EX-99.(B)(1) 11 dex99b1.txt CREDIT AGREEMENT DATED 2/14/2002 Exhibit (b)(1) CONFORMED COPY AGREEMENT DATED 14th February, 2002 U.S.$300,000,000 CREDIT FACILITY FOR SMITH & NEPHEW PLC ARRANGED BY LLOYDS TSB CAPITAL MARKETS WITH LLOYDS TSB BANK plc as Facility Agent ALLEN & OVERY London INDEX
Clause Page 1. Interpretation........................................................ 1 2. Facilities............................................................ 14 3. Purpose............................................................... 14 4. The Offer............................................................. 15 5. Conditions Precedent.................................................. 19 6. Utilisation - Loans................................................... 19 7. Utilisation - Bills................................................... 20 8. Bills................................................................. 23 9. Optional Currencies................................................... 24 10. Repayment............................................................. 26 11. Prepayment and Cancellation........................................... 26 12. Interest.............................................................. 28 13. Terms................................................................. 29 14. Market Disruption..................................................... 30 15. Taxes................................................................. 30 16. Increased Costs....................................................... 33 17. Mitigation............................................................ 34 18. Payments.............................................................. 34 19. Representations....................................................... 36 20. Information Covenants................................................. 39 21. Financial Covenants................................................... 40 22. General Covenants..................................................... 43 23. Default............................................................... 47 24. The Administrative Parties............................................ 50 25. Evidence and calculations............................................. 55 26. Fees.................................................................. 55 27. Indemnities and Break Costs........................................... 56 28. Expenses.............................................................. 57 29. Amendments and Waivers................................................ 57 30. Changes to the Parties................................................ 59 31. Disclosure of Information............................................. 61 32. Set-off............................................................... 62 33. Pro rata Sharing...................................................... 62 34. Severability.......................................................... 63 35. Counterparts.......................................................... 63 36. Notices............................................................... 64 37. Language.............................................................. 65 38. Governing Law......................................................... 65 39. Enforcement........................................................... 65
Schedules 1. Original Parties.................................................. 67 2. Conditions Precedent Documents.................................... 68 3. Form of Request................................................... 69 4. Calculation of the Mandatory Cost................................. 70 5. Form of Transfer Certificate...................................... 72 6. Form of Compliance Certificate.................................... 73 7. Form of Bill...................................................... 74 8. Form of Syndication Agreement..................................... 75 9. Form of Power of Attorney for Bills............................... 88 10. Form of legal opinion of Allen & Overy............................ 87 Signatories................................................................ 90
THIS AGREEMENT is dated 14th February, 2002 BETWEEN: (1) SMITH & NEPHEW PLC (registered number 324357) (the "Company"); (2) LLOYDS TSB CAPITAL MARKETS as arranger (in this capacity the "Arranger"); (3) THE FINANCIAL INSTITUTION listed in Schedule 1 (Original Parties) as original lender (the "Original Lender"); and (4) LLOYDS TSB BANK plc as facility agent (in this capacity the "Facility Agent"). IT IS AGREED as follows: 1. Interpretation 1.1 Definitions In this Agreement: "Administrative Party" means the Arranger or the Facility Agent. "Affiliate" means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company. "Availability Period" means: (a) in the case of any Offer Loan, the period from and including the date of this Agreement to and including the date falling six months after the date of this Agreement; and (b) in the case of any Loan other than an Offer Loan, the period from and including the date of this Agreement to and including: (i) in the case of Facility A, the date falling 364 days after the date of this Agreement; and (ii) in the case of Facility B, the Final Maturity Date. "Bidco" means the wholly owned subsidiary of the Company that makes the Offer. 2 "Bill" means a Sterling bill of exchange substantially in the form of Schedule 7 (Form of Bill). "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 overdue amount is prepaid. "Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for general business in London and: (a) if on that day a payment in or a purchase of a currency (other than euro) is to be made, the principal financial centre of the country of that currency; or (b) if on that day a payment in or a purchase of euro is to be made, which is also a TARGET Day. "Commitment" means a Commitment, as so designated, of a Lender under a particular Facility. "Compliance Certificate" has the meaning given to it in Clause 20.2 (Compliance Certificate). "Credit" means a Loan or a Bill. "Default" means: (a) an Event of Default; or (b) an event which would be (with the expiry of a grace period or the giving of notice under the Finance Documents or any combination of them) an Event of Default. "euro" means the single currency of the Participating Member States. "EURIBOR" means for a Term of any Loan or overdue amount in euro: (a) the applicable Screen Rate; or (b) if no Screen Rate is available for that Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates as supplied to 3 the Facility Agent at its request quoted by the Reference Banks to leading banks in the European Interbank market, as of 11.00 a.m. (Brussels time) on the Rate Fixing Day for the offering of deposits in euro for a period comparable to that Term. "Event of Default" means an event specified as such in this Agreement. "Facilities" means Facility A and Facility B. "Facility A" means the multi-currency revolving credit and Sterling acceptance facility referred to in Clause 2.1 (Facility A). "Facility A Commitment" means: (a) for the Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "Facility A Commitment" and the amount of any other Facility A Commitment it acquires; and (b) for any other Lender, the amount of any other Facility A Commitment it acquires, to the extent not cancelled, transferred or reduced under this Agreement. "Facility A Margin" means the rate set out as the Facility A Margin in the Fee Letter between the Arranger and the Company. "Facility B" means the multi-currency revolving credit and Sterling acceptance facility referred to in Clause 2.2 (Facility B). "Facility B Commitment" means: (a) for the Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "Facility B Commitment" and the amount of any other Facility B Commitment it acquires; and (b) for any other Lender, the amount of any other Facility B Commitment it acquires, to the extent not cancelled, transferred or reduced under this Agreement. 4 "Facility B Margin" means 0.40 per cent. per annum. "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' notice, as the office(s) through which it will perform its obligations under this Agreement. "Fee Letter" means any letter entered into by reference to this Agreement between one or more Administrative Parties and the Company setting out the amount of certain fees referred to in this Agreement. "Final Maturity Date" means the fifth anniversary of the date of this Agreement. "Finance Document" means: (a) this Agreement; (b) a Fee Letter; (c) a Bill; (d) a Transfer Certificate; (e) the Syndication Agreement; (f) the Syndication Letter; and (g) any other document designated as such by the Facility Agent and the Company. "Finance Party" means a Lender or an Administrative Party. "Financial Indebtedness" means any indebtedness (without double counting) for or in respect of: (a) moneys borrowed; (b) any acceptance credit; 5 (c) any bond, note, debenture, loan stock or other similar instrument; (d) any finance or capital lease as defined in accordance with the accounting principles applied in connection with the Original Financial Statements; (e) receivables sold or discounted (otherwise than on a non-recourse basis); (f) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; (g) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and at any time the then marked to market value of the derivative transaction will be used to calculate its amount, such marked to market value being determined by reference to the documentation of that transaction or, if there is no such provision in the documentation, determined by the Company acting reasonably and on the basis of quotations from the relevant counterparty); (h) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; (i) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or (j) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above. "Group" means the Company and its Subsidiaries. "Holding Company" means a holding company within the meaning of section 736 of the Companies Act 1985. "IBOR" means LIBOR or EURIBOR. "Increased Cost" means: (a) an additional or increased cost; (b) a reduction in the rate of return under a Finance Document or on the overall capital of a Finance Party or any of its Affiliates; or (c) a reduction of an amount due and payable under any Finance Document, which is incurred or suffered by a Finance Party or any of its Affiliates but only to the extent attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document. 6 "Lender" means: (a) an Original Lender; or (b) any person which becomes a Lender after the date of this Agreement. "LIBOR" means for any Loan or overdue amount: (a) the applicable Screen Rate; or (b) if no Screen Rate is available for the relevant currency or Term of that Loan or overdue amount, 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 London interbank market, as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the currency of that Loan or overdue amount for a period comparable to its Term. "Loan" means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing. "Majority Lenders" means, at any time, at least three Lenders: (a) whose share in the outstanding Credits and whose undrawn Commitments then aggregate 66 2/3 per cent. or more of the aggregate of all the Credits and the undrawn Commitments of all the Lenders; (b) if there is no Credit then outstanding, whose undrawn Commitments then aggregate 66 2/3 per cent. or more of the Total Commitments; or (c) if there is no Credit then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 66 2/3 per cent. or more of the Total Commitments immediately before the reduction. "Mandatory Cost" means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost). "Margin" means the Facility A Margin or the Facility B Margin, as the case may be. 7 "Material Adverse Effect" means a material adverse effect on the ability of the Company to comply with its payment obligations under this Agreement and its obligations under Clause 21.3 (Gearing) and Clause 21.4 (Interest cover/Cashflow). "Material Subsidiary" means, at any time, a Subsidiary of the Company: (a) whose gross assets (excluding intra-Group items) then equal or exceed 15 per cent. of the gross assets of the Group; or (b) whose earnings before interest and tax (excluding intra-Group items) then equal or exceed 15 per cent. of the earnings before interest and tax of the Group. For this purpose: (i) the gross assets or earnings before interest and tax of a Subsidiary of the Company will be determined from its financial statements (consolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group have been based; (ii) if a Subsidiary of the Company becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the gross assets or earnings before interest and tax of that Subsidiary will be determined from its latest financial statements; (iii) the gross assets or earnings before interest and tax of the Group will be determined from its latest audited financial statements, adjusted (where appropriate) to reflect the gross assets or earnings before interest and tax of any company or business subsequently acquired or disposed of; and (iv) if a Material Subsidiary disposes of all or substantially all of its assets to another Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not. If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of the Company will be, in the absence of manifest error, conclusive. "Maturity Date" means, for a Credit, the last day of its Term. "Merger" means the merger of Bidco with and into the Target on the terms set out in the Merger Agreement. 8 "Merger Agreement" means the Agreement and Plan of Merger dated on or about the date of this Agreement between Bidco, Target and Smith & Nephew Inc., as the same may be amended or revised from time to time (with the consent of the Majority Lenders if required under this Agreement). "Offer" means the tender offer for the Shares made by Bidco on the terms and conditions referred to in the Merger Agreement and set out in the Offer Documents. "Offer Documents" means the offer to purchase, related materials, including the letter of transmittal to be used for tendering shares, the solicitation/recommendation statement on Schedule 14D-9, and the exhibits thereto, to be filed with the SEC with respect to the Offer. "Offer Expiry Date" means the date upon which the Offer lapses, terminates or is withdrawn. "Offer Loan" means any Loan the purpose of which is to finance directly or indirectly the acquisition of Shares tendered into the Offer. "Original Financial Statements" means the audited consolidated financial statements of the Company for the year ended 31st December, 2000. "Participating Member State" means a member state of the European Communities that adopts the euro as its lawful currency under the legislation of the European Union for European Monetary Union. "Party" means a party to this Agreement. "Power of Attorney" means a power of attorney, substantially in the form of Schedule 9 (Form of Power of Attorney) or in any other form agreed by the Company and the Facility Agent. "Pro Rata Share" means on a particular date: (a) the proportion which a Lender's share of the Credits (if any) bears to all the Credits; 9 (b) if there is no Credit outstanding on that date, the proportion which its Commitment bears to the Total Commitments on that date; (c) if the Total Commitments have been cancelled, the proportion which its Commitments bore to the Total Commitments immediately before being cancelled; or (d) when the term is used in relation to a Facility, the above proportions but applied only to the Credits and Commitments for that Facility. For the purpose of paragraph (d) above, the Facility Agent will determine whether the term in any case relates to a particular Facility. "Rate Fixing Day" means: (a) the first day of a Term for a Loan denominated in Sterling; (b) the second Business Day before the first day of a Term for a Loan denominated in any other currency (other than euros); or (c) the second TARGET Day before the first day of a Term for a Loan denominated in euros, or such other day as the Facility Agent determines is generally treated as the rate fixing day by market practice in the relevant interbank market. "Reference Banks" means Lloyds TSB Bank plc and any other bank or financial institution agreed by the Facility Agent and the Company under this Agreement. "Repeating Representations" means the representations which are deemed to be repeated under this Agreement. "Request" means a request for a Credit, substantially in the form of Schedule 3 (Form of Request). "Rollover Loan" means one or more Loans: (a) to be made on the same day that a maturing Loan is due to be repaid; (b) the aggregate amount of which is equal to or less than the maturing Loan; (c) in the same currency as the maturing Loan; and (d) to be made for the purpose of refinancing a maturing Loan. 10 "Screen Rate" means; (a) for LIBOR, the British Bankers Association Interest Settlement Rate (if any); and (b) for EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union, for the relevant currency and Term displayed on the appropriate page of the Telerate screen selected by the Facility Agent. If the relevant page is replaced or the service ceases to be available, the Facility Agent (after consultation with the Company and the Lenders) may specify another page or service displaying the appropriate rate. "SEC" means the United States Securities and Exchange Commission. "Shares" means all the outstanding common stock of the Target (including any stock of the Target issued or to be issued whilst the Offer remains open for acceptance). "Sterling" or "(pound)" means the lawful currency for the time being of the United Kingdom. "Subsidiary" means: (a) a subsidiary within the meaning of section 736 of the Companies Act 1985; and (b) for the purposes of Clause 20 (Financial covenants), unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985. "Syndication" means the primary syndication by the Arranger of the Facilities. "Syndication Agreement" means an agreement between the Company and the Finance Parties for the purpose of incorporating New Lenders (as defined in Clause 29.3 (Assignments and transfers by Lenders)) in Syndication substantially in the form set out in Schedule 8. "Syndication Letter" means a letter dated the date of this Agreement from the Arranger to the Company in respect of the primary syndication of the Facilities and other related matters. 