PizzaExpress Financing 2 plc

Transcription

1 Listing Particulars Not for general distribution in the United States PizzaExpress Financing 2 plc 55,000, % Senior Secured Notes due 2021 PizzaExpress Financing 2 plc (formerly Twinkle Pizza plc), a public limited company incorporated under the laws of England and Wales (the Issuer ), issued 55,000,000 aggregate principal amount of its 6.625% Senior Secured Notes due 2021 (the Notes ) on the Issue Date (as defined below). The Notes were issued as additional notes under the indenture entered into by the Issuer, among others, dated July 31, 2014 (the Indenture ) and are part of the same series as the Issuer s currently outstanding 410,000,000 aggregate principal amount of 6.625% Senior Secured Notes due 2021 issued thereunder (the Original Senior Secured Notes and, together with the Notes, the Senior Secured Notes ). The Notes were initially issued bearing temporary ISINs (as defined herein) and temporary common codes. See Description of the Notes. The Notes have the same terms as those of the Original Senior Secured Notes and are treated as a single class together with the Original Senior Secured Notes for all purposes of the Indenture, including with respect to waivers, amendments, redemptions and offers to purchase, except in relation to the special mandatory redemption discussed below, and will become fully fungible with the Original Senior Secured Notes following termination of certain U.S. selling restrictions. The Issuer will pay interest on the Notes semi-annually in arrears on each February 1 and August 1, commencing on August 1, The Notes will mature on August 1, If the China Acquisition Completion Date (as defined herein) does not occur on or before one Business Day (as defined herein) prior to the last Business Day of the Special Mandatory Redemption Period (as defined herein), the Notes are subject to a special mandatory redemption at 100% of the initial issue price of such Notes plus accrued and unpaid interest and additional amounts, if any, from February 1, 2015 to the Special Mandatory Redemption Date (as defined herein). See Description of the Notes Special Mandatory Redemption. The Issuer may redeem the Senior Secured Notes in whole or in part at any time on or after August 1, 2017 at the redemption prices specified herein. Prior to August 1, 2017, the Issuer may redeem all or part of the Senior Secured Notes at a redemption price equal to 100% of the principal amount of such Senior Secured Notes, plus a make-whole premium as of, and accrued and unpaid interest and additional amounts to, if any, the redemption date. In addition, at any time prior to August 1, 2017, the Issuer may, during any period consisting of 12 consecutive months ending on the day immediately preceding the first, second or third anniversary of the date on which the Original Senior Secured Notes were issued, redeem up to 10% of the aggregate principal amount of the Senior Secured Notes at a price equal to 103% of the principal amount of the Senior Secured Notes redeemed, plus accrued and unpaid interest and additional amounts, if any. Prior to August 1, 2017, the Issuer may redeem up to 40% of the aggregate principal amount of the Senior Secured Notes with the net proceeds from certain equity offerings at the redemption prices set forth in this Listing Particulars. The Issuer may redeem all, but not less than all, of the Senior Secured Notes upon the occurrence of certain changes in applicable tax law. Upon the occurrence of certain events constituting a change of control, the Issuer may be required to make an offer to repurchase the Senior Secured Notes. The Notes are senior obligations of the Issuer and are guaranteed on a senior secured basis (collectively, the Note Guarantees ) by the Parent (as defined herein) and by the Subsidiary Guarantors (as defined herein). Subject to the operation of the Agreed Security Principles (as defined herein), the Notes are secured by the Notes Collateral (as defined herein). The Notes Collateral also secures, on a first-ranking basis, the Original Senior Secured Notes and the Revolving Credit Facility (as defined herein), and may also secure certain future hedging obligations and certain other future indebtedness. Under the terms of the Intercreditor Agreement (as defined herein), lenders under the Revolving Credit Facility, counterparties to certain hedging obligations and holders of certain other indebtedness will receive proceeds from the enforcement of the Notes Collateral in priority to the holders of the Senior Secured Notes. See Summary The Offering Security. There is currently no public market for the Notes. The Irish Stock Exchange has approved this document as a Listing Particulars and the Notes have been admitted to the Official List of the Irish Stock Exchange plc (the Irish Stock Exchange ) and for trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. There can be no assurance that any such listing will be maintained. The Notes are represented by one or more global notes, which were delivered through Euroclear Bank SA/NV ( Euroclear ) and Clearstream Banking, société anonyme ( Clearstream, Luxembourg ), on June 5, 2015 (the Issue Date ). See Book-Entry; Delivery and Form. Investing in the Notes involves a high degree of risk. See Risk Factors beginning on page 18. Price for the Notes: % plus accrued interest from February 1, 2015 to the Issue Date Purchasers of the Notes will be required to pay accrued interest totaling per 1,000 principal amount of Notes, from and including February 1, 2015 to but excluding the Issue Date. The Notes and the Note Guarantees have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act ), or the securities laws of any other jurisdiction. The Notes and the Note Guarantees may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the U.S. Securities Act ( Rule 144A ) and to certain persons in offshore transactions in reliance on Regulation S under the U.S. Securities Act ( Regulation S ). You are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. See Transfer Restrictions for additional information about eligible offerees and transfer restrictions. Deutsche Bank Sole Global Coordinator and Sole Physical Bookrunner Goldman Sachs International Joint Bookrunners The date of this Listing Particulars is June 26, J.P. Morgan

2 TABLE OF CONTENTS NOTICE TO INVESTORS... i PRESENTATION OF FINANCIAL AND OTHER DATA... v EXCHANGE RATE AND CURRENCY INFORMATION... x CERTAIN DEFINITIONS... xi INFORMATION REGARDING FORWARD-LOOKING STATEMENTS... xv SUMMARY... 1 CORPORATE STRUCTURE AND CERTAIN FINANCING ARRANGEMENTS... 6 THE OFFERING... 8 SUMMARY CONSOLIDATED FINANCIAL AND OTHER INFORMATION RISK FACTORS THE TRANSACTIONS USE OF PROCEEDS CAPITALIZATION SELECTED CONSOLIDATED FINANCIAL INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INDUSTRY OVERVIEW BUSINESS MANAGEMENT PRINCIPAL SHAREHOLDERS CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS DESCRIPTION OF THE NOTES BOOK-ENTRY; DELIVERY AND FORM TAX CONSIDERATIONS CERTAIN ERISA CONSIDERATIONS LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE NOTE GUARANTEES AND THE SECURITY INTERESTS AND CERTAIN INSOLVENCY LAW CONSIDERATIONS PLAN OF DISTRIBUTION TRANSFER RESTRICTIONS AVAILABLE INFORMATION INDEPENDENT AUDITOR AND INDEPENDENT REPORTING ACCOUNTANT LEGAL MATTERS ENFORCEABILITY OF CIVIL LIABILITIES LISTING AND GENERAL INFORMATION INDEX TO FINANCIAL STATEMENTS... F-1

3 NOTICE TO INVESTORS In making your investment decision, you should rely only on the information contained in this Listing Particulars. Neither the Issuer, nor any of Goldman Sachs International, Deutsche Bank AG, London Branch and J.P. Morgan Securities plc (collectively, the Initial Purchasers ) have authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this Listing Particulars is accurate as of the date on the front cover of this Listing Particulars only. Neither the delivery of this Listing Particulars nor any sale made hereunder shall under any circumstances imply that the information herein is correct as of any date subsequent to the date on the front cover of this Listing Particulars. This Listing Particulars has been prepared by us solely for use in connection with the offering of the Notes (the Offering ). This Listing Particulars is personal to each offeree and does not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. No action has been, or will be, taken to permit a public offering in any jurisdiction where action would be required for that purpose. Accordingly, the Notes may not be offered or sold, directly or indirectly, nor may this Listing Particulars be distributed, in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. You must comply with all laws applicable in any jurisdiction in which you buy, offer or sell any Notes or possess or distribute this Listing Particulars, and you must obtain all applicable consents and approvals. Neither we nor any of the Initial Purchasers shall have any responsibility for any of the foregoing legal requirements. See Transfer Restrictions. Neither we, the Initial Purchasers, nor any of our or their respective representatives, the Trustee nor any agent named herein are making any representation to you regarding the legality of an investment in the Notes, nor should you construe anything in this Listing Particulars as legal, business, tax or other advice. You should consult your own advisors as to the legal, tax, business, financial and related aspects of an investment in the Notes. In making an investment decision regarding any of the Notes, you must rely on your own examination of our business and the terms of the Offering, including the merits and risks involved. By accepting delivery of this Listing Particulars, you agree to the foregoing restrictions, to make no photocopies of this Listing Particulars or any documents referred to herein and not to use any information herein for any purpose other than considering an investment in the Notes. This Listing Particulars is based on information provided by the Group, and other sources that we believe to be reliable. No representation or warranty, express or implied, is made by the Initial Purchasers or their respective directors, affiliates, advisors and agents, or the Trustee or any agent named herein, as to the accuracy or completeness of any of the information set out in this Listing Particulars, and nothing contained in this Listing Particulars is, or shall be relied upon as, a promise or representation by the Initial Purchasers or their respective directors, affiliates, advisors and agents, whether as to the past or the future. Each prospective investor, by receiving this Listing Particulars, acknowledges that they have not relied on the Initial Purchasers or the Initial Purchasers respective directors, affiliates, advisors and agents in connection with their investigation of the accuracy of this information or their decision whether to invest in the Notes. The Issuer accepts responsibility for the information contained in this Listing Particulars. To the best of the Issuer s knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained in this Listing Particulars is in accordance with the facts and does not omit anything material that is likely to affect the import of such information. However, the information set forth under the sections entitled Exchange Rate and Currency Information, Summary, Industry Overview and Business includes extracts from information and data, including industry and market data, released by publicly available sources in Europe and elsewhere. This information has been accurately reproduced and, as far as the Issuer is aware and has been able to ascertain from information published by those sources, no facts have been omitted which would render the reproduced information inaccurate or misleading. While the Issuer accepts responsibility for the accurate extraction and summarization of such third party information and data, it has not independently verified the accuracy of such third party information and data and accepts no further responsibility in respect thereof. In addition, this Listing Particulars contains summaries, believed to be accurate, of some terms of specific documents, but reference is made to the actual documents, copies of which will be made available upon request for a more complete understanding. All such summaries are qualified in their entirety by such reference. However, as far as the Issuer is aware, no information or data has been omitted which would render reproduced information inaccurate or misleading. See Available Information. The information contained in this Listing Particulars is correct as of the date on the front cover of hereof. Neither the delivery of this Listing Particulars at any time after the date of publication nor any subsequent commitment to purchase the Notes shall, under any circumstances, create an implication that there has been no change in the information i

4 set forth in this Listing Particulars or in the Issuer s or the Group s business since the date on the front cover of this Listing Particulars. References to any website contained herein do not form part of this Listing Particulars. The information set out in those sections of this Listing Particulars describing clearing and settlement arrangements, including the section entitled Book-Entry; Delivery and Form, is subject to any change in or reinterpretation of the rules, regulations and procedures of Euroclear or Clearstream, Luxembourg currently in effect. While we accept responsibility for accurately summarizing the information concerning Euroclear and Clearstream, Luxembourg, we accept no further responsibility in respect of such information. The Notes are available initially only in book-entry form. The Notes were issued in the form of one or more global notes, which were deposited with, or on behalf of, a common depositary for the accounts of Euroclear and Clearstream, Luxembourg. Beneficial interests in the global notes will be shown on, and transfers of beneficial interests in the global notes will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg, and their respective participants, as applicable. See Book- Entry; Delivery and Form. The Notes are subject to restrictions on purchase, transferability and resale, which are described under the section entitled Transfer Restrictions. By possessing this Listing Particulars or purchasing any Note, you will be deemed to have represented and agreed to all of the provisions contained in that section of this Listing Particulars. You should be aware that you may be required to bear the financial risks of your investment for a long period of time. Notes. The Initial Purchasers and certain of their related entities may acquire, for their own accounts, a portion of the The Issuer successfully made an application to list the Notes on the Official List of the Irish Stock Exchange and to have the Notes admitted for trading on the Global Exchange Market thereof. The Issuer submitted this Listing Particulars to the relevant competent authorities in connection with the foregoing listing application. STABILIZATION IN CONNECTION WITH THE OFFERING, GOLDMAN SACHS INTERNATIONAL (THE STABILIZATION MANAGER ) (OR ANY PERSON(S) ACTING ON BEHALF OF THE STABILIZATION MANAGER), MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE CAN BE NO ASSURANCES THAT THE STABILIZATION MANAGER (OR ANY PERSON(S) ACTING ON BEHALF OF THE STABILIZATION MANAGER) WILL UNDERTAKE ANY SUCH STABILIZATION ACTION. SUCH STABILIZATION ACTION, IF COMMENCED, MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFERING IS MADE AND MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 CALENDAR DAYS AFTER THE ISSUE DATE AND 60 CALENDAR DAYS AFTER THE DATE OF ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER ALLOTMENT MUST BE CONDUCTED BY THE STABILIZATION MANAGER (OR ANY PERSON(S) ACTING ON BEHALF OF THE STABILIZATION MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES. ii

5 SETTLEMENT CYCLE The delivery of the Notes was made against payment therefor on the date specified on the front cover of this Listing Particulars, which was the third business day following the date of pricing of the Notes (such settlement cycle being herein referred to as T+3 ). NOTICE TO INVESTORS IN THE UNITED STATES The Notes and the Note Guarantees have not been, and will not be, registered under the U.S. Securities Act, or the laws of any other jurisdiction and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S). The Notes were offered and sold outside the United States to non-u.s. persons in reliance on Regulation S and within the United States to qualified institutional buyers (as defined in Rule 144A of the U.S. Securities Act) in reliance on Rule 144A under the U.S. Securities Act. Prospective purchasers of the Notes are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. For a description of these and certain further restrictions on offers, sales and transfers of the Notes, see Transfer Restrictions. None of the U.S. Securities and Exchange Commission (the SEC ), any U.S. state securities commission or any non-u.s. securities authority has approved or disapproved of the Notes or determined that this Listing Particulars is accurate or complete. Any representation to the contrary is a criminal offence in the United States. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED, 1955, AS AMENDED ( RSA 421-B ) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. European Economic Area NOTICE TO CERTAIN EUROPEAN ECONOMIC AREA INVESTORS This Listing Particulars is not a prospectus and is being distributed to a limited number of recipients for the sole purpose of assisting such recipients in determining whether to proceed with a further investigation of the purchase of, or subscription for, the Notes. This Listing Particulars has been prepared on the basis that all offers of the Notes will be made pursuant to an exemption under the Prospectus Directive, as implemented in member states ( Member States ) of the European Economic Area (the EEA ), from the requirement to produce a prospectus for offers of the Notes. Accordingly, any person making or intending to make any offer within the EEA of the Notes, which are the subject of the placement contemplated in this Listing Particulars, should only do so in circumstances in which no obligation arises for us, the Issuer or any of the Initial Purchasers to produce a prospectus for such offer. Neither we, nor the Issuer, nor the Initial Purchasers have authorized, nor do they authorize, the making of any offer of Notes through any financial intermediary, other than offers made by the Initial Purchasers, which constitute the final placement of the Notes contemplated in this Listing Particulars. In relation to each Member State of the EEA that has implemented the Prospectus Directive (each, a Relevant Member State ), each Initial Purchaser has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date ) it has not made and will not make an offer of Notes that are the subject of this Listing Particulars to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Notes that has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Notes in the Relevant Member State at any time: iii

6 (a) (b) (c) to any legal entity that is a qualified investor as defined in the Prospectus Directive; to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive; or in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of Notes shall result in a requirement for the publication by us, the Issuer or the Initial Purchasers of a prospectus pursuant to Article 3 of the Prospectus Directive or a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an offer of Notes to the public in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including by Directive 2010/73/EU) and includes any relevant implementing measure in the Relevant Member State. United Kingdom This issue and distribution of this Listing Particulars is restricted by law. This Listing Particulars is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by, a person authorized under the Financial Services and Markets Act This Listing Particulars is for distribution only to, and is only directed at, persons who: (i) are outside the United Kingdom; (ii) have professional experience in matters relating to investments (being investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Financial Promotion Order )); (iii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Promotion Order; or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as relevant persons ). Accordingly, by accepting delivery of this Listing Particulars, the recipient warrants and acknowledges that it is such a relevant person. The Notes are available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Notes will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. No part of this Listing Particulars should be published, reproduced, distributed or otherwise made available in whole or in part to any other person without our prior written consent. Hong Kong Each Initial Purchaser has represented and agreed that (1) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (i) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (2) it has not issued or had in its possession for the purposes of issue and will not issue or have in its possession for the purposes of issue any advertisement, invitation or document relating to the Notes, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance. People s Republic of China (PRC) This Listing Particulars does not constitute a public offer of the Notes, whether by sale of by subscription, in the PRC. The Notes will not be offered or sold within the PRC by means of this Listing Particulars or any other document except pursuant to the applicable laws and regulations of the PRC. THIS LISTING PARTICULARS CONTAINS IMPORTANT INFORMATION WHICH YOU SHOULD READ BEFORE YOU MAKE ANY DECISION WITH RESPECT TO AN INVESTMENT IN THE NOTES. iv

7 PRESENTATION OF FINANCIAL AND OTHER DATA Overview On August 18, 2014 (the Hony Acquisition Completion Date ), the Issuer, through PizzaExpress Group Limited (formerly Twinkle Pizza Holding Co Limited) ( PEGL ), completed the acquisition (the Hony Acquisition ) of the entire share capital of each of PizzaExpress (Franchises) Limited, PizzaExpress Operations Limited (formerly Gondola Investments Limited) and PizzaExpress Greater China Limited (together with their subsidiaries, the Acquired PizzaExpress Group ). Each of PizzaExpress Group Holdings Limited ( PEGHL ), PizzaExpress Financing 1 plc ( the Parent ), the Issuer and PEGL was formed for the purpose of facilitating the Hony Acquisition, and, prior to the Hony Acquisition Completion Date, did not engage in any activities other than those related to the Hony Acquisition, including the offering of the Original Senior Secured Notes by the Issuer and the offering of the Existing Senior Notes by the Parent. PEGHL was formed on July 3, 2014 and is the holding company of the Parent. It has no revenue-generating operations or operating assets of its own, other than the ownership of the share capital of the Parent. The Parent was formed on July 14, 2014 and is the intermediate holding company for the Group. The Parent has no revenue-generating operations or operating assets of its own, other than the ownership of the share capital of the Issuer. The Issuer was formed on July 7, 2014 and has no revenue-generating operations or operating assets of its own, other than the ownership of the share capital of PEGL. Since the Hony Acquisition Completion Date, our consolidated financial statements have been the consolidated financial results of PEGHL and its consolidated subsidiaries (the New PizzaExpress Group ). Since the New PizzaExpress Group was created on the Hony Acquisition Completion Date, the most recent unaudited condensed interim financial information of PEGHL available as of the date of this Listing Particulars is as of and for the 33 weeks ended April 5, 2015 (without comparatives). The reporting entity for the consolidated financial statements prior to June 30, 2014 was PizzaExpress Holdings Limited (now Balcombe Street Holdings Limited) ( PE Holdings and, together with its subsidiaries, the Old PizzaExpress Group ). We now report our financial results (i) to our shareholders, at the PEGHL level on a consolidated basis, and (ii) to the holders of the Original Senior Secured Notes and the Existing Senior Notes, at the Parent level on a consolidated basis pursuant to the reporting provisions of the indentures governing the Original Senior Secured Notes and the Existing Senior Notes. Financial Data Based on the foregoing, this Listing Particulars includes or derives information from the following financial statements and information: the unaudited condensed consolidated interim financial information of PEGHL (the Interim Financial Information ) as of and for the 33 weeks ended April 5, 2015 ( 33 Week Interim Period 2015 ) prepared on the basis of the accounting policies set out in note 2 to the unaudited condensed consolidated interim financial information of PEGHL and contained elsewhere in this Listing Particulars, that includes the Pro Forma Financial Information as defined and as described below under As Adjusted and Pro Forma Financial Information; the consolidated financial statements of Balcombe Street Holdings Limited (formerly PE Holdings) as of and for the 52 weeks ended June 29, 2014 ( Financial Year 2014 ) prepared on the basis of the accounting policies set out in note 2 to the consolidated financial statements of Balcombe Street Holdings Limited and contained elsewhere in this Listing Particulars (the 2014 Consolidated Statements ); and the consolidated financial information of PE Holdings as of and for the 52 weeks ended June 30, 2013 ( Financial Year 2013 ) and as of and for the 53 weeks ended July 1, 2012 ( Financial Year 2012 ) prepared on the basis of the accounting policies set out in note 1 to the combined and consolidated financial information of PE Holdings and contained elsewhere in this Listing Particulars (the Consolidated Information and, together with the 2014 Consolidated Statements, the Annual Financial Information ). v

8 This Listing Particulars also contains consolidated financial information of PE Holdings as of and for the 52 weeks ended June 26, 2011 ( Financial Year 2011 ) as supplemental information. The taxation charge included in the consolidated financial information of PE Holdings for Financial Year 2013 was restated in the consolidated financial statements of Balcombe Street Holdings Limited for Financial Year 2014 to reflect a change in group tax relief under the previous ownership structure. The information included in this Listing Particulars for that period is derived from the comparative information included in the consolidated financial statements of Balcombe Street Holdings Limited for Financial Year Going forward, the Holders of the Notes will receive our financial results at the Parent level on a consolidated basis. The financial year of the Group ends on the Sunday nearest to June 30 of each calendar year and the first annual consolidated financial statements for the Parent will be available in respect of the 52 weeks ending June 28, 2015 ( Financial Year 2015 ). Comparability of Financial Information There are no material differences between PEGHL s consolidated financial information and the Parent s consolidated financial information. The material differences between PEGHL s consolidated financial information and PE Holdings consolidated financial information relate to: (i) (ii) (iii) (iv) (v) (vi) the investment by Hony Capital in the equity of PEGHL as part of the Hony Acquisition, compared to the equity of the Acquired PizzaExpress Group contributed by its former owners prior to the Hony Acquisition Completion Date; the indebtedness and interest expense incurred in connection with the Original Senior Secured Notes and the Existing Senior Notes issued in connection with the Hony Acquisition, compared to the outstanding indebtedness and interest expense of the Acquired PizzaExpress Group which indebtedness was repaid and terminated on the Hony Acquisition Completion Date; the impact of the purchase price allocation performed in connection with the Hony Acquisition (including adjustments to goodwill); PE Holdings share of joint venture operating loss from its joint venture in India (the India JV ) (since the India JV did not form part of the Acquired PizzaExpress Group); the total assets less current liabilities of PE Holdings; and, amounts (representing intercompany balances) owed to/due from the Gondola Group (as defined herein) companies (excluding PE Holdings) and the Acquired PizzaExpress Group, which were settled on the Hony Acquisition Completion Date. Neither the India JV nor PE Holdings forms part of the Acquired PizzaExpress Group acquired as a result of the Hony Acquisition. In addition, beginning with Fiscal Year 2015, we began classifying certain operating expenses that were previously reported under cost of sales as administrative expenses (as described in note 2 of the Interim Financial Information) in order to align our external financial reporting and our internal financial reporting. As a result of the foregoing, the historical results of operations of PEGHL and the historical results of operations for PE Holdings, respectively, included elsewhere in this Listing Particulars are not directly comparable. The Interim Financial Information, including the Pro Forma Financial Information, (i) does not include any results of operations for the India JV and (ii) does reflect reclassification of certain operating expenses as if such reclassification occurred on the first day of Interim Period Please see the consolidated financial statements of PEGHL and the notes thereto included elsewhere in this Listing Particulars for further information. LTM Financial Data This Listing Particulars contains certain unaudited financial information of the Group for the 52 weeks ended April 5, 2015 ( LTM Period 2015 ), derived by taking the results of operations for Interim Period 2015 (as defined below under As Adjusted and Pro Forma Financial Information ), adding them to the results of operations for Financial Year 2014 and deducting the results of operations for Interim Period 2014 (as defined below under As Adjusted and Pro Forma Financial Information ). Interim Period 2015 and, to facilitate comparison, Interim Period 2014 do not include any results of operations attributable to the India JV, which was not part of the Acquired PizzaExpress Group, and reflect the reclassification of certain operating expenses from cost of sales to administrative expenses (as vi

9 described in note 2 of the Interim Financial Information) as if such reclassification occurred on the first day of Interim Period For the purposes of calculating the amounts for LTM Period 2015, we therefore also excluded any results of operations attributable to the India JV and reflected the reclassification of certain operating expenses from cost of sales to administrative expenses for the Financial Year Non-UK GAAP Financial Information Certain parts of this Listing Particulars contain non-uk GAAP measures and ratios, including EBITDA, EBITDA margin, Adjusted EBITDA, Estimated Pro Forma Adjusted EBITDA, net rent expense, new site capital expenditures, other capital expenditures, total capital expenditures, free cash flow, free cash flow conversion, working capital, like-for-like sales growth, run rate adjustments, leverage ratios and interest coverage ratios that are not required by, or presented in accordance with, UK GAAP. We believe that these measures are useful indicators of our ability to incur and service our indebtedness and can assist certain investors, security analysts and other interested parties in evaluating us. Because all companies do not calculate these measures on a consistent basis, our presentation of these measures may not be comparable to measures under the same or similar names used by other companies. Accordingly, undue reliance should not be placed on these measures in this Listing Particulars. In particular, EBITDA, Adjusted EBITDA and Estimated Pro Forma Adjusted EBITDA are not measures of our financial performance or liquidity under UK GAAP and should not be considered as an alternative to (a) net income/(loss) for the period as a measure of our operating performance, (b) cash flows from operating, investing and financing activities as a measure of our ability to meet our cash needs or (c) any other measures of performance under UK GAAP. Our non-uk GAAP measures are defined by us as follows: We define EBITDA as the profit/(loss) for the financial period excluding the share of joint venture operating results (for the relevant periods), share based payment charge (for the relevant periods), taxation, interest, depreciation and amortization and before deducting exceptional costs and profit/loss on disposal of fixed assets. We define EBITDA margin as EBITDA as a percentage of Group turnover. We define Adjusted EBITDA as EBITDA for the preceding 52 week period inclusive of an adjustment for expected run rate trading for UK restaurants open less than 18 months. We define Estimated Pro Forma Adjusted EBITDA as Adjusted EBITDA of the Group for the preceding 52 week period inclusive of an adjustment to give effect to the China Acquisition as if the China Acquisition had occurred on the first day of such 52 week period, inclusive of an adjustment for expected run rate trading for China restaurants open less than 18 months. We define net rent expense as aggregate expenses incurred for the period indicated pursuant to our property lease obligations net of rent receivable for sublet properties. We define new site capital expenditures as the capital expenditures we incur in order to purchase and outfit a site in connection with its opening. We define other capital expenditures as all capital expenditures other than new site capital expenditures, principally related to maintenance and refurbishment costs at our restaurants, fitting and fixtures replacement for existing restaurants and other centralized capital expenditures, relating primarily to IT projects. We define total capital expenditures as the purchase of tangible fixed assets as reflected in our cash flow statements. We define free cash flow as EBITDA less other capital expenditures. We define free cash flow conversion as the percentage ratio of EBITDA less other capital expenditures to EBITDA. We define working capital as stock plus receivables from debtors less payables to creditors. We define like-for-like sales growth as sales from restaurants in the UK and Ireland (excluding income generated from concert ticket sales associated with restaurant sites we own that host music events) that have traded for a full financial year at the start of each financial year. This is updated at the start of each financial year. Calculations are performed on a comparable week basis. vii

10 The financial information included in this Listing Particulars is not intended to comply with the applicable accounting requirements of the U.S. Securities Act and the related rules and regulations of the SEC, which would apply if the Offering was being registered with the SEC. As Adjusted and Pro Forma Financial Information We present in this Listing Particulars certain financial information on an adjusted basis to give effect to the issuance of the Notes and the use of proceeds of the Offering, including financial data as adjusted to reflect the effect of the foregoing on the indebtedness of the Group as if the issuance of the Notes and the use of proceeds of the Offering had occurred as of April 5, 2015 in the case of balance sheet data and on April 7, 2014 in the case of profit and loss account data. See Summary Summary Consolidated Financial and Other Information, Capitalization and Management s Discussion and Analysis of Financial Condition and Results of Operations and for a description of the as adjusted effect of the issuance of the Notes and the application of the net proceeds thereof, see Use of Proceeds. The as adjusted financial information has been prepared for illustrative purposes only and does not represent what the actual indebtedness of the Group would have been if the issuance of the Notes and the use of proceeds of the Offering had occurred on April 5, 2015 or April 7, 2014, as applicable; nor does it purport to project our indebtedness at any future date. The Interim Financial Information includes, as set out in note 3 thereof, pro forma condensed consolidated financial information (the Pro Forma Financial Information ) as of and for the 40 weeks ended April 5, 2015 ( Interim Period 2015 ) and the pro forma comparative period as of and for the 40 weeks ended April 6, 2014 ( Interim Period 2014 ) and contained elsewhere in this Listing Particulars, which, to facilitate comparison, excludes income attributable to the India JV and reflects the reclassification of certain operating expenses from cost of sales to administrative expenses, as described in note 2 of the Interim Financial Information, as if such reclassification occurred on the first day of Interim Period Since the New PizzaExpress Group was created on the Hony Acquisition Completion Date, the most recent unaudited condensed interim financial information of PEGHL available as of the date of this Listing Particulars is as of and for the 33 weeks ending April 5, Therefore, the Pro Forma Financial Information for Interim Period 2015 includes seven weeks trading of the Acquired PizzaExpress Group from and including June 30, 2014 up to August 17, 2014, followed by 33 weeks trading of the New PizzaExpress Group from and including August 18, 2014 and up to and including April 5, 2015, plus the comparative period as of and for the 40 weeks ended April 6, We also present in this Listing Particulars Estimated Pro Forma Adjusted EBITDA, which represents the sum of our Adjusted EBITDA and our management s estimate of adjusted EBITDA of the China Targets for the 52 week period ended April 5, 2015, as if the China Acquisition had occurred on April 7, We present Estimated Pro Forma Adjusted EBITDA to show the assumed contribution to the Group s Adjusted EBITDA of the China Targets for the LTM Period Our management s estimate of the adjusted EBITDA contribution of the China Targets is based on historical financial information for the China Targets for the period from April 1, 2014 to March 31, 2015 and management s adjustments for expected run rate trading for those restaurants open for less than 18 months as of March 31, The run rate adjustments are based on anticipated EBITDA for the applicable restaurant once it becomes mature. The China Targets historical financial results and the adjustments described herein may not be indicative of the future results of the China Targets following the consummation of the China Acquisition and the integration of the China Targets into our business. The as adjusted and pro forma financial information has not been prepared in accordance with the requirements of Regulation S-X of the U.S. Securities Act, the Prospectus Directive or any generally accepted accounting standards. Neither the assumptions underlying the adjustments and the pro forma adjustments nor the resulting financial information have been audited or reviewed in accordance with any generally accepted auditing standards. Other Data Certain numerical figures set out in this Listing Particulars, including financial data presented in millions or thousands, certain operating data, percentages describing market share and penetration rates, have been subject to rounding adjustments and, as a result, the totals of the data included in this Listing Particulars may vary slightly from the actual arithmetic totals of such information. Percentages and amounts reflecting changes over time periods relating to financial and other data set forth in the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations are calculated using the numerical data in the consolidated financial information of PE Holdings, the interim financial statements of PEGHL or the tabular presentation of other data (subject to rounding) contained in this Listing Particulars, as applicable, and not using the numerical data in the narrative description thereof. Market and Industry Data In this Listing Particulars, we rely on and refer to information regarding the Group and the market in which it operates and competes. Certain of the market data and certain economic and industry data used in this Listing Particulars was obtained from independent industry publications and reports prepared by industry consultants, including a report viii

11 dated August 2014 prepared by OC&C Strategy Consultants LLP ( OC&C and such report, the OC&C August 2014 Report ) for Gondola Group Limited in the context of the Hony Acquisition and the offering of the Original Senior Secured Notes and the Existing Senior Notes. The OC&C August 2014 Report was not prepared for the purpose of or in connection with this Listing Particulars or the Offering, has not been independently verified and should be treated as a third-party source. OC&C does not assume or accept any responsibility or liability to any person in connection with the use of the market data and statistics or any other information extracted from the OC&C August 2014 Report in connection with this Listing Particulars or the Offering. Industry publications and reports generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. While we believe that each of these studies and publications is reliable, neither we nor the Initial Purchasers have independently verified such data and cannot guarantee their accuracy or completeness. Any third-party information described above and included in this Listing Particulars has been accurately reproduced and as far as we are aware and is able to ascertain from the information published by such third parties, the reproduced information is accurate and no facts have been omitted which would render such information inaccurate or misleading. In particular, any data, statistics or other information contained in the OC&C August 2014 Report and used in this Listing Particulars have not been updated or verified and therefore may not reflect the current position having regard to new or additional information that may be available or changes in the market or otherwise. In addition to the foregoing, certain information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to the Group contained in this Listing Particulars were estimated or derived based on assumptions we deem reasonable and from our own research, surveys or studies conducted by third parties (including the OC&C August 2014 Report) and other industry or general publications. While we believe the Group s internal estimates to be reasonable, these estimates have not been verified by any independent sources and neither the Issuer nor the Initial Purchasers can assure you as to their accuracy or the accuracy of the underlying assumptions used to estimate such data. Our estimates involve risks and uncertainties and are subject to change based on various factors. See Risk Factors, Industry Overview and Business for further discussion. CURRENCY PRESENTATION In this Listing Particulars: all references to pound, sterling, pound sterling, UK pound, UK pound sterling or are to the lawful currency of the United Kingdom; all references to euro, EUR and are to the single currency of the participating member states of the European Union participating in the third stage of economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended or supplemented from time to time; all references to U.S. dollars, USD and $ are to the lawful currency of the United States; all references to renminbi, Chinese renminbi, yuan, Chinese yuan, Chinese yuan renminbi, RMB, CNY, CNH, or are to the lawful currency of the People s Republic of China; and, all references to Hong Kong dollar or HK$ are to the lawful currency of Hong Kong, the Special Administrative Region of the People s Republic of China. ix

12 EXCHANGE RATE AND CURRENCY INFORMATION The following tables set forth, for the periods indicated below, the high, low, average and period end Bloomberg Composite Rate expressed as U.S. dollars per The Bloomberg Composite Rate is a best market calculation, in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these banks. The Bloomberg Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate. The below rates may differ from the actual rates used in the preparation of the consolidated financial information, the interim financial statements and other financial information appearing in this Listing Particulars. We make no representation that the U.S. dollar amounts referred to below could have been or could, in the future, be converted into pound sterling at any particular rate, if at all. Year High Low Average (1) Period end Month High Low Average (2) Period end November December January February March April May June 2015 (through June 12, 2015) (1) The average of the exchange rates on the last business day of each month during the relevant period. (2) The average of the exchange rates on each business day during the relevant period. On June 12, 2015 the Bloomberg Composite Rate between the pound sterling and the U.S. dollar was $ per x

13 CERTAIN DEFINITIONS In this Listing Particulars, the following words and expressions have the following meanings, unless the context otherwise requires or unless otherwise so defined. In particular, capitalized terms set forth and used in the sections entitled Description of Certain Financing Arrangements, and Description of the Notes may have different meanings from the meanings given to such terms and used elsewhere in this Listing Particulars Consolidated Information refers to the consolidated financial information of PE Holdings as of and for Financial Year 2013 and as of and for Financial Year Consolidated Statements refers to the consolidated financial statements of Balcombe Street Holdings Limited (formerly PE Holdings) as of and for Financial Year Week Interim Period 2015 refers to the 33 weeks ended April 5, Agreed Security Principles refers to the Agreed Security Principles as set out in a schedule to the Revolving Credit Facility Agreement as in effect on July 31, 2014, as interpreted and applied mutatis mutandis with respect to the Notes in good faith by the Issuer. Acquired PizzaExpress Group refers to PizzaExpress Greater China Limited, PizzaExpress (Franchises) Limited and PizzaExpress Operations Limited (formerly Gondola Investments Limited) together with their subsidiaries. Annual Financial Information refers to, together, the Consolidated Information and the 2014 Consolidated Statements. ASK refers to the UK casual dining chain ASK Italian, which was owned by the Gondola Group and was our affiliate prior to the Hony Acquisition. China refers to, unless the context indicates otherwise, the People s Republic of China and Hong Kong, the Special Administrative Region of the People s Republic of China. China Acquisition has the meaning ascribed to it under The Transactions The China Acquisition. China Acquisition Agreement means the sale and purchase agreement, dated May 12, 2015, by and among PizzaExpress Group Limited as the buyer and The Greater China Restaurant Company Limited as the seller, as it may be amended from time to time. China Acquisition Completion Date refers to the Closing Date as defined in the China Acquisition Agreement. China Targets refers to PizzaExpress (Hong Kong) Limited and its subsidiaries. See The Transactions The China Acquisition. Clearstream, Luxembourg refers to Clearstream Banking, société anonyme Companies Act refers to the UK s Companies Act 2006, as amended. Deferred Consideration has the meaning ascribed to it under The Transactions The China Acquisition. EU refers to the European Union. Euroclear refers to Euroclear Bank SA/NV. Existing Funding Loan refers to a loan between PizzaExpress Group Limited (formerly Twinkle Pizza Holding Co Limited), as borrower, and the Issuer, as lender, evidencing the terms upon which PizzaExpress Group Limited owes a receivable and debt to the Issuer for the transfer of shares in the Acquired PizzaExpress Group and for PizzaExpress Group Limited to discharge a number of inter-company payables owed by certain members of the Acquired PizzaExpress Group to certain members of the Gondola Group on the Hony Acquisition Completion Date. xi

14 Existing Senior Notes refers to the 200,000,000 aggregate principal amount of 8.625% Senior Notes due 2022 offered and sold by the Parent concurrently with the offering and sale of the Original Senior Secured Notes by the Issuer. Existing Senior Notes Collateral refers to security interests granted over the shares of the Issuer and the Parent s rights under the Existing Senior Notes Proceeds Loan. Existing Senior Note Guarantees collectively refers to the guarantees issued by each of the Existing Senior Notes Guarantors on a senior subordinated basis, in respect of the Existing Senior Notes. Existing Senior Notes Guarantors means the Issuer and the Subsidiary Guarantors. Existing Senior Notes Indenture refers to the indenture governing the Existing Senior Notes, dated July 31, 2014, by and among, inter alios, the Parent and the Existing Senior Notes Trustee. Existing Senior Notes Proceeds Loan refers to the loan of the proceeds of Existing Senior Notes by the Parent, as lender, to the Issuer, as borrower, in order to allow the Issuer to apply the proceeds of the offering of the Existing Senior Notes in connection with the Hony Acquisition. Existing Senior Notes Proceeds Loan Agreement refers to the agreement governing the Existing Senior Notes Proceeds Loan. Existing Senior Notes Trustee refers to Deutsche Trustee Company Limited, as trustee under the Existing Senior Notes Indenture. Financial Year 2012 refers to the 53 weeks ended July 1, Financial Year 2013 refers to the 52 weeks ended June 30, Financial Year 2014 refers to the 52 weeks ended June 29, Financial Year 2015 refers to the 52 weeks ending June 28, First Installment has the meaning ascribed to it under The Transactions The China Acquisition. Gondola refers to Gondola Group Limited, the parent company of the Gondola Group. Gondola Group refers to Gondola and its subsidiaries comprising certain holding companies, the operating subsidiaries that operated the UK casual dining chains ASK and Zizzi, prior to their sale to the Gondola Group to Bridgepoint Capital, and prior to the consummation of the Hony Acquisition, PE Holdings and its consolidated subsidiaries. Guarantors collectively refers to the Parent Guarantor and the Subsidiary Guarantors, and Guarantor refers to each of them. Hony Acquisition refers to the acquisition by the Issuer of all of the issued share capital of the Acquired PizzaExpress Group pursuant to the Hony Acquisition Agreement. Hony Acquisition Agreement means the sale and purchase agreement, dated July 12, 2014, by and among the Issuer and PE Holdings. Hony Acquisition Completion Date refers to August 18, 2014, the date on which the Hony Acquisition was consummated. Hony Capital refers to Hony Capital Fund V, L.P. and/or any of its affiliates or direct or indirect subsidiaries from time to time. IFRS refers to International Financial Reporting Standards as adopted by the European Union. Indenture refers to the Indenture governing the Original Senior Secured Notes and that governs the Notes issued hereby, dated July 31, 2014, as supplemented, between, inter alios, the Issuer, the Guarantors, the Trustee and the Security Agent. xii

15 India JV refers to the PizzaExpress joint venture in India, of which 50% was beneficially owned by PE Holdings, which joint venture was terminated as of August 18, Initial Purchasers refers to Goldman Sachs International, Deutsche Bank AG, London Branch and J.P. Morgan Securities plc, and Initial Purchaser refers to each of them. Intercreditor Agreement refers to the intercreditor agreement dated July 31, 2014 inter alios, the Parent, the Issuer, the Security Agent and the agent under the Revolving Credit Facility on behalf of the lenders thereunder. Interim Financial Information refers to the unaudited condensed consolidated interim financial information of PEGHL as of and for 33 Weeks Interim Period 2015, prepared on the basis of the accounting policies set out in note 2 to the Interim Financial Information and contained elsewhere in this Listing Particulars, which includes the Pro Forma Financial Information. Interim Period 2014 refers to the 40 weeks ended April 6, Interim Period 2015 refers to the 40 weeks ended April 5, Ireland refers to the Republic of Ireland. Issue Date refers to June 5, 2015, the date of issuance of the Notes issued herby. Issuer refers to PizzaExpress Financing 2 plc (formerly Twinkle Pizza plc), a public limited company incorporated under the laws of England and Wales. LTM Period 2015 refers to the 52 weeks ended April 5, Member State refers to a member state of the European Economic Area. Notes Collateral has the meaning ascribed to it under Summary The Offering Security. Note Guarantees collectively refers to the guarantees issued by each of the Guarantors guaranteeing the Notes, and Note Guarantee refers to each of them. Notes refers to the 55.0 million aggregate principal amount of 6.625% Senior Secured Notes due 2021 issued hereby, which constitute a further issuance under the Indenture and form a single series with the Original Senior Secured Notes. OC&C refers to OC&C Strategy Consultants LLP. Offering refers to the offering of the Notes pursuant to this Listing Particulars. Original Senior Secured Notes refers to the 410,000,000 aggregate principal amount of 6.625% Senior Secured Notes due 2021 issued under the Indenture on July 31, Parent or Parent Guarantor refers to PizzaExpress Financing 1 plc (formerly Twinkle Pizza Holdings plc), a public limited company organized under the laws of England and Wales. PE Holdings refers to Balcombe Street Holdings Limited (formerly PizzaExpress Holdings Limited), a private limited company organized under the laws of England and Wales, which was the seller under the Hony Acquisition Agreement and was the previous parent holding company of the Acquired PizzaExpress Group prior to the consummation of the Hony Acquisition. Permitted Collateral Liens has the meaning ascribed to it under Description of the Notes Certain Definitions. Pro Forma Financial Information refers to, as set out in note 3 of the Interim Financial Information, the pro forma condensed consolidated financial information as of and for the 40 weeks ended April 5, 2015 ( Interim Period 2015 ) and the pro forma comparative period as of and for the 40 weeks ended April 6, 2014 ( Interim Period 2014 ), which, to facilitate comparison, exclude income attributable to the India JV and reflect reclassification of certain operating expenses from cost of sales to administrative expenses, as xiii

16 described in note 2 of the Interim Financial Information, as if such reclassification occurred on the first day of Interim Period Regulation S refers to Regulation S under the U.S. Securities Act. Revolving Credit Facility refers to the super senior 20.0 million multicurrency super senior revolving credit facility entered into in connection with the Hony Acquisition. Revolving Credit Facility Agreement refers to the agreement governing the Revolving Credit Facility, dated July 31, 2014, between, inter alios, the Parent, the Issuer, Deutsche Bank AG, London Branch as agent and security agent, and Bank of China Limited, Deutsche Bank AG, London Branch, Goldman Sachs Bank USA, and J.P. Morgan Limited as arrangers. SEC refers to the U.S. Securities and Exchange Commission. Second Installment has the meaning ascribed to it under The Transactions The China Acquisition. Security Agent refers to Deutsche Bank AG, London Branch. Security Documents has the meaning ascribed to it under Description of the Notes Certain Definitions. Senior Secured Notes refers to, together, the Original Senior Secured Notes and the Notes. Subsidiary Guarantors refers to PizzaExpress Group Limited (formerly Twinkle Pizza Holding Co Limited), PandoraExpress 5 Ltd (formerly GondolaExpress Limited), PandoraExpress 7 Limited (formerly Gondola Finance Limited), PizzaExpress Operations Limited (formerly Gondola Investments Limited), PandoraExpress 1 Limited, PandoraExpress 2 Limited, PandoraExpress 3 Limited, PandoraExpress 4 Limited, PizzaExpress Merchandising Limited, PizzaExpress (Restaurants) Limited, PizzaExpress (Wholesale) Limited, PizzaExpress Limited, Riposte Limited, Agenbite Limited and, as of the Issue Date, PizzaExpress International Holdings Limited. Third Installment has the meaning ascribed to it under The Transactions The China Acquisition. Transactions refers to the China Acquisition, the Offering, the use of the net proceeds from the Offering as described under The Transactions and the carrying out of the transactions and entry into documents contemplated by or related to any of the foregoing. Trustee refers to Deutsche Trustee Company Limited, in its capacity as trustee under the Indenture. UK refers to the United Kingdom of Great Britain and Northern Ireland. UK GAAP refers to generally accepted accounting practice in the UK. U.S. Exchange Act refers to the U.S. Securities Exchange Act of 1934, as amended. U.S. GAAP refers to generally accepted accounting principles in the United States. U.S. Securities Act refers to the U.S. Securities Act of 1933, as amended. Zizzi refers to the UK casual dining chain Zizzi, which was owned by the Gondola Group and was our affiliate prior to the Hony Acquisition. In addition to the terms defined above and except where the context otherwise requires, the terms we, us, our, Group, Company, PizzaExpress, and other similar terms refer to, as the context indicates, (i) PE Holdings and its consolidated subsidiaries prior to the consummation of the Hony Acquisition (also, Old PizzaExpress Group ), (ii) PizzaExpress Greater China Limited, PizzaExpress (Franchises) Limited and PizzaExpress Operations Limited (formerly Gondola Investments Limited) together with their subsidiaries (also, Acquired PizzaExpress Group ) and (iii) PEGHL and its consolidated subsidiaries on and from the consummation of the Hony Acquisition (also, New PizzaExpress Group ). xiv

17 INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This Listing Particulars contains forward-looking statements within the meaning of the securities laws of certain jurisdictions, including statements under the captions Summary, Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview, Business and in other sections. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the words believes, estimates, anticipates, expects, intends, may, will, plans, continue, ongoing, potential, predict, project, target, seek or should or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Listing Particulars and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward looking statements are not guarantees of future performance and that our actual financial condition, results of operations and cash flows, and the development of the industries in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this Listing Particulars. In addition, even if our financial condition, results of operations and cash flows, and the development of the industries in which we operate, are consistent with the forward-looking statements contained in this Listing Particulars, those results or developments may not be indicative of results or developments in subsequent periods. Important risks, uncertainties and other factors that could cause these differences include, but are not limited to those relating to: adverse changes in consumer discretionary spending and general economic conditions; the highly competitive nature of the restaurant industry; fluctuations in price and availability of food commodities, packaging materials and freight; shortages or interruptions in our supply chain; increase in labor costs; our ability to extend our leases; our ability to successfully respond to consumer preferences and perceptions; our ability to grow our restaurant operations, both in the UK and Ireland and abroad; the seasonality of our business; the reputation of our business; the safety of our products and/or the food industry in general; regulatory compliance; the performance of our third-party suppliers to which we outsource the manufacturing and packaging of our retail products; the competitive grocery-trading environment and the possibility that our retailer customers may reduce their stock of, or delist entirely, our retail offerings or promote their own branded fresh prepared food products; our ability to successfully manage our international operations; the possibility that the interests of our principal shareholders may be inconsistent with the interests of the holders of the Notes; factors affecting our leverage and our ability to service our debt; xv

18 the effects of our restrictive debt covenants on our ability to finance our future operations and capital needs and to pursue business opportunities and activities; risks associated with the China Acquisition; and other factors discussed or referred to in this Listing Particulars. xvi

19 The foregoing factors and others described under Risk Factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date on the front cover of this Listing Particulars. We urge you to read this Listing Particulars, including the sections entitled Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and Business, for a more complete discussion of the factors that could affect our future performance and the industries in which we operate. Any forward-looking statements are only made as at the date on the front cover of this Listing Particulars and, except as required by law or the rules and regulations of any stock exchange on which the Notes are listed, we undertake no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Listing Particulars, including those set forth under Risk Factors. xvii

20 SUMMARY This summary highlights certain information about us and the Offering described elsewhere in this Listing Particulars. This summary is not complete and does not contain all the information you should consider before investing in the Notes. The summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information included elsewhere in this Listing Particulars, including the consolidated financial statements and the interim condensed consolidated financial information, and the related notes, contained elsewhere in this Listing Particulars. You should read carefully the entire Listing Particulars to understand our business, the nature and terms of the Notes and the tax and other considerations which are important to your decision to invest in the Notes, including, without limitation, the risks discussed under the caption Risk Factors. OVERVIEW We are the largest casual dining restaurant operator in the UK by number of locations, with a menu focusing on pizza and other Italian cuisine served in contemporary surroundings. We opened our first restaurant fifty years ago in Soho, London and, as at April 5, 2015, had 435 restaurants across the UK operating under primarily the PizzaExpress brand and 14 restaurants in Ireland operating under the Milano brand. PizzaExpress is an iconic brand in the UK and has one of the highest unprompted brand recognitions among UK casual dining operators. We are one of the most frequented restaurant chains in the UK, with an average spend per head of (including VAT) in the UK and Ireland for Interim Period In addition to our presence in the UK and Ireland, we have a growing international business. As at April 5, 2015, we had 76 franchise restaurants located in China, Cyprus, Gibraltar, India, Indonesia and the Middle East, and one Company-operated restaurant in Beijing, China that opened in June Following our acquisition in May 2015 of the franchise business that operated our seven restaurants in the United Arab Emirates and following the acquisition of the China franchise businesses pursuant to the China Acquisition, we expect that we will have 35 international Company-operated restaurants and 42 international franchise restaurants. To complement our Company-operated and franchise restaurant business, we offer a range of PizzaExpress and Milano branded retail products in the UK and Ireland, respectively, including chilled bakery products (such as pizza, dough balls and garlic bread), salad dressings and fresh pasta, which are produced under license and sold in a number of leading food retailers. We generated Group turnover and Adjusted EBITDA of million and million, respectively, for LTM Period Our restaurant operations in the UK and Ireland contributed 89.4% of our EBITDA, and achieved like-for-like sales growth of 5.7%, for this period. INDUSTRY OVERVIEW We primarily operate in the full-service restaurant segment of the UK eating and drinking out market, which consists primarily of full-service branded restaurants (including chain casual dining restaurants) and independent full-service restaurants. This market was valued at approximately 61.1 billion in 2012 and delivered growth of approximately 4.3% between 2010 and 2012, following a slight decline during the recession, driven by the increasing popularity of eating out among UK consumers, higher disposable income levels, generally increased desire for greater convenience and an increased willingness of UK consumers to try new eating venues. We compete in the chain casual dining sub-segment, which was valued at approximately 3.2 billion in The sub-segment is expected to grow at a CAGR of approximately 8.8% per annum between 2013 and 2019 and between 2.6% and 4.3% per annum on a like-for-like basis for the same period, according to management estimates taking into consideration the OC&C August 2014 Report. Growth in the chain casual dining sub-segment between 2008 and 2012 outperformed the larger full-service restaurant segment and is projected to continue to outperform the larger market, taking market share from independent full-service restaurants (through better like-for-like performance and continued new restaurant growth) due to the benefits that chain restaurants realize from increased purchasing power, efficiencies of scale and enhanced access to capital combined with their ability to attract stronger management teams to drive strategy, build strong brands and engage customers in a sophisticated manner. THE CHINA ACQUISITION RATIONALE AND BENEFITS We have established ourselves internationally primarily through franchise restaurants, with 76 franchise restaurants across 12 international geographies in China, Cyprus, Gibraltar, India, Indonesia and the Middle East as at April 5, We have been implementing, and plan to continue to implement, our international growth strategy by opening Company-operated restaurants in attractive markets with expected high demand, as well as franchise restaurants in local markets where we believe working with a franchise partner is more appropriate for example, where it may be 1

21 difficult for us to operate independently or where market potential is more limited. In line with this strategy, on May 7, 2015, we acquired the franchise business in the United Arab Emirates, which was purchased with cash in hand and which added seven restaurants to our Company-operated portfolio. We now intend to acquire the Chinese franchise businesses. Our franchise restaurants in Hong Kong, Shanghai and Shenzhen are managed by the same franchise partner. We had previously negotiated options to acquire the franchisee s businesses during two three month windows in 2016 and in 2018, respectively. Given the pace of development in the chain casual dining market in China and the continued positive momentum in our operations in the region, we believe there are strong benefits to acquiring the China franchise business now rather than relying on the call options. Through the current franchise arrangement in China, we receive royalty income on net sales and an opening fee for every new franchise opening. Following the China Acquisition, the full EBITDA and net sales from the China Targets will become attributable to us. The estimated turnover and Adjusted EBITDA of the China Targets for the twelve month period ended March 31, 2015 were 37.5 million and 5.6 million, respectively. Our expansion plan in China remains to open restaurants with a hub and spoke approach by building on our existing presence in the major cities, expanding brand awareness, and continuing the spread to nearby smaller cities over the longer term. We plan to open up to new restaurants per year in China. Longer-term, we anticipate that the majority of our EBITDA growth internationally will arise from the opening of new Company-operated restaurants in China, which we expect to be able to execute more rapidly under our ownership than under a franchise approach. THE TRANSACTIONS The China Acquisition On May 12, 2015, PizzaExpress Group Limited entered into a sale and purchase agreement with The Greater China Restaurant Company Limited, as seller, to acquire (the China Acquisition ) PizzaExpress (Hong Kong) Limited ( PE Hong Kong ) and its subsidiaries (collectively, the China Targets ). The China Targets constitute the existing PizzaExpress franchise business in Hong Kong, Shanghai and Shenzhen, which we are acquiring from our current Chinese franchise partner (who is the majority owner of The Greater China Restaurant Company Limited). Our Chinese franchise partner will continue to work with us for up to one year after the consummation of the China Acquisition to assist with transitional integration of the China Targets with our business. We have appointed a new CEO and are in the process of appointing a new CFO for the China Targets. See The Transactions. The Offering The proceeds of the Offering, less certain costs, fees and expenses associated with the China Acquisition and the Offering, will be used to finance the First Installment of HK$624.0 million (approximately 52.6 million based on the exchange rate as of May 28, 2015) of the purchase price of the China Acquisition and for general corporate purposes. See Use of Proceeds. OUR COMPETITIVE STRENGTHS We believe that we have the following competitive strengths: Leading UK chain casual dining brand with broad appeal and excellent competitive position We are the largest chain casual dining restaurant in the UK, with a well-invested portfolio of 435 Company-operated restaurants in the UK as at April 5, 2015, well diversified across regions and location types. After 50 years of operational history, PizzaExpress is one of the most recognized chain casual dining restaurant brands in the UK, enjoying one of the highest unprompted brand recognitions among UK casual dining operators and a 94% prompted brand recognition rate. The PizzaExpress dining experience appeals to a broad consumer demographic across multiple usage occasions and resulted in us being a Gold Winner in the Mumsnet Family Friendly Awards in March We believe the strength and appeal of our brand is underpinned by the experience we provide customers, and we outperform the chain casual dining competitors of a comparable scale on a number of key metrics, including quality of food, service and consistency. Fast growing market underpinned by favorable economic conditions Consumer expenditure in the UK is projected to increase by approximately 5.1% per annum between 2013 and The UK chain casual dining market is therefore expected to continue to grow strongly, at a CAGR of 8.8% per annum between 2013 and 2019, reflecting a combination of strong like-for-like growth, new space growth and branded chains continuing to take market share from independent full-service restaurants. We believe that we are well positioned to capitalize on this growth given our leading market position, brand awareness and broad consumer appeal. 2

22 Simple, proven and resilient business model We believe that the key to our success is the simplicity of our restaurant model. We install and operate a single cooking platform (an oven) in all our UK and Ireland restaurants that has the benefits of comparatively low installation, maintenance, operational (including kitchen staff) costs, which enables us to achieve high margins. In addition, we offer our customers a focused menu primarily oriented around pizza. This focused menu enables us to deliver a freshly prepared customer offering to a consistently high standard, with the benefit of requiring lower cost ingredients given its low protein content, as well as to derive economies of scale in purchasing. PizzaExpress has developed a proprietary series of global operational and marketing procedures and training programs, which we call the PizzaExpress Way, which are designed to ensure a consistently high level of performance, including customer experience, is delivered consistently across our operations. Our restaurant model is flexible and is adaptable to different location types, sizes of restaurant and geographies. For LTM Period 2015, substantially all of our UK and Ireland restaurants were profitable at the EBITDA level. Well invested, highly attractive restaurant portfolio We believe we have a unique portfolio of restaurant sites across the UK and Ireland, which has been carefully developed over many years and which cannot be easily replicated by our competitors. Most of our restaurants are located in high-pedestrian traffic venues, such as high-streets, tourist locations, shopping centers and commercial districts, which allow for a consistent and large captive audience with minimal marketing expense. Additionally, we invest in restaurant design with distinctive and contemporary decor. Each location is individually styled, incorporating original elements for each neighborhood or location and complemented with familiar PizzaExpress branding accents. We have an established refurbishment cycle in place to maintain estate age and quality of our portfolio. We undertake a minor restaurant refurbishment approximately every five years and a major restaurant refurbishment approximately every ten years. We aim to refurbish approximately 50 of our restaurant sites per annum as we believe our customers respond positively to format updates, which is evidenced by our restaurants generally experiencing increased sales following a refurbishment. We believe that due to our brand recognition, superior credit profile and high volume pedestrian traffic that we generally attract, we are a highly attractive tenant to landlords. Our average lease length is 23 years, with an average unexpired lease of approximately 12 years. As a result, we are able to maintain our sites for a significant period of time and we expect to be able to open new restaurants in desirable locations with relative ease. Enhanced brand recognition through penetration into a growing and profitable retail market Our range of PizzaExpress branded products have been produced under license and sold in food retailers throughout the UK since 1997 and represented 9.3% of our EBITDA in LTM Period We offer the leading non-food retailer branded chilled pizza in the UK, the second largest salad dressing brand and hold leading market positions in our other retail product offerings. Our licensed retail products are sold by a number of leading UK food retailers including Sainsbury s, Tesco, Waitrose, Morrison s, Ocado and Co-Op. In LTM Period 2015 we sold over 30 million chilled pizzas in food retailers. Our recent achievements include ranking 88 th (up five places) in Britain s Biggest Grocery Brands 2015, the successful launch of our new Romana pizzas in Sainsbury s and Waitrose, and our PizzaExpress House Light salad dressing achieving number one ranking in the category for the first time in March Our retail offering provides increased brand recognition, cross-promotion between our restaurant and retail customers and diversification of our earnings. Resilient financial profile, stable margins and high free cash flow generation The combination of our competitive strengths has enabled us to deliver resilient financial performance. We achieved consistent year-over-year growth in Group turnover and EBITDA over the last three financial years and generated consistently high EBITDA margins, which averaged 22.7% over the same period. In addition, our portfolio of restaurants is well invested as a result of our established refurbishment cycles, resulting in a modest level of maintenance and other capital expenditure. As a result, we achieve a high level of free cash flow conversion, which averaged 86.7% over the past three financial years. The ratio of our net total indebtedness to Adjusted EBITDA decreased from 6.5x as at April 6, 2014 to 5.6x as at April 5, 2015 driven by growth in our Adjusted EBITDA from 92.2 million for the twelve months ended April 6, 2014 to million for LTM Period Highly capable management team, supported by a highly engaged workforce We believe we have a strong management team with extensive restaurant and food retail industry experience and a track record of operational excellence that we believe is necessary to successfully lead the development of our business. The senior management team consists of six individuals with extensive experience in the hospitality industry. Our management team is supported by approximately 10,500 employees worldwide. Our culture of progression through 3

23 the business, leading induction program and emphasis on continued training results in a highly engaged workforce with lower employee turnover compared to our competitors. OUR STRATEGY Our strategy focuses on the continued growth of the UK and Ireland business, through sustained like-for-like growth in covers and average spend per head and new restaurant roll-out, supported by our iconic brand, and the opportunity to grow our presence in selected international markets, primarily China. This strategy is based on the following initiatives, which we believe will continue to distinguish us from our competitors in the future: UK and Ireland According to management estimates, taking into consideration the OC&C August 2014 Report, the UK chain casual dining market is projected to grow by a CAGR of approximately 8.8% from 2013 to 2019, with like-for-like sales growth of between 2.6% and 4.3% per year over the same period, underpinned by improving economic growth and higher consumer discretionary spending. As a result, we believe there are significant opportunities to continue growing our UK and Ireland business, through sustained like-for-like growth and new restaurant roll-out. Maintain and enhance our strong customer offering We aim to continue to deliver an outstanding customer experience through our commitment to quality food, excellent customer service and attractive restaurants. We have an established track record of innovation in food, designed to maintain and enhance existing customer interest and attract new customers to the brand. We regularly review our menu offering to incorporate strategic innovation, with the aim of driving sales and/or increasing profitability. For example, during Interim Period 2015, we introduced a new spring menu, which we believe was well received by customers, and launched a new category, the Romana 65s, which we consider to be a fresh upgrade to some of our iconic pizzas from the past 50 years. In addition, we intend to continue our restaurant refurbishment program to maintain the quality of our portfolio and enhance the dining experience at PizzaExpress for our customers. We believe our refurbishment format has been received positively by our customers and restaurants have generally experienced increased sales following refurbishment. Continue to utilize our effective sales strategies to drive profitable growth We have well-established sales and promotional strategies to drive profitable growth. These strategies include our targeted promotional plan to drive customer acquisition and retention, delivered using our proprietary digital database of approximately 3.8 million registered users. This strategy seeks to drive customer footfall and improve capacity utilization in quieter periods through the use of promotional discounts, offers and partnership deals. During peak periods when restaurants are largely at capacity, we seek to maximize average spend per head and cover turn, primarily through excluding promotional discounts, reducing dwell times (by effective labor management) and focusing on set menu deals. In addition to our promotional strategy of increasing weekday customer footfall and weekend spend, we aim to drive financial performance through differentiated pricing across regions and daytime sales strategies (using different menus and excluding certain sites from promotional discounts), and the upselling of specific higher margin products. Optimize efficiency to increase margins We aim to continue operating efficiently and offsetting input cost inflation. We manage raw material costs by employing a range of cost control measures, including leveraging our economies of scale in purchasing, substituting selected products with unbranded products (such as coffee, pasta and sorbet) and working closely with our internal food development team to buy products of the right quality at the right cost. Additionally, we aim to contain labor costs by emphasizing efficient and flexible part-time contracts and reduce non-food and labor costs through a number of ongoing cost-saving initiatives. Expand our operations through new restaurant openings We have an established track record of delivering sustained growth in the UK restaurant portfolio, and on average have opened approximately 18 new sites per annum in the UK and Ireland over the past seven years, opening 124 new restaurant sites over the period. Through a detailed analysis of the UK market, we have identified over 200 locations into which we believe we could successfully expand, including 24 sites where we have begun the legal process of securing the sites. We plan to open up to 100 new locations in the UK in the next five years. We will continue to increase the number of Company-operated restaurants in a disciplined manner by assessing the relevant characteristics of each potential new restaurant site, the performance of other brands in the neighborhood and our knowledge of the local market. 4

24 Grow our retail presence in the UK The retail chilled pizza market in the UK was valued at approximately 437 million in 2012 and is projected to grow a further 3.2% per year between 2012 and 2018, according to management estimates taking into consideration the OC&C August 2014 Report. We aim to capitalize on this expected growth by strengthening our already strong relationships with UK food retailers in order to increase our shelf space, product range and store penetration. Accessing new retailers is also a key component of our growth strategy for our retail offerings. We intend to enhance cross-promotional efforts between our restaurants and retail offerings and lever our strong brand recognition in order to increase our customer base. We also seek to optimize contract terms in order to maintain and improve margins. International We believe pizza has broad appeal across the globe, which, together with our innovative menu, accessible price-points and excellent customer service has enabled our international restaurants to thrive. As the casual dining sector is a largely underdeveloped, yet fast growing, sector in emerging economies, there is limited direct competition. We plan to continue our expansion into these markets, with a particular focus on China where the middle classes and urbanization are increasing rapidly. For LTM Period 2015, our international operations constituted 1.3% of our EBITDA, largely generated through royalties under franchise arrangements; however we believe there are opportunities to increase the proportion of EBITDA generated from our international operations in the future. The PizzaExpress brand has been established in China for several years, with our first restaurant in Hong Kong open since As of April 5, 2015, there were 28 PizzaExpress restaurants in China, located in Hong Kong (13), Shanghai (13), Shenzhen (one) and Beijing (one), of which eight were opened during LTM Period 2015 (one in Hong Kong, five in Shanghai, our first spoke city restaurant in Shenzhen, and one restaurant in Beijing). We directly operate the restaurant in Beijing, with the restaurants in Hong Kong, Shanghai and Shenzhen currently operating under franchise arrangements with our China franchise partner. Our expansion strategy in China is to continue to primarily focus on opening Company-operated restaurants with a hub and spoke approach by building on our existing presence in major cities, expanding brand awareness, and then spreading to nearby smaller cities over the longer term. In connection with that strategy, we had previously negotiated call options with our Chinese franchise partner to acquire the China franchise business, exercisable at our discretion within two three month windows in 2016 and in 2018, respectively. We have elected to acquire the China franchise business now, however, given the pace of development in the chain casual dining market in China and the continued positive momentum in our operations in the region. We believe that our principal shareholder, Hony Capital, is well-positioned to support our growth plans in China, given their local expertise, relationships and long track record investing in this market. We plan to open up to new restaurants per year in China. OUR CONTROLLING PRINCIPAL SHAREHOLDER Hony Capital is the indirect principal shareholder of the Issuer. Hony Capital, founded in 2003 and sponsored by Legend Holdings Corporation, is a leading China-focused private equity firm with approximately $7.0 billion of assets under management. Hony Capital primarily focuses on investments in the consumer, retail, industrial, healthcare and modern services sectors (including financial, media and technology/online related services). 5

25 CORPORATE STRUCTURE AND CERTAIN FINANCING ARRANGEMENTS The following diagram summarizes, in simplified form, our corporate structure and principal outstanding financing arrangements after giving effect to the Transactions. The diagram does not include all entities in the Group, nor all of the debt obligations thereof. For a summary of the debt obligations identified in this diagram, please refer to the sections entitled Description of the Notes, Description of Certain Financing Arrangements and Capitalization for further information. (1) Hony Capital is the indirect controlling principal shareholder of the Issuer. There are two other significant shareholders, Jinjiang Capital and Bank of China Group Investment Limited, which each indirectly hold, through affiliates, minority ownership interests in the Issuer. Certain members of our management, through affiliates, also hold indirect minority ownership interests in the Issuer through an equity incentive program. See Principal Shareholders. 6

26 (2) On the Hony Acquisition Completion Date, PEGHL issued million of subordinated shareholder loan notes to a parent company. PEGHL in turn lent million to the Parent pursuant to a subordinated shareholder loan agreement. See Description of Certain Financing Arrangements Subordinated Shareholder Funding and note 10 to the Interim Financial Information. (3) The entities in the Restricted Group are subject to the covenants in the Revolving Credit Facility Agreement, the Indenture and the Existing Senior Notes Indenture. (4) The Existing Senior Notes are the Parent s senior obligations and are guaranteed on a senior subordinated basis by the Issuer and by the Subsidiary Guarantors (the Existing Senior Note Guarantees ). The Existing Senior Notes and the Existing Senior Note Guarantees are secured on a second priority basis by the Existing Senior Notes Collateral (as defined and described in Description of the Certain Financing Arrangements Existing Senior Notes. (5) On August 18, 2014, the Parent made a proceeds loan available to the Issuer (the Existing Senior Notes Proceeds Loan ), with the proceeds of the offering of the Existing Senior Notes. See Description of Certain Financing Arrangements Existing Senior Notes Proceeds Loan. (6) On July 31, 2014, the Parent and the Issuer, among others, entered into the Revolving Credit Facility Agreement to provide for a revolving credit facility of up to 20,000,000. The Revolving Credit Facility was made available for drawing, as of August 18, 2014, to the Parent, the Issuer, PizzaExpress Group Limited ( PEGL ) and certain other subsidiaries of the Parent that become borrowers under the Revolving Credit Facility, for general corporate and/or working capital purposes. The Revolving Credit Facility is guaranteed on a senior basis by the Issuer and the Guarantors. The Revolving Credit Facility is secured by first-ranking security interests (subject to the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens) granted on a first-priority basis over the Notes Collateral. See Description of Certain Financing Arrangements Revolving Credit Facility Security. Under the terms of the Intercreditor Agreement, lenders under the Revolving Credit Facility, creditors of certain other indebtedness permitted to be secured by the Notes Collateral and counterparties to certain hedging obligations will receive proceeds from the enforcement of the Notes Collateral in priority to the holders of the Notes. See Description of Certain Financing Arrangements Intercreditor Agreement for further information. (7) The Notes are Additional Notes under the Indenture and are part of the same series as the Original Senior Secured Notes. The Notes are the Issuer s senior obligations and are guaranteed on a senior secured basis as of the Issue Date by the Parent and the Subsidiary Guarantors (the Note Guarantees ). The Note Guarantees are subject to certain contractual and legal limitations under applicable laws, and may be released under certain circumstances. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations and Description of the Notes Note Guarantees. The Notes and the Note Guarantees are secured on a first-ranking basis (subject to the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens) by the Notes Collateral. See Description of the Notes Security. If the China Acquisition Completion Date does not occur on or before one Business Date prior to the last Business Day of the Special Mandatory Redemption Period, the Notes will be subject to a special mandatory redemption at 100% of the initial issue price of such Notes plus accrued and unpaid interest and additional amounts, if any, from February 1, 2015 to the Special Mandatory Redemption Date. See Description of the Notes Special Mandatory Redemption. (8) On August 18, 2014, the Issuer entered into a loan agreement with PEGL (the Existing Funding Loan ), following application by it of the proceeds of the offering of the Original Senior Secured Notes and the amount borrowed from the Parent under the Existing Senior Notes Proceeds Loan in order to complete the Hony Acquisition. See Description of Certain Financing Arrangements Existing Funding Loan. (9) We are required under the terms of the Revolving Credit Facility to maintain guarantor average of at least 80% of consolidated EBITDA and consolidated total assets (subject to certain exceptions). Each of the guarantors under the Revolving Credit Facility, except for the Issuer, also guarantees the Original Senior Secured Notes and the Existing Senior Notes, and guarantee the Notes. The Subsidiary Guarantors accounted for 97.9% of EBITDA of PEGHL and its consolidated subsidiaries for LTM Period 2015 and 95.9% of total assets of PEGHL and its consolidated subsidiaries as of April 5, Adjusted to give effect to the Transactions as if the Transactions had occurred on the first day of LTM Period 2015, the Subsidiary Guarantors accounted for 93.9% of EBITDA of PEGHL and its consolidated subsidiaries for LTM Period See Description of Certain Financing Arrangements Revolving Credit Facility Guarantees for further information. For the Issuer s, the Guarantors, the non-guarantors and PizzaExpress (Restaurants) Limited s total net liabilities/assets contributions and EBITDA of the Parent and its consolidated subsidiaries as of and for the 52 weeks ended April 5, 2015, please see Listing and General Information General Information. (10) We expect that PEGL will initially hold the beneficial interest in the shares of PE Hong Kong and its subsidiaries following the China Acquisition, which will subsequently be transferred to PEIHL. We expect that PEIHL will hold the legal title to, and subsequently the beneficial interest in, the shares of PE Hong Kong and its subsidiaries following the China Acquisition. (11) The members of our Group which are not and will not be Guarantors accounted for 2.1% of EBITDA of PEGHL and its consolidated subsidiaries for LTM Period 2015 and 4.1% of total assets of PEGHL and its consolidated subsidiaries as of April 5,

27 THE OFFERING The following is a brief summary of certain terms of the Offering. It may not contain all the information that is important to you. For additional information regarding the Notes and the Note Guarantees, see Description of the Notes and Description of Certain Financing Arrangements Intercreditor Agreement. Issuer... PizzaExpress Financing 2 plc (formerly Twinkle Pizza plc), a public limited company organized under the laws of England and Wales (the Issuer ). Notes... 55,000,000 aggregate principal amount of 6.625% Senior Secured Notes due 2021 (the Notes ). The Notes were issued as additional notes under the indenture entered into by the Issuer and the Trustee, among others, dated July 31, 2014, pursuant to which the Original Senior Secured Notes were issued (the Indenture ). The Notes were initially issued bearing temporary international securities identification numbers (the ISINs ) and temporary common codes that differ from the ISINs and common codes assigned to the Original Senior Secured Notes, and also bear an applicable restrictive U.S. Securities Act legend referred to under the heading Transfer Restrictions in this Listing Particulars. See Description of the Notes Transfer and Exchange. On and from the applicable consolidation date, the Notes will be consolidated and fully fungible with the Original Senior Secured Notes. The consolidation date for Notes sold outside the United States to non-u.s. persons in reliance on Regulation S under the U.S. Securities Act will be the earlier of 40 days after the later of the Issue Date (as defined below) and the earliest date or dates permitted under U.S. federal securities laws. The consolidation date for Notes sold within the United States to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act will be the earlier of one year after the later of the date of the Issue Date and the earliest date or dates permitted under U.S. federal securities laws. Following the replacement of the applicable temporary ISINs and temporary common codes as set forth under Listing and General Information, the Notes will become fully fungible with the Original Senior Secured Notes for trading purposes. The Notes (i) have substantially the same terms as those of the Original Senior Secured Notes and (ii) together with the Original Senior Secured Notes, are treated as a single class for all purposes under the Indenture, including with respect to waivers, amendments, redemptions and offers to purchase, except in relation to the special mandatory redemption discussed below. Issue Date... June 5, 2015 (the Issue Date ). Issue Price % plus an amount equal to the accrued interest on the Notes from February 1, 2015 to, but not including, the Issue Date. Purchasers of the Notes were required to pay accrued interest totaling per 1,000 principal amount of Notes, from and including February 1, 2015 to but excluding the Issue Date. Maturity Date... August 1, Interest Payment Dates... Semi-annually in arrears on each February 1 and August 1, commencing August 1, Interest will accrue from February 1, Interest % per annum. Denomination... Each Note will have a minimum denomination of 100,000 and integral multiples of 1,000 in excess thereof. Ranking of the Notes... The Notes: are general, senior obligations of the Issuer, secured as set forth below under Security; rank pari passu in right of payment with all existing and future indebtedness of the Issuer that is not subordinated in right of payment to the Notes, including the Issuer s obligations in respect of the Revolving Credit Facility Agreement as a borrower thereunder and the Original Senior Secured Notes; rank senior in right of payment to all existing and future indebtedness of the Issuer that is subordinated in right of payment to the Senior Secured Notes, including the guarantee given by the Issuer in favor of the Existing Senior Notes; are effectively subordinated to any existing and future indebtedness of the Issuer that is secured by property or assets that do not secure the Senior Secured Notes, to the extent of the value of the property or assets securing such indebtedness; 8

28 are effectively junior to any existing and future indebtedness of the Issuer that will receive proceeds from any enforcement action over the property and assets securing the Senior Secured Notes on a priority basis, including indebtedness under the Revolving Credit Facility, certain hedging obligations and certain other future indebtedness; and are effectively subordinated to any existing and future indebtedness of subsidiaries of the Parent that are not Guarantors. The Notes are subject to the terms of the Intercreditor Agreement. See Description of Certain Financing Arrangements Intercreditor Agreement. Note Guarantees... The Issuer s obligations under the Notes are guaranteed (collectively, the Note Guarantees ) on a senior basis by the Parent and by the Subsidiary Guarantors as of the Issue Date, which Guarantors also guarantee the Original Senior Secured Notes. The Note Guarantees are full and unconditional and joint and several but are subject to certain contractual and legal limitations under applicable laws, and may be released in certain circumstances. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations, Description of the Notes Note Guarantees and Risk Factors Risks Related to the Notes and the Offering. The Subsidiary Guarantors accounted for 97.9% of EBITDA of PEGHL and its consolidated subsidiaries for the LTM Period 2015 and 95.9% of total assets of PEGHL and its consolidated subsidiaries, as of April 5, The members of our Group which are not and will not be Guarantors accounted for 2.1% of EBITDA of PEGHL and its consolidated subsidiaries for LTM Period 2015 and 4.1% of total assets of PEGHL and its consolidated subsidiaries as of April 5, Ranking of the Note Guarantees.. Each Note Guarantee: is a general, senior obligation of the relevant Guarantor, secured on a first-priority basis as set forth below under Security ; ranks pari passu in right of payment with all existing and future indebtedness of that Guarantor that is not subordinated in right of payment to such Note Guarantee, including such Guarantor s obligations in respect of the Revolving Credit Facility and the Original Senior Secured Notes; ranks senior in right of payment to all existing and future indebtedness of that Guarantor that is subordinated in right of payment to such Note Guarantee including the Existing Senior Notes Guarantor s guarantee of the Existing Senior Notes; is effectively senior to all of that Guarantor s existing and future indebtedness that is unsecured, or secured on a basis junior to the security granted by such Guarantor in respect of its Note Guarantee, in each case to the extent of the value of such Guarantor s property or assets securing its Note Guarantee; and is effectively subordinated to any existing and future indebtedness of that Guarantor that is secured by property or assets that do not secure such Note Guarantee on an equal basis, to the extent of the value of the property or assets securing such indebtedness. The Note Guarantees are subject to the terms of the Intercreditor Agreement. See Description of Certain Financing Arrangements Intercreditor Agreement. Security... The Notes and the Note Guarantees are secured on a first-ranking basis, subject to the operation of the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens, by security interests granted over the same assets that secure the Revolving Credit Facility and the Original Senior Secured Notes, which consist of: substantially all of the assets of the Issuer, the Parent, PizzaExpress Group Limited (previously Twinkle Pizza Holding Co Limited), PandoraExpress 5 Ltd (formerly Gondola Express Limited), PandoraExpress 7 Limited (formerly Gondola Finance Limited), PizzaExpress Operations Limited (formerly Gondola Investments Limited), PandoraExpress 1 Limited, PandoraExpress 2 Limited, PandoraExpress 3 Limited, PandoraExpress 4 Limited, PizzaExpress Merchandising Limited, PizzaExpress (Restaurants) Limited, PizzaExpress (Wholesale) Limited, PizzaExpress Limited, Riposte Limited, Agenbite Limited and PizzaExpress International Holdings Limited; the Issuer s rights under the Existing Funding Loan; the Parent s rights under the Existing Senior Notes Proceeds Loan; the Issuer s rights under the documents governing the Hony Acquisition; and 9

29 the Issuer s rights under an intercompany loan to be dated on or about the China Acquisition Completion Date between the Issuer as lender and PizzaExpress Group Limited as borrower. (collectively, the Notes Collateral ). See Description of the Notes Security. The Revolving Credit Facility is secured on a first-ranking basis, subject to the operation of the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens, by the Notes Collateral. See Description of Certain Financing Arrangements Revolving Credit Facility Security. The Intercreditor Agreement provides that lenders under the Revolving Credit Facility, certain other indebtedness permitted to be secured by the Notes Collateral and counterparties to certain hedging obligations, respectively, will receive the proceeds from the enforcement of the Notes Collateral in priority to holders of the Senior Secured Notes. See Description of the Notes Security and Description of Certain Financing Arrangements Intercreditor Agreement for further information. The security interests securing the Notes may be limited by applicable law or subject to certain defenses that may limit their validity and enforceability. For more information, see Risk Factors Risks Related to the Notes and the Offering. The security interests securing the Notes may be released under certain circumstances. See Risk Factors Risks Related to the Notes and the Offering, Description of the Notes Security Release of Liens and Description of Certain Financing Arrangements Intercreditor Agreement. Additional Amounts... Any payments made with respect to the Senior Secured Notes will be made without withholding or deduction for or on account of taxes in any relevant taxing jurisdiction unless required by law. If withholding or deduction for such taxes is required to be made with respect to a payment under the Senior Secured Notes, subject to certain exceptions, the Issuer or relevant Guarantor will pay the additional amounts necessary so that the net amount received by the holders of the Notes after the withholding or deduction is not less than the amount that they would have received in the absence of the withholding or deduction. See Description of the Notes Withholding Taxes. Special Mandatory Redemption... The 40-day period following the Issue Date is referred to herein as the Special Mandatory Redemption Period. If the China Acquisition Completion Date does not occur on or before one Business Day prior to the last Business Day of the Special Mandatory Redemption Period, the Notes will be subject to a special mandatory redemption (the Special Mandatory Redemption ) at a price (the Special Mandatory Redemption Price) equal to 100% of the initial issue price of such Notes plus accrued and unpaid interest and additional amounts, if any, from February 1, 2015 to the Special Mandatory Redemption Date (as defined below). The Notes may also be redeemed at the Issuer s option at any time during the Special Mandatory Redemption Period, at the Special Mandatory Redemption Price, if, in the Issuer s judgment, the China Acquisition Completion Date will not occur prior to the expiration of the Special Mandatory Redemption Period. The date of such Special Mandatory Redemption is referred to herein as the Special Mandatory Redemption Date. See Description of the Notes Special Mandatory Redemption. Optional Redemption... At any time prior to August 1, 2017, the Issuer will be entitled at its option to redeem all or a portion of the Senior Secured Notes at a redemption price equal to 100% of the principal amount of the Senior Secured Notes, plus a make-whole premium as of, and accrued and unpaid interest and additional amounts to, if any, the redemption date, as described under Description of the Notes Optional Redemption. At any time on or after August 1, 2017, the Issuer will be entitled at its option to redeem all or a portion of the Senior Secured Notes at the redemption prices set forth under the caption Description of the Notes Optional Redemption. 10

