10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 29, 2009

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to               

Commission File Number: 1-9595

BEST BUY CO., INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-0907483
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7601 Penn Avenue South
Richfield, Minnesota	55423
(Address of principal executive offices)	(Zip Code)

(612) 291-1000
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

        Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value — 416,539,000 shares outstanding as of August 29, 2009.

BEST BUY CO., INC.

FORM 10-Q FOR THE QUARTER ENDED AUGUST 29, 2009

INDEX

Part I — Financial Information				3
	Item 1.		Condensed Consolidated Financial Statements (Unaudited)	3
		a)	Condensed consolidated balance sheets as of August 29, 2009; February 28, 2009; and August 30, 2008	3
		b)	Consolidated statements of earnings for the three and six months ended August 29, 2009, and August 30, 2008	5
		c)	Consolidated statements of cash flows for the six months ended August 29, 2009, and August 30, 2008	6
		d)	Notes to condensed consolidated financial statements	7
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk	49
	Item 4.		Controls and Procedures	50
Part II — Other Information				50
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	50
	Item 4.		Submission of Matters to a Vote of Security Holders	51
	Item 6.		Exhibits	52
Signatures				53

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PART I — FINANCIAL INFORMATION

ITEM 1.CONSOLIDATED FINANCIAL STATEMENTS

BEST BUY CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

($ in millions, except per share amounts)

(Unaudited)

	August 29, 2009		February 28, 2009		August 30, 2008
CURRENT ASSETS
Cash and cash equivalents	$	668	$	498	$	544
Short-term investments	93		11		—
Receivables	1,770		1,868		1,785
Merchandise inventories	5,738		4,753		6,105
Other current assets	1,035		1,062		894
Total current assets	9,304		8,192		9,328
PROPERTY AND EQUIPMENT, NET	4,162		4,174		4,119
GOODWILL	2,442		2,203		2,536
TRADENAMES	168		173		188
CUSTOMER RELATIONSHIPS	318		322		488
EQUITY AND OTHER INVESTMENTS	334		395		501
OTHER ASSETS	463		367		362
TOTAL ASSETS	$	17,191	$	15,826	$	17,522

NOTE:  The consolidated balance sheet as of February 28, 2009, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements.

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BEST BUY CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

($ in millions, except per share amounts)

(Unaudited)

	August 29, 2009		February 28, 2009			August 30, 2008
CURRENT LIABILITIES
Accounts payable	$	5,407	$	4,997		$	5,924
Unredeemed gift card liabilities	400		479			457
Accrued compensation and related expenses	427		459			546
Accrued liabilities	1,543		1,382			1,455
Accrued income taxes	51		281			44
Short-term debt	1,091		783			1,515
Current portion of long-term debt	45		54			39
Total current liabilities	8,964		8,435			9,980
LONG-TERM LIABILITIES	1,217		1,109			929
LONG-TERM DEBT	1,111		1,126			1,136
SHAREHOLDERS’ EQUITY
Best Buy Co., Inc. Shareholders’ Equity
Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none	—		—			—
Common stock, $.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 416,539,000, 413,684,000 and 412,332,000 shares, respectively	42		41			41
Additional paid-in capital	329		205			112
Retained earnings	4,908		4,714			4,205
Accumulated other comprehensive income (loss)	27		(317		)	394
Total Best Buy Co., Inc. shareholders’ equity	5,306		4,643			4,752
Noncontrolling interests	593		513			725
Total shareholders’ equity	5,899		5,156			5,477
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	17,191	$	15,826		$	17,522

NOTE:  The consolidated balance sheet as of February 28, 2009, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements.

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BEST BUY CO., INC.

CONSOLIDATED STATEMENTS OF EARNINGS

($ in millions, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	August 29, 2009			August 30, 2008			August 29, 2009			August 30, 2008
Revenue	$	11,022		$	9,801		$	21,117		$	18,791
Cost of goods sold	8,338			7,420			15,876			14,277
Gross profit	2,684			2,381			5,241			4,514
Selling, general and administrative expenses	2,404			2,042			4,613			3,898
Restructuring charges	—			—			52			—
Operating income	280			339			576			616
Other income (expense)
Investment income and other	18			9			27			30
Interest expense	(22		)	(21		)	(45		)	(34		)
Earnings before income tax expense and equity in loss of affiliates	276			327			558			612
Income tax expense	119			122			245			228
Equity in loss of affiliates	—			—			—			(1		)
Net earnings including noncontrolling interests	157			205			313			383
Net loss (earnings) attributable to noncontrolling interests	1			(3		)	(2		)	(2		)
Net earnings attributable to Best Buy Co., Inc.	$	158		$	202		$	311		$	381
Earnings per share attributable to Best Buy Co., Inc.
Basic	$	0.38		$	0.49		$	0.75		$	0.92
Diluted	$	0.37		$	0.48		$	0.74		$	0.91
Dividends declared per common share	$	0.14		$	0.13		$	0.27		$	0.26
Weighted average common shares outstanding (in millions)
Basic	416.5			412.1			415.8			411.7
Diluted	427.0			423.3			426.2			423.0

See Notes to Condensed Consolidated Financial Statements.

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BEST BUY CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

(Unaudited)

	Six Months Ended
	August 29, 2009			August 30, 2008
OPERATING ACTIVITIES
Net earnings including noncontrolling interests	$	313		$	383
Adjustments to reconcile net earnings including noncontrolling interests to total cash provided by operating activities
Depreciation	407			312
Amortization of definite-lived intangible assets	42			1
Restructuring charges	52			—
Stock-based compensation	57			54
Deferred income taxes	6			(24		)
Excess tax benefits from stock-based compensation	(1		)	(4		)
Other, net	(6		)	(2		)
Changes in operating assets and liabilities, net of acquired assets and liabilities
Receivables	165			(57		)
Merchandise inventories	(883		)	(899		)
Other assets	48			14
Accounts payable	316			782
Other liabilities	(33		)	(126		)
Income taxes	(245		)	(384		)
Total cash provided by operating activities	238			50
INVESTING ACTIVITIES
Additions to property and equipment, net of $122 non-cash capital expenditures in the six months ended August 30, 2008	(310		)	(502		)
Purchases of investments	(7		)	(70		)
Sales of investments	37			183
Acquisition of business, net of cash acquired	—			(2,089		)
Change in restricted assets	(11		)	(10		)
Settlement of net investment hedges	66			—
Other, net	(13		)	(12		)
Total cash used in investing activities	(238		)	(2,500		)
FINANCING ACTIVITIES
Borrowings of debt	2,967			2,188
Repayments of debt	(2,680		)	(614		)
Dividends paid	(117		)	(107		)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options	77			46
Acquisition of noncontrolling interests	(34		)	—
Excess tax benefits from stock-based compensation	1			4
Other, net	4			(12		)
Total cash provided by financing activities	218			1,505
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(48		)	51
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	170			(894		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	498			1,438
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	668		$	544

See Notes to Condensed Consolidated Financial Statements.

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BEST BUY CO., INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share amounts)

(Unaudited)

1.Basis of Presentation

Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us” and “our” in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co., Inc. and its consolidated subsidiaries.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States. All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.

Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada, than in any other fiscal quarter. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

We consolidate the financial results of our Europe, China and Mexico operations on a two-month lag. There were no significant intervening events that would have materially affected our consolidated financial statements had they been recorded during the three months ended August 29, 2009.

In preparing the accompanying unaudited condensed consolidated financial statements, we evaluated the period from August 30, 2009 through October 6, 2009, the date the financial statements herein were available to be issued, for material subsequent events requiring recognition or disclosure. No such events were identified for this period.

Reclassifications

To maintain consistency and comparability, we reclassified certain prior-year amounts to conform to the current-year presentation as described in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009. To conform to the current-year presentation, which presents customer relationships separately on our consolidated balance sheets, we reclassified to customer relationships, $488 at August 30, 2008, which was previously reported in other assets on our condensed consolidated balance sheet.

In addition, as a result of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, as described below in New Accounting Standards, we:

·reclassified to noncontrolling interests, a component of shareholders’ equity, $513 and $725 at February 28, 2009, and August 30, 2008, respectively, which was previously reported as minority interests on our condensed consolidated balance sheets;

·reported as separate captions within our consolidated statements of earnings, net earnings including noncontrolling interests, net (earnings) loss attributable to noncontrolling interests, and net earnings attributable to Best Buy Co., Inc. of $205, $(3) and $202, respectively, for the three months ended August 30, 2008, and $383, $(2) and $381, respectively, for the six months ended August 30, 2008; and

·utilized net earnings including noncontrolling interests of $383 for the six months ended August 30, 2008, as the starting point on our consolidated statements of cash flows in order to reconcile net earnings to cash flows from operating activities, rather than beginning with net earnings, which was previously exclusive of noncontrolling interests.

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These reclassifications had no effect on previously reported consolidated operating income, net earnings attributable to Best Buy Co., Inc., or net cash flows from operating activities.  Also, earnings per share continues to be based on net earnings attributable to Best Buy Co., Inc.

New Accounting Standards

In June 2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 168, The “FASB Accounting Standards Codification” and the Hierarchy of Generally Accepted Accounting Principles. This standard replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The FASB Accounting Standards Codification (the “Codification”) became the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the Securities and Exchange Commission (“SEC”), which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009.  We have begun to use the new guidelines and numbering system prescribed by the Codification when referring to GAAP in the third quarter of fiscal 2010.  As the Codification was not intended to change or alter existing GAAP, it will not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R). This standard responds to concerns about the application of certain key provisions of FASB Interpretation (FIN) 46(R), including those regarding the transparency of the involvement with variable interest entities. Specifically, SFAS No. 167 requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (“VIE”) and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. In addition, the standard requires additional disclosures about the involvement with a VIE and any significant changes in risk exposure due to that involvement. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009. We plan to adopt SFAS No. 167 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140. The new standard eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. SFAS No. 166 is effective for fiscal years beginning after November 15, 2009.  We plan to adopt SFAS No. 166 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. This standard is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this standard sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  SFAS No. 165 was effective for fiscal years and interim periods ended after June 15, 2009 and must be applied prospectively. We adopted and applied the provisions of SFAS No. 165 for our fiscal quarter ended August 29, 2009, and have included the disclosures required by SFAS No. 165 in the Basis of Presentation section above. The adoption of SFAS No. 165 did not have an impact on our consolidated financial position or results of operations.

In April 2009, the FASB issued three FASB Staff Positions (“FSP”) intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. FSP No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidelines for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements. FSP No. 115-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance related to the disclosure of impairment losses on securities and the accounting for impairment losses on debt securities. FSP No. 115-2 does not amend existing guidance related to other-than-temporary impairments of equity securities. FSP No. 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1, Interim Disclosures about Fair Value of Financial Instruments, increases the frequency of fair value disclosures. These FSPs are effective for fiscal years and interim periods ended after June 15, 2009.  As such, we adopted these FSPs in the second quarter of fiscal 2010, and have included the additional required interim disclosures about the fair value of financial instruments and valuation techniques within Note 3, Investments, and Note 4, Fair Value Measurements. The adoption of these FSPs did not have a material impact on our consolidated financial position or results of operations.

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In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand the effect these instruments and activities have on an entity’s financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Our adoption of SFAS No. 161 in the fourth quarter of fiscal 2009 had no impact on our consolidated financial statements. However, in the first quarter of fiscal 2010, we entered into significant derivative hedging contracts and, accordingly, we have included the disclosures required by SFAS No. 161 in Note 8, Derivative Instruments, which are provided on a prospective basis.

In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations (“141R”). SFAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. We adopted SFAS No. 141R on March 1, 2009, which changed our accounting treatment for business combinations on a prospective basis.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160 changes the accounting and reporting for minority interests, which must be recharacterized as noncontrolling interests and classified as a component of shareholders’ equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. We adopted SFAS No. 160 on March 1, 2009, and applied the provisions of the standard prospectively, except for the presentation and disclosure requirements, which we applied retrospectively. Our adoption of SFAS No. 160 did not have a material impact on our consolidated financial statements other than the following reporting and disclosure changes which we applied retrospectively to all periods presented:

(i)we recharacterized minority interests previously reported on our condensed consolidated balance sheets as noncontrolling interests and classified them as a component of shareholders’ equity;

(ii)we adjusted certain captions previously utilized on our consolidated statements of earnings to specifically identify net earnings attributable to noncontrolling interests and net earnings attributable to Best Buy Co., Inc.; and

(iii)in order to reconcile net earnings to the cash flows from operating activities, we changed the starting point on our consolidated statements of cash flows from net earnings to net earnings including noncontrolling interests, with net earnings or loss from the noncontrolling interests (previously, minority interests) no longer a reconciling item in arriving at net cash flows from operating activities in our consolidated statement of cash flows.

Additional disclosures required by this standard are included in Note 10, Supplemental Equity and Comprehensive Income Information.

2.Acquisitions

Five Star

We acquired a 75% interest in Jiangsu Five Star Appliance Co., Ltd. (“Five Star”) in June 2006, for $184, which included a working capital injection of $122. At the time of the acquisition, we also entered into an agreement with Five Star’s minority shareholders to acquire the remaining 25% interest in Five Star within four years, subject to Chinese government approval.

On February 6, 2009, we were granted a business license to acquire the remaining 25% interest in Five Star and our acquisition converted Five Star into a wholly-owned foreign enterprise. The $191 purchase price for the remaining 25% interest was primarily based on a previously agreed-upon pricing formula, consisting of a base purchase price and an earn-out for the remaining Five Star shareholders. The amount paid in excess of the fair value of the net assets acquired, as agreed to at the time of the initial purchase, furthers our international growth plans and accelerates the integration of Best Buy and Five Star in China.

The acquisition of the remaining 25% interest in Five Star for $191 was accounted for using the purchase method in accordance with SFAS No. 141, Business Combinations. We recorded the net assets acquired at their estimated fair values. We included Five Star’s operating results, which are reported on a two-month lag, from the date of acquisition as part of our International

9

segment. The purchase price allocation is preliminary and will be finalized no later than the fourth quarter of fiscal 2010. None of the goodwill is deductible for tax purposes.

The preliminary purchase price allocation was as follows:

Net assets of noncontrolling interests	$	48
Tradenames	8
Goodwill	137
Total assets	193
Long-term liabilities	(2		)
Purchase price allocated to assets and liabilities acquired	$	191

Napster

On October 25, 2008, we acquired Napster, Inc. (“Napster”) for $121 (or $100 net of cash acquired), pursuant to a cash tender offer whereby all issued and outstanding shares of Napster common stock, and all stock purchase rights associated with such shares, were acquired by us at a price of $2.65 per share. Of the $121 purchase price, $4 represented our previous ownership interest in Napster common shares. The effective acquisition date for accounting purposes was the close of business on October 31, 2008, the end of Napster’s fiscal October.

We entered into this transaction as we believe Napster has one of the most comprehensive and easy-to-use digital music offerings in the industry. The amount we paid in excess of the fair value of the net assets acquired was to obtain Napster’s capabilities and digital subscriber base to reach new customers with an enhanced experience for exploring and selecting music and other digital entertainment products over an increasing array of devices, such as bundling the sale of hardware with digital services. We believe the combined capabilities of our two companies allows us to build stronger relationships with customers and expand the number of subscribers.

We have consolidated Napster in our financial results as part of our Domestic segment from the date of acquisition. We recorded the net assets acquired at their estimated fair values and allocated the purchase price on a preliminary basis using information then available. The allocation of the purchase price to the acquired assets and liabilities will be finalized no later than the third quarter of fiscal 2010. None of the goodwill is deductible for tax purposes.

The preliminary purchase price allocation was as follows:

Cash and cash equivalents	$	21
Short term investments	28
Receivables	3
Other current assets	2
Property and equipment	10
Goodwill	32
Tradenames	13
Customer relationships	3
Equity and other investments	3
Other assets (deferred tax assets)	47
Total assets	162
Accounts payable	(3		)
Other current liabilities	(38		)
Total liabilities	(41		)
Purchase price allocated to assets and liabilities acquired	$	121

Best Buy Europe

On May 7, 2008, we entered into a Sale and Purchase Agreement with The Carphone Warehouse Group PLC (“CPW”). All conditions to closing were satisfied, and the transaction was consummated on June 30, 2008. The effective acquisition date for accounting purposes was the close of business on June 28, 2008, the end of CPW’s fiscal first quarter. Pursuant to the

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transaction, CPW contributed certain assets and liabilities into a newly-formed company, Best Buy Europe Distributions Limited (“Best Buy Europe”), in exchange for all of the ordinary shares of Best Buy Europe, and our wholly-owned subsidiary, Best Buy Distributions Limited, purchased 50% of such ordinary shares of Best Buy Europe from CPW for an aggregate purchase price of $2,167. In addition to the purchase price paid to CPW, we incurred $29 of transaction costs for an aggregate purchase price of $2,196.

Pursuant to a shareholders’ agreement with CPW, our designees to the Best Buy Europe board of directors have ultimate approval rights over select Best Buy Europe senior management positions and the annual capital and operating budgets of Best Buy Europe.

The assets and liabilities contributed to Best Buy Europe by CPW included CPW’s retail and distribution business, consisting of retail stores and online offerings; mobile airtime reselling operations; device insurance operations; fixed line telecommunications businesses in Spain and Switzerland; facilities management business, under which it bills and manages the customers of network operators in the U.K.; dealer business, under which it acts as a wholesale distributor of handsets and airtime vouchers; and economic interests in pre-existing commercial arrangements with us (Best Buy Mobile in the U.S. and the Geek Squad joint venture in the U.K. and Spain).

The amount we paid at the time of acquisition in excess of the fair value of the net assets acquired was primarily for (i) the expected future cash flows derived from the existing business and infrastructure contributed to Best Buy Europe by CPW, which included over 2,400 retail stores, (ii) immediate access to the European market with a management team that is experienced in both retailing and wireless service technologies in this marketplace, and (iii) the expected synergies our management believes the venture will generate, which include benefits from joint purchasing, sourcing and merchandising. In addition, Best Buy Europe plans to introduce new product and service offerings in its retail stores and, beginning in fiscal 2011, launch large-format Best Buy-branded stores and Web sites in the European market.

We have consolidated Best Buy Europe in our financial results as part of our International segment from the date of acquisition. We consolidate the financial results of Best Buy Europe on a two-month lag to align with CPW’s quarterly reporting periods.

We recorded the net assets acquired at their estimated fair values and allocated the purchase price on a preliminary basis using information then available. The allocation of the purchase price to the acquired assets and liabilities was finalized in the second quarter of fiscal 2010. None of the goodwill is deductible for tax purposes.

The final purchase price allocation was as follows:

Cash and cash equivalents	$	124
Restricted cash	112
Receivables	1,190
Merchandise inventories	535
Other current assets	114
Property and equipment	500
Goodwill	1,546
Tradenames	93
Customer relationships	484
Other assets	184
Total assets	4,882
Accounts payable	(803		)
Other current liabilities	(695		)
Short-term debt	(299		)
Long-term liabilities	(246		)
Total liabilities	(2,043		)
Noncontrolling interests1	(643		)
Purchase price allocated to assets and liabilities acquired	$	2,196

1We recorded the fair value adjustments only in respect of the 50% of net assets acquired, with the remaining 50% of the net assets of Best Buy Europe being consolidated and recorded at their historical cost basis. This also resulted in a $643 noncontrolling interest being reflected in our condensed consolidated balance sheet in respect of the 50% owned by CPW.

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The valuation of the identifiable intangible assets acquired was based on management’s estimates, available information and reasonable and supportable assumptions. The valuation was generally based on the fair value of these assets using income and market approaches. The amortizable intangible assets are being amortized using a straight-line method over their respective estimated useful lives. The following table summarizes the identified intangible asset categories and their respective weighted average amortization periods:

	Weighted Average
	Amortization Period (in years)	Fair Value
Customer relationships	6.8	$	484
Tradenames	4.2	93
Total	6.4	$	577

We recorded an estimate for costs to terminate certain activities associated with Best Buy Europe operations. A restructuring accrual of $20 has been recorded and reflects the accrued restructuring costs incurred at the date of acquisition, primarily for store closure costs and agreement termination fees.

Our interest in Best Buy Europe is separate from our investment in the common stock of CPW, as discussed in Note 3, Investments.

Pro Forma Financial Results

Our pro forma condensed consolidated financial results of operations are presented in the following table as if the acquisitions described above had been completed at the beginning of each period presented:

	Three months		Six months
	ended		ended
	August 30, 2008		August 30, 2008
Pro forma revenue	$	11,250	$	21,778
Pro forma net earnings	161		336
Pro forma earnings per common share
Basic	$	0.39	$	0.82
Diluted	0.38		0.80
Weighted average common shares outstanding
Basic	412.1		411.7
Diluted	423.3		423.0

These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as increased interest expense on acquisition debt, foregone interest income and amortization related to acquired customer relationships and tradenames. They have not been adjusted for the effect of costs or synergies that would have been expected to result from the integration of these acquisitions or for costs that are not expected to recur as a result of the acquisitions. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred at the beginning of each period presented, or of future results of the consolidated entities.

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3.Investments

Investments were comprised of the following:

	August 29, 2009		February 28, 2009		August 30, 2008
Short-term investments
Money market fund	$	4	$	8	$	—
Debt securities (auction-rate securities)	89		—		—
Other investments	—		3		—
Total short-term investments	$	93	$	11	$	—
Equity and other investments
Debt securities (auction-rate securities)	$	209	$	314	$	354
Marketable equity securities	78		41		101
Other investments	47		40		46
Total equity and other investments	$	334	$	395	$	501

Debt Securities

Our debt securities are comprised of auction-rate securities (“ARS”). We classify our investments in ARS as available-for-sale and carry them at fair value. ARS were intended to behave like short-term debt instruments because their interest rates reset periodically through an auction process, most commonly at intervals of 7, 28 and 35 days. The auction process had historically provided a means by which we could rollover the investment or sell these securities at par in order to provide us with liquidity as needed.

In mid-February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. We sold $22 of ARS at par during the first six months of fiscal 2010. However, at August 29, 2009, our entire remaining ARS portfolio, consisting of 51 investments in ARS, was subject to failed auctions. Subsequent to August 29, 2009, and through October 6, 2009, we sold $6 (par value) of our ARS.

As a result of the persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, we have classified all of our investments in ARS as non-current assets within equity and other investments in our consolidated balance sheet at August 29, 2009, except for $89, which was marketed and sold by UBS AG and its affiliates (collectively, “UBS”) and is classified within short-term investments. In October 2008, we accepted a settlement with UBS pursuant to which UBS issued to us Series C-2 Auction Rate Securities Rights (“ARS Rights”). The ARS Rights provide us the right to receive the full par value of our UBS-brokered ARS of $89 plus accrued but unpaid interest at any time between June 30, 2010, and July 2, 2012.  We plan to exercise our ARS Rights in the second quarter of fiscal 2011.

Our ARS portfolio consisted of the following at August 29, 2009, February 28, 2009, and August 30, 2008, at fair value:

Description	Nature of collateral or guarantee	August 29,2009		February 28, 2009		August 30,2008
Student loan bonds	Student loans guaranteed 95% to 100% by the U.S. government	$	278	$	276	$	295
Municipal revenue bonds	100% insured by AA/Aa-rated bond insurers at August 29, 2009	20		24		44
Auction preferred securities	Underlying investments of closed-end funds	—		14		15
Total fair value1		$	298	$	314	$	354

1The par value and weighted-average interest rates (taxable equivalent) of our ARS were $306, $329 and $354 and 1.23%, 2.04% and 6.95%, respectively, at August 29, 2009, February 28, 2009, and August 30, 2008, respectively.

At August 29, 2009, our ARS portfolio was 79% AAA/Aaa-rated, 9% AA/Aa-rated and 12% A/A-rated.

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The investment principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments are due according to the contractual maturities of the debt issues, which range from seven to 39 years. We intend to hold our ARS until we can recover the full principal amount through one of the means described above, and have the ability to do so based on our other sources of liquidity.

We evaluated our entire ARS portfolio of $306 (par value) for impairment at August 29, 2009, based primarily on the methodology described in Note 4, Fair Value Measurements. As a result of this review, we determined that the fair value of our ARS portfolio at August 29, 2009, was $298. Accordingly, we recognized a $8 pre-tax unrealized loss in accumulated other comprehensive income. This unrealized loss reflects a temporary impairment on all of our investments in ARS, except for our investments in ARS with UBS, for which we have determined that fair value approximates par value. The estimated fair value of our ARS portfolio could change significantly based on future market conditions. We will continue to assess the fair value of our ARS portfolio for substantive changes in relevant market conditions, changes in our financial condition or other changes that may alter our estimates described above.

We may be required to record an additional unrealized holding loss or an impairment charge to earnings if we determine that our ARS portfolio has incurred a further decline in fair value that is temporary or other-than-temporary, respectively. Factors that we consider when assessing our ARS portfolio for other-than-temporary impairment include the duration and severity of the impairment, the reason for the decline in value and the potential recovery period, the nature of the collateral or guarantees in place as well as our intent and ability to hold an investment.

We had $(5), $(10) and $0 in unrealized (loss) gain, net of tax, recorded in accumulated other comprehensive income at August 29, 2009, February 28, 2009, and August 30, 2008, respectively, related to our investments in debt securities.

Marketable Equity Securities

We invest in marketable equity securities and classify them as available-for-sale. Investments in marketable equity securities are classified as non-current assets within equity and other investments in our condensed consolidated balance sheets, and are reported at fair value based on quoted market prices.

Our investments in marketable equity securities were as follows:

	August 29,2009		February 28, 2009		August 30,2008
Common stock of CPW	$	78	$	40	$	94
Other	—		1		7
Total	$	78	$	41	$	101

We review all investments for other-than-temporary impairment at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of the decline in fair value as well as the intent and ability to hold the investment to allow for a recovery in the market value of the investment. In addition, we consider qualitative factors that include, but are not limited to: (i) the financial condition and business plans of the investee including its future earnings potential, (ii) the investee’s credit rating, and (iii) the current and expected market and industry conditions in which the investee operates. If a decline in the fair value of an investment is deemed by management to be other-than-temporary, we write down the cost basis of the investment to fair value, and the amount of the write-down is included in net earnings. Such a determination is dependent on the facts and circumstances relating to each investment.

We purchased shares of CPW’s common stock in fiscal 2008 for $183 and in the third quarter of fiscal 2009, recorded a $111 other-than-temporary impairment charge.  Subsequent to February 28, 2009, the market price of CPW common stock increased and, accordingly, we recorded a $32 pre-tax unrealized gain in accumulated other comprehensive income related to this investment at August 29, 2009.

All unrealized holding gains or losses related to our investments in marketable equity securities are reflected net of tax in accumulated other comprehensive income in shareholders’ equity. Net unrealized gain (loss), net of tax, included in accumulated other comprehensive income was $21, $(4) and $(72) at August 29, 2009, February 28, 2009, and August 30, 2008, respectively.

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Other Investments

The aggregate carrying values of investments accounted for using either the cost method or the equity method at August 29, 2009, February 28, 2009, and August 30, 2008, were $47, $43 and $46, respectively.

4.Fair Value Measurements

We adopted SFAS No. 157, Fair Value Measurements, on March 2, 2008. This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a three-tier valuation hierarchy based upon observable and non-observable inputs:

Level 1 —Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2 —Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly.

Level 3 —Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at August 29, 2009, February 28, 2009, and August 30, 2008, according to the valuation techniques we used to determine their fair values.

			Fair Value Measurements Using Inputs Considered as
	Fair Value at August 29, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSETS
Short-term investments
Money market fund	$	4	$	—	$	4	$	—
Auction-rate securities	89		—		—		89
Other current assets
U.S. Treasury bills (restricted cash)	80		80		—		—
Money market funds (restricted cash)	53		53		—		—
Derivative instruments	9		—		9		—
Equity and other investments
Auction-rate securities	209		—		—		209
Marketable equity securities	78		78		—		—
Other assets
Assets that fund deferred compensation	71		71		—		—
Derivative instruments	6		—		6		—
LIABILITIES
Accrued liabilities
Derivative instruments	1		—		1		—
Long-term liabilities
Deferred compensation	60		60		—		—

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			Fair Value Measurements Using Inputs Considered as
	Fair Value at February 28, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSETS
Short-term investments
Money market fund	$	8	$	—	$	8	$	—
Other current assets (restricted assets)
U.S. Treasury bills	125		125		—		—
Equity and other investments
Auction-rate securities	314		—		—		314
Marketable equity securities	41		41		—		—
Other assets
Assets that fund deferred compensation	64		64		—		—
LIABILITIES
Long-term liabilities
Deferred compensation	55		55		—		—

			Fair Value Measurements Using Inputs Considered as
	Fair Value at August 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSETS
Cash and cash equivalents
Money market funds	$	124	$	124	$	—	$	—
Other current assets (restricted assets)
Money market funds	104		104		—		—
Equity and other investments
Auction-rate securities	354		—		—		354
Marketable equity securities	101		101		—		—
Other assets
Assets that fund deferred compensation	79		79		—		—
LIABILITIES
Long-term liabilities
Deferred compensation	71		71		—		—

The following tables provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) for the three and six months ended August 29, 2009 and August 30, 2008.

	Debt securities- Auction-rate securities only
	Student loan  bonds			Municipal revenue bonds			Auction preferred securities		Total
Balances at May 30, 2009	$	274		$	24		$	—	$	298
Changes in unrealized gains (losses)	5			—			—		5
Purchases, sales and settlements, net	(1		)	(4		)	—		(5		)
Balances at August 29, 2009	$	278		$	20		$	—	$	298

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	Debt securities- Auction-rate securities only
	Student loan  bonds			Municipal revenue bonds			Auction preferred securities			Total
Balances at February 28, 2009	$	276		$	24		$	14		$	314
Changes in unrealized gains (losses)	5			—			1			6
Purchases, sales and settlements, net	(3		)	(4		)	(15		)	(22		)
Balances at August 29, 2009	$	278		$	20		$	—		$	298

	Debt securities- Auction-rate securities only
	Student loan  bonds			Municipal  revenue bonds			Auction preferred securities			Total
Balances at May 31, 2008	$	298		$	59		$	23		$	380
Purchases, sales and settlements, net	—			(15		)	(8		)	(23		)
Interest received, net	(3		)	—			—			(3		)
Balances at August 30, 2008	$	295		$	44		$	15		$	354

	Debt securities- Auction-rate securities only
	Student loan  bonds			Municipal  revenue bonds			Auction preferred securities			Total
Balances at March 1, 2008	$	297		$	97		$	23		$	417
Purchases, sales and settlements, net	(1		)	(53		)	(8		)	(62		)
Interest received, net	(1		)	—			—			(1		)
Balances at August 30, 2008	$	295		$	44		$	15		$	354

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Money Market Funds.  Our money market fund investments were classified as Level 1 or 2. If a fund is not trading on a regular basis, and we have been unable to obtain pricing information on an ongoing basis, we classify the fund as Level 2.

U.S. Treasury Bills.  Our U.S. Treasury notes were classified as Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.

Derivative Instruments.  Comprised primarily of foreign currency forward contracts and foreign currency swaps, our derivative instruments were measured at fair value using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not actively traded.

Auction-Rate Securities.  Our investments in auction-rate securities were classified as Level 3 as quoted prices were unavailable due to events described in Note 3, Investments. Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value at August 29, 2009. The assumptions used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with auction-rate securities.

Marketable Equity Securities.  Our marketable equity securities were measured at fair value using quoted market prices. They were classified as Level 1 as they trade in an active market for which closing stock prices are readily available.

Deferred Compensation.  Our deferred compensation liabilities and the assets that fund our deferred compensation consist of investments in mutual funds. These investments were classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.

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Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Disclosures for nonfinancial assets and liabilities that are measured at fair value, but are recognized and disclosed at fair value on a nonrecurring basis, were required prospectively beginning March 1, 2009. During the six months ended August 29, 2009, we had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Fair Value of Financial Instruments

Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments, accounts payable, accrued liabilities and short- and long-term debt. The fair values of cash, receivables, accounts payable, accrued liabilities and short-term debt approximated carrying values because of the short-term nature of these instruments. Fair values for other investments held at cost are not readily available, but are estimated to approximate fair value. See Note 7, Debt, for information about the fair value of our long-term debt.

5.Goodwill and Intangible Assets

The changes in the carrying amount of goodwill and indefinite-lived tradenames by segment were as follows in the six months ended August 29, 2009 and August 30, 2008:

	Goodwill						Tradenames
	Domestic		International		Total		Domestic		International		Total
Balances at February 28, 2009	$	434	$	1,769	$	2,203	$	32	$	72	$	104
Adjustments to purchase price allocation	—		42		42		—		—		—
Changes in foreign currency exchange rates	—		197		197		—		7		7
Balances at August 29, 2009	$	434	$	2,008	$	2,442	$	32	$	79	$	111

	Goodwill								Tradenames
	Domestic		International			Total			Domestic		International			Total
Balances at March 1, 2008	$	450	$	638		$	1,088		$	23	$	74		$	97
Acquisition	—		1,491			1,491			—		—			—
Changes in foreign currency exchange rates	—		(43		)	(43		)	—		(3		)	(3		)
Balances at August 30, 2008	$	450	$	2,086		$	2,536		$	23	$	71		$	94

The following table provides the gross carrying amount and related accumulated amortization of definite-lived intangible assets:

	August 29, 2009					February 28, 2009					August 30, 2008
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Tradenames	$	76	$	(19	)	$	79	$	(10	)	$	94	$	—
Customer relationships	406		(88		)	367		(45		)	489		(1		)
Total	$	482	$	(107	)	$	446	$	(55	)	$	583	$	(1	)

Total amortization expense for the three months ended August 29, 2009 and August 30, 2008 was $21 and less than $1, respectively, and was $42 and $1 for the six months then ended, respectively.  The estimated future amortization expense for identifiable intangible assets during the remainder of fiscal 2010 and for the next four years is as follows:

Fiscal Year
Remainder of fiscal 2010	$	44
2011	89
2012	67
2013	46
2014	41
Thereafter	88

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6.Restructuring Charges

In the fourth quarter of fiscal 2009, we implemented a restructuring plan for our domestic and international businesses to support our fiscal 2010 strategy and long-term growth plans. We believe these changes will provide an operating structure that will support a more effective and efficient use of our resources and provide a platform from which key strategic initiatives can progress despite changing economic conditions. In the fourth quarter of fiscal 2009, we recorded charges of $78, related primarily to voluntary and involuntary separation plans at our corporate headquarters.

In April 2009, we notified our U.S. Best Buy store employees of our intention to update our store operating model, which included eliminating certain positions. In addition, we incurred restructuring charges related to employee termination benefits and business reorganization costs at Best Buy Europe within our International segment.  As a result of our restructuring efforts, we recorded charges of $52 in the first quarter of fiscal 2010.  No restructuring charges were recorded in the second quarter of fiscal 2010, and we believe we are substantially complete with our announced restructuring activities.

All charges related to our restructuring plans were presented as restructuring charges in our consolidated statements of earnings. The composition of our restructuring charges incurred in the six months ended August 29, 2009, as well as the cumulative amount incurred through August 29, 2009, for both the Domestic and International segments, were as follows:

	Domestic					International				Total
	Six Months Ended August 29, 2009			Cumulative Amount through August 29, 2009		Six Months Ended August 29, 2009		Cumulative Amount through August 29, 2009		Six Months Ended August 29, 2009		Cumulative Amount through August 29, 2009
Termination benefits	$		25	$	94	$	26	$	32	$	51	$	126
Facility closure costs	—			1		1		1		1		2
Property and equipment write-downs	—			2		—		—		—		2
Total	$	25		$	97	$	27	$	33	$	52	$	130

The following table summarizes our restructuring accrual activity in the six months ended August 29, 2009, related to termination benefits and facility closure costs:

	Termination Benefits			Facility Closure Costs			Total
Balances at February 28, 2009	$	73		$	1		$	74
Charges	51			1			52
Cash payments	(104		)	(1		)	(105		)
Effects of foreign exchange rates	2			—			2
Balances at August 29, 2009	$	22		$	1		$	23

We will continue to evaluate our operating structure and cannot project whether any further restructuring charges will be necessary.

7.Debt

Short-Term Debt

Short-term debt consisted of the following:

	August 29, 2009		February 28, 2009		August 30, 2008
JPMorgan credit facility	$	325	$	162	$	1,173
Europe receivables financing agreement	—		—		—
Europe revolving credit facility	730		584		299
Canada revolving demand facility	—		2		—
China revolving demand facilities	36		35		43
Total short-term debt	$	1,091	$	783	$	1,515

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Europe Receivables Financing Agreement

In the second quarter of fiscal 2010, a subsidiary of Best Buy Europe (the “Subsidiary”) entered into a £350 (or $573) receivables financing agreement (the “Agreement”) with Barclays Bank PLC, as administrative agent, and a syndication of banks to finance the working capital needs of Best Buy Europe. The Agreement is secured by certain network carrier receivables of the Subsidiary. Availability on the facility is based on a percentage of the available acceptable receivables, as defined in the Agreement.  Although no amount was outstanding under the Agreement at August 29, 2009, in September 2009, we drew the full amount available of £245 (or $401) on the Agreement. The Agreement expires on July 3, 2012.

Interest rates under the Agreement are variable, based on the three-month London Interbank Offered Rate (LIBOR) plus a margin of 3.00%, with a commitment fee of 1.5% on unused available capacity.  The Agreement also required an initial commitment fee of 2.75%.

The Agreement is not guaranteed by Best Buy Co., Inc., or any subsidiary nor does it provide for any recourse to Best Buy Co., Inc. The Agreement contains customary affirmative and negative covenants. Among other things, these covenants restrict or prohibit the Subsidiary’s ability to incur certain types or amounts of indebtedness, incur additional encumbrances on its receivables, make material changes in the nature of its business, dispose of material assets, make guarantees, or engage in a change in control transaction. The Agreement also contains covenants that require the Subsidiary to comply with a maximum annual leverage ratio, a minimum annual interest coverage ratio and a minimum fixed charges coverage ratio.

Europe Revolving Credit Facility

In connection with a £475 (or $777) revolving credit facility available to Best Buy Europe with CPW as lender, Best Buy Co., Inc. is named as guarantor, up to 50% of the amount outstanding. Concurrent with entering into the Agreement described above, we amended the revolving credit facility to decrease the amount available under the revolving credit facility by the amount available under the Agreement. The related guarantee by Best Buy Co., Inc. was similarly reduced. The revolving credit facility expires in March 2013.

Long-Term Debt

Long-term debt consisted of the following:

	August 29, 2009			February 28, 2009			August 30, 2008
6.75% notes	$	500		$	500		$	500
Convertible debentures	402			402			402
Financing lease obligations	195			200			198
Capital lease obligations	55			65			63
Other debt	4			13			12
Total long-term debt	1,156			1,180			1,175
Less: current portion	(45		)	(54		)	(39		)
Total long-term debt, less current portion	$	1,111		$	1,126		$	1,136

The fair value of long-term debt approximated $1,190, $1,122 and $1,183 at August 29, 2009, February 28, 2009, and August 30, 2008, respectively, based primarily on the ask prices quoted from external sources, compared with carrying values of $1,156, $1,180 and $1,175, respectively.

Other than as referred to above, see Note 6, Debt, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, for additional information regarding the terms of our debt facilities and obligations.

8.Derivative Instruments

We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. Under this strategy, foreign currency exchange contracts are utilized to manage foreign currency exposure to certain forecasted inventory purchases, revenue streams and net investments in certain foreign operations. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows as well as net asset values associated with changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for trading or speculative purposes.

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We record all derivatives on our condensed consolidated balance sheets at fair value and evaluate hedge effectiveness prospectively and retrospectively. We formally document all hedging relationships at inception for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. Our strategy employs both cash flow and net investment hedges. We classify the cash flows from derivatives treated as hedges in our consolidated statement of cash flows in the same category as the item being hedged. In addition, we have derivatives which are not designated as hedging instruments. We have no derivatives that have credit-risk-related contingent features, and we mitigate our credit risk by engaging with major financial institutions as our counterparties.

Cash Flow Hedges

We enter into foreign currency exchange contracts to hedge against the effect of exchange rate fluctuations on certain revenue streams denominated in non-functional currencies. The contracts have terms of up to three years. We report the effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income and it is subsequently reclassified into net earnings in the period in which the hedged transaction affects net earnings or the forecasted transaction is no longer probable of occurring.  We report the ineffective portion, if any, of the gain or loss in net earnings.

Net Investment Hedges

We also enter into foreign currency exchange swap contracts to hedge against the effect of euro and swiss franc exchange rate fluctuations on net investments of certain foreign operations. For a net investment hedge, we recognize changes in the fair value of the derivative as a component of foreign currency translation within other comprehensive income to offset a portion of the change in the translated value of the net investment being hedged, until the investment is sold or liquidated.  We limit recognition in net earnings of amounts previously recorded in cumulative translation of other comprehensive income to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.  We report the ineffective portion, if any, of the gain or loss in net earnings.

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include forward currency exchange contracts used to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies and on certain forecasted inventory purchases and revenue streams denominated in non-functional currencies.  The contracts have terms of up to twelve months. These derivative instruments are not designated in hedging relationships; therefore, we record gains and losses on these contracts directly in net earnings.  There were $4 in gains recorded to net earnings in the second quarter of fiscal 2010 related to dedesignated derivative instruments formerly designated in cash flow hedging relationships.

Summary of Derivative Balances

The following table presents the gross fair values for derivative instruments and the corresponding classification in our condensed consolidated balance sheet at August 29, 2009:

	Assets			Liabilities
Contract Type	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Derivatives designated as hedging instruments
Cash flow hedges
Foreign exchange forward contracts	Other current assets	$	5	Accrued liabilities	$	—
Foreign exchange forward contracts	Other assets	6		Long-term liabilities	—
Net investment hedges
Foreign exchange swap contracts	Other current assets	—		Accrued liabilities	—
Total derivatives designated as hedging instruments		$	11		$	—
Derivatives not designated as hedging instruments
Foreign currency forward contracts	Other current assets	4		Accrued liabilities	(1		)
Total derivatives		$	15		$	(1	)

21

The following table presents the effects of derivative instruments on other comprehensive income (“OCI”) and on our consolidated statements of earnings for the three and six months ended August 29, 2009:

	Pre-taxGain (Loss) Recognized in OCI 1		Gain (Loss) Recognized in Income on Derivative(Ineffective Portion) 2				Gain (Loss) Reclassifiedfrom Accumulated OCI to Net Earnings(Effective Portion)
Contract Type	At August 29, 2009		Three months ended August 29, 2009		Six months ended August 29, 2009		Three months ended August 29, 2009		Six months ended August 29, 2009
Derivatives designated as hedging instruments
Cash flow hedges
Foreign exchange forward contracts3	$	11	$	—	$	—	$	3	$	3
Net investment hedges
Foreign exchange swap contracts	72		—		—		—		—
Total	$	83	$	—	$	—	$	3	$	3

1Reflects the amount recognized in OCI prior to the reclassification of $5 and $36 to noncontrolling interests for the cash flow and net investment hedges, respectively.

2There are no amounts excluded from the assessment of hedge effectiveness.

3Gains reclassified from OCI are included within selling, general and administrative expenses in our consolidated statements  of earnings.

The following table presents the effects of derivatives not designated as hedging instruments on our consolidated statements of earnings for the three and six months ended August 29, 2009:

	Gain (Loss) Recognized in Income1
Contract Type	Three months ended August 29, 2009		Six months ended August 29, 2009
Derivatives not designated as hedging instruments
Foreign exchange forward contracts	$	3	$	(1	)

1Included within selling, general and administrative expenses in our consolidated statements of earnings.

The following table presents the notional amounts of our foreign currency exchange contracts at August 29, 2009:

	Notional Amount
Derivatives designated as cash flow hedging instruments	$	141
Derivatives designated as net investment hedging instruments	705
Derivatives not designated as hedging instruments	122
Total	$	968

22

9.Earnings per Share

Our basic earnings per share calculation is computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculation is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive shares of common stock include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well as common shares that would have resulted from the assumed conversion of our convertible debentures. Since the potentially dilutive shares related to the convertible debentures are included in the calculation, the related interest expense, net of tax, is added back to net earnings, as the interest would not have been paid if the convertible debentures had been converted to common stock. Nonvested market-based awards and nonvested performance-based awards are included in the average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods.

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share attributable to Best Buy Co., Inc. (shares in millions):

	Three Months Ended				Six Months Ended
	August 29, 2009		August 30, 2008		August 29, 2009		August 30, 2008
Numerator
Net earnings attributable to Best Buy Co., Inc., basic	$	158	$	202	$	311	$	381
Adjustment for assumed dilution
Interest on convertible debentures, net of tax	2		1		3		3
Net earnings attributable to Best Buy Co., Inc., diluted	$	160	$	203	$	314	$	384
Denominator
Weighted-average common shares outstanding	416.5		412.1		415.8		411.7
Effect of potentially dilutive securities
Shares from assumed conversion of convertible debentures	8.8		8.8		8.8		8.8
Stock options and other	1.7		2.4		1.6		2.5
Weighted-average common shares outstanding, assuming dilution	427.0		423.3		426.2		423.0
Earnings per share attributable to Best Buy Co., Inc.
Basic	$	0.38	$	0.49	$	0.75	$	0.92
Diluted	$	0.37	$	0.48	$	0.74	$	0.91

The computation of average dilutive shares outstanding excluded options to purchase 20.0 million and 12.8 million shares of our common stock for the three months ended August 29, 2009, and August 30, 2008, respectively, and 20.0 million and 12.7 million shares of our common stock for the six months ended August 29, 2009, and August 30, 2008, respectively. These amounts were excluded as the options’ exercise prices were greater than the average market price of our common stock for the periods presented and, therefore, the effect would be antidilutive (i.e., including such options would result in higher earnings per share).