11 "Target" means Oratec Interventions, Inc., a company incorporated under the laws of the State of Delaware. "TARGET Day" means a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer payment system 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 related penalty or interest). "Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document. "Tax Payment" means a payment made by the Company to a Finance Party in any way relating to a Tax Deduction. "Term" means each period determined under this Agreement: (a) by reference to which interest on a Loan or an overdue amount is calculated; or (b) for which a Bill is to be outstanding. "Total A Commitments" means the aggregate of the Facility A Commitments of all the Lenders, being the total amount specified as such in Schedule 1 (Original Parties) at the date of this Agreement. "Total B Commitments" means the aggregate of the Facility B Commitments of all the Lenders, being the total amount specified as such in Schedule 1 (Original Parties) at the date of this Agreement. "Total Commitments" means the aggregate of the Commitments of all the Lenders. "Transaction Documents" means the Finance Documents, the Offer Documents and the Merger Agreement. 12 "Transfer Certificate" means a certificate in the form of Schedule 5 (Form of Transfer Certificate) with such amendments as the Facility Agent may approve or reasonably require or any other form agreed between the Facility Agent and the Company. "U.K." means the United Kingdom. "U.S. Dollars" or "U.S.$" means the lawful currency for the time being of the United States of America. "Utilisation Date" means the date on which any Facility is utilised. 1.2 Construction (a) In this Agreement, unless the contrary intention appears, a reference to: (i) an "amendment" includes a supplement, novation, restatement 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; "indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money; a "person" includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality; a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; (ii) a currency is a reference to the lawful currency for the time being of the relevant country; (iii) a Default being "outstanding" means that it has not been remedied or waived; (iv) a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation; 13 (v) a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement; (vi) a person includes its successors in title, permitted assigns and permitted transferees; (vii) a Finance Document or another document is a reference to that Finance Document or other document as amended; and (viii) a time of day is a reference to London time. (b) Unless the contrary intention appears, a reference to a "month" or "months" 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 or the calendar month in which it is to end, except that: (i) if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not); (ii) if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and (iii) notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the calendar month in which it is to end. (c) (i) 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. (ii) 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. (d) A reference to a Party will not include that Party if it has ceased to be a Party under this Agreement. (e) Unless the contrary intention appears: (i) a term used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement; (ii) any non-payment obligation of the Company under the Finance Documents remains in force for so long as any payment obligation is or may be outstanding under the Finance Documents; (iii) the headings in this Agreement do not affect its interpretation; and (iv) if there is an inconsistency between this Agreement and any other Finance Document, the other Finance Document will prevail. 14 2. FACILITIES 2.1 Facility A (a) Subject to the terms of this Agreement, the Lenders make available to the Company a multi-currency revolving credit facility in an aggregate amount equal to the Total A Commitments. (b) Facility A may also be utilised by way of Bills. 2.2 Facility B (a) Subject to the terms of this Agreement, the Lenders make available to the Company a multi-currency revolving credit facility in an aggregate amount equal to the Total B Commitments. (b) Facility B may also be utilised by way of Bills. 2.3 Nature of a Finance Party's rights and obligations Unless otherwise agreed by all the Finance Parties: (a) the obligations of a Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations does not affect the obligations of any other Party under the Finance Documents; nNo Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents; and (b) the rights of a Finance Party under the Finance Documents are separate and independent rights, and a debt arising under the Finance Documents to a Finance Party is a separate and independent debt; a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights. 3. PURPOSE 3.1 Credits Each Credit may only be used in or towards the financing or refinancing of: (a) the acquisition by Bidco of the Shares pursuant to the Offer; (b) the purchase of any share options over the Shares purchased in connection with the Offer; (c) the fees, costs and expenses associated with the Offer, and for the general corporate purposes of the Group, including (without limitation) financing the acquisition of assets or businesses, share buy-backs or special dividend payments. 3.2 No obligation to monitor No Finance Party is bound to monitor or verify the utilisation of any Facility. 15 4. THE OFFER 4.1 Defined terms In this Subclause: "Certain Funds Period" means the period beginning on the date of this Agreement and ending on the earliest of: (a) the date on which Bidco has paid the consideration monies for all the Shares subject to the Offer to the entity acting as depositary; (b) the date on which the Merger has been completed in accordance with the terms of the Merger Agreement; (c) the date falling 6 months after the date of this Agreement; and (d) the date falling 7 days after the date of this Agreement unless the Company has issued the Press Release. "Clean-Up Period" means the period commencing on the earlier of: (a) the date on which Target becomes a Subsidiary of the Company; and (b) the date on which the Merger completes in accordance with the Merger Agreement, and ending on the date which is 120 days after that date. "Closing Date" means the date on which the Offer expires (being either its scheduled expiration date or any extended expiration date) and on which there have been validly tendered in accordance with the terms of the Offer and not withdrawn, a number of shares of the common stock of the Target that, together with the shares then beneficially owned by the Company, represent at least a majority of the shares of the common stock of the Target on a fully diluted basis. "Major Breach" means a breach of: (a) Clause 22.4 (Pari passu ranking); (b) Clause 22.5 (Negative pledge); (c) Clause 22.6 (Disposals); (d) Clause 22.7 (Financial Indebtedness); (e) Clause 22.9 (Mergers); or 16 (f) Clause 4 (The Offer). "Major Default" means any of the following Events of Default: (a) Clause 23.2 (Non-payment); (b) Clause 23.3 (Breach of other obligations) but only insofar as it relates to a Major Breach; (c) Clause 23.4 (Misrepresentation) but only insofar as it relates to a Major Representation; (d) Clauses 23.6 (Insolvency) and 23.7 (Insolvency proceedings); or (e) Clause 23.10 (Effectiveness of Finance Documents). "Major Representation" means any of the following representations contained in this Agreement: (a) 19.2 (Status); (b) 19.3 (Powers and authority); (c) 19.4 (Legal validity); or (d) 19.5 (Non conflict). "Press Release" means the press release to be made by or on behalf of the Company announcing the Offer. "Target Group" means the Target and its Subsidiaries. 4.2 Press releases Unless required by any law or regulation or to give effect to the Offer, the Company must not make any statement or announcement (other than the Press Release) containing any information or statement concerning the Finance Documents or the Finance Parties without the prior approval of the Arranger. The approval of the Arranger must not be unreasonably withheld or delayed. 4.3 Additional conditions precedent (a) A Request for an Offer Loan may not be given until the Facility Agent has notified the Company and the Lenders that it has received all of the documents and evidence set out in paragraph (b) below. The Facility Agent must give this notification as soon as reasonably practicable. 17 (b) The documents and evidence referred to in paragraph (a) above are as follows: (i) the Press Release, substantially in the form agreed by the Facility Agent on or prior to the date of this Agreement; (ii) the Merger Agreement, in a form which substantially reflects the Press Release; (iii) a copy of any subsequent amendment to the Merger Agreement; (iv) a certificate from the Company confirming that: (A) the Closing Date has occurred; (B) no material term or condition of the Offer has been waived or amended in any respect other than as may be permitted in accordance with this Agreement; (C) all conditions of the Offer have been satisfied, except to the extent waived in accordance with sub-paragraph (B) above; and (D) the Merger Agreement is in full force and effect and has not been terminated; (v) evidence that all necessary filings have been made, clearances have been obtained, or relevant waiting or other time periods under any applicable law or regulation of any jurisdiction (including the U.S. Hart-Scott Rodino Anti-Trust Improvement Act of 1976) have expired, lapsed or terminated; and (vi) evidence that all other necessary authorisations or requirements of the SEC in connection with the Offer have been obtained. 4.4 Certain Funds (a) Notwithstanding any term of this Agreement, during the Certain Funds Period no Lender is entitled to: (i) refuse to participate in or make available any Offer Loan; (ii) cancel its Commitment; (iii) exercise any right of rescission or similar right or remedy which it may have in relation to any Offer Loan; or (iv) accelerate or cause repayment of any Offer Loan, except as provided below in this Subclause. (b) Paragraph (a) does not apply if the entitlement arises because: (i) the Company has not delivered all of the documents required under this Clause or Schedule 2 (Conditions precedent documents); (ii) a Major Representation is not correct or will not be correct immediately after the Offer Loan is made; 18 (iii) a Major Default is outstanding or will result from the making of the Offer Loan; or (iv) it is unlawful for the Lender to perform any of its obligations under the Finance Documents. (c) Nothing in this Subclause will affect the rights of any Finance Party in respect of any outstanding Default upon expiry of the Certain Funds Period irrespective of whether that Default occurred during the Certain Funds Period or not. 4.5 Clean-Up Period Notwithstanding any term of this Agreement, during the Clean-Up Period references to the Group or any member of the Group in the following Subclauses will not include any company which is a member of the Target Group as at the Closing Date: (a) Clause 4 (The Offer); (b) Clause 22.5 (Negative pledge); (c) Clause 22.6 (Disposals); (d) Clause 22.7 (Financial Indebtedness); (e) Clause 22.10 (Environmental matters); (f) Clause 22.11 (Insurance); and (g) Clause 23.5 (Cross-default). 4.6 Compliance The Company must ensure that Bidco complies, in all material respects with all rules and regulations of the SEC applicable to the Offer and the Merger and all other laws and regulations applicable to the Offer and the Merger. 4.7 Information The Company must promptly supply to the Facility Agent: (a) copies of all material documents, notices or announcements received or issued by it in relation to the Offer after the date of this Agreement; and (b) any other information regarding the Offer as the Facility Agent may reasonably request. 4.8 Increase in Offer (a) Except as provided below, except with the prior consent of the Arranger the Company must not increase the purchase price for the Shares specified in the Press Release for the Shares. (b) Paragraph (a) above does not apply to any increase in the purchase price for the Shares equal to 15 per cent. or less of the purchase price for the Shares specified in the Press Release. 19 4.9 Amendments and waivers of the Offer (a) Except as provided below, the Company must not waive or amend any condition of the Offer in any material respect without the consent of the Majority Lenders. (b) Paragraph (a) above does not apply to: (i) any amendment to the purchase price for the Shares permitted under Clause 4.8 (Increase in Offer); or (ii) any extension of the time period within which the Offer may be accepted provided that such time period does not extend beyond the date falling six months after the date of this Agreement. 5. CONDITIONS PRECEDENT 5.1 Conditions precedent documents A Request may not be given until the Facility Agent has notified the Company and the Lenders that it has received all of the documents and evidence set out in Schedule 2 (Conditions precedent documents) in form and substance satisfactory to the Facility Agent. The Facility Agent must give this notification as soon as reasonably practicable. 5.2 Further conditions precedent The obligations of each Lender to participate in any Credit are subject to the further conditions precedent that on both the date of the Request and the Utilisation Date for that Credit: (a) the Repeating Representations are correct in all material respects; and (b) no Event of Default and, in the case of a Loan other than a Rollover Loan, no Default, is outstanding or would result from the Credit. 5.3 Maximum number Unless the Facility Agent agrees, a Request may not be given if, as a result, there would be more than 30 Credits outstanding. 6. UTILISATION - LOANS 6.1 Giving of Requests (a) The Company may borrow a Loan by giving to the Facility Agent a duly completed Request. (b) Unless the Facility Agent otherwise agrees and subject to Clause 7.6(a) (Revocation), the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m. one Business Day before the Rate Fixing Day for the proposed borrowing. (c) Each Request is irrevocable. 20 6.2 Completion of Requests A Request will not be regarded as having been duly completed unless: (a) it identifies the Facility the Loan applies to; (b) the Utilisation Date is a Business Day falling within the relevant Availability Period for that Loan; and (c) the proposed currency, amount and Term comply with this Agreement. Only one Loan may be requested in a Request. 6.3 Amount of Loan (a) Except as provided below, the amount of the Loan must be a minimum of U.S.$5,000,000 and an integral multiple of U.S.$1,000,000, or their equivalents in accordance with Clause 9 (Optional Currencies). (b) The amount of the Loan may also be the balance of the relevant undrawn Total Facility Commitments or such other amount as the Facility Agent or the Lenders may agree. (c) For this purpose, "Total Facility Commitments" means the aggregate of the Commitments of all the Lenders under a Facility. (d) The amount of each Lender's share of the Loan will be its Pro Rata share Share on the proposed Utilisation Date. 6.4 Advance of Loan (a) The Facility Agent must promptly notify each Lender of the details of the requested Loan and the amount of its share in that Loan. (b) No Lender is obliged to participate in a Loan if as a result: (i) its share in the Credits under a Facility would exceed its Commitment for that Facility; or (ii) the Credits would exceed the Total Commitments. (c) If the conditions set out in this Agreement have been met, each Lender must make its share in the Loan available to the Facility Agent for the Company on the Utilisation Date. 7. UTILISATION - BILLS 7.1 Giving of Requests (a) The Company may draw Bills by giving to the Facility Agent a duly completed Request. (b) Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m. one Business Day before the proposed Utilisation Date. 21 (c) Each Request is irrevocable. 7.2 Completion of Requests A Request for Bills will not be regarded as being duly completed unless: (a) it specifies that it is for Bills; (b) the Utilisation Date is a Business Day falling within the Availability Period; (c) the amount requested is: (i) a minimum of(pound)3,000,000; (ii) in respect of Facility A, the balance of the undrawn Total A Commitments; (iii) in respect of Facility B, the balance of the undrawn Total B Commitments; or (iv) such other amount as the Facility Agent or the Lenders may agree; and (d) only one Term is specified which: (i) does not overrun the last day of the applicable Availability Period; and (ii) is a period of between 14 and 187 days. 7.3 Amount of Bills The aggregate principal amount of the Bills to be accepted by a Lender will be its Pro Rata Share of those Bills on the proposed Utilisation Date. 7.4 Acceptance of Bills (a) The Facility Agent must promptly: (i) notify each Lender of the details of the requested Bills and the aggregate principal amount of the Bills to be accepted by t; and (ii) send to each Lender Bills completed in accordance with this Agreement. (b) No Lender is obliged to accept any Bill if, as a result: (i) its share in the Credits under a Facility would exceed its Commitment for that Facility; or (ii) the Credits would exceed the Total Commitments. (c) Subject to Clause 7.7 (Loans as an alternative), if the conditions set out in this Agreement have been met, each Lender must accept the Bills sent to it under paragraph (a) above. 