30 Optional Redemption for Tax Reasons... At any time prior to August 1, 2017, upon not less than 10 nor more than 60 days notice, the Issuer may, during any period consisting of 12 consecutive months ending on the day immediately preceding the first, second or third anniversary of the date of the Indenture, redeem up to 10% of the aggregate principal amount of the Senior Secured Notes at a redemption price equal to 103% of the principal amount of the Senior Secured Notes redeemed, plus accrued and unpaid interest and additional amounts, if any. See Description of the Notes Optional Redemption. At any time prior to August 1, 2017, the Issuer will be entitled at its option, on one or more occasions, to redeem the Senior Secured Notes in an aggregate principal amount not to exceed 40% of the original aggregate principal amount of the Senior Secured Notes (including the Notes and any further Additional Notes (as defined in Description of the Notes ) issued in the future) with the net cash proceeds from certain equity offerings at a redemption price equal to % of the principal amount outstanding in respect of the Senior Secured Notes, plus accrued and unpaid interest and additional amounts, if any, to the date of redemption, so long as at least 60% of the original aggregate principal amount of the Senior Secured Notes (including the principal amount of the Notes and any further Additional Notes issued in the future) remain outstanding immediately after each such redemption and each such redemption occurs no later than 180 days after the date of closing of the relevant equity offering. See Description of the Notes Optional Redemption. In the event of certain developments affecting taxation or in certain other circumstances, the Issuer may redeem the Senior Secured Notes in whole, but not in part, at any time, at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, and additional amounts, if any, to the date of redemption. See Description of the Notes Redemption for Taxation Reasons. Change of Control... Upon the occurrence of certain events constituting a change of control, the Issuer may be required to offer to repurchase the Senior Secured Notes at a purchase price in cash equal to 101% of their aggregate principal amount, plus accrued and unpaid interest and additional amounts, if any, to the date of purchase. See Description of the Notes Change of Control. Certain Covenants... The Indenture limits, among other things, our ability to: incur or guarantee additional indebtedness and issue certain preferred stock; pay dividends or make other distributions or purchase or redeem our stock; make investments or other restricted payments; transfer or sell assets; engage in certain transactions with affiliates; create liens on assets to secure indebtedness; impair the security interests for the benefit of the holders of the Notes; and merge or consolidate with other entities. Each of these covenants is subject to significant exceptions and qualifications. See Description of the Notes Certain Covenants. Transfer Restrictions... The Notes and the Note Guarantees have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any other jurisdiction. The Notes are subject to restrictions on transferability and resale and may only be offered or sold in transactions that are exempt from, or not subject to, the registration requirements of the U.S. Securities Act. We have not agreed to, or otherwise undertaken to, register the Notes (including by way of an exchange offer) under the U.S. Securities Act. See Transfer Restrictions and Plan of Distribution. No Prior Market... The Notes are new securities for which there is currently no established trading market. Although the Initial Purchasers have advised us that they intend to make a market in the Notes, they are not obligated to do so and they may discontinue market-making at any time without notice. Accordingly, there is no assurance that an active trading market will develop for the Notes. Listing... The Notes have been admitted to trading on the Irish Stock Exchange s Global Exchange Market and to listing on the Official List of the Irish Stock Exchange, in accordance with the rules and regulations of such exchange. The Original Senior Secured Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof. 11

31 Governing Law for the Notes, the Note Guarantees and the Indenture... New York. Governing Law for the Intercreditor Agreement... England and Wales. Governing Law for the Security Documents... England and Wales and the Republic of Ireland. Trustee... Deutsche Trustee Company Limited. Listing Agent... Deutsche Bank Luxembourg S.A. Paying Agent... Deutsche Bank AG, London Branch. Registrar and Transfer Agent... Deutsche Bank Luxembourg S.A. Security Agent... Deutsche Bank AG, London Branch. Investing in the Notes involves a high degree of risk. See the Risk Factors section in this Listing Particulars for a description of certain of the risks you should carefully consider before investing in the Notes. 12

32 SUMMARY CONSOLIDATED FINANCIAL AND OTHER INFORMATION The financial information contained in the following tables is derived from: (i) the consolidated financial statements of Balcombe Street Holdings Limited (formerly PE Holdings) as of and for the 52 weeks ended June 29, 2014 ( Financial Year 2014 ); (ii) the consolidated financial information of PE Holdings as of and for the 52 weeks ended June 30, 2013 ( Financial Year 2013 ) and as of and for the 53 weeks ended July 1, 2012 ( Financial Year 2012 ); (iii) and the unaudited condensed consolidated interim financial information of PEGHL (the Interim Financial Information ) as of and for the 33 weeks ended April 5, 2015 ( 33 Week Interim Period 2015 ), which include (iv) the pro forma condensed consolidated financial information of the New PizzaExpress Group as of and for the 40 weeks ended April 5, 2015 ( Interim Period 2015 ) and the pro forma comparative period as of and for the 40 weeks ended April 6, 2014 ( Interim Period 2014 ) set out in note 3 to the Interim Financial Information that, to facilitate comparison, exclude income attributable to the India JV and reclassify certain operating expenses from cost of sales to administrative expenses (as described in note 2 of the Interim Financial Information); and (v) certain unaudited financial information of the Group for the 52 weeks ended April 5, 2015 ( LTM Period 2015 ), derived by taking the results of operations for Interim Period 2015 and adding them to the results of operations for Financial Year 2014 (to facilitate comparison, excluding income attributable to the India JV and reclassifying certain operating expenses from cost of sales to administrative expenses (as described in note 2 of the Interim Financial Information)), and deducting the results of operations for Interim Period The following summary financial information should be read together with the sections Presentation of Financial and Other Data, Selected Consolidated Financial and Other Information, Management s Discussion and Analysis of Financial Condition and Results of Operations, Capitalization, the consolidated financial statements, the consolidated financial information, the interim condensed consolidated financial information, and the related notes, and the additional financial information contained elsewhere in this Listing Particulars. Summary Consolidated Profit and Loss Account Data Financial Year Interim Period LTM Period ( millions) Turnover including share of joint venture Less share of joint venture turnover (1)... (0.1) (0.2) Group turnover Cost of sales... (282.6) (283.7) (296.4) (143.8) (153.6) (197.4) Gross profit Administrative expenses (excluding exceptional costs)... (24.2) (22.6) (22.9) (101.8) (133.8) (164.0) Share based payment charge... (0.1) (0.1) Operating exceptional costs... (0.7) (1.9) (0.2) (0.3) (2.0) Total administrative expenses... (24.2) (23.3) (24.8) (102.0) (134.2) (166.1) Other operating income Operating profit Share of joint venture operating loss (1)... (0.4) (1.8) Operating profit including share of joint venture loss Loss on disposal of fixed assets... (0.5) (0.2) (0.2) (0.1) Profit on ordinary activities before interest and taxation Net interest payable and similar charges... (21.6) (20.1) (18.0) (13.8) (52.9) (57.0) Profit/(loss) on ordinary activities before taxation (13.7) (1.8) Tax on profit on ordinary activities... (15.2) (15.1) (7.6) (5.9) (8.7) (10.4) Profit/(loss) for the financial period (22.4) (12.2) (1) Share of joint venture represents the portion of the India JV attributable to PE Holdings. The India JV did not form part of the Acquired PizzaExpress Group. Following the consummation of the Hony Acquisition, we entered into a franchise agreement to enable our continued operations in India and build on our presence there. Since the Hony Acquisition, the Group has not been party to any joint venture arrangements. The results of operations attributable to the India JV are not included in the results for Interim Period 2014, Interim Period 2015 or LTM Period

33 Summary Consolidated Balance Sheet Data As at As at ( millions) July 1, 2012 June 30, 2013 June 30, 2014 April 6, 2014 April 5, 2015 Fixed Assets Intangible assets Tangible assets Investments Total fixed assets Current Assets Stocks Debtors (1) Cash at bank and in hand Total current assets Creditors: amounts falling due within one year (1)... (673.2) (689.7) (683.3) (517.8) (74.4) Net current liabilities... (546.3) (513.0) (480.5) (465.2) (9.8) Total assets less current liabilities... (353.2) (325.4) (284.1) (273.4) Creditors: amounts falling due after one year (1)... (916.7) Provisions for liabilities and charges... (16.2) (16.0) (14.9) (14.9) (13.0) Net liabilities... (369.4) (341.4) (298.9) (288.3) (27.1) Capital and reserves Share premium Other reserve... (11.4) (11.4) (11.4) (11.4) Profit and loss account... (370.8) (342.8) (300.3) (289.7) (31.6) Total shareholders deficit... (369.4) (341.4) (298.9) (288.3) (27.1) (1) Excluding Interim Period 2015, reflected in the figures presented are amounts (representing intercompany balances) owed to/due from the Gondola Group companies (excluding PE Holdings) and the Acquired PizzaExpress Group, which were settled on the Hony Acquisition Completion Date. Summary Consolidated Cash Flow Statement Data 33 Week Interim Financial Year Period ( millions) Net cash inflow from operating activities Net cash (outflow)/inflow from returns on investments and servicing of finance... (0.2) (44.8) Taxation received/(paid) (0.8) 0.6 (1.9) Net cash outflow from capital expenditure and financial investment... (76.9) (57.6) (94.7) (19.1) Net cash outflow from acquisitions and disposals... (0.1) (11.4) (863.1) Net cash (outflow)/inflow from financing... (0.1) (0.1) (Decrease)/increase in cash... (11.2) 19.6 (11.4) 31.1 Other Financial, Restaurant and As Adjusted Data Financial Year Interim Period LTM Period ( millions, unless otherwise indicated) EBITDA (1)(2)(3) UK and Ireland restaurants Licensed retail offerings International restaurants EBITDA margin (%) (1)(4) Adjusted EBITDA (1)(3) Estimated Pro Forma Adjusted EBITDA (1)(3) Total assets Total liabilities , ,004.1 Net rent expense (1)(5) UK and Ireland like-for-like sales growth (%) (1)(6)... (4.3) (1.1) Free cash flow (1)(7) Total capital expenditures (1)(8) New site capital expenditures (1)(9)

34 Other capital expenditures (1)(10) Number of restaurants at end of period Company-operated restaurants (11) Franchised and joint venture (12) Net secured indebtedness (1) Net total indebtedness (1) As adjusted net secured indebtedness (1)(13) As adjusted net total indebtedness (1)(14) As adjusted net cash interest expense (15) Ratio of as adjusted net secured indebtedness to Estimated Pro Forma Adjusted EBITDA (1)(13) x Ratio of as adjusted net total indebtedness to Estimated Pro Forma Adjusted EBITDA (1)(14) x Ratio of Estimated Pro Forma Adjusted EBITDA to as adjusted net cash interest expense (1)(15) x (1) This measure is not defined under UK GAAP. Not all companies calculate the items that are not defined under UK GAAP in the same manner, and consequently the measures reported are not necessarily comparable with similarly described measures employed by other companies. These financial measures should not be considered as alternatives to operating profit or profit for the financial period as indicators of our performance, or as alternatives to operating cash flows as a measure of our liquidity. Our management uses these measures to assess our operating performance. In addition, we believe that these measures are commonly used by investors. See Presentation of Financial and Other Data. (2) EBITDA represents profit/(loss) for the financial period excluding the share of joint venture operating results (for the relevant periods), share based payment charge (for the relevant periods), taxation, interest, depreciation and amortization and before deducting exceptional costs and profit/loss on disposal of fixed assets. (3) Please find below a reconciliation calculation from profit/(loss) for the financial period to EBITDA, Adjusted EBITDA and Estimated Pro Forma Adjusted EBITDA: Financial Year Interim Period LTM Period ( millions) Profit/(loss) for the financial period (22.4) (12.2) Share of joint venture operating loss (a) Share based payment charge Tax on profit on ordinary activities Net interest payable and similar charges Depreciation and impairment of tangible assets Goodwill amortization Operating exceptional costs (Gain)/loss on disposal of fixed assets EBITDA UK run-rate adjustments (b) Adjusted EBITDA Adjusted EBITDA of the China Targets (c) Estimated Pro Forma Adjusted EBITDA (a) (b) (c) Share of joint venture operating loss represents the portion of the India JV attributable to PE Holdings. The India JV did not form part of Acquired PizzaExpress Group. Following the consummation of the Hony Acquisition, we entered into a franchise agreement to enable our continued operations in India and build on our presence there. Since the Hony Acquisition, the Group has not been party to any joint venture arrangements. The results of operations attributable to the India JV are not included in the results for Interim Period 2014, Interim Period 2015 or LTM Period UK run rate adjustments represent expected run rate trading (excluding pre-opening costs) for restaurants open less than 18 months as of the date of this Listing Particulars. These adjustments apply to nine restaurants open between 12 and 18 months; seven restaurants open between six and 12 months and 11 restaurants open between one and six months. The UK run rate adjustment is based on budgeted EBITDA for the applicable restaurant once it becomes mature. We believe these UK run rate adjustments are appropriate because, based on our experience, the first six months of a restaurant s trading is not representative of run rate trading due to new restaurants not being mature in terms of their operations. Represents our management s estimate of adjusted EBITDA of the China Targets for the 52 week period ended April 5, 2015, as if the China Acquisition had occurred on April 7, Our management s estimate of the adjusted EBITDA contribution of the China Targets is based on historical financial information for the China Targets for the period from April 1, 2014 to March 31, 2015 and management s adjustments for expected run rate trading for those restaurants open for less than 18 months as of March 31, The run rate adjustments are based on anticipated EBITDA for the applicable restaurant once it becomes mature. The China Targets historical financial results and the adjustments described herein may not be indicative of the future results of the China Targets following the consummation of the China Acquisition and the integration of the China Targets into our business. The adjustments to calculate Adjusted EBITDA and Estimated Pro Forma Adjusted EBITDA are presented for informational purposes only and do not purport to present what EBITDA would have been had newly opened stores been open for the entire period nor does it purport to project EBITDA for any future period. The 15

35 assumptions underlying the adjustments are based on our current estimates and they involve risks, uncertainties and other factors that may cause actual results or performance to be materially different from anticipated future results or performance expressed or implied by such adjustments. (4) EBITDA margin represents EBITDA as a percentage of Group turnover. (5) Net rent expense represents aggregate expenses incurred for the period indicated pursuant to our property lease obligations net of rent receivable for sublet properties. (6) Like-for-like sales growth represents sales from our UK and Ireland (excluding income generated from concert ticket sales associated with restaurant sites we own that host music events) restaurants that have traded for a full financial year at the start of each financial year. This is updated at the start of each financial year. Calculations are performed on a comparable week basis. (7) Free cash flow represents EBITDA less other capital expenditures. (8) Total capital expenditures represent the purchase of tangible fixed assets as reflected in our cash flow statements. (9) New site capital expenditures represent capital expenditures we incur in order to purchase and outfit a site in connection with its opening. (10) Other capital expenditures represent all capital expenditures other than new site capital expenditures, principally related to maintenance and refurbishment costs at our restaurants, fitting and fixtures replacement for existing restaurants and other centralized capital expenditures, relating primarily to IT projects. (11) Includes all restaurants in the UK and Ireland, and the Company-operated restaurant we opened in Beijing, China in June (12) The India JV did not form part of Acquired PizzaExpress Group, and since the Hony Acquisition, the Group has not been party to any joint venture arrangements. (13) As adjusted net secured indebtedness represents the principal amount of the Senior Secured Notes and accrued interest thereon from February 1, 2015 to April 5, 2015, net of 35.4 million of cash that we expect to remain on the balance sheet after giving effect to the Offering and the application of the proceeds therefrom as if they occurred on April 5, (14) As adjusted net indebtedness represents the principal amount of the Senior Secured Notes and the Existing Senior Notes, and accrued interest thereon from February 1, 2015 to April 5, 2015, net of 35.4 million of cash that we expect to remain on the balance sheet after giving effect to the Offering and the application of the proceeds therefrom as if they occurred on April 5, (15) As adjusted net cash interest expense represents cash interest payable and similar charges net of interest receivable for LTM Period 2015, after giving effect to the issuance of the Original Senior Secured Notes, the Existing Senior Notes and the Notes and the application of the proceeds therefrom, in each case, as if they had occurred on April 7, Turnover by Geography and Business Line Financial Year Interim Period LTM Period ( millions) UK and Ireland Restaurants (1) Licensed retail offerings Total (2) (2) (2) International restaurants China (3) Middle East (4) Other (5) Total (2) 3.2 (2) 3.8 (2) (1) All of our restaurants in the UK and Ireland are Company-operated. 16

36 (2) Excludes any results of operations attributable to the India JV for Interim Period Interim Period 2015 and LTM Period (3) Our restaurants in Hong Kong, Shanghai and Shenzhen are currently operated by a franchisee. In June 2014, we opened our first Company-operated restaurant in China, in Beijing. Following the China Acquisition, we will have 28 Company-operated restaurants in China. Please see The Transactions and Business The China Acquisition Rationale and Benefits. (4) Restaurants in the Middle East were all operated by franchise partners for the stated financial periods. On May 7, 2015, we acquired from a franchise partner the seven franchise restaurants in the United Arab Emirates. (5) Other consists of our restaurants in Cyprus, Gibraltar, India and Indonesia. The restaurants in India were part of the India JV until August 18, 2014, after which we moved to a franchise arrangement with respect to such restaurants. The restaurants in Cyprus, Gibraltar and Indonesia are also operated by franchisees. 17

37 RISK FACTORS An investment in the Notes involves risks. In addition to considering carefully, in light of the circumstances and your individual investment objectives, the information contained elsewhere in this Listing Particulars, you should carefully consider the risks described below before investing in the Notes. If any of the events described below actually occurs, our business, results of operations, financial condition or prospects could be materially adversely affected and, accordingly, the value and the trading price of the Notes may decline, resulting in a loss of all or part of any investment in the Notes. Furthermore, the risks and uncertainties described herein may not be the only ones that we face. Additional risks and uncertainties not presently known to us or that we currently consider to be immaterial may also have a material adverse effect on our business, results of operations, financial condition or prospects. Risks Related to Our Business Changes in consumer discretionary spending and general economic conditions could have a material adverse effect on our business, financial condition and results of operations. We believe our sales and profitability are strongly correlated to consumer discretionary spending, which is influenced by general economic conditions, unemployment levels, the availability of discretionary income and consumer confidence, particularly by consumers living in the communities in which our restaurants are located. As at April 5, 2015, 85.4% of our total number of restaurants were based in the UK and Ireland. For the LTM Period 2015 we derived 99.1% of our Group turnover from the UK and Ireland. We are therefore particularly impacted by economic conditions and changes in consumer habits in the UK and Ireland. Soft or weakening economic conditions in the UK, or in any of the areas in which our restaurants are located, may cause consumers to curtail discretionary spending, which in turn could reduce our restaurant sales and have an adverse effect on our results of operations. In addition, if successful, our strategy of significantly increasing our restaurant count internationally, particularly in China (as evidenced by our recent acquisition of the franchise business in the United Arab Emirates and the planned China Acquisition), means that we will be increasingly impacted by economic conditions globally. Our business, along with the restaurant industry as a whole, has been affected by the global economic downturn that has persisted since its start in 2008 when negative macroeconomic trends affected the economy and domestic consumer confidence in the markets in which we operate. Although there are signs that the macroeconomic situation has improved, the downturn has led to increased unemployment, lack of real wage increases, static or falling benefits and a decline in house prices, which have depressed consumer confidence and fostered more price conscious spending in the UK and Ireland and across many of our markets. We cannot predict if our business will continue to be successful in the future. While we seek to manage our prices and input costs, volumes, inventories and working capital through economic uncertainty, we cannot predict whether such challenging economic conditions will have any long-term effects on consumer confidence, our prices and input costs, demand for dining out experiences or volatility of raw materials prices, nor can we predict if the state of the global economy will deteriorate further or when it will improve at a consistent rate. These factors may therefore continue to adversely affect our business, financial condition and results of operations. Please see Management s Discussion and Analysis of Financial Condition and Results of Operations Key Factors Affecting Our Results of Operations and Financial Condition. Our success depends on our ability to compete with our major competitors. The restaurant industry is highly competitive with respect to price, service, location and food quality, and there are some well-established competitors with greater financial and other resources than us. Additionally, new competitors frequently enter the restaurant industry. There is also active competition for management personnel as well as attractive suitable restaurant sites. In the UK, our competitors in the chain casual dining market include Frankie and Benny s, Prezzo, ASK, Zizzi, Wagamama, Giraffe, Jamie s Italian, La Tasca, Strada and Pizza Hut, as well as pub dining chains such as Harvester and J.D. Wetherspoon. To a lesser extent we also compete for customers with international, national, regional and local quick service restaurants (such as McDonald s and KFC), fast casual independent and chain restaurants (such as Nando s), other casual eating and drinking establishments (such as coffee shops) and convenience and grocery stores. Western casual dining chains represent a modest portion of the China casual dining market. In China, our competitors in the chain casual dining market include Western chains (such as Blue Frog, Element Fresh, TGI Fridays, Pizza Hut and Latina) and Asian food chains (such as Tairyo, Watami, Din Tai Fung, Haidilao Hotpot, Jardin de Jade, Little Faigo Hotpot, Shanghai Min South Beauty and Spice Spirit). Some of our competitors in China may have more restaurants than us (for example, Pizza Hut) or may have entered the Chinese market before us. This competition affects our pricing strategies and margins. Our ability to compete will depend on the success of our plans to attract consumers, respond to consumer preferences, manage the complexity of our restaurant operations, respond to our competitors actions, including their promotional activities, and retain managerial staff. Any erosion of 18

38 our competitive position could have a material adverse effect on our business, financial condition and results of operations. We are vulnerable to fluctuations in the price and availability of food commodities, packaging materials and freight. The prices of food commodities, packaging materials and freight that our suppliers use to transport our raw materials are subject to fluctuations in price. Such fluctuations are attributable to, among other things, changes in the supply and demand of crops or other commodities, weather, fuel prices, and government-sponsored agricultural and livestock programs. In particular, the availability and the price of fresh produce and other commodities, including cheese and chicken, can be volatile. Epidemics in animal populations and local, national or international quarantines can also adversely affect commodity prices in the long and short-terms. Government commodity programs and export enhancement programs can also have a material effect on commodity prices. These fluctuations may adversely affect our suppliers, who could be forced to raise their prices for our products when renegotiating supply contracts, or earlier if not contracted. We and our suppliers use significant quantities of food commodities, especially cheese and fresh produce, as well as packaging materials provided by non-exclusive, third-party suppliers. While some of our supply arrangements are short-term and we have a limited number of suppliers for our major products (for example, 97% of our cheese is purchased from two suppliers and substantially all of our passata is purchased from one supplier), the ingredients we use are generic and alternate sources of supply are generally available. However, the supply and price are subject to market conditions and are influenced by other factors beyond our control, such as general economic conditions, unanticipated demand, problems in production or distribution, natural disasters, weather conditions during the growing and harvesting seasons, and plant and livestock diseases. Our ability to avoid the adverse effects of a pronounced, sustained price increase in raw materials is limited. Additionally, while we have long-term relationships with many of our key suppliers, we do not have long-term contracts in some key areas, and, as a result, suppliers could increase prices or fail to deliver. Any events leading to price increases or scarcity of raw materials, packaging materials or freight required to deliver raw materials to our restaurants could disrupt our operations, or negatively impact demand for our meals if we pass such price increases onto customers and subsequently have a material adverse effect on our business, gross margin, financial condition and results of operations, both temporarily and permanently. Please see Management s Discussion and Analysis of Financial Condition and Results of Operations Key Factors Affecting Our Results of Operations and Financial Condition. Shortages or interruptions in the supply or delivery of food products could adversely affect our operating results. We are dependent on frequent deliveries of food products that meet our specifications at competitive prices. These deliveries include fresh food, which is especially susceptible to problems arising from even short delays in the supply chain process. Shortages or interruptions in the supply of food products caused by unanticipated demand, problems in production or distribution, disease or food-borne illnesses, inclement weather or other conditions could adversely affect the availability, quality and cost of ingredients, which would adversely affect our business. In particular, if any of our distributors fail to meet their service requirements for any reason, it could lead to a material disruption of service or supply, which could have a material adverse effect on our business, financial condition and results of operations. In addition, although we have a contingency plan in place with a third-party manufacturer, we make all of our dough in our dough-making facility near Witney, Oxfordshire. If we experience any natural or other disaster or any production issues at our dough-making facility it could have a material adverse effect on our business, financial condition and results of operations. Higher labor costs could adversely affect our business and future profitability. We compete with other restaurants for good and dependable employees. The supply of such employees is limited and competition to hire and retain them may result in higher labor costs. Wage rates for a substantial number of our restaurant staff are at or slightly above minimum wage in the UK, Ireland and elsewhere. As minimum wage rates increase, we may be required to increase not only the wage rates of our minimum wage employees but also the wages paid to the employees at wage rates that are above the minimum wage. These higher labor costs could have a material adverse effect on our profitability. We may not be able to extend our leases, find new premises to lease for our new restaurant openings or cancel unprofitable leases. All of our restaurants are presently located on leased premises. While in the UK, under the Landlord and Tenant Act 1954, we have the right to renegotiate lease renewals when they expire before the landlord seeks a new tenant, as leases underlying our restaurants expire, we may nevertheless be unable to negotiate a new lease or lease extension, 19

39 either on commercially acceptable terms or at all, which could cause us or our franchisees to close restaurants in desirable locations. As a result, our sales and our brand building initiatives could be adversely affected. In China, leases tend to be for shorter periods than in the UK and we may encounter difficulties in renewing these leases on commercially acceptable terms, which may adversely affect the result of operations of our China business. We generally cannot cancel these leases; therefore, if an existing or future restaurant is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent up to the lease s first break point. Our future growth depends in part on our ability to respond to changes in consumer preferences and perceptions. Innovation is a key element in our ability to respond to changes in consumer preferences and perceptions, as well as to drive growth. We have in the past responded to consumer health and dietary trends, such as our introduction of gluten-free and healthy eating options, in response to increasing consumer awareness of issues relating to obesity and general health. We have also introduced new food and drink items, such as new pizzas and seasonal options. While we believe that we are recognized as an innovation leader in the chain casual dining industry, we may not be able to maintain this position. If our competitors are more innovative than we are, if we fail to appropriately respond to changes in consumer preferences and perceptions or if prevailing health or dietary preferences cause customers to avoid pizza in favor of foods that are perceived to be more healthy, we may fail to retain, or attract new, customers. Any failure to retain, or attract new, customers could have an adverse effect on our business, financial condition and results of operations. We face risks associated with our expansion plans, including the China Acquisition, that could adversely affect our business, results of operations and financial condition. Our strategy for growth includes strengthening our market position in countries in which we currently operate and expansion into other international markets on a selected basis. We have been implementing this strategy through organic growth, selected acquisitions (such as our recent acquisition of the franchise business in the United Arab Emirates and the planned China Acquisition) and/or by diversifying our activities within the various geographical areas in which we operate and/or plan to operate in the future. Our international presence and any further expansion of such presence does and will expose us to a series of risks associated with the complexity of the integration process following an acquisition, the management of an international company and economic, social and general political conditions in the countries in which we are present or into which we expand (such as fluctuations in exchange rates, restrictions upon international trade, instability in the equity markets, limitations on foreign investments, political instability, war and terrorism and differences in the legal, tax and administrative systems). Although we prepare investments in new locations on the basis of detailed market research analyses, we may still face the risk of unsatisfactory sales performance in new locations. Our market research analyses may prove to be inadequate, in particular due to factors which are difficult to predict, such as customer behavior. We cannot guarantee that investments in new locations will yield the anticipated returns. Investments in unsuitable locations could have a material adverse effect on our business, financial condition, results of operations and cash flow. We will be making significant investments in our China business; while China has experienced periods of rapid GDP growth in recent years, the rate of growth has slowed and the rate of future growth is not possible to predict. Furthermore, our inability to realize anticipated turnover growth, cost-savings and synergies, whether from the China Acquisition or other expansion plans, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our strategy to increase the number of our restaurants and expand internationally may fail. Our growth prospects depend on our ability to implement our strategy of significantly increasing the number of our restaurants in the UK and Ireland, as well as internationally primarily through franchise arrangements. We may face many challenges in opening new restaurants, including, among others: the selection and availability of suitable restaurant locations with acceptable lease terms; competition for new premises; attracting customers to new premises; the impact of local tax, zoning, land use and environmental rules and regulations on our ability to develop restaurants, and the impact of any material difficulties or failures that we experience in obtaining the necessary licenses and approvals for new restaurants; 20

40 recruiting suitable staff; securing acceptable suppliers; and consumer preferences and local market conditions. Our capital and other expenditures may also be higher than expected due to cost overruns, unexpected delays or other unforeseen factors. Further, new restaurants could compete with our existing restaurants for customers, causing the number of customers who visit our existing restaurants to decline and resulting in lower sales growth and/or profitability. If our expansion strategy is not successful or advances at a slower pace than planned, our competitive position and our profitability and growth may be negatively affected. We compete with other global and regional casual restaurant dining operators for restaurant locations and may not be able to secure attractive sites for new restaurants. If we fail to identify and lease attractive restaurant locations, attract and hire skilled sales staff or implement the required infrastructure, our expansion plans may slow down, and the intended increase of our market share may fail to materialize. The success of new restaurants may also be affected if we fail to correctly estimate customer demand in local markets or are unable to successfully establish our brand. This risk is relatively higher in new markets such as Asia where our less established position makes it more difficult to assess customer demand and the appeal of our product offering. Our capital and other expenditures may also be higher than expected due to cost overruns, unexpected delay or other unforeseen factors. We may not be able to integrate the China Targets effectively. The China Acquisition may present significant integration challenges and costs to us. Realization of the benefits of the China Acquisition will require the integration of some or all of the procurement, production, distribution and service, sales and marketing, finance, information technology systems and administrative operations of the China Targets. If we cannot successfully integrate the China Targets within the anticipated time frame following the China Acquisition, we may not be able to realize the potential benefits anticipated from the China Acquisition. For example, there is a requirement in certain restaurant site lease agreements to obtain consents or waivers from landlords due to the change of control brought about by our purchasing the China Targets. While we do not currently envisage any difficulties with obtaining such consents or waivers, and given that leases in China tend to be for shorter periods than in the UK thereby enabling re-location more easily if necessary, we may face certain challenges. Our failure to successfully integrate the China Targets and the diversion of management attention and other resources from our existing operations could have a material adverse effect on our business, financial condition and results of operations. Furthermore, even if we are able to successfully integrate the operations of the China Targets, we may not be able to realize the turnover growth that we anticipate from the China Acquisition, either in the amount or within the time frame that we currently anticipate, and the costs of achieving these benefits may be higher than, and the timing may differ from, what we expect. The China Targets may have liabilities that are not known to us and those that are may pose certain risks. There may be liabilities of the China Targets that we failed or were unable to discover in the course of performing due diligence investigations into the China Targets, and, though we have specific and general indemnities in the China Acquisition Agreement, the extent of certain potential liabilities identified may not have been fully uncovered in the course of performing due diligence investigations into the China Targets, and our recourse to the seller under the China Acquisition Agreement warranties is limited. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations. As we integrate the China Targets, we may learn additional information about the China Targets that adversely affects us, such as unknown or contingent liabilities and issues relating to compliance with applicable laws. Additionally, we cannot guarantee that the potential liabilities that we have identified and mitigated with specific and general indemnities in the China Acquisition Agreement do not pose certain incidental risks such as reputational damage. Such liabilities, known or unknown, could have a material adverse effect on our financial condition, results of operations and reputation following the China Acquisition. Our financial results may fluctuate depending on various factors, including seasonality of the business, many of which are beyond our control. Our sales and operating results can vary from financial period to financial period depending on various factors, which include: variations in timing and volume of our sales; 21

41 sales promotions by us and our competitors; changes in average same store sales and customer visits; variations in the price, availability and shipping costs of our supplies; timing of holidays or other significant events; changes in competitive and economic conditions generally; and rent increases. Certain of the foregoing events may directly and immediately decrease demand for our products, and therefore, could have a material adverse effect on our business, financial condition and results of operations. Our turnover and cash flows are moderately affected by seasonal variations. In our principal markets (the UK and Ireland), restaurant sales are typically higher in the summer months and in the period leading up to Christmas and in February, as these months typically coincide with school holidays. Our restaurant sales and margins are typically lowest in January and in the weeks immediately following the summer holidays. Since our business is moderately seasonal, results for any one financial period are not necessarily indicative of the results that may be achieved for any other financial period. Concerns about food safety may damage our reputation, increase our costs of operation or decrease demand for our products. Food safety and the perception by our customers and the general public that our products are safe are essential to our image and business. Not only do we prepare meals for customers at our restaurants, we license the PizzaExpress and Milano brand names to a range of retail offerings in the UK and Ireland, respectively. As a result, we are subject to food safety risks, and in particular product contamination as a result of food-borne illnesses, new illnesses resistant to any preventative measures, diseases with long incubation periods which could give rise to claims or allegations on a retroactive basis (such as mad cow disease), tampering or exposure to ill employees, spoilage of fresh produce as a result of inadequate storage or refrigeration and the potential cost and disruption of a product recall or withdrawal. Additionally, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could be caused by factors outside our control. We maintain systems designed to control food safety and sourcing risks, including by providing a clean environment at our restaurants and health-related training to our employees. Although we endeavor to control the risks related to product quality, security and sourcing through the implementation of, and strict adherence to, our quality standards, we cannot guarantee that such risks will not materialize. Further, the occurrence of food-borne illnesses or food safety issues could adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain, significantly increase our costs and/or lower our margins. In addition, adverse media reports on our segment of the casual dining industry or restaurants operating under a particular brand within our casual dining industry, can have an almost immediate and significant adverse impact on companies operating in that segment or restaurants using that brand, even though they have personally not engaged in the conduct being publicized. Such sensationalist media topics have in the past severely injured the reputations of certain restaurant brands and could in the future affect us as well. We are subject to increasingly stringent health, safety and environmental regulations, which could result in increased costs and fines, as well as the potential for damage to our reputation. As a preparer of food products for human consumption, we are subject to health, safety and environmental regulations, including regulations promulgated and enforced by local, national, UK, European and international authorities. These directives and regulations relate to the remediation of water supply and use, water discharges, air emissions, waste management, noise pollution, and workplace and product health and safety. We are also subject to stringent preparation, health, quality, and nutritional disclosure regulations and standards. Health, safety and environmental legislation in the UK and elsewhere has tended to become broader and stricter, and enforcement has tended to increase, over time. Any failure to comply with health and safety regulations may lead to increased costs and fines, as well as damage to our reputation. If health, safety and environmental laws and regulations in the countries in which we have restaurants and from which we source ingredients are gradually strengthened in the future, the extent and timing of investments required to maintain compliance may differ from our internal planning and may limit the availability of funding for other investments. In addition, if the costs of compliance with health, safety and environmental laws and 22

42 regulations continue to increase and it is not possible for us to integrate these additional costs into the price of our products, any such changes could reduce our profitability. Our restaurants where our employees work contain hazards associated with food preparation, including large ovens, hot surfaces and sharp utensils. Accidents as a result of the food preparation process and future health claims actually or allegedly resulting from exposure to the food preparation process may occur in our business. We could be subject to claims by government authorities, individuals and other third parties seeking damages for alleged personal injury or property damage resulting from such accidents or other such incidents. Any of these events could adversely impact our customers perception of us or our reputation. Health, safety and environmental laws and regulations and civil liability rules could expose us to liabilities. Under some of these laws and regulations, we could be liable for investigation or remediation of contamination at properties we occupy, even if the contamination was caused by a party unrelated to us and was not our fault, and even if the activity causing the contamination was legal. The discovery of previously unknown contamination, or the imposition of new obligations to investigate or remediate contamination at our properties, could result in substantial unanticipated costs. In some circumstances, we could be required to pay fines or damages under these laws and regulations. Regulatory authorities may also require us to curtail operations or close our restaurants temporarily or permanently, including for the purpose of preventing imminent risks. Although we believe that we conduct our operations in a way that reduces health, safety and environmental risks and have in place appropriate systems for identifying and managing potential liabilities, there can be no assurance that we have identified and are addressing all sources of health, safety and environmental risks. There can be no assurance that we will not incur health, safety and environmental losses or that any losses incurred will not have a material adverse effect on our business, financial condition and results of operations. In addition, future changes in health, safety and environmental laws or regulations may have a material adverse effect on our results of operations and financial condition. Please see Business Regulation. Failure by third-party suppliers of raw materials to comply with food safety, environmental or other regulations may disrupt our supply of certain products and adversely affect our business. We rely on third-party suppliers to supply raw materials used in the preparation of our meals, including flour, eggs, dairy (including cheese), meat and fresh produce. Such suppliers, whether in or outside the UK, are subject to a number of regulations, including food safety and environmental regulations. In addition, our suppliers may be exposed to negative publicity in relation to the content of the raw materials and ingredients they supply to us. Failure by any of our suppliers to comply with regulations, allegations of compliance failure, claims of intentional or negligent contamination of raw materials and ingredients or prolonged and intense negative publicity may disrupt their operations. Disruption of our suppliers operations could disrupt our supply of product or raw materials, which could have a material adverse effect on our business, financial condition and results of operations. Additionally, actions we may take to mitigate the impact of any such disruption or potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, could have a material adverse effect on our business, financial condition and results of operations. The success of our licensed retail offerings business depends, in large part, on third-party suppliers to which we outsource the manufacturing and packaging of our retail products. We license our brand to third-party suppliers that manufacture packaged food products to be sold in food retailers throughout the UK and Ireland. While we work closely with these suppliers to ensure that the products are on-brand and to the same standard and quality that our restaurant customers expect, there are inherent risks to relying on third parties. Risks include, among others, that our suppliers may not be able to source the necessary raw materials or packaging, they could suffer a disruption in the manufacturing process, they may fail to meet agreed quality standards or they may be unable to distribute the products to our retailer customers due to a defect in their distribution operations. The ability to mitigate these scenarios would be largely out of our control, and the result could be a supply shortage of, or fall in demand for, our retail food offerings, which in addition could harm our relationship with our retailer customers. As we generate revenue from royalties based on a percentage of the sales of our retail products, any disruption in the manufacturing, distribution or quality of our retail food offerings could have a material adverse effect on our business, financial condition and results of operations. Our retailer customers may reduce their stock of, or delist entirely, our retail offerings or promote their own or third-party branded fresh prepared food products. The grocery-trading environment has become highly competitive over recent years, with food retailers striving to increase market share. To increase their competitive advantage, food retailers have been providing their customers with their own branded fresh prepared food products, either manufactured under license or in-house, many of which compete with our retail offerings. Should our retailer customers wish to expand their market share in the fresh prepared 23

43 food products market, we could face downward pressure on the pricing of our retail offerings or the prospect of our retailer customers reducing their stock of, or delisting entirely, certain of our products. Further, our retailer customers may promote other branded products over our branded retail offerings. These developments could have a material adverse effect on our business, financial condition and results of operations. We face risks associated with litigation from customers, employees and others in the ordinary course of business. Claims of illness or injury relating to food quality or food handling are common in the foodservice industry. Further, we currently are, and in the future may be, subject to employee and other claims based on, among other things, discrimination, harassment, wrongful termination and wage, rest break and meal break issues, including those relating to overtime compensation. See Business Legal Proceedings. These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract our management s attention from our business operations. We have been subject to these types of claims, and if one or more of these claims were to be successful, or if there is a significant increase in the number of these claims, our business, financial condition and results of operations could be adversely affected. Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment significantly in excess of our insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Further, adverse publicity resulting from these allegations could have a material adverse effect on our business, financial condition and results of operations. We are exposed to risks related to noncompliance with law and regulations and conducting operations in multiple jurisdictions, any of which could have a material adverse effect on our business and results of operations. We operate in the UK, Ireland and China, as well as in India, the Middle East, Indonesia, Cyprus and Gibraltar either directly or through franchise arrangements, and intend to continue to expand our operations in existing and into additional countries. Notwithstanding the benefits of geographic diversification, our business is subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many jurisdictions. Risks generally inherent in international operations include the following, among others: general economic, social or political conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries; compliance with a variety of laws and regulations, including tax and anti-trust, in various jurisdictions may be burdensome, for example in China where some laws may be viewed as difficult to interpret and may be enforced inconsistently; unexpected or potentially adverse changes in laws or regulatory requirements in various jurisdictions may occur; exposure to civil or criminal liability under, to the extent applicable, the UK Bribery Act (the UKBA ), the U.S. Foreign Corrupt Practices Act ( FCPA ), the restrictions imposed by the Office of Foreign Assets Control ( OFAC ) of the U.S. Department of Treasury, trade and export control regulations, as well as other national laws and international conventions; the imposition of withholding taxes or other taxes or royalties on income, or the adoption of other restrictions on foreign trade or investment, including currency exchange controls, for example in China where the government controls the exchange between the Renminbi and foreign currencies; intellectual property rights may be difficult to enforce; transportation and other shipping costs may be higher and may increase; staffing difficulties, national or regional labor strikes or other labor disputes; the imposition of price controls; difficulties in enforcing agreements and collecting receivables; and armed conflicts or terrorist attacks which may affect international economies or consumer confidence. 24

44 We are increasing the scope of our investment and presence in China through the China Acquisition and may continue to increase the scope of our investment and presence there, and we plan to continue to grow our business in other international markets primarily through franchise arrangements. As we expand and increase our international presence, our exposure to the foregoing factors increases. We are required to comply with a number of UK and other anti-bribery and money laundering regulations, which, in the case of the UKBA, generally prohibits UK companies and UK persons from making improper payments, including bribes or facilitation payments. The provisions of the UKBA extend beyond bribery of foreign public officials and are broader than the FCPA, to which we are not currently generally subject, in a number of respects, including the scope of jurisdiction and non-exemption of facilitation payments. Although we enforce and monitor controls to prevent violations of applicable laws, including internal control procedures and compliance policies and training to which our employees are subject, together with compliance policies to which our franchisees are also subject, we nevertheless risk being associated with unauthorized or improper payments or offers of payments by one of our employees, agents, or, to a more limited extent, franchisees, that could be in violation of the UKBA or FCPA, even if these parties are not subject to our control. The risks associated with potential violations of such regulations may negatively affect future results of operation or subject us to criminal or civil enforcement actions in a number of jurisdictions. We could be exposed to a variety of negative consequences as a result of any potential violations of law, such as criminal or civil enforcement actions in multiple jurisdictions, costs in connection with internal or external investigations of any potential violations of which we become aware, costs to undertake additional compliance training and programs to ensure we have effective policies and procedures in place and the focus on such matters by our senior management that could impinge on the time they have available to devote to other matters relating to our business. In addition, we could be subject to media and governmental interest, which could negatively impact our reputation and relationships with our customers, suppliers, partners and other stakeholders. Any of these consequences could have a material adverse effect on our reputation, business, financial condition and results of operations. Our results can be adversely affected by adverse weather conditions or unforeseen events such as natural disasters or catastrophic events. Adverse weather conditions or unforeseen events such as natural disasters or catastrophic events, can adversely impact our restaurant sales. Natural disasters such as earthquakes, hurricanes and severe adverse weather conditions, as well as health pandemics, whether occurring in the UK or abroad, can keep customers in the affected area from dining out and result in lost opportunities for our restaurants. Because a significant portion of our restaurant operating costs is fixed or semi-fixed in nature, the loss of sales during these periods could hurt our operating margins and could result in restaurant operating losses. Some of our restaurants are franchised and this presents a number of disadvantages and risks. All restaurants in Bahrain, China (except for one Company-owned restaurant in Beijing), Cyprus, Gibraltar, India, Indonesia, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which represent approximately 14.4% of restaurants as of April 5, 2015, were franchised and 0.7% of our Group turnover in LTM Period 2015 was generated from franchise fees and royalty payments. Due to the purchase of the franchise business in the United Arab Emirates on May 7, 2015, and our anticipated purchase of the China franchise businesses, our exposure to franchise is and will be somewhat mitigated since the end of LTM Period We do, however, still have significant exposure to franchise arrangements and ongoing we plan to continue to expand internationally primarily through franchise arrangements. Franchise arrangements present a number of drawbacks, such as: our limited influence over franchisees and reliance on franchisees to implement major initiatives, limited ability to facilitate changes in restaurant ownership, limitations on enforcement of franchise obligations due to bankruptcy or insolvency proceedings and inability or unwillingness of franchisees to participate in our strategic initiatives; the need to have the support of our franchisees for marketing programs and any new capital intensive or other strategic initiatives which we may seek to undertake, and the successful execution thereof; the fact that franchisees are independent operators and we cannot control many factors that impact the turnover of their restaurants, which directly affects the royalties and fees we receive from them; and our limited influence over the decision of franchisees to invest in other businesses or incur excessive indebtedness. 25

45 Additionally, we rely on positive brand recognition to attract customers. Our brands could be harmed by the actions of any of our franchisees. Any damage to our reputation, brand images or brand names through either a single event or series of events involving, or due to perceptions (such as the overall quality of our service) regarding our franchisees could have a material adverse effect on our ability to market our restaurants and attract and retain customers. We may be adversely affected by fluctuations in currency exchange rates. Although we report our results in pounds, we conduct a portion of our business in countries that use other currencies, and as a result we are exposed to foreign currency risk on sales that are denominated in a currency other than the pound sterling. The euro is the primary currency giving rise to this risk as a result of our restaurants in Ireland. Following the China Acquisition, we will also start incurring a portion of our expenses in Chinese yuan renminbi and Hong Kong dollars, exposing us to the risk of fluctuations of those currencies. To the extent we are unable to match sales received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in that currency could have an adverse effect on our business, financial condition and results of operations. For example, where we have significantly more costs than sales generated in a foreign currency, we are subject to risk if that foreign currency appreciates against the pound because the appreciation effectively increases our costs in that location. Additionally, certain of our produce is sourced from Europe and the costs are denominated in euros. As a result, any appreciation of the euro against the pound will effectively increase our supply costs for such produce. We depend on the services of key individuals, the loss of whom could materially harm our business. Our success depends, in part, on the efforts of our executive officers and other key employees. In addition, the market for qualified personnel is competitive and our future success will depend on our ability to attract and retain these personnel. The loss of the services of any of our key employees or the failure to attract and retain employees could have a material adverse effect on our business, financial condition and results of operations. Our computer and information systems may fail, be damaged or be perceived to be insecure. Further, if we do not maintain the security of customer-related information, we could damage our reputation with customers, incur substantial additional costs and become subject to litigation. Our operations are dependent upon the successful and uninterrupted functioning of our computer and information systems. Our systems could be exposed to damage or interruption from fire, natural disaster, power loss, telecommunications failure, unauthorized entry and computer viruses. System defects, failures and interruptions could result in: additional development costs; diversion of technical and other resources; disruption to our promotional activities and loss of customers and sales; loss of customer data; negative publicity; harm to our business and reputation; and exposure to litigation claims, fraud losses or other liabilities. To the extent we rely on the systems of third parties in areas such as credit card processing, telecommunications and wireless networks, any defects, failures and interruptions in such systems could result in similar adverse effects on our business. Sustained or repeated system defects, failures or interruptions could have a material adverse effect on our business, financial condition and results of operations. Also, if we are unsuccessful in updating and expanding our systems, our ability to drive same store sales, improve operations, implement cost controls and grow our business may be constrained. Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of our food and alcoholic licenses and, thereby, harm our business. Our restaurant operations are subject to various local and national regulations, including those relating to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these licenses, permits and approvals could adversely affect our operating results. Licenses may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates 26

46 applicable regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay, or result in our decision to cancel, the opening of new restaurants, which would adversely affect our business. Infringement or misappropriation of our intellectual property could harm our business. We regard our PizzaExpress, Pizza Marzano and Milano trademarks, as well as the associated roundel logos, as having significant value and as being important factors in the marketing of our restaurants. We have also obtained trademarks for several other of our menu items, products, operating names and advertising slogans. In addition, we believe that the overall layout, appearance and designs of our restaurants are valuable to our success. We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, and other common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from infringement. We have registered certain trademarks and have other registration applications pending. However, not all of the trademarks that we currently use have been registered in all of the countries in which we do business and they may never be registered in all of these countries. There may not be adequate protection for certain intellectual property, such as the overall appearance of our restaurants. In addition, unauthorized uses or other misappropriation of our trademarks in geographic regions in which we operate or into which we intend to expand could diminish the value of our brand and may adversely affect our business. Failure to adequately protect our intellectual property rights could damage our brands and impair our ability to compete effectively. Further, defending or enforcing our trademark rights, branding practices and other intellectual property, and seeking injunctions and/or compensation for misappropriation of confidential information, could result in the expenditure of significant resources. Our assets, such as goodwill and trademarks, are subject to the risk of impairment. As at April 5, 2015, intangible assets that we carried on our consolidated balance sheet mainly consisted of goodwill. We determine the value of the intangible assets in accordance with applicable accounting principles. An impairment loss with respect to goodwill and/or other intangible assets may have a material adverse effect on our business, financial condition and results of operations. Our current insurance policies may not provide adequate levels of coverage against all claims. We believe that we maintain insurance coverage that is customary for businesses of our size and type. These insurance policies may not be adequate to protect us from liabilities that we incur in our business. In addition, in the future, our insurance premiums may increase and we may not be able to obtain similar levels of insurance on reasonable terms or at all. Moreover, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure against such as trade name restoration coverage associated with losses such as food-borne illness. Any such inadequacy of or inability to obtain insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Challenging economic conditions could have a material adverse effect on our, our suppliers, our distributors and other counterparties liquidity and capital resources. Since 2008 the general economic and capital market conditions in the UK and Ireland and other parts of the world have been challenging. These conditions have resulted in limited access to capital resources. Although we believe that our capital structure and credit facilities are sufficient, there can be no assurance that, to the extent such conditions persist, our liquidity will not be affected by changes in the financial markets or that our capital resources will at all times be sufficient to satisfy our liquidity needs over the long- term. The deterioration of these conditions could have a material adverse effect on our future cost of debt and equity capital and access to the capital markets. Further, the inability of our suppliers or distributors to access liquidity, or the insolvency of our suppliers or distributors, could lead to delivery delays or failures. In addition, failures of other counterparties, including banks, insurance providers and counterparties to contractual arrangements, could have a material adverse effect on our business, financial condition and results of operations. We are required to adopt a new framework for financial reporting, which may differ in certain significant respects from UK GAAP. In November 2012, the Financial Reporting Council published FRS 100, the first of three new UK GAAP standards (FRS 100-FRS 102), which sets out a new framework for financial reporting in the UK. The new framework gives certain options to qualifying entities to implement either IFRS or FRS 102, which would have the effect of replacing existing UK GAAP reporting standards with a single standard broadly based on IFRS principles. 27

47 While we currently prepare our financial statements in accordance with the requirements of UK GAAP, we will be required to comply with the new reporting framework by the financial year ending July 3, In order to implement the new standard for the financial year ended July 3, 2016, we would also need to restate the comparative period presented in our financial statements for the financial year ending June 28, We have not included financial information prepared in accordance with IFRS or FRS 102 in this Listing Particulars. We have not prepared our financial statements in accordance with, nor have we reconciled our financial statements to, IFRS or FRS 102. Therefore we are unable to quantify the impact on our reported profits, financial position or cash flows once they begin to be reported under IFRS or FRS 102. IFRS and FRS 102 are generally more restrictive and comprehensive than UK GAAP regarding the recognition and measurement of transactions, account classification and disclosure requirements. No attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions and events are presented in our financial statements or the notes thereto. As there are significant differences between UK GAAP, IFRS and FRS 102 there may be substantial differences in our results of operations, cash flows and financial condition if we were to prepare our financial statements in accordance with IFRS and FRS 102. You should consult your own professional advisors for an understanding of the differences between UK GAAP, IFRS or FRS 102 and how those differences could affect the financial information contained in this Listing Particulars. In making an investment decision, you should rely upon your own examination of the terms of the Offering and the financial information contained in this Listing Particulars. Moreover, under the Indenture, we may, at our option, for purposes of determining ratios and other computations pursuant to the Indenture, elect to establish that GAAP shall mean the GAAP as in effect on or prior to the date of such election. Risks Related to our Financial Profile Our substantial leverage and debt service obligations could adversely affect our business and prevent us from fulfilling our obligations with respect to the Notes and the Note Guarantees. Upon consummation of the Transactions, we will have a significant amount of outstanding debt with substantial debt service requirements. As at April 5, 2015, after giving effect to the issuance of the Notes and the application of proceeds of the Offering, our total debt would have been million. See Capitalization. Our significant leverage could have important consequences for our business and operations and for holders of the Notes, including, but not limited to: making it difficult for us to satisfy our obligations with respect to the Notes and our other debts and liabilities; increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures, product research and development or other general corporate purposes; limiting our flexibility in planning for, or reacting to, changes in our business and the competitive environment and the industry in which we operate; placing us at a disadvantage to our competitors, to the extent that they are not as highly leveraged; restricting us from pursuing strategic acquisitions or exploiting certain business opportunities; and limiting our ability to borrow additional funds and increasing the cost of any such borrowing. Any of the foregoing or other consequences or events could have a material adverse effect on our ability to satisfy our debt obligations, including the Notes. 28

48 Despite our significant leverage, we and our subsidiaries will still be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness. We and our subsidiaries may be able to incur substantial additional indebtedness in the future, including secured indebtedness and indebtedness drawn under our Revolving Credit Facility of up to 20 million. Although the Indenture, the Existing Senior Notes Indenture and the Revolving Credit Facility Agreement contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. Under the Indenture and the Existing Senior Notes Indenture, we may be able to incur additional indebtedness so long as certain financial ratios are met. In addition, we may also be able incur certain other indebtedness at times when we do not meet these financial ratios. If new debt is added to our and our subsidiaries existing debt levels, the related risks that we now face would increase. In addition, the Indenture, the Existing Senior Notes Indenture and the Revolving Credit Facility Agreement do not prevent us from incurring obligations that do not constitute indebtedness under those respective agreements. We may not be able to generate sufficient cash to meet our debt service obligations. Our ability to make scheduled interest payments when due on our indebtedness and to meet our other debt service obligations, including under the Senior Secured Notes, the Existing Senior Notes and the Revolving Credit Facility, or to refinance our debt, depends on our future operating and financial performance, which will be affected by our ability to successfully implement our business strategy as well as general economic, financial, competitive, regulatory and other factors, many of which are beyond our control, as well as those factors discussed in these Risk Factors and elsewhere in this Listing Particulars. If we cannot generate sufficient cash to meet our debt service requirements, we may, among other things, need to refinance all or a portion of our debt, including the Senior Secured Notes, the Existing Senior Notes and the Revolving Credit Facility, obtain additional financing, delay planned capital expenditures or investments or sell material assets. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our debt obligations, including under the Senior Secured Notes, the Existing Senior Notes and the Revolving Credit Facility. In addition, the terms of our Revolving Credit Facility, the Indenture, the Existing Senior Notes Indenture and any future debt may limit our ability to pursue any of the foregoing measures. We are subject to restrictive covenants that may limit our ability to finance our future operations and capital needs and to pursue business opportunities and activities. Each of the Indenture and the Existing Senior Notes Indenture restrict, among other things, our ability to: incur or guarantee additional indebtedness and issue certain preferred stock; create or incur certain liens; make certain payments, including dividends or other distributions; prepay or redeem subordinated debt or equity; make certain investments; engage in sales of assets and subsidiary stock; enter into certain transactions with affiliates; consolidate or merge with other entities; and impair the security interest for the benefit of the respective holders of the Existing Senior Notes and the Senior Secured Notes. All of these limitations are subject to significant exceptions and qualifications. For a description of covenants that apply to the Senior Secured Notes, see Description of the Notes Certain Covenants. The covenants to which we are subject could limit our ability to finance our future operations and capital needs and our ability to pursue business opportunities and activities that may be in our interest. In addition, we are subject to the affirmative and negative covenants contained in the Revolving Credit Facility Agreement. A breach of any of those covenants or other restrictions could result in an event of default under the Revolving Credit Facility Agreement. Upon the occurrence of any event of default under the Revolving Credit Facility 29

49 Agreement, subject to applicable cure periods and other limitations on acceleration or enforcement, the relevant creditors could cancel the availability of the Revolving Credit Facility and elect to declare all amounts outstanding under the Revolving Credit Facility, together with accrued interest, immediately due and payable. In addition, any default under the Revolving Credit Facility Agreement could lead to an event of default and acceleration under other debt instruments that contain cross-default or cross-acceleration provisions, including the Indenture and the Existing Senior Notes Indenture. If our creditors, including the creditors under the Revolving Credit Facility, accelerate the payment of those amounts, we cannot assure you that our assets and the assets of our subsidiaries would be sufficient to repay in full those amounts, to satisfy all other liabilities of our subsidiaries which would be due and payable and to make payments to enable us to repay the Senior Secured Notes or the Existing Senior Notes, in full or in part. In addition, if we are unable to repay those amounts, our creditors could proceed against any collateral granted to them to secure repayment of those amounts. We are exposed to interest rate risk and shifts in such rates may adversely affect our debt service obligations. Loans under our Revolving Credit Facility bear interest at variable rates, generally linked to market benchmarks, such as GBP LIBOR. To the extent that the interest rates were to increase significantly on such indebtedness, our interest expense would correspondingly increase, reducing our cash flow. While we may attempt to manage this risk through entering into hedging arrangements, there can be no assurance that any current or future hedging contracts we enter into will adequately protect our operating results from the effects of interest rate fluctuations or will not result in losses or that our risk management practices and procedures will operate successfully. Risks Related to the Notes and the Offering Holders of the Notes may not control certain decisions regarding the Notes Collateral. To the extent permitted under applicable law, and subject to the Agreed Security Principles, the Notes are secured on a first-priority basis by the same rights, property and assets securing the obligations under the Revolving Credit Facility and the Original Senior Secured Notes. In addition, under the terms of the Indenture, we are permitted to incur significant additional indebtedness and other obligations that may be secured by the Notes Collateral on a pari passu or super-priority basis. Pursuant to the Intercreditor Agreement, lenders under the Revolving Credit Facility Agreement, providers of certain additional permitted super senior indebtedness, certain priority hedging obligations, the Security Agent, any receiver and certain creditor representatives are entitled to be repaid with the proceeds of the Notes Collateral sold in any enforcement sale in priority to the Notes. As such, in the event of a foreclosure of the Notes Collateral, you may not be able to recover on the Notes Collateral if the aggregate of the then outstanding claims under such super senior indebtedness are greater than or equal to the proceeds realized. Any proceeds from an enforcement sale of the Notes Collateral by any creditor will, after all obligations under super senior indebtedness have been discharged from such recoveries, be applied pro rata in repayment of the Notes, any other obligations secured by the Notes Collateral which are permitted to rank pari passu with the Notes and certain non-priority hedging obligations that do not rank on a super-priority basis. The Intercreditor Agreement provides that a common security agent, who also serves as the security agent for the lenders under the Revolving Credit Facility Agreement, the hedging obligations which are permitted by the Indenture to be secured on the Notes Collateral, and any additional debt secured by the Notes Collateral permitted to be incurred by the Indenture, will act only as provided for in the Intercreditor Agreement. The Intercreditor Agreement regulates the ability of the Trustee or the holders of the Notes to instruct the Security Agent to take enforcement action. The Security Agent is not required to take enforcement action unless instructed to do so by an Instructing Group (as defined below under Description of Certain Financing Arrangements Intercreditor Agreement ) that comprises (i) creditors holding in aggregate more than 66 2 / 3 % of the aggregate commitments under the Revolving Credit Facility, the aggregate commitments under any other permitted super senior indebtedness and the aggregate of hedging exposures under certain priority hedging obligations (the Majority Super Senior Creditors ) and (ii) creditors holding in aggregate more than 50% of the outstanding principal amount of the Notes, the outstanding principal amount of any indebtedness ranking pari passu with the Notes (including the Original Senior Secured Notes) and the aggregate of hedging exposures under certain non-priority hedging obligations (the Majority Senior Secured Creditors ) (in each case acting through their respective creditor representative). If, however, before the discharge of all super senior obligations, (i) the super senior liabilities have not been fully discharged within six months of the later of (x) the date on which the first enforcement instructions were issued and (y) the first day enforcement action can be taken under applicable law, (ii) if no enforcement action has occurred within three months of the date on which the first enforcement instructions were issued, (iii) if the instructions from the Majority Senior Secured Creditors do not comply with the security enforcement principles set forth in the Intercreditor Agreement (one of which states that the primary and overriding objective of an enforcement of security over the collateral is the maximization, so far as is consistent with prompt and expeditious realization of value, of recoveries by the Super Senior Creditors and the Senior Secured Creditors (each as defined below under Description of Certain Financing Arrangements Intercreditor Agreement )), (iv) if an insolvency event (other 30

50 than in insolvency event directly caused by any enforcement action taken by or at the request or discretion of a Super Senior Creditor) is continuing with respect to a debtor or (v) if the Majority Senior Secured Creditors have not either (x) made a determination as to the method of enforcement they wish to instruct the Security Agent to pursue (and notified the Security Agent of that determination in writing) or (y) appointed a financial adviser to assist them in making such a determination, and the Majority Super Senior Creditors (aa) determine in good faith (and notify the other creditor representatives and the Security Agent) that a delay in issuing enforcement instructions could reasonably be expected to have a material adverse effect on the ability to effect a Distressed Disposal (as defined below under Description of Certain Financing Arrangements Intercreditor Agreement ) under or on the expected realisation proceeds of any enforcement and (bb) deliver enforcement instructions which they reasonably believe to be consistent with the security enforcement principles before the Security Agent has received any enforcement instructions from the Majority Senior Secured Creditors, then the instructions of the Majority Super Senior Creditors will, up until the discharge of all super senior obligations, prevail (provided that they are consistent with the security enforcement principles set forth in the Intercreditor Agreement). To the extent we incur additional indebtedness that is secured on a pari passu basis with the Notes, the voting interest of a holder of Notes in an instructing group will be diluted commensurately with the amount of such indebtedness we incur. The foregoing arrangements could result in the enforcement of the Notes Collateral in a manner that results in lower recoveries by holders of the Notes. Disputes may occur between the holders of the Notes and creditors under our Revolving Credit Facility, the counterparties to certain hedging arrangements and/or creditors of certain other super senior indebtedness as to the appropriate manner of pursuing enforcement remedies and strategies with respect to the Notes Collateral securing such obligations. In such an event, the holders of the Notes will be bound by any decisions of the relevant instructing group, which may result in enforcement action in respect of the Notes Collateral, whether or not such action is approved by the holders of the Notes or may be adverse to such noteholders. The creditors under the Revolving Credit Facility, the counterparties to certain hedging arrangements or the holders of certain other super senior indebtedness secured by the Notes Collateral may have interests that are different from the interest of holders of the Notes and they may elect to pursue their remedies under the relevant Security Documents at a time when it would otherwise be disadvantageous for the holders of the Notes to do so. The holders of the Notes will also have no separate right to enforce the Notes Collateral. In addition, the holders of the Notes will not be able to instruct the Security Agent, force a sale of the Notes Collateral or otherwise independently pursue the remedies of a secured creditor under the relevant Security Document, unless they comprise an instructing group which is entitled to give such instructions, which, in turn, will depend on certain conditions and circumstances including those described above. Furthermore, other creditors not subject to the Intercreditor Agreement could commence enforcement action against the Issuer, or any of its subsidiaries during such period, and the Parent, the Issuer, or one or more of its subsidiaries could seek protection under applicable bankruptcy laws, or the value of certain Notes Collateral could otherwise be impaired or reduced in value. In addition, if the Security Agent sells Notes Collateral comprising the shares of any of our subsidiaries as a result of an enforcement action in accordance with the Intercreditor Agreement, claims under the Notes and the Note Guarantees and the liens over any other assets securing the Notes and the Note Guarantees may be released. See Description of Certain Financing Arrangements Intercreditor Agreement and Description of the Notes Security. The Notes and each of the Note Guarantees are each be structurally subordinated to the liabilities and preference shares (if any) of our non- Guarantor subsidiaries. Generally, claims of creditors of a non-guarantor subsidiary, including trade creditors, and claims of preference shareholders (if any) of the subsidiary, will have priority with respect to the assets and earnings of the subsidiary over the claims of creditors of its parent entity, including claims by holders of the Notes under the Note Guarantees. In the event of any foreclosure, dissolution, winding-up, liquidation, reorganization, administration or other bankruptcy or insolvency proceeding of any of our non-guarantor subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to its parent entity. As such, the Notes and each Note Guarantee are structurally subordinated to the creditors (including trade creditors) and preference shareholders (if any) of our non-guarantor subsidiaries. The interests of our controlling principal shareholder may conflict with the interests of the holders of Notes. The interests of our controlling principal shareholder may, in certain circumstances, conflict with your interests as a holder of Notes. Hony Capital indirectly controls PEGHL and the Issuer. As a result, our principal shareholder has, and will continue to have, indirectly the power, among other things, to affect our legal and capital structure and our 31

51 day-to-day operations, as well as the ability to elect and change our management and to approve other changes to our operations. Our controlling principal shareholder may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, will enhance their equity investments, although such transactions might involve risks to you as a holder of Notes. For example, our controlling principal shareholder could vote to cause us to incur additional indebtedness, to sell certain material assets or pay dividends, in each case so long as the Indenture so permits. The incurrence of additional indebtedness would increase our debt service obligations and the sale of certain assets could reduce our ability to generate sales, each of which could adversely affect you as a holder of Notes. In addition, our controlling principal shareholder may, in the future, own businesses that directly compete with ours or do business with us. The Note Guarantees are subject to certain limitations on enforcement and may be limited by applicable law or subject to certain defenses that may adversely affect their validity and enforceability. Each Note Guarantee provides the holders of the Notes with a direct claim against the relevant Guarantor. The Indenture provides that each Note Guarantee is limited to the maximum amount that can be guaranteed by the relevant Guarantor. See Description of the Notes Note Guarantees and Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations. The Note Guarantees and the enforcement thereof are subject to certain generally available defenses. Defenses generally include those that relate to corporate purpose or benefit, fraudulent conveyance or transfer, voidable preference, insolvency or bankruptcy challenges, financial assistance, preservation of share capital, thin capitalization, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally. If one or more of the foregoing laws and defenses are applicable, a Guarantor may have no liability or decreased liability under its Note Guarantee depending on the amounts of its other obligations and applicable law. Although laws differ among various jurisdictions, in general, under bankruptcy or insolvency law and other laws, a court could (i) avoid or invalidate all or a portion of a Guarantor s obligations under its Note Guarantee, (ii) direct that the holders of the Notes return any amounts paid under a Note Guarantee to the relevant Guarantor or to a fund for the benefit of that Guarantor s creditors or (iii) take other action that is detrimental to you, typically if the court found that: the relevant Note Guarantee was incurred with actual intent to give preference to one creditor over another, hinder, delay or defraud creditors or shareholders of the relevant Guarantor or, in certain jurisdictions, when the granting of the relevant Note Guarantee has the effect of giving a creditor a preference or the creditor was aware that the relevant Guarantor was insolvent when the relevant Note Guarantee was given; the relevant Guarantor did not receive fair consideration or reasonably equivalent value or corporate benefit for the relevant Note Guarantee and/or the relevant Guarantor was: (i) insolvent or rendered insolvent because of the relevant Note Guarantee; (ii) undercapitalized or became undercapitalized because of the relevant Note Guarantee; or (iii) intended to incur, or believed that it would incur, indebtedness beyond its ability to pay at maturity; the relevant Note Guarantee was held to exceed the corporate objects of the relevant Guarantor or not to be in the best interests or for the corporate benefit of the relevant Guarantor; or the amount paid or payable under the relevant Note Guarantee was in excess of the maximum amount permitted under applicable law. We cannot assure you which standard a court would apply in determining whether any Guarantor was insolvent at the relevant time or that, regardless of method of valuation, a court would not determine that a Guarantor was insolvent on that date, or that a court would not determine, regardless of whether or not a Guarantor was insolvent on the date a Note Guarantee was issued, that payments to holders of the Notes constituted preferences, fraudulent transfers or conveyances or on other grounds. There is hence a possibility that a Note Guarantee may be set aside, in which case the relevant entire guarantee liability may be extinguished. If a court decided that a Note Guarantee was a preference, fraudulent transfer or conveyance and voided that Note Guarantee, or held it unenforceable for any other reason, you may cease to have any claim in respect of the relevant Guarantor and would be a creditor solely of the Issuer and the other Guarantor(s). The Issuer is a holding company and depends on cash flows from subsidiaries to make payments on the Notes. The Issuer is a holding company with no independent business operations or significant assets other than investments in its subsidiaries, and, accordingly, depends upon the receipt of sufficient funds from its subsidiaries to meet its obligations. We intend to provide funds to the Issuer in order to meet its obligations on the Notes through a 32

52 combination of dividends and interest payments on intercompany loans. The obligations under intercompany loans are junior obligations and are subordinated in right of payment to all existing and future senior and senior subordinated indebtedness of the Issuer, including obligations under, or guarantees of obligations under, the Revolving Credit Facility, the Senior Secured Notes and the Existing Senior Notes. The amount of dividends and distributions available to the Issuer will depend on the profitability and cash flow of its subsidiaries and the ability of those subsidiaries to pay dividends or make other distributions. For example, the subsidiaries of the Issuer may not be able to, or may not be permitted under applicable law to, make distributions or advance upstream loans to the Issuer to make payments in respect of their indebtedness, including the Notes and the Note Guarantees. In addition, while the Indenture governing the Notes, the Existing Senior Notes Indenture and the Revolving Credit Facility Agreement, respectively, limit the ability of our subsidiaries to incur contractual restrictions on their ability to pay dividends or make other intercompany payments to us, such limitations are subject to certain significant qualifications and exceptions. In the event that we do not receive distributions or other payments from our subsidiaries, we may be unable to make required principal and interest payments on the Notes. We do not expect to have any other sources of funds that would allow us to make payments to holders of the Notes. The Notes Collateral may not be sufficient to secure the obligations under the Notes. The Notes and the Note Guarantees are secured by security interests in the Notes Collateral described in this Listing Particulars, which Notes Collateral also secures the obligations under the Original Senior Secured Notes, the Revolving Credit Facility Agreement, certain additional indebtedness and certain hedging obligations. The Notes Collateral may also secure additional debt ranking pari passu with the Notes to the extent permitted by the terms of the Indenture and the Intercreditor Agreement. The rights of the holders of the Notes to the Notes Collateral may therefore be diluted by any increase in the indebtedness secured by the Notes Collateral or a reduction of the Notes Collateral securing the Notes. Not all of our assets secure or will secure the Notes. The value of the Notes Collateral and the amount to be received upon an enforcement of the Notes Collateral will depend upon many factors, including, among others, the ability to sell the collateral in an orderly sale, whether or not the business is sold as a going concern, economic conditions where operations are located, the availability of buyers for the Notes Collateral and any fees, taxes or duties required to be paid under applicable law in connection with the enforcement of the Notes Collateral. The book value of the Notes Collateral should not be relied on as a measure of realizable value for such assets. All or a portion of the Notes Collateral may be illiquid and may have no readily ascertainable market value. Likewise, we cannot assure you that there will be a market for the sale of the Notes Collateral, or, if such a market exists, that there will not be a substantial delay in its liquidation. In addition, the pledges, shares and ownership interests of an entity may be of no value if that entity is subject to an insolvency or bankruptcy proceeding because all or part of the obligations of the entity must first be satisfied, leaving little or no remaining assets in the entity. The Notes Collateral is located in the UK and Republic of Ireland, and the multi-jurisdictional nature of any foreclosure on the Notes Collateral may limit the realizable value of the Notes Collateral. For example, the bankruptcy, insolvency, administrative and other laws of the various jurisdictions may be materially different from, or conflict with, each other, including in the areas of rights of creditors, priority of government and other creditors, ability to obtain post-petition interest and duration of the proceedings. The rights of holders of the Notes in the Notes Collateral may be adversely affected by the failure to perfect the security interests in the Notes Collateral. Under applicable law, a security interest in certain tangible and intangible assets can only be properly perfected, and its priority retained, through certain actions undertaken by the secured party and/or the grantor of the security. The liens in the Notes Collateral securing the Notes may not be perfected with respect to the claims of the Notes if we fail or are unable to take the actions required to be taken in order to perfect any of these liens. Such failure may result in the invalidity of the relevant security interest in the Notes Collateral or adversely affect the priority of such security interest in favor of the Notes against third parties, including a trustee in bankruptcy and other creditors who claim a security interest in the same collateral. Further, it should be noted that neither the Trustee nor the Security Agent shall have any obligation to take any steps or action to perfect any of the liens in the Notes Collateral. The granting of the security interests in the Notes Collateral in connection with the issuance of the Notes may create or have created hardening periods for such security interests in accordance with the law applicable in certain jurisdictions. The granting of new security interests in the Notes Collateral in connection with the issuance of the Notes may create or have created hardening periods for such security interests in certain jurisdictions. The applicable hardening period for these new security interests will run from the moment each such security interest has been granted, perfected, 33

53 extended or recreated. At each time, if the security interest granted, perfected, extended or recreated were to be enforced before the end of the respective applicable hardening period, it may be declared void and/or it may not be possible to enforce it. In addition, the granting of a shared security interest to secure existing and new indebtedness (such as the Original Senior Secured Notes, the Existing Senior Notes, the Notes and any additional notes) or future indebtedness may restart or reopen hardening periods in certain jurisdictions. The applicable hardening period may run from the moment such security interest is amended, granted or perfected. If the security interest granted were to be enforced before the end of the respective applicable hardening period, it may be declared void or ineffective and/or it may not be possible to enforce it. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations. The same rights also apply following the issuance of the Notes in connection with the accession of further subsidiaries as additional Guarantors and the granting of security interest over their relevant assets and equity interests for the benefit of holders of the Notes. Please see Description of the Notes Security. The security interests in the Notes Collateral are not and will not be granted directly to the holders of the Notes. The security interests in the Notes Collateral that will secure the obligations of the Issuer under the Notes and the obligations of the Guarantors under the Note Guarantees, respectively, are not and will not be granted directly to the holders of the Notes but are rather be granted in favor of the Security Agent. The Indenture and the Intercreditor Agreement, respectively, also provide that only the Security Agent shall have the right to enforce on the Notes Collateral. As a consequence, holders of the Notes do not have direct security interests and are not be entitled to take enforcement action in respect of the Notes Collateral securing the Notes, except through the Trustee who will (subject to the provisions of the Notes and the Intercreditor Agreement) provide instructions to the Security Agent in respect of the Notes Collateral. The providers of the security interests securing the Notes have control over the Notes Collateral, and the sale of particular assets could reduce the pool of assets securing the Notes. The Security Documents allow the relevant provider of the security interest securing the Notes to remain in possession of, retain exclusive control over, freely operate, and collect, invest and dispose of any income from, the Notes Collateral. So long as no default or event of default under the Indenture would result therefrom, the relevant security provider, may, among other things, and subject to the terms of the applicable Security Document, without any release or consent by the Security Agent or the Trustee, conduct ordinary course activities with respect to certain of the Notes Collateral such as selling, factoring, abandoning or otherwise disposing of such Notes Collateral and making ordinary course cash payments, including repayments of indebtedness. Any of these activities could reduce the value of the Notes Collateral, which could reduce the amounts payable to you from the proceeds of any sale of the Notes Collateral in the case of an enforcement of the liens on the Notes Collateral. It may be difficult to realize the value of the Notes Collateral securing the Notes. The Notes Collateral securing the Notes are and wuill be subject to any and all exceptions, defects, encumbrances, liens and other imperfections permitted under the Indenture and/or the Intercreditor Agreement and accepted by other creditors that have the benefit of a priority security interest in the Notes Collateral securing the Notes, whether on or after the date the Notes are first issued. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the Notes Collateral securing the Notes, as well as the ability of the Security Agent to realize or foreclose on such Notes Collateral. Furthermore, the ranking of security interests in the Notes Collateral can be affected by a variety of factors, including, among others, the timely satisfaction of perfection requirements, statutory liens or re-characterization under the laws of certain jurisdictions. The security interests are and will be subject to practical problems generally associated with the realization of security interests in collateral. For example, the Security Agent may need to obtain the consent of a third party to enforce a security interest. We cannot assure you that the Security Agent will be able to obtain any such consent. We also cannot assure you that the consent of any third party will be given when required to facilitate a foreclosure on such asset. Accordingly, the Security Agent may not have the ability to foreclose upon that asset, and the value of the Notes Collateral may, as a consequence, significantly decrease. The grant of the Notes Collateral to secure the Notes might be challenged or voidable in an insolvency proceeding. The grant of the Notes Collateral to secure the Notes may be voidable by the grantor or by an insolvency trustee, liquidator, receiver or administrator or by other creditors, or may be otherwise set aside by a court, or be unenforceable if certain events or circumstances exist or occur, including, among others, if the grantor is deemed to be insolvent at the time of the grant, or if the grant permits the secured parties to receive a greater recovery than if the grant had not been given and an insolvency proceeding in respect of the grantor is commenced within a legally specified clawback period 34

54 following the grant. To the extent that the grant of any security interest is voided, holders of the Notes would lose the benefit of the relevant security interest. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations. The insolvency laws of England and Wales or the jurisdiction of incorporation or formation of each of the Guarantors may not be as favorable to holders of Notes as U.S. insolvency laws or those of another jurisdiction with which you may be familiar. The Issuer is incorporated in England and Wales. In the event of a bankruptcy or insolvency event, proceedings could be initiated in England or in one or more other jurisdictions in which the Guarantors are domiciled. Such multi- jurisdictional proceedings are likely to be complex and costly and otherwise may result in greater uncertainty and delay regarding the enforcement of the rights of holders of the Notes. The bankruptcy laws of these jurisdictions may be less favorable to your interests as a creditor than the bankruptcy laws of the U.S. or any other jurisdiction you may be familiar with, including in respect of priority of creditors, the ability to obtain post-petition interest and the ability to influence proceedings and the duration thereof, and this may limit your ability to receive payments due on the Notes. In the event that the Issuer, the Guarantors, any future guarantors of the Notes, if any, or any other of our subsidiaries experienced financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings would be commenced, or the outcome of such proceedings. The insolvency and other laws of different jurisdictions may be materially different from, or in conflict with, each other, including in the areas of rights of secured and other creditors, the ability to void preferential transfer and certain other transactions, priority of governmental and other creditors, ability to obtain post-petition interest and duration of the proceeding. The application of these laws, or any conflict among them, could call into question whether any particular jurisdiction s laws should apply, adversely affect your ability to enforce the rights of holders of the Notes under the Note Guarantees or the rights of holders of the Notes under the Notes Collateral in these jurisdictions and limit any amounts that you may receive. In addition, in actions brought in countries outside of the United States, courts may choose to apply their own law rather than the law of the State of New York, which governs the Indenture, the Notes and the Note Guarantees. The application of foreign law may limit your ability to enforce your rights under the Notes and the Note Guarantees. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations for further information. There are circumstances other than repayment or discharge of the Notes under which the Notes Collateral securing the Notes and the Note Guarantees will be released automatically, without the consent of holders of the Notes or the consent of the Trustee. Under various circumstances, the Notes Collateral securing the Notes and the Note Guarantees may be released automatically without the consent of the holders of the Notes or the Trustee, including: as described under the caption Description of the Notes Amendments and Waivers; upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided under the captions Description of the Notes Defeasance and Description of the Notes Satisfaction and Discharge; in connection with certain asset disposals, if such asset disposal is permitted under the terms of the Indenture and the Revolving Credit Facility Agreement, and is not a distressed disposal as described under Description of Certain Financing Arrangements Intercreditor Agreement; and in connection with certain enforcement actions taken by certain of our creditors in accordance with the Intercreditor Agreement, as further described under Description of Certain Financing Arrangements Intercreditor Agreement. You may face foreign exchange risks by investing in the Notes. The Notes are denominated and payable in pound sterling. If investors measure their investment returns by reference to a currency other than pound sterling, an investment in the Notes will entail foreign exchange related risks due to, among other factors, possible significant changes in the value of the pound sterling relative to the currency by reference to which the investor measures the return on his investments because of economic, political and other factors over which we have no control. Depreciation of the pound sterling against the currency by reference to which an investor measures the return on his investments could cause a decrease in the effective yield of the Notes below their stated coupon rates and could result in a loss to investors when the return on the Notes is translated into the currency by reference to which the investor measures the return on his investments. Investments in the Notes denominated in a currency other than U.S. dollars by U.S. investors may also have important tax consequences as a result of foreign exchange gains, if any. See Tax Considerations Certain U.S. Federal Income Tax Consequences. 35

55 We may not be able to obtain the funds required to repurchase the Notes upon a change of control. The Indenture contains provisions relating to certain events constituting a change of control. Upon the occurrence of a change of control, the Issuer would be required to offer to repurchase all of the outstanding Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest and additional amounts, if any, to the date of repurchase. If a change of control were to occur, we cannot assure you that we would have sufficient funds available at such time, or that we would have sufficient funds to provide to the Issuer to pay the purchase price of the outstanding Notes or that the restrictions in the Indenture, the Revolving Credit Facility Agreement, the Intercreditor Agreement or our other then existing contractual obligations would allow the Issuer to make such required repurchases. A change of control may result in an event of default under, or acceleration of, the Revolving Credit Facility, and certain other indebtedness or trigger a similar obligation to offer to repurchase loans or notes thereunder (as the case may be). The repurchase of the Notes pursuant to such an offer could cause a default under such indebtedness, even if the change of control itself does not. The ability of the Issuer to receive cash from their subsidiaries to make cash payments to the holders of the Notes following the occurrence of a change of control, may be limited by our then existing financial resources. If an event constituting a change of control (as defined in the Indenture) occurs at a time when we are prohibited from providing funds to the Issuer for the purpose of repurchasing the Notes, we may seek the consent of the lenders under such indebtedness to the purchase of the Notes or may attempt to refinance the borrowings that contain such prohibition. If such consent to repay such borrowings is not obtained, the Issuer will remain prohibited from repurchasing any tendered Notes. In addition, we expect that we would require third-party financing to make an offer to repurchase the Notes upon a change of control. We cannot assure you that we would be able to obtain such financing. Any failure by the Issuer to offer to purchase the Notes would constitute a default under the Indenture, which would, in turn, constitute a default under the Revolving Credit Facility and certain other indebtedness. See Description of the Notes Change of Control. The change of control provision contained in the Indenture may not necessarily afford you protection in the event of certain important corporate events, including a reorganization, restructuring, merger or other similar transaction involving us that may adversely affect you, because such corporate events may not involve a shift in voting power or beneficial ownership or, even if they do, may not constitute a change of control as defined in the Indenture. Except as described under Description of the Notes Change of Control, the Indenture does not contain provisions that would require the Issuer to offer to repurchase or redeem the Notes in the event of a reorganization, restructuring, merger, recapitalization or similar transaction. If the China Acquisition is not consummated, the Issuer will be required to redeem all of the Notes, which means that you may not obtain the return you expect on the Notes. If the China Acquisition Completion Date does not occur on or before one Business Day prior to the last Business Day of the Special Mandatory Redemption Period, the Notes will be subject to a special mandatory redemption at 100% of the initial issue price of such Notes plus accrued and unpaid interest and additional amounts, if any, from February 1, 2015 to the Special Mandatory Redemption Date. See Description of the Notes Special Mandatory Redemption. You may therefore not obtain the return you expected to receive on the Notes. The Notes were initially issued with temporary ISINs and common codes. In the event that we are unable to transfer the Notes to the permanent ISINs and common codes, the Notes will continue to trade under a separate ISIN and common code to the Original Senior Secured Notes, which may adversely affect the liquidity of the Notes and cause the Notes to trade at different prices than the Original Senior Secured Notes. The consolidation date for Notes sold outside the United States in reliance on Regulation S under the U.S. Securities Act will be the earlier of 40 days after the later of the Issue Date of the Notes and the earliest date or dates permitted under U.S. federal securities laws. The consolidation date for Notes sold within the United States to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act will be the earlier of one year after the later of the date of the original issue of these Notes and the earliest date or dates permitted under U.S. federal securities laws. Once the Notes have become freely tradeable upon the expiration of the relevant restricted period under Rule 144A and Regulation S under the U.S. Securities Act, we expect that the Notes will share a single ISIN and common code with the relevant Rule 144A and Regulation S Original Senior Secured Notes, and that the Notes and the Original Senior Secured Notes will thereafter be fungible. However, in the event that we are unable to transfer the Notes to the permanent ISINs and common codes, the Notes will continue to trade under separate ISINs and common codes to the Original Senior Secured Notes, which may adversely affect the liquidity of the Notes and cause the Notes to trade at different prices than the Original Senior Secured Notes. The Notes are held in book-entry form, and therefore you must rely on the procedures of the relevant clearing systems to exercise any rights and remedies. Owners of the book-entry interests will not be considered owners or holders of Notes unless and until definitive Notes are issued in exchange for book-entry interests. Instead, the common depositary (or its nominee) for Euroclear and Clearstream, Luxembourg will be the sole registered holder of the Notes in global form. 36

