements and reports that the Borrower
      may make to, or file with, the SEC;

            (f) not later than three Business Days prior to the date of
      consummation of the same, a certificate of a Responsible Officer setting
      forth a calculation of compliance on a pro forma basis with the provisions
      of Section 6.1 after giving effect to any Material Acquisition, Material
      Disposition, incurrence of Additional Indebtedness or making of any
      Restricted Payment with the proceeds of the foregoing; and

            (g) promptly, such additional financial and other information as any
      Lender may from time to time reasonably request.

            5.3 Payment of Obligations. Except to the extent that the failure to
do so would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect, the Borrower will, and will cause each Subsidiary to, pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its material obligations of whatever nature,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and any reserves required under GAAP with
respect thereto have been provided on the books of the relevant Group Member.

            5.4 Maintenance of Existence; Compliance. The Borrower will, and
will cause each Subsidiary to, (a) (i) preserve, renew and keep in full force
and effect its organizational existence and (ii) take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by
Section 6.4 and except, in the case of clause (ii) above and, with respect to
any Subsidiary which is not a Loan Party, in the case of clause (i) above, to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law (including Environmental Laws) except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

            5.5 Maintenance of Property; Insurance. The Borrower will, and will
cause each Subsidiary to, (a) keep all material property useful and necessary in
its business in good working order and condition, ordinary wear and tear
excepted and (b) maintain with financially sound and reputable insurance
companies insurance with respect to its material assets of an insurable nature
in at least such amounts and against at least such risks as are usually insured
against by companies engaged in the same or a similar business; provided that
any Group Member may self-insure on a basis consistent with both its past
practices and customary industry practices in the relevant line of business.

            5.6 Inspection of Property; Books and Records; Discussions. The
Borrower will, and will cause each Subsidiary to, (a) keep proper books of
records and account in which full, true and correct entries in conformity in all
material respects with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Agent and any Lender to visit and inspect (in the
case of a Lender, such visit and inspection to be coordinated through the Paying
Agent) any of its properties and examine and make abstracts from any of its
books and records (but, in the case of each Lender, not more than once during
each fiscal quarter unless a Default or an Event of Default has occurred and is
continuing), at any reasonable time upon

                                                                              38

reasonable prior notice and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of any
Group Member with officers and employees of such Group Member and (so long as
representatives of the Borrower are afforded a reasonable opportunity to be
present and to participate) with their independent certified public accountants.
It is understood that the provisions of Section 9.15 apply to any information
acquired by any Lender in the exercise of its rights under this Section.

            5.7 Notices. The Borrower will promptly give notice to the Paying
Agent with sufficient copies for each Lender of:

            (a) the occurrence of any Default or Event of Default;

            (b) any (i) default or event of default under any Contractual
      Obligation of any Group Member or (ii) litigation, investigation or
      proceeding that may exist at any time between any Group Member and any
      Governmental Authority, that in either case, if not cured or if adversely
      determined, as the case may be, would reasonably be expected to have a
      Material Adverse Effect;

            (c) any litigation or proceeding affecting any Group Member (i)
      which, if adversely determined, could result in liability to a Group
      Member not covered by insurance in an amount exceeding $50,000,000, (ii)
      in which injunctive or similar relief is sought unless such relief, if
      granted, would not reasonably be expected to have a Material Adverse
      Effect or (iii) which relates to any Loan Document;

            (d) the following events: (i) the occurrence of any Reportable Event
      with respect to any Plan, a failure to make any required contribution to a
      Plan, the creation of any Lien in favor of the PBGC or a Plan or any
      withdrawal from, or the termination of, any Multiemployer Plan or (ii) the
      institution of proceedings or the taking of any other action by the PBGC
      or the Borrower or any ERISA Affiliate or any Multiemployer Plan with
      respect to the withdrawal from, or the termination of, any Plan or any
      Multiemployer Plan, as the case may be, which in any event specified in
      clause (i) or (ii) would reasonably be expected to result in a liability
      for the Group in excess of $50,000,000; and

            (e) the occurrence of any development or event that has had or could
      reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 5.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Group Member proposes to take with
respect thereto.

            5.8 Separateness Requirements. Until the Loans are Investment Grade,
the Borrower will, and will cause each Subsidiary to, comply with the
requirements set forth in Schedule 5.8.

            5.9 Concerning the Collateral. (a) The Borrower will furnish to the
Collateral Agent prompt written notice of any change (i) in any Loan Party's
legal name or domicile, (ii) in any Loan Party's identity or corporate structure
or (iii) in any Loan Party's Federal Taxpayer Identification Number. The
Borrower agrees not to effect or permit any change referred to in the preceding
sentence unless all filings under the Uniform Commercial Code or otherwise that
are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected Lien on all the
Collateral to the extent required by the Security Documents are made or
delivered to the Collateral Agent for filing. The Borrower also agrees promptly
to notify the Collateral Agent if any material portion of the Collateral is
damaged or destroyed.

                                                                              39

            (b) The Borrower will, each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
Section 5.l(a), deliver to the Collateral Agent a certificate of an authorized
signatory for the Borrower (i) setting forth the information required pursuant
to Section A of the Perfection Certificate or confirming that that there has
been no change in such information (except changes specified in such
certificate) since the date of the Perfection Certificate delivered on the
Closing Date or the date of the most recent certificate delivered pursuant to
this Section 5.9 and (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
registrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent contemplated
by the Security Documents and necessary to protect and perfect the Liens under
the Security Agreement for a period of not less than 18 months after the date of
such certificate (except as notified therein with respect to any continuation
statements to be filed within such period).

            (c) If any additional Eligible Subsidiary is formed or acquired, or
any Subsidiary becomes an Eligible Subsidiary, after the Closing Date, within
ten Business Days after a Responsible Officer obtains knowledge of such event
the Borrower will notify the Collateral Agent thereof and cause the Collateral
and Guarantee Requirement to be satisfied with respect to such Eligible
Subsidiary and with respect to any Equity Interests in or Indebtedness of such
Eligible Subsidiary.

            (d) The Borrower will, and will cause each other Loan Party to,
execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds of trust
and other documents and the execution and delivery of additional Deposit Account
Control Agreements (as defined in the Security Agreement)), which may be
required under any applicable law, or which the Collateral Agent or the Required
Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied, all at the expense of the Loan Parties.

            (e) The Borrower will, if any asset or group of related assets
having an aggregate book value of $10,000,000 or more (including any real
property owned in fee or improvements thereto or any interest therein) are
acquired by any Loan Party after the Closing Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Liens of the Security Agreement upon acquisition thereof), notify the Collateral
Agent thereof, and, if requested by the Collateral Agent or the Required
Lenders, cause such assets to be subjected to a Lien securing the obligations of
the Borrower or such Loan Party under the Loan Documents and will take, and
cause the other Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Collateral Agent to grant and perfect such Lien,
including actions described in paragraph (d) of this Section, all at the expense
of the Loan Parties.

            (f) In the event a Cash Collateral Event shall occur, the Borrower
will cause the Net Proceeds thereof to be deposited in a Cash Collateral Account
maintained pursuant to (and as defined in) the Security Agreement at the times
and in the amounts (if any) as the Borrower would have been required to prepay
the Loans if such Cash Collateral Event were a Prepayment Event.

            5.10 Interest Rate Protection. As promptly as practicable, and in
any event within 90 days after the Closing Date, the Borrower will enter into,
and thereafter maintain in effect, one or more Swap Agreements on such terms and
with such parties as shall be reasonably satisfactory to the Co- Administrative
Agents, the effect of which shall be to limit the maximum potential interest
cost to the Borrower with respect to at least 50% of the outstanding
Indebtedness of the Borrower for a period of not less than two years.

                                                                              40

                          SECTION 6. NEGATIVE COVENANTS

            The Borrower hereby agrees that, so long as the Commitments remain
in effect or any Loan or other amount is owing to any Lender or any Agent
hereunder:

            6.1 Financial Covenants. The Borrower will not:

            (a) Permit at any time the Leverage Ratio to exceed (i) 3.25 to 1.0,
      if at such time the Loans are not Investment Grade or (ii) 3.75 to 1.0, if
      at such time the Loans are Investment Grade.

            (b) Permit at any time on or after December 31, 2003 the Cash
      Leverage Ratio to exceed (i) 3.5 to 1.0, if at such time the Loans are not
      Investment Grade or (ii) 4.0 to 1.0, if at such time the Loans are
      Investment Grade.

            (c) Permit at any time the Senior Leverage Ratio to exceed (i) 3.0
      to 1.0, if at such time the Loans are not Investment Grade or (ii) 3.5 to
      1.0, if at such time the Loans are Investment Grade.

            (d) Permit the ratio of Consolidated EBITDA to Consolidated Interest
      Expense for any period of four consecutive fiscal quarters to be less than
      (i) 3.5 to 1.O, if on the last day of such period the Loans are not
      Investment Grade, or (ii) 3.0 to 1.0, if on the last day of such period
      the Loans are Investment Grade.

            (e) Permit the ratio of Cash EBITDA to Consolidated Fixed Charges to
      be less than 1.25 to 1.0 for any period of four consecutive fiscal
      quarters ending on or after December 31, 2003.

            6.2 Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, issue, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except:

            (a) Indebtedness owing from one Group Member to another Group
      Member;

            (b) the Loans;

            (c) Indebtedness of the Borrower the proceeds of which are directly
      or indirectly applied to prepay the Loans pursuant to Section 2.5 and
      Permitted Refinancings of any such Indebtedness;

            (d) Indebtedness existing on the Closing Date and described on
      Schedule 6.2 and Permitted Refinancings of any such Indebtedness;

            (e) Guarantee Obligations of (i) a Foreign Subsidiary in respect of
      Indebtedness of another Foreign Subsidiary or (ii) a Loan Party in respect
      of Indebtedness of any other Group Member; provided in each case that the
      Indebtedness which is the primary obligation is permitted under another
      clause of this Section 6.2 and complies with any restrictions herein
      applicable to such Guarantee Obligations;

            (f) Indebtedness of the Borrower or any Subsidiary incurred solely
      to finance (directly or through a partially-owned joint venture) the
      acquisition, construction, development,

                                                                              41

      production or improvement of any assets (including the acquisition,
      development or production in the ordinary course of business of items of
      Product), including any Indebtedness assumed in connection with the
      acquisition of any such assets or secured by a Lien on any such assets
      prior to the acquisition thereof, and Permitted Refinancings of any such
      Indebtedness; provided that the aggregate principal amount of Indebtedness
      permitted by this paragraph (f) and by paragraph (g) below shall not
      exceed $200,000,000 (or the equivalent in other currencies) at any one
      time; and provided further that the aggregate principal amount of such
      Indebtedness so permitted which is Indebtedness of Television Subsidiaries
      or secured by Television Assets (without duplication) shall not exceed
      $100,000,000 (or the equivalent in other currencies) at any one time;

            (g) Indebtedness of any Person that becomes or is merged or
      consolidated with or into the Borrower or a Subsidiary after the date
      hereof; provided that such Indebtedness exists at the time such Person
      becomes or is merged or consolidated with or into the Borrower or a
      Subsidiary and is not created in contemplation of or in connection with
      such Person becoming or merging or consolidating with or into the Borrower
      or a Subsidiary, and Permitted Refinancings of any such Indebtedness;
      provided further that the aggregate principal amount of Indebtedness
      permitted by this paragraph (g) and by paragraph (f) above shall not
      exceed $200,000,000 (or the equivalent in other currencies) at any one
      time; and provided further that the aggregate principal amount of such
      Indebtedness so permitted which is Indebtedness of Television Subsidiaries
      or secured by Television Assets (without duplication) shall not exceed
      $100,000,000 (or the equivalent in other currencies) at any one time;

            (h) reimbursement or indemnification obligations (i) arising in the
      ordinary course of business in respect of letters of credit or (ii)
      arising in respect of appeal bonds;

            (i) 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;

            (j) Indebtedness arising from loans and advances made to any Loan
      Party or any Foreign Subsidiary by Vivendi Universal or any of its
      subsidiaries (other than Group Members); provided that:

                  (i)   any such Indebtedness incurred by any Loan Party is
                        subordinated to the Loans pursuant to the Subordination
                        Agreement; and

                  (ii)  the aggregate outstanding amount of such Indebtedness of
                        Foreign Subsidiaries shall be limited to (A) up to
                        L.100,000,000 of Indebtedness of Universal Pictures
                        Productions Ltd. outstanding on the date hereof and (B)
                        up to $50,000,000 of other Indebtedness;

            (k) Indebtedness arising under a Film Rights Securitization,
      including any such Indebtedness which refinances another Film Rights
      Securitization, so long as after giving effect thereto, and to the
      application of the proceeds thereof, the aggregate outstanding principal
      amount of Indebtedness under all Film Rights Securitizations (other than
      such Indebtedness the Net Proceeds of which are applied to prepay the
      Loans, or which is a Permitted Refinancing of Indebtedness the Net
      Proceeds of which were so applied) does not exceed $950,000,000;

            (l) Indebtedness arising from the guarantee by Universal Studios
      Holdings Ltd. and/or the Borrower of the obligations of Shanghai Universal
      Studios Theme Park Co., Ltd. (the "SHANGHAI J.V."), to the lender to the
      Shanghai J.V. in an amount not to exceed $140,750,000;

                                                                              42

            (m) any Indebtedness of the Borrower arising under the Special Fee
      Advance Agreement and comprising payments of certain partnership
      distributions up to $22,500,000 owing to the Blackstone Parties (as
      defined in the Special Fee Advance Agreement);

            (n) Indebtedness of a Covenant Defeasance SPV incurred in connection
      with a Covenant Defeasance Transaction;

            (o) Indebtedness of Subsidiaries not permitted by the foregoing
      clauses in an aggregate principal amount at no time exceeding (x) for all
      Subsidiaries $100,000,000 (or the equivalent in other currencies) and (y)
      for all Television Subsidiaries, $25,000,000 (or the equivalent in other
      currencies);

            (p) Indebtedness in the form of unsecured Guarantee Obligations of
      the Borrower in respect of Indebtedness of joint ventures in which a Group
      Member has an Equity Interest; provided that (x) such Indebtedness of the
      Borrower is not the subject of a Guarantee Obligation of any Subsidiary
      and (y) the aggregate principal amount of such Guarantee Obligations shall
      at no time exceed $50,000,000;

            (q) Indebtedness of the Borrower not permitted by the foregoing
      clauses, so long as (i) such Indebtedness is unsecured and is not the
      subject of a Guarantee Obligation of any Subsidiary and (ii) the aggregate
      outstanding principal amount of such Indebtedness shall at no time exceed
      an amount equal to (x) $800,000,000 less (y) the sum of (A) the excess at
      such time of the aggregate outstanding principal amount of Indebtedness
      under all Film Rights Securitizations (other than such Indebtedness the
      Net Proceeds of which are applied to prepay the Loans, or which is a
      Permitted Refinancing of Indebtedness the Net Proceeds of which were so
      applied) over $750,000,000 and (B) the aggregate outstanding principal
      amount of Indebtedness of Subsidiaries permitted only by paragraph (o);
      and

            (r) so long as at the date of incurrence thereof the senior
      unsecured Indebtedness of the Borrower is Investment Grade, other
      unsecured Indebtedness of the Borrower which is not the subject of a
      Guarantee Obligation of any Subsidiary.

            6.3 Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or suffer to exist any Lien upon any of its property,
whether now owned or hereafter acquired, except:

            (a) Liens already existing at June 16,2003 securing obligations in
      an aggregate amount of no more than $25,000,000 (or the equivalent in
      other currencies);

            (b) Liens arising solely by operation of law (or by any deed
      evidencing the same) in the ordinary course of its business in respect of
      any obligations which either (i) have been due for less than 30 days or
      (ii) are being contested in good faith and by appropriate means;

            (c) pledges of goods, the related documents of title and/or other
      related documents arising or created in the ordinary course of its
      business as security for Indebtedness or other obligations entered into in
      the ordinary course of business in respect of acceptances or letters of
      credit to a bank or financial institution directly relating to the
      particular goods or documents on or over which that pledge exists;

            (d) any Lien arising out of title retention provisions in a
      supplier's standard conditions of supply of goods acquired in the ordinary
      course of business;

                                                                              43

            (e) any Lien existing at the time of acquisition on or over any
      assets acquired after May 3, 2002 but only if (i) the Lien was not created
      in contemplation of or in connection with that acquisition and (ii) the
      principal, capital or nominal amount secured by any such Lien and
      outstanding at the time of acquisition may not be increased except by
      reason of any fluctuation in the amount outstanding under, and within the
      limits and in accordance with the terms of, facilities which exist and are
      secured by the relevant Lien at the time of acquisition;

            (f) any Lien created on any assets acquired after May 3,2002 for the
      sole purpose of financing that acquisition and securing a principal,
      capital or nominal amount not exceeding 100% of the cost of that
      acquisition (including reasonable transaction costs);

            (g) in the case of any company which becomes a Subsidiary after May
      3,2002, any Lien existing on or over its assets when it becomes a
      Subsidiary, but only if (i) the Lien was not created in contemplation of
      or in connection with it becoming a Subsidiary and (ii) the principal,
      capital or nominal amount secured by any such Lien and outstanding when
      the relevant company becomes a Subsidiary may not be increased except by
      reason of any fluctuation in the amount outstanding under, and within the
      limits and in accordance with the terms of, facilities which exist and are
      secured by the relevant Lien when it becomes a Subsidiary;

            (h) any Lien that is (i) a contractual right of set-off relating to
      a depository relationship with a bank not given as security for
      Indebtedness or (ii) created by virtue of the operation of any cash
      pooling arrangements for any Group Members with their bankers providing
      for the setting-off or netting of debt and credit balances on bank
      accounts of those Group Members;

            (i) any Lien granted by any Group Member to any pension fund or
      managers securing the pension obligations of any Group Member;

            (j) any Lien (the "Replacement Lien") created in substitution for
      any Lien referred to in paragraphs (a) through (y) of Section 6.3 so long
      as the principal, capital or nominal amount secured by the Replacement
      Lien is not increased (except to cover reasonable transaction costs) and
      is not secured by any additional assets;

            (k) any Lien arising out of orders of attachment, sequestration,
      distress or execution which do not constitute an Event of Default under
      Section 7;

            (l) pledges and deposits made in the ordinary course of business in
      compliance with workers' compensation, unemployment insurance and other
      social security laws or regulations and pledges and deposits securing
      liability to insurance carriers under insurance or self-insurance
      arrangements in respect of obligations under such laws or regulations;

            (m) any Lien to secure the performance of tenders, bids, trade
      contracts, leases, statutory obligations, surety and appeal bonds,
      performance bonds, completion bonds, letters of credit and other
      obligations of a like nature, in each case in the ordinary course of
      business;

            (n) any Lien in favor of landlords on leasehold improvements in
      leased premises;

            (o) any Lien arising from Permitted Investments described in clause
     (d) of the definition of the term "Permitted Investments";

                                                                              44

            (p) rights of licensees under access agreements pursuant to which
      such licensees have access to duplicating material for the purpose of
      making copies or prints of items of Product licensed to them, and rights
      of distributors, exhibitors, licensees and other Persons in items of
      Product created in connection with the distribution or other exploitation
      of such items of Product in the ordinary course of business and not
      securing any Indebtedness;

            (q) any Lien securing an obligation incurred in connection with
      acquiring rights to items of Product in the ordinary course of business;
      provided that (i) the obligation secured by such Lien does not constitute
      Indebtedness of the Borrower or any of its Subsidiaries, (ii) such Liens
      shall be created substantially simultaneously with the acquisition,
      production or "pick-up" of such films and (iii) such Liens do not at any
      time encumber any property other than the items of Product being produced
      or acquired and the rights pertaining thereto and proceeds thereof;

            (r) any Lien in an item of Product securing advances to the Borrower
      or any of its Subsidiaries made by licensees thereof in order to finance
      the production or distribution thereof; provided that the aggregate
      principal amount of advances secured thereby shall not exceed (as to the
      Borrower and all of its Subsidiaries) $50,000,000 (or the equivalent in
      other currencies) at any time outstanding;

            (s) any Lien arising in the ordinary course of business that is held
      by or accrues in favor of (i) the Screen Actors Guild, the Writers Guild
      of America, the Directors Guild of America, the International Alliance of
      Theatrical and Stage Employees, and any other unions, guilds or collective
      bargaining units who have rights in or control over items of Product or
      (ii) any Persons who hold a participation or a residual interest in items
      of Product;

            (t) any Lien arising in the ordinary course of business in an item
      of Product that is held by or accrues in favor of any completion
      guarantor, financier or other third person related to production,
      acquisition or exploitation rights in such item of Product; provided that
      such Lien is subject to an intercreditor agreement by such completion
      guarantor, financier or other third person, as the case may be, in favor
      of the Borrower in which such completion guarantor, financier or other
      third person agrees not to (i) interfere with or otherwise disturb the
      exercise or exploitation by the Borrower or its Affiliates of such item of
      Product or (ii) exploit such item of Product (other than in the case, and
      to the extent, of any such completion guarantor, financier or other third
      person acting as a distributor or disseminator of Product, including as a
      result of foreclosing on such person's Lien);

            (u) the transfer of any Lien permitted to exist under this Section
      6.3 from one Person to another, so long as the principal, capital or
      nominal amount secured by that Lien is not increased;

            (v) any Copyright Lien securing obligations specified in the
      definition thereof;

            (w) any Lien arising in the ordinary course of business (including
      in connection with an Exempt Transaction) regarding items of Product that
      is held by or accrues in favor of any government, administrative agency or
      other administrator or beneficiary of a Governmental Incentive Program;

            (x) any Lien created on or over assets of a Foreign Subsidiary which
      is not a Guarantor pledged to secure obligations of such Subsidiary
      permitted to be incurred under this Agreement;

                                                                              45

            (y) any Lien created in connection with a Film Rights
      Securitization, which Film Rights Securitization is permitted under
      Section 6.2;

            (z) any Lien created by the Security Documents;

            (aa) any Lien created upon any cash collateral account of the
      Borrower that is funded exclusively with any portion of the proceeds of
      the UCI Loan;

            (bb) the Lien on Equity Interests in USJ Co., Ltd. contemplated by
      the definition of Indebtedness;

            (cc) any Lien created upon any assets of a Covenant Defeasance SPV
      incurred in connection with a Covenant Defeasance Transaction; and

            (dd) any other Lien created on or over assets of any Group Member;
      provided that the aggregate outstanding principal, capital or nominal
      amount secured by all Liens created or outstanding under this paragraph
      (dd) must not at any time exceed in aggregate $50,000,000 (or the
      equivalent in other currencies).

            6.4 Fundamental Changes. The Borrower will not, and will not permit
any Subsidiary to, enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of all or substantially all of its property or
business, except that:

            (a) any Subsidiary of the Borrower may be merged or consolidated
      with or into the Borrower (provided that the Borrower shall be the
      continuing or surviving entity) or with or into any other Subsidiary
      (provided, that if either such Subsidiary is a Guarantor, the continuing
      or surviving entity shall be a Guarantor);

            (b) any Subsidiary may liquidate or dissolve if the Borrower
      determines in good faith that such liquidation or dissolution is in the
      best interest of the Borrower and is not materially disadvantageous to the
      Lenders; provided that a Guarantor may only liquidate or dissolve into the
      Borrower or another Guarantor; and

            (c) any Investment permitted by Section 6.7 or any Disposition
      permitted pursuant to Section 6.5 may be structured as a merger,
      consolidation or amalgamation and may involve a Disposition of all or
      substantially all of the assets of one or more Group Members.

            6.5 Disposition of Property. The Borrower will not, and will not
permit any Subsidiary to, Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any Equity
Interests in such Subsidiary to any Person, except:

            (a) Dispositions made in the ordinary course of business of the
      Disposing entity, including in connection with any Exempt Transaction;

            (b) Dispositions to a Group Member;

            (c) Restricted Payments that are permitted by Section 6.6;

            (d) leases, including subleases, and licenses entered into in the
      ordinary course of business;

                                                                              46

            (e) Dispositions made in connection with the liquidation in
      bankruptcy of any Subsidiary;

            (f) Dispositions made in connection with a Film Rights
      Securitization, which Film Rights Securitization is permitted under
      Section 6.2;

            (g) Dispositions of 25% of the Equity Interests in Reveille LLC to
      Ben Silverman; and

            (h) other Dispositions, so long as (i) the consideration therefor is
      not less than the fair market value of the related asset, (ii) the
      Borrower complies with the requirements of Sections 2.5 and 5.9(f) in
      connection with such Disposition, if applicable, (iii) in the case of any
      Disposition of Television Assets such consideration is payable solely in
      cash at closing; provided that the Borrower may accept consideration other
      than cash in connection with a Disposition of Television Assets so long as
      the book value of such non-cash consideration does not exceed 15% of the
      aggregate consideration for all such Dispositions of Television Assets;
      and (iv) the aggregate book value of Television Assets (other than the
      Sundance Channel) so Disposed of shall not exceed $50,000,000 during the
      term of this Agreement.

            6.6 Restricted Payments. Unless at the time the Loans are Investment
Grade, the Borrower will not, and will not permit any Subsidiary to, (i) declare
or pay any dividend on, or make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Equity Interests of any Group Member,
whether now or hereafter outstanding (other than an Investment in Equity
Interests in a Subsidiary permitted by Section 6.7), or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Group Member ("Dividends"), (ii) make any
Investment in any member of the Vivendi Group other than a Group Member or (iii)
make any payment on account of, or set apart assets for a sinking or another
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Indebtedness owing to any member of the Vivendi Group other
than a Group Member (collectively, "Restricted Payments"), except that so long
as after giving effect to such Restricted Payment (and any transaction giving
rise thereto), no Event of Default shall have occurred and be continuing:

            (a) the Borrower may declare and pay dividends with respect to its
      Equity Interests payable solely in additional such Equity Interests;

            (b) Subsidiaries may declare and make Restricted Payments to the
      Borrower or other Subsidiaries and declare and pay Dividends ratably with
      respect to their Equity Interests;

            (c) the Borrower may declare and pay regularly scheduled cash
      distributions on its Class B Preferred Interests;

            (d) the Borrower may, promptly after the close of each taxable year,
      make Tax Distributions in respect of the income of the Borrower for such
      taxable year;

            (e) the Canada Preferred Stock may be redeemed or repurchased at any
      time after the exercise by the holder thereof of the put rights related
      thereto;

            (f) the Borrower may make Restricted Payments from the proceeds of
      cash from operations so long as, after giving effect thereto, the Cash
      Leverage Ratio is less than 2.5 to 1.O;

                                                                              47

            (g) the Borrower may make Restricted Payments from the Net Proceeds
      received from the Disposition of assets other than Subject Assets (whether
      consummated prior to, on or after the Closing Date) so long as, after
      giving effect thereto, (x) any Indebtedness associated with such assets
      has been retired or defeased, (y) the Cash Leverage Ratio is less than (a)
      3.0 to 1.0 for any such Disposition consummated prior to the date
      occurring 18 months following the Closing Date and (b) 2.5 to 1.0 for any
      such Disposition consummated on or after the date occurring 18 months
      after the Closing Date and (2) the Loans are rated no less than BB by S&P
      and Ba2 by Moody's (in each case, with a stable outlook); provided that
      the condition in clause (y) above shall not apply in the case of a
      Disposition of Spencer Gifts LLC (and its subsidiaries) or the real
      property and improvements set forth on Schedule 1.1C;

            (h) new intercompany loans may be made to Vivendi Universal or its
      subsidiaries or then-existing intercompany loans owed to Vivendi Universal
      or its subsidiaries may be repaid from the proceeds of cash from
      operations, so long as, after giving effect thereto, no more than
      $600,000,000 of net intercompany loans to Vivendi Universal or its
      subsidiaries are outstanding (subject to an increase to $700,000,000 at
      any time upon election of the Borrower, at which time the maximum ratio
      permitted by clause (i) of Section 6.1(b) shall be reduced to 3.0 to 1.0
      to the extent not already at or below such level); provided that the net
      amount of intercompany loans otherwise permitted to be outstanding under
      this clause (h) shall be reduced by the amount of any Restricted Payments
      in the form of Dividends made pursuant to clauses (f) and (g) above);

            (i) the Borrower may make Restricted Payments in an amount equal to
      the portion of any proceeds of issuances of Equity Interests not required
      to be used to prepay the Loans (or to cash collateralize the Loans);
      provided that, such amount is used to make Restricted Payments
      substantially concurrently with the receipt of such proceeds and so long
      as the Cash Leverage Ratio is less than 2.5 to 1.0;

            (j) UCI Loans may be prepaid with the proceeds of (i) Additional
      Indebtedness, (ii) any Disposition of UCI or (iii) distributions received
      from UCI;

            (k) the Borrower may make Restricted Payments from the proceeds of
      Permitted Debt; and

            (l) the Class A Preferred Interests and/or the Class B Preferred
      Interests may be defeased pursuant to a Covenant Defeasance Transaction;

provided that no such Restricted Payment in the form of loans or advances
otherwise permitted by the foregoing provisions shall be permitted if as a
consequence such loans or advances would in whole or in part be required to be
applied as a mandatory prepayment of Indebtedness of a member of the Vivendi
Group.

            6.7 Investments. The Borrower will not, and will not permit any
Subsidiary to, make any advance, loan, extension of credit (by way of guaranty
or otherwise) or capital contribution to, or purchase any Equity Interests,
bonds, notes, debentures or other debt securities of, or any assets constituting
a business unit of, or make any other investment in, any Person (all of the
foregoing, "Investments"), except:

            (a) Permitted Investments;

            (b) Investments by the Borrower or any Subsidiary existing on
      June 16, 2003;



                                                                              48

         (c) loans, advances or other Investments made by the Borrower to or in
any Subsidiary (including the formation of a new Subsidiary but not the
acquisition of a Person having more than $1,000 of total assets not theretofore
a Subsidiary) or made by any Subsidiary to or in the Borrower or any other
Subsidiary (including the formation of a new Subsidiary but not the acquisition
of a Person not theretofore a Subsidiary having more than $1,000 of total
assets);

         (d) Investments constituting part of the Transaction;

         (e) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers, suppliers or others, in each case in the ordinary course of business,
or received in satisfaction of judgments;

         (f) Investments received as noncash consideration for Dispositions
permitted by Section 6.5;

         (g) extensions of credit in the nature of accounts receivable in the
ordinary course of business;

         (h) loans and advances to employees, directors and officers of the
Borrower or any of the Subsidiaries in the ordinary course of business;

         (i) Investments in the form of Permitted Hedges;

         (j) Investments resulting from pledges and deposits referred to in
Section 6.3;

         (k) Investments of any Person existing at the time such Person becomes
a Subsidiary or at the time such Person merges or consolidates with the Borrower
or any of the Subsidiaries, in either case in compliance with the terms of this
Agreement, which Investments were not created or acquired in contemplation of
such transaction;

         (l) Investments constituting Restricted Payments permitted by Section
6.6;

         (m) guarantees constituting Indebtedness permitted by Section 6.2;

         (n) guarantees made in the ordinary course of business consistent with
past practices;

         (o) acquisitions of Product or interests therein in the ordinary course
of business, including by way of forming and/or funding joint ventures;

         (p) direct or indirect Investments in UCI (including any guarantee of
or pledge of cash collateral to secure Indebtedness of UCI) funded exclusively
with the proceeds of a UCI Loan;

         (q) loans and advances arising under the Special Fee Advance Agreement
comprising payments of certain partnership distributions up to $22,500,000 owing
to the Blackstone Parties (as defined in the Special Fee Advance Agreement);

         (r) loans to any other Person participating in a Governmental Incentive
Program if and only if a Group Member retains control over the distribution
rights in the related Product;

                                                                              49


                  (s) direct or indirect Investments in Shanghai J.V. in an
         amount not to exceed $75,700,000, plus such additional Investment not
         to exceed $140,750,000 as may arise under the Indebtedness permitted
         pursuant to Section 6.2(1); and

                  (t) Investments in addition to those permitted by clauses (a)
         through (s) above so long as after giving effect thereto no Event of
         Default shall have occurred and be continuing.

                  6.8 Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except:

                  (a) at prices and on terms and conditions not less favorable
         to the Borrower or such Subsidiary than could be obtained on an
         arm's-length basis from unrelated third parties;

                  (b) transactions between or among the Borrower and its
         Subsidiaries not involving any other Affiliate;

                  (c) transactions described on Schedule 6.8;

                  (d) loans and advances between the Borrower and its
         Subsidiaries, on the one hand, and Vivendi Universal and its
         subsidiaries (other than the Borrower and its subsidiaries), on the
         other hand, permitted by Sections 6.2(j) and 6.6;

                  (e) other transactions on an arm's-length basis among the
         Borrower, its Subsidiaries and their Affiliates consistent with past
         practices (it being understood that a transaction on terms reasonably
         calculated to reimburse the applicable Group Member for its material
         costs in connection therewith shall not fail to be an arm's length
         transaction for this purpose even though such Group Member would not
         have entered into such a transaction with a Person that was not an
         Affiliate);

                  (f) any Restricted Payment permitted by Section 6.6; and

                  (g) the borrowing of a UCI Loan and the making of any payment
         in respect thereof required by the terms thereof (but not any payment
         which is not required by the terms thereof).

                  6.9 Sales and Leasebacks. The Borrower will not, and will not
permit any Subsidiary to, enter into any arrangement with any Person (other than
a Group Member) providing for the leasing by any Group Member of real or
personal property that has been or is to be sold or transferred by such Group
Member to such Person or to any other Person to whom funds have been or are to
be advanced by such Person on the security of such property or rental
obligations of such Group Member; provided that such an arrangement may be
effected (i) within 270 days after the initial acquisition by any Group Member
of such real or personal property in order to finance the cost of acquisition
thereof or (ii) pursuant to the transactions described on Schedule 6.9.

                  6.10 Swap Agreements. The Borrower will not, and will not
permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Equity Interests
or High-Yield Debt) and (b) Swap Agreements entered into in order to effectively
cap, collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any Subsidiary.

                                                                              50


                  6.11 Changes in Fiscal Periods. The Borrower will not permit
its fiscal year to end on a day other than December 31 or change its method of
determining fiscal quarters.

                  6.12 Negative Pledge Clauses. The Borrower will not, and will
not permit any Subsidiary to, enter into or suffer to exist or become effective
any agreement that prohibits or limits the ability of any Group Member to
create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, in each case other than
Permitted Restrictions.

                  6.13 Clauses Restricting Subsidiary Distributions. The
Borrower will not, and will not permit any Subsidiary to, enter into or suffer
to exist or become effective any consensual restriction on the ability of any
Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to,
the Borrower or any other Subsidiary of the Borrower, (b) make loans or advances
to, or other Investments in, the Borrower or any other Subsidiary of the
Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, in each case other than Permitted Restrictions.

                  6.14 Lines of Business. The Borrower will not enter to any
material extent into any business, either directly or through any Subsidiary,
except for Permitted Lines of Business.

                          SECTION 7. EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:

                  (a) a Loan Party does not pay (i) on the due date, any
         principal of any Loan or (ii) within three Business Days of the due
         date, any other amount payable by it under the Loan Documents, in each
         case at the place at and in the currency in which it is expressed to be
         payable;

                  (b) (i) the Borrower does not comply with any provision of
         Section 5.7(a), Section 5.9(f) or Section 6; or (ii) a Loan Party does
         not comply with any provision of the Loan Documents (other than those
         referred to in Section 7(a) or 7(b)(i)) and the failure to comply (if
         capable of remedy) continues for 30 days after the Paying Agent gives
         notice of such failure to the Borrower;

                  (c) a representation, warranty or statement made or repeated
         in any Loan Document or in any document delivered by or on behalf of
         any Loan Party under or in connection with any Loan Document is
         incorrect in any material respect when made or deemed to be made or
         repeated;

                  (d) (i) any Financial Obligation of any Loan Party, a Material
         Subsidiary, Vivendi Universal or a Vivendi Material Subsidiary is not
         paid when due (or where there is a grace period applicable to that
         Indebtedness, within that grace period); (ii) an event of default
         howsoever described occurs under any document relating to any Financial
         Obligation of any Loan Party, a Material Subsidiary, Vivendi Universal
         or a Vivendi Material Subsidiary; or (iii) any Financial Obligation of
         any Loan Party, a Material Subsidiary, Vivendi Universal or a Vivendi
         Material Subsidiary becomes prematurely due and payable as a result of
         an event of default or is placed on demand as a result of an event of
         default (howsoever described) under the document relating to that
         Indebtedness; provided that there shall only be an Event of Default
         under this Section 7(d) if the aggregate amount of Financial
         Obligations which is not so paid and/or in respect of which such event
         has occurred and/or which becomes prematurely due and payable or is
         placed on demand exceeds $50,000,000 (or the equivalent in other
         currencies); and provided further that no Default or Event of Default
         shall arise hereunder if Indebtedness secured by any asset is required

                                                                              51


to be prepaid by reason of a Disposition of such asset otherwise permitted
hereunder, or any Indebtedness of any Subsidiary is required to be prepaid by
reason of a Disposition of such Subsidiary otherwise permitted hereunder, so
long as such Indebtedness is so prepaid in accordance with such requirements;

         (e) (i) any Loan Party, any Material Subsidiary or Vivendi Universal is
unable to pay its debts as they fall due, or admits in writing inability to pay
its debts as they fall due;

             (ii) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking:

                  (A)      liquidation, reorganization or other relief in
                           respect of any Loan Party, any Material Subsidiary or
                           Vivendi Universal or its debts, or of a substantial
                           part of its assets, under any Federal, state or
                           foreign bankruptcy, insolvency, receivership or
                           similar law now or hereafter in effect; or

                  (B)      the appointment of a receiver, trustee, custodian,
                           sequestrator, conservator or similar official for any
                           Loan Party, any Material Subsidiary or Vivendi
                           Universal or for a substantial part of its assets,
                           and, in any such case, such proceeding or petition
                           shall continue undismissed for 60 days or an order or
                           decree approving or ordering any of the foregoing
                           shall be entered; or

             (iii) any Loan Party, any Material Subsidiary or Vivendi Universal
shall:

                  (A)      voluntarily commence any proceeding or file any
                           petition seeking liquidation, reorganization or other
                           relief under any Federal, state or foreign
                           bankruptcy, insolvency, receivership or similar law
                           now or hereafter in effect;

                  (B)      consent to the institution of, or fail to contest in
                           a timely and appropriate manner, any proceeding or
                           petition described in paragraph (ii) of this Section;

                  (C)      apply for or consent to the appointment of a
                           receiver, trustee, custodian, sequestrator,
                           conservator or similar official for any Loan Party or
                           any Material Subsidiary or for a substantial part of
                           its assets;

                  (D)      file an answer admitting the material allegations of
                           a petition filed against it in any such proceeding;

                  (E)      make a general assignment for the benefit of
                           creditors; or

                  (F)      take any action for the purpose of effecting any of
                           the foregoing;

         (f) the Secured Guarantee of any Guarantor is not effective or is
alleged by any Loan Party to be ineffective for any reason, except as otherwise
provided in Section 5.9 and in the Security Agreement;

                                                                              52


                  (g) one or more judgments for the payment of money in an
         aggregate amount in excess of $50,000,000 (exclusive of amounts covered
         by insurance as to which the insurer has not disputed coverage) shall
         be rendered against any Loan Party or any Material Subsidiary or any
         combination thereof and the same shall remain undischarged for a period
         of 30 consecutive days during which execution shall not be effectively
         stayed, or any action shall be legally taken by a judgment creditor to
         attach or levy upon any assets of the Loan Party or any Material
         Subsidiary to enforce any such judgment;

                  (h) an ERISA Event shall have occurred that, in the opinion of
         the Required Lenders, when taken together with all other ERISA Events
         that have occurred, would reasonably be expected to result in a
         Material Adverse Effect;

                  (i) a Change in Control shall occur;

                  (j) on or after the Closing Date, the Collateral Agent shall
not have for the benefit of the Lenders a perfected first priority security
interest, directly or indirectly through the pledge of the equity interests in a
Group Member which is the direct or indirect owner thereof, in all equity
interests owned by any Group Member in any of the Pledge Subsidiaries, except as
a result of the Collateral Agent's failure (x) to maintain possession of any
stock certificates, promissory notes or other instruments delivered to it under
the Security Agreement or (y) to file properly (A) Uniform Commercial Code
financing statements or comparable filings delivered to it for filing under the
Security Documents or (B) Uniform Commercial Code continuation statements or
comparable filings necessary to maintain perfection, or any Loan Party shall
allege such to be the case; or

                  (k) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a value in excess of
$5,000,000, with the priority required by the applicable Security Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral or such Collateral's becoming subject to a Film Rights Securitization
(and released in accordance with Section 9.14) in a transaction permitted under
the Loan Documents or (ii) as a result of the Collateral Agent's failure (x) to
maintain possession of any stock certificates, promissory notes or other
instruments delivered to it under the Security Agreement or (y) to file properly
(A) Uniform commercial Code financing statements or comparable filings delivered
to it for filing under the Security Documents or (B) Uniform Commercial Code
continuation statements or comparable filings necessary to maintain perfection;

then, and in any such event, the Paying Agent shall, if so directed by the
Required Lenders, by notice to the Borrower: (x) demand that all or part of the
Loans, together with accrued interest and all other amounts accrued under the
Loan Documents be immediately due and payable, whereupon they shall become
immediately due and payable; and/or (y) demand that all or part of the Loans be
payable on demand, whereupon they shall immediately become payable on demand by
the Paying Agent acting on the instructions of the Required Lenders; provided
that upon the occurrence of an Event of Default under Section 7(e) with respect
to the Borrower, the Loans, together with accrued interest and all other amounts
accrued under the Loan Documents, shall become immediately due and payable,
without notice or any other action by any Agent or any Lender.

                              SECTION 8. THE AGENTS

                  8.1 Appointment. Each Lender hereby irrevocably designates and
appoints each of the Co-Administrative Agents, the Collateral Agent and the
Paying Agent as the agents of such Lender under this Agreement and the other
Loan Documents, and irrevocably authorizes each of them, in such capacity, to
take such action on its behalf under the provisions of this Agreement and the
other Loan

                                                                              53


Documents and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement and the other Loan Documents
(including with respect to the Collateral Agent, to sign and deliver the
Security Documents), together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, none of the Co-Administrative Agents, the Collateral Agent and
the Paying Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any of the Co-Administrative Agents, the Collateral
Agent and the Paying Agent. References in this Section 8, other than Sections
8.9 and 8.10 to the Co-Administrative Agents shall be deemed to include a
reference to the Collateral Agent and the Paying Agent.

                  8.2 Delegation of Duties. Each of the Co-Administrative Agents
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Neither of the
Co-Administrative Agents shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.

                  8.3 Exculpatory Provisions. Neither any Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by any Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. No Agent shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

                  8.4 Reliance by Co-Administrative Agents. Each of the
Co-Administrative Agents shall be entitled to rely, and shall be fully protected
in relying, upon any instrument, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the Co-Administrative
Agents. Each of the Co-Administrative Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Co-Administrative Agents. Each of the Co-Administrative Agents shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. Each of the
Co-Administrative Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.

                                                                              54


                  8.5 Notice of Default. No Co-Administrative Agent shall be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Co-Administrative Agents have received notice from a Lender
or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Co-Administrative Agents receive such a notice, the Co-Administrative Agents
shall give notice thereof to the Lenders. The Co-Administrative Agents shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Co-Administrative
Agents shall have received such directions, the Co-Administrative Agents may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as they shall deem
advisable in the best interests of the Lenders.

                  8.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Co-Administrative Agents hereunder, the Co-Administrative Agents shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party that may come into the possession of the Co-Administrative
Agents or any of their officers, directors, employees, agents, attorneys-in-fact
or affiliates.

                  8.7 Indemnification. The Lenders agree to indemnify each Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Exposures in effect on the date on which indemnification is
sought under this Section (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Exposures immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

                                                                              55


                  8.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.

                  8.9 Successor Co-Administrative Agent. Each of the
Co-Administrative Agents may resign as Co-Administrative Agent upon 10 days'
notice to the Lenders and the Borrower. If the Co-Administrative Agents shall
have both resigned as Co-Administrative Agents under this Agreement and the
other Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall (unless
an Event of Default under Section 7(a) or Section 7(e) with respect to the
Borrower shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed). Any
successor agent shall succeed to the rights, powers and duties of the
Co-Administrative Agents, and the term "Co-Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Co-Administrative Agent's rights, powers and duties as Co-Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Co-Administrative Agent or any of the parties to this Agreement or
any holders of the Loans. If both Co-Administrative Agents shall have resigned
and no successor agent has accepted appointment as Co-Administrative Agent by
the date that is 10 days following the last retiring Co-Administrative Agent's
notice of resignation, the last retiring Co-Administrative Agent's resignation
shall nevertheless thereupon become effective and the Lenders shall assume and
perform all of the duties of the Co-Administrative Agents hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above. After any retiring Co-Administrative Agent's resignation as
Co-Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Co-Administrative Agent under this Agreement and the other Loan Documents.

                  8.10 Co-Administrative Agents' and Paying Agent's Fees. The
Borrower agrees to pay (i) to the Co-Administrative Agents, for their own
accounts, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Co-Administrative Agents and (ii) to the Paying
Agent, for its own account, fees payable in the amounts and at the times
separately agreed upon between the Borrower and the Paying Agent.

                  8.11 Syndication Agent. The Syndication Agent shall not have
any duties or responsibilities hereunder in its capacity as such.

                            SECTION 9. MISCELLANEOUS

                  9.1 Amendments and Waivers. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 9.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Co-Administrative
Agents and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Co-Administrative Agents, as
the case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final

                                                                              56


scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Loan, reduce the stated rate of any
interest payable hereunder (except in connection with the waiver of
applicability of any post-default increase in interest rates) or extend the
scheduled date of any payment thereof, or provide that payments shall not be
allocated pro rata to the Lenders, in each case without the written consent of
each Lender directly and adversely affected thereby; (ii) eliminate or reduce
the voting rights of any Lender under this Section 9.1 without the written
consent of such Lender; (iii) reduce any percentage specified in the definition
of Required Lenders, consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the Collateral or release all or
substantially all of the Guarantors from their obligations under the Security
Agreement, in each case without the written consent of all Lenders; (iv) amend,
modify or waive any provision of Section 8 without the written consent of each
Agent affected thereby. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Agents and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.

                  Notwithstanding the foregoing, this Agreement may be amended
(or amended and restated) with the written consent of the Required Lenders, the
Co-Administrative Agents and the Borrower (a) to add one or more additional
credit facilities to this Agreement and to permit the extensions of credit from
time to time outstanding thereunder and the accrued interest and fees in respect
thereof to share ratably in the benefits of this Agreement and the other Loan
Documents with the Loans and (b) to include appropriately the Lenders holding
such credit facilities in any determination of the Required Lenders.

                  9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower, the
Co-Administrative Agents and the Paying Agent, and as set forth in an
administrative questionnaire delivered to the Co-Administrative Agents in the
case of the Lenders, or to such other address as may be hereafter notified by
the respective parties hereto:

Borrower:                 Vivendi Universal Entertainment LLLP
                          Universal Studios
                          100 Universal City Plaza
                          Universal City, California 91608
                          Attention: Chief Financial Officer and General Counsel
                          Telecopy: +1 818 866 1567 and +1 818 866 3444

                          with a copy to:

                          Vivendi Universal S.A.
                          42 avenue de Friedland
                          75008 Paris, France
                          Attention: Dominique Gibert
                          Telecopy: + 33 1 71 71 1127

Co-Administrative Agents: Bank of America, N.A.

                                                                              57


                          335 Madison Avenue
                          New York, New York 10017
                          Attention: Thomas Kane
                          Telecopy: +1-212 503 7173

                          and:

                          JPMorgan Chase Bank
                          Loan and Agency Services Group
                          1111 Fannin Street, 10th Floor
                          Houston, Texas 77002
                          Attention: Cynthia Aguirre
                          Telecopy: +1-713 750 2358

                          with a copy to:

                          JPMorgan Chase Bank
                          270 Park Avenue
                          New York, New York 10017
                          Attention: Peter Thauer
                          Telecopy: +l-212 270 4164

Paying Agent:             JPMorgan Chase Bank
                          Loan and Agency Services Group
                          1111 Fannin Street, 10th Floor
                          Houston, Texas 77002
                          Attention: Cynthia Aguirre
                          Telecopy: +1-713 750 2358

provided that any notice, request or demand to or upon any Agent shall not be
effective until received.

                  Notices and other communications to the Lenders hereunder may
be delivered or furnished by electronic communications pursuant to procedures
approved by the Co-Administrative Agents; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the Paying
Agent and the applicable Lender. The Borrower or any Agent may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

                  9.3 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

                  9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

                                                                              58

         9.5 Payment of Expenses. Upon receipt of reasonable documentation, the
Borrower agrees (a) to pay or reimburse the Co-Administrative Agents, the
Collateral Agent and the Paying Agent for all their reasonable out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of a single outside counsel (and any local counsel) to such Agents
and filing and recording fees and expenses, with statements with respect to the
foregoing to be submitted to the Borrower prior to the Closing Date (in the case
of amounts to be paid on the Closing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Agent that is owed payment
or reimbursement shall deem appropriate, (b) to pay or reimburse each Lender and
each Agent for all their reasonable costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents but, in the case of the
Lenders, only after the occurrence and during the continuance of a Default or an
Event of Default, including the fees and disbursements of counsel to each Lender
and each Agent, and (c) to pay, indemnify, and hold each Lender and each Agent
and their respective officers, directors, trustees, employees, Affiliates,
agents and controlling persons (each, an "Indemnitee") harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of any Group Member or any of the
Properties and the reasonable fees and expenses of legal counsel in connection
with claims, actions or proceedings by any Indemnitee against any Loan Party
under any Loan Document (all the foregoing in this clause (c), collectively, the
"Indemnified Liabilities"); provided that the Borrower shall have no obligation
hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
9.5 shall be payable promptly after written demand therefor. The agreements in
this Section 9.5 shall survive repayment of the Loans and all other amounts
payable hereunder.

         9.6 Successors and Assigns: Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void) and (ii) no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section.

         (b) (i) Subject to the conditions set forth in paragraph (b)(ii) of
this Section, any Lender may assign to one or more assignees (each, an
"Assignee") all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of:

                                                                              59


                           (A) the Borrower; provided that no consent of the
                  Borrower shall be required for an assignment to a Lender, an
                  Affiliate of a Lender, an Approved Fund (as defined below) or,
                  if an Event of Default under Section 7(a) or 7(e) has occurred
                  and is continuing, any other Person; and

                           (B) the Paying Agent; provided that no consent of the
                  Paying Agent shall be required for an assignment of all or any
                  portion of a Loan to a Lender, an Affiliate of a Lender or an
                  Approved Fund; provided further that no consent of the Paying
                  Agent shall be required for an assignment of all or any
                  portion of a Loan to any Person by Bank of America, N.A. or
                  JPMorgan Chase Bank.

                  (ii) Assignments shall be subject to the following additional
conditions:

                           (A) except in the case of an assignment to a Lender,
                  an Affiliate of a Lender or an Approved Fund or an assignment
                  of the entire remaining amount of the assigning Lender's
                  Commitment or Loans, the amount of the Commitment or Loans of
                  the assigning Lender subject to each such assignment
                  (determined as of the date the Assignment and Assumption with
                  respect to such assignment is delivered to the Co-
                  Administrative Agents) shall not be less than $1,000,000
                  unless each of the Borrower and the Paying Agent otherwise
                  consents (such consents not to be unreasonably withheld or
                  delayed); provided that (1) no such consent of the Borrower
                  shall be required if an Event of Default under Section 7(a) or
                  7(e) has occurred and is continuing and (2) such amounts shall
                  be aggregated in respect of each Lender and its Affiliates or
                  Approved Funds, if any;

                           (B) the parties to each assignment shall execute and
                  deliver to the Paying Agent an Assignment and Assumption,
                  together with a processing and recordation fee of $3,500; and

                           (C) the Assignee, if it shall not be a Lender, shall
                  deliver to the Paying Agent an administrative questionnaire.

                  For the purposes of this Section 9.6,the term "Approved Fund"
means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business and that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.

                  (iii) Subject to acceptance and recording thereof pursuant to
         paragraph (b)(v) below, from and after the effective date specified in
         each Assignment and Assumption the Assignee thereunder shall be a party
         hereto and, to the extent of the interest assigned by such Assignment
         and Assumption, have the rights and obligations of a Lender under this
         Agreement, and the assigning Lender thereunder shall, to the extent of
         the interest assigned by such Assignment and Assumption, be released
         from its obligations under this Agreement (and, in the case of an
         Assignment and Assumption covering all of the assigning Lender's rights
         and obligations under this Agreement, such Lender shall cease to be a
         party hereto but shall continue to be entitled to the benefits of
         Sections 2.12,2.13,2.14 and 9.5). Any assignment or transfer by a
         Lender of rights or obligations under this Agreement that does not
         comply with this Section 9.6 shall be treated for purposes of this
         Agreement as a sale by such Lender of a participation in such rights
         and obligations in accordance with paragraph (c) of this Section.

                                                                              60


                  (iv) The Paying Agent, acting for this purpose as an agent of
         the Borrower, shall maintain at one of its offices a copy of each
         Assignment and Assumption delivered to it and a register for the
         recordation of the names and addresses of the Lenders, and the
         Commitments of, and principal amount of the Loans owing to, each Lender
         pursuant to the terms hereof from time to time (the "Register"), a copy
         of which shall be made available to the Borrower upon its request. The
         entries in the Register shall be conclusive, and the Borrower, the
         Agents and the Lenders may treat each Person whose name is recorded in
         the Register pursuant to the terms hereof as a Lender hereunder for all
         purposes of this Agreement, notwithstanding notice to the contrary.
         Upon the reasonable request of a Lender, the Paying Agent may provide
         such Lender with a list of the names and Exposures of the other
         Lenders.

                  (v) Upon its receipt of a duly completed Assignment and
         Assumption executed by an assigning Lender and an Assignee, the
         Assignee's completed administrative questionnaire (unless the Assignee
         shall already be a Lender hereunder), the processing and recordation
         fee referred to in paragraph (b)(ii)(B) of this Section and any written
         consent to such assignment required by this Section 9.6, the Paying
         Agent shall accept such Assignment and Assumption and record the
         information contained therein in the Register. No assignment shall be
         effective for purposes of this Agreement unless it has been recorded in
         the Register as provided in this paragraph.

                  (c) (I) Any Lender may, without the consent of the Borrower or
Agent, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement or any other Loan Document; provided that
such agreement may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that (1) requires
the consent of each Lender directly affected thereby pursuant to the proviso to
the second sentence of Section 9.1 and (2) directly affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12 and 2.13 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.7 as though it
were a Lender; provided such Participant shall be subject to Section 9.7(a) as
though it were a Lender.

                  (ii) A Participant shall not be entitled to receive any
         greater payment under Section 2.12 or 2.13 than the applicable Lender
         would have been entitled to receive with respect to the participation
         sold to such Participant, unless the sale of the participation to such
         Participant is made with the Borrower's prior written consent. Any
         Participant that is a Non-US. Lender shall not be entitled to the
         benefits of Section 2.13 unless such Participant complies with Section
         2.13(d).

                  (d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
as a party hereto.

                                                                              61


                  (e) The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (d) of this Section.

                  (f) Notwithstanding the foregoing, any Conduit Lender may
assign any or all of the Loans it may have funded hereunder to its designating
Lender without the consent of the Borrower or any Agent and without regard to
the limitations set forth in Section 9.6(b). The Borrower, each Lender and each
Agent hereby confirm that it will not institute against a Conduit Lender or join
any other Person in instituting against a Conduit Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
state bankruptcy or similar law, for one year and one day after the payment in
full of the latest maturing commercial paper note issued by such Conduit Lender;
provided, however, that each Lender designating any Conduit Lender hereby agrees
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense arising out of its inability to institute such a proceeding
against such Conduit Lender during such period of forbearance.

                  9.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or Lenders, if any Lender (a "Benefited Lender") shall, at any time after the
Loans and other amounts payable hereunder shall immediately become due and
payable pursuant to Section 7, receive any payment of all or part of the
Obligations owing to it, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(e), or otherwise), in a greater proportion
than any such payment to or Collateral received by any other Lender, if any, in
respect of the Obligations owing to such other Lender, such Benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such Collateral, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such Collateral ratably with each of the Lenders; provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.

                  (b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, during the continuance of an
Event of Default and without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
any amount becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise), to set off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Lender agrees promptly to notify the Borrower and
the Co-Administrative Agents after any such setoff and application made by such
Lender; provided that the failure to give such notice shall not affect the
validity of such setoff and application.

                  9.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Co-Administrative Agents.

                  9.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such

                                                                              62


prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

                  9.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agents or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.

                  9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                  9.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:

                  (a) submits for itself and its property in any legal action or
         proceeding relating to this Agreement and the other Loan Documents to
         which it is a party, or for recognition and enforcement of any judgment
         in respect thereof, to the non-exclusive general jurisdiction of the
         courts of the State of New York, the courts of the United States for
         the Southern District of New York and appellate courts from any
         thereof;

                  (b) consents that any such action or proceeding may be brought
         in such courts and waives any objection that it may now or hereafter
         have to the venue of any such action or proceeding in any such court or
         that such action or proceeding was brought in an inconvenient court and
         agrees not to plead or claim the same;

                  (c) agrees that service of process in any such action or
         proceeding may be effected by mailing a copy thereof by registered or
         certified mail (or any substantially similar form of mail), postage
         prepaid, to the Borrower at its address set forth in Section 9.2 or at
         such other address of which the Co-Administrative Agents shall have
         been notified pursuant thereto;

                  (d) agrees that nothing herein shall affect the right to
         effect service of process in any other manner permitted by law or shall
         limit the right to sue in any other jurisdiction; and

                  (e) waives, to the maximum extent not prohibited by law, any
         right it may have to claim or recover in any legal action or proceeding
         referred to in this Section any special, exemplary, punitive or
         consequential damages.

                  9.13 Acknowledgements. The Borrower hereby acknowledges that:

                  (a) it has been advised by counsel in the negotiation,
         execution and delivery of this Agreement and the other Loan Documents;

                  (b) none of the Agents and Lenders has any fiduciary
         relationship with or duty to the Borrower arising out of or in
         connection with this Agreement or any of the other Loan Documents, and
         the relationship between the Agents and Lenders, on one hand, and the
         Borrower, on the other hand, in connection herewith or therewith is
         solely that of debtor and creditor; and

                                                                              63


                  (c) no joint venture is created hereby or by the other Loan
         Documents or otherwise exists by virtue of the transactions
         contemplated hereby among the Lenders or between the Borrower and the
         Lenders.

                  9.14 Releases of Guarantees and Liens. (a) Notwithstanding the
foregoing, and subject, in the case of the Collateral covered by any Mortgage,
to the provisions of such Mortgage, Collateral (but not the proceeds thereof)
shall be automatically released from the Liens of the Security Documents from
time to time as necessary in respect of any Disposition of assets (which assets
constitute items of Collateral) permitted by the Loan Documents (other than a
Film Rights Securitization, which is addressed in clause (b) below) and made to
a Person other than the Borrower and its Subsidiaries and, in the case of a sale
outside the ordinary course of business, other than an Affiliate; provided that
arrangements reasonably satisfactory to the Collateral Agent shall have been
made to apply the Net Proceeds thereof if and as required by the terms of the
Loan Documents. The Collateral Agent shall execute and deliver all release
documents reasonably requested to evidence such release (without the requirement
of consent from any Lender), including if necessary in respect of such disposal
the delivery of any security certificates or instruments held by the Collateral
Agent and any related stock or note powers or other instruments of transfer.

                  (b) Collateral shall be released from the Liens of the
Security Documents to the extent necessary to permit the consummation of any
Film Rights Securitization permitted under the Loan Documents. The Collateral
Agent shall execute and deliver any release, inter-creditor or similar document
reasonably requested of it and reasonably satisfactory to it in connection with
such a Film Rights Securitization (without the requirement of consent from any
Lender).

                  (c) In the event of any Disposition of Equity Interests
directly or indirectly held by the Borrower in any Guarantor which is permitted
by the Loan Documents and made to a Person other than the Borrower, a Subsidiary
or an Affiliate, if such Disposition results in such Guarantor's ceasing to be a
Subsidiary, then such Guarantor shall be automatically released from its
obligations as a Guarantor under the Loan Documents. The Collateral Agent shall
execute and deliver all release documents reasonably requested to evidence such
release (without the requirement of consent from any Lender).

                  (d) In the event of a Disposition of Collateral outside the
ordinary course of business to an Affiliate in a transaction expressly permitted
hereunder, the Borrower shall be entitled to a release of the Lien of the
Security Documents on such Collateral (and, in the case of such a Disposition of
a Guarantor, to a release of its Secured Guarantee) upon presentation of
evidence reasonably satisfactory to the Collateral Agent that such transaction
is expressly permitted hereunder. The Collateral Agent shall execute and deliver
all release documents reasonably requested to evidence such release (without the
requirement of consent from any Lender).

                  (e) If and to the extent that (i) a Cash Collateral Event
occurs (or is deemed to occur) by reason of a Disposition of assets which
constitute Subject Assets solely because the requisite pro forma Cash Leverage
Ratio specified in the definition of Subject Assets was not achieved at the time
of such Disposition (or was achieved only after giving effect to a related
collateralization of the Loans), but (ii) such Disposition would not have
constituted a Disposition of Subject Assets had such Disposition been
consummated as of the date of each of the then two most recent fiscal quarters
of the Borrower (determined after giving effect to the release of cash
collateral contemplated below), the Borrower shall be entitled to release of the
amount of cash collateral deposited in connection with such Disposition (or to
release of the appropriate portion thereof which permits the condition specified
above to be satisfied). For purposes of Section 6.6, the cash collateral so
released shall be deemed Net Proceeds of a Disposition of assets which are not
Subject Assets consummated on the date of such release.

                                                                              64


                  (f) The Collateral Agent may conclusively rely upon a
certificate of the Borrower to the effect that any Disposition or Film Rights
Securitization is permitted by the Loan Documents.

                  9.15 Confidentiality. Each Agent and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party,
any Agent or any Lender pursuant to or in connection with this Agreement that is
designated by the provider thereof as confidential; provided that nothing herein
shall prevent the Agent or any Lender from disclosing any such information (a)
to the Agent, any other Lender or any affiliate thereof, (b) subject to an
agreement to comply with the provisions of this Section, to any actual or
prospective Transferee or any direct or indirect counterparty to any Swap
Agreement (or any professional advisor to such counterparty), (c) to its
employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, in each case on a confidential
basis, (d) upon the request or demand of any Governmental Authority, (e) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (f) if necessary to do
so in connection with any litigation or similar proceeding, (g) that has been
publicly disclosed, (h) to the National Association of Insurance Commissioners
or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender or (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document;
provided further that effective from the date of commencement of discussions
concerning the transaction contemplated by this Agreement, each of the Loan
Parties, each of the Lenders and each of the Agents and each of their employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
contemplated by this Agreement, and all materials of any kind, including
opinions or other tax analyses, that have been provided to it by any other party
relating to such tax treatment and tax structure.