23

10.Supplemental Equity and Comprehensive Income Information

The following tables present our consolidated statements of changes in shareholders’ equity for the six months ended August 29, 2009 and August 30, 2008, respectively (shares in millions):

	Best Buy Co., Inc.
	Common Shares	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total Best Buy Co., Inc.			Non controlling Interests			Total
Balances at February 28, 2009	414	$	41	$	205		$	4,714		$	(317	)	$	4,643		$	513		$	5,156
Comprehensive income:
Net earnings, six months ended August 29, 2009	—	—		—			311			—			311			2			313
Other comprehensive income, net of tax
Foreign currency translation adjustments	—	—		—			—			310			310			96			406
Unrealized gains on available-for-sale investments	—	—		—			—			30			30			—			30
Cash flow hedging instruments — unrealized gains	—	—		—			—			4			4			4			8
Total comprehensive income													655			102			757
Acquisition of business (adjustments to purchase price allocation)	—	—		—			—			—			—			(22		)	(22		)
Stock-based compensation	—	—		57			—			—			57			—			57
Issuance of common stock under employee stock purchase plan	1	—		21			—			—			21			—			21
Stock options exercised	1	1		55			—			—			56			—			56
Tax deficit from stock options exercised, restricted stock vesting and employee stock purchase plan	—	—		(9		)	—			—			(9		)	—			(9		)
Common stock dividends, $0.27 per share	—	—		—			(117		)	—			(117		)	—			(117		)
Balances at August 29, 2009	416	$	42	$	329		$	4,908		$	27		$	5,306		$	593		$	5,899

24

	Best Buy Co., Inc.
	Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total Best Buy Co., Inc.			Non controlling Interests		Total
Balances at March 1, 2008	411	$	41	$	8	$	3,933		$	502		$	4,484		$	40	$	4,524
Comprehensive income:
Net earnings (loss), six months ended August 30, 2008	—	—		—		381			—			381			2		383
Other comprehensive income, net of tax
Foreign currency translation adjustments	—	—		—		—			(61		)	(61		)	1		(60		)
Unrealized losses on available-for- sale investments	—	—		—		—			(47		)	(47		)	—		(47		)
Total comprehensive income												273			3		276
Acquisition of businesses	—	—		—		—			—			—			682		682
Stock-based compensation	—	—		54		—			—			54			—		54
Issuance of common stock under employee stock purchase plan	—	—		25		—			—			25			—		25
Stock options exercised	1	—		21		—			—			21			—		21
Tax benefit from stock options exercised and employee stock purchase plan	—	—		4		—			—			4			—		4
Common stock dividends, $0.26 per share	—	—		—		(109		)	—			(109		)	—		(109		)
Balances at August 30, 2008	412	$	41	$	112	$	4,205		$	394		$	4,752		$	725	$	5,477

The components of accumulated other comprehensive income (loss), net of tax, attributable to Best Buy Co., Inc. were as follows:

	August 29, 2009		February 28, 2009			August 30, 2008
Foreign currency translation	$	7	$	(303	)	$	466
Unrealized gains (losses) on available-for-sale investments	16		(14		)	(72		)
Unrealized gains on derivative instruments (cash flow hedges)	4		—			—
Total	$	27	$	(317	)	$	394

25

The components of comprehensive income for the three and six months ended August 29, 2009, and August 30, 2008 were as follows:

	Three Months Ended						Six Months Ended
	August 29, 2009			August 30, 2008			August 29, 2009			August 30, 2008
Net earnings including noncontrolling interests	$	157		$	205		$	313		$	383
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	249			(55		)	406			(60		)
Cash flow hedging instruments — unrealized losses	10			—			8			—
Unrealized gains on available-for-sale investments	5			(14		)	30			(47		)
Comprehensive income including noncontrolling interests	421			136			757			276
Comprehensive (income) attributable to noncontrolling interests	(82		)	(3		)	(102		)	(3		)
Comprehensive income attributable to Best Buy Co., Inc.	$	339		$	133		$	655		$	273

11.Segments

We have organized our operations into two segments: Domestic and International. These segments are our primary areas of measurement and decision-making. The Domestic reportable segment is comprised of all operations within the U.S. and its territories. The International reportable segment is comprised of all operations outside the U.S. and its territories. We rely on an internal management reporting process that provides segment information to the operating income level for purposes of assessing performance and allocating resources. The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

Revenue by reportable segment was as follows:

	Three Months Ended				Six Months Ended
	August 29, 2009		August 30, 2008		August 29, 2009		August 30, 2008
Domestic	$	8,274	$	8,133	$	15,799	$	15,586
International	2,748		1,668		5,318		3,205
Total revenue	$	11,022	$	9,801	$	21,117	$	18,791

Operating income (loss) by reportable segment and the reconciliation to earnings before income tax expense and equity in loss of affiliates were as follows:

	Three Months Ended						Six Months Ended
	August 29, 2009			August 30, 2008			August 29,  2009			August 30,  2008
Domestic	$	315		$	315		$	618		$	592
International	(35		)	24			(42		)	24
Total operating income	280			339			576			616
Other income (expense)
Investment income and other	18			9			27			30
Interest expense	(22		)	(21		)	(45		)	(34		)
Earnings before income tax expense and equity in loss of affiliates	$	276		$	327		$	558		$	612

Assets by reportable segment were as follows:

	August 29, 2009		February 28, 2009		August 30, 2008
Domestic	$	9,597	$	9,059	$	9,680
International	7,594		6,767		7,842
Total assets	$	17,191	$	15,826	$	17,522

26

12.Contingencies

We are involved in various legal proceedings arising in the normal course of conducting business. We believe the amounts provided in our consolidated financial statements are adequate in consideration of the probable and estimable liabilities. The resolution of those proceedings is not expected to have a material effect on our results of operations or financial condition.

13.Condensed Consolidating Financial Information

Our convertible debentures, due in 2022, are jointly and severally, fully and unconditionally, guaranteed by our wholly-owned indirect subsidiary Best Buy Stores, L.P. Investments in subsidiaries of Best Buy Stores, L.P., which have not guaranteed the convertible debentures, are accounted for under the equity method. We reclassified certain prior-year amounts as described in Note 1, Basis of Presentation, in this Quarterly Report on Form 10-Q. The aggregate principal balance and carrying amount of our convertible debentures was $402 at August 29, 2009.

The convertible debentures may be converted into shares of our common stock by us at anytime or at the option of the holders if the criteria, as described in Note 6, Debt, of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, are met. At August 29, 2009, the debentures were not convertible at the option of the holders.

We file a consolidated U.S. federal income tax return. We allocate income taxes in accordance with our tax allocation agreement. U.S. affiliates receive no tax benefit for taxable losses, but are allocated taxes at the required effective income tax rate if they have taxable income.

The following tables present condensed consolidating balance sheets as of August 29, 2009; February 28, 2009; and August 30, 2008; condensed consolidating statements of earnings for the three and six months ended August 29, 2009, and August 30, 2008; and condensed consolidating statements of cash flows for the six months ended August 29, 2009, and August 30, 2008:

27

$ in millions, except per share amounts

Condensed Consolidating Balance Sheets

At August 29, 2009

(Unaudited)

	Best Buy Co., Inc.		Guarantor Subsidiary		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	123	$	38	$	507	$	—		$	668
Short-term investments	89		—		4		—			93
Receivables	1		436		1,333		—			1,770
Merchandise inventories	—		3,993		1,770		(25		)	5,738
Other current assets	101		117		840		(23		)	1,035
Intercompany receivable	—		—		7,184		(7,184		)	—
Intercompany note receivable	819		—		43		(862		)	—
Total current assets	1,133		4,584		11,681		(8,094		)	9,304
Property and Equipment, Net	217		1,986		1,959		—			4,162
Goodwill	—		20		2,422		—			2,442
Tradenames	—		—		168		—			168
Customer Relationships	—		—		318		—			318
Equity and Other Investments	220		—		114		—			334
Other Assets	83		57		369		(46		)	463
Investments in Subsidiaries	10,073		142		1,446		(11,661		)	—
Total Assets	$	11,726	$	6,789	$	18,477	$	(19,801	)	$	17,191
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	306	$	35	$	5,066	$	—		$	5,407
Unredeemed gift card liabilities	—		348		52		—			400
Accrued compensation and related expenses	3		195		229		—			427
Accrued liabilities	10		598		958		(23		)	1,543
Accrued income taxes	51		—		—		—			51
Short-term debt	325		—		766		—			1,091
Current portion of long-term debt	2		22		21		—			45
Intercompany payable	4,739		2,356		90		(7,185		)	—
Intercompany note payable	43		500		318		(861		)	—
Total current liabilities	5,479		4,054		7,500		(8,069		)	8,964
Long-Term Liabilities	184		1,149		242		(358		)	1,217
Long-Term Debt	902		140		69		—			1,111
Shareholders’ Equity	5,161		1,446		10,666		(11,374		)	5,899
Total Liabilities and Shareholders’ Equity	$	11,726	$	6,789	$	18,477	$	(19,801	)	$	17,191

28

$ in millions, except per share amounts

Condensed Consolidating Balance Sheets

At February 28, 2009

(Unaudited)

	Best Buy Co., Inc.		Guarantor Subsidiary		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	150	$	48	$	300	$	—		$	498
Short-term investments	—		—		11		—			11
Receivables	3		442		1,423		—			1,868
Merchandise inventories	—		5,402		1,537		(2,186		)	4,753
Other current assets	135		210		764		(47		)	1,062
Intercompany receivable	—		—		8,267		(8,267		)	—
Intercompany note receivable	816		—		21		(837		)	—
Total current assets	1,104		6,102		12,323		(11,337		)	8,192
Property and Equipment, Net	219		2,262		1,693		—			4,174
Goodwill	—		20		2,183		—			2,203
Tradenames	—		—		173		—			173
Customer Relationships	—		—		322		—			322
Equity and Other Investments	318		—		77		—			395
Other Assets	56		16		431		(136		)	367
Investments in Subsidiaries	10,644		136		1,309		(12,089		)	—
Total Assets	$	12,341	$	8,536	$	18,511	$	(23,562	)	$	15,826
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	—	$	—	$	4,997	$	—		$	4,997
Unredeemed gift card liabilities	—		424		55		—			479
Accrued compensation and related expenses	—		253		206		—			459
Accrued liabilities	12		552		868		(50		)	1,382
Accrued income taxes	281		—		—		—			281
Short-term debt	162		—		621		—			783
Current portion of long-term debt	2		21		31		—			54
Intercompany payable	4,168		4,099		—		(8,267		)	—
Intercompany note payable	21		500		316		(837		)	—
Total current liabilities	4,646		5,849		7,094		(9,154		)	8,435
Long-Term Liabilities	110		1,226		190		(417		)	1,109
Long-Term Debt	904		152		70		—			1,126
Shareholders’ Equity	6,681		1,309		11,157		(13,991		)	5,156
Total Liabilities and Shareholders’ Equity	$	12,341	$	8,536	$	18,511	$	(23,562	)	$	15,826

29

$ in millions, except per share amounts

Condensed Consolidating Balance Sheets

At August 30, 2008

(Unaudited)

	Best Buy Co., Inc.		Guarantor Subsidiary		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	65	$	69	$	410	$	—		$	544
Receivables	2		394		1,389		—			1,785
Merchandise inventories	—		4,581		1,939		(415		)	6,105
Other current assets	4		181		755		(46		)	894
Intercompany receivable	—		—		6,373		(6,373		)	—
Intercompany note receivable	524		—		—		(524		)	—
Total current assets	595		5,225		10,866		(7,358		)	9,328
Property and Equipment, Net	222		2,168		1,729		—			4,119
Goodwill	—		6		2,530		—			2,536
Tradenames	—		—		188		—			188
Customer Relationships	—		—		488		—			488
Equity and Other Investments	260		1		240		—			501
Other Assets	100		11		251		—			362
Investments in Subsidiaries	9,211		272		1,408		(10,891		)	—
Total Assets	$	10,388	$	7,683	$	17,700	$	(18,249	)	$	17,522
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	—	$	—	$	5,924	$	—		$	5,924
Unredeemed gift card liabilities	—		398		59		—			457
Accrued compensation and related expenses	—		214		332		—			546
Accrued liabilities	19		548		913		(25		)	1,455
Accrued income taxes	44		—		—		—			44
Short-term debt	1,174		—		341		—			1,515
Current portion of long-term debt	2		21		16		—			39
Intercompany payable	2,966		3,407		—		(6,373		)	—
Intercompany note payable	—		500		24		(524		)	—
Total current liabilities	4,205		5,088		7,609		(6,922		)	9,980
Long-Term Liabilities	68		1,025		405		(569		)	929
Long-Term Debt	904		162		70		—			1,136
Shareholders’ Equity	5,211		1,408		9,616		(10,758		)	5,477
Total Liabilities and Shareholders’ Equity	$	10,388	$	7,683	$	17,700	$	(18,249	)	$	17,522

30

$ in millions, except per share amounts

Condensed Consolidating Statements of Earnings

Three Months Ended August 29, 2009

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	4		$	7,691		$	10,013		$	(6,686	)	$	11,022
Cost of goods sold	—			5,775			8,666			(6,103		)	8,338
Gross profit	4			1,916			1,347			(583		)	2,684
Selling, general and administrative expenses	39			1,795			1,132			(562		)	2,404
Operating (loss) income	(35		)	121			215			(21		)	280
Other income (expense)
Investment income and other	13			—			11			(6		)	18
Interest expense	(13		)	(4		)	(12		)	7			(22		)
(Loss) earnings before equity in earnings of subsidiaries	(35		)	117			214			(20		)	276
Equity in earnings of subsidiaries	273			4			77			(354		)	—
Earnings before income tax expense	238			121			291			(374		)	276
Income tax expense	60			40			19			—			119
Net earnings including noncontrolling interests	178			81			272			(374		)	157
Net loss attributable to noncontrolling interests	—			—			1			—			1
Net earnings attributable to Best Buy Co., Inc.	$	178		$	81		$	273		$	(374	)	$	158

31

$ in millions, except per share amounts

Condensed Consolidating Statements of Earnings

Six Months Ended August 29, 2009

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	8		$	14,678		$	15,838		$	(9,407	)	$	21,117
Cost of goods sold	—			10,987			15,484			(10,595		)	15,876
Gross profit	8			3,691			354			1,188			5,241
Selling, general and administrative expenses	74			3,356			2,175			(992		)	4,613
Restructuring charges	—			25			27			—			52
Operating (loss) income	(66		)	310			(1,848		)	2,180			576
Other income (expense)
Investment income and other	19			—			19			(11		)	27
Interest expense	(25		)	(7		)	(25		)	12			(45		)
(Loss) earnings before equity in (loss) earnings of subsidiaries	(72		)	303			(1,854		)	2,181			558
Equity in (loss) earnings of subsidiaries	(883		)	(6		)	198			691			—
(Loss) earnings before income tax expense	(955		)	297			(1,656		)	2,872			558
Income tax expense (benefit)	915			105			(775		)	—			245
Net (loss) earnings including noncontrolling interests	(1,870		)	192			(881		)	2,872			313
Net (earnings) attributable to noncontrolling interests	—			—			(2		)	—			(2		)
Net (loss) earnings attributable to Best Buy Co., Inc	$	(1,870	)	$	192		$	(883	)	$	2,872		$	311

32

$ in millions, except per share amounts

Condensed Consolidating Statements of Earnings

Three Months Ended August 30, 2008

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	4		$	7,574		$	12,189		$	(9,966	)	$	9,801
Cost of goods sold	—			6,163			11,239			(9,982		)	7,420
Gross profit	4			1,411			950			16			2,381
Selling, general and administrative expenses	38			1,350			651			3			2,042
Operating (loss) income	(34		)	61			299			13			339
Other income (expense)
Investment income and other	14			—			6			(11		)	9
Interest expense	(17		)	(7		)	(8		)	11			(21		)
(Loss) earnings before equity in earnings (loss) of subsidiaries	(37		)	54			297			13			327
Equity in earnings (loss) of subsidiaries	316			(9		)	33			(340		)	—
Earnings before income tax expense	279			45			330			(327		)	327
Income tax expense	90			21			11			—			122
Net earnings including noncontrolling interests	189			24			319			(327		)	205
Net (earnings) attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Net earnings attributable to Best Buy Co., Inc	$	189		$	24		$	316		$	(327	)	$	202

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$ in millions, except per share amounts

Condensed Consolidating Statements of Earnings

Six Months Ended August 30, 2008

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	8		$	14,507		$	17,761		$	(13,485	)	$	18,791
Cost of goods sold	—			11,827			17,359			(14,909		)	14,277
Gross profit	8			2,680			402			1,424			4,514
Selling, general and administrative expenses	74			2,564			1,254			6			3,898
Operating (loss) income	(66		)	116			(852		)	1,418			616
Other income (expense)
Investment income and other	27			—			23			(20		)	30
Interest expense	(21		)	(18		)	(15		)	20			(34		)
(Loss) earnings before equity in (loss) earnings of subsidiaries	(60		)	98			(844		)	1,418			612
Equity in (loss) earnings of subsidiaries	(802		)	(17		)	59			760			—
(Loss) earnings before income tax expense and equity in loss of affiliates	(862		)	81			(785		)	2,178			612
Income tax expense	175			39			14			—			228
Equity in loss of affiliates	—			—			(1		)	—			(1		)
Net (loss) earnings including noncontrolling interests	(1,037		)	42			(800		)	2,178			383
Net (earnings) attributable to noncontrolling interests	—			—			(2		)	—			(2		)
Net (loss) earnings attributable to Best Buy Co., Inc	$	(1,037	)	$	42		$	(802	)	$	2,178		$	381

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$ in millions, except per share amounts

Condensed Consolidating Statements of Cash Flows

Six Months Ended August 29, 2009

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations		Consolidated
Total cash (used in) provided by operating activities	$	(748	)	$	1,679		$	(693	)	$	—	$	238
Investing activities
Additions to property and equipment	—			(117		)	(193		)	—		(310		)
Purchases of investments	(7		)	—			—			—		(7		)
Sales of investments	37			—			—			—		37
Settlement of net investment hedges	—			—			66			—		66
Change in restricted assets	—			—			(11		)	—		(11		)
Other, net	—			(12		)	(1		)	—		(13		)
Total cash provided by (used in) investing activities	30			(129		)	(139		)	—		(238		)
Financing activities
Borrowings of debt	1,895			—			1,072			—		2,967
Repayments of debt	(1,733		)	(11		)	(936		)	—		(2,680		)
Dividends paid	(117		)	—			—					(117		)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options	77			—			—			—		77
Acquisition of noncontrolling interests	—			—			(34		)	—		(34		)
Excess tax benefits from stock-based compensation	1			—			—			—		1
Other, net	—			—			4			—		4
Change in intercompany receivable/payable	568			(1,549		)	981			—		—
Total cash provided by (used in) financing activities	691			(1,560		)	1,087			—		218
Effect of exchange rate changes on cash	—			—			(48		)	—		(48		)
(Decrease) increase in cash and cash equivalents	(27		)	(10		)	207			—		170
Cash and cash equivalents at beginning of period	150			48			300			—		498
Cash and cash equivalents at end of period	$	123		$	38		$	507		$	—	$	668

35

$ in millions, except per share amounts

Condensed Consolidating Statements of Cash Flows

Six Months Ended August 30, 2008

(Unaudited)

	Best Buy Co., Inc.			Guarantor Subsidiary			Non- Guarantor Subsidiaries			Eliminations		Consolidated
Total cash (used in) provided by operating activities	$	(1,599	)	$	998		$	651		$	—	$	50
Investing activities
Additions to property and equipment	—			(282		)	(220		)	—		(502		)
Purchases of investments	(12		)	—			(58		)	—		(70		)
Sales of investments	26			—			157			—		183
Acquisition of business, net of cash acquired	—			—			(2,089		)	—		(2,089		)
Change in restricted assets	—			—			(10		)	—		(10		)
Other, net	—			(12		)	—			—		(12		)
Total cash provided by (used in) investing activities	14			(294		)	(2,220		)	—		(2,500		)
Financing activities
Borrowings of debt	2,149			16			23			—		2,188
Repayments of debt	(592		)	(10		)	(12		)	—		(614		)
Dividends paid	(107		)	—			—			—		(107		)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options	46			—			—			—		46
Excess tax benefits from stock-based compensation	4			—			—			—		4
Other, net	—			—			(12		)	—		(12		)
Change in intercompany receivable/payable	(21		)	(711		)	732			—		—
Total cash provided by (used in) financing activities	1,479			(705		)	731			—		1,505
Effect of exchange rate changes on cash	—			—			51			—		51
Decrease in cash and cash equivalents	(106		)	(1		)	(787		)	—		(894		)
Cash and cash equivalents at beginning of period	171			70			1,197			—		1,438
Cash and cash equivalents at end of period	$	65		$	69		$	410		$	—	$	544

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us” and “our” in the following refers to Best Buy Co., Inc. and its consolidated subsidiaries.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in six sections:

·Overview

·Results of Operations

·Liquidity and Capital Resources

·Off-Balance-Sheet Arrangements and Contractual Obligations

·Significant Accounting Policies and Estimates

·New Accounting Standards

We consolidate the financial results of our Europe, China and Mexico operations on a two-month lag.  Consistent with such consolidation, the financial and non-financial information presented in our MD&A relative to these operations is also presented on a two-month lag. No significant intervening event occurred that would have materially affected our financial condition, results of operations, liquidity or other factors had it been recorded during the three months ended August 29, 2009.

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited.

Overview

We are a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. We operate two reportable segments: Domestic and International. The Domestic segment is comprised of all operations within the U.S. and its territories. The International segment is comprised of all operations outside the U.S. and its territories.

Our business, like that of many U.S. retailers, is seasonal. Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Canada and Europe, than in any other fiscal quarter. The timing of new store openings, costs associated with restructuring or asset impairments, if any, as well as general economic conditions may also affect our future quarterly results.

Throughout this MD&A, we refer to comparable store sales.  Comparable store sales is a measure commonly used in the retail industry, which indicates the performance of our existing stores by measuring the growth in sales for such stores for a particular period over the corresponding period in the prior year.  Our comparable store sales is comprised of revenue from customers at stores operating for at least 14 full months as well as revenue related to call centers, Web sites and our other comparable sales channels.  Revenue we earn from sales of merchandise to resellers is not included within our comparable store sales calculation. Relocated, remodeled and expanded stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of our calculation of the comparable store sales percentage change attributable to our International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating comparable store sales may not be the same as other retailers’ methods.

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Highlights

·Net earnings attributable to Best Buy Co., Inc. decreased 22% to $158 million, or $0.37 per diluted share, in the second quarter of fiscal 2010, compared with $202 million, or $0.48 per diluted share, in the same period one year ago.  Operating income decreased 17% to $280 million, or as a percentage of revenue, 2.5%, in the second quarter of fiscal 2010, compared with $339 million, or 3.5%, in the same period one year ago.  The decrease in net earnings and operating income was primarily driven by a decrease in the International segment’s operating income, while the Domestic segment’s operating income remained flat.

·Revenue in the second quarter of fiscal 2010 increased 12% to $11.0 billion, compared with $9.8 billion in the same period one year ago, driven primarily by the acquisition of Best Buy Europe, which contributed $1.2 billion of revenue, and the net addition of 170 new stores in the past 12 months. These gains were partially offset by a 3.9% comparable store sales decline and unfavorable fluctuations in foreign currency exchange rates.

·Our gross profit rate in the second quarter of fiscal 2010 increased slightly to 24.4% of revenue, compared with 24.3% of revenue in the same period one year ago. The increase was due primarily to the inclusion of Best Buy Europe, partially offset by a decline in our Domestic segment’s gross profit rate due to unfavorable mix and rate impacts.

·Our selling, general and administrative expenses (“SG&A”) rate in the second quarter of fiscal 2010 increased to 21.8% of revenue, compared with 20.8% of revenue in the same period one year ago. The increase was due primarily to the inclusion of Best Buy Europe and deleverage on the comparable store sales decline in the U.S. and Canada, partially offset by reductions in spending in certain discretionary categories and in corporate payroll.  Excluding fiscal 2009 acquisitions, SG&A dollars in the fiscal second quarter declined versus the prior year period.

Results of Operations

Consolidated Performance Summary

The following table presents selected consolidated financial data ($ in millions, except per share amounts):

	Three Months Ended1						Six Months Ended1
	August 29, 2009			August 30, 2008			August 29, 2009			August 30, 2008
Revenue	$	11,022		$	9,801		$	21,117		$	18,791
Revenue % gain	12		%	12		%	12		%	13		%
Comparable store sales % (decline) gain	(3.9		)%	4.2		%	(5.0		)%	4.0		%
Gross profit as % of revenue 2	24.4		%	24.3		%	24.8		%	24.0		%
SG&A as % of revenue2	21.8		%	20.8		%	21.8		%	20.7		%
Operating income 3	$	280		$	339		$	576		$	616
Operating income as % of revenue	2.5		%	3.5		%	2.7		%	3.3		%
Net earnings attributable to Best Buy Co., Inc	$	158		$	202		$	311		$	381
Diluted earnings per share	$	0.37		$	0.48		$	0.74		$	0.91

1	On June 28, 2008, we acquired a 50% interest in Best Buy Europe, whose operating results are reported on a two-month lag and included within our International segment. Accordingly, our results of operations did not reflect Best Buy Europe results until the third quarter of fiscal 2009.
2	Because retailers vary in how they record costs of operating their supply chain between cost of goods sold and SG&A, our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates. For additional information regarding costs classified in cost of goods sold and SG&A, refer to Note 1, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009.
3	Included within our operating income for the first six months of fiscal 2010 is $52 million of restructuring charges related to measures we took to restructure our businesses in the first quarter of fiscal 2010. These charges resulted in a decrease in our operating income of 0.3% of revenue for the first six months of fiscal 2010. No restructuring charges were recorded in the second quarter of fiscal 2010 or the first six months of fiscal 2009.

Revenue in the second quarter of fiscal 2010 increased 12% to $11.0 billion, compared with $9.8 billion in the same period one year ago. In the first six months of fiscal 2010, revenue increased 12% to $21.1 billion, compared with $18.8 billion in the same period one year ago. In both the second quarter and the first six months of fiscal 2010, the revenue increases resulted primarily from the acquisition of Best Buy Europe, which contributed $1.2 billion and $2.6 billion of revenue, respectively, and the net addition of 170

38

new stores (of which 36 were Best Buy Europe stores) in the past 12 months. The increases were partially offset by comparable store sales declines in the second quarter and the first six months of fiscal 2010 of 3.9% and 5.0%, respectively, as well as the unfavorable effect of fluctuations in foreign currency exchange rates.

The components of the net revenue increase for the three and six months ended August 29, 2009 were as follows:

	Three months ended August 29, 2009		Six months ended August 29, 2009
Acquisition of Best Buy Europe	13	%	14	%
Net new stores	4	%	5	%
Comparable store sales decline	(4	)%	(5	)%
Unfavorable impact of foreign currency	(1	)%	(2	)%
Total revenue increase	12	%	12	%

Our gross profit rate in the second quarter of fiscal 2010 increased by 0.1% of revenue to 24.4% of revenue. In the first six months of fiscal 2010, our gross profit rate increased from 24.0% of revenue to 24.8% of revenue. The gross profit rate increase in the second quarter of fiscal 2010 was due to an increase in our International segment’s gross profit rate, due to the inclusion of Best Buy Europe, offset by a decrease in our Domestic segment’s gross profit rate.  For the first six months of fiscal 2010, increases in both our Domestic and International segments’ gross profit rates contributed to the overall gross profit rate increase.  The inclusion of Best Buy Europe, which predominantly features sales of higher-margin mobile phones, increased our gross profit rate by 0.6% of revenue for the fiscal second quarter and by 0.8% of revenue for the first six months of fiscal 2010. For further discussion of each segment’s gross profit rate changes, see the Segment Performance Summary for Domestic and International below.

Our SG&A rate in the second quarter of fiscal 2010 increased by 1.0% of revenue to 21.8% of revenue.  In the first six months of fiscal 2010, our SG&A rate increased from 20.7% of revenue to 21.8% of revenue. The SG&A rate increases in both the second quarter and first six months of fiscal 2010 were due to an increases in our International segment’s SG&A rates, respectively, while the Domestic segment’s rates, respectively, decreased compared with the prior year periods.  The inclusion of Best Buy Europe increased our SG&A rate by 1.3% of revenue for the fiscal second quarter and by 1.2% of revenue for the first six months of fiscal 2010.  For further discussion of each segment’s SG&A rate changes, see the Segment Performance Summary for Domestic and International below.

Other Income (Expense)

Our investment income and other in the second quarter of fiscal 2010 increased to $18 million, compared with $9 million in the same period one year ago. The increase was primarily due to a gain on the sale of an equity investment.  Our investment income and other in the first six months of fiscal 2010 decreased to $27 million, compared with $30 million in the same period one year ago, primarily due to the impact of lower average cash and investment balances and lower interest rates on our cash and investment balances.

Additionally, interest expense in the fiscal second quarter increased to $22 million, compared with $21 million in the same period one year ago. Our interest expense in the first six months of fiscal 2010 increased to $45 million, compared with $34 million in the same period one year ago. The increases in the second quarter and first six months of fiscal 2010 were primarily due to increased borrowings to acquire Best Buy Europe and the financing of its operations.

Income Tax Expense

Our effective income tax rates in the second quarter and first six months of fiscal 2010 were 42.8% and 43.9%, respectively, compared to 37.3% and 37.2%, respectively, in the corresponding periods of fiscal 2009. The increases in our effective income tax rate for the second quarter and first six months of fiscal 2010 were caused primarily by unbenefitted losses in certain foreign jurisdictions.

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Segment Performance Summary

Domestic

The following table presents selected financial data for the Domestic segment ($ in millions):

	Three Months Ended						Six Months Ended
	August 29, 2009			August 30, 2008			August 29, 2009			August 30, 2008
Revenue	$	8,274		$	8,133		$	15,799		$	15,586
Revenue % gain	2		%	12		%	1		%	12		%
Comparable store sales % (decline) gain	(3.1		)%	5.3		%	(4.0		)%	4.4		%
Gross profit as % of revenue	24.3		%	24.9		%	24.7		%	24.7		%
SG&A as % of revenue	20.5		%	21.0		%	20.6		%	20.9		%
Operating income 1	$	315		$	315		$	618		$	592
Operating income as % of revenue	3.8		%	3.9		%	3.9		%	3.8		%

1 Included within our Domestic segment’s operating income for the first six months of fiscal 2010 is $25 million of restructuring charges related to measures we took to restructure our businesses in the fiscal first quarter. These charges resulted in a decrease in our Domestic segment’s operating income of 0.2% for the first six months of fiscal 2010. No restructuring charges were recorded in the second quarter of fiscal 2010or the first six months of fiscal 2009.

The following table presents Domestic stores open at the end of the second quarters of fiscal 2010 and fiscal 2009:

	Total Stores at End of Second Quarter
	Fiscal 2010		Fiscal 2009
U.S. Best Buy	1,044		973
Best Buy Mobile	48		21
Pacific Sales	35		22
Magnolia Audio Video	7		13
U.S. Geek Squad	6		7
Total Domestic stores	1,140	1	1,036	2

1	During the second quarter of fiscal 2010, we opened 22 new stores in our Domestic segment, consisting of 12 U.S. Best Buy stores, nine Best Buy Mobile stores and one Pacific Sales store. There were no store closures in our Domestic segment during the second quarter of fiscal 2010.
2	During the second quarter of fiscal 2009, we opened 33 new stores in our Domestic segment, consisting of 24 U.S. Best Buy stores, seven Best Buy Mobile stores and two Pacific Sales stores. There were no store closures in our Domestic segment during the second quarter of fiscal 2009.

Our Domestic segment’s operating income in the second quarter of fiscal 2010 was $315 million, or 3.8% of revenue, compared with $315 million, or 3.9% of revenue, in the same period one year ago. The decrease in our Domestic segment’s operating income rate for the second quarter of fiscal 2010 reflected a decrease in the gross profit rate, which was partially offset by an improvement in the SG&A rate. In the first six months of fiscal 2010, our Domestic segment’s operating income was $618 million, or 3.9% of revenue, compared with $592 million, or 3.8% of revenue, in the same period one year ago.  The increase in our Domestic segment’s operating income rate in the first six months of fiscal 2010 reflected a decrease in the SG&A rate, while the gross profit rate remained flat.  The increase was partially offset by $25 million of restructuring charges recorded in the fiscal first quarter of 2010.

Our Domestic segment’s revenue in the second quarter of fiscal 2010 increased 2% to $8.3 billion, compared with $8.1 billion in the same period one year ago.  In the first six months of fiscal 2010, our Domestic segment’s revenue increased 1% to $15.8 billion, compared with $15.6 billion in the same period one year ago.  In both the second quarter and first six months of fiscal 2010, the revenue increases resulted primarily from the net addition of 104 new stores in the past 12 months, partially offset by the comparable store sales declines in the second quarter and the first six months of fiscal 2010 of 3.1% and 4.0%, respectively.

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The components of our Domestic segment’s net revenue increase for the three and six months ended August 29, 2009 were as follows:

	Three months ended August 29, 2009		Six months ended August 29, 2009
Net new stores	5	%	5	%
Comparable store sales decline	(3	)%	(4	)%
Total revenue increase	2	%	1	%

The following table presents revenue mix percentages and comparable store sales percentage changes for the Domestic segment by revenue category in the second quarters of fiscal 2010 and fiscal 2009:

	Revenue Mix Summary				Comparable Store Sales Summary
	Three Months Ended				Three Months Ended
	August 29, 2009		August 30, 2008		August 29, 2009		August 30, 2008
Consumer electronics	38	%	38	%	(2.4	)%	2.0	%
Home office	37	%	34	%	7.3	%	15.1	%
Entertainment software	13	%	16	%	(23.4	)%	0.0	%
Appliances	5	%	5	%	(10.1	)%	(9.8	)%
Services	6	%	7	%	(3.7	)%	8.7	%
Other	1	%	<1	%	n/a		n/a
Total	100	%	100	%	(3.1	)%	5.3	%

Our Domestic segment’s comparable store sales decline in the second quarter of fiscal 2010 was driven by a reduction in average ticket, partially offset by a slight increase in customer traffic. The categories having the largest effect on our Domestic segment’s comparable store sales decline in the fiscal second quarter were video gaming, digital cameras, DVDs and CDs.  Weaker sales in these categories were partially offset by comparable store sales gains in notebook computers, mobile phones and flat-panel televisions.

In the second quarter of fiscal 2010, our Domestic segment’s consumer electronics revenue category posted a 2.4% comparable store sales decline, driven primarily by decreases in the sales of digital cameras, navigation products and MP3 players, partially offset by gains in flat-panel televisions as unit sales increases more than offset average selling price decreases. The home office revenue category posted a 7.3% comparable store sales gain driven primarily by a continuation of increases in the sales of notebook computers and mobile phones.  The entertainment software revenue category recorded a 23.4% comparable store sales decline due primarily to a decline in sales of video gaming, partially caused by industry-wide softness, as well as continued decline in sales of DVDs and CDs. The appliances revenue category recorded a 10.1% decline in comparable store sales due to continued weakness in the housing sector.  The services revenue category recorded a 3.7% comparable store sales decline due primarily to reductions in computer and home installation services as a result of lower average selling prices and attachment rates.

Our Domestic segment’s gross profit rate in the second quarter of fiscal 2010 decreased by 0.6% of revenue to 24.3% of revenue.  In the first six months of fiscal 2010, our Domestic segment’s gross profit rate remained flat at 24.7% of revenue, consistent with the same period one year ago. The decrease in the second quarter of fiscal 2010, as well as the flat gross profit rate for the first six months of fiscal 2010, was partially due to a shift in the segment’s revenue mix to sales of lower-margin notebook computers, partially offset by increased sales of higher-margin mobile phones and decreased sales of lower-margin video gaming. In addition, the decrease in the second quarter of fiscal 2010 was impacted by rate unfavorability caused by increased sales of certain lower-margin mobile phones and several focused initiatives such as increased promotional pricing on televisions.  Gross profit rate improvements in digital cameras and camcorders, televisions and services in the first quarter of fiscal 2010 directly offset the unfavorable mix and rate impacts previously discussed, resulting in the gross profit rate remaining flat for the first six months of fiscal 2010.

Our Domestic segment’s SG&A rate in the second quarter of fiscal 2010 decreased by 0.5% of revenue to 20.5% of revenue.  In the first six months of fiscal 2010, our Domestic segment’s SG&A rate was 20.6% of revenue, compared with 20.9% of revenue in the same period one year ago. The decreases in the second quarter and first six months of fiscal 2010 were attributable to reductions in outside and outsourced services, travel expense, advertising and corporate payroll, partially offset by the deleveraging impact of lower comparable store sales on payroll, benefits and overhead and higher incentive pay due to better-than-expected performance.  Overall, SG&A dollars in the fiscal second quarter declined versus the prior year period.

Our Domestic segment incurred no restructuring charges in the second quarter of fiscal 2010, consistent with the same period one year ago.  Our Domestic segment’s restructuring charges in the first six months of fiscal 2010 were $25, compared to $0 in the same period one year ago.  The charges were primarily the result of changes to our U.S. Best Buy store operating model, which resulted in the elimination of certain positions, for which we incurred employee termination costs.

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International

The following table presents selected financial data for the International segment ($ in millions):

	Three Months Ended1						Six Months Ended1
	August 29, 2009			August 30, 2008			August 29, 2009			August 30, 2008
Revenue	$	2,748		$	1,668		$	5,318		$	3,205
Revenue % gain	65		%	10		%	66		%	17		%
Comparable store sales % (decline) gain	(8.3		)%	(1.0		)%	(10.9		)%	1.7		%
Gross profit as % of revenue	24.5		%	21.3		%	25.2		%	20.8		%
SG&A as % of revenue	25.8		%	19.9		%	25.5		%	20.1		%
Operating (loss) income 2	$	(35	)	$	24		$	(42	)	$	24
Operating (loss) income as % of revenue	(1.2		)%	1.4		%	(0.8		)%	0.7		%

1

On June 28, 2008, we acquired a 50% interest in Best Buy Europe, whose operating results are reported on a two-month lag. Accordingly, our results of operations did not reflect Best Buy Europe results until the third quarter of fiscal 2009.

2

Included within our International segment’s operating loss for the first six months of fiscal 2010 is $27 million of restructuring charges related to measures we took to restructure our businesses in the fiscal first quarter. These charges resulted in a decrease in our International segment’s operating income of 0.5% of revenue for the first six months of fiscal 2010. No restructuring charges were recorded in the second quarter of fiscal 2010or the first six months of fiscal 2009.

The following table presents International stores open at the end of the second quarters of fiscal 2010 and fiscal 2009:

	Total Stores at End of Second Quarter
	Fiscal 2010		Fiscal 2009
Best Buy Europe1	2,450		—
Five Star	165		161
Future Shop	142		133
Best Buy Canada	60		52
Best Buy China	6		1
Best Buy Mobile Canada	3		—
Best Buy Mexico	1		—
Total International stores	2,827	2	347	3

1	Consists of The Carphone Warehouse stores in the U.K. and The Phone House stores throughout continental Europe.
2	During the second quarter of fiscal 2010, we opened 34 new stores in our International segment, consisting of 27 Best Buy Europe stores, two Five Star stores, two Future Shop stores, two Best Buy Canada stores, and one Best Buy China store. Offsetting these store openings were 37 store closures in second quarter of fiscal 2010, consisting of 36 Best Buy Europe stores and one Five Star store.
3	During the second quarter of fiscal 2009, we opened one new store in our International segment, a Best Buy Canada store. No stores were closed in our International segment during the second quarter of fiscal 2009.

Our International segment’s operating loss in the second quarter of fiscal 2010 was $(35) million, or (1.2)% of revenue, compared with operating income of $24 million, or 1.4% of revenue, in the same period one year ago. The International segment’s decrease in operating (loss) income for the fiscal second quarter resulted primarily from an operating loss with our Europe business, whose operating results are seasonal and generally at their lowest in the fiscal second quarter, and lower operating income in Canada. In the first six months of fiscal 2010, our International segment’s operating loss was $(42) million, or (0.8)% of revenue, compared with operating income of $24 million, or 0.7% of revenue, in the same period one year ago. The International segment’s decrease in operating income for the first six months of fiscal 2010 resulted primarily from the operating loss with our Europe business in the second quarter of fiscal 2010, the $27 million of restructuring charges incurred in the first quarter of fiscal 2010 and lower operating income in Canada.

Our International segment’s revenue in the second quarter of fiscal 2010 increased 65% to $2.7 billion, compared with $1.7 billion for the same period one year ago.  In the first six months of fiscal 2010, our International segment’s revenue increased 66% to $5.3 billion, compared with $3.2 billion in the same period one year ago.  The inclusion of Best Buy Europe and the net addition of 66 new

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stores in the past 12 months (of which 36 were Best Buy Europe stores) accounted for the majority of the revenue increase. Partially offsetting these increases were the effects of comparable store sales declines in the second quarter and the first six months of fiscal 2010 of 8.3% and 10.9%, respectively, as well as unfavorable fluctuations in foreign currency exchange rates. Excluding the addition of Best Buy Europe and the negative impact of fluctuations in foreign currency exchange rates, the International segment’s revenue declined 3% and 6% for the second quarter and first six months of fiscal 2010, respectively, versus the prior year periods.

The components of our International segment’s net revenue increase for the three and six months ended August 29, 2009 were as follows:

	Three months ended August 29, 2009		Six months ended August 29, 2009
Acquisition of Best Buy Europe	73	%	80	%
Net new stores	5	%	4	%
Comparable store sales decline	(7	)%	(10	)%
Unfavorable impact of foreign currency	(5	)%	(8	)%
Non-comparable store sales channels1	(1	)%	—	%
Total revenue increase	65	%	66	%

1Revenue we earn from sales of merchandise to resellers is not included within our comparable store sales calculation.

The following table presents revenue mix percentages and comparable store sales percentage changes for the International segment by revenue category in the second quarters of fiscal 2010 and fiscal 2009:

	Revenue Mix Summary 1				Comparable Store Sales Summary 2
	Three Months Ended				Three Months Ended
	August 29, 2009		August 30, 2008		August 29, 2009		August 30, 2008
Consumer electronics	19	%	36	%	(14.3	)%	3.7	%
Home office	52	%	30	%	(10.0	)%	(2.6	)%
Entertainment software	5	%	11	%	(21.1	)%	13.1	%
Appliances	11	%	18	%	11.6	%	(13.2	)%
Services	13	%	5	%	10.4	%	(2.6	)%
Other	<1	%	<1	%	n/a		n/a
Total	100	%	100	%	(8.3	)%	(1.0	)%

1

The International segment’s revenue mix changed significantly beginning in the third quarter of fiscal 2009 due to our acquisition of Best Buy Europe. Best Buy Europe comprised 44% of the International segment’s revenue in the second quarter of fiscal 2010. The majority of Best Buy Europe’s business is the sale of mobile phones and acting as an agent to sell mobile voice and data service plans, which are included in our home office revenue category. In addition, Best Buy Europe offers mobile phone insurance and other mobile and fixed-line telecommunication services, which are included in our services revenue category.

2

Comparable store sales does not include Best Buy Europe, which will first be included in our comparable store sales in the third quarter of fiscal 2010.

Our International segment’s comparable store sales decline in the second quarter of fiscal 2010 was driven by Canada, partially offset by a comparable store sales gain in China. The categories having the largest effect on our International segment’s comparable store sales decline in the fiscal second quarter were flat-panel televisions, video gaming, desktop computers and monitors and notebook computers.  Weaker sales in these product categories were partially offset by comparable store sales gains in major appliances and services.

In the second quarter of fiscal 2010, our International segment’s consumer electronics revenue category posted a 14.3% comparable store sales decline resulting primarily from reductions in the comparable sales of nearly all product categories within consumer electronics, particularly flat-panel televisions and digital cameras and camcorders. The home office revenue category posted a 10.0% comparable store sales decline due primarily to desktop computers and monitors as well as notebook computers, partially offset by a modest gain in mobile phones. The entertainment software revenue category recorded a 21.1% comparable store sales decline due to a decrease in the comparable sales of nearly all categories within this revenue category, particularly video gaming. The appliances revenue category recorded an 11.6% comparable store sales gain resulting primarily from increases in the sales of appliances in China operations, where appliances represent a larger percentage of the sales, as well as a gain in appliances in Canada. The services revenue category posted a 10.4% comparable store sales gain due primarily to an increase in revenue from our repair and installation business and sales of service plans.

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Our International segment’s gross profit rate in the second quarter of fiscal 2010 increased by 3.2% of revenue to 24.5% of revenue. In the first six months of fiscal 2010, our International segment’s gross profit rate increased by 4.4% of revenue to 25.2% of revenue. In the second quarter and first six month of fiscal 2010, the inclusion of Best Buy Europe increased our International segment’s gross profit rate by 3.8% and 4.9% of revenue, respectively. In the second quarter of fiscal 2010, partially offsetting the effect of the acquisition of Best Buy Europe was the mix impact of China’s lower-margin operations as well as heavier promotions, while Canada’s gross profit rate remained flat.  In the first six months of fiscal 2010, partially offsetting the effect of the acquisition of Best Buy Europe was a slight reduction in Canada’s gross profit rate, primarily due to promotional pressure on margins in the fiscal first quarter from televisions and notebook computers as well as the mix impact of China’s lower-margin operations.

Our International segment’s SG&A rate in the second quarter of fiscal 2010 increased by 5.9% of revenue to 25.8% of revenue. In the first six months of fiscal 2010, our International segment’s SG&A rate increased by 5.4% of revenue to 25.5% of revenue. In the second quarter and first six months of fiscal 2010, the inclusion of Best Buy Europe increased our International segment’s SG&A rate by 5.2% and 4.4% of revenue, respectively.  The deleveraging impact of Canada’s comparable store sales decline on payroll, benefits and overhead costs further contributed to the overall increase in the SG&A rate for both the second quarter and first six months of fiscal 2010.  Partially offsetting these increases were lower SG&A rates in China in both the second quarter and first six months of fiscal 2010, as compared to the prior year periods, due to savings in payroll and advertising as well as reductions in advertising costs in Canada.

Our International segment incurred no restructuring charges in the second quarter of fiscal 2010, consistent with the same period one year ago.  Our International segment’s restructuring charges in the first quarter of fiscal 2010 were $27 million, compared to $0 in the same period one year ago.  The charges incurred were primarily related to employee termination benefits and business reorganization costs at Best Buy Europe.

Liquidity and Capital Resources

Summary

The following table summarizes our cash and cash equivalents and short-term investments balances at August 29, 2009; February 28, 2009; and August 30, 2008 ($ in millions):

	August 29, 2009		February 28, 2009		August 30, 2008
Cash and cash equivalents	$	668	$	498	$	544
Short-term investments	93		11		—
Total cash and cash equivalents and short-term investments	$	761	$	509	$	544

The increase in the balance of our cash and cash equivalents and short-term investments compared with the end of the second quarter of fiscal 2009 was due primarily to cash inflows from operations as well as our re-classification of certain auction-rate securities to short-term investments in the second quarter of fiscal 2010, partially offset by short-term debt repayments.

Our current ratio, calculated as current assets divided by current liabilities, was 1.0 at the end of the second quarter of fiscal 2010, compared with 1.0 at the end of fiscal 2009 and 0.9 at the end of the second quarter of fiscal 2009.

Our debt-to-capitalization ratio, which represents the ratio of total debt, including the current portion of long-term debt, to total capitalization (total debt plus total shareholders’ equity), was 30% at the end of the second quarter of fiscal 2010, compared with 30% at the end of fiscal 2009, and 36% at the end of the second quarter of fiscal 2009. We view our debt-to-capitalization ratio as an important indicator of our creditworthiness. The decrease from the end of the second quarter of fiscal 2009 was due primarily to higher borrowings in the prior year in connection with our acquisition of Best Buy Europe as well as repayments of short-term borrowings in the second quarter of fiscal 2010.

Our adjusted debt-to-capitalization ratio, which includes capitalized operating lease obligations in its calculation, was 67% at the end of the second quarter of fiscal 2010, compared with 68% at the end of fiscal 2009 and 65% at the end of the first quarter of fiscal 2009.

Our adjusted debt-to-capitalization ratio is considered a non-GAAP financial measure and is not in accordance with, or preferable to, the ratio determined in accordance with U.S. generally accepted accounting principles (“GAAP”). However, we have included this information as we believe that our adjusted debt-to-capitalization ratio, including capitalized operating lease obligations, is important for understanding our operations and provides meaningful additional information about our ability to service our long-term debt and

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other fixed obligations, and to fund our future growth. In addition, we believe our adjusted debt-to-capitalization ratio, including capitalized operating lease obligations, is relevant because it enables investors to compare our indebtedness to that of retailers who own, rather than lease, their stores. Our decision to own or lease real estate is based on an assessment of our financial liquidity, our capital structure, our desire to own or to lease the location, the owner’s desire to own or to lease the location, and the alternative that results in the highest return to our shareholders.

The most directly comparable GAAP financial measure to our adjusted debt-to-capitalization ratio, including capitalized operating lease obligations, is our debt-to-capitalization ratio. Our debt-to-capitalization ratio excludes capitalized operating lease obligations in both the numerator and denominator of the calculation.  The following table presents a reconciliation of the numerator and denominator used in the calculation of our adjusted debt-to-capitalization ratio, including capitalized operating lease obligations, for the dates indicated ($ in millions):

	August 29, 2009			February 28, 2009			August 30, 2008
Debt (including current portion)	$	2,247		$	1,963		$	2,690
Capitalized operating lease obligations (8 times rental expense) 1	8,691			8,114			5,964
Adjusted debt (including capitalized operating lease obligations)	$	10,938		$	10,077		$	8,654
Debt (including current portion)	$	2,247		$	1,963		$	2,690
Capitalized operating lease obligations (8 times rental expense) 1	8,691			8,114			5,964
Total Best Buy Co., Inc. shareholders’ equity	5,306			4,643			4,752
Adjusted capitalization	$	16,244		$	14,720		$	13,406
Debt-to-capitalization ratio	30		%	30		%	36		%
Adjusted debt-to-capitalization ratio (including capitalized operating lease obligations)	67		%	68		%	65		%

1 The multiple of eight times annual rental expense used to calculate our capitalized operating lease obligations total is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness.

Our liquidity is affected by restricted cash balances that are pledged as collateral or restricted to use for vendor payables, general liability insurance, workers’ compensation insurance and customer warranty and insurance programs. Restricted cash and cash equivalents, which is included in other current assets, totaled $515 million, $487 million and $440 million at August 29, 2009; February 28, 2009; and August 30, 2008, respectively. The increase in restricted cash from the end of the second quarter of fiscal 2009 was due primarily to increased reserve requirements with respect to our captive insurance businesses.