56 Payments of principal, interest and other amounts owing on or in respect of the Notes in global form will be made to the Paying Agent, which will make payments to Euroclear and Clearstream, Luxembourg. Thereafter, such payments will be credited to Euroclear and Clearstream, Luxembourg participants accounts that hold book-entry interests in the Notes in global form and credited by such participants to indirect participants. After payment to Euroclear and Clearstream, Luxembourg, as described above, none of the Issuer, the Trustee or any paying agent will have any responsibility or liability for any aspect of the records relating to or payments of interest, principal or other amounts to Euroclear and Clearstream, Luxembourg, or to owners of book-entry interests. Accordingly, if you own a book-entry interest in the Notes, you must rely on the procedures of Euroclear and Clearstream, Luxembourg and, if you are not a participant in Euroclear and/or Clearstream, Luxembourg, on the procedures of the participant through which you own your interest, to exercise any rights and obligations of a holder of the Notes under the Indenture. Owners of book-entry interests will not have the direct right to act upon any solicitations for consents or requests for waivers or other actions from holders of the Notes. Instead, if you own a book-entry interest, you will be reliant on the common depositary (or its nominee) (as registered holder of the Notes) to act on your instructions and/or will be permitted to act directly only to the extent you have received appropriate proxies to do so from Euroclear and/or Clearstream, Luxembourg or, if applicable, from a participant. We cannot assure you that procedures implemented for the granting of such proxies will be sufficient to enable you to vote on any requested actions or to take any other action on a timely basis. Similarly, upon the occurrence of an event of default under and as defined in the Indenture governing the Notes, unless and until the definitive registered Notes are issued in respect of all book-entry interests, if you own a book-entry interest, you will be restricted to acting through Euroclear and Clearstream, Luxembourg. We cannot assure you that the procedures to be implemented through Euroclear and Clearstream, Luxembourg will be adequate to ensure the timely exercise of rights under the Notes. There may not be an active trading market for the Notes, in which case your ability to sell the Notes may be limited. We cannot assure you as to: the liquidity of any market in the Notes; your ability to sell your Notes; or the prices at which you would be able to sell your Notes. The Notes have a different restricted trading period than the Original Senior Secured Notes, given that (i) for the 40 day period after the closing date of the Offering, the Notes issued under Regulation S will not be fungible with the Original Senior Secured Notes issued under Regulation S and (ii) for the one year period after the closing date of the Offering, the Notes issued under Rule 144A will not be fungible with the Original Senior Secured Notes issued under Rule 144A. Accordingly, the Notes will be new securities for which there is no existing trading market and, as such, there can be no assurance that an active or liquid trading market will develop in respect of the Notes in the future. Future trading prices for the Notes will depend on many factors, including, among other things, the period upon which such Notes are restricted from trading with the Original Senior Secured Notes prevailing interest rates, our operating results and the market for similar securities. Historically, the market for non-investment grade securities has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. The liquidity of a trading market for the Notes may be adversely affected by a general decline in the market for similar securities and is subject to disruptions that may cause volatility in prices. The trading market for the Notes may attract different investors and this may affect the extent to which the Notes may trade. It is possible that the market for the Notes will be subject to disruptions. Any such disruption may have a negative effect on you, as a holder of the Notes, regardless of our prospects and financial performance. As a result, there is no assurance that there will be an active trading market for the Notes. If no active trading market develops, you may not be able to resell your holding of the Notes at a fair value, if at all. Although the Notes have been listed on the Official List of the Irish Stock Exchange and are admitted to trading on the Global Exchange Market, we cannot assure you that the Notes will remain listed. No assurance is made as to the liquidity of the Notes as a result of the admission to trading on the Global Exchange Market, failure to be approved for the delisting (whether or not for an alternative admission to listing on another stock exchange) of the Notes, as applicable, from the Irish Stock Exchange may have a material effect on a holder s ability to resell the Notes, as applicable, in the secondary market. In addition, the Indenture allows us to issue additional notes in the future, which could adversely impact the liquidity of the Notes. 37

57 You may not be able to recover in civil proceedings for U.S. securities law violations. The Issuer, the Guarantors and each of their respective subsidiaries are organized outside the United States, and our business is conducted entirely outside the United States. All of the directors, managers and/or executive officers of the Issuer and the Guarantors are non-residents of the United States, and substantially all of their assets are located outside the United States. Although the Issuer and the Guarantors will submit to the jurisdiction of certain New York courts in connection with any action under U.S. securities laws, you may be unable to effect service of process within the United States on these directors, managers and executive officers. In addition, as the majority of the assets of the Issuer, the Guarantors and their respective subsidiaries and those of their respective directors, managers and executive officers are located outside of the United States, you may be unable to enforce judgments obtained in the U.S. courts against them. Moreover, in light of recent decisions of the U.S. Supreme Court, actions of the Issuer and the Guarantors may not be subject to the civil liability provisions of the federal securities laws of the United States. See Enforceability of Civil Liabilities. Credit ratings may not reflect all risks, are not recommendations to buy or hold securities and may be subject to revision, suspension or withdrawal at any time. One or more independent credit rating agencies may assign credit ratings to the Notes. The credit ratings address our ability to perform our obligations under the terms of the Notes and credit risks in determining the likelihood that payments will be made when due under the Notes. The ratings may not reflect the potential impact of all risks related to the structure, market, additional risk factors discussed above and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal by the rating agency at any time. No assurance can be given that a credit rating will remain constant for any given period of time or that a credit rating will not be lowered or withdrawn entirely by the credit rating agency if, in its judgment, circumstances in the future so warrant. A suspension, reduction or withdrawal at any time of the credit rating assigned to the Notes by one or more of the credit rating agencies may adversely affect the cost and terms and conditions of our financings and could adversely affect the value and trading of the Notes. The interests of holders of additional notes under the Indenture may be inconsistent with the holders of Original Senior Secured Notes under the Indenture. The Notes will be issued pursuant to the Indenture, which also governs the Original Senior Secured Notes, and the Senior Secured Notes will vote as a single class with respect to amendments, waivers or other modifications of the Indenture; and to the extent the relevant amendment or waiver is approved by the holders of a majority in aggregate principal amount of the Senior Secured Notes (subject to limited exceptions), all holders of the Senior Secured Notes will be bound by such amendment. Further, series of additional notes may be issued under the Indenture which have different terms in respect of currency, interest rate, maturity, call schedule and other matters. Such additional notes will also generally vote as a single class with other series of notes issued under the Indenture, but may have interests that differ from the holders of other series of notes issued under the Indenture, including the Notes. Transfers of the Notes are restricted, which may adversely affect the value of the Notes. The Notes were offered and sold pursuant to an exemption from registration under the U.S. Securities Act and applicable state securities laws of the United States. The Notes have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws. Therefore, you may not transfer or sell the Notes in the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws, or pursuant to an effective registration statement, and you may be required to bear the risk of your investment in the Notes for an indefinite period of time. The Notes contain and the Indenture contains provisions that restrict the Notes from being offered, sold or otherwise transferred except pursuant to the exemptions available pursuant to Rule 144A and Regulation S under the U.S. Securities Act, or other exemptions under the U.S. Securities Act. In addition, by acceptance of delivery of any Notes, the holder thereof agrees on its own behalf and on behalf of any investor accounts for which it has purchased the Notes that it shall not transfer the Notes in an aggregate principal amount of less than 100,000. Furthermore, we have not registered the Notes under any other country s securities laws. It is your obligation to ensure that your offers and sales of the Notes within the United States and other countries comply with applicable securities laws. See Transfer Restrictions. Payments under the Notes may be subject to withholding tax under the EU Directive on the taxation of savings income. EC Council Directive 2003/48/EC on the taxation of savings income (the Savings Directive ) requires EU Member States to provide to the tax authorities of other EU Member States details of payments of interest and other similar income paid by a person established within its jurisdiction to (or for the benefit of) an individual resident, or certain other types of entity established, in that other EU Member State, except that Austria will instead impose a withholding system for a transitional period (subject to a procedure whereby, on meeting certain conditions, the 38

58 beneficial owner of the interest or other income may request that no tax be withheld) unless during such period it elects otherwise. The Council of the European Union has adopted a Directive (the Amending Savings Directive ) which would, if implemented, amend and broaden the scope of the requirements of the Savings Directive described above. The Amending Savings Directive would expand the range of payments covered by the Savings Directive, in particular to include additional types of income payable on securities, and the circumstances in which payments must be reported or paid subject to withholding. For example, payments made to (or for the benefit of) (i) an entity or legal arrangement effectively managed in an EU Member State that is not subject to effective taxation, or (ii) a person, entity or legal arrangement established or effectively managed outside of the EU (and outside any third country or territory that has adopted similar measures to the Savings Directive) which indirectly benefit an individual resident in an EU Member State, may fall within the scope of the Savings Directive, as amended. The Amending Savings Directive requires EU Member States to adopt national legislation necessary to comply with it by January 1, 2016, which legislation must apply from January 1, The European Commission has published a proposal for a Council Directive repealing the Savings Directive from January 1, 2016 (January 1, 2017 in the case of Austria) (in each case subject to transitional arrangements). The proposal also provides that, if it is adopted, EU Member States will not be required to implement the Amending Savings Directive. If a payment were to be made or collected through an EU Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment pursuant to the Savings Directive or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to such Directives, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. Furthermore, if the Amending Savings Directive is implemented and takes effect, such withholding may occur in a wider range of circumstances than at present, as explained above. The Issuer is required to maintain a Paying Agent with a specified office in an EU Member State that is not obliged to withhold or deduct tax pursuant to the Savings Directive, which may mitigate an element of this risk if the relevant holder of the Note is able to arrange for payment through such a Paying Agent. However, investors should choose their custodians and intermediaries with care, and provide each custodian and intermediary with any information that may be necessary to enable such persons to make payments free from withholding and in compliance with the Savings Directive, as amended. Investors who are in any doubt as to their position should consult their professional advisers. Investors in the Notes may have limited recourse against the independent auditors. In respect of the accountant s report relating to the combined and consolidated financial information for Financial Year 2013, Financial Year 2012 and Financial Year 2011 of PE Holdings reproduced herein, PricewaterhouseCoopers LLP, PE Holdings s independent accountants, states the following: Save for our responsibility to the directors and PE Holdings in respect of that purpose, to the fullest extent permitted by law we do not accept or assume any responsibility or liability for any other purpose or to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with our work or this report. In respect of the auditor s report relating to the consolidated financial statements for Financial Year 2014 of PE Holdings reproduced herein, PricewaterhouseCoopers LLP, PE Holdings independent auditors, states the following: We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing. Investors in the Notes should understand that, in making these statements, the independent auditors confirmed that they do not accept or assume any liability to parties (such as the purchasers of the Notes) other than PE Holdings with respect to the report and to the independent auditors audit work and opinion. The SEC would not permit such limiting language to be included in a registration statement or a prospectus used in connection with an offering of securities registered under the U.S. Securities Act, or in a report filed under the U.S. Exchange Act. If a U.S. court (or any other court) were to give effect to the language quoted above, the recourse that investors in the Notes may have against the independent auditors based on their report or the consolidated financial statements to which they relate could be limited. 39

59 THE TRANSACTIONS THE CHINA ACQUISITION On May 12, 2015, PizzaExpress Group Limited ( PEGL ) entered into a sale and purchase agreement (the China Acquisition Agreement ) with The Greater China Restaurant Company Limited, as seller (the Seller ), to acquire (the China Acquisition ) all of the issued share capital of PizzaExpress (Hong Kong) Limited, a company incorporated in Hong Kong ( PE Hong Kong ). PE Hong Kong is the legal and beneficial owner of all of the issued share capital of PizzaExpress PRD Limited, a company incorporated in Hong Kong ( PE PRD ) and of all of the issued share capital of PizzaExpress China Limited, a company incorporated in Hong Kong ( PECL ). PE PRD is in turn the registered and beneficial owner of all of the paid-up registered capital of PizzaExpress (Shenzhen) Limited ( PE Shenzhen ), a wholly foreign-owned enterprise established under the laws of the People s Republic of China. PECL is in turn the registered and beneficial owner of all of the paid up registered capital of Pizza Marzano (Shanghai) Limited ( PE Shanghai ), a wholly foreign-owned enterprise established under the laws of the People s Republic of China. PE Hong Kong and its subsidiaries (PE PRD, PECL, PE Shenzhen and PE Shanghai) are referred to collectively as the China Targets. The China Targets constitute the existing PizzaExpress franchise business in Hong Kong, Shanghai and Shenzhen, which we are acquiring from our current Chinese franchise partner (who is the majority owner of The Greater China Restaurant Company Limited). We expect that PEGL will initially hold the beneficial interest in the shares of PE Hong Kong and its subsidiaries following the China Acquisition, which will subsequently be transferred to PEIHL. We expect that PEIHL will hold the legal title to, and subsequently the beneficial interest in, the shares of PE Hong Kong and its subsidiaries following the China Acquisition. Our Chinese franchise partner will continue to work with us for up to one year after the consummation of the China Acquisition to assist with transitional integration of the China Targets with our business. We have appointed a new CEO and are in the process of appointing a new CFO for the China Targets. The total purchase price for the China Acquisition is HK$745,000, (approximately 62,803,500, based on the exchange rate as of May 28, 2015), payable in three installments: HK$624,000,000 (approximately 52,603,200) payable at closing (the First Installment ) (which we expect will be financed with a portion of the net proceeds of the Offering. See Use of Proceeds ); HK$106,000,000 (approximately 8,935,800) payable on the first anniversary of closing (the Second Installment ) (which we expect will be financed with cash on the balance sheet); and HK$15,000,000 (approximately 1,264,500) payable on the second anniversary of closing (the Third Installment and, together with the Second Installment, the Deferred Consideration ) (which we expect will be financed with cash on the balance sheet), subject to customary purchase price adjustments for certain net debt of the China Targets. Payment of the Deferred Consideration is not contingent upon any performance criteria being met. The China Acquisition Agreement contains customary warranties given by the Seller as to capacity, title and certain disclosure matters as well as customary covenants given by the Seller regarding, among other things, the conduct of the business and the affairs of the China Targets pending closing of the China Acquisition. The Seller s liability for any breach of a warranty is subject to certain thresholds and limitations. THE OFFERING The proceeds of the Offering, less certain costs, fees and expenses associated with the China Acquisition and the Offering, will be used to finance the First Installment of the purchase price of the China Acquisition and for general corporate purposes. See Use of Proceeds. 40

60 USE OF PROCEEDS The gross proceeds of the Offering were 57.9 million. For descriptions of our indebtedness following the Offering, see Description of the Notes and Description of Certain Financing Arrangements. The expected estimated sources and uses of the funds necessary to consummate the Transactions, including the China Acquisition, are shown in the table below. Actual amounts will vary from estimated amounts depending on several factors, including differences in the estimated total transaction costs, the actual closing date of the China Acquisition and foreign currency movements. Sources (GBP millions) Uses (GBP millions) Notes (1) China Acquisition First Installment (2) General corporate purposes Transaction fees and expenses and other payments (3) Total sources Total uses (1) Represents the gross proceeds that we expect to receive from the issuance of the Notes, consisting of 55.0 million aggregate principal amount of Notes at a premium of %. This amount does not include any accrued and unpaid interest in respect of the Notes from February 1, 2015 to the Issue Date. (2) Represents the estimated First Installment for the China Acquisition of HK$624.0 million (approximately 52.6 million, based on the exchange rate as of May 28, 2015). See The Transactions. (3) Represents estimated fees and expenses associated with the Transactions, including financial advisory fees, Initial Purchasers commissions and discounts, other transaction costs and professional fees. 41

61 CAPITALIZATION The following table sets forth the consolidated cash at bank and in hand and the capitalization of PEGHL, derived from PEGHL s unaudited interim condensed consolidated financial information as at April 5, 2015, which were prepared in accordance with UK GAAP; and as adjusted to give effect to the issuance of the Notes and the application of the proceeds thereof as described in Use of Proceeds as if they had occurred on April 5, You should read the following table in conjunction with Presentation of Financial and Other Data, The Transactions, Use of Proceeds, Management s Discussion and Analysis of Our Financial Condition and Results of Operations, Description of Certain Financing Arrangements and the consolidated financial statements and the accompanying notes of PEGHL included elsewhere in this Listing Particulars. Except as set forth below, as at the Issue Date, there have been no other material changes to PEGHL s capitalization since April 5, As at April 5, 2015 (unaudited) PEGHL As Adjusted ( millions) PEGHL Actual Total cash at bank and in hand (1) (1) Debt: Revolving Credit Facility (2)... Notes (3) Original Senior Secured Notes (4) Total secured debt Existing Senior Notes (5) Total debt (6) Subordinated Shareholder Funding (7) Total shareholders equity/(deficit) (8)... (27.1) (27.1) Total capitalization (1) Represents the assumed use of cash at bank and in hand following completion of the Transactions on the China Acquisition Completion Date. See Use of Proceeds. (2) On July 31, 2014, we entered into the Revolving Credit Facility Agreement, which provides for borrowings from time to time of up to 20.0 million and will mature six years from August 18, The Revolving Credit Facility has not yet been drawn. We currently expect our Revolving Credit Facility to remain undrawn on the closing of the China Acquisition. See Description of Certain Financing Arrangements Revolving Credit Facility. (3) Represents the aggregate principal amount of the Notes but does not include accrued and unpaid interest in respect of the Notes from February 1, 2015 to April 5, Does not reflect the assumed 1.0 million of debt issuance costs that will be amortized over the term of the Notes. (4) Represents million aggregate principal amount of the Original Senior Secured Notes and accrued and unpaid interest in respect of the Original Senior Secured Notes from February 1, 2015 to April 5, Does not reflect unamortized issuance costs of the Original Senior Secured Notes. (5) Represents million aggregate principal amount of the Existing Senior Notes and accrued and unpaid interest in respect of the Existing Senior Notes from February 1, 2015 to April 5, Does not reflect unamortized issuance costs of the Existing Senior Notes. (6) Does not include Deferred Consideration in connection with the China Acquisition. See The Transactions. (7) Represents million of subordinated shareholder loan notes issued by PEGHL to a parent company plus accrued interest. PEGHL in turn lent million to the Parent pursuant to a subordinated shareholder loan agreement plus accrued interest. See Description of Certain Financing Arrangements Subordinated Shareholder Funding and note 10 to the Interim Financial Information. (8) Not adjusted for the China Acquisition or the issue premium on the Notes. 42

62 SELECTED CONSOLIDATED FINANCIAL INFORMATION The financial information contained in the following tables is derived from: (i) the consolidated financial statements of Balcombe Street Holdings Limited (formerly PE Holdings) as of and for the 52 weeks ended June 29, 2014 ( Financial Year 2014 ); (ii) the consolidated financial information of PE Holdings as of and for the 52 weeks ended June 30, 2013 ( Financial Year 2013 ) and as of and for the 53 weeks ended July 1, 2012 ( Financial Year 2012 ); (iii) and the unaudited condensed consolidated interim financial information of PEGHL (the Interim Financial Information ) as of and for the 33 weeks ended April 5, 2015 ( 33 Week Interim Period 2015 ), which include (iv) the pro forma condensed consolidated financial information of the New PizzaExpress Group as of and for the 40 weeks ended April 5, 2015 ( Interim Period 2015 ) and the pro forma comparative period as of and for the 40 weeks ended April 6, 2014 ( Interim Period 2014 ) set out in note 3 to the Interim Financial Information that, to facilitate comparison, exclude income attributable to the India JV and reclassifying certain operating expenses from cost of sales to administrative expenses (as described in note 2 of the Interim Financial Information). The following selected financial information should be read together with the section Presentation of Financial and Other Data, Summary Summary Consolidated Financial and Other Information, Management s Discussion and Analysis of Financial Condition and Results of Operations, Capitalization, the consolidated financial statements, the consolidated financial information, the interim condensed consolidated financial information, and the related notes, and the additional financial information contained elsewhere in this Listing Particulars. SELECTED CONSOLIDATED PROFIT AND LOSS ACCOUNTS Financial Year Interim Period ( millions) Turnover including share of joint venture Less share of joint venture turnover (1)... (0.1) (0.2) Group turnover Cost of sales... (282.6) (283.7) (296.4) (143.8) (153.6) Gross profit Administrative expenses (excluding exceptional costs)... (24.2) (22.6) (22.9) (101.8) (133.8) Share based payment charge... (0.1) Operating exceptional costs... (0.7) (1.9) (0.2) (0.3) Total administrative expenses... (24.2) (23.3) (24.8) (102.0) (134.2) Other operating income Operating profit Share of joint venture operating loss (1)... (0.4) (1.8) Operating profit including share of joint venture loss Loss on disposal of fixed assets... (0.5) (0.2) (0.2) Profit on ordinary activities before interest and taxation Net interest payable and similar charges... (21.6) (20.1) (18.0) (13.8) (52.9) Profit/(loss) on ordinary activities before taxation (13.7) Tax on profit on ordinary activities... (15.2) (15.1) (7.6) (5.9) (8.7) Profit/(loss) for the financial period (22.4) (1) Share of joint venture represents the portion of the India JV attributable to PE Holdings. The India JV did not form part of the Acquired PizzaExpress Group. Following the consummation of the Hony Acquisition, we entered into a franchise agreement to enable our continued operations in India and build on our presence there. Since the Hony Acquisition, the Group has not been party to any joint venture arrangements. The results of operations attributable to the India JV are not included in the results for Interim Period 2014 or Interim Period SELECTED CONSOLIDATED BALANCE SHEETS As at As at ( millions) July 1, 2012 June 30, 2013 June 30, 2014 April 6, 2014 April 5, 2015 Fixed Assets Intangible assets Tangible assets Investments Total fixed assets Current Assets Stocks Debtors (1)

63 Cash at bank and in hand Total current assets Creditors: amounts falling due within one year (1)... (673.2) (689.7) (683.3) (517.8) (74.4) Net current liabilities... (546.3) (513.0) (480.5) (465.2) (9.8) Total assets less current liabilities... (353.2) (325.4) (284.1) (273.4) Creditors: amounts falling due after one year (1)... (916.7) Provisions for liabilities and charges... (16.2) (16.0) (14.9) (14.9) (13.0) Net liabilities... (369.4) (341.4) (298.9) (288.3) (27.1) Capital and reserves Called up share capital... Share premium Other reserve... (11.4) (11.4) (11.4) (11.4) Profit and loss account... (370.8) (342.8) (300.3) (289.7) (31.6) Total shareholders deficit... (369.4) (341.4) (298.9) (288.3) (27.1) (1) Excluding Interim Period 2015, reflected in the figures presented are amounts (representing intercompany balances) owed to/due from the Gondola Group companies (excluding PE Holdings) and the Acquired PizzaExpress Group, which were settled on the Hony Acquisition Completion Date. SELECTED CONSOLIDATED CASH FLOW STATEMENTS 33 Week Financial Year Interim Period ( millions) Net cash inflow from operating activities Net cash (outflow)/inflow from returns on investments and servicing of finance... (0.2) (44.8) Taxation (paid)/received (0.8) 0.6 (1.9) Net cash outflow from capital expenditure and financial investment... (76.9) (57.6) (94.7) (19.1) Net cash outflow from acquisitions and disposals... (0.1) (11.4) (863.1) Net cash (outflow)/inflow from financing... (0.1) (0.1) (Decrease)/increase in cash... (11.2) 19.6 (11.4)

64 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The financial information contained in the following discussion is derived from: (i) the consolidated financial statements of Balcombe Street Holdings Limited (formerly PE Holdings) as of and for the 52 weeks ended June 29, 2014 ( Financial Year 2014 ); (ii) the consolidated financial information of PE Holdings as of and for the 52 weeks ended June 30, 2013 ( Financial Year 2013 ) and as of and for the 53 weeks ended July 1, 2012 ( Financial Year 2012 ),; (iii) and the unaudited condensed consolidated interim financial information of PEGHL (the Interim Financial Information ) as of and for the 33 weeks ended April 5, 2015 ( 33 Week Interim Period 2015 ), which include (iv) the pro forma condensed consolidated financial information of the New PizzaExpress Group as of and for the 40 weeks ended April 5, 2015 ( Interim Period 2015 ) and the pro forma comparative period as of and for the 40 weeks ended April 6, 2014 ( Interim Period 2014 ) set out in note 3 to the Interim Financial Information that, to facilitate comparison, exclude income attributable to the India JV and reclassify certain operating expenses from cost of sales to administrative expenses (as described in note 2 of the Interim Financial Information). The following discussion of our results of operations and financial conditions also contains forward-looking statements. Our actual results could differ materially from those that are discussed in these forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Listing Particulars, particularly under Risk Factors and Forward-Looking Statements. In addition, certain industry issues also affect the Group s results of operations and are described in Industry Overview. Prospective investors should read this Management s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with Presentation of Financial and Other Data, The Transactions, Selected Consolidated Financial Information, Capitalization, the consolidated financial statements, the consolidated financial information, the interim condensed consolidated financial information, and related notes, and the additional financial information contained elsewhere in this Listing Particulars. All financial information is taken or derived from the consolidated financial statements, the consolidated financial information and the interim condensed consolidated financial information, unless otherwise indicated. OVERVIEW We are the largest casual dining restaurant operator in the UK by number of locations, with a menu focusing on pizza and other Italian cuisine served in contemporary surroundings. We opened our first restaurant fifty years ago in Soho, London and, as at April 5, 2015, had 435 restaurants across the UK operating under primarily the PizzaExpress brand and 14 restaurants in Ireland operating under the Milano brand. PizzaExpress is an iconic brand in the UK and has one of the highest unprompted brand recognitions among UK casual dining operators. We are one of the most frequented restaurant chains in the UK, with an average spend per head of (including VAT) in the UK and Ireland for Interim Period In addition to our presence in the UK and Ireland, we have a growing international business. As at April 5, 2015, we had 76 franchise restaurants located in China, Cyprus, Gibraltar, India, Indonesia and the Middle East, and one Company-operated restaurant in Beijing, China that opened in June Following our acquisition in May 2015 of the franchise business that operated our seven restaurants in the United Arab Emirates and following the acquisition of the China franchise businesses pursuant to the China Acquisition, we expect that we will have 35 international Company-operated restaurants and 42 international franchise restaurants. KEY FACTORS AFFECTING COMPARABILITY Restaurant Openings and Closures A significant portion of the growth of our turnover during the periods under review is attributable to turnover from newly opened restaurants. We plan to continue to open new Company-operated restaurants in the UK and Ireland where there is significant opportunity to grow the casual dining market, and to open new franchise restaurants in countries where we believe there is an opportunity for profitable expansion. Our Hong Kong, Shanghai and Shenzhen franchises are managed by the same franchise partner. We had previously negotiated options to acquire the franchisee s businesses during two three month windows in 2016 and in 2018, respectively. We have, however, elected to accelerate the exercise of those options to seize the opportunity to capitalize on our presence there and to expand our brand more broadly in the region. For a detailed description of the options, please see Business International Restaurant Partnerships Franchising China Options. We opened 18 new restaurants in Financial Year 2012, 13 new restaurants in Financial Year 2013, 19 new restaurants in Financial Year 2014, and 17 new restaurants in Interim Period 2015, primarily outside Central London, in shopping centers and market towns. We expect to open approximately 20 new restaurants in the UK over the next 45

65 12 months. We also plan to open up to new restaurants per year in China. We continuously review our restaurant portfolio and restaurants that do not meet our operating performance criteria are either refurbished or closed. The table below shows the number of our Company-operated franchised and joint venture restaurants as at the following dates: July 1, 2012 As at and for the Financial Year ended June 30, 2013 June 29, 2014 April 6, 2014 As at and for the Interim Period ended April 5, 2015 UK and Ireland Company-operated restaurants (1) International Company-operated restaurants (2) Company-operated openings during the period Company-operated closures during the period Franchised (3) Joint Venture (4) Total (1) All of our restaurants in the UK and Ireland are Company- operated. (2) We opened our first international Company-operated restaurant in Beijing in June We acquired from a franchise partner the seven franchise restaurants in the United Arab Emirates on May 7, 2015, and when the China Acquisition is completed, we will have a total of 35 international Company- operated restaurants. (3) Franchised restaurants as at the dates indicated were located in Bahrain, China, Cyprus, Gibraltar, India, Indonesia, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. We acquired from a franchise partner the seven franchise restaurants in the United Arab Emirates on May 7, (4) All joint venture restaurants as at the dates indicated were located in India. The India JV did not form part of the Acquired PizzaExpress Group. Following the consummation of the Hony Acquisition, we entered into a franchise agreement to enable our continued operations in India and build on our presence there. Since the consummation of the Hony Acquisition, the Group has not been party to any joint venture arrangements. Financial Periods We typically have 13 four-week accounting periods each financial year. Each accounting period ends on a Sunday and our financial year of the business ends on the Sunday nearest to June 30. Each year under review is a 52-week period with the exception of Financial Year 2012, which had 53 weeks. Seasonality Our turnover and cash flows are moderately affected by seasonal variations. In our principal markets (the UK and Ireland), restaurant sales are typically higher in the summer months and in the period leading up to Christmas and in February, as these months typically coincide with school holidays. Our restaurant sales and margins are typically lowest in January and in the weeks immediately following the summer holidays. Since our business is moderately seasonal, results for any one financial period are not necessarily indicative of the results that may be achieved for any other financial period. KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION Factors affecting our results of operations include the following: Growth in Turnover Growth in turnover over the past three Financial Years has been substantially driven by new restaurant openings. However, sales are also driven by increased turnover in our existing restaurants or like-for-like sales growth. We define like-for-like sales as sales from restaurants that have traded for a full financial year at the start of each financial year. This is updated at the start of each financial year. Like-for-like sales growth is affected by footfall, the number of customers we serve during a given period, and by average spend per head of each customer. The key drivers of average spend per head include bi-annual price increases, the introduction of new menus and menu items, sales mix and promotional discounts. 46

66 General Economic Conditions and Trends in Consumer Spending Our results of operations and financial condition are strongly impacted by general economic developments in the UK and Ireland, where we generated million (or 99.3%) and million (or 99.0%) of turnover for the Financial Year 2014 and Interim Period 2015, respectively, that affect consumer spending generally, as well as specific factors that affect consumer demand for casual dining experiences and, to a more limited extent, retail food offerings. General economic factors affecting consumer spending on casual dining include consumer confidence and levels of disposable income. A decline in either of these factors encourages consumers to adopt a more considered approach to discretionary spending, and they often seek to economize by taking advantage of promotional offers and price reductions offered by restaurants and grocery retailers. Further, during times of economic uncertainty, consumers may not dine out, preferring to prepare food at home, or may be more likely to comparison shop for promotional deals from restaurants, which can reduce footfall at our restaurants and average spend per head. Please see Competition and Promotional Discounts. Similar developments affect turnover in restaurants in our international markets. Historically, we have had much less exposure to these developments in our international markets due to the relatively small size of our international business and our use of a franchise model in these markets. We generated 0.6% and 1.0% of our turnover from our franchised restaurants in the Financial Year 2014 and Interim Period 2015, respectively. We anticipate that our turnover attributable to operations in China will increase over the years following the China Acquisition, which will therefore increase our exposure to such developments and, more generally, to economic, social and general political conditions in China. Competition and Promotional Discounts The restaurant business is highly competitive. In the UK, our competitors in the chain casual dining market include Frankie and Benny s, Prezzo, ASK, Zizzi, Wagamama, Giraffe, Jamie s Italian, La Tasca, Strada and Pizza Hut as well as pub dining chains such as Harvester and J. D. Wetherspoon. To a lesser extent we also compete for consumer dining spending with international, national, regional and local quick service restaurants (such as McDonald s and KFC), fast casual independent and chain restaurants (such as Nando s), other casual eating and drinking establishments (such as coffee shops) and convenience and grocery stores. In China, our competitors in the chain casual dining market include Western chains (such as Blue Frog, Element Fresh, TGI Fridays, Pizza Hut and Latina) and Asian food chains (such as Tairyo, Watami, Din Tai Fung, Haidilao Hotpot, Jardin de Jade, Little Faigo Hotpot, Shanghai Min South Beauty and Spice Spirit). This competition affects our pricing strategies and margins. Companies in the casual dining industry continuously promote and market new meals and dining options and promotional discounts on meals and bundled offerings (such as set course meal deals) to promote restaurant traffic. Throughout and following the financial crisis, we increased our use of promotional discounts in order to drive traffic at our restaurants. While the level of our promotional initiatives has decreased given the improved economic environment, we must continually assess our competitors promotional strategies and the spending trends of our customers to ensure we remain competitive. Our retail offerings face competition from food retailers providing their own brand chilled foods (such as pizza and fresh pasta) as a way to achieve greater margins and enhance customer loyalty. Additionally, our retail offerings face competition from other chain restaurants leveraging their brands in the retail offering space. Exposure to Changing Consumer Trends Consumer demand for casual dining and retail food offerings is impacted by short- and long-term consumer trends towards health, convenience, environmental responsibility and dining experience. We have an in-house food innovation team and restaurant design team that continuously develop new ideas to be implemented in our restaurants so that we can offer a dining experience that our customers value in line with current trends. For example, we continue to develop lighter dining options, including the Leggera pizza (which is under 500 calories) and a superfood salad (which is under 300 calories), as well as gluten free menu items. Our restaurant refurbishments are aimed at maintaining an attractive and distinctive design at our restaurants. We aim to undertake minor refurbishment every five years and major refurbishment every ten years at each restaurant site. Our financial performance is influenced by our ability to continue to develop our brand in line with these consumer trends and any future trends that may develop. Food and Drink Costs We source a wide range of raw materials, including flour, eggs, dairy (including cheese), meat and fresh produce to create our meals. Many of the raw materials we use in our preparation processes are commodities and are subject to significant price volatility. Our food and drink costs were 54.4 million and 51.1 million during Interim Period 2015 and Interim Period 2014, respectively, and 66.5 million, 62.6 million and 64.3 million for Financial Years 2014, 2013 and 2012, respectively. As a percentage of restaurant sales, food and drink costs were 17.4% and 17.8% for Interim Period 2015 and Interim Period 2014, respectively, and 17.8%, 17.6% and 18.2% for Financial Years 47

67 2014, 2013 and 2012, respectively. Food and drink costs as a percentage of sales have overall declined over the period under review largely due to increases in average spend per head and reduced promotional discounting. Food and drink cost as percentage of sales declined slightly in Interim Period 2015 primarily due to higher average spend per head as a result of the addition of new menu items, many of which are higher margin or may attract new customers who may not have visited our restaurants due to dietary restrictions (e.g. gluten-free dining), lower promotional discounts and the introduction of differential pricing, with premium menus being introduced in targeted restaurants (for example our restaurants in central London with peak tourist footfall). Despite food and drink inflationary pressure generally increasing over the historical period under review, we have mitigated the impact of this through a number of operational measures and, historically, our food and drink costs have increased 1% to 2% less than general inflation. We take actions to optimize spending on raw materials and to reduce our exposure to price fluctuations through regular review of our supply contracts and negotiation of cost caps, volume rebates and other cost savings, which we are able to undertake as a result of our scale and long-term relationships with suppliers and mix of short-term and long-term contracts, depending on market outlook. For example, the contracts with our mozzarella producer, which are typically three to six months in duration, have price caps. While some of our supply arrangements are short-term and we have a limited number of suppliers for our major products (for example, 97% of our cheese is purchased from two suppliers and substantially all of our passata is purchased from one supplier), the ingredients we use are generic and alternate sources of supply are generally available. However, the supply and price are subject to market conditions and are influenced by other factors beyond our control, such as general economic conditions, unanticipated demand, problems in production or distribution, natural disasters, weather conditions during the growing and harvesting seasons, and plant and livestock diseases. Our ability to avoid the adverse effects of a pronounced, sustained price increase in raw materials is limited. Additionally, while we have long-term relationships with most of our key suppliers, we do not have long-term contracts in all key areas, and, as a result, suppliers could increase prices or fail to deliver. Additionally, in order to control food and drink costs, we have selectively replaced branded products, such as coffee, pasta and sorbet with unbranded products of equal quality. We have also decreased preparation time by switching to products such as pre-diced mozzarella; reviewed our specifications and made appropriate changes away from high cost products (such as switching from Parmesan to Gran Moravia cheese); and removed or substituted ingredients where a price increase is unable to be passed on to customers. Labor Costs The casual dining industry is labor intensive and known for having a high level of employee turnover given low hourly wages and the part-time composition of the workforce. While our average annual turnover rate in the UK and Ireland is on the low end of the industry average (with a turnover rate in Interim Period 2015 of between 66% and 71% for all restaurant staff compared to an estimated industry average of between 65% and 75%), the consistent need to find new staff creates an additional cost. Our restaurant labor costs were 96.3 million and 90.2 million during Interim Period 2015 and Interim Period 2014, respectively, and million, million, and million for Financial Years 2014, 2013 and 2012, respectively. As a percentage of restaurant sales, our restaurant labor costs were 30.8% and 31.5% during Interim Period 2015 and Interim Period 2014, respectively, and 31.5%, 31.8%, and 31.7% for Financial Years 2014, 2013 and 2012, respectively. Labor costs as percent of restaurant sales decreased in Financial Year 2014 due to the benefit of increases in menu prices and lower discounts. Labor costs consist primarily of direct staff employed in individual restaurants (hourly paid staff plus managers and supervisors). Hourly paid staff costs are largely variable in nature and can be managed based on expected customers in the restaurant, while the cost of managers and supervisors and a portion of hourly paid staff costs represent fixed costs. Currency Fluctuations We incur a portion of our expenses in currencies other than the pound sterling, principally the euro, as a result of raw materials we source from Europe (such as our passata). Further, during both Interim Period 2015 and Financial Year 2014, 4.6% of turnover was derived from restaurants whose functional currency is other than the pound sterling. Upon consummation of the China Acquisition, we will incur a larger, although still relatively small, portion of our turnover and expenses in Chinese yuan renminbi and Hong Kong dollars. Typically, our costs and the corresponding sales are denominated in the same currency. Occasionally, however, we are unable to match sales received in foreign currencies with costs paid in the same currency, and our results of operations are consequently impacted by currency exchange rate fluctuations. While we do not currently have any operational hedging arrangements in place, we may from time to time seek to mitigate the effect of exchange rate fluctuations through the use of derivative financial instruments. We present our consolidated financial statements in pounds sterling. As a result, we must translate the assets, liabilities, turnover and expenses of all of our operations that have a functional currency other than the pound sterling 48

68 into pounds sterling at the applicable exchange rates, being the spot rate as of the balance sheet date for assets and liabilities, and the average period rate for turnover and expenses. Consequently, increases or decreases in the value of the pound against other currencies may affect the value of these items with respect to our non-pound businesses in our consolidated financial statements, even if their value has not changed in their original currency. For example, a stronger pound will reduce the reported results of operations of the non-pound businesses and conversely a weaker pound will increase the reported results of operations of the non-pound businesses. These translations could affect the comparability of our results between financial periods or result in changes to the carrying value of our assets, liabilities and equity. We record the effects of these translations in our consolidated income statement as exchange differences on translation of foreign operations. International Expansion We have been implementing, and plan to continue to implement, our international growth strategy by opening Company-operated restaurants in attractive markets with expected high demand, as well as franchised restaurants in local markets where we believe working with a franchise partner is more appropriate. For example, we may work with a franchise partner in a market where it may be difficult for us to operate independently or where market potential is more limited. Our international growth strategy includes strengthening our market position in countries in which we currently operate and expansion into other international markets on a selected basis. We have been implementing this strategy through organic growth, selected acquisitions (such as our recent acquisition of the franchise business in the United Arab Emirates and the planned China Acquisition) or by diversifying our activities within the various geographical areas in which we operate and/or plan to operate in the future. We may face many challenges in implementing our international growth strategy, including, among others: the selection and availability of suitable restaurant locations with acceptable lease terms; competition for new premises; attracting customers to new premises; the impact of local tax, zoning, land use and environmental rules and regulations on our ability to develop restaurants, and the impact of any material difficulties or failures that we experience in obtaining the necessary licenses and approvals for new restaurants; recruiting suitable staff; securing acceptable suppliers; and consumer preferences and local market conditions. Conversely, acquiring our franchise businesses in certain key markets has a positive impact on our Group turnover as we gain the full EBITDA and net sales of the franchise business, with a marginal increase in central costs. For international markets where we continue to expand through franchise arrangements, we anticipate that our turnover will grow due to the increased level of royalty fees paid to the Group by our franchise partners, reflecting growth in franchise restaurants. Our inability to realize anticipated turnover growth, cost-savings and synergies and revenue enhancements, whether from the China Acquisition or other expansion plans, could have a material adverse effect on our business, financial condition, results of operations and cash flows. EXPLANATION OF KEY PROFIT AND LOSS ACCOUNT LINE ITEMS Group turnover Group turnover represents net invoiced sales of food and beverages, royalties from retail sales and franchise fees, all excluding value added tax. Turnover of restaurant services is recognized when the goods have been provided. Royalties from retail sales are recognized in turnover on product delivery or when due under the terms of the relevant retail sales agreements. Franchise fees arising outside the UK are recognized when they fall due under the terms of the relevant franchise agreements. 49

69 Cost of sales Prior to Interim Period 2015, we included in the calculation of cost of sales all direct costs attributable to our restaurant operations, including food and drink costs, labor costs for staff employed in our restaurants, depreciation of restaurant assets and other variable and fixed costs, including, rent, electricity, repairs and maintenance, replacement cutlery, crockery and cleaning materials, as well as all other operating expenses. Beginning with Interim Period 2015, we reclassified certain items that were previously reported as cost of sales to administrative expenses, to align our external reporting with our internal reporting and for the purposes of further clarity and transparency of our financial statements. This reclassification did not affect EBITDA-related financial measures. Currently, cost of sales includes costs of goods sold and direct labor costs, while operating expenses relating to restaurant overheads, central and area management, administration and head office costs have been moved to administrative expenses. To facilitate comparison, Interim Period 2014 figures have been pesented on the same basis as Interim Period We have not reclassified any of these operating expenses for Financial Year 2014, Financial Year 2013 or Financial Year Administrative expenses (excluding exceptional costs) Administrative expenses (excluding exceptional costs) include central and area management, administration and head office costs, including, historically, recharges from central administration costs, together with depreciation of head office assets and goodwill amortization. As described under Cost of sales, beginning with Interim Period 2015, we have reclassified certain expense items from cost of sales to administrative expenses. Under UK GAAP, goodwill on the acquisition of a business is capitalized and amortized over its useful economic life, which is a maximum of 20 years. Goodwill is also subject to an impairment review at the end of the first full period following an acquisition and at any other time when the directors believe that impairment may have occurred. Changes in provision for impairment are taken to the profit and loss account. Operating exceptional costs Operating exceptional items are material items of profit or expense that, because of the unusual nature and expected infrequency of the events giving rise to them, merit separate presentation to allow an understanding of our financial performance. Other operating income Other operating income includes income from activities other than normal business operations, such as compensation for a lease that was terminated early. (Loss)/profit on disposal of fixed assets (Loss)/profit on disposal of fixed assets represents the loss or profit recognized in the consolidated profit and loss account on the disposal of a fixed asset. Net interest payable and similar charges Net interest payable and similar charges consist of interest payable on bonds (including the Existing Senior Notes, the Original Senior Secured Notes and, going forward, the Notes), bank loans and overdrafts, as well as interest receivable and similar charges. Interest payable on bonds (including the Existing Senior Notes and the Senior Secured Notes), bank loans and overdrafts consists of bank interest and interest payable, including, historically, interest payable and receivable on intercompany loans. Interest receivable and similar charges consists of bank interest and Group interest receivable on intercompany loans. Tax on profit on ordinary activities Corporation tax expense is recognized using management s estimate of the Group s expected weighted average corporation tax rate for the full financial period adjusted for the change in tax rate applicable to deferred tax. The estimated average rate for the Financial Year 2015 was 33.96%. The primary factor driving the tax rate higher than the standard rate of corporation tax in the UK (20%) is that certain interest costs are disallowed for UK tax purposes. RESULTS OF OPERATIONS The following table summarizes our consolidated profit and loss account for the periods indicated: 50

70 Financial Year Interim Period ( millions) Turnover including share of joint venture Less share of joint venture turnover (1)... (0.1) (0.2) Group turnover Cost of sales... (282.6) (283.7) (296.4) (143.8) (153.6) Gross profit Administrative expenses (excluding exceptional costs)... (24.2) (22.6) (22.9) (101.8) (133.8) Share based payment charge... (0.1) Operating exceptional costs... (0.7) (1.9) (0.2) (0.3) Total administrative expenses... (24.2) (23.3) (24.8) (102.0) (134.2) Other operating income Operating profit Share of joint venture operating loss (1)... (0.4) (1.8) Operating profit including share of joint venture loss Loss on disposal of fixed assets... (0.5) (0.2) (0.2) Profit on ordinary activities before interest and taxation Net interest (payable)/receivable and similar charges... (21.6) (20.1) (18.0) (13.8) (52.9) Profit/(loss) on ordinary activities before taxation (13.7) Tax on profit on ordinary activities... (15.2) (15.1) (7.6) (5.9) (8.7) Profit/(loss) for the financial period (22.4) (1) Share of joint venture represents the portion of the India JV attributable to PE Holdings. The India JV does not form part of the Acquired PizzaExpress Group that was acquired as a result of the Hony Acquisition. The results of operations attributable to the India JV are not included in the results for Interim Period 2014 or Interim Period Turnover by Geography and Business Line The following table shows a breakdown of our turnover by geographic region and business line: Financial Year Interim Period ( millions) UK and Ireland Restaurants (1) Licensed retail offerings Total (2) (2) International restaurants China (3) Middle East (4) Other (5) Total (2) 3.2 (2) (1) All of our restaurants in the UK and Ireland are Company-operated. (2) Excludes any results of operations attributable to the India JV for Interim Period 2014 or Interim Period (3) Our restaurants in Hong Kong, Shanghai and Shenzhen are currently operated by a franchisee. In June 2014, we opened our first Company-operated restaurant in China, in Beijing. Following the China Acquisition, we will have 28 Company-operated restaurants in China. Please see The Transactions, Business The China Acquisition Rationale and Benefits and Business International Restaurant Partnerships Franchising China Options. (4) Restaurants in the Middle East were all operated by a franchise partner for the stated financial periods. On May 7, 2015, we acquired from a franchise partner the seven franchise restaurants in the United Arab Emirates. (5) Other includes our restaurants in Cyprus, Gibraltar, India and Indonesia. The restaurants in India were part of the India JV up until August 18, 2014, after which we moved to a franchise arrangement. The restaurants in Cyprus, Gibraltar and Indonesia are also operated by franchisees. Interim Period 2015 compared with Interim Period 2014 Group Turnover Group turnover increased 9.4% to million in Interim Period 2015 from million in Interim Period A geographic and business line analysis of our Group turnover follows: 51

71 UK and Ireland Restaurants Turnover in our restaurant business in the UK and Ireland increased 9.1% to million in Interim Period 2015 from million in Interim Period 2014 and as a percentage of our total Group turnover, decreased to 96.7% from 96.9%. This was primarily due to the opening of 17 new sites in Interim Period 2015 (partially offset by 5 closures), and the success of our promotional strategy of generating volume through discounting at quieter trading periods, typically early in the week, whilst seeking to drive both cover growth and average spend per head at busier times. Like-for-like turnover increased by 6.4% in Interim Period 2015 primarily as a result of the particularly strong Christmas trading period, with the Group achieving a record sales week during the two week holiday period. Retail Turnover in our licensed retail offerings business line increased 7.0% to 7.6 million in Interim Period 2015 from 7.1 million in Interim Period 2014 and, as a percentage of our total Group turnover, decreased to 2.3% from 2.4%. The increase in turnover was primarily due to our retail partners adopting fewer, but bigger and more price led promotions, which, combined with the strength of our brand and our royalty model, resulted in a significant benefit to us in terms of both sales volume and royalty income. However, as the growth rate of restaurant sales exceeded that of retail sales, the proportion of total sales that retail accounted for decreased slightly. International Restaurants Turnover from our international restaurants business line increased 52.4% to 3.2 million in Interim Period 2015 from 2.1 million in Interim Period 2014 and as a percentage of our total Group turnover, increased to 1.0% from 0.7%. The increase was primarily due to the opening of nine new franchise restaurants in Interim Period 2015 (in China and India) combined with the impact of the opening of our first Company-owned international restaurant in China in June 2014 and turnover generated from the restaurant during Interim Period Cost of Sales Cost of sales increased 6.8% to million in Interim Period 2015 from million in Interim Period 2014, and constituted 47.0% of the total Group turnover Interim Period 2015 as compared to 48.1% in Interim Period This increase in cost of sales was primarily due to the opening of new sites in Interim Period 2015, which resulted in increased food and drink and restaurant labor costs. This increase was offset by food deflation during Interim Period 2015 due to the combination of lower initial price on raw materials and favorable exchange rate movements. Administrative Expenses (Excluding Exceptional Costs) Administrative expenses excluding exceptional costs increased 31.4% to million in Interim Period 2015 from million in Interim Period 2014, and as a percentage of total Group turnover increased from 34.1% to 40.9%. This is primarily due to amortization of the calculated goodwill balance arising on the Hony Acquisition. Excluding goodwill amortization, administrative expenses increased 8.7% from million to million. This is primarily due to an increase in fixed costs (mainly rent and rates) and variable costs (mainly repairs and credit card charges) due to the opening of new restaurants. Operating Exceptional Costs Operating exceptional costs were 0.3 million in Interim Period 2015 and primarily related to one-off costs in relation to and following the Hony Acquisition. Operating exceptional costs amounted to 0.2 million in Interim Period Profit/Loss on Disposal of Fixed Assets Profit on the disposal of fixed assets was nil in Interim Period 2015 compared to a loss of 0.2 million in Interim Period Net Interest Payable and Similar Charges Net interest payable and similar charges increased to 52.9 million in Interim Period 2015 from 13.8 million in Interim Period 2014 and, as a percentage of our total Group turnover, increased to 16.2% in Interim Period 2015 from 4.6% in Interim Period Net interest payable and similar charges comprised mainly of interest charges on the Original Senior Secured Notes and the Existing Senior Notes (the first cash interest payment on which was made on February 2, 2015) of 30.2 million, capitalized interest payments on the shareholder loan of 19.4 million and amortization of financing fees incurred on the Hony Acquisition of 1.6 million. 52

72 Tax on Profit on Ordinary Activities Tax on profit on ordinary activities increased 47.5% to 8.7 million in Interim Period 2015 from 5.9 million in Interim Period 2014 and, as a percentage of our total Group turnover, increased to 2.7% in Interim Period 2015 from 2.0% in Interim Period This was primarily due to a decrease in the amount of deductible interest charges. Financial Year 2014 compared with Financial Year 2013 Group Turnover Group turnover increased 5.7% to million in Financial Year 2014 from million in Financial Year A geographic and business line analysis of our Group turnover follows: UK and Ireland Restaurants Turnover in our restaurant business line in the UK and Ireland increased 5.5% to million in Financial Year 2014 from million in Financial Year 2013 and as a percentage of our total group turnover remained stable at 97.1%. This was primarily due to the opening of 19 new restaurant sites in Financial Year 2014 and an increase in like-for-like average spend per head of 3.2% primarily as a result of increased promotional activity. Like-for-like turnover increased 2.8% in Financial Year 2014 as a result of the increase in average spend per head. Retail Turnover in our licensed retail offerings business line increased 8.1% to 9.3 million in Financial Year 2014 from 8.6 million in Financial Year 2013 and as a percentage of our total Group turnover, increased to 2.4% from 2.3%. This was primarily due to an increase in the number of retailers stocking our products. International Restaurants Turnover in our international restaurants business line increased 9.1% to 2.4 million in Financial Year 2014 from 2.2 million in Financial Year 2013 and as a percentage of our total Group turnover remained stable at 0.6%. This was primarily due to the opening of seven new franchised sites in Financial Year 2014 (in China, India and the United Arab Emirates), combined with the impact of the opening of our first Company-operated international restaurant in June 2014 in Beijing. Cost of Sales Cost of sales increased 4.5% to million in Financial Year 2014 from million in Financial Year 2013, and constituted 75.9% of the total Group turnover for Financial Year 2014 as compared to 76.8% in Financial Year This was primarily due to the opening of new restaurant sites in Financial Year 2014, which resulted in increased fixed (rental and utility), supply (mainly related to food and drink) and restaurant labor costs. Administrative Expenses (Excluding Exceptional Costs) Administrative expenses excluding exceptional costs increased 1.3% to 22.9 million in Financial Year 2014 from 22.6 million in Financial Year 2013, and constituted 5.9% of the total Group turnover for Financial Year 2014 as compared to 6.1% in Financial Year This was primarily due to increased central administration costs related to additional HR and support staff as a result of the opening of new restaurants in Financial Year Operating Exceptional Costs Operating exceptional costs amounted to 1.9 million in Financial Year 2014, of which 1.4 million primarily related to professional fees incurred in relation to the sale of the Acquired PizzaExpress Group and 0.5 million related to restructuring costs (in connection with our separation from the Gondola Group). Operating exceptional costs amounted to 0.7 million in Financial Year Loss on Disposal of Fixed Assets Disposal of fixed assets resulted in a loss of 0.2 million in Financial Year 2014 and in a loss of 0.5 million in Financial Year

73 Net Interest Payable and Similar Charges Net interest payable and similar charges decreased 10.4% to 18.0 million in Financial Year 2014 from 20.1 million in Financial Year The decrease in net interest payable and similar charges was primarily as a result of reduced intercompany loan balances. Tax on Profit on Ordinary Activities Tax on profit on ordinary activities decreased 49.7% to 7.6 million in Financial Year 2014 from 15.1 million in Financial Year This was primarily due to an increase in the interest allowable as a tax deduction. Financial Year 2013 compared with Financial Year 2012 Group Turnover Group turnover increased 0.1% to million in Financial Year 2013 from million in Financial Year A geographic and business line analysis of our Group turnover follows: UK and Ireland Restaurants Turnover in our restaurant business line in the UK and Ireland increased 0.1% to million in Financial Year 2013 from million in Financial Year 2012 and as a percentage of our total group turnover remained stable at 97.1%. This was primarily due to the opening of 13 new restaurant sites in Financial Year 2013 and an increase in average spend per head of 5.6% as a result of bi-annual menu price increases (which take place in the spring and autumn), partially offset by a sales decline between Financial Year 2012 and 2013 as a result of reduced promotional discounts and reduced customer footfall. Like-for-like turnover decreased 1.1% in Financial Year 2012 as a result of reduced promotional discounts and reduced customer footfall. Retail Turnover in our licensed retail offerings business line decreased 3.4% to 8.6 million in Financial Year 2013 from 8.9 million in Financial Year 2012 and as a percentage of our total Group turnover, decreased to 2.3% from 2.4%. This was primarily due to reduced distribution of our bread products and reduced promotional activity at one key retailer-customer. International Franchised Restaurants Turnover in our international franchised restaurants business line increased 22.2% to 2.2 million in Financial Year 2013 from 1.8 million in Financial Year 2012 and as a percentage of our total Group turnover, increased to 0.6% from 0.5%. This was primarily due to the opening of nine new franchised sites in Financial Year Cost of Sales Cost of sales increased 0.4% to million in Financial Year 2013 from million in Financial Year This was primarily due to the opening of new restaurant sites in Financial Year 2013, which resulted in increased fixed (rental and utility), supply (mainly related to food and drink) and restaurant labor costs. In addition, rent and utility rates, as well as food price inflation in Financial Year 2013, increased our cost of sales across our existing restaurant estate. Administrative Expenses (Excluding Exceptional Costs) Administrative expenses excluding exceptional costs decreased 6.6% to 22.6 million in Financial Year 2013 from 24.2 million in Financial Year This was primarily due to increased central administration costs related to additional HR and support staff as a result of the opening of new restaurants in Financial Year 2013, as well as the impact of the extra week in Financial Year Operating Exceptional Costs Operating exceptional costs amounted to 0.7 million in Financial Year 2013, of which 0.6 million related to guarantees we provided with regard to certain properties in Spain operated by a third party under the Pizza Marzano brand. Upon the insolvency of Pizza Marzano, we recorded charges relating to potential liability for the rental costs and early termination fees. The remaining 0.1 million related to staff restructuring costs and brand closure costs related to the closure of our Soho Pizzeria Restaurant. We did not incur operating exceptional costs in Financial Year

74 Other Operating Income We did not generate other operating income in Financial Year In Financial Year 2012 we generated other operating income of 3.3 million as compensation for the loss of future income from one restaurant in London which was closed after the landlord was granted compulsory purchase powers allowing him to terminate the lease. Share of Joint Venture Operating Loss Share of joint venture operating loss increased to 0.4 million in Financial Year 2013 from nil in Financial Year This was due to start-up costs related to the opening of our first restaurant in India, which opened in December We did not incur any such costs in Financial Year Loss on Disposal of Fixed Assets Disposal of fixed assets resulted in a loss of 0.5 million in Financial Year 2013, compared to nil in Financial Year This was primarily due to a small number of restaurant site disposals at less than net book value in Financial Year Net Interest Payable and Similar Charges Net interest payable and similar charges decreased 6.9% to 20.1 million in Financial Year 2013 from 21.6 million in Financial Year Net interest payable in each year related primarily to interest payments on intragroup loans from other members of the Gondola Group. The decrease in net interest payable and similar charges was primarily as a result of reduced intercompany loan balances. Tax on Profit on Ordinary Activities Tax on profit on ordinary activities decreased 0.7% to 15.1 million in Financial Year 2013 from 15.2 million in Financial Year This was primarily due to the increased deductibility of interest charges in 2013 across the Gondola Group. LIQUIDITY AND CAPITAL RESOURCES Overview Our principal source of liquidity since the completion of the Hony Acquisition has been cash on hand, our operating cash flows and availability under our Revolving Credit Facility. The proceeds from the Offering will be used to finance the First Installment of the purchase price of the China Acquisition, for general corporate purposes and to pay related fees and expenses. Our ability to generate cash depends on our operating performance, which in turn depends to some extent on general economic, financial, industry, regulatory and other factors, many of which are beyond our control, as well as other factors discussed in Risk Factors. Our principal uses of cash since the completion of the Hony Acquisition have included operating expenses and capital expenditures, and payment of interest on the Original Senior Secured Notes and the Existing Senior Notes. We believe that, based on our current level of operations as reflected in our results of operations for the Financial Year 2014 and Interim Period 2015 (and taking account of anticipated capital investments in connections with our planned expansion in Asia), our cash flows from operating activities, cash on hand and the availability of borrowings under our Revolving Credit Facility will be sufficient to fund our operations, capital expenditures and debt service (including payment of interest on the Notes) for at least the next twelve months. Historically, we have not drawn on our Revolving Credit Facility. Limitations pursuant to local laws sometimes restrict the amount of cash that a subsidiary may make available to the rest of the Group, or the manner or timing of such actions. These laws include laws restricting the making of dividend payments without sufficient capital resources, restriction of intergroup loans or cash pooling and regulatory restrictions on repatriating funds. We do not anticipate material limitations with respect to the China Targets, as the China Targets will be able to make cash available to the rest of the Group through royalties, interest and dividends. We have substantial indebtedness. As of April 5, 2015, after giving effect to the Offering, we would have had outstanding million of total debt. See Capitalization. Our high level of debt may have important negative consequences for you. See Risk Factors. There are also limitations on our ability to incur additional debt or obtain equity financing. See Description of the Notes Certain Covenants Limitation on Indebtedness and Description of Certain Financing Arrangements Revolving Credit Facility. Further, any additional indebtedness that we do incur 55

75 could reduce the amount of our cash flow available to make payments on our then existing indebtedness, including under the Notes, and increase our leverage. Consolidated Cash Flow The following table summarizes our consolidated cash flow statement for 33 Week Interim Period 2015 and for Financial Years 2012, 2013 and 2014: 33 Week Financial Year Interim Period ( millions) Net cash inflow from operating activities Net cash (outflow)/inflow from returns on investments and servicing of finance... (0.2) (44.8) Taxation received/(paid) (0.8) 0.6 (1.9) Net cash outflow from capital expenditure and financial investment... (76.9) (57.6) (94.7) (19.1) Net cash outflow from acquisitions and disposals... (0.1) (863.1) Net cash (outflow)/inflow from financing... (0.1) (0.1) (Decrease)/increase in cash... (11.2) 19.6 (11.4) 31.1 Net cash inflow from operating activities Net cash inflow from operating activities was 63.7 million in 33 Week Interim Period 2015, reflecting the effects of strong performance and stable working capital movements. Net cash inflow from operating activities increased to 82.5 million in Financial Year 2014 from 77.9 million in Financial Year This was primarily due to the cash generated from new restaurants. Net cash inflow from operating activities increased to 77.9 million in Financial Year 2013 from 58.7 million in Financial Year This was primarily due to the fact that Financial Year 2012 was a 53 week period, which led to an increase in creditor payments being due in the last week of the Financial Year 2012 and an increase in net intercompany creditors. Net cash (outflow)/inflow from returns on investments and servicing of finance Net cash outflow from returns on investments and servicing of finance was 44.8 million in 33 Week Interim Period This represents the initial interest payments on the Original Senior Secured Notes and the Existing Senior Notes as well as the cash financing costs associated with the Hony Acquisition. Net cash (outflow)/inflow from returns on investments and servicing of finance was stable in Financial Year 2014 and in Financial Year 2013 with an inflow of 0.2 million. Net cash (outflow)/inflow from returns on investments and servicing of finance changed to an inflow of 0.2 million in Financial Year 2013 from an outflow of 0.2 million in Financial Year This was due to 0.2 million in interest received on bank deposits in Financial Year 2013 as compared to interest paid of 0.2 million in Financial Year Net cash outflow from capital expenditure and financial investment Net cash outflow from capital expenditure and financial investment was 19.1 million in 33 Week Interim Period 2015, reflecting our investment in capital expenditure for our expansion and refurbishments. Net cash outflow from capital expenditure and financial investment increased to 94.7 million in Financial Year 2014 from 57.6 million in Financial Year This was primarily due to an increased level of funding provided to Gondola Group and increased capital expenditure due to an increased number of restaurants opening in the year. Net cash outflow from capital expenditure and financial investment decreased to 57.6 million in Financial Year 2013 from 76.9 million in Financial Year This was primarily due to a reduction in the purchase of tangible fixed assets of 11.2 million and reduced intercompany funding ( 6.4 million) for Financial Year 2013 as compared to Financial Year See Capital Expenditures. 56

76 Net cash outflow from acquisitions and disposals Net cash outflow from acquisitions and disposals was million in 33 Week Interim Period This was attributable to the payment to our former shareholders in connection with the Hony Acquisition. Net cash outflow from acquisitions and disposals was nil in Financial Year 2014 and Financial Year 2013, and was 0.1 million in Financial Year Net cash outflow/(inflow) from financing Net cash inflow from financing was million in 33 Week Interim Period This was due to the issuance of the Existing Senior Notes and the Original Senior Secured Notes. Net cash outflow from financing was nil in Financial Year Net cash outflow from financing remained at 0.1 million in both Financial Year 2013 and Financial Year Working Capital Our working capital is generally negative as we receive most of our income in cash and credit cards from restaurant and retail customers, while we pay our suppliers on credit terms and our employees four-weekly or monthly in arrears. During Interim Period 2015, working capital movements were generally cash neutral. Capital Expenditures Our capital expenditures mainly consist of new site capital expenditures, or the costs incurred in opening new restaurants, and other capital expenditures, principally related to maintenance and refurbishment costs at our restaurants, fitting and fixtures replacement for existing restaurants and other centralized capital expenditures, relating primarily to IT projects. The following table shows our capital expenditures for the periods indicated: Financial Year Interim Period ( millions) New site capital expenditures Other capital expenditures Total capital expenditures We expect our total capital expenditures for Financial Year 2015 to be approximately 34.0 million, in line with our strategy for continued growth in the UK and internationally. Contractual Obligations The table below summarizes our material contractual obligations and commitments as at April 5, 2015, after giving as adjusted effect to the Offering and the use of proceeds of the Offering. Less than 1 year 2-5 years Payments due by Period More than 5 years Total ( millions) As Adjusted Contractual Obligations Notes (1) Original Senior Secured Notes (1) Existing Senior Notes (1) Revolving Credit Facility... Land and buildings (2) Deferred Consideration (3) Other operating leases (2) Total

77 (1) Does not include interest payments. (2) The contractual obligations under land and building leases and other operating leases show the annual commitment in the period in which the commitment expires. (3) Represents Deferred Consideration payable in connection with the China Acquisition of HK$121.0 million converted into pounds sterling at the exchange rate as of May 28, See The Transactions. For a description of the material terms of our existing and anticipated material long-term financing arrangements, see Description of Certain Financing Arrangements and Description of the Notes. Off-Balance Sheet Arrangements We do not have material off-balance sheet arrangements. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Financial risk management Our activities expose us to a variety of financial risks including foreign exchange risk, credit risk and liquidity risk. Our overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. Risk management is carried out under guidance by the board of directors. We identify, evaluate and address financial risks in close cooperation with our operating units. Foreign exchange risk We operate mainly in the UK and have a subsidiary in Ireland and, as a result, our financial position and results of operations can be affected by movements in the euro. After the China Acquisition Completion Date, we will also be operating company-owned locations in China and Hong Kong and, as a result, our balance sheet may be affected by movements in the Chinese yuan renminbi and the Hong Kong dollar. Foreign exchange risk may also arise from commercial transactions, as we purchase certain goods from European suppliers. We partly hedge these commitments naturally with cash generated from our operations in Ireland. We also have franchise income from various countries, resulting in additional (albeit relatively modest) foreign exchange risk from movements in various other currencies. Our internal finance function is responsible for managing the net position in each foreign currency (primarily euros). This currency exposure is minimal as at the date of this Listing Particulars. Currency exposures are reviewed regularly. Interest rate risk We do not currently intend to enter into any interest rate hedging. The Existing Revolving Credit Facility remains undrawn currently, however, to the extent that amounts are drawn under the Existing Revolving Credit Facility, they will be subject to interest rate risk due to the floating LIBOR interest rate. Credit risk We have no significant concentrations of credit risk. The nature of our operations results in a large and diverse customer base and a significant proportion of cash sales. We have policies that limit the amount of credit exposure to any financial institution. Liquidity risk Liquidity risk is managed by ensuring funds are only deposited with credit worthy financial institutions. CRITICAL ACCOUNTING POLICIES AND ESTIMATES In the opinion of our management, the following accounting policies and topics are critical for the consolidated financial statements in the present economic environment. The influences and judgments, as well as the uncertainties which affect them, are important factors to be considered when looking at our present and future operating earnings. 58

78 The preparation of the consolidated financial statements under UK GAAP requires assumptions and estimates to be made which can impact the valuation of the assets and liabilities recognized, the income and expenses, as well as the disclosure of contingent liabilities. Estimates and the underlying assumptions are based on historical experience and numerous other factors within the scope of the particular circumstances. Actual amounts may deviate from estimated amounts. All estimates and assumptions are reviewed on a regular basis. Changes in estimates are adjusted within the current period in the event that the change only affects the current period. Otherwise the change is recorded in either previous or future periods. We have summarized below our accounting policies that require the more subjective judgment of our management in making assumptions or estimates regarding the effects of matters that are inherently uncertain and for which changes in conditions may significantly affect our results of operations and financial condition. For more information see the notes to our consolidated financial statements included in the financial statements included elsewhere in this Listing Particulars. Tangible assets Tangible assets are stated at historical purchase cost less accumulated depreciation. Cost includes the purchase price of the asset, together with directly attributable costs incurred to bring it into its working condition for intended use. Depreciation is provided at the following annual rates in order to write down to estimated residual values the cost of each asset over its estimated useful economic life on a straight-line basis: Plant... 20% per annum Fixtures & fittings... 10% per annum IT equipment... 20% per annum Short leasehold properties are depreciated over the length of the lease except where the anticipated renewal or extension of the lease is sufficiently certain so that a longer estimated useful life is appropriate. Terms of the lease contracts are such that the vast majority of leases are readily extendible by an additional 14 years. The maximum depreciation period for short term leasehold properties is 30 years. Assets under construction comprise tangible fixed assets acquired for restaurants under construction, including costs directly attributable to bringing the asset into use. Assets are transferred to short leaseholds, plant and fixtures when the restaurant opens. No depreciation is provided on assets under construction, as these assets have not been brought into working condition for intended use. Impairment of tangible fixed assets The carrying values of tangible fixed assets are reviewed for impairment by the directors at each balance sheet date and in periods where events or changes in circumstances indicate that the carrying value may not be recoverable. Any impairment in the value of assets below depreciated cost is charged to the profit and loss account within operating profit. A reversal of an impairment loss is recognized in the profit and loss account up to the extent that the original loss was recognized. Onerous lease provisions Onerous lease provisions are recognized when the Group has an empty property, a sublet property for which the Group s lease obligation cannot be met in full, or where a restaurant is loss-making for an extended period of time. An estimate is made of the period of time and the extent to which the lease obligations cannot be fulfilled and a provision made accordingly. Exceptional costs Exceptional items are material items of profit and expense that, because of the unusual nature and expected infrequency of the events giving rise to them, merit separate presentation to allow an understanding of the Group s financial performance. 59

79 Goodwill Goodwill represents the difference between the cost of an acquired entity and the aggregate of the fair values of that entity s identifiable assets and liabilities. Goodwill on the acquisition of a business is capitalized and amortized over its useful economic life. The useful economic life is a maximum of 20 years. Goodwill is subject to an impairment review at the end of the first full period following an acquisition and at any other time when the directors believe that an impairment indicator has occurred. Changes in provision for impairment are taken to the profit and loss account. 60

80 INDUSTRY OVERVIEW UK DINING OUT MARKET The UK eating and drinking out market, which includes full-service restaurants, quick service restaurants (such as McDonald s and KFC), pubs, bars, hotels and coffee shops, is a large market with total spending of approximately 61.1 billion in 2012, representing a significant and growing proportion of food spend in the UK. This market has returned to growth following the recession in 2009, delivering growth of approximately 4.3% between 2010 and 2012, after a slight decline during the recession in Recent growth of this market has primarily been driven by quick service restaurants, hotels, coffee shops and grab-and-go concepts. The UK restaurant market, defined as branded full-service restaurants (primarily chain casual dining) and independent restaurants, was estimated at approximately 20.9 billion in This market experienced a decline in spending of approximately 1.6% between 2008 and 2012, reflecting the difficulties faced by independent restaurant operators, which comprise the majority of spending in the sector (approximately 81% of the UK restaurant market), and who experienced a 3% decline in spending between 2008 and In contrast, the UK chain casual dining sub-segment has grown rapidly, taking market share from independent operators through continued new space roll-out together with the emergence of new chains and concepts. The UK chain casual dining market was estimated to be worth approximately 3.2 billion in 2012 (approximately 15% of the UK restaurant market) and experienced approximately 6% growth between 2008 and We operate within the chain casual dining segment of the overall UK eating and drinking out market. Market Context Source: OC&C August 2014 Report (1) Catering services (meals, snacks, drinks and refreshments) provided by restaurants, quick service restaurants, fast food restaurants, catering, pubs, bars, coffee shops, hotels, etc (2) Branded full-service restaurants and independent restaurants (3) Includes Bill s Carluccio s, Côte, Brown s Bar & Brasseria, Ed s Easy Diner, GBK, Giraffe, Gondola, Jamie s Italian, Las Iguanas, Loch Fyne, Miller & Carter, Nando s, Pizza Hut dine-in, Prezzo, La Tasca, TGI Friday, Toby Carvery, The Restaurant Group, Tragus, Wagamama, Yo! Sushi 61

81 Increasing Popularity of Eating Out in the UK Eating out is the new normal for UK consumers, given higher disposable income levels, greater convenience and an increased willingness of UK consumers to try new eating venues. Increasingly time pressured and work focused lifestyles are also leading to an increase in the frequency of meals consumed outside the home. The trend towards more eating out in the UK is projected to continue. Growth of the UK eating and drinking out and chain casual dining markets are expected to be supported by a continued shift towards wealthier demographics in the UK. These demographic groups typically have a higher propensity to eat out, with approximately 57% of the wealthier demographic eating out at least once a month compared to approximately 53% for the less wealthy demographic. The general increase in wealthier demographics should also be supportive of higher average spend per head along with increased eating out frequency. Growth of the UK Eating and Drinking Out Market Historical analysis indicates that the UK eating and drinking out market correlates well with real consumer expenditure. Following the recession in 2009 and sub-trend real GDP growth since, there has been a significant improvement in the UK s economic outlook over the last 12 months, with a commensurate improvement in consumer confidence and expenditure. UK consumer expenditure is projected to increase by approximately 5.1% per year between 2013 and 2019, with positive implications for the UK eating and drinking out market. Based on the historical positive correlation between UK eating and drinking out expenditure and consumer expenditure, and the projections for consumer growth, the UK eating and drinking out market is projected to grow at a CAGR of approximately 4.5% between 2013 and UK Consumer Expenditure Compared to UK Eating and Drinking Out Market Source: Historical information based on the OC&C August 2014 Report. Forecast based on management estimates taking into consideration the OC&C August 2014 Report Methodology of forecast: the historical correlation between consumer expenditure and eating and drinking out expenditure has been used and has been expanded to the forecasts of consumer expenditure. Growth of Branded Chain Casual Dining While chain casual dining restaurants are projected to represent approximately 17% of the UK restaurant market in 2013, the segment continues to grow rapidly given new space roll-out and the emergence of new chains and concepts. The success of chain casual dining restaurants reflects their focus on quality, added value and service, combined with their ability to attract strong management teams to drive strategy, build strong brands and engage customers. 62

82 The chain casual dining market has grown at a CAGR of approximately 6% between 2008 and 2012 and is expected to continue to grow at a CAGR of approximately 8.8% between 2013 and 2019 (with like-for-like sales growth of between 2.6% and 4.3% over the same period). As a result, chain casual dining restaurants share of the UK restaurant market is projected to increase from approximately 11% in 2008 to approximately 25% in 2018, with a corresponding decline in the market share of independent operators. UK Chain Casual Dining Market Like-for-Like Growth Rate Source: Historical information based on the OC&C August 2014 Report. Forecast based on management estimates taking into consideration the OC&C August 2014 Report (1) Pre-2008 data based on a different Chain Casual Dining sample, but with significant overlap with post-2008 sample (2) Bottom up like-for-like composed of Carluccios s, Wagamama, Gondola, Las Iguanas, Nando s, Pizza Hut, Prezzo, TGI Friday, La Tasca, The Restaurant Group, Tragus, Yo! Sushi Nominal UK Chain Casual Dining Market Size 63

83 Source: Historical information based on the OC&C August 2014 Report. Forecast based on management estimates taking into consideration the OC&C August 2014 Report (1) Pre-2007 data based on a different Chain Casual Dining sample, but with significant overlap with post-2007 sample Behavior of UK Consumers Market research suggests that Italian remains the UK consumers favorite cuisine, influenced by the popularity of leading chain casual dining restaurant concepts such as PizzaExpress. However, there are a range of chain casual dining brands catering to a broad range of cuisine types and price points, with customers frequently cross-shopping between brands. Brand awareness is therefore critical, with high levels of awareness expected to drive high levels of conversion. Given the difficult economic environment in recent years, chain casual dining restaurants have increasingly used promotional offers and discounts to drive brand awareness, footfall and revenues. Although some customers have adapted their behavior to take advantage of these promotions, we believe that promotional deals rank relatively low on customers list of key purchase considerations, and many chain casual dining restaurant operators have reduced the proportion of meals eaten on promotion, or the depth of promotional discounts, over the years 2012 and Competition The restaurant industry is highly competitive with respect to price, service, location and food quality, and there are some well-established competitors with greater financial and other resources than us. Additionally, new competitors frequently enter the restaurant industry. There is also active competition for management personnel as well as attractive suitable restaurant sites. Competition affects our pricing strategies and margins. Companies in the casual dining industry continuously promote and market new meals and dining options, price discounts on meals and bundled offerings (such as set course meal deals) to promote restaurant traffic, which has led in the past to a decline in like-for-like turnover in our UK restaurants. While the depth of our promotional initiatives has decreased given the improved economic environment, we must continually assess our competitors promotional strategies and the spending trends of our customers to ensure we remain competitive. Further, our retail offerings face competition from other chain restaurants leveraging their brands in the retail offering space and from food retailers providing their own brand chilled foods (such as pizza and fresh pasta) as a way to achieve greater margins and enhance customer loyalty. In the UK, our competitors in the chain casual dining market include Frankie and Benny s, Prezzo, ASK, Zizzi, Wagamama, Giraffe, Jamie s Italian, La Tasca, Strada and Pizza Hut as well as pub dining chains such as Harvester and J. D. Wetherspoon. To a lesser extent we also compete for consumer dining spending with international, national, regional and local quick service restaurants (such as McDonald s and KFC), fast casual independent and chain restaurants (such as Nando s), other casual eating and drinking establishments (such as coffee shops) and convenience and grocery stores. Key competitive factors in the UK chain casual dining market include brand awareness, food offering, food and service quality, location and price. According to the OC&C August 2014 Report, PizzaExpress ranks strongly against competitors with portfolios of similar size. PizzaExpress is an iconic brand in the UK and has one of the highest unprompted brand recognitions among UK casual dining operators. 64

84 Unprompted Restaurant Brand Awareness Source: Morar (Winter 2014 data) Question: Thinking of restaurants (with table service), which brands come to mind? Sample size: 8,046 65

85 Consumer Ratings by Restaurant Brand Source: OC&C August 2014 Report Question: How would you rate <insert restaurant> overall? UK RETAIL PIZZA MARKET The value of the retail pizza market in the UK is estimated at 868 million in 2013, having grown at a CAGR of approximately 3.6% between 2006 and The value of the retail pizza market in the UK is projected to be approximately 945 million by 2018, growing at an estimated CAGR of approximately 1.7% between 2013 and Within this market, the chilled pizza segment is growing faster than the frozen pizza segment, becoming the larger of the two segments in 2011, with growth of both segments historically driven by both increases in volume and price. In 2013, the value of the retail chilled pizza segment was estimated at approximately 450 million, having grown at a CAGR of approximately 4.6% between 2006 and The value of the retail chilled pizza segment is projected to be approximately 527 million by 2018, growing at a CAGR of approximately 3.2% between 2012 and We are the only chilled pizza brand in this segment, with the rest of the market comprising UK food retailers (such as Tesco, Asda and Sainsbury s). Competition Our main retail competitors for chilled pizza are retailer-branded products from Tesco, Asda, Sainsbury s, Morrison s and Waitrose. We also compete with frozen pizza brands, including Chicago Town and Ristorante (both owned by Dr. Oetker) and Goodfella s. CASUAL DINING IN CHINA Overview Foodservice in mainland China was valued at approximately 300 billion in 2013, and is expected to grow at approximately 6% per year between 2013 and 2017, as shown in the chart below. Full-service restaurants (both independent and chain casual dining) are estimated to have accounted for approximately 73% of the foodservice market in mainland China in

86 Source: Historical information based on the OC&C August 2014 Report Forecast based on management estimates taking into consideration the OC&C August 2014 Report (1) Others consist of cafes/bars, self-services cafeterias, street stalls and delivery pure players. (2) Full-service restaurants consist of independent (non-fast food) restaurants and chain (non-fast-food) restaurants. The Hong Kong foodservice market was estimated to be approximately 7.6 billion in 2013, with approximately 70% of the market comprising full-service restaurants. Chain Casual Dining Chain casual dining is a largely underdeveloped sector in China in comparison with developed markets such as the United Kingdom and the United States. In 2013 chain restaurants are estimated to have represented only approximately 6% of the overall full-service restaurant market in mainland China (and approximately 30% in Hong Kong). Demand for chain dining, however, is expected to increase (with projected CAGR of approximately 8% per year between 2013 and 2017). The emergence and increasing wealth of a significant middle-class and increasing urbanization is expected to drive growth in demand for chain dining. Further, Chinese consumers are becoming more focused on food safety, quality, and an overall better dining experience. Consumers are expected to increasingly choose branded restaurants given the expectation of higher quality and more professional service associated with branded chains. Competition While the casual dining market in China is largely underdeveloped, there are a number of chain dining concepts in mainland China and Hong Kong in addition to PizzaExpress that have established themselves in the Western, Other Asian and Chinese cuisine categories. The following tables set forth a mapping of chain casual dining restaurant brands based on cuisine and price level in mainland China and in Hong Kong. Mainland China (1) Price level (2) (HKD/meal) Western Other Asian Chinese Blue Frog Element Fresh Latina PizzaExpress TGI Fridays TairyoWatami Din Tai Fung Haidilao Hotpot Jardin de Jade Little Faigo Hotpot Shanghai Min South Beauty Spice Spirit 67

87 Babeila Baker & Spice NY Pizza Papa Johns Pizza Hut Saizeriya UBC Coffee Wagas Hong Kong (1) Ajisen Ramen Genki Sushi Helv Sushi XiabuXiabu Bellagio Café Chamate Charme Dolar Shop Little Sheep Tsui Wah Price level (3) (HKD/meal) Western Other Asian Chinese BLT Burger California Pizza Kitchen Greyhound Café Outback Steakhouse Pizza Express Simply Life SML The Spaghetti House Wildfire Agnes b Café PHD Pizza Pizza-Box Pizza Hut Ginza Bairin Sen-Ryo Watami Genki Sushi Ippudo Itacho Sushi (1) Comprising mainly chain restaurants with scale (typically more than 10 outlets). (2) Typical average spend per meal on (3) Typical average spend per meal on Din Tai Fung Lei Garden Tao Heung Maxim s Place Café de Coral Crystal Jade Fairwood Maxim MX Shanghai Popo Tsui Wah As shown in the table below, non-western chain casual dining brands generally have a wider coverage in mainland China and Hong Kong in terms of number of outlets and cities covered. Opening Year Number of Restaurants Number of Cities Covered Shanghai Min Haidilao Hotpot Tairyo TGI Fridays* Latina* Jardin de Jade South Beauty PizzaExpress (1) * Din Tai Fung Spice Spirit Element Fresh* Blue Frog* Watami Little Faigo Hotpot Source: Company websites and other publicly available information. * Western chain casual dining brands. (1) Includes franchisee restaurants. 68

88 UNITED ARAB EMIRATES EATING OUT MARKET The United Arab Emirates eating out market is expected to grow at a CAGR of 6.8% over , within which the chain foodservice market is expected to grow at a CAGR of 5.5% during the same period. The pizza foodservice market in United Arab Emirates is expected to grow at 4.7% over this period. 69