                  9.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

                  9.17 Delivery of Addenda. Each Lender listed in Schedule 1.1A
shall become a party to this Agreement by delivering to the Co-Administrative
Agents a Lender Addendum duly executed by such Lender.

                  9.18 Non-Recourse to Partners. No liability, right, remedy or
claim shall arise, be asserted or be enforceable at any time as against any
parties to the Partnership Agreement, or any of their subsidiaries or Affiliates
or any of the respective officers, directors, employees, representatives or
agents of any of the foregoing, other than the Borrower and the other Loan
Parties, by or on behalf of any Agent or any Lender in respect of the Loans,
this Agreement or any other Loan Document, all such liabilities, rights,
remedies and claims, if any, being expressly waived.

                  9.19 Limitation on Individual Enforcement. Each Lender agrees
that it shall not take or institute any action or proceeding, judicial or
otherwise, for any right or remedy against the Borrower or any other Loan Party
under the Loan Documents (including the exercise of any right of setoff, rights
on account of any bankers lien or similar claim or other rights of self-help),
or institute any action or proceeding, or otherwise commence any remedial
procedure, with respect to any Collateral, without the prior written consent of
the Co-Administrative Agents and the Required Lenders. The provisions of this
Section (i) are for the sole benefit of the Lenders and shall not afford any
right to, or constitute a defense available to, any Loan Party and (ii) shall
not extend to any individual Lender enforcement (or other) rights not otherwise
available to an individual Lender under the Loan Documents.

                                                                              65


                  9.20 Restatement of Existing Facility. The Loans are intended
as a renewal and extension of the outstanding principal amount under the
Existing Facility to the extent thereof. The parties hereto (including the
Co-Administrative Agents, in their respective capacities as lenders and
administrative agent under the Existing Facility) agree that, on the Closing
Date and subject to satisfaction of the conditions specified in Section 3.1
hereof, (i) the Co-Administrative Agents, in their respective capacities as
lenders under the Existing Facility, hereby assign to the Lenders all of their
right, title and interest under the Existing Facility, (ii) the proceeds of the
Loans shall be applied on the Closing Date to the payment of all amounts owed by
the Borrower under the Existing Facility, (iii) the Indebtedness thereunder
shall be deemed to be renewed hereunder with the effect that such Indebtedness
shall be deemed not to have been repaid, but shall remain outstanding hereunder
as Loans and (iv) the Existing Facility shall be amended and restated in its
entirety to read as set forth herein.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                         VIVENDI UNIVERSAL ENTERTAINMENT LLLP

                                         By: /s/ Karen Randall
                                             -----------------------------------
                                             Name:  Karen Randall
                                             Title: Executive Vice President and
                                                    General Counsel

                                         CO-ADMINISTRATIVE AGENTS:

                                         BANK OF AMERICA, N.A.


                                         By: /s/ Thomas J. Kane
                                             -----------------------------------
                                             Name:  Thomas J. Kane
                                             Title: Principal




                                         JPMORGAN CHASE BANK

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:



                                 LOAN AGREEMENT

                                         CO-ADMINISTRATIVE AGENTS:

                                         BANK OF AMERICA, N.A.


                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:




                                         JPMORGAN CHASE BANK

                                         By: /s/ Bruce Borden
                                             -----------------------------------
                                             Name:  BRUCE BORDEN
                                             Title: VICE PRESIDENT





                                 LOAN AGREEMENT


                                         SYNDICATION AGENT:

                                         BARCLAYS BANK PLC

                                         By: /s/ Nicholas A. Bell
                                             -----------------------------------
                                             Name:  NICHOLAS A. BELL
                                             Title: DIRECTOR
                                                    LOAN TRANSACTION MANAGEMENT





                                 LOAN AGREEMENT



                                         COLLATERAL AGENT:

                                         JPMORGAN CHASE BANK

                                         By: /s/ Bruce Borden
                                             -----------------------------------
                                             Name:  BRUCE BORDEN
                                             Title: VICE PRESIDENT







                                 LOAN AGREEMENT


                                         PAYING AGENT:

                                         JPMORGAN CHASE BANK

                                         By: /s/ Bruce Borden
                                             -----------------------------------
                                             Name:  BRUCE BORDEN
                                             Title: VICE PRESIDENT






                                 LOAN AGREEMENT

EX-4.10

                                                                    Exhibit 4.10
CHANCE

                                                                  EXECUTION COPY

                               EUR 1,300,000,000

                               FACILITY AGREEMENT
                             dated 06 December 2002

                                      for

                SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A.
                                  as Borrower

                                  arranged by

                                  BNP PARIBAS
                             CDC FINANCE - CDC IXIS
                            CREDIT AGRICOLE INDOSUEZ
                                CREDIT LYONNAIS
                    CREDIT SUISSE FIRST BOSTON, PARIS BRANCH
                               DEXIA CREDIT LOCAL
                           NATEXIS BANQUES POPULAIRES
         COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. (RABOBANK
                          INTERNATIONAL, PARIS BRANCH)
                         THE ROYAL BANK OF SCOTLAND PLC
                             SG INVESTMENT BANKING
                      SUMITOMO MITSUI BANKING CORPORATION
                            WEST LB AG, PARIS BRANCH

                                      with

                                CREDIT LYONNAIS
                                acting as Agent

                                      and

                         THE ROYAL BANK OF SCOTLAND PLC
                           acting as Security Trustee

                       _________________________________



                               FACILITY AGREEMENT


                       _________________________________

                                    CONTENTS



CLAUSE                                                                        PAGE
                                                                           

1.    Definitions And Interpretation  .....................................     1

2.    The Facility ........................................................    14

3.    Purpose .............................................................    14

4.    Conditions Of Utilisation ...........................................    15

5.    Utilisation .........................................................    16

6.    Repayment ...........................................................    17

7.    Prepayment And Cancellation .........................................    18

8.    Interest ............................................................    24

9.    Interest Periods ....................................................    25

10.   Changes To The Calculation Of Interest ..............................    25

11.   Fees ................................................................    26

12.   Tax Gross Up And Indemnities ........................................    27

13.   Increased Costs .....................................................    29

14.   Other Indemnities ...................................................    30

15.   Mitigation By The Lenders ...........................................    32

16.   Costs And Expenses ..................................................    32

17.   Representations .....................................................    34

18.   Information Undertakings ............................................    37

19.   Financial Covenants .................................................    39

20.   General Undertakings ................................................    45

21.   Events Of Default ...................................................    55

22.   Changes To The Lenders ..............................................    60

23.   Changes To The Parent And The Borrower ..............................    63

24.   The Agent, The Security Trustee and The Arranger ....................    64

25.   Conduct Of Business By The Finance Parties ..........................    76

26.   Sharing Among The Finance Parties ...................................    76

27.   Payment Mechanics ...................................................    79

28.   Set-Off .............................................................    81

29.   Application Of Proceeds .............................................    81

30.   Notices .............................................................    83

31.   Calculations And Certificates .......................................    85





                                                                           

32.   Partial Invalidity ..................................................    85

33.   Remedies And Waivers ................................................    85

34.   Amendments And Waivers ..............................................    85

35.   Counterparts ........................................................    86

36.   Governing Law .......................................................    87

37.   Enforcement .........................................................    87




THIS AGREEMENT is dated 06 December 2002 and made between:

(1)  SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A. (the "Borrower");

(2)  VIVENDI UNIVERSAL S.A. (the "Parent");

(3)  BNP PARIBAS, CDC FINANCE - CDC IXIS, CREDIT AGRICOLE INDOSUEZ, CRED
     LYONNAIS, CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA CREDIT LOCAL,
     NATEXIS BANQUES POPULAIRES, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
     B.A., (RABOBANK INTERNATIONAL, PARIS BRANCH), THE ROYAL BANK OF SCOTLAND
     PLC, SG INVESTMENT BANKING, SUMITOMO MITSUI BANKING CORPORATION and WEST LB
     AG, PARIS BRANCH (whether acting individually or together the "Arranger");

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

(5)  CREDIT LYONNAIS as agent of the other Finance Parties (the "Agent"); and

(6)  THE ROYAL BANK OF SCOTLAND PLC as security trustee for the Secured Parties
     (the "Security Trustee").

IT IS AGREED as follows:

                                   SECTION 1
                                 INTERPRETATION

1.   DEFINITIONS AND INTERPRETATION

1.1  Definitions
     in this Agreement:

     "Acquisition" means the acquisition by the Borrower of the Borrower Cegetel
     Shares on the terms of the Acquisition Agreement.

     "Acquisition Agreement" means the share purchase agreement relating to the
     sale and purchase of the Borrower Cegetel Shares to be made between the
     Borrower and the Vender in the form already existing between the Vendor an
     Vodafone AG.

     "Additional Cost Rate" has the meaning given to it in Schedule 9
     (Mandatory Cost Formalae).

     "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.

     "AOL Swap" means the transaction pursuant to which, under the terms and
     conditions of the "Convention de Sous-Participation en Risque et en
     Tresorerie" dated 31 December 2001 between the Parent and Cegetel and the
     "Convention de Sous-

                                      -1-

Participation en Risque es en Tresorerie" dated 31 December 2001 between the
Parent and SNIC (a subsidiary of Cegetel subsequently merged with
Cegetel)(together the "Mirror TRS"), Cegetel sub-participates, up to 66.6667%,
to a total return share swap transaction dated 6 August 2001 entered into
between the Parent and LineInvest Limited and based on 725,000 preferred E
shares issued by AOL Europe (the "Parent TRS") or, as the case may be, following
the restructuring of the Parent TRS, the total return share swap transaction to
be entered into directly between Cegetel and LineInvest Limited in replacement
of the Mirror TRS and based on 483,334 preferred E shares issued by AOL Europe.

"Authorisation" means an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation or registration.

"Availability Period" means the period from and including the date of this
Agreement to and including the earlier of (i) the Utilisation Date and (ii) 30
April 2003.

"Borrower Cegetel Shares" means the shares representing 26% of the ordinary
issued share capital of Cegetel which, on the date of this Agreement, are
beneficially owned, directly or indirectly, by the Vendor.

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

(a)  the interest which a Lender should have received for the period from the
     date of receipt of all or any part of its participation in the Loan or an
     Unpaid Sum to the last day of the current Interest Period in respect of the
     Loan or that 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 European 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.

"Business Day" means a day (other than a Saturday or Sunday) on which banks are
open for general business in London and Paris and any TARGET day.

"Business Plan" means the three year 2002-2004 business plan including profit
and loss account and cashflow projections in relation to the Cegetel Group
presented to the Cegetel board of directors on 13 December 2001, and updated and
extended by the Cegetel Group financial department in September 2002 so as to
include updated projections for the 2002-2004 medium-term period and long-term
projections for the year 2005-2009.

"Cegetel" means Cegetel Groupe S.A., a company incorporated under the laws of
France with registered number 403 106 537 (RCS Paris).

                                      -2-



"Cegetel Group" means Cegetel and its Subsidiaries.

"Cegetel Shareholders Agreement" means the shareholders agreement dated 14 May
1997, as subsequently amended, and made between the Parent, Compagnie
Transatlantique de Telecommunications, British Telecommunications plc, Vodafone
AG, SBC International, Inc., SBC International - Societe de Radiotelephone
Cellulaire, Inc. and Cegetel.

"Closing Date" means the date on which Completion occurs.

"Commitment" means:

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

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

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

"Completion" means the completion of the Acquisition in accordance with clause 7
of the Acquisition Agreement.

"Compliance Certificate" means a certificate substantially in the form set out
in Schedule 5 (Form of Compliance Certificate).

"Confidentiality Undertaking" means a confidentiality undertaking substantially
in a form agreed between the Borrower and the Agent.

"Credit Rating" means, in relation to a corporation, its long-term credit rating
from S&P or Moody's.

"Default" means an Event of Default or any event or circumstance specified in
Clause 21 (Events of Default) which would (with the expiry of a grace period,
the giving of notice, the making of any determination under the Finance
Documents or any combination of any of the foregoing, in each case, under Clause
21 (Events of Default)) be an Event of Default.

"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.

"EURIBOR" means, in the relation to the Loan:

(a)  the applicable Screen Rate; or

(b)  (if no Screen Rate is available for the Interest Period of the Loan) the
     arithmetic mean of the rates (rounded upwards to four decimal places) as

                                      -3-

     supplied to the Agent at its request 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 Loan.

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

"Existing Facilities" means:

(a)  the EUR 3,000,000,000 syndicated credit facility made available to the
     Parent under the terms of a credit agreement dated 15 March 2002;

(b)  the EUR 850,000,000 syndicated credit facility made available to the Parent
     under the terms of a credit agreement dated 2 March 1999;

(c)  the EUR 1,000,000,000 syndicated credit facility made available to the
     Parent under the terms of a credit agreement dated 10 July 2002;

(d)  the New Facility;

(e)  the First Demand Guarantee granted by the Parent to Credit Lyonnais
     Securities in connection with the UMO preferred shares for an amount of
     L136,000,000 dated 14 February 2002;

(f)  the ISDA Master Agreement and Confirmation dated 30 May 2002 entered into
     between the Parent and Deutsche Bank for the Sale and Repurchase
     Transaction on Vivendi Environnement ordinary shares;

(g)  the EUR 300,000,0000 overdraft facility made available by CDC IXIS in
     favour of the Parent dated 12 October 2001 as the same may be refinanced on
     terms no more restrictive than the facility referred to in paragraph (d)
     above;

(h)  the Total Return Swap under ISDA Master Agreement and confirmation entered
     into between the Parent and LineInvest Limited in connection with the AOL
     preferred shares dated 6 August 2001;

(i)  the EUR 215,000,000 facility made available by Societe Generale in favour
     of the Parent dated 6 June 2002;

(j)  the EUR 275,000,000 facility made available by Societe Generale in favour
     of the Parent dated 28 June 2002;

and any extension, restructuring or refinancing thereof where the terms thereof
are no more restrictive in relation to the matters referred to in Clause 20.17
(b) under the relevant facility which is being extended, restructured or
refinanced.

                                      -4-








"Extension Option" means the option of the Borrower to extend the maturity of
the Facility set out in Clause 2.4 (Extension of Facility), the extension being
a prorogation by the Lenders.

"Facility" means the term loan facility made available under this Agreement as
described in Clause 2 (The Facility).

"Facility Office" means the office or offices notified by a Lender to the Agent
in writing on or before the date it becomes a Lender (or, following that date,
by not less than five Business Days' written notice) as the office or offices
through which it will perform its obligations under this Agreement.

"Fee Letter" means any letter or letters dated on or about the date of this
Agreement between the Arranger and the Borrower (or the Agent and the Borrower
or the Security Trustee and the Borrower) setting out any of the fees referred
to in Clause 11 (Fees).

"Final Maturity Date" means 30 June 2004 or, if the Borrower has exercised the
Extension Option, 30 June 2010.

"Finance Document" means this Agreement, any Fee Letter, any Transaction
Security Document, the Hedging Agreements and any other document designated as
such by the Agent and the Borrower.

"Finance Party" means the Agent, the Arranger, the Security Trustee or a Lender.

"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 by
     a bill discounting or factoring credit facility;

(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 or other agreement which would, in accordance with 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);



                                      -5-


(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;

(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;

(k)   any arrangement pursuant to which any asset sold or otherwise disposed of
      by that person may be re-acquired by a member of the Group (whether
      following the exercise of an option or otherwise); and

(l)   (without double counting) the amount of any liability in respect of any
      guarantee or indemnity or similar assurance against financial loss for
      any of the items referred to in paragraphs (a) to (k) above.

"GAAP" means generally accepted accounting principles in France.

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

"Hedging Agreement" means each agreement in agreed form entered into by the
Borrower and a Lender for the purpose of hedging interest rate liabilities in
relation to the Facility in accordance with the letter between the Borrower and
the Agent relating to hedging and delivered to the Agent under Clause 4.1
(Initial Conditions Precedent).

"Holding Account" means an account:

(a)   held in France by the Borrower with the Agent or Security Trustee;

(b)   identified in a letter between the Borrower and the Agent as a Holding
      Account (as the same may be redesignated, substituted or replaced from
      time to time); and

(c)   subject to Security in favour of the Security Trustee which Security is
      in form and substance satisfactory to the Agent and Security Trustee.

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

"Information Package" means the Business Plan and the documents listed in
Schedule 7 (Information Package).

"Interest Period" means, in relation to the Loan, each period determined in
accordance with Clause 9 (Interest Periods) and in relation to an Unpaid Sum,
each period determined in accordance with Clause 8.3 (Default Interest).


                                     - 6 -


"Legal Reservations" means:

(a)   the principle that equitable remedies may be granted or refused at the
      discretion of a court, the limitation of enforcement by laws relating to
      insolvency, reorganisation and other laws generally affecting the rights
      of creditors;

(b)   the time barring of claims under the Limitation Acts, the possibility
      that an undertaking to assume liability for or indemnify a person against
      non-payment of the UK stamp duty may be void and defences of set-off or
      counterclaim; and

(c)   any general principles which are set out in the qualifications as to
      matters of law in the legal opinions delivered to the Agent pursuant to
      Clause 4.1 (Initial Conditions Precedent).

"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 22 (Changes to the Lenders),

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

"Loan" means the 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 is no Loan then outstanding, a Lender or Lenders whose
      Commitments aggregate more than 66 2/3% of the Total Commitments (or, if
      the Total Commitments have been reduced to zero, aggregated more than 66
      2/3% of the Total Commitments immediately prior to the reduction); or

(b)   at any other time, a Lender or Lenders whose participations aggregate
      more than 66 2/3% of the Loan then outstanding.

"Mandatory Cost" means the percentage rate per annum calculated by the Agent in
accordance with Schedule 9 (Mandatory Cost Formulae).

"Margin" means 4.00 per cent. per annum provided that with effect from the date
on which the Parent grants Security in favour of the Security Trustee over its
rights to receive dividends in respect of all of the shares it owns directly or
indirectly (other than through the Borrower) in the issued share capital of
Cegetel, the Margin will be reduced to 2.75 per cent. per annum where the ratio
of (i) 69.999 per cent. of the aggregate cash dividends declared by Cegetel in
the period of 12 months ending on the 30th June immediately following the date
such Security is granted to (ii) Borrower Total


                                     - 7 -


Funding Costs for such 12 month period is at least 2.75:1 provided that in the
event that such Security is released pursuant to the terms of this Agreement,
the Margin shall immediately revert to 4.00 per cent. per annum.

For the purpose of determining the Margin, Borrower Total Funding Costs shall be
determined in accordance with Clause 19.1 (Financial definitions) and Borrower
Total Funding Costs shall be calculated on the basis of a Margin of 4.00 per
cent. per annum.

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

(a)  the business, assets, condition (financial or otherwise); operations or
     prospects of the Group (taken as a whole);

(b)  the ability of the Borrower to perform any of its payment obligations or
     the ability of the Borrower to perform any other of its material
     obligations under any of the Finance Documents; or

(c)  the validity or enforceability of any Finance Document or the effectiveness
     of any Transaction Security purported to be created pursuant to any
     Transaction Security Document or the rights and remedies of any Finance
     Party.

"Material Company" means, at any time, the Borrower, Cegetel, SFR or any other
Subsidiary of Cegetel which:

(a)  has EBITDA (calculated on the same basis as Cegetel EBITDA, as defined in
     Clause 19 (Financial covenants)) representing 5 per cent. or more of
     Cegetel EBITDA; and/or

(b)  has gross assets representing 5 per cent. or more of the gross assets of
     the Cegetel Group; and/or

(c)  has turnover representing 5 per cent. or more of consolidated turnover of
     the Cegetel Group,

in each case calculated on a consolidated basis.

Compliance with the conditions set out in paragraphs (a) to (c) shall be
determined by reference to the most recent Compliance Certificate supplied by
the Borrower.

"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;

                                      -8-



(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.

"Moody's" means Moody's Investors Services, Inc.

"New Facility" means the EUR1,000,000,000 syndicated credit facility made
available to Vivendi Communications North America Inc. and Vivendi Universal
Holding I Corp. on 26 November 2002.

"Original Financial Statements" means:

(a)  in relation to the Parent, its consolidated financial statements for its
     financial year ended 31 December 2001; and

(b)  in relation to Cegetel, its consolidated audited financial statements for
     its financial year ended 31 December 2001.


"Parent Cegetel Shares" means all of the shares in the share capital of Cegetel
beneficially owned by the Parent and its Subsidiaries at the date of this
Agreement.

"Participating Member State" means any member state of the European community
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.

"Proceeds" means all Subscription Proceeds, all Distribution Proceeds and all
TD Distribution Proceeds (each as defined in Clause 7.3 (Mandatory Prepayment
from Proceeds)).

"Quotation Day"  means, in relation to any period for which an interest rate is
to be determined, two TARGET Days before the first day of that period unless
market practice differs in the European interbank market, in which case the
Quotation Day will be determined by the Agent in accordance with market
practice in the European interbank market (and if quotations would normally be
given by leading banks in the European interbank market on more than one day,
the Quotation Day will be the last of those days).

"Reference Banks" means the principal office in Paris or London of Credit
Agricole Indosuez, Credit Lyonnais, CDC Ixis and The Royal Bank of Scotland plc
or such other banks as may be appointed by the Agent in consultation with the
Borrower.

                                      -9-


"Repayment Date" means each of the dates specified in Clause 6.1 (Repayment of
Loan) as Repayment Dates.

"Repayment Instalment" means each instalment for repayment of the Loan referred
to in Clause 6.1 (Repayment of Loan).

"Repeating Representations" means each of the representations set out in
Clauses 17.1 (Status) to paragraph (a) of Clause 17.5 (Validity and
admissibility in evidence).

"Screen Rate" means 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 Agent may specify another page or service
displaying the appropriate rate after consultation with the Borrower and the
Lenders.

"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.

"S&P" means Standard and Poors, a division of the McGraw Hill group of
companies.

"SFR" means Societe Francaise du Radiotelephone (SFR) S.A., a company
incorporated under the laws of France with registered number 343 960 720.

"Specified Time" means a time determined in accordance with Schedule 6
(Timetables).

"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

(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.

"Tag Along and Drag Along Rights" means the rights referred to in paragraph
6(g) of Schedule 2.

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


                                      -10-


"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).

"TD" means Telecom Developpement SA France.

"Total Commitments" means the aggregate of the Commitments, being
EUR 1,300,000,000 at the date of this Agreement.

"Transaction Documents" means the Finance Documents, the Acquisition Agreement
and the document evidencing the Tag Along and Drag Along Rights.

"Transaction Security" means the Security created or expressed to be created in
favour of the Security Trustee pursuant to the Transaction Security Documents.

"Transaction Security Documents" means each of the following documents:

(a)   the charges, pledges and assignments and other security documents in form
      and substance acceptable to the Security Trustee and the Agent and
      identified in and delivered to the Agent under Paragraph 4 of Schedule 2
      (Conditions Precedent); and

(b)   any other document entered into by the Parent or any member of the Group
      creating or expressed to create any Security over all or any part of its
      assets in respect of the obligations of the Borrower under any of the
      Finance Documents.

"Transfer Certificate" means a certificate substantially in one of the forms
set out in Schedule 4 (Form of Transfer Certificates) or any other form agreed
between the Agent and the Borrower.

"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 Agent executes the Transfer Certificate.

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

"Utilisation" means the utilisation of the Facility.

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

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


                                      -11-

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

     "Vendor" means British Telecommunications plc and Cegerel Holdings I B V.

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

          (i)       the "Agent", the "Arranger", the "Security Trustee", any
                    "Finance Party", any "Lender" or any "Party" shall be
                    construed so as to include its successors in title,
                    permitted assigns and permitted transferees and, in the case
                    of the Security Trustee, any person for the time being
                    appointed as Security Trustee or Security Trustee in
                    accordance with this Agreement;

          (ii)      a document in "agreed form" is a document which is:

                    (A)  initialled by or on behalf of the Borrower and the
                         Agent or Arranger; or

                    (B)  a document executed on or before the Closing Date by
                         the Borrower and the Arranger or Agent.

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

          (iv)      the "European interbank market" means the interbank market
                    for euro operating in Participating Member States;

          (v)       a "Finance Document" or a "Transaction Document" or any
                    other agreement or instrument is a reference to that Finance
                    Document or Transaction Document or other agreement or
                    instrument as amended or novated (however fundamentally);

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

          (vii)     a "participation" of a Lender in the Loan means the amount
                    of such Loan which such Lender has made or is to make
                    available and after the Utilisation Date that part of the
                    Loan which is owed to such Lender;

          (viii)    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;

          (ix)      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,

                                      -12-



                 department or regulatory, self-regulatory or other authority
                    or organisation;

               (x)   a "financial year" of a company is a reference to each
                     period in respect of which it is required by law to produce
                     annual financial statements;

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

               (xii) a time of day is a reference to Paris 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 (other than an Event of Default) is "continuing" if it
               has not been remedied or waived and an Event of Default is
               "continuing" if it has not been waived.

1.3      Currency Symbols and Definitions

         "EUR" and "euro" means the single currency unit of the Participating
         Member States.

1.4      Third party rights

         (a)   Unless expressly provided to the contrary in a Finance Document,
               a person who is not a Party has no right under the Contracts
               (Rights of Third Parties) Act 1999 (the "Third Parties Act") to
               enforce or to enjoy the benefit of any term of any Finance
               Document.

         (b)   Notwithstanding any term of any Finance Document, the consent of
               any person who is not a Party is not required to rescind or vary
               any Finance Document at any time.

                                      -13-



                                   SECTION 2
                                  THE FACILITY

2.   THE FACILITY

2.1  The Facility

     Subject to the terms of this Agreement, the Lenders make available to the
     Borrower a euro term 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 the
          Borrower 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.

2.3  Taux Effectif Global (effective overall rate)

     For the purposes of Articles L313-1 et seq., R 313-1 and R313-2 of the Code
     de la Consonunation, the Parties acknowledge that by virtue of certain
     characteristics of the Facility (and in particular the variable interest
     rate applicable to Loan) the taux effectif global cannot be calculated at
     the date of this Agreement. However, the Borrower acknowledges that it has
     received from the Agent a letter containing an indicative calculation of
     the taux effectif global, based on figured examples calculated on
     assumptions as to the taux de periode and duree de periode set out in the
     letter. The Parties acknowledge that that letter forms part of this
     Agreement.

2.4  Extension of Facility

     (a)  The Borrower shall have the option to request an extension of the
          maturity date of the Facility to 30 June 2010, by serving written
          notice (the "Extension Notice") on the Agent at any time prior to 1
          June 2004. Any such extension shall be effective as from the Agent's
          receipt of the Extension Notice.

     (b)  Promptly upon receipt of the same, the Agent shall forward a copy of
          the Extension Notice to the Lenders.

3.   PURPOSE

3.1  Purpose

     The Borrower shall apply forthwith all amounts borrowed by it under the
     Facility towards payment to the Vendor of the purchase price for the
     Borrower Cegetel Shares under the Acquisition Agreement.

                                      -14-


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
     The Lenders shall only be obliged to comply with Clause 5.4 (Lenders'
     participation) in relation to the Utilisation if on or before 30 April 2003
     or, if earlier, the Utilisation Date for that Utilisation the Agent has
     received all of the documents and other evidence listed in Schedule 2
     (Conditions precedent) in form and substance satisfactory to the Agent. The
     Agent shall notify the Borrower and the Lenders promptly upon being so
     satisfied.

4.2  Further conditions precedent

     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:

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

     (b)  all the representations and warranties in Clause 17 (Representations)
          are true in all respects.

                                      -15-






                                   SECTION 3
                                  UTILISATION

5.   UTILISATION

5.1  Delivery of Utilisation Request

     The Borrower may utilise the Facility by delivery to the Agent of a duly
     completed Utilisation Request not later than the Specified Time.

5.2  Completion of a Utilisation Request

     The Utilisation Request is irrevocable and will not be regarded as having
     been duly completed unless:

     (a)  the proposed Utilisation Date is a Business Day within the
          Availability Period which is the Closing Date; or

     (b)  the proposed Interest Period complies with Clause 9 (Interest
          Periods).

5.3  Currency and amount

     The Loan will be made in euro in one amount of EUR 1,300,000,000.

5.4  Lenders' participation

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

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

     (c)  The Agent shall notify each Lender of the amount of the Loan and the
          amount of its participation in the Loan, in each case by the Specified
          Time.



                                      -16-


                                   SECTION 4
                     REPAYMENT, PREPAYMENT AND CANCELLATION

6.   REPAYMENT

6.1  Repayment of Loan

     (a)  Subject to the exercise of the Extension Option, the Borrower shall
          repay the Loan in instalments by repaying on each Repayment Date the
          amount set out below opposite such Repayment Date:

          Repayment Date           Repayment Instalment (euro)

          30 June 2003             105,000,000

          Final Maturity Date      1,195,000,000

     (b)  If the Extension Option is exercised by the Borrower, the Borrower
          shall repay the Loan in instalments by repaying on each Repayment Date
          the amount set out below opposite such Repayment Date:

          Repayment Date           Repayment Instalment (euro)

          30 June 2003             105,000,000

          30 June 2004              90,000,000

          30 June 2005             145,000,000

          30 June 2006             150,000,000

          30 June 2007             160,000,000

          30 June 2008             195,000,000

          30 June 2009             225,000,000

          Final Maturity Date      230,000,000

     (c)  The Borrower may not reborrow any part of the Facility which is
          repaid.

6.2  Effect of Prepayment and Cancellation of Scheduled Repayments

     (a)  If the Borrower cancels the whole or any part of the Commitments in
          accordance with Clause 7.6 (Right of repayment and cancellation in
          relation to a single Lender) or if the Commitment of any Lender is
          reduced under Clause 7.1 (Illegality) then the amount of the Repayment
          Instalment for each Repayment Date falling after that cancellation
          will reduce pro rata by the amount cancelled.

                                      -17-


          (b)  If the Borrower cancels the whole or any part of the Commitments
               in accordance with Clause 7.4 (Voluntary cancellation) then the
               amount of the Repayment Instalment for each Repayment Date
               falling after that cancellation will reduce in inverse
               chronological order by the amount cancelled.

          (c)  If any part of the Loan is prepaid in accordance with Clause 7.6
               (Right of repayment and cancellation in relation to a single
               Lender) or Clause 7.1 (Illegality) then the amount of the
               Repayment Instalment for each Repayment Date falling after that
               prepayment will reduce pro rata by the amount of the Loan
               prepaid.

          (d)  If any part of the Loan is prepaid in accordance with Clause 7.2
               (Mandatory Prepayment in Full), Clause 7.3 (Mandatory prepayment
               from Proceeds) or Clause 7.5 (Voluntary prepayment) then the
               amount of the Repayment Instalment for each Repayment Date
               falling after that prepayment will reduce in the case of
               prepayments made pursuant to Clause 7.3 (Mandatory Prepayment
               from Proceeds), pro-rata, but otherwise in inverse chronological
               order, by the amount of the Loan prepaid.

7.        PREPAYMENT AND CANCELLATION

7.1       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 the Loan:

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

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

          (c)  the Borrower shall repay that Lender's participation in the Loan
               together with accrued interest on and all other amounts owing to
               that Lender under the Financing Documents on the last day of the
               Interest Period for the Loan occurring after the Agent has
               notified the Borrower or, if earlier, the date specified by the
               Lender in the notice delivered to the Agent such date not to be
               earlier than 30 Business Days following the date of the
               notification to the Borrower by the Agent.

7.2       MANDATORY PREPAYMENT IN FULL

7.2.1     If:

          (a)  the Parent ceases to own the entire issued share capital of the
               Borrower;

          (b)  the Borrower disposes of all or any of the Borrower Cegetel
               Shares;

          (c)  the Parent and/or any of its Subsidiaries disposes of all or any
               of the Parent Cegetel Shares, other than pursuant to Clause
               20.18(b)(i) or (ii), or the Parent

                                      -18-



               and/or any of its Subsidiaries creates or permits to subsist any
               Security or Quasi-Security (as defined in Clause 20.8 (Negative
               Pledge)) over all or any of the Parent Cegetel Shares;

          (d)  Cegetel disposes of all or any of the shares in the issued share
               capital of SFR or any other of its Subsidiaries which is a
               Material Company or Cegetel, SFR or any other such Subsidiary
               disposes of all or substantially all of its business and assets
               (in any such event, other than to another member of the Cegetel
               Group but in which case, this paragraph (d) shall apply to any
               subsequent disposal by the relevant acquiror of the relevant
               shares, business or assets);

          (e)  the Parent and/or the Borrower is in breach of any of its
               obligations under Clause 19.2 (Financial condition) and the Agent
               (acting on behalf of the Majority Lenders) so requires by notice
               in writing to that effect served on the Borrower;

          (f)  Cegetel does not declare a distribution by 15 June of any
               calendar year in respect of which the Borrower's entitlement is
               in excess of the aggregate of:

               (i)  the Repayment Instalment payable on the next succeeding
                    Repayment Date pursuant to Clause 6.1 (Repayment of Loan);
                    and

               (ii) the interest payable on such date pursuant to Clause 8.2
                    (Payment of interest); or

          (g)  Cegetel does not pay in full any distribution declared by it by
               30 June in the calendar year in which such distribution is
               declared;

          then, subject to Clauses 7.2.2 and 7.2.3 below, the Facility will on
          the Relevant Date (as defined in Clause 7.2.2 below) be cancelled in
          full and the Loan shall be prepaid in full together with interest
          thereon and all other amounts accrued and owing under the Finance
          Documents.

7.2.2     For the purposes of Clause 7.2.1 above, "Relevant Date" means:

          (1)  in the case of an event referred to in paragraphs (a) to (d)
               inclusive of Clause 7.2.1 above, the date such event occurs; and

          (ii) in the case of an event referred to in paragraphs (e) to (g)
               inclusive of Clause 7.2.1 above, the date falling 3 months after
               the date such event occurs.

7.2.3     If an event occurs under paragraphs (f) or (g) of Clause 7.2.1 above,
          the Facility shall not be cancelled and the Borrower will be under no
          obligation in respect of such event to make payments under Clause
          7.2.1 if, by the Relevant Date, the Repayment Instalment due on 30
          June in the relevant calendar year and all interest due on the
          Facility on such date have been paid from the net cash proceeds of the
          subscription for any new equity share capital issued by the Borrower
          or from a loan granted to the Borrower by the Parent which is
          subordinated to the Facility on terms satisfactory to the Lenders.

                                      -19-


7.3  Mandatory Prepayment from Proceeds
     (a)  For the purposes of Clause 7.2 (Mandatory Prepayment in Full), this
          Clause 7.3 and Clause 7.7 (Holding Account):

          "Subscription Proceeds" means the net cash proceeds of the
          subscription for any new equity share capital issued by the Borrower
          but not any proceeds which are to be applied in:

          (A)  repayment of the Facility (including, for the avoidance of doubt,
               pursuant to Clause 7.1 (Illegality) or 7.6 (Right of Repayment
               and cancellation in relation to a single Lender));

          (B)  payment of interest on the Facility (including, for the
               avoidance of doubt, Increased Costs pursuant to Clause 13
               (Increased Costs));

          (C)  payment of administrative expenses incurred by the Borrower to
               the extent not funded with Distribution Proceeds; or

          (D)  payment of any amount due under the Hedging Agreement.

          "Distribution Proceeds" means the net proceeds of all dividends or
          other distribution (or interest on any unpaid dividend or
          distribution) on or in respect of the Borrower Cegetel Shares (not
          being TD Distribution Proceeds) to the extent that, at the time such
          distribution is made, such distribution exceeds the aggregate of:

          (A)  the interest that has accrued and will accrue on the Loan
               pursuant to Clause 8 (Interest) during the then current Interest
               Period;

          (B)  the Repayment Instalment payable pursuant to Clause 6.1
               (Repayment of Loan) on the Repayment Date which is the last day
               of such Interest Period; and

          (C)  administrative expenses incurred by the Borrower in an amount
               not exceeding EUR 150,000 in any financial year of the Borrower
               to the extent not funded with Subscription Proceeds; and

          (D)  expenses incurred by the Borrower in respect of amounts owed to
               the Agent and the Security Trustee including but not limited to
               the fees set out in the Fee Letters referred to in Clause 11.3
               (Agency fee) and Clause 11.4 (Security Trustee fee); and

          "TD Distribution Proceeds" means to the extent that the Borrower is
          entitled to receive such dividend or distribution, the net proceeds of
          any Cegetel dividend or distribution made by Cegetel in respect of the
          cash proceeds of any disposal by Cegetel of its interest in TD,
          Cegetel S.A., and Reseau Sante Social or a disposal of all or
          substantially all of their assets.



                                      -20-



      (b)   The Borrower shall prepay the Loan in an amount equal to the
            Subscription Proceeds, the Distribution Proceeds and the TD
            Distribution Proceeds.

      (c)   Any mandatory prepayment of the Loan pursuant to this Clause 7.3
            shall be due on and from receipt of the relevant Proceeds by the
            Borrower and shall be paid either:

            (i)   on the last day of the Interest Period during which the
                  relevant Proceeds were received by the Borrower; or

            (ii)  at such earlier time following receipt of such Proceeds by the
                  Borrower as the Agent (upon the occurrence of an Event of
                  Default which is continuing) or the Borrower (subject to
                  payment of Break Costs) shall direct.

      (d)   Pending the application of any amount required to be prepaid under
            this Facility in accordance with this Clause 7.3 any such amount
            shall be deposited in the Holding Account.

7.4   Voluntary cancellation

      The Borrower may, if it gives the 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) of
      the undrawn part of the Facility. Any cancellation under this Clause 7.4
      shall reduce the Commitments of the Lenders rateably.

7.5   Voluntary prepayment

      The Borrower may, if it gives the Agent not less than 5 Business Days' (or
      such shorter period as the Majority Lenders may agree) prior notice,
      prepay the whole or the part of the Loan (but, if in part, being an
      amount that reduces the amount of the Loan by a minimum amount of
      EUR 5,000,000).

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

      (a)   If:

            (i)   any sum payable to any Lender by the Borrower is required to
                  be increased under paragraph (c) of Clause 12.2 (Tax
                  gross-up); or

            (ii)  any Lender claims indemnification from the Borrower under
                  Clause 12.3 (Tax indemnity) or Clause 13 (Increased costs); or

            (iii) any Lender notifies the Agent of its Additional Cost Rate
                  under paragraph 3 of Schedule 9 (Mandatory Cost Formulae),

            the Borrower 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 Agent
            notice of cancellation of the Commitment of that Lender


                                      -21-


            and its intention to procure the repayment of that Lender's
            participation in the Loan.

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

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

7.7   Holding Account

      (a)   The Borrower shall ensure that all Proceeds excluded from
            Subscription Proceeds pursuant to paragraphs (A) and (B) of the
            definition of Subscription Proceeds in Clause 7.3 (Mandatory
            Prepayment from Proceeds) and the proceeds excluded from
            Distribution Proceeds pursuant to paragraphs (A) and (B) of the
            definition of Distribution Proceeds in Clause 7.3 (Mandatory
            Prepayment from Proceeds) are promptly paid into the Holding Account
            on receipt by the Borrower.

      (b)   The Borrower irrevocably authorises the Agent to apply amounts
            credited to the Holding Account in repayment of the Facility and in
            payment of interest on the Facility on the next Repayment Date or,
            following the occurrence of an Event of Default, on the date on
            which the Agent serves notice under Clause 21.12 (Acceleration).

      (c)   A Finance Party with which the Holding Account is held acknowledges
            and agrees that interest shall accrue at normal commercial rates on
            amounts credited to the Holding Account.

7.8   Restrictions

      (a)   Any notice of cancellation or prepayment given by the Borrower under
            this Clause 7 (Prepayment and Cancellation) 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, without premium or penalty.

      (c)   The Borrower may not reborrow any part of the Facility which is
            prepaid.

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


                                      -22-

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

     (f)  If the Agent receives a notice under this Clause 7 (Prepayment and
          Cancellation) it shall promptly forward a copy of that notice to
          either the Borrower or the affected Lender, as appropriate.




















                                      -23-




                                   SECTION 5
                              COSTS OF UTILISATION


8.    INTEREST

8.1   Calculation of interest

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

      (a)   Margin;

      (b)   EURIBOR; and

      (c)   Mandatory Cost, if any.

8.2   Payment of interest

      On the last day of each Interest Period the Borrower shall pay accrued
      interest on the Loan.

8.3   Default interest

      (a)   If the Borrower 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, been the Loan for successive Interest Periods, each
            of a duration selected by the Agent (acting reasonably). Any
            interest accruing under this Clause 8.3 shall be immediately payable
            by the Borrower on demand by the Agent.

      (b)   If any overdue amount consists of all or part of the 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.

8.4   Notification of rates of interest

      The Agent shall promptly notify the Lenders and the Borrower of the
      determination of a rate of interest under this Agreement.


                                      -24-

9.   INTEREST PERIODS

     (a)  Interest on the Loan shall be calculated by reference to successive
          Interest Periods.

     (b)  The first Interest Period for the Loan shall commence on the
          Utilisation Date and end on 30 June 2003. Each subsequent Interest
          Period for the Loan shall commence on the last day of its preceding
          Interest Period and shall be a period of twelve months.

     (c)  An Interest Period for the Loan shall not extend beyond the Final
          Maturity Date.

10.  CHANGES TO THE CALCULATION OF INTEREST

10.1 Absence of quotations

     Subject to Clause 10.2 (Market disruption), if 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
     EURIBOR shall be determined on the basis of the quotations of the remaining
     Reference Banks.

10.2 Market disruption

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

          (i)       the Margin;

          (ii)      the rate notified to the Agent 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 Agent
                    to determine EURIBOR for euro and the relevant Interest
                    Period; or

          (ii)      before close of business in France on the Quotation Day for
                    the relevant Interest Period, the Agent receives
                    notifications from a Lender or Lenders (whose participations
                    in the Loan exceed 35 per cent. of the Loan) that the cost
                    to it of obtaining matching deposits in the European
                    interbank market would be in excess of EURIBOR.

                                      -25-


10.3  ALTERNATIVE BASIS OF INTEREST OR FUNDING

      (a)   If a Market Disruption Event occurs and the Agent or the Borrower so
            requires, the Agent and the Borrower 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 Borrower, be
            binding on all Parties.

10.4  BREAK COSTS

      (a)   The Borrower shall, within 3 Business Days of demand by a Finance
            Party, pay to that Finance Party its Break Costs attributable to all
            or any part of the Loan or any Unpaid Sum being paid by the 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 Agent, provide a certificate confirming the amount of its
            Break Costs for any Interest Period in which they accrue.

11.   FEES

11.1  COMMITMENT FEE

      (a)   A commitment fee shall accrue during the Availability Period at the
            rate of 1.50 per cent. per annum on the undrawn part of the Total
            Commitments for the Availability Period.

      (b)   The accrued commitment fee shall be payable by the Borrower to the
            Agent (for the account of the Lenders (pro rata to their
            Commitments) on the last day of the Availability Period and, if the
            Facility is cancelled in full, on the cancelled amount of the
            relevant Lender's Commitment at the time the cancellation is
            effective.

11.2  PARTICIPATION FEE

      The Borrower shall pay a participation fee to the beneficiaries, in the
      amount and at the times agreed in a Fee Letter.

11.3  AGENCY FEE

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

11.4  SECURITY TRUST FEE

      The Borrower shall pay to the Security Trustee (for its own account) a
      security trustee fee in the amount and at the times agreed in a Fee
      Letter.



                                      -26-










                                   SECTION 6
                         ADDITIONAL PAYMENT OBLIGATIONS

12.  TAX GROSS UP AND INDEMNITIES

12.1 DEFINITIONS

     (a)  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 the
          Borrower to a Finance Party under Clause 12.2 (Tax gross-up) or a
          payment under Clause 12.3 (Tax indemnity).

12.2 TAX GROSS-UP

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

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

     (c)  If a Tax Deduction is required by law to be made by the Borrower, the
          amount of the payment due from the Borrower 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)  If the Borrower is required to make a Tax Deduction, the Borrower
          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.

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

                                      -27-

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

12.3  Tax indemnity

      (a)    The Borrower shall (within three Business Days of demand by the
             Agent) pay to a Protected Party an amount equal to the loss,
             liability or cost which that Protected Party determines 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; or

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

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

                  (B) would have been compensated for by an increased payment
                      under Clause 12.2 (Tax gross-up) but was not so
                      compensated solely because one of the exclusions in
                      paragraph (d) of Clause 12.2 (Tax gross-up) applied.

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

      (d)    A Protected Party shall, on receiving a payment form the Borrower
             under this Clause 12.3, notify the Agent.

12.4   Tax Credit

       If the Borrower makes a Tax Payment and the relevant Finance Party
       determines that:

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

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


                                      -28-

      the Finance Party shall pay an amount to the Borrower 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 Borrower.

12.5  Stamp taxes
      The Borrower 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.

12.6  Value added tax
      (a)   All consideration expressed to be payable under a Finance Document
            by any Party to a Finance Party shall be deemed to be exclusive of
            any VAT. If VAT is chargeable on any supply made by any Finance
            Party to any Party in connection with 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.

      (b)   Where a Finance Document requires any 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 that it is not
            entitled to credit or repayment of the VAT.

13.   INCREASED COSTS

13.1  Increased costs
      (a)   Subject to Clause 13.3 (Exceptions) the Borrower shall, within 15
            Business Days of a demand by the 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) 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 (other
                  than as a result of generally applicable corporation tax on
                  the profits of such Finance Party);

            (ii)  an additional or increased cost mandatorily incurred by the
                  relevant Finance Party; 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 or any of its Affiliates having


                                     - 29 -


               entered into its Commitment or funding or performing its
               obligations under any Finance Document.

13.2      INCREASED COST CLAIMS

          (a)  A Finance Party intending to make a claim pursuant to Clause 13.1
               (Increased costs) shall notify the Agent of the event giving rise
               to the claim, following which the Agent shall promptly notify the
               Borrower.

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

13.3      EXCEPTIONS

          (a)  Clause 13.1 (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 the Borrower;

               (ii)    compensated for by Clause 12.3 (Tax indemnity) (or would
                       have been compensated for under Clause 12.3 (Tax
                       indemnity) but was not so compensated solely because any
                       of the exclusions in paragraph (b) of Clause 12.3 (Tax
                       indemnity) applied);

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

               (iv)    attributable to the wilful breach by the relevant Finance
                       Party or its Affiliates of any law or regulation.(1)

          (b)  In this Clause 13.3, a reference to a "Tax Deduction" has the
               same meaning given to the term in Clause 12.1 (Definitions).

14        OTHER INDEMNITIES

14.1      CURRENCY INDEMNITY

          (a)  If any sum due from the Borrower 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 the Borrower;

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

               the Borrower shall as an independent obligation, within 15
               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.

                                      -30-



     (b)  The Borrower 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.

14.2 Other indemnities

     The Borrower shall, within 15 Business Days of 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 the Borrower 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 26 (Sharing among the
          Finance Parties);

     (c)  funding, or making arrangements to fund, its participation in the Loan
          requested by a Borrower in the 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)  the Loan (or part of the Loan) not being prepaid in accordance with a
          notice of prepayment given by the Borrower.

14.3 Indemnity of the Agent

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

     (a)  (in respect any loss or liability only) 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.

14.4 Indemnity to the Security Trustee

     (a)  The Borrower shall within 15 Business Days of demand indemnify the
          Security Trustee against any cost, loss or liability incurred by the
          Security Trustee 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 Trustee by the Finance
                    Documents or by law; and

          (iii)     any default by the Borrower in the performance of any of the
                    obligations expressed to be assumed by it in the Finance
                    Documents in relation to the Transaction Security.

          provided that, to the extent that any such costs are incurred on or
          prior to the service of a notice by the Agent pursuant to Clause 21.12
          (Acceleration), such costs are reasonable.



                                      -31-

     (b)  The Security Trustee may, in priority to any payment to the Secured
          Parties, indemnify itself out of the property which is subject to the
          Transaction Security Documents in respect of, and pay and retain, all
          sums necessary to give effect to the indemnity in this Clause 14.4 and
          shall have a lien on the Transaction Security and the proceeds of the
          enforcement of the Transaction Security for all monies payable to it.

15.  MITIGATION BY THE LENDERS

15.1 MITIGATION

     (a)  Each Finance Party shall, in consultation with the Borrower, 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 7.1 (Illegality), Clause 12 (Tax
          gross-up and indemnities), Clause 13 (Increased costs) or paragraph 3
          of Schedule 9 (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 the
          Borrower under the Finance Documents.

15.2 LIMITATION OF LIABILITY

     (a)  The Borrower 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 15.1 (Mitigation).

     (b)  A Finance Party is not obliged to take any steps under Clause 15.1
          (Mitigation) if, in the opinion of that Finance Party (acting
          reasonably), to do so might be prejudicial to it.

16.  COSTS AND EXPENSES

16.1 TRANSACTION EXPENSES

     The Borrower shall within 15 Business Days pay the Agent, the Arranger and
     the Security Trustee the amount of all costs and expenses (including legal
     fees) reasonably incurred by any of them in connection with the
     negotiation, preparation, printing, execution, syndication and perfection
     of:

     (a)  this Agreement and any other documents referred to in this Agreement
          and the Transaction Security; and

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

16.2 AMENDMENT COSTS

     If (a) the Parent of the Borrower requests an amendment, waiver or consent
     or (b) an amendment is required pursuant to Clause 27.9 (Change of
     currency), the Borrower shall, within 15 Business Days of demand, reimburse
     or procure reimbursement of each of the Agent and the Security Trustee for
     the amount of all costs and expenses

                                      -32-

          (including legal fees) reasonably incurred by the Agent and the
          Security Trustee in responding to, evaluating, negotiating or
          complying with that request or requirement.

     16.3 Enforcement and preservation costs

          The Borrower shall, within 15 Business Days of demand, pay (or procure
          payment) to each Finance Party the amount of all costs and expenses
          (including legal fees) incurred by that Finance Party in connection
          with:

          (a)  The preservation of any rights, powers and remedies under any
               Finance Document and the Transaction Security and any proceedings
               instituted by or against the Security Trustee as a consequence of
               taking or holding the Transaction Security; and

          (b)  the enforcement of any rights, powers and remedies under any
               Finance Document and the Transaction Security and any proceedings
               instituted by or against the Security Trustee as a consequence of
               enforcing these rights, powers and remedies,

          to the extent, in the case of paragraph (a) above, that such costs and
          expenses have been incurred by the relevant Finance Party acting
          reasonably.















                                      -33-

                                   SECTION 7

              REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

17.  REPRESENTATIONS

     The Borrower and the Parent each makes the representations set out in this
     Clause 17 to each Finance Party on the date of this Agreement. On any other
     date on or before the Closing Date, it is assumed that the Parent and the
     Borrower have the knowledge of the senior management of Cegetel.

17.1 STATUS

     (a)  Each of the Borrower, the Parent and Cegetel is a limited liability
          corporation and each of the Parent, the Borrower, Cegetel and each
          Material Company is, duly incorporated and validly existing under the
          law of its jurisdiction of incorporation.

     (b)  The Borrower, the Parent, Cegetel and each Material Company has the
          power to own its assets and carry on its business as it is being
          conducted.

17.2 BINDING OBLIGATIONS

     Subject to the Legal Reservations, the obligations expressed to be assumed
     by the Parent and the Borrower in each Transaction Document are legal,
     valid, binding and enforceable obligations.

17.3 NON-CONFLICT WITH OTHER OBLIGATIONS

     The entry into and performance by the Parent and the Borrower of, and the
     transactions contemplated by, the Transaction Documents and the granting of
     the Transaction Security do not and will not conflict with:

     (a)  any law or regulation applicable to it or any member of the Cegetel
          Group;

     (b)  its constitutional documents or the constitutional documents of any
          member of the Cegetel Group; or

     (c)  any agreement or instrument binding upon it or any member of the
          Cegetel Group or any of its or any member of the Cegetel Group's
          assets.

17.4 POWER AND AUTHORITY

     (a)  Each of the Parent and the Borrower 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 Transaction Documents
          to which it is or will be a party and the transactions contemplated by
          those Transaction Documents.

     (b)  No limit on the powers of the Parent or the Borrower will be exceeded
          as a result of it entering into the Transaction Documents to which it
          is a party.



                                      -34-







17.5  VALIDITY AND ADMISSIBILITY IN EVIDENCE
      (a)   All Authorisations required or desirable:

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

            (ii)  to make the Transaction Documents to which it is a party
                  admissible in evidence in the Republic of France,

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

      (b)   All Authorisations necessary for the conduct of the business, trade
            and ordinary activities of members of the Cegetel Group have been
            obtained or effected and are in full force and effect except to the
            extent failure to obtain or effect those Authorisations could
            reasonably be expected not to have a Material Adverse Effect.

17.6  INSOLVENCY
      No:

      (a)   corporate action, legal proceeding or other procedure or step
            described in paragraph (a) of Clause 21.6 (Insolvency proceedings);
            or

      (b)   creditors process described in Clause 21.7 (Creditors' process),

      has been taken or, to its knowledge, threatened in relation to the
      Parent, the Borrower or a member of the Cegetel Group and none of the
      circumstances described in Clause 21.5 (Insolvency) applies to the
      Parent, the Borrower or a member of the Cegetel Group.

17.7  NO DEFAULT
      (a)   No Event of Default is continuing or might reasonably be expected
            to result from the making of the Loan.

      (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 member of the Cegetel Group or to which its (or any
            member of the Cegetel Group's) assets are subject which has or
            could reasonably be expected to have a Material Adverse Effect.

17.8  NO MISLEADING INFORMATION
      (a)   Any factual information relating to the Borrower or the Cegetel
            Group contained in the Information Package was true and accurate in
            all material respects as at the date of the relevant report or
            document containing the information.

      (b)   Any financial projections or forecasts contained in the Information
            Package have been prepared on the basis of recent historical
            information and on the basis of reasonable assumptions and were
            fair (as at the date of the relevant


                                     - 35 -


               report or document containing the projection or forecast) and
               arrived at after careful consideration.

         (c)   All other written information provided by the Parent and the
               Borrower in connection with the Facility was true, complete and
               accurate in all material respects as at the date it was provided
               and is not misleading in any material respect.

17.9     MATERIAL ADVERSE CHANGE
         There has been no material adverse change in the business or financial
         condition of the Borrower, the Parent or the Cegetel Group since the
         date of the Original Financial Statements other than any event or
         series of events that have occurred and have been disclosed to the
         Finance Parties as part of the Information Package or which have been
         disclosed in official press releases by the Parent or the Cegetel Group
         or any regulatory authority in each case prior to the date of this
         Agreement.

17.10    NO PROCEEDINGS PENDING OR THREATENED
         (a)   No litigation, arbitration or administrative proceedings or
               investigations of or before any court, arbitral body or agency
               which, if adversely determined, could 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 Cegetel Group.

         (b)   There is no actual or pending dispute or dispute resolution
               process under paragraph 3.5 of the Cegetel Shareholders'
               Agreement in relation to any business plan due to have been
               produced under the terms of the Cegetel Shareholders' Agreement
               prior to the date of this Agreement.

17.11    COMPLIANCE WITH LAWS
         None of the Borrower or any member of the Cegetel Group is in breach of
         any law or regulation in a manner or to an extent which has or could
         reasonably be expected to have a Material Adverse Effect.

17.12    BORROWER'S ACTIVITIES
         The Borrower has not engaged in any activities since its incorporation
         other than the authorisation and execution of the Transaction Documents
         and the activities referred to in or contemplated by the Transaction
         Documents and has no liabilities other than under the terms of the
         Transaction Documents.

17.13    CEGETEL
         On the Closing Date and immediately prior to Completion the Parent will
         be the beneficial owner of 43.999 per cent. of the issued share capital
         of Cegetel.

17.14    TIMES ON WHICH REPRESENTATIONS ARE MADE
         (a)   All the representations and warranties in this Clause 17 are made
               to each Finance Party on the date of this Agreement.

                                      -36-



     (b)  All the representations and warranties in this Clause 17 are deemed to
          be made by the Parent and the Borrower to each Finance Party on the
          Closing Date.

     (c)  The Repeating Representations are deemed to be made by the Parent and
          the Borrower to each Finance Party on the date of the Utilisation
          Request and on the first day of each Interest Period.

     (d)  Each representation or warranty deemed to be made after the date of
          this Agreement shall be made by reference to the facts and
          circumstances existing at the date the representation or warranty is
          made.

18.  INFORMATION UNDERTAKINGS

     The undertakings in this Clause 18 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.

     In this Clause 18:

     "ANNUAL FINANCIAL STATEMENT" means a financial statement for a financial
     year delivered pursuant to paragraph (a) of Clause 18.1 (Financial
     statements).

     "FINANCIAL QUARTER" has the meaning given to that term in Clause 19.1
     (Financial definitions).

     "INTERIM FINANCIAL STATEMENT" means a financial statement delivered
     pursuant to paragraph (b) of Clause 18.1 (Financial statements).

     "QUARTERLY FINANCIAL STATEMENT" means a financial statement delivered
     pursuant to paragraph (c) of Clause 18.1 (Financial statements).

18.1 Financial statements

     The Borrower shall (and the Parent shall procure that the Borrower shall)
     supply to the Agent in sufficient copies for all the Lenders:

     (a)  as soon as they are available, but in any event within 120 days after
          the end of each of its financial years the audited consolidated
          financial statements for each of the Borrower and Cegetel for that
          financial year;

     (b)  as soon as they are available, but in any event within 60 days after
          the end of the first half of each financial year of Cegetel the
          consolidated financial statements of Cegetel for that financial half
          year; and

     (c)  as soon as they are available, but in any event within 45 days after
          the end of each first and third Financial Quarter of any given
          calendar year:

          (i)  the consolidated financial statements of Cegetel for that
               Financial Quarter; and

                                      -37-

               (ii) the financial statements of each Subsidiary of Cegetel
                    which is a Material Company for that Financial Quarter.

18.2 Compliance Certificate

     (a)  The Borrower shall (and the Parent shall procure that the Borrower
          shall) supply a Compliance Certificate to the Agent with each set of
          its Annual Financial Statements, Interim Financial Statements and
          Quarterly Financial Statements.

     (b)  Each Compliance Certificate shall:

          (i)  set out (in reasonable detail) computations as to compliance with
               Clause 19 (Financial Covenants) as at the end of the relevant
               Financial Quarter; and

          (ii) confirm no Default has occurred and is continuing or, if a
               Default has occurred, what Default has occurred and the steps
               being taken to remedy that Default.

     (c)  Each Compliance Certificate shall be signed by the legal
          representative of the Borrower.

18.3 Requirements as to financial statements

     (a)  Each set of financial statements delivered pursuant to Clause 18.1
          (Financial statements) shall be prepared in accordance with GAAP.

     (b)  Each of the Parent and the Borrower shall procure that each set of
          Annual Financial Statements shall be audited by an internationally
          recognised firm of independent auditors licensed to practice in
          France.

18.4 Information: miscellaneous

     (a)  The Borrower shall (and the Parent shall procure that the Borrower
          shall) supply to the Agent (in sufficient copies for all the Lenders,
          if the Agent so requests):

          (i)  each budget and each long term business plan in respect of the
               Cegetel Group, as the same may be updated from time to time, in
               each case, as approved by the board of directors of Cegetel each
               year;

          (ii) promptly upon becoming aware of them, the details of any
               litigation, arbitration or administrative proceedings which are
               current, or, to its knowledge, pending against the Borrower or
               any member of the Cegetel Group, and which might, if adversely
               determined, involve a potential liability of the Borrower or the
               Cegetel Group exceeding EUR 30,000,000; and

         (iii) promptly, such information or projections regarding the
               financial condition, business, operations or performance of the
               Parent, the

                                      -38-









              Borrower or any member of the Cegetel Group as the Agent may
              reasonably request.

       (b)    The Parent shall supply to the Agent (in sufficient copies for all
              the Lenders, if the Agent so requests), within 3 Business Days of
              the date on which the Parent becomes (whether directly or
              indirectly) the beneficial owner of the entire issued share
              capital of Cegetel, written notice of the occurrence of such
              event.

18.5   Notification of default
       The Borrower shall (and the Parent shall procure that the Borrower shall)
       notify the Agent of any Default (and the steps, if any, being taken to
       remedy it) promptly upon becoming aware of its occurrence.

19.    FINANCIAL COVENANTS

19.1   Financial definitions

       In this Clause 19:

       "Borrower Total Funding Costs" means, in relation to any period, the
       aggregate of:

       (a)    all interest, commissions and other financing charges payable by
              the Borrower in respect of that period;

       (b)    all scheduled repayments of the Facility to be made in that
              period; and

       (c)    all amounts payable by the Borrower in respect of that period
              under the Hedging Agreements (less any amount receivable by the
              Borrower in respect of that period under the Hedging Agreements),

       less any interest receivable by the Borrower.

       "Capital Expenditure" means any expenditure or obligation in respect of
       expenditure which in accordance with GAAP is treated as capital
       expenditure, including any expenditure or obligation incurred in
       connection with a finance or capital lease and excluding any expenditure
       incurred in making any acquisition permitted under paragraph (b) of
       Clause 20.5 (Acquisitions).

       "Cegetel Cashflow" means, in respect of any Period, subject to the
       provision below, Cegetel EBITDA after adding back:

       (a)    any decrease in the amount of Working Capital;

       (b)    any non-cash item deducted in computing Cegetel EBITDA,

       and deducting:

       (a)    any amount of Capital Expenditure actually made by any member of
              the Cegetel Group;

       (b)    any increase in the amount of Working Capital;



                                      -39-


     (c)  any non-cash item added in computing Cegetel EBITDA,

     and so that no amount shall be included or excluded more than once,
     provided that for the purposes of computing Cegetel Cashflow for any period
     in relation to SFR and its Subsidiaries, only 80 per cent. of the
     consolidated cashflow (computed, mutatis mutandis, as Cegetel Cashflow) or
     such companies for such period shall be taken into account.

     "Cegetel EBITDA" means, in relation to the Cegetel Group for any period,
     the aggregate of the amount obtained by adding:

     (a)  consolidated operating income of the Cegetel Group before any
          financial income, extraordinary items, income tax and goodwill
          amortisation and impairment;

     (b)  depreciation charged to the consolidated profit and loss account of
          the Cegetel Group during such period excluding, for the avoidance of
          doubt, goodwill, amortisation and impairment;

     (c)  amortisation charged to the consolidated profit and loss account of
          the Cegetel Group during such period;

     and deducting

     (a)  restructuring charges and net restructuring allowances;

     (b)  other one time operating expense or income;

     (c)  gain and loss on sales of tangible and intangible assets.