Cash Flows

The following table summarizes our cash flows for the first six months of the current and prior fiscal years ($ in millions):

	Six Months Ended
	August 29, 2009			August 30, 2008
Total cash provided by (used in):
Operating activities	$	238		$	50
Investing activities	(238		)	(2,500		)
Financing activities	218			1,505
Effect of exchange rate changes on cash	(48		)	51
Increase in cash and cash equivalents	$	170		$	(894	)

Cash provided by operating activities in the first six months of fiscal 2010 was $238 million, compared with $50 million in the first six months of fiscal 2009. The increase in cash provided was due primarily to increases in cash provided by net earnings (excluding depreciation and amortization) and receivables and decreases in cash used for accrued incomes taxes and other liabilities including restructuring charges, partially offset by decreases in cash provided by accounts payable. The increase in cash provided by receivables was due primarily to the timing of the receipt of customer and network operating receivables in our Best Buy Europe business. The decrease in cash used for accrued income taxes was due primarily to the timing of tax payments, while the decrease in cash used for other liabilities was due to the timing and magnitude of transaction taxes payable and other accrued liabilities. The decrease in cash provided by accounts payable was due primarily to the timing of inventory purchases and receipts to later in the period as well as higher average accounts payable balances in the prior year period.

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Cash used in investing activities in the first six months of fiscal 2010 was $238 million, compared with $2.5 billion in the first six months of fiscal 2009. The decrease in cash used in investing activities was due primarily to the $2.1 billion of net cash associated with the acquisition of businesses in the first six months of fiscal 2009, including Best Buy Europe. Also contributing to the decrease was an expected decrease in capital expenditures to $310 million in the first six months of fiscal 2010, compared with $502 million in the prior year period.

Cash provided by financing activities in the first six months of fiscal 2010 was $218 million, compared with $1.5 billion for the first six months of fiscal 2009. The decrease in cash provided by financing activities was primarily the result of a $1.3 billion decrease in borrowings, net of repayments, in the first six months of fiscal 2010 compared to the same period one year ago.  Larger borrowings in the prior year were associated with the acquisition of Best Buy Europe.

Share Repurchases and Dividends

For the three months ended August 29, 2009 and August 30, 2008, we made no share repurchases under our June 2007 share repurchase program or otherwise.

During the second quarter of fiscal 2010, we paid our regular quarterly cash dividend of $0.14 per common share, or $58 million in the aggregate.  During the same period one year ago, we paid a regular quarterly cash dividend of $0.13 per common share, or $53 million in the aggregate.  As announced on September 16, 2009, our Board of Directors authorized payment of our next regular quarterly cash dividend of $0.14 per common share, payable on October 27, 2009, to shareholders of record as of the close of business on October 6, 2009.

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents, and our credit facilities continue to be our most significant sources of liquidity. We believe our sources of liquidity will be sufficient to sustain operations, including announced restructuring costs, and to finance anticipated expansion plans and strategic initiatives for the remainder of fiscal 2010. However, in the event our liquidity is insufficient, we may be required to limit our future expansion plans or we may not be able to pursue promising business opportunities. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our existing credit facilities or obtain additional financing, if necessary, on favorable terms.

We have a $2.32 billion five-year unsecured revolving credit facility, as amended (the “Credit Agreement”), with a syndicate of banks, of which $325 million was outstanding at August 29, 2009. The Credit Agreement expires in September 2012.  We were in compliance with our financial covenants under the Credit Agreement at August 29, 2009. At October 6, 2009, we had $100 million of borrowings outstanding under the Credit Agreement.

We have $1.0 billion available under secured and unsecured revolving demand and credit facilities related to our International segment operations, of which $766 million was outstanding at August 29, 2009.

At August 29, 2009, we had $298 million of auction-rate securities (“ARS”) recorded at fair value within short-term investments and equity and other investments in our consolidated balance sheet. The majority of our ARS portfolio is AAA/Aaa-rated and collateralized by student loans, which are guaranteed 95% to 100% by the U.S. government. Due to the auction failures that began in mid-February 2008, we have been unable to liquidate many of our ARS. The investment principal associated with our ARS subject to failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments come due according to the contractual maturities of the debt issues, which range from seven to 39 years. We intend to hold our ARS until we can recover the full principal amount through one of the means described above, and have the ability to do so based on our other sources of liquidity.

Our credit ratings and outlooks at October 6, 2009, are summarized below and are consistent with the ratings and outlooks reported in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

Rating Agency	Rating	Outlook
Fitch	BBB+	Negative
Moody’s	Baa2	Stable
Standard & Poor’s	BBB–	Stable

Factors that can affect our credit ratings include changes in our operating performance, the economic environment, conditions in the retail and consumer electronics industries, our financial position, and changes in our business strategy. We are not aware of any

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reasonable circumstances under which our credit ratings would be significantly downgraded. If a downgrade were to occur, it could adversely impact, among other things, our future borrowing costs, access to capital markets, vendor financing terms and future new-store occupancy costs. In addition, the conversion rights of the holders of our convertible debentures could be accelerated if our credit ratings were to be downgraded.

Debt and Capital

At August 29, 2009, we had short-term debt outstanding under our various credit agreements of $1.1 billion, an increase from $783 million at February 28, 2009, to meet normal working capital needs. Other than as discussed in Note 7, Debt, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, there were no significant changes in the terms of our debt at August 29, 2009, compared to February 28, 2009. See Note 6, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, for additional information regarding our debt.

Off-Balance-Sheet Arrangements and Contractual Obligations

Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.

There has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2009. See our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, for additional information regarding our off-balance-sheet arrangements and contractual obligations.

Significant Accounting Policies and Estimates

We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended February 28, 2009. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2009.

New Accounting Standards

In June 2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 168, The “FASB Accounting Standards Codification” and the Hierarchy of Generally Accepted Accounting Principles. This standard replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The FASB Accounting Standards Codification (the “Codification”) became the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the Securities and Exchange Commission (“SEC”), which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009.  We have begun to use the new guidelines and numbering system prescribed by the Codification when referring to GAAP in the third quarter of fiscal 2010.  As the Codification was not intended to change or alter existing GAAP, it will not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R). This standard responds to concerns about the application of certain key provisions of FASB Interpretation (FIN) 46(R), including those regarding the transparency of the involvement with variable interest entities. Specifically, SFAS No. 167 requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (“VIE”) and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. In addition, the standard requires additional disclosures about the involvement with a VIE and any significant changes in risk exposure due to that involvement. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009. We plan to adopt SFAS No. 167 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140. The new standard eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. SFAS No. 166 is effective for fiscal years beginning after

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November 15, 2009.  We plan to adopt SFAS No. 166 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. This standard is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this standard sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  SFAS No. 165 was effective for fiscal years and interim periods ended after June 15, 2009 and must be applied prospectively. We adopted and applied the provisions of SFAS No. 165 for our fiscal quarter ended August 29, 2009, and have included the disclosures required by SFAS No. 165 in the Basis of Presentation within Note 1, Basis of Presentation. The adoption of SFAS No. 165 did not have an impact on our consolidated financial position or results of operations.

In April 2009, the FASB issued three FASB Staff Positions (“FSP”) intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. FSP No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidelines for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements. FSP No. 115-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance related to the disclosure of impairment losses on securities and the accounting for impairment losses on debt securities. FSP No. 115-2 does not amend existing guidance related to other-than-temporary impairments of equity securities. FSP No. 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1, Interim Disclosures about Fair Value of Financial Instruments, increases the frequency of fair value disclosures. These FSPs are effective for fiscal years and interim periods ended after June 15, 2009.  As such, we adopted these FSPs in the second quarter of fiscal 2010, and have included the additional required interim disclosures about the fair value of financial instruments and valuation techniques within Note 3, Investments, and Note 4, Fair Value Measurements. The adoption of these FSPs did not have a material impact on our consolidated financial position or results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand the effect these instruments and activities have on an entity’s financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Our adoption of SFAS No. 161 in the fourth quarter of fiscal 2009 had no impact on our consolidated financial statements. However, in the first quarter of fiscal 2010, we entered into significant derivative hedging contracts and, accordingly, we have included the disclosures required by SFAS No. 161 in Note 8, Derivative Instruments, which are provided on a prospective basis.

In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations (“141R”). SFAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. We adopted SFAS No. 141R on March 1, 2009, which changed our accounting treatment for business combinations on a prospective basis.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160 changes the accounting and reporting for minority interests, which must be recharacterized as noncontrolling interests and classified as a component of shareholders’ equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. We adopted SFAS No. 160 on March 1, 2009, and applied the provisions of the standard prospectively, except for the presentation and disclosure requirements, which we applied retrospectively. Our adoption of SFAS No. 160 did not have a material impact on our consolidated financial statements other than the following reporting and disclosure changes which we applied retrospectively to all periods presented:

(i)we recharacterized minority interests previously reported on our condensed consolidated balance sheets as noncontrolling interests and classified them as a component of shareholders’ equity;

(ii)we adjusted certain captions previously utilized on our consolidated statements of earnings to specifically identify net earnings attributable to noncontrolling interests and net earnings attributable to Best Buy Co., Inc.; and

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(iii)in order to reconcile net earnings to the cash flows from operating activities, we changed the starting point on our consolidated statements of cash flows from net earnings to net earnings including noncontrolling interests, with net earnings or loss from the noncontrolling interests (previously, minority interests) no longer a reconciling item in arriving at net cash flows from operating activities in our consolidated statement of cash flows.

Additional disclosures required by this standard are included in Note 10, Supplemental Equity and Comprehensive Income Information, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Safe Harbor Statement Under the Private Securities Litigation Reform Act

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their companies. With the exception of historical information, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements and may be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” “plan,” “project,” “outlook,” and other words and terms of similar meaning. Such statements reflect our current view with respect to future events and are subject to certain risks, uncertainties and assumptions. A variety of factors could cause our future results to differ materially from the anticipated results expressed in such forward-looking statements. Readers should review Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended February 28, 2009, for a description of important factors that could cause future results to differ materially from those contemplated by the forward-looking statements made in this Quarterly Report on Form 10-Q. In addition, general economic conditions, acquisitions and development of new businesses, divestitures, product availability, sales volumes, pricing actions and promotional activities of our competitors, profit margins, weather, changes in law or regulations, foreign currency fluctuation, availability of suitable real estate locations, our ability to react to a disaster recovery situation, availability of consumer credit and the impact of labor markets and new product introductions on our overall profitability, among other things, could cause our future results to differ materially from those projected in any such forward-looking statement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in our operations, we are exposed to certain market risks, including adverse changes in foreign currency exchange rates and interest rates.

Foreign Currency Exchange Rate Risk

We have market risk arising from changes in foreign currency exchange rates related to our International segment operations. On a limited basis, we use forward foreign exchange contracts to hedge the impact of fluctuations in foreign currency exchange rates. Our Canada and Europe businesses enter into the contracts primarily to hedge certain non-functional currency exposures. The aggregate notional amount and fair value recorded on our consolidated balance sheet related to our foreign exchange forward and swap contracts outstanding was $968 million and $14 million, respectively, at August 29, 2009. The aggregate gains recorded in our consolidated statement of net earnings related to all such contracts settled and outstanding were $6 million and $2 in the second quarter and first six months of fiscal 2010, respectively.

Since the second quarter of fiscal 2009, the U.S. dollar has been generally stronger relative to the currencies of the foreign countries in which we operate. The overall strength of the U.S. dollar had a negative impact on our International segment’s revenue and net earnings because the foreign denominations translated into fewer U.S. dollars.

It is not possible to determine the exact impact of foreign currency exchange rate changes; however, the effect on reported revenue and net earnings can be estimated. We estimate that the overall strength of the U.S. dollar had an unfavorable impact on our revenue of approximately $86 million in the second quarter of fiscal 2010. In addition, we estimate that such strength had an unfavorable impact of approximately $2 million on our net earnings in the second quarter of fiscal 2010.

Interest Rate Risk

Short-term and long-term debt

At August 29, 2009, our short-term and long-term debt was comprised primarily of credit facilities, our convertible debentures and our 6.75% notes. We do not currently manage the interest rate risk on our debt through the use of derivative instruments.

Our credit facilities are not subject to material interest rate risk. The credit facilities’ interest rates may be reset due to fluctuations in a market-based index, such as the federal funds rate, the London Interbank Offered Rate (LIBOR), or the base rate or prime rate of our

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lenders. A hypothetical 100-basis-point change in the interest rates of our credit facilities would change our annual pre-tax earnings by $11 million.

There is no interest rate risk associated with our 6.75% notes or convertible debentures, as the interest rates are fixed at 6.75% and 2.25%, respectively, per annum.

Short- and long-term investments in debt securities

At August 29, 2009, our short- and long-term investments in debt securities were comprised of auction-rate securities. These investments are not subject to material interest rate risk. A hypothetical 100-basis-point change in the interest rate would change our annual pre-tax earnings by $3 million. We do not currently manage interest rate risk on these investments through the use of derivative instruments.

Other Market Risks

Investments in auction-rate securities

At August 29, 2009, we held $298 million in investments in ARS, after recording a $8 million pre-tax temporary impairment in the second quarter of fiscal 2010. Given current conditions in the ARS market, we may incur additional temporary unrealized losses or other-than-temporary realized losses in the future if market conditions were to persist and we are unable to recover the cost of our ARS investments. A hypothetical 100-basis-point loss from the par value of these investments would result in a $3 million impairment.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure. We have established a Disclosure Committee, consisting of certain members of management, to assist in this evaluation. The Disclosure Committee meets on a regular quarterly basis, and as needed.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), at August 29, 2009. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at August 29, 2009, our disclosure controls and procedures were effective.

There was no change in internal control over financial reporting during the fiscal quarter ended August 29, 2009, that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

We acquired Best Buy Europe and Napster in fiscal 2009. We are not yet required to evaluate, and have not fully evaluated, changes in Best Buy Europe’s or Napster’s internal control over financial reporting and, therefore, any material changes in internal control over financial reporting that may result from these acquisitions have not been disclosed in this Quarterly Report on Form 10-Q. We intend to disclose all material changes in internal control over financial reporting resulting from these acquisitions prior to or in our Annual Report on Form 10-K for the fiscal year ending February 27, 2010, in which report we will be required for the first time to include Best Buy Europe and Napster in our annual assessment of internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)  Stock Repurchases

During the second quarter of fiscal 2010, we purchased no shares under our June 2007 $5.5 billion share repurchase program.  There is no stated expiration date for the June 2007 share repurchase program.  We purchased $3.0 billion in fiscal 2008.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our Regular Meeting of Shareholders was held on June 24, 2009.

a.The individuals named below were elected as Class 2 directors, each to serve for a term expiring with the election of directors at our 2011 Regular Meeting of Shareholders. Shares voted were as follows:

Ronald James
Shares For	374,884,066
Shares Withheld	5,234,720
Elliot S. Kaplan
Shares For	359,570,232
Shares Withheld	20,548,554
Sanjay Khosla
Shares For	376,250,128
Shares Withheld	3,868,658
George L. Mikan III
Shares For	368,788,964
Shares Withheld	11,329,822
Matthew H. Paull
Shares For	377,063,114
Shares Withheld	3,055,672
Richard M. Schulze
Shares For	371,966,792
Shares Withheld	8,151,994
Hatim A. Tyabji
Shares For	370,929,324
Shares Withheld	9,189,462

b.The appointment of the Class 1 director named below was ratified. The term of the Class 1 director expires with the election of directors at our 2010 Regular Meeting of Shareholders. Shares voted were as follows:

Gérard R. Vittecoq
Shares For	376,267,312
Shares Withheld	3,851,474

c.The appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year beginning March 1, 2009, was ratified. There were 379,133,337 votes for, and 775,333 votes against, ratification. There were 210,116 abstentions.

d.A proposal to approve amendments to the Best Buy Co., Inc. 2004 Omnibus Stock and Incentive Plan, as amended, was approved. There were 311,141,322 votes for, and 34,983,669 votes against, approval. There were 512,690 abstentions and 33,481,105 broker non-votes.

e.A proposal to approve an amendment to Article IX of our Amended and Restated Articles of Incorporation (“Articles”) to change the approval required for certain business combinations was approved. There were 376,485,874 votes for, and 3,064,379 votes against, approval. There were 568,533 abstentions.

f.A proposal to approve an amendment to Article IX of our Articles to decrease the shareholder approval required to amend Article IX was approved. There were 371,515,431 votes for, and 7,951,253 votes against, approval. There were 652,102 abstentions.

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g.A proposal to approve an amendment to Article IX of our Articles to decrease the shareholder approval required to remove directors without cause was approved. There were 373,003,967 votes for, and 6,504,451 votes against, approval. There were 610,368 abstentions.

h.A proposal to approve an amendment to Article IX of our Articles to decrease the shareholder approval required to amend the classified board provisions in our Amended and Restated By-laws was approved. There were 372,380,319 votes for, and 7,109,237 votes against, approval. There were 629,230 abstentions.

i.A proposal to approve an amendment to Article X of our Articles to decrease the shareholder approval required for certain repurchases of stock from substantial shareholders and make other related changes was approved. There were 338,926,337 votes for, and 7,423,176 votes against, approval. There were 288,167 abstentions and 33,481,106 broker non-votes.

j.A proposal to approve an amendment to Article X of our Articles to decrease the shareholder approval required to amend Article X was approved. There were 371,295,229 votes for, and 8,173,572 votes against, approval. There were 649,985 abstentions.

ITEM 6. EXHIBITS

5.0	Receivables Financing Agreement dated July 3, 2009, between a subsidiary of Best Buy Europe and Barclays Bank PLC, as administrative agent, and a syndication of banks
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from our Quarterly Report on Form 10-Q for the second quarter of fiscal 2010, filed with the SEC on October 8, 2009, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed consolidated balance sheets at August 29, 2009; February 28, 2009; and August 30, 2008, (ii) the Consolidated statements of earnings for the three and six months ended August 29, 2009, and August 30, 2008, (iii) the Consolidated statements of cash flows for the six months ended August 29, 2009, and August 30, 2008, and (iv) Notes to condensed consolidated financial statements (tagged as blocks of text).(1)

(1)The XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BEST BUY CO., INC.
	(Registrant)
Date: October 6, 2009	By:	/s/ BRIAN J. DUNN
		Brian J. Dunn
		Chief Executive Officer (duly authorized and principal executive officer)
Date: October 6, 2009	By:	/s/ JAMES L. MUEHLBAUER
		James L. Muehlbauer
		Executive Vice President — Finance and Chief Financial Officer (duly authorized and principal financial officer)
Date: October 6, 2009	By:	/s/ SUSAN S. GRAFTON
		Susan S. Grafton
		Vice President, Controller and Chief Accounting Officer (duly authorized and principal accounting officer)

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EX-5.0

Exhibit 5.0

DATED 3 July 2009

(1) BARCLAYS BANK PLC
as Receivables Purchaser

(2) THE COMPANY LISTED IN SCHEDULE 1
as the SPV

(3) THE COMPANIES LISTED IN SCHEDULE 1

as the Original Obligors

(4) THE COMPANIES LISTED IN SCHEDULE 1

as the Original Participants

(5) BARCLAYS BANK PLC and HSBC INVOICE FINANCE (UK) LIMITED

as the Co-Arrangers

- and -

(6) BARCLAYS BANK PLC

as Security Agent

RECEIVABLES FINANCING

AGREEMENT

relating to

£350,000,000 Sterling facility

CONTENTS

1.	DEFINITIONS AND INTERPRETATION	1
2.	ASSIGNMENT	27
3.	PURPOSE	28
4.	CONDITIONS OF UTILISATION	28
5.	UTILISATION	30
6.	DESIGNATION OF DEBTS	32
7.	PAYMENT ACCOUNT	33
8.	COLLECTION AND ADMINISTRATION	33
9.	TRUST	35
10.	ILLEGALITY	36
11.	FEES	36
12.	INCREASED COSTS	37
13.	OTHER INDEMNITIES	38
14.	MITIGATION BY THE RECEIVABLES PURCHASER	40
15.	COSTS AND EXPENSES	40
16.	REPRESENTATIONS	42
17.	INFORMATION UNDERTAKINGS	48
18.	GENERAL UNDERTAKINGS	54
19.	DEBT SPECIFIC WARRANTIES	62
20.	DEBT SPECIFIC UNDERTAKINGS	64
21.	TERM AND TERMINATION	67
22.	EVENTS OF DEFAULT	68
23.	RIGHTS ON A DEFAULT	74
24.	REASSIGNMENT AND RECOURSE	76
25.	POWER OF ATTORNEY	76
26.	NON-VESTING DEBTS	77

27.	CHANGES TO THE FINANCE PARTIES	78
28.	CHANGES TO THE OBLIGORS AND NETWORK PROVIDERS	80
29.	THE PARTICIPATION	82
30.	CONDUCT OF BUSINESS BY THE FINANCE PARTIES	88
31.	SHARING AMONG THE FINANCE PARTIES	88
32.	PAYMENT ADMINISTRATION	90
33.	PARTICIPATION EXPENSES	93
34.	ADMINISTRATION	94
35.	SET-OFF	95
36.	NOTICES	96
37.	CONFIDENTIALITY	98
38.	CALCULATIONS AND CERTIFICATES	100
39.	PARTIAL INVALIDITY	100
40.	REMEDIES AND WAIVERS	100
41.	AMENDMENTS AND WAIVERS	100
42.	SECURITY AGENT	105
43.	AVOIDANCE OF PAYMENTS	105
44.	DATA PROTECTION	105
45.	COUNTERPARTS	106
46.	GOVERNING LAW	106
47.	ENFORCEMENT	106
SCHEDULE 1		108
	The original parties	108
	Part 1	108
	The SPV	108
	Part 2	108
	The Original Obligors	108

	The Original Participants	108
	Part 4	109
	The Receivables Purchaser	109
SCHEDULE 2		110
	Conditions precedent	110
	Part 1	110
	Part 2	114
SCHEDULE 3		116
	Form of Notice of Assignment and Trust	116
SCHEDULE 4		117
	Forms of Notification Schedule	117
SCHEDULE 5		120
	Receiving Accounts	120
SCHEDULE 6		122
	Form of Accession Letter	122
SCHEDULE 7		123
	Part 1	123
	Form of Compliance Certificate	123
	Part 2	125
	Form of Auditor confirmation	125
SCHEDULE 8		126
	Form of Transfer Certificates	126
	Part 1	126
	Participation Transfer Certificate	126
	Part 2	128
	RP Transfer Certificate	128
SCHEDULE 9		130
	Financial Covenants	130

SCHEDULE 10		136
	Operational Covenants	136
SCHEDULE 11		137
	Part 1	137
	Operational undertakings	137
	Part 2	139
	Additional Network Provider accession protocol	139
	Part 3	141
	Audit requirements	141
SCHEDULE 12		143
	Terms specific to Network Providers	143
	Part 1	143
	O2	143
	Part 2	150
	T-Mobile	150
SCHEDULE 13		155
	Additional Network Provider Accession Certificate	155
SCHEDULE 14		159
	Security Agent provisions	159
SCHEDULE 15		166
	Principal commercial terms at the Commencement Date	166
EXECUTION PAGES		167

THIS DEED is made on 3 July 2009

BETWEEN

(1)BARCLAYS BANK PLC acting through its Asset & Sales Finance division at Churchill Plaza, Churchill Way, Basingstoke, Hampshire RG21 7GP (the “Receivables Purchaser”);

(2)THE COMPANY listed in part 1 of schedule 1 (The original parties) (the “SPV”);

(3)THE COMPANIES listed in part 2 of schedule 1 (The original parties) (the “Original Obligors”);

(4)THE COMPANIES listed in part 3 of schedule 1 (The original parties) (the “Original Participants”);

(5)BARCLAYS BANK PLC and HSBC INVOICE FINANCE (UK) LIMITED as the co-arrangers (the “Co-Arrangers”); and

(6)BARCLAYS BANK PLC as the security agent (the “Security Agent”).

IT IS AGREED as follows:

1.DEFINITIONS AND INTERPRETATION

1.1Definitions

In this Deed, its schedules and all notices or other correspondence and documents between the Parties relating to this Deed:

“Acceptable Bank” has the meaning given in schedule 9 (Financial Covenants);

“Accession Letter” means a document substantially in the form set out in schedule 6 (Form of Accession Letter);

“ACP” means Airtime Contract Protection insurance provided by an Opco to an End User;

“Act” means if the relevant provision of the Companies Act 1985 is still in force, the Companies Act 1985 in so far as it relates to that provision and, if not, the Companies Act 2006;

“Additional Debt” has the meaning given to that term in clause 28.4(a);

“Additional Network Provider” means a company which becomes a Network Provider in accordance with clause 28.4 (Addition of a Network Provider);

“Additional Network Provider Accession Certificate” means a document substantially in the form set out in schedule 13 (Additional Network Provider Accession Certificate);

“Additional Obligor” means a company which becomes an Obligor in accordance with clause 28 (Changes to the Obligors and Network Providers);

“Additional Reserve” has the meaning given to such term in clause 56 Additional Reserve;

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“Additional Security Obligor” means any person which, after the Commencement Date, grants a Security Interest to the Receivables Purchaser in respect of an Obligor’s liabilities to the Receivables Purchaser pursuant to this Deed;

“Administrator” means any person appointed under schedule B1 to the Insolvency Act 1986 to manage a person or partnership’s affairs, business and property;

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;

“Ancillary Document” means any document which is referred to as such in any part of schedule 12 (Terms specific to Network Providers);

“Annual Financial Statements” means the financial statements for a Financial Year delivered pursuant to clause 17.6 (Provision and contents of Compliance Certificate);

“Applicable Rate” means, for the purposes of calculating Discount during any calendar month, LIBOR;

“Approved Auditors” means any of KPMG LLP, PricewaterhouseCoopers LLP, Ernst & Young LLP, Deloitte LLP or such other firm approved in advance by the Receivables Purchaser (such approval not to be unreasonably withheld or delayed);

“Approved Debt” means a Debt which is referred to as such in any part of schedule 12 (Terms specific to Network Providers);

“ARPU” means the average revenue per End User per Month;

“Assignment Date” means:

(a)in relation to an Original Obligor and Debts relating to Original Network Providers, the Commencement Date;

(b)in relation to the SPV and Debts relating to Original Network Providers and assigned to the SPV by an Original Obligor, the Commencement Date;

(c)in relation to any Additional Obligor, the date of its accession to this Deed;

(d)in relation to the SPV and Debts assigned to the SPV by an Additional Obligor, the date of that Additional Obligor’s accession to this Deed;

(e)in relation to an Obligor and Additional Debts, the date of delivery of an Additional Network Provider Accession Certificate; and

(f)in relation to the SPV and Additional Debts assigned to the SPV by an Original Obligor, the date of delivery of an Additional Network Provider Accession Certificate;

“Audit” means an audit undertaken by the Receivables Purchaser in accordance with the terms of this Deed and the Receivables Purchaser’s customary practice in relation to Debts, including the Receivables Purchaser’s consideration of:

(a)all documentation evidencing creation of Debts;

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(b)an Obligor’s orders and proofs of delivery/service relating to Debts;

(c)an Obligor’s procedures in relation to the collection of the proceeds of Debts as agent for the Receivables Purchaser;

(d)an Obligor’s accounting systems, processes or procedures;

(e)each Obligor’s bank statements;

(f)each Obligor’s Preferential Creditors; and

(g)each Obligor’s general financial records;

“Auditors” means Deloitte LLP;

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration;

“Availability” means the maximum aggregate amount of monies capable of being drawn down by the SPV at any time on account of the Purchase Price of Debts, and is the lesser of (from time to time and at any time):

(a)the Facility Limit less the Payment Account Balance; and

(b)the amount calculated by applying the Early Payment Percentage to the aggregate of all Outstanding Approved Debts less Reserves, and then deducting the Payment Account Balance;

but, in each case, adding the Payment Account Balance if in credit.

“Bank Instruction Letter” means the bank instruction letter relating to the operation of the Managed Base Account (as defined in the Trust Deed), entered into between the Receivables Purchaser, CPW and HSBC Bank Plc on or around the Commencement Date;

“Best Buy Co. Inc,” means the US company located in Richfield, Minnesota;

“Best Buy JV” means the joint venture between the Carphone Warehouse group of companies and Best Buy, (a US group of companies), effected through joint ownership of the shares in the Parent, as more particularly described in the JV Agreement;

“Binding Amendment” means, in respect of each Participation:

(a)any amendment or waiver of any term of the Finance Documents applicable to each such Participation, in each case made in accordance with the terms of this Deed; and

(b)any rescheduling, restructuring or reorganisation of the indebtedness of any member of the Group made pursuant to any insolvency legislation or other legislation affecting creditors’ rights generally, in each case in any applicable jurisdiction;

“Breakage Costs” means the sum calculated in accordance with the formula set out at paragraph 1 of schedule 15 (Principal commercial terms at the Commencement Date);

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London:

3

“Cash Equivalent Investments” means at any time:

(a)certificates of deposit maturing within one year after the relevant date of calculation and issued by an Acceptable Bank;

(b)any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security;

(c)commercial paper not convertible or exchangeable to any other security:

(i)for which a recognised trading market exists;

(ii)issued by an issuer incorporated in the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State;

(iii)which matures within one year after the relevant date of calculation; and

(iv)which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or Fl or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investors Service Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;

(d)Sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an Acceptable Bank (or their dematerialised equivalent);

(e)any investment in money market funds which (i) have a credit rating of either A-1 or higher by Standard & Poor’s Ratings Services or Fl or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investors Service Limited, (ii) invest substantially all their assets in securities of the types described in paragraphs (a) to (d) above and (iii) can be turned into cash on not more than 30 days’ notice; or

(f)any other debt security approved by the Majority Finance Parties,

in each case, denominated in Sterling, euros or US dollars and to which any member of the Group is alone (or together with other members of the Group) beneficially entitled at that time and which is not issued or guaranteed by any member of the Group or subject to any Security Interest (other than Security Interest arising under the Transaction Security Documents);

“Change of Control” means any person or group of persons acting in concert gains direct or direct control of the Parent. For the purposes of this definition:

(a)“control” of the Parent means:

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

(A)cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the Parent; or

4

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

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

(ii)the holding beneficially of more than 50 per cent of the issued share capital of the Parent (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital);

(b)“acting in concert” means, a group of persons which, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly of shares in the Parent by any of them, either directly or indirectly, to obtain or consolidate control of the Parent;

“Charged Property” means all of the assets of the Group which from time to time are, or are expressed to be, the subject of the Transaction Security;

“Closing Fee” means a sum specified as such in a Fee Letter;

“Collection Date” means, in relation to a Debt, the date on which the Receivables Purchaser receives cleared funds in respect of the proceeds of that Debt;

“Commencement Date” means the date on which the Receivables Purchaser confirms to CPW that all conditions set out in clause 4.1 (Initial conditions precedent) have been satisfied or waived (as the case may be);

“Commitment” means, in relation to the Facility, the aggregate of the Drawn Commitment and the Receivables Purchaser’s undrawn commitment from time to time under the Facility being a sum equal to the Facility Limit;

“Compliance Certificate” means a certificate substantially in the form set out in schedule 7 (Form of Compliance Certificate);

“Confidentiality Undertaking” means a confidentiality undertaking substantially in the recommended form of the Loan Market Association or in any other form agreed between CPW and the Receivables Purchaser;

“Connection” means the commencement of a telecommunications network service by a Network Provider to a valid End User pursuant to a Minimum Term Contract purchased by the End User from an Opco;

“Contra Accounts” means the actual and potential amount that a Network Provider could set off against the amount owed by the Network Provider to an Opco by virtue of a reciprocal trading relationship (and not otherwise represented as a Specified Reserve), as determined from time to time (acting reasonably and in good faith at all times) by the Receivables Purchaser from the information provided to the Receivables Purchaser by the Opcos and in relation to which the Receivables Purchaser consults with CPW at least three Business Days before such application and provides a written explanation to CPW justifying such application;

“Contractual Rate” means a sum equal to accrued Discount, less any Discount calculated through the application of the Applicable Rate;

5

“Costs” means all reasonable fees, costs, charges and expenses (including all reasonable legal fees and expenses);

“CPW” means The Carphone Warehouse Limited (company number 2142673);

“CPW Brands” means CPW Brands Limited (company number 05840856);

“CPW PLC” means The Carphone Warehouse Group plc (company number 3253714);

“Data Controller” has the meaning set out in section 1 of the DPA;

“Data Subject” has the meaning set out in section 1 of the DPA;

“Debt” means any book debt or other monetary claim or obligation of a Network Provider under a Network Agreement (including any applicable tax or duty payable), present, future or contingent, together with all its Related Rights, and a Debt, where the context permits, shall include a part of a Debt and all or part of its Related Rights, but shall exclude all Excluded Debts;

“Debt Specific Warranties” means the warranties set out at clause 19 (Debt specific warranties) and any warranties referred to as Debt Specific Warranties in any part of schedule 12 (Terms specific to Network Providers);

“Debtor Concentration” means the permitted maximum aggregate Notified Value of Outstanding Approved Debts of a single Network Provider at any time, calculated by applying the Debtor Concentration Percentage to the aggregate value of Outstanding Approved Debts at that time;

“Debtor Concentration Percentage” means the percentage specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Default” means an Event of Default or an event or circumstance specified in clause 22 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default;

“Defaulting Participant” means any Participant in relation to which a Participation Default has occurred;

“Deferred Element” means any outstanding balance of the Purchase Price of an Approved Debt, less the amount of any Early Payment made in respect of such Approved Debt;

“Delegate” means any delegate, agent or attorney appointed by the Receivables Purchaser;

“Discount” means the charge described in clause 7.2(a):

“Discount Margin” means (subject to clause 23.1(i) (Increase Discount Margin)) the percentage specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Discount Rate” means the Applicable Rate plus the Discount Margin;

6

“Disposal” means:

(a)a sale, transfer, discounting, factoring, leasing or otherwise disposing of all or any part of the Debts, Invoices, Network Agreements or any amount standing to the credit of a Trust Account or monies standing to the credit of any other bank account that are held on trust for the Receivables Purchaser; or

(b)a sale, lease, licence, transfer, loan or other disposal by a person of any asset, undertaking or business,

in each case, whether by a voluntary or involuntary single transaction or series of transactions;

“Disruption Event” means either or both of:

(a)a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b)the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i)from performing its payment obligations under the Finance Documents; or

(ii)from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted;

“DPA” means the Data Protection Act 1998;

“Drawn Commitment” means the aggregate value of outstanding Early Payments;

“Early Payment” means a payment made by the Receivables Purchaser to the SPV on account of the Purchase Price of Approved Debts equal to the Notified Value of such Approved Debts less Reserves, multiplied by the Early Payment Percentage;

“Early Payment Percentage” means (subject to the terms of this Deed) the percentage specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“End User” means an End User which is referred to as such in any part of schedule 12 (Terms specific to Network Providers);

“EPOS” means the electronic point of sale computer network which is used by the Group to record transactions with End Users and Network Providers;

7

“Equipment” means any Equipment which is referred to as such in any part of schedule 12 (Terms specific to Network Providers);

“Event of Default” means any event or circumstance specified as such in clause 22 (Events of Default);

“Excluded Debt” means any debt present, future or contingent:

(a)due from the sale of any of an Obligor’s fixed or capital assets;

(b)due from one member of the Group to another member of the Group; and

(c)created by Opcos other than pursuant to a Network Agreement;

“Existing Debt” means a Debt created by an Opco which is Outstanding on the Commencement Date;

“Facility” means the receivables financing facility operating by way of sale and purchase and provided under this Deed;

“Facility Limit” means the sum specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Facility Office” means the office or office through which a Finance Party will perform its obligations under this Deed;

“Fee Letter” means:

(a)a letter dated on or about the date of this Deed between the Receivables Purchaser and CPW setting out any of the fees referred to in clause 11 (Fees); or

(b)any agreement setting out fees payable to a Finance Party under any provision of this Deed or any other Finance Document;

“Finance Documents” means this Deed, the Parent Side Letter, any Additional Network Provider Accession Certificate, any Accession Letter, any Compliance Certificate, any Fee Letter, any Intercreditor Agreement, any Transaction Security Document, the Bank Instruction Letter, the Trust Deed or any document referred to as such in any part of schedule 12 (Terms specific to Network Providers) on or after the Commencement Date, any other agreement granted in favour of the Receivables Purchaser or any Affiliate of the Receivables Purchaser by a member of the Group, or entered into between the Receivables Purchaser and a member of the Group and any other document designated as a “Finance Document” by the Receivables Purchaser;

“Finance Party” means the Receivables Purchaser, Security Agent or a Participant;

“Financial Covenants” means the financial covenants prescribed at schedule 9 (Financial Covenants) or such other financial covenants as may be agreed between the Parties from time to time and “Financial Covenant” means any one or more of them;

“Financial Indebtedness” has the meaning given in schedule 9 (Financial Covenants);

“Financial Year” means the annual accounting period of the Group ending on or about 31 March in each year;

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“First Month” means the calendar month in which the Commencement Date falls;

“First Utilisation Request” means the first Utilisation Request delivered to the Receivables Purchaser on or after the Commencement Date;

“Funds in Use” means the debit balance (if any) on the Payment Account;

“Future Debt” means a Debt created by an Opco after the Commencement Date;

“Group” means each Security Obligor and its Subsidiaries (if any) and “member of the Group” shall be construed accordingly;

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary;

“Information Memorandum” means the document concerning the Original Obligors and the SPV which, at the request of the Original Obligors was prepared in relation to the Facility and distributed by Barclays Bank PLC (in its capacity as Co-Arranger) before the date of this Deed;

“Insolvency Proceedings” means, in relation to any person:

(a)a creditor attaches or takes possession of, or a distress, execution or sequestration or other process is levied or enforced upon or sued out against, any material part of the undertakings, assets, rights or revenues of that person; or

(b)any petition or proposal is presented or a meeting is convened with a view to a composition, assignment or arrangement with any creditors of that person; or

(c)a meeting of that person is convened for the purpose of considering any resolution for (or to petition for) its winding-up or for its administration or any such resolution is passed; or

(d)a notice of intention to appoint an Administrator being given by any person or an Administrator being appointed; or

(e)any person presents a petition for the administration or winding-up of a person (not being a petition which can be demonstrated to the reasonable satisfaction of the Receivables Purchaser to be frivolous, vexatious or an abuse of process of the court and is validly discharged within 10 Business Days); or

(f)an order for the winding-up or administration of that person or for the appointment of a provisional liquidator or judicial factor to that person is made; or

(g)a moratorium pursuant to section IA of and schedule Al to the Insolvency Act 1986 or pursuant to paragraph IA of schedule 1 to the Insolvent Partnerships Order 1994 is established; or

(h)any petition or proposal is presented or a meeting is convened with a view to the rehabilitation, administration, receivership, custodianship, liquidation, provisional liquidation, winding-up or dissolution of that person (other than for the purpose of an amalgamation or reconstruction whilst solvent), or any other insolvency proceedings involving that person (not being proceedings which such person can demonstrate to

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the reasonable satisfaction of the Receivables Purchaser are frivolous, vexatious or an abuse of process).

A person is “Insolvent” if:

(a)it is, or is deemed for the purposes of any law to be, unable to pay its debts or to be insolvent, or admits its inability to pay its debts as they fall due; or

(b)it ceases to trade or notifies the Receivables Purchaser of its intention to cease to trade or the Receivables Purchaser otherwise becomes aware of such intention through a source reasonably considered to be reliable; or

(c)any step (including petition, proposal, giving notice, convening a meeting or applying to court) is taken with a view to:

(i)a composition or scheme of arrangement (including an Obligor’s voluntary arrangement) with its creditors;

(ii)its administration, winding-up, liquidation or dissolution;

(iii)anything analogous to paragraphs (c)(i) and (c)(ii) above;

(iv)an Administrator is appointed over it;

(v)a Receiver is appointed over all or any of its assets; or

(vi)it is insolvent within the terms of the Insolvency Act 1986;

“Intellectual Property” means:

(a)any patents, trade marks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, inventions, confidential information, know-how and other intellectual property rights and interests (which may now or in the future subsist), whether registered or unregistered; and

(b)the benefit of all applications and rights to use such assets,

of each member of the Group (which may now or in the future subsist);

“Intellectual Property Licence” means the trade mark licence agreement between CPW and CPW Brands dated 30 March 2007 pursuant to which CPW Brands grants a non-exclusive licence to CPW to use the Licensed IP;

“Intercreditor Agreement” means any intercreditor agreement entered into after the Commencement Date between the Receivables Purchaser and any member of the Group and any other person;

“Invoice” means any invoice referred to in schedule 12 (Terms specific to Network Providers);

“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity;

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“JV Agreement” means the shareholder agreement dated 30 June 2008 between, amongst others, CPW PLC and Best Buy Co. Inc.;

“KPIs” means any term referred to as such in schedule 12 (Terms specific to Network Providers);

“Legal Opinion” means any legal opinion delivered to the Receivables Purchaser by the Receivables Purchaser’s legal advisors under clause 4.1 (Initial conditions precedent);

“Legal Reservations” means:

(a)the principle that equitable remedies may be granted or refused at the discretion of the court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

(b)the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

(c)similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

(d)any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinion;

“LIBOR” means on or after 11.00 am on the Reporting Date:

(a)the three-month Screen Rate; or

(b)(if no Screen Rate is available on that day) the arithmetic mean of the three month rates (rounded upwards to four decimal places) quoted by the Reference Banks to leading banks in the Relevant Interbank Market provided always that if a Reference Bank does not supply a quotation by 11.00 am on the first Business Day of a calendar month, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks;

“Licensed IP” has the meaning given in clause 18.16 (Intellectual Property);

“Limits” means the Facility Limit and any financial limit set out in schedule 10 (Operational Covenants) from time to time including Debtor Concentration and Minimum Revenue Receipt Percentage and “Limit” shall be construed accordingly;

“Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984;

“Losses” means any losses. Costs, expenses, claims, damages and interest and “Loss” shall be construed accordingly;

“Majority Finance Parties” means a Finance Party or Finance Parties, whose Participation Commitments aggregate more than 662/3 per cent of the Commitment;

“Management Accounting Period” means a period of four weeks or five weeks (as set out in the accounting calendar of CPW);

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“Material Adverse Effect” means, in the reasonable opinion of the Majority Finance Parties, a material adverse effect on:

(a)the ability of an Obligor to perform and comply with the Financial Covenants and/or any payment obligations under any of the Finance Documents;

(b)the business, operations, property, assets or condition (financial or otherwise) of the Group taken as a whole;

(c)the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or purporting to be granted pursuant to any of the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents; or

(d)the ability of the Group to conduct its day-to-day operations in the ordinary course of business, or to process or collect Debts;

“Maturity Date” means, in respect of each Debt, the due date of that Debt as specified in its Invoice or the relevant Network Agreement, or the expiry of the original credit period in relation to such Debt;

“Minimum Revenue Receipt Percentage” has the meaning given in schedule 10 (Operational Covenants)

“Minimum Term Contract” means a contract between a Network Provider and End User that specifies a period of time which is fixed at the date of Connection and within which the End User has an obligation to pay a monthly service charge to the Network Provider and which provides (amongst other things) that the End User may be liable to a cancellation charge if the contract is terminated within that specified period of time;

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

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

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

The above rules will only apply to the last Month of any period. “Monthly” shall be construed accordingly;

“Network Agreement” means any Network Agreement referred to as such in any part of schedule 12 (Terms specific to Network Providers) or any other agreement which the Receivables Purchaser agrees in writing to designate as a “Network Agreement”:

“Network Provider” means an Original Network Provider or an Additional Network Provider;

“Non-Utilisation Fee” means the result of the following formula:

N% x (FL-FU)

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where:

N% is the Non-Utilisation Percentage;

FL is the Facility Limit;

FU is the average Funds in Use during any Month;

“New Participant” means the person described as such in an RP Transfer Certificate;

“Non-Utilisation Percentage” means the percentage specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Notice of Assignment and Trust” means a notice substantially in the form of schedule 3 (Form of Notice of Assignment and Trust);

“Notice Period” means the number of Months specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Notification Schedule” means a notice in substantially the form set out in schedule 4 (Form of Notification Schedule);

“Notified” means, in relation to a Debt, the inclusion of that Debt in a Notification Schedule, and “Notification” shall be construed accordingly;

“Notified Value” means the full value of each Notified Debt as represented in a Notification Schedule including any applicable tax or duty and before any deductions contemplated by and specified in that Notification Schedule and any discount for prompt payment, or otherwise;

“Obligor” means the SPV, an Original Obligor or an Additional Obligor;

“Opco” means each Obligor other than the SPV;

“Operational Covenants” means the covenants at schedule 10 (Operational Covenants);

“Original Financial Statements” means in relation to any Obligor, its audited financial statements delivered to the Receivables Purchaser as required by clause 17.5 (Financial statements);

“Original Network Provider” means 02 and T-Mobile (each as defined in schedule 12 (Terms specific to Network Providers));

“Outstanding” means in relation to any Notified Debt that such Debt remains unpaid and has not been reassigned;

“Parent” means Best Buy Europe Distributions Limited (company number 06534088);

“Parent Side Letter” means the letter more particularly described at paragraph 2(c) of part I of schedule 2 (Conditions precedent) or such replacement letter as may be agreed between the Receivables Purchaser, CPW and the Parent;

“Participant” means:

(a)           each Original Participant; or

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(b)any bank or financial institution which has become a participant in the Facility in accordance with clause 27 (Changes to the Finance Parties),

and which in each case has not ceased to be a Party in accordance with the terms of this Deed;

“Participant’s Share of Discount” means, for each Participant in relation to any applicable period, such sum as is produced by applying that Participant’s Participation Percentage to a sum equal to the Contractual Rate which has accrued during that period;

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

“Participation” means the participation in the funding of the Facility accepted by a Participant or transferred to a Participant in accordance with the terms of this Deed;

“Participation Commitment” means:

(a)in relation to an Original Participant, the amount set opposite its name under the heading “Original Participation Commitment” in part 3 of schedule 1 (The Original Parties);

(b)in relation to any other Participant, the amount of any Participation Commitment novated to it under this Deed and set out in the relevant Transfer Certificate,

and in each case, less (i) any amount cancelled, permanently reduced or novated by it in accordance with this Deed and (ii) an amount equal to the Participation Percentage of any amount of the Commitment cancelled or permanently reduced under this Deed;

“Participation Default” means a Participant fails to comply with its obligations under clause 31.2 (Settlement Amount) (other than due to an event which the Receivables Purchaser, acting reasonably, agrees is a Disruption Event);

“Participation Percentage” means:

(a)in relation to an Original Participant, the percentage set opposite its name under the heading “Original Participation Percentage” in part 3 of schedule 1 (The original parties), or:

(b)in relation to any other Participant at any time, the percentage which its Participation Commitment bears to the Commitment at that time,

or, in each case, such other percentage as may (i) be agreed between a Participant and the Receivables Purchaser at any time, or (ii) be applicable in accordance with the terms of this Deed;

“Participation Transfer Certificate” means a certificate substantially in the form set out in part 1 of schedule 8 (Form of Transfer Certificate) or such other form as may be agreed between the Receivables Purchaser and a Participant;

“Parties” means the parties to this Deed and “Party” means any of them;

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“Payment Account” means the bookkeeping account maintained by the Receivables Purchaser in relation to the SPV under this Deed, as referred to in clause 7 (Payment Account);

“Payment Account Balance” means the balance from time to time on the Payment Account;

“Payment Default” means any of the Events of Default detailed at clauses 22.1 (Breach of trust) to 22.3 (Facility Limit) inclusive;

“Permitted Acquisition” means an acquisition:

(a)in the ordinary course of business;

(b)of an asset sold, leased, transferred or otherwise disposed of by another member of the Group in circumstances constituting a Permitted Disposal;

(c)in respect of which the prior written consent of the Majority Finance Parties has been given;

(d)of shares or securities pursuant to a Permitted Share Issue;

(e)of securities which are Cash Equivalent Investments so long as those Cash Equivalent Investments become subject to the Transaction Security as soon as is reasonably practicable; and

(f)of (i) the issued share capital of a limited liability company or (ii) (if the acquisition is made by a limited liability company whose sole purpose is to make the acquisition) a business or undertaking carried on as a going concern, but only if:

(A)no Event of Default is continuing on the closing date for the acquisition or would occur as a result of the acquisition;

(B)the acquired company, business or undertaking is incorporated or established, and carries on its principal business in, the European Union or the United States of America and is engaged in a business substantially the same as that carried on by the Group; and

(C)the consideration (including associated costs and expenses) for the acquisition and any Financial Indebtedness or other assumed actual or contingent liability, in each case remaining in the acquired company (or any such business) at the date of acquisition (when aggregated with the consideration (including associated costs and expenses) for any other Permitted Acquisition and any Financial Indebtedness or other assumed actual or contingent liability, in each case remaining in any such acquired companies or businesses at the time of acquisition does not in any Financial Year exceed in aggregate £75,000,000 (or its equivalent).