89 BUSINESS OVERVIEW We are the largest casual dining restaurant operator in the UK by number of locations, with a menu focusing on pizza and other Italian cuisine served in contemporary surroundings. We opened our first restaurant fifty years ago in Soho, London and, as at April 5, 2015, had 435 restaurants across the UK operating under primarily the PizzaExpress brand and 14 restaurants in Ireland operating under the Milano brand. PizzaExpress is an iconic brand in the UK and has one of the highest unprompted brand recognitions among UK casual dining operators. We are one of the most frequented restaurant chains in the UK, with an average spend per head of (including VAT) in the UK and Ireland for Interim Period In addition to our presence in the UK and Ireland, we have a growing international business. As at April 5, 2015, we had 76 franchise restaurants located in China, Cyprus, Gibraltar, India, Indonesia and the Middle East, and one Company-operated restaurant in Beijing, China that opened in June Following our acquisition in May 2015 of the franchise business that operated our seven restaurants in the United Arab Emirates and following the acquisition of the China franchise businesses pursuant to the China Acquisition, we expect that we will have 35 international Company-operated restaurants and 42 international franchise restaurants. To complement our Company-operated and franchise restaurant business, we offer a range of PizzaExpress and Milano branded retail products in the UK and Ireland, respectively, including chilled bakery products (such as pizza, dough balls and garlic bread), salad dressings and fresh pasta, which are produced under license and sold in a number of leading food retailers. We generated Group turnover and Adjusted EBITDA of million and million, respectively, for LTM Period Our restaurant operations in the UK and Ireland contributed 89.4% of our EBITDA, and achieved like-for-like sales growth of 5.7%, for this period. THE CHINA ACQUISITION RATIONALE AND BENEFITS We have established ourselves internationally primarily through franchise restaurants, with 76 franchise restaurants across 12 international geographies in China, Cyprus, Gibraltar, India, Indonesia and the Middle East as at April 5, We have been implementing, and plan to continue to implement, our international growth strategy by opening Company-operated restaurants in attractive markets with expected high demand, as well as franchise restaurants in local markets where we believe working with a franchise partner is more appropriate for example, where it may be difficult for us to operate independently or where market potential is more limited. In line with this strategy, on May 7, 2015, we acquired the franchise business in the United Arab Emirates, which was purchased with cash in hand and which added seven restaurants to our Company-operated portfolio. We now intend to acquire the Chinese franchise businesses. Our franchise restaurants in Hong Kong, Shanghai and Shenzhen are managed by the same franchise partner. We had previously negotiated options to acquire the franchisee s businesses during two three month windows in 2016 and in 2018, respectively. Given the pace of development in the chain casual dining market in China and the continued positive momentum in our operations in the region, we believe there are strong benefits to acquiring the China franchise business now rather than relying on the call options. Through the current franchise arrangement in China, we receive royalty income on net sales and an opening fee for every new franchise opening. Following the China Acquisition, the full EBITDA and net sales from the China Targets will become attributable to us. The estimated turnover and Adjusted EBITDA of the China Targets for the twelve month period ended March 31, 2015 were 37.5 million and 5.6 million, respectively. Our expansion plan in China remains to open restaurants with a hub and spoke approach by building on our existing presence in the major cities, expanding brand awareness, and continuing the spread to nearby smaller cities over the longer term. We plan to open up to new restaurants per year in China. Longer-term, we anticipate that the majority of our EBITDA growth internationally will arise from the opening of new Company-operated restaurants in China, which we expect to be able to execute more rapidly under our ownership than under a franchise approach. OUR COMPETITIVE STRENGTHS We believe that we have the following competitive strengths: Leading UK chain casual dining brand with broad appeal and excellent competitive position We are the largest chain casual dining restaurant in the UK, with a well-invested portfolio of 435 Company-operated restaurants in the UK as at April 5, 2015, well diversified across regions and location types. After 70

90 50 years of operational history, PizzaExpress is one of the most recognized chain casual dining restaurant brands in the UK, enjoying one of the highest unprompted brand recognitions among UK casual dining operators and a 94% prompted brand recognition rate. The PizzaExpress dining experience appeals to a broad consumer demographic across multiple usage occasions and resulted in us being a Gold Winner in the Mumsnet Family Friendly Awards in March We believe the strength and appeal of our brand is underpinned by the experience we provide customers, and we outperform the chain casual dining competitors of a comparable scale on a number of key metrics, including quality of food, service and consistency. Fast growing market underpinned by favorable economic conditions Consumer expenditure in the UK is projected to increase by approximately 5.1% per annum between 2013 and The UK chain casual dining market is therefore expected to continue to grow strongly, at a CAGR of 8.8% per annum between 2013 and 2019, reflecting a combination of strong like-for-like growth, new space growth and branded chains continuing to take market share from independent full-service restaurants. We believe that we are well positioned to capitalize on this growth given our leading market position, brand awareness and broad consumer appeal. Simple, proven and resilient business model We believe that the key to our success is the simplicity of our restaurant model. We install and operate a single cooking platform (an oven) in all our UK and Ireland restaurants that has the benefits of comparatively low installation, maintenance, operational (including kitchen staff) costs, which enables us to achieve high margins. In addition, we offer our customers a focused menu primarily oriented around pizza. This focused menu enables us to deliver a freshly prepared customer offering to a consistently high standard, with the benefit of requiring lower cost ingredients given its low protein content, as well as to derive economies of scale in purchasing. PizzaExpress has developed a proprietary series of global operational and marketing procedures and training programs, which we call the PizzaExpress Way, which are designed to ensure a consistently high level of performance, including customer experience, is delivered consistently across our operations. Our restaurant model is flexible and is adaptable to different location types, sizes of restaurant and geographies. For LTM Period 2015, substantially all of our UK and Ireland restaurants were profitable at the EBITDA level. Well invested, highly attractive restaurant portfolio We believe we have a unique portfolio of restaurant sites across the UK and Ireland, which has been carefully developed over many years and which cannot be easily replicated by our competitors. Most of our restaurants are located in high-pedestrian traffic venues, such as high-streets, tourist locations, shopping centers and commercial districts, which allow for a consistent and large captive audience with minimal marketing expense. Additionally, we invest in restaurant design with distinctive and contemporary decor. Each location is individually styled, incorporating original elements for each neighborhood or location and complemented with familiar PizzaExpress branding accents. We have an established refurbishment cycle in place to maintain estate age and quality of our portfolio. We undertake a minor restaurant refurbishment approximately every five years and a major restaurant refurbishment approximately every ten years. We aim to refurbish approximately 50 of our restaurant sites per annum as we believe our customers respond positively to format updates, which is evidenced by our restaurants generally experiencing increased sales following a refurbishment. We believe that due to our brand recognition, superior credit profile and high volume pedestrian traffic that we generally attract, we are a highly attractive tenant to landlords. Our average lease length is 23 years, with an average unexpired lease of approximately 12 years. As a result, we are able to maintain our sites for a significant period of time and we expect to be able to open new restaurants in desirable locations with relative ease. Enhanced brand recognition through penetration into a growing and profitable retail market Our range of PizzaExpress branded products have been produced under license and sold in food retailers throughout the UK since 1997 and represented 9.3% of our EBITDA in LTM Period We offer the leading non-food retailer branded chilled pizza in the UK, the second largest salad dressing brand and hold leading market positions in our other retail product offerings. Our licensed retail products are sold by a number of leading UK food retailers including Sainsbury s, Tesco, Waitrose, Morrison s, Ocado and Co-Op. In LTM Period 2015 we sold over 30 million chilled pizzas in food retailers. Our recent achievements include ranking 88 th (up five places) in Britain s Biggest Grocery Brands 2015, the successful launch of our new Romana pizzas in Sainsbury s and Waitrose, and our PizzaExpress House Light salad dressing achieving number one ranking in the category for the first time in March Our retail offering provides increased brand recognition, cross-promotion between our restaurant and retail customers and diversification of our earnings. 71

91 Resilient financial profile, stable margins and high free cash flow generation The combination of our competitive strengths has enabled us to deliver resilient financial performance. We achieved consistent year-over-year growth in Group turnover and EBITDA over the last three financial years and generated consistently high EBITDA margins, which averaged 22.7% over the same period. In addition, our portfolio of restaurants is well invested as a result of our established refurbishment cycles, resulting in a modest level of maintenance and other capital expenditure. As a result, we achieve a high level of free cash flow conversion, which averaged 86.7% over the past three financial years. The ratio of our net total indebtedness to Adjusted EBITDA decreased from 6.5x as at April 6, 2014 to 5.6x as at April 5, 2015 driven by growth in our Adjusted EBITDA from 92.2 million for the twelve months ended April 6, 2014 to million for LTM Period Highly capable management team, supported by a highly engaged workforce We believe we have a strong management team with extensive restaurant and food retail industry experience and a track record of operational excellence that we believe is necessary to successfully lead the development of our business. The senior management team, consists of six individuals with extensive experience in the hospitality industry. Our management team is supported by approximately 10,500 employees worldwide. Our culture of progression through the business, leading induction program and emphasis on continued training results in a highly engaged workforce with lower employee turnover compared to our competitors. OUR STRATEGY Our strategy focuses on the continued growth of the UK and Ireland business, through sustained like-for-like growth in covers and average spend per head and new restaurant roll-out, supported by our iconic brand, and the opportunity to grow our presence in selected international markets, primarily China. This strategy is based on the following initiatives, which we believe will continue to distinguish us from our competitors in the future: UK and Ireland According to management estimates taking into consideration the OC&C August 2014 Report, the UK chain casual dining market is projected to grow by a CAGR of approximately 8.8% from 2013 to 2019, with like-for-like sales growth of between 2.6% and 4.3% per year over the same period, underpinned by improving economic growth and higher consumer discretionary spending. As a result, we believe there are significant opportunities to continue growing our UK and Ireland business, through sustained like-for-like growth and new restaurant roll-out. Maintain and enhance our strong customer offering We aim to continue to deliver an outstanding customer experience through our commitment to quality food, excellent customer service and attractive restaurants. We have an established track record of innovation in food, designed to maintain and enhance existing customer interest and attract new customers to the brand. We regularly review our menu offering to incorporate strategic innovation, with the aim of driving sales and/or increasing profitability. For example, during Interim Period 2015, we introduced a new spring menu, which we believe was well received by customers, and launched a new category, the Romana 65s, which we consider to be a fresh upgrade to some of our iconic pizzas from the past 50 years. In addition, we intend to continue our restaurant refurbishment program, to maintain the quality of our portfolio and enhance the dining experience at PizzaExpress for our customers. We believe our refurbishment format has been received positively by our customers and restaurants have generally experienced increased sales following refurbishment. Continue to utilize our effective sales strategies to drive profitable growth We have well-established sales and promotional strategies to drive profitable growth. These strategies include our targeted promotional plan to drive customer acquisition and retention, delivered using our proprietary digital database of approximately 3.8 million registered users. This strategy seeks to drive customer footfall and improve capacity utilization in quieter periods through the use of promotional discounts, offers and partnership deals. During peak periods when restaurants are largely at capacity, we seek to maximize average spend per head and cover turn, primarily through excluding promotional discounts, reducing dwell times (by effective labor management) and focusing on set menu deals. In addition to our promotional strategy of increasing weekday customer footfall and weekend spend, we aim to drive financial performance through differentiated pricing across regions and daytime sales strategies (using different menus and excluding certain sites from promotional discounts), and the upselling of specific higher margin products. 72

92 Optimize efficiency to increase margins We aim to continue operating efficiently and offsetting input cost inflation. We manage raw material costs by employing a range of cost control measures, including leveraging our economies of scale in purchasing, substituting selected products with unbranded products (such as coffee, pasta and sorbet) and working closely with our internal food development team to buy products of the right quality at the right cost. Additionally, we aim to contain labor costs by emphasizing efficient and flexible part-time contracts and reduce non-food and labor costs through a number of ongoing cost saving initiatives. Expand our operations through new restaurant openings We have an established track record of delivering sustained growth in the UK restaurant portfolio, and on average have opened approximately 18 new sites per annum in the UK and Ireland over the past seven years, opening 124 new restaurant sites over the period. Through a detailed analysis of the UK market, we have identified over 200 locations into which we believe we could successfully expand, including 24 sites where we have begun the legal process of securing the sites. We plan to open up to 100 new locations in the UK in the next five years. We will continue to increase the number of Company-operated restaurants in a disciplined manner by assessing the relevant characteristics of each potential new restaurant site, the performance of other brands in the neighborhood and our knowledge of the local market. Grow our retail presence in the UK The retail chilled pizza market in the UK was valued at approximately 437 million in 2012 and is projected to grow a further 3.2% per year between 2012 and 2018 according to management estimates taking into consideration the OC&C August 2014 Report. We aim to capitalize on this expected growth by strengthening our already strong relationships with UK food retailers in order to increase our shelf space, product range and store penetration. Accessing new retailers is also a key component of our growth strategy for our retail offerings. We intend to enhance cross-promotional efforts between our restaurants and retail offerings and lever our strong brand recognition in order to increase our customer base. We also seek to optimize contract terms in order to maintain and improve margins. International We believe pizza has broad appeal across the globe, which, together with our innovative menu, accessible price-points and excellent customer service has enabled our international restaurants to thrive. As the casual dining sector is a largely underdeveloped, yet fast growing, sector in emerging economies, there is limited direct competition. We plan to continue our expansion into these markets, with a particular focus on China where the middle classes and urbanization are increasing rapidly. For LTM Period 2015, our international operations constituted 1.3% of our EBITDA, largely generated through royalties under franchise arrangements; however we believe there are opportunities to increase the proportion of EBITDA generated from our international operations in the future. The PizzaExpress brand has been established in China for several years, with our first restaurant in Hong Kong open since As of April 5, 2015, there were 28 PizzaExpress restaurants in China, located in Hong Kong (13), Shanghai (13), Shenzhen (one) and Beijing (one), of which eight were opened during LTM Period 2015 (one in Hong Kong, five in Shanghai, our first spoke city restaurant in Shenzhen and the restaurant in Beijing). We directly operate the restaurant in Beijing, with the PizzaExpress restaurants in Hong Kong, Shanghai and Shenzhen currently operating under franchise arrangements with our China franchise partner. Our expansion strategy in China is to continue to primarily focus on opening Company-operated restaurants with a hub and spoke approach by building on our existing presence in major cities, expanding brand awareness, and then spreading to nearby smaller cities over the longer term. In connection with that strategy, we had previously negotiated call options with our Chinese franchise partner to acquire the Chinese franchise business, exercisable at our discretion within two three month windows in 2016 and in 2018, respectively. We have elected to acquire the China franchise business now, however, given the pace of development in the chain casual dining market in China and the continued positive momentum in our operations in the region. We believe that our principal shareholder, Hony Capital, is well-positioned to support our growth plans in China, given their local expertise, relationships and long track record investing in this market. We plan to open up to new restaurants per year in China. OUR HISTORY We were established in 1965 with the opening of the first restaurant in Soho, London, by Peter Boizot. The Soho site was upmarket yet casual, offering authentic Italian pizza, made from fresh ingredients imported from Italy. The pizza was cooked in an authentic pizza oven that Peter Boizot brought back with him from Italy. As we do today, we aimed to serve high quality authentic food in stylish surroundings at accessible prices. 73

93 By 1993 we had 68 restaurants and our holding company, PizzaExpress plc, completed a public offering on the London Stock Exchange. We expanded our restaurant estate to more than 200 restaurants in the UK between 1993 and 1999, and opened in the Republic of Ireland in In 1998, we acquired the Café Pasta chain, and in 2002, we acquired Gourmet Pizza Co. and Kettner s. We opened our first franchised international restaurant in Cyprus in In June 2003, TDR Capital and Capricorn Ventures, through their bid vehicle Gondola Express plc, acquired an indirect, controlling interest in PizzaExpress Limited (formerly PizzaExpress plc), in a public-to-private transaction. Under their ownership, certain businesses (Café Pasta restaurants and all of our international operations excluding the Republic of Ireland) were identified as non-core and were separated from the group. In 2004, we were merged with ASK Central to create a casual dining group with nearly 500 restaurants in the UK operating under the PizzaExpress, ASK Italian and Zizzi brands. In 2005, Gondola Holdings plc completed an initial public offering on the London Stock Exchange. In January 2007, Gondola Holdings was acquired by Cinven Limited in a public-to-private transaction. Under Cinven Limited s ownership, we continued to grow both in the UK and internationally. In 2010, we reacquired the international franchise business (43 restaurants across 12 geographies) which had been retained by TDR Capital and Capricorn Ventures following the IPO and subsequent sale to Cinven Limited. In June 2014 we opened our first international Company-operated restaurant in Beijing. In August 2014, Hony Capital became, indirectly through the Issuer, the principal shareholder of our Group. Following our planned strategy, we have continued to grow our business in the UK and Ireland through sustained like-for-like growth in covers and average spend per head as well as new restaurant roll-out. We also continued to expand on our presence internationally. Most recently, on May 7, 2015, we purchased from one of our Middle East franchise partners the franchise business operating in the United Arab Emirates. OUR BUSINESS OPERATIONS Restaurants UK and Ireland As at April 5, 2015, we operated 435 restaurants in the UK predominantly under the PizzaExpress brand and 14 restaurants in Ireland under the Milano brand. In the UK and Ireland, we served approximately 28 million meals in Financial Year 2014, or on average approximately 1,230 meals per restaurant per week, and had an average spend per head of (including VAT) for Interim Period We also have a small number of restaurants in the UK that operate under other brands, including Gourmet Pizza. Our restaurant portfolio has a broad balance between regions and location types across the UK and Ireland. The following table indicates our geographic breadth in the UK and Ireland as at April 5, 2015: Number of Region Restaurants North Division UK East Region UK North Region UK West Region Ireland and Northern Ireland South Division London Region and other Outer London Region South Region Total

94 The following table indicates the range of our restaurant locations by format type in the UK and Ireland as at April 5, 2015: Number of Format Restaurants Business district City center Event destination High street/town center Residential neighborhood Shopping & leisure center/retail park Tourist Total International We have a track record of successfully operating internationally. We opened our first international restaurant in Cyprus in 1997 and our first restaurant in Asia in 2001 in Hong Kong by means of a franchise arrangement. Since then, we have established ourselves internationally primarily through franchise restaurants, with 76 franchise restaurants across 12 international geographies in China, Cyprus, Gibraltar, India, Indonesia and the Middle East as at April 5, Our overall approach to each geography is tailored to the needs of the local market where we adapt certain ingredients and marketing tactics to conform to the particular tastes in each geography. Many of our international restaurants are based in, and our international growth strategy centers on, emerging economies, where casual dining is a largely underdeveloped sector, but is growing rapidly, underpinned by the increases in size and disposable income of the middle class in these economies as they continue to expand. This growth, coupled with a preference for sharing food in many of our international markets (food is often placed at the center of the table to facilitate sharing), is well suited to our menu focus. We have been implementing and plan to continue to implement this strategy by opening Company-operated restaurants in attractive markets with expected high demand, as well as franchised restaurants in local markets where we believe working with a franchise partner is more appropriate for example, where it may be difficult for us to operate independently or where market potential is more limited. 75

95 The following table indicates our franchise and Company-owned restaurant locations outside of the UK and Ireland, as at April 5, Number of Country Restaurants China Beijing (Company-owned)... 1 Hong Kong (Franchise) Shenzhen (Franchise)... 1 Shanghai (Franchise) Cyprus (Franchise)... 4 Gibraltar (Franchise)... 1 India (Franchise)... 8 Indonesia (Franchise) Middle East Bahrain (Franchise)... 1 Jordan (Franchise)... 1 Kuwait (Franchise) Oman (Franchise)... 2 Qatar (Franchise)... 3 Saudi Arabia (Franchise)... 1 United Arab Emirates (Franchise) (1)... 7 Total (1) We purchased on May 7, 2015 from one of our Middle East franchise partners, the franchise business that operated our seven restaurants in the United Arab Emirates. See Middle East below. China In June 2014, we opened our first international Company-operated restaurant in Beijing. As at April 5, 2015, we had 27 restaurants in Hong Kong, Shanghai and Shenzhen, which are operated by a single franchise partner. We had previously negotiated call options with our Chinese franchise partner to acquire the China franchise business. Please see International Restaurant Partnerships Franchising China Options. We have elected to acquire the China franchise business now, however, given the pace of development in the chain casual dining market in China and the continued positive momentum in our operations in the region. This will result in our owning a total of 28 Company-operated restaurants across Beijing, Hong Kong, Shanghai and Shenzhen upon the consummation of the China Acquisition. We generated 2.4 million and 1.1 million in turnover from our franchise restaurant operations in China during LTM Period 2015 and Financial Year 2014, respectively, including the Company-owned restaurant in Beijing. The acquisition of the Chinese franchise businesses in China represents another step in our international growth strategy. The shift from franchise restaurants to Company-owned restaurants, in addition to our Company-owned restaurant in Beijing, provides an opportunity to solidify our presence in China and to enable us to capitalize on the established presence of the PizzaExpress brand. Our expansion plan in China is to continue to primarily focusing on opening Company-operated restaurants with a hub and spoke approach by building on our existing presence in the major cities, expanding brand awareness, and continuing the spread to nearby smaller cities over the longer term. The foodservice market in China, which was valued at an estimated billion in 2013, is projected to grow at 6% per year over the following four years. Full-service (non-fast food) restaurants account for nearly 75% of the foodservice market, and we believe demand for casual dining experiences will grow rapidly. We expect to further capitalize on this growth in the foodservice market due to the strong demand for pizza in China, where in 2013 an estimated 52% of restaurants serving non-asian cuisine served pizza. Middle East As at April 5, 2015 we had 25 restaurants in the Middle East, which were operated by franchisees. We generated 1.1 million and 1.0 million in turnover from our restaurant operations in the Middle East during LTM Period 2015 and Financial Year 2014, respectively. On May 7, 2015, we acquired the United Arab Emirates franchise business that operated our seven restaurants in that country. Similarly to the planned China Acquisition, we elected to buy the United Arab Emirates franchise business as part of our international growth strategy. Having gained a presence in the Middle East through our franchise arrangements, shifting from franchisee-owned to Company-owned restaurants in the United Arab Emirates allows us to capitalize on the established brand awareness there and drive further expansion in the region. We therefore expect our turnover from our Middle East operations to increase in the coming years. We currently plan to continue our franchise relationships with our franchise partners who operate the remaining 18 restaurants across Bahrain, Kuwait, Jordan, Oman, Qatar, and Saudi Arabia. 76

96 With growth in the chain foodservice market expected to generally outpace that of the overall eating out market in the Middle East (according to management estimates taking into consideration the OC&C August 2014 Report), we are well-positioned to capitalize on this demand. We intend to expand our operations in the region in a disciplined manner. The United Arab Emirates eating out market is expected to grow at a CAGR of 6.8% over , within which the chain foodservice market is expected to grow at a CAGR of 5.5% during the same period. The pizza foodservice market in UAE is expected to grow at 4.7% over this period (according to management estimates taking into consideration the OC&C August 2014 Report). Other As at April 5, 2015, we had 11 restaurants in Indonesia, which are operated by franchisees. Please see International Restaurant Partnerships Franchising. We generated 0.2 million and 0.2 million in turnover from our restaurant operations in Indonesia during LTM Period 2015 and Financial Year 2014, respectively. While the pizza foodservice industry is still relatively small in Indonesia (valued at between 200 million and 300 million per year), it is projected to grow at a rate of approximately 10.7% per year from 2013 until 2017, according to management estimates taking into consideration the OC&C August 2014 Report. We aim to grow our franchised restaurants in Indonesia in tandem with growth in the pizza foodservice market. As at April 5, 2015 we also had four restaurants in Cyprus and one restaurant in Gibraltar, which are operated by franchisees. Please see International Restaurant Partnerships Franchising. We generated 0.1 million and 0.1 million in turnover from our restaurant operations in Cyprus and Gibraltar during LTM Period 2015 and Financial Year 2014, respectively. Our strategy in Cyprus and Gibraltar is to grow our existing franchises profitably by reviewing market opportunities and emphasizing operational efficiency. In India, the India JV did not form part of the Acquired PizzaExpress Group bought by Hony Capital in However, following the consummation of the Hony Acquisition, we entered into a franchise agreement to enable continued operations in India and build on our presence there. As at April 5, 2015, we had eight restaurants in India, located in Delhi and Mumbai, with the most recent restaurant opening occurring in Gurgaon, near Delhi. The pizza foodservice industry in India, whose value was estimated to be approximately 296 million in 2013, is projected to more than double to 618 million by 2017, driven by a growing middle class. Restaurant Operations Through the The PizzaExpress Way, our proprietary, globally integrated operations manual designed to set operational and consumer standards across our restaurants, together with central oversight, we believe we have standardized operations across our Company-operated, and franchise restaurants, as well as created a uniformly excellent service. Restaurant Staff Restaurant Management Each restaurant manager is responsible for the day-to-day operation of his or her restaurant in accordance with The PizzaExpress Way, including hiring, training and scheduling personnel, financial management, food quality, customer service and purchasing of supplies. Restaurant managers also have responsibility for delivering the annual budget for each restaurant, which they determine jointly with the central support team. The performance of a restaurant manager is evaluated based on his or her ability to work within the designated budget and achieve year-on-year improvements in sales, profit and operating margins. All restaurant managers receive regular training in basic management skills, food production, financial literacy, labor management and standard operating procedures. Restaurant managers have the opportunity to receive 30%-100% of their annual salaries in performance related bonuses based around sales, profits and quality and administrative audits. In the UK and Ireland, we divide our operational management into two divisions: South and North (which includes Ireland), each of which is overseen by a divisional director. The divisional director is supported by approximately seven regional operational managers, each of whom manage between three and seven areas of up to 14 restaurants. Other Restaurant Personnel Each restaurant has approximately 20 to 25 employees comprising a site manager, one or two assistant managers, as well as kitchen and waiting personnel. Staffing is determined according to forecast levels of sales, numbers of customers, expected dwell times and other data. We seek to ensure that restaurants have the optimum levels of 77

97 restaurant personnel to deliver the required service standards, and to generate sales growth and operational efficiencies. We and our franchisees conduct regular performance reviews of each restaurant to monitor key performance indicators and address any shortfalls promptly. All of our restaurant staff in the UK and Ireland are paid national minimum wage rates or above. Employee Development and Satisfaction We encourage the in-house promotion of our employees at all levels through training and development, and many current restaurant managers began their careers as assistant managers or as other restaurant personnel. As a result, our average annual turnover rate in the UK and Ireland is on the low end of the industry average (with a turnover rate of between 66% and 71% for all restaurant staff compared to an estimated industry average of between 65% and 75%). Further, in the UK an average of 83% of our employees would either recommend us as a great place to work or would recommend our restaurants to family and friends, and 90% feel committed to helping PizzaExpress succeed. We feel that happy and enthusiastic restaurant staff are key to providing a pleasant dining experience and we believe this is one of the reasons we score, on average, higher than our competitors in quality of service. Service and Promotional Activities Among the most critical factors in strengthening our brand are the performance of our restaurant staff, which directly affects the customer dining experience, and promotional activity to raise brand awareness and attract new customers. Ensuring that our customers return and spread good word-of-mouth about us is invaluable. UK and Ireland Formal monitoring of restaurant personnel performance and service standards is undertaken in a number of ways. For example, restaurant personnel are assessed on a daily basis by restaurant managers, and at least every four weeks through a mystery diner program. This involves mystery diners visiting each restaurant, on average 13 times per year, and assessing them on defined criteria (for example, whether restaurant personnel recommended any menu items, or offered a second drink). Restaurant managers are also assessed regularly by area management in a number of categories, including leadership and financial management. In addition to delivering excellent service and a high-quality dining experience, we dedicate considerable resources to promoting the PizzaExpress brand, as well as other brands within our portfolio. We employ a dedicated marketing team that handles and coordinates our promotional activities, including public relations. Our promotional strategy is aimed at driving sales and EBITDA growth through targeted and tailored promotions. In order to achieve this, we maintain ongoing promotional activities through various initiatives. We direct our promotions, which are modified to suit restaurant location, format type and time of the week, at our existing customers, primarily through utilizing our proprietary database of more than 3.8 million registered customers. Approximately 37% of our customers have reported using a promotion, of which between 45% and 55% were incremental sales (i.e. they would not have chosen to dine at PizzaExpress without the promotion, or they chose the day or time to eat based on the requirement of the promotion, thus driving customer visits during off-peak times and potentially freeing up capacity during peak times). We are supported in our promotional efforts in our restaurant business by strong partnerships with other leading brands such as Tesco and Nectar. Further, we use cross-promotions between our retail products and restaurant businesses to raise brand awareness and attract new customers by, for example, including vouchers for meals at our restaurants in our retail product packaging. We also undertake periodic concentrated incentives for our restaurant teams that typically last for approximately six weeks to increase sales for certain menu items such as starters, desserts or our higher margin Romana and Calzone pizzas. International For the recently acquired United Arab Emirates restaurants, and for the China Targets that we plan to acquire, we plan to move these restaurants toward our UK and Ireland model outlined above. For the franchises, our franchisees are responsible for achieving the high quality of service expected of our brand. We work with our franchisees marketing teams to ensure that their strategies are on-brand and in line with The PizzaExpress Way. Restaurant Operational Systems Our restaurant operations are characterized by a high degree of systematization. For example: 78

98 we install and operate a single cooking platform (an oven) across the vast majority of our restaurants, which involves relatively low installation, maintenance and operation costs; our menu items are made from simple and standardized recipes, making use of common ingredients that are centrally sourced; and our restaurants have standardized operational procedures and guidelines. These apply across all aspects of restaurant operations, including, for example, table layout, customer recognition, approach to taking orders, speed of service and food preparation how-to cards for each menu item. In addition, all restaurant personnel, including restaurant managers, waiting personnel and chefs, participate in training programs directed at maintaining consistently high service standards. In certain instances, restaurant operational systems are adapted to account for the national market. For example, in China where pasta is particularly popular, the single cooking platform has been supplemented by a pasta station to facilitate the preparation of pasta dishes. Restaurant Monitoring and Reporting UK and Ireland Our central offices, together with our regional directors, operational managers and restaurant managers, monitor the financial and operating performance of our restaurants. We produce an annual financial plan at the start of each financial year, which includes budgets for each individual restaurant. We have reporting procedures and IT systems in place that enable us to monitor the sales, labor and food costs for each of our restaurants on a daily basis. At the end of each four-week reporting cycle, management accounts are prepared, enabling management at all levels to review total company and individual restaurant performance at both sales and profit levels. A review of performance is a key element of each period s management board meeting and in reporting to the board of directors. We actively manage underperforming restaurants by making operational changes (such as deploying new managers) and/or additional capital expenditure, or, in appropriate cases, refurbishing or closing restaurants or selling sites. International Our franchisees are responsible for monitoring the performance of their restaurants. We monitor or will monitor, in line with the UK and Ireland model, the recently acquired United Arab Emirates restaurants and the China Targets we plan to acquire. While we monitor our restaurants and employees on a performance level, we also monitor them on an operational level. We continue to enhance our internal controls to ensure that we, our restaurants and our employees, are conducting business in compliance with all applicable laws. In addition, each of our franchises is required to comply with our corporate governance standards. Supply and Distribution Supply The primary food commodities which we purchase are flour, eggs, dairy (including cheese), meat and fresh produce. Many of the raw materials we use are generally commoditized. As a result, in most situations we have numerous selected suppliers to meet our needs. This reduces the risk that an issue at one of our suppliers will cause a significant supply disruption to our operations. Our top ten suppliers in the UK and Ireland represent no more than 59% of our raw material costs. UK and Ireland Most of our suppliers in the UK and Ireland are accredited by the British Retail Consortium and those that are not undergo a full audit by us. We define a set of specifications for each of our ingredients, and all products have full traceability and are therefore subject to periodic audits by quality service and supply chain buying teams. 79

99 While we deal directly with suppliers to manage the sourcing and costs of our raw materials, we do not contract directly with the suppliers. Our suppliers contract with our distributors, who in turn contract with us, passing on the raw material costs to us in the process, as well as charging us a distribution fee. While raw materials are generally commoditized, for some of our major ingredients we have a limited number of suppliers. We manufacture our own dough at our dough-making facility near Witney, Oxfordshire. The dough production process is automated, with 16 full-time employees, including management, working at the facility. The facility produces, on average, 10,800 cases of dough balls per week. In , we also invested in the expansion of our dough-making facility to enable us to manufacture gluten-free dough in-house. We maintain a contingency plan for the manufacture and supply of dough with Premier Foods at a cost of 5,000 per year until June 2015, which we expect to renew. We also keep more than three weeks worth of stock in storage to account for any lag in production ramp-up at Premier Foods should we require their dough. In addition, following our acquisition by Hony Capital, we continue to supply dough to ASK and Zizzi, our prior affiliates that remained with the Gondola Group and which were subsequently sold by the Gondola Group to Bridgepoint Capital. Further, we currently purchase approximately 97% of our cheese from two suppliers and substantially all of our passata (used as the tomato sauce on pizzas) from one supplier. This has allowed us to develop strong, long- standing relationships with our suppliers. For example, we have sourced passata from the same family-operated company near Parma, Italy for almost 26 years. International In our international operations, a high proportion of ingredients are imported (with the particular ingredients varying based on the region) to ensure a high quality customer offering. These ingredients include passata, mozzarella, certain cured meats, cheeses, pasta, olive oil and wine. Our international partners use local suppliers for certain products where quality and timely delivery are assured, and dough is produced locally (albeit to strict specifications and with the use of Company-provided dough improver in order to ensure consistent dough quality). For the recently acquired United Arab Emirates restaurants, and for the China Targets that we plan to acquire, we plan to follow a similar approach. Commodity Inflation Strategy UK and Ireland We take actions to optimize spending on raw materials and reduce our exposure to price fluctuations through negotiation with our suppliers and by performing an ongoing review of our ingredients. For instance, the prices with our mozzarella producer in the UK and Ireland, are capped for each three to six month contractual period and we have contracted for a decrease in pricing with our fresh produce supplier. Additionally, we have selectively replaced branded products, such as coffee, pasta and sorbet with unbranded products of equivalent quality. We have also decreased preparation time by switching to products such as pre-diced mozzarella; reviewed our specifications and made appropriate changes away from high cost products (e.g. switching from Parmesan to Gran Moravia cheese); and removed or substituted ingredients where a price increase is unable to be passed on to customers. International For the recently acquired United Arab Emirates restaurants, and the China Targets that we plan to acquire, we seek to follow the UK and Ireland model where possible. Distribution Our franchisees are responsible for managing commodity inflation. Once the specifications for a particular product are determined, that product is handled and delivered directly to restaurants by third-party distributors. Distributors handle four types of delivery: (i) frozen and ambient food, (ii) refrigerated and fresh food, (iii) drinks and (iv) non-food products. Deliveries occur up to four times per week, depending on the delivery channel. Distributors are required to meet or exceed certain key performance indicators (including delivery accuracy and timing). Currently in the UK and Ireland, we have three primary distributors who represent 61%, 34% and 5%, respectively, of our distribution costs. 80

100 Estate management The estate management teams are responsible for rent reviews, licenses, service charges and other aspects of the administration of our properties. We currently lease the premises for all of our Company-operated restaurants. Leases in the UK and Ireland are for an average term of 23 years and are generally on standard market terms. The average unexpired lease length in the UK is 12 years. Leases in China are typically for an average term of 3-6 years. We believe that due to our brand recognition, superior credit profile and high volume pedestrian traffic that we attract, we are a highly attractive tenant to landlords. Restaurant site openings We have expanded from 460 Company-operated and franchise restaurants in 2012 to 526 as of April 5, 2015, of which 450 were Company-operated and 76 were franchised restaurants. We commit significant resources and have teams dedicated to our new site roll-out program. During LTM Period 2015 we opened 22 restaurants in the UK. These new restaurants, which were open for an average of approximately 6 months during the period, contributed an aggregate turnover of 9.2 million and restaurant-level EBITDA of 0.5 million during that period. Our new site teams are highly skilled with extensive experience within the restaurant, retail and property sectors. To assist us in the identification and assessment of new site opportunities, we have developed an analytical model that projects the sales and profitability performance for a potential new location, taking into account local demographic factors such as population density and household income levels, as well as site specific factors, such as site visibility, accessibility and proximity to high-trafficked areas such as shopping areas, business districts, cinemas, leisure parks or hotels. We also examine supply and demand trends in the area, such as proposed infrastructure improvements and new property developments. Further, we look for buildings that will be visually appealing. For instance, in the UK and Ireland we often seek historical or character buildings. We devote significant resources to evaluating the long-term investment potential of prospective sites. As part of our returns-driven approach, we model potential investment returns using long-term cash flow forecasts for each site. Maintenance and Refurbishment We have a well invested estate, with approximately 80% of our portfolio comprising either new restaurants or having recently undergone refurbishment. Approximately 11% of our UK and Irish restaurant portfolio is refurbished each year, which amounts to approximately 50 refurbishments per year across the UK and Ireland. Our maintenance teams are responsible for managing ongoing maintenance and refurbishment across our restaurant estate. Refurbishments comprise either major or minor refurbishments. Minor refurbishments, costing on average 90,000 and lasting approximately five days, are planned approximately five years after opening of a site and are primarily directed at refreshing customer facing areas. Major refurbishments, costing on average 170,000 and lasting approximately days, will typically be undertaken approximately 10 years after opening and often include replacement of equipment, tables, chairs and full redecoration. Exceptions are made where trading performance, local competition, the number of current refurbishment programs or the actual condition of the site make it appropriate. The average age of our restaurants is 13 years. After re- setting restaurants age for major refurbishments, the average age of our restaurants is five years. In addition to the standard refurbishment cycle, each restaurant undergoes ongoing maintenance as required. For a discussion of our capital expenditure, please see Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Capital expenditures. International Restaurant Partnerships Franchising Overview In markets where it is difficult for us to operate independently, or where the market potential is more limited, our strategy is to work with franchise partners to plant and grow our restaurant brand. Our restaurants in Bahrain, Cyprus, 81

101 Gibraltar, India, Indonesia, Jordan, Kuwait, Oman, Qatar and Saudi Arabia are operated by franchisees pursuant to franchise agreements with initial terms of either 10 or 20 years. The China franchise agreements were on similar initial terms, however, following the China Acquisition, the restaurants in China will become part of our Company-operated chain. In line with our global strategy to ensure consistent branding, other than two of the four restaurants in Cyprus and one of the 13 restaurants in Shanghai, the franchises operate under the PizzaExpress brand. The two restaurants in Cyprus and the restaurant in Shanghai that do not operate under the PizzaExpress brand, operate under the Marzano by PizzaExpress brand. Exclusivity All rights to use the PizzaExpress, Pizza Marzano and associated brands granted under our franchise agreements are exclusive to the specified territory during the term of the respective franchise agreement. The franchise agreements contain a minimum development schedule which lists the number of restaurants that must be opened in specified territories by certain dates. Generally, if the franchisee fails to meet these targets, the license granted to the franchisee becomes non-exclusive, allowing us or another franchisee to operate in that territory. Non-competition Our franchise agreements contain provisions preventing the franchisee from competing with us. Generally these agreements prohibit the franchisee from engaging in a restaurant business that would compete directly with us, or in a location where the restaurant would compete with one of our restaurants. Some franchisees are also prohibited from acquiring an interest in an undertaking which competes with us, soliciting or employing certain members of our staff, or engaging or being employed by any restaurant that uses or duplicates our concept. Fees Franchisees pay an initial fee to us upon entering into the franchise agreement. Thereafter, franchisees are obligated to pay us restaurant opening fees for restaurants opened in their respective territories and periodic royalty fees calculated as a percentage of their annual total sales (less certain costs). China Options Our Hong Kong, Shanghai and Shenzhen franchises are managed by the same franchise partner. We currently have separate franchise agreements in place with the franchisee. We had previously negotiated options to acquire the franchisee s businesses during two three month windows in 2016 and in 2018, respectively. We have however elected to accelerate the exercise of those options to seize the opportunity to capitalize on our presence there and to expand our brand more broadly in the region. See The China Acquisition Rationale and Benefits. Seasonality In our principal markets (the UK and Ireland), restaurant sales are typically higher in the summer months and in the period leading up to Christmas and in February, as these months typically coincide with school holidays. Our restaurant sales and margins are typically lowest in January and in the weeks immediately following the summer holidays. Since our business is moderately seasonal, results for any one financial period are not necessarily indicative of the results that may be achieved for any other financial period. Licensed Retail Offerings Operation We license the PizzaExpress and Milano brands to a range of retail offerings, manufactured and distributed by third-parties, for sale in food retailers throughout the UK and Ireland. Our retail offerings include chilled bakery products (such as pizza, dough balls and garlic bread), salad dressings and fresh pasta. We currently work with three manufacturer/distributors, one which manufactures and distributes our chilled pizzas and breads; one which manufactures and distributes our salad dressings and passata; and one which manufactures and distributes our fresh pastas. Our largest customers for our retail offerings are Sainsbury s, Tesco, Waitrose, Morrison s, Ocado and Co- Op. Together, these accounted for substantially all of our retail sales in LTM Period Our retail offerings generated aggregate royalty payments to us of 9.8 million. Substantially all of those royalties are a result of pizza sales. We are the leading non-food retailer brand of chilled pizza, with the rest of the market comprised of UK food retailers own brand products. Our market share of the UK retail chilled pizza segment was approximately 17.0% by value and approximately 9.0% by volume in Our retail offerings are branded in line with our restaurants, and are an important element of our brand strength in the UK and Ireland. Our retail offerings are also used to cross-promote our restaurant business, with occasional promotional offer vouchers for use in our restaurants being distributed with our retail products. 82

102 Royalties paid to us by our chilled pizzas manufacturer are based on a percentage of the manufacturer s net sales income (i.e. turnover from the sale of chilled pizzas, less certain costs) though the specific rates applied to the calculation vary depending on the retailer that sold the pizza. Royalty rates for all of our other retail products are based on the type of product rather than the retailer where the product was sold. Royalty payments made by our other retail product manufacturers are based on a percentage of their aggregate net sales value (i.e. the aggregate gross sales value of all products sold by the specific manufacturer less discounts applied and exclusive of VAT). Product Development We believe that continuous menu innovation is key to increasing repeat customer usage, attracting new customers and improving average spend per head. Menu innovation is led by our commercial director, who is supported by a manager and an executive chef. Our menu is refreshed twice each year to reflect market trends in product and pricing and as a mechanism to offset cost inflation with the support of the procurement team. New menu items have generated significant incremental sales and profits, with the financial impact varying by item. For example, the Romana pizza is a higher margin product designed to migrate existing customers away from our comparatively lower margin classic pizza. Our gluten-free range is also driving new customer visits, generating additional turnover from customers with dietary requirements who may not previously have visited PizzaExpress. Similarly, the availability of lighter dining options has broadened our appeal, particularly with female customers, and is a popular lunchtime choice. Menu items are evaluated based on local taste (with minor adjustments for particular national preferences), ease of preparation and whether they can be introduced to the menu profitably. All new recipes and ingredients are tested prior to launch through taste tests or trials in selected restaurants. When our international partners adjust ingredients or add items to our menu, each change must be approved by a business coach, appointed by central management, who is in charge of ensuring consistency of brand. We have recently broadened our menu in a number of ways including the introduction of gluten-free options and healthy eating alternatives in 2014 and we continue to expand on that selection. In our licensed retail offerings business, while we are currently not looking to develop new product lines, we continually assess market opportunities to introduce new products. Regulation Our operations in the UK are regulated pursuant to the UK Health and Safety at Work Act 1974 and related laws. Britain s Health and Safety Commission and Health and Safety Executive as well as local authorities are responsible for enforcing most work-related health and safety guidelines, codes and regulations. Moreover, certain health and safety obligations in the UK and Ireland may exist or arise under EU law, such as local regulations based on European Directives. We have a detailed food safety manual that covers all aspects of cleaning, food handling and storage, pest control, stock control, and waste disposal. We also have rigorous food safety procedures based on a hazard analysis and critical control points plan, which includes controls, critical limits and monitoring for key processes such as receiving food deliveries, defrosting, cooking, cooling and storage. This includes guidelines on date labelling, allergen labelling, fridge plans, temperature checks etc. There are also strict policies on fitness to work, hygiene, hand washing and uniform cleanliness. Allergens lists are communicated by leaflets, posters and online. All team members receive training on critical aspects of food safety as part of their induction, and also complete an online e-learning food safety accredited course. Restaurant team members receive ongoing training regarding sanitary procedures, and all senior back of house personnel and managers are required to attain food safety accredited qualification. Senior operations management may also seek to attain further food safety accredited qualifications. Food hygiene rating schemes vary across the UK. Approximately 87% of our UK restaurants achieved the maximum rating in their location. We have a dedicated health and safety audit team that conducts at least two audits per year for each restaurant using stricter standards than those required by the relevant authorities. Further audits are conducted by operational management each quarter and all audit results are reported to our board of directors. We are also subject to various UK laws and EU regulations governing our relationship with employees, including such matters as minimum wage requirements, the treatment of part-time workers, employers national insurance contributions, overtime and other working conditions. Each of our restaurants in the UK and Ireland sells alcoholic beverages and is therefore subject to licensing and regulation by a number of governmental authorities, including the UK Department of Culture, Media and Sport, pursuant to the UK Licensing Act 2003 and related laws and regulations. See Risk Factors Failure to obtain and maintain 83

103 required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of our food and alcoholic licenses and, thereby, harm our business. We are also subject to various local, national and international laws and regulations affecting our operations, including consumer and data protection, planning permission, as well as various health, sanitation, licensing, fire and safety standards. Under the Equality Act 2010 (or the UK Disability Discrimination Act 1995 in Northern Ireland) and other laws, we have a duty to make our restaurants accessible to disabled customers. Licenses and Trademarks We regard our PizzaExpress, Pizza Marzano and Milano trademarks, as well as the associated roundel logos, as having significant value and as being important factors in the marketing of our restaurants. We have also obtained trademarks for several other of our menu items, products, operating names and advertising slogans. Our policy is to pursue registration of our trademarks where possible, but we rely on a combination of protections provided by contracts, copyrights, patents, trademarks, and other common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from infringement. We license the use of PizzaExpress and Milano registered trademarks in the UK and Ireland, respectively, to third-party manufacturers of our chilled pizzas and other retail offerings. In connection with the separation of Café Pasta from the Group, we granted exclusively to PandoraExpress royalty free licenses to use certain of our trademarks of which only certain sites in Spain continue to do so, as the other restaurant sites have either been rebranded or closed. Information Systems Our Company-operated restaurants have a point-of-sale, or POS, cash register system. The POS system provides effective communication between the kitchen and the server, allowing employees to serve customers in a quick and consistent manner while maintaining a high level of control. The POS system is integrated with our back office system to provide support for automated stock management, payroll, accounts payable, cash management, and management reporting functions. Restaurant sales data is retained and organized by our system to help restaurant managers predict and schedule labor requirements. This data is also used to calculate average spend per head and number of individual product line items sold. Product sales and most purchases are captured through the back office system and transferred directly to our general ledger system for accurate and timely reporting. All corporate computer systems, including laptops, restaurant computers and administrative support systems are connected using a wide-area network. This network supports an internal web site for daily administrative functions, allowing us to eliminate paperwork from many functions and accelerate response time. Further, we have a large data warehouse that securely retains detailed data from all of our key systems. It also stores data on promotional vouchers used by customers, which allows us to track in detail what our customers purchase and which restaurants they visit. We also use up-to-date credit card machines to securely process payments by credit or debit card. Insurance We maintain commercial insurance that is customary for businesses of our size and type. These policies cover material damage, terrorism, business interruption, public and products liability, employer s liability, engineering inspection, director s and officer s liability, commercial vehicle and other coverage in a form, and with such limits, as the board of directors believe are customary for businesses of our size and type. Legal Proceedings We are subject to legal proceedings, claims and liabilities, primarily relating to employment matters, health and safety, and food safety, which arise in the ordinary course and are generally covered by insurance. In December 2012, an employee was injured in one of our restaurants. While proceedings are currently underway, we believe that substantially all of the costs will be covered by our insurers. Settlement of this claim has not had, and is not expected to have, a material impact on the level of cover under our insurance policies or the premiums payable for them. In addition, we may face fines from the local authority as a result of the incident, however we do not expect such fines to be material. No material litigation, arbitration or regulatory proceeding is currently pending or threatened. 84

104 Property Our offices comprise our headquarters in London, England and a finance operations center in Uxbridge, England, the leases for which are held by us. As at April 5, 2015, we had 449 Company-operated restaurants in the UK and Ireland, all of which are leased. For more detail, see Restaurant Operations Estate Management. The leases for our franchise restaurants are all held by the respective franchisee. We also lease the dough-making facility near Witney, Oxfordshire pursuant to a lease that expires in 2031 and is held directly by us. The rent is 137,500 per year, subject to review in 2016, 2021 and Employees During Financial Year 2014, we employed an average of 9,728 persons. This included an average of 9,571 restaurant and distribution staff and an average of 157 administrative staff. For more detail, see Restaurant Operations Restaurant Staff. 85

105 MANAGEMENT The Issuer The Issuer is a public limited company, incorporated and existing under the laws of England and Wales, and was formed to facilitate the Transactions. The Issuer is a wholly owned subsidiary of PizzaExpress Financing 1 plc and an indirect subsidiary of PEGHL. The directors of the Issuer are Richard Hodgson, Andy Pellington, Jinlong Wang, Xiaolong Wang and Bing Yuan. The business address for each of the directors of the Issuer is Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex UB8 1LX, United Kingdom. Group Board of Directors The board of directors of PEGHL is responsible for the overall direction and management of the Group and is comprised of seven directors (including a Chairman), two of whom are the chief executive officer and the chief financial officer of the Group. Pursuant to a Co-Investment Agreement dated as of September 29, 2014, as amended (the Co-Investment Agreement ) (and certain other shareholders documents), Hony Capital, as the lead investor under the Co-Investment Agreement, is entitled to appoint and remove the directors on the board of such parent company and each Group entity, including PEGHL. Each of Jinjiang Capital and Bank of China Group Investment Limited (through their respective affiliates) has a right to require Hony Capital to appoint one director each to the board of PEGHL. In addition, there are certain other minority shareholders of such parent company of PEGHL that are parties to the Co-Investment Agreement, which have no rights to appoint or remove directors. An affiliate (or affiliates) of Hony Capital has designated three members of the board of directors of PEGHL: Mr. Xiaolong Wang, Mr. Bing Yuan and Mr. Jinlong Wang (who is also the chairman of the board). An affiliate (or affiliates) of Bank of China Group Investment Limited has designated Mr. Jianzhong Gong as a member of the board of directors of PEGHL and a member of the PEGHL nomination committee. An affiliate (or affiliates) of Jinjiang Capital has designated Mr. Mingju Ma as a member of the board of directors of PEGHL and a member of the PEGHL audit committee. As of the Issue Date, the board of directors of PEGHL consists of the following members: Jianzhong Gong, Richard Hodgson, Mingju Ma, Andy Pellington, Jinlong Wang, Xiaolong Wang and Bing Yuan. The business address for each of the below Directors is Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex UB8 1LX, United Kingdom. Name Age Position Jianzhong Gong Director Richard Hodgson Director Mingju Ma Director Andy Pellington Director Jinlong Wang Chairman and Director Xiaolong Wang Director Bing Yuan Director Jianzhong Gong has been a director of PEGHL since February Mr. Gong has served as Chief Executive Officer of Bank of China Group Investment Limited for almost 10 years. Mr. Gong also serves as an Executive Director of Bank of China Group Investment Limited, and as a Director of a number of companies that Bank of China Group Investment Limited has invested in. He additionally serves as Managing Director of Bank of China Investment Management Limited. Mr. Gong holds a Master in Economics from Dongbei University of Finance and Economics. Richard Hodgson has been a director of PEGHL since August 2014 and has been a member of the senior management since April 2013, when he joined as Chief Executive Officer. Mr. Hodgson has over 20 years of experience in the food industry. He started his career in 1990 at Dalgety. Mr. Hodgson then joined Asda in 1996 where he spent ten years progressing through the company to hold a number of senior positions. Mr. Hodgson joined Waitrose in 2006 as Commercial Director, where he played a key role in developing the company s international business, as well as its launch of the Essential Waitrose value range. Before joining PizzaExpress, Mr. Hodgson was the Group Commercial Director of Morrison s. Mingju Ma has been a director of PEGHL since March Mr. Ma has served as Vice President of Jin Jiang International (Group) Co., Ltd since He has also served as Manager of Department of Planning and Finance of Jin Jiang (Group) Co., Ltd. since 1999 and has been a Director of Shanghai Jin Jiang International Industrial Investment Co., Ltd. since He served as Supervisor of Jin Jiang International Hotels (Group) Co., Ltd. from

106 to 2009, and served as a Director of Jin Jiang International Travel Co., Ltd. from 2007 to Mr. Ma holds an M.B.A. from Macau University of Science and Technology. Andy Pellington has been a director of PEGHL since August 2014 and has been a member of the senior management since March Mr. Pellington started his career in 1986 at Cadbury Schweppes before gaining significant experience across a range of leisure and hospitality businesses. He was Group Financial Controller of Laurel Pub Company from 2001 to 2003 before joining Little Chef as Finance Director in Mr. Pellington joined Whitbread in 2004 as Finance Director of the Restaurant Division and went on to hold various roles with the group, including Finance Director of its subsidiaries David Lloyd, Premier Inn and Whitbread Hotels and Restaurants. Mr. Pellington holds an Economics degree from Birmingham University and is a qualified accountant. Jinlong Wang has been a director of PEGHL since April Mr. Wang currently also serves as an advisor to Starbucks CAP region and senior advisor to Hony Capital, and serves on the board of Sonova Holding AG. He has previously served as Chairman of Starbucks China and Senior Vice President of Business Development from 2013 to From October 2005 to May 2011, Mr. Wang served as President, Chairman and acting President of Starbucks Greater China region where he played a critical leading role in creating coffee culture in a tea-drinking nation/region. Xiaolong Wang has been a director of PEGHL since August Mr. Wang serves as a Managing Director of Hony Capital, with responsibility for investments in the consumer products and retail sectors. He has seven years of experience in the consumer and retail sectors investment, and serves as Director of Coagent Electronic Technology Co., Ltd., Sichuan Lessin Holdings Company Limited, China Restaurants Group Limited, Longhao Tiandi Corporation Limited, Yantai Andre Pectin Co., Ltd and Anhui Commercial Capital Co., Ltd. Mr. Wang holds an M.B.A. from Tsinghua University after completing the MIT Tsinghua University Joint International Program in Bing Yuan has been a director of PEGHL since July Mr. Yuan has served as a Managing Director of Hony Capital since 2009, having previously served as Managing Director of Morgan Stanley Principal Investments based in Hong Kong, where he was responsible for direct investment activities in China. Mr. Yuan served as Managing Director at Morgan Stanley Asia Limited from 2004 to 2009, previously serving as the Vice President of Credit Suisse First Boston (Hong Kong) Limited. He has been a Director at Shanghai Rural Commercial Bank Co., Ltd. since 2011, a Non-Executive Director of Haichang Holdings Ltd. since 2012, an Executive Director of AGORA Hospitality Group Co., Ltd. since 2012, a Non-Executive Director of Hydoo International Holding Limited since 2011, and a Non-Executive Non- Independent Director of Biosensors International Group, Ltd. since Mr. Yuan holds a J.D. from Yale University. Senior Management The day-to-day business of the Group is run by the senior management team. Set forth below is information concerning the senior management. The business address for each of these managers is Fifth Floor, 2 Balcombe Street, London NW1 6NW. Name Age Position Richard Hodgson Chief Executive Officer Andy Pellington Chief Financial Officer Zoe Bowley Operations Director Charlotte Maxwell Commercial Director Luke Davies Managing Director, International Mark Jones Property Director The following section presents a brief summary of the biographies of the members of our senior management: Richard Hodgson: Directors. Andy Pellington: Directors. For biographical details of Mr. Hodgson, see the description under Group Board of For biographical details of Mr. Pellington, see the description under Group Board of Luke Davies has been a member of senior management since 2014, when he was appointed to the Board as Divisional Operations Director for the UK. In January 2014 he was appointed to the role of Managing Director for International. Mr. Davies career with PizzaExpress started in 1998, at the age of 16, when he joined the company as a waiter. Before moving into multi- site management, he led the new openings management team for PizzaExpress international business, launching restaurants in Dubai and Kuwait. Over the last seven years he has worked in a number of senior operational roles including that of Regional Operations Manager and Regional Director. 87

107 Charlotte Maxwell has been a member of senior management since March 2014, when she joined as Commercial Director. She started her career in 1994 at Safeway. In 1999, Ms. Maxwell joined Tesco from 1999 to 2009, where she held various positions, including Trading Director of Fresh and Easy, Tesco s U.S. venture, during its initial startup phase and first 12 months of trading. In 2009, Ms. Maxwell joined Coles Supermarket in Australia from 2009 to 2011 and subsequently worked as Trading Director for TalkTalk s phone, broadband, TV and mobile business from 2012 to Ms. Maxwell holds a BSC (Hons) degree in Applied Consumer Sciences from Northumbria University. Zoe Bowley has been a member of senior management since 2011, prior to which she acted as PizzaExpress London Regional Director. She started her career in 1994 at Allied Domecq as Graduate Trainee/Area Manager. In 1998, Ms. Bowley then joined Whitbread, where she held various positions, including Operations Director of Café Rouge, Operations Director of David Lloyd Leisure and Human Resources Director of the restaurants division from 1998 to In 2009, Ms. Bowley joined Weightwatchers as the Vice-President of Operations, UK from 2009 to Ms. Bowley holds a BA Honors Degree in Business Studies from Oxford Brookes University. Mark Jones has been a member of senior management since 2012, prior to which he acted as Group Acquisition Manager and Group Property Manager for 6 years. He started his career in 1988 at London Shop Plc as Graduate property manager. Mr. Jones worked as Acquisition Surveyor for the Early Learning Centre from 1990 to 1998, Head of Retail Real Estate for Nike Netherlands from 1998 to 2002 and Portfolio Management and Cash Generation for Somerfield Supermarkets from 2002 to Mr. Jones holds a Bachelor of Sciences (Hons) in Urban Land Economics from Sheffield Hallam University and is a Chartered Surveyor. Senior Management Compensation As at the Issue Date, the members of senior management receive a remuneration that consists of the following main components: a fixed annual base salary, which is paid in monthly installments; a discretionary bonus based on milestones set for each year; an employer contribution to a group personal pension scheme; share based payments; and a company car allowance. The table below illustrates the aggregate senior management compensation by category for Financial Year 2014: Aggregate Compensation category Amount ( ) Base salaries ,458 Discretionary bonuses ,178 Employer pension contributions... 76,637 Other payments... 28,529 Total... 1,768,803 A parent company also maintains a directors and officers insurance policy for the members of senior management. Senior Management Employment Contracts As at the Issue Date, all members of senior management have permanent service contracts, which can be terminated by either of PizzaExpress (Restaurants) Limited or PizzaExpress Limited (depending on the applicable senior manager), or the senior manager, with a six month notice. In addition, the contracts include a standard commitment not to compete during their employment as well as a 12-month post contractual restrictive covenant. Senior Management Practices We are committed to fulfilling corporate governance requirements. We maintain internal guidelines (e.g., purchasing directives) and a code of conduct which is to be countersigned and adhered to by our managers. 88

108 Equity Incentive Program An equity incentive program for senior employees has been put in place through the issue and allotment of shares in the direct parent company of PEGHL. Where such employees are eligible, the share issues have been structured so as to give the employees, when elected, Employee Shareholder status in accordance with s.205a of the Employee Rights Act Remuneration and Nomination Committee The Remuneration and Nomination Committee is comprised of three Directors of PEGHL, one of whom is the Chief Executive Officer of the Group (save that the Chief Financial Officer of the Group replaces the Chief Executive Officer when the Chief Executive Officer s remuneration package or other terms of employment are being considered). The Remuneration and Nomination Committee is responsible for determining the emoluments from time to time of the Group s employees and directors. It determines the allocation of shares pursuant to the employee share program and linked employee share scheme. It is also responsible for nominating candidates for office within the Group. Audit Committee The Audit Committee is comprised of three Directors of PEGHL, one of whom is the Chief Financial Officer of the Group. It is responsible for review of the Group s annual financial statements before submission to the PEGHL board of directors for approval, and it reviews reports from management and the Group s auditors on accounting and internal control matters. 89

109 PRINCIPAL SHAREHOLDERS The Parent owns 100% of the ordinary shares of the Issuer. PEGHL in turn owns 100% of the ordinary shares of the Parent. Hony Capital, through certain affiliates, is the indirect controlling shareholder of the Parent and the Issuer, with an indirect majority ownership interest in a parent company of PEGHL. There are two other significant shareholders, Jinjiang Capital and Bank of China Group Investment Limited, which each indirectly hold, through affiliates, minority ownership interests in such parent company of PEGHL. Certain members of our management, through affiliates, also hold indirect minority ownership interests in such parent company through an equity incentive program. Controlling principal shareholder Hony Capital, founded in 2003 and sponsored by Legend Holdings Corporation, is a leading China-focused private equity firm with approximately $7.0 billion of assets under management. Hony Capital primarily focuses on investments in the consumer, retail, industrial, healthcare and modern services sectors (including financial, media and technology/online related services). 90

110 Sponsor Agreement CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS After the consummation of the Hony Acquisition, we entered into a monitoring fee arrangement with an affiliate of Hony Capital. Other As of the date of this Listing Particulars, there is a loan outstanding on the amount of 825,000 to our Chief Executive Officer. See also note 15 to our Interim Financial Information and note 21 to our audited financial information for Financial Year 2014 for further information related to other related party transactions. 91

111 DESCRIPTION OF CERTAIN FINANCING ARRANGEMENTS The following is a summary of the material terms of our principal financing arrangements after giving effect to the Transactions. The following summaries do not purport to describe all of the applicable terms and conditions of such arrangements and are qualified in their entirety by reference to the actual agreements. We recommend you refer to the actual agreements for further details, copies of which are available upon request. Existing Senior Notes Overview and Structure On July 31, 2014, the Parent issued 200 million in aggregate principal amount of the 8.625% Senior Notes due 2022 (the Existing Senior Notes ) under the Existing Senior Notes Indenture, which remain outstanding as of the date of this Listing Particulars. The Existing Senior Notes mature on August 1, The proceeds from the issuance and sale of the Existing Senior Notes were used in connection with the Hony Acquisition. The Existing Senior Notes are subject to the provisions of the Intercreditor Agreement. Interest Rate The Existing Senior Notes accrue interest at 8.625% per annum. Interest on the Existing Senior Notes is payable in cash semi-annually in arrears on each February 1 and August 1, commencing February 1, Interest on the Existing Senior Notes accrued from July 31, Prepayments and Redemptions At any time prior to August 1, 2018, the Parent is entitled at its option to redeem all or a portion of the Existing Senior Notes at a redemption price equal to 100% of the principal amount of the Existing Senior Notes, plus a make- whole premium as of, and accrued and unpaid interest and additional amounts to, if any, the redemption date. At any time on or after August 1, 2018, the Parent is entitled at its option to redeem all or a portion of the Existing Senior Notes, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest to the redemption date: Twelve month period commencing August 1 in Percentage % % 2020 and thereafter % At any time prior to August 1, 2018, the Parent is entitled at its option, on one or more occasions, to redeem the Existing Senior Notes in an aggregate principal amount not to exceed 40% of the original aggregate principal amount of the Existing Senior Notes (including any Additional Notes) with the net cash proceeds from certain equity offerings at a redemption price equal to % of the principal amount outstanding in respect of the Existing Senior Notes, plus accrued and unpaid interest and additional amounts, if any, to the date of redemption, so long as at least 60% of the original aggregate principal amount of the Existing Senior Notes (including the principal amount of any Additional Notes) remain outstanding immediately after each such redemption and each such redemption occurs no later than 180 days after the date of closing of the relevant equity offering. In the event of certain developments affecting taxation or in certain other circumstances, the Parent may redeem the Existing Senior Notes in whole, but not in part, at any time, at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, and additional amounts, if any, to the date of redemption. Upon the occurrence of certain events constituting a change of control, the Parent may be required to offer to repurchase the Existing Senior Notes at a purchase price in cash equal to 101% of their aggregate principal amount, plus accrued and unpaid interest and additional amounts, if any, to the date of purchase. Guarantees The Parent s obligations as Parent Guarantor under the Existing Senior Notes are guaranteed on a senior subordinated basis (collectively, the Existing Senior Note Guarantees ) by the Issuer and by the Subsidiary Guarantors, excepting PizzaExpress International Holdings Limited, which will guarantee the Existing Senior Notes on or about the Issue Date. 92

112 Security The Existing Senior Notes and the Existing Senior Note Guarantees are secured on a second ranking basis, subject to the operation of the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens, by security interests granted over the shares of the Issuer and the Parent s rights under the Existing Senior Notes Proceeds Loan, (collectively, the Existing Senior Notes Collateral ). The Intercreditor Agreement provides that lenders under the Revolving Credit Facility, certain other indebtedness permitted to be secured by the Existing Senior Notes Collateral, counterparties to certain hedging obligations and holders of the Existing Senior Secured Notes, respectively, will receive the proceeds from the enforcement of the Existing Senior Notes Collateral in priority to holders of the Existing Senior Notes. Certain Covenants and Events of Default The Existing Senior Notes Indenture contains a number of covenants which, among other things, restrict, subject to certain exceptions our ability to: incur or guarantee additional indebtedness and issue certain preferred stock; pay dividends or make other distributions or purchase or redeem our stock; make investments or other restricted payments; transfer or sell assets; engage in certain transactions with affiliates; create liens on assets to secure indebtedness; impair the security interests for the benefit of the holders of the Existing Senior Notes; and merge or consolidate with other entities. Each of these covenants is subject to significant exceptions and qualifications. In addition, the Existing Senior Notes Indenture imposes certain requirements as to future subsidiary guarantors. The Existing Senior Notes Indenture also contains certain customary events of default. Governing Law The Existing Senior Notes and the Existing Senior Notes Indenture are governed by New York law. Revolving Credit Facility Overview and Structure On July 31, 2014, PizzaExpress Financing 1 plc (formerly Twinkle Pizza Holdings plc) as the parent (the Parent ), PizzaExpress Financing 2 plc as the company (the Issuer ) and PizzaExpress Group Limited (formerly Twinkle Pizza Holding Co Limited) ( PEGL ) entered into a 20 million super senior revolving credit facility agreement (the Revolving Credit Facility Agreement ) with, among others, Deutsche Bank AG, London Branch, as agent (the RCF Facility Agent ) and security agent (the Security Agent ), and Deutsche Bank AG, London Branch, Goldman Sachs Bank USA, J.P. Morgan Limited and Bank of China Limited, London Branch, as arrangers. The Revolving Credit Facility Agreement may be utilized by any current or future borrower under the Revolving Credit Facility Agreement in euros, U.S. dollars, pound sterling, Hong Kong dollars or any other readily available and agreed currency by the drawing of cash advances or the issue of letters of credit or ancillary (including fronted ancillary) facilities. The Revolving Credit Facility Agreement may be used for financing or refinancing our working capital requirements and/or for general corporate purposes. In addition, the Parent may elect to request additional facilities either as a new facility or as additional tranches of the Revolving Credit Facility Agreement (the Additional Facility Commitments ). The Parent and the lenders in respect of the Additional Facility Commitments may agree to certain terms in relation to the Additional Facility 93

113 Commitments, including the margin, the termination date (each subject to parameters as set out in the Revolving Credit Facility Agreement) and the availability period thereof. The Revolving Credit Facility may be utilized from and including the date of the Revolving Credit Facility Agreement until the date falling one month prior to the termination date of the Revolving Credit Facility (which is the date falling 72 months after the date of the Revolving Credit Facility Agreement). Interest and Fees The original borrowers under the Revolving Credit Facility Agreement are the Issuer, the Parent and PEGL. Loans under the Revolving Credit Facility initially bear interest at rates per annum equal to LIBOR or, for loans under the Revolving Credit Facility denominated in euro or Hong Kong dollars, EURIBOR or HIBOR (as the case may be), plus a margin of 3.75% per annum. Beginning on August 18, 2015, the margin for each loan under the Revolving Credit Facility will be subject to reduction if certain leverage ratios are met. The margin on any loans under an Additional Facility Commitment will be agreed between the Parent and the relevant lenders. A commitment fee is payable on the aggregate undrawn and uncancelled amount of the Revolving Credit Facility Agreement from August 18, 2014 to the end of the availability period for the Revolving Credit Facility at a rate of 35% of the then applicable margin for the Revolving Credit Facility. Generally, the commitment fee is payable (in each case within 5 business days) quarterly in arrears, on the last day of availability of the Revolving Credit Facility and, if cancelled, on the cancelled amount of the relevant lender s commitment under the Revolving Credit Facility at the time such cancellation is effective. Default interest is calculated as an additional 1% per annum on the overdue amount. The Parent is also required to pay (or procure the payment of) customary agency fees to the RCF Facility Agent and the Security Agent in connection with the Revolving Credit Facility. Repayments Loans under the Revolving Credit Facility must be repaid on the last day of the interest period relating thereto, subject to a netting mechanism against new loans under the Revolving Credit Facility to be drawn on such date. All outstanding amounts under the Revolving Credit Facility Agreement are required to be repaid on the termination date (see Overview and Structure above). The termination date in respect of an Additional Facility Commitment will be the date agreed between the Parent and the relevant lenders, provided that it cannot be earlier than that of the Revolving Credit Facility. Prepayment The Revolving Credit Facility Agreement allows for voluntary prepayments (subject to a minimum amount). The Revolving Credit Facility Agreement also permits each lender to require the mandatory prepayment of all amounts due to that lender upon a change of control (which comprises, generally, the scenarios set out under the definition of Change of Control under the caption Description of the Notes Certain Definitions, the sale of all or substantially all of the assets of the Restricted Group and a full refinancing of the Existing Senior Notes and the Senior Secured Notes). Guarantees The Revolving Credit Facility has been guaranteed, as of its date of execution, by the Parent, the Issuer and PEGL and, as of November 14, 2014, by all other Subsidiary Guarantors excepting PizzaExpress International Holdings Limited, which will guarantee the Existing Senior Notes on or about the Issue Date. The guarantees of the Revolving Credit Facility are contained in the Revolving Credit Facility Agreement. The Revolving Credit Facility Agreement requires that (subject to the Agreed Security Principles) each member of the Restricted Group that is or becomes a material company (which is generally defined under the Revolving Credit Facility Agreement to include, among other things, any member of the Restricted Group that has earnings before interest, tax, depreciation and amortization representing more than 5% of consolidated EBITDA of the Restricted Group or total assets representing more than 5% of the total assets of the Restricted Group) following August 18, 2014 will be required to become a guarantor under the Revolving Credit Facility Agreement within 90 days of the date of delivery of the 94

114 annual financial statements of the Parent for the relevant fiscal year demonstrating that such subsidiary is a material company (commencing with the first complete financial year after August 18, 2014). Furthermore, the Parent shall ensure that on the date of the delivery of the annual financial statements of the Parent, the guarantors of the Revolving Credit Facility represent not less than 80% of the consolidated EBITDA of the Restricted Group and not less than 80% of the total assets of the Restricted Group (subject to certain exceptions), and shall ensure that within 90 days of such date (commencing with the first complete financial year after August 18, 2014), such other members of the Restricted Group (subject to Agreed Security Principles) become additional guarantors of the Revolving Credit Facility until the requirement is satisfied (to be calculated as if such additional guarantors had been guarantors of the Revolving Credit Facility on such dates). Security The Revolving Credit Facility Agreement is secured by security interests granted on a first priority basis over (1) as of August 18, 2014, substantially all of the assets of the Parent, the Issuer and PEGL and (2) as of November 14, 2014, substantially all of the assets of the guarantors of the Revolving Credit Facility, in each case subject to the Agreed Security Principles. Representations and Warranties The Revolving Credit Facility Agreement contains certain customary representations and warranties (subject to certain exceptions and qualifications and with certain representations and warranties being repeated), including status and incorporation, binding obligations, non-conflict with other obligations, power and authority, authorizations and no default. Covenants The Revolving Credit Facility Agreement contains certain of the incurrence covenants and related definitions (with certain adjustments) that are included in the section entitled Description of the Notes Certain Covenants. In addition, the Revolving Credit Facility Agreement contains a financial covenant (see Financial Covenant below). The Revolving Credit Facility Agreement also contains a notes purchase condition covenant. Subject to certain exceptions set out in the Revolving Credit Facility Agreement, the Parent may not, and shall procure that no other member of the Restricted Group will, repay, prepay, purchase, defease, redeem or otherwise acquire or retire the principal amount of the Senior Secured Notes (or, in each case, any replacement or refinancing thereof as permitted under the Revolving Credit Facility Agreement from time to time but, for the avoidance of doubt, excluding any amount outstanding under any finance document entered into in respect of the Revolving Credit Facility) prior to its scheduled repayment date in any manner which involves the payment of cash consideration by a member of the Restricted Group to a person which is not a member of the Restricted Group. The exceptions to such covenant include, inter alia, generally, payments that do not exceed 50% of the aggregate principal amount of the Senior Secured Notes in existence. The Revolving Credit Facility Agreement also contains a similar notes purchase condition covenant in respect of the Existing Senior Notes. The Revolving Credit Facility Agreement also requires certain members of the Restricted Group to observe certain affirmative covenants, including covenants relating to maintenance of guarantor and security coverage (see Guarantees above) and further assurance with respect to security interests granted. Certain of the covenants under the Revolving Credit Facility Agreement will be suspended, generally, upon (i) a public equity offering of any member of the Restricted Group or any holding company of the Parent and an achievement of a consolidated net leverage ratio for the Restricted Group equal to or less than 3.50:1 (pro forma for any prepayment of certain indebtedness from the proceeds of such public equity offering) or (ii) an achievement by the Issuer (or, if given such a rating, any affiliate of the Issuer) or the Senior Secured Notes of a long-term credit rating equal to or better than Baa3 or BBB (as applicable) according to Moody s Investor Services, Inc. or Standard & Poor s Investors Ratings Services, respectively. The Revolving Credit Facility Agreement also contains an information covenant under which, among other things and in the first instance, the Parent is required to deliver to the RCF Facility Agent annual financial statements, quarterly financial statements and compliance certificates. Note, however, that the delivery of accounts/financial statements as set out under the caption Description of the Notes Certain Covenants Reports will satisfy the information covenant. 95

115 Financial Covenant The Revolving Credit Facility Agreement requires the Parent to comply with a consolidated net leverage covenant. The consolidated net leverage covenant will be tested quarterly on a rolling basis, subject to (i) the first test date falling at least 12 months after the date of execution of the Revolving Credit Facility Agreement; and (ii) the Revolving Credit Facility being at least 25% drawn on the relevant test date by way of cash advance. The consolidated net leverage covenant only acts as a drawstop to new drawings under the Revolving Credit Facility and, if breached, will not trigger a default or event of default under the Revolving Credit Facility Agreement. The Parent is permitted to prevent or cure breaches of the consolidated net leverage covenant by applying a cure amount (generally, amounts received by the Group in cash pursuant to any new equity or permitted subordinated debt) as if consolidated net indebtedness had been reduced by such amount. The cure amount shall be applied in prepayment of the Revolving Credit Facility but will remain available for any redrawing. No more than four different cure amounts may be taken into account prior to the termination date of the Revolving Credit Facility Agreement and cure amounts in consecutive financial quarters are not permitted. Events of Default The Revolving Credit Facility Agreement contains events of default, with certain adjustments, as those applicable to the Notes as set forth in the section entitled Description of the Notes Events of Default. In addition, the Revolving Credit Facility Agreement contains the following events of default: Governing Law inaccuracy of a representation or statement when made; and unlawfulness, invalidity, rescission and repudiation, or unenforceability of the finance documents entered into in connection with the Revolving Credit Facility Agreement. Subject to certain exceptions including in relation to certain information undertakings, incurrence covenants, events of default and definitions relating to the Notes, which shall be governed by the law of the State of New York, the Revolving Credit Facility Agreement is governed by English law. Intercreditor Agreement General To establish the relative rights of certain of our creditors under our financing arrangements, the Parent, the Issuer, PEGL and any other entity that has acceded to or otherwise becomes a party to or which accedes or otherwise becomes a party to the Intercreditor Agreement as a debtor (together the Debtors ) are or will be parties to the Intercreditor Agreement with, among others, the Security Agent, the lenders under our Revolving Credit Facility Agreement and the RCF Facility Agent. Each of the Trustee and the Existing Senior Notes Trustee, respectively, acceded to the Intercreditor Agreement on or prior to August 18, The Intercreditor Agreement is governed by English law and sets out, among other things, the relative ranking of certain indebtedness of the Debtors, the relative ranking of certain security granted by the Debtors, when payments can be made in respect of certain debt of the Debtors, when enforcement action can be taken in respect of that indebtedness, the terms pursuant to which certain of that indebtedness will be subordinated upon the occurrence of certain insolvency events and turnover provisions. Capitalized terms set forth and used in this summary of the Intercreditor Agreement may have different meanings from that given to such terms and used elsewhere in this Listing Particulars. Definitions The following capitalized terms used in this summary of the Intercreditor Agreement have the meaning given to them below: Agent means each of the RCF Facility Agent, any Senior Secured Notes Trustee, any Senior Notes Trustee, any Super Senior Creditor Representative, any Senior Creditor Representative, any Subordinated Creditor Representative and the Security Agent, as the context requires. Agent Liabilities means all present and future liabilities and obligations, whether actual or contingent, of the Parent and/or any Debtor to any Agent under the debt documents. 96

116 Creditors means on and from the Senior Notes Issue Date, the Senior Creditors, the Subordinated Creditors, the intra-group lenders and the investors. Debt Financing Agreement means each of the Revolving Credit Facility Agreement, the Senior Secured Notes Indenture, the Senior Notes Indenture, any Permitted Super Senior Financing Agreement, Permitted Senior Financing Agreement and any Permitted Parent Financing Agreement. Debtor means each original debtor and any person which becomes a party to the Interecreditor Agreement as a debtor in accordance with the terms of the Intercreditor Agreement, Group has the meaning given to the term Group in the Revolving Credit Facility Agreement. Hedge Counterparty means any person which is or becomes a party to the Intercreditor Agreement as a Hedge Counterparty, provided that such person has not ceased to be a Hedge Counterparty. Hedging Agreement means, at the election of the Parent, any agreement entered into or to be entered into by a Debtor (or any member of the Group that is to become a Debtor) and a Hedge Counterparty in relation to a derivative or hedging arrangement entered into (or which has or will be allocated) to satisfy any minimum hedging requirements under any of the Debt Financing Agreements and/or for any purpose not prohibited by the terms of the Debt Financing Agreements at the time the relevant agreement is entered into. Hedging Liabilities means the liabilities owed by any Debtor to the Hedge Counterparties under or in connection with any Hedging Agreements (excluding certain swap obligations of such Debtor). Majority Permitted Parent Financing Creditors means, in relation to any Permitted Parent Financing Debt, the requisite number or percentage of Permitted Parent Financing Creditors under the Permitted Parent Financing Agreement on whose instructions the Subordinated Creditor Representative is required to act in relation to the relevant matter. Majority Permitted Senior Financing Creditors means, in relation to any Permitted Senior Financing Debt, the requisite number or percentage of Permitted Senior Financing Creditors under the Permitted Senior Financing Agreement on whose instructions the Senior Creditor Representative is required to act in relation to the relevant matter. Majority Permitted Super Senior Financing Creditors means, in relation to any Permitted Super Senior Financing Debt, the requisite number or percentage of Permitted Super Senior Financing Creditors under the Permitted Super Senior Financing Agreement on whose instructions the Super Senior Creditor Representative is required to act in relation to the relevant matter. Majority Senior Lenders has the meaning given to the term Majority Lenders in the Revolving Credit Facility Agreement. Majority Senior Secured Creditors means, at any time, those Senior Secured Creditors whose Senior Secured Credit Participations at that time aggregate more than 50 per cent. of the total Senior Secured Credit Participations at that time. Majority Subordinated Creditors means, at any time, those Subordinated Creditors whose Subordinated Credit Participations at that time aggregate to more than 50 per cent. of the total aggregate amount of all Subordinated Credit Participations at that time. Majority Super Senior Creditors means, at any time, those Super Senior Creditors whose Super Senior Credit Participations at that time aggregate more than 66 2 / 3 per cent. of the total Super Senior Credit Participations at that time. Payment means, in respect of any liabilities or obligations, a payment, prepayment, repayment, redemption, defeasance or discharge of those liabilities or obligations. Permitted Parent Financing Agent Liabilities means the Agent Liabilities owed by the Debtors to the relevant Subordinated Creditor Representative under or in connection with the Permitted Parent Financing Documents. Permitted Parent Financing Agreement means, in relation to any Permitted Parent Financing Debt, the facility agreement, indenture or other equivalent document by which that Permitted Parent Financing Debt is made available or, as the case may be, issued. 97

117 Permitted Parent Financing Creditors means, in relation to any Permitted Parent Financing Debt, each of the lenders, holders or other creditors in respect of that Permitted Parent Financing Debt from time to time (including the applicable Subordinated Creditor Representative). Permitted Parent Financing Debt means any indebtedness incurred by any member of the Group which is notified to the Security Agent by the Senior Notes Issuer in writing as indebtedness to be treated as Permitted Parent Financing Debt for the purposes of the Intercreditor Agreement (provided that incurrence of such indebtedness is not prohibited by the terms of the Secured Debt Documents and (i) (in the case of indebtedness under a loan or credit or debt facility) the providers of such indebtedness have agreed to become a party to the Intercreditor Agreement as a Subordinated Creditor and (ii) (in all cases), the agent, trustee or other relevant representative in respect of that Permitted Parent Financing Debt has agreed to become a party to the Intercreditor Agreement as a Subordinated Creditor and Subordinated Creditor Representative). Permitted Parent Financing Documents means, in relation to any Permitted Parent Financing Debt, the Permitted Parent Financing Agreement, any fee letter entered into under or in connection with the Permitted Parent Financing Agreement and any other document or instrument relating to that Permitted Parent Financing Debt and designated as such by the Senior Notes Issuer and the Subordinated Creditor Representative in respect of that Permitted Parent Financing Debt. Permitted Parent Financing Liabilities means all liabilities of any Debtor to any Permitted Parent Financing Creditors under or in connection with the Permitted Parent Financing Documents. Permitted Senior Financing Agent Liabilities means the Agent Liabilities owed by the Debtors to the relevant Senior Creditor Representative under or in connection with the Permitted Senior Financing Documents. Permitted Senior Financing Agreement means, in relation to any Permitted Senior Financing Debt, the facility agreement, indenture or other equivalent document by which that Permitted Senior Financing Debt is made available or, as the case may be, issued. Permitted Senior Financing Creditors means, in relation to any Permitted Senior Financing Debt, each of the lenders, holders or other creditors in respect of that Permitted Senior Financing Debt from time to time (including the applicable Senior Creditor Representative). Permitted Senior Financing Debt means any indebtedness incurred by any member of the Group which is notified to the Security Agent by the Senior Notes Issuer in writing as indebtedness to be treated as Permitted Senior Financing Debt for the purposes of the Intercreditor Agreement (provided that incurrence of such indebtedness is not prohibited by the terms of the Secured Debt Documents and (i) (in the case of indebtedness under a loan or credit or debt facility) the providers of such indebtedness have agreed to become a party to the Intercreditor Agreement as a Senior Secured Creditor on behalf of the providers of such indebtedness and (ii) (in all cases) the agent, trustee or other relevant representative in respect of that Permitted Senior Financing Debt has agreed to become a party to the Intercreditor Agreement as a Senior Secured Creditor and Senior Creditor Representative). Permitted Senior Financing Documents means, in relation to any Permitted Senior Financing Debt, the Permitted Senior Financing Agreement, any fee letter entered into under or in connection with the Permitted Senior Financing Agreement and any other document or instrument relating to that Permitted Senior Financing Debt and designated as such by the Senior Notes Issuer and the Senior Creditor Representative in respect of that Permitted Senior Financing Debt. Permitted Senior Financing Liabilities means all liabilities of any Debtor to any Permitted Senior Financing Creditors under or in connection with the Permitted Senior Financing Documents. 98