     "Cegetel Total Net Debt" means the aggregate, on a consolidated basis, of:

     (a)  that part of the Financial Indebtedness of members of the Cegetel
          Group Companies which relates to obligations for the payment or
          repayment of money in respect of principal incurred in respect of (i)
          monies borrowed or raised, (ii) any bond, note, loan stock, debenture
          or similar instrument, or (iii) any acceptance credit, bill
          discounting, note purchase, factoring or documentary credit facility
          (including, for the avoidance of doubt, any Financial Indebtedness
          under this Agreement) and excluding, for the purpose of the testing of
          the financial covenant referred to in paragraph (b) or Clause 19.2
          (Financial Condition) only, any Financial Indebtedness under the AOL
          Swap;

     (b)  the capital element of all rentals or, as the case may be, other
          payments payable under any finance lease entered into by any member of
          the Cegetel Group,

     less:

     (i)  cash at hand and at bank of members of the Cegetel Group;




                                      -40-



     (ii)  bonds, notes and commercial paper beneficially owned by members of
           the Cegetel Group with a maturity of not more than 6 months and rated
           at least A-1 by S&P or at least P-1 by Moody's (or an equivalent
           rating of another agency which the Agent reasonable determines to be
           comparable);

     (iii) other cash equivalent instruments (including, for the avoidance of
           doubt, shares in SICAV or FCP constituted of cash or bonds);

     (iv)  the principal amount of any outstanding loans granted by Cegetel to
           its shareholders in accordance with the terms of this Agreement; and

     (v)  the principal amount of any outstanding loans granted by Cegetel to
          TD, up to an aggregate maximum amount of EUR 25,000,000.

     "Financial Quarter" means the period commencing on the day following one
     Quarter Date and ending on the next Quarter Date.

     "Quarter Date" means each of 31 March, 30 June, 30 September and 31
     December.

     "Working Capital" means, in respect of the Cegetel Group, on any date
     operating current assets less operating current liabilities excluding
     income tax assets and liabilities.

19.2 Financial condition

     Each of the Parent and the Borrower shall ensure that:

     (a)  Minimum Cegetel EBITDA:

          (i)  Cegetel EBITDA in respect of each period of 12 months ending on a
               date set out in Column A below shall not be less than the figure
               set out in Column B below opposite that date:



          Column A                      Column B
          Date                          EUR
                                     
          31 March 2003                 2,100,000,000
          30 June 2003                  2,180,000,000
          30 September 2003             2,270,000,000
          31 December 2003              2,400,000,000
          31 March 2004                 2,450,000,000
          30 June 2004                  2,600,000,000; and


          (ii) if the Extension Option is exercised by the Borrower, Cegetel
               EBITDA in respect of each period of 12 months ending on a date
               set out in Column A below shall not be less than the figure set
               out in Column B below opposite that date:

                                      -41-




      Column A                   Column B
      Date                       EUR
                              
      30 September 2004          2,700,000,000
      31 December 2004           2,800,000,000
      31 March 2005              2,800,000,000
      30 June 2005               2,800,000,000
      30 September 2005          2,800,000,000
      31 December 2005           2,800,000,000
      31 March 2006              2,800,000,000
      30 June 2006               2,800,000,000
      30 September 2006          2,800,000,000
      31 December 2006           2,800,000,000
      31 March 2007              2,850,000,000
      30 June 2007               2,900,000,000
      30 September 2007          2,950,000,000
      31 December 2007           3,000,000,000
      31 March 2008              3,050,000,000
      30 June 2008               3,100,000,000
      30 September 2008          3,110,000,000
      31 December 2008           3,150,000,000
      31 March 2009              3,150,000,000
      30 June 2009               3,150,000,000
      30 September 2009          3,150,000,000
      31 December 2009           3,150,000,000
      31 March 2010              3,200,000,000
      30 June 2010               3,200,000,000


(b)   Leverage:
      (i)   the ratio of Cegetel Total Net Debt on each date referred to in
            Column A below to Cegetel EBITDA for the period of 12 months ending
            on such date shall not be greater than the ratio set out in Column B
            below opposite that date:



      Column A                   Column B
      Date                       Ratio
                           
      30 June 2003               0.75:1
      30 September 2003          0.60:1
      31 December 2003           0.50:1
      31 March 2004              0.40:1
      30 June 2004               0.70:1; and


      (ii) if the Extension Option is exercised by the Borrower, the ratio of
           Cegetel Total Net Debt on each date referred to in Column A below to
           Cegetel EBITDA for the period of 12 months ending on such date shall

                                      -42-



          not be greater than the ratio set out in Column B below opposite that
          date:

     Column A                 Column B
     Date                     Ratio

     30 September 2004        0.50:1
     31 December 2004         0.40:1
     31 March 2005            0.40:1
     30 June 2005             0.65:1
     30 September 2005        0.50:1
     31 December 2005         0.40:1
     31 March 2006            0.40:1
     30 June 2006             0.60:1
     30 September 2006        0.40:1
     31 December 2006         0.30:1
     31 March 2007            0.30:1
     30 June 2007             0.40:1
     30 September 2007        0.30:1
     31 December 2007         0.30:1
     31 March 2008            0.30:1
     30 June 2008             0.30:1
     30 September 2008        0.30:1
     31 December 2008         0.30:1
     31 March 2009            0.30:1
     30 June 2009             0.30:1
     30 September 2009        0.30:1
     31 December 2009         0.30:1
     31 March 2010            0.30:1
     30 June 2010             0.30:1

(c)  Cashflow to Borrower Total Funding Costs:

     (i)  the ratio of (i) 26% of Cegetel Cashflow in respect of the period of
          12 months ending on each date (the "Measurement Date") referred to in
          Column A below to (ii) Borrower Total Funding Costs for the period of
          12 months ending on, if the Measurement Date is a 31 March or 30 June,
          the 30 June in the same calendar year or, if the Measurement Date is a
          30 September or 31 December, the 30 June in the immediately succeeding
          calendar year, shall not be less than the ratio set out in Column B
          below opposite that date:

     Column A                 Column B
     Date                     Ratio

     30 June 2003             1.60:1
     30 September 2003        1.65:1

                                      -43-



               Column A                           Column B
               Date                               Ratio
                                               

               31 December 2003                   1.70:1
               31 March 2004                      1.80:1
               30 June 2004                       1.80:1; and


               (ii) if the Extension Option is exercised by the Borrower, the
                    ratio of (i) 26% of Cegetel Cashflow in respect of the
                    period of 12 months ending on each date (the "Measurement
                    Date") referred to in Column A below to (ii) Borrower. Total
                    Funding Costs for the period of 12 months ending on, if the
                    Measurement Date is a 31 March or 30 June, the 30 June in
                    the same calendar year or, if the Measurement Date is a 30
                    September or 31 December, the 30 June in the immediately
                    succeeding calendar year, shall not be less than the ratio
                    set out in Column B below opposite that date:



               Column A                           Column B
               Date                               Ratio
                                               
               30 September 2004                  1.60:1
               31 December 2004                   1.65:1
               31 March 2005                      1.70:1
               30 June 2005                       1.70:1
               30 September 2005                  1.80:1
               31 December 2005                   1.80:1
               31 March 2006                      1.85:1
               30 June 2006                       1.85:1
               30 September 2006                  1.90:1
               31 December 2006                   1.90:1
               31 March 2007                      1.90:1
               30 June 2007                       1.95:1
               30 September 2007                  1.85:1
               31 December 2007                   1.90:1
               31 March 2008                      1.90:1
               30 June 2008                       1.95:1
               30 September 2008                  1.85:1
               31 December 2008                   1.90:1
               31 March 2009                      1.90:1
               30 June 2009                       1.95:1
               30 September 2009                  2.00:1
               31 December 2009                   2.00:1
               31 March 2010                      2.00:1
               30 June 2010                       2.00:1


                                      -44-










19.3  Financial testing

      The financial covenants set out in Clause 19.2 (Financial condition) shall
      be tested by reference to each of the financial statements and/or each
      Compliance Certificate delivered pursuant to Clause 18.2 (Compliance
      Certificate).

20.   GENERAL 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  Authorisations

      Each of the Parent and the Borrower shall procure that the Borrower and
      each member of the Cegetel Group shall obtain, comply with and do all that
      is necessary to maintain in full force and effect any Authorisations
      required under any law or regulation to:

      (a)   enable it to perform its obligations under the Transaction
            Documents;

      (b)   ensure the legality, validity, enforceability or admissibility in
            evidence of any Transaction Document; and

      (c)   enable it to own its property and assets and to carry on its
            business, trade and ordinary activities as currently conducted
            except to the extent failure to obtain or comply with these
            Authorisations could reasonably be expected not to have a Material
            Adverse Effect.

20.2  Compliance with laws

      Each of the Parent and the Borrower shall procure that the Borrower and
      each member of the Cegetel Group shall comply in all respects with all
      laws (including Environmental Law) to which it may be subject, if failure
      so to comply has, or could reasonably be expected to have, a Material
      Adverse Effect.

20.3  Merger

      (a)   Except as permitted under paragraph (b) below, each of the Parent
            and the Borrower shall procure that neither the Borrower nor any
            member of the Cegetel Group shall enter into any amalgamation,
            demerger, merger or corporate reconstruction, save insofar as any
            Subsidiary of Cegetel does so in accordance with the terms of the
            Cegetel Shareholders' Agreement;

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

            (i)   any amalgamation, merger or corporate reconstruction between
                  Cegetel and one of its Subsidiaries where Cegetel is the
                  surviving corporate entity;

            (ii)  any amalgamation, merger or corporate reconstruction of any
                  Subsidiary of Cegetel with any other Subsidiary of Cegetel,
                  and TD; and


                                      -45-


            (iii) any amalgamation, merger or corporate reconstruction involving
                  a member of the Cegetel Group and a company which is not a
                  member of the Cegetel Group where the member of the Cegetel
                  Group is the surviving entity if:

                  (A)   the amount of the contribution made to the relevant
                        member of the Cegetel Group when aggregated with the
                        contributions to other members of the Cegetel Group and
                        the acquisition cost of any other companies or
                        businesses acquired by members of the Cegetel Group
                        pursuant to paragraph (b)(iii) of Clause 20.5
                        (Acquisitions) since the date of this Agreement does not
                        exceed EUR500,000,000;

                  (B)   no Default has occurred and is continuing at the time of
                        that acquisition or would occur as a result of that
                        acquisition; and

                  (C)   the asset contributed to the relevant member of the
                        Cegetel Group is either:

                        (1)   that part of TD that Cegetel presently does not
                              beneficially own; or

                        (2)   a company operating predominantly in France whose
                              principal business is similar to or complementary
                              to the fixed telephony business of the Cegetel
                              Group,

                        where in the case of paragraph (2) above the Majority
                        Lenders have given their prior written consent, such
                        consent not to be unreasonably withheld and to be deemed
                        to have been given if not expressly refused within 5
                        Business Days of the request for such consent.

20.4  Change of business

      Each of the Parent and the Borrower shall procure that no substantial
      change is made to the general nature of the business of the Borrower or
      any Material Company from that carried on at the date of this Agreement.

20.5  Acquisitions

      (a)   Each of the Parent and the Borrower shall procure that neither the
            Borrower nor any member of the Cegetel Group shall acquire a company
            or acquire (or acquire an interest in) shares or a business.

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

            (i)   an acquisition of the Borrower Cegetel Shares by the Borrower
                  under the Acquisition Agreement;

            (ii)  an acquisition by a member of the Cegetel Group permitted
                  pursuant to paragraph (c)(ii) of Clause 20.9 (Disposals);


                                      -46-

          (iii)     an acquisition by any member of the Cegetel Group if:

                    (A)  the amount of the acquisition cost, when aggregated
                         with the contributions made to members of the Cegetel
                         Group under paragraph (b)(iii) of Clause 20.3 (Merger)
                         and the acquisition cost of any other companies or
                         businesses acquired by members of the Cegetel Group
                         since the date of this Agreement (other than
                         acquisitions permitted pursuant to paragraph (iv)
                         below) does not exceed EUR 500,000,000;

                    (B)  no Default has occurred and is continuing at the time
                         of that acquisition or would occur as a result of that
                         acquisition; and

                    (C)  the company or business being acquired is either:

                         (1)  that part of TD that Cegetel presently does not
                              beneficially own; or

                         (2)  a company or business operating predominantly in
                              France whose principal business is similar to or
                              complementary to the fixed telephony business of
                              the Cegetel Group,

                         where in the case of paragraph (2) above the Majority
                         Lenders have given their prior written consent, such
                         consent not to be unreasonably withheld and to be
                         deemed given if not expressly refused within 5 Business
                         Days of the request for such consent; or

          (iv)      any other acquisition by any member of the Cegetel Group for
                    an individual acquisition cost of not more than EUR
                    20,000,000 provided that (i) the aggregate amount of the
                    acquisition cost of all acquisitions permitted pursuant to
                    this paragraph (iv) made since the date of this Agreement
                    shall not exceed EUR 100,000,000 and (ii) no Default has
                    occurred and is continuing at the time of that acquisition
                    or would occur as a result of that acquisition.

20.6 HOLDING COMPANY
     The Borrower shall not (and the Parent shall procure that the Borrower
     shall not) trade, undertake any commercial activity, carry on any business,
     own any assets or incur any liabilities except for:

     (a)  business as a holding company;

     (b)  ownership of the Borrower Cegetel Shares, credit balances in bank
          accounts and cash; or

     (c)  any liabilities under the Transaction Documents to which it is a party
          and professional fees and administration costs in the ordinary course
          of business as a holding company.

                                      -47-

20.7 PARI PASSU RANKING

     The Borrower shall (and the Parent shall procure that the Borrower shall)
     ensure that at all times any unsecured and unsubordinated claims of a
     Finance Party against it under the Finance Documents rank at least pari
     passu with the claims of all its other unsecured and unsubordinated
     creditors except those creditors whose claims are mandatorily preferred by
     laws of general application to companies.

20.8 NEGATIVE PLEDGE

     In this Clause 20.8, "Quasi-Security" means a transaction described in
     paragraph (c) below.

     Except as permitted under paragraph (d) below:

     (a)  the Borrower shall not (and the Parent shall procure that the Borrower
          shall not) create or permit to subsist any Security or Quasi-Security
          over its assets other than under the Finance Documents.

     (b)  each of the Parent and the Borrower shall procure that no member of
          the Cegetel Group shall create or permit to subsist any Security over
          any of its assets.

     (c)  each of the Parent and the Borrower shall procure that no member of
          the Cegetel Group shall:

          (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 any
                other member of the Cegetel Group;

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

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

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

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

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

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

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

                                      -48-


(iii)     any Security or Quasi-Security over or affecting any asset acquired by
          a member of the Cegetel 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 Cegetel
               Group; and

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

(iv)      any Security or Quasi-Security over or affecting any asset of any
          company which becomes a member of the Cegetel 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 Cegetel
          Group, if:

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

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

(v)       any retention of title, hire purchase or conditional sale arrangement
          or arrangements having similar effect in respect of goods supplied to
          a member of the Cegetel Group in the ordinary course of trading and on
          the suppliers standard or usual terms;

(vi)      any sale, transfer or other disposal of an asset by a member of the
          Cegetel Group on terms it may be leased to or re-acquired by another
          member of the Cegetel Group;

(vii)     any Security entered into by any member of the Cegetel Group in
          accordance with the terms of the Cegetel Shareholders' Agreement as at
          the date of this Agreement; or

(viii)    Security or Quasi-Security created after the date of this Agreement
          over any asset of any member of the Cegetel Group acquired after the
          date of this Agreement for the purpose of securing Financial
          Indebtedness incurred for the purpose of acquiring such asset (or any
          part thereof) and provided the amount secured by such Security or
          Quasi-Security does not exceed at any time the amount thereby secured
          as at the date of such acquisition;

(ix)      any Security or Quasi-Security over receivables or any collection
          account into which the proceeds of such receivables are paid created
          by any member of the Cegetel Group to secure Financial Indebtedness


                                      -49-


               incurred pursuant to a securitisation transaction for an
               aggregate amount not to exceed EUR 500,000,000;

          (x)  Security or Quasi-Security renewing or extending any Security or
               Quasi-Security permitted pursuant to paragraphs (i) to (ix) above
               provided that the principal amount secured thereby has not
               increased and that such Security or Quasi-Security is not
               extended to other property; and

          (xi) any Security or Quasi-Security which exists in respect of any
               asset of any member of the Cegetel Group where the amount of
               Financial Indebtedness secured by such Security or Quasi-Security
               (when aggregated with the amount of all Financial Indebtedness of
               each member of the Cegetel Group secured by Security or
               Quasi-Security other than that permitted under paragraphs (i) to
               (x) above) does not exceed EUR 100,000,000.

20.9 Disposals

     (a)  The Borrower shall not (and the Parent shall procure that the Borrower
          shall not), sell, lease, transfer or otherwise dispose of any asset
          other than as permitted or required by the terms of the Finance
          Documents.

     (b)  Except as permitted under paragraph (c) below, each of the Parent and
          the Borrower shall procure that no member of the Cegetel Group shall
          enter into a single transaction or a series of transactions (whether
          related or not) and whether voluntary or involuntary to sell, lease,
          transfer or otherwise dispose of any asset.

     (c)  Paragraph (b) above does not apply to any sale, lease, transfer or
          other disposal:

          (i)  by any member of the Cegetel Group of assets made in the
               ordinary course of day to day business of the disposing entity;

          (ii) of any asset by a member of the Cegetel Group to another member
               of the Cegetel Group;

         (iii) of obsolete vehicles, plant, machinery or equipment;

          (iv) of cash where that disposal is not otherwise prohibited by the
               Finance Documents;

           (v) of fixed assets where the proceeds of disposal are used within 12
               months of that disposal to purchase replacement fixed assets
               comparable or superior as to type, value and quality;

          (vi) in accordance with the terms of the Cegetel Shareholders'
               Agreement as at the date of this Agreement;

         (vii) otherwise permitted pursuant to Clause 20.8 (Negative Pledge);


                                      -50-



               (viii)   of the interest of any member of the Cegetel Group in
                        TD, Cegetel S.A., Reseau Sante Social or all or
                        substantially all of the assets of any such company; or

               (ix)     by any member of the Cegetel Group on arm's length terms
                        of assets where the aggregate net consideration received
                        pursuant to this paragraph (ix) does not exceed
                        EUR 100,000,000 (or its equivalent) in any financial
                        year of Cegetel.

20.10    ARM'S LENGTH BASIS
         (a)   Each of the Parent and the Borrower shall procure that neither
               the Borrower nor any member of the Cegetel Group will, except as
               permitted by paragraph (b) below, enter into any transaction with
               the Parent or any of its Subsidiaries except on arm's length
               terms.

         (b)   Intra-Group loans permitted under Clause 20.11 (Loans or credit)
               shall not be a breach of this Clause 20.10.

20.11    LOANS OR CREDIT
         (a)   The Borrower shall not (and the Parent shall ensure that the
               Borrower shall not) make any loans or grant any credit or make
               any other financial arrangement having a similar effect, other
               than pursuant to the terms of paragraph (c)(iii)(B) below.

         (b)   Each of the Parent and the Borrower shall procure that the
               members of the Cegetel Group shall not make any loans to, grant
               any credit to or make any other financial arrangement having a
               similar effect with the Parent or any of its Subsidiaries other
               than members of the Cegetel Group except as permitted under
               paragraph (c) below.

         (c)   Paragraph (b) above does not apply to loans made by Cegetel to
               its shareholders on a pro rata basis provided that:

               (i)   such loans are repayable to Cegetel by its shareholders on
                     a pro rata basis;

               (ii)  no such loan may be advanced, and all such outstanding
                     loans shall be immediately repayable, if the Credit Rating
                     of the Parent with S&P or Moody's is lower than BBB- (or
                     its equivalent);

               (iii) in respect of any such loan to the Borrower:

                     (A)   such loan shall be fully subordinated to the Facility
                           on terms acceptable to the Agent;

                                      -51-



               (B)  either:

                    (1)   the proceeds of such loan shall be credited to an
                          account (an "Escrow Account") held in France by the
                          Borrower with the Agent or the Security Trustee; or

                    (2)   (i)   if the Credit Rating of the Parent with S&P or
                                Moody's is not less than A- (or its equivalent);
                                or


                          (ii)  if the Credit Rating of the Parent with S&P or
                                Moody's is at least BBB- (or its equivalent) and
                                the relevant loan to the Parent is the subject
                                of a bank guarantee from a prime bank or
                                financial institution with a Credit Rating form
                                S&P or Moody's of at least A- (or its
                                equivalent),

                          the proceeds of that loan may be advanced to the
                          Parent by way of loan on the basis that such loan is
                          repayable on demand; and

               (C)  both the loan made to the Parent and the Escrow Account
                    shall be subject to Security in favour of the Security
                    Trustee, which Security is in form and substance
                    satisfactory to the Agent;

       (iv)   the aggregate amount of all such loans made in any financial
              year of Cegetel shall not exceed the dividend paid by Cegetel in
              respect of its previous financial year; and

       (v)    to the extent possible, such loans shall be converted into a
              dividend payment on Cegetel's next dividend payment date in full
              or partial settlement of the dividend due for payment on such
              date.

20.12  Fees

       The Borrower shall not (and the Parent shall ensure that the Borrower
       shall not) incur or pay any fees or commissions to any person other
       than fees incurred under the terms of any Transaction Document and any
       administrative fees incurred in the ordinary course of its day-to-day
       business.

20.13 Dividends

       (a)  The Borrower shall not (and the Parent shall procure that the
            Borrower shall not):

           (i)   declare, make or pay any dividend, charge, fee or other
                 distribution (or interest on any unpaid dividend, fee or
                 distribution) (whether in cash or in kind) on or in respect of
                 its share capital (or any class of its share capital);

           (ii)  repay or distribute any dividend or share premium reserve;

                                      -52-

            (iii) pay any management, advisory or other fee to or to the order
                  of the Parent; or

            (iv)  redeem, repurchase, defease, retire or repay any of its share
                  capital or resolve to do so.

      (b)   Each of the Parent and the Borrower shall procure that Cegetel
            shall not pay any dividend in relation to its share capital unless
            such dividend is paid in cash.

      (c)   Each of the Parent and the Borrower shall procure that neither
            Cegetel nor SFR shall enter into any agreement or arrangement
            containing any prohibition, limitation or other restriction on
            either Cegetel or SFR in respect of the declaration or payment of
            dividends or other distributions on its issued share capital, save
            to the extent such restriction is set out under the terms of the
            Cegetel Shareholders' Agreement as at the date of this Agreement.

20.14 Financial Indebtedness

      (a)   Other than under the Transaction Documents or pursuant to any loan
            made to it (i) by Cegetel in accordance with paragraph (c) of
            Clause 20.11 (Loans or Credit) or (ii) by the Parent on a
            subordinated basis the terms of which shall have been approved by
            the Lenders, the Borrower shall not (and the Parent shall ensure
            that the Borrower shall not) incur or allow to remain outstanding
            any Financial Indebtedness.

      (b)   Each of the Parent and the Borrower shall ensure that no member of
            the Cegetel Group enters into any guarantee, indemnity or other
            instrument of suretyship in respect of Financial Indebtedness of
            the Parent and its Subsidiaries (other than members of the Cegetel
            Group).

20.15 Amendments

      The Borrower shall not (and the Parent shall ensure that the Borrower
      shall not) agree to amend, vary, novate, supplement, supersede, waive or
      terminate any term of a Transaction Document, the Cegetel Shareholders'
      Agreement or any other document delivered to the Agent pursuant to
      Clause 4.1 (Initial Conditions Precedent) (including, without limitation,
      the dividend policy in respect of Cegetel) except:

      (a)   prior to or on the Closing Date, with the prior written consent of
            the Majority Lenders; or

      (b)   after the Closing Date, in a way which:

            (i)   could reasonably be expected not to materially and adversely
                  affect the interests of the Lenders; and

            (ii)  would not change the date, amount or method of payment of
                  dividends on the issued share capital of Cegetel,


                                     - 53 -


          provided that, for the avoidance of doubt, a change in the dividend
          policy of Cegetel which would reduce the dividends payable by Cegetel
          shall only be made with the prior written consent of the Majority
          Lenders.

20.16     SALE OF THE BORROWER CEGETEL SHARES

          If an Event of Default is continuing and if the Agent (on the
          instructions of the Lenders) so requests, the Borrower shall (and the
          Parent shall procure that the Borrower shall), subject to the proviso
          below, sell the Borrower Cegetel Shares as soon as practicable for the
          best consideration available on arm's length terms, and that the
          proceeds of such sale are applied in prepayment of the Loan, all
          accrued interest and all other amounts accrued under the terms of the
          Finance Documents, provided that, if the agreed net consideration is
          less than the aggregate of the Loan and all accrued and outstanding
          interest in respect thereof, the prior written consent of the Lenders
          shall be obtained before the Borrower agrees to any sale of the
          Borrower Cegetel Shares.

20.17     CONDITIONS SUBSEQUENT

          (a)  The Borrower shall (and the Parent shall procure that the
               Borrower shall) as soon as possible, and in any event within 30
               Business Days of the date of receipt of a draft pledge agreement
               from the legal advisers to the Agent, execute first ranking
               Security in the form of a pledge (nantissement de compte
               d'instruments financiers) in favour of the Security Trustee over
               the Borrower Cegetel Shares and carry out any action to protect,
               perfect or give priority to such Security.

          (b)  The Parent shall, and the Parent shall procure that each of its
               Subsidiaries (other than the Borrower) shall, as soon as any
               restriction in respect of the same ceases to have effect,
               whether under the terms of the Cegetel Shareholders' Agreement
               and any other relevant shareholder agreement existing at the date
               of this Agreement or under the terms of the Existing Facilities,
               execute first ranking Security in the form of a cession de
               creance in favour of the Lenders over its rights to receive
               dividends on all of the shares held by it whether directly or
               indirectly in the issued share capital of Cegetel, provided that
               such Security shall be released in accordance with the terms of
               paragraph (b) of Clause 24.24 (Releases).

20.18     PARENT

          (a)  The Parent shall not, and shall procure that none of its
               Subsidiaries (other than the Borrower) shall, grant Security over
               any shares in the issued share capital of Cegetel beneficially
               owned by such company, unless:

                    (i)  such shares remain subject to the Tag Along and Drag
                         Along Rights; and

                    (ii) such Security is subject to any Security granted by it
                         pursuant to paragraph (b) of Clause 20.17 (Conditions
                         Subsequent).

                                      -54-

      (b) The Parent shall not, and shall procure that none of its Subsidiaries
          shall, sell, transfer or otherwise dispose of all or any of the Parent
          Cegetel Shares beneficially owned by such company unless:

          (i)

               (A)  such disposal is made to a wholly owned Subsidiary of the
                    Parent;

               (B)  the Subsidiary referred to in paragraph (A) above is
                    incorporated in France; and

               (C)  such shares remain subject to the Tag Along and Drag Along
                    Rights; or

          (ii) such disposal is made pursuant to the terms of the Tag Along and
               Drag Along Rights.

20.19 TD, CEGETEL S.A., RESEAU SANTE SOCIAL

      Each of the Parent and the Borrower shall use all reasonable endeavours,
      subject to the terms of the Cegetel Shareholders' Agreement, to ensure
      that on any disposal by Cegetel of its interest in TD, Cegetel S.A. or
      Reseau Sante Social (or a disposal of all or substantially all of the
      assets of any such company), Cegetel shall apply the cash proceeds of such
      disposal in payment of a dividend to its shareholders within 12 months of
      such disposal.

21.   EVENTS OF DEFAULT

      Each of the events or circumstances set out in this Clause 21 is an Event
      of Default.

21.1  NON-PAYMENT

      The Borrower 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 three Business Days of its due date.

21.2  OTHER OBLIGATIONS

      (a) The Parent or the Borrower does not comply with any provision of the
          Finance Documents (other than those referred to in Clause 20.18(b)
          (Parent), Clause 19.2 (Financial condition) or Clause 21.1
          (Non-payment)).

      (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 Agent giving notice to the Parent or the Borrower
          or the Parent or the Borrower becoming aware of the failure to comply.

21.3  MISREPRESENTATION

      Any representation or statement made or deemed to be made by the Parent,
      the Borrower or Cegetel in the Finance Documents or any other document
      delivered by or

                                      -55-


      on behalf of the Parent, the Borrower or Cegetel under or in connection
      with any Finance Document is or proves to have been incorrect or
      misleading when made or deemed to be made.

21.4  Cross Default

      (a)   Any Financial Indebtedness of the Parent, the Borrower or any member
            of the Cegetel Group is not paid when due (subject to any applicable
            grace period).

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

      (d)   No Event of Default will occur under this Clause 21.4 if the
            aggregate amount of Financial Indebtedness or commitment for
            Financial Indebtedness falling within paragraphs (a) to (c) above is
            less than:

            (i)   in the case of the Parent, if the Credit Rating of the Parent
                  with S&P or Moody's is less than BBB- (or its equivalent), EUR
                  40,000,000 but otherwise EUR 50,000,000 (or its equivalent in
                  any other currency or currencies); or

            (ii)  in the case of the Cegetel Group, EUR 30,000,000 (or its
                  equivalent to any other currency or currencies).

21.5  Insolvency

      (a)   The Parent, the Borrower or any other Material Company is unable or
            admits inability to pay its debts as they fall due or is deemed to
            or declared to be unable to pay its debts under applicable law,
            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 all or a
            class of its indebtedness.

      (b)   The Parent, the Borrower or any other Material Company which
            conducts business in France is in a state of cessation des
            paiements, or any Material Company becomes insolvent for the purpose
            of any insolvency law.

      (c)   A moratorium is declared in respect of all or any class of any
            indebtedness of the Parent, the Borrower or any other Material
            Company.

                                      -56-



21.6 INSOLVENCY PROCEEDINGS

     (a)  Any corporate action, 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
               the Parent, the Borrower or any other Material Company other than
               a solvent liquidation or reorganisation of any Material Company
               other than the Borrower or Cegetel;

         (ii)  a composition, assignment or arrangement with all or any class
               of creditors of the Parent, the Borrower or any other Material
               Company;

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

          (iv) enforcement of any Security over any assets of the Parent, the
               Borrower or any other Material Company,

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

     (b)  The Parent, the Borrower or any other Material Company commences
          proceedings for reglement amiable in accordance with articles L.611-3
          to L.611-6 of the French Code de Commerce.

     (c)  A judgement for redressement judiciaire, cession totale de
          l'entreprise or liquidation judiciaire is entered in relation to the
          Parent, the Borrower or any other Material Company under articles
          L.620-1 to L.628-3 of the French Code de Commerce.

     (d)  Paragraph (a) shall not apply to any winding-up petition which is
          frivolous or vexatious and is discharged, stayed or dismissed within
          30 days of commencement.

21.7 CREDITORS' PROCESS

     Any expropriation, attachment, sequestration, distress or execution or any
     analogous process in any jurisdiction affects any asset or assets of the
     Parent, the Borrower or any other Material Company and is not discharged
     within 30 days.

21.8 UNLAWFULNESS AND INVALIDITY

     (a)  It is or becomes unlawful for the Borrower or the Parent to perform
          any of its material obligations under the Finance Documents or any
          Transaction Security created or expressed to be created or evidenced
          by the Transaction Security Documents ceases to be effective.



                                      -57-


     (b)  Any obligation or obligations of the Borrower or the Parent under any
          Finance Documents are not or cease to be legal, valid, binding or
          enforceable and the cessation individually or cumulatively materially
          and adversely effects the interests of the Lenders under the Finance
          Documents.

     (c)  Any Finance Document ceases to be in full force and effect or any
          Transaction Security ceases to be legal, valid, binding, enforceable
          or effective or any subordination created thereunder is alleged by a
          party to it (other than a Finance Party) to be ineffective.

21.9  REPUDIATION

      The Borrower or the Parent repudiates a Finance Document or any of the
      Transaction Security or evidences an intention to repudiate a Finance
      Document or any Transaction Security.

21.10 CESSATION OF BUSINESS

      The Parent, the Borrower or any other Material Company ceases (or
      threatens to cease) to carry on all or substantially all of its business.

21.11 MATERIAL ADVERSE CHANGE

      Any event or circumstance occurs in respect of (i) the Parent, (ii) the
      Borrower or (iii) the Cegetel Group (taken as a whole) which has, or could
      reasonably be expected to have a Material Adverse Effect.

21.12 ACCELERATION

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

      (a) cancel the Total Commitments whereupon they shall immediately be
          cancelled and any fees payable under the Finance Documents in
          connection with these Commitments shall be immediately due and
          payable;

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

      (c) direct the Security Trustee to exercise any or all of its rights,
          remedies, powers or discretions under the Finance Documents.

21.13 NON-RECOURSE

      Each Finance Party hereby waives all rights and claims it may have against
      the Parent as a result of a breach of any undertaking by the Parent under
      the terms of this Agreement. Such waiver shall be without prejudice to:

      (a) the occurrence of an Event of Default pursuant to Clause 21.2 (Other
          obligations) and the rights of the Agent and the Lenders pursuant to
          Clause 21.12 (Acceleration); and



                                      -58-



               (b)  the rights and claims of the Finance Parties pursuant to the
                    enforcement of any of the Transaction Security from time to
                    time, whether such Transaction Security is granted by the
                    Parent or the Borrower.
















                                      -59-


                                   SECTION 8
                               CHANGES TO PARTIES

22.    CHANGES TO THE LENDERS

22.1   Assignments and transfers by the Lenders
       Subject to this Clause 22, a Lender (the "Existing Lender") may:

       (a)    assign any of its rights and benefits, or

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

       to another bank or financial institution (the "New Lender") provided that
       any assignment or transfer of part (but not the whole) of a Lender's
       Commitment shall be in a minimum aggregate amount of EUR15,000,000.

22.2   Conditions of assignment or transfer

       (a)  The consent of the Borrower is required for an assignment or
            transfer by a Lender, unless:

            (i)  the assignment or transfer is to another Lender or an Affiliate
                 of a Lender; or

            (ii)  an Event of Default is continuing.

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

       (c)  The consent of the Borrower 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 receipt by the Agent of
            written confirmation from the New Lender (in form and substance
            satisfactory to the Agent) that the New Lender will assume the same
            obligations to the other Finance Parties as it would have been under
            if it was an Original Lender.

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

       (f)  If:

            (i)  a Lender assigns or transfers any of its rights, benefits 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, the Borrower would be
                 obliged to make a payment to the New Lender or Lender acting
                 through its new Facility Office under


                                      -60-

                Clause 12 (Tax gross-up and indemnities) of Clause 13 (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.

22.3 ASSIGNMENT OR TRANSFER FEE

     The New Lender shall, on the date upon which an assignment or transfer
     takes effect, pay to the Agent (for its own account) a fee of EUR 1,500.

22.4 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 the Parent, the Borrower or any
                member of the Cegetel Group;

          (iii) the performance and observance by the Parent, the Borrower or
                any member of the Cegetel Group 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 the Parent, the Borrower and the Cegetel Group in
                connection with its participation in this Agreement and has not
                relied exclusively on any information provided to it by the
                Existing Lender or any other Finance Party in connection with
                any Finance Document or the Transaction Security; and

          (ii)  will continue to make its own independent appraisal of the
                creditworthiness of the Parent, the Borrower and the Cegetel
                Group 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 22; or

                                      -61-

          (ii) support any losses directly or indirectly incurred by the New
               Lender by reason of the non-performance by the Parent, the
               Borrower or any member of the Cegetel Group of its obligations
               under the Finance Documents or otherwise.

22.5 PROCEDURE FOR TRANSFER

     (a)  Subject to the conditions set out in Clause 22.2 (Conditions of
          assignment or transfer) a transfer is effected in accordance with
          paragraph (b) below when the Agent executes an otherwise duly
          completed Transfer Certificate delivered to it by the Existing Lender
          and the New Lender. The Agent shall, 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)  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 Parent, the Borrower 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 under the Finance Documents and in respect of the
               Transaction Security shall be cancelled (being the "Discharged
               Rights and Obligations");

          (ii) each of the Parent and Borrower 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 the Parent, the Borrower and the New Lender have
               assumed and/or acquired the same in place of the Parent, the
               Borrower and the Existing Lender;

        (iii)  the Agent, the Arranger, the Security Trustee, 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 Agent, the Arranger, the Security Trustee
               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".


                                      -62-







22.6 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 the Finance Documents;

     (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, the
          Finance Documents; or

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

     any information about the Parent, the Borrower, the Cegetel Group and the
     Finance Documents as that Lender shall consider appropriate provided that
     the person to whom the information is to be given has entered into a
     Confidentiality Undertaking.

23.  CHANGES TO THE PARENT AND THE BORROWER

     Neither the Parent nor the Borrower may assign any of its rights or
     transfer any of its rights or obligations under the Finance Documents.

                                      -63-

                                   SECTION 9
                               THE FINANCE PARTIES

24.  THE AGENT, THE SECURITY TRUSTEE AND THE ARRANGER

24.1 APPOINTMENT OF THE AGENT

     (a)  Each other Finance Party appoints the Agent to act as its agent under
          and in connection with the Finance Documents, including any
          Transaction Security Documents entered into in favour of the Lenders.

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

24.2 DECLARATION OF TRUST

     (a)  The Security Trustee declares that it shall hold the Transaction
          Security created on trust for the Finance Parties on the terms
          contained in this Agreement.

     (b)  Each party agrees that the Security Trustee shall have only those
          duties, obligations and responsibilities expressly specified in the
          Finance Documents to which it is a party (and no others shall be
          implied).

     (c)  The Finance 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 pursuant to the Transaction Security Documents
          except through the Agent.

     (d)  The rights, powers and discretions conferred upon the Security Trustee
          by this Agreement shall be supplemental to the Trustee Act 1925 and in
          addition to any which may be vested in the Security Trustee by general
          law or otherwise.

     (e)  Section 1 of the Trustee Act 2000 shall not apply to the duties of the
          Security Trustee in relation to the trusts constituted by this
          Agreement. Where there are any inconsistencies between the Trustee
          Acts 1925 and 2000 and the provisions of this Agreement, the
          provisions of this Agreement shall, to the extent allowed by law,
          prevail and, in the case of any inconsistency with the Trustee Act
          2000, the provisions of this Agreement shall constitute a restriction
          or exclusion for the purposes of that Act.

24.3 DUTIES OF THE AGENT

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

     (b)  If the Agent receives notice from a Party referring to this Agreement,
          describing a Default and stating that the circumstance described is a
          Default, then (i) in the case of a notice received by the Agent, the
          Agent shall promptly

                                      -64-

               notify the Lenders or (ii) in the case of the notice received by
               the Security Trustee, the Security Trustee shall promptly inform
               the Agent.

          (c)  The Agent shall promptly notify the Lenders of any Default
               arising under Clause 21.1 (Non-Payment).

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

24.4      Role of the Arranger

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

24.5      No fiduciary or other duties

          (a)  Nothing in the Finance Documents constitutes the Agent or the
               Arranger as a trustee or fiduciary of any other person.

          (b)  Neither the Agent nor the Arranger nor the Security Trustee shall
               be bound to account to any Lender or other Finance Party for any
               sum or the profit element of any sum received by its for its own
               account.

          (c)  The Security Trustee shall not have or be deemed to have any
               duty, obligation or responsibility to, or a relationship of
               trust or agency with, the Parent, the Borrower, Cegetel or any
               other member of the Group party to the Finance Documents.

24.6      Business with the Group

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

24.7      Rights and discretions of the Agent and Security Trustee

          (a)   Each of the Agent and the Security Trustee may rely on:

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

               (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)  Each of the Agent and the Security Trustee may assume, unless it
               has received actual notice to the contrary in its capacity as
               Agent for the Lenders (in the case of the Agent) or Security
               Trustee for the Finance Parties (in the case of the Security
               Trustee), that:

               (i)  no Default has occurred (unless, in the case of the Agent,
                    it has actual knowledge of a Default arising under Clause
                    21.1 (Non-Payment)); and


                                     - 65 -


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

     (c)  Each of the Agent and the Security Trustee may engage, pay for and
          rely on (whether or not retained by the Agent or Security Trustee) the
          advice or services of any lawyers, accountants, surveyors or other
          experts.

     (d)  Each of the Agent and the Security Trustee may act in relation to the
          Finance Documents through its personnel and agents.

     (e)  The 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 Agent nor the Arranger is 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.

     (g)  The Security Trustee 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. This
          paragraph (g) shall not apply to any legal or arbitration proceeding
          relating to the perfection, preservation or protection of rights under
          the Transaction Security Documents or enforcement of the Transaction
          Security or Transaction Security Documents.

     (h)  The Security Trustee 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 Finance
          Party, the Parent, the Borrower or any member of the Group, upon a
          certificate signed by or on behalf of that person.

     (i)  The Security Trustee may refrain from acting in accordance with the
          instructions of the 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.

24.8 Agent's Actions

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


                                      -66-



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

     (c)  The Agent may refrain from acting in accordance with the instructions
          of by the Majority Lenders (or, if appropriate, the Lenders) until it
          has received such indemnification and/or 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 Agent may act (or refrain from taking
          action) as it considers to be in the best interest of the Lenders.

     (e)  The 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. This sub-clause (e)
          shall not apply to any legal or arbitration proceeding relating to the
          perfection, preservation or protection of rights under the Transaction
          Security Documents or enforcement of the Transaction Security or
          Transaction Security Documents.

24.9 Security Trustee's Actions
     The Security Trustee:

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

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

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

     (d)  may, and shall if so directed by the Agent, at any time after receipt
          by the Security Trustee of notice from the Agent directing the
          Security Trustee to exercise all or any of its rights, remedies,
          powers or discretions pursuant to Clause 21.12 (Acceleration), take
          such action as in its sole discretion it thinks fit to enforce the
          Transaction Security;

                                      -67-


      (e)   shall be entitled to carry out all dealings with the Lenders
            through the Agent, to give to the Agent any notice or other
            communication required to be given by the Security Trustee to the
            Lenders and to rely on a certificate from the Agent as to the
            amount owed to any of the Finance Parties;

      (f)   may place (at the cost of the Borrower) any of the Finance
            Documents and any other documents relating to the Transaction
            Security created pursuant to the Transaction Security Documents in
            any safe custody selected by the Security Trustee or with any
            financial institution, any company whose business includes the safe
            custody of documents or any firm of lawyers of good repute and the
            Security Trustee shall not be responsible for, or required to
            insure against, any loss incurred in connection with that deposit;

      (g)   may accept without enquiry, and shall not be obliged to
            investigate, such right and title as the Parent or any member of
            the Group may have to any of the property subject to or expressed
            to be subject to Security under a Transaction Security Document and
            shall not be liable for or bound to require any such person to
            remedy any defect in its right or title;

      (h)   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 Trustee may do anything which is, in its
            opinion, necessary to comply with any such law, directive or
            regulation;

      (i)   shall promptly inform the Agent of:

            (i)   the contents of any notice or document received by it in its
                  capacity as Security Trustee from the Parent or the Borrower
                  under any Finance Document; and

            (ii)  the occurrence of any Default of which the Security Trustee
                  has received notice from any other party to this Agreement;

      (j)   shall not:

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

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

            (iii) be bound to disclose to any other person (including any
                  Finance 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;


                                     - 68 -


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

            (v)   have or be deemed to have any duty, obligation or
                  responsibility to, or relationship of trust or agency with
                  the Parent, the Borrower or any other person which has
                  entered into a Transaction Security Document;

      (k)   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
            Trustee 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 Trustee 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.

24.10 Responsibility for documentation

      Neither the Agent nor the Arranger nor the Security Trustee:

      (a)   is responsible for the adequacy, accuracy and/or completeness of
            any information (whether oral or written) supplied by the Agent,
            the Arrangers, the Security Trustee, the Parent, the Borrower or
            any other person given in or in connection with any Finance
            Document; 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.

24.11 Exclusion of liability

      (a)   Without limiting sub-clause (b) below, neither the Agent nor the
            Security Trustee 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 Agent of the Security Trustee (as
            applicable)) may take any proceedings against any officer, employee
            or agent of the Agent or the Security Trustee in respect of any
            claim it might have against the Agent or the Security Trustee 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 Agent or the Security Trustee may
            rely on this Clause subject to Clause 1.4 (Third Party Rights) and
            the provisions of the Contracts (Rights of Third Parties) Act
            1999.

      (c)   The 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 Agent if the Agent
            has taken all necessary steps as soon as


                                     - 69 -


               reasonably practicable to comply with the regulations or
               operating procedures of any recognised clearing or settlement
               system used by the Agent for that purpose.

          (d)  Neither the Agent nor the Security Trustee will 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 Agent, the
               Security Trustee, or otherwise.

          (e)  Neither the Agent nor the Security Trustee will 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.

24.12     SECURITY TRUSTEE'S EXCLUSIONS

          The Security Trustee 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 the Parent or any
               member of the Group to any of property that is subject to or
               expressed to be subject to the Transaction Security;

          (b)  obtain any license, 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 under any applicable laws in any
               jurisdiction or to give notice to any person of the execution of
               any of the Finance Documents or of the Transaction Security;

          (d)  take, or to require the Parent or the Borrower to take, any steps
               to perfect its title to any of the property that is subject to or
               expressed to be subject to the Transaction Security 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 assurance in relation to any of the
               Transaction Security Documents.

24.13     INSURANCE BY SECURITY TRUSTEE

          The Security Trustee shall not be under any obligation to insure any
          of the property subject to or expressed to be subject to the
          Transaction Security, 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 Trustee shall not be

                                      -70-

         responsible for any loss which may be suffered by any person as a
         result of the lack of or inadequacy of any such insurance. Where the
         Security Trustee is named on any insurance policy as an insured party,
         it shall not be responsible for any loss which may be suffered by
         reason of, directly or indirectly, its failure to notify the insurers
         of any material fact relating to the risk assumed by such insurers or
         any other information of any kind, unless any Finance Party shall have
         requested it to do so in writing and the Security Trustee shall have
         failed to do so within fourteen days after receipt of that request.

24.14    LENDERS' INDEMNITY TO THE AGENT AND THE SECURITY TRUSTEE

         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 the
         Agent and the Security Trustee, within three Business Days of demand,
         against any cost, loss or liability incurred by the Agent or the
         Security Trustee (otherwise than by reason of the Agent's or the
         Security Trustee's gross negligence or wilful misconduct) in acting as
         Agent or as Security Trustee under the Finance Documents (unless the
         Agent or the Security Trustee has been reimbursed by the Borrower
         pursuant to a Finance Document).

24.15    RESIGNATION

         (a)   Each of the Agent and the Security Trustee may resign and
               appoint one of its Affiliates as successor by giving notice to
               the Lenders and the Borrower.

         (b)   Alternatively each of the Agent and the Security Trustee may
               resign by giving notice to the Lenders and the Borrower, in which
               case the Majority Lenders (after consultation with the Borrower)
               may appoint a successor Agent of Security Trustee.


         (c)   If the Majority Lenders have not appointed a successor Agent or
               Security Trustee in accordance with sub-clause (b) above within
               30 days after notice of resignation was given, the Agent or
               Security Trustee (after consultation with the Borrower) may
               appoint a successor Agent or Security Trustee.

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

         (e)   The Agent's or Security Trustee's resignation notice shall only
               take effect upon the appointment of a successor and, in the case
               of the Security Trustee, upon the transfer of all the Security
               created pursuant to the Transaction Security Documents to a
               successor.

         (f)   Upon the appointment of a successor, the retiring Agent or
               Security Trustee shall be discharged from any further obligation
               in respect of the Finance Documents but shall remain entitled to
               the benefit of this Clause 24. Its

                                      -71-



          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 Borrower, the Majority Lenders may, by
          notice to the Agent or Security Trustee, require it to resign in
          accordance with sub-clause (b) above. In this event, the Agent or
          Security Trustee shall resign in accordance with sub-clause (b) above.

24.16 DELEGATION AND ADDITIONAL SECURITY TRUSTEES

      The Security Trustee may, at any time:

     (a)  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 and such delegation may be made upon
          such terms and conditions (including the power to sub-delegate) and
          subject to such restrictions as the Security Trustee may think fit in
          the interest of the Finance 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 such delegate
          or sub-delegate; and

     (b)  appoint (and subsequently remove) any person to act as a separate
          Security Trustee or as a co-Security Trustee jointly with it (i) if it
          considers such appointment to be in the interests of the Finance
          Parties or (ii) for the purposes of conforming to any legal
          requirements, restrictions or conditions which the Security Trustee
          deems to be relevant or (iii) for obtaining or enforcing any judgement
          in any jurisdiction, and the Security Trustee shall give prior notice
          to the Borrower and the Agent of any such appointment. Any person so
          appointed (subject to the terms of this Agreement) shall have such
          rights, powers and discretions (not exceeding those conferred or
          imposed on the Security Trustee by this Agreement) and the duties and
          obligations that are conferred by the instrument of appointment. The
          remuneration the Security Trustee may pay to any such person, and any
          costs and expenses incurred by such 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
          Trustee.

24.17 CONFIDENTIALITY

     (a) In acting as agent for the Finance Parties, the Agent and the Security
         Trustee shall be regarded as acting through its agency 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
         Agent or Security Trustee, it may be treated as confidential to that
         division or department and neither the Agent nor Security Trustee shall
         be deemed to have notice of it.

                                      -72-


          (c)  Notwithstanding any other provision of any Finance Document to
               the contrary, neither the Agent nor the Arranger nor the Security
               Trustee are obliged to disclose to any other person (including
               any Finance Party) (i) any confidential information or (ii) any
               other information if the disclosure would or might in its
               reasonable opinion constitute a breach of any law or a breach of
               a fiduciary duty or otherwise be actionable at the suit of any
               person.

24.18     Agent's Relationship with the Lenders

          (a)  The 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 Agent with any information required
               by the Agent in order to calculate the Mandatory Cost in
               accordance with Schedule 9 (Mandatory Cost Formulae).

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

24.19    Credit appraisal by the Lenders

          Without affecting the responsibility of the Parent or the Borrower for
          information supplied by it or on its behalf in connection with any
          Finance Document, each Finance Party confirms to the Agent, the
          Arranger and the Security Trustee 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 Financed 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, under or executed in anticipation of,
               under or in connection with any Finance Document;

          (d)  the adequacy, accuracy and/or completeness of any information
               provided by the Agent, the Security Trustee, any Party or by any
               other person under or in


                                     - 73 -


               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 property subject to or expressed
               to be subject to the Transaction Security, the priority of any of
               Security or the existence of any Security affecting the property
               subject to or expressed to be subject to the Transaction
               Security,

         and, each Finance Party acknowledges to the Agent, the Arranger and the
         Security Trustee that it has not relied on and will not rely on the
         Agent, the Arranger or the Security Trustee in respect of any of these
         matters.

24.20    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 Agent
         shall (in consultation with the Borrower) appoint another Lender or an
         Affiliate of a Lender to replace that Reference Bank.

24.21    Manner of Enforcement
         Each of the Parent and the Borrower, in so far as it is party to the
         Transaction Security Documents waives, to the extent permitted under
         applicable law, all rights it may otherwise have to require that
         Transaction Security be enforced in any particular order or manner or
         at any particular time or that any sum received or recovered from any
         person, or by virtue of the enforcement of the Transaction Security or
         any other Security, which is capable of being applied in or towards
         discharge of any of the obligations of the Borrower to the Finance
         Parties under the Finance Documents is so applied.

24.22    Winding-up of Trust and Perpetuity Period
         If the Security Trustee, with the approval of the Majority Lenders,
         determines that (i) all of the obligations of the Borrower to the
         Finance Parties under the Finance Documents and all other obligations
         secured by any of the Transaction Security Documents, have been
         discharged in full and (ii) none of the Finance Parties is under any
         commitment, obligation or liability (whether actual or contingent) to
         make the Loan available or provide other financial accommodation to the
         Borrower pursuant to the Finance Documents, the trusts set out in this
         Agreement shall be wound up. At that time the Security Trustee shall
         release, without recourse or warranty, all of the Transaction Security
         then held by it and the rights of the Security Trustee under each of
         the Transaction Security Documents, at which time each of the Security
         Trustee, the Agent, the Finance Parties, the Parent and the Borrower
         shall be released from its obligations in respect of these trusts and
         the Security created pursuant to the Transaction Security Documents
         (save for those which arose prior to such winding-up). The perpetuity
         period under the rule against perpetuities, if applicable to this
         Agreement, shall be the period of eight years from the date of this
         Agreement.

                                      -74-



24.23     Deduction from amounts payable by the Agent

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

24.24     Releases

          (a)  Upon a disposal of any of the property that is subject to or
               expressed to be subject to the Transaction Security:

               (i)  pursuant to the enforcement of the Transaction Security; or

               (ii) if that disposal is permitted under the Finance Documents,

               the Security Trustee shall (at the cost of the Borrower) release
               that property from the Transaction Security and is authorised to
               execute, without the need for any further authority from the
               Finance Parties, any release of the Transaction Security or other
               claim over that asset that may be required or desirable.

          (b)  The Finance Parties hereby agree that any Security granted
               pursuant to paragraph (b) of Clause 20.17 (Conditions Subsequent)
               shall be released by the Security Trustee immediately upon its
               being notified that a Pledgee of any such shares has enforced its
               rights under the terms of any Security granted to it by the
               Parent or any Subsidiary of the Parent (other than the Borrower),
               as the case may be. For the purpose of this paragraph (b),
               "Pledgee" means any person in favour of whom the Parent or any of
               its Subsidiaries (other than the Borrower) has granted Security
               over any of the shares in the issued share capital of Cegetel
               pursuant to the terms of the Existing Facilities.

24.25     Covenant to pay the Security Trustee

          (a)  Notwithstanding any other provision of this Agreement, the
               Borrower hereby irrevocably and unconditionally undertakes to pay
               to the Security Trustee, as creditor in its own rights and not as
               representative of the Finance Parties a sum equal to and in the
               currency of each amount payable by it to the other Finance
               Parties under the Finance Documents, as and when that amount
               falls due for payment under the relevant Finance Document.

          (b)  The rights of the Finance Parties to receive payment of amounts
               payable by the borrower under the Finance Documents are several
               and are separate and independent from, and without prejudice to,
               the rights of the Security Trustee to receive payment under this
               Clause 24.25.

          (c)  The Security Trustee shall have its own independent right to
               demand payment of the amounts payable by the Borrower under this
               Clause 24.25, irrespective


                                      -75-



          of any discharge (otherwise than by payment) of the Borrower's
          obligation to pay those amounts.

     (d)  Any amount due and payable by the Borrower to the Security Trustee
          under this Clause 24.25 (Covenant to pay the Security Trustee) shall
          be decreased to the extent that the other Finance Parties have
          received (and are entitled to retain) payment in full of the
          corresponding amount under the other provisions of the Finance
          Documents and any amount payable by the Borrower to the other Finance
          Parties under those provisions shall be decreased to the extent that
          the Security Trustee has received (and is entitled to retain) payment
          in full of the corresponding amount under this Clause 24.25.

25.  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.

26.  SHARING AMONG THE FINANCE PARTIES

26.1 Payments to Finance Parties

     If a Finance Party (a "Recovering Finance Party") receives or recovers any
     amount from the Borrower other than in accordance with Clause 27 (Payment
     mechanics) or Clause 29 (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 Agent;

     (b)  the 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 Agent and
          distributed in accordance with Clause 27 (Payment mechanics), without
          taking account of any Tax which would be imposed on the Agent in
          relation to the receipt, recovery or distribution; and

     (c)  the Recovering Finance Party shall, within three Business Days of
          demand by the Agent, pay to the Agent an amount (the "Sharing
          Payment") equal to such receipt or recovery less any amount which the
          Agent determines may be retained by the Recovering Finance Party as
          its share of any payment to be made, in accordance with Clause 27.5
          (Partial payments).

                                      -76-


26.2  Redistribution of payments

      The Agent shall treat the Sharing Payment as if it had been paid by the
      party from whom it has been recovered and distribute it between the
      Finance Parties (other than the Recovering Finance Party) in accordance
      with Clause 27.5 (Partial payments).

26.3  Recovering Finance Party's rights

      (a)  On a distribution by the Agent under Clause 26.2 (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 party from whom
           such payment has been recovered shall be liable to the Recovering
           Finance Party for a debt equal to the Sharing Payment which is
           immediately due and payable.

26.4  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 Lender which has received a share of the relevant Sharing
           Payment pursuant to Clause 26.2 (Redistribution of payments) shall,
           upon request of the Agent, pay to the Agent for account of that
           Recovering Finance Party an amount equal to 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 party from whom such
           payment has been recovered will be liable to the reimbursing Finance
           Party for the amount so reimbursed.

26.5  Exceptions

      (a)  This Clause 26 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 party from
           whom such payment has been recovered.

      (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



                                      -77-


                    practicable having received notice and did not take separate
                    legal or arbitration proceedings.




























                                      -78-





                                   SECTION 10
                                 ADMINISTRATION

27.  PAYMENT MECHANICS

27.1 Payments to the Agent

     (a)  On each date on which the Borrower or a Lender is required to make a
          payment under a Finance Document, the Borrower or Lender shall make
          the same available to the 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 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 or London)
          with such bank as the Agent specifies.

27.2 Distributions by the Agent

     Each payment received by the Agent under the Finance Documents for another
     Party shall, subject to Clause 27.3 (Distributions to the Borrower), Clause
     27.4 (Clawback) and Clause 24.23 (Deduction from amounts payable by the
     Agent) be made available by the 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 Agent by not less than five
     Business Days' notice with a bank in the principal financial centre of the
     country of the currency (or, in relation to euro, in the principal
     financial centre of a Participating Member State or London).

27.3 Distributions to the Borrower

     The Agent may (with the consent of the Borrower or in accordance with
     Clause 28 (Set-off)) apply any amount received by it for the Borrower in or
     towards payment (on the date and in the currency and funds of receipt) of
     any amount due from the Borrower under the Finance Documents or in or
     towards purchase of any amount of any currency to be so applied.

27.4 Clawback

     (a)  Where a sum is to be paid to the Agent under the Finance Documents for
          another Party, the Agent is not obliged to pay that sum so 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 Agent pays an amount to another Party and it proves to be the
          case that the 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 Agent shall on demand refund the same to the
          Agent together with interest on that amount from the date of payment
          to the date of receipt by the Agent, calculated by the Agent to
          reflect its cost of funds.

                                      -79-




27.5 Partial payments

     (a)  If the Agent receives a payment that is insufficient to discharge all
          the amounts then due and payable by the Borrower under the Finance
          Documents, the Agent shall apply that payment towards the obligations
          of the Borrower 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 Agent and the Arranger 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)  Paragraph (a) above will override any appropriation made by the
          Borrower.

27.6 No set-off

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

27.7 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.

27.8 Currency of account

     (a)  Subject to paragraphs (b) to (e) below euro is the currency of account
          and payment for any sum from the Borrower under any Finance Document.

     (b)  A repayment of the Loan or an Unpaid Sum or a part of the Loan or an
          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.


                                      -80-







      (e)   Any amount expressed to be payable in a currency other than euro
            shall be paid in that other currency.

27.9  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, the currency or
                  currency unit of that country designated by the Agent (after
                  consultation with the Borrower); 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 Agent (acting
                  reasonably).

      (b)   If a change in any currency of a country occurs, this Agreement
            will, to the extent the Agent (acting reasonably and after
            consultation with the Borrower) specifies to be necessary, be
            amended to comply with any generally accepted conventions and market
            practice in the European interbank market and otherwise to reflect
            the change in currency.

28.   SET-OFF

      A Finance Party may set off any matured obligation due from the Borrower
      under the Finance Documents (to the extent beneficially owned by that
      Finance Party) against any matured obligation owed by that Finance Party
      to the Borrower, 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.

29.   APPLICATION OF PROCEEDS

29.1  ORDER OF APPLICATION

      All monies from time to time received or recovered by the Security Trustee
      in connection with the realisation or enforcement of all or any part of
      the Transaction Security shall be held by the Security Trustee on trust to
      apply them at such times as Security Trustee sees fit, to the extent
      permitted by applicable law in the following order of priority:

      (a)   in discharging any sums owing to the Security Trustee (in its
            capacity as Security Trustee);

      (b)   in payment to the Agent, on behalf of the Secured Parties, for
            application towards the discharge of all sums due and payable by the
            Borrower under any of the Finance Documents in accordance with
            Clause 27.5 (Partial payments).

                                      -81-



     (c) if the Borrower is under no further actual or contingent liability
         under any Finance Document, in payment to any person to whom the
         Security Trustee is obliged to pay in priority to the Borrower; and

     (d) the balance, if any, in payment to the Borrower.

29.2 Investment of proceeds

     Prior to the application of the proceeds of the Transaction Security in
     accordance with Clause 29.1 (Order of Application) the Security Trustee
     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
     Trustee or Agent with such financial institution (including itself) for so
     long as the Security Trustee thinks fit (the interest being credited to the
     relevant account) pending the application from time to time of those monies
     at the Security Trustee's discretion in accordance with the provisions of
     this Clause 29.

29.3 Currency conversion

     (a) For the purpose of or pending the discharge of any of the obligations
         owed by the Borrower to the Finance Parties under the Finance Documents
         the Security Trustee may convert any monies received or recovered by
         the Security Trustee from one currency to another, at the spot rate at
         which the Security Trustee is able to purchase the currency in which
         the such obligations owed by the Borrower are due with the amount
         received.

     (b) The obligations of the Borrower to pay in the due currency shall only
         be satisfied to the extent of the amount of the due currency purchased
         after the deducting the costs of conversion.

29.4 Permitted deductions

     The Security Trustee 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 Taxes 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 Taxes which may be assessed
     against it in respect of any of the property that is subject to or
     expressed to be subject to the Transaction Security, or as a consequence of
     performing its duties, or by virtue of its capacity as Security Trustee
     under any of the Finance Documents or otherwise (except in connection with
     its remuneration for performing its duties under any Finance Document).

29.5 Discharge of Obligations

     (a) Any payment to be made in respect of the obligations owed by the
         Borrower to the Finance Parties under the Finance Documents by the
         Security Trustee may be made to the Agent on behalf of the Lenders and
         that payment shall be a good discharge to the extent of that payment,
         to the Security Trustee.

     (b) The Security Trustee is under no obligation to make payment to the
         Agent in the same currency as that in which any Unpaid Sum is
         denominated.

                                      -82-


29.6   Sums received by the Borrower

       If the Borrower receives any sum which, pursuant to any of the Finance
       Documents, should have been paid to the Security Trustee, that sum shall
       promptly be paid to the Security Trustee for application in accordance
       with this Clause.

30.    NOTICES

30.1   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 or letter.

30.2  Addresses

       The address and fax number (and the department or officer, if any, for
       whose attention the communication is to be made) of each Party or any
       communication or document to be made or delivered under or in connection
       with the Finance Documents is:

       (a)  in the case of the Parent or the Borrower, that identified with its
            name below;

       (b)  in the case of each Lender, that notified in writing to the Agent
            on or prior to the date on which it becomes a Party; and

       (c)  in the case of the Agent or the Security Trustee, that identified
            with its name below,

       or any substitute address, fax number or department or officer as the
       Party may notify to the Agent (or the Agent may notify to the other
       Parties, if a change is made by the Agent) by not less than five Business
       Days' notice.