“Permitted Disposal” means any Disposal:

(a)(save in relation to Debts, Network Agreements, Ancillary Documents or any sums collected on behalf of a Network Provider) made in the ordinary course of business of the disposing entity;

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(b)(save in relation to Debts, Network Agreements, Ancillary Documents or any sums collected on behalf of a Network Provider) of assets in exchange for other assets comparable or superior as to type, value and quality;

(c)of obsolete or redundant vehicles, plant and equipment for cash;

(d)of Cash Equivalent Investments for cash or in exchange for other Cash Equivalent Investments;

(e)arising as a result of any Permitted Security; and

(f)(save in relation to Debts, Network Agreements, Ancillary Documents or any sums collected on behalf of a Network Provider) where the higher of the market value or consideration receivable (when aggregated with the higher of the market value or consideration receivable for any other Disposal, other than any permitted under paragraphs (a) to (e) above) does not exceed £75,000,000 (or its equivalent in any other currency or currencies) in any Financial Year;

“Permitted Financial Indebtedness” means any Financial Indebtedness:

(a)incurred by any member of the Group to another member of the Group or an Affiliate of CPW, provided that no Security Interest is directly or indirectly granted by any member of the Group in consideration of incurring such Financial Indebtedness; or

(b)incurred by any member of the Group to any person other than those specified in sub-paragraph (a) above, provided that no Security Interest is directly or indirectly granted by any member of the Group in consideration of incurring such Financial Indebtedness; or

(c)as contemplated by the definition of “Permitted Security” subject to the entry into of an Intercreditor Agreement in a form satisfactory to the Majority Finance Parties (acting reasonably) in relation to Permitted Security contemplated by sub-paragraphs (d), (m) and (n) of the definition of “Permitted Security”;

“Permitted Guarantee” means:

(a)any performance or similar bond guaranteeing performance by an Opco under any contract entered into in the ordinary course of business;

(b)any guarantee given in respect of cash-pooling arrangements and which are entered into by any member of the Group in the ordinary course of its banking arrangements; or

(c)any guarantee given on arms length and normal commercial terms in connection with an acquisition or disposal transaction which is a Permitted Acquisition or Permitted Disposal;

“Permitted Loan” means:

(a)any trade credit extended by an Opco to:

(i)a Network Provider in accordance with a Network Agreement; or

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(ii)any other customer on normal commercial terms and in the ordinary course of its business activities;

(b)Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, Permitted Financial Indebtedness;

(c)a loan made by an Obligor to another Obligor or by a member of the Group which is not an Obligor to another member of the Group;

(d)a loan made by an Obligor to another member of the Group which is not an Obligor so long as the aggregate amount of the Financial Indebtedness under such loans does not exceed £1,000,000 (or its equivalent) at any time provided always that this paragraph (d) shall not apply to the SPV;

(e)a loan made under cash-pooling arrangements and which is entered into by any member of the Group in the ordinary course of its banking arrangements;

(f)a loan made by a member of the Group to an employee or director of any member of the Group if the amount of that loan when aggregated with the amount of all loans to employees and directors by members of the Group does not exceed £1,000,000 (or its equivalent) at any time; and

(g)any loan (other than a loan made by a member of the Group to another member of the Group) so long as the aggregate amount of the Financial Indebtedness under such loans does not exceed £5,000,000 (or its equivalent) at any time;

“Permitted Security”means:

(a)any netting or set-off arrangement (including but not limited to cash-pooling arrangements) entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances, provided always that such arrangements do not extend to the proceeds of Debts or any sums collected on behalf of a Network Provider (unless such sums are the subject of a Specified Reserve);

(b)any lien arising by operation of law and in the ordinary course of business;

(c)any lien created in favour of a bank in the ordinary course of its banking arrangements pursuant to standard banking terms of business;

(d)(save in relation to Debts, Network Agreements or the Ancillary Documents) any Security Interest given on arms length and normal commercial terms in connection with an acquisition or disposal transaction which is a Permitted Acquisition or Permitted Disposal;

(e)any Security Interest or Quasi-Security over or affecting any asset acquired by a member of the Group after the Commencement Date if:

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

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

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(iii)the Security Interest or Quasi-Security is removed or discharged within 90 days of the date of acquisition of such asset;

(f)any Security Interest or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the Commencement Date, where the Security Interest or Quasi-Security is created before the date on which that company becomes a member of the Group if:

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

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

(iii)the Security Interest or Quasi-Security is removed or discharged within 90 days of the date of that company becoming a member of the Group;

(g)any Security Interest created with the prior written consent of the Majority Finance Parties;

(h)any Security Interest over goods and documents of title to goods arising in the ordinary course of letter of credit transactions entered into in the ordinary course of business;

(i)any Quasi-Security arising as a result of a Disposal which is a Permitted Disposal;

(j)any Security Interest created or expressed to be created in favour of any Finance Party pursuant to the Finance Documents;

(k)any Security Interest or Quasi-Security arising as a consequence of any finance or capital lease permitted pursuant to the definition of “Permitted Financial Indebtedness”;

(l)any Security Interest or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Group in the ordinary course of business and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group;

(m)(save in relation to Debts, Network Agreements or the Ancillary Documents) any Security Interest or Quasi-Security securing any sale and leaseback involving an asset or assets the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other sale and leaseback involving an asset or assets given by any member of the Group) does not exceed £25,000,000 (or its equivalent in other currencies); or

(n)(save in relation to Debts, Network Agreements or the Ancillary Documents) any Security Interest or Quasi-Security securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of any Security Interest or Quasi-Security not otherwise permitted by preceding paragraphs) does not exceed £25,000,000 (or its equivalent in other currencies);

“Permitted Share Issue” means an issue of:

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(a)ordinary shares by a member of the Group, paid for in full in cash upon issue and which by their terms are not redeemable and where such shares:

(i)are of the same class and on the same terms as those initially issued by such member of the Group; and

(ii)are issued to the same shareholder as those previously issued or are issued to another member of the Group; or

(b)shares by a member of the Group which is a Subsidiary of CPW to its immediate Holding Company where (if the existing shares of the Subsidiary are the subject of the Transaction Security) the newly-issued shares also become subject to the Transaction Security on the same terms;

“Permitted SPV Distribution” means any dividend or distribution made by the SPV but only if an Event of Default has not occurred and is continuing;

“Permitted Transaction” means:

(a)any Disposal required by the terms of the Finance Documents;

(b)any Financial Indebtedness arising under the Finance Documents;

(c)any guarantee or indemnity entered into in favour of any Finance Party under the Finance Documents;

(d)any Security or Quasi-Security granted in favour of any Finance Party under the Finance Documents;

(e)any Shareholding Change, in relation to which the conditions prescribed by clause 17.2 (Shareholding Change and Joint Ventures) have been met;

(f)any Joint Venture, in relation to which the conditions prescribed by clause 17.2 (Shareholding Change and Joint Ventures) have been met; or

(g)any transaction (other than a Disposal, the granting of any guarantee or indemnity, the entry into of any loan, the granting or creation of Security Interests, or the incurring or permitting to subsist of Financial Indebtedness, the issue of any shares or the making of any dividend or distribution by the SPV) conducted in the ordinary course of business on arms length terms;

“Personal Data” has the meaning set out in section 1 of the DPA;

“Preferential Creditor” means any person which, in the reasonable opinion of the Receivables Purchaser, may be entitled to receive payment from the realisations of floating charge assets in priority to the Receivables Purchaser including, for the avoidance of doubt, the prescribed part of any Obligor’s net property that would be made available for the satisfaction of its unsecured debts pursuant to section 176A of the Insolvency Act 1986;

“Purchase Price” means the amount received by the Receivables Purchaser towards the discharge of the Debt, less:

(a)accrued Discount; and

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(b)the aggregate value of any Contra Account made by the relevant Network Provider at any time or to which such Network Provider may be entitled (for the avoidance of doubt, including the aggregate value of any Contra Account subsequently waived by the relevant Network Provider); and

(c)any other deduction permitted or provided for by the terms of this Deed.

“Receivables Purchaser’s Participation Limit” means, in relation to the Receivables Purchaser, the amount set opposite its name under the heading “Original Participation Commitment” in part 4 of schedule 1 (The original parties) less an amount equal to the Receivables Purchaser’s Participation Percentage of any amount of the Commitment cancelled or permanently reduced under this Deed;

“Receivables Purchaser’s Participation Percentage” means the percentage set opposite its name under the heading “Original Participation Percentage” in part 4 of schedule 1 (The original parties), or such other percentage as may (i) be agreed between the Participants and the Receivables Purchaser at any time, or (ii) be applicable in accordance with the terms of this Deed;

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property;

“Receiving Account” means:

(a)in relation to the Receivables Purchaser and each Original Participant, the account designated as its Receiving Account in schedule 5 (Receiving Accounts); and

(b)in relation to any Participant other than an Original Participant, the account designated as its Receiving Account in the Transfer Certificate signed by such Participant;

“Recourse” means the Receivables Purchaser’s right to require the SPV to repurchase a Debt;

“Reference Banks” means the principal London offices of Barclays Bank Plc, HSBC Bank Plc, Lloyds TSB Bank Plc and The Royal Bank of Scotland plc or such other banks as may be appointed by the Receivables Purchaser in consultation with CPW;

“Related Rights” in relation to a Debt, means any of the following (if any):

(a)all of an Obligor’s rights at law as an unpaid vendor or provider of services under a Network Agreement (without any obligation on the Receivables Purchaser to complete a Network Agreement);

(b)the benefit of all insurances;

(c)all negotiable and non-negotiable instruments, all securities, bonds, guarantees and indemnities; and

(d)subject to clause 37.1 (Duties to Relevant Third Parties), all of an Obligor’s rights to any ledger, computer or electronic data or materials or document recording or evidencing a Debt;

“Relevant Interbank Market” means the London interbank market;

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“Relevant Jurisdiction” means, in relation to a member of the Group:

(a)its jurisdiction of incorporation;

(b)any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;

(c)any jurisdiction where it conducts its business; and

(d)the jurisdiction whose laws govern the perfection of any Transaction Security Document entered into by it;

“Relevant Period” shall have the meaning given to it in schedule 9 (Financial Covenants);

“Relevant Third Party” has the meaning given to that term in clause 37.1(a);

“Remittance” means cash, cheques, bills of exchange, negotiable or non-negotiable instruments, letters of credit, electronic payments, BACS, CHAPS and any other remittance or instrument of payment in whatever form received by the Receivables Purchaser or an Obligor in and towards discharge of a Debt;

“Repeating Representations” means each of the representations set out in clause 16.2 (Status) to clause 16.6 (Deduction of Tax), clause 16.7 (No Default), clause 16.8(d) (No misleading information), clause 16.9(c) and (e) (Original Financial Statements), clause 16.10 (Pari passu) clause 16.11 (No proceedings threatened), clause 16.12 (Validity and admissibility in evidence), clause 16.13 (Governing law and enforcement), clause 16.19 (Ranking) to clause 16.21 (Legal and beneficial ownership) and clause 16.25 (Centre of main interest and establishments);

“Reporting Date” means the third Friday of each Management Accounting Period and if not a Business Day, the immediately following Business Day;

“Repurchase Price” means:

(a)in relation to the Outstanding Debts due by a Network Provider, the Early Payments received in relation to those Debts less the value of any Remittance referable to those Debts plus any accrued and unpaid Discount referable to those Debts; or

(b)in relation to all Outstanding Debts, the aggregate debit balance on the Payment Account;

“Reserves” means (in each case, without double-counting):

(a)any Specified Reserve;

(b)any Additional Reserve;

(c)the aggregate balance of any sum in excess of a Limit; and

(d)the aggregate value of any Contra Accounts;

and “Reserve”shall be construed accordingly;

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“Revenue Share”means the income payable to an Opco by a Network Provider for procuring a Connection;

“RP Transfer Certificate”means a certificate substantially in the form set out in part 2 of schedule 8 (Form of Transfer Certificates) or any other form agreed by the Receivables Purchaser;

“Screen Rate”means the British Bankers’ Association Interest Settlement Rate for Sterling and the relevant period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Receivables Purchaser may specify another page or service displaying the appropriate rate;

“Security Interest”means any mortgage, charge (whether fixed or floating), pledge, lien, trust, assignment or tracing or other equitable right, or any other security interest securing any obligation of any person or any other agreement or arrangement intended to have and having substantially the same effect;

“Security Obligor”means an Obligor or an Additional Security Obligor;

“Senior Facility Agreement”means any of:

(a)the £550,000,000 Facility Agreement dated 13 March 2008 for The Carphone Warehouse Group plc arranged by Barclays Capital, HSBC Bank plc, ING Bank N.V., London Branch and The Royal Bank of Scotland with ING Bank N.V., London Branch acting as agent;

(b)the £375,000,000 Facility Agreement dated 11 October 2006 (as amended by an Amendment and Syndication Agreement dated 23 November 2006) for The Carphone Warehouse Group plc arranged by HSBC Bank plc, ING Bank N.V and The Royal Bank of Scotland with HSBC Bank plc acting as agent; and

(c)the commitment documents in respect of the £150,000,000 revolving credit facility agreement for CPW PLC arranged by Barclays Capital, Credit Suisse, London Branch and HSBC Bank plc with HSBC Bank plc acting as agent;

“Service Fee”means the annual sum payable in consideration for the Co-Arrangers’ administration of the Facility specified as such in a Fees Letter;

“Settlement Amount”means, in relation to each Participant:

(a)on the Commencement Date, a sum equal to the Participation Percentage of the Utilisation requested on the Commencement Date; and

(b)after the Commencement Date, as at the close of business on the Business Day immediately preceding each Settlement Date, the sum that will result in its Participation being equal to its Participation Percentage of the Drawn Commitment, provided always that its Participation Commitment is not exceeded;

“Settlement Date”means:

(a)in relation to each Original Participant, the Commencement Date;

(b)in relation to each Participant other than an Original Participant, the Transfer Date,

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and then, in each case, until such time as the Receivables Purchaser has recovered all outstanding Early Payments and the Facility has been terminated, each Wednesday, commencing with the first Wednesday following the Commencement Date;

“Shareholding Change” shall have the meaning given to that term in clause 17.2 (Shareholding Change and Joint Ventures);

“Shortfall” means, in relation to a Debt, the amount (if any) by which the amount received or recovered by the Receivables Purchaser for that Debt is less than the Notified Value of that Debt;

“SIM” means a subscriber identification module card programmable with a unique telephone number or numbers which enables access to and the use of telecommunications network services when operated in conjunction with a compatible mobile telephone handset;

“Specified Reserve” means any category of Reserve described as such in schedule 12 (Terms specific to Network Providers);

“Spot Rate of Exchange” means the Receivables Purchaser’s spot rate of exchange for the purchase of the relevant currency with Sterling in the London foreign exchange market on or about 11.00 am on a particular day;

“Sterling” or “£” means the lawful currency of the United Kingdom;

“Subsidiary” has the meaning given in schedule 9 (Financial Covenants);

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

“Term” means the period expiring the number of Months after the Commencement Date which is specified as the “Term” in schedule 15 (Principal commercial terms at the Commencement Date);

“Termination Date” means the earliest of:

(a)the final Business Day of the Term;

(b)the final Business Day prior to the date on which this Deed is validly terminated pursuant to clause 21.2 (Termination); and

(c)the Business Day on which this Deed is validly terminated pursuant to clause 22 (Events of Default);

“Transaction Security” means any Security Interest created or expressed to be created in favour of the Receivables Purchaser pursuant to a Transaction Security Document;

“Transaction Security Documents” means each of the documents specified in:

(a)paragraph 2(d) of part 1 of schedule 2 (Conditions precedent); and

(b)paragraph 10 of part 2 of schedule 2 (Conditions precedent),

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together with any other document entered into by any member of the Group creating or expressed to create any Security Interest in favour of the Receivables Purchaser in relation to the obligations of any member of the Group under any Finance Document;

“Transfer Certificate” means a Participation Transfer Certificate or an RP Transfer Certificate;

“Transfer Date” means the date on which a person becomes a Participant, as specified in a Transfer Certificate;

“Transferee” has the meaning given in clause 27.5 (Procedure for transfer of a Participation);

“Trust Account” means any bank account in CPW’s name, mandated in favour of or otherwise controlled by the Receivables Purchaser and/or declared in trust for the Receivables Purchaser, and to which, in each case, no Obligor has any right, title, interest in or to any balance standing from time to time to the credit thereof including the bank accounts specified as such in schedule 15 (Principal commercial terms at the Commencement Date);

“Trust Deed” means the trust deed entered into on or around the Commencement Date in which CPW declares in trust for the Receivables Purchaser and Telefonica O2 (UK) Limited, collections which relate to the Managed Base (as defined in part 1 of schedule 12 (Terms specific to Network Providers));

“UK GAAP” means generally accepted accounting principles, standards and practices in the United Kingdom;

“Unapproved Debt” means:

(a)any Debt other than an Approved Debt; and

(b)any Approved Debt:

(i)in relation to which an Obligor is in breach of any representation, warranty, covenant or undertaking given to the Receivables Purchaser pursuant to this Deed;

(ii)which is disputed by the Network Provider, or in respect of which the Network Provider shall dispute its liability to pay an Obligor or to pay the Debt by its due date for payment, or the Debt is subject to a claim by the Network Provider to set-off or counterclaim;

(iii)in relation to which any payment on account of the Purchase Price would cause or has caused a Limit to be exceeded or which has been Notified in excess of a Limit;

(iv)in relation to which Recourse is exercised;

(v)in existence upon the Receivables Purchaser exercising its rights under clause 8.5 (Variation or cancellation of agency) or coming into existence thereafter;

(vi)in respect of which an Obligor is in material breach of any provision of this Deed applicable to such Debt;

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(vii)payable by a Network Provider, the long-term unsecured and non-credit enhanced obligations of whose Holding Company, has a sub-investment grade credit rating as determined from time to time by Standard & Poor’s Ratings Group;

(viii)which is created by an Opco using the trading style “Hugh Symons Communications”;

(ix)in relation to a Network Provider which is party to an Ancillary Document which is revoked or otherwise terminated without the Receivables Purchaser’s prior written consent;

(x)in relation to which an Obligor is unable to provide material and relevant information on account of its obligations to Relevant Third Parties to keep information confidential; and

(xi)which the Receivables Purchaser designates as an Unapproved Debt in accordance with clause 6.2 (Unapproved Debts) or clause 23.1(d) (Unapproved Debts);

“United Kingdom” or “UK” means the United Kingdom of Great Britain and Northern Ireland (excluding the Isle of Man and the Channel Islands);

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents;

“Utilisation” means a drawdown by the SPV from Availability in accordance with the terms of this Deed;

“Utilisation Date” means the date of a Utilisation, being the date on which an Early Payment is made;

“Utilisation Request” means a request for a Utilisation;

“VAT” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature; and

“Vest” means, in relation to a Debt, the transfer of ownership of that Debt by assignment or the holding of that Debt in trust and “Vested” and “Vesting” shall be construed accordingly.

1.2Interpretation

(a)Unless a contrary indication appears, a reference in this Deed to:

(i)the “Receivables Purchaser”, a “Participant”, any “Security Obligor”, any “Finance Party”, any “Obligor”, the “Parent”, any “Party” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

(ii)“assets”includes present and future properties, revenues and rights of every description and includes uncalled capital;

(iii)“including” or “includes” means including or includes without limitation.

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(iv)a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, supplemented, extended, restated, novated and/or replaced in any manner from time to time (however fundamentally and even if any of the same increases the obligations of any member of the Group or provides for further advances);

(v)“guarantee” means any guarantee, letter or credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

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

(vii)a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture; consortium or partnership (whether or not having separate legal personality);

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

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

(x)the singular includes the plural and vice versa;

(xi)a time of day is a reference to London time; and

(xii)“sub-participation” means any sell down or proposal by a Finance Party to sell down a proportion of its interest in the Finance Documents to a third party financier.

(b)Section, clause and schedule headings are for ease of reference only and shall not affect the construction of this Deed.

(c)References to clauses, paragraphs and schedules are references to clauses, paragraphs and schedules of or to this Deed unless otherwise stated. References to this Deed include its schedules.

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

(e)A Default (other than an Event of Default) is “continuing” if it has not been remedied or waived in writing and an Event of Default and a Participation Default is “continuing” if it has not been waived in writing, in each case to the satisfaction of the Receivables Purchaser.

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(f)In this Deed, any agreement, confirmation, notice, authority, breach, obligation, liability, representation, warranty, covenant, undertaking or indemnity contained in this Deed of or by (i) each Obligor and/or the Obligors and (ii) each member of the Group shall be deemed to be joint and several.

1.3Third party rights

(a)Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Deed.

(b)Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Deed at any time.

2.ASSIGNMENT

2.1Assignment

(a)On the Assignment Date, each of the Opcos assign to the SPV all Existing Debts and all Future Debts.

(b)On the Assignment Date, the SPV assigns to the Receivables Purchaser all Existing Debts and all Future Debts.

2.2Vesting of Existing Debts

Pursuant to clause 2.1 (Assignment), on the Commencement Date:

(a)the Existing Debts shall Vest in the SPV; and

(b)upon the Existing Debts Vesting in the SPV, the Existing Debts shall Vest in the Receivables Purchaser,

in each case, without any further act on the part of an Obligor or the Receivables Purchaser.

2.3Vesting of Future Debts

Pursuant to clause 2.1 (Assignment), Future Debts shall Vest in the Receivables Purchaser automatically upon such Future Debts being created by the relevant Opco, without any further act on the part of an Obligor or the Receivables Purchaser.

2.4Related Rights

For the avoidance of doubt, upon each Debt Vesting in the Receivables Purchaser there shall automatically Vest in the Receivables Purchaser all and any of the Related Rights.

2.5Legal assignment

The Opcos shall, at any time upon or following an Event of Default which is continuing, at the request of the Receivables Purchaser, execute and deliver to the SPV a legal assignment of any Debt.

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2.6Acceptance

No Opco shall challenge the existence, extent or nature of:

(a)the Receivables Purchaser’s right, title and interest in and to the Debts;

(b)an Opco’s obligations to the SPV;

(c)the SPV’s obligations to the Receivables Purchaser;

(d)the assignment of Debts to the SPV; and

(e)the assignment of the Debts by the SPV to the Receivables Purchaser.

2.7No termination of assignment

The Opcos undertake that they shall not terminate or purport to terminate the assignment of Debts to the SPV in clause 2.1 (Assignment), without the prior written consent of the Receivables Purchaser.

2.8No reassignment

The SPV undertakes that it will not reassign or purport to reassign to an Opco any Debt assigned to the Receivables Purchaser other than in accordance with the terms of clause 24 (Reassignment and Recourse).

3.PURPOSE

3.1Purpose

(a)The SPV shall apply all amounts drawn by it under the Facility towards payment to the Opcos for the Debts assigned to the SPV by the Opcos.

(b)Each Opco shall apply all sums paid to the Opco by the SPV in accordance with clause 3.1(a) for general corporate purposes.

3.2Monitoring

The Receivables Purchaser is not bound to monitor or verify the application of any amount drawn under the Facility.

4.CONDITIONS OF UTILISATION

4.1Initial conditions precedent

(a)The SPV may not deliver a Utilisation Request unless the Receivables Purchaser has received all of the documents and other evidence listed in part 1 of schedule 2 (Conditions precedent) in form and substance satisfactory to the Receivables Purchaser.

(b)The Receivables Purchaser shall notify CPW and the Original Participants promptly upon receipt of all such documents and other evidence in accordance with clause 4.1(a).

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4.2Conditions relating to Existing Debts

The Receivables Purchaser will only be obliged to comply with the First Utilisation Request:

(a)if the First Utilisation Request requests a drawdown on the Commencement Date, the Receivables Purchaser has received the relevant Notification Schedules by not later than 11.00 am on the Commencement Date (or by not later than 11.00 am on the Business Day that the first Utilisation is requested, if the first Utilisation is requested after the Commencement Date);

(b)insofar as the Existing Debts are Approved Debts;

(c)if such Approved Debts are denominated in Sterling and the Network Provider is domiciled in England and Wales;

(d)if such payment by the Receivables Purchaser would not result in a breach of any Limit;

(e)if all the representations and warranties in clause 16 (Representations) are true in all material respects;

(f)provided that no Default has occurred which is continuing or will result from the Receivables Purchaser making such payment; and

(g)if the Original Participants have complied with their obligations under clause 31.2(a).

4.3Further conditions precedent

(a)The Receivables Purchaser will only be obliged to comply with a Utilisation Request after the First Utilisation Request, if on the date of the Utilisation Request and on the proposed Utilisation Date:

(i)the Opcos have complied with their obligations under schedule 11 (Operational undertakings);

(ii)subject to clause 4.4(a), complying with the Utilisation Request will not result in a breach of Availability or any Limit;

(iii)no Default is continuing or would result from the proposed Utilisation;

(iv)the Repeating Representations are true in all material respects; and

(v)the date of the Utilisation Request is a Business Day on which the Receivables Purchaser has received the relevant Notification Schedules by not later than 11.00 am.

(b)If the Receivables Purchaser receives the relevant Notification Schedules on a Business Day but after 11.00 am, the Receivables Purchaser will only be obliged to comply with a Utilisation Request on the immediately succeeding Business Day.

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4.4Participation Default

(a)Upon the occurrence of any Participation Default, the Receivables Purchaser may waive the Participation Default in writing to the Defaulting Participant.

(b)If a Participation Default is not waived, the Receivables Purchaser shall immediately, by notice to CPW and the Participants:

(i)reduce the Facility Limit by the amount of the Defaulting Participant’s Participation Commitment; and

(ii)reduce the Defaulting Participant’s Participation Commitment and Participation Percentage to zero and amend the other Finance Party’s Participation Percentages accordingly.

5.UTILISATION

5.1Purchase Price

(a)The Receivables Purchaser shall pay the Purchase Price in accordance with clause 5.2 (Early Payment) and clause 5.3 (Payment of Deferred Element).

(b)The Purchase Price of each Debt shall be paid by the Receivables Purchaser in Sterling.

5.2Early Payment

Subject to clause 4 (Conditions of Utilisation), the Receivables Purchaser shall, in relation to Approved Debts, make an Early Payment to the SPV on each Utilisation Date (or such lesser amount as may be agreed with the SPV or CPW on behalf of the SPV).

5.3Payment of Deferred Element

Subject to the terms of this Deed, the Receivables Purchaser shall give credit to the SPV for the Deferred Element in accordance with clause 7.3 (Proceeds of Debts and Deferred Element) on each Collection Date.

5.4Payment to CPW

(a)The SPV requests that each Early Payment and payment of the Deferred Element to which the SPV is entitled under clause 5.2 (Early Payment) and clause 5.3 (Payment of Deferred Element) shall be made to an account in the name of CPW. The SPV has notified the Receivables Purchaser that this request is made to satisfy the SPV’s obligations to make payment to CPW for the Debts assigned to the SPV under this Deed (and CPW shall ensure that each other Opco receives any payments to which it may be entitled in this regard).

(b)Each Opco acknowledges that CPW (and not the Receivables Purchaser) is solely responsible for ensuring that each Opco receives from the SPV all monies to which it is entitled.

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5.5Payment obligations

(a)The payment of an Early Payment and/or the Deferred Element in accordance with clauses 5.2 (Early Payment) to 5.4 (Payment to CPW) shall constitute a good discharge by the Receivables Purchaser of such monies so paid.

(b)Each Opco acknowledges that any failure by the SPV to comply with clause 3.1(a) shall not affect the provisions of clause 2 (Assignment).

(c)The SPV shall, within three Business Days of demand, repay to the Receivables Purchaser upon the Receivables Purchaser’s request:

(i)the amount of any payment by the Receivables Purchaser made in excess of any Limit or that has caused any Limit to be exceeded;

(ii)the amount by which the Payment Account Balance exceeds Availability; or

(iii)any Early Payment and accrued and unpaid Discount in relation to any Debt where such Debt becomes an Unapproved Debt.

5.6Additional Reserve

(a)If the Receivables Purchaser (acting reasonably and in good faith at all times) becomes aware of an event or circumstance that the Receivables Purchaser could not reasonably have been expected to have contemplated by:

(i)if the Approved Debt is payable by an Original Network Provider, the Commencement Date; or

(ii)if the Approved Debt is payable by an Additional Network Provider, the Assignment Date referable to that Approved Debt,

and that might reasonably be expected to materially reduce the Notified Value of any Debt, the Receivables Purchaser may restrict Availability by applying an additional reserve to the Payment Account (an “Additional Reserve”).

(b)The amount of an Additional Reserve shall be specified by the Receivables Purchaser, provided always that the Receivables Purchaser consults with CPW at least three Business Days before making such application in relation to such application and provides a written explanation to CPW justifying such application.

(c)If CPW evidences, to the Receivables Purchaser’s satisfaction (acting reasonably), that the event or circumstance which caused an Additional Reserve to be applied in accordance with clause 5.6(a) no longer applies, that Additional Reserve shall be released.

(d)If CPW evidences, to the Receivables Purchaser’s satisfaction (acting reasonably), that the value of an Additional Reserve applied in accordance with clause 5.6(a) exceeds the maximum amount by which the Notified Value of the Approved Debt might reasonably be expected to be reduced by the relevant event or circumstance, the amount of the Additional Reserve shall be reduced by such excess.

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5.7Contra Accounts

(a)If CPW evidences, to the Receivables Purchaser’s satisfaction (acting reasonably) that the set-off risk associated with a Contra Account no longer applies, the Reserve applied in relation to that Contra Account shall be released.

(b)If CPW evidences, to the Receivables Purchaser’s satisfaction (acting reasonably), that the value of a Reserve applied in accordance with clause 5.7(a) exceeds the maximum amount by which the Notified Value of the Approved Debt might reasonably be expected to be reduced by the Contra Account, the amount of the Reserve shall be reduced by such excess.

5.8Bank account

All payments by the Receivables Purchaser under this Deed shall be made to that bank account or those bank accounts that the SPV shall have notified in writing to the Receivables Purchaser prior to the Commencement Date, or such alternative account or accounts as the SPV may notify in writing to the Receivables Purchaser on not less than five Business Days’ notice.

6.DESIGNATION OF DEBTS

6.1Notified Debts

The Receivables Purchaser shall designate all Notified Debts in accordance with the terms of the definitions of such terms as either Approved Debts or Unapproved Debts.

6.2Unapproved Debts

(a)The Receivables Purchaser (acting reasonably and in good faith at all times) may designate an Approved Debt as an Unapproved Debt, including a Debt previously designated as an Approved Debt, if the Receivables Purchaser becomes aware of an event or circumstance that the Receivables Purchaser could not reasonably have been expected to have contemplated by:

(i)if the Approved Debt is payable by an Original Network Provider, the Commencement Date; or

(ii)if the Approved Debt is payable by an Additional Network Provider, the Assignment Date referable to that Approved Debt,

which event or circumstance would have the effect of materially reducing the Notified Value of that Debt, provided always that the Receivables Purchaser consults with CPW at least three Business Days before making such designation in relation to such designation and provides a written explanation to CPW justifying such designation.

(b)If CPW evidences, to the Receivables Purchaser’s satisfaction (acting reasonably), that the event or circumstance which caused an Approved Debt to be designated as an Unapproved Debt in accordance with clause 6.2(a) no longer applies, the Receivables Purchase shall cease to designate the Debt as an Unapproved Debt.

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7.PAYMENT ACCOUNT

7.1Early Payment

The Receivables Purchaser shall, on each Utilisation Date, debit an amount equal to any Early Payment made (if any) to the Payment Account.

7.2Discount

(a)Discount in respect of any Approved Debt shall be calculated by applying the Discount Rate to the debit balance of the Payment Account from day to day and shall be maintained as a separate accrual.

(b)Subject to clause 7.4(b), for administrative convenience accrued Discount shall be debited to the Payment Account on the last Business Day of each month.

7.3Proceeds of Debts and Deferred Element

On a Collection Date the Receivables Purchaser shall credit to the Payment Account the amount received by the Receivables Purchaser.

7.4Other

(a)The Receivables Purchaser shall debit the following to the Payment Account:

(i)any Costs due and payable under this Deed; and

(ii)any other sums at that time due and payable by the SPV or CPW to a Finance Party pursuant to this Deed.

(b)In relation to Discount, the Non-Utilisation Fee, a Closing Fee (in the event that the Closing Fee is not paid in accordance with the terms of the relevant Fee Letter) and the Service Fee and the sums referred to at clause 7.4(a):

(i)the Receivables Purchaser shall notify CPW of the sum to be debited as soon as possible and in any event prior to 11.00 am on the day that the debit is to be made; and

(ii)CPW or the SPV (as applicable) may make payment to the Receivables Purchaser in respect of any such sums to a Trust Account.

(c)Any payments received by the Receivables Purchaser in accordance with clause 7.4(b) shall be credited to the Payment Account on the Business Day on which payment from CPW is received in cleared funds.

(d)In relation to clause 7.4(a), the Receivables Purchaser may debit to the Payment Account an amount estimated by the Receivables Purchaser in good faith to be the amount of such Costs or such sums, although the Receivables Purchaser shall promptly credit to the Payment Account any amount which, with the passage of time, can be evidenced to have been debited in excess of any such estimate.

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8.COLLECTION AND ADMINISTRATION

8.1Appointment

The Receivables Purchaser appoints each Opco as agent, for the time being, of the Receivables Purchaser to collect Debts Vested in the Receivables Purchaser, but for no other purpose.

8.2Collection as agent

(a)Each Opco shall, as agent and trustee of the Receivables Purchaser, continue to collect at its own expense all Debts under this Deed with at least the same standard of diligence in relation to the collection of such Debts as undertaken by it prior to the date of this Deed.

(b)Each Obligor shall, in relation to any Remittance received or recovered by it in respect of a Debt, comply in all respects with this clause 8 and clause 9 (Trust).

8.3Communication with Network Providers

(a)The Obligors undertake that they will not give notice to any Network Provider of the assignment of Debts to the SPV or the onward assignment of Debts to the Receivables Purchaser without the Receivables Purchaser’s prior written consent.

(b)Subject to clause 8.3(c), the Receivables Purchaser may communicate with Network Providers at any time in the name of an Obligor for the purposes of Debt verification and each Obligor shall, and shall procure that the Network Providers shall, provide the Receivables Purchaser with such assistance as the Receivables Purchaser shall reasonably require for such purpose.

(c)Prior to the occurrence of an Event of Default which is continuing, the Receivables Purchaser may only communicate with Network Providers if:

(i)such communication occurs once per Month;

(ii)three Business Days’ prior written notice has been given to CPW; and

(iii)such communication is conducted in the presence of a CPW representative nominated by CPW.

8.4Payments to Trust Account

Each Obligor undertakes:

(a)to use all reasonable endeavours to ensure that all Network Providers pay (or continue to pay, as the case may be) all Remittances directly to the relevant Trust Account and no other bank account; and

(b)that without prejudice to clause 8.4(a) above, in the event that an Obligor receives or recovers any Remittance the Obligor shall immediately upon receipt, pay into the appropriate Trust Account (or such other account as the Receivables Purchaser may nominate) such identical Remittance including any Remittances made payable to such Obligor. without any reduction and endorsing the same where necessary.

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8.5Variation or cancellation of agency

(a)The agency appointment referred to in clause 8.1 (Appointment) may only be varied or cancelled by the Receivables Purchaser upon or following an Event of Default which is continuing.

(b)Upon or at any time following the cancellation of the agency:

(i)the Receivables Purchaser may give notice to any Network Provider that the Receivables Purchaser is the owner of all present and future Debts, such notice being in such form as the Receivables Purchaser may determine;

(ii)no Obligor shall hold itself out as an agent of the Receivables Purchaser for any purpose;

(iii)each Obligor shall ensure that Network Providers pay (or continue to pay, as the case may be) all Debts direct to a Trust Account and no other bank account;

(iv)subject to clause 37.1 (Duties to Relevant Third Parties), each Obligor shall immediately deliver to the Receivables Purchaser such ledgers, books of account, computer data, electronic records and all documents recording or evidencing Debts as the Receivables Purchaser may determine; and

(v)the Receivables Purchaser shall, at the expense of the SPV and subject to clause 15.3 (Ongoing costs), exercise its sole and unfettered right to collect the Debts in such manner as the Receivables Purchaser considers appropriate and each Obligor shall be bound by any act or omission of the Receivables Purchaser in the exercise of its rights of collection.

8.6Automatic termination

The agency shall be treated as automatically terminated should the Receivables Purchaser serve notice to terminate this Deed upon or following an Event of Default which is continuing.

9.TRUST

9.1Proceeds of Debts

Each Obligor confirms and agrees that the proceeds of Debts are the absolute property of the Receivables Purchaser and pending any transfer in accordance with clause 8.4(b) above (and without prejudice to the provisions of that clause), shall now and hereafter be held on trust absolutely for the Receivables Purchaser and kept separate from each Obligor’s own monies.

9.2Status of bank accounts

Each Obligor shall procure and shall ensure that the bank accounts referred to in schedule 15 (Principal commercial terms at the Commencement Date) as “Trust Accounts” and any other bank accounts maintained pursuant to or for the purposes of the receipt of monies from Network Providers are opened or re-characterised (as the case may be) and maintained as, and are compliant at all times with the definition of “Trust Account”.

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9.3Payment Default

(a)The Receivables Purchaser may upon or following a Payment Default complete a Notice of Assignment and Trust and send it to the relevant Network Provider and the Receivables Purchaser may thereafter take proceedings directly against the relevant Network Provider.

(b)For the avoidance of doubt, the rights contained in clause 9.3(a) are in addition to any rights of the Receivables Purchaser under clause 22 (Events of Default), clause 23 (Rights on a default)and clause 25 (Power of Attorney).

10.ILLEGALITY

If it becomes unlawful for the Receivables Purchaser to perform any of its obligations as contemplated by this Deed or to make or maintain any Early Payment:

(a)the Receivables Purchaser shall promptly notify CPW upon becoming aware of that event; and

(b)the Receivables Purchaser shall cease to make any further Early Payment, and the SPV shall pay to the Receivables Purchaser a sum equal to the aggregate debit balances on the Payment Accounts on the date specified by the Receivables Purchaser in the notice delivered to CPW (being no earlier than the last day of any applicable grace period permitted by law).

11.FEES

11.1Closing Fees

The Closing Fees are due and payable in accordance with the terms of a Fee Letter.

11.2Service Fee

The Service Fee is due and payable in accordance with the terms of a Fee Letter.

11.3Non-Utilisation Fee

(a)The Non-Utilisation Fee shall be calculated monthly, commencing on the Commencement Date.

(b)Subject to clause 7.4(b), the Receivables Purchaser shall debit the Non-Utilisation Fee to the Payment Account on the first Business Day of the calendar month immediately following the month in which it accrues.

11.4Other

The SPV shall pay to the Receivables Purchaser all bank commissions and charges (at Barclays Bank PLC’s prevailing tariff from time to time) for:

(a)maintaining any Trust Account;

(b)converting to Sterling the proceeds of any Debt if not in Sterling; and

(c)dealing with dishonoured Remittances.

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11.5Breakage Costs

If this Deed is terminated for any reason prior to the expiry of the Term, then the SPV shall, on the Termination Date, pay to the Receivables Purchaser all and any sums whatsoever and howsoever unpaid but due and payable under this Deed, together with the Breakage Costs.

11.6VAT

All fees and charges are and shall be quoted exclusive of VAT which shall be added if applicable.

12.INCREASED COSTS

12.1Increased Costs

(a)Subject to clause 12.3 (Exceptions)the SPV shall, within three Business Days of a demand by the Receivables Purchaser, pay to the Receivables Purchaser the amount of any Increased Costs incurred by a Finance Party or any of its Affiliates as a result of (A) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation, or (B) compliance with any law or regulation made after the Commencement Date.

(b)In this Deed “Increased Costs”means:

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

(ii)an additional or increased cost; or

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

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

12.2Increased Costs claims

(a)If a Finance Party intends to make a claim pursuant to clause 12.1 (Increased Costs), the Receivables Purchaser shall promptly notify CPW of the event giving rise to the claim.

(b)If a Participant intends to make a claim pursuant to clause 12.1 (Increased Costs), the Participant shall promptly notify the Receivables Purchaser (who shall then promptly notify CPW) of the event giving rise to the claim.

(c)A Finance Party shall, as soon as practicable after a demand by CPW, provide a certificate confirming the amount of its Increased Costs.

12.3Exceptions

Clause 12.1 (Increased Costs) does not apply to the extent any Increased Cost is attributable to the breach by a Finance Party or its Affiliates of any law or regulation.

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13.OTHER INDEMNITIES

13.1Currency indemnity

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

(i)making or filing a claim or proof against that member of the Group; or

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

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

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

13.2Other indemnities

Each Obligor shall, within three Business Days of demand, indemnify the Receivables Purchaser against any Loss or liability incurred by it as a result of:

(a)the failure by the SPV to comply with any obligation assumed by the SPV under this Deed;

(b)complying with Utilisation Requests on the basis of incorrect information provided to the Receivables Purchaser contained within any Notification Schedule;

(c)any act or omission on the part of a member of the Group including any breach by a member of the Group of the terms of the Finance Documents or any law applicable thereto;

(d)any Network Provider making (or claiming to be entitled to make) any deduction from any amount payable to the Receivables Purchaser in relation to Debts purchased by the Receivables Purchaser, or otherwise reducing the Notified Value of any Debt, due to:

(i)any provision in the relevant Network Agreement to such effect; or

(ii)any sum owed to the Network Provider from an Obligor, whether by way of contract, damages or otherwise;

(e)a Shortfall;

(f)the release of Debts from any Security Interests;

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(g)dealing with disputes by Network Providers;

(h)dealing with disputes by the Parent in connection with the Parent Side Letter;

(i)dealing with disputes by CPW Brands (or such other relevant person) in connection with the Licensed IP;

(j)issuing proceedings to collect any Debts;

(k)assignments or reassignments of Debts in accordance with the terms of the Finance Documents;

(1)all Costs incurred by the Receivables Purchaser:

(i)payable to any third party arising from claims or proceedings; or

(ii)as a result of acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

(m)a failure by any member of the Group to pay any amount due under a Finance Document on its due date;

(n)funding, or making arrangements to fund, any Early Payment requested by the SPV but not made by reason of the operation of any one or more of the provisions of this Deed (other than by reason of default or negligence by the Receivables Purchaser alone or any Participant’s failure to comply with its obligations under clause 31.2(a)).

13.3SPV indemnity

The SPV shall within three Business Days of demand indemnify the Receivables Purchaser against any Loss or liability incurred by the Receivables Purchaser as a result of the failure by a member of the Group (other than the SPV) to comply with any obligation assumed by that member of the Group under the Finance Documents.

13.4Indemnity to the Receivables Purchaser

(a)Each Obligor shall within three Business Days of demand indemnify the Receivables Purchaser against any Loss or liability incurred by the Receivables Purchaser (acting reasonably) as a result of:

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

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

(iii)acting in accordance with any authorisation in relation to internet communication and facsimiles made or given by each of the Obligors in any Finance Document.

(b)Each Obligor shall within three Business Days of demand indemnify the Receivables Purchaser and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

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

(ii)anything done or omitted in the exercise or purported exercise of any of the rights, powers, discretions and remedies vested in the Receivables Purchaser and each Receiver and Delegate by the Finance Documents or by law;

(iii)the use or occupation by any person of assets subject to the Transaction Security; and

(iv)any default by any member of the Group in the performance of any of the obligations expressed to be assumed by it in the Finance Documents.

14.MITIGATION BY THE RECEIVABLES PURCHASER

14.1Mitigation

(a)Each Finance Party shall, in consultation with CPW, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 10 (Illegality), clause 12.1 (Increased Costs) and clause 13 (Other Indemnities) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

(b)If any Participant seeks to rely on clause 14.1(a), any consultation with CPW shall be conducted through the Receivables Purchaser (or otherwise agreed in writing between the Receivables Purchaser and the relevant Participant).

(c)Clause 14.1(a) does not in any way limit the obligations of any member of the Group under the Finance Documents.

14.2Limitation of liability

(a)Each Obligor shall, within three Business Days of demand indemnify each Finance Party for all Costs reasonably incurred by that Finance Party as a result of steps taken by it under clause 14.1 (Mitigation).

(b)A Finance Party is not obliged to take any steps under clause 14.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

15.COSTS AND EXPENSES

15.1Transaction expenses

Each Obligor shall within 30 days of an invoice being tendered, pay to the Receivables Purchaser the amount of all Costs reasonably incurred by the Receivables Purchaser or a Participant, or the Security Agent, or by any Receiver or Delegate in connection with the negotiation, preparation, sub-participation, printing, execution and perfection of:

(a)this Deed and any other documents referred to in this Deed and the Transaction Security; and

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

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15.2Amendment costs

If a member of the Group requests an amendment, waiver or consent an Obligor shall, within three Business Days of demand, pay to the Receivables Purchaser the amount of all Costs reasonably incurred by the Receivables Purchaser (or any Participant, Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

15.3Ongoing costs

In the event of:

(a)a Default; or

(b)the Receivables Purchaser considering it necessary or expedient; or

(c)the Receivables Purchaser being requested by a member of the Group to undertake duties which the Receivables Purchaser and CPW (acting reasonably) agree to be of an exceptional nature and/or outside the scope of its normal duties under the Finance Documents,

each Obligor shall pay to the Receivables Purchaser any additional Costs that the Receivables Purchaser certifies to CPW have been properly incurred in respect of that event or request.

15.4Enforcement and preservation costs

Each Obligor shall within three Business Days of demand pay to the Receivables Purchaser or the Security Agent or any Receiver or Delegate the amount of all Costs reasonably incurred by it in connection with the enforcement of or the preservation of any rights under any Finance Document and the Transaction Security and any proceedings instituted by or against the Receivables Purchaser as a consequence of taking or holding the Transaction Security or enforcing these rights.

15.5Other costs and expenses

The Obligors (or any of them) shall pay to the Receivables Purchaser within three Business Days of demand (whether or not any sums have been drawn down from Availability and provided that there is no double-counting):

(a)any stamp duties in connection with this Deed, the purchase of any Debt by the Receivables Purchaser from an Obligor or any documents served or created in connection with this Deed;

(b)the amount of all Costs in any relevant jurisdiction and any VAT or similar Tax thereon reasonably and properly incurred by any of them in connection with:

(i)the carrying out of due diligence procedures in relation to any of the Finance Documents or any of the documents referred to in this Deed;

(ii)the transactions contemplated by the Finance Documents; and

(c)any Losses flowing from any judgment or claim being payable in a different currency from that agreed under this Deed and/or in connection with the enforcement of or the preservation of the Receivables Purchaser’s rights under this Deed.

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16.REPRESENTATIONS

16.1General

(a)Save for the warranties and representations in clause 16.26 (Opco warranties and representations), CPW makes the representations and warranties set out in this clause 16 to the Receivables Purchaser in relation to itself and each member of the Group.

(b)Each Opco makes the representations and warranties set out in clause 16.26 (Opco warranties and representations) in relation to itself.

16.2Status

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

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

16.3Binding obligations

Subject to the Legal Reservations:

(a)the obligations expressed to be assumed by it in each Finance Document are legal, valid, binding and enforceable obligations; and

(b)without limiting the generality of clause 16.3(a), each Transaction Security Document to which it is a party creates the Security Interests which that Transaction Security Document purports to create and those Security Interests are valid and effective and are not liable to be avoided or otherwise set aside on the liquidation or administration of any member of the Group or otherwise.