118 Permitted Subordinated Payments means the Payments of Subordinated Liabilities permitted under the terms of the Intercreditor Agreement, as further described in the section Restrictions Relating to Subordinated Creditors and Subordinated Liabilities Permitted Subordinated Payments. Permitted Super Senior Financing Agent Liabilities means the Agent Liabilities owed by the Debtors to the relevant Super Senior Creditor Representative under or in connection with the Permitted Super Senior Financing Documents. Permitted Super Senior Financing Agreement means, in relation to any Permitted Super Senior Financing Debt, the facility agreement, indenture or other equivalent document by which that Permitted Super Senior Financing Debt is made available or, as the case may be, issued. Permitted Super Senior Financing Creditors means, in relation to any Permitted Super Senior Financing Debt, each of the lenders, holders or other creditors in respect of that Permitted Super Senior Financing Debt from time to time (including the applicable Super Senior Creditor Representative). Permitted Super Senior Financing Debt means any indebtedness incurred by any member of the Group which is notified to the Security Agent by the Senior Notes Issuer in writing as indebtedness to be treated as Permitted Super Senior Financing Debt for the purposes of the Intercreditor Agreement (provided that incurrence of such indebtedness is not prohibited by the terms of the Secured Debt Documents and either (i) the providers of such indebtedness have agreed to become a party to the Intercreditor Agreement as a Super Senior Creditor, or (ii) the agent, trustee or other relevant representative in respect of that Permitted Super Senior Financing Debt has agreed to become a party to the Intercreditor Agreement as a Super Senior Creditor and Super Senior Creditor Representative). Permitted Super Senior Financing Documents means, in relation to any Permitted Super Senior Financing Debt, the Permitted Super Senior Financing Agreement, any fee letter entered into under or in connection with the Permitted Super Senior Financing Agreement and any other document or instrument relating to that Permitted Super Senior Financing Debt and designated as such by the Senior Notes Issuer and the Super Senior Creditor Representative in respect of that Permitted Super Senior Financing Debt. Permitted Super Senior Financing Liabilities means all liabilities of any Debtor to any Permitted Super Senior Financing Creditors under or in connection with the Permitted Super Senior Financing Documents. Primary Creditors means the Senior Creditors and the Subordinated Creditors. Qualifying Instructions mean, in relation to any enforcement or other action contemplated by the Intercreditor Agreement in connection with any enforcement, instructions which comply with certain security enforcement principles, as set out in the Intercreditor Agreement. RCF Finance Documents has the meaning given to the term Finance Document in the Revolving Credit Facility Agreement. Secured Debt Documents means the RCF Finance Documents, the Senior Secured Notes Finance Documents, the Permitted Super Senior Financing Documents, the Permitted Senior Financing Documents, the Hedging Agreements, the Senior Notes Finance Documents and/or the Permitted Parent Financing Documents, as the context requires. Secured Party means, to the extent legally possible, the Security Agent, any receiver or delegate and each of the Agents, arrangers, the Senior Creditors and the Subordinated Creditors from time to time but, to the extent required by the Intercreditor Agreement, only if each such party is or has become a party to the Intercreditor Agreement. Senior Agent Liabilities means the Agent Liabilities owed by the Debtors to the Senior Facility Agent under or in connection with the RCF Finance Documents. Senior Creditor Representative means, in relation to any Permitted Senior Financing Debt, the agent, trustee or other relevant representative in respect of that Permitted Senior Financing Debt. Senior Creditors means the Super Senior Creditors and the Senior Secured Creditors. Senior Debt Documents means the RCF Finance Documents, the Permitted Super Senior Financing Documents, the Senior Secured Notes Finance Documents and/or the Permitted Senior Financing Documents, as the context requires. 99

119 Senior Discharge Date means the first date on which all of the Senior Lender Liabilities, the Senior Secured Notes Liabilities, the Permitted Super Senior Financing Liabilities, the Permitted Senior Financing Liabilities and the Hedging Liabilities have been fully and finally discharged. Senior Facility has the meaning given to the term Facility in the Revolving Credit Facility Agreement. Senior Financing Agreement means the Revolving Credit Facility Agreement, any Senior Secured Notes Indenture, any Permitted Super Senior Financing Agreement and/or any Permitted Senior Financing Agreement, as the context requires. Senior Lender Liabilities means the liabilities owed by the Debtors to the Senior Lenders under the RCF Finance Documents. Senior Lenders means each lender under and as defined in the Revolving Credit Facility Agreement, together with each issuing bank, ancillary lender, fronted ancillary lender and fronting ancillary lender under and as defined in the RCF Finance Documents. Senior Liabilities Transfer means a transfer of the Senior Lender Liabilities, the Senior Secured Notes Liabilities, any Permitted Super Senior Financing Liabilities and any Permitted Senior Financing Liabilities to all or any of the Subordinated Creditors as provided for in the Intercreditor Agreement and as further set out in the section Option to Purchase: Subordinated Creditors. Senior Noteholders means the registered holders from time to time of the applicable Senior Notes, as determined in accordance with the relevant Senior Notes Indenture(s). Senior Notes Creditors means on and from the Senior Notes Issue Date, the Senior Noteholders and each Senior Notes Trustee. Senior Notes Finance Documents means the Senior Notes, each Senior Notes Indenture, the Subordinated Guarantees in respect of the Senior Notes, the Intercreditor Agreement, the security documents (if and to the extent expressed to secure the Senior Notes Liabilities) and any other document entered into in connection with the Senior Notes and designated a Senior Notes Finance Document by the Senior Notes Issuer and the applicable Senior Notes Trustee (which, for the avoidance of doubt, excludes any document to the extent it sets out rights of the initial purchasers of the Senior Notes (in their capacities as initial purchasers) against any member of the Group). Senior Notes Finance Parties means any Senior Notes Trustee (on behalf of itself and the Senior Noteholders which it represents), any Senior Noteholder and the Security Agent. Senior Notes Indenture means each indenture pursuant to which any Senior Notes are issued. Senior Notes Issue Date means, in respect of each Senior Notes Indenture, the first date on which a Senior Note is issued pursuant to that Senior Notes Indenture. Senior Notes Liabilities means on and from the first Senior Notes Issue Date, liabilities owed by the Debtors to the Senior Notes Finance Parties under the Senior Notes Finance Documents (excluding any Senior Notes Trustee Amounts). Senior Notes Trustee means any entity acting as trustee under any issue of Senior Notes (to the extent it has acceded to the Intercreditor Agreement in such capacity), in each case as the context requires. Senior Notes Trustee Amounts means, in relation to a Senior Notes Trustee (a) amounts in respect of costs and expenses, (b) any provisions (including indemnity provisions) for costs and expenses; (c) all compensation for services provided and (d) all out-of-pocket costs and expenses properly incurred in carrying out its duties or performing any service pursuant to the terms of the Senior Notes Finance Documents payable to that Senior Notes Trustee (or any adviser, receiver, delegate, attorney, agent or appointee thereof) under the Senior Notes Finance Documents. Senior Secured Credit Participation means (a) in relation to a Senior Secured Notes Creditor, the principal amount of outstanding Senior Secured Notes Liabilities held by that Senior Secured Notes Creditor, (b) in relation to a non-priority Hedge Counterparty, amounts which are or would be payable to it under any Hedging Agreements (subject to the conditions outlined in the Intercreditor Agreement) and (c) in relation to a Permitted Senior Financing Creditor, the aggregate amount of its commitments under each Permitted Senior Financing Agreement (drawn or undrawn and calculated in a manner consistent with the senior commitments) and/or the principal amount of outstanding Permitted Senior Financing Debt held by that Permitted Senior Financing Creditor. 100

120 Senior Secured Creditors means the Senior Secured Notes Creditors, the non-priority Hedge Counterparties and/or the Permitted Senior Financing Creditors, as the context requires. Senior Secured Noteholders means the registered holders from time to time of the applicable Senior Secured Notes, as determined in accordance with the relevant Senior Secured Notes Indenture(s). Senior Secured Notes Creditors means the Senior Secured Noteholders and each Senior Secured Notes Trustee. Senior Secured Notes Finance Documents means the Senior Secured Notes, each Senior Secured Notes Indenture, each guarantee granted by a member of the Group in respect of the Senior Secured Notes, the Intercreditor Agreement, the security documents and any other document entered into in connection with the Senior Secured Notes and designated a Senior Secured Notes Finance Document by the Senior Notes Issuer and the applicable Senior Secured Notes Trustee (which, for the avoidance of doubt, excludes any document to the extent it sets out rights of the initial purchasers of the Senior Secured Notes (in their capacities as initial purchasers) against any member of the Group). Senior Secured Notes Finance Parties means any Senior Secured Notes Trustee (on behalf of itself and the Senior Secured Noteholders which it represents), any Senior Secured Noteholder and the Security Agent. Senior Secured Notes Indenture means each indenture pursuant to which any Senior Secured Notes are issued. Senior Secured Notes Liabilities means liabilities owed by the Debtors to the Senior Secured Notes Finance Parties under the Senior Secured Notes Finance Documents (excluding any Senior Secured Notes Trustee Amounts). Senior Secured Notes/Permitted Financing Credit Participations means the aggregate of all the Senior Secured Credit Participations at any time of the Senior Secured Notes Creditors and the Permitted Senior Financing Creditors. Senior Secured Notes Trustee means any entity acting as trustee under any issue of Senior Secured Notes (to the extent it has acceded to the Intercreditor Agreement). Senior Secured Notes Trustee Amounts means, in relation to a Senior Secured Notes Trustee (a) amounts in respect of costs and expenses, (b) any provisions (including indemnity provisions) for costs and expenses; (c) all compensation for services provided and (d) all out-of- pocket costs and expenses properly incurred in carrying out its duties or performing any service pursuant to the terms of the Senior Secured Notes Finance Documents payable to that Senior Secured Notes Trustee (or any adviser, receiver, delegate, attorney, agent or appointee thereof) under the Senior Secured Notes Finance Documents. Senior Secured Parties means the Secured Parties other than the Subordinated Finance Parties. Subordinated Credit Participation means (a) in relation to a Senior Notes Creditor, the principal amount of outstanding Senior Notes Liabilities held by that Senior Noteholder and (b) in relation to a Permitted Parent Financing Creditor, the aggregate amount of its commitments under each Permitted Parent Financing Agreement and/or the principal amount of outstanding Permitted Parent Financing Debt held by that Permitted Parent Financing Creditor (as applicable and without double counting). Subordinated Creditor Representative means, in relation to any Permitted Parent Financing Debt, the agent, trustee or other relevant representative in respect of that Permitted Parent Financing Debt. Subordinated Creditors means the Senior Notes Creditors and any Permitted Parent Financing Creditors. Subordinated Debt Issuer means, in relation to any Senior Notes or Permitted Parent Financing Debt, the member of the Group which is the issuer or, as the case may be, the borrower of those Senior Notes or that Permitted Parent Financing Debt, subject to certain exceptions specified in the Intercreditor Agreement. Subordinated Discharge Date means the first date on which all of the Senior Notes Liabilities and the Permitted Parent Financing Liabilities have been fully and finally discharged. Subordinated Finance Documents means the Senior Notes Finance Documents and the Permitted Parent Financing Documents. Subordinated Finance Parties means the Senior Notes Finance Parties and the Permitted Parent Financing Creditors. 101

121 Subordinated Guarantee means each guarantee by a member of the Group of any obligations of a member of the Group under the Subordinated Finance Documents which is expressly subject to the provisions of the Intercreditor Agreement. Subordinated Liabilities means the Senior Notes Liabilities and any Permitted Parent Financing Liabilities. Super Senior Credit Participations means (a) in relation to a Super Senior Creditor, its aggregate senior commitments (whether drawn or undrawn), (b) in relation to a priority Hedge Counterparty, amounts which are or would be payable to it under any Hedging Agreements (subject to the conditions outlined in the Intercreditor Agreement) and (c) in relation to a Permitted Super Senior Financing Creditor, the aggregate amount of its commitments under each Permitted Super Senior Financing Agreement and/or the principal amount of outstanding Permitted Super Senior Financing Debt held by that Permitted Super Senior Financing Creditor. Super Senior Creditors means the Senior Lenders, the arrangers under the Revolving Credit Facility Agreement, the RCF Facility Agent, the Permitted Super Senior Financing Creditors and the priority Hedge Counterparties. Super Senior Creditor Representative means, in relation to any Permitted Super Senior Financing Debt, the agent, trustee or other relevant representative in respect of that Permitted Super Senior Financing Debt. Super Senior Facilities Discharge Date means the first date on which all of the Senior Lender Liabilities and the Permitted Super Senior Financing Liabilities have been fully and finally discharged. Super Senior Liabilities means the Senior Lender Liabilities and the Permitted Super Senior Financing Liabilities (if any). Debt Refinancing The Intercreditor Agreement permits any of the liabilities under the debt documents to be refinanced, replaced, increased or otherwise restructured in whole or in part from time to time including by way of Permitted Super Senior Financing Debt, Permitted Senior Financing Debt and/or Permitted Parent Financing Debt or the issue of additional Notes) (each a Debt Refinancing ). Each party to the Intercreditor Agreement shall be required to enter into any amendment to or replacement of the then current Secured Debt Documents and/or take such other action as is required by the Parent in order to facilitate such a Debt Refinancing, including changes to, the taking of, or release and retake of, any guarantee or security, subject to certain conditions. At the option of the Parent, a Debt Refinancing may be made available on a basis which is senior to, pari passu with or junior to any of the other liabilities, shall be entitled to benefit from all or any of the security, may be made available on a secured or unsecured basis (subject to certain restrictions) and may be effected in whole or in part by way of a debt exchange, non-cash rollover or other similar or equivalent transaction, in each case unless otherwise prohibited by the Debt Financing Agreements. Under the terms of the Intercreditor Agreement, each agent, each Secured Party and each Primary Creditor agrees that it shall co-operate with the Parent, each other member of the Group and each Agent in order to facilitate any Debt Refinancing (including by way of, at the request and cost of the Senior Notes Issuer, executing any document or agreement and/or giving instructions to any person). In the event of any refinancing or replacement of all or any part of the Senior Lender Liabilities (or any such refinancing or replacement indebtedness from time to time), the Parent shall be entitled to require that the definition of Instructing Group is amended such that the relevant refinancing or replacement indebtedness is treated in the same manner as the Senior Facilities (meaning that for the purpose of calculating the voting entitlement of any person, at the option of the Parent all or any part of the relevant refinancing or replacement indebtedness may be treated as Senior Secured Credit Participations of the Super Senior Creditors and not Senior Secured Notes/Permitted Financing Credit Participations). Ranking and Priority Priority of Debts Subject to the provisions set out in the caption Subordinated Liabilities and Security below, the Intercreditor Agreement provides that the liabilities owed by the Debtors (other than any Subordinated Debt Issuer to the extent relating to liabilities in respect of Existing Senior Notes and/or Permitted Parent Financing Debt where that Subordinated Debt Issuer is the issuer or the borrower) to the Primary Creditors shall rank in right and priority of payment in the following order and are postponed and subordinated to any prior ranking liabilities as follows: first, the Senior Lender Liabilities, the Permitted Super Senior Financing Liabilities, the Senior Secured Notes Liabilities, the Permitted Senior Financing Liabilities, the Hedging Liabilities, the Senior Secured 102

122 Notes Trustee Amounts and the Senior Notes Trustee Amounts pari passu and without any preference amongst them; second, the Senior Notes Liabilities and the Permitted Parent Financing Liabilities pari passu and without any preference amongst them; and third, the intra-group liabilities and the investor liabilities pari passu and without any preference amongst them. The liabilities owed by any Subordinated Debt Issuer (to the extent relating to liabilities in respect of Senior Notes and/or Permitted Parent Financing Debt where that Subordinated Debt Issuer is the issuer or the borrower) to the Primary Creditors shall rank pari passu in right and priority of payment without any preference among them. Priority of Security The Intercreditor Agreement provides that the security shall secure the liabilities (but only to the extent that such security is expressed to secure those liabilities) in the following order: first, the Senior Lender Liabilities, the Permitted Super Senior Financing Liabilities, the Senior Secured Notes Liabilities, the Permitted Senior Financing Liabilities, the Hedging Liabilities, the Senior Secured Notes Trustee Amounts and the Senior Notes Trustee Amounts pari passu and without any preference amongst them; and second, the Senior Notes Liabilities and the Permitted Parent Financing Liabilities pari passu and without any preference amongst them. Subordinated Liabilities and Security The Senior Notes Liabilities and the Permitted Parent Financing Liabilities (if any) owed by a Subordinated Debt Issuer (to the extent relating to liabilities in respect of Senior Notes and/or Permitted Parent Financing Debt where that Subordinated Debt Issuer is the issuer or the borrower) are senior obligations of that Subordinated Debt Issuer. Notwithstanding the preceding sentence, until the Senior Discharge Date, the Subordinated Creditors and the Permitted Parent Financing Creditors may not take any steps to appropriate the assets of a Subordinated Debt Issuer subject to the security documents in connection with any Enforcement Action (as defined below), other than as expressly permitted by the Intercreditor Agreement. Intra-Group Liabilities and Investor Liabilities The Intercreditor Agreement provides that the intra-group liabilities of the Group and the liabilities of the Group to an investor are postponed and subordinated to the liabilities owed by the Debtors to the Primary Creditors. Additional Debt The creditors under the Intercreditor Agreement acknowledge in the Intercreditor Agreement that the Debtors (or any of them) may wish to incur incremental borrowing liabilities (including guarantees of such liabilities) or refinance or replace borrowing liabilities (including incurring guarantee liabilities in respect of such refinancing or replacement). Such liabilities are intended to rank pari passu with any other liabilities and/or share pari passu in any security and/or to rank behind any other liabilities and/or to share in any security behind any such other liabilities. The creditors under the Intercreditor Agreement confirm and undertake in the Intercreditor Agreement (at the cost of the Debtors) to co-operate with the Senior Notes Issuer and the Debtors with a view to enabling and facilitating such financing, refinancing or replacement and such sharing in the security, if and to the extent such financing, refinancing, replacement, ranking and security is not prohibited by the terms of the Debt Financing Agreements at such times to take place in a timely manner. In particular, but without limitation, each of the Secured Parties authorizes and directs each of its respective Agents and the Security Agent to execute any amendment to the Intercreditor Agreement and such other debt documents required by the Senior Notes Issuer to reflect, enable and/or facilitate any such arrangements (including as regards the ranking of any such arrangements) to the extent such financing, refinancing, replacement and/or sharing is not prohibited by the Debt Financing Agreements to which they are party. Restrictions Relating to Senior Liabilities The Senior Notes Issuer and the Debtors may make payments of the Senior Liabilities, the Senior Notes Trustee Amounts and the Senior Secured Notes Trustee Amounts at any time. 103

123 However, following the occurrence of an acceleration event, and subject to certain conditions, no member of the Group may make payments of Senior Liabilities. The Intercreditor Agreement provides that the Senior Creditors, the Senior Notes Issuer and the Debtors may at any time amend or waive the terms of the RCF Finance Documents, Permitted Super Senior Financing Documents, the Senior Secured Notes Finance Documents and/or the Permitted Senior Financing Documents in accordance with their respective terms from time to time (and subject only to any consent required under them). Security and Guarantees: Senior Creditors The Senior Creditors (and/or the Security Agent and/or the other person acting on behalf of any of them) may take, accept or receive the benefit of: (a) any Security from any member of the Group in respect of any of the Senior Liabilities (in addition to the shared security) provided that to the extent legally possible and subject to certain agreed security principles set out in the Revolving Credit Facility Agreement, at the same time, such Security is also offered either to: (i) (ii) the Security Agent as trustee for the other Senior Creditors in respect of their liabilities; in the case of any jurisdiction in which effective security cannot be granted in favor of the Security Agent as trustee for the Senior Creditors either: (A) (B) (C) to the Security Agent under a parallel debt structure for the benefit of the Senior Creditors; to the other Senior Creditors in respect of their liabilities; or to a security agent or representative for the benefit of the Senior Creditors provided that all Senior Creditors agree that amounts actually received or recovered by any Senior Creditor with respect to any such Security shall immediately be paid to the Security Agent and applied in accordance with the provisions set out under the caption Application of Proceeds ; and provided that such Security shall rank in the same order of priority as that contemplated in the provisions set out under the caption Ranking and Priority and such Security may only be enforced in accordance with the provisions set out under the caption Enforcement of Security Security Held by Other Creditors. (b) any guarantee, indemnity or other assurance against loss from any member of the Group in respect of any of the Senior Liabilities in addition to those in: (i) (ii) (iii) the Revolving Credit Facility Agreement, any Permitted Super Senior Financing Document, any Senior Secured Notes Indenture or any Permitted Senior Financing Document; the Intercreditor Agreement; or any guarantee, indemnity or other assurance against loss in respect of any of the liabilities, the benefit of which (however conferred) is, to the extent legally possible and subject to certain agreed security principles set out in the Revolving Credit Facility Agreement, given to all the senior secured parties in respect of their Senior Liabilities; 104

124 provided that, to the extent legally possible, and subject to certain agreed security principles set out in the Revolving Credit Facility Agreement, such guarantee, indemnity or assurance is also offered to the Senior Creditors in respect of their Liabilities and ranks in the same order of priority as that contemplated in the provisions set out under the caption Ranking and Priority. (c) any security, guarantee, indemnity or other assurance against loss from any member of the Group in connection with: (i) (ii) any escrow or similar or equivalent arrangements entered into in respect of amounts which are being held (or will be held) by a person which is not a member of the Group prior to release of those amounts to a member of the Group; or any actual or proposed defeasance, redemption, prepayment, repayment, purchase or other discharge of any Senior Lender Liabilities, Permitted Super Senior Financing Liabilities, Senior Secured Notes Liabilities and/or Permitted Senior Financing Liabilities (in each case not prohibited by the terms of the Intercreditor Agreement); if and to the extent legally possible at the same time it is also offered to the other Senior Creditors in respect of their respective liabilities and (subject to the terms of the Intercreditor Agreement) ranks in the same order of priority as that contemplated in the provisions set out under the caption Ranking and Priority. Restriction on Enforcement: Senior Creditors The Intercreditor Agreement provides that none of the Senior Lenders, Permitted Super Senior Financing Creditors, Senior Secured Notes Creditors or Permitted Senior Financing Creditors may take certain Enforcement Action without the prior written consent of an Instructing Group (as defined below). Notwithstanding the above restriction or anything to the contrary in the Intercreditor Agreement, after the occurrence of certain specified insolvency events (an Insolvency Event ) in relation to the Senior Notes Issuer or a Debtor, each Senior Lender, Permitted Super Senior Financing Creditor, Senior Secured Notes Creditor and/or Permitted Senior Financing Creditor may, to the extent it is able to do so under the relevant debt documents, take certain enforcement action and/or claim in any winding up, dissolution, administration, reorganization or similar insolvency event in relation to that Debtor for liabilities owing to it (but a Senior Creditor may not direct the Security Agent to enforce the common security in any manner). Option to Purchase: Senior Secured Creditors Senior Secured Notes Creditors holding at least a simple majority of the Senior Secured Notes Liabilities or Permitted Senior Financing Creditors holding at least a simple majority of the Permitted Senior Financing Liabilities (the Senior Secured Acquiring Creditors ) may, after the occurrence of an acceleration event which is continuing, by giving not less than ten (10) days notice to the Security Agent (with the first notice to prevail in the event that more than one set of Creditors serves such notice), require the transfer to them (or to a nominee or nominees), in accordance with the applicable transfer provisions of the Intercreditor Agreement, of all, but not part, of the rights, benefits and obligations in respect of the Super Senior Liabilities (a Super Senior Liabilities Transfer ) if: (a) (b) that transfer is lawful and, subject to paragraph (b) below, otherwise permitted by the terms of the Revolving Credit Facility Agreement and the Permitted Super Senior Financing Agreements; any conditions relating to such a transfer contained in the Revolving Credit Facility Agreement and the Permitted Super Senior Financing Agreements are complied with, other than: (i) (ii) any requirement to obtain the consent of, or consult with, a member of the Group in relation to such transfer, which consent or consultation shall not be required; and to the extent to which all the Senior Secured Acquiring Creditors provide cash cover for any letter of credit, the consent of the relevant issuing bank relating to such transfer; (c) the RCF Facility Agent, on behalf of the Senior Lenders, is paid an amount equal to the aggregate of: (i) any amounts provided as cash cover by the Senior Secured Acquiring Creditors for any letter of credit (as envisaged in paragraph (b)(ii) above); 105

125 (ii) (iii) all of the Senior Lender Liabilities at that time (whether or not due), including all amounts that would have been payable under the Revolving Credit Facility Agreement if the Revolving Credit Facility were being prepaid by the relevant Debtors on the date of that payment; and all costs and expenses (including legal fees) incurred by the RCF Facility Agent and/or the Senior Lenders and/or the Security Agent as a consequence of giving effect to that transfer; (d) any Super Senior Creditor Representative, on behalf of the Permitted Super Senior Financing Creditors, is paid an amount equal to the aggregate of: (i) (ii) (iii) any amounts provided as cash cover by the Senior Secured Acquiring Creditors for any letter of credit (as envisaged in paragraph (b)(ii) above); all of the Permitted Super Senior Financing Liabilities at that time (whether or not due), including all amounts that would have been payable under the Permitted Super Senior Financing Agreements if the Permitted Super Senior Financing Debt was being prepaid by the relevant Debtors on the date of that payment; and all costs and expenses (including legal fees) incurred by the Super Senior Creditor Representative and/or the Permitted Super Senior Financing Creditors and/or the Security Agent as a consequence of giving effect to that transfer. (e) as a result of that transfer: (i) (ii) the Senior Lenders have no further actual or contingent liability to a Debtor under the RCF Finance Documents; and the Permitted Super Senior Financing Creditors have no further actual or contingent liability to a Debtor under the Permitted Super Senior Financing Documents. (f) (g) (h) an indemnity is provided from each of the Senior Secured Acquiring Creditors (other than any senior agent) or from another third party acceptable to all the Senior Lenders and the Permitted Super Senior Financing Creditors in a form reasonably satisfactory to each Senior Lender and Permitted Super Senior Financing Creditor in respect of all costs, expenses, losses and liabilities which may be sustained or incurred by any Senior Lender or Permitted Super Senior Financing Creditor in consequence of any sum received or recovered by any Senior Lender or Permitted Super Senior Financing Creditor from any person being required (or it being alleged that it is required) to be paid back by or clawed back from any Senior Lender or Permitted Super Senior Financing Creditor for any reason; the transfer is made without recourse to, or representation or warranty from, the Senior Lenders or the Permitted Super Senior Financing Creditors, except that each Senior Lender and Permitted Super Senior Financing Creditor shall be deemed to have represented and warranted on the date of that transfer that it has the corporate power to effect that transfer and it has taken all necessary action to authorize the making by it of that transfer; and the Subordinated Creditors have not exercised their rights to purchase as described under the provisions set out in the caption Option to Purchase: Subordinated Creditors or, having exercised such rights, have not failed to complete the acquisition of the relevant Senior Liabilities in accordance with such provisions. Subject to the Intercreditor Agreement, the Senior Secured Acquiring Creditors may only require a Super Senior Liabilities Transfer if, at the same time, they require a transfer of Hedging Liabilities in accordance with the Intercreditor Agreement and if, for any reason, such transfer cannot be made in accordance with the Intercreditor Agreement, no Super Senior Liabilities Transfer may be required to be made. At the request of a Senior Agent (on behalf of the Senior Secured Acquiring Creditors), the RCF Facility Agent and the Permitted Super Senior Financing Creditors shall notify that senior agent of the foregoing payable sums in connection with such transfer. Instructing Group The term Instructing Group means, at any time: 106

126 (a) (b) subject to paragraph (ii) below, the Majority Super Senior Creditors and the Majority Senior Secured Creditors (in each case acting through their respective Agents (other than in respect of any Hedge Counterparty)); and in relation to instructions with respect to any enforcement: (i) prior to the Senior Lender Discharge Date, the Majority Super Senior Creditors and the Majority Senior Secured Creditors (in each case acting through their respective Agents), provided that: (A) the Security Agent will act in accordance with instructions given by the Majority Senior Secured Creditors provided that if: A. the Super Senior Liabilities have not been fully discharged within six months of the later of (x) the date of the first instructions of enforcement given to the Security Agent, and (y) the first day enforcement action can be taken under applicable law; or B. Majority Senior Secured Creditors have either not made a determination as to the method of enforcement (and notified the Security Agent of such determination in writing) or appointed a financial advisor to assist them in making such determination within three months of the date of the first instructions of enforcement given to the Security Agent; or C. if the instructions from the Majority Senior Secured Creditors do not qualify as Qualifying Instructions, or D. an Insolvency Event is continuing with respect to a Debtor in respect of Super Senior Credit Liabilities; or E. the Majority Senior Secured Creditors have either not made a determination as to the method of enforcement (and notified the Security Agent of that determination in writing) or appointed a financial advisor to assist them in making the determination and the Majority Super Senior Creditors determine in good faith (and notify the other creditor representatives, the Hedge Counterparties and the Security Agent) that a delay in issuing enforcement instructions could be reasonably expected to have a material adverse effect on the ability to effect a distressed sale or on the expected realisation proceeds and deliver enforcement instructions which they reasonably believe to be consistent with the enforcement principles to the Security Agent, then, in relation to such Enforcement, the Security Agent shall thereafter follow any instructions that are given (whether at the same time or subsequently) up until the Super Senior Facilities Discharge Date by the Majority Super Senior Creditors (in each case provided the same are Qualifying Instructions) to the exclusion of those given by the Majority Senior Secured Creditors (to the extent conflicting with the instructions given by the Majority Senior Secured Creditors), and Instructing Group in relation to such enforcement shall mean the Majority Super Senior Creditors; and (B) after the Super Senior Facilities Discharge Date, the Majority Senior Secured Creditors; and (ii) on or after the Senior Discharge Date but before the Subordinated Discharge Date, and subject to the Intercreditor Agreement, the Subordinated Agent (acting on the instructions of the Majority Subordinated Creditors). Restrictions Relating to Subordinated Creditors and Subordinated Liabilities Restriction on Payment and Dealings The Intercreditor Agreement provides that, until the Senior Discharge Date, the Subordinated Debt Issuer shall not (and the Senior Notes Issuer shall ensure that no member of the Group will): (a) pay, repay, prepay, redeem, acquire or defease any principal, interest or other amount on or in respect of, or make any distribution in respect of, any Subordinated Liabilities in cash or in kind or apply any such money or property in or towards discharge of any Subordinated Liabilities except as permitted by the provisions set out below under the captions Permitted Subordinated Payments, Permitted Parent Enforcement, and the 107

127 fourth paragraph under the caption Effect of Insolvency Event; Filing of Claims or by a refinancing of the Senior Notes or the Permitted Parent Financing Debt as permitted by the Intercreditor Agreement; (b) (c) exercise any set-off against any Subordinated Liabilities, except as permitted by the provisions set out in the caption Permitted Parent Payments below, the provisions set out in the caption Restrictions on Enforcement by Subordinated Creditors below or the fourth paragraph under the caption Effect of Insolvency Event; Filing of Claims below or by a refinancing of the Senior Notes or the Permitted Parent Financing Debt as permitted by the Intercreditor Agreement; or create or permit to subsist any security over any assets of any member of the Group or give any guarantee (and the Senior Notes Trustee or Subordinated Creditor Representative, as the case may be, may not, and no Subordinated Creditor may, accept the benefit of any such security or guarantee from any member of the Group) for, or in respect of, any Subordinated Liabilities other than: (i) (ii) (iii) (iv) Subordinated Guarantees; at the option of the Senior Notes Issuer, all or any of the Transaction Security (as defined in the Revolving Credit Facility Agreement) (provided that, for the avoidance of doubt, each of the parties agrees that the security shall rank and secure any Subordinated Liabilities as set out in Ranking and Priority Priority of Security ); any security over any assets of any Subordinated Debt Issuer (other than, without prejudice to paragraph (ii) above, shares over which the Senior Notes Issuer has granted security and loan receivables over which a Subordinated Debt Issuer has granted security); and any other security or guarantee provided by a member of the Group (the Credit Support Provider ) provided that to the extent legally possible, such security or guarantee is also offered at the same time to: (A) (B) the Security Agent as trustee for the other Secured Parties in respect of their liabilities; in the case of any jurisdiction in which effective security cannot be granted in favor of the Security Agent as trustee for the Secured Parties either: A. to the Security Agent under a parallel debt structure for the benefit of the Secured Parties; B. to the other Secured Parties in respect of their liabilities; or C. to a security agent or representative for the benefit of the Senior Creditors provided that all Secured Parties agree that amounts actually received or recovered by any Secured Party with respect to any such security shall immediately be paid to the Security Agent and applied in accordance with the provisions under the caption Application of Proceeds, and provided that such security shall rank in the same order of priority as that contemplated in the provisions under the caption Ranking and Priority and such Security may only be enforced in accordance with provisions set out under the caption Enforcement of Security Security Held by Other Creditors and (v) any security, guarantee, indemnity or other assurance against loss from any member of the Group in connection with: (A) (B) any escrow or similar or equivalent arrangements entered into in respect of amounts which are being held (or will be held) by a person which is not a member of the Group prior to release of those amounts to a member of the Group; or any actual or proposed defeasance, redemption, prepayment, repayment, purchase or other discharge of any Senior Lender Liabilities, Senior Secured Notes Liabilities, Permitted Super Senior Financing Liabilities and/or Permitted Senior Financing Liabilities (in each case provided that such defeasance, redemption, prepayment, repayment, purchase or other discharge is not prohibited by the terms of the Intercreditor Agreement), 108

128 if and to the extent legally possible at the same time it is also offered to the other Secured Parties in respect of their respective liabilities and (subject to the terms of the Intercreditor Agreement) ranks in the same order of priority as that contemplated in the provisions under the caption Ranking and Priority. Permitted Subordinated Payments (a) (b) A Subordinated Debt Issuer may make Payments in respect of the Subordinated Liabilities at any time in accordance with the terms of the Subordinated Finance Documents in its capacity as a borrower or issuer thereunder. In addition to and without limiting paragraph (a) above and without prejudice to any restrictions on such payments in the Senior Financing Agreements, prior to the Senior Discharge Date, any member of the Group may make payments in respect of the Subordinated Liabilities at any time: (i) (A) if: the payment is of: A. any of the principal amount of the Subordinated Liabilities which is either (x) not prohibited from being paid by the Senior Financing Agreements; or (y) paid on or after the final maturity date of the relevant Subordinated Liabilities (subject to certain conditions); or B. any other amount which is not an amount of principal or capitalized interest; (B) no Subordinated Payment Stop Notice (as defined below) is outstanding; and (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) no payment default under the Senior Financing Agreements ( Senior Payment Default ) has occurred and is continuing; or if the Majority Senior Lenders, the Majority Permitted Super Senior Financing Creditors, the Super Senior Creditor Representative, the Senior Secured Notes Trustee, the Majority Permitted Senior Financing Creditors or the Senior Creditor Representative (as applicable) give prior consent (the Required Senior Consent ) to that payment being made; if the payment is of certain amounts due to the Senior Notes Trustee for its own account; of any costs and expenses of any holder of security in relation to protection, preservation or enforcement of such security; of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any of the Subordinated Finance Documents (including in relation to any reporting or listing requirements under such documents); of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any refinancing of the Subordinated Liabilities not prohibited by the Senior Debt Documents; if the payment is funded directly or indirectly with Permitted Parent Financing Debt; if the payment is funded directly or indirectly with the proceeds of New Shareholder Injections or Available Shareholder Amounts (each as defined in the Revolving Credit Facility Agreement); or of any other amount not exceeding 5,000,000 (or its equivalent) in aggregate in any fiscal year of the Senior Notes Issuer. (c) On or after the Senior Discharge Date, the Debtors may make payments in respect of the Subordinated Liabilities at any time. 109

129 Payment Blockage Provisions Until the Senior Discharge Date, except with the Required Senior Consent, no Subordinated Debt Issuer shall make (and the Senior Notes Issuer shall procure that no other member of the Group will make), and no Subordinated Finance Party may receive from any other members of the Group any Permitted Subordinated Payment (other than Senior Notes Trustee Amounts and except as provided in (vii) of Permitted Subordinated Payments above) if: (i) (ii) a Senior Payment Default is continuing; or an event of default under the Revolving Credit Facility Agreement, the Senior Secured Notes Indenture, any Permitted Super Senior Financing Documents or the Permitted Senior Financing Documents (a Senior Event of Default ) (other than a Senior Payment Default) is continuing, from the date which is one business day after the date on which any of the RCF Facility Agent, the Senior Secured Notes Trustee, any Super Senior Creditor Representative and any Senior Creditor Representative (together, the Senior Agents and each a Senior Agent ) delivers a payment stop notice (a Subordinated Payment Stop Notice ) specifying the event or circumstance in relation to that Senior Event of Default to the Senior Notes Issuer, the Security Agent and the Subordinated Agents until the earliest of: (a) (b) (c) (d) (e) (f) the date falling 179 days after delivery of that Subordinated Payment Stop Notice; in relation to payments of the Subordinated Liabilities, if a subordinated standstill period is in effect at any time after delivery of that Subordinated Payment Stop Notice, the date on which that standstill period expires; the date on which the relevant Senior Event of Default has been remedied or waived in accordance with the applicable Senior Financing Agreement (as applicable); the date on which the Senior Agent which delivered the relevant Subordinated Payment Stop Notice delivers a notice to the Senior Notes Issuer, the Security Agent and the Subordinated Agents cancelling the Subordinated Payment Stop Notice; the Senior Discharge Date; and the date on which the Security Agent or a Subordinated Agent takes Enforcement Action permitted under the Intercreditor Agreement against a Debtor, provided, further, that nothing in this paragraph shall prevent the Subordinated Debt Issuer making Payments (or the Subordinated Creditors receiving any such Payments) in respect of the Subordinated Liabilities as contemplated in the preceding paragraph, but only to the extent that Payment is not funded from the proceeds of a payment received from a member of the Group which is otherwise prohibited under this paragraph entitled Payment Blockage Provisions. Unless each of the Subordinated Agents waives this requirement, (a) a new Subordinated Payment Stop Notice may not be delivered unless and until 360 days have elapsed since the delivery of the immediately prior Subordinated Payment Stop Notice; and (b) no Subordinated Payment Stop Notice may be delivered by a Senior Agent in reliance on a Senior Event of Default more than 60 days after the date that Senior Agent received notice of that Senior Event of Default. The Senior Agents may only serve one Subordinated Payment Stop Notice with respect to the same event or set of circumstances. Subject to the immediately preceding paragraph, this shall not affect the right of the Senior Agents to issue a Subordinated Payment Stop Notice in respect of any other event or set of circumstances. No Subordinated Payment Stop Notice may be served in respect of a Senior Event of Default which had been notified to the Agents at the time at which an earlier Subordinated Payment Stop Notice was issued. Any failure to make a payment due under the Subordinated Finance Documents as a result of the issue of a Subordinated Payment Stop Notice or the occurrence of a Senior Payment Default shall not prevent (i) the occurrence of an event of default (as defined in any Subordinated Finance Document, as applicable) as a consequence of that failure to make a payment in relation to the relevant Subordinated Finance Document; or (ii) the issue of a Subordinated Enforcement Notice (as defined below) on behalf of the Subordinated Creditors. 110

130 Payment Obligations and Capitalization of Interest Continue Neither the relevant Subordinated Debt Issuer nor any other Debtor shall be released from the liability to make any payment (including of default interest, which shall continue to accrue) under any Subordinated Finance Document by the operation of the provisions set out under each section above under the caption Restrictions Relating to Subordinated Creditors and Subordinated Liabilities even if its obligation to make such payment is restricted at any time by the terms of any of those provisions. The accrual and capitalization of interest (if any) in accordance with the Subordinated Finance Documents shall continue notwithstanding the issue of a Subordinated Payment Stop Notice. Cure of Payment Stop If: (i) (ii) at any time following the issue of a Subordinated Payment Stop Notice or the occurrence of a Senior Payment Default, that Subordinated Payment Stop Notice ceases to be outstanding and/or (as the case may be) the Senior Payment Default ceases to be continuing; and the relevant Subordinated Debt Issuer or the relevant Debtor then promptly pays to the Subordinated Creditors an amount equal to any payments which had accrued under the Subordinated Finance Documents and which would have been Permitted Subordinated Payments but for that Subordinated Payment Stop Notice or Senior Payment Default, then any event of default (including any cross default or similar provision under any other debt document) which may have occurred as a result of that suspension of payments shall be waived, and any Subordinated Enforcement Notice which may have been issued as a result of that event of default shall be waived, in each case without any further action being required on the part of the Subordinated Creditors or any other Creditor. Restrictions on Amendments and Waivers The Intercreditor Agreement provides that the Subordinated Creditors, the Subordinated Debt Issuers and the other Debtors may amend or waive the terms of the Senior Notes Finance Documents and/or the Permitted Parent Financing Documents in accordance with their terms at any time (and subject only to any consent required under them). Restrictions on Enforcement by Subordinated Creditors Until the Senior Discharge Date, except with the prior consent of or as required by an Instructing Group: (a) (b) no Subordinated Creditor shall direct the Security Agent to enforce, or otherwise require the enforcement of any security; and/or no Subordinated Creditor shall take or require the taking of any Enforcement Action in relation to the Subordinated Guarantees, except as permitted under the provisions set out below under the caption Permitted Subordinated Enforcement below, provided, however, that no such action required by the Security Agent need be taken except to the extent the Security Agent otherwise is entitled under the Intercreditor Agreement to direct such action. Option to Purchase: Subordinated Creditors Subject to the following paragraphs, any of the Subordinated Agents (on behalf of the Subordinated Creditors) may, after an acceleration event under any of the Revolving Credit Facility Agreement, the Senior Secured Notes or in relation to any Permitted Super Senior Financing Debt or Permitted Senior Financing Debt which is continuing, by giving not less than 10 days notice to the Security Agent, require the transfer to the Subordinated Creditors (or to a nominee or nominees) of all, but not part, of the rights, benefits and obligations in respect of the Senior Liabilities if: (a) (b) that transfer is lawful and, subject to paragraph (b) below, otherwise permitted by the terms of the Revolving Credit Facility Agreement, the Senior Secured Notes Indenture, any Permitted Super Senior Financing Agreement and any Permitted Senior Financing Agreement (as applicable); any conditions relating to such a transfer contained in the Revolving Credit Facility Agreement (in the case of the Senior Lender Liabilities), the Senior Secured Notes Indenture (in the case of the Senior Secured Notes 111

131 Liabilities), any Permitted Super Senior Financing Agreement (in the case of the Permitted Super Senior Financing Liabilities) and any Permitted Senior Financing Agreement (in the case of the Permitted Senior Financing Liabilities) are complied with, in each case, other than as specified in the Intercreditor Agreement; (c) (d) (e) (f) each of the RCF Facility Agent (on behalf of the Senior Lenders), the Senior Secured Notes Trustee (on behalf of the relevant Senior Secured Notes Creditors), the applicable Senior Creditor Representative (on behalf of the relevant Permitted Senior Financing Creditors) and the applicable Super Senior Creditor Representative (on behalf of the relevant Permitted Super Senior Financing Creditors) is paid the amounts required under the Intercreditor Agreement; as a result of that transfer the Senior Lenders, the Senior Secured Notes Creditors, the Permitted Super Senior Financing Creditors and the Permitted Senior Financing Creditors have no further actual or contingent liability to the Senior Notes Issuer or any other Debtor under the relevant Secured Debt Documents; an indemnity is provided from each Subordinated Creditor (other than any Subordinated Agent) (or from another third party acceptable to all the Senior Lenders, Senior Secured Notes Creditors, Permitted Super Senior Financing Creditors and Permitted Senior Financing Creditors) in respect of all costs, expenses, losses and liabilities which may be sustained or incurred by any Senior Lender, Senior Secured Notes Creditor, Permitted Super Senior Financing Creditor or Permitted Senior Financing Creditor in consequence of any sum received or recovered by any such party from any person being required (or it being alleged that it is required) to be paid back by or clawed back from any Senior Lender, Senior Secured Notes Creditor, Permitted Super Senior Financing Creditor or Permitted Senior Financing Creditor for any reason; and the transfer is made without recourse to, or representation or warranty from, the Senior Lenders, the Senior Secured Notes Creditors, the Permitted Super Senior Financing Creditors or the Permitted Senior Financing Creditors, except that each of them shall be deemed to have represented and warranted on the date of that transfer that it has the corporate power to effect that transfer and it has taken all necessary action to authorize the making by it of that transfer. Subject to the Intercreditor Agreement, a Subordinated Agent (on behalf of all the Subordinated Creditors) may only require a Senior Liabilities Transfer if, at the same time, they require a transfer of Hedging Liabilities and if, for any reason, such transfer cannot be made in accordance with the Intercreditor Agreement, no transfer of Senior Liabilities may be required to be made. At the request of a Subordinated Agent (on behalf of all the Subordinated Creditors), the RCF Facility Agent, the Senior Secured Notes Trustee, any relevant Senior Creditor Representative and any relevant Super Senior Creditor Representative shall notify the Subordinated Agents of the foregoing payable sums in connection with such transfer. Enforcement Action The term Enforcement Action comprises: (a) in relation to any liabilities: (i) (ii) (iii) (iv) (v) the acceleration of any liabilities or the making of any declaration that any liabilities are prematurely due and payable (other than as a result of it becoming unlawful for a Senior Creditor or a Subordinated Creditor to perform its obligations under, or of any voluntary or mandatory prepayment arising under, any of the debt documents); the making of any declaration that any liabilities are payable on demand; the making of a demand in relation to a liability that is payable on demand; the making of any demand against any member of the Group in relation to any guarantee liabilities of that member of the Group; the exercise of any right to require any member of the Group to acquire any liability (including exercising any put or call option against any member of the Group for the redemption or purchase of any liability other than in connection with an asset sale, offer or a change of control offer as set out in the Secured Debt Documents and excluding any such right which arises as a result of any voluntary tender offer or exchange offer for Senior Secured Notes or Senior Notes at a time when no Default is continuing (including exercising any put or call option against any member of the Group for the redemption or purchase of any Liability); 112

132 (vi) the exercise of any right of set-off, account combination or payment netting against any member of the Group in respect of any liabilities other than the exercise of any such right: (A) (B) (C) (D) (E) as close-out netting by a Hedge Counterparty or by a hedging ancillary lender; as payment netting by a Hedge Counterparty or by a hedging ancillary lender; as inter-hedging agreement netting by a Hedge Counterparty; as inter-hedging ancillary document netting by a hedging ancillary lender; and/or which is otherwise permitted by the terms of any of the Secured Debt Documents, in each case to the extent that the exercise of that right gives effect to a permitted payment; and (vii) the suing for, commencing or joining of any legal or arbitration proceedings against any member of the Group to recover any liabilities; (b) (c) (d) (e) the premature termination or close-out of any hedging transaction under any hedging agreement, save to the extent permitted by the Intercreditor Agreement; the taking of any steps to enforce or require the enforcement of any security (including the crystallization of any floating charge forming part of the security); the entering into any composition, compromise, assignment or similar arrangement with any member of the Group which owes any liabilities, or has given any security, guarantee or indemnity or other assurance against loss in respect of the liabilities (other than any action permitted under the Intercreditor Agreement or pursuant to any debt buy-back, tender offer, exchange offer or similar or equivalent arrangement not otherwise prohibited by the debt documents); or the petitioning, applying or voting for, or the taking of any steps (including the appointment of any liquidator, receiver, examiner, administrator or similar officer) in relation to the winding up, dissolution, examinership, administration or reorganization of any member of the Group which owes any liabilities, or has given any security, guarantee, indemnity or other assurance against loss in respect of any of the liabilities, or any of such member of the Group s assets or any suspension of payments or moratorium of any indebtedness of any such member of the Group, or any analogous procedure or step in any jurisdiction, except that the following shall not constitute Enforcement Action: (i) (ii) (iii) (iv) (v) the taking of any action falling above which is necessary (but only to the extent necessary) to preserve the validity, existence or priority of claims in respect of liabilities, including the registration of such claims before any court or governmental authority and the bringing, supporting or joining of proceedings to prevent any loss of the right to bring, support or join proceedings by reason of applicable limitation periods; or a Senior Creditor or Subordinated Creditor bringing legal proceedings against any person solely for the purpose of: (A) obtaining injunctive relief (or any analogous remedy outside England and Wales) to restrain any actual or putative breach of any debt document to which it is party, (B) obtaining specific performance (other than specific performance of an obligation to make a payment) with no claim for damages or (C) requesting judicial interpretation of any provision of any debt document to which it is party with no claim for damages; or bringing legal proceedings against any person in connection with any securities violation, securities or listing regulations or common law fraud; or to the extent entitled by law, the taking of any action against any creditor (or any agent, trustee or receiver acting on behalf of that creditor) to challenge the basis on which any sale or disposal is to take place pursuant to the powers granted to those persons under any relevant documentation; or any person consenting to, or the taking of any other action pursuant to or in connection with, any merger, consolidation, reorganization or any other similar or equivalent step or transaction initiated or undertaken by a member of the Group (or any analogous procedure or step in any jurisdiction) that is not prohibited by the terms of the Secured Debt Documents to which it is a party. 113

133 Permitted Subordinated Enforcement The restrictions set out in the caption Restrictions on Enforcement by Subordinated Creditors above will not apply if: (a) (b) (c) (d) an event of default (as defined in any Senior Notes Indenture and any Permitted Parent Financing Agreement, as applicable, each a Subordinated Event of Default ) (the Relevant Subordinated Default ) is continuing; each Senior Agent has received a notice of the Relevant Subordinated Default specifying the event or circumstance in relation to the Relevant Subordinated Default from the Senior Notes Trustee or the Subordinated Creditor Representative, as the case may be; a Subordinated Standstill Period (as defined below) has elapsed; and the Relevant Subordinated Default is continuing at the end of the relevant Subordinated Standstill Period. Promptly upon becoming aware of a Subordinated Event of Default, the Senior Notes Trustee or the Subordinated Creditor Representative, as the case may be, may by notice (a Subordinated Enforcement Notice ) in writing notify the Senior Agents of the existence of such Subordinated Event of Default. Subordinated Standstill Period In relation to a Relevant Subordinated Default, a Subordinated Standstill Period shall mean the period beginning on the date (the Subordinated Standstill Start Date ) the relevant Senior Agent serves a Subordinated Enforcement Notice on each of the Senior Agents in respect of such Relevant Subordinated Default and ending on the earlier to occur of: (a) (b) (c) (d) (e) (f) the date falling 179 days after the Subordinated Standstill Start Date (the Subordinated Standstill Period ); the date the Senior Secured Parties take any Enforcement Action in relation to a particular guarantor of the Senior Notes and any Permitted Parent Financing Debt (a Subordinated Guarantor ); provided, however, that if a Subordinated Standstill Period ends pursuant to this paragraph, the Subordinated Finance Parties may only take the same Enforcement Action in relation to the Subordinated Guarantor as the Enforcement Action taken by the Senior Secured Parties against such Subordinated Guarantor and not against any other member of the Group; the date of an Insolvency Event in relation to the relevant Subordinated Debt Issuer or a particular Subordinated Guarantor against whom Enforcement Action is to be taken (other than such Insolvency Event arising solely as a result of any action taken by the relevant Subordinated Agent on behalf of the relevant Subordinated Creditors, in which case Enforcement Action is to be taken only against such particular Subordinated Debt Issuer or Subordinated Guarantor); the expiry of any other Subordinated Standstill Period outstanding at the date such first mentioned Subordinated Standstill Period commenced (unless that expiry occurs as a result of a cure, waiver or other permitted remedy); the date on which the consent of each of the RCF Facility Agent (acting on the instructions of the Majority Senior Lenders), any Super Senior Creditor Representative (acting on the instructions of the Majority Permitted Super Senior Financing Creditors), the Senior Secured Notes Trustee (acting on behalf of the Senior Secured Noteholders) and any Senior Creditor Representative (acting on the instructions of the Majority Permitted Senior Financing Creditors) has been obtained; and a failure to pay the principal amount outstanding under the Senior Notes or on any Permitted Parent Financing Debt, as the case may be, at the final stated maturity of the amounts outstanding under the Senior Notes or on the Permitted Parent Financing Debt, as the case may be (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Senior Notes Issuer, such final stated maturity does not fall on a date prior to the date falling 85 months after the Closing Date (as defined in the Revolving Credit Facility Agreement)). Subsequent Subordinated Event of Default The Subordinated Finance Parties may take Enforcement Action under the provisions set out under the caption Permitted Subordinated Enforcement above in relation to a Relevant Subordinated Default even if, at the end of any 114

134 relevant Subordinated Standstill Period or at any later time, a further Subordinated Standstill Period has begun as a result of any other Subordinated Event of Default. Enforcement on Behalf of Subordinated Creditors If the Security Agent has notified each of the Senior Notes Trustee and any Subordinated Creditor Representative (collectively, the Subordinated Agents and each, a Subordinated Agent ) that it is enforcing security created pursuant to any security document over shares of a Subordinated Guarantor, no Subordinated Creditor may take any action referred to under the provisions set out under the caption Permitted Subordinated Enforcement above against that Subordinated Guarantor while the Security Agent is taking steps to enforce that security in accordance with the instructions of an Instructing Group where such action might be reasonably likely to adversely affect such enforcement or the amount of proceeds to be derived therefrom. Effect of Insolvency Event; Filing of Claims The Intercreditor Agreement provides that, among other things, after the occurrence of an Insolvency Event in relation to any Debtor, or, following an acceleration event which is continuing, any member of the Group, any party entitled to receive a distribution out of the assets of that member of the Group in respect of liabilities owed to that party shall, subject to receiving payment instructions and any other relevant information from the Security Agent and to the extent it is able to do so, direct the person responsible for the distribution of the assets of that member of the Group to pay that distribution to the Security Agent until the liabilities owing to the Secured Parties have been paid in full. In this respect, the Security Agent shall apply distributions paid to it in accordance with the provisions set out under the caption Application of Proceeds below. Subject to certain exceptions, to the extent that any member of the Group s liabilities are discharged by way of set off (mandatory or otherwise) after the occurrence of an Insolvency Event in relation to that member of the Group, any creditor which benefited from that set off shall (if prior to a distress event, only if required by the Security Agent acting on the instructions of an Instructing Group), subject to receiving payment instructions and any other relevant information from the Security Agent, pay an amount equal to the amount of the liabilities owed to it which are discharged by that set off to the Security Agent for application in accordance with the provisions set out under the caption Application of Proceeds below. Subject to the provisions set out under the caption Application of Proceeds below, if the Security Agent or any other Secured Party receives a distribution in a form other than in cash in respect of any of the liabilities, the liabilities will not be reduced by that distribution until and except to the extent that the realization proceeds are actually applied towards the liabilities. After the occurrence of an Insolvency Event in relation to any Debtor (or, following an acceleration event which is continuing, any member of the Group), each Creditor irrevocably authorizes the Security Agent, on its behalf, to: (a) (b) (c) (d) take any Enforcement Action (in accordance with the terms of the Intercreditor Agreement) against that member of the Group; demand, sue, prove and give receipt for any or all of that member of the Group s liabilities; collect and receive all distributions of, or on account of, any or all of that member of the Group s liabilities; and file claims, take proceedings and do all other things the Security Agent considers reasonably necessary to recover that member of the Group s liabilities. Each creditor will: (a) (b) do all things that the Security Agent reasonably requests in order to give effect to the matters referred to in this Effect of Insolvency Event; Filing of Claims section; and if the Security Agent is not entitled to take any of the actions contemplated by this Effect of Insolvency Event; Filing of Claims section or if the Security Agent requests that a creditor take that action, undertake that action itself in accordance with the instructions of the Security Agent or grant a power of attorney to the Security Agent (on such terms as the Security Agent may reasonably require, although neither the Senior Secured Notes Trustee nor the Senior Notes Trustee shall be under an obligation to grant such powers of attorney) to enable the Security Agent to take such action. 115

135 Turnover Subject to certain exceptions, the Intercreditor Agreement provides that, if any creditor receives or recovers from any member of the Group: (a) (b) (c) any payment or distribution of, or on account of or in relation to, any of the liabilities which is prohibited under the Intercreditor Agreement or, following the occurrence of an acceleration event where any of the RCF Facility Agent, a Super Senior Creditor Representative, the Senior Secured Notes Trustee or a Senior Creditor Representative declare in writing to the Security Agent that a Senior Distress Event has occurred and such Senior Distress Event is continuing, any Senior Lender Liabilities, Hedging Liabilities, Senior Secured Notes Liabilities, Senior Notes Liabilities, Permitted Super Senior Financing Liabilities, Permitted Senior Financing Liabilities or Permitted Parent Financing Liabilities; other than as referred to in the second paragraph under the caption Effect of Insolvency Event; Filing of Claims any amount by way of set off in respect of any of the liabilities owed to it which does not give effect to a payment permitted under the Intercreditor Agreement; any amount: (i) (ii) on account of, or in relation to, any of the liabilities after the occurrence of a distress event (including as a result of any litigation or proceedings against a member of the Group, other than after the occurrence of an Insolvency Event in respect of that member of the Group); or by way of set-off in respect of any of the liabilities owed to it after the occurrence of a distress event, other than, in each case, any amount received or recovered in accordance with the provisions set out under the caption Application of Proceeds and, in the case of intra-group liabilities, any amount received in accordance with the Intercreditor Agreement; (d) (e) the proceeds of any enforcement of any security except in accordance with the provisions set out below under the caption Application of Proceeds ; or subject to certain exceptions, any distribution in cash or in kind or payment of, or on account of or in relation to, any of the liabilities owed by any member of Group which is not in accordance with the provisions set out in the caption Application of Proceeds and which is made as a result of, or after, the occurrence of an Insolvency Event in respect of that member of Group, that Creditor will, subject to certain exceptions: (i) (ii) in relation to receipts and recoveries not received or recovered by way of set-off (A) hold an amount of that receipt or recovery equal to the relevant liabilities (or if less, the amount received or recovered) on trust for the Security Agent and promptly pay that amount to the Security Agent for application in accordance with the terms of the Intercreditor Agreement, and (B) promptly pay an amount equal to the amount (if any) by which the receipt or recovery exceeds the relevant liabilities to the Security Agent for application in accordance with the terms of the Intercreditor Agreement; and in relation to receipts and recoveries received or recovered by way of set-off, promptly pay an amount equal to that receipt or recovery to the Security Agent for application in accordance with the terms of the Intercreditor Agreement. Enforcement of Security Enforcement Instructions The Security Agent may refrain from enforcing the security unless instructed otherwise by (s) an Instructing Group; or (b) if required as set out under the third paragraph of this section, the Majority Subordinated Creditors and in each case unless indeminified and/or secured and/or prefunded to its satisfaction. Subject to the security having become enforceable in accordance with its terms: (a) an Instructing Group; or (b) to the extent permitted to enforce or to require the enforcement of the security prior to the Senior Discharge Date as described under the caption Restrictions Relating to Subordinated Creditors and Subordinated Liabilities above, the Majority Subordinated Creditors, may give or refrain from giving instructions to the Security Agent to enforce, or refrain 116

136 from enforcing, the security as they see fit, provided that the instructions as to enforcement given by the Instructing Group are Qualifying Instructions. Prior to the Senior Discharge Date, (a) if an Instructing Group has instructed the Security Agent not to enforce or to cease enforcing the security or (b) in the absence of instructions from an Instructing Group, and, in each case, an Instructing Group has not required any Debtor to make a distressed disposal, the Security Agent shall give effect to any instructions to enforce the security which the Majority Subordinated Creditors are then entitled to give to the Security Agent as described under the caption Restrictions Relating to Subordinated Creditors and Subordinated Liabilities above, provided that the instructions as to enforcement given by the Instructing Group are Qualifying Instructions and provided further that, if an Instructing Group gives (at that time or subsequently) Qualifying Instructions, the Security Agent shall act in accordance with such Qualifying Instructions. Subject to certain provisions of the Intercreditor Agreement, no Secured Party shall have any independent power to enforce, or to have recourse to any security, or have any independent power to exercise any rights or powers arising under the security documents, or may enforce or have recourse to any security, except through the Security Agent in a manner contemplated by the Intercreditor Agreement. Manner of Enforcement If the security is being enforced as set forth above under the caption Enforcement Instructions, the Security Agent shall enforce the security in such manner (including, without limitation, the selection of any administrator, examiner or equivalent officer of any Debtor to be appointed by the Security Agent) as: (a) (b) an Instructing Group; or prior to the Senior Discharge Date, if (i) the Security Agent has, pursuant to the third paragraph under the caption Enforcement of Security above, given effect to instructions given by the Majority Subordinated Creditors to enforce the security; and (ii) an Instructing Group has not given instructions as to the manner of enforcement of the security, the Majority Subordinated Creditors, shall instruct (provided that any such instructions are consistent with certain security enforcement principles as set out in the Intercreditor Agreement) or, in the absence of any such instructions, as the Security Agent sees fit, in each case, taking into account the requirements of each relevant security document and the security enforcement principles as set out in the Intercreditor Agreement. Exercise of Voting Rights To the fullest extent permitted under applicable law, each Subordinated Creditor, investor and intra-group lender agrees with the Security Agent that it will cast its vote in any proposal put to the vote by, or under the supervision of, any judicial or supervisory authority in respect of any insolvency, pre-insolvency or rehabilitation or similar proceedings relating to any member of the Group as instructed by the Security Agent. The Security Agent shall give instructions for the purposes of this paragraph as directed by an Instructing Group. Notwithstanding the foregoing, no party can exercise or require any other Creditor under the Intercreditor Agreement to exercise its power of voting or representation to waive, reduce, discharge, extend the due date for payment or otherwise reschedule any of the liabilities owed to that creditor. Waiver of Rights To the extent permitted under applicable law and subject to certain provisions of the Intercreditor Agreement, each of the Secured Parties and the Debtors waives all rights it may otherwise have to require that the security be enforced in any particular order or manner or at any particular time, or that any sum received or recovered from any person, or by virtue of the enforcement of any of the security or of any other security interest, which is capable of being applied in or towards discharge of any of the secured obligations, is so applied. Security Held by Other Creditors If any security is held by a Creditor other than the Security Agent, then that Ccreditor may only enforce that security in accordance with instructions given by an Instructing Group pursuant to the terms of the Intercreditor Agreement (and for this purpose references to the Security Agent shall be construed as references to that creditor). 117

137 Duties Owed Pursuant to the Intercreditor Agreement, each of the Secured Parties and the Debtors acknowledges that, in the event that the Security Agent enforces, or is instructed to enforce, the security prior to the Senior Discharge Date, the duties of the Security Agent and of any receiver or delegate owed to the Secured Parties in respect of the method, type and timing of that enforcement or of the exploitation, management or realization of any of that security shall be no different to or greater than the duty that is owed by the Security Agent, receiver or delegate to the Debtors under general law. Proceeds of Disposals Non-Distressed Disposals The Security Agent agrees and is irrevocably authorized and instructed that it shall (at the request and cost of the Senior Notes Issuer) promptly release (or procure that any other relevant person releases): (a) any security (and/or any other claim relating to a debt document) over any asset which is the subject of: (i) (ii) a disposal not prohibited by the terms of the Debt Financing Agreements (including a disposal to a member of the Group, but without prejudice to any obligation of any member of the Group in a Debt Financing Agreement to provide replacement security); or any other transaction not prohibited by the terms of any Debt Financing Agreement pursuant to which that asset will cease to be held or owned by a member of the Group; (b) (c) (d) any security (and/or any other claim relating to a debt document) over any document or agreement in order for any member of the Group to effect any amendment or waiver in respect of that document or agreement or otherwise exercise any rights, comply with any obligations or take any action in relation to that document or agreement (in each case to the extent not prohibited by the terms of any Debt Financing Agreement); any security (and/or any other claim relating to a debt document) over any asset of any member of the Group which has ceased to be a Debtor or will cease to be a Debtor simultaneously with such release; and any security (and/or any other claim relating to a debt document) over any other asset to the extent that such release is in accordance with the terms of the Debt Financing Agreements. In the case of a disposal of shares or other ownership interests in a Debtor (or any holding company of any Debtor), or any other transaction pursuant to which a Debtor (or any holding company of any Debtor) will cease to be a member of the Group or a Debtor, the Security Agent (on behalf of itself and the Secured Parties) shall (at the request and cost of the relevant Debtor or the Senior Notes Issuer) promptly release (or procure the release of) that Debtor and its subsidiaries from all present and future liabilities both actual and contingent under the Secured Debt Documents and the respective assets of such Debtor and its subsidiaries from the transaction security and the Secured Debt Documents. When making any request for a release pursuant to this Non-Distressed Disposals section, the Senior Notes Issuer shall confirm in writing to the Security Agent that: (a) (b) in the case of any release requested pursuant to paragraph (a) or (b) above, the relevant disposal or other action is not prohibited by the terms of any Debt Financing Agreement; or in the case of any release requested pursuant to paragraph (d) above, the relevant release is in accordance with terms of the Debt Financing Agreements, and the Security Agent shall be entitled to rely on that confirmation for all purposes under the Secured Debt Documents. The Security Agent shall (at the cost and expense of the relevant Debtor or the Senior Notes Issuer but without the need for any further consent, sanction, authority or further confirmation from any Creditor or Debtor) promptly enter into (or procure that the relevant person enters into) and deliver such documentation and/or take such other action as the Senior Notes Issuer (acting reasonably) shall require to give effect to any release or other matter described in the paragraph above. If any member of the Group is required or not prohibited under the Senior Debt Documents, to apply the proceeds of any disposal or other transaction in prepayment, redemption or any other discharge or reduction of the Senior Lender Liabilities, the Permitted Super Senior Financing Liabilities, the Hedging Liabilities, the Senior Secured Notes 118

138 Liabilities or the Permitted Senior Financing Liabilities (as applicable) (together, the Senior Liabilities ) then no such application of those proceeds shall require the consent of any other party or Subordinated Creditor or will result in any breach of any Subordinated Finance Document, and any such application shall discharge in full any obligation to apply those proceeds in prepayment, redemption or any other discharge or reduction of any Subordinated Liabilities. Distressed Disposals Generally, a Distressed Disposal is a disposal of an asset of a member of the Group which is (a) being effected at the request of an Instructing Group in circumstances where security has become enforceable in accordance with the terms of the relevant security document(s), (b) being effected by enforcement of security in accordance with the terms of the relevant security document(s), or (c) being effected, after the occurrence of a distress event, by a Debtor to a person or persons which is not a member of the Group. If a Distressed Disposal is being effected, the Security Agent is irrevocably authorized (at the cost of the relevant Debtor or the Senior Notes Issuer and without any consent, sanction, authority or further confirmation from any Creditor or Debtor): (a) (b) to release the security or any other claim over that asset and execute and deliver or enter into any release of that security or claim and issue any letters of non-crystallization of any floating charge or any consent to dealing that may, in the discretion of the Security Agent, be considered necessary or desirable; if the asset which is disposed of consists of shares in the capital of a Debtor, to release: (i) (ii) (iii) that Debtor and any subsidiary of that Debtor from all or any part of its borrowing liabilities, its guarantee liabilities and its other liabilities; any security granted by that Debtor or any subsidiary of that Debtor over any of its assets; and any other claim of an investor, an intra-group lender, or another Debtor over that Debtor s assets or over the assets of any subsidiary of that Debtor, on behalf of the relevant Creditors, Debtors and Agents; (c) if the asset which is disposed of consists of shares in the capital of any holding company of a Debtor, to release: (i) (ii) (iii) that holding company and any subsidiary of that holding company from all or any part of its borrowing liabilities, its guarantees liabilities and its other liabilities; any security granted by that holding company or any subsidiary of that holding company over any of its assets; and any other claim of any investor, any intra-group lender or another Debtor over that holding company s assets or the assets of any subsidiary of that holding company, on behalf of the relevant Creditors, Debtors and Agents; (d) if the asset which is disposed of consists of shares in the capital of a Debtor or the holding company of a Debtor and the Security Agent (acting in accordance with the Intercreditor Agreement) decides to dispose of all or any part of the liabilities or the Debtor liabilities owed by that Debtor or holding company or any subsidiary of that Debtor or holding company: (i) (ii) (if the Security Agent (acting in accordance with the Intercreditor Agreement) does not intend that any transferee of those liabilities or Debtor liabilities (the Transferee ) will be treated as a Primary Creditor or a Secured Party for the purposes of the Intercreditor Agreement), to execute and deliver or enter into any agreement to dispose of all or part of those liabilities or Debtor liabilities; provided that, notwithstanding any other provision of any debt document, the Transferee shall not be treated as a Primary Creditor or a Secured Party for the purposes of the Intercreditor Agreement; and (if the Security Agent (acting in accordance with the Intercreditor Agreement) does intend that any Transferee will be treated as a Primary Creditor or a Secured Party for the purposes of the Intercreditor Agreement), to execute and deliver or enter into any agreement to dispose of all (and not part only) of the liabilities owed to the Primary Creditors and all or part of any other liabilities and the Debtor liabilities, 119

139 on behalf of, in each case, the relevant Creditors and Debtors; (e) if the asset which is disposed of consists of shares in the capital of a Debtor or the holding company of a Debtor (the Disposed Entity ) and the Security Agent (acting in accordance with the Intercreditor Agreement) decides to transfer to another Debtor (the Receiving Entity ) all or any part of the Disposed Entity s obligations or any obligations of any subsidiary of that Disposed Entity in respect of the intra-group liabilities or the Debtor liabilities, to execute and deliver or enter into any agreement to: (i) (ii) agree to the transfer of all or part of the obligations in respect of those intra-group liabilities or Debtor liabilities on behalf of the relevant intra-group lenders and Debtors to which those obligations are owed and on behalf of the Debtors which owe those obligations; and (if the Receiving Entity is a holding company of the Disposed Entity which is also a guarantor of Senior Liabilities) to accept the transfer of all or part of the obligations in respect of those intra-group liabilities or Debtor liabilities on behalf of the Receiving Entity or Receiving Entities to which the obligations in respect of those intra-group liabilities or Debtor liabilities are to be transferred. The net proceeds of each Distressed Disposal (and the net proceeds of any disposal of liabilities or Debtor liabilities) shall be paid to the Security Agent for application in accordance with the provisions set out under the caption Application of Proceeds as if those proceeds were the proceeds of an enforcement of security and, to the extent that any disposal of liabilities or Debtor liabilities has occurred, as if that disposal of liabilities or Debtor liabilities had not occurred. In the case of a Distressed Disposal effected by, or at the request of, the Security Agent (acting in accordance with the Intercreditor Agreement), the Security Agent shall take reasonable care to obtain a fair market price in the prevailing market conditions (though the Security Agent shall not have any obligation to postpone any such Distressed Disposal or disposal of liabilities in order to achieve a higher price). Where borrowing liabilities, guarantee liabilities and/or other liabilities in relation to a member of the Group would otherwise be released pursuant to the terms of the Intercreditor Agreement, the creditor concerned may elect (subject to certain conditions) to have those borrowing liabilities, guarantee liabilities and/or, as the case may be, other liabilities transferred to the Senior Notes Issuer, in which case the Security Agent is irrevocably authorized (to the extent legally possible and at the cost of the relevant Debtor or the Senior Notes Issuer and without any consent, sanction, authority or further confirmation from any Creditor or Debtor) to execute such documents as are required to so transfer those liabilities. If prior to the first date on which the discharge date for the Senior Notes and any Permitted Parent Financing Debt has occurred, a Distressed Disposal is being effected such that, generally, the guarantees of the Senior Notes and the guarantees of any Permitted Parent Financing Debt or any security over the assets of a Subordinated Debt Issuer or any Subordinated Guarantor will be released and/or the Senior Notes Liabilities and any Permitted Parent Financing Liabilities will be released or disposed of, it is a further condition to the release that either: (a) (b) the Senior Notes Trustee and any Senior Notes Creditor Representative has approved the release; or where shares or assets of a Subordinated Guarantor or assets of a Subordinated Debt Issuer are sold: (i) (ii) the proceeds of such sale or disposal are in cash (or substantially in cash); all claims of the Senior Creditors (other than in relation to performance bonds or guarantees or similar instruments) against a member of the Group (if any), all of whose shares (other than any minority interest not owned by members of the Group) are sold or disposed of pursuant to such Enforcement Action, are unconditionally released and discharged or sold or disposed of concurrently with such sale (and are not assumed by the purchaser or one of its affiliates), and all security under the security documents in respect of the assets that are sold or disposed of is simultaneously and unconditionally released and discharged concurrently with such sale, provided that, if each Senior Agent (acting reasonably and in good faith): (A) (B) determines that the Senior Creditors will recover a greater amount if any such claim is sold or otherwise transferred to the purchaser or one of its affiliates and not released or discharged; and serves a written notice on the Security Agent confirming the same, 120

140 the Security Agent shall be entitled to sell or otherwise transfer such claim to the purchaser or one of its affiliates; and (iii) such sale or disposal is made: (A) (B) pursuant to a public auction in respect of which the Primary Creditors are entitled to participate; or where a financial adviser selected by the Security Agent has delivered an opinion in respect of such sale or disposal, that the amount received in connection therewith, generally, is fair from a financial point of view. Application of Proceeds Order of Application The Intercreditor Agreement provides that all amounts from time to time received or recovered by the Security Agent pursuant to the terms of any debt document or in connection with the realization or enforcement of all or any part of the security (for the purposes of this Application of Proceeds section and the Equalization of the Senior Creditors section, the Recoveries ) shall be applied by the Security Agent at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law (and subject to the provisions of this Application of Proceeds section), in the following order of priority: (a) (b) (c) (d) in discharging any sums owing to the Security Agent, any receiver or any delegate; in discharging any sums owing to any Senior Agent (in respect of Senior Agent Liabilities), any Super Senior Creditor Representative (in respect of Permitted Super Senior Financing Agent Liabilities), any Senior Creditor Representative (in respect of Permitted Senior Financing Agent Liabilities), any Subordinated Creditor Representative (in respect of Permitted Parent Financing Agent Liabilities) or any Senior Secured Notes Trustee Amounts or Senior Notes Trustee Amounts on a pro rata and pari passu basis; in payment of all costs and expenses incurred by any Agent or Primary Creditor in connection with any realization or enforcement of the security taken in accordance with the terms of the Intercreditor Agreement or any action taken at the request of the Security Agent under the Intercreditor Agreement; in respect of Recoveries resulting from the realization or enforcement of all or any part of the security or a transaction in lieu thereof, in payment to: (i) (ii) (iii) the RCF Facility Agent on its own behalf and on behalf of the arrangers under the Revolving Credit Facility Agreement and the Senior Lenders; the priority Hedge Counterparties; and any Super Senior Creditor Representative; for application towards the discharge of: (A) (B) (C) the liabilities of the Debtors owing to the arrangers under or in connection with the Revolving Credit Facility and the Senior Lender Liabilities (in accordance with the terms of the RCF Finance Documents); the priority Hedging Liabilities (on a pro rata basis between the priority Hedging Liabilities of each priority Hedge Counterparty); and the liabilities of the Debtors owing to the arrangers with respect to the Permitted Super Senior Financing Debt and the Permitted Super Senior Financing Liabilities (other than the Permitted Super Senior Financing Agent Liabilities) (in accordance with the terms of the Permitted Super Senior Financing Documents and, if there is more than one Permitted Super Senior Financing Agreement, on a pro rata basis between the Permitted Super Senior Financing Debt in respect of each Permitted Super Senior Financing Agreement), on a pro rata basis and pari passu between the immediately preceding paragraphs (A), (B) and (C) above; 121

141 (e) in payment to: (i) (ii) (iii) each Senior Secured Notes Trustee on its own behalf and on behalf of the Senior Secured Noteholders; the non-priority Hedge Counterparties; and each Senior Creditor Representative on its own behalf and on behalf of the arrangers with respect to the Permitted Senior Financing Debt and the Permitted Senior Financing Creditors; and for application towards the discharge of: (A) (B) (C) the Senior Secured Notes Liabilities (other than sums owing to the Security Agent) (in accordance with the terms of the Senior Secured Notes Indenture and the other finance documents for the Senior Secured Notes); the non-priority Hedging Liabilities (on a pro rata basis between the non-priority Hedging Liabilities of each non-priority Hedge Counterparty); and the liabilities of the Debtors owing to the arrangers with respect to the Permitted Senior Financing Debt and the Permitted Senior Financing Liabilities (other than the Permitted Senior Financing Agent Liabilities) (in accordance with the terms of the Permitted Senior Financing Documents and, if there is more than one Permitted Senior Financing Agreement, on a pro rata basis between the Permitted Senior Financing Debt in respect of each Permitted Senior Financing Agreement), on a pro rata basis and pari passu between the immediately preceding paragraphs (A) to (C) above; (f) in payment to: (i) (ii) each Senior Notes Trustee on its own behalf and on behalf of the Senior Noteholders; and each Subordinated Creditor Representative on its own behalf and on behalf of the arrangers under the Permitted Parent Financing Debt and the Permitted Parent Financing Creditors, for application towards the discharge of: (A) (B) the Senior Notes Liabilities (other than any sums owing to the Security Agent) (in accordance with the terms of the Senior Notes Finance Documents); and the liabilities of the Debtors owing to the arrangers with respect to the Permitted Parent Financing Debt and the Permitted Parent Financing Liabilities (other than the Permitted Parent Financing Agent Liabilities) (in accordance with the terms of the Permitted Parent Financing Documents and, if there is more than one Permitted Parent Financing Agreement, on a pro rata basis between the Permitted Parent Financing Debt in respect of each Permitted Parent Financing Agreement), on a pro rata basis and pari passu between the immediately preceding paragraphs (A) and (B) above; (g) (h) if none of the Debtors is under any further actual or contingent liability under any Secured Debt Document, in payment to any person to whom the Security Agent is obliged to pay in priority to any Debtor; and the balance, if any, in payment to the relevant Debtor. Liabilities of the Subordinated Debt Issuer Generally, all amounts from time to time received or recovered by the Security Agent from or in respect of a Subordinated Debt Issuer pursuant to the terms of any debt document (other than in connection with the realization or enforcement of all or any part of the security) shall be held by the Security Agent on trust to apply them at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law, in the following order of priority: (a) in accordance with paragraph (a) under the caption Application of Proceeds Order of Application ; 122

142 (b) (c) (d) in accordance with paragraphs (e) and (f) under the caption Application of Proceeds Order of Application, provided that payments will be made on a pro rata basis and pari passu between each of the payments referred to in the foregoing paragraphs (e) and (to the extent relating to liabilities in respect of Senior Notes and/or Permitted Parent Financing Debt where the relevant Subordinated Debt Issuer is the issuer or, as the case may be, the borrower) (f); if none of the Debtors is under any further actual or contingent liability under any Secured Debt Document, in payment to any person to whom the Security Agent is obliged to pay in priority to any Debtor; and the balance, if any, in payment to the relevant Debtor. Equalization of the Senior Secured Creditors The Intercreditor Agreement generally provides that if, for any reason, any Senior Liabilities remain unpaid after the relevant enforcement date and the resulting losses are not borne by the Super Senior Creditors and the Senior Secured Creditors in the proportions which their respective exposures at the enforcement date bore to the aggregate exposures of all the Super Senior Creditors and the Senior Secured Creditors at the relevant enforcement date (or, in the case of Recoveries resulting from the realization or enforcement of all or any part of the security or a transaction in lieu thereof, in a manner reflecting the order of priority contemplated under the caption Application of Proceeds Order of Application ), the Super Senior Creditors and the Senior Secured Creditors (subject, in the case of amounts owing to the applicable trustee, to the terms of the Intercreditor Agreement) will make such payments among themselves as the Security Agent shall require to put the Super Senior Creditors and the Senior Secured Creditors in such a position that (after taking into account such payments) those losses are borne in those proportions (or, as the case may be, to otherwise reflect the order of priority contemplated under the caption Application of Proceeds Order of Application ). Required Consents The Intercreditor Agreement provides that, subject to certain exceptions, it and/or a security document may be amended or waived only with the written consent of: (a) (b) (c) (d) (e) (f) (g) (h) if the relevant amendment or waiver (the Proposed Amendment ) is prohibited by the Revolving Credit Facility Agreement, the RCF Facility Agent (acting on the instructions of the requisite Senior Lenders in accordance with the applicable provisions of the Revolving Credit Facility Agreement); if any Permitted Super Senior Financing Debt has been incurred and the Proposed Amendment is prohibited by the terms of the relevant Permitted Super Senior Financing Agreement, the Super Senior Creditor Representative in respect of that Permitted Super Senior Financing Debt (if applicable, acting on the instructions of the Majority Permitted Super Senior Financing Creditors); if any Senior Secured Notes have been issued and the Proposed Amendment is prohibited by the terms of the relevant Senior Secured Notes Indenture, the Senior Secured Notes Trustee; if any Permitted Senior Financing Debt has been incurred and the Proposed Amendment is prohibited by the terms of the relevant Permitted Senior Financing Agreement, the Senior Creditor Representative in respect of that Permitted Senior Financing Debt (if applicable, acting on the instructions of the Majority Permitted Senior Financing Creditors); if any Senior Notes have been issued and if the Proposed Amendment is prohibited by the terms of the relevant Senior Notes Indenture, the Senior Notes Trustee; if any Permitted Parent Financing Debt has been incurred and the Proposed Amendment is prohibited by the terms of the relevant Permitted Parent Financing Agreement, the Subordinated Creditor Representative in respect of that Permitted Parent Financing Debt (if applicable, acting on the instructions of the Majority Permitted Parent Financing Creditors); if a Hedge Counterparty is providing hedging to a Debtor under a hedging agreement, that Hedge Counterparty (in each case only to the extent that the relevant amendment or waiver adversely affects the continuing rights and/or obligations of that Hedge Counterparty and is an amendment or waiver which is expressed to require the consent of that Hedge Counterparty under the applicable hedging agreement, as notified by the Senior Notes Issuer to the Security Agent at the time of the relevant amendment or waiver); certain investors as permitted under the Intercreditor Agreement; and 123