30.3   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,

            and, if a particular department or officer is specified as part of
            its address details provided under Clause 30.2 (Addresses), when
            addressed to that department or officer.

       (b)  Any communication or document to be made or delivered to the Agent
            will be effective only when actually received by the Agent or the
            Security Trustee and then only if it is expressly marked for the
            attention of the department or officer identified with the Agent's
            or the Security Trustee's signature below (or any substitute
            department or officer as the Agent or the Security Trustee shall
            specify for this purpose).

                                      -83-

      (c)  All notices from or to the Parent or the Borrower shall be sent
           through the Agent.

      (d)  Any communication or document made or delivered to the Borrower in
           accordance with this Clause will be deemed to have been made or
           delivered to the Parent.

30.4  Notification of address and fax number

      Promptly upon receipt of notification of an address and fax number or
      change of address or fax number pursuant to Clause 30.2 (Addresses) or
      changing its own address or fax number, the Agent shall notify the other
      Parties.

30.5  Electronic communication

      (a)  Any communication to be made between the Agent or the Security
           Trustee and a Lender under or in connection with the Finance
           Documents may be made by electronic mail or other electronic means,
           if the Agent, the Security Trustee and the relevant Lender:

           (i)   agree that, unless and until notified to the contrary, this is
                 to be an accepted form of communication;

           (ii)  notify each other in writing of their electronic mail address
                 and/or any other information required to enable the sending and
                 receipt of information by that means; and

           (iii) notify each other of any change to their address or any other
                 such information supplied by them.

      (b)  Any electronic communication made between the Agent and a Lender or
           the Security Trustee will be effective only when actually received in
           readable form and in the case of any electronic communication made by
           a Lender to the Agent or the Security Trustee only if it is addressed
           in such a manner as the Agent or the Security Trustee shall specify
           for this purpose.

30.6  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

           (ii)  if not in English, and if so required by the Agent, 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.


                                      -84-


31.    CALCULATIONS AND CERTIFICATES

31.1   Accounts

       In any litigation or arbitration proceeding 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.

31.2   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.

31.3   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 year of 360 days or, in any case where the
       practice in the European interbank market differs, in accordance with the
       market practice.

32.    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.

33.    REMEDIES AND WAIVERS

       No failure to exercise, nor any delay in exercising, on the part of any
       Finance Party, 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.

34.    AMENDMENTS AND WAIVERS

34.1   Required consents

       (a)   Subject to Clause 34.2 (Exceptions) any term of the Finance
             Documents may be amended or waived only with the consent of the
             Majority Lenders and the Parent and/or the members of the Group
             party thereto and any such amendment or waiver will be binding on
             all parties thereto.

       (b)   The Agent may effect, on behalf of any Finance Party, any amendment
             or waiver permitted by this Clause.

34.2   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);

                                       -85-

          (ii)   an extension to the date of payment of any amount under the
                 Finance Documents;

          (iii)  a reduction in the Margin or a reduction in the amount of any
                 payment of principal, interest, fees or commission payable (for
                 fees and commissions to the extent payable to all Lenders
                 only);

          (iv)   an increase in or an extension of any Commitment;

          (v)    Clause 23 (Changes to the Parent and the Borrower);

          (vi)   any provision which expressly requires the consent of all the
                 Lenders;

          (vii)  Clause 2.2 (Finance Parties' rights and obligations), Clause 22
                 (Changes to the Lenders) or this Clause 34; or

          (viii) the nature or scope of the property that is subject to or
                 expressed to be subject to the Transaction Security 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 Agent, the Security Trustee or the Arranger may not be effected
          without the consent of the Agent, the Security Trustee or the
          Arranger.

34.3 Amendments by Security Trustee
     The Security Trustee may, if authorised by the Lenders, amend the terms of,
     waive any of the requirements of, or grant consents under, any of the
     Transaction Security Documents, any such amendment, waiver or consent being
     binding on all the parties to this Agreement.

35.  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.

                                      -86-



                                   SECTION 11
                         GOVERNING LAW AND ENFORCEMENT

36.  GOVERNING LAW

     This Agreement is governed by English law.

37.  ENFORCEMENT

37.1 Jurisdiction

     (a)  The courts of England have 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)  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 37.1 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.

37.2 Service of process

     Without prejudice to any other mode of service allowed under any relevant
     law, each of the Parent and the Borrower:

     (a)  irrevocably appoints Law Debenture Corporate Services Limited, Fifth
          Floor, 100 Wood Street, London EC2V 7EX 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 a process agent to notify it 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.


                                     - 87 -



                                   SCHEDULE 1

                              THE ORIGINAL LENDERS



Lender and Lending Office               Address for Notices          Commitment

CDC Finance - CDC IXIS              Credit                           141,324,042
26-28 rue Neuve Tolbiac
75658 Paris cedex 13                254 boulevard Saint Germain
France                              75007 Paris
                                    France

                                    Contact: Mr Luc Ercheberrigaray
                                    Phone:   00 33 1 40 49 96 69
                                    Fax:     00 33 1 40 49 91 62

                                    Loan Administration

                                    26 rue Neuve Tolbiac
                                    75013 Paris
                                    France

                                    Contact: Nicolas Devaux
                                    Phone:   00 33 1 58 55 60 39
                                    Fax:     00 33 1 58 55 60 29


                                     - 88 -



Credit Agricole Indosuez            Credit                           141,324,042
9 Quai du President Paul Doumer
92920 Paris la Defense cedex        9 Quai du President Doumer
                                    92920 Paris la Defense cedex

                                    Contact: Stephane Bailly (cc Jacques
                                             de Villaines/Dominique
                                             Meilhoc)
                                    Phone:   00 33 1 4189 1571 / 3892 /
                                             3090
                                    Fax:     00 33 1 4189 2950 / 3953 /
                                             1934


                                    Loan Administration

                                    9 Quai du President Doumer
                                    92920 Paris la Defense cedex

                                    Contact: Marie Claire Santoiemma
                                    Phone:   00 33 1 4189 0142
                                    Fax:     00 33 1 4189 1964


Credit Lyonnais                     Credit                           141,324,042
90 Quai de Bercy
75613 Paris                         1 rue des Italiens
Cedex 12                            75009 Paris

                                    Contact: Thibault Rosset/
                                             Gilles Gantois
                                    Phone:   00 33 1 42 95 66 52 / 21 21
                                    Fax:     00 33 1 42 95 03 82


                                    Loan Administration

                                    19 boulevard des Italiens
                                    75002 Paris

                                    Contact: Sandrine Miroph
                                    Phone:   00 33 1 53 02 56 56
                                    Fax:     00 33 1 53 02 67 23



                                     - 89 -


The Royal Bank of Scotland plc     Credit                           141,324,042
8 rue Lavoisier
75008 Paris                        8 rue Lavoisier
                                   75008 Paris

                                   Contact:  Brian Rowley/
                                             Drifa Ouabmed
                                   Phone:    00 33 1 49 24 12 19/12 23
                                   Fax:      00 33 1 49 24 12 20

                                   cc:       135 Bishopsgate
                                             London EC2M 3UR

                                   Contact:  Neil Jones, CIB TMT
                                   Phone:    00 44 20 7375 8475
                                   Fax:      00 44 20 7375 8549


                                   Loan Administration

                                   3rd Floor
                                   Regents House
                                   42 Islington High Street
                                   London N1 8XL

                                   Contact:  Paul Divall
                                   Phone:    00 44 20 7615 7430
                                   Fax:      00 44 20 7220 7370

                                   cc:       8 rue Lavoisier
                                             75008 Paris

                                   Contact:  Valerie Werdenberg,
                                             Middle Office
                                   Phone:    00 33 1 49 24 12 08
                                   Fax:      00 33 1 49 24 12 10



                                      -90-


BNP Paribas                    Credit                                136,567,944
16, boulevard del Italiens
75009 Paris                    BFI Structured Finance
                               Corporate Acquisition Finance
                               37, Place du Marche Saint Honore
                               75031 Paris Cedex 01

                               Contact:   Sophie Gazel
                               Phone:     00 33 1 43 16 91 66
                               Fax:       00 33 1 43 16 9029

                               cc 37 Plce du Marche St
                               Honore
                               75001 Paris
                               Contact:   Patrick d'Herouville
                               Phone:     00 33 1 42 98 43 15
                               Fax:       00 33 1 43 16 9029

                               Loan Administration

                               GSCI Gestion des Credits Financieres
                               150 rue du Faubourg
                               Poissonniere
                               75010 Paris

                               Contact:   Marie-Catherine Hurgues
                               Phone:     00 33 1 40 14 7342
                               Fax:       00 33 1 40 14 7425

Natexis Banques Populaires     Credit                                136,567,944
BP 4   75060
Paris cedex 2                  BP 4 75060
                               Paris cedex 2

                               Contact:   Helen Bully/Laurent Gillet
                               Phone:     00 33 1 48 00 78 77/
                                          00 33 1 48 00 25 47
                               Fax:       00 33 1 45 55 18 77

                               Loan Administration

                               Gestion des Credits
                               Bercy 2-8 avenue du General de Gaulle
                               94 220 Charenton Le Pont

                               Contact:   Annie Lecomte
                               Phone:     00 33 1 58 32 63 93
                               Fax:       00 33 1 58 32 24 90

                                      -91-



Societe Generale                     Credit                          136,567,944
Tour Societe Generale
17 cours Valmy                       Tour Societe Generale
92972 Paris - La Defense             17 cours Valmy
Cedex France                         92972 Paris - La Defense
                                     Cedex France

                                     Contact: Alain Gruge
                                     Phone:   00 33 1 42 14 80 11
                                     Fax:     00 33 1 42 13 41 69

                                     Loan Administration

                                     5 Place de la Pyramide
                                     92088 Paris - La Defense
                                     Cedex France

                                     Contact: O Gueguen/G Jacob
                                     Phone:   00 33 1 42 13 07 52/
                                              00 33 1 42 14 80 91
                                     Fax:     00 33 1 42 14 06 18/
                                              00 33 1 42 13 43 20

WestLB AG, Paris Branch              Credit                          100,000,000
15 Avenue de Friedland
75008 Paris                          15 Avenue de Friedland
                                     75008 Paris

                                     Contact: Nadine Veldung/Frederick
                                              Beaumelou
                                     Tel:     00 33 1 40 75 76 37
                                     Fax:     00 33 1 45 63 15 72

                                     Loan Administration

                                     6, rue Lamennais
                                     75008 Paris

                                     Contact: Catherine Ritter
                                     Tel:     00 33 1 40 75 76 02
                                     Fax:     00 33 1 45 61 42 22



                                      -92-


Dexia Credit Local                     Credit                         75,000,000
76, rue de la Victoire
75320 Paris Cedex 09                   76, rue de la Victoire
France                                 75320 Paris Cedex 09
                                       France

                                       Contact: Christophe Boucher
                                       Phone:   00 33 1 43 92 72 64
                                       Fax:     00 33 1 43 92 74 25

                                       Loan Administration

                                       Room 806
                                       7-11 Quai Andre Citroen
                                       BP 1002
                                       75901 Paris Cedex 15

                                       Contact: Thierry Plantelin/Christelle
                                                Pautrot
                                       Phone:   00 33 1 43 92 79 37
                                       Fax:     00 33 1 43 92 71 50

Cooperatieve Centrale Raiffeisen-      Credit                         50,000,000
Boerenleenbank B.A., (Rabobank
International, Paris Branch)           69 Boulevard Haussmann
69 Boulevard Haussmann                 75008 Paris
75008 Paris                            France
France
                                       Contact: Fabrice Vidal/
                                                Benjamin Guerini
                                       Phone:   00 33 1 44 71 82 47/82 26
                                       Fax:     00 33 1 44 71 00 60/81 26

                                       Loan Administration

                                       69 Boulevard Haussmann
                                       75008 Paris
                                       France

                                       Contact: Patrick Tinchant
                                       Phone:   00 33 1 44 71 82 17
                                       Fax:     00 33 1 44 71 82 61


                                      -93-



Credit Suisse First Boston, Paris       Credit                        50,000,000
Branch
21 Boulevard de la Madeleine            1 Cabot Square
Paris F-75038                           London E14 4QJ
Cedex 01 France                         United Kingdom

                                        Contact: Peter Oien/
                                                 Tarek Abuzayyad
                                        Phone:   00 44 20 7888 7135/
                                                 00 44 20 7883 3490
                                        Fax:     00 44 20 7943 7394/
                                                 00 44 20 7943 7490

                                        Loan Administration

                                        21 Boulevard de la Madeleine
                                        Paris F-75038
                                        Cedex 01 France

                                        Contact: Jean-Francois Cressot
                                        Phone:   00 33 1 40 76 57 18
                                        Fax:     00 33 1 40 76 57 26

Sumitomo Mitsui Banking                 Credit                        50,000,000
Corporation
Temple Court                            Temple Court
11 Queen Victoria Street                11 Queen Victoria Street
London EC4N 4TA                         London EC4N 4TA

                                        Contact: Layth Irani/Vinay Rustagi
                                        Tel:     00 44 20 7786 1757/
                                                 00 44 20 7786 1883
                                        Fax:     00 44 20 7786 1131/
                                                 00 44 20 7786 1227

                                        Loan Administration

                                        Temple Court
                                        11 Queen Victoria Street
                                        London EC4N 4TA

                                        Contact: IFDE Operations
                                        Tel:     00 44 20 7786 1014/1588/
                                                 1063
                                        Fax:     00 44 20 7786 1569


                                     - 94 -



                                   SCHEDULE 2

                              CONDITIONS PRECEDENT

1.   Corporate documentation

     (a) A copy of the statuts of each of the Parent, the Borrower and Cegetel.

     (b) A copy of a resolution of the board of directors of the Borrower and of
         appropriate corporate authority of the Parent:

         (i)   approving the terms of, and the transactions contemplated by, the
               Transaction Documents to which it is a party and resolving that
               it execute the Transaction Documents to which it is a party;

         (ii)  authorising a specified person or persons to execute the
               Transaction Documents to which it is a party on its behalf;

         (iii) authorising a specified person or persons, on its behalf, to sign
               and/or despatch all documents and notices (including, if
               relevant, the 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
         or corporate authority referred to in paragraph (b) above in relation
         to the Finance Documents.

     (d) A certificate of each of the Parent and the Borrower (signed by an
         authorised signatory) confirming that borrowing or securing, as
         appropriate, the Total Commitments would not cause any borrowing,
         security or similar limit binding on it to be exceeded.

     (e) A certificate of an authorised signatory of each of the Parent and the
         Borrower certifying that each copy document relating to it specified in
         this Schedule 2 is correct, complete and in full force and effect as at
         a date no earlier than the date of this Agreement.

2.   Transaction Documents

     (a) A copy of the Acquisition Agreement and all documentation relating
         thereto executed by the parties to those documents.

     (b) A certificate of an authorised signatory of the Borrower certifying
         that each of the conditions for completion of the Acquisition under the
         terms of the Acquisition Agreement has been satisfied or waived (other
         than payment of the purchase price under the terms of the Acquisition
         Agreement which will be satisfied immediately following utilisation of
         the Facility).

                                      -95-


     (c)  A certificate of an authorised signatory of the Borrower certifying
          each copy document specified in this paragraph 2 is correct, complete
          and in full force and effect as at a date no earlier than the date of
          this Agreement.

3.   Finance Documents

     (a)  The Fee Letters executed by the Borrower.

     (b)  A letter between the Agent and the Borrower in the agreed form dated
          on or before the date of this Agreement (and executed by the Borrower)
          in which the Borrower describes its interest rate hedging policy and
          undertakes not to change such policy without the prior written consent
          of the Agent.

4.   Transaction Security Documents

     First ranking security over all the assets of the Borrower other than the
     Borrower Cegetel Shares, to include, without limitation, an assignment (in
     the form of a cession de creance) of all of the Borrower's rights, title,
     benefit and interest in:

     (a)  all cash dividends payable in respect of the Borrower Cegetel Shares;

     (b)  the Acquisition Agreement;

     (c)  any right the Borrower may at any time have to the reimbursement of
          all or any part of the consideration paid by the Borrower to the
          Vendor in respect of the Borrower Cegetel Shares;

     (d)  the indemnity from the Parent in respect of any breach of the Tag
          Along and Drag Along Rights by the Parent, in a fixed amount of EUR
          1,300,000,000; and

     (e)  any amounts payable to the Borrower in consequence of the termination
          of the Hedging Agreements.

5.   Legal Opinions

     The following legal opinions, each addressed to the Finance Parties:

     (a)  A legal opinion of Clifford Chance Limited Liability Partnership,
          legal advisers to the Arranger and the Agent in England, as to English
          law substantially in the form distributed to the Original Lenders
          prior to signing this Agreement.

     (b)  a legal opinion of Clifford Chance Limited Liability Partnership,
          legal advisers to the Arranger and the Agent in France, as to French
          law, substantially in the form distributed in the Original Lenders
          prior to signing this Agreement.

                                      -96-


6.    Other Documents and Evidence

      (a)   Evidence that any process agent referred to in Clause 37.2 (Service
            of process), has accepted its appointment.

      (b)   Evidence that the fees, costs and expenses then due pursuant to
            Clause 11 (Fees), Clause 16 (Costs and Expenses) and Clause 12.5
            (Stamp Taxes) have been paid or will be paid by the Utilisation
            Date.

      (c)   The Business Plan

      (d)   A Certificate of the Borrower (signed by an authorised signatory)
            certifying that the Parent has subscribed in cash for ordinary
            shares in the Borrower, those ordinary shares subscribed for have
            been issued fully paid and as a result of the above subscription the
            Company has a sum of at least EUR 2,700,000,000 available to it
            which has been applied or will, simultaneously with utilisation
            under this Agreement, be applied for the same purpose as the
            proceeds of the Facility.

      (e)   A letter from the Parent to the Agent specifying the Holding Account
            including details of each account name, account number and the name
            and address of the bank where each account is held.

      (f)   Evidence that all relevant governmental and regulatory approvals,
            consents and authorisations, filings, notarisations and
            registrations (if any) for the transactions contemplated by the
            Transaction Documents, including the approval of the European
            Commission in respect of the Acquisition, have been obtained and are
            in full force and effect.

      (g)   Evidence that the Borrower Cegetel Shares benefit from tag along and
            drag along rights in relation to the share capital of Cegetel owned
            by the Parent (which, as at the date of this Agreement, represent
            not less than 43.999% of all of the share capital of Cegetel) which
            rights:

            (i)   are for the sole benefit of the Borrower (and, in the event of
                  enforcement of the Transaction Security providing Security in
                  respect thereof, the Security Trustee and the Secured
                  Parties);

            (ii)  apply to a sale of all or part of the share capital of Cegetel
                  owned by the Parent (in the manner contemplated in the letter
                  from the Parent to the Borrower relating to the Tag Along and
                  Drag Along Rights); and

            (iii) benefit from an indemnity from the Parent to the Borrower in
                  respect of a breach by the Parent of its obligations under
                  such rights in a fixed amount of EUR 1,300,000,000.

      (h)   A list including all contingent liabilities of the Cegetel Group as
            of the Utilisation Date, which shall not be materially different
            from the list attached

                                      -97-



         hereto as Schedule 8, save for new miscellaneous guarantees which shall
         not exceed an aggregate amount of EUR 50,000,000.

     (i) An update of the initial Cegetel Total Net Debt forecast included in
         the Information Package evidencing that Cegetel will have funds
         available to it which are sufficient to pay the dividend proposed to be
         paid by Cegetel in June 2003 in accordance with the Business Plan.

     (j) A solvency certificate in respect of the Parent, signed by the Chairman
         and the Chief Executive Officer of the Parent.

     (k) A certificate of the Borrower (signed by an authorised signatory)
         certifying that there are no contractual restrictions on Cegetel or SFR
         in respect of the declaration and payment of dividends on the issued
         share capital of each such company, save as set out in the Cegetel
         Shareholders' Agreement.

     (l) The letter from the Agent to the Borrower referred to in Clause 2.3
         (Taux Effectif Global).

     (m) Hedging Agreements duly executed by the Borrower on or before 31
         December 2002 in accordance with the hedging policy set out in the
         letter referred to in paragraph 3(b) above.

     (n) A certificate of the Borrower (signed by an authorised signatory)
         certifying that the copy of the Cegetel Shareholders' Agreement
         publicly available on the website of the Parent is true, accurate and
         complete as at the date of this Agreement.

                                      -98-


                                   SCHEDULE 3

                              UTILISATION REQUEST

From: [Borrower]

To:   [Agent]

Dated:

Dear Sirs

               [Borrower] - EUR 1,300,000,000 Facility Agreement
                       dated [        ] (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 the Loan on the following terms:

      Proposed Utilisation Date:       [       ] (or, if that is not a Business
                                       Day, the next Business Day)
      Amount:                          EUR [        ]

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
                               [name of Borrower]


                                      -99-



                                   SCHEDULE 4

                         FORM OF TRANSFER CERTIFICATES

                                     Part I

To:      [   ] as Agent

From:    [The Existing Lender] (the "Existing Lender") and [The New Lender]
(the "New Lender")

Dated:

               [Borrower] - EUR 1,300,000,000 Facility Agreement
                    dated [         ] 2002 (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 22.5 (Procedure for transfer):

    (a)  The Existing Lender and the New Lender agree to the Existing Lender and
         the New Lender transferring by novation all or part of the Existing
         Lender's Commitment, rights and obligations referred to in the Schedule
         in accordance with Clause 22.5 (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 30.2 (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 22.4 (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,]



                                     -100-


[Existing Lender]                         [New Lender]

By:                                       By:

This Transfer Certificate is accepted by the Agent and the Transfer Date is
confirmed at [       ].

[Agent]

By:





                                     -101-


                                    Part II

                         LMA Transfer Certificate(Par)

BANK:                                                           Date:

TRANSFEREE:

This Transfer Certificate is entered into pursuant to (i) the agreement (the
"Sale Agreement") evidenced by the Confirmation dated         between the Bank
and the Transferee (acting directly or through their respective agents) and (ii)
the Credit Agreement.

On the Transfer Date, the transfer by way of novation from the Bank to the
Transferee on the terms set out herein and in the Credit Agreement shall become
effective subject to:

(a)  the Sale Agreement and the terms and conditions incorporated in the Sale
     Agreement;

(b)  the terms and conditions annexed hereto; and

(c)  the schedule annexed hereto,

all of which are incorporated herein by reference.

The Bank                                    The Transferee
[            ]                              [          ]
By:                                         By:





                                     -102-


                                  The Schedule


Credit Agreement Details:

Borrower(s):                           ________________________________________
Credit Agreement Dated                 ________________________________________
Guarantor(s):                          ________________________________________
Agent Bank:                            ________________________________________
Security:                              / / No    / / Yes (specify)  ___________

Total Facility Amount:                 ________________________________________
Governing Law:                         ________________________________________
Additional Information:                ________________________________________

Transfer Details:
Name of Tranche Facility:              ________________       _________________
Nature (Revolving, Term, Acceptances
  Guarantee/Letter of Credit, Other):  ________________       _________________
Final Maturity:                        ________________       _________________
Participation Transferred
Commitment transferred(1)              ________________       _________________
  Drawn Amount (details below):(1)     ________________       _________________
  Undrawn Amount:(1)                   ________________       _________________

Statement Date:                        ________________

Details of outstanding Credits(1)

  Specify in respect of each Credit:   ________________
  Transferred Portion (amount):        ________________
  Tranche/Facility:                    ________________
  Nature:                              / / Term  / / Revolver / / Acceptance
                                       / / Guarantee/Letter of Credit
                                       / / Other (specify)  _____________

  / / Details of other Credits are set out on the attached sheet

Administration Details
Bank's Receiving Account:              ______________________
Transferee's Receiving Account:        ______________________

Addresses
Bank                                   Transferee
[        ]                             [        ]
Address:                               Address:
Telephone:                             Telephone:
Facsimile:                             Facsimile:
Telex:                                 Telex:
Attn/Ref:                              Attn/Ref:


(1) As at the date of the Transfer Certificate


                                    - 103 -




                              TERMS AND CONDITIONS

These are the Terms and Conditions applicable to the transfer certificate
including the Schedule thereto (the "Transfer Certificate") to which they are
annexed.

1.    Interpretation

      In these Terms and Conditions words and expressions shall (unless
      otherwise expressly defined herein) bear the meaning given to them in the
      Transfer Certificate, the Credit Agreement or the Sale Agreement.

2.    Transfer

      The Bank requests the Transferee to accept and procure the transfer by
      novation of all or a part (as applicable) of such participation of the
      Bank under the Credit Agreement as set out in the relevant part of the
      Transfer Certificate under the heading "Participation Transferred" (the
      "Purchased Assets") by counter-signing and delivering the Transfer
      Certificate to the Agent at its address for the service of notice
      specified in the Credit Agreement. On the Transfer Date the Transferee
      shall pay to the Bank the Settlement Amount as specified in the pricing
      letter between the Bank and the Transferee dated the date of the Transfer
      Certificate (adjusted, if applicable, in accordance with the Sale
      Agreement) and completion of the transfer will take place.

3.    Effectiveness of Transfer

      The Transferee hereby requests the Agent to accept the Transfer
      Certificate as being delivered to the Agent pursuant to and for the
      purposes of the Credit Agreement so as to take effect in accordance with
      the terms of the Credit Agreement on the Transfer Date or on such later
      date as may be determined in accordance with the terms thereof.

4.    Transferee's Undertaking

      The Transferee hereby undertakes with the Agent and the Bank and each of
      the other parties to the Credit Documentation that it will perform in
      accordance with its terms all those obligations which by the terms
      thereof will be assumed by it after delivery of the Transfer Certificate
      to the Agent and satisfaction of the conditions (if any) subject to which
      the Transfer Certificate is to take effect.

5.    Payments

5.1   Place

      All payments by either party to the other under the Transfer Certificate
      shall be made to the Receiving Account of that other party. Each party
      may designate a different account as its Receiving Account for payment by
      giving the other not less than five Business Days notice before the due
      date for payment.


                                    - 104 -


5.2   Funds

      Payments under the Transfer Certificate shall be made in the currency in
      which the amount is denominated for value on the due date at such times
      and in such funds as are customary at the time for settlement of
      transactions in that currency.

6.    The Agent

      The Agent shall not be required to concern itself with the Sale Agreement
      and may rely on the Transfer Certificate without taking account of the
      provisions of such agreement.

7.    Assignment of Rights

      The Transfer Certificate shall be binding upon and ensure to the benefit
      of each party and its successors and permitted assigns provided that
      neither party may assign or transfer its rights thereunder without the
      prior written consent of the other party.

8.    Counterparts

      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.

9.    Governing Law and Jurisdiction

      The Transfer Certificate (including, without limitation, these Terms and
      Conditions) 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.

      Each party irrevocably appoints the person described as process agent (if
      any) specified in the Sale Agreement to receive on its behalf service of
      any action, suit or other proceedings in connection with the Transfer
      Certificate. If any person appointed as process agent ceases to act for
      any reason the appointing party shall notify the other party and shall
      promptly appoint another person incorporated within England and Wales to
      act as its process agent.


                                    - 105 -


                                   SCHEDULE 5

                         FORM OF COMPLIANCE CERTIFICATE


To:   [        ] as Agent

From: [Borrower]

Dated:

Dear Sirs

               [Borrower] - EUR 1,300,000,000 Facility Agreement
                     dated [           ] (the "Agreement")

1.  We refer to the Agreement. This is a Compliance Certificate. Terms defined
    in the Agreement have the same meaning in this Compliance Certificate unless
    given a different meaning in this Compliance Certificate.

2.  We confirm that:

    (a)  Cegetel EBITDA for the twelve month period ending on [-] was [-].
         Therefore the covenant contained in paragraph (a) of Clause 19.2
         (Financial condition) [has/has not] been complied with;

    (b)  on the last day of the twelve month period ending on [-] Cegetal Total
         Net Debt was [-] and Cegetel EBITDA for the twelve month period ending
         on such date was [-]. Therefore Cegetel Total Net Debt at such time
         [did/did not] exceed [-] times Cegetel EBITDA for such twelve month
         period and the covenant contained in paragraph (b) of Clause 19.2
         (Financial condition) [has/has not] been complied with;

    (c)  In respect of the twelve month period ending on [-] 26% of Cegetel
         Cashflow for such period was [-] and Borrower Total Funding Costs for
         such period were [-]. Therefore 26% of Cegetel Cashflow for such period
         was [-] times Borrower Total Funding Costs for the relevant period and
         the covenant contained in paragraph (c) of Clause 19.2 (Financial
         condition) [has/has not] been complied with.

3.  We confirm that the following companies constitute Material Companies for
    the purposes of the Facility Agreement: [-].]

4.  [We confirm that no Default is continuing.]*





* 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.




                                    - 106 -

Signed:
       ---------------------------         -----------------------------------
       Director                            Director
       of                                  Of
       [Borrower]                          [Borrower]






                                     -107-

                                   SCHEDULE 6

                                   TIMETABLES


Delivery of a duly completed                              U-3
Utilisation Request (Clause 5.1
(Delivery of a Utilisation Request))                    10.30am

Agent notifies the Lenders of the Loan                    U-3
in accordance with Clause 5.4                            4.00pm
(Lenders' participation)

EURIBOR is fixed                             Quotation Day as of 11:00 a.m.
                                             Brussels time


"U" = date of utilisation

"U - X" = X Business Days prior to date of utilisation

                                     -108-



                                   SCHEDULE 7
                              INFORMATION PACKAGE

1.   Cegetel Group consolidated financial statements for the financial years
     ended 31 December 2000 and 31 December 2001, Cegetel Group, SFR, and
     Cegetal SA financial statements for the financial year ended 31 December
     2000 and 31 December 2001,

2.   Cegetel group dividends scheme including dividends assumptions and
     projected calculations for fiscal years 2002 to 2010, dated 19 November
     2002,

3.   Presentation of SFR Business Plan (SFR Financial Model) by the Parent,
     dated 19 November 2002,

4.   Cegetel projected consolidated Net Debt after dividend payment as of 30
     June 2003.







                                   SCHEDULE 8
                  CONTINGENT LIABILITIES OF THE CEGETEL GROUP

1.   Liability for the AOL Swap, in which Cegetel will owe the difference
     between E541,335,413.34 and the amount recovered from LineInvest from the
     sale of the AOL Europe Preferred E Shares.

2.   Guarantee given by Cegetel with respect to the credit agreement between
     Societe Financiere de Distribution and Credit Mutuel for an amount of
     FRF 200,000,000 (now FRF 160,000,000) (EUR24,400,000).

3.   Guarantee given by Cegetel with respect to the lease between SFR2 and
     Mairie de Toulouse dated 30 September 1998 (amount of liability estimated
     to be EUR 1,200,000).

4.   First Demand Guarantee given by Cegetel for the benefit of Societe
     Nationale des Chemins de Fers Francais (SNCF) for an amount of
     EUR 1,000,000.

5.   All indemnities (including guarantees) given by SFR with respect to 5-Box
     Qualified Technology Equipment Leases with US equity investors for
     technology equipment and peripherals.

6.   Miscellaneous guarantees given by the Cegetel Groupe in the aggregate
     amount of EUR12,100,000.

                                     -110-



                                   SCHEDULE 9

                            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 Bank
     of England and/or the Financial Services Authority (or, in either case,
     any other authority which replaces all or any of its functions) or (b) the
     requirements of the European Central Bank.

2.   On the first day of each Interest Period (or as soon as possible
     thereafter) the Agent shall calculate, as a percentage rate, a rate (the
     "Additional Cost Rate") for each Lender, in accordance with the paragraphs
     set out below. The Mandatory Cost will be calculated by the Agent as a
     weighted average of the Lenders' Additional Cost Rates (weighted in
     proportion to the percentage participation of each Lender in the relevant
     Loan) and will be expressed as a percentage rate per annum.

3.   The Additional Cost Rate for any Lender lending from a Facility Office in
     a Participating Member State will be the percentage notified by that
     Lender to the Agent. This percentage will be certified by that Lender in
     its notice to the Agent to be its reasonable determination of the cost
     (expressed as a percentage of that Lender's participation in all Loans
     made from that Facility Office) of complying with the minimum reserve
     requirements of the European Central Bank in respect of loans made from
     that Facility Office.

4.   The Additional Cost Rate for any Lender lending from a Facility Office in
     the United Kingdom will be calculated by the Agent as follows:

               E x 0.01
               -------- per cent per annum
                 300

     Where:

     E    is designed to compensate Lenders for amounts payable under the Fees
          Rules and is calculated by the Agent as being the average of the most
          recent rates of charge supplied by the Reference Banks to the Agent
          pursuant to paragraph 6 below and expressed in pounds per L1,000,000.

5.   For the purposes of this Schedule:

     (a)  "Eligible Liabilities" and "Special Deposits" have the meanings given
          to them from time to time under or pursuant to the Bank of England
          Act 1998 or (as may be appropriate) by the Bank of England;

     (b)  "Fee Rules" means the rules on periodic fees contained in the FSA
          Supervision Manual or such other law or regulation as may be in force
          from time to time in respect of the payment of fees for the acceptance
          of deposits;

     (c)  "Fee Tariffs" means the fee tariffs specified in the Fees Rules under
          the activity group A.1 Deposit acceptors (ignoring any minimum fee or
          zero rated

                                     -111-



         fee required pursuant to the Fees Rules but taking into account any
         applicable discount rate); and

     (d) "Tariff Base" has the meaning given to it in, and will be calculated in
         accordance with, the Fees Rules.

6.   If requested by the Agent, each Reference Bank shall, as soon as
     practicable after publication by the Financial Services Authority, supply
     to the Agent, the rate of charge payable by that Reference Bank to the
     Financial Services Authority pursuant to the Fees Rules in respect of the
     relevant financial year of the Financial Services Authority (calculated for
     this purpose by that Reference Bank as being the average of the Fee Tariffs
     applicable to that Reference Bank for that financial year) and expressed in
     pounds per L1,000,000 of the Tariff Base of that Reference Bank.

7.   Each Lender shall supply any information required by the Agent for the
     purpose of calculating its Additional Cost Rate. In particular, but without
     limitation, each Lender shall supply the following information on or prior
     to the date on which it becomes a Lender:

     (a) the jurisdiction of its Facility Office; and

     (b) any other information that the Agent may reasonably require for such
         purpose.

     Each Lender shall promptly notify the Agent of any change to the
     information provided by it pursuant to this paragraph.

8.   The rates of charge of each Reference Bank for the purpose of E above shall
     be determined by the Agent based upon the information supplied to it
     pursuant to paragraphs 6 and 7 above and on the assumption that, unless a
     Lender notifies the Agent to the contrary, each Lender's obligations in
     relation to cash ratio deposits and Special Deposits are the same as those
     of a typical bank from its jurisdiction of incorporation with a Facility
     Office in the same jurisdiction as its Facility Office.

9.   The Agent shall have no liability to any person if such determination
     results in an Additional Cost Rate which over or under compensates any
     Lender and shall be entitled to assume that the information provided by any
     Lender or Reference Bank pursuant to paragraphs 3, 6 and 7 above is true
     and correct in all respects.

10.  The Agent shall distribute the additional amounts received as a result of
     the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate
     for each Lender based on the information provided by each Lender and each
     Reference Bank pursuant to paragraphs 3, 6 and 7 above.

11.  Any determination by the Agent pursuant to this Schedule in relation to a
     formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
     to a Lender shall, in the absence of manifest error, be conclusive and
     binding on all Parties.

12.  The Agent may from time to time, after consultation with the Parent and the
     Lenders, determine and notify to all Parties any amendments which are
     required to be made to

                                     -112-


               this Schedule in order to comply with any change in law,
               regulation or any requirements from time to time imposed by the
               Bank of England, the Financial Services Authority or the European
               Central Bank (or, in any case, any other authority which replaces
               all or any of its functions) and any such determination shall, in
               the absence of manifest error, be conclusive and binding on all
               Parties.




















                                     -113-


                                   SIGNATURES

THE BORROWER

SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A.

By:
               --------------------------------

Address:       c/o Vivendi Universal
               42, avenue de Friedland
               75008 Paris

Fax:           00 33 1 71 71 10 47

Attention:     Hubert Dupont Lhotelain


THE PARENT
VIVENDI UNIVERSAL S.A.

By:
               -------------------------------

Address:       42, avenue de Friedland
               75008 Paris

Fax:           00 33 1 71 71 10 47

Attention:     Hubert Dupont Lhotelain



[CREDIT LYONNAIS LETTERHEAD]

DEBT, PRODUCTS & INSTRUMENTS DIVISION -- D.P.I.D.
STRUCTURED & ACQUISITION FINANCE DEPARTMENT
AGENCY & BUSINESS SUPPORT
Jean Herve Carlou
[telephone graphic]  33 1 42 95 22 62
Fax:                 33 1 42 95 41 07
[e-mail graphic]     jean-herve.carlou@credit1yonnais.fr

Societe d'Investissement pour is Telephonie S.A.
c/o Vivendi Universal
42, avenue de Friedland
75008 Paris
France

Attention: Hubert Dupont Lhotelain

Vivendi Universal S.A.
42, avenue de Friedland
75008 Paris
France

Attention: Hubert Dupont Lhotelain

                                                                 20 January 2003


Dear Sirs,

Credit Agreement dated 6 December 2002 between Societe d'Investissement pour la
Telephonie S.A. as Borrower (1), Vivendi Universal S.A. as Parent (2), BNP
Paribas, CDC Finance-CDC Ixis, Credit Agricole Indosnez, Credit Lyonnais, Credit
Suisse First Boston, Paris Branch, Dexia Credit Local, Natexis Banques
Populaires, Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., (Rabobank
International, Paris Branch), The Royal Bank of Scotland plc, SG Investment
Banking, Sumitomo Mitsui Banking Corporation and West LB AG, Paris Branch as
Arrangers (3), the Original Lenders named therein (4), Credit Lyonnais as Agent
(5) and The Royal Bank of Scotland plc as Security Trustee (6) (the "Credit
Agreement")

We refer to the Credit Agreement. In this letter, words and expressions defined
in the Credit Agreement shall have the same meaning where used herein.

We hereby agree, as Agent on behalf of all the Lenders in accordance with
Clause 34.1 (Required consents) of the Credit Agreement:

(i)  that Clause 7.3 (Mandatory Prepayment from Proceeds) of the Credit
     Agreement shall be amended by the addition of the following words at the
     end of the definition of "Distribution Proceeds":

     "(E) payment of any amount due under the Hedging Agreement; and

(ii) that paragraph 6(e) of Schedule 2 (Conditions Precedent) of the Credit
     Agreement shall be amended by substituting the word "Borrower" for
     "Parent"; and

Subject to the amendment set out above, the Credit Agreement shall remain in
full force and effect in accordance with its terms.

This letter may be executed by fax and in any number of counterparts, all of
which taken together shal constitute one and the same instrument.


                                                                     [Illegible]



This letter is governed by and shall be construed in accordance with English
law.

The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this letter (including a dispute regarding the
existence or validity of this letter) (a "DISPUTE"). The signatories to this
letter agree that the courts of England are the most appropriate and convenient
courts to settle Disputes and accordingly no such party will argue to the
contrary. This paragraph is for the benefit of the Agent only. As a result, the
Agent shall not be prevented from taking proceedings relating to a Dispute in
any other courts with jurisdiction. To the extent allowed by law, the Agent may
take concurrent proceedings in any number of jurisdictions.

Please sign and return the enclosed duplicate of this letter to confirm your
agreement to its terms.


Yours faithfully,



/s/ Michel Anastassiados                     /s/ Jean Herve Cariou
- -----------------------------------          -----------------------------------
Name:     Michel Anastassiados               Jean Herve Cariou
Position: Global Head of Structured          Head of Agency & Business Support
          & Acquisition Finance


For and on behalf of CREDIT LYONNAIS AS AGENT



Accepted and agreed



/s/ Jacques Espinasse
- -----------------------------------
Name:     Jacques Espinasse
Position: Director Financier Groupe


For and on behalf of SOCIETE D'INVESTISSIMENT POUR LA TELEPHONIE S.A.


/s/ Jacques Espinasse
- -----------------------------------
Name:     Jacques Espinasse
Position: Director Financier Groupe


For and on behalf of VIVENDI UNIVERSAL S.A.






[CREDIT LYONNAIS LETTERHEAD]
- -------------------------------------------------------------------------------
           DEBT, PRODUCTS & INSTRUMENTS DIVISION - D.P.I.D.
           STRUCTURED & ACQUISITION FINANCE DEPARTMENT
           AGENCY & BUSINESS SUPPORT
           Jean Herve Cariou
           [TELEPHONE GRAPHIC]  33 1 42 95 22 62
           FAX                  33 1 42 95 41 07
           E-MAIL               jean-herve.cariou@creditlyonnais.fr

           Societe d'Investissement pour la Telephonie S.A.
           c/o Vivendi Universal
           42, avenue de Friedland
           75008 Paris
           France

           Attention: Hubert Dupont Lhotelain

           Vivendi Universal S.A.
           42, avenue de Friedland
           75008 Paris
           France

           Attention: Hubert Dupont Lhotelain

                                                                 21 January 2003

           Dear Sirs,

           CREDIT AGREEMENT DATED 6 DECEMBER 2002 AND AMENDED BY AN AMENDMENT
           LETTER DATED 20 JANUARY 2003 BETWEEN SOCIETE D'INVESTISSEMENT POUR LA
           TELEPHONIE S.A. AS BORROWER (1), VIVENDI UNIVERSAL S.A. AS PARENT
           (2), BNP PARIBAS, CDC FINANCE-CDC IXIS, CREDIT AGRICOLE INDOSUEZ,
           CREDIT LYONNAIS, CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA
           CREDIT LOCAL, NATEXIS BANQUES POPULAIRES, COOPERATIEVE CENTRALE
           RAIFFEISEN-BOERENLEENBANK B.A., (RABOBANK INTERNATIONAL, PARIS
           BRANCH), THE ROYAL BANK OF SCOTLAND PLC, SG INVESTMENT BANKING,
           SUMITOMO MITSUI BANKING CORPORATION AND WEST LB AG, PARIS BRANCH AS
           ARRANGERS (3), THE ORIGINAL LENDERS NAMED THEREIN (4), CREDIT
           LYONNAIS AS AGENT (5), AND THE ROYAL BANK OF SCOTLAND PLC AS SECURITY
           TRUSTEE (6) (THE "CREDIT AGREEMENT")

           We refer to the Credit Agreement. In this letter, words and
           expressions defined in the Credit Agreement shall have the same
           meaning where used herein.

           We hereby agree, as Agent on behalf of all the Lenders in accordance
           with Clause 34.1 (Required consents) of the Credit Agreement, that
           the Credit Agreement shall be amended as follows:

           1.  In Clause 1.1 (Definitions), the definition of "ACQUISITION"
               shall be deleted and replaced with the following:

               ""ACQUISITION" means the acquisition by the Borrower of the
               Borrower Cegetel Shares pursuant to the Acquisition Agreement,";

           2.  in Clause 1.1 (Definitions), the definition of "ACQUISITION
               AGREEMENT" shall be deleted and replaced with the following:

               ""ACQUISITION AGREEMENT" means the contract between the Borrower
               and the Vendor relating to the Borrower Cegetel Shares, evidenced
               by the execution by the Vendor of the transfer forms (ordres de
               mouvements) relating to the Borrower Cegetel Shares and the
               payment by the Borrower of the purchase price of the Borrower
               Cegetel Shares.";

                                                                     [ILLEGIBLE]



3.  in Clause 1.1 (Definitions), the definition of "COMPLETION" shall be deleted
    and replaced with the following:

    ""COMPLETION" means the completion of the Acquisition upon execution of the
    Acquisition Agreement by the Vendor and payment of the purchase price for
    the Borrower Cegetel Shares by the Borrower to the Vendor.";

4.  in Clause 1.1 (Definitions), the definition of "PROCEEDS" shall be deleted
    and replaced with the following:

    ""PROCEEDS" means all Subscription Proceeds, all Distribution Proceeds, all
    TD Distribution Proceeds and all Swap Proceeds (each as defined in Clause
    7.3 (Mandatory Prepayment from Proceeds)).";

5.  Clause 3.1 (Purpose) shall be amended by the deletion of the words "under
    the Acquisition Agreement" at the end of that clause;

6.  in paragraph (a) of Clause 7.3 (Mandatory Prepayment from Proceeds), the
    following new definition shall be added at the end of that clause:

    ""SWAP PROCEEDS" means all, if any, net proceeds payable to the Borrower on
    termination of the Hedging Agreement.";

7.  paragraph (b) of Clause 7.3 (Mandatory Prepayment from Proceeds) shall be
    deleted and replaced with the following:

    "(b)  The Borrower shall prepay the Loan in an amount equal to the
          Subscription Proceeds, the Distribution Proceeds, the TD Distribution
          Proceeds and (on termination of the Hedging Agreement) the Swap
          Proceeds.";

8.  paragraph (c) of Clause 7.7 (Holding Account) of the Credit Agreement be
    deleted and replaced with the following:

    (a)   "The Borrower shall be entitled, notwithstanding the Security over the
          Holding Account, to invest the credit balance of the account in
          financial instruments acceptable to the Agent, on condition that
          Security in favour of the Security Trustee is created over the
          financial instruments so acquired, in form and substance satisfactory
          to the Agent and Security Trustee."; and

9.  Schedule 2 (Conditions Precedent) shall be amended as follows:

      (i) paragraph 2(b) of Schedule 2 (Conditions Precedent) shall be deleted;

     (ii) paragraph 2(c) of Schedule 2 shall be renumbered as paragraph 2(b);

    (iii) paragraph 4(b) of Schedule 2 (Conditions Precedent) shall be deleted;

     (iv) paragraph 4(c) of Schedule 2 shall be renumbered as paragraph 4(b);

      (v) paragraph 4(d) of Schedule 2 shall be renumbered as paragraph 4(c);

     (vi) paragraph 4(e) of Schedule 2 shall be renumbered as paragraph 4(d).

Subject to the amendments set out above, the Credit Agreement shall remain in
full force and effect in accordance with its terms.

This letter may be executed by fax and in any number of counterparts, all of
which taken together shall constitute one and the same instrument.

This letter is governed by and shall be construed in accordance with English
law.

The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this letter (including a dispute regarding the
existence or validity of this letter) (a "DISPUTE"). The signatories to this
letter agree that the courts of England are the most appropriate and convenient
courts to settle Disputes and accordingly no such party will argue to the
contrary. This paragraph is


for the benefit of the Agent only. As a result, the Agent shall not be prevented
from taking proceedings relating to a Dispute in any other courts with
jurisdiction. To the extent allowed by law, the Agent may take concurrent
proceedings in any number of jurisdictions.

Please sign and return the enclosed duplicate of this letter to confirm your
agreement to its terms.

Yours faithfully,

/s/ Michel Anastassiades                     /s/ Jean Herve Cariou
- -----------------------------------          ---------------------------------
Name: Michel Anastassiades                   Jean Herve Cariou
Position: Global Head of Structured          Head of Agency & Business Support
          & Acquisition Finance

For and on behalf of CREDIT LYONNAIS AS AGENT




Accepted and agreed


[illegible]
- -----------------------------------
Name:
Position:

For and on behalf of SOCIETE D'INVESTISSMENT POUR LA TELEPHONIE S.A.



/s/ Jacques Espinasse
- -----------------------------------
Name:
Position:

For and on behalf of VIVENDI UNIVERSAL S.A.




[CREDIT LYONNAIS LETTERHEAD]

DEBT, PRODUCTS & INSTRUMENTS DIVISION - D.P.I.D.
STRUCTURED & ACQUISITION FINANCE DEPARTMENT
AGENCY & BUSINESS SUPPORT
Jean Herve Cariou
[TELEPHONE GRAPHIC] 33 1 42 95 22 62
Fax  33 1 42 95 41 07
E[ENVELOPE GRAPHIC] jean-herve.cariou@creditiyonnals.fr



Societe d'Investissement pour la Telephonie S.A.
c/o Vivendi Universal
42, avenue de Friedland
75008 Paris
France

Attention:  Hubert Dupont Lhotelain

Vivendi Universal S.A.
42, avenue de Friedland
75008 Paris
France

Attention: Hubert Dupont Lhotelain

                                                                 31st March 2003

Dear Sirs,

Credit Agreement dated 6 December 2002 between Societe d'Investissement pour la
Telephonie S.A. as borrower (1), Vivendi Universal S.A. as parent (2), BNP
Paribas CDC Finance - CDC Ixis, Credit Agricole Indosuez, Credit Lyonnais,
Credit Suisse First Boston, Paris Branch, Dexia Credit Local, Natexis Banques
Populaires, Cooperatieve Centrale Ralffeisen-Boerenleenbank B.A., (Rabobank
International, Paris Branch), the Royal Bank of Scotland PLC, SG Investment
Banking, Sumitomo Mitsui Banking Corporation and West LB AG, Paris Branch as
arrangers (3), the original lenders named therein (4), Credit Lyonnais as agent
(5) and the Royal Bank of Scotland PLC as security trustee (6) (the "Credit
Agreement") (as amended by an amendment letter dated 20 January 2003 and by a
second Amendment Letter dated 21 January 2003).

We refer to the Credit Agreement. In this letter, words and expressions defined
in the Credit Agreement shall have the same meaning where used herein.

We hereby agree, as Agent on behalf of all the Lenders in accordance with
Clause 34.1 (Required consents) of the Credit Agreement, that Clause 7.3
(Mandatory Prepayment from Proceeds) of the Credit Agreement shall be amended
as follows:

     1.   paragraph (A) of the definition of "DISTRIBUTION PROCEEDS" shall be
          deleted and replaced with the following:

          "(A) interest payable on the Loan pursuant to Clause 8 (Interest) plus
               amounts payable by the Borrower under the Hedging Agreement
               during the then current Interest Period, minus amounts receivable
               by the Borrower under the Hedging Agreement during the then
               current Interest Period; and"; and


2. paragraph (E) of the definition of "DISTRIBUTION PROCEEDS" shall be deleted.

Subject to the amendments set out above, the Credit Agreement shall remain in
full force and effect in accordance with its terms.

This letter may be executed by fax and in any number of counterparts, all of
which taken together shall constitute one and the same instrument.

This letter is governed by and shall be construed in accordance with English
law.

The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this letter (including a dispute regarding the
existence or validity of this letter) (a "DISPUTE"). The signatories to this
letter agree that the courts of England are the most appropriate and convenient
courts to settle Disputes and accordingly no such party will argue to the
contrary. This paragraph is for the benefit of the Agent only. As a result, the
Agent shall not be prevented from taking proceedings relating to a Dispute in
any other courts with jurisdiction. To the extent allowed by law, the Agent may
take concurrent proceedings in any number of jurisdictions.

Please sign and return the enclosed duplicate of this letter to confirm your
agreement to its terms.

Yours faithfully,

/s/ Alain Lecrivain                          /s/ Jean Herve Cariou
- -------------------------------------        ---------------------------------
Name: Alain Lecrivain                        Jean Herve Cariou
Position: Senior Vice-President              Position: Head of Agency & Business
          Co-ordination & Development        Support

For and on behalf of CREDIT LYONNAIS AS AGENT




Accepted and agreed


/s/ Sean Bennard Levy
- -----------------------------------
Name: Sean Bennard Levy
Position: President

For and on behalf of SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A.



/s/ Jacques Espinasse
- -----------------------------------
Name: Jacques Espinasse
Position: Directeur financier Group

For and on behalf of VIVENDI UNIVERSAL S.A.





- --------------------------------------------------------------------------------

[LOGO] CREDIT LYONNAIS
- --------------------------------------------------------------------------------

DEBT, PRODUCTS & INSTRUMENTS DIVISION -- D.P.I.D.
STRUCTURED & ACQUISITION FINANCE DEPARTMENT
AGENCY & BUSINESS SUPPORT
Jean Herve Cariou
[PHONE GRAPHIC] 33 1 42 95 22 62
Fax 33 1 42 95 41 07
E[MAIL GRAPHIC] jean-herve.cariou@creditlyonnais.fr


Societe d'Investissement pour la Telephonie S.A.
c/o Vivendi Universal
42 avenue de Friedland
75008 Paris
France

Attention:     Hubert Dupont Lhotelain

Vivendi Universal S.A.
42 avenue de Friedland
75008 Paris
France

Attention:     Hubert Dupont Lhotelain

                                                                  25th June 2003

Dear Sirs,

CREDIT AGREEMENT DATED 6 DECEMBER 2002 BETWEEN SOCIETE D'INVESTISSEMENT POUR LA
TELEPHONIE S.A. AS BORROWER (1), VIVENDI UNIVERSAL S.A. AS PARENT (2), BNP
PARIBAS, CDC FINANCE-CDC IXIS, CREDIT AGRICOLE INDOSUEZ, CREDIT LYONNAIS,
CREDIT SUISSE FIRST BOSTON, PARIS BRANCH, DEXIA CREDIT LOCAL, NATEXIS BANQUES
POPULAIRES, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., (RABOBANK
INTERNATIONAL, PARIS BRANCH), THE ROYAL BANK OF SCOTLAND PLC, SG INVESTMENT
BANKING, SUMITOMO MITSUI BANKING CORPORATION AND WEST LB AG, PARIS BRANCH AS
ARRANGERS (3), THE ORIGINAL LENDERS NAMED THEREIN (4), CREDIT LYONNAIS AS AGENT
(5) AND THE ROYAL BANK OF SCOTLAND PLC AS SECURITY TRUSTEE (6) (THE "CREDIT
AGREEMENT") (AS AMENDED BY AN AMENDMENT LETTER DATED 20 JANUARY 2003, BY A
SECOND AMENDMENT LETTER DATED 21 JANUARY 2003 AND BY A THIRD AMENDMENT LETTER
DATED 31 MARCH 2003).

We refer to the Credit Agreement. In this letter, words and expressions defined
in the Credit Agreement shall have the same meaning where used herein.

We hereby agree, as Agent, on behalf of all the Lenders in accordance with
Clauses 34.1 (Required consents) and 34.2 (Exceptions) of the Credit Agreement,
that in Clause 1.1 (Definitions), the definition of "BREAK COSTS" shall be
deleted and replaced with the following:

""BREAK COSTS" means the amount (if any) by which:

     (a)  that part of the interest (excluding the Margin) which a Lender should
          have received for the period from the date of receipt of all or any
          part of its participation in the Loan or an Unpaid Sum to the last day
          of the current Interest Period in respect of the Loan or that Unpaid
          Sum, had the principal



            Address: 81, rue de Richelieu -- 75002 PARIS (France) --
             TEL. : 33 (0)1 42 95 70 00 -- FAX: 33 (0)1 42 95 41 07
- --------------------------------------------------------------------------------
    Credit Lyonnais -- S.A. with registered capital of 1,808,394,053 Euro --
                           SIREN 954 509 741 RCS Lyon

          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 European 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."

Subject to the amendment set out above, the Credit Agreement shall remain in
full force and effect in accordance with its terms.

This letter may be executed by fax and in any number of counterparts, all of
which taken together shall constitute one and the same instrument.

This letter is governed by and shall be construed in accordance with English
law.

The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this letter (including a dispute regarding the
existence or validity of this letter) (a "Dispute"). The signatories to this
letter agree that the courts of England are the most appropriate and convenient
courts to settle Disputes and accordingly no such party will argue to the
contrary. This paragraph is for the benefit of the Agent only. As a result, the
Agent shall not be prevented from taking proceedings relating to a Dispute in
any other courts with jurisdiction. To the extent allowed by law, the Agent may
take concurrent proceedings in any number of jurisdictions.

Please sign and return the enclosed duplicate of this letter to confirm your
agreement to its terms.

Yours faithfully,


/s/ MICHEL ANASTASSIADES                /s/ JEAN HERVE CARIOU
- -----------------------------------     -----------------------------------
Name: Michel Anastassiades              Name: Jean Herve Cariou
Position: Global Head of Structured     Position: Head of Agency & Business
          & Acquisition Finance                   Support

For an on behalf of CREDIT LYONNAIS as Agent


Accepted and agreed


/s/ REGIS TURRINI
- ----------------------------------
Name:
Position: President Directeur General

For an on behalf of SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE S.A.


/s/ JACQUES ESPINASSE
- ----------------------------------
Name: Jacques Espinasse
Position: Directeur financier Groupe

For and on behalf of VIVENDI UNIVERSAL S.A.

EX-4.11

                                                                    Exhibit 4.11


                             Vivendi Universal S.A.

                                     Issuer

                           9.25% SENIOR NOTES DUE 2010

                           9.50% SENIOR NOTES DUE 2010


                                    INDENTURE

                            Dated as of April 8, 2003

                              The Bank of New York

                                     Trustee

                             CROSS-REFERENCE TABLE*


Trust Indenture                                                                 Indenture Section
Act Section
                                                                             
310  (a)(1).................................................................          7.10
     (a)(2).................................................................          7.10
     (a)(3).................................................................          N.A.
     (a)(4).................................................................          N.A.
     (a)(5).................................................................          7.10
     (b)....................................................................          7.10
     (c)....................................................................          N.A.
311  (a)....................................................................          7.11
     (b)....................................................................          7.11
     (c)....................................................................          N.A.
312  (a)....................................................................          2.05
     (b)....................................................................         11.03
     (c)....................................................................         11.03
313  (a)....................................................................          7.06
     (b)(1).................................................................          N.A.
     (b)(2).................................................................       7.06; 7.07
     (c)....................................................................      7.06; 11.02
     (d)....................................................................          7.06
314  (a)....................................................................     4.03; 11.02; 11.05
     (b)....................................................................          N.A.
     (c)(1).................................................................         11.04
     (c)(2).................................................................         11.04
     (c)(3).................................................................          N.A.
     (d)....................................................................          N.A.
     (e)....................................................................         11.05
     (f)....................................................................          N.A.
315  (a)....................................................................          7.01
     (b)....................................................................      7.05; 11.02
     (c)....................................................................          7.01
     (d)....................................................................          7.01
     (e)....................................................................          6.11
316  (a)(last sentence).....................................................          2.09
     (a)(1)(A)..............................................................          6.05
     (a)(1)(B)..............................................................          6.04
     (a)(2).................................................................          N.A.
     (b)....................................................................          6.07
     (c)....................................................................          2.12
317  (a)(1).................................................................          6.08
     (a)(2).................................................................          6.09
     (b)....................................................................          2.04
318  (a)....................................................................         11.01
     (b)....................................................................          N.A.
     (c)....................................................................         11.01


N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.

                                TABLE OF CONTENTS


                                                                                                                Page
                                                                                                             

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01      Definitions.................................................................................    1
Section 1.02      Other Definitions...........................................................................   26
Section 1.03      Incorporation by Reference of Trust Indenture Act...........................................   27
Section 1.04      Rules of Construction.......................................................................   27

                                   ARTICLE 2.
                                    THE NOTES

Section 2.01      Form and Dating.............................................................................   28
Section 2.02      Execution and Authentication................................................................   29
Section 2.03      Registrar and Paying Agent..................................................................   29
Section 2.04      Paying Agent to Hold Money in Trust.........................................................   30
Section 2.05      Holder Lists................................................................................   30
Section 2.06      Transfer and Exchange.......................................................................   30
Section 2.07      Replacement Notes...........................................................................   42
Section 2.08      Outstanding Notes...........................................................................   42
Section 2.09      Treasury Notes..............................................................................   43
Section 2.10      Temporary Notes.............................................................................   43
Section 2.11      Cancellation................................................................................   44
Section 2.12      Defaulted Interest..........................................................................   44
Section 2.13      Additional Amounts..........................................................................   44

                                   ARTICLE 3.
                REDEMPTION AND PREPAYMENT; MANDATORY CANCELLATION

Section 3.01      Notices to Trustee..........................................................................   46
Section 3.02      Selection of Notes to Be Redeemed or Purchased..............................................   47
Section 3.03      Notice of Redemption........................................................................   47
Section 3.04      Effect of Notice of Redemption..............................................................   48
Section 3.05      Deposit of Redemption or Purchase Price.....................................................   48
Section 3.06      Notes Redeemed or Purchased in Part.........................................................   48
Section 3.07      Optional Redemption.........................................................................   49
Section 3.08      Mandatory Redemption........................................................................   49
Section 3.09      Offer to Purchase by Application of Excess Proceeds.........................................   49
Section 3.10      Redemption of Notes for Changes in Withholding Taxes........................................   51
Section 3.11      Mandatory Cancellation......................................................................   52

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01      Payment of Notes............................................................................   53
Section 4.02      Maintenance of Office or Agency.............................................................   53
Section 4.03      Reports.....................................................................................   54
Section 4.04      Compliance Certificate......................................................................   55
Section 4.05      Taxes.......................................................................................   55


                                       i



                                                                                                           
Section 4.06      Stay, Extension and Usury Laws..............................................................   55
Section 4.07      Restricted Payments.........................................................................   56
Section 4.08      Dividend and Other Payment Restrictions Affecting Subsidiaries..............................   58
Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock..................................   61
Section 4.10      Asset Sales.................................................................................   66
Section 4.11      Transactions with Affiliates................................................................   68
Section 4.12      Liens.......................................................................................   69
Section 4.13      Business Activities.........................................................................   69
Section 4.14      Corporate Existence.........................................................................   69
Section 4.15      Offer to Repurchase Upon Change of Control..................................................   69
Section 4.16      Limitation on Sale and Leaseback Transactions...............................................   71
Section 4.17      Payments for Consent........................................................................   71
Section 4.18      Designation of Restricted and Unrestricted Subsidiaries.....................................   72
Section 4.19      Limitation on Guarantees of Indebtedness by Restricted Subsidiaries.........................   72
Section 4.20      Anti Layering...............................................................................   73
Section 4.21      Escrow of Proceeds..........................................................................   74
Section 4.22      Changes in Covenants when Notes Rated Investment Grade......................................   74

                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01      Merger, Consolidation, or Sale of Assets....................................................   74
Section 5.02      Successor Corporation Substituted...........................................................   75

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01      Events of Default...........................................................................   75
Section 6.02      Acceleration................................................................................   77
Section 6.03      Other Remedies..............................................................................   77
Section 6.04      Waiver of Past Defaults.....................................................................   77
Section 6.05      Control by Majority.........................................................................   77
Section 6.06      Limitation on Suits.........................................................................   78
Section 6.07      Rights of Holders of Notes to Receive Payment...............................................   78
Section 6.08      Collection Suit by Trustee..................................................................   78
Section 6.09      Trustee May File Proofs of Claim............................................................   78
Section 6.10      Priorities..................................................................................   79
Section 6.11      Undertaking for Costs.......................................................................   79

                                   ARTICLE 7.
                                     TRUSTEE

Section 7.01      Duties of Trustee...........................................................................   80
Section 7.02      Rights of Trustee...........................................................................   81
Section 7.03      Individual Rights of Trustee................................................................   82
Section 7.04      Trustee's Disclaimer........................................................................   82
Section 7.05      Notice of Defaults..........................................................................   82
Section 7.06      Reports by Trustee to Holders of the Notes..................................................   82
Section 7.07      Compensation and Indemnity..................................................................   83
Section 7.08      Replacement of Trustee......................................................................   83
Section 7.09      Successor Trustee by Merger, etc............................................................   84
Section 7.10      Eligibility; Disqualification...............................................................   84
Section 7.11      Preferential Collection of Claims Against Company...........................................   85

                                       ii



                                                                                                           
                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance....................................   85
Section 8.02      Legal Defeasance and Discharge..............................................................   85
Section 8.03      Covenant Defeasance.........................................................................   86
Section 8.04      Conditions to Legal or Covenant Defeasance..................................................   86
Section 8.05      Deposited Money and Government Securities to be Held in
                   Trust; Other Miscellaneous Provisions......................................................   87
Section 8.06      Repayment to Company........................................................................   88
Section 8.07      Reinstatement...............................................................................   88

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      Without Consent of Holders of Notes.........................................................   88
Section 9.02      With Consent of Holders of Notes............................................................   89
Section 9.03      Compliance with Trust Indenture Act.........................................................   90
Section 9.04      Revocation and Effect of Consents...........................................................   90
Section 9.05      Notation on or Exchange of Notes............................................................   90
Section 9.06      Trustee to Sign Amendments, etc.............................................................   91

                                   ARTICLE 10.
                           SATISFACTION AND DISCHARGE

Section 10.01     Satisfaction and Discharge..................................................................   91
Section 10.02     Application of Trust Money..................................................................   92

                                   ARTICLE 11.
                                  MISCELLANEOUS

Section 11.01     Trust Indenture Act Controls................................................................   92
Section 11.02     Notices.....................................................................................   92
Section 11.03     Communication by Holders of Notes with Other Holders of Notes...............................   94
Section 11.04     Certificate and Opinion as to Conditions Precedent..........................................   94
Section 11.05     Statements Required in Certificate or Opinion...............................................   94
Section 11.06     Rules by Trustee and Agents.................................................................   94
Section 11.07     No Personal Liability of Directors, Officers, Employees and Stockholders....................   94
Section 11.08     Governing Law...............................................................................   95
Section 11.09     No Adverse Interpretation of Other Agreements...............................................   95
Section 11.10     Successors..................................................................................   95
Section 11.11     Severability................................................................................   95
Section 11.12     Counterpart Originals.......................................................................   95
Section 11.13     Table of Contents, Headings, etc............................................................   95
Section 11.14     Submission to Jurisdiction; Appointment of Agent............................................   95

                                      iii

                                    EXHIBITS
               
Exhibit A         FORM OF NOTE
Exhibit B         FORM OF CERTIFICATE OF TRANSFER
Exhibit C         FORM OF CERTIFICATE OF EXCHANGE
Exhibit D         FORM OF ESCROW AGREEMENT



                                       iv

         INDENTURE dated as of April 8, 2003 between Vivendi Universal S.A., a
French societe anonyme (the "Company"), and The Bank of New York, as trustee
(the "Trustee").