16.4Non-conflict with other obligations

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

(a)any law or regulation applicable to it;

(b)the constitutional documents of any member of the Group;

(c)the JV Agreement or constitute a default or termination event (however described) under such agreement;

(d)a Senior Facility Agreement or constitute a default or termination event (however described) under such agreement; or

(e)any other material agreement or instrument relating to Financial Indebtedness or any other material agreement or instrument binding upon it or any member of the Group or any of its, or any member of the Group’s, assets.

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16.5Power and authority

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

(b)No limit on its powers will be exceeded as a result of the sale and purchase of receivables, grant of security or giving of guarantees or indemnities contemplated by any Finance Document to which it is a party.

16.6Deduction of Tax

It is not required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

16.7No Default

(a)No Event of Default and, on the date of this Deed and the Commencement Date, no Default, is continuing or might reasonably be expected to result from the making of any Early Payment or the entry into, the performance of, or any transaction contemplated by, any Finance Document.

(b)No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which might reasonably be expected to have a Material Adverse Effect.

16.8No misleading information

(a)Any material and relevant written factual information, taken as a whole, provided in writing by CPW to any Finance Party in connection with the Finance Documents or the transactions contemplated by the Finance Documents, in each case, for the purpose of incorporation within the Information Memorandum was true and accurate in all material respects as at the date it was provided or, if updated, the date on which it was so updated or as at the date (if any) at which it was stated.

(b)Any final form, written financial projection or forecast provided by CPW to the Receivables Purchaser on or before the Commencement Date in respect of the Obligors and in connection with the Finance Documents or the transactions contemplated by the Finance Documents was arrived at after due and careful consideration and genuinely represented the views of CPW and was based on good faith estimates and assumptions believed by it to be reasonable in each case at the time they were made.

(c)Nothing has occurred or been omitted and no information has been given or withheld that results in the material and factual information, forecasts or projections referred to in clauses 16.8(a) and (b) above, taken as a whole, being untrue or misleading in any material respect.

(d)All other material and relevant written information provided by or on behalf of any member of the Group to any Finance Party in connection with the Finance Documents or the transactions contemplated by the Finance Documents was reasonably believed by CPW to be true and accurate in all material respects as at the

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date it was provided or, if updated, the date on which it was so updated or as at the date (if any) at which it is stated.

16.9Original Financial Statements

(a)Its Original Financial Statements were prepared in accordance with UK GAAP consistently applied.

(b)Its audited Original Financial Statements give a true and fair view of the state of affairs of the Group as at the end of the relevant financial year and of the profit of the Group for that year.

(c)There has been no material adverse change in the business or consolidated financial condition of the Group since 29 March 2008.

(d)Its most recent financial statements delivered pursuant to clause 17.5 (Financial statements):

(i)have been prepared in accordance with the UK GAAP as applied to the Original Financial Statements; and

(ii)give a true and fair view of (if audited) or fairly present (if unaudited) the state of affairs of the Group as at the end of the period to which they relate and of the profit of the Group for that period.

(e)Since the date of the most recent financial statements delivered pursuant to clause (Financial statements) there has been no material adverse change in the business, assets or financial condition of the Group.

16.10Pari passu

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

16.11No proceedings threatened

Without prejudice to clause 19.1(g), no litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have, to the best of its knowledge and belief, been started or threatened against it or any member of the Group which could reasonably be expected to have a Material Adverse Effect.

16.12Validity and admissibility in evidence

(a)All Authorisations required or desirable:

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

(ii)to make the Finance Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,

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have been obtained or effected and are in full force and effect except for any Authorisation referred to in clause 16.15 (No filing or stamp taxes) which Authorisations will be promptly obtained or effected after the Commencement Date.

(b)All Authorisations necessary for the conduct of the business, trade and ordinary activities of members of the Group have been obtained or effected and are in full force and effect.

16.13Governing law and enforcement

(a)The choice of the governing law of the Finance Documents will be recognised and enforced in its Relevant Jurisdictions.

(b)Any judgment obtained in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions.

16.14Insolvency

No:

(a)corporate action, legal proceeding or other procedure or step described in clause 22.12 (Insolvency proceedings); or

(b)creditors’ process described in clause 22.12 (Insolvency proceedings),

has been taken or, to the knowledge of CPW, threatened in relation to a member of the Group and none of the circumstances described in clause 22.11 (Insolvency) applies to a member of the Group.

16.15No filing or stamp taxes

Under the laws of its Relevant Jurisdiction it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in those jurisdictions or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except the filing in the United Kingdom of the prescribed particulars of the Transaction Security Documents at the Companies Registration Office in England and Wales pursuant to section 395 of the Act and payment of associated fees, which filings will be made promptly after the date of the Transaction Security Documents.

16.16No breach of laws

(a)It has not (and none of its Subsidiaries has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

(b)No labour disputes are current or, to the best of its knowledge and belief (having made due and careful enquiry), threatened against any member of the Group which have or are reasonably likely to have a Material Adverse Effect.

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16.17Taxation

(a)It is not (and none of its Subsidiaries is) materially overdue in the filing of any Tax returns and it is not (and none of its Subsidiaries is) overdue in the payment of any amount in respect of Tax.

(b)No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any of its Subsidiaries) with respect to Taxes which could reasonably be expected to have a Material Adverse Effect.

16.18Security Interests and Financial Indebtedness

(a)No Security Interest or Quasi-Security exists over all or any of the present or future assets of any member of the Group other than as permitted by this Deed.

(b)No member of the Group has any Financial Indebtedness outstanding other than as permitted by this Deed.

16.19Ranking

Subject to any Intercreditor Agreement, the Transaction Security has or will have first ranking priority and it is not subject to any prior ranking or prior passu ranking Security Interest.

16.20Good title to assets

It has (and each of its Subsidiaries has) a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.

16.21Legal and beneficial ownership

It is (and each of its Subsidiaries is) the sole legal and beneficial owner of the respective assets over which it purports to grant Security Interests.

16.22Shares

The shares of any member of the Group which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares are subject to the Transaction Security do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Transaction Security.

16.23Intellectual Property

It (and each of its Subsidiaries):

(a)is the sole legal and beneficial owner of or has licensed to it on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as presently conducted;

(b)does not, in carrying on its business, infringe any Intellectual Property of any third party in any material respect; and

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(c)has taken all formal or procedural actions (including payment of fees) required to maintain any material Intellectual Property owned by it.

16.24Financial Year

The Financial Year end of each member of the Group is the Saturday falling nearest to 31 March.

16.25Centre of main interest and establishments

For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in England and Wales and it has no “establishment” (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.

16.26Opco warranties and representations

(a)Each Opco holds valid and subsisting product and public liability insurance with a reputable insurer acceptable to the Receivables Purchaser which is appropriate and commensurate with businesses of the size and nature of the Obligors’ businesses.

(b)Each Opco holds insurances on and in relation to its business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business, including damage to or destruction of Equipment.

(c)Each Opco owns or has a valid and effective licence to use all computer systems used in connection with its business, including all software and hardware associated with such systems and, so far as it is aware, there are no circumstances which could reasonably be expected to lead to any such licence being revoked or not renewed in the ordinary course.

(d)Each Opco has made, and will continue to make, all necessary notifications or registrations under the terms of the DPA.

16.27Times when representations made

(a)All the representations and warranties in this clause 16 are made by the SPV and each Original Obligor on the date of this Deed and on the Commencement Date.

(b)The Repeating Representations are deemed to be made by CPW on the date of each Utilisation Request and each Utilisation Date (except that those contained in clauses 16.9(a) to (c) will cease to be so made once subsequent financial statements have been delivered under this Deed).

(c)All the representations and warranties in this clause 16 are deemed to be made by each Additional Obligor on the day on which it becomes (or it is proposed that it becomes) an Additional Obligor.

Each representation or warranty deemed to be made after the date of this Deed shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.

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17.INFORMATION UNDERTAKINGS

The undertakings in this clause 17 remain in force from the Commencement Date for so long as any amount is outstanding under the Facility.

17.1Notifications

Following the Commencement Date, CPW (on behalf of the Opcos and the SPV) undertakes to deliver to the Receivables Purchaser on the Reporting Date (or on such other date or by such frequency as otherwise agreed in writing with the Receivables Purchaser) Notification Schedules in respect of each Network Provider.

17.2Shareholding Change and Joint Ventures

Following the Commencement Date, CPW undertakes to use all commercially reasonable endeavours to:

(a)promptly inform the Receivables Purchaser of any material information concerning any change in ownership of five per cent or more of the issued share capital of the Parent (“Shareholding Change”) including (without limitation) the likely timing of such Shareholding Change becoming effective, details of the proposed change of ownership, and (if applicable) material discussions with Network Providers concerning that Shareholding Change;

(b)promptly inform the Receivables Purchaser of any material information concerning any proposed Joint Venture concerning any member of the Group, including (without limitation) the likely timing of such Joint Venture becoming effective, details of the proposed change of ownership, and (if applicable) material discussions with Network Providers concerning the Joint Venture;

(c)in relation to clauses 17.2(a) and (b) above, procure that each member of the Group will, at its own expense, promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Receivables Purchaser may reasonably specify after consultation with CPW (and in such form as the Receivables Purchaser may reasonably require in favour of the Receivables Purchaser or its nominee(s)) to ensure that:

(i)any material aspect of the business and operation of the Group relating to the creation of Debts and the Receivables Purchaser’s ability to fully collect the Debts; and

(ii)the nature and extent of the Receivables Purchaser’s Security Interests immediately following the Shareholding Change or Joint Venture (as applicable) becoming effective.

are, as a result of such Shareholding Change or Joint Venture (as applicable), in each case, not materially more prejudicial to the Receivables Purchaser than those existing immediately prior to such Shareholding Change or Joint Venture (as applicable) becoming effective; and

(d)procure, following a Change of Control of the Parent as a result of a Shareholding Change or Joint Venture (as applicable), a replacement Parent Side Letter (or such other relevant person enters into a side letter in substantially similar terms as the

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Parent Side Letter) in either case, in form and substance satisfactory to the Receivables Purchaser, acting reasonably.

17.3Indemnity claims

Each Opco undertakes to promptly inform the Receivables Purchaser upon the Opco incurring any liability in excess of £1,000,000 to a Network Provider under an indemnity given by the Opco in favour of the Network Provider.

17.4Provision of other Debt specific information

(a)Promptly upon the Receivables Purchaser’s reasonable request each Obligor shall deliver to the Receivables Purchaser written evidence, satisfactory to the Receivables Purchaser, that Connections which relate to Approved Debts have been procured in accordance with a Network Agreement, including:

(i)any information that the Receivables Purchaser may require from EPOS;

(ii)a copy of any documentation provided to or signed by an End User;

(iii)any Invoice; and

(iv)the aggregate value of the immediately preceding Month’s ACP liabilities.

(b)Promptly upon becoming aware of any other information which could materially affect the Receivables Purchaser’s right, title or interest in the Debts or the Receivables Purchaser’s ability to collect Debts in full:

(i)CPW shall provide such information to the Receivables Purchaser; or

(ii)subject to clause 37.1 (Duties to Relevant Third Parties), if CPW is unable to provide such information, CPW shall inform the Receivables Purchaser accordingly.

17.5Financial statements

CPW shall supply to the Receivables Purchaser with sufficient copies for all the Participants as soon as they are available, but in any event within 120 days after the end of each of its Financial Years:

(a)its and each Obligor’s audited financial statements for that Financial Year;

(b)the audited financial statements of each member of the Group for that Financial Year.

17.6Provision and contents of Compliance Certificate

(a)CPW shall supply to the Receivables Purchaser with each set of financial statements delivered pursuant to clause 17.5 (Financial statements) a Compliance Certificate in relation to the Financial Covenants.

(b)CPW shall supply to the Receivables Purchaser within 10 Business Days of each Reporting Date a Compliance Certificate in relation to the Operational Covenants.

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(c)Each Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with the Operational Covenants and (if applicable) the Financial Covenants.

(d)Each Compliance Certificate delivered pursuant to clause 17.6(a) shall be signed by two directors of CPW (one of whom shall be the finance director) and each Compliance Certificate delivered pursuant to clause 17.6(b) shall be signed by one director of CPW.

17.7Requirements as to financial statements

(a)CPW shall procure that each set of Annual Financial Statements includes a balance sheet, profit and loss account and cashflow statement. In addition, the Obligors shall procure that each set of Annual Financial Statements shall be audited by the Auditors.

(b)Each set of financial statements delivered pursuant to clause 17.5 (Financial statements):

(i)shall be certified by a director of the relevant company as giving a true and fair view of (in the case of Annual Financial Statements for any Financial Year), or fairly presenting (in other cases), its financial condition and operations as at the date at which those financial statements were drawn up and, in the case of the Annual Financial Statements, shall be accompanied by any letter addressed to the management of the relevant company by the Auditors and accompanying those Annual Financial Statements;

(ii)in the case of financial statements of CPW, shall be accompanied by a statement by the directors of CPW comparing actual performance for the period to which the financial statements relate to the actual performance for the corresponding period in the preceding Financial Year of the Group; and

(iii)shall be prepared using UK GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for the Group unless, in relation to any set of financial statements, CPW notifies the Receivables Purchaser that there has been a change in UK GAAP or the accounting practices and the Auditors deliver to the Receivables Purchaser:

(A)a description of any change necessary for those financial statements to reflect UK GAAP or accounting practices upon which that Obligor’s Original Financial Statements were prepared; and

(B)sufficient information, in form and substance as may be reasonably required by the Receivables Purchaser, to enable the Receivables Purchaser to determine whether the Operational Covenants and the Financial Covenants have been complied with and to make an accurate comparison between the financial position indicated in those financial statements and the Obligor’s Original Financial Statements.

Any reference in this Deed to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

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(c)If CPW notifies the Receivables Purchaser of a change in UK GAAP in accordance with clause 17.7(b)(iii), CPW and the Receivables Purchaser shall enter into negotiations in good faith with a view to agreeing any amendments to this Deed which are necessary as a result of the change. To the extent practicable, these amendments will be such as to ensure that the change does not result in any material alteration in the commercial effect of the obligations in this Deed. If any amendments are agreed they shall take effect and be binding on each of the Parties in accordance with their terms.

17.8Presentations

(a)Provided that CPW PLC retains a material interest in the Parent, CPW:

(i)shall procure that CPW PLC shall provide at least 15 Business Days’ notice to the Receivables Purchaser of any public results presentation being given by CPW PLC to market analysts and its banks generally (an “Analysts Presentation”); and

(ii)shall (to the extent that CPW PLC so permits) invite any Finance Party to such Analysts Presentation if the Finance Party has given CPW at least five Business Days’ prior notice (in writing) that it wishes to attend the Analysts Presentation.

(b)Upon CPW PLC ceasing to have a material shareholding (directly or indirectly) in the Parent, CPW shall use reasonable endeavours to procure that the person with the material shareholding (directly or indirectly) in the Parent shall assume the obligations in clause 17.8(a).

17.9Year-end

CPW shall procure that the Financial Year of each member of the Group ends on the nearest Saturday to 31 March.

17.10Information: miscellaneous

CPW shall supply to the Receivables Purchaser (with sufficient copies for all the Participants, if the Receivables Purchaser so requests):

(a)at the same time as they are dispatched, copies of all documents dispatched by each member of the Group to its shareholders generally (or any class of them) or dispatched by the relevant person to its creditors generally (or any class of them);

(b)promptly upon receipt from a Network Provider, a copy of any notice to an Opco by a Network Provider that the Opco is in material breach of a Network Agreement;

(c)promptly upon becoming aware of it, the details of any material breach of a Network Agreement or Ancillary Document committed by an Obligor or Network Provider;

(d)promptly upon becoming aware of it, the details of any notice to suspend or terminate a Network Agreement or Ancillary Document or any intention of a Network Provider to serve such notice, or assign or otherwise transfer or delegate its rights under a Network Agreement or Ancillary Document;

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(e)promptly upon becoming aware of any material changes to ACP terms which might reasonably be expected to result in the Receivables Purchaser receiving materially less than the full Notified Value of a Debt;

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

(g)promptly on request, such information as the Receivables Purchaser may reasonably require regarding the Charged Property or the compliance by any member of the Group with the terms of any Transaction Security Document;

(h)promptly on request, such further information regarding the financial condition of the Group and/or any member of the Group (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Deed, and an up-to-date copy of its shareholders’ register (or equivalent in its jurisdiction of incorporation)) and subject to clause 37.1 (Duties to Relevant Third Parties), such further information regarding the assets and operations of the Group and/or any member of the Group, in each case, as the Receivables Purchaser (or any Finance Party through the Receivables Purchaser) may reasonably request;

(i)promptly upon becoming aware of it, a notice to revoke or terminate the Intellectual Property Licence or that the Intellectual Property Licence has been revoked or terminated for any reason, or that the term of the Intellectual Property Licence has been extended beyond its initial period; and

(j)promptly upon becoming aware of it, any acquisition or formation of a new member of the Group, or a non-trading member of the Group commencing to trade or acquiring assets.

17.11Notification of default

(a)CPW shall notify the Receivables Purchaser of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

(b)Promptly upon a request by the Receivables Purchaser, CPW shall supply to the Receivables Purchaser a certificate signed by two of its directors or senior officers on its behalf certifying that, so far as they are aware, or ought reasonably to be aware (without personal liability), no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

17.12“Know your customer” checks

(a)If:

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

(ii)any change in the status of a member of the Group or the composition of the shareholders of a member of the Group after the date of this Deed,

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obliges a Finance Party to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, CPW shall promptly upon the request of the Receivables Purchaser (or a Participant through the Receivables Purchaser) supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Finance Party to carry out and be satisfied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to any relevant person pursuant to the transactions contemplated in the Finance Documents.

(b)CPW shall, by not less than 10 Business Days’ prior written notice to the Receivables Purchaser, notify the Receivables Purchaser of its intention to request that a member of the Group becomes an Additional Obligor pursuant to clause 28.2 (Additional Obligors).

(c)Following the giving of any notice pursuant to clause 17.12(b), if the accession of Additional Obligor obliges any Finance Party to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, CPW shall promptly upon the request of the Receivables Purchaser (or a Participant through the Receivables Purchaser) supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Receivables Purchaser (or a Participant through the Receivables Purchaser) in order for the relevant Finance Party to carry out and be satisfied it has complied with all necessary “know your customer” or other checks in relation to any relevant person pursuant to the accession of such Subsidiary to this Deed as an Additional Obligor.

17.13Auditors

CPW shall procure that the Auditors are not changed other than to an Approved Auditor.

17.14Financial and other reporting information to Participants

(a)To the extent that it is lawfully able to do so without breaching any duty of confidentiality or other obligation owed to any person, the Receivables Purchaser shall promptly provide to each Participant, or procure that each Participant is provided with copies of:

(i)financial and other information sent to it pursuant to the terms of this Deed;

(ii)all and any information received from the Obligors in accordance with schedule 11 (Operational undertakings);

(iii)such documents and all such other information, notices and requests as are received from any member of the Group which the Receivables Purchaser reasonably believes evidence a Material Adverse Effect; and

(iv)following the occurrence of a Default, any additional information received or otherwise obtained by it, in its capacity as a party to this Deed, from any Obligor regarding Notified Debts, including information in relation to any notifications made to the Network Providers,

In each case, as soon as reasonably practicable after receipt of such information by the Receivables Purchaser

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(b)In the event that the Receivables Purchaser is not lawfully able to provide any information in accordance with clause 17.14(a) due to any duty of confidentiality or other obligation owed to any person, the Receivables Purchaser shall use its reasonable efforts to remove the relevant impediment.

(c)Clause 17.14(a) shall not apply to a Participant which gives notice to the Receivables Purchaser that it does not wish to receive copies of all communications and documents received by the Receivables Purchaser under the Finance Documents.

Any notice given by the Participant under clause 17.14(c) above may be revoked by the Participant at any time. If such notice is revoked, the provisions of clause 17.14(c) will apply from the date on which the Receivables Purchaser receives notice of the revocation.

18.GENERAL UNDERTAKINGS

The undertakings in this clause 18 remain in force from the date of this Deed for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

18.1Authorisations

Each member of the Group shall promptly:

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

(b)upon request, supply certified copies to the Receivables Purchaser of,

any Authorisation required by it (i) to carry on its business (where failure to do so has or is reasonably likely to have a Material Adverse Effect) and (ii) under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document.

18.2Compliance with laws

CPW shall (and shall ensure that each member of the Group will) comply in all respects with all laws, regulations and Authorisations to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

18.3Taxation

(a)CPW shall (and shall ensure that each member of the Group will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

(i)such payment is being contested in good faith;

(ii)adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Receivables Purchaser under clause 17.1 (Notifications): and

(iii)such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

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(b)CPW shall not (and shall ensure that no member of the Group will) change its residence for Tax purposes.

18.4Negative pledge

In this Deed, “Quasi-Security” means a transaction described in clause I 8.4(a)(ii).

(a)Except as permitted under clause 18.4(b):

(i)no member of the Group will create or permit to subsist any Security Interest over any of its assets; and

(ii)no member of the Group will:

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

(B)sell, transfer or otherwise dispose of any of its receivables;

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

(D)enter into any other preferential arrangement intended to have and having substantially the same commercial effect,

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

(b)Clause 18.4(a) does not apply to any Security Interest or, as the case may be, Quasi-Security, which is:

(i)Permitted Security; or

(ii)a Permitted Transaction.

18.5Disposals

(a)Except as permitted under clause 18.5(b), CPW shall not (and shall ensure that no member of the Group will) make a Disposal.

(b)Clause 18.5(a) does not apply to any Disposal which is:

(i)required by the terms of the Finance Documents:

(ii)a Permitted Disposal: or

(iii)a Permitted Transaction.

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18.6Financial Indebtedness

(a)Except as permitted under clause 18.6(b), no member of the Group will incur or allow to remain outstanding any Financial Indebtedness.

(b)Clause 18.6(a) does not apply to Financial Indebtedness which is:

(i)Permitted Financial Indebtedness; or

(ii)a Permitted Transaction.

18.7Merger

CPW shall not (and shall ensure that no other member of the Group will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than a Permitted Transaction.

18.8Change of business

CPW shall procure that no substantial change is made to the general nature of the business of the Group from that carried on at the Commencement Date.

18.9Insurance

CPW shall (and shall ensure that each other member of the Group will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks, and to the extent, usually insured against by prudent companies located in the same or a similar location and carrying on a similar business, including damage to or destruction of Equipment.

18.10Acquisitions

(a)Except as permitted under clause 18.10(b), CPW shall not (and shall ensure that no other member of the Group will):

(ii)acquire or agree to acquire any business or part of any business or any company or any shares in any company; or

(ii)incorporate a company whose specific purpose is to trade with a Network Provider whether in substitution of an Opco or otherwise.

(b)Clause 18.10(a) does not apply to an acquisition of a company, of shares, securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company which is:

(i)a Permitted Acquisition; or

(ii)a Permitted Transaction.

18.11Pari passu ranking

CPW will ensure that its payment obligations under the Finance Documents rank and will at all times rank pari passu with the claims of all its other unsecured and unsubordinated

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creditors except for obligations mandatorily preferred by law applying to companies generally.

18.12Arms length basis

(a)Except as permitted by clause 18.12(b), no member of the Group will enter into any transaction with any person except on arms length terms and for full market value.

(b)The following shall not be a breach of this clause 18.12:

(i)intra-Group loans permitted under clause 18.13 (Loans or credit);

(ii)fees, costs and expenses payable under the Finance Documents in the amounts set out in the Finance Documents delivered to the Receivables Purchaser under clause 4.1 (Initial conditions precedent) or agreed by the Receivables Purchaser; and

(iii)any Permitted Transactions.

18.13Loans or credit

(a)Except as permitted under clause 18.13(b), no member of the Group will be a creditor in respect of any Financial Indebtedness.

(b)Clause 18.13(a) does not apply to:

(i)a Permitted Loan; or

(ii)a Permitted Transaction.

18.14No guarantees

(a)Except as permitted under clause 18.14(b), no member of the Group will incur or allow to remain outstanding any guarantee in respect of any obligation of any person.

(b)Clause 18.14(a) does not apply to a guarantee which is:

(i)a Permitted Guarantee; or

(ii)a Permitted Transaction.

18.15Dividends and share redemption

CPW (or any other member of the Group) may:

(a)declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);

(b)repay or distribute any dividend or share premium reserve:

(c)pay or allow any member of the Group to pay any management, advisory or other fee to or to the order of any of the shareholders of the Parent; or

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(d)redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so,

provided always that the latest Compliance Certificate delivered pursuant to clause 17.6(a) prior to such action being taken demonstrates compliance with the Financial Covenants and CPW believes (acting reasonably and in good faith) that the immediately succeeding Compliance Certificate to be delivered pursuant to clause 17.6(a) will also demonstrate compliance with the Financial Covenants.

18.16Intellectual Property

CPW shall (and shall procure that each member of the Group will):

(a)preserve and maintain the subsistence and validity of the Intellectual Property licensed to any member of the Group necessary for the business of the relevant member of the Group (the “Licensed IP”);

(b)use reasonable endeavours to prevent any infringement in any material respect of the Licensed IP;

(c)maintain registrations and pay all registration fees and taxes necessary to maintain the Licensed IP in full force and effect and record its interest in that Licensed IP;

(d)not use or permit the Licensed IP to be used in a way or take any step or omit to take any step in respect of that Licensed IP which may materially and adversely affect the existence or value of the Licensed IP or imperil the right of any member of the Group to use such property;

(e)not discontinue, revoke or terminate the Intellectual Property Licence, or permit it to lapse by effluxion of time, without the prior written consent of the Receivables Purchaser; and

(f)not amend the Intellectual Property Licence so that it could reasonably be expected to have a material adverse effect on the Group’s right to validly use the Licensed IP.

18.17Financial assistance

CPW shall (and shall procure each member of the Group will) comply in all respects with any legislation in the jurisdiction of its incorporation prohibiting unlawful financial assistance including in relation to the execution of the Transaction Security Documents and payment of amounts due under this Deed.

18.18SPY undertakings

The SPV shall:

(a)maintain its books and records separate from any other person or entity:

(b)maintain its accounts separate from any other person or entity:

(c)not commingle its assets with the assets of any other person or entity;

(d)conduct its own business in its own name;

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(e)maintain separate financial statements;

(f)observe all statutory obligations imposed on private limited companies generally;

(g)use stationery in its name only;

(h)hold itself out as a separate entity;

(i)take prompt action to correct any known misunderstanding on the part of any person dealing with the SPV regarding its separate identity;

(j)(notwithstanding any other provision of this clause 18) not create or permit to subsist any Security Interest over all or any of the Debts or its other assets or undertaking (other than in favour of the Receivables Purchaser);

(k)(notwithstanding any other provision of this clause 18) except as contemplated by this Deed, not incur or permit to subsist any indebtedness of any kind save for Permitted Financial Indebtedness;

(l)(notwithstanding any other provision of this clause 18) not merge or consolidate with any other company or person;

(m)(notwithstanding any other provision of this clause 18) except as contemplated by this Deed not sell, transfer or otherwise dispose of or cease to exercise direct control over any part of its present or future undertaking, assets, rights or revenues whether by one transaction or a series of transactions related or not;

(n)(notwithstanding any other provision of this clause 18) except as contemplated by this Deed, not make any loans, grant any credit or give any guarantee to or for the benefit of any person;

(o)not engage in any business or activity other than those necessary or incidental to the requirements of this Deed;

(p)(notwithstanding any other provision of this clause 18) not allot, issue or purchase any shares or alter any of the rights attaching to its shares currently in issue;

(q)(notwithstanding any other provision of this clause 18) not declare or pay any dividend or make any other distribution (whether in cash or in specie) in respect of its share capital other than a Permitted SPV Distribution;

(r)not have any employees;

(s)not own, rent, lease or be in possession of any buildings or equipment;

(t)(save as imposed by legislation as a result of the SPV being treated as connected to, associated with, or becoming a member of the same group or consortium as any member of the Group) not become liable for any tax liabilities of any other company in the Group as a result of being a member of the Group;

(u)(save as imposed by legislation as a result of CPW being treated as connected to, associated with, or becoming a member of the same group or consortium as any member of the Group) not become a party to may arrangements (including as

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mentioned in section 36 of the Finance Act 1998) providing for the discharge by it of a tax liability of any other company;

(v)not make or join in any election under section 171A of the Taxation of Chargeable Gains Act 1992, section 179A of the Taxation of Chargeable Gains Act 1992, section 179B of the Taxations of Chargeable Gains Act 1992, section 792 of the Corporation Tax Act 2009 or any other provision the effect of which is that a liability to corporation tax which would, apart from that election, be a liability of a company other than the SPV is borne by the SPV; and

(w)not surrender tax losses or other amounts available for surrender by it by way of group relief to any other company in the Group save where full value is received by the SPV in respect of such losses or other amounts.

18.19Further assurance

CPW shall (and shall procure that each member of the Group will) at its own expense promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Receivables Purchaser may reasonably specify when exercising its rights under the Finance Documents (and in such form as the Receivables Purchaser may reasonably require in favour of the Receivables Purchaser or its nominee(s)):

(a)to create, perfect, control and maintain the Security Interests created or intended to be created under or evidenced by the Transaction Security Documents (which may include the giving of notices, orders or directions and the making of filings and registrations, the execution of a mortgage, charge, transfer, conveyance, assignation, assignment or other Security Interests over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Receivables Purchaser provided by or pursuant to the Finance Documents or by law;

(b)to confer on the Receivables Purchaser Security Interests over any property and assets of that member of the Group located in any jurisdiction equivalent or similar to the Security Interests intended to be conferred by or pursuant to the Transaction Security Documents; and/or

(c)to facilitate the realisation of (i) Debts assigned to the Receivables Purchaser under this Deed, and (ii) the assets which are, or are intended to be, the subject of the Transaction Security.

18.20Participation

CPW undertakes to assist and co-operate with the Finance Parties in any sub-participation, sale or transfer of a Finance Party’s interest in the Finance Documents in such manner and to such extent as the Receivables Purchaser (or a Participant through the Receivables Purchaser) may from time to time reasonably require, including:

(a)assisting in the preparation of an information memorandum in relation to the business, trading prospects, financial condition, assets and liabilities of the Group;

(b)making available senior management and representatives of the Group from time to time to participate in presentations, meetings or conference calls to prospective (and

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existing financiers) concerning the business and commercial activities of the Group; and

(c)subject to clause 37.1 (Duties to Relevant Third Parties) providing to the Receivables Purchaser Party any material information relating to the Group (including financial information, evaluations and projections) reasonably required by a Finance Party or proposed participants.

18.21Financial condition

CPW shall comply with the Financial Covenants.

18.22Operational Covenants

Each Obligor shall comply with the provisions of schedule 10 (Operational Covenants).

18.23Software licences

CPW shall promptly notify the Receivables Purchaser in writing of the revocation or termination of any relevant software licence granted in favour of an Opco for the principal purpose of conducting its business, and the reasons therefor, or of any event of which it becomes aware which is reasonably likely to result in such revocation or termination.

18.24Conditions subsequent

(a)As soon as reasonably practicable after the Commencement Date, and upon the re-negotiation of any other terms of the T-Mobile Contract or a new T-Mobile Contract being negotiated, CPW shall use reasonable endeavours to:

(i)amend paragraph 4.4 of part 2 of schedule 3 (Schedule CPW Benefits) to the Receivables Purchaser’s reasonable satisfaction so that the paragraph states expressly that post-termination of the T-Mobile Contract, the Obligors are entitled to revenue share from Connections procured prior to the termination of the T-Mobile Contract until the date on which the prescribed period during which such entitlement arises expires; and

(ii)include in the T-Mobile Contract an annual cap on the Obligor’s liability to T-Mobile under the T-Mobile Contract.

(b)As soon as reasonably practicable after (A) in relation to the Original Network Providers, the Commencement Date, and (B) in relation to an Additional Network Provider, the Assignment Date referable to that Additional Network Provider, and upon the re-negotiation of any other terms of a Network Agreement, CPW shall use reasonable endeavours to procure from each Network Provider, in each case (if applicable):

(i)a waiver of the ban on assignment contained in each Network Agreement, to allow Debts created under that Network Agreement to be assigned to the Obligors’ financiers; and

(ii)a waiver to permit the Obligor to disclose confidential information to the Obligors’ financiers.

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(c)In order to effect the accession of an Additional Network Provider, the Obligors shall afford all such reasonable assistance as may be necessary and appropriate to enable the Co-Arrangers and their professional advisers to complete to their satisfaction, an audit and due diligence exercise in relation to all material and relevant information and documentation concerning the relevant Additional Network Provider and their subsisting contractual arrangements with the Group.

(d)Within 60 days of the Commencement Date, CPW shall ensure that a certified copy of an extract of the relevant insurance policy in respect of damage or destruction of Equipment is provided to the Receivables Purchaser.

(e)Within 60 days of the Commencement Date, CPW shall ensure that the Intellectual Property Licence will be varied such that its term shall be extended for a period of not less than five years from the date of such variation.

(f)As soon as reasonably practicable after the Commencement Date, CPW shall procure from T-Mobile a certified copy letter (in form and substance satisfactory to the Receivables Purchaser) addressed to CPW clarifying CPW’s entitlement to revenue share under the T-Mobile Contract.

19.DEBT SPECIFIC WARRANTIES

The warranties in this clause 19 are made by each Obligor to the Receivables Purchaser at the time that a Debt is Notified, on each Utilisation Date and on the date that each Utilisation Request is made.

19.1Binding obligations

(a)Each Outstanding Debt is capable of being assigned by an Opco to the SPV and by the SPV to the Receivables Purchaser.

(b)Each Outstanding Debt is an existing, legal, valid, binding, undisputed and enforceable payment obligation of the relevant Network Provider.

(c)Each Outstanding Debt can be evidenced by information derived from EPOS and capable of being evidenced by an Invoice.

(d)Save for any sum the subject of a Reserve, the Network Provider is bound to pay each Outstanding Debt (as Notified in a Notification Schedule) in full, without abatement, allowance, claim, counterclaim, debit, deduction, discount, retention, set-off, withholding, or any other act or thing which may cause the Receivables Purchaser to receive less than the Notified Value of such Debt.

(e)All necessary consents, waivers, approvals and Authorisations (if any) required for the assignment by Opco to the SPV and by the SPV to the Receivables Purchaser of the benefits of each Network Agreement and/or any Outstanding Debt have been obtained.

(f)Save for any potential breach of contractual obligations which relates to a Specified Reserve, each Outstanding Debt relates to a Network Agreement in relation to which the Opco has fully met and (where relevant) will fully meet all of its contractual obligations.

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(g)There is no material dispute with the Network Provider outstanding in connection with a Network Agreement or an Invoice.

(h)Each Outstanding Debt relates to a Network Agreement in relation to which no notice of termination has been served by a party thereto and/or which has not been suspended, terminated or rescinded.

19.2Ownership and interests of third parties

(a)Prior to the assignment to the SPV, the relevant Opco was the legal and beneficial owner of each Outstanding Debt.

(b)Prior to the assignment to the Receivables Purchaser, the SPV was the legal and beneficial owner of each Outstanding Debt.

(c)Save in accordance with the terms of the Finance Documents, no Obligor has transferred or granted any interest in and to all or any of its rights in relation to an Outstanding Debt or the proceeds of an Outstanding Debt or under the Network Agreement or any Ancillary Document to any person.

(d)Save for any Permitted Security no Outstanding Debt, no Obligor’s rights under the relevant Network Agreement and Ancillary Document, and no Invoice are subject to an assignment, or Security Interest or other equitable interest in favour of any person.

(e)No third party can trace into any Outstanding Debt.

19.3Affiliates

No Outstanding Debt is owed by an Affiliate.

19.4Supporting documentation

(a)Any copy Network Agreement or Ancillary Document which an Obligor has delivered to the Receivables Purchaser represents the contractual basis upon which the Obligor contracts with the relevant Network Provider.

(b)At the time of delivery to the Receivables Purchaser:

(i)any copy of any Network Agreement and Ancillary Document was a true, complete and up-to-date copy of the original Network Agreement or Ancillary Document at the time it was delivered; and

(ii)no agreements or arrangements existed which could materially alter the substance, operation, scope or legal effect of such Network Agreement or Ancillary Document, which were not also disclosed to the Receivables Purchaser at the time of delivery of the Network Agreement or Ancillary Document.

(c)Save in accordance with clause 20.1 (No amendments to Network Agreements and Ancillary Documents) no amendments or variations have been made to any Network Agreement or Ancillary Document delivered to the Receivables Purchaser.

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(d)The correct name and address of the Network Provider appears on every Invoice and on all other relevant documentation sent by the Obligor to the Receivables Purchaser.

(e)No Minimum Term Contract has a term in excess of 36 Months.

19.5Applicable law and domicile of Network Provider

(a)The Debt arises pursuant to a Network Agreement governed by English law.

(b)No Network Agreement or Ancillary Document conflicts with any law applicable to the Network Provider or the Debt.

(c)The assignment of the Debt pursuant to this Deed does not conflict with any law applicable to the relevant Network Provider and/or the Debt.

(d)The Network Provider is domiciled in England and Wales.

19.6Currency

The Network Agreement provides for payment in Sterling.

19.7Default

(a)The relevant Network Provider is not in default of any sums due to the relevant Obligor under the Network Agreement or otherwise.

(b)The relevant Obligor is not aware (having made reasonable enquiries) of the occurrence of any event likely to result in the Receivables Purchaser receiving materially less than the full Notified Value on or before the Maturity Date.

19.8Insolvency of a Network Provider

CPW is not aware (having made reasonable enquiries) of any relevant Network Provider being subject to Insolvency Proceedings or it being Insolvent.

19.9Withholding tax

The Debt is not subject to any withholding tax.

20.DEBT SPECIFIC UNDERTAKINGS

The undertakings in this clause 20 remain in force from the Commencement Date and for so long as any amount is outstanding under the Facility.

20.1No amendments to Network Agreements and Ancillary Documents

Subject to clause 20.2, an Opco may not, without the prior written consent of the Majority Finance Parties:

(a)amend or vary a Network Agreement or Ancillary Document (or acquiesce in any such amendment or variation) in a way which might reasonably be expected to:

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(i)materially prejudice the Receivables Purchaser’s right, title and interest in and ability to collect in full any Outstanding Notified Debts; or

(ii)materially postpone or delay the period over which payment is due to be made; or

(b)waive or agree to waive any material or persistent breach of a Network Agreement or Ancillary Document in a way which might reasonably be expected to:

(i)materially prejudice the Receivables Purchaser’s right, title and interest in and ability to collect in full any Outstanding Notified Debts; or

(ii)materially postpone or delay the period over which payment is due to be made;

20.2Amendments to Network Agreements and Ancillary Documents

CPW may amend, vary or waive a term of a Network Agreement (or acquiesce in any such amendment, variation or waiver) where:

(a)the change is made by a Network Provider to enable the Network Provider to comply with any approval of a regulatory authority, provided that the proposed change is notified to the Receivables Purchaser as soon as reasonably practicable; or

(b)the Receivables Purchaser has already set a Specified Reserve in relation to that specific amendment, variation or waiver; or

(c)CPW has notified the Receivables Purchaser of the effect of that amendment, variation or waiver prior to it being made and the Receivables Purchaser has set a Reserve in relation to that amendment, variation or waiver or waived its right to do so in writing to CPW.

20.3Contractual undertakings

(a)The Opcos undertake to comply in all material respects with the terms of the Network Agreements and Ancillary Documents.

(b)No Opco shall enter into an agreement with a Network Provider to replace any Network Agreement or Ancillary Document unless:

(i)the replacement Network Agreement is on substantially the same terms as the Network Agreement and any relevant Ancillary Document; and

(ii)any terms in the replacement agreement which differ from the terms of the original Network Agreement would not materially prejudice the Receivables Purchaser’s right, title and interest in and ability to collect in full any Outstanding Notified Debts,

or otherwise, with the prior written consent of the Majority Finance Parties.

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(c)The Opcos undertake to inform the Receivables Purchaser:

(i)as soon as reasonably practicable prior to any negotiations with a Network Provider to replace a Network Agreement, that such negotiations are due to commence; and

(ii)upon completion of any negotiations with a Network Provider to replace a Network Agreement,

and the Opco shall promptly provide to the Receivables Purchaser (A) a copy of any replacement Network Agreement and, (B) upon request, any information that the Receivables Purchaser may reasonably request in relation to any ongoing negotiations with a Network Provider the subject of this clause 20.3.

(d)Each Opco undertakes that it will not elect or agree that the parties to a Network Agreement can discharge obligations by exercising a set-off which is not expressly permitted in accordance with the terms of the Network Agreements at the Commencement Date.

(e)If any Opco proposes to enter into any material contractual arrangement with a Network Provider beyond the contractual arrangements contemplated by its respective Network Agreement, it shall by virtue of set-off rights which may arise as a consequence, promptly notify the Receivables Purchaser.

20.4Notification

(a)No Debt shall be Notified to the Receivables Purchaser more than once for the purpose of calculating Availability.

(b)Each Obligor undertakes that the information and data in each and every Notification Schedule (including the Debts Notified in the Notification Schedule) was true and accurate in all respects as at the date on which the Notification Schedule was delivered and that any other information provided to the Receivables Purchaser in accordance with schedule 11 (Operational undertakings), or otherwise, was true and accurate in all material respects as at the date on which the information was delivered.

20.5Warranties

Each Obligor shall ensure that the Debt Specific Warranties given to the Receivables Purchaser upon Notification of a Debt remain unaltered whilst the Debt remains Outstanding.

20.6Collection of Debts and the proceeds of Debts

Each Obligor shall:

(a)comply in all respects with clause 8 (Collection and administration) and clause 9 (Trust):

(b)(subject to any other relevant provisions of this Deed) at any time do such things and take, continue, discontinue or abandon such proceedings as the Receivables Purchaser may prescribe for the purpose of enforcing payment of and collecting Debts; and

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(c)exercise such care and prudence in granting credit to and withholding credit from Network Providers and do such things (including issuing any requisite legal proceedings) in procuring or attempting to procure payment of all Debts as would be exercised and effected by a reasonably careful and prudent supplier of goods and services of the nature of those supplied by that Obligor.

20.7Insurance

CPW shall (and shall ensure that each other member of the Group will) ensure that the benefit of any insurance policy or policies referable to any Debt held or to be held by an Obligor, in relation to which a written assignment of such policy or policies in favour of the Receivables Purchaser cannot for any reason be effected, is held absolutely on trust for the Receivables Purchaser, and that the conduct of any claim or other matter under or pursuant to any such policy or policies is solely determined and effected by the Receivables Purchaser.

20.8Insolvency of Network Providers

Each Opco shall, immediately the Receivables Purchaser is notified of Insolvency Proceedings relating to any Network Provider or that a Network Provider is Insolvent:

(a)notify the Receivables Purchaser (in such form and manner as the Receivables Purchaser may from time to time prescribe) of the nature of the Insolvency Proceedings or that it is Insolvent and the particulars of the Debts owing by such Network Provider;

(b)on the Receivables Purchaser’s request submit a proof in respect of such Debt in the insolvent estate of such Network Provider and to give the person administering such Network Provider’s estate irrevocable instructions in such form as the Receivables Purchaser may require that any dividends or other sums of money payable out of such estate in respect of any proof or claim by an Opco or the Receivables Purchaser shall be paid only to the Receivables Purchaser;

(c)on the Receivables Purchaser’s request, take such other action as shall be reasonably available to an Opco and execute such other documents as shall be needed to procure payment to the Receivables Purchaser of any dividends or in mitigating any loss which the Receivables Purchaser may suffer by reason of such Insolvency Proceedings or it becoming Insolvent; and

(d)pay to the Receivables Purchaser all monies received by an Opco from the estates of insolvent Network Providers which relate to Debts.

21.TERM AND TERMINATION

21.1Term

Subject to clause 21.2 (Termination), clause 22 (Events of Default) and clause 23 (Rights on a default), the Facility is available for the Term.

21.2Termination

(a)Subject to clause 22 (Events of Default), clause 21.2(b) and clause 11.5 (Breakage Costs), the Obligors may terminate this Deed by giving notice of at least the Notice Period to the Receivables Purchaser in accordance with clause 36 (Notices), such notice to expire upon the date stated in the notice.

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(b)Any notice given in accordance with clause 21.2(a) may only be given simultaneously by all Obligors which are party to this Deed, at the time of the giving of that notice.

21.3Termination Date

(a)On the Termination Date, the Receivables Purchaser shall cease to make available any further Early Payments and shall effect Recourse in relation to all Outstanding Debts.

(b)Upon payment of the Repurchase Price, the Receivables Purchaser shall reassign all Outstanding Debts to the SPV.

(c)The rights and obligations of each Obligor and the Receivables Purchaser accrued prior to the Termination Date will continue in full force and effect following the Termination Date.

22.EVENTS OF DEFAULT

Each of the events or circumstances set out in this clause 22 is an Event of Default, save that in relation to clauses 22.1 (Breach of trust) and 22.2 (Non-payment) only, an Event of Default shall not arise if:

(a)an Obligor genuinely disputes the relevant breach; and

(b)within three Business Days of raising such dispute with the Receivables Purchaser, provides to the Receivables Purchaser written evidence (in form and substance satisfactory to the Receivables Purchaser) supporting the Obligor’s contention; and

(c)following a consideration of such written evidence, the Majority Finance Parties agree that such written evidence adequately supports the Obligor’s contention that no breach has arisen.

22.1Breach of trust

The failure of an Obligor to immediately remit to the correct Trust Account within three Business Days of the earlier of:

(a)the Receivables Purchaser giving notice to an Obligor requiring remedy; and

(b)an Obligor becoming aware of the failure to comply,

any sum received by such Obligor representing the proceeds of Debts administered or dealt with in any manner contrary to that set out in clauses 8 (Collection and administration) and 9 (Trust), unless the Obligor demonstrates to the Receivables Purchaser’s satisfaction that its failure to pay is caused by:

(i)an administrative or technical error: or

(ii)a Disruption Event

and payment is made within five Business Days of its due date.

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22.2Non-payment

A member of the Group does not pay on the due date any amount payable pursuant to a Finance Document at the place at which and in the currency in which it is expressed to be payable, unless the relevant member of the Group demonstrates to the Receivables Purchaser’s satisfaction that its failure to pay is caused by:

(a)an administrative or technical error; or

(b)a Disruption Event,

and payment is made within five Business Days of its due date.

22.3Facility Limit

Any breach of the Facility Limit which continues unremedied for three Business Days from the earlier of:

(a)the Receivables Purchaser giving notice to an Obligor requiring remedy; and

(b)an Obligor becoming aware of the failure to comply

22.4Absence of Notification

The failure by CPW to comply with its obligations under clause 17.1 (Notifications) and such failure continues unremedied for 14 days after the latest Reporting Date during which period the earlier of the following has occurred:

(a)the Receivables Purchaser has given notice to an Obligor requiring remedy; and

(b)an Obligor has become aware of the failure to comply.

22.5Negative pledge

A breach:

(a)by an Obligor of clause 18.4 (Negative pledge); or

(b)by the Parent of the negative pledge contained in the Parent Side Letter, which breach, if capable of remedy, remains unremedied for 10 Business Days from the earlier of:

(i)the Receivables Purchaser giving notice to the Parent and CPW requiring remedy; and

(ii)CPW becoming aware of the failure to comply.

22.6Withdrawal of waiver

Any person, having waived or released its rights or any Security Interest it may have in or to the Debts, withdraws or attempts to withdraw such waiver of release or otherwise asserts any interest adverse to the Receivables Purchaser in the Debts which breach remains unremedied for 10 Business Days from the earlier of:

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(a)the Receivables Purchaser giving notice to an Obligor requiring remedy; and

(b)an Obligor becoming aware of the failure to comply.

22.7Financial covenants and other obligations

(a)Any requirement of clause 18.21 (Financial condition) is not satisfied.

(b)Any member of the Group does not comply with any provision of any Transaction Security Document.

22.8Other obligations

(a)A member of the Group or the Parent (as applicable) does not comply with any provision of a Finance Document to which it is party (other than those referred to in clause 22.1 (Breach of trust) to clause 22.7 (Financial covenants and other obligations) (inclusive)).

(b)No Event of Default under clause 22.8(a) will occur if the failure to comply is capable of remedy and is remedied within 10 Business Days of the earlier of:

(i)the Receivables Purchaser giving notice to the relevant member of the Group; and

(ii)a member of the Group becoming aware of the failure to comply.