22 7.5 Payment of proceeds (a) The Facility Agent must, not later than 11.30 a.m. on the applicable Utilisation Date, notify the Company and each Lender of the applicable EBDR. (b) "EBDR" means the arithmetic mean (rounded upwards to four decimal places) of the rates supplied by the Reference Banks to the Facility Agent as its request at or about 10.30 a.m. on the applicable Utilisation Date) at which Sterling bills eligible for rediscounting at the Bank of England of an equivalent tenor can be discounted in the London discount market at or about that time. (c) Subject to the terms of this Agreement, each Lender must pay to the Facility Agent for the Company an amount equal to: (i) the amount which the Lender would have received as the proceeds of discounting if it had discounted the Bills accepted by it at the applicable EBDR; less (ii) acceptance commission calculated, at any time, at a rate equal to the then applicable Margin and on the aggregate principal amount of those Bills. (d) Acceptance commission is calculated on the basis of the number of days in the relevant Term and a year of 365 days. 7.6 Revocation (a) If no or only one Reference Bank supplies a rate in accordance with Clause 7.5 (Payment of proceeds) by 11.30 a.m. on the Utilisation Date; or (b) if the Facility Agent determines that any Bills do not comply with the then current Bank of England regulations for Sterling bankers' acceptances, then: (i) the Facility Agent must promptly notify the Company; and (ii) the relevant Bills will not be accepted. (c) If either of the events referred to in paragraph (a) or (b) occurs, the Company shall be entitled to deliver a Request for a Loan in Sterling in a principal amount equal to the aggregate principal amount of the Bills which it would otherwise have been obliged to accept under this Clause and for a Term equal to the Term of those Bills. Such Request shall be delivered by no later than 5.00 p.m. on the day on which the Facility Agent has given the notification to the Company under sub-paragraph (i) above and shall specify a Utilisation Date for that Loan which is no earlier than the Business Day following the date on which that Request is delivered (or if such notification is received by the Company after 4.30 p.m. on that day, the Request may be delivered by no later 9.15 a.m. on the next succeeding Business Day and the Utilisation Date can be the same date as that Request). 7.7 Loans as an alternative (a) If as a result of any law or regulation, a Lender (acting reasonably) determines that it may not be able to accept any Bills or to discount Bills at EBDR, then it may notify the Facility Agent by no later than 4.00 p.m. on the Business Day before the proposed Utilisation Date that, subject to paragraph (b) below, it elects not to accept any Bills. 23 (b) If a Lender notifies the Facility Agent under paragraph (a) above, then, subject to the terms of this Agreement, the Lender must instead make a Loan in Sterling on the relevant Utilisation Date in a principal amount equal to the aggregate principal amount of the Bills which it would otherwise have been obliged to accept under this Clause and for a Term equal to the Term of those Bills. 8. BILLS 8.1 Repayment/prepayment (a) The Company repays or prepays a Bill drawn by it by paying an amount equal to the principal amount of that Bill to the Facility Agent for the Lender that accepted that Bill. (b) A reference in this Agreement to: (i) a principal amount of a Bill will be construed as a reference to its face amount; (ii) to a Lender's share in the Credits includes all outstanding Bills accepted by that Lender; and (iii) amounts outstanding under this Agreement includes the face amount of any outstanding Bill. 8.2 Holding and completion of Bills (a) The Company must ensure that the Facility Agent has a Power of Attorney which is in full force and effect, before delivering a Request for Bills. (b) If the Power of Attorney is then still in force, the Facility Agent must, subject to the terms of this Agreement: (i) on behalf of the Company, draw and endorse sufficient Bills to fulfil each Request for Bills; (ii) date each such Bill with its Utilisation Date; (iii) insert in each such Bill the name of the Lender on which it is drawn, its face amount and its Maturity Date; and (iv) send the requisite number of completed Bills to the Lenders for acceptance under this Agreement. 8.3 Rounding The Facility Agent may round the principal amount of the Bills to be accepted by each Lender to ensure that each Bill has a principal amount of an integral multiple of (pound)10,000, being not less than (pound)250,000 nor more than (pound)5,000,000. 8.4 Discounting Each Lender may arrange for a Bill accepted by it to be discounted on its behalf in the London discount market or elsewhere or discount the Bill itself. 24 8.5 Eligible Bills The Company must ensure that each Bill drawn by it and accepted by a Lender is, assuming that the accepting Lender is a bank whose acceptances are then being treated as eligible acceptances by the Bank of England, eligible for rediscounting at the Bank of England. 9. OPTIONAL CURRENCIES 9.1 General In this Clause: (a) "Agent's Dollar Rate of Exchange" means the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with U.S. Dollars at or about 11.00 a.m. on a particular day. (b) "Committed Currency" means Sterling, euro, Yen and Swiss Francs. (c) "Optional Currency" means any currency (other than U.S. Dollars) in which a Loan may be denominated under this Agreement. 9.2 Selection (a) The Company may select the currency of a Loan in its Request. (b) Unless the Facility Agent otherwise agrees, the Loans may not be denominated at any one time in more than 10 currencies. 9.3 Conditions relating to Optional Currencies (a) A Loan may be denominated in an Optional Currency for a Term if: (i) that Optional Currency is readily available in the amount required and freely convertible into U.S. Dollars in the relevant interbank market on the Rate Fixing Day and the first day of that Term; and (ii) that Optional Currency is euro, Sterling, Yen, Swiss Francs or has been previously approved by the Facility Agent (acting on the instructions of all the Lenders). (b) If the Facility Agent has received a request from the Company for a currency to be approved as an Optional Currency, the Facility Agent must, within five Business Days, confirm to the Company: (i) whether or not the Lenders have given their approval; and (ii) if approval has been given, the minimum amount (and, if required, integral multiples) for any Loan in that currency. 25 (c) If the euro is an Optional Currency at any time, a Loan in that Optional Currency will only be made available in the euro unit. 9.4 Revocation of currency (a) Notwithstanding any other term of this Agreement, if before 9.30 a.m. on any Rate Fixing Day the Facility Agent receives notice from a Lender that: (i) the Optional Currency (other than a Committed Currency) requested is not readily available to it in the relevant interbank market in the amount and for the period required; or (ii) participating in a Loan in the proposed Optional Currency might contravene any law or regulation applicable to it, the Facility Agent must give notice to the Company to that effect promptly and in any event before 11.00 a.m. on that day. (b) In this event: (i) that Lender must participate in a Loan in U.S. Dollars; and (ii) the share of that Lender in the Loan and any other similarly affected Lender(s) will be treated as a separate Loan denominated in U.S. Dollars during that Term. (c) Any part of a Loan treated as a separate Loan under this Subclause will not be taken into account for the purposes of any limit on the number of Loans or currencies outstanding at any one time. (d) A Loan will still be treated as a Rollover Loan if it is not denominated in the same currency as the maturing Loan by reason only of the operation of this Subclause. 9.5 Optional Currency equivalents (a) The equivalent in U.S. Dollars of a Loan or part of a Loan in an Optional Currency for the purposes of calculating: (i) whether any limit under this Agreement has been exceeded; (ii) the amount of a Loan; (iii) the share of a Lender in a Loan; (iv) the amount of any repayment of a Loan; or (v) the undrawn amount of a Lender's Commitment, is its Dollar Amount. (b) The "Dollar Amount" of a Loan or part of a Loan means: (i) if the Loan is denominated in U.S. Dollars, its amount; or 26 (ii) if the Loan is denominated in an Optional Currency for a Term, its equivalent in U.S. Dollars calculated on the basis of the Agent's Dollar Rate of Exchange one Business Day before the Rate Fixing Day for that Term. 9.6 Notification The Facility Agent must notify the Lenders and the Company of the relevant Dollar Amount (and the applicable Agent's Dollar Rate of Exchange) promptly after they are ascertained. 10. REPAYMENT 10.1 Repayment of Loans (a) The Company must repay each Loan in full on its Maturity Date. (b) Subject to the other terms of this Agreement, any amounts repaid under paragraph (a) above may be re-borrowed or redrawn (whether as a Loan or a Bill or both). 10.2 Payment of Bills (a) The Company must pay an amount equal to the principal amount of each Bill on its Maturity Date. (b) Subject to the other terms of this Agreement, any amounts repaid under paragraph (a) above may be re-borrowed or redrawn (whether as a Loan or a Bill or both). 11. PREPAYMENT AND CANCELLATION 11.1 Mandatory prepayment - illegality (a) A Lender must notify the Company promptly if it becomes aware that it is unlawful in any jurisdiction for that Lender to perform any of its obligations under a Finance Document or to fund or maintain its share in any Credit. (b) After notification under paragraph (a) above: (i) the Company must repay or prepay the share of that Lender in each Credit on the date specified in paragraph (c) below; and (ii) the Commitments of that Lender will be immediately cancelled. (c) The date for repayment or prepayment of a Lender's share in a Credit will be: (i) within three Business Days following receipt by the Company of notice from the Facility Agent; or (ii) if allowed by the relevant law, the last day of the current Term of that Credit. 11.2 Mandatory prepayment - change of control (a) The Company must promptly notify the Facility Agent if it becomes aware of any person or group of persons acting in concert which acquires control of the Company. 27 (b) After notification under paragraph (a) above, each Lender may by notice to the Company: (i) cancel its Commitments; and (ii) demand that its participation in all outstanding Credits, together with accrued interest and all other amounts accrued under the Finance Documents be immediately due and payable. Any such notice will take effect in accordance with its terms. (c) In paragraph (a) above: "control" has the meaning given to it in section 416 of the Income and Corporation Taxes Act 1988; and "acting in concert" has the meaning given to it in the City Code on Takeovers and Mergers. 11.3 Voluntary prepayment (a) The Company may, by giving not less than 5 Business Days' prior notice to the Facility Agent, prepay any Credit at any time in whole or in part. (b) A prepayment of part of a Credit must be in a minimum amount of U.S.$5,000,000 (or its equivalent) and an integral multiple of U.S.$1,000,000 (or its equivalent). 11.4 Automatic cancellation The Commitment of each Lender will be automatically cancelled at the close of business on the last day of the relevant Availability Period. 11.5 Voluntary cancellation (a) The Company may, by giving not less than 5 Business Days' prior notice to the Facility Agent, cancel the unutilised amount of the Commitments in respect of a specified Facility in whole or in part. (b) Partial cancellation of the Commitments under a specified Facility must be in a minimum amount of U.S.$5,000,000 and an integral multiple of U.S.$1,000,000. (c) Any cancellation in part will be applied against the Commitment of each Lender pro rata. 11.6 Involuntary prepayment and cancellation (a) If the Company is, or will be, required to pay to a Lender a Tax Payment or an Increased Cost, the Company may, while the requirement continues, give notice to the Facility Agent requesting prepayment and cancellation in respect of that Lender. (b) After notification under paragraph (a) above: (i) the Company must repay or prepay that Lender's share in each Credit made to it on the date specified in paragraph (c) below; and (ii) the Commitments of that Lender will be immediately cancelled. 28 (c) The date for repayment or prepayment of a Lender's share in a Credit will be the last day of the current Term for that Credit or, if earlier, the date specified by the Company in its notification. 11.7 Re-borrowing of Loans and Bills Any voluntary prepayment of a Loan or Bill may be re-borrowed on the terms of this Agreement. Any mandatory or involuntary prepayment of a Loan or Bill may not be re-borrowed. 11.8 Miscellaneous provisions (a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s) and the affected Credits and Commitments. The Facility Agent must notify the Lenders promptly of receipt of any such notice. (b) All prepayments under this Agreement must be made with accrued interest on the amount prepaid. No premium or penalty is payable in respect of any prepayment except for Break Costs. (c) The Majority Lenders may agree a shorter notice period for a voluntary prepayment or a voluntary cancellation. (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. 12. INTEREST 12.1 Calculation of interest The rate of interest on each Loan for each Term is the percentage rate per annum equal to the aggregate of the applicable: (a) Margin; (b) LIBOR or (in the case of a Loan denominated in euro) EURIBOR; and (c) Mandatory Cost. 12.2 Payment of interest Except where it is provided to the contrary in this Agreement, the Company must pay accrued interest on each Loan made to it on the last day of each Term and also, if the Term is longer than six months, on the dates falling at six-monthly intervals after the first day of that Term. 12.3 Interest on overdue amounts (a) If the Company fails to pay any amount payable by it under the Finance Documents, it must immediately on demand by the Facility Agent pay interest on the overdue amount from its due date up to the date of actual payment, both before, and after judgment. 29 (b) Interest on an overdue amount is payable at a rate determined by the Facility Agent to be one per cent. per annum above 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 this purpose, the Facility Agent may (acting reasonably): (i) select successive Terms of any duration of up to three months; and (ii) determine the appropriate Rate Fixing Day for that Term. (c) Notwithstanding paragraph (b) above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Term, then: (i) the first Term for that overdue amount will be the unexpired portion of that Term; and (ii) the rate of interest on the overdue amount for that first Term will be 1 per cent. per annum above the rate then payable on that Loan. After the expiry of the first Term for that overdue amount, the rate on the overdue amount will be calculated in accordance with paragraph (b) above. (d) Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable. 12.4 Notification of rates of interest The Facility Agent must promptly notify each relevant Party of the determination of a rate of interest under this Agreement. 13. TERMS 13.1 Selection (a) Each Loan has one Term only. (b) The Company will select the Term for a Loan in the relevant Request. (c) Subject to the following provisions of this Clause, each Term for a Loan will be one, two, three or six months or any other period agreed by the Company and the Lenders. 13.2 No overrunning the Final Maturity Date If a Term would otherwise overrun the Final Maturity Date, it will be shortened so that it ends on the Final Maturity Date. 13.3 Other adjustments The Facility Agent and the Company may enter into such other arrangements as they may agree for the adjustment of Terms and the consolidation and/or splitting of Loans. 13.4 Notification The Facility Agent must notify the Company and the Lenders of the duration of each Term promptly after ascertaining its duration. 30 14. MARKET DISRUPTION 14.1 Failure of a Reference Bank to supply a rate If IBOR is to be calculated by reference to the Reference Banks but a Reference Bank does not supply a rate by 12.00 noon (local time) on a Rate Fixing Day, the applicable IBOR will, subject as provided below, be calculated on the basis of the rates of the remaining Reference Banks. 14.2 Market disruption (a) In this Clause, each of the following events is a "market disruption event": (i) IBOR is to be calculated by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 12.00 noon (local time) on the Rate Fixing Day; or (ii) the Facility Agent receives by close of business on the Rate Fixing Day notification from Lenders whose shares in the relevant Loan exceed 50 per cent. of that Loan that the cost to them of obtaining matching deposits in the relevant interbank market is in excess of IBOR for the relevant Term. (b) The Facility Agent must promptly notify the Company and the Lenders of a market disruption event. (c) After notification under paragraph (b) above, the rate of interest on each Lender's share in the affected Loan for the relevant Term will be the aggregate of the applicable: (i) Margin; (ii) rate notified to the Facility Agent by that Lender as soon as practicable to be that which expresses as a percentage rate per annum the cost to that Lender of funding its share in that Loan from whatever source it may reasonably select; and (iii) Mandatory Cost. 14.3 Alternative basis of interest or funding (a) If a market disruption event occurs and the Facility Agent or the Company so requires, the Company and the Facility Agent must enter into negotiations for a period of not more than thirty (30) days with a view to agreeing an alternative basis for determining the rate of interest and/or funding for the affected Loan and any future Loan. (b) Any alternative basis agreed will be, with the prior consent of all the Lenders, binding on all the Parties. 