         The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders (as defined herein)
of the U.S. dollar-denominated 9.25% Senior Notes due 2010 (the "Dollar Notes")
and the euro-denominated 9.50% Senior Notes due 2010 (the "Euro Notes"). The
Euro Notes and the Dollar Notes are referred to herein as the "Notes".

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01      Definitions.

         "144A Global Note" means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
respective Depositary therefor or its nominee that will be issued in a
denomination equal to the outstanding principal amount of the Dollar Notes or
Euro Notes, as the case may be, sold in reliance on Rule 144A.

         "Acquired Debt" 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 Subsidiary of such
         specified Person, whether or not such Indebtedness is incurred in
         connection with, or in contemplation of, such other Person merging with
         or into, or becoming a Subsidiary of, such specified Person; and

                  (2) Indebtedness secured by a Lien encumbering any asset
         acquired by such specified Person,

         but excluding Indebtedness of such other Person that is extinguished,
retired or repaid concurrently with such other Person becoming a Restricted
Subsidiary of, or at the time it is merged into or consolidates with, such
specified Person.

         "Additional Credit Facility" means any Credit Facility (including the
New Credit Facility) entered into by the Company or any Restricted Subsidiary
(other than Cegetel or any of its Subsidiaries) after the date of this
Indenture, and any amendment, restatement, refunding, renewal, replacement or
refinancing of an Existing Credit Facility (including in a manner that results
in an increase in the amount borrowed thereunder). The extent to which a
Additional Credit Facility may benefit from Liens or Subsidiary guarantees is
described under Sections 4.12 and 4.19 hereof.

         "Additional Notes" means additional notes (other than the Initial
Notes) issued from time to time under this Indenture in accordance with Sections
2.02 and 4.09 hereof.

         "Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, where:

                  (1) "Comparable Treasury Issue" means the U. S. Treasury
         security selected by the Quotation Agent as having a fixed maturity
         most nearly equal to the period from such redemption


                                       1

       date to April 15, 2007, and that would be utilized, at the time of
       selection and in accordance with customary financial practice, in pricing
       new issues of U.S. dollar denominated corporate debt securities in a
       principal amount approximately equal to the then outstanding principal
       amount of the Dollar Notes and of a majority most nearly equal to April
       15, 2007; provided, however, that, if the period from such redemption
       date to the maturity date of the relevant series of Dollar Notes is less
       than one year, a fixed maturity of one year shall be used;

       (2)    "Comparable Treasury Price" means, with respect to any redemption
              date:

                  (a) the average of the bid and asked prices for the Comparable
       Treasury Issue (expressed in each case as a percentage of its principal
       amount) on the third Business Day preceding such redemption date, as set
       forth in the daily statistical release (or any successor release)
       published by the Federal Reserve Bank of New York and designated
       "Composite 3:30 p.m. Quotations for US Government Securities"; or

                  (b) if such release (or any successor release) is not
       published or does not contain such prices on such Business Day, (a) the
       average of the Reference Treasury Dealer Quotations for such redemption
       date (which in any event, must include at least two such quotations),
       after excluding the highest and lowest of such Reference Treasury Dealer
       Quotations, or (b) if the Quotation Agent obtains fewer than four such
       Reference Treasury Dealer Quotations, the average of all such Quotations.

       (3) "Reference Treasury Dealer" means any primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer") appointed by
the Company in consultation with the Trustee.

       (4) "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and offered prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.

       (5) "Quotation Agent" means the Reference Treasury Dealer appointed by
the Company to act as the Quotation Agent after consultation with the Trustee.

         "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,"
as used with respect to any Person, means 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 definition, the terms
"controlling," "controlled by" and "under common control with" have correlative
meanings. Notwithstanding the foregoing, no Person (other than the Company or
any Subsidiary of the Company) in whom a Receivables Subsidiary makes an
Investment in connection with a Receivables Program shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.

         "Agent" means any Registrar, co-registrar, Paying Agent or additional
paying agent.

         "Applicable Premium" means with respect to any Note on any redemption
date the greater of:

                  (1)      1% of the principal amount of such Note; or

                                       2

       (2)    the excess (to the extent positive) of:

              (a) the present value at such redemption date of (i) the
       redemption price of such Note on April 15, 2007 (such redemption price
       expressed as a percentage of principal amount) being set forth in the
       relevant table under Section 3.07 hereof plus (ii) all required interest
       payments due on such Notes to and including April 15, 2007 (excluding
       accrued but unpaid interest) computed using a discount rate equal to the
       Bund Rate as of such redemption date (in the case of Euro Notes) or the
       Adjusted Treasury Rate as of such redemption date (in the case of Dollar
       Notes), in each case, plus 50 basis points; over

              (b) the principal amount of such Note.

       "Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary with respect thereto that apply to such transfer or exchange.

       "Asset Sale" means:

              (1) the sale, lease, conveyance or other disposition of any assets
       or rights; provided that the sale, conveyance or other disposition of all
       or substantially all of the assets of the Company and its Restricted
       Subsidiaries taken as a whole shall be governed by the provisions of
       Section 4.15 hereof and/or the provisions of Section 5.01 hereof and not
       by the provisions of Section 4.10 hereof; and

              (2) the issuance of Equity Interests by any of the Company's
       Restricted Subsidiaries.

         In any VUE Asset Sale in which the transferee assumes the outstanding
Class B Preferred Stock of Vivendi Universal Entertainment LLLP, either directly
or through the acquisition of Vivendi Universal Entertainment LLLP, the transfer
of the common shares of USA Interactive owned by the Company as of the date of
this Indenture to such transferee in connection with the assumption of
obligations by that transferee under such Class B Preferred Stock will not be
regarded as a separate Asset Sale.

         Notwithstanding the preceding, none of the following items shall be
deemed to be an Asset Sale.

                  (1) any single transaction or series of related transactions
         that involves Equity Interests or assets having a fair market value of
         less than E20 million;

                  (2) a transfer of assets between or among the Company and one
         or more of its Restricted Subsidiaries (including any Person that
         becomes a Restricted Subsidiary in connection with such transaction);

                  (3) an issuance of Equity Interests by a Restricted Subsidiary
         to the Company or to another Restricted Subsidiary;

                  (4) the sale or lease of inventory or accounts receivable in
         the ordinary course of business;

                  (5) any sale or other disposition of Receivables and Related
         Assets pursuant to or in connection with a Receivables Program;

                                       3

                  (6) any sale, lease or other disposition in the ordinary
         course of business of obsolete, worn out or damaged equipment no longer
         being used by the Company or its Restricted Subsidiaries;

                  (7) any sale or disposition deemed to occur in connection with
         creating or granting any Permitted Lien;

                  (8) the sale or other disposition of cash or Cash Equivalents;
         and

                  (9) a Restricted Payment or Permitted Investment that is
         permitted by Section 4.07 hereof.

         "Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such Sale and Leaseback Transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such lease, determined in accordance with GAAP.

         "Bankruptcy Law" means (i) with respect to the Company, Section six
(livre sixieme) of the French commercial code (Code de commerce) and any
implementation decree mentioned in such Section and (ii) with respect to any
other Person, title 11, U.S. Code or any similar U.S. federal or state law for
the relief of debtors.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the passage of time or occurrence of a subsequent
condition within the control of that person. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

         "Board of Directors" means:

                  (1) with respect to a corporation, the board of directors of
         the corporation or, except in the context of the definitions of "Change
         of Control" and "Continuing Directors," any committee thereof;

                  (2) with respect to a partnership, the Board of Directors of
         the general partner of the partnership; and

                  (3) with respect to any other Person, the board or committee
         of such Person serving a similar function.

          "Broker-dealer" has the meaning set forth in the Registration Rights
Agreement.

         "Bund Rate" means, with respect to any redemption date, the rate per
annum equal to the equivalent yield to maturity as of such date of the
Comparable German Bund Issue, assuming a price for the Comparable German Bund
Issue (expressed as a percentage of its principal amount) equal to the
Comparable German Bund Price for such redemption date, where:

                                       4

                  (1) "Comparable German Bund Issue" means the German
         Bundesanleihe security selected by any Reference German Bund Dealer as
         having a fixed maturity most nearly equal to the period from such
         redemption date to April 15, 2007, and that would be utilized, at the
         time of selection and in accordance with customary financial practice,
         in pricing new issues of Euro denominated corporate debt securities in
         a principal amount approximately equal to the then outstanding
         principal amount of the Euro Notes and of a maturity most nearly equal
         to April 15, 2007; provided, however, that, if the period from such
         redemption date to the maturity date of the Euro Notes is less than one
         year, a fixed maturity of one year shall be used;

                  (2) "Comparable German Bund Price" means, with respect to any
         redemption date, the average of all Reference German Bund Dealer
         Quotations for such date (which, in any event, must include at least
         two such quotations), after excluding the highest and lowest such
         Reference German Bund Dealer Quotations, or if the Company obtains
         fewer than four such Reference German Bund Dealer Quotations, the
         average of all such quotations;

                  (3) "Reference German Bund Dealer" means any dealer of German
         Bundesanleihe securities appointed by the Company in consultation with
         the Trustee; and

                  (4) "Reference German Bund Dealer Quotations" means, with
         respect to each Reference German Bund Dealer and any relevant date, the
         average as determined by the Company, of the bid and offered prices for
         the Comparable German Bund Issue (expressed in each case as a
         percentage of its principal amount) quoted in writing to the Company by
         such Reference German Bund Dealer at 3.30 p.m. Frankfurt, Germany time
         on the third Business Day preceding such redemption date.

         "Business Day" means each day other than a Saturday, a Sunday or a day
on which commercial banking institutions are authorized or required by law to
close in New York City, London, England or Paris, France.

         "Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.

         "Capital Stock" means:

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

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

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

                  (4) 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,

but excluding any debt securities convertible into such equity securities.

                                       5

         "Cash Equivalents" means:

                  (1) U.S. dollars, euros and any other currency that is freely
         convertible into U.S. dollars or euros without legal restrictions and
         which is used by the Company or any of the Restricted Subsidiaries
         holding such other currency in the ordinary course of its business;

                  (2) securities issued or directly and fully guaranteed or
         insured by the government of France, Germany, the United Kingdom or the
         United States or any agency or instrumentality of such government
         (provided that the full faith and credit of such government is pledged
         in support of those securities) having maturities of not more than one
         year from the date of acquisition;

                  (3) certificates of deposit and euro and dollar time deposits
         with maturities of one year or less from the date of acquisition,
         bankers' acceptances with maturities not exceeding six months and
         overnight bank deposits, in each case, with any commercial bank having
         capital and surplus in excess of $500 million and a Thomson Bank Watch
         Rating (or the successor thereto) of "B" or better;

                  (4) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clauses (2)
         and (3) above entered into with any financial institution meeting the
         qualifications specified in clause (3) above;

                  (5) commercial paper having the highest rating obtainable from
         Moody's or S&P and in each case maturing within one year after the date
         of acquisition; and

                  (6) money market funds at least 95% of the assets of which
         constitute Cash Equivalents of the kinds described in clauses (1)
         through (5) of this definition.

         "Cegetel" means Cegetel Groupe S.A., a French societe anonyme.

         "Cegetel Minority Interest Percentage" means at any time the proportion
         of Capital Stock of Cegetel, held by Persons who are not Affiliates of
         the Company at any time.

         "Cegetel Shareholders Agreement" means the Shareholders Agreement,
         dated May 14, 1997, among the shareholders of Cegetel, as amended,
         novated or replaced from time to time.

         "Change of Control" means the occurrence of any of the following:

                  (1) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the
         properties or assets of the Company and its Restricted Subsidiaries,
         taken as a whole, to any "person" (as that term is used in Section
         13(d)(3) of the Exchange Act);

                  (2) the adoption of a plan relating to the liquidation or
         dissolution of the Company;

                  (3) the consummation of any transaction (including, without
         limitation, any merger or consolidation) or series of related
         transactions the result of which is that any "person" (as that term is
         used in Section 13(d)(3) of the Exchange Act), becomes the Beneficial
         Owner, directly or indirectly, of more than 50% of the Voting Stock of
         the Company, measured by voting power rather than number of shares; or



                                       6

                  (4) during any consecutive two-year period, the first day on
         which a majority of the members of the Board of Directors of the
         Company who were members of the Board of Directors at the beginning of
         such period are not Continuing Directors.

         "Clearstream" means Clearstream Banking, S.A.

         "Common Depositary" means The Bank of New York as common depositary for
         Euroclear and Clearstream with respect to the Euro Global Notes, and
         any successor entity thereto.

         "Company" means Vivendi Universal S.A., a French societe anonyme, and
         any and all successors thereto.

         "Consolidated Adjusted EBITDA" means, with respect to any specified
         Person for any period, the aggregate of the EBITDA of such Person and
         its Restricted Subsidiaries for such period, on a consolidated basis;
         provided that:

                  (1) the EBITDA of any Person that is not a Restricted
         Subsidiary or that is accounted for by the equity method of accounting
         will be included only to the extent of the amount of dividends or
         distributions paid in cash (or to the extent converted into cash) to or
         by the specified Person or a Restricted Subsidiary of the Person;

                  (2) the EBITDA of any Restricted Subsidiary for the relevant
         period will be excluded to the extent that the declaration or payment
         of dividends or similar distributions (including by intercompany loan)
         by that Restricted Subsidiary in respect of that EBITDA is at the date
         of determination not permitted, in each case (a) without any prior
         governmental approval (that has not been obtained) or (b) directly or
         indirectly, by operation of the terms of its charter or any agreement,
         instrument, judgment, decree, order, statute, rule or governmental
         regulation applicable to that Restricted Subsidiary or its
         shareholders, whether as a result of the need for a third-party
         approval (that has not been obtained) or otherwise (including, for the
         avoidance of doubt, the terms of the Cegetel Shareholders Agreement and
         the Maroc Shareholders Agreement, in each case as in effect on the date
         of this Indenture); provided that the terms of the Vivendi Universal
         Entertainment LLLP Term Loan Facility, or any refinancing of such
         facility containing similar restrictions on dividends and intercompany
         loans, shall not result in the exclusion of the EBITDA of any member of
         the VUE Group if on the date of determination at least $50 million in
         dividends or similar distributions (including by intercompany loans) to
         the Company would be permitted;

                  (3) the cumulative effect of a change in accounting principles
         will be excluded; and

                  (4) the EBITDA of any Unrestricted Subsidiary will be included
         to the extent distributed or otherwise paid in cash (or to the extent
         converted into cash) to the specified Person or one of its Restricted
         Subsidiaries.

         "Consolidated Financial Debt" means Indebtedness of the Company and its
Subsidiaries on a consolidated basis reported as "Financial Debt" or under a
similar heading in its financial statements, plus to the extent not included in
"Financial Debt" the amount of any preferred stock or Capital Lease Obligation,
in each case calculated in accordance with GAAP applied on a basis consistent
with past practice.

          "Consolidated Interest Expense" means, for any period, the total
interest expense of a Person and its consolidated Restricted Subsidiaries,
including any periodic cash payments in respect of


                                       7

         preference shares, determined on a consolidated basis in accordance
         with GAAP, net of any interest income, plus, to the extent not included
         in such total interest expense and to the extent incurred by such
         Person or its Restricted Subsidiaries and included in Consolidated Net
         Income, without duplication:

                  (1) interest expense attributable to Capital Lease Obligations
         and imputed interest with respect to Attributable Debt;

                  (2) amortization of debt discount;

                  (3) capitalized interest;

                  (4) non-cash interest expense;

                  (5) commissions, discounts and other fees and charges owed
         with respect to letters of credit and bankers' acceptance financings;

                  (6) net costs associated with interest rate swap, cap or
         collar agreements and other agreements designed to protect such Person
         against fluctuations in interest rates;

                  (7) the interest component of any deferred payment
         obligations; and

                  (8) any premiums, fees, discounts, expenses and losses on the
         sale of Receivables and Related Assets (and any amortization thereof)
         payable in connection with a Receivables Program,

         less,

                           (a) in the case of Consolidated Interest Expense
             incurred by Cegetel, Maroc Telecom or their respective Restricted
             Subsidiaries only, during such period and for so long as the
             Cegetel Shareholders Agreement or the Maroc Shareholders Agreement
             (or any amendment, novation or replacement thereof), as applicable,
             contains a restriction on dividend payments or intercompany loans
             that results in less than all the EBITDA of Cegetel or Maroc
             Telecom and their respective Restricted Subsidiaries being included
             in Consolidated Adjusted EBITDA of the Company for that period, an
             amount equal to such Consolidated Interest Expense; and

                           (b) in the case of Consolidated Interest Expense
             incurred by the VUE Group during a period when some or all of the
             Consolidated Adjusted EBITDA of the VUE Group was excluded from the
             calculation of the Company's Consolidated Adjusted EBITDA because
             of restrictions in place on intercompany loans, dividends or other
             distributions under the terms of agreements or instruments binding
             on the VUE Group, the amount of Consolidated Interest Expense
             incurred by the VUE Group during such period.

         "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:

                  (1) the Net Income of any Person that is not a Restricted
         Subsidiary or that is accounted for by the equity method of accounting
         shall be included only to the extent of the amount of dividends or
         distributions paid in cash (or to the extent converted into cash) to or
         by the specified Person or a Restricted Subsidiary of the Person;

                                       8

                  (2) the Net Income of any Restricted Subsidiary for the
         relevant period shall be excluded to the extent that the declaration or
         payment of dividends or similar distributions (including by
         intercompany loan) by that Restricted Subsidiary in respect of that Net
         Income is at the date of determination not permitted, in each case (a)
         without any prior governmental approval (that has not been obtained)
         or, (b) directly or indirectly, by operation of the terms of its
         charter or any agreement, instrument, judgment, decree, order, statute,
         rule or governmental regulation applicable to that Restricted
         Subsidiary or its shareholders, whether as a result of the need for a
         third-party approval (that has not been obtained) or otherwise
         (including, for the avoidance of doubt, the terms of the Cegetel
         Shareholders Agreement and the Maroc Shareholders Agreement, in each
         case as in effect on the date of this Indenture); provided that the
         terms of the Vivendi Universal Entertainment LLLP Term Loan Facility or
         any refinancing of such facility containing similar restrictions on
         dividends and intercompany loans shall not result in the exclusion of
         the Net Income of any member of the VUE Group if on the date of
         determination, at least $50 million in dividends or similar
         distributions (including by intercompany loans) to the Company would be
         permitted;

                  (3) the cumulative effect of a change in accounting principles
         shall be excluded; and

                  (4) the Net Income of any Unrestricted Subsidiary shall be
         included to the extent distributed or otherwise paid in cash (or to the
         extent converted into cash) to the specified Person or one of its
         Restricted Subsidiaries.

         "Consolidated Total Assets" means the total assets after deducting
therefrom (1) any item representing investments in Unrestricted Subsidiaries and
(2) all goodwill recorded in relation to such assets, in each case as set forth
on the most recent balance sheet of the Company and its consolidated Restricted
Subsidiaries and computed in accordance with GAAP.

         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:

                  (1) was a member of such Board of Directors on the date of
         this Indenture; or

                  (2) was nominated for election or elected to such Board of
         Directors with the approval of a majority of the Continuing Directors
         who were members of such Board of Directors at the time of such
         nomination or election.

         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company in accordance with Section 11.02.

         "Credit Facilities" means one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans or letters of credit, in each
case, as amended, restated, refunded, renewed, replaced or refinanced (including
by increasing the amount borrowed thereunder) in whole or in part from time to
time.

         "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement with respect to currency values.

         "Custodian" means

                                       9

                  (a) in the case of any Global Note held through DTC, the
         Trustee, as custodian for DTC with respect to such Global Note, and

                  (b) in the case of any Global Note held through Euroclear or
         Clearstream, The Bank of New York, as common depositary for Euroclear
         and Clearstream with respect to such Global Note, or any successor
         entity thereto.

         "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

         "Depositary" means, with respect to any Global Note, the Person
specified in Section 2.03 hereof as the Depositary with respect to such Global
Note and any and all successors thereto appointed as Depositary hereunder and
having become such pursuant to the applicable provision of this Indenture.

          "Designated Amount" means as of the date of this Indenture an amount
equal to E2,100 million, which amount shall be reduced from time to time by the
sum, without duplication, of (i) the aggregate amount of all Net Proceeds of
Asset Sales applied pursuant to mandatory prepayment provisions of Tranche A of
the New Credit Facility or Additional Credit Facilities to repay any term
indebtedness under any such Additional Credit Facility, or to repay revolving
credit indebtedness under any such Additional Credit Facility and to
correspondingly reduce commitments thereunder, in each case to the extent such
Indebtedness was incurred under clause (B) or (C) of Section 4.09(b)(1) hereof
and (ii) the aggregate amount of any undrawn and available capacity under any
such Additional Credit Facility that is cancelled pursuant to mandatory
prepayment or cancellation provisions as a result of any Asset Sale or the
application of proceeds therefrom; provided that the Designated Amount shall not
be reduced below E1,000 million.

         "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable (other
than redeemable only for Capital Stock that is not itself Disqualified Stock),
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.

         "Dollar Global Note" means a Global Note representing Dollar Notes.

         "Dollar Note" has the meaning assigned to it in the preamble to this
Indenture.


                                       10

         "EBITDA" means, with respect to any specified Person for any period,
the operating income (loss) of such Person for such period, determined in
accordance with GAAP, adjusted by:

                  (1) deducting any gain and adding back any loss, together with
         any related provision for taxes on such gain (but not loss), realized
         in connection with (a) any Asset Sale or (b) the extinguishments of any
         Indebtedness of such Person or any of its Restricted Subsidiaries;

                  (2) deducting any exceptional or non-recurring gain and adding
         back any exceptional or non-recurring loss, including any restructuring
         charges, together with any related provision for taxes on such
         exceptional or non-recurring gain (but not loss); and

                  (3) adding back depreciation of fixed assets and amortization
         of goodwill and acquired intangible assets and other non-cash expenses
         or charges (excluding any such non-cash expense to the extent that it
         represents an accrual of or reserve for cash expenses in any future
         period or amortization of a prepaid cash expense that was paid in a
         prior period) of such Person for such period to the extent that such
         depreciation, amortization and other non-cash expenses or charges were
         deducted in computing such operating income.

         "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 primary private or public offering of
Equity Interests of the Company (other than Disqualified Stock) to Persons who
are not Subsidiaries of the Company other than (1) public offerings with respect
to the Company's common stock registered on Form S-8 and (2) issuances upon
exercise of options by employees of the Company or any of its Restricted
Subsidiaries.

         "Escrow Funds" has the meaning assigned thereto in the Escrow
Agreement.

         "Euroclear" means Euroclear Bank S.A./N.V.

         "Euro Equivalent" means with respect to any monetary amount in a
currency other than euros, at any time of determination thereof, the amount of
euros obtained by converting such foreign currency involved in such computation
into euros at the average of the spot rates for the purchase and sale of euros
with the applicable foreign currency as published in The Financial Times on the
date two Business Days prior to such determination. Except as described under
Section 4.09 hereof, whenever it is necessary to determine whether the Company
has complied with any covenant in this Indenture or a Default has occurred and
an amount is expressed in a currency other than euros, such amount shall be
treated as the Euro Equivalent determined as of the date such amount is
initially determined in such currency.

         "Euro Global Note" means a Global Note representing Euro Notes.

         "Euro Note" has the meaning assigned to it in the preamble to this
Indenture.

         "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.

         "Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof and any Private Exchange Notes issued in a Private
Exchange. References to the "Notes" in this Indenture shall include any Exchange
Notes issued hereunder.

         "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.


                                       11

         "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

         "Existing Credit Facility" means any Credit Facility of the Company or
its Restricted Subsidiaries in effect on the date of this Indenture. The Company
will provide to the Trustee on or prior to the date of this Indenture a list of
all such Credit Facilities and the amounts outstanding thereunder.

         "Existing Indebtedness" means (i) any Indebtedness of the Company and
its Restricted Subsidiaries in existence or committed to be incurred on the date
of this Indenture, until such amounts are repaid, and (ii) in the case of a
revolving Credit Facility, the borrowing of Indebtedness up to the amount
outstanding under such revolving Credit Facility at the date of this Indenture
pursuant to commitments in effect under such revolving Credit Facility at the
date of this Indenture, unless such commitments are cancelled as a result of any
repayment.

         For purposes of Section 4.09(b)(2) hereof, the only Indebtedness of the
Company or its Restricted Subsidiaries committed to be incurred on the date of
this Indenture is (i) the agreement between certain members of the VUE Group and
the Blackstone Group that the Blackstone Group will lend to certain members of
the VUE Group up to approximately $22.5 million in respect of its share of
certain distributions from the Universal City Development Partners, Ltd. joint
venture between the Blackstone Group and certain members of the VUE Group, and
(ii) the obligation of a subsidiary of Vivendi Universal Entertainment LLLP
under the Shanghai Theme Park Joint Venture Agreement to provide a project
completion guarantee in respect of the Shanghai theme park joint venture on a
pro rata basis based on its 25% interest in the joint venture.

         "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

                  (1) the Consolidated Interest Expense of such Person and its
         Restricted Subsidiaries for such period; plus

                  (2) any interest expense on Indebtedness of any Person other
         than such Person or any of its Restricted Subsidiaries to the extent
         such Indebtedness is Guaranteed by such Person or one of its Restricted
         Subsidiaries or secured by a Lien on assets of such Person or one of
         its Restricted Subsidiaries, whether or not such Guarantee or Lien is
         called upon; plus

                  (3) the product of (a) all dividends, whether paid or accrued
         and whether or not in cash, on any series of preferred stock of such
         Person or any of its Restricted Subsidiaries, other than dividends on
         Equity Interests payable solely in Equity Interests of the Company
         (other than Disqualified Stock) or to the Company or a Restricted
         Subsidiary of the Company, times (b) a fraction, the numerator of which
         is one and the denominator of which is one minus the then current
         combined federal, state and local statutory tax rate of such Person,
         expressed as a decimal, in each case, on a consolidated basis and
         estimated in a manner consistent with GAAP.

         "Fixed Charge Coverage Ratio" means, for any four-quarter period, the
ratio of the Consolidated Adjusted EBITDA of the Company and its Restricted
Subsidiaries for such period to the Fixed Charges of the Company and its
Restricted Subsidiaries for such period. In the event that the Company or any of
its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or
redeems any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio (and its

                                       12

components) shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom, as if the same had occurred at the beginning of the
applicable four-quarter reference period.

         In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

                  (1) acquisitions or dispositions that have been made by the
         Company or any of its Restricted Subsidiaries, including through
         mergers, consolidations or Investments and including any related
         financing transactions, during the four-quarter reference period or
         subsequent to such reference period and on or prior to the Calculation
         Date (including any acquisitions or dispositions made during such
         reference period or subsequent to such reference period and on or prior
         to the Calculation Date by any Person that became a Restricted
         Subsidiary or was merged with and into the Company or any of its
         Restricted Subsidiaries on or prior to such Calculation Date) shall be
         given pro forma effect as if they had occurred on the first day of the
         four-quarter reference period and Consolidated Adjusted EBITDA for such
         reference period shall be calculated on a pro forma basis consistent
         with Regulation S-X under the Securities Act;

                  (2) interest on Capital Lease Obligations and Attributable
         Debt shall be deemed to accrue at an interest rate reasonably
         determined by a responsible financial or accounting officer of the
         Company to be the rate of interest implicit in such Capital Lease
         Obligation or Attributable Debt in accordance with GAAP;

                  (3) the consolidated interest expense attributable to interest
         on (a) any Indebtedness computed on a pro forma basis that was not
         outstanding during the period for which the computation is being made
         but which bears, at the option of such Person, a fixed or floating rate
         of interest, shall be computed by applying, at the option of such
         Person, either the fixed or floating rate and (b) borrowings under a
         revolving credit facility computed on a pro forma basis shall be
         computed based upon the average daily balance of such borrowings during
         the applicable period;

                  (4) the interest rate on any Indebtedness that bears a
         floating rate of interest shall be calculated as if the weighted
         average interest rate that would have been applicable to such
         Indebtedness over the latest 12-month period ending on the last
         calendar month immediately prior to the Calculation Date had been the
         applicable rate on such Indebtedness for the entire reference period,
         taking into account any Hedging Obligation designed to protect such
         Person or any of its Restricted Subsidiaries against fluctuations in
         interest rates (including any agreement that exchanges a fixed rate
         interest obligation for a floating rate interest obligation) applicable
         to such Indebtedness if such Hedging Obligation has a remaining term in
         excess of the shorter of (i) the remaining term of such Indebtedness or
         (ii) 12 months;

                  (5) the Consolidated Adjusted EBITDA attributable to
         discontinued operations, as determined in accordance with GAAP, shall
         be excluded; and

                  (6) the Fixed Charges attributable to discontinued operations,
         as determined in accordance with GAAP, shall be excluded, but only to
         the extent that the obligations giving rise to such Fixed Charges shall
         not be obligations of the Company or any of its Restricted Subsidiaries
         following the Calculation Date.

                                       13

         "GAAP" means generally accepted accounting principles as in effect in
France from time to time, consistently applied; provided that all ratios and
computations contained or referred to in this Indenture shall be computed in
conformity with GAAP as in effect on the date of this Indenture.

         "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(3),
2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(g)(2),
which is required to be placed on all Global Notes issued under this Indenture.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States or France and the payment for which any such
government pledges its full faith and credit.

         "Guarantee" means a direct or indirect guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), provided in any manner, including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof, of all or any part of any Indebtedness.

         "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

                  (1) 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

                  (2) other agreements or arrangements designed to protect such
         Person against fluctuations in currency exchange, interest rates or
         commodity prices.

         "Holder" means a Person in whose name a Note is registered.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent and without duplication:

                  (1)      in respect of borrowed money;

                  (2) evidenced by bonds, notes, debentures or similar
         instruments or letters of credit (or reimbursement agreements in
         respect thereof);

                  (3)      in respect of bankers' acceptances;

                  (4)      representing Capital Lease Obligations;

                  (5) representing the balance deferred and unpaid of the
         purchase price of any property, except any such balance that
         constitutes an accrued expense or trade payable, or similar obligations
         to trade creditors; or

                  (6)      representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, but without
duplication, the term "Indebtedness" includes all Indebtedness of others


                                       14

secured by a Lien on any asset of the specified Person (whether or not such
Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any indebtedness of
any other Person.

         The amount of any Indebtedness outstanding as of any date shall be: (1)
the accreted value of the Indebtedness, in the case of any Indebtedness issued
with original issue discount; and (2) the principal amount of the Indebtedness,
in the case of any other Indebtedness.

         Notwithstanding the foregoing, "Indebtedness" shall not include (a)
advance payments by customers, vendors or distributors in the ordinary course of
business for services or products to be provided or delivered in the future or
(b) deferred taxes.

         "Indenture" means this Indenture, as amended or supplemented from time
to time.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Initial Notes" means the $935 million aggregate principal amount of
Dollar Notes or the E325 million aggregate principal amount of Euro Notes, as
the case may be, issued under this Indenture on the date hereof.

         "Investment Grade Rating" means a rating of Baa3 or better by Moody's
(or its equivalent under any successor rating categories of Moody's) and BBB- or
better by S&P (or its equivalent under any successor rating categories of S&P)
(or, in each case, if such Rating Agency ceases to rate the Notes for reasons
outside of the control of the Company, the equivalent investment grade credit
rating from any Rating Agency selected by the Company as a replacement Rating
Agency).

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for value of Indebtedness, Equity Interests or other securities,
together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted 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 Investments in such Restricted Subsidiary that
were not sold or disposed of in an amount determined as provided in Section
4.07(c) hereof; provided that, in lieu thereof and with respect to a VUE Asset
Sale only, the Company may elect by notice to the Trustee delivered at the date
of completion of such sale or disposition to treat a disposition of Equity
Interests in a member of the VUE Group as a sale of all (and not less than all)
of the Company's Equity Interests in that member of the VUE Group, the
consideration for which, for purposes of Section 4.10 hereof, shall be deemed to
include (a) the Company's retained Equity Interests in such entity (which shall
be deemed to be consideration other than cash or Cash Equivalents unless
converted into cash in accordance with the terms of that Section) and (b) any
other consideration received by the Company in connection with such transaction.
"Investments" shall exclude extensions of trade credit by the Company or any of
its Restricted Subsidiaries in the ordinary course of business.

         "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

                                       15

         "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.

         "LineInvest Total Return Swap" means the total return swap entered into
by the Company, certain of its Restricted Subsidiaries and LineInvest Limited,
as described in Note 11.3 to the Company's consolidated financial statements
included in the Offering Circular, dated April 3, 2003, in respect of the Notes.

         "Maroc Minority Interest Percentage" means at any time the proportion
of Capital Stock of Maroc Telecom held by Persons who are not Affiliates of the
Company at that time.

         "Maroc Telecom" means Maroc Telecom S.A., a Moroccan societe anonyme.

         "Maroc Shareholders Agreement" means the Shareholders Agreement, dated
December 19, 2000, among the shareholders of Maroc Telecom, as amended, novated
or replaced from time to time.

         "Moody's" means Moody's Investors Service, Inc. and its successors.

         "Multicurrency Revolving Credit Facility" means the E3,000 million
multicurrency revolving credit facility dated March 15, 2002, as amended on
February 6, 2003, among the Company, certain of its Subsidiaries and a syndicate
of banks, as amended, restated, refunded, renewed, replaced or refinanced in
whole or in part from time to time; provided that for the purposes of Section
4.12 and 4.19 hereof, references to the Multicurrency Revolving Credit Facility
shall only include amounts under such facility in excess of E3,000 million to
the extent such amounts were incurred under clause 1(C) of Section 4.09(b)
hereof.

         "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

                  (1) any gain or loss, together with any related provision for
         taxes on such gain (but not loss), realized in connection with (a) any
         Asset Sale; or (b) the extinguishment of any Indebtedness of such
         Person or any of its Restricted Subsidiaries; and

                  (2) any exceptional or non-recurring gain or loss, including
         restructuring charges, together with any related provision for taxes on
         such exceptional or non-recurring gain (but not loss).

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of:

                  (1) costs relating to such Asset Sale, including, without
         limitation, legal, accounting and investment banking fees, sales
         commissions, recording fees, title transfer fees, appraisal fees and
         any relocation expenses incurred as a result of the Asset Sale and
         taxes paid or payable as a result of the Asset Sale,

                                       16

                  (2) amounts required to be applied to the repayment of
         Indebtedness, other than Indebtedness under a Credit Facility, secured
         by a Lien on the asset or assets that were the subject of such Asset
         Sale;

                  (3) any reserve for adjustment in respect of the sale price of
         such asset or assets established in accordance with GAAP against any
         liabilities associated with the asset disposed of in such transaction
         and retained by the Company or any of its Restricted Subsidiaries 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; and

                  (4) all distributions or other payments made to minority
         interest holders or joint ventures required in connection with the
         Asset Sale.

          "New Credit Facility" means the senior secured credit facility to be
entered into by the Company and certain of its subsidiaries pursuant to the term
sheet agreed by the Company and a syndicate of banks on March 17, 2003, as such
facility is thereafter amended, restated, refunded, renewed, replaced or
refinanced (including by increasing the amount borrowed thereunder) in whole or
in part from time to time.

         "Non-Recourse Debt" means Indebtedness:

                  (1) as to which neither the Company nor any of its Restricted
         Subsidiaries (a) provides credit support of any kind (including any
         undertaking, agreement or instrument that would constitute
         Indebtedness), (b) is directly or indirectly liable as a guarantor or
         otherwise or (c) constitutes the lender; and

                  (2) no default with respect to which (including any rights
         that the holders of the Indebtedness may have to take enforcement
         action against an Unrestricted Subsidiary) would permit upon notice,
         lapse of time or both any holder of any other Indebtedness (other than
         the Notes) of the Company or any of its Restricted Subsidiaries to
         declare a default on such other Indebtedness or cause the payment of
         such other Indebtedness of the Company or any of its Restricted
         Subsidiaries to be accelerated or payable prior to its Stated Maturity.

         "Non-Recourse Product Financing" means any Indebtedness incurred by the
Company or any Restricted Subsidiary solely for the purpose of financing
(whether directly or through a partially-owned joint venture) the production,
acquisition or development of items of Product (including any Indebtedness
assumed in connection with the acquisition of any such items of Product or
secured by a Lien on any such items of Product prior to the acquisition thereof)
where the recourse of the creditor in respect of that Indebtedness is limited to
Product revenues generated by such items of Product or any rights pertaining
thereto and where the Indebtedness is unsecured save for Liens over such items
of Product or revenues and such rights, and any extension, renewal, replacement
or refinancing of such Indebtedness. "Product Financing" excludes, for the
avoidance of doubt, any Indebtedness raised or secured against Products where
the proceeds are used for any other purposes.

         "Non-Recourse Project Finance Indebtedness" means any Indebtedness to
finance a project incurred by the Company or any Restricted Subsidiary (the
"relevant Group member") which has no activity or assets other than those
comprised in the project and acquired, constructed or developed with the
proceeds of such Indebtedness and in respect of which the person to whom that
Indebtedness is owed by the Company or any

                                       17

Restricted Subsidiary has no recourse whatsoever to the Company or any
Restricted Subsidiary for the repayment of or payment of any sum relating to
that Indebtedness other than:

                  (1) recourse to the Company or such Restricted Subsidiary for
         amounts limited to its interest in the aggregate cash flow or net cash
         flow (other than historic cash flow or historic net cash flow) from the
         project; and/or

                  (2) recourse to the Company or such Restricted Subsidiary for
         the purpose only of enabling amounts to be claimed in respect of that
         Indebtedness on an enforcement of any Lien given by the Company or such
         Restricted Subsidiary over the assets comprised in that project to
         secure the Indebtedness; and/or

                  (3) recourse to a shareholder of the Company or such
         Restricted Subsidiary for the purpose only of enforcement of any Lien
         given by that shareholder over shares (or the like) of the Company or
         such Restricted Subsidiary to secure that Indebtedness.

         "Non-U.S. Person" means a Person who is not a U.S. Person.

         "Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes shall be treated as a
single class for all purposes under this Indenture, except as described under
Article 9 hereof, and unless the context otherwise requires, all references to
the Notes shall include the Initial Notes and any Additional Notes.

         "Obligations" means any principal, interest, penalties, fees, taxes,
costs, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing, securing or relating to any Indebtedness,
whether or not a claim in respect thereof has been asserted.

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.

         "Opinion of Counsel" means an opinion from legal counsel that meets the
requirements of Section 11.05 hereof. The counsel may be an employee of or
counsel to the Company or any Subsidiary of the Company.

         "Participant" means, with respect to any Depositary, a Person who is a
participant of or has an account with such Depositary, respectively (and, with
respect to DTC, shall include Euroclear and Clearstream).

         "Permitted Business" means any business conducted by the Company or any
of its Restricted Subsidiaries on the date of this Indenture, any reasonable
extension thereof, and any additional business reasonably related, incidental,
ancillary or complementary thereto.

         "Permitted Investments" means:

                  (1) any Investment in the Company or in a Restricted
         Subsidiary of the Company;

                                       18

                  (2) any Investment in Cash Equivalents;

                  (3) any Investment by the Company or any Restricted Subsidiary
         of the Company in a Person, if as a result of such Investment:

                      (a) such Person becomes a Restricted Subsidiary of the
         Company; or

                      (b) such Person is merged, consolidated or amalgamated
         with or into, or transfers or conveys substantially all of its assets
         to, or is liquidated into, the Company or a Restricted Subsidiary of
         the Company;

                  (4) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with Section 4.10 hereof;

                  (5) any Investment made solely in exchange for the issuance of
         Equity Interests (other than Disqualified Stock) of the Company;

                  (6) any Investments received in compromise of obligations of
         trade creditors or customers that were incurred in the ordinary course
         of business, including pursuant to any plan of reorganization or
         similar arrangement upon the bankruptcy or insolvency of any trade
         creditor or customer;

                      (7) Hedging Obligations permitted to be incurred under
         Section 4.09 hereof;

                  (8) Investments constituting loans, advances or extensions of
         credit (including indemnity arrangements) to employees, officers and
         directors made in the ordinary course of business;

                  (9) Investments in existence on the date of this Indenture and
         an Investment in any Person to the extent such Investment replaces or
         refinances an Investment in such Person existing on the date of this
         Indenture in an amount not exceeding the amount of the Investment being
         replaced or refinanced; provided, however, that the new Investment is
         on terms and conditions no less favorable to the Company than the
         Investment being renewed or replaced;

                  (10) an Investment in a trust, limited liability company,
         special purpose entity or other similar entity in connection with a
         Receivables Program; provided, however, that the only assets
         transferred to such trust, limited liability company, special purpose
         entity or other similar entity consist of Receivables and Related
         Assets of such Receivables Subsidiary;

                  (11) Investments in any of the Notes or the exchange Notes to
         be issued pursuant to the Registration Rights Agreement;

                  (12) Guarantees of Indebtedness of the Company or any of its
         Restricted Subsidiaries issued in accordance with Sections 4.09 and
         4.19 hereof;

                  (13) receivables owing to the Company or any Restricted
         Subsidiary if created or acquired in the ordinary course of business
         and payable or dischargeable in accordance with customary trade terms;
         provided, however, that such trade terms may include such concessionary
         trade terms as the Company or any such Restricted Subsidiary deems
         reasonable under the circumstances;

                                       19

                  (14) payroll, travel and similar advances to cover matters
         that are expected at the time of such advances ultimately to be treated
         as expenses for accounting purposes and that are made in the ordinary
         course of business;

                  (15) Investments in any Person to the extent such Investments
         consist of prepaid expenses, negotiable instruments held for collection
         and lease, utility and workers' compensation, performance and other
         similar deposits, in each case made in the ordinary course of business
         by the Company or any Restricted Subsidiary; and

                  (16) Any Investment made to acquire Product or interests
         therein in the ordinary course of business consistent with past
         practice, including by way of forming and/or funding joint ventures,
         provided that this clause will only apply to the Company's film,
         television and music businesses; and

                  (17) other Investments in any Person having an aggregate fair
         market value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with all other Investments made pursuant to this clause (17)
         since the date of this Indenture not to exceed E40 million.

         "Permitted Liens" means:

                  (1) Liens securing Indebtedness and other Obligations incurred
         under (i) clause (1)(A), (B) or (C) of Section 4.09(b) hereof or (ii)
         the Multicurrency Revolving Credit Facility;

                  (2) Liens in favor of the Company or a Restricted Subsidiary;

                  (3) Liens on property or shares of Capital Stock of a Person
         existing at the time such Person is merged with or into or consolidated
         with or becomes a Subsidiary of the Company or any Restricted
         Subsidiary of the Company, provided that such Liens were in existence
         prior to the contemplation of such merger or consolidation and do not
         extend to any assets other than those of the Person merged into or
         consolidated with the Company or the Restricted Subsidiary;

                  (4) Liens on assets existing at the time of acquisition of the
         assets by the Company or any Restricted Subsidiary of the Company,
         provided that such Liens were in existence prior to the contemplation
         of such acquisition;

                  (5) Liens to secure the performance of statutory obligations,
         surety or appeal bonds, performance bonds or other obligations of a
         like nature incurred in the ordinary course of business;

                  (6) Liens (i) to secure Indebtedness (including Capital Lease
         Obligations) permitted by Section 4.09(b)(4) hereof covering only the
         assets acquired with such Indebtedness or (ii) in respect of
         Attributable Debt permitted under Section 4.16 hereof;

                  (7) Liens (i) existing or required to be granted under the
         terms of Indebtedness or under the LineInvest Total Return Swap, in
         each case as in effect on the date of this Indenture, or (ii) granted
         in respect of such Indebtedness or the LineInvest Total Return Swap
         that replace any such liens referred to in this subclause (i); provided
         that such replacement Liens cover only the assets subject to the Liens
         being replaced;



                                       20

                  (8) Liens 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
         concluded, provided that any reserve or other appropriate provision as
         is required in conformity with GAAP has been made therefor;

                  (9) Liens on Receivables and Related Assets to reflect sales
         of receivables pursuant to a Receivables Program permitted by Section
         4.09(b)(12) hereof covering only the Receivables and Related Assets
         sold under such Receivables Program;

                  (10) Liens in favor of issuers of tender, bid, surety, appeal
         or performance bonds or letters of credit or bankers' acceptances
         issued pursuant to the request of and for the account of the Company or
         any Restricted Subsidiary in the ordinary course of its business;

                  (11) Liens on assets of a Restricted Subsidiary securing
         Indebtedness of that Restricted Subsidiary;

                  (12) Liens incurred in the ordinary course of business of the
         Company or any Restricted Subsidiary of the Company with respect to
         obligations that do not exceed E15 million at any one time outstanding;

                  (13) Liens securing Permitted Refinancing Indebtedness
         incurred to refinance Indebtedness that was previously so secured,
         provided that any such Lien is limited to all or part of the same
         property or assets (plus assets or property affixed or appurtenant
         thereto or proceeds in respect thereof) that secured (or, under the
         written arrangements under which the original Lien arose, could secure)
         the Indebtedness being refinanced or is in respect of property that is
         the security for a Permitted Lien;

                  (14) Liens securing Non-Recourse Product Financing or
         Non-Recourse Project Finance Indebtedness;

                  (15) Liens securing Hedging Obligations so long as such
         Hedging Obligations are permitted to be incurred under this Indenture;
         and

                  (16) Liens on assets or shares of Capital Stock of
         Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
         Subsidiaries.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

                  (1) the principal amount (or accreted value, if applicable) of
         such Permitted Refinancing Indebtedness does not exceed the principal
         amount (or accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded (plus all accrued
         interest on the Indebtedness and the amount of all expenses and
         premiums incurred in connection therewith);

                  (2) such Permitted Refinancing Indebtedness has a final
         maturity date no earlier than the final maturity date of, and has a
         Weighted Average Life to Maturity equal to or greater than the Weighted
         Average Life to Maturity of, the Indebtedness being extended,
         refinanced, renewed, replaced, defeased or refunded;



                                       21

                  (3) if the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded is subordinated in right of payment to
         the Notes, such Permitted Refinancing Indebtedness is subordinated in
         right of payment to the Notes on terms at least as favorable to the
         Holders of Notes as those contained in the documentation governing the
         Indebtedness being extended, refinanced, renewed, replaced, defeased or
         refunded; and

                  (4) such Indebtedness is incurred either by the Company or, if
         a Restricted Subsidiary is the obligor on the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded, by that
         Restricted Subsidiary or its Subsidiaries. The Company shall not be
         entitled to guarantee any Permitted Refinancing Indebtedness incurred
         by a Restricted Subsidiary unless the Indebtedness being refinanced was
         originally guaranteed by the Company.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

         "Private Placement Legend" means the legend set forth in Section
2.06(g)(1) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

         "Product" means any music (including mail order music), music
copyright, motion picture, television programming, film, videotape, video clubs,
DVD manufactured or distributed or any other product produced for theatrical,
non-theatrical or television release or for release in any other medium, in each
case whether recorded on film, videotape, cassette, cartridge, disc or on or by
any other means, method, process or device whether now known or hereafter
developed, with respect to which the Company or any Restricted Subsidiary:

                  (1)      is an initial copyright owner; or

                  (2) acquires (or shall acquire upon delivery) an equity
         interest or distribution rights; and

         the term "items of Product" shall include the scenario, screenplay or
script upon which such Product is based, all of the properties thereof, tangible
or intangible, and whether now in existence or hereafter to be made or produced,
whether or not in possession of the Company or any Restricted Subsidiary, and
all rights therein and thereto of every kind and character.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

         "Rating Agency" means (1) each of Moody's and S&P and (2) if Moody's or
S&P ceases to rate the Notes for reasons outside of the control of the Company,
a "nationally recognized statistical rating organization" within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a
replacement agency for Moody's or S&P, as the case may be.

         "Receivables and Related Assets" means accounts receivable,
instruments, chattel paper, obligations, general intangibles and other similar
assets, including interests in merchandise or goods, the sale or lease of which
give rise to the foregoing, related contractual rights, guarantees, insurance
proceeds, collections, other related assets and proceeds of all the foregoing.

         "Receivables Program" means, with respect to any Person, any accounts
receivable securitization program pursuant to which such Person pledges, sells
or otherwise transfers or encumbers its accounts receivable, including a trust,
limited liability company, special purpose entity or other similar entity.

                                       22

         "Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
or a Restricted Subsidiary of the Company (or another Person in which the
Company or any Restricted Subsidiary of the Company makes an Investment and to
which the Company or any Restricted Subsidiary of the Company transfers
Receivables and Related Assets) which engages in no activities other than in
connection with the financing of Receivables and Related Assets and which is
designated by the Board of Directors of the Company as a Receivables Subsidiary.

         "Registration Rights Agreement" means the Exchange and Registration
Rights Agreement, dated as of April 8, 2003, among the Company and the other
parties named on the signature pages thereof, relating to the Notes, as such
agreement may be amended, modified or supplemented from time to time, and, with
respect to any Additional Notes, one or more registration rights agreements
among the Company and the other parties thereto, as such agreement(s) may be
amended, modified or supplemented from time to time, relating to rights given by
the Company to the purchasers of Additional Notes to register such Additional
Notes under the Securities Act.

         "Regulation S" means Regulation S promulgated under the Securities Act.

         "Regulation S Global Note" means a Global Note bearing the Private
Placement Legend and deposited with or on behalf of the respective Depositary
(or the common depositary) therefor and registered in the name of the respective
Depositary (or the common depositary) therefor or its nominee, issued in a
denomination equal to the outstanding principal amount of the Dollar Notes or
the Euro Notes, as the case may be, initially sold in reliance on Rule 903 of
Regulation S.

         "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

         "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

         "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

         "Restricted Investment" means an Investment other than a Permitted
Investment.

         "Restricted Subsidiary" of a Person means any Subsidiary of that Person
that is not an Unrestricted Subsidiary.

         "Rule 144" means Rule 144 promulgated under the Securities Act.

         "Rule 144A" means Rule 144A promulgated under the Securities Act.

         "Rule 902" means Rule 902 promulgated under the Securities Act.

         "Rule 903" means Rule 903 promulgated under the Securities Act.

         "Rule 904" means Rule 904 promulgated under the Securities Act.

         "S&P" means Standard & Poor's Ratings Service, a division of The McGraw
Hill Companies, and its successors.

                                       23

         "Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
properties or assets of the Company and/or such Restricted Subsidiary (except
for leases between the Company and any Restricted Subsidiary, between any
Restricted Subsidiary and the Company or between Restricted Subsidiaries), which
properties or assets have been or are to be sold or transferred by the Company
or such Subsidiary to such Person with the intention of taking back a lease of
such properties or assets.

         "SEC" means the U.S. Securities and Exchange Commission.

         "Securities Act" means the U.S. Securities Act of 1933, as amended.

         "Shanghai Theme Park Joint Venture Agreement" means the Joint Venture
Agreement, dated February 10, 2003, among Universal Studios Holding, Ltd.,
Shanghai Waigaoqiao (Group) Co., Ltd. and Jinjiang Holdings Co., Ltd.

         "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

         "Significant Subsidiary" means any Subsidiary other than an
Unrestricted 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 of this Indenture.

         "Special Interest" means interest payable on the Notes in the event of
a registration default, the amount of which shall be determined as provided in
the Registration Rights Agreement.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid (including with respect to
sinking fund obligations) in the original documentation governing such
Indebtedness, and shall not include any contingent obligations to repay, redeem
or repurchase any such interest or principal prior to the date originally
scheduled for the payment thereof.

         "Subsidiary" means, with respect to any specified Person:

                  (1) any corporation, association or other business 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 of the
         corporation, association or other business entity is at the time owned
         or controlled, directly or indirectly, by that Person or one or more of
         the other Subsidiaries of that Person (or a combination thereof); and

                  (2) any partnership (a) the sole general partner or the
         managing general partner of which is such Person or a Subsidiary of
         such Person or (b) the only general partners of which are that Person
         or one or more Subsidiaries of that Person (or any combination
         thereof).

         "TIA" means the U.S. Trust Indenture Act of 1939 (15
U.S.C.Sections77aaa-77bbbb) as in effect on the date on which this
Indenture is qualified under the TIA.

         "Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

                                       24

         "Unrestricted Global Note" means a permanent Global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary therefor or its nominee, representing a series of Notes that
do not bear and are not required to bear the Private Placement Legend.

         "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

         "Unrestricted Subsidiary" means each Subsidiary of the Company that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a resolution of the Board of Directors, but only to the
extent that each such Subsidiary:

                  (1) has no Indebtedness other than Non-Recourse Debt;

                  (2) is not party to any agreement, contract, arrangement or
         understanding with the Company or any Restricted Subsidiary of the
         Company unless the terms of any such agreement, contract, arrangement
         or understanding are no less favorable to the Company or such
         Restricted Subsidiary than those that might be obtained at the time in
         a comparable transaction from Persons who are not Affiliates of the
         Company;

                  (3) is a Person with respect to which neither the Company nor
         any of its Restricted Subsidiaries has any direct or indirect
         obligation (a) to subscribe for additional Equity Interests or (b) to
         maintain or preserve such Person's financial condition or to cause such
         Person to achieve any specified levels of operating results; and

                  (4) has not guaranteed or otherwise directly or indirectly
         provided credit support for any Indebtedness of the Company or any of
         its Restricted Subsidiaries.

         Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of Section 4.09. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of the outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period; and (2) no Default or Event of Default would be in existence
following such designation.

         "U.S. GAAP" means generally accepted accounting principles in the
United States as in effect from time to time.

         "U.S. Person" means a U.S. Person as defined in Rule 902 under the
Securities Act.

                                       25

         "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.

         "VUE Group" means Vivendi Universal Entertainment LLLP and its
Subsidiaries, and any Restricted Subsidiary the assets of which consist solely
of holding, directly or indirectly, Capital Stock of Vivendi Universal
Entertainment LLLP and any assets that are immaterial and incidental.

         "VUE Partnership Agreement" means the amended and restated limited
liability limited partnership agreement of Vivendi Universal Entertainment LLLP,
dated as of May 7, 2002, as amended, novated or replaced from time to time.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

                  (1) the sum of the products obtained by multiplying (a) the
         amount of each then remaining installment, sinking fund, serial
         maturity or other required payments of principal, including payment at
         final maturity, in respect of the Indebtedness, by (b) the number of
         years (calculated to the nearest one-twelfth) that shall elapse between
         such date and the making of such payment; by

                  (2) the then outstanding principal amount of such
         Indebtedness.

         "Wholly Owned Subsidiary" of any specified Person means a Subsidiary of
such Person all 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 and/or by one or more Wholly Owned Subsidiaries of such Person.

Section 1.02      Other Definitions.



                                                                                                Defined in
        Term                                                                                      Section
        ----                                                                                      -------
                                                                                             
        "Additional Amounts"................................................................       2.13
        "Affiliate Transaction".............................................................       4.11
        "Asset Sale Offer"..................................................................       3.09
        "Authentication Order"..............................................................       2.02
        "Change of Control Offer"...........................................................       4.15
        "Change of Control Payment".........................................................       4.15
        "Change of Control Payment Date"....................................................       4.15
        "Covenant Defeasance"...............................................................       8.03
        "DTC"...............................................................................       2.03
        "Escrow Accounts"...................................................................       4.21
        "Escrow Agent"......................................................................       4.21
        "Escrow Agreement"..................................................................       4.21
        "Escrow Release Certificate"........................................................       4.21
        "Event of Default"..................................................................       6.01
        "Excess Proceeds"...................................................................       4.10
        "Fall Away Event"...................................................................       4.22
        "Final Escrow Date".................................................................       3.11
        "incur".............................................................................       4.09
        "Legal Defeasance"..................................................................       8.02
        "Liquidating Distributions" ........................................................       4.08



                                       26



                                                                                                Defined in
        Term                                                                                      Section
        ----                                                                                      -------
                                                                                             
        "Offer Amount"......................................................................       3.09
        "Offer Period"......................................................................       3.09
        "Paying Agent"......................................................................       2.03
        "Payment Default"...................................................................       6.01
        "Permitted Debt"....................................................................       4.09
        "Prior Capital Expenditures"........................................................       4.10
        "Private Exchange" .................................................................       2.06
        "Private Exchange Notes" ...........................................................       2.06
        "Purchase Date".....................................................................       3.09
        "Registrar".........................................................................       2.03
        "Restricted Payments"...............................................................       4.07
        "Special Mandatory Cancellation"....................................................       3.11
        "Special Mandatory Cancellation Date"...............................................       3.11
        "Special Mandatory Cancellation Notice".............................................       3.11
        "Special Mandatory Cancellation Price"..............................................       3.11
        "Successor Company" ................................................................       5.01
        "Taxes".............................................................................       2.13
        "Taxing Jurisdiction"...............................................................       2.13
        "VUE Asset Sale"....................................................................       4.10


Section 1.03      Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

         The following TIA terms used in this Indenture have the following
meanings:

         "indenture securities" means the Notes;

         "indenture security Holder" means a Holder of a Note;

         "indenture to be qualified" means this Indenture;

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes means the Company and any successor obligor upon
the Notes.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

Section 1.04      Rules of Construction.

         Unless the context otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                                       27

                  (3) "or" is not exclusive;

                  (4) words in the singular include the plural, and in the
         plural include the singular;

                  (5) "will" shall be interpreted to express a command;

                  (6) provisions apply to successive events and transactions;
         and

                  (7) references to sections of or rules under the Securities
         Act will be deemed to include substitute, replacement of successor
         sections or rules adopted by the SEC from time to time.

                                   ARTICLE 2.
                                    THE NOTES

Section 2.01      Form and Dating.

         (a) General. The Notes shall be issued in series of fixed rate senior
unsecured notes consisting of U.S. dollar-denominated 9.25% Senior Notes due
2010 and euro-denominated 9.50% Senior Notes due 2010. Each series of Notes and
the Trustee's certificate of authentication will be substantially in the form of
Exhibit A hereto. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Note will be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof, or of E1,000 and integral multiples thereof, as the case may
be.

         The terms and provisions contained in the Notes will constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

         (b) Global Notes. Notes issued in global form will be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form will be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note will represent such of the outstanding Notes of such
series as will be specified therein and each shall provide that it represents
the aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby will be made by the Trustee or the
Custodian therefor, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.

         (c) Euroclear and Clearstream Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream will be applicable to transfers
of beneficial interests in the Global Notes that are held by Participants
through Euroclear or Clearstream.

                                       28

Section 2.02 Execution and Authentication.

         An Officer must sign the Notes for the Company by manual or facsimile
signature.

         If the Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note will nevertheless be valid.

         A Note will not be valid until authenticated by the manual signature of
the Trustee. The signature will be conclusive evidence that the Note has been
authenticated under this Indenture.

         On the date of this Indenture, the Trustee shall, upon receipt of a
written order of the Company signed by an Officer (an "Authentication Order"),
authenticate the Initial Notes for original issue up to $935,000,000 in
aggregate principal amount of 9.25% Senior Notes due 2010 and E325,000,000 in
aggregate principal amount of 9.50% Senior Notes due 2010, as the case may be,
and, upon delivery of any Authentication Order at any time and from time to time
thereafter, the Trustee shall authenticate Additional Notes and Exchange Notes
for original issue in an aggregate principal amount specified in such
Authentication Order.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03 Registrar and Paying Agent.

         The Company will maintain offices or agencies where Notes may be
presented for registration of transfer or for exchange (each, a "Registrar") and
offices or agencies where Notes may be presented for payment (each, a "Paying
Agent"). Offices or agencies of the Registrar and Paying Agent (a) for the
Dollar Notes, will be maintained in the Borough of Manhattan, the City of New
York, and, for so long as the Dollar Notes are listed on the Luxembourg Stock
Exchange, in Luxembourg, and (b) for the Euro Notes, will be maintained in the
Borough of Manhattan, the City of New York, in London, England, and, for so long
as the Euro Notes are listed on the Luxembourg Stock Exchange, in Luxembourg.
The Registrar will keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company will
notify the Trustee in writing of the name and address of any Paying Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.