143 (i) the Senior Notes Issuer. Notwithstanding the foregoing, any amendment or waiver of any Secured Debt Document that is made or effected in connection with any Debt Refinancing (see Debt Refinancing above), any incurrence of additional and/or refinancing debt (as referred to in Ranking and Priority Additional and/or Refinancing Debt above) or non-distressed Disposal (see Proceeds of Disposals Non-Distressed Disposals ) or any other provision of the Intercreditor Agreement or in connection with any other provision of any Secured Debt Document (provided that such amendment or waiver is not expressly prohibited by the terms of any other Secured Debt Document) is binding on all parties to the Intercreditor Agreement. The Intercreditor Agreement or a security document may be amended or waived by the Senior Notes Issuer and the Security Agent without the consent of any other party if that amendment or waiver is to cure defects or omissions, resolve ambiguities or inconsistencies or reflect changes of a minor, technical or administrative nature or as otherwise for the benefit of all or any of the Secured Parties. Any amendment, waiver or consent which relates only to the rights or obligations applicable to Creditors under a particular Debt Financing Agreement (and which does not materially and adversely affect the rights or interests of creditors under other Debt Financing Agreements) may be approved with only the consent of the Agent in respect of that Debt Financing Agreement and the Senior Notes Issuer. Amendments and Waivers: Security Documents Subject to the paragraph below and to certain exceptions under the Intercreditor Agreement and unless the provisions of any debt document expressly provide otherwise, the Security Agent may, if authorized by an Instructing Group, and if the Senior Notes Issuer consents, amend the terms of, waive any of the requirements of or grant consents under, any of the security documents which shall be binding on each party. Subject to the second and third paragraphs of the section captioned Exceptions below, any amendment or waiver of, or consent under, any security document which would adversely affect the nature or scope of the charged property or the manner in which the proceeds of enforcement of the security are distributed requires approval as set out under the section captioned Required Consents. Exceptions Subject to the following paragraphs of this Exceptions section, an amendment, waiver or consent which adversely relates to the express rights or obligations of an Agent, an arranger or the Security Agent (in each case in such capacity) may not be effected without the consent of that Agent, that arranger or the Security Agent (as the case may be) at such time. The foregoing shall not apply: (a) (b) to any release of security, claim or liabilities; or to any consent, which, in each case, the Security Agent gives in accordance with the provisions set out in the caption Proceeds of Disposals above. The first paragraph of this Exceptions section shall apply to an arranger only to the extent that the arranger liabilities are then owed to that arranger. Agreement to Override Unless expressly stated otherwise in the Intercreditor Agreement, the Intercreditor Agreement overrides anything in the debt documents to the contrary. Existing Senior Notes Proceeds Loan On the Hony Acquisition Completion Date and in connection with the acquisition of the Acquired PizzaExpress Group, the Parent, as lender, entered into a loan agreement with the Issuer, as borrower, pursuant to which the Parent lent to the Issuer the proceeds received from the offering of the Existing Senior Notes. The Parent s rights under the Existing Senior Notes Proceeds Loan have been pledged (i) on a first priority basis to secure the obligations under the Revolving Credit Facility and the Senior Secured Notes and (ii) on a second priority basis to secure the obligations under the Existing Senior Notes. 124

144 Interest on the Existing Senior Notes Proceeds Loan accrues at a rate that is not lower than the interest rate applicable to the Existing Senior Notes. The maturity date of the Existing Senior Notes Proceeds Loan is on or after the scheduled maturity date of the Existing Senior Notes. The Existing Senior Notes Proceeds Loan is governed by English law. Existing Funding Loan On the Hony Acquisition Completion Date and in connection with the acquisition of the Acquired PizzaExpress Group, the Issuer, as lender, entered into the Funding Loan Agreement with PEGL, as borrower, pursuant to which PEGL owes a receivable to the Issuer for the transfer of shares in the Acquired PizzaExpress Group. The Issuer, using the proceeds received from the offering of the Original Senior Secured Notes and together with the amount borrowed under the Existing Senior Notes Proceeds Loan, applied the proceeds primarily to fund the Hony Acquisition. Interest on the Existing Funding Loan accrues at a rate that is not lower than the interest rate applicable to the Senior Secured Notes. The maturity date of the Existing Funding Loan is on or after the scheduled maturity date of the Senior Secured Notes. The Existing Funding Loan is governed by English law. Subordinated Shareholder Funding Subordinated Shareholder Loan Notes On the Hony Acquisition Completion Date and in connection with the acquisition of the Acquired PizzaExpress Group, PizzaExpress Group Holdings Limited ( PEGHL ) issued million of 10% Unsecured Notes due 2024 ( Subordinated Shareholder Loan Notes ) to Crystal Bright Developments Limited, the entity through which Hony Capital indirectly holds its shares in the Group. The interest is non-cash pay interest. Intercompany Loan Agreement In connection with the acquisition of the Acquired PizzaExpress Group, PEGHL made a loan in the amount of million (the Intercompany Loan ) to the Parent, pursuant to the Intercompany Loan Agreement between PEGHL, as lender, and the Parent, as borrower, dated as of the Hony Acquisition Completion Date (the Intercompany Loan Agreement ). The Parent on-lent the proceeds of the Intercompany Loan to its subsidiaries primarily to fund the Hony Acquisition. The rights of the lender under the Intercompany Loan Agreement are subordinated to the rights of the secured creditors of the borrower pursuant to the Intercreditor Agreement. Interest on the Intercompany Loan is non-cash pay interest accruing at a rate of 10% per annum. The maturity date of the Intercompany Loan is August 18, Intercompany Loan On or about the China Acquisition Completion Date, the Issuer as lender expects to enter into an intercompany loan with PizzaExpress Group Limited as borrower to on-lend the net proceeds of the Offering for purposes of the China Acquisition. 125

145 DESCRIPTION OF THE NOTES PizzaExpress Financing 2 plc (the Issuer ) issued an additional 55,000,000 aggregate principal amount of 6.625% Senior Secured Notes due 2021 (the New Notes ) under the indenture (the Indenture ) dated as of July 31, 2014 (the Indenture ) among, inter alios, the Issuer, PizzaExpress Financing 1 plc (the Company ), Deutsche Trustee Company Limited, as trustee (the Trustee ) and Deutsche Bank AG, London Branch, as security agent (the Security Agent ), as amended or supplemented from time to time. Pursuant to the Indenture, the Issuer had issued 410,000,000 aggregate principal amount of 6.625% Senior Secured Notes due 2021 (the Original Notes ) on July 31, 2014 (the Issue Date ). The New Notes were initially issued bearing temporary international securities identification numbers (the ISINs ) and temporary common codes that differ from the original ISINs and original common codes assigned to the Original Notes, and also bear an applicable restrictive U.S. Securities Act legend referred to under the heading Transfer Restrictions in this Listing Particulars. See Transfer and Exchange. On and from the applicable consolidation date, the New Notes will be consolidated and fully fungible with the Original Notes. The consolidation date for New Notes sold outside the United States in reliance on Regulation S under the U.S. Securities Act will be the earlier of 40 days after the later of the date of issuance of the New Notes and the earliest date or dates permitted under U.S. federal securities laws. The consolidation date for New Notes sold within the United States to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act will be the earlier of one year after the later of the date of the original issue of these New Notes and the earliest date or dates permitted under U.S. federal securities laws. Following the replacement of the applicable temporary ISINs and temporary common codes as set forth under Listing and General Information, the New Notes will become fully fungible with the Original Notes for trading purposes. The New Notes constitute Additional Notes (as defined in the Indenture), and will be part of the same series as the Original Notes and will become fully fungible with the Original Notes following termination of certain U.S. selling restrictions. In addition, the New Notes, the Original Notes and any other Additional Notes (as defined below) issued under the Indenture constitute a single class of debt securities for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase except in relation to the special mandatory redemption discussed below. The Original Notes, and the New Notes that are issued in the Offering, will collectively be referred to in this Description of the Notes, together with any Additional Notes issued after the date hereof, as the Notes. The Security Documents referred to below under Security describe the terms of the pledges and assignments that secure the Notes. You can find the definitions of certain terms used in this description under Certain Definitions. In this Description of the Notes, the term Issuer refers only to PizzaExpress Financing 2 plc (formerly Twinkle Pizza plc), a public limited company organized under the laws of England and Wales, and any successor obligor to PizzaExpress Financing 2 plc of the Notes, and not to any of its subsidiaries or to its direct parent, the Company, and the term Company refers only to PizzaExpress Financing 1 plc, a public limited company incorporated under the laws of England and Wales, and any successor obligor to PizzaExpress Financing 1 plc of its guarantee of the Notes. The Guarantors that are Restricted Subsidiaries of the Issuer are referred to herein as the Subsidiary Guarantors, and each guarantee provided by such a Subsidiary Guarantor, a Subsidiary Guarantee. The proceeds of the offering of the New Notes sold in the Offering will be used by the Issuer to fund, directly or indirectly, the first installment of consideration for the acquisition of all of the issued and outstanding capital stock of PizzaExpress (Hong Kong) Limited, including any adjustments or interest payments under the agreement governing such acquisition, for general corporate purposes and to pay fees, costs and expenses incurred in connection with the Transactions (as defined above in the section entitled Certain Definitions ), as set forth in the Listing Particulars under the caption Use of Proceeds. The Notes will be subject to a special mandatory redemption. Please see Special Mandatory Redemption. The New Notes were issued in private transactions that are not subject to the registration requirements of the Securities Act. See Notice to Investors. The terms of the Notes include those stated in the Indenture and do not incorporate provisions by reference to, or be subject to, the Trust Indenture Act. The Notes are subject to all such terms pursuant to the provisions of the Indenture, and Holders of the Notes are referred to the Indenture for a statement thereof. The Indenture is subject to the terms of the Intercreditor Agreement and any Additional Intercreditor Agreements (as defined below). The terms of the Intercreditor Agreement are important to understanding the terms and ranking of the Liens on the Collateral (each as defined below) securing the Notes. Please see Description of Certain Financing Arrangements Intercreditor Agreement for a description of certain terms of the Intercreditor Agreement. 126

146 The following is a summary of the material provisions of the Indenture and the Security Documents and does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all provisions of the Indenture and the Security Documents, respectively. Because this is a summary, it may not contain all the information that is important to you. You should read the Indenture and the Security Documents in their entirety. Copies of the Indenture and the Intercreditor Agreement are available as described under Available Information. The Original Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof. The New Notes are also listed on the Official List of the Irish Stock Exchange and have been admitted for trading on the Global Exchange Market thereof. Brief Description of the Notes and the Guarantees The Notes are or will be senior obligations of the Issuer, secured by the Collateral described below on a first-priority basis along with obligations under the Revolving Credit Facility, certain Hedging Agreements and certain other future indebtedness (although any liabilities in respect of obligations under the Revolving Credit Facility, certain Hedging Agreements and certain other future indebtedness that are secured by the Collateral will receive priority over the Holders with respect to any proceeds received upon any enforcement action over the Collateral); are or will be senior in right of payment to any Subordinated Indebtedness of the Issuer, including the senior subordinated guarantee of the Senior Notes given by the Issuer; are or will be effectively senior in right of payment to any existing or future unsecured obligations of the Issuer, to the extent of the value of the Collateral that is available to satisfy the obligations under the Notes; and are or will be guaranteed on a senior basis by the Guarantors, subject to the guarantee limitations described herein. The Parent Guarantee is the senior obligation of the Company, secured by the Collateral described below on a first priority basis along with obligations under the Revolving Credit Facility and certain Hedging Agreements (although any liabilities in respect of obligations under the Revolving Credit Facility and certain Hedging Agreements that are secured by the Collateral will receive priority over the Holders with respect to any proceeds received upon any enforcement action over the Collateral); is senior in right of payment to any Subordinated Indebtedness of the Company; is senior in right of payment to any future Subordinated Shareholder Funding of the Company; is effectively senior in right of payment to any existing or future unsecured obligations of the Company, to the extent of the value of the Collateral that is available to satisfy the obligations under the Parent Guarantee; and is effectively senior in right of payment to any existing or future obligations of the Company secured on a basis junior to the Parent Guarantee, including the Senior Notes, to the extent of the value of the Collateral that is available to satisfy the obligations under the Notes. The Subsidiary Guarantees are or will be the senior obligations of the relevant Subsidiary Guarantor, secured by the Collateral described below on a first priority basis along with obligations under the Revolving Credit Facility, certain Hedging Agreements and certain other future indebtedness (although any liabilities in respect of obligations under the Revolving Credit Facility, certain Hedging Agreements and certain other future indebtedness that are secured by the Collateral will receive priority over the Holders with respect to any proceeds received upon any enforcement action over the Collateral); are or will be senior in right of payment to any Subordinated Indebtedness of the relevant Subsidiary Guarantor; 127

147 are or will be effectively senior in right of payment to any existing or future unsecured obligations of the relevant Subsidiary Guarantor, to the extent of the value of the Collateral that is available to satisfy the obligations under the Subsidiary Guarantee; are or will be effectively senior in right of payment to any existing or future obligations of the relevant Subsidiary Guarantor secured on a basis junior to its Subsidiary Guarantee, to the extent of the value of the Collateral that is available to satisfy the obligations under the Notes; and are or will be subject to limitations described herein. Principal and Maturity The Issuer issued in the Offering 55 million in aggregate principal amount of New Notes pursuant to the Indenture. The Issuer had issued 410,000,000 aggregate principal amount of the Original Notes on July 31, The Original Notes are, and the New Notes were, issued in minimum denominations of 100,000 and in integral multiples of 1,000 in excess thereof. The Notes will mature on August 1, The rights of holders of beneficial interests in the Notes to receive the payments on such Notes are subject to applicable procedures of Euroclear and Clearstream. If the due date for any payment in respect of any Notes is not a Business Day at the place at which such payment is due to be paid, the Holder thereof will not be entitled to payment of the amount due until the next succeeding Business Day at such place, and will not be entitled to any further interest or other payment as a result of any such delay. Interest Interest on the Notes accrues at the rate of 6.625% per annum and is payable, in cash, semi-annually in arrears on February 1 and August 1 of each year, commencing, in the case of the New Notes, on August 1, 2015, to Holders of record on the immediately preceding January 15 and July 15, respectively. Interest on the Notes accrues from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months. Each interest period shall end on (but not include) the relevant interest payment date. Additional Notes From time to time, subject to the Issuer s compliance with the covenants described under the headings Certain Covenants Limitation on Indebtedness and Certain Covenants Limitation on Liens, the Issuer is permitted to issue additional Notes, which shall have terms substantially identical to the Notes except in respect of any of the following terms which shall be set forth in an Officer s Certificate delivered by the Issuer to the Trustee ( Additional Notes ): (1) the title of such Additional Notes; (2) the aggregate principal amount of such Additional Notes; (3) the date or dates on which such Additional Notes will be issued; (4) the rate or rates (which may be fixed or floating) at which such Additional Notes shall bear interest and, if applicable, the interest rate basis, formula or other method of determining such interest rate or rates, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable or the method by which such dates will be determined, the record dates for the determination of Holders thereof to whom such interest is payable and the basis upon which such interest will be calculated; (5) the currency or currencies in which such Additional Notes shall be denominated and the currency in which cash or government obligations in connection with such series of Additional Notes may be payable; (6) the date or dates and price or prices at which, the period or periods within which, and the terms and conditions upon which, such Additional Notes may be redeemed, in whole or in part; (7) if other than in denominations of 100,000 and in integral multiples of 1,000 in excess thereof, the denominations in which such Additional Notes shall be issued and redeemed; and (8) the ISIN, Common Code, CUSIP or other securities identification numbers with respect to such Additional Notes. 128

148 Such Additional Notes will be treated, along with all other Notes, as a single class for the purposes of the Indenture with respect to waivers, amendments and all other matters which are not specifically distinguished for such series. Unless the context otherwise requires, for all purposes of the Indenture and this Description of the Notes, references to Notes shall be deemed to include references to the Notes initially issued on the Issue Date as well as any Additional Notes. Additional Notes may also be designated to be of the same series as the Notes initially issued on the Issue Date, but only if they have terms substantially identical in all material respects to such initial Notes. However, in order for any Additional Notes to have the same ISIN, CUSIP or common code, as applicable, as the Notes initially issued on the Issue Date, such Additional Notes must be fungible with the initial Notes for U.S. federal income tax purposes. Methods of Receiving Payments on the Notes Principal, premium, if any, interest and Additional Amounts (defined below), if any, on the Global Notes (as defined below) are or will be payable at the specified office or agency of one or more Paying Agents; provided that all such payments with respect to Notes represented by one or more Global Note registered in the name of or held by a nominee of Euroclear or Clearstream, as applicable, are or will be made by wire transfer of immediately available funds to the account specified by the Holder or Holders thereof. Principal, premium, if any, interest and Additional Amounts, if any, on any certificated securities ( Definitive Registered Notes ) are or will be payable at the specified office or agency of one or more Paying Agents in London maintained for such purposes. In addition, interest on the Definitive Registered Notes may be paid by check mailed to the person entitled thereto as shown on the register for the Definitive Registered Notes. See Paying Agent and Registrar for the Notes. Paying Agent and Registrar for the Notes The Issuer will maintain one or more paying agents (each, a Paying Agent ) for the Notes, including in the City of London. The Issuer has also undertaken, to the extent possible, to use reasonable efforts to maintain a paying agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the European Council Directive 2003/48/EC regarding the taxation of savings income (the Directive ). As of the date hereof, the initial Paying Agent for the Notes is Deutsche Bank AG, London Branch in the City of London. The Issuer will also maintain one or more registrars (each, a Registrar ) with offices in Luxembourg, for so long as the Notes are listed on the Official List of the Irish Stock Exchange and its rules so require. The Issuer will also maintain a transfer agent (the Transfer Agent ) in Luxembourg. As of the date hereof, the initial Registrar and Transfer Agent is Deutsche Bank Luxembourg S.A. The Registrar, the Paying Agent and the Transfer Agent, respectively, will maintain a register reflecting ownership of Definitive Registered Notes outstanding from time to time, if any, and will make payments on and facilitate transfers of Definitive Registered Notes on behalf of the Issuer. The Issuer may change any Paying Agent, Registrar or Transfer Agent for the Notes without prior notice to the Holders of the Notes. The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar in respect of the Notes. For so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof and the rules of the Irish Stock Exchange so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or Transfer Agent in a newspaper having a general circulation in Dublin, Ireland (which is expected to be The Irish Times) or, to the extent and in the manner permitted by such rules, post such notice on the official website of the Irish Stock Exchange ( Transfer and Exchange The Notes are or will be issued in the form of registered notes in global form without interest coupons, as follows: The Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act ( Rule 144A ) are (with respect to the Original Notes) and will initially be (with respect to the New Notes) represented by one or more global notes in registered form without interest coupons attached (the Original 144A Global Notes and New 144A Global Notes, respectively and, together, the 144A Global Notes ). The Original 144A Global Notes were, upon issuance, deposited with and registered in the name of the common depositary for the accounts of Euroclear and Clearstream. The New 144A Global Notes will, upon issuance, be deposited with and registered in the name of the common depositary for the accounts of Euroclear and Clearstream. 129

149 The Notes sold outside the United States pursuant to Regulation S under the Securities Act are (with respect to the Original Notes) and will initially be (with respect to the New Notes) represented by one or more global notes in registered form without interest coupons attached ((the Original Regulation S Global Notes and New Regulation S Global Notes, respectively and, together, the Regulation S Global Notes and together with the 144A Global Notes, the Global Notes ). The Original Regulation S Global Notes were, upon issuance, deposited with and registered in the name of the common depositary for the accounts of Euroclear and Clearstream. The New Regulation S Global Notes will, upon issuance, be deposited with and registered in the name of the common depositary for the accounts of Euroclear and Clearstream. Ownership of interests in the Global Notes ( Book-Entry Interests ) is and will be limited to persons that have accounts with Euroclear or Clearstream or persons that may hold interests through such participants. Ownership of interests in the Book-Entry Interests and transfers thereof are and will be subject to the restrictions on transfer and certification requirements summarized below and described more fully under Transfer Restrictions. In addition, transfers of Book-Entry Interests between participants in Euroclear or participants in Clearstream are and will be effected by Euroclear or Clearstream, as applicable, pursuant to customary procedures and subject to the applicable rules and procedures established by Euroclear or Clearstream, as applicable, and their respective participants. Book-Entry Interests in the 144A Global Notes (the 144A Book-Entry Interests ) may be transferred to a person who takes delivery in the form of Book-Entry Interests in the Regulation S Global Notes (the Regulation S Book-Entry Interests ) only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. During a one-year period after the issuance of the New Notes, the New Rule 144A Global Notes will have a temporary ISIN and Common Code. After the one-year period ends, the ISIN and Common Code for Book-Entry Interests in the New 144A Global Note will automatically convert into the same ISIN and Common Code as the Original 144A Global Notes. Prior to 40 days after the issuance of the New Notes, ownership of Regulation S Book-Entry Interests in the New Notes will be limited to persons that have accounts with Euroclear or Clearstream or persons who hold interests through Euroclear or Clearstream, and any sale or transfer of such interest to U.S. persons (as defined in Regulation S) shall not be permitted during such period unless such resale or transfer is made pursuant to Rule 144A. During this 40-day period, the New Regulation S Global Notes will have a temporary ISIN and Common Code. After the 40-day period ends, the ISIN and Common Code for Book-Entry Interests in the New Regulation S Global Notes will automatically convert into the same ISIN and Common Code as the Original Regulation S Global Notes. Subject to the foregoing, Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under Transfer Restrictions and in accordance with any applicable securities law of any other jurisdiction. Any Book-Entry Interest that is transferred as described in the immediately preceding paragraphs will, upon transfer, cease to be a Book-Entry Interest in the Global Note from which it was transferred and will become a Book-Entry Interest in the Global Note to which it was transferred. Accordingly, from and after such transfer, it will become subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in the Global Note to which it was transferred. If Definitive Registered Notes are issued, they will be issued only in minimum denominations of 100,000 aggregate principal amount, as the case may be, and integral multiples of 1,000 in excess thereof, upon receipt by the Registrar of instructions relating thereto and any certificates, opinions and other documentation required by the Indenture. It is expected that such instructions will be based upon directions received by Euroclear or Clearstream, as applicable, from the participant that owns the relevant Book-Entry Interests. Definitive Registered Notes issued in exchange for a Book-Entry Interest will, except as set forth in the Indenture or as otherwise determined by the Issuer to be in compliance with applicable law, be subject to, and will have a legend with respect to, the restrictions on transfer summarized below and described more fully under Transfer Restrictions. Subject to the restrictions on transfer referred to above, Notes issued as Definitive Registered Notes may be transferred or exchanged, in whole or in part, in minimum denominations of 100,000 in aggregate principal amount and integral multiples of 1,000 in excess thereof. In connection with any such transfer or exchange, the Indenture requires the transferring or exchanging Holder to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee at Euroclear or Clearstream, as applicable, to furnish certain certificates and opinions, and to pay any taxes, duties and governmental charges in connection with such transfer 130

150 or exchange. Any such transfer or exchange will be made without charge to the Holder, other than any taxes, duties and governmental charges payable in connection with such transfer. Notwithstanding the foregoing, the Issuer is not required to register the transfer or exchange of any Notes: (1) for a period of 15 days prior to any date fixed for the redemption of such Notes; (2) for a period of 15 days immediately prior to the date fixed for selection of such Notes to be redeemed in part; (3) for a period of 15 days prior to the record date with respect to any interest payment date applicable to such Notes; or (4) which the Holder has tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Disposition Offer (each, as defined below). The Issuer, the Trustee, the Registrar, the Transfer Agent and the Paying Agent will be entitled to treat the Holder of a Note as the owner of it for all purposes. Restricted Subsidiaries and Unrestricted Subsidiaries As of the date hereof, all of the Company s Subsidiaries are Restricted Subsidiaries. In the circumstances described below under Certain Definitions Unrestricted Subsidiary, the Company is permitted to designate Restricted Subsidiaries (other than the Issuer) as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the Indenture. Note Guarantees The obligations of the Issuer pursuant to the Notes, including any payment obligation resulting from a Change of Control (as defined below), are or will (subject to the Agreed Security Principles) be full and unconditionally guaranteed, jointly and severally on a senior basis, by the Company and certain subsidiaries of the Issuer (each, a Guarantor ). The current Guarantors, the type of guarantee of the Notes and their respective jurisdictions of incorporation is as follows: The Company... Parent Guarantee England PizzaExpress Group Limited... Subsidiary Guarantee England PandoraExpress 5 Limited... Subsidiary Guarantee England PandoraExpress 7 Limited... Subsidiary Guarantee England PizzaExpress Operations Limited... Subsidiary Guarantee England PandoraExpress 1 Limited... Subsidiary Guarantee England PandoraExpress 2 Limited... Subsidiary Guarantee England PandoraExpress 3 Limited... Subsidiary Guarantee England PandoraExpress 4 Limited... Subsidiary Guarantee England PizzaExpress Merchandising Limited... Subsidiary Guarantee England PizzaExpress (Restaurants) Limited... Subsidiary Guarantee England PizzaExpress (Wholesale) Limited... Subsidiary Guarantee England PizzaExpress Limited... Subsidiary Guarantee England Riposte Limited... Subsidiary Guarantee England Agenbite Limited... Subsidiary Guarantee Republic of Ireland For the twelve months ended April 5, 2015, the Subsidiary Guarantors accounted for 97.9% of EBITDA of PEGHL and its consolidated subsidiaries. As of the date hereof, the Company has granted the Parent Guarantee and also a senior guarantee of the Revolving Credit Facility. The Subsidiary Guarantors set forth above have delivered the relevant Subsidiary Guarantees. The Guarantees of each of the Guarantors is and will be subject to certain limitations. On the date of issuance of the New Notes, PizzaExpress International Holdings Limited, a private limited company incorporated under the laws of England and Wales, and an indirect wholly-owned subsidiary of the Parent, will provide a Guarantee. 131

151 In addition, as described below under Certain Covenants Additional Guarantees and subject to the Intercreditor Agreement and the Agreed Security Principles, each Restricted Subsidiary of the Company (other than the Issuer) that guarantees the Revolving Credit Facility, Public Debt or certain other indebtedness shall also enter into a supplemental indenture as a Guarantor of the Notes and accede to the Intercreditor Agreement. The Agreed Security Principles apply to the granting of guarantees and security in favor of obligations under the Revolving Credit Facility, the Notes and the Senior Notes. The Agreed Security Principles include restrictions on the granting of guarantees where, among other things, such grant would be restricted by general statutory or other legal limitations or requirements, financial assistance, capital maintenance, corporate benefit, fraudulent preference, earnings stripping, controlled foreign corporation, thin capitalization rules, retention of title claims and similar matters. Each guarantee of the Notes will be limited to the maximum amount that would not render the Guarantor s obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of foreign or state law, or as otherwise required under the Agreed Security Principles to comply with corporate benefit, financial assistance and other laws. By virtue of this limitation, a Guarantor s obligation under its Guarantee could be significantly less than amounts payable with respect to the Notes, or a Guarantor may have effectively no obligation under its Guarantee. See Risk Factors Risks Related to the Notes The Note Guarantees are subject to certain limitations on enforcement and may be limited by applicable law or subject to certain defenses that may adversely affect their validity and enforceability and Risk Factors Risks Related to the Notes and the Offering The insolvency laws of England and Wales or the jurisdiction of incorporation or formation of each of the Guarantors may not be as favorable to holders of Notes as U.S. insolvency laws or those of another jurisdiction with which you may be familiar. The Guarantee of a Guarantor will terminate and release upon: except in the case of the Parent Guarantee, a sale or other disposition (including by way of consolidation or merger) of ownership interests in the Guarantor (directly or through a parent company) such that the Guarantor does not remain a Restricted Subsidiary, or the sale or disposition of all or substantially all the assets of the Guarantor (other than to the Company or a Restricted Subsidiary), in each case, otherwise permitted by the Indenture; except in the case of the Parent Guarantee, the designation in accordance with the Indenture of the Guarantor as an Unrestricted Subsidiary; defeasance or discharge of the Notes, as provided in Defeasance and Satisfaction and Discharge; except in the case of the Parent Guarantee, with respect to a Guarantor that is not a Significant Subsidiary, so long as no Event of Default has occurred and is continuing, to the extent that such Guarantor (i) is unconditionally released and discharged from its liability with respect to the Revolving Credit Facility and (ii) does not guarantee any other Credit Facility or Public Debt; in accordance with the provisions of the Intercreditor Agreement or any Additional Intercreditor Agreement; or as described under Amendments and Waivers. Substantially all the operations of the Company and the Issuer are conducted through their Subsidiaries. Claims of creditors of Subsidiaries that are not Subsidiary Guarantors, including trade creditors, secured creditors and creditors holding debt and guarantees issued by those Subsidiaries, and claims of preferred and minority stockholders (if any) of those Subsidiaries generally will have priority with respect to the assets and earnings of those Subsidiaries over the claims of creditors of the Issuer and the Guarantors, including Holders of the Notes. The Notes and each Guarantee of the Notes therefore are and will be effectively subordinated to creditors (including trade creditors) and preferred and minority stockholders (if any) of Subsidiaries of the Company (other than the Guarantors). As of April 5, 2015, after giving effect to the Transactions, the total financial liabilities of the Company and the Issuer s Subsidiaries that do not guarantee the Notes, were de minimis. Although the Indenture limits the incurrence of Indebtedness, Disqualified Stock and Preferred Stock of Restricted Subsidiaries, the limitation is subject to a number of significant exceptions. Moreover, the Indenture does not impose any limitation on the incurrence by the Company or Restricted Subsidiaries of liabilities that are not considered Indebtedness, Disqualified Stock or Preferred Stock under the Indenture. See Certain Covenants Limitation on Indebtedness. 132

152 Security The Collateral Pursuant to the Security Documents, each of the Issuer and the Company have granted or will grant in favor of the security agent under the Indenture (the Security Agent ), liens and security interests on an equal and ratable first-priority basis, subject to the operation of the Agreed Security Principles, certain perfection requirements and any Permitted Collateral Liens, over those of its assets listed below: (a) (b) (c) (d) (e) substantially all the assets of the Company, the Issuer, PizzaExpress Group Limited, PizzaExpress Operations Limited, PizzaExpress Limited, PandoraExpress 1 Limited, PandoraExpress 2 Limited, PandoraExpress 3 Limited, PandoraExpress 4 Limited, PandoraExpress 5 Limited, PandoraExpress 7 Limited, PizzaExpress (Merchandising) Limited, PizzaExpress (Restaurants) Limited, PizzaExpress (Wholesale) Limited, Riposte Limited, Agenbite Limited and, as of the date of issuance of the New Notes, PizzaExpress International Holdings Limited; the Company s rights under the Existing Senior Notes Proceeds Loan (as defined above under the section entitled Certain Definitions ); the Issuer s rights under the Existing Funding Loan (as defined above under the section entitled Certain Definitions ); the rights of the Issuer under the documents governing the Hony Acquisition (as defined above under the section entitled Certain Definitions ); and the Issuer s rights under an intercompany loan to be dated on or about the China Acquisition Completion Date between the Issuer as lender and PizzaExpress Group Limited as borrower. On the date of the issuance of the New Notes, PizzaExpress International Holdings Limited will enter into an accession deed to the fixed and floating security agreement dated August 18, 2014 between, among others, the Issuer, the Parent and the Security Agent (the Debenture, which is one of the Security Documents). The Collateral secures and will secure the payment and performance when due of all of the obligations of the Issuer and the Guarantors under the Indenture, the Notes and the Guarantees of the Notes as provided in the relevant Security Document. Notwithstanding the foregoing, certain assets are not and will not be pledged (or the Liens not perfected) in accordance with the Agreed Security Principles, including: if the legal fees, registration fees, stamp duty, taxes and any other fees or costs associated with providing security is disproportionate to the benefit obtained by the Holders; if there is material incremental cost involved in creating security over all assets owned by a Guarantor in a particular category of assets, only the material assets in that category will be subject to security; if providing such security requires a consent or waiver before such assets may be secured or where providing such security would give a third party the right to terminate or otherwise amend any rights, benefits and/or obligations of the Company, the Issuer or any of their Subsidiaries in respect of those assets or require any of them to take any action materially adverse to their interests and where (subject to certain conditions being met) such consent or waiver cannot be obtained after the use of reasonable endeavors; if providing such security would be prohibited by applicable law, general statutory limitations, financial assistance, corporate benefit, capital maintenance, corporate benefit, fraudulent preference, earnings stripping, controlled foreign corporation, thin capitalization rules, retention of title claims and similar principles; if providing such security would be outside the applicable pledgor s legal capacity or contravene any legal prohibition, contractual restriction or regulatory condition or result in personal or criminal liability on the part of any officer or result in any significant risk of legal liability for the directors; if in certain jurisdictions it may be either impossible or impractical to create security over certain categories of assets, security will not be taken over such assets; 133

153 no security will be required over any assets subject to security in favor of a third party (and such assets shall be excluded from any relevant Security Document); no perfection action will be required if it would have a material adverse effect on the ability of the relevant Guarantor to conduct its operations and business in the ordinary course as otherwise permitted by the Indenture; no security will be taken over parts, stock, moveable plant, equipment or receivables if it would require labeling, segregation or periodic listing, filing, notification or specification of such parts, stock, moveable plant, equipment or receivables; and no perfection action will be required in jurisdictions where a Guarantor is not located. Issuer. The Agreed Security Principles with respect to the Notes are to be interpreted and applied in good faith by the The Collateral also secures the liabilities under the Revolving Credit Facility and may secure the liabilities under certain hedging arrangements and other indebtedness (including any Additional Notes). Pursuant to the Intercreditor Agreement, any liabilities in respect of obligations under the Revolving Credit Facility and hedging obligations permitted to be incurred under the covenant Certain Covenants Limitation on Indebtedness and permitted to be secured on the Collateral on a super priority basis to the Notes (see Certain Definitions Permitted Collateral Liens ) will receive priority over the Holders with respect to any proceeds received upon any enforcement action over any Collateral. Subject to certain conditions, including compliance with the covenant described under Certain Covenants Impairment of Security Interest, the Company is permitted to grant security over the Collateral in connection with future issuances of its Indebtedness or Indebtedness of its Restricted Subsidiaries, including any Additional Notes, in each case, as permitted under the Indenture and the Intercreditor Agreement. Any proceeds received upon any enforcement over any Collateral, after all liabilities in respect of obligations under the Revolving Credit Facility and certain hedging obligations that are secured have been discharged from such recoveries, will be applied pro rata in payment of all liabilities in respect of obligations under the Indenture and the Notes and any other Indebtedness of the Company or its Restricted Subsidiaries permitted to be incurred and secured by the Collateral pursuant to the Indenture and the Intercreditor Agreement. Administration of Security and Enforcement of Liens The Security Documents and the Collateral are administered by the Security Agent, in each case pursuant to the Intercreditor Agreement, for the benefit of all holders of secured obligations. The enforcement of the Security Documents is subject to the procedures set forth in the Intercreditor Agreement. For a description of certain terms of the Intercreditor Agreement, see Description of Certain Financing Arrangements Intercreditor Agreement. The ability of Holders of the Notes to realize upon the Collateral will be subject to various bankruptcy law limitations in the event of the Issuer s, a Guarantor s or the relevant Collateral grantor s or provider s bankruptcy. In addition, the enforcement of the Collateral will be limited to the maximum amount required under the Agreed Security Principles to comply with corporate benefit, financial assistance and other laws. As a result of these limitations, the enforceable amounts of the Issuer s obligation under the Notes and a Guarantor s obligation under its Guarantee of the Notes could be significantly less than the total amounts payable with respect to the Notes, or a Guarantor may have effectively no obligation under its Guarantee of the Notes. See Limitations on Validity and Enforceability of the Note Guarantees and the Security Interests and Certain Insolvency Law Considerations. The Security Documents are to be entered into by the relevant security provider and the Security Agent to the extent permitted by applicable laws. Subject to the terms of the Security Documents, the Issuer, the Guarantors and the other relevant providers or grantors of the Collateral have the right to remain in possession and retain exclusive control of the Collateral securing the Notes (other than as set forth in the Security Documents), to freely operate the Collateral, to collect, invest and dispose of any income therefrom and, where applicable, dispose of or use up assets that are Collateral. No appraisals of any of the Collateral have been prepared by or on behalf of the Issuer in connection with the issuance of the Original Notes or the New Notes. There can be no assurance that the proceeds from the sale of the Collateral would be sufficient to satisfy the obligations owed to the Holders of the Notes. By its nature, some or all of the Collateral is illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time or at all. 134

154 In addition, the Intercreditor Agreement places limitations on the ability of the Security Agent to cause the sale of certain of the Collateral. These limitations may include requirements that some or all of the Collateral be disposed of only pursuant to public auctions or only at a price confirmed by a valuation. See Description of Certain Financing Arrangements Intercreditor Agreement. The Indenture provides that by accepting a Note, each Holder is deemed to have: irrevocably appointed the Security Agent to act as its agent under the Intercreditor Agreement and the other relevant documents to which it is a party (including, without limitation, the Security Documents); irrevocably authorized the Trustee and the Security Agent to: (i) perform the duties and exercise the rights, powers and discretions that are specifically given to it under the Intercreditor Agreement or other documents to which it is a party (including, without limitation, the Security Documents), together with any other incidental rights, power and discretions; and (ii) execute each document, waiver, modification, amendment, renewal or replacement expressed to be executed by the Trustee and the Security Agent on its behalf; and accepted the terms and conditions of the Intercreditor Agreement and any Additional Intercreditor Agreement (as defined below) and each Holder is also deemed to have authorized the Trustee and the Security Agent to enter into any such Additional Intercreditor Agreement and to give effect to the provisions in the Intercreditor Agreement and any Additional Intercreditor Agreement. On the date of the issuance of the New Notes, PizzaExpress International Holdings Limited will enter into an accession deed to the Revolving Credit Facility and the Intercreditor Agreement. Priority The relative priority with regard to the Collateral as between (a) the lenders under the Revolving Credit Facility and other future indebtedness, (b) the counterparties under certain hedging contracts, (c) the Trustee and the Holders under the Indenture and (d) the trustee and the holders with respect to the Senior Notes, is established by the terms of the Intercreditor Agreement and the Security Documents, which provide that the obligations under the Notes will receive proceeds of enforcement of security over the Collateral only after the claims of lenders under the Revolving Credit Facility, certain other future indebtedness and certain hedging contracts are satisfied. See Description of Certain Financing Arrangements Intercreditor Agreement. In addition, pursuant to the Intercreditor Agreement or Additional Intercreditor Agreements entered into after the Issue Date, the Collateral may be pledged to secure other Indebtedness. See Release of Liens, Certain Covenants Impairment of Security Interest and Certain Definitions Permitted Collateral Liens. Release of Liens The Security Agent will take any action required to effectuate any release of Collateral required by a Security Document: (1) upon payment in full of principal, interest and all other obligations in respect of the Notes issued under the Indenture or discharge or defeasance thereof in accordance with the Indenture; (2) upon release of a Guarantee (with respect to the Liens securing such Guarantee granted by such Guarantor) in accordance with the Indenture; (3) in connection with any disposition of Collateral, directly or indirectly, to (a) any Person other than the Company or any of its Restricted Subsidiaries (but excluding any transaction subject to Certain Covenants Merger and Consolidation ) that is permitted by the Indenture (with respect to the Lien on such Collateral) or (b) the Company or any Restricted Subsidiary consistent with the Intercreditor Agreement; (4) as described under Amendments and Waivers; (5) automatically without any action by the Trustee, if the Lien granted in favor of the Revolving Credit Facility, Public Debt or such other Indebtedness that gave rise to the obligation to grant the Lien over such Collateral is released (other than pursuant to the repayment and discharge thereof); provided that such release would otherwise be permitted by another clause above; (6) as otherwise provided in the Intercreditor Agreement; and 135

155 (7) in order to effectuate a merger, consolidation, conveyance or transfer conducted in compliance with the covenant described under Certain Covenants Merger and Consolidation. Each of these releases shall be effected by the Security Agent and, to the extent required or necessary, the Trustee, without the consent of the Holders. The Company, the Issuer and the other Restricted Subsidiaries may also, among other things, without any release or consent by the Trustee or the Security Agent, conduct ordinary course activities with respect to Collateral, including, without limitation: (i) selling or otherwise disposing of, in any transaction or series of related transactions, any property subject to the Lien under the Security Documents which has become worn out, defective or obsolete or not used or useful in the business; (ii) selling, transferring, paying off or using up or otherwise disposing of current assets or intercompany receivables in the ordinary course of business; and (iii) any other action permitted by the Security Documents or the Intercreditor Agreement. Amendments to the Intercreditor Agreement and Additional Intercreditor Agreements In connection with the Incurrence of any Indebtedness by the Company or any of its Restricted Subsidiaries that is permitted to share the Collateral, the Trustee and the Security Agent shall, at the request of the Company, enter into with the Company, the relevant Restricted Subsidiaries and the holders of such Indebtedness (or their duly authorized representatives) one or more intercreditor agreements or deeds (including a restatement, replacement, amendment or other modification of the Intercreditor Agreement) (an Additional Intercreditor Agreement ), on substantially the same terms as the Intercreditor Agreement (or terms that are not materially less favorable to the Holders) and substantially similar as applies to sharing of the proceeds of security and enforcement of security, priority and release of security; provided that such Additional Intercreditor Agreement will not impose any personal obligations on the Trustee or Security Agent or adversely affect the personal rights, duties, liabilities, indemnification or immunities of the Trustee or the Security Agent under the Indenture or the Intercreditor Agreement. In connection with the foregoing, the Company shall furnish to the Trustee such documentation in relation thereto as it may reasonably require. As used herein, a reference to the Intercreditor Agreement will also include any Additional Intercreditor Agreement. In relation to the Intercreditor Agreement, the Trustee shall consent on behalf of the Holders to the payment, repayment, purchase, repurchase, defeasance, acquisition, retirement or redemption of any obligations subordinated to the Notes thereby; provided, however, that such transaction would comply with the covenant described herein under Certain Covenants Limitation on Restricted Payments. The Indenture also provides that, at the written direction of the Issuer and without the consent of Holders, the Trustee and the Security Agent shall from time to time enter into one or more amendments to any Intercreditor Agreement to: (1) cure any ambiguity, omission, defect or inconsistency of any such agreement, (2) increase the amount or types of Indebtedness covered by any such Intercreditor Agreement that may be Incurred by the Company or its Restricted Subsidiaries that is subject to any such Intercreditor Agreement (provided that such Indebtedness is Incurred in compliance with the Indenture), (3) add Guarantors or other Restricted Subsidiaries to the Intercreditor Agreement, (4) further secure the Notes (including Additional Notes), (5) make provision for pledges of the Collateral to secure Additional Notes or to implement any Permitted Collateral Liens or (6) make any other change to any such agreement that does not adversely affect the Holders of Notes in any material respect. The Issuer shall not otherwise direct the Trustee or Security Agent to enter into any amendment to any Intercreditor Agreement without the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding, except as otherwise permitted below under Amendments and Waivers or as permitted by the terms of such Intercreditor Agreement, and the Issuer may only direct the Trustee or Security Agent to enter into any amendment to the extent such amendment does not impose any personal obligations on the Trustee or Security Agent or, in the reasonable opinion of the Trustee or Security Agent, adversely affect their respective rights, duties, liabilities or immunities under the Indenture or any Intercreditor Agreement. The Indenture also provides that each Holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms and conditions of the Intercreditor Agreement (whether then entered into or entered into in the future pursuant to the provisions described herein) and to have authorized the Trustee and the Security Agent to enter into the Intercreditor Agreement and any Additional Intercreditor Agreement on each Holder s behalf. A copy of the Intercreditor Agreement or an Additional Intercreditor Agreement shall be made available to the Holders upon request and has been made available for inspection during normal business hours on any Business Day upon prior written request at the office of the Issuer and, for so long as any Notes are admitted for trading on the Global Exchange Market of the Irish Stock Exchange, at the offices of the Paying Agent in London. 136

156 Special Mandatory Redemption The 40-day period following the issue date of the New Notes is referred to herein as the Special Mandatory Redemption Period. If the China Acquisition Completion Date does not occur on or before one Business Day prior to the last Business Day of the Special Mandatory Redemption Period, the New Notes will be subject to a special mandatory redemption (the Special Mandatory Redemption ) at a price (the Special Mandatory Redemption Price ) equal to 100% of the initial issue price of such Notes plus accrued and unpaid interest and additional amounts, if any, from February 1, 2015 to the Special Mandatory Redemption Date (as defined below) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). The New Notes may also be redeemed at the Issuer s option at any time during the Special Mandatory Redemption Period at the Special Mandatory Redemption Price if, in the Issuer s judgment, the China Acquisition Completion Date will not occur prior to the expiration of the Special Mandatory Redemption Period. The date of such Special Mandatory Redemption is referred to herein as the Special Mandatory Redemption Date. Notice of the Special Mandatory Redemption will be delivered by the Issuer to the Trustee no later than one Business Day prior to the Special Mandatory Redemption Date and will provide that the New Notes shall be redeemed on the Special Mandatory Redemption Date. If at the time of a Special Mandatory Redemption, the New Notes are listed on the Irish Stock Exchange and the rules of the Irish Stock Exchange so require, the Issuer will notify the Irish Stock Exchange that a Special Mandatory Redemption has occurred and provide any relevant details relating to such Special Mandatory Redemption. For New Notes which are represented by global certificates held on behalf of Euroclear or Clearstream, notices may be given by delivery of the relevant notices to Euroclear or Clearstream for communication to entitled account holders. Optional Redemption Except as set forth herein and under Redemption for Taxation Reasons and Special Mandatory Redemption. the Notes are not redeemable at the option of the Issuer. At any time prior to August 1, 2017, the Issuer may redeem the Notes in whole or in part, at its option, upon not less than 10 nor more than 60 days prior notice at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the relevant Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the redemption date. At any time prior to August 1, 2017, the Issuer will be entitled at its option on one or more occasions, during any period consisting of 12 consecutive months ending on the day immediately preceding the first, second or third anniversary of the Issue Date, to redeem the Notes in an aggregate principal amount not to exceed 10% of the aggregate principal amount of the Notes, at a redemption price (expressed as a percentage of principal amount) of 103%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption may be made upon notice delivered or caused to be delivered to each Holder, not less than 10 nor more than 60 days prior to the redemption date. At any time and from time to time on or after August 1, 2017, the Issuer may redeem the Notes in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest to the redemption date: Twelve month period commencing August 1 in Percentage % % 2019 and thereafter % At any time and from time to time prior to August 1, 2017, the Issuer may redeem Notes with the net cash proceeds received by the Issuer from any Equity Offering at a redemption price equal to % plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 40% of the original aggregate principal amount of the Notes (including Additional Notes), provided that: (1) in each case the redemption takes place not later than 180 days after the closing of the related Equity Offering; and (2) not less than 60% of the original principal amount of the Notes being redeemed (including the principal amount of any Additional Notes) remain outstanding immediately thereafter. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof. 137

157 We may repurchase the Notes at any time and from time to time in the open market or otherwise. General Any redemption and notice of redemption may, at the Issuer s discretion, be subject to the satisfaction of one or more conditions precedent (including, in the case of a redemption related to an Equity Offering, the consummation of such Equity Offering). If the Issuer effects an optional redemption of the Notes, it will, for so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof and the rules of the Irish Stock Exchange so require, inform the Irish Stock Exchange of such optional redemption and confirm the aggregate principal amount of the Notes that will remain outstanding immediately after such redemption. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Issuer. Sinking Fund Notes. The Issuer is not required to make mandatory redemption payments or sinking fund payments with respect to the Selection and Notice If less than all of the Notes are to be redeemed at any time, the Registrar will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed, as certified to the Registrar, as applicable, by the Issuer, and in compliance with the requirements of Euroclear or Clearstream, or if the Notes are not so listed or such exchange prescribes no method of selection and the Notes are not held through Euroclear or Clearstream or Euroclear or Clearstream prescribe no method of selection, on a pro rata basis or by use of a pool factor; provided, however, that no Note of 100,000 in aggregate principal amount or less shall be redeemed in part and only Notes in integral multiples of 1,000 will be redeemed. The Registrar will not be liable for any selections made in accordance with this paragraph. For the Notes represented by global certificates held on behalf of Euroclear and Clearstream, notices may be given by delivery to Euroclear and Clearstream for communication to entitled account holders in substitution for below- mentioned mailing. So long as any Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof and the rules of the Irish Stock Exchange so require, any such notice to the Holders of the Notes shall to the extent and in the manner permitted by such rules be posted on the official website of the Irish Stock Exchange ( and in addition to such release, not less than 10 days nor more than 60 days prior to the redemption date, the Issuer will mail, or at the expense of the Issuer, cause to be mailed, such notice to Holders by first-class mail, postage prepaid, at their respective addresses as they appear on the registration books of the Registrar. Such notice of redemption may also be posted on the official website of the Irish Stock Exchange ( to the extent and in the manner permitted by the rules of the Irish Stock Exchange. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed, in which case a portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. In the case of a Global Note, an appropriate notation will be made on such Note to decrease the principal amount thereof to an amount equal to the unredeemed portion thereof. Subject to the terms of the applicable redemption notice (including any conditions contained therein), Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. Redemption for Taxation Reasons The Issuer or Successor Issuer, as defined below, may redeem the Notes in whole, but not in part, at any time upon giving not less than 10 nor more than 60 days notice to the Holders of the Notes (which notice will be irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed for redemption (a Tax Redemption Date ) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) and all Additional Amounts (see Withholding Taxes ), if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise, if any, if the Issuer, Successor Issuer or Guarantor determine in good faith that, as a result of: 138

158 (1) any change in, or amendment to, the law (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction (as defined below) affecting taxation; or (2) any change in, or amendment to, or the introduction of, an official position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) of a Relevant Taxing Jurisdiction (each of the foregoing in clauses (1) and (2), a Change in Tax Law ), the Issuer, Successor Issuer or Guarantor are, or on the next interest payment date in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to the Issuer, Successor Issuer or Guarantor (including, for the avoidance of doubt, the appointment of a new Paying Agent where this would be reasonable but not including assignment of the obligation to make payment with respect to the Notes). In the case of redemption due to withholding as a result of a Change in Tax Law in a jurisdiction that is a Relevant Taxing Jurisdiction at the date of the 2014 OM, such Change in Tax Law must become effective on or after the date of the 2014 OM. In the case of redemption due to withholding as a result of a Change in Tax Law in a jurisdiction that becomes a Relevant Taxing Jurisdiction after the date of the 2014 OM, such Change in Tax Law must become effective on or after the date the jurisdiction becomes a Relevant Taxing Jurisdiction, unless the Change in Tax Law would have applied to the predecessor of the Successor Issuer. Notice of redemption for taxation reasons will be published in accordance with the procedures described under Selection and Notice. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the Payor (see Withholding Taxes ) would be obliged to make such payment of Additional Amounts if a payment in respect of the Notes were then due and (b) unless at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer or Successor Issuer will deliver to the Trustee (a) an Officer s Certificate stating that it is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied and that it would not be able to avoid the obligation to pay Additional Amounts by taking reasonable measures available to it and (b) an opinion of an independent tax counsel of recognized standing to the effect that the Issuer, Successor Issuer or Guarantor has or have been or will become obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officer s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, without further inquiry, in which event it will be conclusive and binding on the Holders. The foregoing will apply mutatis mutandis to any jurisdiction in which any successor to the Issuer is incorporated or organized or any political subdivision or taxing authority or agency thereof or therein. Withholding Taxes All payments made by the Issuer, a Successor Issuer or Guarantor (a Payor ) on the Notes or the Guarantees, as defined below, will be made free and clear of and without withholding or deduction for, or on account of, any Taxes unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of: (1) the United Kingdom or any political subdivision or Governmental Authority thereof or therein having power to tax; (2) any jurisdiction from or through which payment on any such Note or Guarantee is made by the Issuer, Successor Issuer, Guarantor or their agents, or any political subdivision or Governmental Authority thereof or therein having the power to tax; or (3) any other jurisdiction in which the Payor is incorporated or organized, engaged in business or otherwise resident for tax purposes, or any political subdivision or Governmental Authority thereof or therein having the power to tax (each of clause (1), (2) and (3), a Relevant Taxing Jurisdiction ), will at any time be required from any payments made by a Payor with respect to any Note or Guarantee, including payments of principal, redemption price, premium, if any, or interest, the Payor will pay (together with such payments) such additional amounts (the Additional Amounts ) as may be necessary in order that the net amounts received in respect of such payments by the Holders or the Trustee, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts), will equal the amounts which would have been received in respect of such payments on any such Note or Guarantee in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable for or on account of: 139

159 (1) any Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant Holder or the beneficial owner of a Note (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over the relevant Holder or beneficial owner, if the relevant Holder or beneficial owner is an estate, nominee, trust, partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) but excluding, in each case, any connection arising solely from the acquisition, ownership or holding of such Note or the receipt of any payment in respect thereof; (2) any Taxes that are imposed or withheld by reason of the failure by the Holder or the beneficial owner of the Note to comply with a written request of the Payor addressed to the Holder, after reasonable notice, to provide certification, information, documents or other evidence concerning the nationality, residence or identity of the Holder or such beneficial owner or to make any declaration or similar claim or satisfy any other reporting requirement relating to such matters, which is required by a statute, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from all or part of such Taxes; (3) any Taxes that are payable otherwise than by deduction or withholding from a payment of the principal or, premium, if any, or interest, if any, on the Notes; (4) any estate, inheritance, gift, sales, excise, transfer, personal property or similar tax, assessment or other governmental charge; (5) any Taxes that are required to be deducted or withheld on a payment to an individual and that are required to be made pursuant to Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on taxation of savings income or any law implementing or complying with, or introduced in order to conform to such Directives; (6) any Taxes imposed in connection with a Note presented for payment (where presentation is permitted or required for payment) by or on behalf of a Holder or beneficial owner who would have been able to avoid such Tax by presenting the Note to, or otherwise accepting payment from, another paying agent; or (7) any combination of the above. Such Additional Amounts will also not be payable (x) if the payment could have been made without such deduction or withholding if the beneficiary of the payment had presented the Note for payment (where presentation is permitted or required for payment) within 15 days after the relevant payment was first made available for payment to the Holder or (y) where, had the beneficial owner of the Note been the Holder, such beneficial owner would not have been entitled to payment of Additional Amounts by reason of any of clauses (1) to (7) inclusive above. In addition, no Additional Amounts shall be paid with respect to any payment to any Holder who is a fiduciary or a partnership or other than the sole beneficial owner of such Notes to the extent that the beneficiary or settlor with respect to such fiduciary, the member of such partnership or the beneficial owner of such Notes would not have been entitled to Additional Amounts had such beneficiary, settlor, member or beneficial owner held such Notes directly. Notwithstanding anything to the contrary contained herein, the Issuer shall be entitled to withhold and deduct any amounts required to be deducted or withheld pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended, (the Code ) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any law implementing such an intergovernmental agreement) (any such withholding or deduction, a FATCA Withholding ), and the Issuer shall not be required to pay any additional amounts in respect of FATCA Withholding. The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes, in such form as provided in the ordinary course by the Relevant Taxing Jurisdiction and as is reasonably available to the Issuer and will provide such certified copies to the Trustee. Such copies shall be made available to the Holders upon request and will be made available at the offices of the Paying Agent if the Notes are then admitted for trading on the Global Exchange Market. If any Payor will be obligated to pay Additional Amounts under or with respect to any payment made on any Note or Guarantee, at least 30 days prior to the date of such payment, the Payor will deliver to the Trustee an Officer s Certificate stating the fact that Additional Amounts will be payable and the amount so payable and such other 140

160 information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date (unless such obligation to pay Additional Amounts arises less than 45 days prior to the relevant withholding tax or deduction payment date, in which case the Payor may deliver such Officer s Certificate as promptly as practicable after the date that is 30 days prior to the payment date). The Officer s Certificate must also set forth any other information reasonably necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant paying date. The Trustee will be entitled to rely solely on such Officer s Certificate as conclusive proof that such payments are necessary. Wherever in either the Indenture, the Guarantees or this Description of the Notes there are mentioned, in any context: (1) the payment of principal; (2) purchase prices in connection with a purchase of Notes; (3) interest; or (4) any other amount payable on or with respect to any of the Notes, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. The Payor will pay any present or future stamp, court or documentary taxes, or any other property or similar taxes, charges or levies that arise in any jurisdiction from the execution, delivery, registration or enforcement of any Notes, the Indenture, the Security Documents or any other document or instrument in relation thereto (other than a transfer of the Notes) excluding any such taxes, charges or levies imposed by any jurisdiction that is not a Relevant Taxing Jurisdiction, and the Payor agrees to indemnify the Holders for any such taxes paid by such Holders. The foregoing obligations of this paragraph will survive any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to the Issuer is organized or any political subdivision or taxing authority or agency thereof or therein. Change of Control If a Change of Control occurs, subject to the terms hereof, each Holder will have the right to require the Issuer to repurchase all (equal to 100,000 aggregate principal amount and integral multiples of 1,000 in excess thereof) of such Holder s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that the Issuer shall not be obliged to repurchase Notes as described under this Change of Control section in the event and to the extent that it has unconditionally exercised its right to redeem all of the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived. Unless the Issuer has unconditionally exercised its right to redeem all the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived, no later than the date that is 60 days after any Change of Control, the Issuer will mail a notice (the Change of Control Offer ) to each Holder of any such Notes, with a copy to the Trustee: (1) stating that a Change of Control has occurred or may occur and that such Holder has the right to require the Issuer to purchase such Holder s Notes at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest to, but not including, the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date) (the Change of Control Payment ); (2) stating the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the Change of Control Payment Date ); (3) describing the circumstances and relevant facts regarding the transaction or transactions that constitute the Change of Control; (4) describing the procedures determined by the Issuer, consistent with the Indenture, that a Holder must follow in order to have its Notes repurchased; and (5) if such notice is mailed prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control. 141

161 On the Change of Control Payment Date, if the Change of Control shall have occurred, the Issuer will, to the extent lawful: (1) accept for payment all Notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes so tendered; (3) deliver or cause to be delivered to the Trustee an Officer s Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Issuer in the Change of Control Offer; (4) in the case of Global Notes, deliver, or cause to be delivered, to the Paying Agent the Global Notes in order to reflect thereon the portion of such Notes or portions thereof that have been tendered to and purchased by the Issuer; and (5) in the case of Definitive Registered Notes, deliver, or cause to be delivered, to the relevant Registrar for cancellation all Definitive Registered Notes accepted for purchase by the Issuer. If any Definitive Registered Notes have been issued, the Paying Agent will promptly mail to each Holder of Definitive Registered Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate (or cause to be authenticated) and mail (or cause to be transferred by book-entry) to each Holder of Definitive Registered Notes a new Note equal in aggregate principal amount to the unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in an aggregate principal amount that is at least 100,000 and integral multiples of 1,000 in excess thereof. If and for so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof and the rules of the Irish Stock Exchange so require, the Issuer will publish notices relating to the Change of Control Offer as soon as reasonably practicable after the Change of Control Payment Date in a leading newspaper of general circulation in Ireland (which is expected to be The Irish Times) or, to the extent and in the manner permitted by such rules, post such notices on the official website of the Irish Stock Exchange ( The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders to require that the Issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The existence of a Holder s right to require the Issuer to repurchase such Holder s Notes upon the occurrence of a Change of Control may deter a third party from seeking to acquire the Company or its Subsidiaries in a transaction that would constitute a Change of Control. The Issuer will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations (or rules of any exchange on which the Notes are then listed) in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations (or exchange rules) conflict with provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations (or exchange rules) and will not be deemed to have breached its obligations, or require a repurchase of the Notes, under the Change of Control provisions of the Indenture by virtue of the conflict. Under the Revolving Credit Facility, the occurrence of a change of control under and as defined therein would permit each lender thereunder to require the repayment of such lender s commitments. Future debt of the Company or its Subsidiaries may prohibit the Issuer from purchasing Notes in the event of a Change of Control or provide that a Change of Control is a default or requires repurchase upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Issuer to purchase the Notes could cause a default under, or require a repurchase of, other debt, even if the Change of Control itself does not, due to the financial effect of the purchase on the Issuer. Finally, the Issuer s ability to pay cash to the Holders following the occurrence of a Change of Control may be limited by the Issuer s then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make the required purchase of the Notes. See Risk Factors Risks Related to our Structure We may not be able to obtain the funds required to repurchase the Notes upon a change of control. 142

162 The provisions of the Indenture relating to the Issuer s obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of Holders of a majority in outstanding aggregate principal amount of the Notes under the Indenture. Certain Covenants Limitation on Indebtedness The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company and any of the Restricted Subsidiaries may Incur Indebtedness if on the date of such Incurrence and after giving pro forma effect thereto (including pro forma application of the proceeds thereof), (i) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries is not less than 2.0 to 1.0 and (ii) if the Indebtedness to be Incurred is Senior Secured Indebtedness, the Consolidated Secured Leverage Ratio for the Company does not exceed 4.5 to 1.0. The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness: (1) Indebtedness Incurred pursuant to any Credit Facility and any Refinancing Indebtedness in respect thereof and guarantees in respect of such Indebtedness, not exceeding (i) the greater of 70 million and 75% of Consolidated EBITDA, plus (ii) in the case of any refinancing of any Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses Incurred in connection with such refinancing; (2) (a) guarantees by the Company or any Restricted Subsidiary of Indebtedness of the Company or any Restricted Subsidiary; or (b) without limiting the covenant described under Limitation on Liens, Indebtedness arising by reason of any Lien granted by or applicable to such Person securing Indebtedness of the Company or any Restricted Subsidiary so long as the Incurrence of such Indebtedness is permitted under the terms of the Indenture; (3) Indebtedness of the Company owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary; provided, however, that: (a) (b) if the Issuer or any Guarantor is the obligor on such Indebtedness and the obligee is not the Issuer or a Guarantor, such Indebtedness must be unsecured and ((i) except in respect of the intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Company and its Restricted Subsidiaries and (ii) only to the extent legally permitted (the Company and its Restricted Subsidiaries having completed all procedures required in the reasonable judgment of directors or officers of the obligee or obligor to protect such Persons from any penalty or civil or criminal liability in connection with the subordination of such Indebtedness)) expressly subordinated to the prior payment in full in cash of all obligations then due with respect to the Notes, in the case of the Issuer, or the Guarantee, in the case of a Guarantor; and any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Restricted Subsidiary of the Company and any sale or other transfer of any such Indebtedness to a Person other than the Company or a Restricted Subsidiary of the Company, shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (4) Indebtedness represented by (a) the Notes (other than any Additional Notes), (b) any Indebtedness (other than Indebtedness described in clauses (1) and (3) of this paragraph) outstanding on the Completion Date, including the loans of the proceeds of and the guarantees of and security granted with respect to the Senior Notes, (c) any Indebtedness of the PizzaExpress Group outstanding on the Completion Date, (d) Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (4) or clause (5) of this paragraph or Incurred pursuant to the first paragraph of this covenant and (e) Management Advances; (5) Indebtedness of any Person (i) Incurred and outstanding on the date on which such Person becomes a Restricted Subsidiary of the Company or another Restricted Subsidiary of the Company or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Company or any Restricted Subsidiary or (ii) Incurred to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Company or a Restricted Subsidiary; provided, 143

163 however, with respect to each of clause (5)(i) and (5)(ii), that at the time of such acquisition or other transaction (x) the Company would have been able to Incur 1.00 of additional Indebtedness pursuant to clause (i) of the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this clause (5) or (y) the Fixed Charge Coverage Ratio would not be lower than it was immediately prior to giving effect to such acquisition or other transaction; (6) Indebtedness under Currency Agreements, Interest Rate Agreements and Commodity Hedging Agreements entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries and not for speculative purposes (as determined in good faith by the Board of Directors or Senior Management of the Company); (7) Indebtedness represented by Capitalized Lease Obligations or Purchase Money Obligations, and in each case any Refinancing Indebtedness in respect thereof, in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (7) and then outstanding, will not exceed the greater of (A) 20 million and (B) 5.0% of Total Assets; (8) Indebtedness in respect of (a) workers compensation claims, self-insurance obligations, performance, indemnity, surety, judgment, appeal, advance payment, customs, VAT or other tax or other guarantees or other similar bonds, instruments or obligations and completion guarantees and warranties provided by the Company or a Restricted Subsidiary or relating to liabilities, obligations or guarantees Incurred in the ordinary course of business or in respect of any governmental requirement, (b) letters of credit, bankers acceptances, guarantees or other similar instruments or obligations issued or relating to liabilities or obligations Incurred in the ordinary course of business or in respect of any governmental requirement; provided, however, that upon the drawing of such letters of credit or similar instruments, the obligations are reimbursed within 30 days following such drawing, (c) the financing of insurance premiums in the ordinary course of business and (d) any customary cash management, cash pooling or netting or setting off arrangements in the ordinary course of business; (9) Indebtedness arising from agreements providing for customary guarantees, indemnification, obligations in respect of earn-outs or other adjustments of purchase price or, in each case, similar obligations, in each case, Incurred or assumed in connection with the acquisition or disposition of any business or assets or Person or any Capital Stock of a Subsidiary (other than guarantees of Indebtedness Incurred by any Person acquiring or disposing of such business or assets or such Subsidiary for the purpose of financing such acquisition or disposition); provided that the maximum liability of the Company and its Restricted Subsidiaries in respect of all such Indebtedness shall at no time exceed the gross proceeds, including the fair market value of non-cash proceeds (measured at the time received and without giving effect to any subsequent changes in value), actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (10) (a) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence; (b) (c) (d) Customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business; Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions Incurred in the ordinary course of business of the Company and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Company and its Restricted Subsidiaries; and Indebtedness Incurred by a Restricted Subsidiary in connection with bankers acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management of bad debt purposes, in each case Incurred or undertaken in the ordinary course of business on arm s length commercial terms on a recourse basis; (11) Indebtedness in an aggregate outstanding principal amount which, when taken together with any Refinancing Indebtedness in respect thereof and the aggregate principal amount of all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed the greater of 30 million and 8.0% of Total Assets, provided that the aggregate principal amount of such Indebtedness that may be incurred pursuant to this clause (11) by Restricted Subsidiaries that are not Guarantors or the Issuer shall not exceed 15 million; (12) Indebtedness in an aggregate outstanding principal amount which, when taken together with any Refinancing Indebtedness in respect thereof and the principal amount of all other Indebtedness Incurred pursuant to this clause (12) and then outstanding, will not exceed 100% of the Net Cash Proceeds received by the Company 144

164 from the issuance or sale (other than to a Restricted Subsidiary) of its Subordinated Shareholder Funding or its Capital Stock (other than Disqualified Stock, Designated Preference Shares or an Excluded Contribution) or otherwise contributed to the equity (other than through the issuance of Disqualified Stock, Designated Preference Shares or an Excluded Contribution) of the Company, in each case, subsequent to the Issue Date; provided, however, that (i) any such Net Cash Proceeds that are so received or contributed shall be excluded for purposes of making Restricted Payments under the first paragraph and clauses (1), (6) and (10) of the third paragraph of the covenant described below under Limitation on Restricted Payments to the extent the Company and its Restricted Subsidiaries Incur Indebtedness in reliance thereon and (ii) any Net Cash Proceeds that are so received or contributed shall be excluded for purposes of Incurring Indebtedness pursuant to this clause (12) to the extent the Company or any of its Restricted Subsidiaries makes a Restricted Payment under the first paragraph and clauses (1), (6) and (10) of the third paragraph of the covenant described below under Limitation on Restricted Payments in reliance thereon; (13) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing; (14) Indebtedness under daylight borrowing facilities Incurred in connection with the Transactions or any refinancing of Indebtedness (including by way of set-off or exchange) so long as any such Indebtedness is repaid within three days of the date on which such Indebtedness is Incurred; and (15) Indebtedness Incurred in connection with the acquisition of the business, assets (and assumption of related liabilities) or Capital Stock of PizzaExpress businesses in Hong Kong (and related cities and areas) and/or Shanghai (and related cities and areas) (including through the exercise of call options or other arrangements), in an amount under this clause (15) not to exceed 70 million. Notwithstanding the foregoing, Restricted Subsidiaries that are not Guarantors or the Issuer may not incur any Indebtedness under the first paragraph of this covenant, unless, immediately after giving effect to such Incurrence, the aggregate principal amount of Indebtedness incurred pursuant to the first paragraph by such Restricted Subsidiaries shall not exceed 30 million at any one time outstanding. For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant: (1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Company, in its sole discretion, will classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the clauses of the second paragraph or the first paragraph of this covenant; (2) guarantees of, or obligations in respect of letters of credit, bankers acceptances or other similar instruments relating to, or Liens securing, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included; (3) if obligations in respect of letters of credit, bankers acceptances or other similar instruments are Incurred pursuant to any Credit Facility and are being treated as Incurred pursuant to clause (1), (7), (11), (12) or (15) of the second paragraph above or the first paragraph above and the letters of credit, bankers acceptances or other similar instruments relate to other Indebtedness, then such other Indebtedness shall not be included; (4) the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; (5) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; (6) the amount of Indebtedness shall be determined as specified in the definition of Indebtedness; and (7) for the purposes of determining Consolidated EBITDA under clause (1)(i) of the second paragraph of this covenant, (i) pro forma effect shall be given to Consolidated EBITDA on the same basis as for calculating the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries and (ii) Consolidated EBITDA shall be measured on the most recent date on which new commitments are obtained (in the case of revolving facilities) or the date upon which Indebtedness is Incurred (in the case of term facilities). 145

165 Accrual of interest, accrual of dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest in the form of additional Indebtedness, the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock or the reclassification of commitments or obligations not treated as Indebtedness due to a change in GAAP to IFRS or U.S. GAAP, as applicable, will not be deemed to be an Incurrence of Indebtedness for purposes of the covenant described under this Limitation on Indebtedness. The amount of any Indebtedness outstanding as of any date shall be calculated as specified under the definition of Indebtedness. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary of the Company as of such date. For purposes of determining compliance with any pound sterling-denominated restriction on the Incurrence of Indebtedness, the Sterling Equivalent of the aggregate principal amount of Indebtedness denominated in another currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or, at the option of the Company, first committed, in the case of Indebtedness Incurred under a revolving credit facility; provided that: (a) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a currency other than pound sterling, and such refinancing would cause the applicable pound sterling-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such pound sterling-denominated restriction shall be deemed not to have been exceeded so long as the aggregate principal amount of such Refinancing Indebtedness does not exceed the aggregate principal amount of such Indebtedness being refinanced; (b) the Sterling Equivalent of the aggregate principal amount of any such Indebtedness outstanding on the Completion Date shall be calculated based on the relevant currency exchange rate in effect on the Completion Date; and (c) if and for so long as any such Indebtedness is subject to a Currency Agreement with respect to the currency in which such Indebtedness is denominated covering principal and interest on such Indebtedness, the amount of such Indebtedness, if denominated in pound sterling, will be the amount of the principal payment required to be made under such Currency Agreement and, otherwise, the Sterling Equivalent of such amount plus the Sterling Equivalent of any premium which is at such time due and payable but is not covered by such Currency Agreement. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or a Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Limitation on Restricted Payments The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to: (1) declare or pay any dividend or make any distribution on or in respect of the Company s or any Restricted Subsidiary s Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) except: (a) (b) dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company or in Subordinated Shareholder Funding; and dividends or distributions payable to the Company or a Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making such dividend or distribution, to holders of its Capital Stock other than the Company or another Restricted Subsidiary on no more than a pro rata basis, measured by value); (2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect Parent of the Company held by Persons other than the Company or a Restricted Subsidiary of the Company (other than in exchange for Capital Stock of the Company (other than Disqualified Stock)); (3) make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Indebtedness (other than (a) any such payment, purchase, repurchase, redemption, defeasance or other acquisition or retirement or in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case, due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement and (b) any Indebtedness Incurred pursuant to clause (3) of the second paragraph of the covenant described under Limitation on Indebtedness ); 146

166 (4) make any payment (other than by capitalization of interest) on or with respect to, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Shareholder Funding; or (5) make any Restricted Investment in any Person; (any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (5) above are referred to herein as a Restricted Payment ), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (a) (b) (c) a Default shall have occurred and be continuing (or would result immediately thereafter therefrom); the Company is not able to Incur an additional 1.00 of Indebtedness pursuant to the first paragraph under the Limitation on Indebtedness covenant after giving effect, on a pro forma basis, to such Restricted Payment; or the aggregate amount of such Restricted Payment and all other Restricted Payments made subsequent to the Issue Date (and not returned or rescinded) (including Permitted Payments permitted below by clauses (5), (10), (11) and (17) of the second succeeding paragraph, but excluding all other Restricted Payments permitted by the second succeeding paragraph) would exceed the sum of (without duplication): (i) (ii) (iii) (iv) 50% of Consolidated Net Income for the period (treated as one accounting period) from the first day of the first fiscal quarter commencing prior to the Issue Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which internal consolidated financial statements of the Company are available (or, in the case such Consolidated Net Income is a deficit, minus 100% of such deficit); 100% of the aggregate Net Cash Proceeds, and the fair market value (as determined in accordance with the next succeeding paragraph) of property or assets or marketable securities, received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock or Designated Preference Shares) or Subordinated Shareholder Funding subsequent to the Issue Date or otherwise contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares) of the Company subsequent to the Issue Date (other than (1) the Equity Contribution, (2) Net Cash Proceeds or property or assets or marketable securities received from an issuance or sale of such Capital Stock to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Company or any Subsidiary of the Company for the benefit of its employees to the extent funded by the Company or any Restricted Subsidiary, (3) Net Cash Proceeds or property or assets or marketable securities to the extent that any Restricted Payment has been made from such proceeds in reliance on clause (6) of the second succeeding paragraph and (4) Excluded Contributions); 100% of the aggregate Net Cash Proceeds, and the fair market value (as determined in accordance with the next succeeding paragraph) of property or assets or marketable securities, received by the Company or any Restricted Subsidiary from the issuance or sale (other than to the Company or a Restricted Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any Subsidiary of the Company for the benefit of its employees to the extent funded by the Company or any Restricted Subsidiary) by the Company or any Restricted Subsidiary subsequent to the Issue Date of any Indebtedness that has been converted into or exchanged for Capital Stock of the Company (other than Disqualified Stock or Designated Preference Shares) or Subordinated Shareholder Funding (plus the amount of any cash, and the fair market value (as determined in accordance with the next succeeding paragraph) of property or assets or marketable securities, received by the Company or any Restricted Subsidiary upon such conversion or exchange); the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries resulting from: (A) (B) repurchases, redemptions or other acquisitions or retirements of any such Restricted Investment, proceeds realized upon the sale or other disposition to a Person other than the Company or a Restricted Subsidiary of any such Restricted Investment, repayments of loans or advances or other transfers of assets (including by way of dividend, distribution, interest payments or returns of capital) to the Company or any Restricted Subsidiary; or the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued, in each case, as provided in the definition of Investment ) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted 147

167 Subsidiary in such Unrestricted Subsidiary, which amount, in each case under this clause (iv), was included in the calculation of the amount of Restricted Payments referred to in the first sentence of this clause (c); provided, however, that no amount will be included in Consolidated Net Income for purposes of the preceding clause (i) to the extent that it is (at the Company s option) included under this clause (iv); and (v) the amount of the cash and the fair market value (as determined in accordance with the next succeeding paragraph) of property or assets or of marketable securities received by the Company or any of its Restricted Subsidiaries in connection with: (A) (B) the sale or other disposition (other than to the Company or a Restricted Subsidiary or an employee stock ownership plan or trust established by the Company or any Subsidiary of the Company for the benefit of its employees to the extent funded by the Company or any Restricted Subsidiary) of Capital Stock of an Unrestricted Subsidiary of the Company; and any dividend or distribution made by an Unrestricted Subsidiary or Affiliate to the Company or a Restricted Subsidiary; provided, however, that no amount will be included in Consolidated Net Income for purposes of the preceding clause (i) to the extent that it is (at the Company s option) included under the preceding clause (v); provided further, however, that such amount shall not exceed the amount included in the calculation of the amount of Restricted Payments referred to in the first sentence of this clause (c). The fair market value of property or assets other than cash covered by the preceding sentence shall be the fair market value thereof as determined in good faith by the Board of Directors of the Company. The foregoing provisions will not prohibit any of the following (collectively, Permitted Payments ): (1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Designated Preference Shares, Subordinated Shareholder Funding or Subordinated Indebtedness made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock or Designated Preference Shares), Subordinated Shareholder Funding or a substantially concurrent contribution to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through an Excluded Contribution) of the Company; provided, however, that to the extent so applied, the Net Cash Proceeds, or fair market value (as determined in accordance with the preceding sentence) of property or assets or of marketable securities, from such sale of Capital Stock, Subordinated Shareholder Funding or such contribution will be excluded from clause (c)(ii) of the preceding paragraph; (2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent sale of, Refinancing Indebtedness permitted to be Incurred pursuant to the covenant described under Limitation on Indebtedness above; (3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Preferred Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Preferred Stock of the Company or a Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to the covenant described under Limitation on Indebtedness above, and that in each case, constitutes Refinancing Indebtedness; (4) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness: (a) (i) from Net Available Cash to the extent permitted under Limitation on Sales of Assets and Subsidiary Stock below, but only if the Company shall have first complied with the terms described under Limitation on Sales of Assets and Subsidiary Stock and purchased all Notes tendered pursuant to any offer to repurchase all the Notes required thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such Subordinated Indebtedness and (ii) at a purchase price not greater than 100% of the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest; 148

168 (b) (c) to the extent required by the agreement governing such Subordinated Indebtedness, following the occurrence of a Change of Control (or other similar event described therein as a change of control ), but only (i) if the Company shall have first complied with the terms described under Change of Control and purchased all Notes tendered pursuant to any offer to repurchase all the Notes required thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such Subordinated Indebtedness and (ii) at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest; or (i) consisting of Acquired Indebtedness (other than Indebtedness Incurred (A) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Company or a Restricted Subsidiary or (B) otherwise in connection with or contemplation of such acquisition) and (ii) at a purchase price not greater than 100% of the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest and any premium required by the terms of any Acquired Indebtedness; (5) any dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this covenant; (6) the purchase, repurchase, redemption, defeasance or other acquisition, cancellation or retirement for value of Capital Stock of any Parent (including any options, warrants or other rights in respect thereof) and loans, advances, dividends or distributions by the Company to any Parent to permit any Parent to purchase, repurchase, redeem, defease or otherwise acquire, cancel or retire for value Capital Stock of any Parent (including any options, warrants or other rights in respect thereof), or payments to purchase, repurchase, redeem, defease or otherwise acquire, cancel or retire for value Capital Stock of any Parent (including any options, warrants or other rights in respect thereof), in each case from Management Investors; provided that such payments, loans, advances, dividends or distributions do not exceed an amount (net of repayments of any such loans or advances) equal to (1) 5 million plus (2) 2 million multiplied by the number of calendar years that have commenced since the Issue Date plus (3) the Net Cash Proceeds received by the Company or its Restricted Subsidiaries since the Issue Date (including through receipt of proceeds from the issuance or sale of its Capital Stock or Subordinated Shareholder Funding to a Parent, but not including the Equity Contribution) from, or as a contribution to the equity (in each case under this clause (6), other than through the issuance of Disqualified Stock or Designated Preference Shares) of the Company from, the issuance or sale to Management Investors of Capital Stock (including any options, warrants or other rights in respect thereof), to the extent such Net Cash Proceeds are not included in any calculation under clause (c)(ii) of the first paragraph describing this covenant; (7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock, or of any Preferred Stock of a Restricted Subsidiary, Incurred in accordance with the terms of the covenant described under Limitation on Indebtedness above; (8) purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of Capital Stock deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such Capital Stock represents a portion of the exercise price thereof; (9) dividends, loans, advances or distributions to any Parent or other payments by the Company or any Restricted Subsidiary in amounts equal to (without duplication): (a) (b) the amounts required for any Parent to pay any Parent Expenses or any Related Taxes; or amounts constituting or to be used for purposes of making payments (i) of fees and expenses Incurred in connection with the Transactions or disclosed in the 2014 OM or (ii) to the extent specified in clauses (2), (3), (5), (7), (11) and (12) of the second paragraph under Limitation on Affiliate Transactions; (10) so long as no Default or Event of Default has occurred and is continuing (or would result from), the declaration and payment by the Company of, or loans, advances, dividends or distributions to any Parent to pay, dividends on the common stock or common equity interests of the Company or any Parent following a Public Offering of such common stock or common equity interests, in an amount not to exceed in any fiscal year the greater of (a) 6% of the Net Cash Proceeds received by the Company from such Public Offering or contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through an Excluded Contribution) of the Company or loaned as Subordinated Shareholder Funding to the Company and (b) following the Initial Public Offering, an amount equal to the greater of (i) the greater of (A) 7% of the Market Capitalization and (B) 7% of the IPO Market Capitalization; provided that after giving pro forma effect 149

169 to such loans, advances, dividends or distributions, the Consolidated Leverage Ratio shall be equal to or less than 3.25 to 1.00 and (ii) the greater of (A) 5% of the Market Capitalization and (B) 5% of the IPO Market Capitalization; provided that after giving pro forma effect to such loans, advances, dividends or distributions, the Consolidated Leverage Ratio shall be equal to or less than 3.75 to 1.00; (11) so long as no Default or Event of Default has occurred and is continuing (or would result from), Restricted Payments (including loans or advances) in an aggregate amount outstanding at any time not to exceed 20 million or, if greater, 5.0% of Total Assets; (12) payments by the Company, or loans, advances, dividends or distributions to any Parent to make payments, to holders of Capital Stock of the Company or any Parent in lieu of the issuance of fractional shares of such Capital Stock, provided, however, that any such payment, loan, advance, dividend or distribution shall not be for the purpose of evading any limitation of this covenant or otherwise to facilitate any dividend or other return of capital to the holders of such Capital Stock (as determined in good faith by the Board of Directors of the Company); (13) Investments in an aggregate amount outstanding at any time not to exceed the aggregate cash amount of Excluded Contributions, or consisting of non-cash Excluded Contributions, or Investments to the extent made in exchange for or using as consideration Investments previously made under this clause (13); (14) (i) the declaration and payment of dividends to holders of any class or series of Designated Preference Shares of the Company issued after the Issue Date; and (ii) the declaration and payment of dividends to any Parent or any Affiliate thereof, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preference Shares of such Parent issued after the Issue Date; provided, however, that, in the case of clauses (i) and (ii), the amount of all dividends declared or paid pursuant to this clause (14) shall not exceed the Net Cash Proceeds received by the Company or the aggregate amount contributed in cash to the equity (other than through the issuance of Disqualified Stock or an Excluded Contribution or, in the case of Designated Preference Shares by Parent or an Affiliate, the issuance of Designated Preference Shares) of the Company or loaned as Subordinated Shareholder Funding to the Company, from the issuance or sale of such Designated Preference Shares; (15) dividends or other distributions of Capital Stock of Unrestricted Subsidiaries; (16) payment of any Receivables Fees and purchases of Receivables Assets pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing; and (17) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), any dividend, distribution, loan or other payment; provided that the Consolidated Net Leverage Ratio on a pro forma basis after giving effect to any such dividend, distribution, loan or other payment does not exceed 3.0 to 1.0. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount, and the fair market value of any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith. The Company, in its sole discretion, may classify any Investment or other Restricted Payment as being made in part under one of the provisions of this covenant (or, in the case of any Investment, the paragraphs in the definition of Permitted Investments) and in part under one or more other such provisions (or, as applicable, clauses). Limitation on Liens The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of a Restricted Subsidiary of the Company), whether owned on the Issue Date or acquired after that date, or any interest therein or any income or profits therefrom, which Lien is securing any Indebtedness (such Lien, the Initial Lien ), except (a) in the case of any property or asset that does not constitute Collateral, (1) Permitted Liens or (2) Liens on property or assets that are not Permitted Liens if the Notes and the Indenture (or a Guarantee in the case of Liens of a Guarantor) are secured equally and ratably with, or prior to, in the case of Liens with respect to Subordinated Indebtedness, or junior to, in the case of Liens securing Indebtedness consisting of Hedging Obligations or Indebtedness Incurred pursuant to clause (1) of the second paragraph of the covenant described under Limitation on Indebtedness, the Indebtedness secured by such Initial Lien for so long as such Indebtedness is so secured, and (b) in the case of any property or asset that constitutes Collateral, Permitted Collateral Liens. 150