15. TAXES 15.1 General In this Clause: 31 "Qualifying Lender" means a Lender which is: (a) a U.K. Lender; or (b) a Treaty Lender. "Tax Credit" means a credit against any Tax or any relief or remission for Tax (or its repayment). "Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document. "Treaty Lender" means a Lender which, on the date a payment of interest falls due under this Agreement: (a) is resident (as defined in the appropriate double taxation agreement) in a country with which the U.K. has a double taxation agreement giving residents of that country exemption from U.K. taxation on interest; and (b) does not carry on a business in the U.K. through a permanent establishment with which the payment is effectively connected. "U.K. Lender" means a Lender which is within the charge to U.K. corporation tax in respect of, and beneficially entitled to, a payment of interest on a Loan made by a person that was a bank for the purpose of section 349 of the Income and Corporation Taxes Act 1988 (as currently defined in section 840A of the Income and Corporation Taxes Act) at the time the Loan was made. 15.2 Tax gross-up (a) The Company must make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law. (b) If: (i) a Lender is not, or ceases to be, a Qualifying Lender; or (ii) the Company or a Lender is aware that the Company must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it must promptly notify the Facility Agent. The Facility Agent must then promptly notify the affected Parties. (c) Except as provided below, if a Tax Deduction is required by law to be made by the Company or the Facility Agent, the amount of the payment due from the Company will be increased to 32 an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. (d) The Company is not required to make an increased payment under paragraph (c) above to a Lender for a Tax Deduction from a payment of interest, if: (i) that Lender is not or has ceased to be a Qualifying Lender in respect of that payment, unless the altered status results from any change after the date of this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement or any published practice or concession of any relevant taxing authority; or (ii) that Lender is a Treaty Lender and the Company is able to demonstrate that the Tax Deduction would not have been made if the Lender had complied with its obligations under paragraph (g) below. (e) If the Company is required to make a Tax Deduction, it must make the minimum Tax Deduction and must make any payment required in connection with that Tax Deduction within the time allowed by law. (f) Within thirty (30) days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Company must deliver to the Facility Agent for the relevant Finance Party evidence satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority. (g) A Treaty Lender must co-operate with the Company in completing any procedural formalities necessary for the Company to obtain authorisation to make that payment without a Tax Deduction. 15.3 Tax indemnity (a) Except as provided below, the Company must indemnify a Finance Party against any loss or liability which that Finance Party (in its absolute discretion) determines will be or has been suffered (directly or indirectly) by that Finance Party for or on account of Tax in relation to a payment received or receivable (or any payment deemed to be received or receivable) under a Finance Document. (b) Paragraph (a) above does not apply to any Tax assessed on a Finance Party under the laws of the jurisdiction in which: (i) 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 (ii) 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 by that Finance Party. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Finance Party, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose. (c) A Finance Party making, or intending to make, a claim under paragraph (b) above must promptly notify the Company of the event which will give, or has given, rise to the claim. 33 15.4 Tax Credit If the Company makes a Tax Payment and the relevant Finance Party (in its absolute discretion) determines that: (a) a Tax Credit is attributable to that Tax Payment; and (b) it has used that Tax Credit, the Finance Party must pay an amount to the Company which that Finance Party determines (in its absolute discretion) will leave it (after that payment) in the same after-tax position as it would have been in if the Tax Payment had not been made by the Company. 15.5 Stamp taxes The Company must pay and indemnify each Finance Party against any stamp duty, registration or other similar Tax payable in connection with the entry into, performance or enforcement of any Finance Document, except for any such Tax payable in connection with the entry into of a Transfer Certificate. 15.6 Value added taxes (a) Any amount (including costs and expenses) payable under a Finance Document by the Company is exclusive of any Tax (including value added tax) which might be chargeable in connection with that amount. If any such Tax is chargeable, the Company must pay to the Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that Tax. (b) The obligation of the Company under paragraph (a) above will be reduced to the extent that the Finance Party is entitled to repayment or a credit in respect of the relevant Tax. 16. INCREASED COSTS 16.1 Increased Costs Except as provided below in this Clause, the Company must pay to a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates as a result of: (a) the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or (b) compliance with any law or regulation made after the date of this Agreement. 16.2 Exceptions The Company need not make any payment for an Increased Cost to the extent that the Increased Cost is: (a) compensated for under another Clause, or would have been but for an exception to that Clause; (b) a tax on the overall net income of a Finance Party or any of its Affiliates; or 34 (c) attributable to a Finance Party or its Affiliate wilfully or grossly negligently failing to comply with any law or regulation. 16.3 Claims A Finance Party intending to make a claim for an Increased Cost must notify the Company promptly of the circumstances giving rise to, and the amount of, the claim. 17. MITIGATION 17.1 Mitigation (a) Each Finance Party must, in agreement with the Company, take all reasonable steps to mitigate any circumstances which arise and which result or would result in: (i) any Tax Payment, any claim under Clause 15.3 (Tax indemnity) or Increased Cost being payable to that Finance Party; or (ii) that Finance Party being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality, including transferring its rights and obligations under the Finance Documents to an Affiliate or changing its Facility Office. (b) The Company must indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of any step taken by it under this Subclause. (c) A Finance Party is not obliged to take any step under this Subclause if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. 17.2 Conduct of business by a Finance Party No term 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 in respect of Tax 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 computation in respect of Tax. 18. PAYMENTS 18.1 Place Unless a Finance Document specifies that payments under it are to be made in another manner, all payments by a Party (other than the Facility Agent) under the Finance Documents must 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 35 (b) in the case of euro, in the principal financial centre of a Participating Member State or London, as it may notify to that Party for this purpose by not less than five Business Days' prior notice. 18.2 Funds Payments under the Finance Documents to the Facility Agent must 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. 18.3 Currency (a) Unless a Finance Document specifies that payments under it are to be made in a different manner, the currency of each amount payable under the Finance Documents is determined under this Clause. (b) Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated. (c) A repayment or prepayment of any principal amount is payable in the currency in which that principal amount is denominated on its due date. (d) Amounts payable in respect of costs and expenses are payable in the currency in which they are incurred. (e) Each other amount payable under the Finance Documents is payable in Sterling. 18.4 Distribution (a) Each payment received by the Facility Agent under the Finance Documents for another Party must, except as provided below, be made available by the Facility Agent to that Party by payment (as soon as practicable after receipt) to its account with such office or bank: (i) in the principal financial centre of the country of the relevant currency; or (ii) in the case of euro, in the principal financial centre of a Participating Member State or London, 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 (with the consent and at the expense of the Company) apply any amount received by it for the Company in or towards payment (as soon as practicable after receipt) of any amount due from the Company under the Finance Documents or in or towards the purchase of any amount of any currency to be so applied. (c) Where a sum is paid to the Facility Agent under this Agreement 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 it. However, the Facility Agent may assume that the sum has been paid to it, and, in reliance on that assumption, make available to that Party a corresponding amount. If it transpires that the sum had not been made available, that Party must immediately on demand 36 by the Facility Agent refund any corresponding amount made available to it together with interest on that amount from the date of payment to the date of receipt by the Facility Agent at a rate calculated by the Facility Agent to reflect its cost of funds. 18.5 No set-off or counterclaim All payments made by the Company under the Finance Documents must be made without set-off or counterclaim. 18.6 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 will instead be 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 under this Agreement interest is payable on that principal at the rate payable on the original due date. 18.7 Partial payments (a) If the Facility Agent receives a payment insufficient to discharge all the amounts then due and payable by the Company under the Finance Documents, the Facility Agent must apply that payment towards the obligations of the Company 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 or fee due but unpaid under this Agreement; (iii) thirdly, in or towards payment pro rata of any principal amount 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 must, if so directed by all the Lenders, vary the order set out in sub-paragraphs (a)(ii) to (iv) above. (c) This Subclause will override any appropriation made by the Company. 18.8 Timing of payments If a Finance Document does not provide for when a particular payment is due, that payment will be due within three Business Days of demand by the relevant Finance Party. 19. REPRESENTATIONS 19.1 Representations (a) The representations set out in this Clause are made by the Company to each Finance Party. 37 (b) The representations set out in this Clause which relate to Bidco shall not apply to Bidco after completion of the Merger. 19.2 Status (a) It is a limited liability company, duly incorporated and validly existing under the laws of its jurisdiction of incorporation. (b) It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted. 19.3 Powers and authority It has the power to enter into and perform, and has taken all necessary corporate action to authorise the entry into and performance of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents. 19.4 Legal validity Subject to any general principles of law limiting its obligations and referred to in any legal opinion required under this Agreement, each Finance Document to which it is a party is its legally binding, valid and enforceable obligation. 19.5 Non-conflict The entry into and performance by it and Bidco of, and the transactions contemplated by, the Transaction Documents do not conflict with: (a) any law or regulation applicable to it; or (b) its constitutional documents; or (c) at the date of this Agreement, any document which is binding upon it or any of its Material Subsidiaries or any of its or its Material Subsidiaries' assets. 19.6 No default (a) No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, any Finance Document; and (b) no other event is outstanding which constitutes a default under any document which is binding on it or any of its Subsidiaries or any of its or its Subsidiaries' assets to an extent or in a manner which is reasonably likely to have a Material Adverse Effect. 19.7 Authorisations All authorisations required by it in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents have been, or in the case of the other Transaction Documents will have been by the Closing Date, obtained or effected (as appropriate) and are, or will be by the Closing Date in the case of the other Transaction Documents, in full force and effect. 38 19.8 Financial statements Its audited consolidated financial statements most recently delivered to the Facility Agent (which, at the date of this Agreement, are the Original Financial Statements): (a) have been prepared in accordance with accounting principles and practices generally accepted in its jurisdiction of incorporation, consistently applied; and (b) give a true and fair view of its consolidated financial condition as at the date to which they were drawn up, except, in each case, as disclosed to the contrary in those financial statements. 19.9 No material adverse change There has been no material adverse change in its consolidated financial condition since the date to which the audited consolidated financial statements most recently delivered to the Facility Agent were drawn up. 19.10 Litigation No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened in writing, which, if adversely determined, are reasonably likely to have a Material Adverse Effect. 19.11 Information (a) All material factual information supplied by the Company to any Finance Party in writing was accurate in all material respects as at the date to which it was prepared; (b) as at its date and to the best of its knowledge, the opinions, projections and forecasts supplied by the Company to any Finance Party and the assumptions on which they were based were arrived at after due and careful consideration and genuinely represented its views; and (c) to the best of its knowledge there are no material facts or circumstances which have not been disclosed to the parties to this Agreement by the Company prior to the date of this Agreement and which would make any of the information, opinions, projections, forecasts or assumptions supplied by the Company inaccurate or misleading in any material respect. 19.12 Times for making representations (a) The representations set out in this Clause are made by the Company on the date of this Agreement. (b) Unless a representation is expressed to be given at a specific date, each representation is deemed to be repeated by the Company on the date of each Request and the first day of each Term. (c) When a representation is repeated, it is applied to the circumstances existing at the time of repetition. 39 20. INFORMATION COVENANTS 20.1 Financial statements (a) The Company must supply to the Facility Agent in sufficient copies for all the Lenders: (i) its audited consolidated financial statements for each of its financial years; and (ii) its interim financial statements for the first half-year of each of its financial years. (b) All financial statements must be supplied as soon as they are available and: (i) in the case of the Company's audited consolidated financial statements, within 180 days; and (ii) in the case of the Company's interim financial statements, within 120 days, of the end of the relevant financial period. 20.2 Compliance Certificate (a) The Company must supply to the Facility Agent a Compliance Certificate with each set of its financial statements, sent to the Facility Agent under this Agreement. (b) A "Compliance Certificate" is a certificate substantially in the form of Schedule 6 setting out, among other things, calculations of the financial covenants. (c) A Compliance Certificate must be signed by two authorised signatories of the Company. 