         The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Dollar Global Notes and Euroclear and
Clearstream to act as Depositaries with respect to the Euro Global Notes. The
Bank of New York will act as Common Depositary for the Euro Global Notes on
behalf of Euroclear and Clearstream.

         The Company initially appoints the Trustee to act as the Registrar and
Paying Agent in New York and London and to act as Custodian with respect to the
Global Notes, and initially appoints The Bank of New York (Luxembourg) S.A. as
Registrar and Paying Agent in Luxembourg.

                                       29

Section 2.04    Paying Agent to Hold Money in Trust.

         The Company will require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Special Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) will have no
further liability for the money. If the Company or a Subsidiary acts as Paying
Agent, it will segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. During the period that funds
are held in escrow pursuant to Section 4.21 hereof and upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee and the Bank of
New York (Luxembourg) S.A. will serve as Paying Agents for the Notes.

Section 2.05  Holder Lists.

         The Trustee will preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company will furnish to the Trustee at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).

Section 2.06  Transfer and Exchange.

         (a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the applicable Depositary to a nominee of the
applicable Depositary, by a nominee of the applicable Depositary to the
applicable Depositary or to another nominee of the applicable Depositary, or by
the applicable Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes of a series will be
exchanged by the Company for Definitive Notes if:

                  (1) in the case of a Dollar Global Note, the Company delivers
         to the Trustee notice from the applicable Depositary that it is
         unwilling or unable to continue to act as Depositary, that it is no
         longer a clearing agency registered under the Exchange Act or that it
         is unwilling or unable to continue as clearing agency and, in each
         case, a successor Depositary is not appointed by the Company within 120
         days after the date of such notice from the Depositary;

                  (2) in the case of a Euro Global Note, the Company delivers to
         the Trustee notice (i) from Euroclear and Clearstream that they are
         unwilling or unable to continue as clearing agencies or (ii) from the
         Common Depositary that it is unwilling or unable to continue to act as
         Common Depositary, and a successor Depositary or Common Depositary is
         not appointed by the Company within 120 days after the date of such
         notice from the Euroclear and Clearstream or the Common Depositary, as
         the case may be;

                  (3) in the case of a Euro Global Note, Euroclear or
         Clearstream is closed for business for a continuous period of 14 days
         (other than by reason of legal holidays) or announces an intention to
         cease business permanently; or

                                       30

                  (4) there has occurred and is continuing an Event of Default
         with respect to the Notes.

         Upon the occurrence of any of the events listed in the preceding
clauses (1) to (4) of this Section 2.06(a), or if the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Definite Notes under this Indenture, the Company shall execute, and the
Trustee shall, upon receipt of an Authentication Order, authenticate and deliver
Definitive Notes of the series and in an aggregate principal amount equal to the
principal amount of the applicable Global Note in exchange therefor. The Company
will, at the cost of the Company (but against such indemnity as the Registrar or
any relevant Agent may require in respect of any tax or other duty of whatever
nature which may be levied or imposed in connection with such exchange), cause
sufficient Definitive Notes to be executed and delivered to the Trustee for
authentication and the Registrar for registration of the exchange and dispatch
to the relevant Holders within 30 days of the relevant event. The Trustee or the
Registrar shall, at the cost of the Company, deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Definitive Notes issued
in exchange for beneficial interests in Global Notes pursuant to this Section
2.06(a) shall be registered in such names and in such authorized denominations
as the applicable Depositary, pursuant to instructions from its direct or
indirect Participants or otherwise, shall instruct the Trustee. A Global Note
may not be exchanged for another Note other than as provided in this Section
2.06(a), however, beneficial interests in a Global Note may be transferred and
exchanged as provided in Section 2.06(b), (c) or (f) hereof.

         (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes will be
effected through the applicable Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes will be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also will require
compliance with either subparagraph (1) or (2) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

                  (1) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in the same Restricted Global Note in accordance with the
         transfer restrictions set forth in the Private Placement Legend;
         provided, however, that transfers of beneficial interests in the
         Regulation S Global Note may not be made to a U.S. Person or for the
         account or benefit of a U.S. Person prior to the expiration of the
         40-day "Distribution Compliance Period" under Regulation S, unless such
         person is a "Distributor" as defined in Rule 902. Beneficial interests
         in any Unrestricted Global Note may be transferred to Persons who take
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note. No written orders or instructions shall be
         required to be delivered to the Registrar to effect the transfers
         described in this Section 2.06(b)(1).

                  (2) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.06(b)(1) above,
         the transferor of such beneficial interest must deliver to the
         Registrar both (i) a written order from a Participant or an Indirect
         Participant given to the applicable Depositary in accordance with the
         Applicable Procedures directing the applicable Depositary to credit or
         cause to be credited a beneficial interest in another Global Note in an
         amount equal to the beneficial interest to be transferred or exchanged,
         and (ii) instructions given in accordance with the Applicable
         Procedures containing information regarding the Participant account to
         be credited with such increase.

                                       31

         Upon consummation of an Exchange Offer by the Company in accordance
with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder of
such beneficial interests in the Restricted Global Notes. Upon satisfaction of
all of the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.

                  (3) `Transfer of Beneficial Interests to Another Restricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.06(b)(2) above and the
         Registrar receives the following:

                      (A) if the transferee will take delivery in the form of a
                  beneficial interest in a 144A Global Note, then the transferor
                  must deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (1) thereof; and

                      (B) if the transferee will take delivery in the form of a
                  beneficial interest in a Regulation S Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (2) thereof.

                  (4) Transfer and Exchange of Beneficial Interests in a
         Restricted Global Note for Beneficial Interests in an Unrestricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         exchanged by any holder thereof for a beneficial interest in an
         Unrestricted Global Note or transferred to a Person who takes delivery
         thereof in the form of a beneficial interest in an Unrestricted Global
         Note if the exchange or transfer complies with the requirements of
         Section 2.06(b)(2) above and:

                      (A) such exchange or transfer is effected pursuant to the
                  Exchange Offer in accordance with the Registration Rights
                  Agreement and the holder of the beneficial interest to be
                  transferred, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (i) a Broker-dealer, (ii) a Person
                  participating in the distribution of the Exchange Notes or
                  (iii) a Person who is an affiliate (as defined in Rule 144) of
                  the Company;

                      (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                      (C) such transfer is effected by a Broker-dealer pursuant
                  to the Exchange Offer Registration Statement in accordance
                  with the Registration Rights Agreement; or

                      (D) the Registrar receives the following:

                           (i) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a beneficial interest in an Unrestricted Global
                  Note, a certificate from such holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(a) thereof;
                  or

                           (ii) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a beneficial interest in an Unrestricted Global


                                       32

                 Note, a certificate from such holder in the form of Exhibit B
                 hereto, including the appropriate certifications in item (3)
                 thereof;


            and, in each such case set forth in this subparagraph (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer is in compliance with the
            Securities Act and that the restrictions on transfer contained
            herein and in the Private Placement Legend are no longer required in
            order to maintain compliance with the Securities Act.

         If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.

         (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
If any one of the events listed in clauses (1) to (4) of this Section 2.06(a)
has occurred or the Company has elected pursuant to Section 2.06(a) to cause the
issuance of Definitive Notes, transfers or exchanges of beneficial interests in
a Global Note for a Definitive Note shall be effected, subject to the
satisfaction of the conditions set forth in the applicable subclauses of this
Section 2.06(c).

                (1) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a Person who takes delivery thereof in the form of a
         Restricted Definitive Note, then, upon receipt by the Registrar of the
         following documentation:

                   (A) if the holder of such beneficial interest in a Restricted
                Global Note proposes to exchange such beneficial interest for a
                Restricted Definitive Note, a certificate from such holder in
                the form of Exhibit C hereto, including the certifications in
                item (2)(a) thereof;

                   (B) if such beneficial interest is being transferred to a QIB
                in accordance with Rule 144A, a certificate to the effect set
                forth in Exhibit B hereto, including the certifications in item
                (1) thereof;

                   (C) if such beneficial interest is being transferred to a
                Non-U.S. Person in an offshore transaction in accordance with
                Rule 903 or Rule 904, a certificate to the effect set forth in
                Exhibit B hereto, including the certifications in item (2)
                thereof;

                   (D) if such beneficial interest is being transferred to the
                Company or any of its Subsidiaries, a certificate to the effect
                set forth in Exhibit B hereto, including the certifications in
                item (4) thereof.

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and upon receipt of an Authentication Order the Trustee
shall authenticate and deliver to the Person designated in the


                                       33

instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest in
a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the
Private Placement Legend and shall be subject to all restrictions on transfer
contained therein.

                (2) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only if:

                       (A) such exchange or transfer is effected pursuant to the
                Exchange Offer in accordance with the Registration Rights
                Agreement and the holder of the beneficial interest to be
                transferred, in the case of an exchange, or the transferee, in
                the case of a transfer, certifies in the applicable Letter of
                Transmittal that it is not (i) a Broker-dealer, (ii) a Person
                participating in the distribution of the Exchange Notes or (iii)
                a Person who is an affiliate (as defined in Rule 144) of the
                Company;

                       (B) such transfer is effected pursuant to the Shelf
                Registration Statement in accordance with the Registration
                Rights Agreement;

                       (C) if such beneficial interest is being transferred
                pursuant to an effective registration statement under the
                Securities Act, a certificate to the effect set forth in Exhibit
                B hereto, including the certifications in item (3)(c) thereof,

                       (D) if such beneficial interest is being transferred
                pursuant to an exemption from the registration requirements of
                the Securities Act in accordance with Rule 144, a certificate to
                the effect set forth in Exhibit B hereto, including the
                certifications in item (3)(a) thereof;

                       (E) such transfer is effected by a Broker-dealer pursuant
                to the Exchange Offer Registration Statement in accordance with
                the Registration Rights Agreement; or

                       (F) the Registrar receives the following:

                           (i) if the holder of such beneficial interest in a
                Restricted Global Note proposes to exchange such beneficial
                interest for an Unrestricted Definitive Note, a certificate from
                such holder in the form of Exhibit C hereto, including the
                certifications in item (1)(b) thereof; or

                           (ii) if the holder of such beneficial interest in a
                Restricted Global Note proposes to transfer such beneficial
                interest to a Person who shall take delivery thereof in the form
                of an Unrestricted Definitive Note, a certificate from such
                holder in the form of Exhibit B hereto, including the
                appropriate certifications in item (3) thereof;

                and, in each such case set forth in this subparagraph (F), if
                the Registrar so requests or if the Applicable Procedures so
                require, an Opinion of Counsel in form reasonably


                                       34

                acceptable to the Registrar to the effect that such exchange or
                transfer is in compliance with the Securities Act and that the
                restrictions on transfer contained herein and in the Private
                Placement Legend are no longer required in order to maintain
                compliance with the Securities Act.

                (3) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company will execute and
upon receipt of an Authentication Order the Trustee will authenticate and
deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(3) will be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest requests through instructions to the
Registrar from or through the applicable Depositary and the Participant or
Indirect Participant. The Trustee will deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will
not bear the Private Placement Legend.

(d)      Transfer and Exchange of Definitive Notes for Beneficial Interests.

         (1) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Restricted Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt by
the Registrar of the following documentation:

             (A) if the Holder of such Restricted Definitive Note proposes to
         exchange such Note for a beneficial interest in a Restricted Global
         Note, a certificate from such Holder in the form of Exhibit C hereto,
         including the certifications in item (2)(b) thereof;

             (B) if such Restricted Definitive Note is being transferred to a
         QIB in accordance with Rule 144A, a certificate to the effect set forth
         in Exhibit B hereto, including the certifications in item (1) thereof;

             (C) if such Restricted Definitive Note is being transferred to a
         Non-U.S. Person in an offshore transaction in accordance with Rule 903
         or Rule 904, a certificate to the effect set forth in Exhibit B hereto,
         including the certifications in item (2) thereof;

             (D) if such Restricted Definitive Note is being transferred to the
         Company or any of its Subsidiaries, a certificate to the effect set
         forth in Exhibit B hereto, including the certifications in item (4)
         thereof,

         the Trustee will cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the 144A Global Note, and in the case of clause
         (C) or (D) above, the Regulation S Global Note.

                                       35

         (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:

             (A) such exchange or transfer is effected pursuant to the Exchange
         Offer in accordance with the Registration Rights Agreement and the
         Holder, in the case of an exchange, or the transferee, in the case of a
         transfer, certifies in the applicable Letter of Transmittal that it is
         not (i) a Broker-dealer, (ii) a Person participating in the
         distribution of the Exchange Notes or (iii) a Person who is an
         affiliate (as defined in Rule 144) of the Company;

             (B) such transfer is effected pursuant to the Shelf Registration
         Statement in accordance with the Registration Rights Agreement;

             (C) if such Restricted Definitive Note is being transferred
         pursuant to an effective registration statement under the Securities
         Act, a certificate to the effect set forth in Exhibit B hereto,
         including the certifications in item (3)(c) thereof;

             (D) if such Restricted Definitive Note is being transferred
         pursuant to an exemption from the registration requirements of the
         Securities Act in accordance with Rule 144, a certificate to the effect
         set forth in Exhibit B hereto, including the certifications in item
         (3)(a) thereof;

             (E) such transfer is effected by a Broker-dealer pursuant to the
         Exchange Offer Registration Statement in accordance with the
         Registration Rights Agreement; or

             (F) the Registrar receives the following:

                 (i) if the Holder of such Restricted Definitive Note proposes
             to exchange such Restricted Definitive Note for a beneficial
             interest in the Unrestricted Global Note, a certificate from such
             Holder in the form of Exhibit C hereto, including the
             certifications in item (1)(c) thereof; or

                 (ii) if the Holder of such Restricted Definitive Note proposes
             to transfer such Restricted Definitive Note to a Person who shall
             take delivery thereof in the form of a beneficial interest in the
             Unrestricted Global Note, a certificate from such Holder in the
             form of Exhibit B hereto, including the appropriate certifications
             in item (3) thereof;

         and, in each such case set forth in this subparagraph (F), if the
         Registrar so requests or if the Applicable Procedures so require, an
         Opinion of Counsel in form reasonably acceptable to the Registrar to
         the effect that such exchange or transfer is in compliance with the
         Securities Act and that the restrictions on transfer contained herein
         and in the Private Placement Legend are no longer required in order to
         maintain compliance with the Securities Act.

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the
         Definitive Note and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                                       36

                  (3) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee will cancel the applicable
         Unrestricted Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (2)(B),
         (2)(D) or (3) above at a time when an Unrestricted Global Note has not
         yet been issued, the Company will issue and, upon receipt of an
         Authentication Order in accordance with Section 2.02 hereof, the
         Trustee will authenticate one or more Unrestricted Global Notes in an
         aggregate principal amount equal to the principal amount of Definitive
         Notes so transferred.

         (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar will register the transfer
or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder must present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

             (1) Restricted Definitive Notes to Restricted Definitive Notes. Any
         Restricted Definitive Note may be transferred to and registered in the
         name of Persons who take delivery thereof in the form of a Restricted
         Definitive Note if the Registrar receives the following:

                 (A) if the transfer will be made pursuant to Rule 144A under
              the Securities Act, then the transferor must deliver a certificate
              in the form of Exhibit B hereto, including the certifications in
              item (1) thereof;

                 (B) if the transfer will be made pursuant to Rule 903 or Rule
              904, then the transferor must deliver a certificate in the form of
              Exhibit B hereto, including the certifications in item (2)
              thereof; and

                 (C) if the transfer will be made pursuant to any other
              exemption from the registration requirements of the Securities
              Act, then the transferor must deliver a certificate in the form of
              Exhibit B hereto, including the certifications required by item
              (3) thereof.

             (2) Restricted Definitive Notes to Unrestricted Definitive Notes.
         Any Restricted Definitive Note may be exchanged by the Holder thereof
         for an Unrestricted Definitive Note or transferred to a Person or
         Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                 (A) such exchange or transfer is effected pursuant to the
              Exchange Offer in accordance with the Registration Rights
              Agreement and the Holder, in the case of an exchange, or the
              transferee, in the case of a transfer, certifies in the applicable
              Letter of Transmittal that it is not (i) a Broker-dealer, (ii) a
              Person participating in the distribution


                                       37

      of the Exchange Notes or (iii) a Person who is an affiliate (as defined in
      Rule 144) of the Company;

            (B) such transfer is effected pursuant to the Shelf Registration
      Statement in accordance with the Registration Rights Agreement;

            (C) such transfer is effected by a Broker-dealer pursuant to the
      Exchange Offer Registration Statement in accordance with the Registration
      Rights Agreement; or

            (D)   the Registrar receives the following:

                  (i) if the Holder of such Restricted Definitive Note proposes
             to exchange such Note for an Unrestricted Definitive Note, a
             certificate from such Holder in the form of Exhibit C hereto,
             including the certifications in item (1)(d) thereof; or

                  (ii) if the Holder of such Restricted Definitive Note proposes
            to transfer such Note to a Person who shall take delivery thereof in
            the form of an Unrestricted Definitive Note, a certificate from such
            Holder in the form of Exhibit B hereto, including the appropriate
            certifications in item (3) thereof;

         and, in each such case set forth in this subparagraph (D), if the
         Registrar so requests, an Opinion of Counsel in form reasonably
         acceptable to the Company to the effect that such exchange or transfer
         is in compliance with the Securities Act and that the restrictions on
         transfer contained herein and in the Private Placement Legend are no
         longer required in order to maintain compliance with the Securities
         Act.

         (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
      Holder of Unrestricted Definitive Notes may transfer such Notes to a
      Person who takes delivery thereof in the form of an Unrestricted
      Definitive Note. Upon receipt of a request to register such a transfer,
      the Registrar shall register the Unrestricted Definitive Notes pursuant to
      the instructions from the Holder thereof.

      (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company will issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee will authenticate:

         (1) one or more Unrestricted Global Notes in an aggregate principal
      amount equal to the principal amount of the beneficial interests in the
      Restricted Global Notes tendered into the Exchange Offer by Persons that
      certify in the applicable Letters of Transmittal that (A) they are not
      Broker-dealers, (B) they are not participating in a distribution of the
      Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of
      the Company; and

         (2) Unrestricted Definitive Notes in an aggregate principal amount
      equal to the principal amount of the Restricted Definitive Notes accepted
      for exchange in the Exchange Offer.

      Concurrently with the issuance of such Notes, the Trustee will cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company will execute and the Trustee will
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Unrestricted Definitive Notes in the appropriate principal
amount. If, upon consummation of the Exchange Offer, any Holder holds Initial
Notes, the Company may thereafter issue


                                       38

and deliver to such Holder, in exchange (a "Private Exchange") for the Initial
Notes held by such Holder, a like principal amount of debt securities of the
Company issued under this Indenture and identical in all material respects to
the Initial Notes (the "Private Exchange Notes"); provided that the Company
shall have obtained certifications and other evidence reasonably satisfactory to
the Company that any such Holder may receive Private Exchange Notes in such
Private Exchange in compliance with applicable securities laws. The Exchange
Notes issued in the Exchange Offer and the Private Exchange Notes shall be
issued in the same series under this Indenture and shall have the same CUSIP,
Common Code, ISIN and/or other identification numbers.

      (g) Legends. The following legends will appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.

          (1) Private Placement Legend.

              (A) Except as permitted by subparagraph (B) below, each Global
          Note and each Definitive Note (and all Notes issued in exchange
          therefor or substitution thereof) shall bear the legend in
          substantially the following form:

          "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
          STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE
          OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE
          INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
          A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER
          THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
          OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
          REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
          WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
          PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
          PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) PURSUANT TO AN
          EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (5) TO
          THE COMPANY OR ANY OF ITS SUBSIDIARIES AND (B) BY SUBSEQUENT
          INVESTORS, AS SET FORTH IN (A) ABOVE, IN EACH CASE IN ACCORDANCE WITH
          ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES".

              (B) Notwithstanding the foregoing, any Global Note or Definitive
          Note issued pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2),
          (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes
          issued in exchange therefor or substitution thereof) will not bear the
          Private Placement Legend.

          (2) Global Dollar Note Legend. Each Dollar Global Note will bear a
legend in substantially the following form:

          "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
          INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
          BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
          ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY
          MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06
          OF THE INDENTURE, (2) THIS


                                       39

          GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
          SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
          DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF
          THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
          SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

          UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
          DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
          THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
          DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR
          BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
          NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
          PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
          COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY
          OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
          ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
          OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
          (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
          REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
          PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
          IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
          AN INTEREST HEREIN".

          (3) Global Euro Note Legend. Each Euro Global Note will bear a legend
in substantially the following form:

          "THIS GLOBAL NOTE IS HELD BY THE COMMON DEPOSITARY (AS DEFINED IN THE
          INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
          BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
          ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY
          MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06
          OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
          NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
          GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
          TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE
          TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
          OF THE COMPANY.

          UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
          DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
          THE COMMON DEPOSITARY TO A NOMINEE OF THE COMMON DEPOSITARY OR BY A
          NOMINEE OF THE COMMON DEPOSITARY TO THE COMMON DEPOSITARY OR ANOTHER
          NOMINEE OF THE COMMON DEPOSITARY OR BY THE COMMON DEPOSITARY OR ANY
          SUCH NOMINEE TO A SUCCESSOR COMMON DEPOSITARY OR A NOMINEE OF SUCH
          SUCCESSOR COMMON DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
          AN AUTHORIZED REPRESENTATIVE OF THE COMMON


                                       40

          DEPOSITARY (WHICH SHALL INITIALLY BE THE BANK OF NEW YORK, 101 BARCLAY
          STREET, FLOOR 21W, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR
          REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
          ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR SUCH
          OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
          COMMON DEPOSITARY (AND ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR
          SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE
          OF THE COMMON DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
          FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
          REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY, HAS AN INTEREST
          HEREIN".

          (h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note will be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note will be
reduced accordingly and an endorsement will be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note will be increased accordingly and
an endorsement will be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

          (i) General Provisions Relating to Transfers and Exchanges.

              (1) To permit registrations of transfers and exchanges, the
          Company will execute and the Trustee will authenticate Global Notes
          and Definitive Notes upon receipt of an Authentication Order in
          accordance with Section 2.02 or at the Registrar's request.

              (2) No service charge will be made to a Holder of a Global Note or
          to a Holder of a Definitive Note for any registration of transfer or
          exchange, but the Company may require payment of a sum sufficient to
          cover any transfer tax or similar governmental charge payable in
          connection therewith (other than any such transfer taxes or similar
          governmental charge payable upon exchange or transfer pursuant to
          Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

              (3) The Registrar will not be required to register the transfer of
          or exchange any Note selected for redemption in whole or in part,
          except the unredeemed portion of any Note being redeemed in part.

              (4) All Global Notes and Definitive Notes issued upon any
          registration of transfer or exchange of Global Notes or Definitive
          Notes will be the valid obligations of the Company, evidencing the
          same debt, and entitled to the same benefits under this Indenture, as
          the Global Notes or Definitive Notes surrendered upon such
          registration of transfer or exchange.

              (5) The Company will not be required:

                  (A) to issue, to register the transfer of or to exchange any
              Notes during a period beginning at the opening of business 15 days
              before the day of any selection of

                                       41

          Notes for redemption under Section 3.02 hereof and ending at the close
          of business on the day of selection;

                  (B) to register the transfer of or to exchange any Note
          selected for redemption in whole or in part, except the unredeemed
          portion of any Note being redeemed in part; or

                  (C) to register the transfer of or to exchange a Note between
          a record date and the next succeeding interest payment date.

          (6) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and for
all other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.

          (7) The Trustee will authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.

          (8) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.

Section 2.07      Replacement Notes.

         If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company will issue and the Trustee, upon receipt of an
Authentication Order, will authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.

         If, after the delivery of such replacement Note, a bona fide purchaser
of the original Note in lieu of which such replacement Note was issued presents
for payment or registration such original Note, the Trustee shall be entitled to
recover such replacement Note from the Person to whom it was delivered or any
Person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Company, the Trustee, any Agent
and any authenticating agent in connection therewith.

         Subject to the provisions of the final sentence of the preceding
paragraph of this Section 2.07, every replacement Note is an obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.

Section 2.08      Outstanding Notes.

         The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the


                                       42

Company or a Subsidiary of the Company shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.

         If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

         If the entire principal amount and premium, if any, of any Note is
considered paid under Section 4.01 hereof, it ceases to be outstanding and
interest on it ceases to accrue.

         If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes will be deemed to be no longer outstanding and will cease to accrue
interest.

         For purposes of determining whether the Holders of the requisite
principal amount of Notes have taken any action as herein described, the
principal amount of Dollar Notes shall be deemed to be the Euro Equivalent of
such principal amount of Dollar Notes as of (i) if a record date has been set
with respect to the taking of such action, such date or (ii) if no such record
date has been set, the date the taking of such action by the Holders of such
requisite principal amount is certified to the Trustee by the Company.

         Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an Agent duly appointed in writing
or may be embodied in or evidenced by an electronic transmissions which
identifies the documents containing the proposal on which such consent is
requested and certifies such Holders' consent thereto and agreement to be bound
thereby; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and where it is hereby expressly required, to the Company.

Section 2.09      Treasury Notes.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, will be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee will be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
will be so disregarded.

Section 2.10      Temporary Notes.

         Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
will authenticate temporary Notes. Temporary Notes will be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company will prepare and the Trustee
will authenticate definitive Notes in exchange for temporary Notes.

         Holders of temporary Notes will be entitled to all of the benefits of
this Indenture.

                                       43

Section 2.11      Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent will forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else will cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and will dispose of
such canceled Notes (subject to the record retention requirements of the
Exchange Act) in its customary manner unless the Company directs the Trustee to
deliver canceled Notes to the Company. The Company may not issue new Notes to
replace Notes that it has redeemed or paid or that have been delivered to the
Trustee for cancellation.

Section 2.12      Defaulted Interest.

         If the Company defaults in a payment of interest on the Notes, it will
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company will notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company will fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
may be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) will mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.

Section 2.13      Additional Amounts.

          (a) All payments made by the Company under or with respect to the
Notes will be made free and clear of and without withholding or deduction for or
on account of any present or future tax, duty, levy, impost, assessment or other
governmental charge (including penalties, interest and other liabilities related
thereto) (hereinafter, "Taxes") imposed or levied by or on behalf of the
government of France or any other jurisdiction in which the Company is organized
or is a resident for tax purposes or within or through which payment is made or
any political subdivision or taxing authority or agency thereof or therein (any
of the aforementioned being a "Taxing Jurisdiction"), unless the Company is
required to withhold or deduct any such Taxes by law or by the interpretation or
administration thereof.

          (b) If the Company is so required to withhold or deduct any amount for
or on account of Taxes from any payment made under or with respect to a Note,
the Company will, to the extent permitted by applicable law, pay such additional
amounts ("Additional Amounts") as may be necessary so that the net amount
received by the Holder of such Note (including Additional Amounts) after such
withholding or deduction of such Taxes will not be less than the amount such
Holder would have received if such Taxes had not been required to be withheld or
deducted; provided, however, that notwithstanding the foregoing, Additional
Amounts will not be paid with respect to:

                    (1) any Taxes that would not have been so imposed, deducted
          or withheld but for the existence of any present or former connection
          between the Holder or beneficial owner of such Note (or between a
          fiduciary, settlor, beneficiary, member or shareholder of, or
          possessor of power over, the Holder or beneficial owner of such Note,
          if the Holder or beneficial owner is an estate, nominee, trust,
          partnership or corporation) and the relevant Taxing Jurisdiction
          (other than the mere receipt of such payment or the ownership or
          holding of or the execution, delivery, registration or enforcement of
          such Note);

                                       44

                    (2) subject to Section 2.13(f) hereof, any estate,
          inheritance, gift, sales, excise, transfer or personal property tax or
          similar tax, assessment or governmental charge;

                    (3) any Taxes payable otherwise than by deduction or
          withholding from payments under or with respect to such Note;

                    (4) any Taxes that would not have been so imposed, deducted
          or withheld if the Holder or beneficial owner of such Note or
          beneficial owner of any payment on such Note had (i) made a
          declaration of non-residence, or any other claim or filing for
          exemption, to which it is entitled or (ii) complied with any
          certification, identification, information, documentation or other
          reporting requirement concerning the nationality, residence, identity
          or connection with the relevant Taxing Jurisdiction of such Holder or
          beneficial owner of such Note or any payment on such Note (provided
          that such declaration of non-residence or other claim or filing for
          exemption or such compliance is required by the applicable law of the
          relevant Taxing Jurisdiction as a precondition to exemption from, or
          reduction in the rate of the imposition, deduction or withholding of,
          such Taxes, and at least 30 days prior to the first payment date with
          respect to which such declaration of non-residence or other claim or
          filing for exemption or such compliance is required under the
          applicable law of the Taxing Jurisdiction, the relevant Holder at that
          time has been notified by the Company, or any other person through
          whom payment may be made that a declaration of non-residence or other
          claim or filing for exemption or such compliance is required to be
          made);

                    (5) any Taxes that would not have been so imposed, deducted
          or withheld if the beneficiary of the payment had presented such Note
          for payment within 30 days after the date on which such payment or
          such Note became due and payable or the date on which payment thereof
          is duly provided for, whichever is later (except to the extent that
          the Holder would have been entitled to Additional Amounts had the Note
          been presented on the last day of such 30-day period);

                    (6) any payment under or with respect to a Note to any
          Holder that is a fiduciary or partnership or any person other than the
          sole beneficial owner of such payment or Note, to the extent that a
          beneficiary or settlor with respect to such fiduciary, a member or
          such a partnership or the beneficial owner of such payment or Note
          would not have been entitled to the Additional Amounts had such
          beneficiary, settlor, member or beneficial owner been the actual
          Holder of such Note;

                    (7) any withholding or deduction imposed on a payment that
          is required to be made pursuant to any European Union Directive on the
          taxation of savings implementing the draft directive agreed upon by
          the European Council of Economic and Finance Ministers (ECOFIN) on
          January 21, 2003, or any law implementing or complying with, or
          introduced in order to conform to, such Directive;

                    (8) any withholding or deduction that is imposed on a Note
          that is presented for payment by or on behalf of a Holder that would
          have been able to avoid such withholding or deduction by presenting
          such Note to another paying agent in a member state of the European
          Union for Holders of Notes who are resident in the European Union, and
          in the United States for Holders of Notes who are resident in the
          United States; or

                    (9) any combination of items (1) through (8) above.

                                       45


      The foregoing provisions shall survive any termination or discharge of
this Indenture and shall apply mutatis mutandis to any Taxing Jurisdiction
with respect to any successor Person to the Company.

      (c)   The Company will also make any applicable withholding or
deduction and remit the full amount deducted or withheld to the relevant
authority in accordance with applicable law.  The Company will furnish to the
Trustee certified copies or tax receipts or, if such tax receipts are not
reasonably available to the Company, such other documentation that provides
reasonable evidence of such payment by the Company. Copies of such receipts
or other documentation will be made available to the Holders or the Paying
Agents, as applicable, upon request.

      (d)   At least 30 days prior to each date on which any payment under or
with respect to any Note is due and payable, unless such obligation to pay
Additional Amounts arises after the 30th day prior to such date, in which
case it shall be promptly paid thereafter, if the Company will be obligated
to pay Additional Amounts with respect to such payment, the Company will
deliver to the Trustee and the Paying Agent an Officers' Certificate stating
the fact that such Additional Amounts will be payable and the amounts so
payable and will set forth such other information necessary to enable the
Trustee and Paying Agent to pay such Additional Amounts to Holders of such
Note on the payment date.  Each Officers' Certificate shall be relied upon
until receipt of a further Officers' Certificate addressing such matters.

      (e)   Whenever in this Indenture there is mentioned, in any context,
the payment of principal, premium, if any, interest or any other amount
payable under or with respect to any Note, such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in
such context, Additional Amounts are, were or would be payable in respect
thereof.

      (f)   The Company will pay any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise in any jurisdiction from the execution, delivery,
enforcement or registration of the Notes, this Indenture or any other
document or instrument in relation thereto; provided, however, that no such
payments will be made in respect of any taxes, charges or similar levies
imposed by any jurisdiction outside any jurisdiction in which the Company or
any successor Person is organized or resident for tax purposes, or any
jurisdiction in which a Paying Agent is located, other than those resulting
from, or required to be paid in connection with, the enforcement of the Notes
or any other document or instrument following the occurrence of an Event of
Default with respect to the Notes, and the Company agrees to indemnify the
Holders of the Notes for any such non-excluded taxes paid by such Holders.

                                   ARTICLE 3.
                REDEMPTION AND PREPAYMENT; MANDATORY CANCELLATION

Section 3.01      Notices to Trustee.

      If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it must furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth:

            (1)   the clause of this Indenture pursuant to which the
      redemption shall occur;

            (2)   the redemption date;

            (3)   the principal amount of each series of Notes to be redeemed;
      and


                                       46

            (4)   the redemption price.

Section 3.02      Selection of Notes to Be Redeemed or Purchased.

      If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee will select Notes for redemption
or purchase as follows:

            (1)   if the applicable Notes are listed on any national
      securities exchange, in compliance with the requirements of the
      principal national securities exchange on which they are listed; or

            (2)   if the applicable Notes are not listed on any national
      securities exchange or the relevant national securities exchange does
      not have any applicable requirements, on a pro rata basis, by lot or by
      such method as the Trustee shall deem fair and appropriate.

      In the event of partial redemption or purchase by lot, the particular
Notes to be redeemed or purchased will be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption or
purchase date by the Trustee from the outstanding Notes not previously called
for redemption or purchase.

      The Trustee will promptly notify the Company in writing of the Notes
selected for redemption or purchase and, in the case of any Note selected for
partial redemption or purchase, the principal amount thereof to be redeemed
or purchased.  Notes and portions of Notes selected will be in amounts of
$1,000 or whole multiples of $1,000, or of E1,000 or whole multiples of
E1,000, as the case may be; except that if all of the Notes of a Holder are
to be redeemed or purchased, the entire outstanding amount of Notes held by
such Holder, even if not a multiple of $1,000 or of E1,000, as the case may
be, shall be redeemed or purchased.  Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for
redemption or purchase also apply to portions of Notes called for redemption
or purchase.

Section 3.03      Notice of Redemption.

      Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company will mail or
cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address, except that
redemption notices may be mailed more than 60 days prior to a redemption date
if the notice is issued in connection with a defeasance of the Notes or a
satisfaction and discharge of this Indenture pursuant to Article 8 or 10 of
this Indenture.  Notices of redemption shall not be conditional.  So long as
any series of the Notes is listed on the Luxembourg Stock Exchange and if
required by the rules of the Luxembourg Stock Exchange, notice will be given
to the Luxembourg Stock Exchange and published in Luxembourg in a daily
leading newspaper with general circulation in Luxembourg.

      The notice will identify the Notes to be redeemed and will state:

            (1)   the redemption date;

            (2)   the redemption price;

            (3)   if any Note is being redeemed in part, the portion of the
      principal amount of such Note to be redeemed and that, after the
      redemption date upon surrender of such Note, a new Note or Notes in
      principal amount equal to the unredeemed portion will be issued upon
      cancellation of the original Note;


                                       47

            (4)   the name and address of the Paying Agent;

            (5)   that Notes called for redemption must be surrendered to the
      Paying Agent to collect the redemption price;

            (6)   that, unless the Company defaults in making such redemption
      payment, interest on Notes called for redemption ceases to accrue on
      and after the redemption date;

            (7)   the paragraph of the Notes and/or Section of this Indenture
      pursuant to which the Notes called for redemption are being redeemed;
      and

            (8)   that no representation is made as to the correctness or
      accuracy of the CUSIP, ISIN or Common Code number, if any, listed in
      such notice or printed on the Notes.

      At the Company's request, the Trustee will give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company has delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.

Section 3.04      Effect of Notice of Redemption.

      Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price.

Section 3.05      Deposit of Redemption or Purchase Price.

      No later than one Business Day prior to the redemption or purchase
price date, the Company will deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption or purchase price of and accrued
interest and Special Interest, if any, on all Notes to be redeemed or
purchased on that date.  The Trustee or the Paying Agent will promptly return
to the Company any money deposited with the Trustee or the Paying Agent by
the Company in excess of the amounts necessary to pay the redemption or
purchase price of, and accrued interest and Special Interest, if any, on, all
Notes to be redeemed or purchased.

      If the Company complies with the provisions of the preceding paragraph,
on and after the redemption or purchase date, interest will cease to accrue
on the Notes or the portions of Notes called for redemption or purchase.  If
a Note is redeemed or purchased on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered
at the close of business on such record date.  If any Note called for
redemption or purchase is not so paid upon surrender for redemption or
purchase because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the
redemption or purchase date until such principal is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.

Section 3.06      Notes Redeemed or Purchased in Part.

      Upon surrender of a Note that is redeemed or purchased in part, the
Company will issue and, upon receipt of an Authentication Order, the Trustee
will authenticate for the Holder at the expense of the Company a new Note
equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.


                                       48

Section 3.07      Optional Redemption.

      (a)   At any time prior to April 15, 2007, the Company may at its
option redeem all or part of the Notes upon not less than 30 nor more than 60
days' prior notice at a redemption price equal to 100% of the principal
amount of the Notes being redeemed plus the Applicable Premium plus accrued
and unpaid interest and Special Interest, if any, to the applicable
redemption date.

      (b)   At any time prior to April 15, 2006, the Company may at its
option on any one or more occasions redeem up to 35% of the aggregate
principal amount of each series of the Notes issued under this Indenture at a
redemption price equal to 109.25% of the principal amount for the Dollar
Notes and 109.50% of the principal amount for the Euro Notes, plus in each
case accrued and unpaid interest and Special Interest, if any, to the
redemption date, with the net cash proceeds of an Equity Offering; provided
that:

            (1)   The Company received at least E50 million in gross proceeds
      from such Equity Offering;

            (2)   at least 65% of the initial aggregate principal amount of
      Notes issued under this Indenture remains outstanding immediately after
      the occurrence of such redemption (excluding Notes held by the Company
      and its Subsidiaries); and

            (3)   the redemption occurs within 120 days of the date of the
      closing of such Equity Offering.

      (c)   On or after April 15, 2007, the Company may redeem all or a part
of the Dollar Notes, or all of a part of the Euro Notes, upon not less than
30 nor more than 60 days' prior notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Special Interest, if any, on the Notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period
beginning on April 15 of the years indicated below:



                                               DOLLAR NOTE      EURO NOTE
                             YEAR              PERCENTAGE       PERCENTAGE
                             ----              ----------       ----------
                                                          
                       2007.................    104.625%         104.750%
                       2008.................    102.313%         102.375%
                       2009 and thereafter..    100.000%         100.000%


      (d)   Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.

Section 3.08      Mandatory Redemption.

      The Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes.

Section 3.09      Offer to Purchase by Application of Excess Proceeds.

      In the event that, pursuant to Section 4.10 hereof, the Company is
required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.

      The Asset Sale Offer shall be made to all Holders of Notes.  The Asset
Sale Offer will remain open for a period of at least 20 Business Days
following its commencement and not more than 30


                                       49

Business Days, except to the extent that a longer period is required by
applicable law (the "Offer Period"). No later than three Business Days after the
termination of the Offer Period (the "Purchase Date"), the Company shall apply
all Excess Proceeds (the "Offer Amount") to the purchase of Notes or, if less
than the Offer Amount has been tendered, all Notes tendered in response to the
Asset Sale Offer. Payment for any Notes so purchased will be made in the same
manner as interest payments are made.

      If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest,
and Special Interest, if any, will be paid to the Person in whose name a Note
is registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Notes pursuant to the Asset
Sale Offer.

      Upon the commencement of an Asset Sale Offer, the Company will send, by
first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee.  The notice will contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer.  The notice, which will govern the terms of the Asset Sale Offer, will
state:

            (1)   that the Asset Sale Offer is being made pursuant to this
      Section 3.09 and Section 4.10 hereof and the length of time the Asset
      Sale Offer will remain open;

            (2)   the Offer Amount, the purchase price and the Purchase Date;

            (3)   that any Note not tendered or accepted for payment will
      continue to accrue interest;

            (4)   that, unless the Company defaults in making such payment,
      any Note accepted for payment pursuant to the Asset Sale Offer will
      cease to accrue interest after the Purchase Date;

            (5)   that Holders electing to have a Note purchased pursuant to
      an Asset Sale Offer may elect to have Notes purchased in integral
      multiples of $1,000 or of E1,000 only, as the case may be;

            (6)   that Holders electing to have a Note purchased pursuant to
      any Asset Sale Offer will be required to surrender the Note, with the
      form entitled "Option of Holder to Elect Purchase" attached to the Note
      completed, or transfer by book-entry transfer, to the Company, a
      Depositary, if appointed by the Company, or a Paying Agent at the
      address specified in the notice at least three days before the Purchase
      Date;

            (7)   that Holders will be entitled to withdraw their election if
      the Company, the Depositary or the Paying Agent, as the case may be,
      receives, not later than the expiration of the Offer Period, a
      telegram, telex, facsimile transmission or letter setting forth the
      name of the Holder, the principal amount of the Note the Holder
      delivered for purchase and a statement that such Holder is withdrawing
      his election to have such Note purchased;

            (8)   that, if the aggregate principal amount of Notes
      surrendered by Holders exceeds the Offer Amount, the Company will
      select the Notes to be purchased on a pro rata basis based on the
      principal amount of Notes surrendered (with such adjustments as may be
      deemed appropriate by the Company so that only Notes in denominations
      of $1,000 or integral multiples thereof, or of E1,000 or integral
      multiples thereof, as the case may be, will be purchased); and


                                       50

            (9)   that Holders whose Notes were purchased only in part will
      be issued new Notes equal in principal amount to the unpurchased
      portion of the Notes surrendered (or transferred by book-entry
      transfer).

      On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company
in accordance with the terms of this Section 3.09.  The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in
any case not later than five days after the Purchase Date) mail or deliver to
each tendering Holder an amount equal to the purchase price of the Notes
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee, upon written
request from the Company will authenticate and mail or deliver such new Note
to such Holder, in a principal amount equal to any unpurchased portion of the
Note surrendered.  Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof.  The Company will publicly
announce the results of the Asset Sale Offer on the Purchase Date.

      Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

Section 3.10      Redemption of Notes for Changes in Withholding Taxes.

      The Company may, at its option, redeem all, but not less than all, of
the then outstanding Notes of a series at a redemption price equal to 100% of
the principal amount of the Notes, plus accrued and unpaid interest thereon
to the redemption date.  This redemption applies only if as a result of any
amendment to, or change in, the laws or treaties (including any rulings or
regulations promulgated thereunder) of France or any other jurisdiction in
which the Company is organized or is a resident for tax purposes or within or
through which payment is made or any political subdivision or taxing
authority or agency thereof or therein (or, in the case of Additional Amounts
payable by a successor Person to the Company, of the jurisdiction in which
such successor Person is organized or is a resident for tax purposes or any
political subdivision or taxing authority or agency thereof or therein) or
any amendment to or change in any official position concerning the
interpretation, administration or application of such laws, treaties, rulings
or regulations (including a holding by a court of competent jurisdiction),
which amendment or change is effective on or after the date of this Indenture
(or, in the case of Additional Amounts payable by a successor Person to the
Company, the date on which such successor Person became such pursuant to
applicable provisions of this Indenture), that the Company has become or will
become obligated to pay Additional Amounts (as described in Section 2.13
hereof) on the next date on which any amount would be payable with respect to
such Notes and the Company determines in good faith that such obligation
cannot be avoided (including, without limitation, by changing the
jurisdiction from which or through which payment is made) by the use of
reasonable measures available to the Company.

      No such notice of redemption may be given earlier than 90 days prior to
the earliest date on which the Company would be obligated to pay such
Additional Amounts were a payment in respect of the such Notes then due or
later than 180 days after such amendment or change referred to in the
preceding paragraph.  At the time such notice of redemption is given, such
obligation to pay such Additional Amounts must remain in effect.  Immediately
prior to the mailing of any notice of redemption described above, the Company
shall deliver to the Trustee (i) a certificate stating that the Company is
entitled to elect to effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right of the Company so to
elect to redeem have occurred and (ii) an Opinion of Counsel qualified


                                       51

under the laws of the relevant jurisdiction to the effect that the Company or
such successor Person, as the case may be, has or will become obligated to pay
such Additional Amounts as a result of such amendment or change.

Section 3.11      Mandatory Cancellation

      If (a) in accordance with the terms of the Escrow Agreement, the Escrow
Release Certificate is not delivered by the Company by 11:59 p.m. New York
City time on the date that is 120 days from the date hereof (or, if such
120th day is not a Business Day, the first Business Day after such day) (the
"Final Escrow Date") or (b) on an earlier date the Company notifies the
Escrow Agent that it reasonably believes it will not be possible for the
Company to deliver the Escrow Release Certificate by the Final Escrow Date,
upon the date that is the earlier of the Final Escrow Date and the date that
is five Business Days from the date of such notification, as the case may be,
the Company shall promptly instruct the Trustee to cancel each series of
Notes (the "Special Mandatory Cancellation") on a date that is not more than
10 Business Days after such instruction (the "Special Mandatory Cancellation
Date").  Promptly following receipt of instructions from the Company to
cancel the Notes in accordance with the previous sentence, or if no such
instructions have been received, on the Final Escrow Date, the Trustee shall
mail by first class mail notice of the Special Mandatory Cancellation (the
"Special Mandatory Cancellation Notice") to each Holder of the Notes at its
registered address, to the Escrow Agent and, so long as any series of the
Notes is listed on the Luxembourg Stock Exchange and if required by the rules
of the Luxembourg Stock Exchange, notice will be published in Luxembourg as
set forth in Section 3.03 hereof.

      As provided in the Escrow Agreement, upon receipt of the Special
Mandatory Cancellation Notice or, if the Escrow Agent shall not have received
an Escrow Release Certificate on or before the Final Escrow Date, on the next
following Business Day, the Escrow Agent will liquidate all Escrow Funds held
by it and the Escrow Agent will deliver such proceeds to the relevant Paying
Agent for pro rata distribution to the Holders of the Notes.  On the Special
Mandatory Cancellation Date, the Company will pay to the relevant Paying
Agent for payment to each Holder of Notes an aggregate amount equal to the
difference between (a) 101% of the aggregate principal amount of the Notes
plus interest that would have accrued on the Notes if the proceeds of the
offering of the Notes had been released to the Company on the date of
issuance of the Notes from such date to the Special Mandatory Cancellation
Date (the "Special Mandatory Cancellation Price") and (b) the proceeds from
the liquidation of the Escrow Funds, such that each holder of the Notes shall
receive the Special Mandatory Cancellation Price upon surrender and
cancellation of its Notes.

      The Special Mandatory Cancellation Notice will state:

      (1)   the Special Mandatory Cancellation Date;

      (2)   the Special Mandatory Cancellation Price;

      (3)   the name and address of the Paying Agent;

      (4)   that the Notes must be surrendered to the Paying Agent to be
cancelled to collect the Special Mandatory Cancellation Price; and

      (5)   that, unless the Company defaults on paying the portion of the
Special Mandatory Cancellation Price to be paid by it, no interest on the
Notes shall accrue on and after the Special Mandatory Cancellation Date.

                                       52

      Once the Special Mandatory Cancellation Notice has been mailed, the
Notes will become irrevocably due and payable on the Special Mandatory
Cancellation Date at the Special Mandatory Cancellation Price.

      All Notes surrendered by a Holder to the Trustee for cancellation shall
be irrevocably cancelled after payment to that Holder of the Special
Mandatory Cancellation Price.

      If the Notes are not cancelled because of a failure of the Company to
pay the portion of the Special Mandatory Cancellation Price to be paid by it,
the interest will be deemed to accrue for purposes of calculation of the
Special Mandatory Cancellation Price and the Special Mandatory Cancellation
Price shall be adjusted accordingly until the date such amount is paid to the
relevant Paying Agent.

      Pending delivery of the Escrow Release Certificate, the Company will
not have and will not be deemed to have any rights, title or interest in the
Escrow Funds, and any contingent or other rights the Company may have in
respect of the Escrow Funds under the Escrow Agreement will be extinguished
with respect to the Escrow Funds that are required to be released for payment
to the Holders of the Notes in the circumstances described above.

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01      Payment of Notes.

      The Company shall pay or cause to be paid the principal of, premium, if
any, and interest and Special Interest, if any, on the Notes on the dates and
in the manner provided in the Notes.  Principal, premium, if any, and
interest and Special Interest, if any will be considered paid on the date due
if the Paying Agent, if other than the Company or a Subsidiary thereof, holds
as of 10:00 a.m. New York Time on the due date money deposited by the Company
in immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.  The Company will pay all
Special Interest, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

      The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to the then applicable interest rate on the Notes; it will pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Special Interest (without regard to
any applicable grace period) at the same rate.

      If a Paying Agent pays out on or after the due date therefor, or
becomes liable to pay out funds on the assumption that the corresponding
payment by the Company has been or will be made and such payment has in fact
not been so made by the Company, then the Company shall on demand reimburse
the Paying Agent for the relevant amount, and pay interest to the Paying
Agent on such amount from the date on which it is paid out to the date of
reimbursement at a rate per annum equal to the cost to the Paying Agent of
funding the amount paid out, as certified by the Paying Agent and expressed
as a rate per annum.

Section 4.02      Maintenance of Office or Agency.

      The Company shall maintain an office or agency (which may be an office
of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) (a)
for the Dollar Notes, in the Borough of Manhattan, the City of New York, and,
for so long as the Dollar Notes are listed on the Luxembourg Stock Exchange,


                                       53

in Luxembourg, and (b) for the Euro Notes, in New York, in London, and, for
so long as the Euro Notes are listed on the Luxembourg Stock Exchange, in
Luxembourg, where (i) Notes may be surrendered for registration of transfer
or for exchange and (ii) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served, provided that in the
case of clause (ii) above as it applies to the Euro Notes, such office may be
maintained in Paris, France.  The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office
or agency.  If at any time the Company fails to maintain any such required
office or agency or fails to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee.

      The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission will in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York and London, England for such
purposes.  The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.

      The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03
hereof.

Section 4.03      Reports.

      (a)   Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the
Trustee and Holders of Notes:

            (1)   within the time periods specified by the SEC's rules and
      regulations, all financial information that would be required to be
      contained in a filing with the SEC on Form 20-F if the Company were
      required to file such Form, including a "Management's Discussion and
      Analysis of Financial Condition and Results of Operations" and a report
      on the Company's annual financial statements by the Company's certified
      independent accountants;

            (2)   within 90 days after the end of each of the first three
      fiscal quarters of each fiscal year, (a) quarterly financial statements
      (including a consolidated statement of income, consolidated balance
      sheet and consolidated statement of cash flows) of the Company prepared
      in accordance with generally accepted accounting principles in France
      as in effect at the time of such financial statements with a
      reconciliation to U.S. GAAP of net income, interest expense, EBIT and
      net debt and (b) a statement of management regarding the Company's
      financial position and results of operations, in each case (except for
      the U.S. GAAP information) that is substantially similar in scope and
      detail to the information publicly released by the Company in respect
      of its financial results for the first six months of each fiscal year;
      and

            (3)   within the time periods specified by the SEC's rules and
      regulations, all current reports that would be required to be filed
      with the SEC on Form 6-K if the Company were required to file such
      reports.

      To the extent GAAP in effect from time to time differs in any material
respect from GAAP in effect on the date of this Indenture, the Company will
separately prepare and deliver to the Trustee and Holders of the Notes with
its annual financial statements a reasonably detailed reconciliation to GAAP
as in effect on the date of this Indenture with respect to the financial
items necessary to ascertain compliance with the covenants set forth in this
Indenture.


                                       54

      In addition, following the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, whether or not required by
the SEC, the Company will file or furnish a copy of all of the information
and reports referred to in clauses (1), (2) and (3) above with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request and through publication on its internet website or similar means of
electronic dissemination.  The Company will at all times comply with TIA Section
314(a).

      (b)   For so long as any Notes remain outstanding, the Company will
furnish to the Trustee and Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.

Section 4.04      Compliance Certificate.

      (a)   The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review
of the activities of the Company and its Restricted Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best
of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default has
occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action the Company is taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.

      (b)   So long as any of the Notes are outstanding, the Company will
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.

Section 4.05      Taxes.

      The Company shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all Taxes except such as are
contested in good faith and by appropriate proceedings or where the failure
to effect such payment is not adverse in any material respect to the Holders
of the Notes.

Section 4.06      Stay, Extension and Usury Laws.

      The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenant that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power
as though no such law has been enacted.


                                       55

Section 4.07      Restricted Payments.

      (a)   The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:

            (1)   declare or pay any dividend or make any other payment or
      distribution on account of the Company's Equity Interests (including,
      without limitation, any payment in connection with any merger or
      consolidation involving the Company) or to the direct or indirect
      holders of the Company's Equity Interests in their capacity as such
      (other than dividends or distributions payable in Equity Interests
      (other than Disqualified Stock) of the Company);

            (2)   purchase, redeem or otherwise acquire or retire for value
      (including, without limitation, in connection with any merger or
      consolidation involving the Company) any Equity Interests of the
      Company;

            (3)   make any payment on or with respect to, or purchase,
      redeem, defease or otherwise acquire or retire for value any
      Indebtedness that is subordinated to the Notes, except a payment of
      interest or principal at the Stated Maturity thereof (other than
      Indebtedness permitted under clauses (2) or (7) of Section 4.09(b)
      hereof and the purchase, repurchase or other acquisition of
      subordinated Indebtedness with a Stated Maturity earlier than the
      maturity of the Notes purchased in anticipation of satisfying a payment
      of principal at the Stated Maturity thereof, within one year of such
      Stated Maturity; 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 and after giving effect to such Restricted Payment:

                  (a)  no Default or Event of Default has occurred and is
                       continuing or would occur as a consequence thereof;

                  (b)  the Company could incur at least E1.00 of additional
                       Indebtedness pursuant to Section 4.09(a) hereof; and

                  (c)  with respect to a Restricted Payment of the type
                       described in clause (1) or (2) of the definition of
                       Restricted Payments above, a period of not less than
                       365 days has elapsed since the date of this Indenture;
                       and

                  (d)  such Restricted Payment, together with the aggregate
                       amount of all other Restricted Payments made by the
                       Company and its Restricted Subsidiaries after the date
                       of this Indenture (excluding Restricted Payments
                       permitted by clauses (3), (4), (5), (6), (7) or (10)
                       of Section 4.07(b) hereof), is less than the sum,
                       without duplication, of:

                  (A)   50% of the Consolidated Net Income of the Company for
            the period (taken as one accounting period) from the beginning of
            the fiscal quarter in which the Notes are issued to the end of
            the Company's most recently ended fiscal quarter for which
            financial statements are publicly available at the time of such
            Restricted Payment (or, if such Consolidated Net Income for such
            period is a deficit, less 100% of such deficit), plus


                                       56

                  (B)   100% of the aggregate net cash proceeds received by
            the Company since the date of this Indenture (i) as a
            contribution to its common equity capital or from the issue or
            sale of Equity Interests of the Company (other than Disqualified
            Stock) or (ii) from the issue or sale of convertible or
            exchangeable Disqualified Stock or convertible or exchangeable
            debt securities of the Company upon conversion into or exchange
            for such Equity Interests (other than Equity Interests (or
            Disqualified Stock or debt securities) sold to a Subsidiary of
            the Company), plus

                  (C)   to the extent that any Restricted Investment that was
            made after the date of this Indenture is sold for cash or
            otherwise liquidated or repaid for cash, the lesser of (i) the
            cash return of capital with respect to such Restricted Investment
            (less the cost of disposition, if any) and (ii) the initial
            amount of such Restricted Investment, plus

                  (D)   to the extent that any Unrestricted Subsidiary of the
            Company is redesignated as a Restricted Subsidiary after the date
            of this Indenture, the fair market value of the Company's
            Investment in such Subsidiary as of the date of such
            redesignation (or, if such redesignation occurs within one year
            of the date on which such Subsidiary was originally designated as
            an Unrestricted Subsidiary, the lesser of (i) such fair market
            value and (ii) the fair market value of such Subsidiary as of the
            date on which such Subsidiary was originally designated as an
            Unrestricted Subsidiary).

      (b)   The provisions of Section 4.07(a) will not prohibit:

            (1)   the payment of any dividend or distribution on, or any
      redemption of, Equity Interests, within 60 days after the date of
      declaration or notice thereof, if at the date of declaration  or notice
      the dividend payment, distribution or redemption would have complied
      with the provisions of this Indenture;

            (2)   Investments that the Company or its Restricted Subsidiaries
      are required to make as the result of the exercise of rights by persons
      that are not Affiliates of the Company pursuant to contracts or
      agreements in effect as of the date of this Indenture that are referred
      to in Note 11.3 to the Company's consolidated financial statements
      included in the Offering Circular, dated April 3, 2003, relating to the
      Notes.

            (3)   the purchase, repayment, prepayment, redemption,
      repurchase, retirement, defeasance or other acquisition of any
      subordinated Indebtedness of the Company or any Restricted Subsidiary
      or of any Equity Interests of the Company in exchange for, or out of
      the net cash proceeds of the substantially concurrent sale (other than
      to a Restricted Subsidiary) of Equity Interests of the Company (other
      than Disqualified Stock); provided that the amount of any such net cash
      proceeds that are utilized for any such purchase, repayment,
      prepayment, redemption, repurchase, retirement, defeasance or other
      acquisition shall be excluded from Section 4.07(a)(i)(B) hereof;

            (4)   the purchase, repayment, prepayment, redemption,
      repurchase, retirement, defeasance or other acquisition of subordinated
      Indebtedness of the Company or any Restricted Subsidiary (a) with the
      net cash proceeds from an incurrence of Permitted Refinancing
      Indebtedness or (b) from Net Proceeds from any Asset Sale to the extent
      permitted under clause (3) of Section 4.10 hereof;

            (5)   so long as no Default or Event of Default shall have
      occurred and be continuing, the purchase, redemption, repurchase or
      other acquisition or retirement for value of any Equity


                                       57

      Interests of the Company from employees, former employees, directors or
      former directors of the Company or any of its Subsidiaries or their
      authorized representatives pursuant to any management equity plan, share
      option plan or any other management or employee benefit plan or agreement
      with respect to the management, directors or employees of the Company and
      its Subsidiaries; provided that the aggregate price paid for all such
      purchased, redeemed, repurchased, acquired or retired Equity Interests may
      not exceed E3 million in any twelve-month period;

            (6)   repurchases of Equity Interests deemed to occur upon (a)
      the exercise of stock options, warrants or convertible securities
      issued as compensation if such Equity Interests represent a portion of
      the exercise price thereof and (b) the withholding of a portion of the
      Equity Interests granted or awarded to an employee to pay taxes
      associated therewith;

            (7)   the declaration and payment of dividends to holders of any
      class or series of Disqualified Stock or preferred stock of the Company
      issued in accordance with Section 4.09 hereof to the extent such
      dividends are included in the definition of Fixed Charges;

            (8)   in connection with a VUE Asset Sale, the purchase of a
      letter of credit for the purpose of defeasing the outstanding Class A
      Preferred Stock of Vivendi Universal Entertainment LLLP in accordance
      with the VUE Partnership Agreement;

            (9)   equity contributions to the joint venture formed for the
      purpose of developing a theme park in Shanghai, People's Republic of
      China, pursuant to the Shanghai Theme Park Joint Venture Agreement in
      aggregate amounts of up to E80 million; and

            (10)  so long as no Default or Event of Default shall have
      occurred and be continuing, other Restricted Payments in an aggregate
      amount, when taken together with all other Restricted Payments made
      pursuant to this clause (10), not to exceed E15 million.

      (c)   The amount of all Restricted Payments (other than cash) will be
the fair market value on the date of the Restricted Payment of the assets or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required
to be valued by this Section 4.07 will be determined in good faith (a) in the
case of assets or securities valued at E40 million or less, by a senior
financial officer of the Company and set forth in an Officers' Certificate to
the Trustee, and (b) in the case of assets or securities valued at more than
E40 million, by the Company's Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee.

Section 4.08      Dividend and Other Payment Restrictions Affecting
                  Subsidiaries.

      (a)   The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability
of any Restricted Subsidiary to:

            (1)   pay dividends or make any other distributions on its
      Capital Stock to the Company or any of its Restricted Subsidiaries;

            (2)   make loans or advances to the Company or any of its
      Restricted Subsidiaries; or

            (3)   transfer any of its properties or assets to the Company or
      any of its Restricted Subsidiaries.