22.9Misrepresentation

Any representation or statement made or deemed to be made by a member of the Group in the Finance Documents or any other document delivered by or on behalf of any member of the Group under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made (other than a manifest error which is corrected within three Business Days of the Receivables Purchaser giving notice to an Obligor requiring remedy).

22.10Cross default

(a)Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.

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

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

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

(e)No Event of Default will occur under this clause 22.10 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within

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clauses 22.10(a) to 22.10(d) is less than £5,000,000 (or its equivalent in any other currency or currencies).

22.11Insolvency

(a)A member of the Group is unable or admits inability to pay its debts as they fall due or is deemed to or declared to be unable to pay its debts under applicable law, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

(b)The value of the assets of any member of the Group is less than its liabilities (taking into account contingent and prospective liabilities).

(c)A moratorium is declared in respect of any indebtedness of any member of the Group.

22.12Insolvency proceedings

Any corporate action, legal proceedings or other procedure or step is taken (other than a petition for winding-up filed for a creditor which is contested in good faith and is withdrawn or discharged by the date which is the earlier of 21 days after its presentation and the hearing date for such petition):

(a)the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any member of the Group;

(b)a composition, compromise, assignment or arrangement with any creditor of any member of the Group;

(c)the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any member of the Group or any of its assets; or

(d)enforcement of any Security Interest over any assets of any member of the Group, securing an amount in excess of £5,000,000 (or its equivalent in any other currency or currencies),

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

22.13Creditors’ process

Any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction affects any asset or assets of a member of the Group having an aggregate value of £1,000,000 or more and is not discharged within 10 Business Days.

22.14Unlawfulness and invalidity

(a)It is or becomes unlawful for a member of the Group that is a party to the Intercreditor Agreement to perform any of its obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Transaction Security Documents ceases to be effective or any subordination created under the Intercreditor Agreement is or becomes unlawful.

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(b)Subject to the Legal Reservations, any obligation or obligations of a member of the Group under any Finance Documents or the Intercreditor Agreement are not or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Receivables Purchaser under the Finance Documents.

(c)Any Finance Document ceases to be in full force and effect or any Transaction Security or any subordination created under the Intercreditor Agreement ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.

22.15Intercreditor Agreement

(a)Any party to the Intercreditor Agreement (other than a Finance Party or a member of the Group) fails to comply with the provisions of, or does not perform its obligations under, the Intercreditor Agreement; or

(b)a representation or warranty given by that party in the Intercreditor Agreement is incorrect in any material respect,

and, if the non-compliance or circumstances giving rise to the misrepresentation are capable of remedy, it is not remedied within 10 Business Days of the earlier of:

(i)the Receivables Purchaser giving notice to that party; and

(ii)that party becoming aware of the non-compliance or misrepresentation.

22.16Cessation of business

The Group taken as a whole suspends or ceases, or threatens to cease, to carry on all or a substantial part of its business except as a result of a Disposal which is a Permitted Disposal or a Permitted Transaction.

22.17Change of ownership

After the Commencement Date:

(a)the SPV ceases to be a wholly-owned Subsidiary of CPW; or

(b)an Obligor ceases to be a wholly-owned Subsidiary of the Parent.

22.18Audit qualification

The Auditors qualify the audited annual financial statements of CPW in any material respect, unless CPW provides to the Receivables Purchaser within 30 days of such qualification, evidence in writing (to the satisfaction of the Majority Finance Parties (acting reasonably)):

(a)that the event or circumstance that gave rise to such qualification (the “Qualification Event”) is capable of remedy;

(b)the basis upon which the Qualification Event is to be remedied: and

(c)the period within which the Qualification Events is to be remedied:

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and CPW further provides to the Receivables Purchaser additional evidence in writing (to the satisfaction of the Majority Finance Parties (acting reasonably)) confirming the remedy of the Qualification Event within the agreed cure period contemplated by sub-paragraph (c) above.

22.19Expropriation

The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets.

22.20Repudiation and rescission of agreements

(a)A member of the Group (or any other relevant party) rescinds or repudiates a Finance Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Finance Document or any Transaction Security.

(b)Any party to the Intercreditor Agreement rescinds or purports to rescind or repudiates or purports to repudiate the Intercreditor Agreement in whole or in part where to do so has, or is, in the reasonable opinion of the Receivables Purchaser, likely to have, a material adverse effect on the interests of the Receivables Purchaser under the Finance Documents.

22.21Governmental and regulatory matters

Any governmental, regulatory or other investigations are commenced:

(a)in relation to the Finance Documents;

(b)in relation to the transactions contemplated by the Finance Documents; or

(c)against any member of the Group or its assets,

which has or is reasonably likely to have a Material Adverse Effect.

22.22Material adverse change

Any event or circumstance occurs which has or could reasonably be expected to have a Material Adverse Effect which, if capable of remedy, is not remedied within 10 Business Days of the Receivables Purchaser giving notice to an Obligor requiring remedy.

22.23Fraud and gross negligence

In relation to any member of the Group, any fraudulent or dishonest act or omission or wilful default or gross negligence arises in connection with a Finance Document.

22.24Intellectual Property Licence

The revocation or termination of the Intellectual Property Licence for any reason.

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23.RIGHTS ON A DEFAULT

23.1Event of Default

On and at any time after the occurrence of an Event of Default which is continuing, the Receivables Purchaser shall be entitled (but not obliged) to exercise or enforce all or any of the following rights with or without notice:

(a)Early Payment Percentage

reduce the Early Payment Percentage and/or the Facility Limit, including to zero;

(b)Availability

immediately reduce or entirely withdraw all Availability;

(c)No payment

not make payment of any Early Payment or any Deferred Element, provided always that the Receivables Purchaser shall make payment of any credit balance on the Payment Account when the Receivables Purchaser reasonably believes that the proceeds of all Approved Debts Outstanding at any time have been paid to the Receivables Purchaser and following the exercise by the Receivables Purchaser of its rights pursuant to clause 35 (Set-Off) but without prejudice to clause 43 (Avoidance of payments);

(d)Unapproved Debts

automatically designate all Debts as Unapproved Debts;

(e)Funds in Use

request the immediate repayment of a sum equal to the aggregate value of all Early Payments;

(f)Repayment

demand immediate repayment from any or all of the Obligors of all sums that an Obligor may then or thereafter owe to the Receivables Purchaser howsoever arising, whether under this Deed or otherwise and the Obligors shall pay interest to the Receivables Purchaser on demand on the unpaid amount (both before and after judgment);

(g)Fees and expenses

charge the Obligors (or any of them) all and any Costs arising from the perfection and/or collection of all and any Debts or the enforcement of all or any of the Receivables Purchaser’s rights arising under this Deed;

(h)Combination of accounts

combine all accounts the Obligors (or any of them) may have with the Receivables Purchaser and/or reduction of such sums that may then or thereafter be owing to the Receivables Purchaser (howsoever arising, whether under this Deed or

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otherwise) by the Obligors (or any of them) any sums which the Receivables Purchaser then or thereafter owe to the Obligors (or any of them) to the effect that the Receivables Purchaser shall only be liable to account to an Obligor for any net resulting sum due from the Receivables Purchaser to such Obligor after such combination and/or application shall have been effected;

(i)Increase Discount Margin

increase the Discount Margin by up to four percentage points;

(j)Recourse

determine that Recourse shall be treated as having occurred in relation to all and any Debts;

(k)Reassignment

subject to clause 24 (Reassignment and Recourse), to reassign all and any Debts to the SPV;

(l)Transaction Security Documents

without prejudice to the provisions of such Transaction Security Documents, to take any steps to enforce the Transaction Security Documents, or any guarantee or indemnity of an Obligor’s obligations arising under any Finance Document;

(m)Termination

immediately terminate this Deed by notice to the Obligors;

(n)Cancellation of agency

exercise all rights arising under clause 8.5 (Variation or cancellation of agency);

(o)Notice of Assignment and Trust

serve a Notice of Assignment and Trust on all or any of the Network Providers; and

(p)Notification

to require any or all of the Obligors, immediately upon the Receivables Purchaser’s request, to notify any Network Provider of the assignment of Debts to the Receivables Purchaser under this Deed.

23.2Operational Covenants and Financial Covenants

Notwithstanding any other remedy available to the Receivables Purchaser pursuant to this Deed:

(a)the Early Payment Percentage may be reduced in accordance with the terms of schedule 10 (Operational Covenants):

(b)serious and/or more than three consecutive breaches of all or any of the Operational Covenants and Financial Covenants shall constitute a Material Adverse Effect; and

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(c)if the Receivables Purchaser determines that there has been a breach of the Financial Covenants, the Receivables Purchaser may without prejudice to its rights pursuant to clause 23.1 (Event of Default) reduce the Early Payment Percentage to such a level which the Majority Finance Parties agree reflects the increased risk associated with such circumstances.

24.REASSIGNMENT AND RECOURSE

24.1Unapproved Debts

The Receivables Purchaser may at any time reassign any Unapproved Debt to the SPV.

24.2Completion of reassignment

(a)Reassignment shall be complete upon payment of the Repurchase Price.

(b)If, following:

(i)payment of the Repurchase Price in relation to all Outstanding Debts; and

(ii)the exercise by the Receivables Purchaser of all rights arising under this Deed;

a balance is standing to the credit of the Payment Account, the Receivables Purchaser shall promptly pay such credit balance to CPW.

24.3Recourse

The Receivables Purchaser may exercise Recourse:

(a)in respect of a Debt upon the relevant Opco ceasing to be entitled to Revenue Share in respect of that Debt; and

(b)in respect of all or any Debts upon or at any time following the occurrence of an Event of Default which is continuing (whether or not the Receivables Purchaser exercises its right to terminate this Deed).

25.POWER OF ATTORNEY

25.1Power of attorney

Each Obligor, by way of security, irrevocably appoints the Receivables Purchaser (which shall have the power to nominate any of its directors, company secretary, authorised signatories and managers (and Administrators in the event that such are appointed in relation to such Obligor), from time to time from the date hereof, to exercise the Receivables Purchaser’s powers under this clause 25.1) as its attorney in its name and on its behalf to take any action which such Obligor is obliged to take under this Deed (including the completion or execution of any Notification Schedule or Notice of Assignment and Trust) and including:

(a)signing and executing a legal assignment of all or any of the Debts in accordance with section 136(1) of the Law of Property Act 1925; or

(b)otherwise obtaining payment of or perfecting its ownership of any Debts; or

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(c)securing the performance of any Obligor’s obligations pursuant to any Finance Document; or

(d)conducting any claim or other matter under or pursuant to any relevant insurance policy or policies in relation to all or any Debts.

25.2Substitutes

Each Obligor each agrees that:

(a)the Receivables Purchaser may at any time appoint a substitute to act as its attorney, and may revoke any such appointment without giving a reason;

(b)the appointment of a substitute is to be in writing signed by the Receivables Purchaser (acting through any of its directors, company secretary or authorised signatories); and

(c)every substitute appointed under this clause 25.2 shall have full powers as the Obligor’s attorney as if appointed by the Obligor pursuant to clause 25.1 (Power of attorney), except the power to appoint a substitute.

The power of attorney granted pursuant to this clause is only capable of being exercised upon or following the occurrence of an Event of Default which is continuing.

26.NON-VESTING DEBTS

26.1Definition of Non-Vesting Debts

For the purposes of this clause 26, “Non-Vesting Debts” means all or any Debts:

(a)which were purportedly assigned or should have been assigned to the SPV or the Receivables Purchaser in accordance with clause 2 (Assignment); and/or

(b)in respect of which the Receivables Purchaser has made any Early Payment or accepted any obligation to make payment of the Deferred Element,

but which have failed for any reason to effectively Vest in the Receivables Purchaser in accordance with clause 2 (Assignment).

26.2Trust

(a)Each Obligor agrees to deal with Non-Vesting Debts in all respects as if they had been assigned to the Receivables Purchaser pursuant to this Deed.

(b)Without prejudice to clause 26.2(a), each Obligor agrees to hold the Non-Vesting Debts on trust for the Receivables Purchaser absolutely.

(c)Without prejudice to clause 26.2(a), if any Obligor at any time holds the proceeds of any Non-Vesting Debts it agrees to hold such proceeds on trust for the Receivables Purchaser absolutely, separately from the Obligor’s other monies, and to immediately pay them to the Receivables Purchaser, upon the Receivables Purchaser’s request, without any set-off, waiver or reduction whatsoever or howsoever arising.

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27.CHANGES TO THE FINANCE PARTIES

27.1Transfers by the Obligors

The Obligors may not assign, sub-contract or delegate any of their rights or transfer by novation (as the case may be) any of their rights and/or obligations hereunder to another person.

27.2Assignment and transfer by a Finance Party

Subject to this clause 27, a Finance Party (the “Exiting Participant”) may:

(a)assign its rights; or

(b)transfer by novation its rights and obligations,

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged or established for the purpose of making, purchasing or investing in loans, securities or other financial assets.

27.3Conditions of assignment or transfer

(a)The consent of CPW is required for an assignment or transfer of a Participation unless:

(i)that assignment or transfer is to another Participant or Affiliate of a Participant; or

(ii)an Event of Default is continuing.

(b)The consent of CPW to an assignment or transfer must not be unreasonably withheld or delayed. CPW will be deemed to have given its consent 14 days after the Finance Party (through the Receivables Purchaser) has requested it, unless consent is expressly refused by CPW within that time.

(c)An assignment or transfer will only be effective if the procedure set out in clause 27.5 (Procedure for transfer of a Participation) is complied with.

27.4Increased Costs

If:

(a)a Finance Party assigns or transfers any of its rights or 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. an Obligor would he obliged to make a payment to the Transferee or Finance Party acting through its new Facility Office under clause 12 (Increased costs),

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

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27.5Procedure for transfer of a Participation

(a)A Participant may transfer its rights and obligations under a Participation to a third party (a “Transferee”) by delivery to the Receivables Purchaser of a Participant Transfer Certificate duly completed and signed by the Participant and the Transferee.

(b)The Receivables Purchaser will only be obliged to execute a Participation Transfer Certificate delivered to it by the Participant and Transferee once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such Transferee.

(c)With effect from the Transfer Date:

(i)the Receivables Purchaser and the relevant Participant shall be released from further obligations towards one another under the relevant Participation (or proportion thereof) and their respective rights against one another shall be cancelled (being the “Discharged Rights and Obligations”);

(ii)the Receivables Purchaser and the relevant Transferee shall assume obligations towards one another and acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Receivables Purchaser and the Transferee have assumed and/or acquired the same in place of the Receivables Purchaser and the relevant Participant; and

(iii)the relevant Transferee shall become a party to this Deed as a “Participant”.

27.6Procedure for sub-participation by the Receivables Purchaser

(a)The Receivables Purchaser may sub-participate its rights and obligations under the Facility by entering into an RP Transfer Certificate, a copy of which shall be provided to each Participant promptly after being entered into.

(b)With effect from the Transfer Date a New Participant shall become a party to this Deed as a “Participant”.

(c)A sub-participation by the Receivables Purchaser will only be effective if the procedure set out in this clause 27.6 is complied with.

27.7Limitation of responsibility of Participants

(a)Unless expressly agreed to the contrary, a Participant makes no representation or warranty and assumes no responsibility to a Transferee for:

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

(ii)the financial condition of any member of the Group;

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

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

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and any representations or warranties implied by law are excluded.

(b)Nothing in this Deed obliges a Participant to:

(i)accept a re-transfer from a Transferee of any of the rights and obligations assigned or transferred under this clause 27; or

(ii)support any losses directly or indirectly incurred by a Transferee by reason of the non-performance by any member of the Group of its obligations under the Finance Documents or otherwise.

27.8Transfer fee

Unless the Receivables Purchaser otherwise agrees and excluding an assignment or transfer to an Affiliate of a Participant, a Transferee and a New Participant shall, on the date upon which an assignment or transfer takes effect, pay to the Receivables Purchaser (for its own account) a fee of £1,250.

27.9Transfer Certificates

The Receivables Purchaser shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to CPW a copy of that Transfer Certificate.

28.CHANGES TO THE OBLIGORS AND NETWORK PROVIDERS

28.1Assignment and transfers by Obligors

No member of the Group may assign any of its rights or transfer, sub-contract or delegate any of its rights or obligations under the Finance Documents.

28.2Additional Obligors

(a)Subject to compliance with the provisions of clauses 17.12(b) and 17.12(c), CPW may request that any member of the Group or its Affiliate becomes an Obligor. That member of the Group shall become an Obligor if:

(i)the Receivables Purchaser approves the addition of that member of the Group as an Additional Obligor;

(ii)it is incorporated in the same jurisdiction as an existing Obligor;

(iii)CPW and that member of the Group deliver to the Receivables Purchaser a duly completed and executed Accession Letter;

(iv)the member of the Group is (or becomes) a Security Obligor prior to becoming an Obligor;

(v)CPW confirms that no Default is continuing or would occur as a result of that member of the Group becoming an Additional Obligor; and

(vi)the Receivables Purchaser has received all of the documents and other evidence listed in part 2 of schedule 2 (Conditions precedent) in relation to that Additional Obligor, each in form and substance satisfactory to the Receivables Purchaser.

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(b)The Receivables Purchaser shall notify CPW promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in part 2 of schedule 2 (Conditions precedent).

(c)Delivery of an Accession Letter constitutes confirmation by the relevant person that the representations and warranties referred to in clause 16.27(c) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

28.3Resignation of Obligors

No member of the Group may resign its obligations under this Deed or otherwise cease to be a party to this Deed (other than in accordance with clause 19 (Debt specific warranties) or 23 (Rights on a default)).

28.4Addition of a Network Provider

(a)Subject to the consent of the Majority Finance Parties, any accounts receivable payable to an Opco by a UK telecommunications network operator which is not a Network Provider (“Additional Debts”) may be included within the Facility by each of the Receivables Purchaser, CPW, the SPV and any Opco involved in the creation of such accounts receivable executing and delivering an Additional Network Provider Accession Certificate.

(b)Additional Debts shall not be eligible for Early Payments unless:

(i)the Receivables Purchaser has received, or waived the requirement to receive, all of the documents and other evidence listed in schedule 1 (Conditions Precedent) to the relevant Additional Network Provider Accession Certificate in form and substance satisfactory to the Receivables Purchaser; and

(ii)the Additional Network Provider accession protocol set out at part 2 of schedule 11 (Operational undertakings) has been fully complied with.

(c)The Receivables Purchaser shall notify CPW and the Participants promptly upon:

(i)receipt of all such documents and other evidence in accordance with clause 28.4(b); and

(ii)full compliance with the Additional Network Provider accession protocol set out at part 2 of schedule 11 (Operational undertakings).

(d)Upon delivery of an Additional Network Provider Accession Certificate:

(i)the provisions of schedule 2 (Terms specific to Network Provider) of the Additional Network Provider Accession Certificate shall be included as a new part of schedule 12 (Terms specific to Network Providers) to this Deed; and

(ii)the provisions of schedule 3 (Other terms) of the Additional Network Provider Accession Certificate (if any) shall be included as new clauses of this Deed or paragraphs of schedules to this Deed as specified in that schedule 3 (Other terms)

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and the Receivables Purchaser shall promptly provide to CPW and each Participant a conformed copy of this Deed, including any such additional terms.

29.THE PARTICIPATION

29.1The Participation

The Receivables Purchaser grants to each Original Participant, and each Original Participant accepts, its Participation with effect from the Commencement Date and subject to the terms of this Deed.

29.2Status of Participation

(a)Under the Participation, the Receivables Purchaser does not transfer or assign any rights or obligations under the Finance Documents to any Participant and no Participant will have any proprietary interest in the benefit of the Finance Documents or in any monies received by the Receivables Purchaser under or in relation to the Facility or the Transaction Security Documents.

(b)The relationship between the Receivables Purchaser and each Participant is that of debtor and creditor with the right of the Participant to receive monies from the Receivables Purchaser restricted to the extent of an amount equal to the relevant portion of any monies received and applied by the Receivables Purchaser from any Security Obligor.

(c)No Participant shall be subrogated to or substituted in respect of the Receivables Purchaser’s claims by virtue of any payment under a Participation and no Participant shall have any direct contractual relationship with or rights against any member of the Group.

(d)Nothing in any Finance Document (or any document related to or connected with any Finance Document) constitutes the Receivables Purchaser as agent, fiduciary or trustee for a Participant.

(e)Subject to clause 29.8 (Standard of care):

(i)nothing in any Finance Document (or any document related to or connected with any Finance Document) shall place the Receivables Purchaser under an obligation to enquire as to the occurrence or otherwise of a Default or an Event of Default;

(ii)the Receivables Purchaser may assume (unless it has received notice to the contrary) that no Default or Event of Default has occurred unless it has actual knowledge of a Default or Event of Default; and

(iii)nothing in any Finance Document (or any document related to or connected with any Finance Document) shall place the Receivables Purchaser under an obligation to exercise any rights off set-off it may have against any member of the Group.

(f)The Receivables Purchaser’s, obligations to a Participant under this Deed shall be subject to its obligations to the Group under the Finance Documents.

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(g)No Participant shall be entitled to deal directly with, make payment to or receive payments from any member of the Group or any Network Provider in connection with the Participation.

(h)No Participant has any interest, proprietary, contractual or otherwise, in any property for the time being constituting the security for the obligations of any Security Obligor under the Finance Documents (or any part of them) or in any other property now or in the future in the possession or control of the Receivables Purchaser which may be or become security for the obligations of any Security Obligor under the Finance Documents (whether by reason of the general description contained in any document held by the Receivables Purchaser or otherwise) and, subject to clause 29.8 (Standard of care), the Receivables Purchaser shall be under no obligation to make any claim on, or assert any lien against, any such property.

29.3The Receivables Purchaser’s representations and warranties

At the Commencement Date, the Receivables Purchaser represents and warrants to each Original Participant that:

(a)the Receivables Purchaser is duly incorporated and validly existing and has the power to execute, deliver and perform its obligations under this Deed, all necessary corporate and shareholder action has been taken to authorise the execution, delivery and performance of this Deed and this Deed constitutes the valid and legally binding obligations of the Receivables Purchaser;

(b)the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Deed by the Receivables Purchaser will not contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Receivables Purchaser is subject; and

(c)every authorisation of, or registration with, or declaration to, governmental or public bodies or authorities or courts required by the Receivables Purchaser to authorise, or required by the Receivables Purchaser in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Deed, or the performance by the Receivables Purchaser of its obligations under this Deed, has been obtained or made and is in full force and effect and there has been no default in the observance of the conditions or restrictions (if any) imposed in, or in connection with, any of the same.

29.4Participants’ representations and warranties

Each Participant represents and warrants to the Receivables Purchaser that:

(a)it is duty incorporated and validly existing and has the power to execute, deliver and perform its obligations under this Deed, all necessary corporate and shareholder action has been taken to authorise the execution, delivery and performance of this Deed and this Deed constitutes the valid and legally binding obligations of the Participant;

(b)the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Deed by the relevant Participant will not contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which such Participant is subject; and

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(c)every authorisation of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the relevant Participant to authorise, or required by such Participant in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Deed, or the performance by the Participant of its obligations under this Deed, has been obtained or made and is in full force and effect and there has been no default in the observance of the conditions or restrictions (if any) imposed in, or in connection with, any of the same.

29.5Representations and undertakings

The Receivables Purchaser represents and undertakes to each Participant that:

(a)subject to the provisions of any Legal Opinion delivered by the legal advisers to the Receivables Purchaser and the Original Participants on the Commencement Date, it beneficially owns or shall beneficially own, or be the beneficiary of a trust in relation to, all of the Debts free from any rights of set-off in favour of any Obligor or any lien, security interest, trust or other encumbrance, any purchase or option agreement or arrangement, or any agreement to create or effect any of the same;

(b)it will not be in default of any of its obligations in relation to the Debts; and

(c)save as otherwise specified under this Deed and subject to the obtaining of any necessary consents and the entry into and the performance of its obligations, the exercise of its rights under the Participation will not breach any provision of the Finance Documents.

29.6Reliance

(a)Each Participant confirms to the Receivables Purchaser that:

(i)it has made, and will continue to make, its own analysis of thecreditworthiness of each member of the Group and each Network Provider independently of, and without reliance on, the Receivables Purchaser and based on such financial and other information and documents as the Participant deems appropriate;

(ii)it has received copies of the Finance Documents subsisting at the Commencement Date; and

(iii)save as set out in clause 29.3 (The Receivables Purchaser’s representationsand warranties), it has not relied on any statement, opinion, forecast or other representation made by or on behalf of the Receivables Purchaser to induce the Participant to enter into its Participation.

(b)Without prejudice to clause 29.8 (Standard of care), the Receivables Purchaser assumes no responsibility for the completeness or accuracy of any financial or other document or information which it may have furnished to the Participants or may furnish to the Participants in the future.

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29.7Restriction of liability

The Receivables Purchaser makes no representations or warranties and assumes no liability with respect to:

(a)the due execution (save for its own), legality, validity, adequacy or enforceability of the Finance Documents or any document relating thereto or contemplated thereby or the recoverability of any Debt or any other sum due under the Finance Documents;

(b)the financial condition of any member of the Group or any Network Provider, or any other party to any Finance Documents or any document relating to or contemplated by the Finance Documents;

(c)the performance by any member of the Group, any Network Provider or (without prejudice to clause 29.8(a)) any other party of their respective obligations under the Finance Documents or any document relating to or contemplated by the Finance Documents;

(d)the accuracy of any representation or warranty made by any member of the Group, any Network Provider or any other party to any Finance Documents or any document relating to, or contemplated by, the Finance Documents; or

(e)the accuracy of any opinions or certificates delivered, or to be delivered, under or in connection with the Finance Documents or any document relating to or contemplated by the Finance Documents,

and if any member of the Group or any other person (with the exception of the Receivables Purchaser) fails to perform any of its respective obligations under the Finance Documents or any document relating to or contemplated by the Finance Documents, the Participants shall have no recourse whatsoever to the Receivables Purchaser in respect of such failure, save in accordance with clause 29.8 (Standard of care).

29.8Standard of care

(a)The Receivables Purchaser covenants that it will administer the Finance Documents with the same degree of care as it exercises with regard to similar transactions which it administers on its own account, but the Receivables Purchaser shall have and shall be deemed to have no other duties to the Participants under the Participation (save as expressly stated in this Deed) and whether in relation to the administration of the Finance Documents or otherwise.

(b)Save in accordance with clause 29.8(a), neither the Receivables Purchaser nor any of its officers, employees or agents shall have any liability to a Participant as a result of failing or omitting to take any action in relation to the Finance Documents or any related document or for any error of judgment by the Receivables Purchaser in connection with, or in connection with any matter or thing contemplated by, the Finance Documents or any related document, save in the case of wilful default or gross negligence on the part of the Receivables Purchaser or any of its officers, employees or agents.

(c)The Receivables Purchaser shall be entitled to rely on any communication, instrument or document reasonably believed by it to be genuine and correct and tohave been signed or sent by the proper persons and shall be entitled to rely

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as to legal matters on written opinions of legal advisors selected or approved by the Receivables Purchaser.

29.9Ineffectiveness

Subject to clause 29.8 (Standard of care), the Receivables Purchaser shall not be liable to any Participant for any damage or loss arising from any want of due formality in the constitution of any assignment, trust or the security expressed to be constituted by the Finance Documents resulting in the invalidity, illegality, ineffectiveness, inadequacy or unenforceability of such documentation.

29.10Nature of Participation obligations

(a)Each Participant acknowledges that its Participation is at its sole risk and responsibility and, subject to clause 29.8 (Standard of care), will have no right of recourse against the Receivables Purchaser for any loss it incurs as a result of any default by any member of the Group or any Network Provider or any other person.

(b)The Receivables Purchaser and the Participants agree that, subject to clause 29.8 (Standard of care), the Participants shall have no recourse or claim on the Receivables Purchaser for any loss, cost, expense or liability sustained or incurred by the Participants as a result of or in connection with the Participation, not arising out of any negligence or wilful default of the Receivables Purchaser’s obligations under the Participation.

29.11Absolute obligations

The obligation of each Participant to make payment of Settlement Amounts shall, subject only to the terms and conditions of this Deed, be absolute and unconditional, and shall not be affected by:

(a)the financial condition of any member of the Group or Network Provider; or

(b)the unenforceability or invalidity of any obligation of (i) any member of the Group under any of the Finance Documents (or any other document or security) or (ii) any Network Provider; or

(c)any other act, matter or thing which, but for this provision, might affect such obligation.

29.12Authorisation to act

(a)The Receivables Purchaser is not authorised to act on behalf of a Participant in anylegal or arbitration proceedings relating to any Finance Documents, without first obtaining that Participant’s prior written consent.

(b)Clause 29.12(a) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under any Finance Documents or enforcement of any Finance Documents.

29.13Binding Amendments

(a)Each Participant will bear the risk of any Binding Amendment in relation to the relevant Participation.

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(b)In respect of any Participation, the Receivables Purchaser shall not be obliged to make any payment to the relevant Participant under that Participation in respect of:

(i)any sum which is paid into a blocked account (other than a Trust Account) oris paid in a non-transferable or non-convertible currency until that impediment is removed;

(ii)any sum which is required to be used for a specific purpose pursuant to a Binding Amendment; or

(iii)any financial or other instrument issued to the Receivables Purchaser, in either case in satisfaction or purported satisfaction of any obligation of a member of the Group to make any payment under the Finance Documents (which payment, if made to the Receivables Purchaser in the manner provided for in the Finance Documents applicable to that Participation, would have given rise to a liability on the part of the Receivables Purchaser to make a corresponding payment to the Participant under that Participation) unless and until such instrument is disposed of, redeemed or otherwise realised for cash and where the proceeds of realisation are not themselves subject to this clause 29.13(b).

(c)In respect of each Participation, the Receivables Purchaser will endeavour (at theexpense of the relevant Participant) to give the relevant Participant the equivalent pro rata benefit of any sum (including, without limitation, any amounts received in cash) to the extent that the Receivables Purchaser is able to do so and to the extent that the same is, in the Receivables Purchaser reasonable opinion, attributable to a Participant’s Participation.

29.14Review meetings

(a)The Receivables Purchaser shall, on such dates as are agreed between the Finance Parties (which shall, for the period of 12 Months beginning on the Commencement Date, be no less frequent than once in every six Months), present to the Participants at the offices of the Receivables Purchaser in relation to the operation of the Facility and any other material issues resulting from the Finance Documents since the Commencement Date and following the first review meeting after the Commencement Date, the immediately preceding review meeting.

(b)The Receivables Purchaser shall use reasonable endeavours to procure that a suitable representative of the Group attends any review meeting referred to in clause 29.14(a) and reports to the Participants on the business, undertaking and general financial condition of each of the Obligors.

29.15Audit

A representative of each Participant may accompany the representatives of the Co-Arrangers during quarterly Audits of the Opcos and the SPV undertaken by the Co-Arrangers.

29.16Further assurance

Each Finance Party shall, at its own expense, promptly do all acts or execute all such documents as any other Finance Party may reasonably request to give effect to the Participation.

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29.17Miscellaneous

(a)All express representations made by the Finance Party pursuant to this Deed shall survive execution and delivery of the Participation.

(b)Nothing in this Deed shall constitute a partnership, joint venture or other form of association between the Finance Parties.

30.CONDUCT OF BUSINESS BY THE FINANCE PARTIES

30.1Financial movements

Not later than 10.30 am on each Settlement Date (or as soon as practicable thereafter if delivery within such timeframe is not possible due to non-compliance by a member of the Group with any of its obligations), the Receivables Purchaser will notify each Participant in writing of the details of the financial movements under the Facility in the period between the last such notice and close of business on the immediately preceding Business Day, including, without limitation, the Settlement Amounts (if any) payable by a Finance Party pursuant to clause 31.2 (Settlement Amount) or clause 31.3(b).

30.2Inspection

The records and accounts maintained by the Receivables Purchaser in relation to the Facility and the Participation shall be available for inspection by the Participants at all reasonable times and shall, in the absence of manifest error or error of law, be conclusive and binding upon the Participants.

30.3Consent

Any consent requested by the Receivables Purchaser of any Participant to alter any of the timings for delivery of information pursuant to clause 29.14 (Review meetings) shall not be unreasonably withheld or delayed by such Participant.

30.4Non-disclosure

Each Finance Party acknowledges that each other Finance Party may possess material information not known to it. Each agrees that such other Finance Party shall have no liability with respect to the non-disclosure of any such information except to the extent:

(a)of any breach of any disclosure obligations set out in this Deed;

(b)that such information evidences a Material Adverse Effect; or

(c)that such information renders inaccurate an express representation made pursuant to this Deed by the Finance Party possessing such information.

31.SHARING AMONG THE FINANCE PARTIES

31.1Receipts

The Receivables Purchaser is entitled to receive, recover and retain the proceeds of all Debts together with all Discount, interest and other money payable under the Finance Documents in relation to each Utilisation.

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31.2Settlement Amount

(a)Subject to clause 31.2(b), on each Settlement Date, each Participant shall pay to the Receivables Purchaser any Settlement Amount which is then due to the Receivables Purchaser.

(b)Save in relation to the Participation Date or the Transfer Date, a Participant shall only be obliged to comply with its obligations under clause 31.2(a), if the Receivables Purchaser has previously complied with its payment obligations under clause 31.3(b).

(c)Each payment of the Settlement Amount shall be made by CHAPS.

31.3Payments

Subject to compliance by the Participant with its payment obligations under clause 31.2(a) and subject to compliance by the Participant with the terms of this Deed, the Receivables Purchaser shall pay to the Participant without material delay:

(a)any unpaid balance of a Closing Fee which has been debited to the Payment Account in accordance with clause 7.4 (Other);

(b)on each Settlement Date, any Settlement Amount which is then due to the Participant;

(c)save in relation to the First Month, on the first Business Day of each calendar month after the Participation Date, the Participant’s Share of Discount paid by the SPV in the immediately preceding calendar month;

(d)in relation to the First Month, on the first Business Day of the following calendar month, the Participant’s Share of Discount paid by the SPV in the proportion of the calendar month constituting the First Month;

(e)such sum as is produced by applying the Participant’s Participation Percentage to a sum equal to any Non-Utilisation Fee paid in accordance with clause 11.3 (Non-Utilisation Fee);

(f)such sum as is produced by applying the Participant’s Participation Percentage to a sum equal to any default interest payable under clause 23.1(f); and

(g)within three Business Days of receipt by the Receivables Purchaser, a sum equal to the Participant’s Participation Percentage of any Breakage Costs.

31.4De minimis

Save for any final settlement payment due from the Receivables Purchaser to an Exiting Participant in accordance with clause 31.6 (Payments to Exiting Participant), no payment of any Settlement Amount shall be made by a Finance Party unless and until such payment is greater than or equal to £10,000.

31.5Closing Fees

The Original Participants confirm that the Closing Fee is based upon a programme of work that has been carried out by the Original Participants as prospective participants, and

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not as lender, and that the programme included the management time and company resource involved in assessing the suitability of the Obligors for the Facility to be provided by a syndicate of funders, of which the Original Participants are all part and involved meetings, reviews, due diligence and financial analysis as such required to participate in the funding pursuant to this Deed.

31.6Payments to Exiting Participant

Where the Participation Percentage of any Participant has been reduced to zero following the operation of either clause 41.7 (Replacement of Participant) or clause 10 (Illegality), the Receivables Purchaser shall, following the consequent reduction of the Facility Limit, make all payments which it receives from an Obligor or from a Network Provider in respect of Debts and Early Payments (and which would otherwise result in a payment to each of the Participants in accordance with clause 31.3(b)) to the Exiting Participant until the amount of the Participation of such Exiting Participant has been repaid in full.

31.7Non-attributable sums

If any sum which is received or recovered by the Receivables Purchaser under the Finance Documents is not attributable to any particular amount due under the Finance Documents, as the Receivables Purchaser may determine, that sum will be applied (after payment of any expenses incurred in its collection) by the Receivables Purchaser towards such obligations of the relevant member of the Group as the Receivables Purchaser may determine.

32.PAYMENT ADMINISTRATION

32.1Place

All payments or deposits by a Finance Party to, or with, any other Finance Party under any Participation shall be made to the relevant Receiving Account of that other Finance Party. Each Finance Party may designate a different account as its Receiving Account for payment by giving the other not less than five Business Days’ notice before the due date for payment.

32.2Funds and currency

(a)Subject to clauses 32.2(b) and 32.2(d) below, payments under a Participation shall be made in the currency in which the amount is denominated for value on the due date at such times and in such funds as are customary at the time for settlement of transactions in that currency in the place of payment.

(b)All payments from the Receivables Purchaser to a Participant:

(i)of the Settlement Amount shall be made in Sterling.

(ii)of any sum referred to in this Deed other than the Settlement Amount shall be made in Sterling.

(c)All payments from the Receivables Purchaser to an Exiting Participant pursuant to clause 31.6 (Payments to Exiting Participant) shall be made in Sterling.

(d)Each Participant shall make each payment required under clause 31.2 (Settlement Amount) in Sterling.

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(e)If any sum (an “Amount”) due from one Finance Party to another Finance Party under this Deed has to be converted from the currency in which that Amount is denominated to Sterling:

(i)to calculate the Settlement Amount; or

(ii)so that the relevant Finance Party can make payment in the currency in which that Finance Party is required to make payment in accordance with the terms of this Deed,

the Receivables Purchaser shall convert the Amount to Sterling at the Spot Rate of Exchange on the date on which the Amount is debited to a Payment Account or, if the Amount is not debited to a Payment Account, on or around the date on which payment of the Amount is due.

32.3Other payments

(a)All payments relating to costs, losses or expenses in relation to a Participation shall be made in Sterling.

(b)All payments due from one Finance Party to another Finance Party under this Deed, and which are not specifically dealt with in any clause of this Deed other than this clause 32.3(b), shall be payable in Sterling.

32.4Set-off

(a)Subject to clause 32.4(b), all payments by a Finance Party under this Deed shall be made without set-off or counterclaim.

(b)The Receivables Purchaser may, but shall not be bound to, apply any sum at any time due from it to a Participant under this Deed in or towards satisfaction of any amount then due from such Participant to the Receivables Purchaser under this Deed, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Receivables Purchaser may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

(c)Where the Receivables Purchaser exercises any right of set-off against an Obligor, it shall have been treated as having received a payment from an Obligor for the purpose of calculating the Settlement Amount.

32.5Withholding

(a)All payments by the Receivables Purchaser under each Participation shall be made net of any deduction or withholding required to be made from such payments by any law, regulation or practice. If any such deduction or withholding is made, the relevant Participant shall bear the risk of such deduction or withholding and shall be deemed to have received the amount that it would have received if such deduction or withholding had not been made.

(b)All payments by a Participant under a Participation shall be made free and clear ofany deduction or withholding unless such deduction or withholding is required to be made by any law, regulation or practice. If any such deduction or withholding is made or is required to be made the relevant Participant shall increase the amount to

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be paid to the Receivables Purchaser to ensure that the Receivables Purchaser receives and retains a sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made.

(c)The Receivables Purchaser and each Participant shall use their reasonableendeavours to avoid any obligation to make any deduction or withholding as is referred to in clauses 32.5(a) and 32.5(b).

32.6Failure to remit

(a)No Finance Party shall be responsible for any loss or liability arising out of its failure, or the failure of its relevant branch, owing to causes outside its control (such as, but not limited to, the imposition of foreign exchange restrictions) to remit to any other Finance Party any amount due to that other Finance Party under the Participation.

(b)Except as otherwise provided in clause 32.7 (Default interest), the Receivables Purchaser shall not be liable to remit to the Participant any amount greater than its Participation Percentage of any amount it receives from any Obligor or Network Provider in respect of any Drawn Commitment.

(c)If a Finance Party fails to make a payment for the reasons set out in clause 32.6(a), interest shall accrue (before as well as after judgment) on the unpaid balance of the sum from day to day at the rate which is being offered by Barclays Bank PLC in the relevant interbank market for overnight deposits in the currency (or, in the event of the relevant interbank market rate not being available due to unforeseen reasons or market dislocation, such other published rate as determined by Barclays Bank PLC and agreed by the relevant Participant) of and for an amount equal to the unpaid balance. Interest shall be payable at the end of each day and, for the purposes of this clause 32.6(c), shall constitute part of the unpaid balance to the extent it is not paid.

32.7Default interest

Save in relation to clause 32.6(a), if a Finance Party (the “payer”) fails to pay any amount payable by it under this Deed to any other Finance Party (the “payee”) on its due date, interest shall accrue (before and after judgment) on the overdue amount from the due date up to the date of actual payment from day to day at a rate which is two per cent per annum over the rate (as determined by the payee) which is being offered by leading banks in the relevant interbank market for overnight deposits in the currency of and for an amount equal to the overdue amount. Interest accruing under this clause 32.7 shall be payable by the payer at the end of each day and, for the purposes of this clause 32.7, shall constitute part of the overdue amount to the extent it is not so paid.

32.8Confirmation of receipts

(a)Where the obligation of the Receivables Purchaser to make a payment to a Participant under a Participation arises as a result of its having received an amount, the Receivables Purchaser is not obliged to make that payment to the Participant until the Receivables Purchaser has established that it has actually received the appropriate amount.

(b)If, in respect of any Participation, the Receivables Purchaser makes a payment to a Participant and it proves to be the case that the Receivable Purchaser had not actually received all or part of the amount on which that payment was conditional,

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the Participant shall forthwith on demand of the Receivables Purchaser refund the amount paid to the Participant or the relevant portion of that amount together with interest on that amount from the date of payment to the date of refund, calculated at a rate reasonably determined by the Receivables Purchaser to reflect its costs of funds.

32.9Refunds

(a)If, in respect of any Participation, the Receivables Purchaser applies any amount in or towards satisfaction of a member of the Group’s obligations under the Finance Documents applicable to such Participation and the Receivables Purchaser is, as a result of the application or any payment to the Receivables Purchaser giving rise to the application, obliged by any law, rule or regulation to make any payment to any person, then the relevant Participant shall, upon demand by the Receivables Purchaser, repay to the Receivables Purchaser a corresponding portion of any amount paid to the Participant as a result of the application.

(b)If, in respect of any Participation, under any pro rata sharing, loss-sharing or similar clause in the Finance Documents applicable to such Participation the Receivables Purchaser is obliged to share any receipts or recoveries by the Receivables Purchaser, then the Receivables Purchaser shall be deemed for the purposes of such Participation not to have received any sum from a member of the Group to the extent of that sharing. Any Discount or interest acquired shall be deemed to be relevant for the purpose of calculating the Settlement Amount.

33.PARTICIPATION EXPENSES

33.1Definitions

For the purposes of this clause 33:

“Relevant Costs and Expenses” means, in respect of any Participation, any costs or expenses which the Receivables Purchaser incurs in connection with the Finance Documents applicable to such Participation (other than any costs or expenses in connection with the preparation and negotiation of such Finance Documents and other than the Receivables Purchaser’s normal administrative costs and expenses prior to the occurrence of an Event of Default) which are not recovered from the relevant member of the Group on demand.

33.2Expenses

(a)In respect of each Participation, subject to clause 33.2(c), each Participant shall forthwith on demand pay to the Receivables Purchaser an amount equal to the Participant’s Participation Percentage of the Relevant Costs and Expenses.

(b)In respect of each Participation, the Receivables Purchaser shall pay to the relevant Participant its Participation Percentage of any amounts subsequently recovered by the Receivables Purchaser in respect of any Relevant Costs and Expenses.

(c)In respect of each Participation, the Receivables Purchaser shall, as soon as practicable after a request by the relevant Participant, provide to the Participant reasonably detailed information regarding any Relevant Costs and Expenses incurred by the Receivables Purchaser.

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(d)The Participants shall not be obliged to reimburse the Receivables Purchaser for the cost and expense of performing its various administrative functions for the Group in relation to the Facility.

(e)The Receivables Purchaser shall pay to each Participant its Participation Percentage of any amounts subsequently recovered by the Receivables Purchaser from any member of the Group in respect of costs and expenses.

34.ADMINISTRATION

34.1Business Days

Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

34.2Currency of account

(a)Subject to clauses 34.2(b) to 34.2(e), Sterling is the currency of account and payment for any sum due from a member of the Group under any Finance Document.

(b)A repayment of an Early Payment or payment of an Unpaid Sum shall be made in the currency in which that Early Payment or Unpaid Sum is denominated on its due date.

(c)Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

(d)Each payment in respect of costs or expenses shall be made in the currency in which the costs or expenses are incurred.

(e)Any amount expressed to be payable in a currency other than Sterling shall be paid in that other currency.

34.3Disruption to payment systems

If either the Receivables Purchaser determines (in its discretion) that a Disruption Event has occurred or the Receivables Purchaser is notified by CPW that a Disruption Event has occurred:

(a)the Receivables Purchaser may, and shall if requested to do so by CPW, consult with CPW with a view to agreeing with CPW such changes to the operation or administration of the Facility as the Receivables Purchaser may deem necessary in the circumstances;

(b)the Receivables Purchaser shall not be obliged to consult with CPW in relation to any changes mentioned in clause 34.3(a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

(c)the Receivables Purchaser may consult with the Participants in relation to any changes mentioned in clause 34.3(a) but shall not be obligated to do so if, in its opinion, it is not practicable to do so in the circumstances;

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(d)any such changes agreed upon by the Receivables Purchaser and CPW shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents; and

(e)the Receivables Purchaser shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Receivables Purchaser) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause 34.3.

34.4Reasonableness

The terms of this Deed are agreed by each member of the Group to be reasonable.

34.5No partnership

This Deed shall not constitute a partnership between the Receivables Purchaser and a member of the Group (or any of them).

35.SET-OFF

35.1Set-off

(a)The Receivables Purchaser may set off any matured obligation due from any member of the Group under the Finance Documents against any matured obligation owed by the Receivables Purchaser to that member of the Group, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Receivables Purchaser may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

(b)All payments made or to be made by a member of the Group to the Receivables Purchaser under this Deed shall be made without any abatement, allowance, claim, counterclaim, debit, deduction, discount, retention, set-off, or withholding or any other reduction.

(c)Without prejudice to clause 35.1(a), if a member of the Group is compelled to reduce any amount payable to the Receivables Purchaser, or any reduction is made, that member of the Group shall pay additional amounts to ensure receipt by the Receivables Purchaser of the full amount the Receivables Purchaser would have received but for the reduction.

35.2Demand

Unless otherwise stated in this Deed, the Receivables Purchaser need not make any demand for any sum due from a member of the Group to the Receivables Purchaser before exercising the Receivables Purchaser’s rights under clause 35.1.

35.3Participants

The Receivables Purchaser may, but shall not be bound to, apply any sum at any time due from it to a Participant under this Deed in or towards satisfaction of any amount then due from such Participant to the Receivables Purchaser under this Deed, and for this purpose the

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Receivables Purchaser may purchase with such sum such amounts of such other currencies as may be necessary to enable the Receivables Purchaser to make such application.

36.NOTICES

36.1Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

36.2Addresses

The address, fax number and email address(es) number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)in the case of any member of the Group, that identified with its name below or notified in writing to the Receivables Purchaser on or prior to the date on which it becomes a Party;

(b)in the case of the Receivables Purchaser, that identified with its name below; and

(c)in the case of Participant, that identified with its name below or given in a Transfer Certificate,

or any substitute address, fax number, email address or department or officer as the Party may notify to the Receivables Purchaser (or the Receivables Purchaser may notify to the other Parties, if a change is made by the Receivables Purchaser) by not less than five Business Days’ notice.

36.3Delivery

(a)Subject to clause 36.3(b), any communication or document made or delivered byone person to another under or in connection with the Finance Documents will only be effective:

(i)if by way of fax, when received in legible form; or

(ii)if by email, when received in legible form; or

(iii)if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

and, if a particular department or officer is specified as part of its address details provided under clause 36.2 (Addresses), if addressed to that department or officer.

(b)Any communication or document to be made or delivered to the ReceivablesPurchaser will be effective only when actually received by the Receivables Purchaser and then only if it is expressly marked for the attention of the department or officer identified with the Receivables Purchaser’s signature below (or any substitute department or officer as the Receivables Purchaser shall specify for this purpose).

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(c)Any communication or document made or delivered to CPW in accordance with thisclause 36.3 will be deemed to have been made or delivered to each member of the Group.