20.3 Form of financial statements (a) The Company must ensure that each set of financial statements supplied under this Agreement fairly represents its financial condition (consolidated or otherwise) as at the date to which those financial statements were drawn up. (b) The Company must notify the Facility Agent of any change to the basis on which its audited consolidated financial statements are prepared. (c) If requested by the Facility Agent, the Company must supply to the Facility Agent: (i) a full description of any change notified under paragraph (b) above; and (ii) sufficient information to enable the Finance Parties to make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and its most recent audited consolidated financial statements delivered to the Facility Agent under this Agreement. (d) If requested by the Facility Agent, the Company must enter into discussions for a period of not more than 30 days with a view to agreeing any amendments required to be made to this Agreement to place the Company and the Lenders in the same position as they would have been in if the change had not happened. Any agreement between the Company and the Facility Agent will be, with the prior consent of the Majority Lenders, binding on all the Parties. 40 (e) If no agreement is reached under paragraph (d) above on the required amendments to this Agreement, the Company must supply with each set of its financial statements another set of its financial statements prepared on the same basis as the Original Financial Statements. 20.4 Information - miscellaneous The Company must supply to the Facility Agent: (a) copies of all documents despatched by the Company to its shareholders (or any class of them) or its creditors generally at the same time as they are despatched; (b) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which: (i) are current, threatened in writing or pending; (ii) are reasonably likely to be adversely determined; and (iii) would, if adversely determined, have a Material Adverse Effect; (c) promptly on request, a list of the then current Material Subsidiaries; and (d) promptly on request, such further information regarding the financial condition and operations of the Group as any Finance Party through the Facility Agent may reasonably request. 20.5 Notification of Default (a) The Company must notify the Facility Agent of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. (b) Promptly on request by the Facility Agent, the Company must supply to the Facility Agent a certificate, signed by two of its authorised signatories 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. 20.6 Year end The Company must not change its financial year end without the prior written consent of the Majority Lenders such consent not to be unreasonably withheld or delayed. 21. FINANCIAL COVENANTS 21.1 Definitions In this Clause: "Consolidated Cash and Cash Equivalents" means, at any time: (a) cash in hand or on deposit with any acceptable bank, which, in either case, is not subject to any security interest and is readily remittable to the U.K; 41 (b) certificates of deposit, maturing within one year after the relevant date of calculation, issued by an acceptable bank; (c) any investment in marketable obligations issued or guaranteed by the government of the United States of America or the U.K. or by an instrumentality or agency of the government of the United States of America or the U.K. having an equivalent credit rating; (d) any investment in debt instruments permitting cash withdrawals on not more than one month's notice and which have a rating of AA or higher by Standard and Poor's or Aa2 or higher by Moody's; (e) open market commercial paper: (i) for which a recognised trading market exists; (ii) issued in the United States of America or the U.K.; (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 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; (f) sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an acceptable bank; or (g) any other instrument, security or investment approved by the Majority Lenders, in each case, to which any member of the Group is beneficially entitled at that time and which is capable of being applied against Consolidated Total Borrowings. 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 IBCA or A-2 or higher by Moody's or a comparable rating from a nationally recognised credit rating agency for its long-term debt obligations. "Consolidated EBITA" means Consolidated EBITDA for a Measurement Period adjusted by deducting depreciation. "Consolidated EBITDA" means the consolidated net pre-taxation profits of the Group for a Measurement Period, adjusted by: (a) adding back Consolidated Interest Payable; (b) taking no account of any exceptional or extraordinary item; (c) excluding any amount attributable to minority interests; (d) adding back depreciation and amortisation; 42 (e) including the net pre-taxation profits of a member of the Group acquired during that Measurement Period for the part of that Measurement Period when it was not a member of the Group; and (f) excluding the net pre-taxation profit attributable to any business sold during that Measurement Period. "Consolidated Interest Payable" means all interest and periodic financing charges including acceptance commission, commitment fee and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised), incurred by the Group in effecting, servicing or maintaining Total Consolidated Borrowings during a Measurement Period. "Consolidated Net Interest Payable" means Consolidated Interest Payable less all financing charges received or receivable by the Group during the relevant Measurement Period. "Consolidated Total Borrowings" means, in respect of the Group, at any time the aggregate of the following: (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; (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; and (i) the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (h) above which is the subject of a guarantee, indemnity or similar assurances against financial loss. Any amount outstanding in a currency other than Sterling is to be taken into account at its Sterling equivalent calculated on the basis of: 43 (i) the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on the day the relevant amount falls to be calculated; or (ii) if the amount is to be calculated on the last day of a financial period of the Company, the rate of exchange used by the Company in its financial statements for that period. "Consolidated Total Net Borrowings" means at any time Consolidated Total Borrowings less Consolidated Cash and Cash Equivalents. "Measurement Period" means a period of 12 months ending on the last day of a financial year or financial half-year of the Company. 21.2 Interpretation (a) Except as provided to the contrary in this Agreement, an accounting term used in this Clause is to be construed in accordance with the principles applied in connection with the Original Financial Statements. (b) No item must be credited or deducted more than once in any calculation under this Clause. 21.3 Gearing The Company must ensure that Consolidated Total Net Borrowings are not, at the end of each Measurement Period ending after 31st December, 2001, more than 2.5 times Consolidated EBITDA. 21.4 Interest cover/Cashflow The Company must ensure that the ratio of Consolidated EBITA to Consolidated Net Interest Payable is not, at the end of each Measurement Period ending after 31st December, 2001, less than 3.5 to 1. 22. GENERAL COVENANTS 22.1 General The Company agrees to be bound by the covenants set out in this Clause relating to it and, where the covenant is expressed to apply to each member or to specified members of the Group, the Company must ensure that each of its Subsidiaries to which the covenant relates performs that covenant. 22.2 Authorisations The Company must promptly obtain, maintain and comply with the terms of any authorisation required under any law or regulation to enable it to perform its obligations under, or for the validity or (subject to any general principles of law limiting its obligations and referred to in any legal opinion required under this Agreement) enforceability of, any Finance Document. 22.3 Compliance with laws Each member of the Group must comply in all respects with all regulations to which it is subject where failure to do so is reasonably likely to have a Material Adverse Effect. 22.4 Pari passu ranking The Company must ensure that its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally. 22.5 Negative pledge (a) In this Subclause, "Security Interest" means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest. (b) Except as provided below, no member of the Group may create or allow to exist any Security Interest on any of its assets. (c) Paragraph (b) does not apply to: (i) any Security Interest comprising a netting, set-off or lien arrangement entered into by a member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances; (ii) any lien arising by operation of law and in the ordinary course of business; (iii) any Security Interest on an asset, or an asset of any person, acquired by a member of the Group after the date of this Agreement to the extent that the principal amount secured by that Security Interest has not been incurred or increased in contemplation of, or since, the acquisition; (iv) any Security Interest arising under any contract for the purchase of goods entered into in the normal course of trading pursuant to a supplier's normal terms and conditions; and (v) any Security Interest securing indebtedness the amount of which (when aggregated with the amount of assets or receivables sold, transferred or disposed of under paragraph (d) below) does not exceed 10 per cent. of the consolidated gross assets of the Group as shown in the most recent audited consolidated financial statements of the Company delivered to the Facility Agent pursuant to Clause 20.1 (Financial statements) (being as at the date of this Agreement the Original Financial Statements). (d) No member of the Group may: (i) sell, transfer or otherwise dispose of any of its assets on terms where 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) sell, transfer or otherwise dispose of any of its receivables on recourse terms, 45 in circumstances where the transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset unless the amount of assets or receivables sold, transferred or disposed of under this paragraph (including any assets the subject of any such arrangement on the date of this Agreement) (when aggregated with the amount of indebtedness secured under Subclause 22.5(c)(vi) above) does not exceed 10 per cent. of the consolidated gross assets of the Group as shown in the most recent audited consolidated financial statements of the Company delivered to the Facility Agent pursuant to Clause 20.1 (Financial statements) (being as at the date of this Agreement the Original Financial Statements). 22.6 Disposals (a) In this Subclause, "disposal" means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and "dispose" will be construed accordingly. (b) Except as provided below, the Company will not, and will procure that no Subsidiary will, either in a single transaction or in a series of transactions and whether related or not, dispose of all or any part of its assets. (c) Paragraph (b) does not apply to any disposal: (i) made in the ordinary course of trading of the disposing entity; (ii) of assets which are exchanged within 180 days for other assets comparable or superior as to type, value and quality; (iii) by one company in the Group (other than the Company) to another company in the Group; or (iv) of machinery of plant at or nearly at the end of their useful life or period of depreciation; (v) of obsolete equipment owned by a member of the Group no longer required for the purposes of the business carried on by that member of the Group; or (vi) which would not be deemed to be a class 1 transaction under the Listing Rules of the Financial Services Authority or which would not require the approval of the shareholders of the Company in general meeting. 22.7 Financial Indebtedness (a) Except as provided below no member of the Group (other than the Company) may incur any Financial Indebtedness. (b) Paragraph (a) does not apply to: (i) any Financial Indebtedness of any person acquired by a member of the Group which is incurred under arrangements in existence at the date of acquisition, but only for a period of 6 months from the date of acquisition; (ii) any derivative transaction protecting against or benefiting from fluctuations in any rate or price entered into in the ordinary course of business; 46 (iii) the capital element of any liability under finance or capital leases up to a maximum amount not exceeding (pound)10,000,000 (or the equivalent in any other currency) or any higher amount which is approved in writing by the Facility Agent acting on the instructions of the Majority Lenders; or (iv) foreign exchange, interest rate or similar hedging arrangements entered into only for the purposes of managing the interest rate and foreign exchange rates of the Group and not for any speculative purpose or pursuant to any financial trading; or (v) any other Financial Indebtedness which in aggregate does not exceed(pound)125,000,000 or its equivalent at any time. 22.8 Change of business The Company must ensure that no material change is made to the general nature of the business of the Company or the Group from that carried on at the date of this Agreement. 22.9 Mergers The Company must not enter into any amalgamation, demerger, merger or reconstruction otherwise than under an intra-Group re-organisation on a solvent basis or other transaction agreed by the Majority Lenders. 22.10 Environmental matters (a) In this Subclause: "Environmental Approval" means any authorisation required by an Environmental Law. "Environmental Claim" means any claim by any person in connection with: (i) a breach, or alleged breach, of an Environmental Law; (ii) any accident, fire, explosion or other event of any type involving an emission or substance which is capable of causing harm to any living organism or the environment; or (iii) any other environmental contamination, which might result in any liability on any Party. "Environmental Law" means any law or regulation concerning: (i) the protection of health and safety; (ii) the environment; or 47 (iii) any emission or substance which is capable of causing harm to any living organism or the environment. (b) Each member of the Group must comply with all Environmental Law and Environmental Approvals applicable to it if failure to do so is reasonably likely to have a Material Adverse Effect. (c) The Company must promptly upon becoming aware notify the Facility Agent of: (i) any Environmental Claim current or to its knowledge, pending or threatened in writing; or (ii) any circumstances reasonably likely to result in an Environmental Claim, which, if substantiated, is reasonably likely either to have a Material Adverse Effect or result in any liability for a Finance Party. 22.11 Insurance Each member of the Group must (subject to market availability on reasonably commercial terms) insure its business and assets with insurance companies to such an extent and against such risks as companies engaged in a similar business normally insure. 23. DEFAULT 23.1 Events of Default (a) Each of the events set out in this Clause is an Event of Default. (b) In this Clause: "Material Group Member" means the Company or a Material Subsidiary; and "Permitted Transaction" means: (i) an intra-Group re-organisation of a Material Subsidiary on a solvent basis; or (ii) any other transaction agreed by the Majority Lenders. 23.2 Non-payment The Company does not pay on the due date any amount payable by it under the Finance Documents in the manner required under the Finance Documents, unless the non-payment: (a) is caused by administrative or technical error; and (b) is remedied within three Business Days (in the case of principal amounts due under this Agreement) and within five Business Days (in the case of any other amount due under this Agreement) of its due date. 48 23.3 Breach of other obligations (a) The Company does not comply with any term of Clause 21 (Financial covenants); or (b) the Company does not comply with any other term of the Finance Documents not already referred to in this Clause, unless the non-compliance: (i) is capable of remedy; and (ii) is remedied within twenty Business Days of the earlier of the Facility Agent giving notice and the Company becoming aware of the non-compliance. 23.4 Misrepresentation A representation made or repeated by the Company in any Finance Document or in any document delivered by or on behalf of the Company under any Finance Document is incorrect in any material respect when made or deemed to be repeated unless the circumstances giving rise to the misrepresentation: (a) are capable of remedy; and (b) are remedied within twenty Business Days or the earlier of the Facility Agent giving notice and the Company becoming aware of the misrepresentation. 23.5 Cross-default Any of the following occurs in respect of a member of the Group: (a) any of its Financial Indebtedness is not paid when due (after the expiry of any originally applicable grace period); (b) any of its Financial Indebtedness: (i) becomes prematurely due and payable; or (ii) is placed on demand, in each case, as a result of an event of default (howsoever described); or (c) any commitment for its Financial Indebtedness is cancelled or suspended as a result of an event of default (howsoever described), unless the aggregate amount of Financial Indebtedness falling within paragraphs (a)-(c) above is less than (pound)10,000,000 or its equivalent. 23.6 Insolvency Any of the following occurs in respect of a Material Group Member: (a) it is or is deemed for the purposes of Section 123 of the Insolvency Act 1986 (but as if the figure of (pound)750 in paragraph (a) was replaced with the figure of (pound)1,000,000) to be unable to pay its debts as they fall due; 49 (b) it admits its inability to pay its debts as they fall due; (c) it suspends making payments on its debts generally or announces an intention to do so; (d) by reason of actual or anticipated financial difficulties, it begins negotiations with creditors generally or any class of them for the rescheduling of any of its indebtedness; or (e) a moratorium is declared in respect of its indebtedness generally. 