170 Any such Lien created in favor of the Notes pursuant to clause (a)(2) of the preceding paragraph will be automatically and unconditionally released and discharged upon (i) the release and discharge of the Initial Lien to which it relates, and (ii) otherwise as set forth under Security Release of Liens. Limitation on Restrictions on Distributions from Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (A) (B) (C) pay dividends or make any other distributions in cash or otherwise on its Capital Stock or pay any Indebtedness or other obligations owed to the Issuer; make any loans or advances to the Issuer; or sell, lease or transfer any of its property or assets to the Issuer, provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock and (y) the subordination of (including the application of any standstill requirements to) loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction. The provisions of the preceding paragraph will not prohibit: (1) any encumbrance or restriction pursuant to (a) any Credit Facility (including the Senior Finance Documents) or (b) any other agreement or instrument, in each case, in effect at or entered into on the Issue Date or the Completion Date, including the Indenture governing the Notes and the Senior Notes Indenture; (2) any encumbrance or restriction pursuant to an agreement or instrument of a Person or relating to any Capital Stock or Indebtedness of a Person, entered into on or before the date on which such Person was acquired by or merged, consolidated or otherwise combined with or into the Company or any Restricted Subsidiary, or was designated as a Restricted Subsidiary or on which such agreement or instrument is assumed by the Company or any Restricted Subsidiary in connection with an acquisition of assets (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by the Company or was merged, consolidated or otherwise combined with or into the Company or any Restricted Subsidiary entered into or in connection with such transaction) and outstanding on such date; provided that, for the purposes of this clause (2), if another Person is the Successor Company (as defined below), any Subsidiary thereof or agreement or instrument of such Person or any such Subsidiary shall be deemed acquired or assumed by the Company or any Restricted Subsidiary when such Person becomes the Successor Company; (3) any encumbrance or restriction pursuant to an agreement or instrument effecting a refinancing of Indebtedness Incurred pursuant to, or that otherwise refinances, an agreement or instrument referred to in clause (1) or (2) of this paragraph or this clause (3) (an Initial Agreement ) or contained in any amendment, supplement or other modification to an agreement referred to in clause (1) or (2) of this paragraph or this clause (3); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement or instrument are no less favorable in any material respect to the Holders taken as a whole than the encumbrances and restrictions contained in the Initial Agreement or Initial Agreements to which such refinancing or amendment, supplement or other modification relates (as determined in good faith by the Company); (4) any encumbrance or restriction: (a) (b) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any lease, license or other contract; contained in mortgages, pledges, charges or other security agreements permitted under the Indenture or securing Indebtedness of the Company or a Restricted Subsidiary permitted under the Indenture to the extent such encumbrances or restrictions restrict the transfer of the property or assets subject to such mortgages, pledges, charges or other security agreements; or 151

171 (c) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary; (5) any encumbrance or restriction pursuant to Purchase Money Obligations and Capitalized Lease Obligations permitted under the Indenture, in each case, that impose encumbrances or restrictions on the property so acquired or any encumbrance or restriction pursuant to a joint venture agreement that imposes restrictions on the transfer of the assets of the joint venture; (6) any encumbrance or restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition to a Person of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; (7) customary provisions in leases, licenses, joint venture agreements and other similar agreements and instruments entered into in the ordinary course of business; (8) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order, or required by any regulatory authority; (9) any encumbrance or restriction on cash or other deposits or net worth imposed by customers under agreements entered into in the ordinary course of business; (10) any encumbrance or restriction pursuant to Currency Agreements, Interest Rate Agreements or Commodity Hedging Agreements; (11) any encumbrance or restriction arising pursuant to an agreement or instrument relating to any Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under Limitation on Indebtedness if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favorable to the Holders than (i) the encumbrances and restrictions contained in the Revolving Credit Facility, the Senior Notes Indenture and the Intercreditor Agreement, together with the security documents associated therewith as in effect no later than 90 days after (and excluding) the Completion Date or (ii) in comparable financings (as determined in good faith by the Company) or where the Company determines when such Indebtedness is Incurred that such encumbrances or restrictions will not adversely affect, in any material respect, the Company s ability to make principal or interest payments on the Notes; (12) any encumbrance or restriction existing by reason of any lien permitted under Limitation on Liens; or (13) restrictions effected in connection with a Qualified Receivables Financing that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Qualified Receivables Financing. Limitation on Sales of Assets and Subsidiary Stock unless: The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at least equal to the fair market value (such fair market value to be determined on the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Company, of the shares and assets subject to such Asset Disposition (including, for the avoidance of doubt, if such Asset Disposition is a Permitted Asset Swap); (2) in any such Asset Disposition, or series of related Asset Dispositions (except to the extent the Asset Disposition is a Permitted Asset Swap), at least 75% of the consideration from such Asset Disposition (excluding any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, other than Indebtedness) together with all other Asset Dispositions since the Issue Date (on a cumulative basis) received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash, Cash Equivalents or Temporary Cash Investments; and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition may be applied by the Company or such Restricted Subsidiary, at its option: 152

172 (a) (b) to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness of a Restricted Subsidiary), (i) to prepay, repay or purchase any Indebtedness of a non- Guarantor Restricted Subsidiary (other than the Issuer) (in each case, other than Indebtedness owed to the Company or any Restricted Subsidiary) or Indebtedness under the Revolving Credit Facility (or any Refinancing Indebtedness in respect thereof) within 365 days from the later of (A) the date of such Asset Disposition and (B) the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related commitment (if any) (except in the case of any revolving Indebtedness) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; or (ii) to prepay, repay or purchase Pari Passu Indebtedness at a price of no more than 100% of the principal amount of such Pari Passu Indebtedness plus accrued and unpaid interest to the date of such prepayment, repayment or purchase; provided that the Company or Restricted Subsidiary shall redeem, repay or repurchase Pari Passu Indebtedness that is Public Debt pursuant to this clause (ii) only if the Company makes (at such time or subsequently in compliance with this covenant) an offer to the Holders of the Notes to purchase their Notes in accordance with the provisions set forth below for an Asset Disposition Offer for an aggregate principal amount of Notes at least equal to the proportion that (x) the total aggregate principal amount of Notes outstanding bears to (y) the sum of the total aggregate principal amount of Notes outstanding plus the total aggregate principal amount outstanding of such Pari Passu Indebtedness; or to the extent the Company or such Restricted Subsidiary elects, to invest in or commit to invest in Additional Assets (including by means of an investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 365 days from the later of (i) the date of such Asset Disposition and (ii) the receipt of such Net Available Cash; provided, however, that any such reinvestment in Additional Assets made pursuant to a definitive binding agreement or a commitment approved by the Board of Directors of the Company that is executed or approved within such time will satisfy this requirement, so long as such investment is consummated within 180 days of such 365th day, provided that, pending the final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Indenture. Any Net Available Cash from Asset Dispositions that is not applied or invested or committed to be applied or invested as provided in the preceding paragraph will be deemed to constitute Excess Proceeds under the Indenture. On the 366th day after an Asset Disposition, or at such earlier date that the Company elects, if the aggregate amount of Excess Proceeds under the Indenture exceeds 25 million, the Company will be required to make an offer ( Asset Disposition Offer ) to all Holders of Notes issued under the Indenture and, to the extent the Company elects, to all holders of other outstanding Pari Passu Indebtedness, to purchase the maximum aggregate principal amount of Notes and any such Pari Passu Indebtedness to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in respect of the Notes in an amount equal to (and, in the case of any Pari Passu Indebtedness, an offer price of no more than) 100% of the principal amount of the Notes and 100% of the principal amount of such Pari Passu Indebtedness, in each case, plus accrued and unpaid interest, if any, to, but not including, the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing such Pari Passu Indebtedness, as applicable, and in the case of the Notes in minimum denominations of 100,000 and integral multiples of 1,000 in excess thereof. To the extent that the aggregate amount of Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture. If the aggregate principal amount of the Notes surrendered in any Asset Disposition Offer by Holders and other Pari Passu Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Excess Proceeds shall be allocated among the Notes and Pari Passu Indebtedness to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Indebtedness. For the purposes of calculating the aggregate principal amount of any such Indebtedness not denominated in pound sterling, such Indebtedness shall be calculated by converting any such aggregate principal amounts into their Sterling Equivalent determined as of a date selected by the Company that is within the Asset Disposition Offer Period (as defined below). Upon completion of any Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero. To the extent that any portion of Net Available Cash payable in respect of the Notes is denominated in a currency other than the currency in which the Notes are denominated, the amount thereof payable in respect of such 153

173 Notes shall not exceed the net amount of funds in the currency in which such Notes are denominated that is actually received by the Company upon converting such portion into such currency. The Asset Disposition Offer, in so far as it relates to the Notes, will remain open for a period of not less than 20 Business Days following its commencement (the Asset Disposition Offer Period ). No later than five Business Days after the termination of the Asset Disposition Offer Period (the Asset Disposition Purchase Date ), the Company will purchase the aggregate principal amount of Notes and, to the extent they elect, Pari Passu Indebtedness required to be purchased pursuant to this covenant (the Asset Disposition Offer Amount ) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Pari Passu Indebtedness validly tendered in response to the Asset Disposition Offer. On or before the Asset Disposition Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Pari Passu Indebtedness or portions of Notes and such Pari Passu Indebtedness so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn and in the case of the Notes in minimum denominations of 100,000 and in integral multiples of 1,000 in excess thereof. The Company will deliver to the Trustee an Officer s Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this covenant. The Company or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering Holder of Notes an amount equal to the purchase price of the Notes so validly tendered and not properly withdrawn by such Holder, and accepted by the Company for purchase, and the Company will promptly issue a new Note (or amend the Global Note), and the Trustee, upon delivery of an authentication order from the Company, will authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder, in an aggregate principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in an aggregate principal amount with a minimum denomination of 100,000. Any Note not so accepted will be promptly mailed or delivered (or transferred by book-entry) by the Company to the Holder thereof. For the purposes of clause (2) of the first paragraph of this covenant, the following will be deemed to be cash: (1) the assumption by the transferee of Indebtedness of the Company or Indebtedness of a Restricted Subsidiary (other than Subordinated Indebtedness of the Company or a Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; (2) securities, notes or other obligations received by the Company or any Restricted Subsidiary of the Company from the transferee that are converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents within 180 days following the closing of such Asset Disposition; (3) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Company and each other Restricted Subsidiary are released from any guarantee of payment of such Indebtedness in connection with such Asset Disposition; (4) consideration consisting of Indebtedness of the Company (other than Subordinated Indebtedness) received after the Issue Date from Persons who are not the Company or any Restricted Subsidiary; and (5) any Designated Non-Cash Consideration received by the Company or any Restricted Subsidiary in such Asset Dispositions having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this covenant that is at that time outstanding, not to exceed the greater of 10 million and 2.5% of Total Assets (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value). The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations (or rules of any exchange on which the Notes are then listed) in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations (or exchange rules) conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations (or exchange rules) and will not be deemed to have breached its obligations under the Indenture by virtue of any conflict. Limitation on Affiliate Transactions The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an Affiliate Transaction ) involving aggregate value in excess of 5 million 154

174 unless: (1) the terms of such Affiliate Transaction taken as a whole are not materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction or the execution of the agreement providing for such transaction in arm s length dealings with a Person who is not such an Affiliate; (2) in the event such Affiliate Transaction involves an aggregate value in excess of 20 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company; and (3) in the event such Affiliate Transaction involves an aggregate value in excess of 30 million, the Company or any of its Restricted Subsidiaries, as the case may be, has received a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable than those that would have been obtained in comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person on an arm s length basis. Any Affiliate Transaction shall also be deemed to have satisfied the requirements set forth in clause (2) of this paragraph if such Affiliate Transaction is approved by a majority of the Disinterested Directors. If there are no Disinterested Directors, any Affiliate Transaction shall also be deemed to have satisfied the requirements set forth in this covenant if the Company or any of its Restricted Subsidiaries, as the case may be, has received a letter from an Independent Financial Advisor that satisfies the requirements set forth in clause (3) of this paragraph. The provisions of the preceding paragraph will not apply to: (1) any Restricted Payment permitted to be made pursuant to the covenant described under Limitation on Restricted Payments, any Permitted Payments (other than pursuant to clause (9)(b)(ii) of the third paragraph of the covenant described under Limitation on Restricted Payments ) or any Permitted Investment (other than Permitted Investments as defined in paragraphs (l)(b), (2) and (11) of the definition thereof); (2) any issuance or sale of Capital Stock, options, other equity-related interests or other securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or entering into, or maintenance of, any employment, consulting, collective bargaining or benefit plan, program, agreement or arrangement, related trust or other similar agreement and other compensation arrangements, options, warrants or other rights to purchase Capital Stock of the Company, any Restricted Subsidiary or any Parent, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits or consultants plans (including valuation, health, insurance, deferred compensation, severance, retirement, savings or similar plans, programs or arrangements) or indemnities provided on behalf of officers, employees, directors or consultants approved by the Board of Directors of the Company, in each case in the ordinary course of business; (3) any Management Advances and any waiver or transaction with respect thereto; (4) any transaction between or among the Company and any Restricted Subsidiary (or entity that becomes a Restricted Subsidiary as a result of such transaction), or between or among Restricted Subsidiaries; (5) the payment of reasonable fees and reimbursement of expenses to, and customary indemnities (including under customary insurance policies) and employee benefit and pension expenses provided on behalf of, directors, officers, consultants or employees of the Company, any Restricted Subsidiary of the Company or any Parent (whether directly or indirectly and including through any Person owned or controlled by any of such directors, officers or employees); (6) the Transactions and the entry into and performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any transaction arising out of, and any payments pursuant to or for purposes of funding, any agreement or instrument in effect as of or on the Issue Date, as these agreements and instruments may be amended, modified, supplemented, extended, renewed or refinanced from time to time in accordance with the other terms of this covenant or to the extent not more disadvantageous to the Holders in any material respect and the entry into and performance of any registration rights or other listing agreement in connection with any Public Offering; (7) execution, delivery and performance of any Tax Sharing Agreement or the formation and maintenance of any consolidated group for tax, accounting or cash pooling or management purposes in the ordinary course of business; (8) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business, which are fair to the Company or the relevant Restricted Subsidiary in the reasonable determination of the Board of Directors or the Senior Management of the Company or the relevant Restricted Subsidiary, or are on terms no less favorable than those that could reasonably have been obtained at such time from an unaffiliated party; 155

175 (9) any transaction in the ordinary course of business between or among the Company or any Restricted Subsidiary and any Affiliate of the Company or an Associate or similar entity that would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary or any Affiliate of the Company or a Restricted Subsidiary or any Affiliate of any Permitted Holder owns an equity interest in or otherwise controls such Affiliate, Associate or similar entity; (10) (a) issuances or sales of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of the Company or options, warrants or other rights to acquire such Capital Stock or Subordinated Shareholder Funding; provided that the interest rate and other financial terms of such Subordinated Shareholder Funding are approved by a majority of the members of the Board of Directors of the Company in their reasonable determination and (b) any amendment, waiver or other transaction with respect to any Subordinated Shareholder Funding in compliance with the other provisions of the Indenture; (11) without duplication in respect of payments made pursuant to clause (12) hereof, (a) payments by the Company or any Restricted Subsidiary to any Permitted Holder (whether directly or indirectly, including through any Parent) of annual customary management, consulting, monitoring or advisory fees and related expenses in an aggregate amount not to exceed 1 million per year and (b) customary payments by the Company or any Restricted Subsidiary to any Permitted Holder (whether directly or indirectly, including through any Parent) for financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments in respect of this clause (b) are approved by a majority of the Board of Directors of the Company in good faith; (12) payment to any Permitted Holder of all reasonable out-of- pocket expenses Incurred by such Permitted Holder in connection with its direct or indirect investment in the Company and its Subsidiaries; and (13) any transaction effected as part of a Qualified Receivables Financing. Reports For so long as any Notes are outstanding, the Company will provide to the Trustee the following reports: (1) within 120 days after the end of the Company s fiscal year, beginning with the fiscal year ending June 2014, annual reports containing, to the extent applicable, the following information: (a) audited consolidated balance sheets of the Company or its predecessor as of the end of the two most recent fiscal years and audited consolidated income statements and statements of cash flow of the Company or its predecessor for the two most recent fiscal years, including complete footnotes to such financial statements and the report of the independent auditors on the financial statements; (b) unaudited pro forma income statement information and balance sheet information of the Company (which, for the avoidance of doubt, shall not include the provision of a full income statement or balance sheet to the extent not reasonably available), together with explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since the beginning of the most recently completed fiscal year; (c) an operating and financial review of the audited financial statements, including a discussion of the results of operations, financial condition, and liquidity and capital resources of the Company, and a discussion of material commitments and contingencies and critical accounting policies; (d) description of the business, management and shareholders of the Company, all material affiliate transactions and a description of all material contractual arrangements, including material debt instruments; and (e) a summary description of material risk factors and material recent developments; (2) within 60 days following the end of the first three fiscal quarters in each fiscal year of the Company, all quarterly reports of the Company containing the following information: (a) an unaudited condensed consolidated balance sheet as of the end of such quarter and unaudited condensed statements of income and cash flow for the most recent year-to-date period ending on the unaudited condensed balance sheet date, and the comparable prior year period, together with condensed footnote disclosure; (b) unaudited pro forma income statement information and balance sheet information of the Company (which, for the avoidance of doubt, shall not include the provision of a full income statement or balance sheet to the extent not reasonably available), together with explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since the beginning of the relevant quarter; (c) an operating and financial review of the unaudited financial statements, including a discussion of the results of operations, financial condition, EBITDA or Adjusted EBITDA and material changes in liquidity and capital resources of the Company, and a discussion of material changes not in the ordinary course of business in commitments and contingencies since the most recent report; and (d) material recent developments; and (3) promptly after the occurrence of any material acquisition, disposition or restructuring or any senior executive officer changes at the Company or change in auditors of the Company or any other material event that the 156

176 Company or any of its Restricted Subsidiaries announces publicly, a report containing a description of such event. All financial statement and pro forma financial information shall be prepared in accordance with GAAP as in effect on the date of such report or financial statement (or otherwise on the basis of GAAP as then in effect) and on a consistent basis for the periods presented; provided, however, that the reports set forth in clauses (1), (2) and (3) above may, (i) in the event of a change in applicable GAAP, present earlier periods on a basis that applied to such periods, and (ii) to the extent comparable prior period financial information of the Company does not exist, the comparable prior period financial information of PizzaExpress Holdings Limited may be provided in lieu thereof. Except as provided for above, no report need include separate financial statements for any Subsidiaries of the Company. At any time that any of the Company s Subsidiaries are Unrestricted Subsidiaries and any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries, if taken together as one Subsidiary, constitutes a Significant Subsidiary of the Company, then the annual and quarterly financial information required by clauses (1) and (2) of the first paragraph of this covenant shall include either (i) a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company or (ii) stand-alone audited or unaudited financial statements, as the case may be, of such Unrestricted Subsidiary or Unrestricted Subsidiaries (as a group or otherwise) together with an unaudited reconciliation to the financial information of the Company and its Subsidiaries, which reconciliation shall include the following items: revenues, EBITDA or Adjusted EBITDA, net income, cash, total assets, total debt, shareholders equity, capital expenditures and interest expense. Substantially concurrently with the issuance to the Trustee of the reports specified in clauses (1), (2) and (3) of the first paragraph of this covenant, the Company shall also (a) use its commercially reasonable efforts (i) to post copies of such reports on such website as may be then maintained by the Company and its Subsidiaries or (ii) otherwise to provide substantially comparable availability of such reports (as determined by the Company in good faith) or (b) to the extent the Company determines in good faith that it cannot make such reports available in the manner described in the preceding clause (a) owing to applicable law or after the use of its commercially reasonable efforts, furnish such reports to the Holders and, upon request, prospective purchasers of the Notes. The Company will also make available copies of all reports required by clauses (1) through (3) of the first paragraph of this covenant, if and so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market and the rules of the Irish Stock Exchange so require, at the offices of the Paying Agent in Luxembourg or, to the extent and in the manner permitted by such rules, post such reports on the official website of the Irish Stock Exchange. In addition, so long as the Notes remain outstanding and during any period during which the Company is not subject to Section 13 or 15(d) of the Exchange Act nor exempt therefrom pursuant to Rule 12g3-2(b), the Company shall furnish to the Holders and, upon their request, prospective purchasers of the Notes, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Merger and Consolidation The Issuer The Issuer will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the Successor Issuer ) will be a Person organized and existing under the laws of any member state of the European Union or the United States of America, any State of the United States or the District of Columbia, Canada or any province of Canada, Norway or Switzerland and the Successor Issuer (if not the Issuer) will expressly assume (a) by supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Issuer under the Notes and the Indenture and (b) all obligations of the Issuer under the Security Documents (and, to the extent required by the Intercreditor Agreement, the Intercreditor Agreement); (2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Issuer or any Subsidiary of the Successor Issuer as a result of such transaction as having been Incurred by the Successor Issuer or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and (3) the Issuer shall have delivered to the Trustee an Officer s Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture and an Opinion of Counsel to the effect that such supplemental indenture (if any) has been duly 157

177 authorized, executed and delivered and is a legal, valid and binding agreement enforceable against the Successor Issuer (in each case, in form and substance reasonably satisfactory to the Trustee), provided that in giving an Opinion of Counsel, counsel may rely on an Officer s Certificate as to any matters of fact, including as to satisfaction of clauses (1) and (2) above. For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the assets of one or more Subsidiaries of the Issuer, which assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the assets of the Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the assets of the Issuer. The Successor Issuer will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture but in the case of a lease of all or substantially all its assets, the predecessor company will not be released from its obligations under such Indenture or the Notes. Notwithstanding the preceding clauses (2) and (3) and the provisions described below under The Company and Subsidiary Guarantors (which do not apply to transactions referred to in this sentence), (a) any Restricted Subsidiary of the Company may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to the Issuer, (b) any Restricted Subsidiary may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to any other Restricted Subsidiary and (c) the Company and its Restricted Subsidiaries may undertake the Transactions. Notwithstanding the preceding clauses (2) and (3) (which does not apply to the transactions referred to in this sentence), the Issuer may consolidate or otherwise combine with or merge into an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Issuer, reincorporating the Issuer in another jurisdiction, or changing the legal form of the Issuer. The foregoing provisions (other than the requirements of clause (2) of the first paragraph of this covenant) will not apply to the creation of a new subsidiary of the Issuer that becomes a parent of one or more of the Issuer s Subsidiaries. The Company The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the Successor Company ) will be a Person organized and existing under the laws of any member state of the European Union or the United States of America, any State of the United States or the District of Columbia, Canada or any province of Canada, Norway or Switzerland and the Successor Company (if not the Company) will expressly assume (a) by supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Parent Guarantee and (b) all obligations of the Company under the Security Documents (and, to the extent required by the Intercreditor Agreement, the Intercreditor Agreement); (2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (3) immediately after giving effect to such transaction, either (a) the Successor Company would be able to Incur at least an additional 1.00 of Indebtedness pursuant to clause (i) of the first paragraph of the covenant described under Limitation on Indebtedness or (b) the Fixed Charge Coverage Ratio would not be lower than it was immediately prior to giving effect to such transaction; and (4) the Company shall have delivered to the Trustee an Officer s Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture and an Opinion of Counsel to the effect that such supplemental indenture (if any) has been duly authorized, executed and delivered and is a legal, valid and binding agreement enforceable against the Successor Company (in each case, in form and substance reasonably satisfactory to the Trustee), provided that in giving an Opinion of Counsel, counsel may rely on an Officer s Certificate as to any matters of fact, including as to satisfaction of clauses (2) and (3) above. Any Indebtedness that becomes an obligation of the Company or any Restricted Subsidiary (or that is deemed to be Incurred by any Restricted Subsidiary that becomes a Restricted Subsidiary) as a result of any such transaction undertaken in compliance with this covenant, and any Refinancing Indebtedness with respect thereto, shall be deemed to have been Incurred in compliance with the covenant described under Limitation on Indebtedness. 158

178 For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the assets of one or more Subsidiaries of the Company, which assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the assets of the Company. The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture but in the case of a lease of all or substantially all its assets, the predecessor company will not be released from its obligations under such Indenture or the Notes. Notwithstanding the preceding clauses (2) and (3) and the provisions described above under The Issuer and below under Subsidiary Guarantors (which do not apply to transactions referred to in this sentence) and, other than with respect to the second preceding paragraph, clause (4) of the first paragraph of this covenant, (a) any Restricted Subsidiary of the Company may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to the Company, (b) any Restricted Subsidiary may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to any other Restricted Subsidiary and (c) the Company and its Restricted Subsidiaries may undertake the Transactions. Notwithstanding the preceding clauses (2), (3) and (4) (which does not apply to the transactions referred to in this sentence), the Company may consolidate or otherwise combine with or merge into an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Company, reincorporating the Company in another jurisdiction, or changing the legal form of the Company. The foregoing provisions (other than the requirements of clause (2) of the first paragraph of this covenant) will not apply to the creation of a new subsidiary as a Restricted Subsidiary of the Company. Subsidiary Guarantors No Subsidiary Guarantor may: (1) consolidate with or merge with or into any Person; (2) sell, convey, transfer or dispose of, all or substantially all its assets as an entirety or substantially as an entirety, in one transaction or a series of related transactions, to any Person; or (3) permit any Person to merge with or into such Guarantor, unless (A) the other Person is the Company or any Restricted Subsidiary that is Guarantor or becomes a Guarantor concurrently with the transaction); or (B) (1) either (x) a Guarantor is the continuing Person or (y) the resulting, surviving or transferee Person expressly assumes all of the obligations of the Guarantor under its Guarantee and the Security Documents (and, to the extent required by the Intercreditor Agreement, the Intercreditor Agreement); and (2) immediately after giving effect to the transaction, no Default has occurred and is continuing; or (C) the transaction constitutes a sale or other disposition (including by way of consolidation or merger) of the Guarantor or the sale or disposition of all or substantially all the assets of the Guarantor (in each case other than to the Company or a Restricted Subsidiary) otherwise permitted by the Indenture. Notwithstanding the preceding clause (3)(B)(2) and the provisions described above under The Issuer and The Company, (which does not apply to transactions referred to in this sentence), (a) any Restricted Subsidiary may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to a Subsidiary Guarantor, (b) any Subsidiary Guarantor may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to any other Subsidiary Guarantor and (c) the Subsidiary Guarantors may undertake the Transactions. Notwithstanding the preceding clause (3)(B)(2) (which does not apply to the transactions referred to in this sentence), a Subsidiary Guarantor may consolidate or otherwise combine with or merge into an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Subsidiary Guarantor reincorporating the Subsidiary Guarantor in another jurisdiction, or changing the legal form of the Subsidiary Guarantor. 159

179 Suspension of Covenants on Achievement of Investment Grade Status If on any date following the Issue Date, the Notes have achieved Investment Grade Status and no Default or Event of Default has occurred and is continuing (a Suspension Event ), then, beginning on that day and continuing until the Reversion Date, the provisions of the Indenture summarized under the following captions will not apply to such Notes: Limitation on Restricted Payments, Limitation on Indebtedness, Limitation on Restrictions on Distributions from Restricted Subsidiaries, Limitation on Affiliate Transactions, Limitation on Sales of Assets and Subsidiary Stock, Additional Guarantees, Lines of Business, and the provisions of clause (3) of the first paragraph of the covenant described under Merger and Consolidation The Company, and, in each case, any related default provision of such Indenture will cease to be effective and will not be applicable to the Company and its Restricted Subsidiaries. Such covenants and any related default provisions will again apply according to their terms from the first day on which a Suspension Event ceases to be in effect. Such covenants will not, however, be of any effect with regard to actions of the Company properly taken during the continuance of the Suspension Event, and the Limitation on Restricted Payments covenant will be interpreted as if it has been in effect since the date of such Indenture except that no default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended. On the Reversion Date, all Indebtedness Incurred during the continuance of the Suspension Event will be classified, at the Company s option, as having been Incurred pursuant to the first paragraph of the covenant described under Limitation on Indebtedness or one of the clauses set forth in the second paragraph of such covenant (to the extent such Indebtedness would be permitted to be Incurred thereunder as of the Reversion Date and after giving effect to Indebtedness Incurred prior to the Suspension Event and outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be Incurred under the first two paragraphs of the covenant described under Limitation on Indebtedness, such Indebtedness will be deemed to have been outstanding on the Completion Date, so that it is classified as permitted under clause (4)(b) of the second paragraph of the covenant described under Limitation on Indebtedness. The Company shall notify the Trustee that the conditions set forth in the first paragraph under this caption have been satisfied, provided that, no such notification shall be a condition for the suspension of the covenants described under this caption to be effective; provided, further that the Trustee shall be under no obligation to inform the Holders that the conditions set forth in the first paragraph under this caption have been satisfied. Additional Guarantees The Company will not cause or permit any of its Restricted Subsidiaries (other than the Issuer) that are not Guarantors, directly or indirectly, to guarantee any Indebtedness under the Revolving Credit Facility (or other Indebtedness that is Incurred under clause (1) of the second paragraph of the covenant described under Limitation on Indebtedness ) or Public Debt and any refinancing thereof in whole or in part unless such Restricted Subsidiary becomes a Guarantor on the date on which such other guarantee is Incurred and, if applicable, executes and delivers to the Trustee a supplemental indenture in the form attached to the Indenture pursuant to which such Restricted Subsidiary will provide a Guarantee, which Guarantee will be senior to or pari passu with such Restricted Subsidiary s guarantee of such other Indebtedness. A Restricted Subsidiary that is not a Guarantor may become a Guarantor if it executes and delivers to the Trustee a supplemental indenture in the form attached to the Indenture pursuant to which such Restricted Subsidiary will provide a Guarantee. Concurrently with the provision of any additional Guarantees as described above, subject to the Intercreditor Agreement and any Additional Intercreditor Agreement (if such security is being granted in respect of the other Indebtedness), and subject to the Agreed Security Principles, any such Guarantor will provide security over certain of its material assets (excluding any assets of such Guarantor which are subject to a Permitted Lien at the time of the execution of such supplemental indenture if providing such security interest would not be permitted by the terms of such Permitted Lien or by the terms of any obligations secured by such Permitted Lien) to secure its Guarantee on a first priority basis consistent with the Collateral. See Security. Each additional Guarantee will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose, thin capitalization, distributable reserves, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally) or other considerations under applicable law. Notwithstanding the foregoing, the Company shall not be obligated to cause such Restricted Subsidiary to Guarantee the Notes to the extent and for so long as the Incurrence of such Guarantee could reasonably be expected to give rise to or result in: (1) any violation of applicable law or regulation; (2) any liability for the officers, directors or (except in the case of a Restricted Subsidiary that is a partnership) shareholders of such Restricted Subsidiary (or, in the case of a Restricted Subsidiary that is a partnership, directors or shareholders of the partners of such partnership); (3) any 160

180 cost, expense, liability or obligation (including with respect to any Taxes) other than reasonable out-of-pocket expenses and other than reasonable expenses incurred in connection with any governmental or regulatory filings required as a result of, or any measures pursuant to clause (1) of this paragraph undertaken in connection with, such Guarantee, which in any case under any of clauses (1), (2) and (3) of this paragraph cannot be avoided through measures reasonably available to the Company or a Restricted Subsidiary; or (4) an inconsistency with the Intercreditor Agreement or the Agreed Security Principles. Impairment of Security Interest The Company shall not, and shall not permit any Restricted Subsidiary to, take or omit to take any action that would have the result of materially impairing the security interest with respect to the Collateral (it being understood that the Incurrence of Permitted Collateral Liens shall under no circumstances be deemed to materially impair the security interest with respect to the Collateral) for the benefit of the Trustee and the Holders, and the Company shall not, and shall not permit any Restricted Subsidiary to, grant to any Person other than the Security Agent, for the benefit of the Trustee and the Holders and the other beneficiaries described in the Security Documents, any Lien over any of the Collateral that is prohibited by the covenant entitled Limitation on Liens; provided, that the Company and its Restricted Subsidiaries may Incur any Lien over any of the Collateral that is not prohibited by the covenant entitled Limitation on Liens, including Permitted Collateral Liens and the Collateral may be discharged, transferred or released in any circumstances not prohibited by the Indenture, the Intercreditor Agreement or the applicable Security Documents. Notwithstanding the above, nothing in this covenant shall restrict the discharge and release of any Lien in accordance with the Indenture and the Intercreditor Agreement. Subject to the foregoing, the Security Documents may be amended, extended, renewed, restated, supplemented or otherwise modified or released (followed by an immediate retaking of a Lien of at least equivalent ranking over the same assets) to (i) cure any ambiguity, omission, defect or inconsistency therein; (ii) provide for Permitted Collateral Liens; (iii) add to the Collateral; or (iv) make any other change thereto that does not adversely affect the Holders in any material respect; provided, however, that (except where permitted by the Indenture or the Intercreditor Agreement or to effect or facilitate the creation of Permitted Collateral Liens Incurred in accordance with the Indenture), no Security Document may be amended, extended, renewed, restated, or otherwise modified or released (followed by an immediate retaking of a Lien of at least equivalent ranking over the same assets), unless contemporaneously with such amendment, extension, renewal, restatement, or modification or release (followed by an immediate retaking of a Lien of at least equivalent ranking over the same assets), the Company delivers to the Security Agent and the Trustee, either (1) a solvency opinion, in form and substance reasonably satisfactory to the Security Agent and the Trustee, from an independent financial advisor or appraiser or investment bank of international standing which confirms the solvency of the Company and its Subsidiaries, taken as a whole, after giving effect to any transactions related to such amendment, extension, renewal, restatement, modification or release (followed by an immediate retaking of a lien of at least equivalent ranking over the same assets), (2) a certificate from the chief financial officer or the Board of Directors of the relevant Person which confirms the solvency of the person granting Security Interest after giving effect to any transactions related to such amendment, extension, renewal, restatement, modification or replacement, or (3) an Opinion of Counsel (subject to any qualifications customary for this type of Opinion of Counsel), in form and substance reasonably satisfactory to the Trustee, confirming that, after giving effect to any transactions related to such amendment, extension, renewal, restatement, modification or release (followed by an immediate retaking of a lien of at least equivalent ranking over the same assets), the Lien or Liens created under the Security Document, so amended, extended, renewed, restated, modified or released and replaced are valid and perfected Liens not otherwise subject to any limitation, imperfection or new hardening period, in equity or at law, that such Lien or Liens were not otherwise subject to immediately prior to such amendment, extension, renewal, restatement, modification or replacement and to which the new Indebtedness secured by the Permitted Collateral Lien is not subject. In the event that the Company and its Restricted Subsidiaries comply with the requirements of this covenant, the Trustee and the Security Agent shall (subject to customary protections and indemnifications) consent to such actions without the need for instructions from the Holders. Lines of Business The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Similar Business, except to such extent as would not be material to the Company and its Restricted Subsidiaries, taken as a whole. Events of Default Each of the following is an Event of Default under the Indenture: (1) default in any payment of interest or Additional Amounts, if any, on any Note when due and payable, continued for 30 days; 161

181 (2) default in the payment of the principal amount of or premium, if any, on any Note issued under the Indenture when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise; (3) failure to comply for 30 days after written notice by the Trustee on behalf of the Holders or by the Holders of 30% in aggregate principal amount of the outstanding Notes with any of the Company s or the Issuer s obligations under the covenants described under Change of Control above or under the covenants described under Certain Covenants above (in each case, other than a failure to purchase Notes which will constitute an Event of Default under clause (2) above); (4) failure by the Company or any of its Restricted Subsidiaries to comply for 60 days after written notice by the Trustee on behalf of the Holders or by the Holders of 30% in aggregate principal amount of the outstanding Notes with its other agreements contained in the Indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) other than Indebtedness owed to the Company or a Restricted Subsidiary whether such Indebtedness or guarantee now exists, or is created after the date hereof, which default: (a) (b) is caused by a failure to pay principal at stated maturity on such Indebtedness, immediately upon the expiration of the grace period provided in such Indebtedness ( payment default ); or results in the acceleration of such Indebtedness prior to its maturity (the cross acceleration provision ); and, in each case, the aggregate principal amount of any such Indebtedness, together with the aggregate principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates 20 million or more; (6) certain events of bankruptcy, insolvency or court protection of the Company, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the bankruptcy provisions ); (7) failure by the Company, the Issuer or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of 20 million (exclusive of any amounts that a solvent insurance company has acknowledged liability for), which judgments are not paid, discharged or stayed for a period of 60 days after the judgment becomes final (the judgment default provision ); (8) any security interest under the Security Documents on any material Collateral shall, at any time, cease to be in full force and effect (other than in accordance with the terms of the relevant Security Document, the Intercreditor Agreement and the Indenture) for any reason other than the satisfaction in full of all obligations under the Indenture or the release or amendment of any such security interest in accordance with the terms of the Indenture, the Intercreditor Agreement or such Security Document or any such security interest created thereunder shall be declared invalid or unenforceable or the Company or any Restricted Subsidiary shall assert in writing that any such security interest is invalid or unenforceable and any such Default continues for 10 days (the security default provisions ); and (9) any Guarantee of the Company or a Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Guarantee or the Indenture) or is declared invalid or unenforceable in a judicial proceeding or any Guarantor denies or disaffirms in writing its obligations under its Guarantee and any such Default continues for 10 days (the guarantee provisions ). However, a default under clauses (3), (4), (5) or (7) of this paragraph will not constitute an Event of Default until the Trustee or the Holders of 30% in aggregate principal amount of the outstanding Notes notify the Company of the default and, with respect to clauses (3), (4), (5) and (7), the Company does not cure such default within the time specified in clauses (3), (4), (5) or (7), as applicable, of this paragraph after receipt of such notice. If an Event of Default (other than an Event of Default described in clause (6) above) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 30% in aggregate principal amount of the outstanding 162

182 Notes by written notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, including Additional Amounts, if any, on all the Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest, including Additional Amounts, if any, will be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (5) under Events of Default has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (5) shall be remedied or cured, or waived by the holders of the Indebtedness, or the Indebtedness that gave rise to such Event of Default shall have been discharged in full, within 30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest, including Additional Amounts, if any, on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. If an Event of Default described in clause (6) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest, including Additional Amounts, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in aggregate principal amount of the outstanding Notes under the Indenture may waive all past or existing Defaults or Events of Default (except with respect to nonpayment of principal, premium or interest, or Additional Amounts, if any) and rescind any such acceleration with respect to such Notes and its consequences if rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security (including by way of pre-funding) reasonably satisfactory to the Trustee against any loss, claim, liability or expense. Except to enforce the right to receive payment of principal or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless: (1) such Holder has previously given the Trustee written notice that an Event of Default is continuing; (2) Holders of at least 30% in aggregate principal amount of the outstanding Notes have requested in writing the Trustee to pursue the remedy; (3) such Holders have offered in writing the Trustee security and/or indemnity satisfactory to the Trustee against any loss, claim, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt of the written request and the offer of such security and/or indemnity; and (5) the Holders of a majority in aggregate principal amount of the outstanding Notes have not given the Trustee a written direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in aggregate principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Indenture provides that, in the event an Event of Default, of which a responsible officer of the Trustee has received written notice, has occurred and is continuing, the Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification and/or security (including by way of pre- funding) reasonably satisfactory to it against all losses, claims, liabilities and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and a responsible officer of the Trustee is informed of such occurrence by the Company, the Trustee must give notice of the Default to the Holders within 60 days after being notified by the Company. Except in the case of a Default in the payment of principal of, or premium, if any, or interest on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding notice is in the interests of the Holders. The Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer s Certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events of which it is aware which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof. 163

183 If a Default occurs for a failure to deliver a required certificate in connection with another default (an Initial Default ) then at the time such Initial Default is cured, such Default for a failure to report or deliver a required certificate in connection with the Initial Default will also be cured without any further action. Any Default or Event of Default for the failure to comply with the time periods prescribed in the covenant entitled Reports or otherwise to deliver any notice or certificate pursuant to any other provision of the Indenture shall be deemed to be cured upon the delivery of any such report required by such covenant or notice or certificate, as applicable, even though such delivery is not within the prescribed period specified in the Indenture. The Notes provide for the Trustee to take action on behalf of the Holders in certain circumstances, but only if the Trustee is indemnified and/or secured (including by way of pre-funding) to its satisfaction. It may not be possible for the Trustee to take certain actions in relation to the Notes and, accordingly, in such circumstances the Trustee will be unable to take action, notwithstanding the provision of an indemnity to it, and it will be for Holders to take action directly. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture and may not enforce the Security Documents except as provided in such Security Documents and the Intercreditor Agreement or any Additional Intercreditor Agreement. Amendments and Waivers Subject to certain exceptions, the Note Documents may be amended, supplemented or otherwise modified with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, such Notes) and, subject to certain exceptions, any default or compliance with any provisions thereof may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, such Notes); provided that, if any amendment, waiver or other modification will only affect one series of the Notes, only the consent of a majority in principal amount of the then outstanding Notes of such series shall be required. However, without the consent of Holders holding not less than 90% of the then outstanding aggregate principal amount of Notes affected, an amendment or waiver may not, with respect to any such series of the Notes held by a non- consenting Holder: (1) reduce the principal amount of such Notes whose Holders must consent to an amendment; (2) reduce the stated rate of or extend the stated time for payment of interest on any such Note; (3) reduce the principal of or extend the Stated Maturity of any such Note; (4) reduce the premium payable upon the redemption of any such Note or change the time at which any such Note may be redeemed, in each case as described above under Optional Redemption; (5) make any such Note payable in money other than that stated in such Note; (6) impair the right of any Holder to receive payment of principal of and interest on such Holder s Notes on or after the due dates therefor or to institute suit for the enforcement of any such payment on or with respect to such Holder s Notes; (7) make any change in the provision of the Indenture described under Withholding Taxes that adversely affects the right of any Holder of such Notes in any material respect or amends the terms of such Notes in a way that would result in a loss of an exemption from any of the Taxes described thereunder or an exemption from any obligation to withhold or deduct Taxes so described thereunder unless the Payor agrees to pay Additional Amounts, if any, in respect thereof; (8) release (i) the security interest granted for the benefit of the Holders in the Collateral or (ii) any Guarantee, in each case, other than pursuant to the terms of the Security Document or the Indenture, as applicable, except as permitted by the Intercreditor Agreement; (9) waive a Default or Event of Default with respect to the nonpayment of principal, premium or interest (except pursuant to a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the payment default that resulted from such acceleration); or 164

184 (10) make any change in the amendment or waiver provisions which require the Holders consent described in this sentence. Notwithstanding the foregoing, without the consent of any Holder, the Company, the Trustee and the other parties thereto, as applicable, may amend or supplement any Note Documents to: (1) cure any ambiguity, omission, defect, error or inconsistency, conform any provision to this Description of the Notes, or reduce the minimum denomination of the Notes; (2) provide for the assumption by a successor Person of the obligations of the Company, the Issuer or any Guarantor under any Note Document; (3) provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); (4) add to the covenants or provide for a Guarantee for the benefit of the Holders or surrender any right or power conferred upon the Company or any Restricted Subsidiary; (5) make any change that does not adversely affect the rights of any Holder in any material respect; (6) at the Company s election, comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act, if such qualification is required; (7) make such provisions as necessary (as determined in good faith by the Company) for the issuance of Additional Notes; (8) to provide for any Restricted Subsidiary to provide a Guarantee in accordance with the Covenant described under Certain Covenants Limitation on Indebtedness and Certain Covenants Additional Guarantees, to add Guarantees with respect to the Notes, to add security to or for the benefit of the Notes, or to confirm and evidence the release, termination, discharge or retaking of any Guarantee or Lien (including the Collateral and the Security Documents) with respect to or securing the Notes when such release, termination, discharge or retaking is provided for under the Indenture, the Intercreditor Agreement or the Security Documents; (9) to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof or to provide for the accession by the Trustee to any Note Document; or (10) in the case of the Security Documents, to mortgage, pledge, hypothecate or grant a security interest in favor of the Security Agent for the benefit of parties to the Revolving Credit Facility, in any property which is required by the Revolving Credit Facility (as in effect on the Issue Date) to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Security Agent, or to the extent necessary to grant a security interest for the benefit of any Person; provided that the granting of such security interest is not prohibited by the Indenture and the covenant described under Certain Covenants Impairment of Security Interest is complied with. The Trustee shall be entitled to rely on such evidence as it deems appropriate, including Officer s Certificates and Opinions of Counsel. The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment of any Note Document. It is sufficient if such consent approves the substance of the proposed amendment. A consent to any amendment or waiver under the Indenture by any Holder of Notes given in connection with a tender of such Holder s Notes will not be rendered invalid by such tender. Acts by Holders In determining whether the Holders of the required aggregate principal amount of the Notes have concurred in any direction, waiver or consent, any Notes owned by the Issuer or by any Person directly or indirectly controlled, or controlled by, or under direct or indirect common control with, the Issuer will be disregarded and deemed not to be outstanding. 165

185 Defeasance The Issuer at any time may terminate all its and each Guarantor s obligations under the Notes and the Indenture ( legal defeasance ) and cure all then existing Defaults and Events of Default, except for certain obligations, including those respecting the defeasance trust, the rights, powers, trusts, duties, immunities and indemnities of the Trustee and the obligations of the Issuer in connection therewith and obligations concerning issuing temporary Notes, registrations of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust. Subject to the foregoing, if the Issuer exercises its legal defeasance option, the Security Documents in effect at such time will terminate (other than with respect to the defeasance trust). The Issuer at any time may terminate its and each Guarantor s obligations under the covenants described under Certain Covenants (other than with respect to clauses (1) and (2) of each of the covenants described under Certain Covenants Merger and Consolidation The Issuer, Certain Covenants Merger and Consolidation The Company and Certain Covenants Merger and Consolidation Subsidiary Guarantors ) and Change of Control and the default provisions relating to such covenants described under Events of Default above, the operation of the cross-default upon a payment default, the cross acceleration provisions, the bankruptcy provisions with respect to the Company and Significant Subsidiaries, the judgment default provision, the guarantee provision and the security default provision described under Events of Default above ( covenant defeasance ). The Issuer at its option at any time may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to the Notes. If the Issuer exercises its covenant defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default specified in clause (3) (other than with respect to clauses (1) and (2) of each of the covenants described under Certain Covenants Merger and Consolidation The Issuer, Certain Covenants Merger and Consolidation The Company and clauses (A), (B) and (C) of the covenant described under Certain Covenants Merger and Consolidation Subsidiary Guarantors ), (4), (5), (6) (with respect only to the Company and Significant Subsidiaries), (7), (8) or (9) under Events of Default above. In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the defeasance trust ) with the Trustee (or such entity designated or appointed as agent by the Trustee for this purpose) cash in pound sterling or non-callable U.K. Government Obligations or a combination thereof for the payment of principal, premium, if any, and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of: (1) an Opinion of Counsel in the United States to the effect that Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and in the case of legal defeasance only, such Opinion of Counsel in the United States must be based on a ruling of the U.S. Internal Revenue Service or other change in applicable U.S. federal income tax law since the issuance of the Notes); (2) an Officer s Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying, defrauding or preferring any creditors of the Issuer; (3) an Officer s Certificate and an Opinion of Counsel (which opinion of counsel may be subject to customary assumptions and exclusions), each stating that that all conditions precedent provided for or relating to legal defeasance or covenant defeasance, as the case may be, have been complied with; (4) an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the U.S. Investment Company Act of 1940; and (5) the Issuer delivers to the Trustee all other documents or other information that the Trustee may reasonably require in connection with either defeasance option. Satisfaction and Discharge The Indenture, and the rights of the Trustee and the Holders under the Security Documents will be discharged and cease to be of further effect (except as to surviving rights of conversion or transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when (1) either (a) all the Notes previously authenticated and delivered (other than certain lost, stolen or destroyed Notes and certain Notes for which provision for payment was previously made and thereafter the funds have been released to the Issuer) have been delivered to the Paying Agent or Registrar for cancellation; or (b) all Notes not previously delivered to the Paying Agent or Registrar for 166

186 cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer; (2) the Issuer has deposited or caused to be deposited with the Trustee (or such entity designated or appointed as agent by the Trustee for this purpose), cash in pound sterling or non-callable U.K. Government Obligations or a combination thereof, as applicable in an amount sufficient to pay and discharge the entire indebtedness on the Notes not previously delivered to the Trustee for cancellation, for principal, premium, if any, and interest to the date of deposit (in the case of Notes that have become due and payable), or to the Stated Maturity or redemption date, as the case may be; (3) the Issuer has paid or caused to be paid all other sums payable under the Indenture; (4) the Issuer has delivered irrevocable instructions under the Indenture to apply the deposited money towards payment of the Notes at maturity or on the redemption date, as the case may be; and (5) the Issuer has delivered to the Trustee an Officer s Certificate and an Opinion of Counsel each to the effect that all conditions precedent under the Satisfaction and Discharge section of the Indenture relating to the satisfaction and discharge of the Indenture have been complied with, provided that any such counsel may rely on any Officer s Certificate as to matters of fact (including as to compliance with the foregoing clauses (1), (2) and (3)). No Personal Liability of Directors, Officers, Employees and Shareholders No director, officer, employee, incorporator or shareholder of the Company or any of its Subsidiaries or Affiliates, as such, shall have any liability for any obligations of the Company, the Issuer, or any Subsidiary thereof under the Note Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy. Concerning the Trustee and Certain Agents Deutsche Trustee Company Limited has been appointed as Trustee under the Indenture. The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are set forth specifically in such Indenture. During the existence of an Event of Default, of which a responsible officer of the Trustee has received written notice, the Trustee will exercise such of the rights and powers vested in it under the Indenture and use the same degree of care that a prudent Person would use in conducting its own affairs. The permissive rights of the Trustee to take or refrain from taking any action enumerated in the Indenture will not be construed as an obligation or duty. The Trustee is permitted to engage in other transactions with the Company and its Affiliates and Subsidiaries. The Indenture sets out the terms under which the Trustee may retire or be removed, and replaced. Such terms include, among others, (1) that the Trustee may be removed at any time by the Holders of a majority in principal amount of the then outstanding Notes, or may resign at any time by giving written notice to the Issuer and (2) that if the Trustee at any time (a) has or acquires a conflict of interest that is not eliminated, (b) fails to meet certain minimum limits regarding the aggregate of its capital and surplus or (c) becomes incapable of acting as Trustee or becomes insolvent or bankrupt, then the Issuer may remove the Trustee, or any Holder who has been a bona fide Holder for not less than 6 months may petition any court for removal of the Trustee and appointment of a successor Trustee. Any removal or resignation of the Trustee shall not become effective until the acceptance of appointment by the successor Trustee. The Indenture contains provisions for the indemnification (including by way of pre-funding) of the Trustee for any loss, claim, liability, taxes and expenses incurred without negligence, willful misconduct or fraud on its part, arising out of or in connection with the acceptance or administration of the Indenture. Notices All notices to Holders of Notes will be validly given if mailed to them at their respective addresses in the register of the Holders of the Notes, if any, maintained by the Registrar. In addition, for so long as any of the Notes are listed on the Irish Stock Exchange and the rules of the Irish Stock Exchange shall so require, notices with respect to the Notes will be published in a newspaper having general circulation in Ireland (which is expected to be The Irish Times) or, to the extent and in the manner permitted by such rules, posted on the official website of the Irish Stock Exchange ( In addition, for so long as any Notes are represented by Global Notes, all notices to Holders of the Notes will be delivered to Euroclear and Clearstream, each of which will give such notices to the holders of Book-Entry Interests. Such notices may also be published on the official website of the Irish Stock Exchange ( to the extent and in the manner permitted by the rules of the Irish Stock Exchange. 167

187 Each such notice shall be deemed to have been given on the date of such publication or, if published more than once on different dates, on the first date on which publication is made; provided that, if notices are mailed, such notice shall be deemed to have been given on the later of such publication and the seventh day after being so mailed. Any notice or communication mailed to a Holder shall be mailed to such Person by first-class mail or other equivalent means and shall be sufficiently given to such Holder if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Prescription Claims against the Issuer or any Guarantor for the payment of principal, or premium, if any, on the Notes will be prescribed five years after the applicable due date for payment thereof. Claims against the Issuer for the payment of interest on the Notes will be prescribed three years after the applicable due date for payment of interest. Currency Indemnity and Calculation of Pound Sterling-Denominated Restrictions The pound sterling is the sole currency of account and payment for all sums payable by the Company and the Guarantors under or in connection with the Notes and the Guarantees, including damages. Any amount received or recovered in a currency other than pound sterling, whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Guarantor or otherwise by any Holder or by the Trustee, in respect of any sum expressed to be due to it from the Issuer or a Guarantor will only constitute a discharge to the Issuer or such Guarantor, as applicable, to the extent of the pound sterling amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that pound sterling amount is less than the pound sterling amount expressed to be due to the recipient or the Trustee under any Note, the Issuer and the Guarantors will indemnify them against any loss sustained by such recipient or the Trustee as a result. In any event, the Issuer and the Guarantors will indemnify the recipient or the Trustee on a joint and several basis against the cost of making any such purchase. For the purposes of this currency indemnity provision, it will be prima facie evidence of the matter stated therein for the Holder of a Note or the Trustee to certify in a manner reasonably satisfactory to the Issuer (indicating the sources of information used) the loss it incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuer s and the Guarantors other obligations, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any Holder of a Note or the Trustee (other than a waiver of the indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note, any Guarantee or to the Trustee. Except as otherwise specifically set forth herein, for purposes of determining compliance with any pound sterling-denominated restriction herein, the Sterling Equivalent amount for purposes hereof that is denominated in a non-pound sterling currency shall be calculated based on the relevant currency exchange rate in effect on the date such non-pound sterling amount is Incurred or made, as the case may be. Enforceability of Judgments Since substantially all the assets of the Company and its Subsidiaries are located outside the United States, any judgment obtained in the United States against the Issuer or any Guarantor, including judgments with respect to the payment of principal, premium, if any, interest, Additional Amounts, if any, and any redemption price and any purchase price with respect to the Notes or the Guarantees, may not be collectable within the United States. Consent to Jurisdiction and Service In relation to any legal action or proceedings arising out of or in connection with the Indenture and the Notes and the Guarantees, the Issuer and each Guarantor have in the Indenture irrevocably submitted to the jurisdiction of the federal and state courts in the Borough of Manhattan in the City of New York, County and State of New York, United States. Governing Law The Indenture and the Notes, including any Guarantees, and the rights and duties of the parties thereunder are governed by and construed in accordance with the laws of the State of New York. The Intercreditor Agreement and the rights and duties of the parties thereunder are governed by and construed in accordance with the laws of England and Wales. 168

188 Certain Definitions 2014 OM means the offering memorandum dated July 24, 2014, relating to the offering of the Original Notes and the Senior Notes. Acquired Indebtedness means Indebtedness (1) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary, or (2) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with such Person becoming a Restricted Subsidiary of the Company or such acquisition or (3) of a Person at the time such Person merges with or into or consolidates or otherwise combines with the Company or any Restricted Subsidiary. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (1) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (2) of the preceding sentence, on the date of consummation of such acquisition of assets and, with respect to clause (3) of the preceding sentence, on the date of the relevant merger, consolidation or other combination. Acquisition means the acquisition of the PizzaExpress Subsidiaries, directly or indirectly, by the Issuer pursuant to the Acquisition Agreement. Acquisition Agreement means the sale and purchase agreement, dated July 12, 2014, by and among the Issuer, as the purchaser, and PizzaExpress Holdings Limited, as the seller, as it may be amended from time to time. Additional Assets means: (1) any property or assets (other than Indebtedness and Capital Stock) used or to be used by the Company, a Restricted Subsidiary or otherwise useful in a Similar Business (it being understood that capital expenditures on property or assets already used in Similar Business or to replace any property or assets that are the subject of such Asset Disposition shall be deemed an investment in Additional Assets); (2) the Capital Stock of a Person that is engaged in a Similar Business and becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary of the Company; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary of the Company. Affiliate of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Agreed Security Principles means the Agreed Security Principles as set out in an annex to the Revolving Credit Facility as in effect on or about the Issue Date, as applied mutatis mutandis with respect to the Notes in good faith by the Issuer. Applicable Premium means, with respect to any Note, the greater of: (A) (B) 1% of the principal amount of such Note; and on any redemption date, the excess (to the extent positive) of: (a) the present value at such redemption date of (i) the redemption price of such Note at August 1, 2017 (such redemption price (expressed in percentage of principal amount) being set forth in the table under Optional Redemption (excluding accrued but unpaid interest)), plus (ii) all required interest payments due on such Note to and including such date set forth in clause (i) (excluding accrued but unpaid interest), computed upon the redemption date using a discount rate equal to the applicable Gilt Rate at such redemption date plus 50 basis points; over (b) the outstanding principal amount of such Note, as calculated by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate. For the avoidance of doubt, calculation of the Applicable Premium shall not be an obligation or duty of the Trustee, the Registrar or the Paying Agent. 169

189 Asset Disposition means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases (other than operating leases entered into in the ordinary course of business), transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors qualifying shares), property or other assets (each referred to for the purposes of this definition as a disposition ) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. Notwithstanding the preceding provisions of this definition, the following items shall not be deemed to be Asset Dispositions: (1) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary; (2) a disposition of cash, Cash Equivalents, Temporary Cash Investments or Investment Grade Securities; (3) a disposition of inventory or other assets in the ordinary course of business; (4) a disposition of obsolete, surplus or worn out equipment or other assets or equipment or other assets that are no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries; (5) transactions permitted under Certain Covenants Merger and Consolidation The Company or a transaction that constitutes a Change of Control; (6) an issuance of Capital Stock by a Restricted Subsidiary to the Company or to another Restricted Subsidiary or as part of or pursuant to an equity incentive or compensation plan approved by the Board of Directors of the Company; (7) any dispositions of Capital Stock, properties or assets in a single transaction or series of related transactions with a fair market value (as determined in good faith by the Company) of less than 5 million or, if greater, 1.25% of Total Assets; (8) any Restricted Payment that is permitted to be made, and is made, under the covenant described above under Certain Covenants Limitation on Restricted Payments and the making of any Permitted Payment or Permitted Investment or, solely for purposes of clause (3) of the first paragraph under Certain Covenants Limitation on Sales of Assets and Subsidiary Stock, asset sales, the proceeds of which are used to make such Restricted Payments or Permitted Investments; (9) dispositions in connection with Permitted Liens; (10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (11) the licensing or sub-licensing of intellectual property or other general intangibles and licenses, sub-licenses, leases or subleases of other property, in each case, in the ordinary course of business; (12) foreclosure, condemnation or any similar action with respect to any property or other assets; (13) the sale or discount (with or without recourse, and on customary or commercially reasonable terms and for credit management purposes) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable; (14) any disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary; (15) any disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Company or a Restricted Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition; (16) any surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (17) any disposition of assets to a Person who is providing services related to such assets, the provision of which have been or are to be outsourced by the Company or any Restricted Subsidiary to such Person, provided that the fair market value of the assets disposed of does not exceed 10 million; 170

190 (18) any disposition with respect to property built, owned or otherwise acquired by the Company or any Restricted Subsidiary pursuant to customary sale and lease-back transactions, asset securitizations and other similar financings permitted by the Indenture; and (19) sales or dispositions of receivables in connection with any Qualified Receivables Financing or any factoring transaction or in the ordinary course of business. Associate means (i) any Person engaged in a Similar Business of which the Company or its Restricted Subsidiaries are the legal and beneficial owners of between 20% and 50% of all outstanding Voting Stock and (ii) any joint venture entered into by the Company or any Restricted Subsidiary of the Company. Board of Directors means: (1) with respect to the Company, the Issuer or any corporation, the board of directors or managers, as applicable, of the corporation, or any duly authorized committee thereof; (2) with respect to any partnership, the board of directors or other governing body of the general partner of the partnership or any duly authorized committee thereof; and (3) with respect to any other Person, the board or any duly authorized committee of such Person serving a similar function. Whenever any provision requires any action or determination to be made by, or any approval of, a Board of Directors, such action, determination or approval shall be deemed to have been taken or made if approved by a majority of the directors (excluding employee representatives, if any) on any such Board of Directors (whether or not such action or approval is taken as part of a formal board meeting or as a formal board approval). Business Day means each day that is not a Saturday, Sunday or other day on which banking institutions in London, United Kingdom, or New York, New York, United States are authorized or required by law to close; provided, however, that for any payments to be made under the Indenture, such day shall also be a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer ( TARGET ) payment system is open for the settlement of payments. Capital Stock of any Person means any and all shares of, rights to purchase, warrants or options for, or other equivalents of or partnership or other interests in (however designated), equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. Capitalized Lease Obligations means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes on the basis of GAAP. The amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined on the basis of GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. Cash Equivalents means: (1) securities issued or directly and fully guaranteed or insured by the United States or Canadian governments, a Permissible Jurisdiction, Switzerland or Norway or, in each case, any agency or instrumentality of thereof (provided that the full faith and credit of such country or such member state is pledged in support thereof), having maturities of not more than two years from the date of acquisition; (2) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of not more than one year from the date of acquisition thereof issued by any lender or by any bank or trust company (a) whose commercial paper is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody s (or if at the time neither is issuing comparable ratings, then a comparable rating of another Nationally Recognized Statistical Rating Organization) or (b) (in the event that the bank or trust company does not have commercial paper which is rated) having combined capital and surplus in excess of 500 million; (3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (1) and (2) entered into with any bank meeting the qualifications specified in clause (2) above; (4) commercial paper rated at the time of acquisition thereof at least A-2 or the equivalent thereof by S&P or P-2 or the equivalent thereof by Moody s or carrying an equivalent rating by a Nationally Recognized Statistical Rating Organization, if both of the two named rating agencies cease publishing ratings of investments or, if no rating is available in respect of the commercial paper, the issuer of which has an equivalent rating in respect of its long-term debt, and in any case maturing within one year after the date of acquisition thereof; (5) readily marketable direct obligations issued by any state of the United States of America, any province of Canada, any Permissible Jurisdiction, Switzerland or Norway or any political subdivision thereof, in each case, 171

191 having one of the two highest rating categories obtainable from either Moody s or S&P (or, if at the time, neither is issuing comparable ratings, then a comparable rating of another Nationally Recognized Statistical Rating Organization) with maturities of not more than two years from the date of acquisition; (6) Indebtedness or preferred stock issued by Persons with a rating of BBB or higher from S&P or Baa3 or higher from Moody s (or, if at the time, neither is issuing comparable ratings, then a comparable rating of another Nationally Recognized Statistical Rating Organization) with maturities of 12 months or less from the date of acquisition; (7) bills of exchange issued in the United States, Canada, any Permissible Jurisdiction, Switzerland, Norway or Japan eligible for rediscount at the relevant central bank and accepted by a bank (or any dematerialized equivalent); and (8) interests in any investment company, money market or enhanced high yield fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (7) above. Change of Control means: (1) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) any person or group of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Issue Date), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Issue Date), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company, provided that for the purposes of this clause, (x) no Change of Control shall be deemed to occur by reason of the Company becoming a Subsidiary of a Successor Parent and (y) any Voting Stock of which any Permitted Holder is the beneficial owner (as so defined) shall not be included in any Voting Stock of which any such person or group is the beneficial owner (as so defined), unless that person or group is not an affiliate of a Permitted Holder and has greater voting power with respect to that Voting Stock; or (2) the sale, lease, transfer, conveyance or other disposition (other than by way of merger, consolidation or other business combination transaction), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to a Person, other than a Restricted Subsidiary or one or more Permitted Holders. Clearstream means Clearstream Banking, a société anonyme as currently in effect or any successor securities clearing agency. Code means the United States Internal Revenue Code of 1986, as amended. Commodity Hedging Agreements means, in respect of a Person, any commodity purchase contract, commodity futures or forward contract, commodities option contract or other similar contract (including commodities derivative agreements or arrangements), to which such Person is a party or a beneficiary. Completion Date means August 18, 2014, the date of the Acquisition. Consolidated EBITDA for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) Consolidated Interest Expense and Receivables Fees; (2) Consolidated Income Taxes; (3) consolidated depreciation expense; (4) consolidated amortization or impairment expense; (5) any expenses, charges or other costs related to any Equity Offering, Investment, acquisition (including one-time amounts paid in connection with the acquisition or retention of one or more individuals comprising part of a management team retained to manage the acquired business; provided that such payments are made in connection with such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), disposition, recapitalization or the Incurrence of any Indebtedness permitted by the Indenture (in each case whether or not successful) in each case, as determined in good faith by an Officer of the Company; 172

192 (6) any minority interest expense (whether paid or not) consisting of income attributable to minority equity interests of third parties in such period; (7) the amount of management, monitoring, consulting and advisory fees and related expenses paid in such period to the Permitted Holders to the extent permitted by the covenant described under Certain Covenants Limitation of Affiliate Transactions and any management fees or charges paid or to be paid to former shareholders and/or their Affiliates; and (8) other non-cash charges, write-downs or items reducing Consolidated Net Income (excluding any such non-cash charge, write-down or item to the extent it represents an accrual of or reserve for cash charges in any future period) or other items classified by the Company as extraordinary, exceptional, unusual or nonrecurring items less other non-cash items of income increasing Consolidated Net Income (excluding any such non-cash item of income to the extent it represents a receipt of cash in any future period). Notwithstanding the foregoing, the provision for taxes and the depreciation, amortization, non-cash items, charges and write-downs of a Restricted Subsidiary shall be added to Consolidated Net Income to compute Consolidated EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income (loss) of such Restricted Subsidiary was included in calculating Consolidated Net Income for the purposes of this definition. Consolidated Financial Interest Expense means, for any period (in each case, determined on the basis of GAAP), the consolidated net interest income/expense of the Company and its Restricted Subsidiaries related to Indebtedness (including (a) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (b) the interest component of Capitalized Lease Obligations, and (c) net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness) but not including any pension liability interest cost, amortization of debt discount, debt issuance cost and premium, commissions, discounts and other fees and charges owed or paid with respect to financings, or costs associated with Hedging Obligations (other than those described in clause (c) above). Consolidated Income Taxes means taxes or other payments, including deferred Taxes, based on income, profits or capital (including without limitation withholding taxes), trade taxes and franchise taxes of any of the Company and its Restricted Subsidiaries whether or not paid, estimated, accrued or required to be remitted to any Governmental Authority. Consolidated Interest Expense means, for any period (in each case, determined on the basis of GAAP), the consolidated net interest income/expense of the Company and its Restricted Subsidiaries, whether paid or accrued, including any pension liability interest cost, plus or including (without duplication) any interest, costs and charges consisting of: (1) interest expense attributable to Capitalized Lease Obligations; (2) amortization of debt discount, debt issuance cost and premium; (3) non-cash interest expense; (4) commissions, discounts and other fees and charges owed with respect to financings not included in clause (2) above; (5) costs associated with Hedging Obligations and any foreign currency losses; (6) dividends on other distributions in respect of all Disqualified Stock of the Company and all Preferred Stock of any Restricted Subsidiary, to the extent held by Persons other than the Company or a subsidiary of the Company; (7) the consolidated interest expense that was capitalized during such period; and (8) interest actually paid by the Company or any Restricted Subsidiary under any guarantee of Indebtedness or other obligation of any other Person. Consolidated Leverage means the sum of the aggregate outstanding Indebtedness of the Company and its Restricted Subsidiaries (excluding Hedging Obligations except to the extent provided in clause (c) of the penultimate paragraph of the covenant described under Certain Covenants Limitation on Indebtedness ). 173

193 Consolidated Leverage Ratio means, as of any date of determination, the ratio of (x) Consolidated Leverage at such date to (y) the aggregate amount of Consolidated EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which internal consolidated financial statements of the Company are available; provided, however, that for the purposes of calculating Consolidated EBITDA for such period, if, as of such date of determination: (1) since the beginning of such period, the Company or any Restricted Subsidiary has disposed of any company, any business, or any group of assets constituting an operating unit of a business (any such disposition, a Sale ) or if the transaction giving rise to the need to calculate the Consolidated Leverage Ratio is such a Sale, Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets which are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period; provided that if any such sale constitutes discontinued operations in accordance with GAAP, Consolidated Net Income shall be reduced by an amount equal to the Consolidated Net Income (if positive) attributable to such operations for such period or increased by an amount equal to the Consolidated Net Income (if negative) attributable thereto for such period; (2) since the beginning of such period, the Company or any Restricted Subsidiary (by merger or otherwise) has made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise has acquired any company, any business, or any group of assets constituting an operating unit of a business (any such Investment or acquisition, a Purchase ), including any such Purchase occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto, including anticipated synergies and cost savings, as if such Purchase occurred on the first day of such period; and (3) since the beginning of such period, any Person (that became a Restricted Subsidiary or was merged or otherwise combined with or into the Company or any Restricted Subsidiary since the beginning of such period) will have made any Sale or any Purchase that would have required an adjustment pursuant to clause (1) or (2) above if made by the Company or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto, including anticipated synergies and cost savings, as if such Sale or Purchase occurred on the first day of such period. For the purposes of this definition and the definitions of Consolidated EBITDA, Consolidated Income Taxes, Consolidated Interest Expense, Consolidated Net Income and Fixed Charge Coverage Ratio, (a) calculations will be as determined in good faith by a responsible financial or chief accounting officer of the Company (including in respect of cost savings and synergies) as though the full effect of synergies and cost savings were realized on the first day of the relevant period and shall also include the reasonably anticipated full run rate cost savings effect (as calculated in good faith by a responsible financial or chief accounting officer of the Company) of cost savings programs that have been initiated by the Company or its Restricted Subsidiaries as though such cost savings programs had been fully implemented on the first day of the relevant period and (b) in determining the amount of Indebtedness outstanding on any date of determination, pro forma effect shall be given to any Incurrence, repayment, repurchase, defeasance or other acquisition, retirement or discharge of Indebtedness as if such transaction had occurred on the first day of the relevant period. For the purposes of this definition and the definitions of Consolidated EBITDA, Consolidated Income Taxes, Consolidated Interest Expense, Consolidated Net Income and Fixed Charge Coverage Ratio, the financial results of PizzaExpress Holdings Limited (or pro forma financial results for the PizzaExpress Group) shall be considered the financial information of the Company for any periods prior to the date of the acquisition of the PizzaExpress Subsidiaries. For the purpose of calculating pro forma effects pursuant to clause (2) above, the third paragraph of the definition of Fixed Charge Coverage Ratio and for the first paragraph and clause (5) of the second paragraph of the covenant described under Limitation on Indebtedness, as well as clause (3) of the first paragraph of the covenant described under Merger and Consolidation The Company, pro forma effect may also be given to anticipated acquisitions where the Indebtedness to be Incurred is to finance such acquisitions, which have not yet occurred. The pro forma calculation of the Consolidated Leverage Ratio shall not give effect to (i) any Indebtedness incurred on the calculation date pursuant to the provisions described in the second paragraph under Certain Covenants Limitation on Indebtedness or (ii) the discharge on the calculation date of any Indebtedness to the extent that such discharge results from the proceeds incurred pursuant to the provisions described in the second paragraph under Certain Covenants Limitation on Indebtedness. Consolidated Net Income means, for any period, the net income (loss) of the Company and its Restricted Subsidiaries determined on a consolidated basis on the basis of GAAP; provided, however, that there will not be included in such Consolidated Net Income: (1) subject to the limitations contained in clause (3) below, any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that the Company s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents 174

194 actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution or return on investment or could have been distributed, as reasonably determined by an Officer of the Company (subject, in the case of a dividend or other distribution or return on investment to a Restricted Subsidiary, to the limitations contained in clause (2) below); (2) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(i) of the first paragraph of the covenant described under Certain Covenants Limitation on Restricted Payments, any net income (loss) of any Restricted Subsidiary (other than Guarantors) if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company or a Guarantor by operation of the terms of such Restricted Subsidiary s charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise released, (b) restrictions pursuant to the Notes or the Indenture, and (c) restrictions not prohibited by the covenant described under Certain Covenants Limitation on Restrictions on Distributions from Restricted Subsidiaries ), except that the Company s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); (3) any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the Company or any Restricted Subsidiaries (including pursuant to any sale/leaseback transaction) which is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by an Officer or the Board of Directors of the Company); (4) any extraordinary, exceptional, unusual or nonrecurring gain, loss or charge (including for the avoidance of doubt, (i) any rebranding of the business (or any part thereof); (ii) any separation of the business in and following the Transactions (including any working capital impact); (iii) any fines, penalties or similar amounts owed or paid to regulators or authorities or pursuant to court orders, judgments or decisions; (iv) any tax referable to any payments, dividends or other distributions made or declared intra-group; and/or (v) any integration costs) or any charges or reserves in respect of any restructuring, redundancy or severance expense or other costs related to the Transactions, in each case, as determined in good faith by the Company; (5) the cumulative effect of a change in accounting principles; (6) any non-cash compensation charge or expense arising from any grant of stock, stock options or other equity based awards and any non-cash deemed finance charges in respect of any pension liabilities or other provisions; (7) all deferred financing costs written off and premiums paid or other expenses incurred directly in connection with any early extinguishment of Indebtedness and any net gain (loss) from any write-off or forgiveness of Indebtedness; (8) any unrealized gains or losses in respect of Hedging Obligations or any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value of changes therein recognized in earnings for derivatives that do not qualify as hedge transactions, in each case, in respect of Hedging Obligations; (9) any unrealized foreign currency transaction gains or losses in respect of Indebtedness of any Person denominated in a currency other than the functional currency of such Person and any unrealized foreign exchange gains or losses relating to translation of assets and liabilities denominated in foreign currencies; (10) any unrealized foreign currency translation or transaction gains or losses in respect of Indebtedness or other obligations of the Company or any Restricted Subsidiary owing to the Company or any Restricted Subsidiary; (11) any purchase accounting effects including, but not limited to, adjustments to inventory, property and equipment, software and other intangible assets and deferred revenues in component amounts required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Company and the Restricted Subsidiaries), as a result of any consummated acquisition (either prior to or after the Issue Date) or the amortization or write-off of any amounts thereof (including any write-off of in process research and development); (12) any goodwill or other intangible asset impairment, charge, amortization or write-off; 175

195 (13) Consolidated Income Taxes to the extent in excess of cash payments made in respect of such Consolidated Income Taxes; (14) consolidated depreciation expense; (15) the impact of capitalized, accrued or accreting or pay-in- kind interest or principal on Subordinated Shareholder Funding; and (16) the non-cash portion of straight-line rent expense. Consolidated Net Leverage Ratio means the Consolidated Leverage Ratio, but calculated by deducting cash and Cash Equivalents on a consolidated basis. Consolidated Secured Leverage Ratio means the Consolidated Leverage Ratio, but calculated by excluding all Indebtedness other than Senior Secured Indebtedness. Contingent Obligations means, with respect to any Person, any obligation of such Person guaranteeing in any manner, whether directly or indirectly, any operating lease, dividend or other obligation that does not constitute Indebtedness ( primary obligations ) of any other Person (the primary obligor ), including any obligation of such Person, whether or not contingent: (1) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (2) to advance or supply funds: (a) (b) for the purchase or payment of any such primary obligation; or to maintain the working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or (3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. Credit Facility means, with respect to the Company or any of its Subsidiaries, one or more debt facilities, indentures or other arrangements (including the Revolving Credit Facility or commercial paper facilities and overdraft facilities) with banks, other financial institutions or investors providing for revolving credit loans, term loans, notes, receivables financing (including through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables), letters of credit or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks or institutions and whether provided under the original Revolving Credit Facility as in effect on the Issue Date or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term Credit Facility shall include any agreement or instrument (1) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (2) adding Subsidiaries of the Company as additional borrowers or guarantors thereunder, (3) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (4) otherwise altering the terms and conditions thereof. Currency Agreement means in respect of a Person any foreign exchange contract, currency swap agreement, currency futures contract, currency option contract, currency derivative or other similar agreement to which such Person is a party or beneficiary. Default means any event which is, or after notice or passage of time or both would be, an Event of Default. Designated Non-Cash Consideration means the fair market value (as determined in good faith by the Company) of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Disposition that is so designated as Designated Non-Cash Consideration pursuant to an Officer s Certificate, setting forth the basis of such valuation, less the amount of cash, Cash Equivalents or Temporary Cash Investments received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated 176

196 Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with the covenant described under Certain Covenants Limitation on Sales of Assets and Subsidiary Stock. Designated Preference Shares means, with respect to the Company or any Parent, Preferred Stock (other than Disqualified Stock) (a) that is issued for cash (other than to the Company or a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees to the extent funded by the Company or such Subsidiary) and (b) that is designated as Designated Preference Shares pursuant to an Officer s Certificate of the Company at or prior to the issuance thereof, the Net Cash Proceeds of which are excluded from the calculation set forth in clause (c)(ii) of the second paragraph of the covenant described under Certain Covenants Limitation on Restricted Payments. Disinterested Director means, with respect to any Affiliate Transaction, a member of the Board of Directors of the Company having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors of the Company shall be deemed not to have such a financial interest by reason of such member s holding Capital Stock of the Company or any Parent or any options, warrants or other rights in respect of such Capital Stock. Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event: (1) matures or is mandatorily redeemable for cash or in exchange for Indebtedness pursuant to a sinking fund obligation or otherwise; (2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or (3) is or may become (in accordance with its terms) upon the occurrence of certain events or otherwise redeemable or repurchasable for cash or in exchange for Indebtedness at the option of the holder of the Capital Stock in whole or in part, in each case, on or prior to the earlier of (a) the Stated Maturity of the Notes or (b) the date on which there are no Notes outstanding; provided, however, that (i) only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock and (ii) any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (howsoever defined or referred to) shall not constitute Disqualified Stock if any such redemption or repurchase obligation is subject to compliance by the relevant Person with the covenant described under Certain Covenants Limitation on Restricted Payments. Equity Contribution means the contribution to the Company of shareholder funds on or about the Completion Date as part of the Transactions. Equity Offering means (x) a sale of Capital Stock of the Company (other than Disqualified Stock) other than offerings registered on Form S-8 (or any successor form) under the Securities Act or any similar offering in other jurisdictions, or (y) the sale of Capital Stock or other securities, the proceeds of which are contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through an Excluded Contribution) of, or as Subordinated Shareholder Funding to, the Company or any of its Restricted Subsidiaries. Escrowed Proceeds means the proceeds from the offering of any debt securities or other Indebtedness paid into an escrow account with an independent escrow agent on the date of the applicable offering or Incurrence pursuant to escrow arrangements that permit the release of amounts on deposit in such escrow account upon satisfaction of certain conditions or the occurrence of certain events. The term Escrowed Proceeds shall include any interest earned on the amounts held in escrow. Euroclear means Euroclear Bank SA/NV or any successor securities clearing agency. European Union means all members of the European Union as of January 1, Exchange Act means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, as amended. 177

197 Excluded Contribution means Net Cash Proceeds or property or assets received by the Company as capital contributions to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares) of the Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Company or any Subsidiary of the Company for the benefit of its employees to the extent funded by the Company or any Restricted Subsidiary) of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of the Company, in each case, to the extent designated as an Excluded Contribution pursuant to an Officer s Certificate of the Company and other than the Equity Contribution. fair market value may be conclusively established by means of an Officer s Certificate or a resolution of the Board of Directors of the Company setting out such fair market value as determined by such Officer or such Board of Directors in good faith. Fixed Charge Coverage Ratio means, with respect to any Person on any determination date, the ratio of Consolidated EBITDA of such Person for the most recently completed four consecutive fiscal quarters ending immediately prior to such determination date for which internal consolidated financial statements of such Person are available to the Fixed Charges of such Person and its Restricted Subsidiaries for such four consecutive fiscal quarters. In the event that the Company or any Restricted Subsidiary Incurs, assumes, guarantees, redeems, defeases, retires or extinguishes any Indebtedness (other than Indebtedness incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the Fixed Charge Coverage Ratio Calculation Date ), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such Incurrence, assumption, guarantee, redemption, defeasance, retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period; provided, however, that the pro forma calculation of Fixed Charges shall not give effect to (i) any Indebtedness incurred on the Fixed Charge Coverage Ratio Calculation Date pursuant to the provisions described in the second paragraph under Certain Covenants Limitation on Indebtedness or (ii) the discharge on the Fixed Charge Coverage Ratio Calculation Date of any Indebtedness to the extent that such discharge results from the proceeds incurred pursuant to the provisions described in the second paragraph under Certain Covenants Limitation on Indebtedness. For purposes of making the computation referred to above, any Investment, acquisitions, dispositions, mergers, consolidations and disposed operations that have been made by the Company or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date shall (at the election of the Company, except in the case of material acquisitions, dispositions, mergers, consolidations and disposed operations) be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and disposed or discontinued operations (and the change in any associated fixed charge obligations and the change in Consolidated EBITDA resulting therefrom), including the full run rate effect of anticipated synergies and cost savings, had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation or disposed or discontinued any operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall (at the election of the Company, except in the case of material acquisitions, dispositions, mergers, consolidations and disposed operations) be calculated giving pro forma effect thereto, including the full effect of anticipated synergies and cost savings, for such period as if such Investment, acquisition, disposition, merger, consolidation or disposed operation and the full run rate effect of such anticipated synergies and cost savings had occurred at the beginning of the applicable four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or chief accounting officer of the Company (including synergies and cost savings). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period except as set forth in the first paragraph of this definition. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Company may designate. 178

198 Fixed Charges means, with respect to any Person for any period, the sum of: (1) Consolidated Financial Interest Expense of such Person for such period; (2) all cash and non-cash dividends or other distributions payable (excluding items eliminated in consolidation) on any series of Preferred Stock during such period; (3) all cash and non-cash dividends or other distributions payable (excluding items eliminated in consolidation) on any series of Disqualified Stock during such period; and (4) any interest expense on Indebtedness of another person that is guaranteed by such Person or its Restricted Subsidiaries or secured by a Lien on assets of such Person or its Restricted Subsidiaries, but only to the extent such interest expense is actually paid, determined on a consolidated basis in accordance with GAAP. GAAP means generally accepted accounting principles in the United Kingdom in effect as on the date of any calculation or determination required hereunder, provided that at any time after the Issue Date, the Company may elect to apply IFRS or U.S. GAAP for the purposes of the Indenture, and from and after such election references herein to GAAP shall be deemed to be references to IFRS or U.S. GAAP (as applicable) in effect at the date of any calculation or determination required hereunder and all defined terms in the Indenture, and all ratios and computations based on GAAP shall be computed in conformity with IFRS or U.S. GAAP in effect at the date of any calculation or determination required hereunder, from and after any such election. In addition, at any time after the Issue Date, the Company may elect (whether then reporting pursuant to IFRS or U.S. GAAP) to establish that GAAP shall mean the GAAP as in effect on or prior to the date of such election, provided that any such election, once made, shall be irrevocable. Gilt Rate means, with respect to any redemption date, the yield to maturity as of such redemption date of U.K. Government Obligations with a fixed maturity (as compiled by the Office for National Statistics and published in the most recent Financial Statistics that have become publicly available at least two Business Days in London prior to such redemption date (or, if such Financial Statistics are no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to August 1, 2017; provided, however, that if the period from such redemption date to August 1, 2017, is less than one year, as applicable, the weekly average yield on actually traded U.K. Government Obligations denominated in sterling adjusted to a fixed maturity of one year shall be used; and provided, further, that in no case shall the Gilt Rate be less than zero. Governmental Authority means any nation, sovereign or government, any state, province, territory or other political subdivision thereof, and any entity or authority exercising executive, legislative, judicial, regulatory, self-regulatory or administrative functions of or pertaining to government, including a central bank or stock exchange. guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person, including any such obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or (2) entered into primarily for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term guarantee will not include endorsements for collection or deposit in the ordinary course of business. The term guarantee used as a verb has a corresponding meaning. Notes. Guarantee means the guarantee by each Guarantor of the Issuer s obligations under the Indenture and the Guarantor means the Company and any Restricted Subsidiary that Guarantees the Notes. Hedging Obligations of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Hedging Agreement (each, a Hedging Agreement ). 179