                                       58

      (b)   The restrictions in Section 4.08(a) shall not apply to
encumbrances or restrictions existing under or by reason of:

            (1)   the New Credit Facility or agreements or instruments in
      effect on the date of this Indenture and any amendments, modifications,
      restatements, renewals, supplements, replacements or refinancings of
      the New Credit Facility or those agreements or instruments, provided
      that the encumbrances or restrictions contained in the New Credit
      Facility or any such amendments, modifications, restatements, renewals,
      supplements, replacements or refinancings taken as a whole, are not
      materially less favorable to the Holders of the Notes than the
      encumbrances or restrictions contained in agreements or instruments in
      place on the date of this Indenture;

            (2)   this Indenture, the Notes and the exchange Notes to be
      issued pursuant to the registration rights agreement;

            (3)   any applicable law, rule, regulation or order;

            (4)   any agreement or instrument relating to Indebtedness or
      Capital Stock of a Person acquired by, or merged, consolidated or
      otherwise combined with or into the Company or any of its Restricted
      Subsidiaries as in effect at the time of such acquisition (except to
      the extent such Indebtedness or Capital Stock was incurred in
      connection with or in contemplation of such acquisition), which
      encumbrance or restriction is not applicable to any Person, or the
      properties or assets of any Person, other than the Person or the
      property or assets of the Person so acquired, and any amendments,
      modifications, restatements, renewals, supplements, replacements or
      refinancings of those instruments, provided that the encumbrances or
      restrictions contained in any such amendments, modifications,
      restatements, renewals, supplements, replacements or refinancings,
      taken as a whole, are not materially less favorable to the Holders of
      the Notes than the encumbrances or restrictions contained in agreements
      or instruments in effect on the date of acquisition;

            (5)   customary non-assignment provisions in leases or other
      agreements entered into in the ordinary course of business;

            (6)   an agreement or instrument relating to any Indebtedness,
      Disqualified Stock or preferred stock of a Restricted Subsidiary
      permitted to be incurred or issued subsequent to the date of this
      Indenture pursuant to the provisions of Section 4.09 hereof if (i) the
      encumbrances and restrictions contained in any such agreement or
      instrument taken as a whole are not materially less favorable to the
      Holders of the Notes than the encumbrances and restrictions contained
      in the agreements relating to Indebtedness, Disqualified Stock or
      preferred stock, as appropriate, of that Restricted Subsidiary in
      effect on the date of this Indenture, or (ii) in the event such
      Restricted Subsidiary did not have any Indebtedness, Disqualified Stock
      or preferred stock outstanding on the date of this Indenture, such
      encumbrance or restriction will not impair the ability of the Company
      to make payments of principal, interest and other amounts on the Notes
      in any material respect;

            (7)   the terms of any preferred stock issued by any Restricted
      Subsidiary of the Company; provided, however, that the terms of such
      preferred stock do not impose any consensual encumbrance or restriction
      on the ability of the Restricted Subsidiary to pay dividends or make
      distributions on its Capital Stock except in a manner that is no more
      restrictive than the following, as determined in good faith by the
      Board of Directors of the Company and evidenced by a resolution adopted
      by such Board of Directors:


                                       59

                  (A)   dividends and distributions on Capital Stock of the
            Restricted Subsidiary may not be declared or paid or set apart
            for payment at any time when the Restricted Subsidiary has not
            declared and paid any dividends or distributions on such
            preferred stock which are required to be declared and paid as a
            precondition to dividends or distributions on other Capital Stock
            of the Restricted Subsidiary;

                  (B)   distributions upon the liquidation, dissolution or
            winding up of the Restricted Subsidiary, whether voluntary or
            involuntary ("Liquidating Distributions"), may not be made on the
            Capital Stock of the Restricted Subsidiary at any time when such
            preferred stock is entitled to receive Liquidating Distributions
            which have not been paid; and

                  (C)   dividends and distributions on Capital Stock of the
            Restricted Subsidiary may not be declared or paid or set apart
            for payment at any time when such preferred stock is required to
            be, but has not been, redeemed pursuant to mandatory redemption
            provisions that do not require such preferred stock to be
            redeemed prior to the Stated Maturity of the Notes;

            (8)   purchase money obligations for property acquired in the
      ordinary course of business that impose restrictions on that property
      of the nature described in Section 4.08(a)(3) hereof;

            (9)   any agreement for the sale or other disposition of a
      Restricted Subsidiary that restricts distributions by that Restricted
      Subsidiary pending its sale or other disposition;

            (10)  Permitted Refinancing Indebtedness, provided that the
      restrictions contained in the agreements governing such Permitted
      Refinancing Indebtedness, taken as a whole, are not materially more
      restrictive than those contained in the agreements governing the
      Indebtedness being refinanced;

            (11)  Liens securing Indebtedness otherwise permitted to be
      incurred under the provisions of Section 4.12 or 4.16 hereof that limit
      the right of the debtor to dispose of the assets subject to such Liens;

            (12)  customary provisions in joint venture agreements, asset
      sale agreements, stock sale agreements and other similar agreements
      entered into in the ordinary course of business that  will not impair
      the ability of the Company to make payments of principal, interest and
      other amounts on the Notes in any material respect;

            (13)  restrictions on cash or other deposits or net worth imposed
      by customers or lessors under contracts or leases entered into in the
      ordinary course of business; and

            (14)  with respect to a Receivables Subsidiary, encumbrances and
      restrictions that are imposed pursuant to a Receivables Program of such
      Receivables Subsidiary; provided that such encumbrances and
      restrictions are customarily required by the institutional sponsor or
      arranger at the time of entering into such Receivables Program in
      similar types of documents relating to the purchase of similar
      receivables in connection with the financing thereof.


                                       60

Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock.

      (a)   The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt), and the Company shall not issue any Disqualified
Stock and shall not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock, and its
Restricted Subsidiaries may incur Acquired Debt (and not any other
Indebtedness), if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which financial statements are
publicly 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 3.0 to 1, 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 preferred stock or
Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period.

      (b)   The provisions of Section 4.09(a) shall not prohibit the
incurrence of any of the following items of Indebtedness, Disqualified Stock
or preferred stock, as applicable (collectively, "Permitted Debt"):

            (1)   the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness and letters of credit (with letters of
      credit being deemed to have a principal amount equal to the maximum
      potential liability of the Company and the Restricted Subsidiaries
      thereunder) under

                  (A)   Tranche B of the New Credit Facility in an aggregate
            principal amount of up to E1,000 million;

                  (B)   Tranche A of the New Credit Facility in an aggregate
            principal amount of up to E1,500 million that is committed or
            outstanding at any time; and

                  (C)   one or more other Additional Credit Facilities in an
            aggregate principal amount at any one time outstanding under this
            clause (C), when taken together with (i) the aggregate principal
            amount of all Indebtedness that is committed or outstanding under
            Tranche A of the New Credit Facility and under clause (12) of
            this Section 4.09(b) and (ii) all Permitted Refinancing
            Indebtedness incurred pursuant to Tranche A of the New Credit
            Facility, this clause (C) or clause 12 of this Section 4.09(b),
            not to exceed the Designated Amount,

            provided that prior to or concurrently with the incurrence of any
            Indebtedness under Tranche B of the New Credit Facility or under
            clause (C) above, at least E1,540 million of Existing
            Indebtedness shall have been repaid by the Company since the date
            of this Indenture (and to the extent such repayments have been
            applied to revolving credit Indebtedness, the commitments in
            respect of such Indebtedness have been correspondingly reduced);

            (2)   the incurrence by the Company and its Restricted Subsidiaries
      of the Existing Indebtedness;


                                       61

            (3)   the incurrence by the Company of Indebtedness represented
      by (A) the Notes to be issued on the date of this Indenture, and (B)
      the Exchange Notes to be issued pursuant to the Registration Rights
      Agreement;

            (4)   the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness represented by Capital 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, lease or cost of construction or improvement of property (real
      or personal), plant or equipment (whether through the direct purchase
      of assets or through the purchase of the Capital Stock of any Person
      owning such assets) used in a Permitted Business, in an aggregate
      principal amount at any time outstanding, including all Permitted
      Refinancing Indebtedness incurred under clause (5) of this Section
      4.09(b) to refund, refinance or replace any Indebtedness incurred
      pursuant to this clause (4), not to exceed 1.4% of the Consolidated
      Total Assets of the Company and its Restricted Subsidiaries less any
      Attributable Debt outstanding with Respect to Sale and Leaseback
      Transactions entered into in compliance with Section 4.16 hereof;

            (5)   the incurrence by the Company or any of its Restricted
      Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
      the net proceeds of which are used to refund, refinance or replace
      Indebtedness (other than intercompany Indebtedness) that was permitted
      by this Indenture to be incurred under Section 4.09(a) or clause (1),
      (2), (3), (4), (5) or (12) of this Section 4.09(b);

            (6)   the incurrence by the Company or any of its Restricted
      Subsidiaries of obligations with respect to letters of credit securing
      obligations entered into in the ordinary course of business to the
      extent such letters of credit are not drawn upon or, if drawn upon,
      such drawing is reimbursed within five Business Days following receipt
      of a demand for reimbursement;

            (7)   the incurrence by the Company or any of its Restricted
      Subsidiaries of intercompany Indebtedness between or among the Company
      and any of its Restricted Subsidiaries; provided, however, that:

                  (A)   if the Company is the obligor on such Indebtedness
            and such Indebtedness is held by a Restricted Subsidiary, such
            Indebtedness (other than Indebtedness incurred with a principal
            amount outstanding of E5 million or less, up to an aggregate of
            E30 million of any such Indebtedness at any time outstanding held
            by Restricted Subsidiaries) must be expressly subordinated to the
            prior payment in full in cash of all Obligations with respect to
            the Notes to the extent permissible under law without subjecting
            the directors or officers of the obligee or obligor under any
            such Indebtedness in their reasonable judgment to any penalty or
            civil or criminal liability in connection with the subordination
            of such Indebtedness; and

                  (B)   (i) any subsequent issuance or transfer of Equity
            Interests that results in any such Indebtedness being held by a
            Person other than the Company or a Restricted Subsidiary of the
            Company and (ii) any sale or other transfer of any such
            Indebtedness to a Person that is not either the Company or a
            Restricted Subsidiary of the Company shall be deemed, in each
            case, to constitute an incurrence of such Indebtedness by the
            Company or such Restricted Subsidiary, as the case may be, that
            was not permitted by this clause (7);

            (8)   the issuance of shares of preferred stock by a Restricted
      Subsidiary to the Company or another Restricted Subsidiary; provided
      that any subsequent issuance or transfer of


                                       62

      any Capital Stock or any other event which, in either case, results in any
      Restricted Subsidiary holding such preferred stock ceasing to be a
      Restricted Subsidiary or any other subsequent transfer of any such shares
      of preferred stock (except to the Company or another Restricted
      Subsidiary) shall be deemed in each case to be an issuance of such shares
      of preferred stock that was not permitted by this clause (8);

            (9)   the incurrence by the Company or any of its Restricted
      Subsidiaries of Hedging Obligations that are incurred in the ordinary
      course of business and not for speculative purposes;

            (10)  Indebtedness of the Company or any of its Restricted
      Subsidiaries in respect of performance bonds, bankers' acceptances,
      workers' compensation claims, surety or appeal bonds, payment
      obligations in connection with self-insurance or similar obligations,
      and bank overdrafts (and letters of credit in respect thereof) in the
      ordinary course of business;

            (11)  Indebtedness of the Company or any Restricted Subsidiary
      owed to (including obligations in respect of letters of credit for the
      benefit of) any Person in connection with worker's compensation,
      health, disability or other employee benefits or property, casualty or
      liability insurance provided by such Person to the Company or such
      Restricted Subsidiary pursuant to reimbursement or indemnification
      obligations to such Person, in each case incurred in the ordinary
      course of business and consistent with past practices;

            (12)  the incurrence by any Receivables Subsidiary of
      Indebtedness pursuant to a Receivables Program; provided, however, that
      the aggregate principal amount of Indebtedness incurred pursuant to
      this clause (12) at any one time outstanding, when taken together with
      the aggregate principal amount of all Indebtedness committed under
      Tranche A of the New Credit Facility and all then-outstanding
      Indebtedness incurred pursuant to clauses (1)(B) and (C) of Section
      4.09(b) hereof, does not exceed the Designated Amount;

            (13)  the incurrence by the Company or a Restricted Subsidiary of
      Indebtedness to the extent the net proceeds thereof are promptly
      deposited to defease all outstanding Notes as described in Article 8
      hereof;

            (14)  the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness arising from the honoring by a bank or
      other financial institution of a check, draft or similar institution
      inadvertently drawn against insufficient funds in the ordinary course
      of business, provided that such Indebtedness is extinguished within ten
      days of occurrence;

            (15)  the incurrence of Indebtedness by Cegetel or any Restricted
      Subsidiary thereof, provided that the terms of such Indebtedness do not
      restrict the ability of Cegetel or such Restricted Subsidiary to
      distribute cash (by dividend or otherwise) to the Company and

                  (A)   if, at the time such Indebtedness is incurred, the
            outstanding senior unsecured Indebtedness of Cegetel has
            Investment Grade Ratings from both of the Rating Agencies, to the
            extent the proceeds of such Indebtedness are distributed to the
            Company, such proceeds must be used to repay outstanding
            Indebtedness of the Company or its Restricted Subsidiaries of the
            type described in clause (1), (2) or (3) of the second paragraph
            under Section 4.10 hereof; and

                  (B)   if, at the time such Indebtedness is incurred, the
            outstanding senior unsecured Indebtedness of Cegetel does not
            have Investment Grade Ratings from both of the Rating Agencies,
            either (i) all the net proceeds (net of amounts distributed to
            minority


                                       63

            shareholders) of such Indebtedness must be distributed to the
            Company and used for the purpose of repaying outstanding
            Indebtedness and other Obligations of Societe d'Investissement pour
            la Telephonie S.A. or under any other Credit Facility that
            constitutes outstanding senior secured bank debt of the Company or
            any Restricted Subsidiary or, if no such Indebtedness is
            outstanding, any Indebtedness of the Company or any Restricted
            Subsidiary that is not subordinated in right of payment to the
            Notes, (ii) such Indebtedness must be used to finance the
            acquisition of a French fixed line telephone business which has
            positive EBITDA based on its latest financial accounts and
            Indebtedness of not more than E300 million (any such Indebtedness
            incurred under this clause (ii) not to exceed E500 million plus E300
            million of Acquired Debt), (iii) such Indebtedness must be used to
            finance the payment of any liabilities of Cegetel or any of its
            Restricted Subsidiaries that accrue to LineInvest Limited under the
            terms of the LineInvest Total Return Swap, or (iv) any combination
            of (i), (ii) and (iii);

            (16)  the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness solely to finance the purchase of Capital
      Stock of Maroc Telecom as a result of the exercise by the Kingdom of
      Morocco of its put right in respect of such Capital Stock, provided
      that the recourse of any lenders of such Indebtedness shall be limited
      solely to the Capital Stock of Maroc Telecom held directly or
      indirectly by the Company, dividends and distributions in respect
      thereof, and the assets of Maroc Telecom;

            (17)  the incurrence of Indebtedness by (a) Restricted
      Subsidiaries of the Company to fund working capital requirements in an
      aggregate principal amount outstanding at any time not to exceed E300
      million and (b) by Maroc Telecom in an aggregate principal amount
      outstanding at any one time not to exceed E500 million for the purpose
      of financing capital expenditures and the acquisition of assets related
      to its business;

            (18)  Indebtedness of the Company or a Restricted Subsidiary
      arising from agreements of the Company or a Restricted Subsidiary
      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 Restricted Subsidiary of the
      Company in accordance with the terms of this Indenture, other than
      guarantees by the Company or any Restricted Subsidiary of Indebtedness
      incurred by any Person acquiring all or any portion of such business,
      assets or a Subsidiary of the Company for the purpose of financing such
      acquisition; provided that (a) such Indebtedness is not reflected on
      the balance sheet of the Company or any Restricted Subsidiary at the
      time of such agreement or disposition (contingent obligations referred
      to in a footnote to financial statements and not otherwise reflected on
      the balance sheet at such time will not be deemed to be reflected on
      such balance sheet for purposes of this clause 18(a)); and (b) the
      maximum aggregate liability in respect of all such Indebtedness may at
      no time exceed the gross proceeds, including the fair market value of
      non-cash proceeds (such fair market value being measured at the time
      such non-cash proceeds are received and without giving effect to any
      subsequent changes in value), actually received by the Company and the
      Restricted Subsidiaries in connection with such disposition;

            (19)  the incurrence of Non-Recourse Project Financing or
      Non-Recourse Product Financing; and

            (20)  the incurrence by the Company or any of its Restricted
      Subsidiaries of additional Indebtedness or the issuance of Disqualified
      Stock by the Company or any Restricted Subsidiary or preferred stock by
      any Restricted Subsidiary in an aggregate principal amount or
      liquidation preference (or accreted value, as applicable) at any time
      outstanding, including all Permitted


                                       64

      Refinancing Indebtedness incurred to refund, refinance or replace any
      Indebtedness incurred pursuant to this clause (20), not to exceed E100
      million.

      (c)   For purposes of determining compliance with this Section 4.09:

            (1)   in the event that an item of proposed Indebtedness meets
      the criteria of more than one of the categories of Permitted Debt
      described in clauses (1) through (20) of Section 4.09(b) hereof, or is
      entitled to be incurred pursuant to Section 4.09(a) hereof, the Company
      shall be permitted to classify such item of Indebtedness on the date of
      its incurrence or later reclassify all or a portion of such item of
      Indebtedness, in any manner that complies with this Section 4.09;

            (2)   the outstanding principal amount of any particular
      Indebtedness shall be counted only once and any obligations arising
      under any guarantee, Lien, letter of credit or similar instrument
      supporting such Indebtedness shall not be double counted;

            (3)   the accrual of interest, the accretion or amortization of
      original issue discount, the payment of interest on any Indebtedness in
      the form of additional Indebtedness with the same terms, and the
      payment of dividends on preferred stock or Disqualified Stock in the
      form of additional shares of the same class of preferred stock or
      Disqualified Stock (in each case where payment of dividends is not part
      of a financing transaction) will not be deemed to be an incurrence of
      Indebtedness or an issuance of Disqualified Stock or preferred stock
      for purposes of this Section 4.09; provided, in each such case, that
      the amount thereof is included in Fixed Charges of the Company as
      accrued;

            (4)   the Company will be entitled to divide and classify an item
      of Indebtedness in more than one of the types of Indebtedness described
      in clauses (1) through (20) of Section 4.09(b) hereof; and

            (5)   the maximum amount of Indebtedness that the Company or a
      Restricted Subsidiary may incur pursuant to this Section 4.09 will not
      be deemed to be exceeded, with respect to any outstanding Indebtedness,
      due solely to the result of fluctuations in the exchange rates of
      currencies.

      For purposes of determining compliance with any euro denominated
restriction on the incurrence of Indebtedness where the Indebtedness incurred
is denominated in a different currency, the amount of such Indebtedness will
be the Euro Equivalent, as the case may be, determined on the date of the
incurrence of such Indebtedness; provided, however, that if any such
Indebtedness denominated in a different currency is subject to a Currency
Agreement with respect to euros covering all principal, premium, if any, and
interest payable on such Indebtedness, the amount of such Indebtedness
expressed in euros will be as provided in such Currency Agreement.  The
principal amount of any Permitted Refinancing Indebtedness incurred in the
same currency as the Indebtedness being refinanced will be the Euro
Equivalent of the Indebtedness refinanced, except to the extent that (1) such
Euro Equivalent was determined based on a Currency Agreement, in which case
the Permitted Refinancing Indebtedness will be determined in accordance with
the preceding sentence, and (2) the principal amount of the Permitted
Refinancing Indebtedness exceeds the principal amount of the Indebtedness
being refinanced, in which case the Euro Equivalent of such excess, as
appropriate, will be determined on the date such Permitted Refinancing
Indebtedness is incurred.


                                       65

Section 4.10      Asset Sales.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

            (1)   the Company (or the Restricted Subsidiary, as the case may
      be) receives consideration at the time of the Asset Sale at least equal
      to the fair market value of the assets or Equity Interests issued or
      sold or otherwise disposed of, with such fair market value being
      determined in good faith (a) in the case of Asset Sales for aggregate
      consideration equal to or less than E50 million, by a senior financial
      officer of the Company and set forth in an Officers' Certificate to the
      Trustee; and (b) in the case of Asset Sales for aggregate consideration
      in excess of E50 million, by the Company's Board of Directors and set
      forth in an Officers' Certificate delivered to the Trustee; and

            (2)   at least 75% of the consideration received in the Asset
      Sale by the Company or such Restricted Subsidiary is in the form of
      cash or Cash Equivalents, or a combination thereof.  For purposes of
      this provision, each of the following will be deemed to be cash:

                  (A)   any liabilities, as shown on the Company's most
            recent consolidated balance sheet, of the Company or any
            Restricted Subsidiary (other than contingent liabilities and
            liabilities that are by their terms subordinated to the Notes)
            that are assumed by the transferee of any such assets pursuant to
            an agreement that fully releases the Company or such Restricted
            Subsidiary from further liability; and

                  (B)   any securities, notes or other obligations received
            by the Company or any such Restricted Subsidiary from such
            transferee that are converted by the Company or such Restricted
            Subsidiary into cash, to the extent of the cash received in that
            conversion, within 180 days after receipt;

provided that in the case of an Asset Sale of the Capital Stock of any member of
the VUE Group or any assets or rights held by any member of the VUE Group (a
"VUE Asset Sale"), if as of the date of the balance sheet included in the most
recent financial statements publicly released by the Company before such VUE
Asset Sale and giving pro forma effect to any assumption, incurrence, repayment,
repurchase or redemption of Indebtedness since such date and to the application
of the Net Proceeds from such VUE Asset Sale, the Consolidated Financial Debt of
the Company and its Restricted Subsidiaries has been reduced through the
application of Net Proceeds from Asset Sales by E3,250 million or more since the
date of this Indenture, the reference in the foregoing clause (2) to 75% shall
instead be 50% with respect to such VUE Asset Sale, and the reference in the
foregoing sub-clause (2)(B) to 180 days shall instead be 365 days with respect
to such VUE Asset Sale.

      Within 365 days after the receipt of any Net Proceeds from an Asset
Sale (or, in the case of a VUE Asset Sale where securities, notes or other
obligations are converted into cash in compliance with this Section 4.10,
within 180 days of receipt of cash upon such conversion, if later) the
Company or any Restricted Subsidiary may apply such Net Proceeds:

            (1)   to repay or prepay Indebtedness and other Obligations under
      any Credit Facility that is not subordinated in right of payment to the
      Notes;

            (2)   to repay or prepay (or repurchase) any Indebtedness of a
      Restricted Subsidiary or repay, prepay, repurchase or defease preferred
      stock issued by a Restricted Subsidiary;


                                       66

            (3)   to repay or prepay (or repurchase) any Indebtedness with a
      final Stated Maturity that is prior or equal to the final Stated
      Maturity of the Notes;

            (4)   to acquire (or enter into a binding agreement to acquire,
      which acquisition must be consummated within 180 days after the end of
      the 365-day period following receipt of any Net Proceeds) all or
      substantially all of the assets of, or a majority of the Voting Stock
      of, a Permitted Business (including by means of a merger, consolidation
      or other business combination permitted under this Indenture) or all or
      a portion of any minority interest in a Restricted Subsidiary of the
      Company;

            (5)   to make a capital expenditure; or

            (6)   to acquire (or enter into a binding agreement to acquire,
      which acquisition must be consummated within 180 days after the end of
      the 365-day period following receipt of any Net Proceeds) other
      long-term assets that are used or useful in a Permitted Business.

      Capital expenditures made in the 365 days prior to the date of any Net
Proceeds from an Asset Sale ("Prior Capital Expenditures") may be counted
towards compliance with this Section 4.10; provided that the 365-day period
during which the Net Proceeds from such Asset Sale may be applied for capital
expenditures or other purposes permitted under this Section 4.10 after the
date of receipt of such Net Proceeds (or the 180-day period following receipt
of cash upon conversion of securities, notes or other obligations in a VUE
Asset Sale, if applicable) will be reduced by one day for every day before
the date of receipt of such Net Proceeds that such Prior Capital Expenditures
were made.

      Pending the final application of any such Net Proceeds, the Company and
any Restricted Subsidiary may temporarily reduce revolving credit borrowings
or otherwise invest the Net Proceeds in any manner that is not prohibited by
this Indenture.

      Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraphs will constitute "Excess Proceeds";
provided, however, that cash received by any member of the VUE Group in a VUE
Asset Sale shall not constitute Excess Proceeds to the extent and for so long
as such cash is held in a segregated bank account and not commingled with any
other funds and, upon any withdrawal of such funds, such funds are used for
one or more of the purposes described above. Any cash placed in such account
may be invested in Cash Equivalents pending application in accordance with
this Section 4.10. When the aggregate amount of Excess Proceeds exceeds E20
million, the Company shall, within 30 days, make an Offer to all Holders of
Notes, in accordance with Section 3.09 hereof, to purchase the maximum
principal amount of Notes that may be purchased with such Excess Proceeds.
The offer price in any Asset Sale Offer will be equal to 100% of the
principal amount of the Notes being repurchased plus accrued and unpaid
interest and Special Interest, if any, to the date of purchase, and will be
payable in cash. If any Excess Proceeds remain after consummation of an Asset
Sale Offer, such funds will no longer constitute Excess Proceeds and may be
used for any purpose not otherwise prohibited by this Indenture. If the
aggregate principal amount of Notes tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee will select the Notes to
be purchased on a pro rata basis.

      The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer.  To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of Sections 3.09 or 4.10 of this Indenture, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under those provisions of this Indenture by virtue
of such conflict.


                                       67

Section 4.11      Transactions with Affiliates.

      (a)   The Company shall not, and shall not permit any of its Restricted
Subsidiaries 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, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each, an "Affiliate Transaction"), unless:

            (1)   the Affiliate Transaction is on terms, when taken as a
      whole, that are no less favorable to the Company or the relevant
      Restricted Subsidiary than those that would have been obtained in a
      comparable transaction by the Company or such Restricted Subsidiary
      with an unrelated Person; and

            (2)   the Company delivers to the Trustee:

                  (A)   with respect to any Affiliate Transaction or series
            of related Affiliate Transactions involving aggregate
            consideration in excess of E15 million, an Officers' Certificate
            certifying that such Affiliate Transaction complies with this
            Section 4.11; and

                  (B)   with respect to any Affiliate Transaction or series
            of related Affiliate Transactions involving aggregate
            consideration in excess of E40 million, (i) a resolution of the
            Board of Directors of the Company set forth in an Officers'
            Certificate certifying that such Affiliate Transaction complies
            with this Section 4.11 and that such Affiliate Transaction has
            been approved by a majority of the disinterested members of the
            Board of Directors and (ii) an opinion as to the fairness to the
            Company of such Affiliate Transaction from a financial point of
            view issued by an internationally recognized accounting,
            appraisal or investment banking firm.

      (b)   The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of Section
4.11(a):

            (1)   any employment, compensation, benefit or indemnification
      agreement or arrangement (and any payments or other transactions
      pursuant thereto) entered into by the Company or any of its Restricted
      Subsidiaries in the ordinary course of business with an officer,
      employee or director and any transactions pursuant to stock option
      plans, stock ownership plans and employee benefit plans or arrangements;

            (2)   transactions between or among the Company and/or its
      Restricted Subsidiaries (including any Person that becomes a Restricted
      Subsidiary as a result of any such transaction);

            (3)   transactions with a Person that is an Affiliate of the
      Company solely because the Company owns an Equity Interest in, or
      controls, such Person;

            (4)   payment of reasonable fees to directors;

            (5)   sales of Equity Interests (other than Disqualified Stock)
      to Affiliates of the Company;

            (6)   Restricted Payments that are permitted by Section 4.07
      hereof;


                                       68

            (7)   loans, advances or extensions of credit (including
      indemnity arrangements) to employees, directors or consultants in the
      ordinary course of business;

            (8)   transactions between a Receivables Subsidiary and any
      Person in which the Receivables Subsidiary has an Investment or any
      other transactions in connection with a Receivables Program of the
      Company or a Restricted Subsidiary; and

            (9)   transactions pursuant to or contemplated by any agreement
      of the Company or any Restricted Subsidiary as in effect as of the date
      of this Indenture or any amendment thereto or any replacement agreement
      so long as any such amendment or replacement agreement, taken as a
      whole, is not materially more disadvantageous to the Holders than the
      original agreement as in effect on the date of this Indenture.

Section 4.12      Liens.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to
exist any Lien securing Indebtedness or Attributable Debt (other than
Permitted Liens) on any asset now owned or hereafter acquired, or upon any
income or profits therefrom or assign any rights to receive income therefrom
unless all payments due under this Indenture and the Notes are secured on an
equal and ratable basis with (or prior to) the obligations so secured until
such time as such obligations are no longer secured by a Lien.

Section 4.13      Business Activities.

      The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than a Permitted Business, except to such
extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

Section 4.14      Corporate Existence.

      Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect:

            (1)   its corporate existence, and the corporate, partnership or
      other existence of each of its Restricted Subsidiaries, in accordance
      with the respective organizational documents (as the same may be
      amended from time to time) of the Company or any such Restricted
      Subsidiary; and

            (2)   the rights (charter and statutory), licenses and franchises
      of the Company and its Restricted Subsidiaries; provided, however, that
      the Company shall not be required to preserve any such right, license
      or franchise, or the corporate, partnership or other existence of any
      of its Restricted Subsidiaries, if the Board of Directors shall
      determine that the preservation thereof is no longer desirable in the
      conduct of the business of the Company and its Restricted Subsidiaries,
      taken as a whole.

Section 4.15      Offer to Repurchase Upon Change of Control.

      (a)   Upon the occurrence at any time of a Change of Control, unless
the Company has exercised its right to redeem the Notes as described in
Section 3.07 hereof, the Company will be required to make an offer (a "Change
of Control Offer") to each Holder to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000, or to E1,000 or an integral
multiple of E1,000, as the case may be) of each Holder's Notes at a
repurchase price in cash equal to 101% of the aggregate principal amount


                                       69

thereof plus accrued and unpaid interest and Special Interest, if any, on the
Notes repurchased to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and stating:

            (1)   that the Change of Control Offer is being made pursuant to
      this Section 4.15 and that all Notes tendered will be accepted for
      payment;

            (2)   the purchase price and the purchase date, which shall be no
      earlier than 30 days and no later than 60 days from the date such
      notice is mailed (the "Change of Control Payment Date");

            (3)   that any Note not tendered will continue to accrue
      interest;

            (4)   that, unless the Company 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 after the
      Change of Control Payment Date;

            (5)   that 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" attached to
      the Notes completed, to the Paying Agent at the address specified in
      the notice prior to the close of business on the third Business Day
      preceding the Change of Control Payment Date;

            (6)   that Holders will be entitled to withdraw their election if
      the Paying Agent receives, not later than the close of business on the
      second Business Day preceding the Change of Control Payment Date, a
      telegram, telex, facsimile transmission or letter setting forth the
      name of the Holder, the principal amount of Notes delivered for
      purchase, and a statement that such Holder is withdrawing his election
      to have the 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 $1,000 in principal amount or an integral multiple thereof,
      or to E1,000 in principal amount or an integral multiple thereof, as
      the case may be.

      The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.  To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of Section 4.15 of this Indenture, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section 4.15 by virtue of such conflict.

      (b)   On the Change of Control Payment Date, the Company will, to the
extent lawful:

            (1)   accept for payment all Notes or portions thereof properly
      tendered pursuant to the Change of Control Offer;

            (2)   deposit with the relevant Paying Agent an amount equal to
      the Change of Control Payment in respect of all Notes or portions of
      Notes properly tendered; and


                                       70

            (3)   deliver or cause to be delivered to the Trustee the Notes
      properly accepted together with an Officers' Certificate stating the
      aggregate principal amount of Notes or portions of Notes being
      purchased by the Company.

      The relevant Paying Agent will promptly mail to each Holder of Notes
properly tendered the Change of Control Payment for such Notes, and the
Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each new
Note will be in a principal amount of $1,000 or an integral multiple thereof,
or of E1,000 in principal amount or an integral multiple thereof, as the case
may be.

      If, at the time of the Change of Control, any series of the Notes is
listed on the Luxembourg Stock Exchange and if required by the rules of the
Luxembourg Stock Exchange, notice will be published in Luxembourg as set
forth in Section 3.03 hereof.

       The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Payment Date.  If any series of the Notes is listed on the Luxembourg Stock
Exchange and if required by the rules of the Luxembourg Stock Exchange notice
will be published in Luxembourg as set forth in Section 3.03 hereof.

      (c)   Notwithstanding anything to the contrary in this Section 4.15,
the Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and purchases all Notes properly tendered and not
withdrawn under the Change of Control Offer.

Section 4.16      Limitation on Sale and Leaseback Transactions.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that
the Company or any Restricted Subsidiary may enter into a Sale and Leaseback
Transaction if:

            (1)   after giving effect to the incurrence of the Attributable
      Debt relating to such Sale and Leaseback Transaction, the Company or
      that Restricted Subsidiary, as applicable, could have incurred at least
      E1.00 in additional Indebtedness under Section 4.09(b)(4) hereof;

            (2)   the gross cash proceeds of that Sale and Leaseback
      Transaction are at least equal to the fair market value of the property
      that is the subject of the Sale and Leaseback Transaction, as
      determined in good faith (a) in the case of a Sale and Leaseback
      Transaction valued at E40 million or less, by a senior financial
      officer of the Company and set forth in an Officers' Certificate
      delivered to the Trustee, and (b) in the case of a Sale and Leaseback
      Transaction valued at more than E40 million, by the Board of Directors
      and set forth in an Officers' Certificate delivered to the Trustee; and

            (3)   the transfer of assets in that Sale and Leaseback
      Transaction is permitted by, and the Company applies the proceeds of
      such transaction in compliance with, Section 4.10 hereof.

Section 4.17      Payments for Consent.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as


                                       71

an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid to all Holders of the Notes and is paid to all holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

Section 4.18      Designation of Restricted and Unrestricted Subsidiaries.

      The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if that designation would not
cause a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments
owned by the Company and its Restricted Subsidiaries in the Subsidiary
properly designated will be deemed to be an Investment made as of the time of
the designation and will reduce the amount available for Restricted Payments
under Section 4.07(a) hereof or Permitted Investments, as determined by the
Company. That designation will only be permitted if the Investment would be
permitted at that time and if the Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may
redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the
redesignation would not cause a Default.

Section 4.19      Limitation on Guarantees of Indebtedness by Restricted
            Subsidiaries

      The Company will not permit any Restricted Subsidiary to guarantee any
Indebtedness of the Company or another Restricted Subsidiary unless:

            (1)   such Restricted Subsidiary simultaneously executes and
      delivers a supplemental indenture to this Indenture providing for a
      guarantee by it of payment of the Notes; provided that:

                  (A)   if the Indebtedness is pari passu in right of payment
            to the Notes, any such guarantee of such Restricted Subsidiary
            with respect to such Indebtedness shall rank pari passu in right
            of payment to its guarantee of the Notes; and

                  (B)   if the Indebtedness is subordinated in right of
            payment to the Notes, any such guarantee of such Restricted
            Subsidiary with respect to such Indebtedness shall be
            subordinated in right of payment to the guarantee of the Notes
            substantially to the same extent as such Indebtedness is
            subordinated in right of payment to the Notes;

            (2)   such Restricted Subsidiary waives and will not in any
      manner whatsoever claim or take the benefit or advantage of, any rights
      of reimbursement, indemnity or subrogation or any other rights against
      the Company or any other Restricted Subsidiary as a result of any
      payment by such Restricted Subsidiary under its guarantee; and

            (3)   such Restricted Subsidiary shall deliver to the Trustee an
      Opinion of Counsel to the effect that:

                  (A)   such guarantee has been duly executed and authorized;
            and

                  (B)   such guarantee constitutes a valid, binding and
            enforceable obligation of such Restricted Subsidiary, except
            insofar as enforcement thereof may be limited by insolvency,
            bankruptcy, liquidation, reorganization, administration,
            moratorium, receivership or similar laws (including all laws
            relating to fraudulent transfers) and except insofar as
            enforcement thereof is subject to general principles of equity;


                                       72

      except, in each case, for

                  (A)   guarantees by a Restricted Subsidiary to the extent
            required under any Existing Credit Facility or under the
            LineInvest Total Return Swap, in each case as in effect at the
            date of this Indenture;

                  (B)   guarantees by a Restricted Subsidiary of Indebtedness
            incurred under (i) clause (1) (A), (B) or (C) of Section 4.09(b)
            hereof or (ii) the Multicurrency Revolving Credit Facility;

                  (C)   guarantees by a Restricted Subsidiary under any
            Permitted Refinancing Indebtedness refinancing any Existing
            Indebtedness, to the extent such Restricted Subsidiary provided a
            guarantee in respect of the Existing Indebtedness being
            refinanced; and

                  (D)   guarantees by a Restricted Subsidiary of Acquired
            Debt that is incurred under Section 4.09(a) hereof to the extent
            existing under, or required under the terms of, such Acquired
            Debt; provided that the guarantee or any requirement to provide
            such guarantees was in existence prior to the contemplation of
            the merger, consolidation or acquisition that resulted in the
            incurrence of such Acquired Debt; and

                  (E)   guarantees by a Restricted Subsidiary of Indebtedness
            of any Subsidiary of such Restricted Subsidiary.

      Notwithstanding the foregoing and the other provisions of this
Indenture, any guarantee by a Restricted Subsidiary of the Notes shall
provide by its terms that it shall be automatically and unconditionally
released and discharged:

            (1)   upon the unconditional release or discharge of the
      guarantee by such Restricted Subsidiary which resulted in the creation
      of such guarantee, except a discharge or release by or as a result of
      payment under such guarantee;

            (2)   upon the full and final payment of all amounts payable by
      the Company under this Indenture and the Notes;

            (3)   subject to Section 5.01 hereof, if all of the Voting Stock
      of a Subsidiary guarantor (or any company holding, directly or
      indirectly, all the Voting Stock of such guarantor) is sold or
      otherwise disposed of (and any proceeds therefrom are applied) to a
      person which is not an Affiliate in compliance with Section 4.10
      hereof;

            (4)   upon the Legal Defeasance or discharge of the Notes in
      accordance with Section 8.04 hereof.

            (5)   upon the designation, in accordance with this Indenture, of
      the Subsidiary guarantor as an Unrestricted Subsidiary.

Section 4.20      Anti Layering

      The Company will not, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness) which is subordinated in right of payment
to any other Indebtedness of the Company unless such Indebtedness is
subordinated at least to the same extent to the Notes; provided, however that
(i) no


                                       73

Indebtedness of the Company shall be deemed to be subordinated in right of
payment to other Indebtedness of the Company solely by virtue of being
unsecured, and (ii) the Company shall be entitled to subordinate, through
intercreditor arrangements or otherwise, senior secured bank debt to other
senior secured bank debt.

Section 4.21      Escrow of Proceeds

      At the date of this Indenture, the Trustee, the Company and The Bank of
New York, as escrow agent (the "Escrow Agent"), shall enter into an escrow
agreement (the "Escrow Agreement") substantially in the form attached as
Exhibit D hereto.  The gross proceeds from the offering of the Notes (less a
E1 or $1 initial payment in respect of each series of Notes) will be paid
into escrow accounts (the "Escrow Accounts") by the initial purchasers of the
Notes and held in the name of the Trustee on behalf of the Holders under the
terms of the Escrow Agreement.

      In accordance with the terms of the Escrow Agreement, the Escrow Funds
will be released to the Company upon delivery to the Escrow Agent and the
Trustee of a certificate of the company signed by two officers, one of whom
must be the Chief Executive Officer or Chief Financial Officer of the Company
(the "Escrow Release Certificate"), in the form attached to the Escrow
Agreement.  The Company agrees for the benefit of the Holders to comply with
the terms and conditions of the Escrow Agreement and shall use its reasonable
best efforts to satisfy the conditions precedent to availability of the New
Credit Facility, deliver the Escrow Release Certificate and receive the gross
proceeds from the offering and sale of the Notes as provided in the Escrow
Agreement, as soon as practicable following the date hereof.

Section 4.22      Changes in Covenants when Notes Rated Investment Grade

      If, on any date following the date of this Indenture, the Notes have an
Investment Grade Rating from both of the Rating Agencies and no Default or
Event of Default has occurred and is continuing (a "Fall Away Event") then,
beginning on that day and continuing at all times thereafter regardless of
any subsequent changes in the rating of those Notes, Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.13, 4.15, 4.19, 4.20, clauses (1) and (3) of Section 4.16
and Section 5.01(a)(4) hereof will no longer be applicable to the Notes.

                                   ARTICLE 5.

                                   SUCCESSORS

Section 5.01      Merger, Consolidation, or Sale of Assets.

      (a)   The Company shall not, directly or indirectly: (i) consolidate or
merge with or into another Person (whether or not the Company is the
surviving corporation); or (ii) sell, assign, transfer, convey, lease or
otherwise dispose of all or substantially all of the properties or assets of
the Company and its Restricted Subsidiaries taken as a whole, in one or more
related transactions, to another Person; unless:

            (1)   either:

                  (A)   the Company is the surviving corporation; or

                  (B)   the Person formed by or surviving any such
            consolidation or merger (if other than the Company) or to which
            such sale, assignment, transfer, conveyance, lease or other
            disposition has been made is a corporation organized and existing
            under the laws


                                       74

            of a member state of the European Union (as it exists on the date of
            this Indenture), the United States, any state thereof or the
            District of Columbia.

            (2)   the Person formed by or surviving any such consolidation or
      merger (if other than the Company) or the Person to which such sale,
      assignment, transfer, conveyance, lease or other disposition shall have
      been made assumes all the obligations of the Company under the Notes,
      this Indenture and the Registration Rights Agreement pursuant to
      agreements reasonably satisfactory to the Trustee;

            (3)    immediately after such transaction, no Default or Event of
      Default exists; and

            (4)   either (i) the Company or the Person formed by or surviving
      any such consolidation or merger (if other than the Company), or to
      which such sale, assignment, transfer, conveyance, lease or other
      disposition has been made (the "Successor Company") will, on the date
      of such transaction after giving pro forma effect thereto and any
      related financing transactions as if the same had occurred at the
      beginning of the applicable four-quarter period, be permitted to incur
      at least E1.00 of additional Indebtedness pursuant to Section 4.09(a)
      hereof or (ii) giving such pro forma effect to any such transaction,
      the Fixed Charge Coverage Ratio of the Successor Company would exceed
      the Fixed Charge Coverage Ratio of the Company immediately prior to
      giving effect to such transaction.

      (b)   Notwithstanding Section 5.01(a)(4) hereof, if any Restricted
Subsidiary consolidates with, merges into or transfers all or part of its
properties and assets to the Company or to any other Restricted Subsidiary of
the Company, then no violation of this Section 5.01 shall be deemed to have
occurred, as long as the requirements of clauses (1), (2) and (3) of Section
5.01(a) are satisfied.

Section 5.02      Successor Corporation Substituted.

      Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in a transaction that is subject to, and that complies
with the provisions of, Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein; provided, however, that the predecessor Company shall not be relieved
from the obligation to pay the principal of and interest on the Notes except
in the case of a sale of all of the Company's assets in a transaction that is
subject to, and that complies with the provisions of, Section 5.01 hereof.

                                   ARTICLE 6.

                              DEFAULTS AND REMEDIES

Section 6.01      Events of Default.

      (a)   Each of the following is an "Event of Default":

            (1)   the Company defaults for 30 days in the payment when due of
      interest on, or Special Interest with respect to, the Notes;


                                       75

            (2)   the Company defaults in the payment when due (at maturity,
      upon redemption or otherwise) of the principal of, or premium, if any,
      on the Notes;

            (3)   the Company or any of its Restricted Subsidiaries fails to
      comply with the provisions of Section 4.10, 4.15 or 5.01 hereof;

            (4)   the Company or any of its Restricted Subsidiaries fails to
      observe or perform any other covenant, representation, warranty or
      other agreement in this Indenture 60 days after receipt of notice to
      the Company by the Trustee or the Holders of at least 25% in aggregate
      principal amount of the Notes outstanding;

            (5)   a default occurs under any mortgage, indenture or
      instrument under which there may be issued or by which there may be
      secured or evidenced any Indebtedness for money borrowed by the Company
      or any of its Restricted Subsidiaries (or the payment of which is
      guaranteed by the Company or any of its Restricted Subsidiaries),
      whether such Indebtedness or guarantee now exists, or is created after
      the date of this Indenture, if that default:

                  (A)   is caused by a failure to pay principal of, or
            interest or premium, if any, on such Indebtedness prior to the
            expiration of the grace period provided in such Indebtedness on
            the date of such default (a "Payment Default"); or

                  (B)   results in the acceleration of such Indebtedness
            prior to its express maturity,

            and, in each case, the principal amount of any such Indebtedness,
            together with the principal amount of any other such Indebtedness
            under which there has been a Payment Default or the maturity of
            which has been so accelerated, aggregates E40 million or more and
            has not been discharged in full or such acceleration rescinded or
            annulled within 20 days of such Payment Default or acceleration;

            (6)   failure by the Company or any of its Restricted
      Subsidiaries to pay final, non-appealable judgments aggregating in
      excess of E25 million, which judgments are not paid, discharged or
      stayed for a period of 60 days; and

            (7)   the Company or any of its Significant Subsidiaries pursuant
      to or within the meaning of Bankruptcy Law:

                  (A)   files an application for the appointment of a
            conciliator (conciliateur);

                  (B)   enters into an amicable settlement (accord amiable)
            with its creditors;

                  (C)   is in a state of a mandatory suspension of payments
            (cessation de paiements), is made the object of bankruptcy
            proceedings (procedure collective ou de faillite), or agrees to a
            forfeiture of assets in favor of its preferential creditors or
            concludes a settlement in bankruptcy with them;

                  (D)   passes a resolution for the winding-up or the
            dissolution of the Company or any of its Significant
            Subsidiaries; or

            (8)   a court or other authority of competent jurisdiction enters
      an order or decree under any Bankruptcy Law that:


                                       76

                  (A)   orders the judicial liquidation (liquidation
            judiciaire) of the Company or any of its Significant Subsidiaries
            or orders the transfer of the whole of the Company's business
            (cession totale de l'entreprise);

                  (B)   orders the dissolution or the winding-up of the
            Company or any of its Significant Subsidiaries.

      (b)   Upon becoming aware of any Default or Event of Default, the
Company is required to deliver to the Trustee a statement specifying such
Default or Event of Default.

Section 6.02      Acceleration.

      In the case of an Event of Default specified in clause (7) or (8) of
Section 6.01(a) hereof, with respect to the Company or any of its Restricted
Subsidiaries, all outstanding Notes will become due and payable immediately
without further action or notice.  If any other Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and payable
immediately.

      The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal, interest, Special Interest or
premium that has become due solely because of the acceleration) have been
cured or waived.

Section 6.03      Other Remedies.

      If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment
of principal, premium and Special Interest, if any, and interest on the Notes
or to enforce the performance of any provision of the Notes or this Indenture.

      The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.  A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default.  No remedy
is exclusive of any other remedy. All remedies are cumulative to the extent
permitted by law.

Section 6.04      Waiver of Past Defaults.

      Subject to Section 6.07 and Section 9.02 hereof, the Holders of not
less than a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
hereunder except a continuing Default or Event of Default in the payment of
interest or the premium and Special Interest on, or the principal of the
Notes (including in connection with an offer to purchase).  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
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.

Section 6.05      Control by Majority.

      Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or


                                       77

exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that the Trustee believes conflicts with law or this
Indenture that the Trustee determines may be unduly prejudicial to the rights of
other Holders of Notes or that may involve the Trustee in personal liability;
provided that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.

Section 6.06      Limitation on Suits.

      A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:

            (1)   the Holder of a Note gives to the Trustee written notice of
      a continuing Event of Default;

            (2)   the Holders of at least 25% in principal amount of the then
      outstanding Notes make a written request to the Trustee to pursue the
      remedy;

            (3)   such Holder of a Note or Holders of Notes offer and, if
      requested, provide to the Trustee indemnity satisfactory to the Trustee
      against any loss, liability or expense;

            (4)   the Trustee does not comply with the request within 60 days
      after receipt of the request and the offer and, if requested, the
      provision of such indemnity; and

            (5)   during such 60-day period the Holders of a majority in
      principal amount of the then outstanding Notes do not give the Trustee
      a direction which, in the opinion of the Trustee, is inconsistent with
      the request.

      A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.

Section 6.07      Rights of Holders of Notes to Receive Payment.

      Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Special
Interest, if any, and interest on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.

Section 6.08      Collection Suit by Trustee.

      If an Event of Default specified in Section 6.01(a)(1) or (2) occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Special Interest, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, overdue interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

Section 6.09      Trustee May File Proofs of Claim.

      The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the


                                       78

Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof.  To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

Section 6.10      Priorities.

      If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:

            First:   to the Trustee, its agents and attorneys for amounts due
      under Section 7.07 hereof, including payment of all compensation,
      expense and liabilities incurred, and all advances made, by the Trustee
      and the costs and expenses of collection;

            Second:  to Holders of Notes for amounts due and unpaid on the
      Notes for principal, premium and Special Interest, if any, and
      interest, ratably, without preference or priority of any kind,
      according to the amounts due and payable on the Notes for principal,
      premium and Special Interest, if any and interest, respectively; and

            Third:   to the Company or to such party as a court of competent
      jurisdiction shall direct.

      The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

Section 6.11      Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant.  This Section 6.11 does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.


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                                   ARTICLE 7.
                                     TRUSTEE

Section 7.01      Duties of Trustee.

      (a)   If an Event of Default has occurred and is continuing, the
Trustee will exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

      (b)   Except during the continuance of an Event of Default:

            (1)   the duties of the Trustee will be determined solely by the
      express provisions of this Indenture and the Trustee need perform only
      those duties that are specifically set forth in this Indenture and no
      others, and no implied covenants or obligations shall be read into this
      Indenture against the Trustee; and

            (2)   in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the
      correctness of the opinions expressed therein, upon certificates or
      opinions furnished to the Trustee and conforming to the requirements of
      this Indenture.  However, with respect to certificates or opinions
      specifically required to be furnished to it hereunder, the Trustee will
      examine the certificates and opinions to determine whether or not they
      conform to the requirements of this Indenture.

      (c)   The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

            (1)   this paragraph does not limit the effect of paragraph (b)
      of this Section 7.01;

            (2)   the Trustee will not be liable for any error of judgment
      made in good faith by a Responsible Officer, unless it is proved that
      the Trustee was negligent in ascertaining the pertinent facts; and

            (3)   the Trustee will not be liable with respect to any action
      it takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.02, 6.04 or 6.05 hereof.

      (d)   Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.

      (e)   No provision of this Indenture will require the Trustee to expend
or risk its own funds or incur any liability.  The Trustee will be under no
obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holders have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

      (f)   The Trustee will not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.  Money
held in trust by the Trustee need not be segregated from other funds except
to the extent required by law.


                                       80

Section 7.02      Rights of Trustee.

      (a)   The Trustee may conclusively rely upon any document (whether in
original or facsimile form) believed by it to be genuine and to have been
signed or presented by the proper Person.  The Trustee need not investigate
any fact or matter stated in the document.

      (b)   Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both.  The Trustee will
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel.  The Trustee
may consult with counsel and the advice of such counsel or any Opinion of
Counsel will be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.

      (c)   The Trustee may act through its attorneys and agents and will not
be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.

      (d)   The Trustee will not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights
or powers conferred upon it by this Indenture.

      (e)   Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company will be sufficient if
signed by an Officer of the Company.

      (f)   The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders have offered to the Trustee
reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.

      (g)   The Trustee will have no duty to inquire as to the Company's
performance of the covenants in Article 4 hereof.  In addition, the Trustee
will not be deemed to have knowledge of any Default or Event of Default
except:  (1) any Event of Default occurring pursuant to Section 6.01(a) or
6.01(b) hereof; or (2) any Default or Event of Default of which a Responsible
Officer of the Trustee has received written notification or obtained actual
knowledge.

      (h)   The Trustee is not required to give any bond or surety with
respect to the performance of its duties or the exercise of its powers under
this Indenture.

      (i)   In the event the Trustee receives inconsistent or conflicting
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority in aggregate principal amount of the Notes
then outstanding, pursuant to the provisions of this Indenture, the Trustee,
in its sole discretion, may determine what action, if any, will be taken.

      (j)   The permissive right of the Trustee to take the actions permitted
by this Indenture will not be construed as an obligation or duty to do so.

      (k)   Delivery of reports, information and documents to the Trustee
under Section 4.03 is for informational purposes only and the Trustee's
receipt of the foregoing will not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of their covenants
hereunder (as to which the Trustee is entitled to rely exclusively on
Officers' Certificates).


                                       81

      (l)   The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and will be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person
employed to act hereunder.

      (m)   The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

Section 7.03      Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee.  However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign.  Any Paying Agent or Registrar
may do the same with like rights and duties.  The Trustee is also subject to
Sections 7.10 and 7.11 hereof.

Section 7.04      Trustee's Disclaimer.

      The Trustee shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it will not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Notes or any other
document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05      Notice of Defaults.

      If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee will mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs.  Except in
the case of a Default or Event of Default in payment of principal of, premium
or Special Interest, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of
the Holders of the Notes.

Section 7.06      Reports by Trustee to Holders of the Notes.

      (a)   Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee will mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted).  The Trustee
also will comply with TIA Section 313(b)(2).  The Trustee will also transmit by
mail all reports as required by TIA Section 313(c).

      (b)   A copy of each report at the time of its mailing to the Holders
of Notes will be mailed by the Trustee to the Company and filed by the Trustee
with the SEC and each stock exchange on which the Notes are listed in accordance
with TIA Section 313(d). The Company will promptly notify the Trustee when the
Notes are listed on any stock exchange or delisted therefrom.


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Section 7.07      Compensation and Indemnity.

      (a)   The Company will pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as
the Company and the Trustee shall from time to time agree in writing.  The
Trustee's compensation will not be limited by any law on compensation of a
trustee of an express trust.  The Company will reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services.  Such
expenses will include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.

      (b)   The Company will indemnify the Trustee against any and all
losses, claims, damages, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company, or any Holder or any
other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder.  The Trustee will notify the Company
promptly of any claim for which it may seek indemnity.  Failure by the
Trustee to so notify the Company will not relieve the Company of its
obligations hereunder.  At the Trustee's sole discretion, the Company will
defend the claim and the Trustee will provide reasonable cooperation and may
participate at the Company's expense in the defense.  Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company will pay the reasonable fees and expenses of such counsel; provided
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense, there is, in the reasonable opinion of the
Trustee, no conflict of interest between the Company and the Trustee in
connection with such defense as reasonably determined by the Trustee and no
Default or Event of Default has occurred and is continuing.  The Company need
not pay for any settlement made without its written consent, which consent
shall not be unreasonably withheld.  The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.

      (c)   The obligations of the Company under this Section 7.07 and any
lien arising hereunder will survive the resignation or removal of the
Trustee, the discharge of the Company's obligations pursuant to Article 10 or
the termination of this Indenture.

      (d)   To secure the Company's payment obligations in this Section 7.07,
the Trustee will have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes and the Escrow Funds.  Such Lien will survive
the satisfaction and discharge of this Indenture.

      (e)   When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(7) or (8) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

      (f)   The Trustee will comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.

Section 7.08      Replacement of Trustee.

      (a)   A resignation or removal of the Trustee and appointment of a
successor Trustee will become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.


                                       83

      (b)   The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company.  The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing.  The Company
may remove the Trustee if:

            (1)   the Trustee fails to comply with Section 7.10 hereof;

            (2)   the Trustee is adjudged a bankrupt or an insolvent or an
      order for relief is entered with respect to the Trustee under any
      Bankruptcy Law;

            (3)   a custodian or public officer takes charge of the Trustee
      or its property; or

            (4)   the Trustee becomes incapable of acting.

      (c)   If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company will promptly appoint a
successor Trustee.  Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.

      (d)   If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.

      (e)   If the Trustee, after written request by any Holder who has been
a Holder for at least six months, fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

      (f)   A successor Trustee will deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Thereupon, the
resignation or removal of the retiring Trustee will become effective, and the
successor Trustee will have all the rights, powers and duties of the Trustee
under this Indenture.  The successor Trustee will mail a notice of its
succession to Holders.  The retiring Trustee will promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof.  Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof will continue for the benefit of the retiring Trustee.

Section 7.09      Successor Trustee by Merger, etc.

      If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act will be the successor
Trustee.

Section 7.10      Eligibility; Disqualification.

      There will at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States or of any
state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by U.S. federal
or state authorities and that has a combined capital and surplus of at least
$100 million as set forth in its most recent published annual report of
condition.


                                       84

      This Indenture will always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

Section 7.11      Preferential Collection of Claims Against Company.

      The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

      The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.

Section 8.02      Legal Defeasance and Discharge.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance").  For this purpose, Legal Defeasance means that the
Company will be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which will thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below, and to
have satisfied all its other obligations under such Notes, and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
provisions which will survive until otherwise terminated or discharged
hereunder:

            (1)   the rights of Holders of outstanding Notes to receive
      payments in respect of the principal of, or interest or premium and
      Special Interest, if any, on such Notes when such payments are due from
      the trust referred to in Section 8.04 hereof;

            (2)   the Company's obligations with respect to the Notes
      concerning issuing temporary Notes, registration of Notes, mutilated,
      destroyed, lost or stolen Notes and the maintenance of an office or
      agency for payment and money for security payments held in trust;

            (3)   the rights, powers, trusts, duties and immunities of the
      Trustee hereunder and the Company's obligations in connection
      therewith; and

            (4)   this Article 8.

      Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.


                                       85

Section 8.03      Covenant Defeasance.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of its obligations under the covenants contained in Sections 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.18, 4.19, 4.20
and Section 5.01(a)(4) hereof with respect to the outstanding Notes on and
after the date the conditions set forth in Section 8.04 hereof are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes will thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but will continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes will
not be deemed outstanding for accounting purposes).  For this purpose,
Covenant Defeasance means that, with respect to the outstanding Notes, the
Company may omit to comply with and will have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply will
not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Notes will be unaffected thereby.  In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03
hereof, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(a)(3) through 6.01(a)(6) and Section 6.01(a)(8)
(as it relates to Significant Subsidiaries) hereof will not constitute Events
of Default.

Section 8.04      Conditions to Legal or Covenant Defeasance.

      In order to exercise either Legal Defeasance or Covenant Defeasance
under either Section 8.02 or 8.03 hereof:

            (1)   the Company must irrevocably deposit with the Trustee, in
      trust, for the benefit of the Holders, cash in U.S. dollars in the case
      of Dollar Notes, cash in euros in the case of Euro Notes, non-callable
      Government Securities, or a combination thereof, in such amounts as
      will be sufficient, in the opinion of an internationally recognized
      firm of independent public accountants, to pay the principal of,
      premium and Special Interest, if any, and interest on the outstanding
      Notes on the stated date for payment thereof or on the applicable
      redemption date, as the case may be, and the Company must specify
      whether the Notes are being defeased to maturity or to a particular
      redemption date;

            (2)   in the case of an election under Section 8.02 hereof, the
      Company has delivered to the Trustee an Opinion of Counsel in the
      United States reasonably acceptable to the Trustee confirming that:

                  (A)   the Company has received from, or there has been
            published by, the Internal Revenue Service a ruling; or

                  (B)   since the date of this Indenture, there has been a
            change in the applicable U.S. federal income tax law,

            in either case to the effect that, and based thereon such Opinion
            of Counsel shall confirm that, the Holders of the outstanding
            Notes will not recognize income, gain or loss for U.S. federal
            income tax purposes as a result of such Legal Defeasance and will
            be subject to U.S. federal income tax on the same amounts, in the
            same manner and at the same times as would have been the case if
            such Legal Defeasance had not occurred;


                                       86

            (3)   in the case of an election under Section 8.03 hereof, the
      Company must deliver to the Trustee an Opinion of Counsel in the United
      States reasonably acceptable to the Trustee confirming that the Holders
      of the outstanding Notes will not recognize income, gain or loss for
      U.S. federal income tax purposes as a result of such Covenant
      Defeasance and will be subject to U.S. federal income tax on the same
      amounts, in the same manner and at the same times as would have been
      the case if such Covenant Defeasance had not occurred;

            (4)   no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit (other than a Default or Event
      of Default resulting from the borrowing of funds to be applied to such
      deposit);

            (5)   such Legal Defeasance or Covenant Defeasance will not
      result in a breach or violation of, or constitute a default under, any
      material agreement or instrument (other than this Indenture) to which
      the Company or any of its Restricted Subsidiaries is a party or by
      which the Company or any of its Restricted Subsidiaries is bound;

            (6)   the Company must deliver to the Trustee an Officers'
      Certificate stating that the deposit was not made by the Company with
      the intent of preferring the Holders of Notes being defeased over the
      other creditors of the Company with the intent of defeating, hindering,
      delaying or defrauding any other creditors of the Company or others; and

            (7)   the Company must deliver to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that all conditions
      precedent provided for or relating to the Legal Defeasance or the
      Covenant Defeasance have been complied with.

Section 8.05      Deposited Money and Government Securities to be Held in
                  Trust; Other Miscellaneous Provisions.

      Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding
Notes will be held in trust and applied by the Trustee, in accordance with
the provisions of such Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in respect of principal, premium and Special
Interest, if any, and interest, but such money need not be segregated from
other funds except to the extent required by law.

      The Company will pay and indemnify the Trustee against any Taxes
imposed or levied on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such Taxes which by law
is for the account of the Holders of the outstanding Notes.

      Notwithstanding anything in this Article 8 to the contrary, the Trustee
will deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of an internationally
recognized firm of independent public accountants, expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(1) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.


                                       87


Section 8.06 Repayment to Company.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium or Special
Interest, if any, or interest on any Note and remaining unclaimed for two years
after such principal, premium or Special Interest, if any, or interest has
become due and payable shall be paid to the Company on its request or (if then
held by the Company) will be discharged from such trust; and the Holder of such
Note will thereafter be permitted to look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, will
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Financial
Times, notice that such money remains unclaimed and that, after a date specified
therein, which will not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

Section 8.07 Reinstatement.

      If the Trustee or Paying Agent is unable to apply any U.S. dollars, euros
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
will be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium or Special Interest, if any, or interest on any
Note following the reinstatement of its obligations, the Company will be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

      Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:

            (1) to cure any ambiguity, defect, omission or inconsistency;

            (2) to provide for uncertificated Notes in addition to or in place
      of certificated Notes or to alter the provisions of Article 2 hereof
      (including the related definitions) in a manner that does not materially
      adversely affect any Holder;

            (3) to provide for the assumption of the Company's obligations to
      the Holders of the Notes by a successor to the Company pursuant to Article
      5 hereof;

            (4) to make any change that would provide any additional rights or
      benefits to the Holders of the Notes or that does not adversely affect in
      any material respect the legal rights under this Indenture of any Holder
      of the Notes;

            (5) to comply with requirements of the SEC in order to effect or
      maintain the qualification of this Indenture under the TIA;


                                       88

            (6) to provide for the issuance of Additional Notes in accordance
      with the limitations set forth in this Indenture as of the date hereof; or

            (7) to add guarantors or guarantees with respect to the Notes or to
      grant Liens in favor of the Notes.

      Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee will join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee will not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

      Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including, without limitation, Sections
3.09, 4.10 and 4.15 hereof) and the Notes with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes) and, subject to this Indenture
and the Notes, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium or Special
Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes); provided, however, that if any amendment,
waiver or other modification would only affect the Dollar Notes or Euro Notes,
only the consent of the Holders of at least a majority in principal amount of
the then outstanding notes of the affected series (and not the consent of the
Holders of any other series of Notes) shall be required. Section 2.08 hereof
shall determine which Notes are considered to be "outstanding" for purposes of
this Section 9.02.

      Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee will
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but will not be obligated to, enter into such
amended or supplemental Indenture.

      It is not be necessary for the consent of the Holders of Notes under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it is sufficient if such consent approves the substance thereof.

      After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company will mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, will not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any


                                       89

provision of this Indenture or the Notes. However, without the consent of each
Holder affected, an amendment or waiver under this Section 9.02 may not (with
respect to any Notes held by a non-consenting Holder):

            (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 fixed maturity of any Note
      or alter or waive any of the provisions with respect to the redemption of
      the Notes except as provided above with respect to Sections 3.09, 4.10 and
      4.15 hereof;

            (3) reduce the rate of or change the time for payment of interest,
      including default interest, on any Note;

            (4) waive a Default or Event of Default in the payment of principal
      of or premium or Special Interest, if any, or interest on the Notes
      (except a rescission of acceleration of the Notes by the Holders of at
      least a majority in aggregate principal amount of the then outstanding
      Notes and a waiver of the payment default that resulted from such
      acceleration);

            (5) make any Note payable in money other than that stated in the
      Notes;

            (6) make any change in the provisions of this Indenture relating to
      waivers of past Defaults or the rights of Holders of Notes to receive
      payments of principal of, or interest or premium or Special Interest, if
      any, on the Notes;

            (7) change the ranking of the Notes; or

            (8) make any change in Section 6.04 or 6.07 hereof or in the
      foregoing amendment and waiver provisions in this Section 9.02.