23.7 Insolvency proceedings (a) Except as provided below, any of the following occurs in respect of a Material Group Member: (i) any step is taken with a view to a composition, assignment or similar arrangement with its creditors generally; (ii) a meeting of it is convened for the purpose of considering any resolution for (or to petition for) its winding-up, administration or dissolution or any such resolution is passed; (iii) any person presents a petition for its winding-up, administration or dissolution; (iv) an order for its winding-up, administration or dissolution is made; (v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it; (vi) its directors or other officers request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or (vii) any other analogous step or procedure is taken in any jurisdiction. (b) Paragraph (a) does not apply to: (i) any step or procedure which is part of a Permitted Transaction; or (ii) a petition for winding-up presented by a creditor which is being contested in good faith and with due diligence and is discharged or struck out within fourteen days. 23.8 Creditors' process Any attachment, sequestration, distress, execution or analogous event affects any asset(s) of a Material Group Member, having an aggregate value of (pound)5,000,000, and is not discharged within fourteen days or is being contested in good faith to the satisfaction of the Facility Agent acting reasonably. 50 23.9 Cessation of business A Material Group Member ceases, or threatens to cease, to carry on business except: (a) as part of a Permitted Transaction; or (b) as a result of any disposal allowed under this Agreement. 23.10 Effectiveness of Finance Documents (a) It is or becomes unlawful for the Company to perform any of its obligations under the Finance Documents. (b) The Company repudiates a Finance Document or purports to repudiate a Finance Document. 23.11 Material adverse change Any event or series of events occurs which will have a Material Adverse Effect. 23.12 Acceleration If an Event of Default is outstanding, the Facility Agent may, and must if so directed by the Majority Lenders, by notice to the Company: (a) cancel the Total Commitments; and/or (b) declare that all or part of any amounts outstanding under the Finance Documents are: (i) immediately due and payable; and/or (ii) payable on demand by the Facility Agent acting on the instructions of the Majority Lenders. Any notice given under this Subclause will take effect in accordance with its terms. 24. THE ADMINISTRATIVE PARTIES 24.1 Appointment and duties of the Facility Agent (a) Each Finance Party (other than the Facility Agent) irrevocably appoints the Facility Agent to act as its agent under the Finance Documents. (b) Each Finance Party irrevocably authorises the Facility Agent to: (i) perform the duties and to exercise the rights, powers and discretions that are specifically given to it under 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. (c) The Facility Agent has only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature. 51 24.2 Role of the Arranger Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party in connection with any Finance Document. 24.3 No fiduciary duties Except as specifically provided in a Finance Document, nothing in the Finance Documents makes an Administrative Party a trustee or fiduciary for any other Party or any other person. No Administrative Party need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys. 24.4 Individual position of an Administrative Party (a) If it is also a Lender, each Administrative Party has the same rights and powers under the Finance Documents as any other Lender and may exercise those rights and powers as though it were not an Administrative Party. (b) Each Administrative Party may: (i) carry on any business with the Company or its related entities (including acting as an agent or a trustee for any other financing); and (ii) retain any profits or remuneration it receives under the Finance Documents or in relation to any other business it carries on with the Company or its related entities. 24.5 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 any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; (c) engage, pay for and rely on professional advisers selected by it (including those representing a Party other than the Facility Agent); and (d) act under the Finance Documents through its personnel and agents. 24.6 Majority Lenders' instructions (a) The Facility Agent is fully protected if it acts on the instructions of the Majority Lenders in 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 instructions, the Facility Agent may act as it considers to be in the best interests of all the Lenders. (b) The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings in connection with any Finance Document. 52 (c) 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 may incur in complying with the instructions of the Majority Lenders. 24.7 Responsibility (a) No Administrative Party is responsible to any other Finance Party for the adequacy, accuracy or completeness of: (i) any Finance Document or any other document; or (ii) any statement or information (whether written or oral) made in or supplied in connection with any Finance Document. (b) Without affecting the responsibility of the Company for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms that it: (i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of the Company and its related entities and the nature and extent of any recourse against any Party or its assets); and (ii) has not relied exclusively on any information provided to it by any Administrative Party in connection with any Finance Document. 24.8 Exclusion of liability (a) The Facility Agent is not liable to any other Finance Party for any action taken or not taken by it 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 by that officer, employee or agent in connection with any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this Subclause and enforce its terms under the Contracts (Rights of Third Parties) Act 1999. 24.9 Default (a) The Facility Agent is not obliged to monitor or enquire whether a Default has occurred. The Facility Agent is not deemed to have knowledge of the occurrence of a Default. (b) If the Facility Agent: (i) receives notice from a Party referring to this Agreement, describing a Default and stating that the event is a Default; or (ii) is aware of the non-payment of any principal or interest or any fee payable to a Lender under this Agreement, it must promptly notify the Lenders. 53 24.10 Information (a) The Facility Agent must 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) Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. (c) Except as provided above, the Facility Agent has no duty: (i) either initially or on a continuing basis to provide any Lender with any credit or other information concerning the risks arising under or in connection with the Finance Documents (including any information relating to the financial condition or affairs of the Company or its related entities or the nature or extent of recourse against any Party or its assets) whether coming into its possession before, on or after the date of this Agreement; or (ii) unless specifically requested to do so by a Lender in accordance with a Finance Document, to request any certificate or other document from the Company. (d) In acting as the Facility Agent, the agency division of the Facility Agent is 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 the Facility Agent may be treated as confidential by the Facility Agent and will not be treated as information possessed by the Facility Agent in its capacity as such. (e) The Company irrevocably authorises the Facility Agent to disclose to the other Finance Parties any information which, in its opinion, is received by it in its capacity as the Facility Agent. 24.11 Indemnities (a) Without limiting the liability of the Company under the Finance Documents, each Lender must indemnify the Facility Agent for that Lender's Pro Rata Share of any loss or liability incurred by the Facility Agent in acting as the Facility Agent, except to the extent that the loss or liability is caused by the Facility Agent's gross negligence or wilful misconduct. (b) The Facility Agent may deduct from any amount received by it for a Lender any amount due to the Facility Agent from that Lender under a Finance Document but unpaid. 24.12 Compliance The Facility Agent may refrain from doing anything (including the disclosure of any information) 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. 24.13 Resignation of the Facility Agent (a) The Facility Agent may resign and appoint any of its Affiliates as successor Facility Agent by giving notice to the Lenders and the Company. 54 (b) Alternatively, the Facility Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders may appoint a successor Facility Agent. (c) If no successor Facility Agent has been appointed under paragraph (b) above within 30 days after notice of resignation was given, the Facility Agent may appoint a successor Facility Agent. (d) The person(s) appointing a successor Facility Agent must, if practicable, consult with the Company prior to the appointment for a period of not less than 30 days. Any successor Facility Agent must have an office in the U.K. (e) The resignation of the Facility Agent and the appointment of any successor Facility Agent will both become effective only when the successor Facility Agent notifies 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" will mean the successor Facility Agent. (f) The retiring Facility Agent must, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as the Facility Agent under the Finance Documents. (g) Upon its resignation becoming effective, this Clause will continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was the Facility Agent, and, subject to paragraph (f) above, it will have no further obligations under any Finance Document. (h) The Majority Lenders may, by notice to the Facility Agent, require it to resign under paragraph (b) above. 24.14 Relationship with 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 must if requested to do so by the Majority Lenders, convene a meeting of the Lenders. (c) The Facility Agent must keep a register of all the Parties and supply any other Party with a copy of the register on request. The register will include each Lender's Facility Office(s) and contact details for the purposes of this Agreement. 24.15 Notice period Where this Agreement specifies a minimum period of notice to be given to the Facility Agent, the Facility Agent may, at its discretion, accept a shorter notice period. 55 25. EVIDENCE AND CALCULATIONS 25.1 Accounts Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings. 25.2 Certificates and determinations Any certification or determination by a Finance Party of a rate or amount under the Finance Documents will be, in the absence of manifest error, conclusive evidence of the matters to which it relates. 25.3 Calculations Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 or 365 days or otherwise, depending on what the Facility Agent determines is market practice. 26. FEES 26.1 Facility Agent's fee The Company must pay to the Facility Agent for its own account an agency fee in the manner agreed in the Fee Letter between the Facility Agent and the Company. 26.2 Arrangement fee The Company must pay to the Arranger for its own account an arrangement fee in the manner agreed in the Fee Letter between the Arranger and the Company. 26.3 Facility A Commitment fee (a) The Company must pay a commitment fee computed at the rate set out in the Fee Letter between the Arranger and the Company on the undrawn, uncancelled amount of each Lender's Facility A Commitment. (b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Facility A Commitment is cancelled in full. 26.4 Facility B Commitment fee (a) The Company must pay a commitment fee computed at the rate of 0.175 per cent. per annum on the undrawn, uncancelled amount of each Lender's Facility B Commitment. (b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Facility B Commitment is cancelled in full. 56 27. INDEMNITIES AND BREAK COSTS 27.1 Currency indemnity (a) The Company must, as an independent obligation, indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of: (i) that Finance Party receiving an amount in respect of the Company's liability under the Finance Documents; or (ii) that liability being converted into a claim, proof, judgment or order, in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document. (b) Unless otherwise required by law, the Company 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. 27.2 Other indemnities (a) The Company must 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) any failure by the Company to pay any amount due under a Finance Document on its due date, including any resulting from any distribution or redistribution of any amount among the Lenders under this Agreement; (iii) (other than by reason of negligence or default by that Finance Party) a Loan not being made after a Request has been delivered for that Loan; or (iv) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment. The Company's liability in each case includes any 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. (b) The Company must indemnify the Facility Agent against any loss or liability incurred by the Facility Agent as a result of: (i) investigating any event which the Facility Agent reasonably believes to be a Default; or (ii) acting or relying on any notice which it reasonably believes to be genuine, correct and appropriately authorised. 27.3 Break Costs (a) The Company must pay to each Lender its Break Costs. 57 (b) Break Costs are the amount (if any) determined by the relevant Lender by which: (i) the interest which 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 Term for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term; 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 applicable Term. (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. 28. EXPENSES 28.1 Initial costs The Company must pay to each Administrative Party the amount of all costs and expenses (including reasonable legal fees) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and syndication of the Finance Documents. 28.2 Subsequent costs The Company must pay to the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with: (a) the negotiation, preparation, printing and execution of any Finance Document (other than a Transfer Certificate) executed after the date of this Agreement; and (b) any amendment, waiver or consent requested by or on behalf of the Company or specifically allowed by this Agreement. 28.3 Enforcement costs The Company must pay to each Finance Party the amount of all 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. 29. AMENDMENTS AND WAIVERS 29.1 Procedure (a) Except as provided in this Clause, any term of the Finance Documents may be amended or waived with the agreement of the Company and the Majority Lenders. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause. 58 (b) The Facility Agent must promptly notify the other Parties of any amendment or waiver effected by it under paragraph (a) above. Any such amendment or waiver is binding on all the Parties. 29.2 Exceptions (a) An amendment or waiver which relates to: (i) the definition of "Majority Lenders" in Clause 1.1 (Definitions); (ii) an extension of the date of payment of any amount to a Lender under the Finance Documents; (iii) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fee or other amount payable to a Lender under the Finance Documents; (iv) an increase in, or an extension of, a Commitment; (v) a release of the Company; (vi) a term of a Finance Document which expressly requires the consent of each Lender; (vii) the right of a Lender to assign or transfer its rights or obligations under the Finance Documents; or (viii) this Clause, may only be made with the consent of all the Lenders. (b) An amendment or waiver which relates to the rights or obligations of an Administrative Party may only be made with the consent of that Administrative Party. 29.3 Change of currency If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognised at the same time as the lawful currency of a country), this Agreement will be amended to the extent the Facility Agent (acting reasonably and after consultation with the Company) determines is necessary to reflect the change. 29.4 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 right is not a waiver of that right. 59 30. CHANGES TO THE PARTIES 30.1 General In this Clause: "Transfer Certificate" means a transfer certificate in the form of Schedule 5 (Form of Transfer Certificate), in each case with such amendments as the Facility Agent may approve or reasonably require or, in the case of a Transfer Certificate, any other form agreed between and the Company; and "Transfer Date" means: (a) for a Transfer Certificate, the later of: (i) the proposed Transfer Date specified in that Transfer Certificate; and (ii) the date on which the Facility Agent executes that Transfer Certificate; and (b) for a Syndication Agreement, the Effective Date specified in that Syndication Agreement. 30.2 Assignments and transfers by the Company The Company may not assign or transfer any of its rights and obligations under the Finance Documents without the prior consent of all the Lenders. 30.3 Assignments and transfers by Lenders (a) A Lender (the "Existing Lender") may, subject to the following provisions of this Subclause, at any time assign or transfer (including by way of novation) any of its rights and obligations under this Agreement to another bank or financial institution which is a Qualifying Lender, as defined in Clause 15.1 (General) (the "New Lender"). (b) A transfer of part of a Commitment must be in a minimum amount of at least U.S.