36.4Notification of address and fax number

Promptly upon receipt of notification of an address, email address or fax number or change of address, email address or fax number pursuant to clause 36.2 (Addresses) or changing its own address, email address or fax number, the Receivables Purchaser shall notify the other Parties.

36.5Obligor’s agent

The SPV and each Opco, other than CPW, by its execution of this Deed, irrevocably appoints CPW to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises CPW on its behalf to:

(a)supply all information concerning itself contemplated by the Finance Documents to a Finance Party;

(b)give all notices and instructions contemplated by the Finance Documents to a Finance Party,

in each case, without further reference to or the consent of that member of the Group and in each case the member of the Group shall be bound as though the member of the Group itself supplied had given the notices and instructions.

36.6English language

(a)Any notice given under or in connection with any Finance Document must be inEnglish.

(b)All other documents provided under or in connection with any Finance Documentmust be:

(i)in English; or

(ii)if not in English, and if so required by the Receivables Purchaser, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

36.7Authorisation to remit information by internet communication and facsimile

The Receivables Purchaser authorises each Obligor to send to the Receivables Purchaser information (including confidential information) by internet communication to include email and facsimile, and in giving such authority each Obligor agrees that it shall not hold the Receivables Purchaser responsible for any Loss that the Obligors or any member of the Group may sustain, suffer or incur as a consequence of any such communication:

(a)proving not to have been sent by an Obligor;

(b)proving not to have been authorised by an Obligor;

(c)proving to contain information not authorized by an Obligor;

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(d)proving to have been intercepted, revised, altered or in any manner changed by a third party from the original communication sent by an Obligor;

(e)containing any errors or omissions;

(f)being corrupted in transmission; or

(g)being incomplete in any way.

36.8Authorisation to remit information by internet communication and facsimile

Each of the Obligors authorises the Receivables Purchaser to send to each of the Obligors information (including confidential information) by internet communication to include email and facsimile, and in giving such authority each Obligor agrees that it shall not hold the Receivables Purchaser responsible for any Loss that any Obligor or member of the Group may sustain, suffer or incur as a consequence of any such internet communication or facsimile:

(a)proving not to have been sent by the Receivables Purchaser;

(b)proving not to have been authorised by the Receivables Purchaser;

(c)proving to contain information not authorised by the Receivables Purchaser;

(d)proving to have been intercepted, revised, altered or in any manner changed by a third party from the original communication sent by the Receivables Purchaser;

(e)containing any errors or omissions;

(f)being corrupted in transmission; or

(g)being incomplete in any way.

36.9Internet communications

Each Obligor acknowledges that internet communications are not secure and may be intercepted by third parties, and, as such, the Receivables Purchaser does not accept any responsibility, legal or otherwise, for any interception of internet communications or interference by third parties.

36.10Reliance

The Receivables Purchaser shall be entitled to rely on any act done and on any document signed and any Notification Schedule received, and on any written communication by any person purportedly doing, signing or communicating on behalf of an Obligor, notwithstanding any defect in or absence of any authority in such person.

37.CONFIDENTIALITY

37.1Duties to Relevant Third Parties

(a)If any confidentiality obligation owed by a member of the Group to a person who isnot a member of the Group (“Relevant Third Party”) would prohibit the disclosure by that member of the Group of any data, ledger, materials, information

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or document which that member of the Group is required to disclose to a Finance Party under the Finance Documents, CPW shall use all commercially reasonable endeavours to procure that such Relevant Third Party provides the consent necessary to permit such disclosure.

(b)Provided that CPW is in compliance with clause 37.1 (Duties to Relevant ThirdParties), no member of the Group shall be obliged to disclose to a Finance Party any data, ledger, materials, information or document required to be disclosed under the Finance Documents to the extent it is bound by applicable confidentiality obligations to a Relevant Third Party.

37.2Disclosure of information

Subject to clause 37.3 (Confidentiality):

(a)any Participant may disclose any information about any member of the Group andany Finance Documents to any of its Affiliates and any other person:

(i)to (or through) whom that Participant assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Deed;

(ii)with (or through) whom that Participant enters into (or may potentially enter into) any sub-participation and/or risk participation in relation to, or any other transaction under which payments are to be made by reference to, the Finance Documents or any member of the Group; or

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

(b)the Receivables Purchaser and any Participant may disclose to a rating agency ortheir professional advisors or (in each case subject to the prior written consent of CPW which is not to be unreasonably withheld or delayed) to any other persons any information about any member of the Group and the Finance Documents as the Receivables Purchaser and that Participant shall consider appropriate if, in relation to clauses 37.2(a)(i) and 37.2(a)(ii), the person to whom the information is to be given has entered into a Confidentiality Undertaking. Any Confidentiality Undertaking signed by the Receivables Purchaser and that Participant shall supersede any prior confidentiality undertaking signed by such Finance Party for the benefit of any member of the Group.

37.3Confidentiality

Each Participant undertakes to keep confidential all information it receives from the Receivables Purchaser under each Participation or otherwise to the extent required by the Finance Documents applicable to such Participation. If there is any inconsistency between this clause 37.3 and any confidentiality agreement entered into by the Finance Party for any of them), the terms of that confidentiality agreement shall prevail.

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38.CALCULATIONS AND CERTIFICATES

38.1Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Receivables Purchaser are prima facie evidence of the matters to which they relate.

38.2Certificates and determinations

Any certification or determination by the Receivables Purchaser of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

38.3Determination

In arriving at the amount payable to the Receivables Purchaser according to any certificate referred to at clause 38.2 (Certificates and determinations), the Receivables Purchaser shall be entitled to take into account all Losses suffered or properly incurred by the Receivables Purchaser provided that a member of the Group is obliged to reimburse the Receivables Purchaser for such Losses under a Finance Document.

38.4Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days.

39.PARTIAL INVALIDITY

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

40.REMEDIES AND WAIVERS

(a)No failure to exercise, nor any delay in exercising, on the part of any Finance Party,any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Deed are cumulative, may be exercised as often as necessary and are not exclusive of any rights or remedies provided by law.

b)No Finance Party’s rights and benefits under the Finance Documents shall beaffected by the granting of any time or indulgence to any person (including a member of the Group or a Network Provider).

41.AMENDMENTS AND WAIVERS

41.1Variation

Any variation of this Deed shall be valid if in writing and signed by the Receivables Purchaser and by CPW.

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41.2Instructions to the Receivables Purchaser

Where required pursuant to this Deed and unless otherwise specified in this Deed, the Receivables Purchaser shall without prejudice to clause 29.8 (Standard of care):

(a)act or, as the case may be, refrain from acting, in accordance with any instructions given to it by the Majority Finance Parties or, as the case may be, all the Participants; and

(b)not be liable for any act or omission if it takes or, as the case may be, refrains from taking any action in accordance with an instruction of the Majority Finance Parties or all the Participants in accordance with the provisions of this Deed.

41.3Consent

(a)Where this Deed requires the consent of Majority Finance Parties to be obtained, any instructions given by the Majority Finance Parties will be binding on all the Finance Parties.

(b)Notwithstanding anything expressed or implied to the contrary in this Deed, the Receivables Purchaser shall be under no obligation to the Participants to take any action or refrain from taking any action pursuant to any instructions given by the Majority Finance Parties that would:

(i)violate any Finance Documents;

(ii)expose the Receivables Purchaser to any, or any greater, liability, obligation or exposure;

(iii)expose the Receivables Purchaser to any unreasonable administrative burden; or

(iv)change the regulatory treatment of any Finance Documents and/or any Early Payments.

41.4Authorisation

(a)Subject to clauses 29.8 (Standard of care) and 41.5 (Exceptions), the Receivables Purchaser may effect any amendment or waiver permitted by this clause 41.4.

(b)Each of the Participants hereby authorises the Receivables Purchaser, in its sole discretion and without obtaining the prior consent of any Participant, to:

(i)exercise or refrain from exercising any or all of the rights, powers, authoritiesand discretions specifically given to the Receivables Purchaser under or in connection with the Finance Documents, together with any other incidental rights powers, authorities and discretions;

(ii)agree to waive any individual obligation of any member of the Group under the Finance Documents; and

(iii)agree to any amendment or modification of any terms of the FinanceDocuments,

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provided that, in taking any such action, or refraining from doing so, the Receivables Purchaser shall have regard to all relevant circumstances, including the commercial interests of the Participants in their capacity as Participants under this Deed.

(c)The Receivables Purchaser shall, with the prior written consent of, or if so directedby, the Majority Finance Parties:

(i)exercise its rights to terminate this Deed under clause 23.1(m) (Termination); and/or

(ii)terminate the agency of any Opco to collect Debts under clause 8.5 (Variation or cancellation of agency); and/or

(iii)enforce or procure the enforcement of any of the Finance Documents,

provided that the Receivables Purchaser shall be entitled to take any such action without having obtained the prior consent of the Majority Finance Parties in circumstances where, in the reasonable opinion of the Receivables Purchaser, any delay which could arise through the obtaining of such consent may impede the efficiency of or jeopardise in any way any such enforcement or termination, in which event the Receivables Purchaser shall notify each Participant as soon as reasonably practicable after such enforcement or termination.

41.5Exceptions

An amendment, waiver or exercise of a discretion afforded to the Receivables Purchaser that has the effect of changing or which relates to:

(a)an increase in the Facility Limit or the Early Payment Percentage;

(b)a change to any of the definitions of “Approved Debt”, “Unapproved Debt”, “Event of Default” and “Reserves”;

(c)any change to the definition of “Majority Finance Parties”;

(d)any change to the Financial Covenants;

(e)any change to the Operational Covenants;

(f)the write-off, or release from any trust, as the case may be, of any of the Debts following their assignment, or purported assignment, to the Receivables Purchaser;

(g)the release of any member of the Group from any of its guarantee obligations under the Finance Documents;

(h)the release of any member of the Group from the security created by the FinanceDocuments to which it is a party;

(i)the postponement of the due date of, or a reduction in the Discount, the Non-Utilisation Fee, default interest or any Breakage Costs;

(j)the grant of any waiver in writing which has the effect of permanently varying any continuing provision of the Finance Documents;

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(k)other than in accordance with the terms of this Deed, an increase in or extension ofany Participation Commitment or Participation Percentage;

(l)a change to any provision which requires the consent of all Participants; or

(m)a change to this clause 41.5,

and, in addition, an amendment, waiver or exercise of a discretion that has the effect of changing clause 22 (Events of Default) shall not be made without the prior consent of all of the Participants.

41.6Collection and enforcement

Without prejudice to clause 41.4(c), each Participant acknowledges that the Receivables Purchaser shall have full control of any collection and enforcement procedures conducted pursuant to the Finance Documents, provided that the Receivables Purchaser complies with clause 29.8 (Standard of care) and consults with each Participant on a regular basis throughout the duration of the collection and/or enforcement process, as the case may be, and promptly provides to each Participant any information which is reasonably requested by such Participant about such process.

41.7Replacement of Participant

(a)If at any time:

(i)any Participant becomes a Non-Consenting Participant (as defined in clause 41.7(c));

(ii)any Participant becomes a Downgraded Participant (as defined in clause 41.7(d)); or

(iii)a member of the Group becomes obliged to repay any amount in accordance with clause 10 (Illegality) or to pay additional amounts pursuant to clause 12.1 (Increased Costs) to the Receivables Purchaser (for the benefit of a Participant) in excess of amounts payable to the other Participants generally,

then the Receivables Purchaser may, on giving 14 Business Days’ prior written notice to the Participants, replace such Participant by requiring such Participant to (and such Participant shall) transfer pursuant to clause 28 (Changes to the Obligors and Network Providers) all (and not part only) of its rights and obligations under this Deed to a Participant or other bank, financial institution, trust, fund or other entity (a “Replacement Participant”) selected by the Receivables Purchaser, and which is acceptable to the other Participants (acting reasonably), which confirms its willingness to assume and does assume all the obligations of the transferring Participant (including the assumption of the transferring Participant’s participations on the same basis as the transferring Participant) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Participant’s participation in the Drawn Commitment and all accrued interest and other amounts payable in relation thereto under the Finance Documents.

(b)The replacement of a Participant pursuant to clause 41.7(a) shall be subject to the following conditions:

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(i)a Non-Consenting Participant or Downgraded Participant shall have no right to replace the Receivables Purchaser;

(ii)the Receivables Purchaser shall have no obligation to find a Replacement Participant and in the event that a Non-Consenting Participant or Downgraded Participant is not replaced in accordance with clause 41.7(a), its Participation Percentage shall be reduced to zero and the Facility Limit shall be reduced by an amount equal to the Participation Commitment of the Non-Consenting Participant or Downgraded Participant;

(iii)in the event of a replacement of a Non-Consenting Participant such replacement must take place no later than 15 Business Days after the date the Non-Consenting Participant notifies the Receivables Purchaser of its failure or refusal to give a consent in relation to, or agree to any waiver or amendment to, the Finance Documents requested by the Receivables Purchaser;

(iv)in no event shall the Participant replaced under this clause 41.7 be required to pay or surrender to such Replacement Participant any of the fees received by such Participant pursuant to this Deed; and

(v)repayment of any participation fee which was paid to the Non-Consenting Participant or Downgraded Participant, in accordance with the following formula:

P x (1-U/M)

where:

Pmeans the participation fee paid to the Non-Consenting Participant orDowngraded Participant on the Relevant Date;

Umeans the number of Months from the Exit Date to the expiry of the Term (including the month in which the Term expires);

Mmeans the number of Months from the Relevant Date to the expiry of the Term;

“Exit Date” means the date on which the Non-Consenting Participant or Downgraded Participant ceases to be a Participant;

“Relevant Date” means the date on which the Non-Consenting Participant or Downgraded Participant became a Participant.

c)In the event that:

(i)the Receivables Purchaser has requested the Participants to give a consent in relation to, or to agree to a waiver or amendment of any provisions of the Finance Documents;

(ii)the consent, waiver or amendment in question requires the approval of all the Participants; and

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(iii)Finance Parties whose Participation Commitments and/or the ReceivablesPurchaser’s Participation Limit aggregate more than 80 per cent of the Commitment (or, if the Commitment has been reduced to zero, aggregated more than 80 per cent of the Commitment prior to that reduction) have consented to such waver or amendment,

then any Participant which does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Participant”.

(d)In the event that the Participant (or its Holding Company, if its Holding Company is a public limited company) has a rating for its long-term unsecured and non-credit enhanced obligations of:

(i)BB or lower by Standard & Poor’s Rating Services; or

(ii)Ba or lower by Moody’s Investors Service Limited; or

(iii)a comparable rating from an internationally recognised credit rating agency,

that Participant shall be deemed a “Downgraded Participant”.

41.8Excluded Participant

If any Participant fails to respond to a request for a consent, waiver or amendment of or in relation to any of the terms of any Finance Documents or other vote of Participants under the terms of this Deed within 15 Business Days of that request being made (unless the Receivables Purchaser agrees to a longer time period in relation to any request) its Participation Commitment shall not be included for the purpose of ascertaining whether any relevant percentage of the Commitment and/or Participations has been obtained to approve that request.

42.SECURITY AGENT

The provisions of schedule 14 (Security Agent Provisions) shall apply in respect of the appointment, powers and duties of the Security Agent.

43.AVOIDANCE OF PAYMENTS

The right of the Receivables Purchaser to payment of any sums due under this Deed or to enforce the terms of this Deed shall not be affected by any payment or any act or thing which is avoided or adjusted under the laws relating to bankruptcy or insolvency or under part VI of the Insolvency Act 1986. Any release or discharge given or settlement made by the Receivables Purchaser relying on any such payment, act or thing shall be void and of no effect.

44.DATA PROTECTION

The warranties and representations in this clause 44 are made by each Obligor to the Receivables Purchaser on the Commencement Date, and for so long as any Early Payments or facilities are outstanding or available under this Deed.

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44.1Compliance with the DPA

Subject to clause 44.2 (Information), the Obligor has duly complied with all relevant requirements of the DPA including, but not limited to, compliance with the following:

(a)the data protection principles established in the DPA;

(b)requests from Data Subjects for access to data held by it; and

(c)the requirements relating to the notification of Data Controllers.

44.2Information

Notwithstanding any other provision of the Finance Documents, any requirement for an Obligor to provide data, ledgers, materials, information or documents to a Finance Party under the Finance Documents shall be subject to the Obligor’s compliance with the relevant requirements of the DPA.

44.3Information Commissioner

The Obligor has not received a notice or allegation from either the Information Commissioner (as defined in the DPA) or a Data Subject alleging non-compliance with the data protection principles.

44.4Consent of Data Subject

The Obligor has obtained the consent of each Data Subject and provided all fair processing notices as required under the DPA to such Data Subject to enable the Obligor to pass Personal Data about such Data Subject to the Receivables Purchaser where the Receivables Purchaser is entitled to such information under, or otherwise for the purposes contemplated by, this Deed.

45.COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

46.GOVERNING LAW

This Deed and any non-contractual obligations arising out of or in connection with it shall be governed by English law.

47.ENFORCEMENT

(a)The courts of England have exclusive jurisdiction to settle any dispute arising out ofor in connection with this Deed (including a dispute relating to the existence, validity or termination of this Deed or any non-contractual obligation arising out of or in connection with this Deed) (a “Dispute”).

(b)The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

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(c)This clause 47 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

IN WITNESS of which this Deed has been duly executed by the Parties as a deed and has been delivered on the first date specified on page 1 of this Deed.

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SCHEDULE 1

The original parties

Part 1

The SPV

Name	Registered number	Registered address
CPWCO 18 Limited	06852983	1 Portal Way London W3 6RS

Part 2

The Original Obligors

Name	Registered number	Registered address
The Carphone Warehouse Limited	02142673	1 Portal Way London W3 6RS
Mobiles.co.uk Limited	06320783	1 Portal Way London W3 6RS

Part 3

The Original Participants

Name	Original Participation Commitment		Original Participation Percentage		Address
HSBC Invoice Finance (UK) Limited	£	77,770,000	22.22	%	Farncombe Road WorthingWest SussexBN11 2BW
Credit Suisse, London Branch	£	38,920,000	11.12	%	Credit Suisse, London Branch One Cabot SquareLondon El4 4QJ
RBS Invoice Finance Limited	£	77,770,000	22.22	%	7th Floor 280 Bishopsgate London EC2M 4RB
Lloyds TSB Commercial Finance Limited	£	77,770.000	22.22	%	Boston House The Little Green Richmond Surrey TW9 1QE

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Part 4

The Receivables Purchaser

Name	Original Participation Commitment		Original Participation Percentage		Address
Barclays Bank PLC	£	77,770,000	22.22	%	Asset & Sales Finance Division Churchill PlazaChurchill WayBasingstoke

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SCHEDULE 2

Conditions precedent

Part 1

Conditions precedent to be delivered by the original parties

1.             Original parties

(a)A certified copy of the constitutional documents of each Original Obligor and the SPV.

(b)A copy of a resolution of the board of directors of the SPV, each Original Obligor and the Parent:

(i)approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute, deliver and perform the Finance Documents to which it is a party;

(ii)authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf;

(iii)authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party; and

(iv)in the case of the SPV, authorising CPW to act as its agent in connection with the Finance Documents.

(c)A specimen of the signature of each person authorised by the resolution referred to in paragraph 1(b) above in relation to the Finance Documents and related documents.

(d)A copy of a written resolution of the holder of the issued shares in the SPV and each Original Obligor, approving the terms of, and the transactions contemplated by, the Finance Documents to which the SPV and each Original Obligor are party.

(e)A copy of a resolution of the board of directors of each corporate shareholder of the SPV and each Original Obligor approving the terms of the resolution referred to in paragraph 1(b) above.

(f)A certificate of CPW (signed by two directors) confirming that entering into the Finance Documents would not cause any guarantee, security or similar limit binding on any member of the Group to be exceeded.

(g)A certificate of CPW certifying that each copy document relating to it specified in this part 1 of schedule 2 is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Deed.

(h)A certified copy of the register of members of the SPV.

110

2.             Finance documents

(a)This Deed executed by the members of the Group party to this Deed.

(b)The Fee Letters executed by the members of the Group party thereto.

(c)The Parent Side Letter:

(i)acknowledging the terms of the Facility and warranting that it has no right, title or interest in the Debts;

(ii)giving the repeating representations set out therein; and

(iii)giving a negative pledge in relation to the share capital of the Obligors.

(d)At least two originals of the following Transaction Security Document executed by the members of the Group specified below opposite the Transaction Security Document:

Name of Original Obligor	Transaction Security Document
The SPV and the Opcos	Composite Guarantee and Debenture

(e)All share certificates, transfers and stock transfer forms or equivalent duly executed by the relevant member of the Group in blank in relation to the assets subject to or expressed to be subject to the Transaction Security granted by the members of the Group and other documents of title to be provided under the Transaction Security Document specified in paragraph 2(d) above.

(f)The Trust Deed executed by the members of the Group party to that agreement.

(g)The Bank Instruction Letter.

3.Legal opinions

(a)A legal opinion of Freshfields Bruckhaus Deringer LLP, legal advisers to the Group, as to English law and in relation to the Senior Facility Agreements, the JV Agreement and the ability of the Group to enter into the Finance Documents, addressed to the Receivables Purchaser and Original Participants.

(b)A legal opinion of DLA Piper UK LLP, legal advisers to the Receivables Purchaser and Original Participants, as to English law addressed to the Receivables Purchaser and Original Participants.

4.Debt specific conditions

(a)Evidence that no Security Interest affects the Debts.

(b)Evidence that each Original Obligor has issued the Network Providers with revised payment instructions so that the proceeds of Debts are directed to the respective Trust Accounts and no other bank account.

(c)Completion of final verification process.

111

5.Financial information

Notification Schedules in a form agreed by the Original Participants.

6.Operational requirements

(a)Agreed operational arrangements and procedures between the Obligors and the Receivables Purchaser as set out in schedule 11 (Operational undertakings).

(b)The opening, mandating, transfer or conversion of all requisite Trust Accounts in relation to the Original Obligors.

7.Other documents

(a)A certified copy of the ban on assignment waiver from O2, to allow Debts created under each O2 Agreement to be assigned to the SPV.

(b)A certified copy of the ban on assignment waiver from T-Mobile, to allow Debts created under the T-Mobile Contract to be assigned to the SPV.

(c)Original letter of commitment signed by each of the Original Participants.

8.Other evidence - general

(a)A copy of the Intellectual Property Licence granted by CPW Brands to CPW relating to the Licensed IP, evidencing that CPW has a right to use Licensed IP and that right will not automatically terminate on CPW’s Insolvency (with the exception of liquidation) but will be expressly stated to survive CPW’s Insolvency (with the exception of liquidation).

(b)Confirmation of how payment is made for Equipment purchased by the Original Obligors.

(c)Confirmation of the operation of the “hardware account”.

(d)Evidence that the fees, costs and expenses then due from the Original Obligor pursuant to clause 11 (Fees) and clause 15 (Costs and Expenses) have been paid or will be paid by the Commencement Date.

9.Other evidence - O2

(a)Confirmation that O2 has consented to the change of control following the Best Buy JV.

(b)Confirmation of the rights of O2 in relation to the migration of End User betweenbilling platforms.

10.Other evidence - T-Mobile

(a)Confirmation from CPW evidencing compliance with clause 14.4 of the T-Mobile Contract (in relation to the Best Buy JV).

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(b)Values for Returns Cap and Equipment Charge (each as defined in paragraph 5 of schedule 2 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract) at the Commencement Date.

11.Others

(a)Clear winding-up and administration searches in relation to each member of the Group.

(b)In relation to each member of the Group (and directors and shareholders of such persons), the results of the “know your customer” checks and procedures concerning such persons, as required by the Receivables Purchaser’s and each Original Participant’s policies and/or any applicable laws or regulations.

(c)Any other document, assurance or opinion that the Receivables Purchaser may reasonably require.

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Part 2

Conditions precedent required to be delivered by an Additional Obligor

1.An accession letter executed by the Additional Obligor and [·].

2.A copy of a resolution of the board of directors of the Additional Obligor:

(d)approving the terms of, and the transactions contemplated by, the Accession Letter and the other Finance Documents to which it is a party and resolving that it execute, deliver and perform the Accession Letter and any other Finance Document to which it is party;

(e)authorising a specified person or persons to execute the Accession Letter and other Finance Documents to which it is a party on its behalf;

(f)authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party; and

(g)[authorising · to act as its agent in connection with the Finance Documents.]

3.A specimen of the signature of each person authorised by the resolution referred to in paragraph 2 above in relation to the Finance Documents and related documents.

4.A copy of a written resolution of the holder of the issued shares in the Additional Obligor, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Additional Obligor is a party.

5.A copy of a resolution of the board of directors of each corporate shareholder of the Additional Obligor approving the terms of the resolution referred to in paragraph 2 above.

6.A certificate of the Additional Obligor (signed by a director) confirming that entering into the Finance Documents would not cause any guarantee, security or similar limit binding on the Additional Obligor to be exceeded.

7.A certificate of an authorised signatory of the Additional Obligor certifying that each copy document listed in this part 2 of schedule 2 is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of the Accession Letter.

8.If available, the latest audited financial statements of the Additional Obligor.

9.the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales. evidence that a process agent satisfactory to the Receivables Purchaser (if not an Obligor) has accepted its appointment in relation to the proposed Additional Obligor.

10.Any  security documents which are required by the Receivables Purchaser executed by the proposed Additional Obligor.

11.Any notices or documents required to be given or executed under the terms of those security documents.

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12.[An accession memorandum to the Intercreditor Agreement executed by the Additional Obligor.]

12.Such documentary evidence as legal advisers to the Receivables Purchaser may require, that such Additional Obligor has complied with any law in its jurisdiction relating to financial assistance or analogous process.

13.Satisfaction with such of the conditions precedent listed at part 1 of this schedule 2 as the Receivables Purchaser may require.

115

SCHEDULE 3

Form of Notice of Assignment and Trust

[On the letterhead of Barclays Bank PLC]

To:   [ ·DEBTOR]

[ · DATE]

Dear Sirs

[· insert name of Network Agreement between [ ·specify Network Provider] and [ ·specify Opco] dated [ ·] and Receivables Financing Agreement dated [ · ] 2009 between [ ·specify Opco] and Barclays Bank PLC (the “Receivables Purchaser”) (the “Deeds”)

This letter constitutes notice to you that, by virtue of the operation and effect of the Deeds, [·specify] holds all its rights in respect of the following invoices on trust for the Receivables Purchaser.

Network Agreement Self billed invoice
number Date of self billed
invoice Amount Due date

Until further notice from us all payments due from you under the above invoices must be paid to the Receivables Purchaser for its own account [in accordance with your existing payment instructions][as follows: ·Name account details]

Please acknowledge receipt of this notice by signing and returning the attached copies to the Receivables Purchaser at the address above and to [ ·specify] at the address below:

[· set out address].

Yours faithfully

for and on behalf of

BARCLAYS BANK PLC

116

SCHEDULE 4

Forms of Notification Schedule

O2 Availability Calculation

VAT 15%

		Eligible Receivables
Postpay deferred income (2-18) Direct Base
Postpay current month Direct Base
Postpay deferred income (2-18) Managed Base
Postpay current month Managed Base
Post pay related Up Front Fees prior month trade
Pre pay related Up Front Fees
Other Receivables
Other Receivables
Other Receivables
Other Receivables
Total Reserves		—
Cooling off disconnections (14 days)
Amts collected by CPW from customers on managed base
Airtime Contract Protection (ACP) insurance
Connection Process Clawback		—
Post Pay Mobile Broadband Connection Returns		—
Clawbacks for Fixed Home Broadband Connections		—
O2 KPI Failure Penalties
Liquidated Damages
AP Contra		—
Credit Card Cash		—
Other Reserves		—
Other Reserves		—
Total Reserves		—
Eligible Debt		—
Gross of VAT		—
Early Payment %	90%
Availability / Value to be notified to Barclays		—

117

T-Mobile Availability Calculation

VAT 15%

		Eligible Receivables
Postpay deferred income (2-13)
Postpay current month
Post pay related Up Front Fees prior month trade
Pre pay related Up Front Fees
Laptop deferred
Upgrade upfront
Other Receivables
Other Receivables
Other Receivables
Other Receivables
Total Reserves		—
Cooling off disconnections (14 days)
Amts collected by CPW from customers on managed base
Airtime Contract Protection (ACP) Insurance
Connection Process Clawback
Post Pay Mobile Broadband Connection Returns
Clawbacks for Fixed Home Broadband Connections
Liquidated Damages
AP Contra
Other Reserves		—
Other Reserves		—
Other Reserves		—
Other Reserves		—
Total Reserves		—
Eligible Debt		—
Gross of VAT		—
Early Payment %	90%
Availability / Value to be notified to Barclays		—

118

Drawing Notification Schedule

Total Calculated Availability
Less: Current Drawn Balance
Headroom	—
Drawdown Requested
Permissible Drawdown Request	—
Remaining Headroom	—
Drawn Balance c/f	—

119

SCHEDULE 5

Receiving Accounts

BARCLAYS BANK PLC

Re: HSBC Invoice Finance (UK) Limited

Sterling

Account name:	HSBC Invoice Finance (UK) Limited re CPWCO 18 Limited Barclays Bank PLC
Sort code:	20-37-63
Account number:	23867242

Re: Credit Suisse, London Branch

Sterling

Account name:	Credit Suisse, London Branch re CPWCO 18 Limited Barclays Bank PLC
Sort code:	20-37-63
Account number:	63214842

Re: RBS Invoice Finance Limited

Sterling

Account name:	RBS Invoice Finance Ltd re CPWCO 18 Limited Barclays Bank PLC
Sort code:	20-37-63
Account number:	73536440

Re: Lloyds TSB Commercial Finance Limited

Sterling

Account name:	Lloyds TSB Commercial Finance Limited re CPWCO 18 Limited Barclays Bank PLC
Sort code:	20-37-63
Account number:	23710343

120

HSBC INVOICE FINANCE (UK) LIMITED

Sterling

Account name:	The Carphone Warehouse Ltd in trust for HSBC Invoice Finance (UK) Limited
Sort code:	40-02-50
Account number:	01307932

RBS INVOICE FINANCE LIMITED

Sterling

Account name:	The Carphone Warehouse Limited re: RBS Invoice Finance Ltd
Sort code:	60-08-46
Account number:	67692079

CREDIT SUISSE, LONDON BRANCH

Sterling

Account name:	Credit Suisse, London Branch
Sort code:	40-05-15
Account number:	39266769

LLOYDS TSB COMMERCIAL FINANCE LIMITED

Sterling

Account name:	LTSB Commercial Finance LTD
Sort code:	30-15-99
Account number:	0002975

121

SCHEDULE 6

Form of Accession Letter

To:	Barclays Bank PLC, Asset & Sales Finance division, as the Receivables Purchaser
From:	· and ·
Dated	· 200 ·

Dear Sirs

£· receivables financing agreement dated · 2009 (the “RFA”)

We refer to the RFA. This is an Accession Letter. Terms defined in the RFA have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.

1.· agrees to become an Additional Obligor and to be bound by the terms of the RFA, the Intercreditor Agreement and the other Finance Documents as an Additional Obligor pursuant to clause 28.2 (Additional Obligors) of the RFA [and as a · pursuant to clause · of the Intercreditor Agreement.] · is a company duly incorporated under the laws of ·         and is a limited liability company with registered number ·     .

2.·          administrative details are as follows:

Address:	·
Fax no:	·
Attention:	·

3.This Accession Letter and any non-contractual obligations arising out of or in connection with it shall be governed by English law.

IN WITNESS of which this deed has been duly executed by · as a deed and has been delivered on the first date specified on [page 1] of this deed.

· ·

122

SCHEDULE 7

Part 1

Form of Compliance Certificate

To be typed on the headed paper of CPW

To:	Barclays Bank PLC, Asset & Sales Finance division, as the Receivables Purchaser
From:	The Carphone Warehouse Limited
Dated:	· 200 ·

Dear Sirs

£· receivables financing agreement dated · 2009 (the “RFA”)

1.We refer to the RFA. This is a Compliance Certificate.

2.Terms defined in the RFA have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

3.[We confirm that no Default is continuing.]4

Operational Covenants

We confirm that throughout the immediately preceding Management Accounting Period:

(a)Debtor Concentration did not exceed the Debtor Concentration Percentage (if applicable); and

(b)Minimum Revenue Receipt Percentage was not less than:

(i)[ · ] per cent in relation to O2; and

(ii)[ · ] per cent in relation to T-Mobile.

[Financial Covenants

We confirm that:

(a)the ratio of EBITA to Net Interest Expense in respect of the Relevant Period ended on [ · ] was [ · ] to 1;

(b)the ratio of Net Debt to EBITDA in respect of the Relevant Period ended on [ · ] was [ · ] to 1; and

(c)the ratio of EBITA (after adding back Rental and Operating Lease Expenditure) to Net Interest Expense (plus Rental and Operating Lease Expenditure) in respect of the Relevant Period ended on [ · ] was [ · ] to 1.

4 If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

123

4.[EBITDA has been adjusted pursuant to paragraph 2.3 (EBITDA adjustments) of schedule 9 (Financial Covenants) as follows:

[ · ]. ]]2

We have attached to this Compliance Certificate, copies of spreadsheet calculations and/or other appropriate and relevant data evidencing the calculation of (i) the Operational Covenants referred to in this Compliance Letter and (ii) the calculation of the Financial Covenants referred to in this Compliance Letter.

Based on the above confirmation, the Obligors are in compliance with the Operational Covenants and/or Financial Covenants, as at the expiry of the Management Accounting Period referable to the Operational Covenants and/or the Relevant Period referable to the Financial Covenants.

This certificate is given without personal liability.

[ · insert name of Director]	[ · insert name of Finance Director](3)
for and on behalf of	for and on behalf of
[ · Name of Obligor]	[ · Name of Obligor]
[(as agent for and on behalf of the Obligors)]	[(as agent for and on behalf of the Obligors)]

2 To be included when Compliance Certificate is delivered in accordance with clause 17.6(a).

124

Part 2

Form of Auditor confirmation

[We have reviewed the receivables financing agreement and have audited, in accordance with generally accepted accounting standards, the financial statements of CPW for the year ended [ ·       ] and have issued an audited report thereon dated [ ·       ].

On the basis of that review and audit, nothing has come to our attention which would require any modification to the confirmations in paragraph [ ·       ] of the above Compliance Certificate. However, our audit was not undertaken for the purpose of ascertaining compliance with the financial covenants in the receivables financing agreement.

for and on behalf of

[·name of auditors of CPW]5

5 To be included if required by Receivables Purchaser pursuant to paragraph 3 of schedule 9 (Financial Covenants)

125

SCHEDULE 8

Form of Transfer Certificates

Part 1

Participation Transfer Certificate

To:	·	(as the Receivables Purchaser)
From:	·	the Existing Participant(the “Existing Participant”) and ·the New Participant(the Transferee)

Dated:

Receivables financing agreement dated ·          between ·          (the “Deed”)

1.We refer to the Deed. This is a Participation Transfer Certificate. Terms defined in the Deed have the same meaning in this Participation Transfer Certificate unless given a different meaning in this Participation Transfer Certificate.

2.We refer to clause 27.5 (Procedure for transfer of a Participation) of the Deed:

(a)The Existing Participant and the Transferee agree to the Existing Participant transferring to the Transferee by novation all or part of the Existing Participant’s Participation, rights and obligations in accordance with clause 27.5 (Procedure for transfer of a Participation) of the Deed.

(b)The proposed Transfer Date is ·.

3.The Transferee expressly acknowledges the limitations on the Existing Participant’s obligations set out in clause 27.7 (Limitation of responsibility of Participants) of the Deed.

4.The address, fax number and attention details for notices to the Transferee are set out in the schedule.

5.The Receiving Account(s) of the Transferee is/are set out in the schedule.

6.This Participation Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Participation Transfer Certificate.

7.This Participation Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.

IN WITNESSof which this deed has been duly executed by ·  as a deed and has been delivered on the first date specified on [page 1] of this deed.

126

SCHEDULE

Rights and obligations to be transferred and administrative details

[ ·insert relevant details]

Notices to be sent to:

Address: ·

Fax number: ·

Attention: ·

Receiving Account:

Account name: ·

Sort code: ·

Account number: ·

PARTICIPANT

[· Execute by deed]

TRANSFEREE

[ · Execute by deed]

This Participation Transfer Certificate is accepted by the Receivables Purchaser and the Transfer Date is confirmed as ·

RECEIVABLES PURCHASER

[ · Signed by Receivables Purchaser]

127

Part 2

RP Transfer Certificate

From:	·	(as the Receivables Purchaser)
To:	·	the New Participant(the “New Participant”)

Dated:

Receivables financing agreement dated ·between ·(the “Deed”)

We refer to the Deed. This is an RP Transfer Certificate. Terms defined in the Deed have the same meaning in this RP Transfer Certificate unless given a different meaning in this RP Transfer Certificate.

1.We refer to clause 27.6 (Procedure for sub-participation by the Receivables Purchaser):

(a)the Receivables Purchaser grants and the New Participant accepts its Participation in accordance with the terms of this RP Transfer Certificate and the Deed.

(b)The proposed Transfer Date is ·.

2.On the Transfer Date the New Participant’s Participation Commitment will be £ ·.

3.The New Participant expressly acknowledges the limitations on the Receivables Purchaser set out in clause 29.7 (Restriction of liability).

4.The address, fax number and attention details for notices to the New Participant are set out in the schedule.

5.The Receiving Account(s) of the New Participant is/are set out in the schedule.

6.This RP Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this RP Transfer Certificate.

7.This RP Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.

IN WITNESS of which this deed has been duly executed by ·as a deed and has been delivered on the first date specified on [page 1] of this deed.

128

SCHEDULE

Rights and obligations to be transferred and administrative details

[ · insert relevant details]

Notices to be sent to:

Address: ·

Fax number: ·

Attention: ·

Receiving Account:

Account name: ·

Sort code: ·

Account number: ·

NEW PARTICIPANT

[ ·Execute by deed]

This RP Transfer Certificate is accepted by the Receivables Purchaser, the Transfer Date is confirmed as ·  and from the Transfer Date:

1.             the Receivables Purchaser’s Participation Limit will be £ · ,000,000;

2.             the New Participant’s Participation Percentage will be · per cent; and

3.             the Receivables Purchaser’s Participation Percentage will be · per cent.

RECEIVABLES PURCHASER

[ ·Execute by deed]

129

SCHEDULE 9

Financial Covenants

1.Definitions

“Acceptable Bank” means a commercial bank or trust company which has a rating of A or higher by Standard & Poor’s Ratings Group or Fitch Limited or A2 or higher by Moody’s Investors Services, Inc. or a comparable rating from an internationally recognised credit rating agency for its long-term debt obligations.

“Compliance Certificate” means a certificate substantially in the form set out in part I of schedule 7 (Compliance Certificate).

“EBIT” means, in relation to any Relevant Period, the total consolidated operating profit of the Group for that Relevant Period before taking into account:

(a)Net Interest Expense;

(b)Tax;

(c)any share of the profit of any associated company or undertaking, except for dividends received in cash by any member of the Group; and

(d)all extraordinary and exceptional items,

as determined (except as needed to reflect the terms of paragraph 2 of this schedule 9) from the financial statements of the Group and Compliance Certificates delivered under clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate).

“EBITA” means, in relation to any Relevant Period, EBIT for that Relevant Period after adding back all amounts provided for amortisation and write-downs of goodwill and other intangible assets, as determined (except as needed to reflect the terms of paragraph 2 of this schedule 9) from the financial statements of the Group and Compliance Certificates delivered under clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate).

“EBITDA” means, in relation to any Relevant Period, EBIT for that Relevant Period after adding back all amounts provided for depreciation, amortisation and write-downs of goodwill and other intangible assets, as determined (except as needed to reflect the terms of paragraph 2 of this schedule 9) from the financial statements of the Group and Compliance Certificates delivered under clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate).

“Final Maturity Date” means the third anniversary of the date of this Deed;

“Financial Indebtedness” means, without double counting, any indebtedness for or in respect of;

(a)           monies borrowed;

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

130

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

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

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

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

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

(h)shares which are expressed to be redeemable before the Final Maturity Date;

(i)any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution (provided that, for all purposes (other than in relation to clause 22.10 (Cross default), any counter-indemnity obligation relating to the obligations of a member of the Group arising in the ordinary course of its trade for purposes other than to raise finance shall not be included in this paragraph (i)); and

(j)the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above;

“Net Debt” means, as at any particular time, Total Debt as at that time, less:

(a)any cash in hand or on deposit at call with any bank or financial institution incorporated in any OECD country;

(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, the UK or a member state of the European Union with a credit rating of AAA by Standard & Poor’s Ratings Group or Fitch Limited or Aaa by Moody’s Investors Services, Inc. or by an instrumentality or agency of the government of the United States of America, the UK or such member state of the European Union having an equivalent credit rating to the government of the United States of America, the UK or such member state of the European Union respectively;

(d)open market commercial paper, corporate bonds or similar investments:

(i)for which a recognised trading market exists;

(ii)issued in the United States of America, the UK or a member state of the European Union with a credit rating of AAA by Standard & Poor’s Ratings Group or Fitch Limited or Aaa by Moody’s Investors Services, Inc.

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(iii)which mature within one year after the relevant date of calculation or which are repayable at call; and

(iv)which, on the relevant date of calculation, has a:

(A)short term credit rating of either A-1 by Standard & Poor’s Ratings Group, F-1 by Fitch Limited or P-1 by Moody’s Investors Services, Inc. in the case of investments maturing within one year of issue; or

(B)long term credit rating of either A by Standard & Poor’s Ratings Group or Fitch Limited or A2 by Moody’s Investors Services, Inc. in the case of any other investments; or

(e)the aggregate outstanding principal, capital or nominal amount of any Financial Indebtedness under any loans by any member of the Group to the Parent (or to such other person as the Receivables Financier may consent (not to be unreasonably withheld)) under cash-pooling arrangements entered into by such members of the Group in the ordinary course of their banking arrangements; and

(f)the value of any investment in any money market or similar fund which in each case has a credit rating of either AAA by Standard & Poor’s Ratings Group or Fitch Limited or Aaa by Moody’s Investors Services, Inc. provided that:

(i)that investment is repayable at call; or

(ii)(A)          under the terms of that fund, a member of the Group has the right to be repaid the value of that investment on not more than seven days’ notice; and

(B)the maximum amount invested in such funds does not exceed £25,000,000 (or its equivalent in any other currencies) in aggregate at any time,

to the extent that:

(X)the items in paragraphs (a) to (e) above (inclusive) are denominated in any freely convertible and transferable currencies;

(Y)those items are beneficially owned by any member of the Group and are unencumbered by any security (except for any Security Interests securing obligations to the Finance Parties under the Finance Documents); and

(Z)no other person (except as a result of mandatory provisions of law applying to companies generally in the relevant jurisdiction of incorporation) has a prior claim which would at that time rank in priority to a claim by any other unsecured and unsubordinated creditor against those items on an Insolvency of the relevant member of the Group;

“Net Interest Expense”means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges (whether or not paid, payable or capitalised) accrued by the Group in that Relevant Period in respect of Total Debt:

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(a)including the interest element of leasing and hire purchase payments;

(b)including commitment fees, commissions, arrangement fees and guarantee fees; and

(c)including amounts in the nature of interest payable in respect of any shares redeemable before the Final Maturity Date,

after (but without double counting):

(i)adding back the net amount payable (or deducting the net amount receivable) by members of the Group in respect of that Relevant Period under any interest or (so far as they relate to interest) currency hedging arrangements; and

(ii)deducting interest income of the Group in respect of that Relevant Period to the extent freely distributable to a member of the Group in cash,

all as determined (except as needed to reflect the terms of paragraph 2 of this schedule 9) from the financial statements of the Group and Compliance Certificates delivered under clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate);

“Relevant Date” means 31 March or 30 September in any year or the closest Saturday to these dates on which the Group prepares consolidated accounts;

“Relevant Period” means each period of 12 Months ending on a Relevant Date;

“Rental and Operating Lease Expenditure” means, in relation to any Relevant Period, the aggregate amount of all rent and other charges and payments accrued under any lease agreement or arrangement (other than any lease or hire-purchase contract which would, in accordance with UK GAAP, be treated as a finance or capital lease) (whether or not paid, payable or capitalised) accrued by the Group in that Relevant Period, as determined (except as needed to reflect the terms of paragraph 2 of this schedule 9) from the financial statements of the Group and Compliance Certificates delivered under clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate);

“Subsidiary” means a subsidiary within the meaning of section 736 of the Companies Act 1985 and in relation to financial statements of the Group, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985;

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

“Total Debt” means, as at any particular time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on prepayment or redemption) of the Financial Indebtedness of members of the Group owed to persons outside the Group other than any indebtedness referred to in paragraph (g) of the definition of “Financial Indebtedness”, and any guarantee or indemnity in respect of that indebtedness, and without double-counting items referred to in the definition of “Financial Indebtedness”;

For this purpose, any amount outstanding or repayable in a currency other than Sterling shall on that day be taken into account:

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(a)if an audited consolidated balance sheet of the Group has been prepared as at that day, in its Sterling equivalent at the rate of exchange used for the purpose of preparing that balance sheet; and

(b)in any other case, in its Sterling equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with UK GAAP.

“UK GAAP” means generally accepted accounting principles, standards and practices in the United Kingdom;

2.Financial Covenants

2.1Financial condition

CPW shall ensure that:

(a)the ratio of EBITA to Net Interest Expense will not be less than 3 to 1 in respect of any Relevant Period;

(b)the ratio of Net Debt (as at any Relevant Date) to EBITDA (in respect of the Relevant Period ending on that Relevant Date) will not be greater than 3 to 1; and

(c)the ratio of:

(i)EBITA before taking into account Rental and Operating Lease Expenditure; to

(ii)Net Interest Expense plus Rental and Operating Lease Expenditure,

will not be less than 1.2 to 1 in respect of any Relevant Period.

2.2Financial Covenant calculations

(a)EBIT, EBITA, EBITDA, Net Interest Expense, Net Debt, Total Debt, and Rental and Operating Lease Expenditure shall be calculated and interpreted on a consolidated basis in accordance with UK GAAP and shall be expressed in Sterling.

(b)For the avoidance of doubt, interest and any other finance charges accrued by the Group in connection with leasing arrangements of the kind referred to in the definition of Rental and Operating Lease Expenditure in paragraph 1(Definitions) shall be treated as Rental and Operating Lease Expenditure and not as a Net Interest Expense.

2.3EBITDA adjustments

(a)This paragraph 2.3 applies if, and to the extent that, any member of the Group acquires or disposes of any business or Subsidiary after the date of this Deed.

(b)For any Relevant Period ending less than 12 Months after the date on which any such business or Subsidiary is acquired. EBITDA will be calculated on a pro forma basis as if such business or Subsidiary had been acquired by the Group at the beginning of that Relevant Period.

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(c)For any Relevant Period ending less than 12 Months after the date on which any such business or Subsidiary is disposed of, EBITDA will be calculated on a pro forma basis as if such business or Subsidiary had been disposed of by the Group at the beginning of that Relevant Period.

(d)If any adjustment is made to EBITDA for any Relevant Period pursuant to this paragraph 2.3, CPW or the relevant Obligor will set out in the Compliance Certificate for that Relevant Period details of that adjustment.

3.Compliance Certificate

If the Receivables Purchaser has reasonable grounds for doubting the accuracy of the details concerning the Financial Covenants contained in any Compliance Certificate supplied to it pursuant to clause 17.5 (Financial statements) and clause 17.6 (Provision and contents of Compliance Certificate) it will explain those grounds to CPW. If CPW is unable to satisfy the Receivables Purchaser as to the accuracy of that Compliance Certificate within 10 Business Days of the Receivables Purchaser notifying it of its reasonable grounds, the Receivables Purchaser may require that CPW promptly delivers to it a confirmation signed by CPW’s Auditors substantially in the form of part 2 of schedule 7 (Form of Auditor confirmation).

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SCHEDULE 10

Operational Covenants

1.Audits

If the Receivables Purchaser (acting reasonably and in good faith) determines the results of any Audit to be materially unsatisfactory, the Receivables Purchaser may reduce the Early Payment Percentage to a level which, in its discretion, reflects the increased risk associated with such circumstances provided that the Receivables Purchaser consults with CPW at least three Business Days before making any such reduction.