Section 9.03 Compliance with Trust Indenture Act.

      Every amendment or supplement to this Indenture or the Notes will be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.

Section 9.04 Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

      The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.


                                       90

      Failure to make the appropriate notation or issue a new Note will not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

      The Trustee will sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
will be provided with and (subject to Section 7.01 hereof) will be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental Indenture is authorized or
permitted by this Indenture.

                                  ARTICLE 10.
                           SATISFACTION AND DISCHARGE

Section 10.01 Satisfaction and Discharge.

      This Indenture will be discharged and will cease to be of further effect
as to all Notes issued hereunder, when:

            (1) either:

                  (a) all the Notes that have been authenticated (except lost,
      stolen or destroyed Notes that have been replaced or paid and Notes for
      whose payment money has theretofore been deposited in trust and thereafter
      repaid to the Company in accordance with this Indenture) have been
      delivered to the Trustee for cancellation; or

                  (b) all the Notes that have not been delivered to the Trustee
      for cancellation have become due and payable by reason of the making of a
      notice of redemption or otherwise or will become due and payable within
      one year and the Company has irrevocably deposited or caused to be
      deposited with the Trustee as trust funds in trust solely for the benefit
      of the Holders, cash in U.S. dollars in the case of Notes denominated in
      U.S. dollars, or euros in the case of Notes denominated in euros,
      non-callable Government Securities, or a combination thereof, in such
      amounts as will be sufficient without consideration of any reinvestment of
      interest, to pay and discharge the entire indebtedness on the Notes not
      delivered to the Trustee for cancellation for principal, premium and
      Special Interest, if any, and accrued interest to the date of maturity or
      redemption;

            (2) no Default or Event of Default has occurred and is continuing on
      the date of such deposit or will occur as a result of such deposit and
      such deposit will not result in a breach or violation of, or constitute a
      default under, any other instrument to which the Company is a party or by
      which the Company is bound;

            (3) the Company has paid or caused to be paid all sums payable by it
      under this Indenture; and

            (4) the Company has delivered irrevocable instructions to the
      Trustee under this Indenture to apply the deposited money toward the
      payment of the Notes at maturity or the redemption date, as the case may
      be.


                                       91

      In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

      Notwithstanding the satisfaction and discharge of this Indenture, if money
has been deposited with the Trustee pursuant to subclause (b) of clause (1) of
this Section, the provisions of Section 10.02 and Section 8.06 will survive. In
addition, nothing in this Section 10.01 will be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

Section 10.02 Application of Trust Money.

      Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

      If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 10.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 10.01; provided that if
the Company has made any payment of principal of, premium, if any, or interest
on any Notes because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

                                  ARTICLE 11.
                                  MISCELLANEOUS

Section 11.01 Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties will control.

Section 11.02 Notices.

      Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:

      If to the Company:

      Vivendi Universal S.A.
      42 avenue de Friedland
      75008 Paris
      France
      Telecopier No. +33 6 1104 3118
      Attention: Corporate Secretary


                                       92

      With a copy to:

      Cravath, Swaine & Moore LLP
      CityPoint
      One Ropemaker Street
      London EC2Y 9HR
      United Kingdom
      Telecopier No. +44 20 7860 1150
      Attention: W. P. Rogers, Jr.

      If to the Trustee:

      The Bank of New York
      101 Barclay Street, Floor 21W
      New York, New York 10286
      United States
      Telecopier No. +1 212 815 5802
      Attention: Corporate Trust Administration

      with a copy to:

      The Bank of New York
      One Canada Square
      London  E14 5AL
      United Kingdom
      Telecopier No.  +44 20 7964 6399
      Attention:  Corporate Trust Administration

      The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.

      In addition, notices to the Holders of the applicable series of Euro Notes
shall be given by publishing such notices, as long as such series of Euro Notes
are listed on the Luxembourg Stock Exchange and the rules of such Exchange so
require, in a leading daily newspaper of general circulation in Luxembourg.

      All notices and communications (other than those sent to Holders) will be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

      Any notice or communication to a Holder will be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication will also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it will
not affect its sufficiency with respect to other Holders.

      If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.


                                       93

      If the Company mails a notice or communication to Holders, it will mail a
copy to the Trustee and each Agent at the same time.

Section 11.03 Communication by Holders of Notes with Other Holders of Notes.

      Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).

Section 11.04 Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

            (1) an Officers' Certificate in form and substance reasonably
      satisfactory to the Trustee (which must include the statements set forth
      in Section 11.05 hereof) stating that, in the opinion of the signers, all
      conditions precedent and covenants, if any, provided for in this Indenture
      relating to the proposed action have been satisfied; and

            (2) an Opinion of Counsel in form and substance reasonably
      satisfactory to the Trustee (which must include the statements set forth
      in Section 11.05 hereof) stating that, in the opinion of such counsel, all
      such conditions precedent and covenants have been satisfied.

Section 11.05 Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) must comply with the provisions of TIA
Section 314(e) and must include:

            (1) a statement that the Person making such certificate or opinion
      has read such covenant or condition;

            (2) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (3) a statement that, in the opinion of such Person, he or she has
      made such examination or investigation as is necessary to enable him or
      her to express an informed opinion as to whether or not such covenant or
      condition has been satisfied; and

            (4) a statement as to whether or not, in the opinion of such Person,
      such condition or covenant has been satisfied.

Section 11.06 Rules by Trustee and Agents.

            The Trustee may make reasonable rules for action by or at a meeting
      of Holders. The Registrar or Paying Agent may make reasonable rules and
      set reasonable requirements for its functions.

Section 11.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.

      No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, will have any liability for any obligations
of the Company under the Notes or this Indenture, or for any claim based on, in
respect of, or by reason of, such obligations or their creation.


                                       94

Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
The waiver may not be effective to waive liabilities under U.S. federal
securities laws.

Section 11.08 Governing Law.

      THIS INDENTURE AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 11.09 No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 11.10 Successors.

      All agreements of the Company in this Indenture and the Notes will bind
its successors. All agreements of the Trustee in this Indenture will bind its
successors.

Section 11.11 Severability.

      In case any provision in this Indenture or in the Notes is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

Section 11.12 Counterpart Originals.

      The parties may sign any number of copies of this Indenture. Each signed
copy will be an original, but all of them together represent the same agreement.

Section 11.13 Table of Contents, Headings, etc.

      The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and will in no way
modify or restrict any of the terms or provisions hereof.

Section 11.14 Submission to Jurisdiction; Appointment of Agent.

      The Company irrevocably submits to the non-exclusive jurisdiction of any
New York state or U.S. federal court located in the Borough of Manhattan in the
City and State of New York over any suit, action or proceeding arising out of or
relating to this Indenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may have, pursuant to New York
law or otherwise, to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in any inconvenient forum.
In furtherance of the foregoing, the Company hereby irrevocably designates and
appoints Vivendi Universal US Holding Co., 800 Third Avenue, Fifth Floor, New
York, New York, 10022, United States, as its agent to receive service of all
process brought against it with respect to any such suit, action or proceeding
in any such court in the City and State of New York, such service being hereby
acknowledged by it to be effective and binding service in every respect. Copies
of any such process so served shall also


                                       95

be given to the Company in accordance with Section 3.01 hereof, but the failure
of the Company to receive such copies shall not affect in any way the service of
such process as aforesaid.

      Nothing in this Section shall limit the right of the Trustee or any Holder
to bring proceedings against the Company in the courts of any other jurisdiction
or to serve process in any other manner permitted by law.

                         [Signatures on following page]


                                       96

                                   SIGNATURES

Dated as of April 8, 2003




                                        VIVENDI UNIVERSAL S.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:








Attest:



By:
   --------------------------------
Name:
Title:








                                        THE BANK OF NEW YORK

                                        As Trustee

                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:



                                       97

                                                                       EXHIBIT A

                                 [Face of Note]
- --------------------------------------------------------------------------------
                                                         CUSIP/ISIN
                                                                    ------------

                          [9.25% Senior Notes due 2010/
                          9.50% Senior Notes due 2010]

No.                                                             [$      /E     ]

                             VIVENDI UNIVERSAL S.A.

promises to pay to [CEDE & CO.]/[THE BANK OF NEW YORK DEPOSITORY (NOMINEES)
LIMITED]

or registered assigns,

the principal sum of
                     -----------------------------------------------------------

U.S. Dollars/Euros on April 15, 2010.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated:  April 8, 2003

                                        VIVENDI UNIVERSAL S.A.


                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:


This is one of the [9.25%/9.50%]
Senior Notes due 2010 referred to
in the within-mentioned Indenture:

THE BANK OF NEW YORK,
as Trustee

By:
   --------------------------------
        Authorized Signatory
Date of authentication: [      ]

- --------------------------------------------------------------------------------


                                       A-1

                                 [Back of Note]
                         [9.25% Senior Notes due 2010/]
                          [9.50% Senior Notes due 2010]

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]

      Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

            (1) INTEREST.

                  (A) Vivendi Universal S.A., a French societe anonyme (the
            "Company"), promises to pay interest on the principal amount of this
            Note at [9.25%]/[9.50%] per annum from April 8, 2003 (subject to
            subparagraph (1)(B) below) until maturity and shall pay the Special
            Interest, if any, payable pursuant to the Registration Rights
            Agreement referred to below. The Company will pay interest and
            Special Interest, if any, semi-annually in arrears on April 15 and
            October 15 of each year, or if any such day is not a day other than
            a Saturday, a Sunday or a day on which commercial banking
            institutions are authorized or required by law to close in New York
            City, London, England or Paris, France (a "Business Day"), on the
            next succeeding Business Day (each, an "Interest Payment Date").
            Interest on the Notes will accrue from the most recent date to which
            interest has been paid or, if no interest has been paid, from the
            date of issuance; provided that if there is no existing Default in
            the payment of interest, and if this Note is authenticated between a
            record date referred to on the face hereof and the next succeeding
            Interest Payment Date, interest shall accrue from such next
            succeeding Interest Payment Date; provided, further, that the first
            Interest Payment Date shall be October 15, 2003. The Company will
            pay interest (including post-petition interest in any proceeding
            under any Bankruptcy Law) on overdue principal and premium, if any,
            and on overdue installments of interest and Special Interest, if any
            (without regard to any applicable grace periods), from time to time
            on demand at the same rate to the extent lawful. Interest will be
            computed on the basis of a 360-day year of twelve 30-day months.

                  (B) The gross proceeds of the offering and sale of the Notes
            (less $1 or E1, as appropriate) will be placed in escrow accounts as
            provided in Section (9) below. In the event the Escrow Funds are
            released to the Company as provided in such Section, on the first
            Interest Payment Date, the Company will pay interest accrued since
            the date of such release plus an amount equal to the amount of
            interest on the Notes from April 8, 2003 to the date of release of
            the Escrow Funds to the Company calculated as if all the proceeds of
            the Notes had been released to the Company on April 8, 2003.

            (2) METHOD OF PAYMENT. The Company will pay interest on the Notes
      (except defaulted interest) and Special Interest, if any, to the Persons
      who are registered Holders of Notes at the close of business on the April
      1 or October 1 next preceding the Interest Payment Date, even if such
      Notes are canceled after such record date and on or before such Interest
      Payment Date, except as provided in Section 2.12 of the Indenture with
      respect to defaulted interest. The Notes will be payable as to principal,
      premium and Special Interest, if any, and interest at the


                                       A-2

      office or agency of the Company maintained for such purpose as provided in
      the Indenture, or, at the option of the Company, payment of interest and
      Special Interest, if any, may be made by check mailed to the Holders at
      their addresses set forth in the register of Holders; provided that
      payment by wire transfer of immediately available funds will be required
      with respect to principal of and interest, premium and Special Interest,
      if any, on, all Global Notes and all other Notes the Holders of which will
      have provided wire transfer instructions to the Company or the Paying
      Agent. Such payment will be in such coin or currency of the United
      States/the European Union as at the time of payment is legal tender for
      payment of public and private debts.

            (3) PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
      Paying Agent and Registrar and The Bank of New York (Luxembourg) S.A. will
      act as Paying Agent in Luxembourg. The Company may change any Paying Agent
      or Registrar without notice to any Holder. The Company or any of its
      Subsidiaries may act in any such capacity.

            (4) INDENTURE. The Company issued the Notes under an Indenture dated
      as of April 8, 2003 (the "Indenture") between the Company and the Trustee.
      The terms of the Notes include those stated in the Indenture and those
      made part of the Indenture by reference to the Trust Indenture Act of
      1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are
      subject to all such terms, and Holders are referred to the Indenture and
      such Act for a statement of such terms. To the extent any provision of
      this Note conflicts with the express provisions of the Indenture, the
      provisions of the Indenture shall govern and be controlling. The Notes are
      unsecured obligations of the Company.

            (5) OPTIONAL REDEMPTION.

            (a) On or after April 15, 2007, the Company may redeem [all or a
part of the Dollar Notes/all or a part of the Euro Notes], upon not less than 30
nor more than 60 days' prior notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Special Interest, if any, on the Notes redeemed, to the applicable
redemption date, if redeemed during the twelve-month period beginning on April
15 of the years indicated below:



                              DOLLAR NOTE     EURO NOTE
           YEAR                PERCENTAGE     PERCENTAGE
- -------------------------      ----------     ----------
                                        
2007......................       104.625%       104.750%
2008......................       102.313%       102.375%
2009 and thereafter.......       100.000%       100.000%


            (b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to April 15, 2006, the Company may at its option
on any one or more occasions redeem up to 35% of the aggregate principal amount
of Notes issued under the Indenture with the net cash proceeds of an Equity
Offering at a redemption price equal to [109.25% of the principal amount for the
Dollar Notes/109.50% of the principal amount for the Euro Notes], plus accrued
and unpaid interest and Special Interest, if any, to the redemption date;
provided that the Company received at least E50 million in gross proceeds from
such Equity Offering; at least 65% in initial aggregate principal amount of the
Notes issued under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and such redemption occurs within 120 days of the date of the
closing of such Equity Offering.

            (c) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to April 15, 2007, the Company may at its option
redeem all or part of the Notes upon not less than 30 nor more than 60 days'
prior notice at a redemption price equal to 100% of the principal amount


                                      A-3

of the Notes being redeemed plus the Applicable Premium plus accrued and unpaid
interest and Special Interest, if any, to the applicable redemption date.

            (6) MANDATORY REDEMPTION.

            The Company will not be required to make mandatory redemption or
      sinking fund payments with respect to the Notes.

            (7) REPURCHASE AT OPTION OF HOLDER.

            (a) Upon the occurrence at any time of a Change of Control, unless
the Company has exercised its right to redeem the Notes as described in Section
3.07 of the Indenture, the Company will be required to make an offer (a "Change
of Control Offer") to each Holder to repurchase all or any part ([equal to
$1,000 or an integral multiple thereof/ E1,000 or an integral multiple thereof])
of each Holder's Notes at a repurchase price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and Special
Interest, if any, on the Notes repurchased to the date of purchase (the "Change
of Control Payment"). Within 30 days following any Change of Control, the
Company will mail a notice to each Holder setting forth the procedures governing
the Change of Control Offer as required by the Indenture.

            (b) If the Company or any Restricted Subsidiary consummates any
Asset Sales, within 30 days of each date on which the aggregate amount of Excess
Proceeds exceeds E20 million, the Company will commence an offer to all Holders
of Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes 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 and Special Interest,
if any, to the date fixed for the closing of such offer in accordance with the
procedures set forth in the Indenture. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, such funds will no longer constitute Excess
Proceeds and may be used for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the subject
of an offer to purchase will receive an Asset Sale Offer from the Company prior
to any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" attached to
this Note.

            (8) NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than [$1,000 / E1,000], may be redeemed in part but only in
whole multiples of [$1,000 / E1,000], unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date interest ceases to accrue
on Notes or portions thereof called for redemption.

            (9) ESCROW OF PROCEEDS; SPECIAL MANDATORY CANCELLATION.

                  (a) At the date of the Indenture, the Trustee, the Company and
      The Bank of New York, as escrow agent (the "Escrow Agent") shall enter
      into an escrow agreement (the "Escrow Agreement") substantially in the
      form attached as Exhibit D to the Indenture. The gross proceeds from the
      offering of the Notes (less a [E1 / $1] initial payment in respect of the
      [Dollar] [Euro] Notes) will be paid into escrow accounts (the "Escrow
      Accounts") by the initial purchasers of the Notes and held in the name of
      the Trustee on behalf of the Holders under the terms of the Escrow
      Agreement. In accordance with the terms of the Escrow Agreement, the
      Escrow Funds


                                      A-4

      will be released to the Company upon delivery to the Escrow Agent and the
      Trustee of a certificate of the company signed by two officers, one of
      whom must be the Chief Executive Officer or Chief Financial Officer of the
      Company (the "Escrow Release Certificate"), in the form attached to the
      Escrow Agreement. The Company has agreed in the Indenture for the benefit
      of the Holders to comply with the terms and conditions of the Escrow
      Agreement and shall use its reasonable best efforts to satisfy the
      conditions precedent to availability of the New Credit Facility, deliver
      the Escrow Release Certificate and receive the gross proceeds from the
      offering and sale of the Notes as provided in the Escrow Agreement, as
      soon as practicable following the date hereof.

                  (b) If (i) in accordance with the terms of the Escrow
      Agreement, the Escrow Release Certificate is not delivered by the Company
      by 11.59 p.m. New York City time on the date that is 120 days from the
      date of the Indenture (or, if such 120th day is not a Business Day, the
      first Business Day after such day) (the "Final Escrow Date") or (ii) on an
      earlier date the Company notifies the Escrow Agent that it reasonably
      believes it will not be possible for the Company to deliver the Escrow
      Release Certificate by the Final Escrow Date, upon the date that is the
      earlier of the Final Escrow Date and the date that is five Business Days
      from the date of such notification, as the case may be, the Company shall
      promptly instruct the Trustee to cancel each series of Notes (the "Special
      Mandatory Cancellation") on a date that is not more than 10 Business Days
      after such instruction (the "Special Mandatory Cancellation Date").
      Promptly following receipt of instructions from the Company to cancel the
      Notes in accordance with the previous sentence, or if no such instructions
      have been received, on the Final Escrow Date, the Trustee shall mail by
      first class mail notice of the Special Mandatory Cancellation (the
      "Special Mandatory Cancellation Notice") to each Holder of the Notes at
      its registered address, to the Escrow Agent, and, so long as any series of
      the Notes is listed on the Luxembourg Stock Exchange and if required by
      the rules of the Luxembourg Stock Exchange, notice will be published in
      Luxembourg in a daily leading newspaper with general circulation in
      Luxembourg. As provided in the Escrow Agreement, upon receipt of the
      Special Mandatory Cancellation Notice or, if the Escrow Agent shall not
      have received an Escrow Release Certificate on or before the Final Escrow
      Date, on the next following Business Day, the Escrow Agent will liquidate
      all Escrow Funds held by it and the Escrow Agent will deliver such
      proceeds to the relevant Paying Agent for pro rata distribution to the
      Holders of the Notes. On the Special Mandatory Cancellation Date, the
      Company will pay to the relevant Paying Agent for payment to each Holder
      of Notes an aggregate amount equal to the difference between (i) 101% of
      the aggregate principal amount of the Notes plus interest that would have
      accrued on the Notes if the proceeds of the offering of the Notes had been
      released to the Company on the date of issuance of the Notes from such
      date to the Special Mandatory Cancellation Date (the "Special Mandatory
      Cancellation Price") and (ii) the proceeds from the liquidation of the
      Escrow Funds, such that each holder of the Notes shall receive the Special
      Mandatory Cancellation Price upon surrender and cancellation of its Notes.
      Once the Special Mandatory Cancellation Notice has been mailed, the Notes
      will become irrevocably due and payable on the Special Mandatory
      Cancellation Date at the Special Mandatory Cancellation Price. All Notes
      surrendered by a Holder to the Trustee for cancellation shall be
      irrevocably cancelled after payment to that Holder of the Special
      Mandatory Cancellation Price. If the Notes are not cancelled because of a
      failure of the Company to pay the portion of the Special Mandatory
      Cancellation Price to be paid by it, the interest will be deemed to accrue
      for purposes of calculation of the Special Mandatory Cancellation Price
      and the Special Mandatory Cancellation Price shall be adjusted accordingly
      until the date such amount is paid to the relevant Paying Agent. Pending
      delivery of the Escrow Release Certificate, the Company will not have and
      will not be deemed to have any rights, title or interest in the Escrow
      Funds, and any contingent or other rights the Company may have in respect
      of the Escrow Funds under the Escrow Agreement will be extinguished with
      respect to the Escrow Funds that are


                                      A-5

      required to be released for payment to the Holders of the Notes in the
      circumstances described above.

            (10) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
      form without coupons in denominations of [$1,000 / E1,000], and integral
      multiples of [$1,000 / E1,000]. The transfer of Notes may be registered
      and Notes may be exchanged as provided in the Indenture. The Registrar and
      the Trustee may require a Holder, among other things, to furnish
      appropriate endorsements and transfer documents and the Company may not
      require a Holder to pay any taxes and fees, except as otherwise set forth
      in the Indenture. The Company need not exchange or register the transfer
      of any Note or portion of a Note selected for redemption, except for the
      unredeemed portion of any Note being redeemed in part. Also, the Company
      need not exchange or register the transfer of any Notes for a period of 15
      days before a selection of Notes to be redeemed or during the period
      between a record date and the corresponding Interest Payment Date.

            (11) PERSONS DEEMED OWNERS. The registered Holder of a Note may be
      treated as its owner for all purposes.

            (12) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
      exceptions, the Indenture or the Notes may be amended or supplemented with
      the consent of the Holders of at least a majority in principal amount of
      the then outstanding Notes and Additional Notes, if any, and any existing
      default or compliance with any provision of the Indenture or the Notes may
      be waived with the consent of the Holders of a majority in principal
      amount of the then outstanding Notes and Additional Notes, if any. Without
      the consent of any Holder of a Note, the Indenture or the Notes may be
      amended or supplemented to cure any ambiguity, defect, omission or
      inconsistency, to provide for uncertificated Notes in addition to or in
      place of certificated Notes, to provide for the assumption of the
      Company's obligations to Holders of the Notes in case of a merger or
      consolidation or sale of all or substantially all of the Company's assets,
      to make any change that would provide any additional rights or benefits to
      the Holders of the Notes or that does not adversely affect in any material
      respect the legal rights under the Indenture of any such Holder, to comply
      with the requirements of the SEC in order to effect or maintain the
      qualification of the Indenture under the Trust Indenture Act or to provide
      for the issuance of Additional Notes in accordance with the limitations
      set forth in the Indenture or to add guarantors or guarantees with respect
      to the Notes or to grant Liens in favor of the Notes.

            (13) DEFAULTS AND REMEDIES. Events of Default include: (i) default
      for 30 days in the payment when due of interest or Special Interest on the
      Notes; (ii) default in payment when due of principal of or premium, if
      any, on the Notes when the same becomes due and payable at maturity, upon
      redemption (including in connection with an offer to purchase) or
      otherwise, (iii) failure by the Company or any of its Restricted
      Subsidiaries to comply with Section 4.10, 4.15 or 5.01 of the Indenture;
      (iv) failure by the Company or any of its Restricted Subsidiaries for 60
      days after receipt of notice to the Company by the Trustee or the Holders
      of at least 25% in aggregate principal amount of the Notes then
      outstanding to observe or perform any covenant, representation, warranty
      or other agreement in the Indenture; (v) a default occurs under any
      mortgage, indenture or instrument under which there may be issued or by
      which there may be secured or evidenced any Indebtedness for money
      borrowed by the Company or any of its Restricted Subsidiaries (or the
      payment of which is guaranteed by the Company or any of its Restricted
      Subsidiaries), whether such Indebtedness or guarantee now exists, or is
      created after the date of the Indenture, if that default (a) is caused by
      a failure to pay principal of, or interest or premium, if any, on such
      Indebtedness prior to the expiration of the grace period provided in such
      Indebtedness on the date of such default (a "Payment Default"); or (b)
      results in the acceleration


                                      A-6

      of such Indebtedness prior to its express maturity, and, in each case, the
      principal amount of any such Indebtedness, together with the principal
      amount of any other such Indebtedness under which there has been a Payment
      Default or the maturity of which has been so accelerated, aggregates E40
      million or more and has not been discharged in full or such acceleration
      rescinded or annulled within 20 days of such Payment Default or
      acceleration; (vi) certain final judgments for the payment of money that
      remain undischarged for a period of 60 days; and (vii) certain events of
      bankruptcy or insolvency with respect to the Company or any of its
      Significant Subsidiaries. If any Event of Default occurs and is
      continuing, the Trustee or the Holders of at least 25% in principal amount
      of the then outstanding Notes may declare all the Notes to be due and
      payable. Notwithstanding the foregoing, in the case of an Event of Default
      arising from certain events of bankruptcy or insolvency, all outstanding
      Notes will become due and payable without further action or notice.
      Holders may not enforce the Indenture or the Notes except as provided in
      the Indenture. Subject to certain limitations, Holders of a majority in
      principal amount of the then outstanding Notes may direct the Trustee in
      its exercise of any trust or power. The Trustee may withhold from Holders
      of the Notes notice of any continuing Default or Event of Default (except
      a Default or Event of Default relating to the payment of principal or
      interest) if it determines that withholding notice is in their interest.
      The Holders of a majority in aggregate principal amount of the Notes then
      outstanding by notice to the Trustee may on behalf of the Holders of all
      of the Notes waive any existing Default or Event of Default and its
      consequences under the Indenture except a continuing Default or Event of
      Default in the payment of interest or premium and Special Interest on, or
      the principal of, the Notes. The Company is required to deliver to the
      Trustee annually a statement regarding compliance with the Indenture, and
      the Company is required upon becoming aware of any Default or Event of
      Default, to deliver to the Trustee a statement specifying such Default or
      Event of Default.

            (14) TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
      or any other capacity, may make loans to, accept deposits from, and
      perform services for the Company or its Affiliates, and may otherwise deal
      with the Company or its Affiliates, as if it were not the Trustee.

            (15) NO RECOURSE AGAINST OTHERS. A director, officer, employee,
      incorporator or stockholder, of the Company, as such, will not have any
      liability for any obligations of the Company under the Notes or the
      Indenture or for any claim based on, in respect of, or by reason of, such
      obligations or their creation. Each Holder by accepting a Note waives and
      releases all such liability. The waiver and release are part of the
      consideration for the issuance of the Notes.

            (16) AUTHENTICATION. This Note will not be valid until authenticated
      by the manual signature of the Trustee or an authenticating agent.

            (17) 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).

            (18) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
      RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
      of Notes under the Indenture, Holders of Restricted Global Notes and
      Restricted Definitive Notes will have all the rights set forth in the
      Registration Rights Agreement dated as of April 8, 2003, among the Company
      and the other parties named on the signature pages thereof or, in the case
      of Additional Notes, Holders of Restricted Global Notes and Restricted
      Definitive Notes will have the rights set forth in one or more
      registration rights agreements, if any, among the Company and the other


                                      A-7

      parties thereto, relating to rights given by the Company to the purchasers
      of any Additional Notes (collectively, the "Registration Rights
      Agreement").

            (19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
      Committee on Uniform Security Identification Procedures, the Company has
      caused CUSIP numbers to be printed on the Notes and the Trustee may use
      CUSIP numbers in notices of redemption as a convenience to Holders. No
      representation is made as to the accuracy of such numbers either as
      printed on the Notes or as contained in any notice of redemption and
      reliance may be placed only on the other identification numbers placed
      thereon.

      The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

Vivendi Universal S.A.
42 avenue de Friedland
75008 Paris
France

Attention:  Corporate Secretary


                                      A-8

                                                                       EXHIBIT A

                                 ASSIGNMENT FORM

      To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
                                             -----------------------------------
                                               (Insert assignee's legal name)


- --------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)


- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

and irrevocably appoint
                       ---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:
     -----------------
                               Your Signature:
                                              ----------------------------------
                                              (Sign exactly as your name appears
                                                       on the face of this Note)

Signature Guarantee*:
                     ---------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).


                                      A-1

                                                                       EXHIBIT A

                       OPTION OF HOLDER TO ELECT PURCHASE

      If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

                  / Section 4.10         / Section 4.15

      If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                              [$/E]
                                   ---------------

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-1

                                                                       EXHIBIT A

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

      The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:

                                                                                              
                                                                               Principal Amount           Signature of authorized
                       Amount of decrease in       Amount of increase in      of this Global Note          officer of Trustee or
                        Principal Amount of        Principal Amount of       following such decrease         [Custodian][Common
Date of Exchange         this Global Note            this Global Note             (or increase)                  Depositary]
- ----------------         ----------------            ----------------             -------------                  -----------




                                      A-1

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Vivendi Universal S.A.
42 avenue de Friedland
75008 Paris
France

The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
United States

      Re: [9.25% Senior Notes due 2010/ 9.50% Senior Notes due 2010]

      Reference is hereby made to the Indenture, dated as of April 8, 2003 (the
"Indenture"), between Vivendi Universal S.A., as issuer (the "Company"), and The
Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

      ___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or beneficial interest in such Note[s] specified in Annex A hereto, in
the principal amount of [$/E]___________ (the "Transfer"), to
___________________________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

      1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor
hereby further certifies that the beneficial interest or Definitive Note is
being transferred to a Person that the Transferor reasonably believed and
believes is purchasing the beneficial interest or Definitive Note for its own
account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.

      2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a Person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the 40-day
"Distribution Compliance Period" under Regulation S, the transfer is not being
made to a U.S. Person or


                                      B-1

for the account or benefit of a U.S. Person (other than a "Distributor" as
defined in Rule 902 of Regulation S). Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.

      3. [ ] Check if Transferee will take delivery of a beneficial interest in
an Unrestricted Global Note or of an Unrestricted Definitive Note.

      (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

      (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

      (c) [ ] CHECK IF TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT. The Transfer is being effected in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus
delivery requirements of the Securities Act.

      (d) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

      4. [ ] CHECK IF TRANSFER IS TO THE COMPANY OR ANY OF ITS SUBSIDIARIES. The
transfer is being effected in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States.

      This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.


                                      B-2

                                        ----------------------------------------
                                              [Insert Name of Transferor]

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

Dated:
      -------------------------


                                      B-3

                       ANNEX A TO CERTIFICATE OF TRANSFER

      1.    The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

                  (a) [ ] a beneficial interest in the:

                        (i) [ ] 144A Global Note (CUSIP _________), or

                        (ii) [ ] Regulation S Global Note (CUSIP _________)

                  (b) [ ] a Restricted Definitive Note.

      2.    After the Transfer the Transferee will hold:

                                   [CHECK ONE]

                  (a) [ ] a beneficial interest in the:

                        (i) [ ] 144A Global Note (CUSIP _________), or

                        (ii) [ ] Regulation S Global Note (CUSIP _________), or

                        (iii) [ ] Unrestricted Global Note (CUSIP _________); or

                  (b) [ ] a Restricted Definitive Note; or

                  (c) [ ] an Unrestricted Definitive Note,

                  in accordance with the terms of the Indenture.


                                      B-1

                         FORM OF CERTIFICATE OF EXCHANGE

Vivendi Universal S.A.
42 avenue de Friedland
75008 Paris
France

The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
United States

      Re: [9.25% Senior Notes due 2010/9.50% Senior Notes due 2010]

                              (CUSIP ____________)

      Reference is hereby made to the Indenture, dated as of April 8, 2003 (the
"Indenture"), between Vivendi Universal S.A., as issuer (the "Company"), and The
Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

      __________________________, (the "Owner") owns and proposes to exchange
the Note[s] or beneficial interest in such Note[s] specified herein, in the
principal amount of [$/E]____________ (the "Exchange"). In connection with the
Exchange, the Owner hereby certifies that:

      1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

      (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), (iii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest in
an Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

      (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

      (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is


                                      D-2

being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

      (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

      2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

      (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

      (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
[ ] 144A Global Note, [ ] Regulation S Global Note, with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.


                                      E-2

      This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.


                                        ----------------------------------------
                                              [Insert Name of Transferor]

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

Dated:
      -------------------------


                                      E-3

EX-4.12

                                                                    Exhibit 4.12



                                                               Date Dec 17, 2001

PRIVILEGED & CONFIDENTIAL

Edgar M. Bronfman
Vivendi Universal
375 Park Avenue
New York, New York 10152

Dear Edgar,

     I am writing to set out our agreement regarding your retirement from
Vivendi Universal (the "Company") and its affiliates.

     1.        It is understood that you will retire from all of your current
     positions with the Company and its affiliates, effective December 31, 2001.
     Until that date, you will continue as an employee of the Company at your
     current salary of $825,000 per year and your current benefit levels. It is
     further understood that you will continue to be a member of the Company's
     Board of Directors and act as the Chairman of the Board's Human Resources
     Committee after December 31, 2001.

     2.        You will receive a Management Incentive Award for the Stub fiscal
     year ending December 31, 2001 based upon the actual award paid to the
     Corporate Division. Your MIP award will be paid at the time such awards are
     paid to employees generally. All previously deferred compensation will be
     paid out in accordance with the terms of the applicable plans.

     3.        Under the current provisions of the Pension Plan for the
     Employees of Joseph E. Seagram & Sons, Inc. and Affiliates and the Benefits
     Equalization Plan, you will be eligible for a retirement benefit based upon
     your continuous service through December 31, 2001. In the event of your
     death, your spouse will receive two-thirds of your pension benefit. Your
     spousal designation cannot be changed after your retirement. An estimate of
     your total annual benefit, including the spousal death benefit payable to
     your spouse upon your death, is attached to this letter as Exhibit A. You
     will receive additional details concerning your pension benefits from the
     Benefits Department under separate cover.



4.        The Company will continue to make minimum distributions to you of your
accrual account balances in The Seagram 401(k) Plan after December 31, 2001
unless you elect to have your account balance paid to you. After December 31,
you will not be permitted to make any additional contributions to your account
although you may continue to direct the investment of your accounts.

5.        Commencing on January 1, 2002, you and your spouse shall be eligible
to receive the Senior Executive Retirement Benefits listed in Exhibit B, as the
same may be changed from time to time, until your respective deaths. You will
continue to be covered under the indemnification provisions of the by-laws and
Directors and Officers insurance policies of the Company and its affiliates, in
accordance with their terms.

6.        In accordance with the terms of the Retiree Salary Continuation
Program, you will receive a payment of $374,500 per annum for the period from
January 2002 until December 2011 (the "Continuation Period"), payable on a
monthly basis beginning January, 2002.

7.        During the Continuation Period, (or, if earlier, until your date of
death) the Company will provide you with the following additional benefits and
services:

     a)             Office space for you and an assistant on the 6th floor at
          375 Park Avenue at the Company's expense. So long as you have office
          space on the 6th floor of 375 Park Avenue, the Company will provide
          you with ongoing office support and maintenance, including computer
          services, telephone services, communications and mail room services
          ("Support Services") In the event that you select office space other
          than as described in this section voluntarily or as the result of the
          Company's determination to relocate its offices from 375 Park Avenue,
          the Company will reimburse you for the cost of such alternative office
          space up to $60,000 per year;

     b)             The services of one assistant who will be an employee of the
          Company and who will receive benefits comparable to those provided by
          the Company generally to employees of the same level. In the event you
          choose to employ an assistant other than as described in this
          subparagraph, the Company will reimburse you for the cost of such
          assistant's salary and benefits up to $100,000 per year;

     c)             The services of one driver who shall be an employee of the
          Company and who will receive benefits comparable to those



          provided by the Company generally to employees of the same level. Such
          employee will be provided with space with the Company's other drivers,
          so long as the Company's offices are located at 375 Park Avenue, New
          York. In the event you choose to employ a driver other that as
          described in this subparagraph, the Company will reimburse you for the
          cost of such driver's salary and benefits up to $75,000 per year;

     d)        Reimbursement for the cost of renting a luxury automobile. Such
          automobile will be garaged at the Company's expense at 375 Park
          Avenue, New York, so long as the Company maintains offices there, and
          the Company will pay or reimburse you for insurance and operating
          expenses for such automobile.

7.        You may continue to use the Executive Dining Room on the 5th floor at
375 Park Avenue.

8.        You may continue to use the exercise room on the 2nd floor at 375
Park Avenue.

If you have any questions concerning any of the above terms, please do not
hesitate to contact me.


                                        Sincerely,

                                             /s/  John Borgia

                                                  EVP - HR

                                                  Vivendi Universal


Accepted and Agreed:

/s/ Edgar M. Bronfman
- ------------------------
Edgar M. Bronfman



                                   EXHIBIT A

For example, commencing upon January 1, 2002, the combined total pension
benefit payable to you will be $1,073,177.50 per annum, payable monthly
($89,431.46). In the event you predecease your spouse, she would be paid an
annual amount of $715,451.64, payable monthly ($59,620.97). This amount is
two-thirds of your total pension amount.

Should you elect to receive the portion of your retirement benefit payable from
the Pension Plan for Employees of Joseph E. Seagram & Sons, Inc. and Affiliates
(the "Qualified Plan") in a lump sum, which is permitted pursuant to the
Qualified Plan, that lump sum amount is $1,406,880. This election would reduce
your overall monthly pension payment from the BEP to $76,534.79. In the event
you predecease your spouse after your receipt of the lump sum, she would be paid
an annual amount of $599,381.64, payable monthly ($49,948.47). This amount is
two-thirds of your BEP pension amount.


                                   EXHIBIT B

                      SENIOR EXECUTIVE RETIREMENT BENEFITS
                               (EFFECTIVE 1/1/02)


In addition to retiree medical insurance, you are eligible for the
following benefits:

- -         Retired Senior Executive Dental Insurance*

- -         Executive Personal accident Insurance* (benefit ceases upon retiree's
     death)

- -         Excess Liability Insurance*

- -         Executive Financial Counseling*

- -         Income Tax Services (up to $4,000 per year)

- -         Vivendi Universal Product Allowance* (up to $250.00 per year)

- -         Retired Executive Matching Gifts Program* (double match
          up to $7,500 in contributions per year)


- -         Retirement Salary Continuation
          Effective January 2002, you will begin receiving Retirement Salary
Continuation payments in the amount of $374,500 per year for 10 years
($31,208.34 per month) through December 2011. If your death should occur during
this period, your beneficiary will receive a lump sum payment of the remaining
Retirement Salary Continuation.

- -         Subject to any modifications or termination of these benefits by the
Company and any payments required under the terms of these benefits.

EX-4.13

                                                                    Exhibit 4.13

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (the "Agreement"), dated September 25, 2002, by and
between Vivendi Universal U.S. Holding Co. (the "Company") and Mr. Edgar
Bronfman, Jr. (the "Executive").

     WHEREAS, the Company desires to employ Executive in order to assist the
Company and its U.S. affiliates in the definition and implementation of the
strategy regarding their U.S. entertainment businesses, among other things, and
to enter into an agreement embodying the terms of such employment;

     WHEREAS, Executive desires to accept such employment and enter into such
an employment agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and for other good and valuable consideration, the parties agree
as follows:

     1.   Term of Employment. Subject to the provisions of Section 6 of this
Agreement, Executive shall be employed by the Company for a period commencing
on September 25, 2002 and ending on December 31, 2004 (the "Employment Term")
on the terms and subject to the conditions set forth in this Agreement.

     2.   Position/Location

     a.   During the Employment Term, Executive shall serve as an executive
employee of the Company. In such position, Executive shall render services to
the Company, and shall perform such duties commensurate with such office as he
shall reasonably be directed by the Chief Executive Officer of the Company, Mr.
Jean-Rene Fourtou (the "CEO"). Without limiting the generality of the
foregoing, Executive shall use his experience in, and knowledge of, the
entertainment business in the U.S. to advise the CEO in connection with the
Company's and its U.S. affiliates' entertainment businesses in the U.S. more
specifically, including but not limited to the following matters:

     -      definition and implementation of the strategy concerning the
        Company's and its U.S. affiliates' entertainment businesses in the U.S.;

     -      definition and implementation of the synergies between the
        Company's and its U.S. affiliates' music business and the Company's and
        its U.S. affiliates' other entertainment businesses (e.g., theme parks);

     -      maintenance and development of the relationships between the
        Company's and its U.S. affiliates' new management team and the Company's
        and its U.S. affiliates' U.S. businesses.

     b.   During the Employment Term, Executive will be required to devote a
substantial time commitment to the performance of his duties under this
Agreement, but he will not be precluded or prohibited from securing one or more
additional part time employment or consulting positions. Executive agrees to
render the services described above in a diligent and businesslike manner.
Executive's principal place of business will be located

                                       1

                                                                  EXECUTION COPY

in the Borough of Manhattan, New York City, subject to reasonable travel
requirements on behalf of the Company.

     3.   Salary. During the Employment Term, the Company shall pay Executive a
salary (the "Salary") at the annual rate of US$ 1,000,000, payable in regular
installments in accordance with the Company's usual payment practices
applicable to senior executives.

     4.   Employee Benefits. During the Employment Term, Executive shall be
entitled to participate in the Company's employee benefit plans (including,
without limitation, pension, welfare, flexible perquisites, matching gifts, and
fringe benefit plans) (collectively, "Employee Benefits") at the levels
afforded to other senior executives of the Company. Notwithstanding any terms
or provisions of this Agreement to the contrary, the Company acknowledges and
agrees that (a) Executive has earned certain benefits, including, without
limitation, pension benefits, in connection with his prior relationship in any
and all capacities with Vivendi Universal S.A., its affiliates, including,
without limitation, the Company, and their respective predecessors, and (b)
nothing in this Agreement shall result in any cessation of or reduction in any
pension benefits or other benefits payable to Executive as a result of such
prior service or his retirement therefrom; provided, however, that the parties
hereto acknowledge and agree that, during the Employment Term, Executive will
not accrue any benefits under the Company's Benefit Equalization Plan in
addition to those he was entitled to receive as of the first day of the
Employment Term.

     5.   Business Expenses and Perquisites. During the Employment Term, all
business expenses reasonably incurred by Executive in the performance of
Executive's duties hereunder shall be reimbursed by the Company in accordance
with the Company's policies applicable to senior executives. In addition,
during the Employment Term, the Company shall provide Executive in connection
with the performance of his obligations hereunder; (i) appropriate office space
in the Borough of Manhattan, New York City; (ii) the services of an assistant;
and (iii) such other facilities as may be necessary or appropriate, in
accordance with the Company's policies, for the performance by Executive of his
services under this Agreement (collectively, the "Perquisites").

     6.   Termination. The Employment Term and Executive's employment hereunder
may be terminated by the Company or Executive at any time and for any reason.

     a.   By the Company for Cause or by Executive's Resignation Without Good
Reason.

     (i)  The Employment Term and Executive's employment hereunder may be
terminated by the Company for Cause (as defined below) and shall terminate
automatically upon Executive's resignation without Good Reason (as defined in
Section 6(c)(ii)).

     (ii) For purposes of this Agreement, "Cause" shall mean (A) conviction of
a felony under the laws of the United States or any state thereof, (B)
Executive's willful malfeasance or willful misconduct in connection with
Executive's duties hereunder, or Executive's repeated willful refusal to
perform Executive's duties which, in each case, results in demonstrable harm to
the financial condition or business reputation of the Company or any of its
subsidiaries or affiliates or (C) Executive engages in or provides services to
a business that is a material competitor of Vivendi Universal S.A., the Company
or any of their respective affiliates; provided, however, that the
circumstances described in Section 6(a)(ii)(C) above shall not constitute Cause
unless Executive fails to cure such circumstances


                                       2

                                                                 EXECUTION COPY
                                                                 ______________


within twenty days following receipt by Executive of written notice from the
Company describing such competitive activity in reasonable detail.

    (iii) If Executive's employment is terminated by the Company for Cause, or
if Executive resigns without Good Reason, Executive shall be entitled to
receive;

    (A)   the Salary and Perquisites through the date of termination;

    (B)   reimbursement for any unreimbursed business expenses properly incurred
by Executive in accordance with the Company's policy prior to the date of
Executive's termination; and

    (C)   such Employee Benefits, if any, to which Executive may be entitled
(the amounts described in clauses (A) through (C) hereof being referred to as
the "Accrued Rights").

    Following such termination of Executive's employment by the Company for
Cause or resignation by Executive without Good Reason, except as set forth in
this Section 6(a)(iii), as well as Sections 7, 9(j) and 9(k), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement.

    b.    Disability or Death.

    (i)   The Employment Term and Executive's employment hereunder shall
terminate upon Executive's death and may be terminated by the Company upon
Executive's inability, by reason of any physical or mental impairment, to
substantially perform the significant aspects of his regular duties, which
inability has lasted for six consecutive months and is reasonably expected to be
permanent (such incapacity is hereinafter referred to as "Disability"). Any
question as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of this Agreement.

    (ii)  Upon termination of Executive's employment hereunder for either
Disability or death, Executive or Executive's estate (as the case may be) shall
be entitled to receive the Accrued Rights. Following Executive's termination of
employment due to death or Disability, except as set forth in this Section
6(b)(ii), as well as Sections 7, 9(j) and 9(k). Executive shall have no further
rights to any compensation or any other benefits under this Agreement.

    c.    By the Company without Cause or Resignation by Executive for Good
Reason.

    (i)   The Employment Term and Executive's employment hereunder may be
terminated by the Company without Cause (other than by reason of death or
Disability) or by Executive's resignation for Good Reason.



                                       3


     (ii) For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without Executive's express written
approval, other than due to Executive's death or Disability: (A) any decrease in
the Salary, (B) any diminution in Executive's title or reporting relationship,
or substantial diminution in duties or responsibilities, (C) any relocation of
Executive's principal place of business outside of the Borough of Manhattan,
New York City, other than reasonable travel and travel to and from Paris as
required to perform Executive's duties hereunder, provided, however, that
Executive shall have six months from the time Executive first becomes aware of
the existence of Good Reason to give notice of his resignation for Good Reason.

     (iii) If Executive's employment is terminated by the Company without Cause
(other than by reason of death or Disability) or if Executive resigns for Good
Reason, Executive shall be entitled to receive the following payments and
benefits:

     (A)  the Accrued Rights;

     (B)  a lump-sum payment equal to the total amount of Salary that Executive
would have received had the Employment Term continued through December 31, 2004.

     Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
6(c)(iii), as well as Sections 7, 9(j) and 9(k), Executive shall have no further
rights to any compensation or any other benefits under this Agreement.

     d.   Timing of Payment. All lump sum payments provided in this Section 6
shall be made within fifteen days after the termination of Executive's
employment.

     e.   Notice of Termination. Any purported termination of employment by the
Company or by Executive (other than due to Executive's death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 9(i) hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.

     7.   Gross-Up

     a.   In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Company, any of its affiliates, or
one or more trusts established by the Company for the benefit of its employees,
to or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, or otherwise)(a
"Payment") is subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest or penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

                                       4



                                                                  EXECUTION COPY


          b.   All determinations required to be made under this Section 7,
     including whether and when a Gross-Up Payment is required and the amount of
     such Gross-Up Payment and the assumptions to be utilized in arriving at
     such determination, shall be made by a nationally recognized certified
     public accounting firm as may be designated by the Company (the "Accounting
     Firm") which shall provide detailed supporting calculations both to the
     Company and Executive within ten business days of the receipt of notice
     from Executive that there has been a Payment, or such earlier time as is
     requested by the Company and Executive; provided that for purposes of
     determining the amount of any Gross-Up Payment, Executive shall be deemed
     to pay federal income tax at the highest marginal rates applicable to
     individuals in the calendar year in which any such Gross-Up Payment is to
     be made deemed to pay state and local income taxes at the highest effective
     rates applicable to individuals in the state or locality of Executive's
     residence or place of employment in the calendar year in which any such
     Gross-Up Payment is to be made, net of the maximum reduction in federal
     income tax at the highest marginal rates. All fees and expenses of the
     Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
     as determined pursuant to this Section 7, shall be paid by the Company to
     Executive (or to the appropriate taxing authority on Executive's behalf)
     when due. If the Accounting Firm determined that no Excise Tax is payable
     by Executive, it shall so indicate to Executive in writing. Any
     determination by the Accounting Firm shall be binding upon the Company and
     Executive. As a result of the uncertainty in the application of Section
     4999 of the Code, it is possible that the amount of the Gross-Up Payment
     determined by the Accounting Firm to be due to (or on behalf of) Executive
     was lower than the amount actually due ("Underpayment"). In the event that
     the Company exhausts its remedies pursuant to Section 7(c) and Executive
     thereafter is required to make a payment of any Excise Tax, the Accounting
     Firm shall determine the amount of the Underpayment that has occurred and
     any such Underpayment shall be promptly paid by the Company to or for the
     benefit of Executive.

          c.   Executive shall notify the Company in writing of any claim by the
     Internal Revenue Service that, if successful, would require the payment by
     the Company of any Gross-Up Payment. Such notification shall be given as
     soon as practicable but no later than ten business days after Executive is
     informed in writing of such claim and shall apprise the Company of the
     nature of such claim and the date on which such claim is requested to be
     paid. Executive shall not pay such claim prior to the expiration of the
     thirty day period following the day on which he gives notice to the Company
     (or such shorter period ending on the date that any payment of taxes with
     respect to such claim is due). If the Company notifies Executive in writing
     prior to the expiration of such period that it desires to contest such
     claim, Executive shall (i) give the Company any information reasonably
     requested by the Company relating to such claim, (ii) take such action in
     connection with contesting such claim as the Company shall reasonably
     request in writing from time to time, including, without limitation,
     accepting legal representation with respect to such claim by an attorney
     reasonably selected by the Company, (iii) cooperate with the Company in
     good faith in order to effectively contest such claim and (iv) permit the
     Company to participate in any proceedings relating to such claim; provided,
     however, that the Company shall bear and pay directly all costs and
     expenses (including additional interest and penalties) incurred in
     connection with such contest and shall indemnify and hold Executive
     harmless, on an after-tax basis, for any Excise Tax or income tax
     (including interest and penalties with respect thereto) imposed as a result
     of such representation and payment of costs and expenses. Without
     limitation of the foregoing provisions of this Section 7(c), the Company
     shall control all proceedings taken in connection with such contest and, at
     its sole option, may pursue or



                                       5


forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, further, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance:
provided further, that if Executive is required to extend the statute of
limitations to enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.


     d.   If, after the receipt by Executive of an amount paid or advanced by
the Company pursuant to this Section 7, Executive becomes entitled to receive a
refund with respect to a Gross-Up Payment, Executive shall (subject to the
Company's complying with the requirements of Section 7(c)) promptly pay to the
Company the amount of such refund received (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 7(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive of its intent to
contest such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.

     8.   Confidentiality.

     a.   Executive acknowledges that Executive's employment by the Company
(which, for purposes of this Section 8, shall include its affiliates, including
Vivendi, Universal S.A.) will, throughout the Employment Term, bring Executive
into close contact with many confidential affairs of the Company, including
information about costs, profits, markets, sales, products, key personnel and
other information not readily available to the public, and plans for future
development.

     b.   In recognition of the foregoing, Executive covenants and agrees to
keep secret all confidential matters of the Company and to not intentionally
disclose such matters to anyone outside of the Company, either during or after
the Employment Term, except with the Company's prior written consent or in the
performance of Executive's duties to the Company; provided that (A) Executive
shall have no such obligation to the extent such matters are or become publicly
known other than as a result of Executive's breach of Executive's obligations
hereunder, (B) Executive may, after giving prior notice to the Company to the
extent reasonably practicable under the circumstances, disclose such matters to
the extent required by applicable laws or governmental regulations or judicial
or regulatory processes and (C) Executive may disclose information with regard
to the terms of this Agreement to his lawyers, financial advisors and immediate
family members, and, if he does so, will instruct them to abode by this
confidentiality covenant. In the event of his termination of employment,
Executive shall use reasonable beet efforts to provide the


                                       6


                                                                  EXECUTION COPY

Company, upon the Company's reasonable request, a limited number of specifically
identified confidential Company documents that he alone possesses.

9.   Miscellaneous.

     a.   Governing Law/Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles thereof, and all actions and proceedings arising
out of or relating to this Agreement shall be heard and determined exclusively
in any federal or state court of competent jurisdiction, located in the Borough
of Manhattan, New York.

     b.   Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company and its affiliates during the Employment Term. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto.

     c.   No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

     d.   Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.

     e.   Assignment. This Agreement shall not be assignable by Executive. This
Agreement shall be assigned, if Executive consents, by the Company to a person
or entity which is an affiliate or a successor in interest to substantially all
of the business operations of the Company. Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate or successor person or entity.

     f.   No Set Off/No Mitigation. The Company's obligation to pay Executive
the amounts provide and to make the arrangements provided hereunder shall not be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Company or its affiliates. Executive shall not be required to mitigate any
payments or benefits made or provided to Executive in connection with the
termination of his employment by seeking alternative employment, nor shall the
Company's obligations to Executive be reduced by any compensation payable to
Executive following his termination of employment with the Company.

     g.   Authorization of Agreement. All corporate action has been taken on the
part of the Company's or its affiliates' directors and shareholders necessary
for the authorization of, execution of, delivery of, and the performance of all
obligations of the Company under, the Agreement. The Agreement, when executed
and delivered by the Company, and assuming the due execution and delivery by
Executive, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with its terms. Employee
represents and warrants that entering into this Agreement does not, and that his
performance under this Agreement will not, violate the provisions of any
employment, severance, consulting, termination, resignation, non-competition,
non-solicitation, assignment of inventions or other intellectual property, or
confidentiality agreement or instrument to

                                       7


                                                                  EXECUTION COPY

which Employee is a party, or any decree, judgment or order to which Employee is
subject, and that this Agreement constitutes a valid and binding obligation of
Employee in accordance with its terms.

     h.   Successors/Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees.

     i.   Notices. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid (or similar method outside of the U.S.),
addressed to the respective addresses set forth below, or to such other address
as either party may have provided to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.

     If to Vivendi Universal U.S. Holding Co.:

     Vivendi Universal U.S. Holding Co.
     375 Park Avenue
     New York, New York 10152
     Attention: Daniel J. Losito, Esquire

     If to Executive:

     To the most recent address of Executive set forth in the personnel record
of the Company.

     j.   D&O Indemnification. The Company shall indemnify Executive to the
fullest extent permitted by applicable law against damages in connection with
his status or performance of duties as an officer of the Company and shall
maintain and cover Executive under customary and appropriate directors and
officers liability insurance during the Employment Term and throughout the
period of any applicable statute of limitations.

     k.   Legal Fees and Expenses. The Company will reimburse Executive for all
legal fees and related expenses incurred in connection with, or arising out of,
any dispute in respect of severance following his termination of employment, so
long as either Executive and the Company agree on the basis for such termination
being, or Executive prevails as to such termination being, other than for Cause
or for Good Reason.

     l.   Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such federal, state and local and foreign taxes as may be
required to be withheld pursuant to any applicable law or regulation.

     m.   Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

               [remainder of this page intentionally left blank]

                                       8



                                                                  EXECUTION COPY

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
     of September 25, 2002.




                                             VIVENDI UNIVERSAL U.S.
                                             HOLDING CO.


                                             By:    /s/ Jean-Rene Fourtou
                                                    ___________________________
                                             Name:  Jean-Rene Fourtou
                                             Title: Chief Executive Officer





                                             By: /s/ Edgar Bronfman, Jr.
                                                 ___________________________
                                                 EDGAR BRONFMAN, JR.


                                       9

EX-8.1

                                                                     EXHIBIT 8.1

                  LIST OF SUBSIDIARIES OF VIVENDI UNIVERSAL

      Vivendi Universal maintains over 1,000 subsidiaries. Set forth below are
the names of certain of its subsidiaries which carry on a substantial portion of
Vivendi Universal's lines of business. The names of various subsidiaries,
including subsidiaries conducting operating activities of Vivendi Universal's
various businesses domestically and internationally, have been omitted. None of
the foregoing omitted subsidiaries are considered to be material in relation to
Vivendi Universal's balance sheet and operations.



                                                                COUNTRY OF
                         NAME                                  INCORPORATION
                         ----                                  -------------
      CEGETEL GROUP
                                                            
      Cegetel Groupe S.A.                                          France
       Cegetel S.A.                                                France
       Societe Francaise du Radiotelephone S.A.                    France
       Telecom Developpement                                       France
      MUSIC
      Centenary Holding N.V.                                    Netherlands
       Universal Music (UK) Holdings Ltd                             UK
       Universal Entertainment GmbH                               Germany
       Universal Music K.K.                                        Japan
       Universal Music S.A.S.                                      France
      Universal Studios, Inc.                                       USA
       PolyGram Holding, Inc.                                       USA
       Interscope Records                                           USA
       UMG Recordings, Inc.                                         USA
      VIVENDI UNIVERSAL ENTERTAINMENT
      Universal Pictures International B.V.                     Netherlands
      Universal Studios, Inc.                                       USA
       Vivendi Universal Entertainment LLLP                         USA
      CANAL+ GROUP
      Groupe Canal+ S.A.                                           France
       Canal Plus S.A.                                             France
       CanalSatellite S.A.                                         France
       StudioCanal S.A.                                            France
       Multithematiques                                            France
      MAROC TELECOM S.A.                                          Morocco
      VIVENDI UNIVERSAL GAMES, INC.                                 USA
      HOLDING & CORPORATE
       Societe d'Investisement pour la Telephonie                  France
       UGC                                                         France
      VIVENDI TELECOM INTERNATIONAL S.A.                           France
       Vivendi Telecom Hungary                                     Hungary
       Kencell S.A.                                                Kenya
       Monaco Telecom S.A.M.                                       Monaco
       Elektrim Telekomunikacja S.A.                               Poland
       Xfera Moviles S.A.                                          Spain
      PUBLISHING ACTIVITIES EXCL. VIVENDI
      UNIVERSAL GAMES
      Vivendi Universal Publishing S.A.                            France
       Groupe Express-Expansion S.A.                               France
       Comareg S.A.                                                France
       Atica                                                       Brazil
      VIVENDI UNIVERSAL NET




                                                                 COUNTRY OF
                         NAME                                  INCORPORATION
                         ----                                  -------------
                                                            
      Vivendi Universal Net S.A.                                   France
       i-France S.A.                                               France
       Scoot Europe N.V.                                          Belgium
       Ad-2-One S.A.                                               France
       CanalNumedia S.A.                                           France
      Vivendi Universal Net U.S.A. Group, Inc.                      USA
       MP3.com, Inc.                                                USA
       Emusic.com, Inc.                                             USA
       Flipside, Inc./Uproar, Inc.                                  USA
      VEOLIA ENVIRONNEMENT S.A.                                    France

EX-11.1

                                                                    Exhibit 11.1

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statements of
Vivendi Universal S.A. ("Vivendi Universal") listed below of our report dated
April 2, 2003 (except with respect to the matters discussed in Note 17, as to
which the date is June 27, 2003), with respect to the consolidated financial
statements of Vivendi Universal and subsidiaries, which is included in Vivendi
Universal's Annual Report on Form 20-F for the year ended December 31, 2002,
filed with the Securities and Exchange Commission:



        SEC Form             Filing Date          Registration Number
        --------             -----------          -------------------
                                            
          S-8                  06/06/02                333-72270
          S-8                  06/04/02                333-89744
          S-8                  06/04/02                333-89754
          S-8                  05/06/02                333-87622
          S-8                  01/31/02                333-81830
          S-8                  10/26/01                333-72270
          S-8                  08/29/01                333-64754
          S-8                  12/11/00                333-51654
          S-8                  12/11/00                333-48966
          S-8                  10/05/00                333-47440
         F-3/A                 06/03/02                333-81578
          F-3                  01/29/02                333-81578


                                  Paris, France
                                  June 27, 2003

/s/ RSM Salustro Reydel             /s/ Barbier Frinault & Cie
- -----------------------             --------------------------------------------
RSM Salustro Reydel                 Barbier Frinault & Cie
                                    A member firm of Ernst & Young International

EX-11.2

                                                                    Exhibit 11.2

                         CONSENT OF INDEPENDENT AUDITOR


We consent to the incorporation by reference in the following Registration
Statements of Vivendi Universal S.A.:



                                                    REGISTRATION
        SEC FORM             FILING DATE                NUMBER
        --------             -----------            ------------
                                              
          S-8                  06/06/02                33372270
          S-8                  06/04/02                33389744
          S-8                  06/04/02                33389754
          S-8                  05/06/02                33387622
          S-8                  01/31/02                33381830
          S-8                  10/26/01                33372270
          S-8                  08/29/01                33364754
          S-8                  12/11/00                33351654
          S-8                  12/11/00                33348966
          F-3/A                06/03/02                33381578
          F-3                  01/29/02                33381578
          S-8                  10/05/00                33347440



of our report dated March 28, 2002 (except with respect to the matters discussed
in Note 14 as to which date is May 24, 2002) with respect to the consolidated
balance sheets of Vivendi Universal and subsidiaries as of December 31, 2001 and
2000 and the related consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the period ended December
31, 2001, included in this Annual Report on Form 20-F for the year ended
December 31, 2002. This report is a copy of the joint audit report previously
issued by Barbier Frinault & Cie, a member of Andersen Worldwide and RSM
Salustro Reydel.



                                               Paris, France
                                               June 27, 2003

/s/ RSM Salustro Reydel
- -----------------------
RSM Salustro Reydel

EX-11.3

                                                                    EXHIBIT 11.3


                                  CERTIFICATION

      I, Jean-Rene Fourtou, certify that:

1. I have reviewed this annual report on Form 20-F of Vivendi Universal;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: June 30, 2003


                                                /s/ Jean-Rene Fourtou
                                                ----------------------------
                                                Jean-Rene Fourtou
                                                Chief Executive Officer

                                  CERTIFICATION

      I, Jacques Espinasse, certify that:

1. I have reviewed this annual report on Form 20-F of Vivendi Universal;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: June 30, 2003
                                                /s/ Jacques Espinasse
                                                ----------------------------
                                                Jacques Espinasse
                                                Chief Financial Officer

EX-11.4

                                                                    EXHIBIT 11.4

                            CERTIFICATION PURSUANT TO

                             18 U.S.C. SECTION 1350

      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

      In connection with the Annual Report on Form 20-F of Vivendi Universal, a
societe anonyme organized under the laws of France (the "Company"), for the
period ending December 31, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), each of the undersigned officers
of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, to such officer's knowledge,
that:

      1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

Dated: June 30, 2003


                                                /s/ Jean-Rene Fourtou
                                                ----------------------------
                                                Jean-Rene Fourtou
                                                Chief Executive Officer

Dated: June 30, 2003
                                                /s/ Jacques Espinasse
                                                ----------------------------
                                                Jacques Espinasse
                                                Chief Financial Officer

*The foregoing certification is incorporated solely for purposes of complying
with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not
intended to be used for any other purpose. A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.