$10,000,000 and an integral multiple of U.S.$5,000,000. (c) The consent of the Company is required for any assignment or transfer unless the New Lender is another Lender or an Affiliate of a Lender. The consent of the Company must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent ten Business Days after the Company is given notice of the request unless it is expressly refused by the Company within that time. (d) A transfer of obligations will be effective only if either: (i) the obligations are novated in accordance with the following provisions of this Clause; or (ii) the New Lender confirms to the Facility Agent and the Company in form and substance satisfactory to the Facility Agent that it is bound by the terms of this 60 Agreement as a Lender. On the transfer becoming effective in this manner the Existing Lender will be released from its obligations under this Agreement to the extent that they are transferred to the New Lender. (e) Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of(pound)1,000. (f) 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. 30.4 Procedure for transfer by way of novations (a) A novation is effected if: (i) the Existing Lender and the New Lender deliver to the Facility Agent a duly completed Transfer Certificate and the Facility Agent executes it; and (ii) a Syndication Agreement is executed by all the Administrative Parties, the Lenders and the Company. The Facility Agent must execute as soon as reasonably practicable a Transfer Certificate delivered to it and which appears on its face to be in order. (b) Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Transfer Certificate on its behalf. (c) On the Transfer Date: (i) the New Lender will assume the rights and obligations of the Existing Lender expressed to be the subject of the novation in the Transfer Certificate in substitution for the Existing Lender; and (ii) the Existing Lender will be released from those obligations and cease to have those rights. 30.5 Limitation of responsibility of Existing Lender (a) Unless expressly agreed to the contrary, an Existing Lender is not responsible to a New Lender for the legality, validity, adequacy, accuracy, completeness or performance of: (i) any Finance Document or any other document; or (ii) any statement or information (whether written or oral) made in or supplied in connection with any Finance 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 will continue to make, its own independent appraisal of the financial condition and affairs of the Company and its related entities in connection with its participation in this Agreement; and 61 (ii) has not relied exclusively on any information supplied to it by the Existing Lender in connection with any Finance Document. (c) Nothing in any Finance Document requires 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; or (ii) support any losses incurred by the New Lender by reason of the non-performance by the Company of its obligations under any Finance Document or otherwise. 30.6 Costs resulting from change of Lender or Facility Office If: (a) a Lender assigns or transfers any of its rights and obligations under the Finance Documents or changes its Facility Office; and (b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Company would be obliged to pay a Tax Payment or an Increased Cost, then, unless the assignment, transfer or change is made by a Lender to mitigate any circumstances giving rise to the Tax Payment, Increased Cost or right to be prepaid and/or cancelled by reason of illegality, the Company need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred. 30.7 Changes to the 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 must (with the agreement of the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank. 31. DISCLOSURE OF INFORMATION (a) Each Finance Party must keep confidential any information supplied to it by or on behalf of the Company 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) in connection with any legal or arbitration proceedings; (iii) if required to do so under any law or regulation; (iv) to a governmental, banking, taxation or other regulatory authority; (v) to its professional advisers provided that its professional advisers are made aware that that information must be kept confidential in accordance with the terms of this Clause; (vi) to the extent allowed under paragraph (b) below; or 62 (vii) with the agreement of the Company. (b) A Finance Party may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a "participant"): (i) a copy of any Finance Document; and (ii) any information which that Finance Party has acquired under any Finance Document. However, before a participant may receive any confidential information, it must agree with the relevant Finance Party to keep that information confidential on the terms of paragraph (a) above. (c) This Clause supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party. 32. SET-OFF A Finance Party may set off any matured obligation owed to it by the Company 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 the Company, 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. 33. PRO RATA SHARING 33.1 Redistribution If any amount owing by the Company under this Agreement to a Lender (the "recovering Lender") is discharged by payment, set-off or any other manner other than through the Facility Agent under this Agreement (a "recovery"), then: (a) the recovering Lender must, within three Business Days, supply details of the recovery to the Facility Agent; (b) the Facility Agent must calculate whether the recovery is in excess of the amount which the recovering Lender would have received if the recovery had been received by the Facility Agent under this Agreement; and (c) the recovering Lender must pay to the Facility Agent an amount equal to the excess (the "redistribution"). 33.2 Effect of redistribution (a) The Facility Agent must treat a redistribution as if it were a payment by the Company under this Agreement and distribute it among the Lenders accordingly. (b) When the Facility Agent makes a distribution under paragraph (a) above, the recovering Lender will be subrogated to the rights of the Finance Parties which have shared in that redistribution. 63 (c) If and to the extent that the recovering Lender is not able to rely on any rights of subrogation under paragraph (b) above, the Company will owe the recovering Lender a debt which is equal to the redistribution, immediately payable and of the type originally discharged. (d) If: (i) a recovering Lender must subsequently return a recovery, or an amount measured by reference to a recovery, to the Company; and (ii) the recovering Lender has paid a redistribution in relation to that recovery, each Finance Party must reimburse the recovering Lender all or the appropriate portion of the redistribution paid to that Finance Party, together with interest for the period while it held the re-distribution. In this event, the subrogation in paragraph (b) above will operate in reverse to the extent of the reimbursement. 33.3 Exceptions Notwithstanding any other term of this Clause, a recovering Lender need not pay a redistribution to the extent that: (a) it would not, after the payment, have a valid claim against the Company in the amount of the redistribution; or (b) it would be sharing with another Finance Party any amount which the recovering Lender has received or recovered as a result of legal or arbitration proceedings, where: (i) the recovering Lender notified the Facility Agent of those proceedings; and (ii) the other Finance Party had an opportunity to participate in those proceedings but did not do so or did not take separate legal or arbitration proceedings as soon as reasonably practicable after receiving notice of them. 34. SEVERABILITY If a term of a 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 term of the Finance Documents; or (b) the validity or enforceability in other jurisdictions of that or any other term of the Finance Documents. 35. COUNTERPARTS Each Finance Document may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document. 64 36. NOTICES 36.1 In writing (a) Any formal communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given in person, by post, telex or fax approved by the Facility Agent. (b) Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing. 36.2 Contact details (a) Except as provided below, the contact details of each Party for all communications in connection with the Finance Documents are those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party. (b) The contact details of the Company for this purpose are: Smith & Nephew plc 15 Adam Street London WC2N 6LA Fax: 0207 930 3353 For the attention of: The Company Secretary (c) The contact details of the Facility Agent for this purpose are: Lloyds TSB Bank Plc Bank House Wine Street Bristol BS1 2AN Telex: 88301 LOYDLN Fax: 0117 923 3367 For the attention of: Loans Administration Department (d) Any Party may change its contact details by giving five Business Days' notice to the Facility Agent or (in the case of the Facility Agent) to the other Parties. (e) Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer. 36.3 Effectiveness (a) Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows: (i) if delivered in person, at the time of delivery; (ii) if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope; (iii) if by telex, when despatched, but only if, at the time of transmission, the correct answerback appears at the start and at the end of the sender's copy of the notice; 65 (iv) if by fax, when received in legible form. (b) A communication given under paragraph (a) 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. (c) A communication to the Facility Agent will only be effective on actual receipt by it. 36.4 The Company All formal communication under the Finance Documents to or from the Company must be sent through the Facility Agent. 37. LANGUAGE (a) Any notice given in connection with a Finance Document must be in English. (b) Any other document provided in connection with a Finance Document must be: (i) in English; or (ii) (unless the Facility Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document. 38. GOVERNING LAW This Agreement is governed by English law. 39. ENFORCEMENT 39.1 Jurisdiction (a) The English courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document. (b) The English courts are the most appropriate and convenient courts to settle any such dispute. (c) This Clause is for the benefit of the Finance Parties only. To the extent allowed by law, a Finance Party may take: (i) proceedings in any other court; and (ii) concurrent proceedings in any number of jurisdictions. 39.2 Waiver of trial by jury EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OR ACTION IN CONNECTION WITH ANY FINANCE DOCUMENT OR ANY TRANSACTION CONTEMPLATED BY ANY FINANCE DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY COURT. 66 This Agreement has been entered into on the date stated at the beginning of this Agreement. 67 SCHEDULE 1 ORIGINAL PARTIES Name of Original Lender Facility A Commitments Lloyds TSB Bank plc U.S.$100,000,000 ------------------ Total A Commitments U.S.$100,000,000 ------------------ Name of Original Lender Facility B Commitments Lloyds TSB Bank plc U.S.$200,000,000 ------------------ Total B Commitments U.S.$200,000,000 ------------------ 68 SCHEDULE 2 CONDITIONS PRECEDENT DOCUMENTS Company 1. A copy of the constitutional documents of the Company. 2. A copy of a resolution of the board of directors or a committee of the board of directors of the Company approving the terms of, and the transactions contemplated by, this Agreement. 3. If applicable, a copy of a resolution of the board of directors of the Company establishing the committee referred to in paragraph 2 above. 4. A specimen of the signature of each person authorised on behalf of the Company to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document. 5. A certificate of an authorised signatory of the Company: (a) confirming that utilising the Total Commitments in full would not breach any limit binding on it; and (b) certifying that each copy document specified in this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. Legal opinions A legal opinion of Allen & Overy, legal advisers to the Arranger and the Facility Agent, substantially in the form of Schedule 10, addressed to the Finance Parties. 69 SCHEDULE 3 FORM OF REQUEST To: LLOYDS TSB PLC as Facility Agent From: SMITH & NEPHEW PLC Date: [ ], 2002 SMITH & NEPHEW PLC-U.S $300,000,000 Credit Agreement dated [ ] February, 2002 (the "Agreement") 1. We refer to the Agreement. This is a Request. 2. We wish to [borrow a/an [Offer] Loan/draw Bills]* [under Facility A/Facility B]* on the following terms: (a) Utilisation Date: [ ] (b) Amount/currency: [ ] (c) Term: [ ]. 3. Our payment instructions are: [ ]. 4. We confirm that each condition precedent under the Agreement which must be satisfied on the date of this Request is so satisfied. 5. This Request is irrevocable. By: SMITH & NEPHEW PLC __________________________________ * Delete as appropriate 70 SCHEDULE 4 CALCULATION OF THE MANDATORY COST 1. General The Mandatory Cost is the weighted average of the rates calculated below by the Facility Agent on the first day of a Term. The Facility Agent must distribute each amount of Mandatory Cost among the Lenders on the basis of the rate for each Lender. 2. For a Lender lending from a Facility Office in the U.K. (a) The relevant rate for a Lender lending from a Facility Office in the U.K. is the arithmetic mean of the rates notified by each of the Reference Banks to the Facility Agent and calculated in accordance with the following formulae: for a Loan in Sterling: AB + C(B-D)+ E x 0.01 ---------------------- per cent. per annum 100-(A+C) for any other Loan: E x 0.01 -------- per cent. per annum 300 where on the day of application of the formula: A is the percentage of the Reference Bank's eligible liabilities (in excess of any stated minimum) which the Bank of England requires it to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements; B is LIBOR for that Term; C is the percentage of the Reference Bank's eligible liabilities which the Bank of England requires it to place as a special deposit; D is the interest rate per annum allowed by the Bank of England on a special deposit; and E is the charge payable by the Reference Bank to the Financial Services Authority under the fees rules (but, for this purpose, calculated by the Facility Agent on a notional basis as being the average of the fee tariffs within fee-block Category A1 (Deposit acceptors) of the fee rules, applying any applicable discount and ignoring any minimum fee required under the fees rules) and expressed in pounds per (pound)1 million of the tariff base of that Reference Bank. (b) For the purposes of this paragraph 2: 71 (i) "eligible liabilities" and "special deposit" 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 of the FSA Handbook; and (iii) "tariff base" has the meaning given to it in the fees rules. (c) (i) In the application of the formulae, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero. (ii) Each rate calculated in accordance with a formula is, if necessary, rounded upward to four decimal places. (d) (i) Each Reference Bank must supply to the Facility Agent the information required by it to make a calculation of the rate for that Reference Bank. The Facility Agent may assume that this information is correct in all respects. (ii) If a Reference Bank fails to do so, the Facility Agent may assume that the Reference Bank's obligations in respect of cash ratio deposits, special deposits and the fees rules 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. (iii) The Facility Agent has no liability to any Party if its calculation over or under compensates any Lender. 3. For a Lender lending from a Facility Office in a Participating Member State (a) The relevant rate for a Lender lending from a Facility Office in a Participating Member State is the percentage rate per annum notified by that Lender to the Facility Agent as its cost of complying with the minimum reserve requirements of the European Central Bank. (b) If a Lender fails to specify a rate under paragraph (a) above, the Facility Agent will assume that the Lender has not incurred any such cost. 4. Changes The Facility Agent may, after consultation with the Company and the Lenders, notify all the Parties of any amendment to this Schedule which is required to reflect: (a) any change in law or regulation; or (b) any requirement imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any successor authority). Any notification will be, in the absence of manifest error, conclusive and binding on all the Parties. 72 SCHEDULE 5 FORM OF TRANSFER CERTIFICATE To: LLOYDS TSB BANK plc as Facility Agent From: [THE EXISTING LENDER] (the "Existing Lender") and [THE NEW LENDER] (the "New Lender") Date: [ ] SMITH & NEPHEW PLC - US$300,000,000 Credit Agreement dated [ ] February, 2002 (the "Agreement") We refer to the Agreement. This is a Transfer Certificate. 1. The Existing Lender transfers by novation to the New Lender the Existing Lender's rights and obligations referred to in the Schedule below in accordance with the terms of the Agreement. 2. The proposed Transfer Date is [ ]. 3. The administrative details of the New Lender for the purposes of the Agreement are set out in the Schedule. 