2.Debtor Concentration

With effect from six Months after the Commencement Date, the aggregate Notified Value of Debts of a single Network Provider shall not exceed the Debtor Concentration at that time. The Receivables Purchaser shall reduce the Early Payment Percentage by one percentage point for every one per cent that the Debtor Concentration Percentage is exceeded.

3.Minimum Revenue Receipt Percentage

When tested on each Reporting Date in relation to each Network Provider, the Receivables Purchaser shall reduce the Early Payment Percentage by one percentage point for every one per cent that the Revenue Receipt Percentage is less than the Minimum Revenue Receipt Percentage, where:

“Minimum Revenue Receipt Percentage”means, in relation to each Network Provider, the floor (expressed as a percentage) below which the Revenue Receipt Percentage must not fall, being:

(a)for O2, 115 per cent; and

(b)for T-Mobile, 115 per cent;

“Post-Pay Current Month Amortised Income”means the expected income from CPW’s share of the line rental for the calendar month immediately preceding each Reporting Date;

“Relevant Receipts” shall have the meaning given to it in relation to each Network Provider in schedule 12 (Terms specific to Network Providers); and

“Revenue Receipt Percentage”means, in relation to each Network Provider, the Relevant Receipts received into Trust Accounts during the calendar month immediately preceding each Reporting Date (“Relevant Accounting Period”), expressed as a percentage of each Network Provider’s Post-Pay Current Month Amortised Income as notified in the Notification Schedule which was delivered immediately prior to the start of the Relevant Accounting Period (in accordance with clause 17.1 (Notifications)).

4.Sole remedy

Notwithstanding clause 22.8 (Other obligations), subject to clause 23.2(b), the reduction of the Early Payment Percentage expressed in paragraphs 1 to 3 above, shall constitute the sole remedy for breach of each Operational Covenant.

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SCHEDULE 11

Part 1

Operational undertakings

In this schedule 11, unless otherwise defined in this Deed, capitalised terms shall have the meaning given to them in schedule 12 (Terms specific to Network Providers).

1.Management Accounting Period reporting obligations

On the Reporting Date (or as soon as reasonably practicable thereafter in relation to the matters referred to at sub-paragraphs (h) to (k) (inclusive) in relation to the immediately preceding Management Accounting Period, CPW shall provide to the Receivables Purchaser, in a form satisfactory to the Receivables Purchaser, information and data concerning:

(a)volume of new Connections and Upgrades;

(b)volume of i-Phone Connections as a percentage of all O2 Connections;

(c)average length of Minimum Term Contract for new Connections and Upgrades;

(d)average value of Minimum Term Contract for new Connections and Upgrades;

(e)average unexpired period of Minimum Term Contracts;

(f)volume of all End Users within specified fixed period of Minimum Term Contracts;

(g)Churn;

(h)Monthly Voluntary Churn Percentage, Four Monthly Forced Churn Percentage and Twelfth Monthly Forced Churn Percentage (insofar as they relate to T-Mobile;

(i)actual ARPU for each Network Provider;

(j)values of SBIs and WSIs; and

(k)sums due to O2 under WSI.

2.Remedial action

2.1Consultation

The Receivables Purchaser and CPW shall consult in good faith and, acting reasonably, CPW shall give an explanation (and only in so far as the Receivables Purchaser and CPW consider necessary (acting reasonably) an appropriate course of action will be agreed):

(a)where there is a consistent downward trend associated with, or a material reduction in, any of the matters reported at paragraphs 1(a), (c), (d), (e), (f), (i), or (j) of this schedule;

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(b)where there is a consistent upward trend associated with, or a material increase in, any of the matters reported at paragraphs 1(g), (h) or (k) of this schedule; or

(c)where there is any consistent trend associated with, or material variation in, the matter reported at paragraph 1(b) of this schedule.

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Part 2

Additional Network Provider accession protocol

1.CPW shall identify an Additional Network Provider and notify the Receivables Purchaser accordingly.

2.The Receivables Purchaser shall, together with Barclays Capital, undertake a credit scoring process in relation to the Additional Network Provider in a manner consistent with customary practice.

3.Following a satisfactory credit score, the Receivables Purchaser shall notify CPW and CPW shall promptly provide to the Receivables Purchaser a final form execution copy of the Network Agreement referable to the Additional Network Provider together with any relevant ancillary documentation associated with or connected to that Network Agreement.

4.CPW shall provide to the Co-Arrangers a draft Notification Schedule in relation to the Additional Network Provider for consideration by the Co-Arrangers.

5.The Receivables Purchaser shall engage DLA Piper UK LLP (based on a reasonable fee level agreed in advance with CPW) to undertake legal due diligence on behalf of the Finance Parties which shall include an analysis of the following in relation to the relevant Network Agreement:

(a)the commissions and rewards for procuring Connections;

(b)the nature and extent of Connections to be procured;

(c)the entitlement to and cessation of entitlement to Revenue Share;

(d)the payment process;

(e)the churn (as such term is used in the telecommunications industry);

(f)key performance indicators;

(g)the contractual rights of set-off;

(h)CPW’s indemnity liabilities;

(i)any annual limitation on CPW’s liability;

(j)terms relating to equipment, products and SIMs;

(k)ban on assignment; and

(l)retention of title.

6.The Co-Arrangers shall conduct an Audit in relation to the Additional Network Provider and the relevant Network Agreement (and may engage PricewaterhouseCoopers LLP to assist in this regard, based on a reasonable fee level agreed in advance with CPW) to address the following:

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(a)a comparison against the operational aspects of the O2 Contract (as defined in part 1 of schedule 12 (Terms specific to Network Providers);

(b)an analysis of possible Debts and Reserves;

(c)a confirmation of key performance indicators and possible Operational Covenants;

(d)the setting of Audit tests and confirmation of compliance levels; and

(e)a definition of Approved Debts and Specific Reserves referable to the Additional Network Provider.

7.Following the due diligence more particularly described in paragraphs 5 and 6 above, the Co-Arrangers will determine the conditions precedent referable to the Additional Network Provider, which shall constitute part 1 of schedule 13 (Additional Network Provider Accession Certificate), and the specific and other terms which shall respectively constitute parts 2 and 3 of schedule 13 (Additional Network Provider Accession Certificate).

8.Each of the Finance Parties shall conduct its respective customary credit approval process concerning the Additional Network Provider.

9.CPW and the Co-Arrangers shall use reasonable endeavours to finalise the Notification Schedule referable to the Additional Network Provider in accordance with the terms of the Finance Parties’ credit sanction approval.

10.An Additional Network Provider Accession Certificate shall be prepared by DLA Piper UK LLP and approved by the Finance Parties and CPW.

11.All monitoring and operational issues shall be agreed with the Receivables Purchaser’s relationship director for CPW.

12.The Receivables Purchaser shall procure additional commitment letters from the Finance Parties to account for the increase in Facility Limit and respective Participation Commitments.

13.DLA Piper UK LLP will draft an amendment and restatement deed scheduling a conformed copy of this Deed for execution by the Receivables Purchaser and CPW.

14.CPW shall submit a final form Notification Schedule and Utilisation Request.

15.For the avoidance of doubt, CPW may withdraw the Additional Network Provider from the accession protocol at any time, subject always to CPW paying to the Receivables Purchaser, within three Business Days of receipt of CPW’s notice of withdrawal, a sum equal to all professional fees properly incurred by the Receivables Purchaser on behalf of CPW up to and including the date of such withdrawal in relation to the Additional Network Provider accession.

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Part 3

Audit requirements

1.Each Obligor shall and shall ensure that each member of the Group will permit the Receivables Purchaser (or any employee, representative or agent of the Receivables Purchaser) or any Participant (provided such Participant is accompanied by an employee, representative or agent of the Receivables Purchaser) and/or accountants or other professional advisers and contractors of the Receivables Purchaser free access at all reasonable times and on reasonable notice, at the risk and cost of the Obligors, to conduct an Audit which may, without limitation, include:

(a)entering any premises at which the Obligor carries on business to inspect assets, goods, stock and Network Agreements;

(b)inspecting, verifying and checking all such books, accounts and records, computer and other records, orders, correspondence and other documents as the Receivables Purchaser, its agent or a Participant (as the case may be) may reasonably require;

(c)copying (including computer disks), at the expense of the Obligors (or any of them), such of the items referred to at paragraph (b) above as may be required or checking or removing any software or hardware provided by the Receivables Purchaser or any licensor of the Receivables Purchaser in connection with access to its computer facilities; and

(d)meeting for discussions with senior management.

2.The first Audit shall be undertaken on a Business Day which falls on or around three months after the Commencement Date and subsequent Audits shall be undertaken at three monthly intervals thereafter. Notwithstanding the foregoing, the Receivables Purchaser may conduct Audits without notice and upon such frequency as it shall determine upon the occurrence of and following an Event of Default which is continuing.

3.Each Obligor shall (and shall ensure that each member of the Group will) give assistance to the accountants or other professional advisers and contractors preparing any reports reasonably required by the Receivables Purchaser.

4.The cost of the reports referred to in paragraph 3 above shall be borne by the Receivables Purchaser unless:

(a)it is the first such report in the relevant Financial Year;

(b)the period between reports is 12 Months or more; or

(c)the Receivables Purchaser reasonably suspects that a Default is continuing or may occur,

in which case the cost shall be borne by the Obligors. Such cost shall be subject to a pre-agreed fee estimate obtained by the Receivables Purchaser.

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SCHEDULE 12

Terms specific to Network Providers

Part 1

O2

1.O2 specific definitions

In this part 1 of schedule 12:

“Additional KPIs”has the meaning given to that term at clause 5.5 (Remedies for failure to achieve Additional KPIs) of the O2 Contract;

“Ancillary Document” means:

(a)the letter waiving the ban on assignment in the O2 Contract dated 18 March 2009 issued by CPW and signed in acknowledgement by O2;

(b)the letter waiving the ban on assignment in the Old O2 Agreement dated 25 June 2009 issued by CPW and signed in acknowledgement by O2;

(c)the letter waiving the ban on assignment in the i-Phone Contract dated 2009 issued by 12 June 2009 CPW and signed in acknowledgement by O2; and

(d)the letter dated 6 May 2008 issued by O2 to CPW, in which O2 consents to the Best Buy JV;

“Approved Debt”means:

(a)pursuant to the O2 Contract, a one-off up-front commission payment or CPW’s entitlement to revenue share on total Bill Spend, in respect of:

(i)New Post-Pay Voice Connections;

(ii)Upgrade Post-Pay Voice Connections;

(iii)Post-Pay Voice Connections to £15 tariff (as more particularly described at paragraph 2.6 of schedule 1 (Post-Pay Voice Connections) to the O2 Contract);

(iv)New Simplicity Voice Connections;

(v)Migrated Simplicity Voice Connections;

(vi)Upgrade Post-Pay Voice Connections on the Managed Base; and

in each case, excluding any sums which may become payable following the end of the Minimum Term; and

(b)pursuant to the O2 Contract, a one-off up-front commission payment in respect of:

(i)            New Pre-Pay Voice Connections;

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(ii)           Upgrade Pre-Pay Voice Connections;

(iii)          Fixed Home Broadband Connections; and

(iv)          Mobile Broadband Connections.

(c)pursuant to the Old O2 Agreement, any payment due to CPW that falls within one of the categories referred to at paragraphs (a) and (b) above; and

(d)pursuant to the i-Phone Contract, any payment due to CPW that falls within one of the categories referred to at paragraphs (a) and (b) above;

“Bill Spend” has the meaning given to that term in the O2 Contract;

“Churn” has the meaning given to that term in the O2 Contract;

“Connection Process Clawback” means:

(a)in relation to the O2 Contract, the amounts described in schedule 6 (Connection Process) of the O2 Contract, payable to O2 if CPW fails to meet any of the conditions set out in paragraph 2 of schedule 6 (Connection Process) to the O2 Contract; and

(b)in relation to the i-Phone Contract, the amounts which are analogous to the amounts described at paragraph (a) above of this definition;

“Contingency” means a period of contingency which has been officially notified to O2, as more particularly described in appendix E (Contingency Process) of the O2 Contract;

“Cooling Off Disconnection” has the meaning given to that term in the O2 Contract;

“Credit Card Receipts” means, pending payment to O2, sums received by CPW arising from the discharge (in whole or in part) of payment obligations under Minimum Term Contracts by credit card transaction;

“Disconnections” has the meaning given to that term in the O2 Contract;

“End User” means a natural person or sole trader who is a consumer under a Minimum Term Contract;

“Equipment” has the meaning given to that term in the O2 Contract together with:

(a)SLMs; and

(b)any further equipment included in any analogous definition in the i-Phone Contract;

“Fixed Home Broadband Connections” has the meaning given to it in paragraph 1.1 of the O2 Contract;

“i-Phone Contract” means the sales agreement entered into between O2 and CPW on 11 July 2007 as amended by an amendment to the sales agreement dated 11 April 2008;

“Initial KPIs” has the meaning given to that term at clause 4.5.1 (Liquidated damages per Quarter of the O2 Contract;

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“Invoice” means in relation to an O2 Agreement, either an SBI or a WSI;

“KPIs” means the Initial KPIs and the Additional KPIs;

“Managed Base” has the meaning given to that term in the O2 Contract;

“Migrated Simplicity Voice Connection” has the meaning given in paragraph 1.1.4 of schedule 1 (Post-Pay Voice Connections) of the O2 Contract);

“Minimum Term” has the meaning given to that term in the O2 Contract;

“Mobile Broadband Connections” has the meaning given to it in paragraph 1.1 of the O2 Contract;

“New Post-Pay Voice Connection” has the meaning given in paragraph 1.1.1 of schedule 1 (Post-Pay Voice Connections) of the O2 Contract;

“New Pre-Pay Voice Connection” has the meaning given in paragraph 1.1.1 of schedule 2 (Pre-Pay Voice Connections) of the O2 Contract;

“New Simplicity Voice Connection” has the meaning given in paragraph 1.1.3 of schedule 1 (Post-Pay Voice Connections) of the O2 Contract);

“O2” means Telefonica O2 (UK) Limited (company number 1743099);

“O2 Contract” means the Network Agreement, more particularly described as the trading agreement entered into between CPW and O2 on 18 March 2009;

“Old O2 Agreement” means the Network Agreement, more particularly described as the trading agreement entered into between CPW and O2 on or around 1 September 2008;

“O2 Agreement” means the Network Agreement, more particularly described as the O2 Contract or the Old O2 Agreement or the iPhone Contract;

“Post-Pay Mobile Broadband Connection Returns” means any sum due from CPW to O2 due to the return of laptops in accordance with paragraph 5.4 of schedule 3 (Mobile Broadband Connections) to the O2 Contract;

“Post-Pay Voice Connection” has the meaning given to that term in the O2 Contract;

“Quarter” has the meaning given to that term in the O2 Contract;

“Relevant Receipts” means for the purpose of schedule 10 (Operational Covenants) in relation to the relevant Management Accounting Period:

(a)the WSI;

(b)O2 Base Upgrade Revenue Share (Traditional);

(c)O2 Base Upgrade Revenue Share (iPhone);

(d)O2 Base Upgrade Revenue Share (SIMO);

(e)O2 Base Upgrade Revenue Share (pre July ’08);

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(f)O2 Base Upgrade Revenue Share (inc 3G iPhone);

(g)TRO - One Stop Phone Shop;

(h)iPhone 2G Revenue Share;

(i)47.5% Rev Share - - CUK;

(j)47.5% Rev Share iPhone;

(k)47.5% Simplicity (S1MO) Rev Share - CUK;

(l)Termination fees Clawback;

(m)IPB - O2 Base; and

(n)Cable and Wireless;

(the line items set out in (b) to (n) (inclusive) being as described in the form of SBI subsisting at the Commencement Date);

“Reserves” means:

(a)in relation to any Quarter, £1,500,000 if CPW confirms to the Receivables Purchaser that any Initial KPI will not be met in that Quarter;

(b)in relation to any Quarter, £250,000 if CPW confirms to the Receivables Purchaser that any Additional KPI will not be met in that Quarter;

provided always that, in relation to paragraphs (a) and (b) above, if CPW and O2 agree to vary the liquidated damages payable by CPW for failing to meet KPIs, the sums referred to in those paragraphs shall be varied accordingly with effect from the date of the variation;

(c)any Debt referable to a Cooling Off Disconnection;

(d)sums due (if any) to O2 in relation to Connection Process Clawback;

(e)sums due (if any) to O2 in relation to Post-Pay Mobile Broadband Connection Returns;

(f)sums due to O2 in relation to Disconnections from the Managed Base;

(g)the Receivables Purchaser’s reasonable estimate of any reduction in the value of Approved Debts as a result of a Contingency arising;

(h)(solely upon or following the breach of a Financial Covenant) the sum of £10,000,000 (less amounts (if any) reserved for in relation to sub-paragraphs (a) and (b) of this definition) in connection with liquidated damages to which the Opcos may be subject pursuant to the O2 Contract;

(i)the value of any indemnity claim notified to the Receivables Purchaser in accordance with clause 17.3 (Indemnity claims); and

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(j)either (i) (on each Reporting Date) a sum equal to 50 per cent of the value of the accounts payable ledger as at the end of the immediately preceding Management Accounting Period in respect of Equipment purchased by an Opco from O2; or

(ii) (upon or following the breach of a Financial Covenant), a sum equal to 100 per cent of the value of the accounts payable ledger in respect of Equipment purchased by an Opco from O2;

(k)any sums due to O2 in relation to ACP insurance disconnections; and

(l)sums due to O2 in relation to Credit Card Receipts (i) upon or following the breach of a Financial Covenant or (ii) in the absence of Financial Covenant breach if the outstanding principal amount at any time exceeds £1,000,000.

“SBI” has the meaning give in schedule 8 (Payment and Accounting Procedures) to the O2 Contract;

“Upgrade Post-Pay Voice Connections” has the meaning given in paragraph 1.1.2 of schedule 1 (Post-Pay Voice Connections) to the O2 Contract;

“Upgrade Pre-Pay Voice Connections” has the meaning given in paragraph 1.1.2 of schedule 2 (Pre-Pay Voice Connections) to the O2 Contract;

“Upgrades” means Upgrade Post-Pay Voice Connections and Upgrade Pre-Pay Voice Connections; and

“WSI” has the meaning give in schedule 8 (Payment and Accounting Procedures) to the O2 Contract.

2.Information undertakings

The undertakings in this paragraph 2 remain in force from the Commencement Date for so long as any amount is outstanding under the Facility.

2.1KPIs

CPW undertakes to promptly:

(a)provide to the Receivables Purchaser (with sufficient copies for each Participant) a copy of any review notice issued by CPW to O2 under clause 13.1 of the O2 Contract;

(b)inform the Receivables Purchaser upon CPW or O2 initiating any discussion in relation to the resetting of the KPIs or the resetting of any remedies for failure to meet the KPIs, as more particularly described at clause 7 (Amending the KPIs and remedies) of the O2 Contract;

(c)notify the Receivables Purchaser of any failure or anticipated failure by CPW to achieve:

(i)two or more of the Initial KPIs in any Quarter; and

(ii)two or more of the Additional KPls in any Quarter.

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and promptly provide to the Receivables Purchaser a copy of CPW’s formal written explanation provided to O2 together with details of a resolution plan which CPW is obliged to submit in accordance with the O2 Contract.

2.2Contingencies

CPW undertakes to promptly:

(a)inform the Receivables Purchaser upon the occurrence of a period of Contingency;

(b)provide to the Receivables Purchaser a copy of any notice provided to O2 in relation to the Contingency; and

(c)provide materially accurate information to the Receivables Purchaser in relation to any Debts created during the Contingency.

2.3Rights under the O2 Contract

Subject to clause 37.1 (Duties to Relevant Third Parties), CPW undertakes to use its rights under clause 10.8 and clause 20.1 of the O2 Contract to procure such information as the Receivables Purchaser acting reasonably may require to enable a verification of the Debts and to protect the Receivables Purchaser’s rights under the Finance Documents.

2.4Information: miscellaneous

CPW shall promptly upon becoming aware of it, supply to the Receivables Purchaser (with sufficient copies for all the Participants, if the Receivables Purchaser so requests) the details of:

(a)any proposed meeting contemplated by clause 4.6 of the O2 Contract;

(b)any material reduction in termination fees payable to O2, contemplated by clause 8.5.2 of the O2 Contract; and

(c)any proposed changes to accept rates by O2, contemplated by clause 9.2 of the O2 Contract.

3.Debt specific undertakings

The undertakings in this paragraph 3 remain in force from the Commencement Date and for so long as any amount is outstanding under the Facility.

3.1Mobiles.co.uk.Limited

Mobiles.co.uk.Limited (company number 06320783) undertakes that:

(a)notwithstanding the fact that it is not named as a party to any O2 Agreement, it is bound by the terms of each O2 Agreement as if it was named as a party thereto; and

(b)it will not enter into or purport to enter into any agreement relating to the procuring of connections with a Network Provider (as defined in clause 1.1 (Definitions) of this Deed) without the prior written consent of the Receivables Purchaser.

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3.2Phone Contract

CPW represents and undertakes that:

(a)the terms of the i-Phone Contract are, and shall remain, substantially the same as the terms of the O2 Contract including in relation to the following matters:

(i)the commissions and rewards for procuring Connections;

(ii)the nature and extent of Connections to be procured;

(iii)the entitlement to and cessation of entitlement to Revenue Share;

(iv)the payment process pursuant to the SBIs and WSIs;

(v)the Churn;

(vi)the KPIs and Additional KPIs;

(vii)the contractual rights of set off;

(viii)CPW’s indemnity liabilities;

(ix)the annual limitation on CPW’s liability; and

(x)the Equipment

(b)any terms in the i-Phone Contract which differ from the terms of the O2 Contract could not reasonably be expected to prejudice the Receivables Purchaser’s right, title and interest in and ability to collect in full any Outstanding Notified Debts.

4.O2 Agreements

Any provision of a Finance Document relating to the O2 Contract shall apply equally to the i-Phone Contract and Old O2 Agreement.

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Part 2

T-Mobile

1.T-Mobile specific definitions

In this part 2 of schedule 12:

“Affiliate List” has the meaning given in the T-Mobile Contract;

“Ancillary Document” means:

(a)the letter (inter alia) waiving the ban on assignment in the T-Mobile Contract dated on or around the date of this Deed issued by T-Mobile and signed in acknowledgement by CPW and the SPV;

(b)the letter issued, or to be issued as soon as reasonably practicable after the Commencement Date, by T-Mobile to CPW, in which T-Mobile confirms that CPW is entitled to revenue share post-termination of the T-Mobile Contract; and

(c)the email dated 2 June 2009 issued by CPW to the Receivables Purchaser, in which CPW confirms that T-Mobile has not raised any objection to the Best Buy JV;

“Annual Balancing Return Rate Charge” means any sum due to T-Mobile which is described in paragraph 5.13 of schedule 2 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract;

“Annual Volume Bonus Adjustment” means any sum due to T-Mobile which is described in paragraph 9 of part 2 of schedule 3 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract;

“Approved Debt” means:

(a)Revenue share;

(b)Price plan connection bonus;

(c)Web-n-Walk bonus;

(d)Handset connection bonus;

(e)Quarterly volume bonus;

(f)Annual volume bonus;

(g)Pre-pay connection bonus;

(h)Upgrade subsidy and upgrade bonus (including any free of charge refund);

(i)Standard Allowance bonus;

(j)Contract Allowance bonus; and

(k)Migrations bonus;

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in each case, as described or defined in the T-Mobile Contract;

“Benefit Bulletin” has the meaning given to that term in the T-Mobile Contract;

“Claw Back” has the meaning given to that term in the T-Mobile Contract;

“Channel Level Reporting” has the meaning contemplated by clause 8 (CPW Channel Level Reporting) of the T-Mobile Contract;

“CPW Partners” has the meaning given in the T-Mobile Contract;

“Deposit” has the meaning given to that term in the T-Mobile Contract;

“End User” means any individual, company, partnership or other legal entity whether incorporated or unincorporated which is a consumer under a Minimum Term Contract;

“Equipment” has the meaning given to Product in the T-Mobile Contract;

“Equipment Charge” has the meaning given in clause 5.1 (Definitions) of schedule 2 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract;

“First Bill Failure” means any sums due to T-Mobile by an Opco where the End User fails to pay its first bill;

“Marketing Support Fund” has the meaning given in the T-Mobile Contract;

“Price Plan” has the meaning given in the T-Mobile Contract;

“Price Plan Reductions” means any sums due to T-Mobile which are contemplated by paragraph 2 of part 2 of schedule 3 (Schedule CPW Benefits) to the T-Mobile Contract;

“Product” has the meaning given to that term in the T-Mobile Contract;

“Quarterly Volume Bonus Adjustment” means any sum due to T-Mobile which is described in paragraph 3.3 of part 2 of schedule 3 (Schedule CPW Benefits);

“Relevant Receipts” means for the purpose of schedule 10 (Operational Covenants) in relation to the relevant Management Accounting Period, a sum equal to the aggregate of all Remittances received from T-Mobile;

“Reserves” means:

(a)sums due to T-Mobile (if any) due to a failure to meet the minimum performance levels referred to in part 2 of schedule 4 (CPW Performance Schedule) to the T-Mobile Contract:

(b)sums due to T-Mobile in relation to Deposits;

(c)sums due to T-Mobile in relation to First Bill Failure;

(d)in relation to each Quarter, any sum payable by an Opco to T-Mobile due to the Return Rate for that Quarter exceeding the Returns Cap for that Quarter (where, in each case Quarter has the meaning given to that term the T-Mobile Contract);

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(e)sums due to T-Mobile in relation to Equipment Charge;

(f)sums due (if any) to T-Mobile for the Annual Balancing Return Rate Charge;

(g)sums due (if any) to T-Mobile for the Quarterly Volume Bonus Adjustment or the Annual Volume Bonus Adjustment;

(h)sums due to T-Mobile in respect of Price Plan Reductions;

(i)any Claw Back referred to in the then applicable Benefit Bulletin;

(j)the value of any indemnity claim notified to the Receivables Purchaser in accordance with clause 17.3 (Indemnity claims);

(k)(i) (on each Reporting Date) a sum equal to 50 per cent of the value of the accounts payable ledger as at the end of the immediately preceding Management Accounting Period in respect of Equipment purchased by an Opco from T-Mobile; or

(ii) (upon or following the breach of a Financial Covenant), a sum equal to 100 per cent of the value of the accounts payable ledger in respect of Equipment purchased by an Opco from T-Mobile; and

(l)any sums due to T-Mobile in relation to ACP insurance disconnections;

“Returns Cap” has the meaning given to that term in paragraph 5 of schedule 2 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract;

“Return Rate” has the meaning given to that term in paragraph 5 of schedule 2 (T-Mobile standard terms and conditions of sale) of the T-Mobile Contract;

“T-Mobile” means T-Mobile (UK) Limited (company number 02382161);

“T-Mobile Contract” means the Network Agreement, more particularly described as the dealer agreement entered into between CPW and T-Mobile on 6 September 2006;

2.Information undertakings

The undertaking in this paragraph 2 remain in force from the Commencement Date for so long as any amount is outstanding under the Facility.

CPW shall supply to the Receivables Purchaser (with sufficient copies for all the Participants, if the Receivables Purchaser so requests) promptly upon becoming aware of it:

(a)any intention of T-Mobile to take any of the action referred to in clause 6.6 of the T-Mobile Contract;

(b)any change to the CPW Partners or the Affiliate List; and

(c)any material change to a Price Plan or Benefit Bulletin or any replacement Price Plan or Benefit Bulletin being issued.

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3.Debt Specific Warranties

The warranties in this paragraph 3 are made by each Obligor to the Receivables Purchaser at the time that a Debt is Notified, on each Utilisation Date and on the date that each Utilisation Request is made.

3.1CPW Partners and CPW Affiliates

(a)At the Commencement Date the CPW Partners and Affiliate List are identical and comprise The Carphone Warehouse Limited Mobiles.co.uk.Limited.

(b)No change has been made to the CPW Partners or the Affiliate List since the latest list was provided to T-Mobile by CPW and notified to the Receivables Purchaser.

(c)No terms apply to Debts created by a CPW Affiliate or CPW Partner which:

(i)are not in the T-Mobile Contract or the latest Benefit Bulletin delivered to the Receivables Purchaser; or

(ii)have not been previously approved by the Receivables Purchaser in writing.

(d)Any Approved Debt shall automatically become an Unapproved Debt upon a CPW Partner or CPW Affiliate being removed for any reason (whether temporarily or permanently) by T-Mobile from an Affiliate List.

3.2Self Billing Agreement

(a)Notwithstanding the terms of the T-Mobile Contract, no Self Billing Agreement (which has the meaning given to it in the T-Mobile Contract) exists and T-Mobile has waived a requirement for it.

(b)The procedures for self-billing which relate to Debts created under the T-Mobile Contract have not changed since those evidenced to the Co-Arrangers prior to the Commencement Date.

3.3Notification Schedule

CPW and the SPV acknowledge that until the earlier of (i) CPW’s compliance with clause 18.24(a)(Conditions subsequent) and (ii) CPW’s compliance with clause 18.24(f) (Conditions subsequent), the numerical figure which may be ascribed to “Postpay deferred income” in line 1 of the T-Mobile Notification Schedule will be zero.

4.Debt specific undertakings

The undertakings in this paragraph 4 remain in force from the Commencement Date and for so long as any amount is outstanding under the Facility.

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4.1Condition subsequent

CPW shall not enter into an agreement with T-Mobile in replacement of the T-Mobile Contract unless clause 18.24(a) (Conditions subsequent) has been complied with.

4.2Products

Each Opco undertakes not to discharge obligations to pay for Product by the exercise of or agreeing to acquiesce in the exercise of rights of set-off against sums due to it by T-Mobile.

4.3CPW Partners and CPW Affiliates

(a)CPW shall promptly provide to the Receivables Purchaser a copy of any updated or amended Affiliate List.

(b)Any company which is added to the Affiliate List or becomes a CPW Partner which is not an Obligor shall promptly accede to the Transaction Security Documents as a Security Obligor and to this Deed as an Obligor and (where relevant) an Opco.

4.4Other

(a)Sums due in respect of the Marketing Support Fund are invoiced and paid separately of Debts and no election has been made by an Opco or T-Mobile permitting contractual set-off to discharge liabilities in this regard.

(b)Channel Level Reporting cannot affect and does not relate to T-Mobile’s obligation to make payment of a Debt.

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SCHEDULE 13

Additional Network Provider Accession Certificate

To:Barclays Bank PLC (Asset & Sales Finance division) as the Receivables Purchaser

From:· and ·

Dated:· 200·

Dear Sirs

£·receivables financing agreement dated ·2009 (the “RFA”)

We refer to the RFA. This is an Additional Network Provider Accession Certificate. Terms defined in the RFA have the same meaning in this Additional Network Provider Accession Certificate unless given a different meaning in this Additional Network Provider Accession Certificate.

1.[CPW] [The SPV] requests that ·(company number ·) (the “Additional Network Provider”) is included in the RFA as a Network Provider such that debts payable by the Additional Network Provider to [CPW] [the Opcos][·] are assigned to the SPV and become certain of those debts eligible for Early Payments in accordance with the terms of the RFA.

2.The Receivables Purchaser confirms that the Majority Finance Parties have consented to [CPW’s][the SPV’s] request at paragraph 1 of this Additional Network Provider Accession Certificate and agrees that the Additional Network Provider is a Network Provider in accordance with clause 28.4 (Addition of a Network Provider) of the RFA.

3.This Additional Network Provider Accession Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by English law.

IN WITNESS of which this deed has been duly executed by ·as a deed and has been delivered on the first date specified on [page l] of this deed.

· ·

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Schedule 1

Conditions precedent

To be completed

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Schedule 2

Terms specific to Network Provider

To be completed

157

Schedule 3

Other terms

To be completed

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SCHEDULE 14

Security Agent provisions

1.Appointment of Security Agent

(a)Each Finance Party appoints the Security Agent to act as its agent under and in connection with the Transaction Security Documents and this Deed.

(b)Each Finance Party irrevocably authorises the Security Agent to:

(i)execute each Transaction Security Document expressed to be executed by the Security Agent on its behalf; and

(ii)exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Transaction Security Documents and this Deed, together with any other incidental rights, powers, authorities and discretions.

(c)Except as specifically provided in the Transaction Security Documents or this Deed, nothing in the Transaction Security Documents or this Deed constitutes the Security Agent a trustee or fiduciary of any Party or other person.

2.The Security Agent as holder of security

(a)The Security Agent shall:

(i)hold any Security created by the Transaction Security Documents and the benefit of the Transaction Security Documents on trust for itself and the Finance Parties; and

(ii)apply all payments and other benefits received by it under the Transaction Security Documents in accordance with this Deed.

(b)Section 1 of the Trustee Act 2000 shall not apply to that trust. In the event of any inconsistency with the Trustee Act 2000, the terms of this Deed shall constitute a restriction or exclusion for the purposes of that Act.

(c)The perpetuity period for the trusts in this Deed is 80 years.

3.Security Agent’s duties

The Security Agent shall:

(a)subject to paragraph 5 (Security Agent’s rights), exercise any right, power, authority or discretion vested in it as Security Agent (or, if so instructed, refrain from exercising any right, power, authority or discretion vested in it as Security Agent) in accordance with any instructions given to it by whichever of the Receivables Purchaser or Majority Finance Parties is entitled under the relevant provisions of the Transaction Security Documents or this Deed to instruct the Security Agent: and

(b)have only those duties expressly specified in this Deed or the Transaction Security Documents and these duties are solely of a mechanical and administrative nature

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4.Instructions to the Security Agent

(a)The Security Agent in exercising any right, power, authority or discretion vested in it as Security Agent under the Finance Documents shall not be liable for any act (or omission) if it acts on any instructions given in accordance with this Deed or any Transaction Security Document. Any such instructions will be binding on all the Finance Parties other than the Security Agent. In the absence of instructions, the Security Agent may act or refrain from acting as it considers to be in the best interests of all the Finance Parties.

(b)The Security Agent may assume that, unless it has received notice to the contrary, any right, power, authority or discretion vested in any Party has not been exercised.

(c)The Security Agent is not authorised to act on behalf of a Finance Party (without first obtaining that Finance Party’s consent) in any legal or arbitration proceedings in connection with any Transaction Security Document, unless the legal or arbitration proceedings relate to:

(i)the perfection, preservation, protection or enforcement of rights under any Transaction Security Documents; or

(ii)the enforcement of any Transaction Security Document.

5.Security Agent’s rights

Subject to applicable law, the Security Agent may:

(a)act in relation to this Deed or the Transaction Security Documents by or through its personnel or agents;

(b)refrain from acting on instructions given to it or otherwise taking any step to protect or enforce the rights of any Finance Party under this Deed or any Transaction Security Document until it has been indemnified and/or received security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions or taking any such step;

(c)refrain from doing anything which would or might in its opinion be contrary to any fiduciary duty, duty of confidentiality of any law, regulation or judgment of any court, or otherwise render it liable to any person and may do anything which is in its opinion necessary to comply with any such law, regulation, judgment or duty;

(d)assume that no Default has occurred;

(e)rely on any notice, communication or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person;

(f)rely on any statement by any person regarding matters which may reasonably be assumed to be within his knowledge or within his power to verify;

(g)engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts;

(h)accept without enquiry any title which an Obligor may have to any of the Charged Property; and

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(i)hold or deposit any document of title, Transaction Security Documents or any other documents in connection with any of the Charged Property with any banker or banking company or any company whose business includes undertaking the safe custody of documents or with any lawyer or firm of lawyers and it shall not be responsible for or be required to insure against any loss incurred in connection with any such holding or deposit and it may pay all sums required to be paid on account or in respect of any such deposit.

6.Exclusion of liability

Neither the Security Agent nor any of its officers, employees or agents shall be:

(a)liable or responsible to any other Finance Party for any action taken or not taken by it in connection with this Deed and the Transaction Security Documents unless directly caused by its gross negligence or wilful misconduct;

(b)responsible for the adequacy, accuracy and/or completeness of any representation, warranty, statement or information in this Deed or the Transaction Security Documents or any notice or other document delivered under this Deed or the Transaction Security Documents;

(c)responsible for the legality, validity, effectiveness, adequacy or enforceability of this Deed or any Transaction Security Document or any other agreement, arrangement or document entered into, made or executed in anticipation or in connection with this Deed or any Transaction Security Document;

(d)obliged to monitor or enquire whether a Default has occurred or is continuing, and the Security Agent is not deemed to have knowledge of the occurrence of a Default;

(e)responsible for any failure of any Obligor or any of the Finance Parties duly and punctually to observe and perform their respective obligations under this Deed or any Transaction Security Document;

(f)liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Security Agent if the Security Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Security Agent for that purpose; or

(g)obliged to carry out any “know your customer” or other checks in relation to any person on behalf of any Finance Party and each Finance Party confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent.

7.The Security Agent individually

(a)For so long as it is a Finance Party, the Security Agent shall have the same rights and powers under the Finance Documents as any other Finance Party and may exercise those rights and powers as if it were not also acting as Security Agent.

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(b)The Security Agent may:

(i)retain for its own benefit and without liability to account to any other person any fee or other sum receivable by it for its own account; and

(ii)accept deposits from, lend money to, provide any advisory, trust or other services to or engage in any kind of banking or other business with any Party or any subsidiary of any Party (and, in each case, may do so without liability to account).

8.Information and confidentiality

(a)The Security Agent shall send to each Finance Party the original or copy of any document which is delivered by any Obligor or other Finance Party to the Security Agent for that Finance Party under this Deed or any Transaction Security Document unless disclosure is prohibited by clause 37 (Confidentiality).

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

(c)In acting as Security Agent for the Finance Parties, the Security Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. If information is received by another division or department of the Security Agent, it may be treated as confidential to that division or department and will not be treated as information possessed by the Security Agent in its capacity as such. The Security Agent will not be obliged to transmit to the Finance Parties any information or other information relating to any Party or any Transaction Security Document which the Security Agent may have acquired otherwise than in its capacity as Security Agent.

(d)Notwithstanding anything to the contrary expressed or implied in this Deed or any Transaction Security Document, the Security Agent shall not, as between itself and the Finance Parties, be bound to disclose to any Finance Party or other person any information, the disclosure of which:

(i)might in the opinion of the Security Agent result in a breach of any law or regulation or be otherwise actionable at the suit of any person; or

(ii)is not permitted by clause 37 (Confidentiality).

(e)Subject to clause 37 (Confidentiality) each Obligor irrevocably authorises the Security Agent to disclose to the other Finance Parties any information in the Security Agent’s possession which is received by it in its capacity as the Security Agent.

9.Indemnities

Each Finance Party shall on demand indemnify the Security Agent (pro rata to its respective Participation Commitment) against any cost, loss or liability incurred by the Security Agent, except to the extent that the cost, loss or liability is incurred as a result of the gross negligence or wilful misconduct of the Security Agent.

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10.Termination and resignation of Security Agent

(a)The Security Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the Finance Parties and CPW.

(b)Alternatively, the Security Agent may resign by giving 30 days notice to the Finance Parties and CPW, in which case the Majority Finance Parties may appoint a successor Security Agent.

(c)If no successor Security Agent has been appointed under paragraph (b) above within 20 days after notice of resignation was given, the retiring Security Agent may appoint a successor Security Agent.

(d)The person(s) appointing a successor Security Agent must, if practicable, consult with CPW prior to the appointment.

(e)The resignation of a Security Agent and the appointment of a successor Security Agent will not become effective until the Receivables Purchaser confirms that it is satisfied that the Transaction Security Documents (and any related documentation) have been transferred to or into (and where required registered in) the name of the proposed successor Security Agent.

(f)On satisfying the above conditions, the successor Security Agent will succeed to the position of the retiring Security Agent and the term Security Agent will mean the successor Security Agent.

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

(h)Upon its resignation becoming effective, this schedule 14 will continue to benefit a retiring Security Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was a Security Agent, and, subject to paragraph 10(g) above, it will have no further obligations under any Finance Document.

(i)The Majority Finance Parties may, by notice to the Security Agent, require it to resign under paragraph 10(b) above.

(j)An Obligor must (at its own cost) take any action and execute any document which is required by the Security Agent so that a Security Document provides for effective and perfected security in favour of any successor Security Agent.

11.Payments to the Security Agent

The Security Agent may retain for its own use and benefit, and will not be liable to account to any person for all or any part of, any sums receivedby way of agency or arrangement fees or by way of reimbursement of costs and expenses incurred by it.

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12.Change of office of the Security Agent

The Security Agent may at any time in its sole discretion by notice to each Finance Party and CPW designate a different office in London from which its duties as Security Agent will be performed from the date of notification.

13.Security and Title

(a)The Security Agent shall not be liable or responsible to any other Finance Party for:

(i)any failure in perfecting or protecting the Security created by any Transaction Security Document; or

(ii)any other action taken or not taken by it in connection with a Transaction Security Document.

(b)The Security Agent may accept without enquiry the title (if any) which an Obligor may have to any asset over which Security is intended to be created by any Transaction Security Document.

(c)The Security Agent shall have no obligation to insure any asset or interests of the Finance Parties in any asset.

14.No duty to collect payments or insure

The Security Agent shall not have any duty:

(a)to ensure that any payment or other financial benefit in respect of any of the Charged Property is duly and punctually paid, received or collected; or

(b)to take up any stocks, shares, rights, moneys or other property accruing or offered at any time by way of interest, dividend, redemption, bonus, rights, preference, option, warrant or otherwise in respect of any of the Charged Property.

15.Investments

All moneys received or held by the Security Agent may, in the name of, or under the control of, the Security Agent:

(a)be invested in any investment it may select; or

(b)be deposited at such bank or institution (including itself, any other Finance Party or any Affiliate of any Finance Party) as it thinks fit.

16.Releases

(a)If a disposal to a person or persons of any asset is:

(i)permitted by the terms of clause 18.5 (Disposals); or

(ii)effected by enforcement of any Transaction Security Document,

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the Security Agent is irrevocably authorised by each Finance Party to release in any manner whatsoever any Security Interest created by the Transaction Security Documents over the relevant asset.

(b)Each Finance Party undertakes in favour of the Security Agent to execute any releases or other documents and take any action which the Security Agent may reasonably require in order to give effect to the provisions of this paragraph 16 (Releases). For the avoidance of doubt any such release will not affect any other rights of any Finance Party under the Finance Documents.

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SCHEDULE 15

Principal commercial terms at the Commencement Date

1.	Breakage Costs	If the Termination Date occurs prior to the first anniversary of the Commencement Date, the Breakage Costs shall be an amount equal to one per cent of the Facility Limit at that time. If the Termination Date occurs after the first anniversary of the Commencement Date but prior to the date falling 18 Months after the Commencement Date, the Breakage Costs shall be an amount equal to 0.25 per cent of the Facility Limit at that time. If the Termination Date occurs after the date falling 18 Months after the Commencement Date but prior to the expiry of the Term, no Breakage Costs shall be payable.
2.	Debtor Concentration Percentage	80 per cent (to be effective six Months from the Commencement Date).
3.	Discount Margin	3.00 per cent
4.	Early PaymentPercentage	90 per cent
5.	Facility Limit	£350,000,000 (three hundred and fifty million pounds)
6.	Non-Utilisation Percentage	1.50 per cent
7.	Notice Period	3 Months
8.	Term	36 Months
9.	Trust Accounts	Account name: The Carphone Warehouse Limited Barclays BankPLC Account number: 33457737 Sort code: 20-37-63

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EXECUTION PAGES

THE RECEIVABLES PURCHASER

SIGNEDas a deed on the  3	)
day of July 2009 on behalf of	)
BARCLAYS BANK PLCacting by:	)

Gary Spencer Davies
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	Barclays Bank PLC
	Churchill Plaza
	Churchill Way
	Basingstoke
	Hampshire
	RG21 7GP
Facsimile no:	01256 791240
Attention:	Alistair Dormon

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THE SPV

SIGNED as a deed by
CPWCO 18 LIMITED acting by two directors or by one director and the secretary, and delivered when dated:	) ) ) )
	)
	Director
	Signature:
	Name:	T. S. MORRIS
	Secretary
	Signature:
	Name:	Shamim Kazeneh

168

ORIGINAL OBLIGORS

SIGNED as a deed by THE CARPHONE WAREHOUSE LIMITED acting by two directors or by one director and the secretary, and delivered when dated:	) ) ) )
	)
	Director
	Signature:
	Name:	NICK WILLCOX
	Director/Secretary
	Signature:
	Name:	T.S. MORRIS
SIGNED as a deed by MOBILES.CO.UK LIMITED acting by two directors or by one director and the secretary, and delivered when dated:	) ) ) )
	)
	Director
	Signature:
	Name:	T.S. MORRIS
	Secretary
	Signature:
	Name:	Shamim Kazeneh

169

ORIGINAL PARTICIPANTS

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
HSBC INVOICE FINANCE (UK)	)
LIMITED	)

KEVIN DAVID CRAVEN
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	21 Farncombe Road
	Worthing
	West Sussex
	BN11 2BW
Facsimile no:	01903 825731
Attention:	Phil Simmonds

170

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
RBS INVOICE FINANCE	)
LIMITED	)

Christopher Sean Hawes
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	RBS Invoice Finance
	Limited
	7th Floor
	280 Bishopsgate
	London
	EC2M 4RB
Facsimile no:	0207 672 1356
Attention:	David Handley (Relationship Director)

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SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
CREDIT SUISSE, LONDON	)
BRANCH	)

GARRETT LYNSKEY
Its authorised signatory in the presence of:

NISHAN SRINIVASAN
Its authorised signatory in the presence of:

Witness signature:
Full name:	SCOTT D SIMPSON
Address:	ONE CABOT SQUARE, LONDON, E14 4QJ
Occupation:	SOLICITOR
Address:	Credit Suisse London Branch
	One Cabot Square
	London
	E14 4QJ
Facsimile no:	020 7888 8398
Attention:	Loans Participations / Mick Dowdy

172

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
LLOYDS TSB COMMERCIAL	)
FINANCE LIMITED	)

NEIL J KERRIDGE
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	Vanbrugh House
	Grange Drive
	Hedge End
	Southampton
	SO30 2AF
Facsimile no:	020 8332 7761
Attention:	Philip Barnes

173

THE CO-ARRANGERS

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
BARCLAYS BANK PLCacting by:	)

GARY SPENCER DAVIES
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	Barclays Bank PLC
	Churchill Plaza
	Churchill Way
	Basingstoke
	Hampshire
	RG21 7GP
Facsimile no:	01256 791240
Attention:	Alistair Dormon

174

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
HSBC INVOICE FINANCE (UK)	)
LIMITED	)

KEVIN DAVID CRAVEN
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	21 Farncombe Road
	Worthing
	West Sussex
	BN11 2BW
Facsimile no:	01903 825731
Attention:	Phil Simmonds

175

THE SECURITY AGENT

SIGNEDas a deed on the 3	)
day of July 2009 on behalf of	)
BARCLAYS BANK PLCacting by:	)

GARY SPENCER DAVIES
Its duly appointed attorney in the presence of:

Witness signature:
Full name:	SIMON ROGER WARBURTON
Address:	3 NOBLE STREET LONDON
Occupation:	SOLICITOR
Address:	Barclays Bank PLC
	Churchill Plaza
	Churchill Way
	Basingstoke
	Hampshire
	RG21 7GP
Facsimile no:	01256 791240
Attention:	Alistair Dormon

176

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian J. Dunn, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Best Buy Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 6, 2009	/s/ BRIAN J. DUNN
	Brian J. Dunn
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James L. Muehlbauer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Best Buy Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 6, 2009	/s/ JAMES L. MUEHLBAUER
	James L. Muehlbauer
	Executive Vice President — Finance
	and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Executive Officer of Best Buy Co., Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended August 29, 2009 (the “Report”), fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934, as amended, and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: October 6, 2009	/s/ BRIAN J. DUNN
	Brian J. Dunn
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Executive Vice President — Finance and Chief Financial Officer of Best Buy Co., Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended August 29, 2009 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: October 6, 2009	/s/ JAMES L. MUEHLBAUER
	James L. Muehlbauer
	Executive Vice President — Finance and Chief Financial Officer