4. This Transfer Certificate is governed by English law. THE SCHEDULE Rights and obligations to be transferred by novation [insert relevant details, including applicable Commitment (or part)] Administrative details of the New Lender [insert details of Facility Office, address for notices and payment details etc.] [EXISTING LENDER] [NEW LENDER] By: By: The Transfer Date is confirmed by the Facility Agent as [ ]. LLOYDS TSB BANK plc By 73 SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE To: LLOYDS TSB BANK plc as Facility Agent From: SMITH & NEPHEW PLC Date: [ ] SMITH & NEPHEW PLC - US$300,000,000 Credit Agreement dated [ ] February, 2002 (the "Agreement") 1. We refer to the Agreement. This is a Compliance Certificate. 2. We confirm that as at [relevant testing date]: (a) Consolidated EBITDA was [ ]; and Consolidated Total Net Borrowings are [ ]; therefore, Consolidated Total [Net] Borrowings are [ ] x Consolidated EBITDA; and (b) Consolidated EBITA was [ ] and Consolidated Net Interest Payable was [ ]; therefore, the ratio of Consolidated EBITA to Consolidated Net Interest Payable was [ ] to 1. 3. We set out below calculations establishing the figures in paragraph 2 above: [ ]. 4. [We confirm that no Default is outstanding as at [relevant testing date].** SMITH & NEPHEW PLC By: [insert applicable certification language] ---------- ** If this statement cannot be made, the certificate should identify any Default that is outstanding and the steps, if any, being taken to remedy it. 74 SCHEDULE 7 FORM OF BILL Face of Bill No. for(pound)............ ................ 20... To On ..............20.. pay against this Bill of Exchange to our order the sum of .............. for value received against [ ]. Accepted by: For [ACCEPTING LENDER] [COMPANY] .................... .................... Authorised Signatory Authorised Signatory Reverse of Bill For [COMPANY] .................... Authorised Signatory 75 SCHEDULE 8 FORM OF SYNDICATION AGREEMENT SYNDICATION AGREEMENT DATED [ ], 2002 relating to a US$300,000,000 Credit Facility dated [ ] February, 2002 for SMITH & NEPHEWPLC arranged by LLOYDS TSB CAPITAL MARKETS ALLEN & OVERY London 76 THIS AGREEMENT is dated [ ], 2002 BETWEEN: (1) SMITH & NEPHEW PLC (registered number 324357) (the "Company"); (2) LLOYDS TSB CAPITAL MARKETS as arranger (in this capacity the "Arranger"); (3) THE FINANCIAL INSTITUTIONS listed in Part I of Schedule 1 (Lenders) as the lender party to the Credit Agreement (as defined below) as at the date of this Agreement (the "Existing Lender"); (4) THE FINANCIAL INSTITUTIONS listed in Part II Schedule 1 (Lenders) as the lenders who wish to accede to the Credit Agreement as Lenders (the "New Lenders"); and (5) LLOYDS TSB BANK plc as Facility Agent (the "Facility Agent"). IT IS AGREED as follows: 1. INTERPRETATION 1.1 Definitions In this Agreement: "Credit Agreement" means the credit agreement dated [ ] February, 2002 between, among others, the Company, the Arranger and the Facility Agent. "Effective Date" means [ ]. 1.2 Construction (a) Capitalised terms defined in the Credit Agreement have, unless expressly defined in this Agreement, the same meaning in this Agreement. (b) The provisions of Clause 1.2 (Construction) of the Credit Agreement apply to this Agreement as though they were set out in full in this Agreement except that if references to the Credit Agreement are to be construed as references to this Agreement. 2. CONSENT AND CONFIRMATION The Company, the Arranger, the Existing Lender and the Facility Agent consent to the New Lenders becoming Lenders and confirm that, except as provided in this Agreement, the Finance Documents will continue in full force and effect. 3. REPRESENTATIONS (a) In this Clause "Information Memorandum" means [ ]. 77 (b) The Company represents and warrants to each other party to this Agreement that: (i) as at its date the material factual information relating to the Group contained in the Information Memorandum was accurate in all material respects; (ii) as at its date and to the best of its knowledge, the opinions, projections and forecasts contained in the Information Memorandum and the assumptions on which they are based were arrived at after due and careful consideration and genuinely represented its views; and (iii) to the best of its knowledge there are no material facts or circumstances which have not been disclosed to the parties to this Agreement by the Information Memorandum or otherwise prior to the date of this Agreement and which would make any of the information, opinions, projections, forecasts or assumptions contained in the Information Memorandum incomplete, inaccurate or misleading in any material respect. 4. TRANSFER OF COMMITMENTS On the Effective Date (regardless of whether a Default is outstanding): (a) each New Lender will become a Lender under the Credit Agreement with a Facility B Commitment set opposite its name in Schedule 2 (Lenders and Facility B Commitments); (b) the Facility B Commitments of the Existing Lender will be reduced to the amount set opposite its name in Schedule 2 (Lenders and Facility B Commitments); and (c) each New Lender obtains and undertakes to perform all of the rights and obligations of a Lender in connection with the Finance Documents in respect of the rights and obligations transferred to it under this Clause. 5. [TRANSFER OF PARTICIPATIONS 5.1 Definitions "Participation" means, for a Lender, the amount of its share in the Credits under Facility B, being the amount set out opposite its name in Schedule 3 (Lenders and Participations). 5.2 Participation On the Effective Date (regardless of whether a Default is outstanding): (a) each New Lender will become a Lender under the Credit Agreement with a Participation set opposite its name in Schedule 3 (Lenders and Participations); (b) the Participation of the Existing Lender will be reduced to the amount set opposite its name in Schedule 3 (Lenders and Participations); 78 (c) each New Lender obtains and undertakes to perform all of the rights and obligations of a Lender in connection with the Finance Documents in respect of the rights and obligations transferred to it under this Clause; (d) the Existing Lender will pay to each New Lender the amount notified to it by the Facility Agent, being the amount necessary to ensure that after the payment the amount of each Lender's Participation is equal to the amount set opposite its name in Schedule 3 (Lenders and Participations); (e) each New Lender will pay to the Facility Agent, an amount equal to its Participation in the currency specified by the Facility Agent and in immediately available and freely transferable funds, to be received for value on the Effective Date; and (f) the Facility Agent will pay to the Existing Lender an amount equal to the amount it received from the New Lenders under paragraph (e) above up to a maximum amount equal to the difference between the Existing Lender's Participation immediately prior to the date of this Agreement and the amount of its Participation set opposite its name in Schedule 3 (Lenders and Participations).]/1/ 6. EFFECTIVE DATE 6.1 Amounts due on or before the Effective Date Any amounts payable to the Existing Lender by the Company on or prior to the Effective Date in respect of any period ending prior to the Effective Date will be for the account of the Existing Lender, and none of the New Lenders will have any interest in, or any rights in respect of, those amounts. 6.2 [Credit on the Effective Date If any Credit falls to be utilised on the Effective Date: (a) the Facility Agent will promptly notify each New Lender of the amount of its participation in that Credit; (b) the Existing Lender and each New Lender must participate in that Credit (subject to the terms of the Credit Agreement) as if the transfer of the Facility B Commitments under this Agreement had taken effect prior to opening of business on the Business Day before the Effective Date; and (c) the Company acknowledges that the Existing Lender will not be obliged to participate in that Credit to any greater extent.] 7. NATURE OF THIS AGREEMENT The transfer of Commitments and rights and obligations contemplated by this Agreement will take effect as a novation and clause 30.4 (Procedure for transfer by way of novations) of the Credit Agreement will apply to the Commitments, rights and obligations transferred, as if this Agreement were a Transfer Certificate. __________________________ /1/ Required if transfer during a Term of any Credit. 79 8. PAYMENTS 8.1 Claw-back The Facility Agent is not obliged to pay any amount to the Existing Lender under this Agreement until it has established that it has actually received a related amount from a New Lender. However, the Facility Agent may assume the sum has been paid to it and, in reliance on that assumption, make available to the Existing Lender a corresponding amount. If it transpires that the sum had not been made available, the Existing Lender will within five Business Days of demand by the Facility Agent refund the relevant amount together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, at a rate calculated by the Facility Agent to reflect its cost of funds. 8.2 Administrative details Each New Lender confirms that it has delivered to the Facility Agent its initial details for the purposes of clause 36 (Notices) of the Credit Agreement. 8.3 Administrative details The Reference Banks are, subject to Clause 30.7 (Changes to the Reference Banks) of the Credit Agreement, [ ], [ ] and [ ]. 9. 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. 80 SCHEDULE 1 LENDERS PART I THE EXISTING LENDER Lloyds TSB Bank plc 81 PART II THE NEW LENDERS [ ] 82 SCHEDULE 2 LENDERS AND FACILITY B COMMITMENTS Name of Lender Facility B Commitment ----------- Total Facility B Commitments [ ] 83 SCHEDULE 3 LENDERS AND PARTICIPATIONS Name of Lender Facility B Participation 84 SIGNATORIES Company SMITH & NEPHEW PLC By: Arranger LLOYDS TSB CAPITAL MARKETS By: Existing Lender LLOYDS TSB BANK plc By: New Lenders [ ] By: Facility Agent LLOYDS TSB BANK plc By: 85 SCHEDULE 9 FORM OF POWER OF ATTORNEY FOR BILLS To: LLOYDS TSB BANK PLC as Facility Agent From: SMITH & NEPHEW PLC Date: [ ] SMITH & NEPHEW PLC - U.S.$300,000,000 Credit Agreement dated [ ] February, 2002 (the Agreement) 1. We refer to the Agreement. This is a Power of Attorney. 2. Terms defined in the Agreement have the same meaning when used in this Power of Attorney. 3. We appoint you as our attorney to draw, complete, clause, endorse and deliver Bills in our name and on our behalf in accordance with the Agreement. 4. The powers conferred on you under this Power of Attorney are exercisable jointly by any two of your authorised signatories. 5. In exercising those powers, your authorised signatories will: (a) act as your agents in your capacity as our attorney under this Power of Attorney; (b) sign as follows: "For [Name of Company] by [Name of Facility Agent] as Attorney. ___________________________________ ___________________________________ Authorised Signatories"; and (c) take any other steps they in good faith consider necessary to enable the Company to fulfil its obligations in respect of a Request for Bills and for the Agent to fulfil its obligations under Clause 8.2 (Holding and completion of Bills) of the Agreement. 6. Any Bill drawn and delivered in accordance with this Power of Attorney will be binding upon us. We: (a) indemnify you against any loss or liability incurred by you in acting as our attorney; and (b) agree to ratify anything done by you on our behalf under this Power of Attorney. 86 7. Except as provided below, this Power of Attorney remains in force until you receive a notice in writing signed by us, addressed to [ ] and delivered to your offices at [ ] expressly revoking it (a revocation notice). 8. A revocation notice will not be effective for any Bills drawn pursuant to a Request made before your receipt of that revocation notice. 9. This Power of Attorney is governed by English law. This Power of attorney has been entered into as a deed on the date stated at the beginning of this Power of Attorney. Executed as a deed ) On behalf of ) SMITH & NEPHEW PLC ) By: __________________________ Director __________________________ Director/Secretary 87 SCHEDULE 10 FORM OF LEGAL OPINION OF ALLEN & OVERY To: The Finance Parties named as original parties to the Agreement (as defined below) [ ], 2002 Dear Sirs, SMITH & NEPHEW PLC - US$300,000,000 Agreement dated [ ] February, 2002 (the "Agreement") We have received instructions from the Facility Agent in connection with the Agreement. Defined Terms Terms defined in the Agreement have the same meaning in this opinion. Documents and searches For the purposes of this opinion we have examined the following documents: (a) a signed copy of the Agreement; (b) a certified copy of the memorandum and articles of association and certificate of incorporation of the Company; (c) a certified copy of the minutes of a meeting of a committee of the board of directors of the Company held on[ ]; (d) a certified copy of the minutes of a meeting of the board of directors of the Company held on[ ]; and (e) a certificate of the Company confirming, amongst other things, that the entry into and performance of the Agreement will not contravene any borrowing limit contained in the articles of association of the Company. On [ ] we carried out a search of the Company at the Companies Registry. On [ ] we made a telephone search of the Company at the winding-up petitions at the Companies court. The above are the only documents or records we have examined and the only searches and enquiries we have carried out for the purposes of this opinion. 88 Assumptions We assume that: (a) the Company is not unable to pay its debts within the meaning of section 123 of the Insolvency Act, 1986 at the time it enters into the Agreement and will not as a result of the Agreement be unable to pay its debts within the meaning of that section; (b) no step has been taken to wind up the Company or appoint a receiver in respect of it or any of its assets although the searches of the Companies Registry referred to above gave no indication that any winding-up order or appointment of a receiver has been made; (c) all signatures and documents are genuine; (d) all documents are and remain up-to-date; (e) the correct procedure was carried out at all the board meetings referred to above; for example, there was a valid quorum, all relevant interests of directors were declared and the resolutions were duly passed at each meeting; (f) any restrictions on the ability of the Company to borrow contained in its Articles of Association would not be contravened by the entry into and performance by it of the Agreement; (g) the Agreement has been duly executed on behalf of the Company by the person(s) authorised by the resolutions passed at the relevant meeting referred to above; (h) the Agreement is a legally binding, valid and enforceable obligation of each Finance Party; and (i) no foreign law affects the conclusions stated below. Opinion Subject to the qualifications set out below and to any matters not disclosed to us, it is our opinion that, so far as the present laws of England are concerned: 1. Status: The Company is a company incorporated with limited liability under the laws of England and is not in liquidation. 2. Powers and authority: The Company has the corporate power to enter into and perform the Agreement and has taken all necessary corporate action to authorise the execution, delivery and performance of the Agreement. 3. Legal validity: The Agreement constitutes a legally binding, valid and enforceable obligation of the Company. 4. Non-conflict: The entry into and performance by the Company of the Agreement will not violate any provision of (i) any existing English law applicable to companies generally, or (ii) its memorandum or articles of association. 89 5. Consents: No authorisations of governmental, judicial or public bodies or authorities in England are required by the Company in connection with the performance, validity or enforceability of its payment obligations under the Agreement. 6. Taxes: All payments due from the Company under the Agreement may be made without deduction of any U.K. Taxes, if, in the case of interest: (a) (i) the person that advanced the participation in the Loan to which the interest relates was a bank for the purpose of Section 349 of the Income and Corporation Taxes Act 1988 (as currently defined in section 840A of the Income Corporation Taxes Act 1988) at the time the Loan was made; and (ii) the person beneficially entitled to that interest is within the charge to U.K. corporation tax as regards that interest at the time the interest is paid; or (b) the interest is payable to a Treaty Lender and the Financial Intermediaries and Claims Office has given the necessary exemption authorisation. 7. Registration requirements: It is not necessary or advisable to file, register or record the Agreement in any public place or elsewhere in England. 8. Stamp duties: No stamp, registration or similar tax or charge is payable in England in respect of the Agreement. Qualifications This opinion is subject to the following qualifications: (a) This opinion is subject to all insolvency and other laws affecting the rights of creditors generally. (b) No opinion is expressed on matters of fact. (c) The term "enforceable" means that a document is of a type and form enforced by the English courts. It does not mean that each obligation will be enforced in accordance with its terms. Certain rights and obligations may be qualified by the non-conclusivity of certificates, doctrines of good faith and fair conduct, the availability of equitable remedies and other matters, but in our view these qualifications would not defeat your legitimate expectations in any material respect. This opinion is given for your sole benefit and may not be relied upon by or disclosed to any other person. Yours faithfully 90 SIGNATORIES Company SMITH & NEPHEW PLC By: P.HOOLEY C.J. O'DONNELL Arranger LLOYDS TSB CAPITAL MARKETS By: ROBERT GREENE Original Lender LLOYDS TSB BANK plc By: DAVID BORAN Facility Agent LLOYDS TSB BANK plc By: DAVID BORAN