199 Holder means each Person in whose name the Notes are registered on the Registrar s books, which shall initially be the respective nominee of Clearstream and Euroclear. IFRS means International Financial Reporting Standards (formerly International Accounting Standards) ( IFRS ) endorsed from time to time by the European Union or any variation thereof with which the Company or its Restricted Subsidiaries are, or may be, required to comply; provided that at any date after the Issue Date the Company may make an irrevocable election to establish that IFRS shall mean IFRS as in effect on a date that is on or prior to the date of such election. Incur means issue, create, assume, enter into any guarantee of, incur, extend or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and the terms Incurred and Incurrence have meanings correlative to the foregoing and any Indebtedness pursuant to any revolving credit or similar facility shall only be Incurred at the time any funds are borrowed thereunder. Indebtedness means, with respect to any Person on any date of determination (without duplication): (1) the principal of indebtedness of such Person for borrowed money; (2) the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (3) all reimbursement obligations of such Person in respect of letters of credit, bankers acceptances or other similar instruments (except to the extent such reimbursement obligations relate to trade payables and such obligations are satisfied within 30 days of Incurrence), in each case only to the extent that the underlying obligation in respect of which the instrument was issued would be treated as Indebtedness; (4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), where the deferred payment is arranged primarily as a means of raising finance, which purchase price is due more than one year after the date of placing such property in service or taking final delivery and title thereto; (5) Capitalized Lease Obligations of such Person; (6) the principal component of all obligations, or liquidation preference, of such Person with respect to any Disqualified Stock or, with respect to any Restricted Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends); (7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination (as determined in good faith by the Company) and (b) the amount of such Indebtedness of such other Persons; (8) guarantees by such Person of the principal component of Indebtedness of other Persons to the extent guaranteed by such Person; and (9) to the extent not otherwise included in this definition, net obligations of such Person under Currency Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time). The term Indebtedness shall not include Subordinated Shareholder Funding or any lease, concession or license of property (or guarantee thereof) which would be considered an operating lease under GAAP as in effect on the Issue Date, any asset retirement obligations, any prepayments of deposits received from clients or customers in the ordinary course of business, or obligations under any license, permit or other approval (or guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the ordinary course of business. For the avoidance of doubt and notwithstanding the above, the term Indebtedness excludes any accrued expenses or trade payables. The amount of Indebtedness of any Person at any time in the case of a revolving credit or similar facility shall be the total amounts of funds borrowed and then outstanding. The amount of Indebtedness of any Person at any date shall be determined as set forth above or otherwise provided in the Indenture, and (other than with respect to letters of credit or guarantees or Indebtedness specified in clause (7) or (8) above) shall equal the amount thereof that would appear on a balance sheet of such Person (excluding any notes thereto) prepared on the basis of GAAP. 180

200 Notwithstanding the above provisions, in no event shall the following constitute Indebtedness: (i) (ii) (iii) Contingent Obligations Incurred in the ordinary course of business or obligations under or in respect of Qualified Receivables Financings; in connection with the purchase by the Company or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter; or for the avoidance of doubt, any obligations in respect of workers compensation claims, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage Taxes. Independent Financial Advisor means an investment banking or accounting firm of international standing or any third party appraiser of international standing; provided, however, that such firm or appraiser is not an Affiliate of the Company. Initial Investors means Hony Capital Fund V, L.P., any of its holding companies or Subsidiaries or any other Subsidiary of any of its holding companies and any fund, partnership and/or other entities represented, managed, advised, owned or controlled by Hony Capital Fund V, L.P. or any of its Affiliates or direct or indirect shareholders and any Affiliate of any such fund, partnership or entity but does not include any portfolio company of Hony Capital Fund V, L.P. or of any Affiliate of Hony Capital Fund V, L.P. Initial Public Offering means an Equity Offering of common stock or other common equity interests of the Company or any Parent or any successor of the Company or any Parent (the IPO Entity ) following which there is a Public Market and, as a result of which, the shares of common stock or other common equity interests of the IPO Entity in such offering are listed on an internationally recognized exchange or traded on an internationally recognized market. Intercreditor Agreement means the Intercreditor Agreement dated July 31, 2014, among, inter alios, the lenders and agent under the Revolving Credit Facility, as amended from time to time and which the Trustee acceded to on the Issue Date. Interest Rate Agreement means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement to which such Person is party or a beneficiary. Investment means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan or other extensions of credit (other than advances or extensions of credit to customers, suppliers, directors, officers or employees of any Person in the ordinary course of business, and excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or the Incurrence of a guarantee of any obligation of, or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such other Persons and all other items that are or would be classified as investments on a balance sheet prepared on the basis of GAAP; provided, however, that endorsements of negotiable instruments and documents in the ordinary course of business will not be deemed to be an Investment. If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. For purposes of Certain Covenants Limitation on Restricted Payments: (1) Investment will include the portion (proportionate to the Company s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary of the Company at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company s Investment in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company s equity interest in such Subsidiary) of the fair market value of 181

201 the net assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary; and (2) any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company s option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment. Investment Grade Securities means: (1) securities issued or directly and fully guaranteed or insured by the United States or Canadian government or any agency or instrumentality thereof (other than Cash Equivalents); (2) securities issued or directly and fully guaranteed or insured by a Permissible Jurisdiction or Switzerland, Norway or any agency or instrumentality thereof (other than Cash Equivalents); (3) debt securities or debt instruments with a rating of A or higher from S&P or A3 or higher by Moody s or the equivalent of such rating by such rating organization or, if no rating of Moody s or S&P then exists, the equivalent of such rating by any other Nationally Recognized Statistical Ratings Organization, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries; and (4) investments in any fund that invests exclusively in investments of the type described in clauses (1), (2) and (3) above which fund may also hold cash and Cash Equivalents pending investment or distribution. Investment Grade Status shall occur when the Notes receive both of the following: (1) a rating of BBB or higher from S&P; and (2) a rating of Baa3 or higher from Moody s; or the equivalent of such rating by either such rating organization or, if no rating of Moody s or S&P then exists, the equivalent of such rating by any other Nationally Recognized Statistical Ratings Organization. IPO Market Capitalization means an amount equal to (i) the total number of issued and outstanding shares of common stock or common equity interests of the IPO Entity at the time of closing of the Initial Public Offering multiplied by (ii) the price per share at which such shares of common stock or common equity interests are sold in such Initial Public Offering. Issue Date means July 31, Lien means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). Management Advances means loans or advances made to, or guarantees with respect to loans or advances made to, directors, officers, employees or consultants of any Parent, the Company or any Restricted Subsidiary: (1) (a) in respect of travel, entertainment or moving related expenses Incurred in the ordinary course of business or (b) for purposes of funding any such person s purchase of Capital Stock or Subordinated Shareholder Funding (or similar obligations) of the Company, its Subsidiaries or any Parent with (in the case of this sub-clause (b)) the approval of the Board of Directors of the Company; (2) in respect of moving related expenses Incurred in connection with any closing or consolidation of any facility or office; or (3) not exceeding 2 million in the aggregate outstanding at any time. Management Investors means the officers, directors, employees and other members of the management of or consultants to any Parent, the Company or any of their respective Subsidiaries, or spouses, family members or relatives thereof, or any trust, partnership or other entity for the benefit of or the beneficial owner of which (directly or indirectly) is any of the foregoing, or any of their heirs, executors, successors and legal representatives, who at any date beneficially 182

202 own or have the right to acquire, directly or indirectly, Capital Stock of the Company, any Restricted Subsidiary or any Parent. Market Capitalization means an amount equal to (i) the total number of issued and outstanding shares of common stock or common equity interests of the IPO Entity on the date of the declaration of the relevant dividend multiplied by (ii) the arithmetic mean of the closing prices per share of such common stock or common equity interests for the 30 consecutive trading days immediately preceding the date of declaration of such dividend. Moody s means Moody s Investors Service, Inc. or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization. Nationally Recognized Statistical Rating Organization means a nationally recognized statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act. Net Available Cash from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Taxes paid or required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition; (2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which by its terms or by applicable law are required to be repaid out of the proceeds from such Asset Disposition; (3) all distributions and other payments required to be made to minority interest holders (other than any Parent, the Company or any of their respective Subsidiaries) in Subsidiaries or joint ventures as a result of such Asset Disposition; and (4) the deduction of appropriate amounts required to be provided by the seller as a reserve, on the basis of GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. Net Cash Proceeds, with respect to any issuance or sale of Capital Stock or Subordinated Shareholder Funding, means the cash proceeds of such issuance or sale net of attorneys fees, accountants fees, underwriters or placement agents fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). Note Documents means the Notes (including Additional Notes), the Indenture and the Security Documents. Officer means, with respect to any Person, (1) the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, any Managing Director or the Secretary (a) of such Person or (b) if such Person is owned or managed by a single entity, of such entity, or (2) any other individual designated as an Officer for the purposes of the Indenture by the Board of Directors of such Person. Officer s Certificate means, with respect to any Person, a certificate signed by one Officer of such Person. Opinion of Counsel means a written opinion from legal counsel reasonably satisfactory to the Trustee. The counsel may be an employee of or counsel to the Company or its Subsidiaries. Parent means any Person of which the Company at any time is or becomes a Subsidiary after the Issue Date and any holding companies established by any Permitted Holder for purposes of holding its investment in any Parent. Parent Expenses means: (1) costs (including all professional fees and expenses) Incurred by any Parent in connection with reporting obligations under or otherwise Incurred in connection with compliance with applicable laws, rules or regulations 183

203 of any governmental, regulatory or self-regulatory body or stock exchange, the Indenture or any other agreement or instrument relating to Indebtedness of the Company or any Restricted Subsidiary, including in respect of any reports filed with respect to the Securities Act, Exchange Act or the respective rules and regulations promulgated thereunder; (2) customary indemnification obligations of any Parent owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person to the extent relating to the Company and its Subsidiaries; (3) obligations of any Parent in respect of director and officer insurance (including premiums therefor) to the extent relating to the Company and its Subsidiaries; (4) fees and expenses payable by any Parent in connection with the Transactions; (5) general corporate overhead expenses, including (a) professional fees and expenses and other operational expenses of any Parent related to the ownership or operation of the business of the Company or any of its Restricted Subsidiaries or (b) costs and expenses with respect to any litigation or other dispute relating to the Transactions or the ownership, directly or indirectly, by any Parent; (6) other fees, expenses and costs relating directly or indirectly to activities of the Company and its Subsidiaries or any Parent or any other Person established for purposes of or in connection with the Transactions or which holds directly or indirectly any Capital Stock or Subordinated Shareholder Funding of the Company, in an amount not to exceed 1 million in any fiscal year; and (7) expenses Incurred by any Parent in connection with any Public Offering or other sale of Capital Stock or Indebtedness: (x) (y) (z) where the net proceeds of such offering or sale are intended to be received by or contributed to the Company or a Restricted Subsidiary; in a pro-rated amount of such expenses in proportion to the amount of such net proceeds intended to be so received or contributed; or otherwise on an interim basis prior to completion of such offering so long as any Parent shall cause the amount of such expenses to be repaid to the Company or the relevant Restricted Subsidiary out of the proceeds of such offering promptly if completed. Pari Passu Indebtedness means Indebtedness of the Company or any Guarantor if such Indebtedness ranks equally in right of payment to the Notes or the Guarantees, as the case may be, and, in each case, is secured by a Lien on assets of the Company. Paying Agent means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Note on behalf of the Company. Permissible Jurisdiction means any member state of the European Union. Permitted Asset Swap means the concurrent purchase and sale or exchange of assets used or useful in a Similar Business or a combination of such assets and cash, Cash Equivalents or Temporary Cash Investments between the Company or any of its Restricted Subsidiaries and another Person; provided that any cash or Cash Equivalents received in excess of the value of any cash or Cash Equivalents sold or exchanged must be applied in accordance with the covenant described under Certain Covenants Limitation on Sales of Assets and Subsidiary Stock. Permitted Collateral Liens means: (A) Liens on the Collateral (i) that are Permitted Liens described in one or more of clauses (2), (3), (4), (5), (6), (8), (9), (11), (17), (18), (19), (20), (22) or (24) of the definition thereof or (ii) that are Liens on bank accounts equally and ratably granted to cash management banks securing cash management obligations; (B) Liens securing Additional Notes; (C) Liens on the Collateral to secure Indebtedness of the Company or a Restricted Subsidiary that is permitted to be Incurred under clauses (1), (2) (in the case of (2), to the extent such guarantee is in respect of Indebtedness otherwise permitted to be secured and specified in this definition of Permitted Collateral Liens), (4)(a) and (c) (if the original Indebtedness was so secured), (5)(i) (covering only the shares and assets of the acquired Person the Indebtedness of which is so secured), (5)(ii) (but only if after giving effect to such Incurrence on that date, the Consolidated Secured Leverage Ratio either does not exceed 4.5 to 1.0, or is not greater than prior to such incurrence), (6), (7), (11), (12) or (15) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness; provided, 184

204 however, that (a) such Lien will not give an entitlement to be repaid with proceeds of enforcement of the Collateral in a manner which is inconsistent with the Intercreditor Agreement and any Additional Intercreditor Agreement and (b) notwithstanding the terms of any Intercreditor Agreement or Additional Intercreditor Agreement, no Indebtedness shall be given super priority status, except for Indebtedness incurred pursuant to clauses (1) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness and any Hedging Obligations, and any Refinancing Indebtedness in respect of any such Indebtedness; (D) Liens on the Collateral securing Indebtedness incurred under the first paragraph of Certain Covenants Limitation on Indebtedness; and (E) Liens on the Collateral that secure Indebtedness on a basis junior to the Notes. To the extent that Indebtedness relating to an instrument or agreement is permitted to be secured by a Permitted Collateral Lien, other associated obligations under such instrument or agreement not themselves constituting Indebtedness may also be secured by such Permitted Collateral Lien. For purposes of determining compliance with this definition, in the event that an item of Indebtedness and/or a Lien meets the criteria of more than one of the categories of Permitted Collateral Liens described in clauses (A) through (E) above, the Company will be permitted to classify such item of Indebtedness and/or Lien on the date of its incurrence and reclassify such item of Indebtedness and/or Lien, in each case at any time and in any manner that complies with this definition. Permitted Holders means, collectively, (1) the Initial Investors and any Affiliate thereof, (2) Senior Management and Related Persons, (3) any Person who is acting as an underwriter in connection with a public or private offering of Capital Stock of any Parent or the Company, acting in such capacity, and (4) any group (as such term is defined under Section 13(d)(3) of the Exchange Act) of which a Permitted Holder (without giving effect to this clause (4)) is a Permitted Holder and where such Permitted Holder is the beneficial owner of more than 50% of the Capital Stock beneficially owned by such group. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture, will thereafter, together with its Affiliates, constitute an additional Permitted Holder. Permitted Investment means (in each case, by the Company or any of its Restricted Subsidiaries): (1) Investments in (a) a Restricted Subsidiary (including the Capital Stock of a Restricted Subsidiary) or the Company or (b) a Person (including the Capital Stock of any such Person) that is engaged in any Similar Business and such Person will, upon the making of such Investment, become a Restricted Subsidiary; (2) Investments in another Person if such Person is engaged in any Similar Business and as a result of such Investment such other Person is merged, consolidated or otherwise combined with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; (3) Investments in cash, Cash Equivalents, Temporary Cash Investments or Investment Grade Securities; (4) Investments in receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business; (5) Investments in payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (6) Management Advances; (7) Investments in Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement including upon the bankruptcy or insolvency of a debtor; (8) Investments made as a result of the receipt of non-cash consideration from a sale or other disposition of property or assets, including an Asset Disposition (but excluding a Permitted Asset Swap), in each case, that was made in compliance with Certain Covenants Limitation on Sales of Assets and Subsidiary Stock; (9) Investments in existence on, or made pursuant to legally binding commitments in existence on, the Issue Date; (10) Currency Agreements, Interest Rate Agreements, Commodity Hedging Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Certain Covenants Limitation on Indebtedness; 185

205 (11) Investments, taken together with all other Investments made pursuant to this clause (11) and at any time outstanding, in an aggregate amount at the time of such Investment not to exceed 20 million or, if greater, 5% of Total Assets; provided that, if an Investment is made pursuant to this clause in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is subsequently designated a Restricted Subsidiary pursuant to the covenant described under Certain Covenants Limitation on Restricted Payments, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) of the definition of Permitted Investments and not this clause (11); (12) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of business or Liens otherwise described in the definition of Permitted Liens or made in connection with Liens permitted under the covenant described under Certain Covenants Limitation on Liens; (13) any Investment to the extent made using Capital Stock of the Company (other than Disqualified Stock) or Capital Stock of any Parent as consideration; (14) any transaction to the extent constituting an Investment that is permitted and made in accordance with the provisions of the second paragraph of the covenant described under Certain Covenants Limitation on Affiliate Transactions (except those described in clauses (1), (3), (6), (8), (9) and (12) of that paragraph); (15) Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or licenses or leases of intellectual property, in any case, in the ordinary course of business and in accordance with the Indenture; (16) guarantees, keepwells and similar arrangements not prohibited by the covenant described under Certain Covenants Limitation on Indebtedness; and (17) Investments in the Notes and the Senior Notes. Permitted Liens means, with respect to any Person: (1) Liens on assets or property of a Restricted Subsidiary that is not the Issuer or a Guarantor securing Indebtedness of any Restricted Subsidiary that is not the Issuer or a Guarantor; (2) pledges, deposits or Liens under workmen s compensation laws, unemployment insurance laws, social security laws or similar legislation, or insurance related obligations (including pledges or deposits securing liability to insurance carriers under insurance or self-insurance arrangements), or in connection with bids, tenders, completion guarantees, contracts (other than for borrowed money) or leases, or to secure utilities, licenses, public or statutory obligations, or to secure surety, indemnity, judgment, appeal or performance bonds, guarantees of government contracts (or other similar bonds, instruments or obligations), or as security for contested taxes or import or customs duties or for the payment of rent, or other obligations of like nature, in each case Incurred in the ordinary course of business; (3) Liens imposed by law, including carriers, warehousemen s, mechanics, landlords, materialmen s and repairmen s or other like Liens, in each case, for sums not yet overdue for a period of more than 60 days or that are bonded or being contested in good faith by appropriate proceedings; (4) Liens for taxes, assessments or other governmental charges not yet delinquent or which are being contested in good faith by appropriate proceedings; provided that appropriate reserves required pursuant to GAAP have been made in respect thereof; (5) Liens in favor of the issuers of surety, performance or other bonds, guarantees or letters of credit or bankers acceptances (not issued to support Indebtedness for borrowed money) issued pursuant to the request of and for the account of the Company or any Restricted Subsidiary in the ordinary course of its business; (6) encumbrances, ground leases, easements (including reciprocal easement agreements), survey exceptions, or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of the Company and its Restricted Subsidiaries or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Company and its Restricted Subsidiaries; 186

206 (7) Liens on assets or property of the Company or any Restricted Subsidiary securing Hedging Obligations permitted under the Indenture, or over assets or property of any Restricted Subsidiary which is not required to give a Guarantee pursuant to the Agreed Security Principles and which Lien is in favor of obligations under the Indenture; (8) leases, licenses, subleases and sublicenses of assets (including real property and intellectual property rights), in each case, entered into in the ordinary course of business; (9) Liens arising out of judgments, decrees, orders or awards not giving rise to an Event of Default so long as any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree, order or award have not been finally terminated or the period within which such proceedings may be initiated has not expired; (10) Liens on assets or property of the Company or any Restricted Subsidiary for the purpose of securing Capitalized Lease Obligations or Purchase Money Obligations, or securing the payment of all or a part of the purchase price of, or securing other Indebtedness Incurred to finance or refinance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business; provided that (a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and (b) any such Lien may not extend to any assets or property of the Company or any Restricted Subsidiary other than assets or property acquired, improved, constructed or leased with the proceeds of such Indebtedness and any improvements or accessions to such assets and property; (11) Liens arising by virtue of any statutory or common law provisions relating to banker s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary or financial institution; (12) Liens arising from Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business; (13) (a) Liens existing on the Issue Date, excluding Liens securing the Revolving Credit Facility and the Notes and, with respect to the assets, property or capital stock of the PizzaExpress Group, Liens existing on the Completion Date; (b) Liens directly or indirectly securing the Notes; and (c) Liens in respect of property and assets securing Indebtedness if the recovery in respect of such Liens is subject to the Intercreditor Agreement or an Additional Intercreditor Agreement, or otherwise is subject to loss- sharing as among the Holders of the Notes and the creditors of such Indebtedness; (14) Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary (or at the time the Company or a Restricted Subsidiary acquires such property, other assets or shares of stock, including any acquisition by means of a merger, consolidation or other business combination transaction with or into the Company or any Restricted Subsidiary); provided, however, that such Liens are not created, Incurred or assumed in anticipation of or in connection with such other Person becoming a Restricted Subsidiary (or such acquisition of such property, other assets or stock); provided, further, that such Liens are limited to all or part of the same property, other assets or stock (plus improvements, accession, proceeds or dividends or distributions in connection with the original property, other assets or stock) that secured (or, under the written arrangements under which such Liens arose, could secure) the obligations to which such Liens relate; (15) Liens on assets or property of the Company or any Restricted Subsidiary securing Indebtedness or other obligations of the Company or such Restricted Subsidiary owing to the Company or another Restricted Subsidiary, or Liens in favor of the Company or any Restricted Subsidiary; (16) Liens (other than Permitted Collateral Liens) securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, and permitted to be secured under the Indenture; provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is or could be the security for or subject to a Permitted Lien hereunder; (17) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (18) (a) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any government, statutory or regulatory authority, developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any leased 187

207 property and subordination or similar arrangements relating thereto and (b) any condemnation or eminent domain proceedings affecting any real property; (19) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; (20) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets; (21) Liens on cash accounts securing Indebtedness incurred under clause (10) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness with local financial institutions; (22) Liens on Escrowed Proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters or arrangers thereof) or on cash set aside at the time of the Incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose; (23) Liens securing or arising by reason of any netting or set-off arrangement entered into in the ordinary course of banking or other trading activities, or liens over cash accounts securing cash pooling arrangements; (24) Liens arising out of conditional sale, title retention, hire purchase, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business; (25) Liens with respect to obligations which do not exceed 15 million at any one time outstanding; (26) Permitted Collateral Liens; (27) Liens on Capital Stock or other securities or assets of any Unrestricted Subsidiary that secure Indebtedness of such Unrestricted Subsidiary; (28) Liens on Receivables Assets Incurred in connection with a Qualified Receivables Financing; (29) Liens on Indebtedness permitted to be Incurred pursuant to clause (15) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness; (30) Liens on any proceeds loan made by the Company or any Restricted Subsidiary in connection with any future incurrence of Indebtedness permitted under the Indenture and securing that Indebtedness; and (31) Liens in connection with customary cash management, cash pooling or netting or setting off arrangements in the ordinary course of business. Person means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision thereof or any other entity. PizzaExpress Group means the PizzaExpress Subsidiaries, together with their respective Subsidiaries. PizzaExpress Subsidiaries means each of PizzaExpress Greater China Limited, PizzaExpress (Franchises) Limited and PizzaExpress Operations Limited (formerly Gondola Investments Limited). pound sterling and denote the lawful currency of the united Kingdom. Preferred Stock, as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. Public Debt means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (1) a public offering registered under the Securities Act or (2) a private placement to institutional investors that is underwritten for resale in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it 188

208 includes registration rights entitling the holders of such debt securities to registration thereof with the SEC for public resale. Public Market means any time after: (1) an Equity Offering has been consummated; and (2) shares of common stock or other common equity interests of the IPO Entity having a market value in excess of 100 million on the date of such Equity Offering have been distributed pursuant to such Equity Offering. Public Offering means any offering, including an Initial Public Offering, of shares of common stock or other common equity interests that are listed on an exchange or publicly offered (which shall include an offering pursuant to Rule 144A and/or Regulation S under the Securities Act to professional market investors or similar persons). Purchase Money Obligations means any Indebtedness Incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets (including Capital Stock), and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise. Qualified Receivables Financing means any Receivables Financing of a Receivables Subsidiary that meets the following conditions: (1) the Board of Directors of the Company shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the Receivables Subsidiary, (2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at fair market value (as determined in good faith by the Company), and (3) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Company) and may include Standard Securitization Undertakings. The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Indebtedness under a Credit Facility or Indebtedness in respect of the Notes shall not be deemed a Qualified Receivables Financing. Receivables Assets means any assets that are or will be the subject of a Qualified Receivables Financing. Receivables Fees means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing. Receivables Financing means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Subsidiaries), or (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interest are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Company or any such Subsidiary in connection with such accounts receivable. Receivables Repurchase Obligation means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller. Receivables Subsidiary means a Wholly Owned Subsidiary of the Company (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and: 189

209 (1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Restricted Subsidiary of the Company (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is subject to terms that are substantially equivalent in effect to a guarantee of any losses on securitized or sold receivables by the Company or any other Restricted Subsidiary of the Company, (iii) is recourse to or obligates the Company or any other Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (iv) subjects any property or asset of the Company or any other Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; (2) with which neither the Company nor any other Restricted Subsidiary of the Company has any contract, agreement, arrangement or understanding other than on terms which the Company reasonably believes to be no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and (3) to which neither the Company nor any other Restricted Subsidiary of the Company has any obligation to maintain or preserve such entity s financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officer s Certificate certifying that such designation complied with the foregoing conditions. Refinance means refinance, refund, replace, renew, repay, modify, restate, defer, substitute, supplement, reissue, resell, extend or increase (including pursuant to any defeasance or discharge mechanism) and the terms refinances, refinanced and refinancing as used for any purpose in the Indenture shall have a correlative meaning. Refinancing Indebtedness means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of the Company or another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, however, that: (1) if the Indebtedness being refinanced constitutes Subordinated Indebtedness, the Refinancing Indebtedness has a final Stated Maturity at the time such Refinancing Indebtedness is Incurred that is the same as or later than the final Stated Maturity of the Indebtedness being refinanced or, if shorter, the Notes; (2) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and costs, expenses and fees Incurred in connection therewith); and (3) if the Indebtedness being refinanced is expressly subordinated to the Notes or the Guarantees, such Refinancing Indebtedness is subordinated to the Notes or the Guarantees on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being refinanced, provided, however, that Refinancing Indebtedness shall not include Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and provided, further, that the provisions of clause (3) above would not operate to preclude the refinancing of Indebtedness with Indebtedness that is secured with a super priority status (or other preferential security status) if such security is otherwise permitted pursuant to the Indenture. Refinancing Indebtedness in respect of any Credit Facility or any other Indebtedness may be Incurred from time to time after the termination, discharge or repayment of any such Credit Facility or other Indebtedness. Related Person with respect to any Permitted Holder means: (1) any controlling equityholder or Subsidiary of such Person; or 190

210 (2) in the case of an individual, any spouse, family member or relative of such individual, any trust or partnership for the benefit of one or more of such individual and any such spouse, family member or relative, or the estate, executor, administrator, committee or beneficiaries of any thereof; or (3) any trust, corporation, partnership or other Person for which one or more of the Permitted Holders and other Related Persons of any thereof constitute the beneficiaries, stockholders, partners or owners thereof, or Persons beneficially holding in the aggregate a majority (or more) controlling interest therein; or (4) in the case of the Initial Investors, any investment fund or vehicle managed, sponsored or advised by such Person or any successor thereto, or by any Affiliate of such Person or any such successor. Related Taxes means (1) any Taxes, including sales, use, transfer, rental, ad valorem, value added, stamp, property, consumption, franchise, license, capital, registration, business, customs, net worth, gross receipts, excise, occupancy, intangibles or similar Taxes (other than (x) Taxes measured by income and (y) withholding imposed on payments made by any Parent), required to be paid (provided such Taxes are in fact paid) by any Parent by virtue of its: (a) (b) (c) (d) (e) being organized or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than, directly or indirectly, the Company or any of the Company s Subsidiaries); issuing or holding Subordinated Shareholder Funding; being a Parent, directly or indirectly, of the Company or any of the Company s Subsidiaries; receiving dividends from or other distributions in respect of the Capital Stock of, directly or indirectly, the Company or any of the Company s Subsidiaries; or having made any payment in respect to any of the items for which the Company is permitted to make payments to any Parent pursuant to Certain Covenants Limitation on Restricted Payments; or (2) if and for so long as the Company is a member of a group filing a consolidated or combined tax return with any Parent, any Taxes measured by income for which such Parent is liable up to an amount not to exceed with respect to such Taxes the amount of any such Taxes that the Company and its Subsidiaries would have been required to pay on a separate company basis or on a consolidated basis if the Company and its Subsidiaries had paid tax on a consolidated, combined, group, affiliated or unitary basis on behalf of an affiliated group consisting only of the Company and its Subsidiaries. Restricted Investment means any Investment other than a Permitted Investment. Restricted Subsidiary means any Subsidiary of the Company other than an Unrestricted Subsidiary. Reversion Date means, after the Notes have achieved Investment Grade Status, the date, if any, that such Notes shall cease to have such Investment Grade Status. Revolving Credit Facility means the revolving credit facility established pursuant to the revolving credit facility agreement dated July 31, 2014, among, inter alios, the Issuer, the Company, the agent and the security agent (each as named therein), as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time. S&P means Standard & Poor s Investors Ratings Services or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization. SEC means the U.S. Securities and Exchange Commission or any successor thereto. Securities Act means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, as amended. Security Documents means the Intercreditor Agreement and each collateral pledge agreement, security assignment agreement or other document under which collateral is pledged to secure the Notes. 191

211 Senior Finance Documents means the Revolving Credit Facility and such other documents identified as Finance Documents as defined in and in accordance with the Revolving Credit Facility. Senior Management means the officers, directors, and other members of senior management of the Company or any of its Subsidiaries, who at any date beneficially own or have the right to acquire, directly or indirectly, Capital Stock of the Company or any Parent and with an equity investment in excess of 250,000. Senior Notes means any notes issued under the Senior Notes Indenture. Senior Notes Indenture means the indenture governing the Senior Notes entered into, among others, the Company, the Issuer and Deutsche Trustee Company Limited, as trustee, on the Issue Date, as amended and/or supplemented from time to time. Senior Secured Indebtedness means any Indebtedness secured by a Lien on the Collateral on a basis pari passu with or senior to the security in favor of the Notes. Significant Subsidiary means any Restricted Subsidiary that meets any of the following conditions: (1) the Company s and its Restricted Subsidiaries investments in and advances to the Restricted Subsidiary exceed 10% of the total assets of the Company and its Restricted Subsidiaries on a consolidated basis as of the end of the most recently completed fiscal year; (2) the Company s and its Restricted Subsidiaries proportionate share of the total assets (after intercompany eliminations) of the Restricted Subsidiary exceeds 10% of the total assets of the Company and its Restricted Subsidiaries on a consolidated basis as of the end of the most recently completed fiscal year; or (3) the Company s and its Restricted Subsidiaries equity in the income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle of the Restricted Subsidiary exceeds 10% of such income of the Company and its Restricted Subsidiaries on a consolidated basis for the most recently completed fiscal year. Similar Business means any businesses, services or activities in any sector engaged in by the Company or any of its Subsidiaries (including the PizzaExpress Group) or any Associates on the Issue Date and any businesses, services and activities engaged in by the Company or any of its Subsidiaries (including the PizzaExpress Group) or any Associates that are related, complementary, incidental, ancillary or similar to any of the foregoing or are extensions or developments of any thereof. Standard Securitization Undertakings means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Company or any Subsidiary of the Company which the Company has determined in good faith to be customary in a Receivables Financing, including those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking. Stated Maturity means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. Sterling Equivalent means, with respect to any monetary amount in a currency other than pound sterling, at any time of determination thereof by the Company or the Trustee, the amount of pound sterling obtained by converting such currency other than pound sterling involved in such computation into pound sterling at the spot rate for the purchase of pound sterling with the applicable currency other than pound sterling as published in The Financial Times in the Currency Rates section (or, if The Financial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may be selected in good faith by the Company) on the date of such determination. Subordinated Indebtedness means, with respect to any person, any Indebtedness (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinated in right of payment to the Notes or the Guarantees pursuant to a written agreement (and for the avoidance of doubt, for the purposes of the Indenture, Indebtedness shall not be considered subordinated in right of payment solely because it is unsecured, or secured on a junior basis to or entitled to proceeds from security enforcement after, other Indebtedness). Subordinated Shareholder Funding means, collectively, any funds provided to the Company by a Parent in exchange for or pursuant to any security, instrument or agreement other than Capital Stock, in each case, issued to and 192

212 held by a Parent or a Permitted Holder, including, for the avoidance of doubt, any preferred equity or subordinated loans to be issued by the Company in connection with the Transactions, together with any such security, instrument or agreement and any other security or instrument other than Capital Stock issued in payment of any obligation under any Subordinated Shareholder Funding; provided, however, that such Subordinated Shareholder Funding: (1) does not mature or require any amortization, redemption or other repayment of principal or any sinking fund payment prior to the first anniversary of the Stated Maturity of the Notes (other than through conversion or exchange of such funding into Capital Stock (other than Disqualified Stock) of the Company or any funding meeting the requirements of this definition); (2) does not require, prior to the first anniversary of the Stated Maturity of the Notes, payment of cash interest, cash withholding amounts or other cash gross-ups, or any similar cash amounts; (3) contains no change of control or similar provisions and does not accelerate and has no right to declare a default or event of default or take any enforcement action or otherwise require any cash payment, in each case, prior to the first anniversary of the Stated Maturity of the Notes; (4) does not provide for or require any security interest or encumbrance over any asset of the Company or any of its Subsidiaries; and (5) pursuant to its terms is fully subordinated and junior in right of payment to the Notes pursuant to subordination, payment blockage and enforcement limitation terms which are customary in all material respects for similar funding. Subsidiary means, with respect to any Person: (1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (2) any partnership, joint venture, limited liability company or similar entity of which: (a) (b) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership interests or otherwise; and such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. Successor Parent with respect to any Person means any other Person with more than 50% of the total voting power of the Voting Stock of which is, at the time the first Person becomes a Subsidiary of such other Person, beneficially owned (as defined below) by one or more Persons that beneficially owned (as defined below) more than 50% of the total voting power of the Voting Stock of the first Person immediately prior to the first Person becoming a Subsidiary of such other Person. For purposes hereof, beneficially own has the meaning correlative to the term beneficial owner, as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date). Taxes means all present and future taxes, levies, imposts, deductions, charges, duties and withholdings and any charges of a similar nature (including interest, penalties and other liabilities with respect thereto) that are imposed or levied by any government or other taxing authority. Tax Sharing Agreement means any tax sharing or profit and loss pooling or similar agreement with customary or arm s-length terms entered into with any Parent or Unrestricted Subsidiary, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of the Indenture. Temporary Cash Investments means any of the following: (1) any investment in 193

213 (a) (b) direct obligations of, or obligations guaranteed by, (i) the United States of America or Canada, (ii) any Permissible Jurisdiction, (iii) Switzerland or Norway, (iv) any country in whose currency funds are being held specifically pending application in the making of an investment or capital expenditure by the Company or a Restricted Subsidiary in that country with such funds or (v) any agency or instrumentality of any such country or member state; or direct obligations of any country recognized by the United States of America rated at least A by S&P or A-1 by Moody s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization); (2) overnight bank deposits, and investments in time deposit accounts, certificates of deposit, bankers acceptances and money market deposits (or, with respect to foreign banks, similar instruments) maturing not more than one year after the date of acquisition thereof issued by: (a) (b) (c) any lender under the Revolving Credit Facility; any institution authorized to operate as a bank in any of the countries or member states referred to in subclause (1)(a) above; or any bank or trust company organized under the laws of any such country or member state or any political subdivision thereof, in each case, having capital and surplus aggregating in excess of 250 million (or the foreign currency equivalent thereof) and whose long-term debt is rated at least A by S&P or A-2 by Moody s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization) at the time such Investment is made; (3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) or (2) above entered into with a Person meeting the qualifications described in clause (2) above; (4) Investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a Person (other than the Company or any of its Subsidiaries), with a rating at the time as of which any Investment therein is made of P-2 (or higher) according to Moody s or A-2 (or higher) according to S&P (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization); (5) Investments in securities maturing not more than one year after the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, Canada, any Permissible Jurisdiction or Switzerland, Norway or by any political subdivision or taxing authority of any such state, commonwealth, territory, country or member state, and rated at least BBB by S&P or Baa3 by Moody s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization); (6) bills of exchange issued in the United States, Canada, a Permissible Jurisdiction, Switzerland, Norway or Japan eligible for rediscount at the relevant central bank and accepted by a bank (or any dematerialized equivalent); (7) any money market deposit accounts issued or offered by a commercial bank organized under the laws of a country that is a member of the Organization for Economic Co-operation and Development, in each case, having capital and surplus in excess of 250 million (or the foreign currency equivalent thereof) or whose long term debt is rated at least A by S&P or A2 by Moody s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization) at the time such Investment is made; (8) investment funds investing 95% of their assets in securities of the type described in clauses (1) through (7) above (which funds may also hold reasonable amounts of cash pending investment and/or distribution); and (9) investments in money market funds complying with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the SEC under the U.S. Investment Company Act of 1940, as amended. Total Assets means the consolidated total assets of the Company and its Restricted Subsidiaries in accordance with GAAP as shown on the most recent balance sheet of such Person. 194

214 Transactions means the transactions contemplated by the Acquisition Agreement, the Equity Contribution, any bridge credit facility agreements to which the Company or the Issuer are a party and any other issuance of intercompany debt, the issuance of the Original Notes issued on the Issue Date and the Senior Notes, the Security Documents and borrowings under the Revolving Credit Facility as in effect on the Issue Date, the repayment or discharge of existing indebtedness of the PizzaExpress Group, the closing out or replacement of Hedging Obligations pursuant to the foregoing, and the payment or incurrence of any fees, expenses or charges associated with any of the foregoing. Trust Indenture Act means the Trust Indenture Act of 1939, as amended. U.K. Government Obligations means direct obligations of, or obligations guaranteed by, the United Kingdom, and the payment for which the United Kingdom pledges its full faith and credit. Uniform Commercial Code means the New York Uniform Commercial Code. Unrestricted Subsidiary means: (1) any Subsidiary of the Company that at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of the Company in the manner provided below); and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger, consolidation or other business combination transaction, or Investment therein but not including the Issuer) to be an Unrestricted Subsidiary only if: (1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; and (2) such designation and the Investment of the Company in such Subsidiary complies with Certain Covenants Limitation on Restricted Payments. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officer s Certificate certifying that such designation complies with the foregoing conditions. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that immediately after giving effect to such designation (1) no Default or Event of Default would result therefrom and (2)(x) the Company could Incur at least 1.00 of additional Indebtedness pursuant to clause (i) of the first paragraph of the Limitation on Indebtedness covenant, (y) the Fixed Charge Coverage Ratio would not be lower than it was immediately prior to giving effect to such designation, in each case, on a pro forma basis taking into account such designation, or (z) any Indebtedness of such Unrestricted Subsidiary would be permitted to be Incurred pursuant to the second paragraph of the Limitation on Indebtedness covenant. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of such Board of Directors giving effect to such designation or an Officer s Certificate certifying that such designation complied with the foregoing provisions. U.S. GAAP means generally accepted accounting principles in the United States of America as in effect from time to time. Voting Stock of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors. Wholly Owned Subsidiary means a Restricted Subsidiary of the Company, all of the Voting Stock of which (other than directors qualifying shares or shares required by any applicable law or regulation to be held by a Person other than the Company or another Wholly Owned Subsidiary) is owned by the Company or another Wholly Owned Subsidiary. 195

215 BOOK-ENTRY; DELIVERY AND FORM General The Original Senior Secured Notes and the Notes initially have a different common code and a different international securities identification number ( ISIN ). Once the Notes become freely tradeable, the Notes and the Original Senior Secured Notes will share the same common code and ISIN. See The Offering, Description of the Notes and Listing and General Information. Notes sold to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act are initially represented by one or more global notes in registered form without interest coupons attached (the Rule 144A Global Notes ). Notes sold to non-u.s. persons outside the United States in reliance on Regulation S under the U.S. Securities Act are initially represented by one or more global notes in registered form without interest coupons attached (the Regulation S Global Notes and, together with the Rule 144A Global Notes, the Global Notes ). The Global Notes were deposited, on the Issue Date, with a common depositary and registered in the name of the nominee of the common depositary for the accounts of Euroclear and Clearstream, Luxembourg. Ownership of interests in the Rule 144A Global Notes ( Rule 144A Book-Entry Interests ) and ownership of interests in the Regulation S Global Notes (the Regulation S Book-Entry Interests and, together with the Rule 144A Book-Entry Interests, the Book-Entry Interests ) will be limited to persons that have accounts with Euroclear and/or Clearstream, Luxembourg or persons that hold interests through such participants. Euroclear and Clearstream, Luxembourg will hold interests in the Global Notes on behalf of their participants through customers securities accounts in their respective names on the books of their respective depositaries. Except under the limited circumstances described below, Book- Entry Interests will not be issued in definitive form. Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream, Luxembourg and their respective participants. The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of securities take physical delivery of those securities in definitive form. The foregoing limitations may impair your ability to own, transfer or pledge, respectively, Book-Entry Interests. In addition, while the Notes are in global form, holders of Book-Entry Interests will not be considered the registered owners or holders of Notes for any purpose. So long as the Notes are held in global form, the common depositary for Euroclear and/or Clearstream, Luxembourg (or its nominee), as applicable, will be considered the sole holders of the Global Notes for all purposes under the Indenture. In addition, participants must rely on the procedures of Euroclear and Clearstream, Luxembourg, and indirect participants must rely on the procedures of Euroclear and Clearstream, Luxembourg and the participants through which they own Book-Entry Interests, to transfer their interests or to exercise any rights of holders of Notes under the Indenture. None of the Issuer, the Guarantors or the Trustee or any agent named herein or any of their respective affiliates will have any responsibility, or be liable, for any aspect of the records relating to the Book-Entry Interests. Redemption of the Global Notes In the event that any Global Note (or any portion thereof) is redeemed, Euroclear and/or Clearstream, Luxembourg, as applicable, will redeem an equal amount of the Book-Entry Interests in such Global Note from the amount received by it in respect of the redemption of such Global Note. The redemption price payable in connection with the redemption of such Book-Entry Interests will be equal to the amount received by Euroclear and/or Clearstream, Luxembourg, as applicable, in connection with the redemption of such Global Note (or any portion thereof). The Issuer understands that, under the existing practices of Euroclear and Clearstream, Luxembourg, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream, Luxembourg will credit their respective participants accounts on a proportionate basis (with adjustments to prevent fractions) or by using a pool factor or on such other basis as they deem fair and appropriate unless otherwise required by law or applicable stock exchange or depositary requirements. Payments on Global Notes The Issuer will make payments of any amounts owing in respect of the relevant Global Notes (including principal, premium, if any, interest and additional amounts, if any) to the relevant paying agent. The relevant paying agent will, in turn, make such payments to the common depositary or its nominee for Euroclear and Clearstream, Luxembourg, which will distribute such payments to participants in accordance with their respective customary procedures. All payments required to be made by the Issuer with respect to the Notes or by a Guarantor under its Note Guarantee, will be made free and clear of, and without deduction or withholding for or on account of, any present or 196

216 future taxes, duties, assessments or governmental charges of whatever nature, except as may be required by law and except as described under Description of the Notes Withholding Taxes. If any such deduction or withholding is required to be made, then, to the extent described under Description of the Notes Withholding Taxes, the Issuer will pay additional amounts as may be necessary in order for the net amounts received by any holder of the relevant Global Notes or owner of the relevant Book-Entry Interests after such deduction or withholding to equal the net amounts that such holder or owner would have otherwise received in respect of such Global Note or Book-Entry Interest, as the case may be, absent such withholding or deduction. The Issuer expects that standing customer instructions and customary practices will govern payments by participants to owners of Book-Entry Interests held through such participants. Under the terms of the Indenture, the Issuer, Trustee, registrar, transfer agent and paying agent(s), respectively, will treat the registered holders of the relevant Global Notes (i.e., the common depositary for Euroclear or Clearstream, Luxembourg (or its nominee)) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, none of the Issuer, the Trustee, the registrar, transfer agent or the paying agent(s) has or will have any responsibility or liability for: any aspect of the records of Euroclear, Clearstream, Luxembourg or any participant or indirect participant relating to, or payments made on account of, a Book-Entry Interest or for maintaining, supervising or reviewing the records of Euroclear or Clearstream, Luxembourg or any participant or indirect participant relating to, or payments made on account of, a Book-Entry Interest; Euroclear, Clearstream, Luxembourg or any participant or indirect participant; or the records of the common depositary. Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such participants. Currency of Payment for the Global Notes The principal of, premium, if any, and interest on, and all other amounts payable in respect of, the Global Notes, will be paid to holders of interests in such Notes through Euroclear and/or Clearstream, Luxembourg in pound sterling. Payments will be subject in all cases to any fiscal or other laws and regulations (including any regulations of the applicable clearing system) applicable thereto. None of the Issuer, the Trustee, any agents named herein, the Initial Purchasers or any of their respective agents or affiliates will be liable to any holder of Global Notes or any other person for any commissions, costs, losses or expenses in relation to or resulting from any currency conversion or rounding effected in connection with any such payment. Action by Owners of Book-Entry Interests Euroclear and Clearstream, Luxembourg have advised us that they will take any action permitted to be taken by a holder of a Note (including the presentation of Notes for exchange as described above) only at the direction of one or more participants to whose account the Book-Entry Interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. Euroclear and Clearstream, Luxembourg will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Notes. However, if there is an Event of Default (as defined in the Indenture) under a Note, each of Euroclear and Clearstream, Luxembourg, at the request of the holders of the Notes, reserve the right to exchange the Global Notes for definitive registered Notes in certificated form (together, the Definitive Registered Notes ), and to distribute such Definitive Registered Notes to their respective participants. Transfers Transfers between participants in Euroclear and Clearstream, Luxembourg will be effected in accordance with Euroclear and Clearstream, Luxembourg s rules and will be settled in immediately available funds. If a holder of a Note requires physical delivery of Definitive Registered Notes for any reason, including to sell Notes to persons in states that require physical delivery of such securities or to pledge such securities, such holder must transfer its interest in the Global Notes in accordance with the normal procedures of Euroclear and Clearstream, Luxembourg and in accordance with the procedures to be set forth in the Indenture. The Global Notes each bear a legend to the effect set forth under Transfer Restrictions. Book-Entry Interests in the Global Notes will be subject to the restrictions on transfers and certification requirements discussed under Transfer Restrictions. 197

217 Transfers of Rule 144A Book-Entry Interests to persons wishing to take delivery of Rule 144A Book-Entry Interests will at all times be subject to such transfer restrictions. Rule 144A Book-Entry Interests may be transferred to a person who takes delivery in the form of a Regulation S Book-Entry Interest only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S or Rule 144 under the U.S. Securities Act or any other exemption (if available under the U.S. Securities Act). Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of a Rule 144A Book-Entry Interest only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the U.S. Securities Act in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under Transfer Restrictions and in accordance with any applicable securities laws of any other jurisdiction. In connection with transfers involving an exchange of a Regulation S Book-Entry Interest for a Rule 144A Book-Entry Interest, appropriate adjustments will be made to reflect a decrease in the principal amount of the Regulation S Global Note and a corresponding increase in the principal amount of the Rule 144A Global Note. Definitive Registered Notes may be transferred and exchanged for Book- Entry Interests in a Global Note only as described under Description of the Notes Transfer and Exchange, and, if required, only if the transferor first delivers to the registrar a written certificate (in the form to be provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to the Notes. See Transfer Restrictions. Any Book-Entry Interest in one of the Global Notes that is transferred to a person who takes delivery in the form of a Book-Entry Interest in any other Global Note will, upon transfer, cease to be a Book-Entry Interest in the first-mentioned Global Note and become a Book-Entry Interest in such other Global Note, and accordingly will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as it remains such a Book- Entry Interest. Definitive Registered Notes Under the terms of the Indenture, owners of the Book-Entry Interests will receive Definitive Registered Notes: if Euroclear or Clearstream, Luxembourg notifies the Issuer that it is unwilling or unable to continue to act as depositary and a successor depositary is not appointed by the Issuer within 120 days; or if the owner of a Book-Entry Interest requests such exchange in writing delivered through Euroclear or Clearstream, Luxembourg following an Event of Default under and as defined in the Indenture and enforcement action is being taken in respect thereof under the Indenture. In such an event, the Issuer will issue Definitive Registered Notes, registered in the name or names and issued in any approved denominations, requested by or on behalf of Euroclear and/or Clearstream, Luxembourg or the Issuer, as applicable (in accordance with their respective customary procedures and based upon directions received from participants reflecting the beneficial ownership of Book-Entry Interests), and such Definitive Registered Notes will bear the restrictive legend as provided in the Indenture, unless that legend is not required by the Indenture or applicable law. To the extent permitted by law, the Issuer, the Trustee, the paying agent(s) and the registrar shall be entitled to treat the registered holder of a Global Note as the absolute owner thereof and no person will be liable for treating the registered holder as such. Ownership of the Global Notes will be evidenced through registration from time to time at the registered office of the Issuer, and such registration is a means of evidencing title to the Notes. We will not impose any fees or other charges in respect of the Notes; provided, however, owners of the Book-Entry Interests may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear and/or Clearstream, Luxembourg, as applicable. Information Concerning Euroclear and Clearstream, Luxembourg All Book-Entry Interests will be subject to the operations and procedures of Euroclear and Clearstream, Luxembourg, as applicable. We provide the following summaries of those operations and procedures solely for the convenience of investors in the Notes. The operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time. None of the Issuer, the Initial Purchasers, the Trustee, the Security Agent, the Paying Agent, the Registrar nor the Transfer Agent are responsible for those operations or procedures. 198

218 The Issuer understands as follows with respect to Euroclear and Clearstream, Luxembourg: Euroclear and Clearstream, Luxembourg hold securities for participating organizations. They facilitate the clearance and settlement of securities transactions between their respective participants through electronic book- entry changes in accounts of such participants. Euroclear and Clearstream, Luxembourg provide various services to their participants, including the safekeeping, administration, clearance, settlement, lending and borrowing of internationally traded securities. Euroclear and Clearstream, Luxembourg also interface with domestic securities markets in several countries. Euroclear and Clearstream, Luxembourg participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear and Clearstream, Luxembourg participant, either directly or indirectly. Euroclear and Clearstream, Luxembourg have no record of, or relationship with, persons holding through their account holders. Since Euroclear and Clearstream, Luxembourg only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a beneficial interest to pledge such interest to persons or entities that do not participate in the Euroclear and/or Clearstream, Luxembourg systems, or otherwise take actions in respect of such interest, may be limited by the lack of a definitive certificate for that interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests to such persons may be limited. In addition, owners of beneficial interests through the Euroclear or Clearstream, Luxembourg systems will receive distributions attributable to the Rule 144A Global Notes only through Euroclear or Clearstream, Luxembourg participants. Global Clearance and Settlement under the Book-Entry System Application was made to list the Notes represented by the Global Notes on the Official List of the Irish Stock Exchange and to admit the Notes for trading on the Global Exchange Market of the Irish Stock Exchange, and any permitted secondary market trading activity in the Notes will, therefore, be required to be settled in immediately available funds. The Issuer expects that secondary trading in any certificated Notes will also be settled in immediately available funds. Although Euroclear and Clearstream, Luxembourg currently follow the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants in Euroclear or Clearstream, Luxembourg, as the case may be, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued or modified at any time. None of the Issuer, the Initial Purchasers, the Trustee, the registrar or the paying agent(s) in respect of the Notes will have any responsibility for the performance by Euroclear or Clearstream, Luxembourg or their participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Initial Settlement Initial settlement for the Notes was made in pound sterling. Book-Entry Interests owned through Euroclear or Clearstream, Luxembourg accounts followed the settlement procedures applicable to conventional bonds in registered form. Book-Entry Interests were credited to the securities custody accounts of Euroclear and Clearstream, Luxembourg holders on the business day following the settlement date against payment for value of the settlement date. Secondary Market Trading The Book-Entry Interests will trade through participants of Euroclear or Clearstream, Luxembourg and will settle in same-day funds. Since the purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both the purchaser s and the seller s accounts are located to ensure that settlement can be made on the desired value date. Special Timing Considerations You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the Notes through Euroclear or Clearstream, Luxembourg on days when those systems are open for business. In addition, because of time zone differences, there may be complications with completing transactions involving Euroclear and/or Clearstream, Luxembourg on the same business day as in the United States. U.S. investors who wish to transfer their interests in the Notes, or to receive or make a payment or delivery of Notes, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg if Clearstream, Luxembourg is used, or Brussels if Euroclear is used. 199

219 Clearing Information The Notes were accepted for clearance through the facilities of Euroclear and Clearstream, Luxembourg. The international securities identification numbers and common codes for each series of the Notes are set out under Listing and General Information. 200

220 TAX CONSIDERATIONS Prospective purchasers of Notes are advised to consult their own tax advisers as to the tax consequences, under the tax laws of the country of which they are resident, of a purchase of Notes including without limitation, the consequences of receipt of interest and premium, if any, on and sale or redemption of Notes or any interest therein. EU Information Reporting and Withholding Council Directive 2003/48/EC (the Savings Directive ) requires EU Member States to provide to the tax authorities of other EU Member States details of payments of interest and other similar income paid by a person established within its jurisdiction to (or for the benefit of) an individual resident, or certain other types of entity established, in that other EU Member State, except that Austria will instead impose a withholding system for a transitional period (subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld) unless during such period it elects otherwise. The Council of the European Union has adopted a Directive (the Amending Savings Directive ) which would, if implemented, amend and broaden the scope of the requirements of the Savings Directive described above. The Amending Savings Directive would expand the range of payments covered by the Savings Directive, in particular, to include additional types of income payable on securities, and the circumstances in which payments must be reported or paid subject to withholding. For example, payments made to (or for the benefit of) (i) an entity or legal arrangement effectively managed in an EU Member State that is not subject to effective taxation, or (ii) a person, entity or legal arrangement established or effectively managed outside of the EU (and outside any third country or territory that has adopted similar measures to the Savings Directive) which indirectly benefit an individual resident in an EU Member State, may fall within the scope of the Savings Directive, as amended. The Amending Savings Directive requires EU Member States to adopt national legislation necessary to comply with it by January 1, 2016, which legislation must apply from January 1, The Council of the European Union has also adopted a Directive (the Amending Cooperation Directive ) amending Council Directive 2011/16/EU on administrative cooperation in the field of taxation so as to introduce an extended automatic exchange of information regime in accordance with the Global Standard released by the OECD Council in July The Amending Cooperation Directive requires EU Member States to adopt national legislation necessary to comply with it by December 31, 2015, which legislation must apply from January 1, 2016 (January 1, 2017 in the case of Austria). The Amending Cooperation Directive is generally broader in scope than the Savings Directive, although it does not impose withholding taxes, and provides that to the extent there is overlap of scope as regards the exchange of information at issue, the Amending Cooperation Directive prevails. The European Commission has therefore published a proposal for a Council Directive repealing the Savings Directive from 1 January 2016 (1 January 2017 in the case of Austria) (in each case subject to transitional arrangements). The proposal also provides that, if it is adopted, Member States will not be required to implement the Amending Savings Directive. Information reporting and exchange will however still be required under Council Directive 2011/16/EU (as amended). Investors who are in any doubt as to their position should consult their professional advisers. Certain United Kingdom Tax Considerations The following is a general description of certain UK tax consequences relating to the Notes and is not intended to be exhaustive. It is based on current UK tax law, as at the date on the front cover page of this Listing Particulars, as applied in England and Wales and HM Revenue & Customs ( HMRC ) practice (which may not be binding on HMRC). It assumes that there will be no substitution of the Issuer and does not address the consequences of any such substitution (notwithstanding that such substitution may be permitted by the terms and conditions of the Notes). It does not necessarily apply where the income is deemed for UK tax purposes to be the income of any person other than holders of the Notes. It relates only to the position of persons who hold their Notes as investments (regardless of whether the noteholder also carries on a trade, profession or vocation through a permanent establishment, branch or agency to which the Notes are attributable) and are the absolute beneficial owners of their Notes. (In particular, noteholders holding their Notes via a depositary receipt system or clearance service should note that they may not always be the beneficial owners thereof.) Certain classes of persons such as dealers, certain professional investors, or persons connected with the Issuer may be subject to special rules and the following description does not apply to such noteholders. References in the following description to interest shall mean amounts that are treated as interest for the purposes of UK taxation. This description does not take into account any different definition of interest that may prevail under any other tax law or that may apply under the terms and conditions of each series of the Notes or any related document. 201

221 Any holders of the Notes who are in doubt as to their own tax position should consult their professional advisers. Withholding Interest on the Notes While the Notes are and continue to be listed on a recognized stock exchange, within the meaning of Section 1005 of the Income Tax Act 2007, payments of interest by the Issuer may be made without withholding or deduction for or on account of UK income tax. The Global Exchange Market of the Irish Stock Exchange is a recognized stock exchange for these purposes. Securities will be treated as listed on the Irish Stock Exchange if they are both admitted to trading on the Global Exchange Market of the Irish Stock Exchange and are officially listed in Ireland in accordance with provisions corresponding to those generally applicable in countries in the European Economic Area. If any series of the Notes cease to be listed, interest will generally be paid on the Notes by the Issuer under deduction of UK income tax at the basic rate unless: (i) another relief applied; or (ii) the Issuer has received a direction to the contrary from HMRC in respect of such relief as may be available pursuant to the provisions of any applicable double taxation treaty. If interest were paid under deduction of UK income tax (e.g. if the relevant series of Notes lost their listing), noteholders who are not resident in the UK may be able to recover all or part of the tax deducted if there is an appropriate provision in an applicable double taxation treaty. Payments in respect of the Note Guarantees The UK withholding tax treatment of payments by a Guarantor under the terms of its Note Guarantee in respect of interest on the Notes (or other amounts due under the Notes other than the repayment of amounts subscribed for such Notes) is uncertain. In particular, such payments by the Guarantor may not be eligible for the exemption in respect of securities listed on a recognized stock exchange described above in relation to payments of interest by an Issuer. Accordingly, if the Guarantor makes any such payments, these may be subject to UK withholding tax at the basic rate. Treatment of any Premium Payable on Redemption Where Notes are to be, or may fall to be, redeemed at a premium as opposed to being issued at a discount, then any such element of premium may constitute a payment of interest that would be subject to the rules on UK withholding tax outlined above and reporting requirements as outlined below. Information Reporting Information relating to securities and accounts may be required to be provided to HMRC in certain circumstances. This may include the value of the Notes, amounts paid or credited with respect to the Notes, details of the noteholders or beneficial owners of the Notes (or the persons for whom the Notes are held), details of the persons who exercise control over entities that are, or are treated as, holders of the Notes, details of the persons to whom payments derived from the Notes are or may be paid and information and documents in connection with transactions relating to the Notes. Information may be required to be provided by, amongst others, the Issuer, the holders of the Notes, persons by (or via) whom payments derived from the Notes are made or who receive (or would be entitled to receive) such payments, persons who effect or are a party to transactions relating to the Notes on behalf of others and certain registrars or administrators. In certain circumstances, the information obtained by HMRC may be provided to tax authorities in other countries. Taxation of Disposal (including Redemption) and Return Holders of the Notes within the charge to UK Corporation Tax Holders of the Notes within the charge to UK corporation tax (including non- resident noteholders whose Notes are used, held or acquired for the purposes of a trade carried on in the UK through a permanent establishment) will be subject to tax as income on all profits and gains from the Notes broadly in accordance with their statutory accounting treatment. Such noteholders will generally be charged in each accounting period by reference to interest and other amounts which, in accordance with generally accepted accounting practice, are recognized in determining the noteholder s profit or loss for that period. Fluctuations in value relating to foreign exchange gains and losses in respect of the Notes will be brought into account as income. 202

222 Other UK holders of the Notes Interest Holders of the Notes who are either individuals or trustees and are resident for tax purposes in the UK or who carry on a trade, profession or vocation in the UK through a branch or agency to which the Notes are attributable will generally be liable to UK tax on the amount of any interest received in respect of such Notes. Transfer (including redemption) Each series of the Notes will constitute qualifying corporate bonds with the result that on a disposal of the Notes, neither chargeable gains nor allowable losses will arise for the purposes of taxation of capital gains. Accrued Income Profits and Losses Transfers of Notes by noteholders who are either individuals or trustees and are resident for tax purposes in the UK or who carry on a trade, profession or vocation in the UK through a branch or agency to which the Notes are attributable may give rise to a charge to tax on income in respect of an amount representing interest on the Notes which has accrued since the preceding interest payment date under the provisions of Chapter 2 of Part 12 of the Income Tax Act 2007 (Accrued Income Profits and Losses). These provisions will not apply to Notes which are deemed to constitute deeply discounted securities (as to which see Taxation of discounts below). Non-United Kingdom holders of the Notes The interest has a UK source and accordingly may be chargeable to UK tax by direct assessment irrespective of the residence of the holder of the Notes. However, where the interest is paid without withholding or deduction on account of UK tax, the interest will not be assessed to UK tax in the hands of noteholders (other than certain trustees) who are not resident for tax purposes in the UK, except where the noteholder carries on a trade, profession or vocation through a branch or agency, or in the case of a corporate holder, carries on a trade through a permanent establishment in the UK, in connection with which the interest is received or to which the Notes are attributable, in which case (subject to exemptions for interest received by certain categories of agent) tax may be levied on the UK branch or agency, or permanent establishment. Holders of the Notes should note that the provisions relating to additional amounts referred to in Description of the Notes Withholding Taxes above, respectively, would not apply if HMRC sought to assess directly the person entitled to the relevant interest to UK tax. However exemption from, or reduction of, such UK tax liability might be available under an applicable double taxation treaty. Taxation of discounts Dependent, amongst other things, on the discount (if any) at which a future issue (if any) of additional Notes are issued under and in accordance with the Indenture, or, in certain cases the premium (if any) payable on redemption, all of the Notes (including, for the purposes of this Taxation of discounts, the Notes which are already in issue and the additional Notes) may be deemed to constitute deeply discounted securities for the purposes of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act In respect of any Notes that are deemed to constitute deeply discounted securities, individual holders of the Notes who are resident for tax purposes in the UK or who carry on a trade, profession or vocation in the UK through a branch or agency to which the Notes are attributable generally may be liable to UK income tax on any profit made on the sale or other disposal (including redemption) of the Notes. Holders of Notes are advised to consult their own professional advisers if they require any advice or further information relating to deeply discounted securities. United Kingdom Stamp Duty and Stamp Duty Reserve Tax No UK stamp duty or stamp duty reserve tax is payable on the issue or transfer of, or an agreement to transfer, a Note, or on its redemption. Certain U.S. Federal Income Tax Consequences The following description is a summary of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes. This summary deals only with Notes that are held as capital assets by a U.S. Holder (as defined below) who is an initial purchaser and who acquired the Notes at the offering proce set forth on the cover page of this Listing Particulars. This summary does not cover all aspects of U.S. federal income taxation that may be relevant to a U.S. Holder in light of such holder s particular circumstances, or the actual tax effects that any of the 203

223 matters described herein will have on the acquisition, ownership or disposition of Notes by particular investors, and does not address state, local, foreign or other tax laws, such as U.S. federal estate and gift tax laws. This summary also does not discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, investors liable for the alternative minimum tax or the Medicare contribution tax on net investment income, individual retirement accounts and other tax-deferred accounts, tax-exempt organizations, dealers in securities or currencies, investors that will hold the Notes as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. dollar). As used herein, the term U.S. Holder means a beneficial owner of Notes that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organized under the laws of the United States, any State thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or the trust has validly elected to be treated as a domestic trust for U.S. federal income tax purposes. The U.S. federal income tax treatment of a partner in an entity treated as a partnership for U.S. federal income tax purposes that holds Notes will depend on the status of the partner and the activities of the partnership. Prospective purchasers that are entities treated as partnerships for U.S. federal income tax purposes should consult their tax advisers concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of Notes by the partnership. This summary is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as amended, ( the Code ) its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect. ALL PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING, AND DISPOSING OF THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND POSSIBLE CHANGES IN TAX LAW. Qualified Reopening For U.S. federal income tax purposes, the Issuer intends to treat the Notes as issued in a qualified reopening of the Original Senior Secured Notes. Provided such treatment is respected, for U.S. federal income tax purposes, the Notes will be considered to have the same issue date as the Original Senior Secured Notes and to have been issued at par, even though, considered separately, the Additional Notes might be considered to have been issued at a premium or at a discount. The remainder of this discussion assumes that the Additional Notes are treated as having been issued in a qualified reopening of the Original Senior Secured Notes. Payments of Interest General. Interest on a Note will generally be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on such holder s method of accounting for U.S. federal income tax purposes. In addition to interest on the Notes, a U.S. Holder will be required to include in income any non-u.s. tax withheld from the interest payments such U.S. Holder receives in income and any additional amounts paid in respect of such non- U.S. tax withheld. U.S. Holders may be entitled to deduct or credit this tax, subject to certain limitations (including that the election to deduct or credit non-u.s. taxes applies to all of your non-u.s. taxes for a particular tax year). Interest income (including any additional amounts) generally will constitute income from sources outside the United States and, for purposes of the U.S. foreign tax credit, generally will be considered passive category income. U.S. Holders will generally be denied a foreign tax credit (and may instead be allowed deductions) for foreign taxes imposed with respect to the Notes where holders do not meet a minimum holding period requirement during which holders are not protected from risk of loss. The rules governing the foreign tax credit are complex. Prospective purchasers should consult their tax advisers concerning the applicability of the foreign tax credit and source of income rules to income attributable to the Notes. Foreign Currency Denominated Interest. The amount of income recognized by a cash basis U.S. Holder will be the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. An accrual basis U.S. Holder may determine the amount of income recognized with respect to an interest payment denominated in pounds sterling in accordance with either of two methods. Under the first method, the amount of 204

224 income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year). Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year). Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the Internal Revenue Service (the IRS ). Prospective purchasers should consult their own tax advisers as to the advisability of making the above election. Upon receipt of the interest payment on a Note (including a payment attributable to accrued but unpaid interest upon the sale, exchange, retirement or other taxable disposition of a Note) denominated in pounds sterling, an accrual basis U.S. Holder may recognize U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference, if any, between the amount received (translated into U.S. dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. dollars. Pre-Issuance Accrued Interest. A portion of the purchase price of the Notes will be attributable to the amount of interest accrued after February 1, 2015 and prior to the date the Notes are issued (the pre- issuance accrued interest ). The Issuer intends to take the position that a portion of the first interest payment on the Notes, equal to the amount of pre-issuance accrued interest, will be treated as a non-taxable return of the pre-issuance accrued interest. The remainder of this discussion assumes that the first interest payment on the Notes will be so treated, and references to interest in the remainder of this discussion exclude pre- issuance accrued interest. U.S. Holders should consult their tax advisers concerning the U.S. federal income tax treatment of pre-issuance accrued interest. Notes Purchased at a Premium. A U.S. Holder that purchases a Note for an amount in excess of its principal amount (not including any amount paid for pre-issuance accrued interest) may elect to treat the excess as amortisable bond premium. In such case, the amount required to be included in the U.S. Holder s income each year with respect to interest on the Note will be reduced by the amount of amortisable bond premium allocable (based on the Note s yield to maturity) to that year. Because the Notes are permitted to be redeemed by the Issuer prior to maturity at a premium, special rules may apply to defer some or all of the amount of amortizable bond premium that a U.S. Holder is permitted to amortize with respect to the Notes in any given year. Among other things, the application of these rules to a debt instrument with a make-whole redemption feature, such as the Notes, is unclear. These special rules would not apply if you elected to treat all interest on the Notes as original issue discount, in which case the notes would be subject to different rules not discussed herein. Bond premium will be computed in pounds sterling, and amortisable bond premium that is taken into account currently will reduce interest income in pounds sterling. On the date amortised bond premium offsets interest income, a U.S. Holder will recognize U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference, if any, between the U.S. dollar values of the amount of such amortised bond premium (i) on the date such amortised bond premium offsets interest income and (ii) on the date on which the U.S. Holder acquired the Notes. A U.S. Holder that does not elect to take amortisable bond premium into account currently will recognize gain or loss on the sale or retirement of the Notes in the manner described below under Sale, Exchange, Retirement or Other Disposition of the Notes. Any election to amortise bond premium applies to all bonds (other than bonds the interest on which is excludible from gross income for U.S. federal income tax purposes) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of the IRS. A U.S. Holder should consult its tax advisor regarding the calculation of amortizable bond premium allowable as a deduction each year, and whether it is advisable to elect to treat all interest on the Notes as original issue discount. Sale, Exchange, Retirement or Other Disposition of the Notes A U.S. Holder will generally recognize gain or loss on the sale, exchange, retirement or other taxable disposition of a Note equal to the difference between the amount realized on the sale, exchange, retirement or other taxable disposition and the U.S. Holder s adjusted tax basis of the Note. A U.S. Holder s adjusted tax basis in a Note will generally be its U.S. dollar cost (as defined below) reduced by the amount of any principal paid on the Note. The U.S. dollar cost of a Note purchased with pounds sterling will generally be the U.S. dollar value of the purchase price on the date of purchase, or the settlement date for the purchase in the case of Notes traded on an established securities market, within the meaning of the applicable United States Treasury regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). The amount realized does not include the amount attributable to accrued but unpaid interest, which will be taxable as interest income to the extent not previously included in income. The amount 205

225 realized on a sale, exchange, retirement or other taxable disposition for an amount in pounds sterling will be the U.S. dollar value of this amount on the date of sale, exchange, retirement or other taxable disposition, or the settlement date for the sale in the case of Notes traded on an established securities market, within the meaning of the applicable United States Treasury regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). An accrual basis U.S. Holder that does not make the election will recognize gain or loss to the extent that there are exchange rate fluctuations between the sale date and the settlement date. A portion of a U.S. Holder s gain or loss may be treated as exchange gain or loss with respect to the principal amount of the Note. A U.S. Holder will recognize U.S. source exchange rate gain or loss (taxable as ordinary income or loss) on the sale, exchange, retirement or other taxable disposition of a Note equal to the difference, if any, between the U.S. dollar values of the U.S. Holder s purchase price for the Note (i) on the date of sale, exchange, retirement or other taxable disposition and (ii) the date on which the U.S. Holder purchased the Note. Any such exchange rate gain or loss (including any exchange gain or loss with respect to the receipt of accrued but unpaid interest) will be realized only to the extent of total gain or loss realized on the sale, exchange, retirement or other taxable disposition. Except to the extent resulting from changes in exchange rates, gain or loss recognized by a U.S. Holder on the sale, exchange, retirement or other taxable disposition of a Note will be capital gain or loss and will be long-term capital gain or loss if the Note was held by the U.S. Holder for more than one year. Long-term capital gain of certain non-corporate U.S. Holders generally is taxable at reduced rates. The deductibility of capital losses is subject to limitations. Gain or loss realized by a U.S. Holder on the sale, exchange, retirement or other taxable disposition of a Note generally will be U.S. source. Disposition of Foreign Currency Foreign currency received as interest on a Note or on the sale, exchange, retirement or other taxable disposition of a Note will have a tax basis equal to its U.S. dollar value at the time the foreign currency is received. Foreign currency that is purchased will generally have a tax basis equal to the U.S. dollar value of the foreign currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a foreign currency (including its use to purchase Notes or upon exchange for U.S. dollars) will be U.S. source ordinary income or loss. Backup Withholding and Information Reporting Payments of principal and interest on, and the proceeds of sale or other disposition, of Notes will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding may apply to these payments if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to comply with applicable certification requirements. Certain U.S. Holders are not subject to backup withholding. U.S. Holders should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. Holder s U.S. federal income tax liability provided the required information is timely furnished to the IRS. Reportable Transactions A U.S. taxpayer that participates in a reportable transaction will be required to disclose its participation to the IRS. Under the relevant rules, because the Notes are denominated in a foreign currency, a U.S. Holder may be required to treat a foreign currency exchange loss from the Notes as a reportable transaction if this loss exceeds the relevant threshold in the regulations (U.S.$50,000 in a single taxable year, if the U.S. Holder is an individual or trust, or higher amounts for other non-individual U.S. Holders), and to disclose its investment by filing Form 8886 with the IRS. A penalty in the amount of U.S.$10,000 in the case of a natural person and U.S.$50,000 in all other cases generally is imposed on any taxpayer that fails to timely file an information return with the IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective purchasers are urged to consult their tax advisers regarding the application of these rules Foreign Financial Asset Reporting U.S. taxpayers that own certain foreign financial assets, including debt of foreign entities, with an aggregate value in excess of U.S.$50,000 at the end of the taxable year or U.S.$75,000 at any time during the taxable year, may be required to file an information report with respect to such assets with their tax return. The thresholds are higher for certain individuals living outside of the United States and married couples filing jointly. The Notes are expected to constitute foreign financial assets subject to these requirements unless the Notes are held in an account at a financial institution (in which case the account may be reportable if maintained by a foreign financial institution). If a U.S. Holder 206

226 does not file a required information report, such holder may be subject to substantial penalties and the statute of limitations on the assessment and collection of all U.S. Federal income taxes of such U.S. Holder for the related tax year may not close before the date which is three years after the date on which such report is filed. U.S. Holders should consult their tax advisors regarding the application of these rules. 207

227 CERTAIN ERISA CONSIDERATIONS The following is a summary of certain considerations associated with the purchase, holding and, to the extent relevant, disposition of the Notes by (i) employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ( ERISA and such plans, ERISA Plans ), (ii) tax-qualified defined benefit or defined contribution plans, individual retirement accounts, health savings accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-u.s. or other laws, rules or regulations that are similar to such provisions of ERISA or the Code (collectively, Similar Laws ) and/or (iii) entities whose underlying assets are considered to include plan assets (within the meaning of ERISA and any Similar Laws) of such plans, accounts and arrangements by reason of a plan s investment in such entity, each plan or entity described in clause (i) (iii) referred to as a Plan. General Matters ERISA imposes certain duties on persons who are fiduciaries of ERISA Plans and prohibits fiduciaries of an ERISA Plan from causing the plan to engage in certain transactions between the plan and a party in interest or dealing with plan assets in the fiduciary s own interest or engaging in other self-dealing transactions. Similarly, the Code imposes excise taxes on non-exempt prohibited transactions between a plan subject to Section 4975 of the Code and a fiduciary of the plan or other disqualified person. In general, under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to a Plan, is generally considered to be a fiduciary of the ERISA Plan (within the meaning of Section 3(21) of ERISA). In considering the acquisition, holding and, to the extent relevant, disposition of the Notes, in any case, involving a portion of the assets of any Plan, the Plan fiduciary should consider, among other matters to the extent applicable to the Plan, whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to the fiduciary s duties to the Plan including, without limitation, the prudence, diversification, delegation of investment authority and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws. Prohibited Transactions Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans and other Plans that are subject to Section 4975 of the Code from engaging in specified transactions involving plan assets with persons or entities who are parties in interest, within the meaning of Section 3(14) of ERISA, or disqualified persons, within the meaning of Section 4975(e)(2) of the Code (as applicable), in each case, unless a statutory or administrative exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. Plans that are governmental plans (as defined in Section 3(32) of ERISA and Section 414(d) of the Code), certain church plans (as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) and non-u.s. plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of Section 406 of ERISA or Section 4975 of the Code, but may be subject to comparable prohibitions under other applicable Similar Laws. The occurrence of a prohibited transaction could also cause an individual retirement account to lose its tax-exempt status. The acquisition and/or holding (and, to the extent relevant, disposition) of the Notes by an ERISA Plan or other Plan that is subject to Section 4975 of the Code with respect to which we, the Initial Purchasers, or any of our, or their affiliates is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the United States Department of Labor has issued prohibited transaction class exemptions, or PTCEs, that may apply to provide exemptive relief for direct or indirect prohibited transactions arising in connection with the acquisition, holding and/or disposition (to the extent relevant) of the Notes. These class exemptions include, without limitation, PTCE 84-14, respecting investments by transactions determined by independent qualified professional asset managers, PTCE 90-1, respecting investments by insurance company pooled separate accounts, PTCE 91-38, respecting investments by bank collective investment funds, PTCE 95-60, respecting investments by life insurance company general accounts and PTCE 96-23, respecting transactions determined by in-house asset managers. In addition to the foregoing, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code each provides a limited exemption, called the service provider exemption, from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code for certain purchases and sales of securities, provided that neither the issuer of the securities nor any of its affiliates (either directly or indirectly) has or exercises any discretionary control or renders any investment advice with respect to the assets of any ERISA Plan involved in the transaction, and provided further that the ERISA Plan receives no less, and pays no more, than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied. 208

228 Because of the foregoing, the Notes should not be purchased or held by any person investing plan assets of any Plan, unless such purchase and holding will not constitute a non-exempt prohibited transaction under ERISA or the Code and will not constitute a similar violation of any applicable Similar Laws. Representation Accordingly, by acceptance of a Note, each purchaser, holder and subsequent transferee will be deemed to have represented and warranted that either (1) it is not a Plan, and no portion of the assets used by such purchaser or transferee to acquire and hold the Notes constitutes assets of any Plan or (2) the acquisition and holding of the Notes will not constitute a non- exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws. The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions or breaches of fiduciary obligations, it is particularly important that fiduciaries or other persons considering purchasing the Notes (and holding the Notes) on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such transactions and whether an exemption would be applicable to the purchase and holding of the Notes. Investors in the Notes have exclusive responsibility for ensuring that none of the acquisition, holding and/or disposition of these securities violates the fiduciary or prohibited transaction rules of ERISA, the Code and/or any Similar Laws. We make no representation, and the sale of the Notes by or to any Plan is in no respect a representation by us or any of our affiliates or representatives, as to whether an investment in the Notes meets all the relevant legal requirements with respect to investments by such Plans generally or with respect to any particular Plan, or that such an investment is appropriate for any Plan in general or for any particular Plan. 209

229 LIMITATIONS ON VALIDITY AND ENFORCEABILITY OF THE NOTE GUARANTEES AND THE SECURITY INTERESTS AND CERTAIN INSOLVENCY LAW CONSIDERATIONS The following is a summary of certain limitations on the validity and enforceability of the Note Guarantees and the security interests being provided for the Notes, and a summary of certain insolvency law considerations in each of the jurisdictions in which the Issuer and the Guarantors are incorporated or organized. The description below is only a summary, and does not purport to be complete or to discuss all of the limitations or considerations that may affect the validity and enforceability of the Notes or the Note Guarantees or security interests being provided for the relevant series of Notes. Prospective investors in the Notes should consult their own legal advisors with respect to such limitations and considerations. European Union Each of the Issuer, the Parent, and certain of the Subsidiary Guarantors is incorporated and organized under the laws of the Member States of the European Union. Pursuant to Council Regulation (EC) No. 1346/2000 of May 29, 2000 on insolvency proceedings (the EU Insolvency Regulation ), the court which shall have jurisdiction to open insolvency proceedings in relation to a company is the court of the Member State (other than Denmark) where the company concerned has its center of main interests (as that term is used in Article 3(1) of the EU Insolvency Regulation). The determination of where any such company has its center of main interests is a question of fact on which the courts of the different Member States may have differing and conflicting views. The term center of main interests is not a static concept. Although there is a rebuttable presumption under Article 3(1) of the EU Insolvency Regulation that any such company has its center of main interests in the Member State in which it has its registered office, Preamble 13 of the EU Insolvency Regulation states that the center of main interests of a debtor should correspond to the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. In that respect, factors such as where board meetings are held, the location where the company conducts the majority of its business and the perception of the company s creditors as regards the center of the company s business operations may all be relevant in the determination of the place where the company has its center of main interests. If the center of main interests of a company is and will remain located in the state in which it has its registered office, the main insolvency proceedings in respect of the company under the EU Insolvency Regulation would be commenced in such jurisdiction and, accordingly, a court in such jurisdiction would be entitled to commence the types of insolvency proceedings referred to in Annex A to the EU Insolvency Regulation. Insolvency proceedings opened in one Member State under the EU Insolvency Regulation are to be recognized in the other Member States (other than Denmark), although secondary proceedings may be opened in another Member State. If the center of main interests of a debtor is in one Member State (other than Denmark), under Article 3(2) of the EU Insolvency Regulation, the courts of another Member State (other than Denmark) have jurisdiction to open territorial proceedings only in the event that such debtor has an establishment (in the meaning of the EU Insolvency Regulation) in the territory of such other Member State. The effects of those territorial proceedings are restricted to the assets of the debtor situated in the territory of such other Member State. If the company does not have an establishment in any other Member State, no court of any other Member State has jurisdiction to open territorial proceedings in respect of such company under the EU Insolvency Regulation. In the event that any one or more of the Issuer, the Parent, the Subsidiary Guarantors or any of their respective subsidiaries experience financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings would be commenced, or the outcome of such proceedings. Applicable insolvency laws may affect the enforceability of the obligations of the Issuer, the Parent and the Subsidiary Guarantors. England and Wales Each of the Issuer, the Parent, and almost all of the Subsidiary Guarantors, is a company incorporated under the laws of England and Wales (each, an English company ). As a general rule, insolvency proceedings with respect to an English company should be commenced in England based on English insolvency laws; although insolvency proceedings in respect of English companies could also be based in other jurisdictions under certain circumstances (please see European Union above). Formal insolvency proceedings under the laws of England and Wales may be initiated in a number of ways, including by (i) the company, its directors, or one or more of its creditors making an application for administration, (ii) the company, its directors, or certain creditors (discussed below) appointing administrators out of court, or (iii) a creditor filing a petition to wind-up the English company or the company resolving to wind itself up (in the case of liquidation). An English company may be wound up if it is unable to pay its debts, and may be placed into administration 210

230 if it is, or is likely to become, unable to pay its debts, and the administration is reasonably likely to achieve one of three statutory purposes (as described below). Under the Insolvency Act 1986 as amended (the UK Insolvency Act ), a company is deemed to be unable to pay its debts if it is insolvent on a cash flow basis (it is proved to the satisfaction of the court that it is unable to pay its debts as they fall due), if it is insolvent on a balance sheet basis (it is provided to the satisfaction of the court that the value of the company s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities), if it fails to satisfy a creditor s statutory demand for a debt exceeding 750 within the specified time or if it fails to satisfy in full a judgment debt (or similar court order). Administration The UK Insolvency Act empowers English courts to make an administration order in respect of an English company in certain circumstances. An administrator can also be appointed out of court by the company, its directors or the holder of a qualifying floating charge, and different procedures apply according to the identity of the person making the appointment. During the administration, in general, no resolution may be passed, and no order may be made, for the winding up of the debtor and no proceedings or other legal process may be commenced or continued against the debtor, or security enforced over the company s property, except with permission of the court or the consent of the administrator. Certain creditors of a company in administration may be able to realize their security over that company s property notwithstanding the statutory moratorium. This is by virtue of the disapplication of the administration moratorium in relation to a security financial collateral agreement under the Financial Collateral Arrangements (No. 2) Regulations 2003 (as amended) (the FCARs ). It is likely, to the extent that it is not a financial collateral arrangement, that the security granted by an English company may not be enforced while it is in administration. The administration of a company must achieve one of the following statutory objectives: (1) the rescue of the company (as distinct from the business carried on by the company) as a going concern (the primary objective); (2) the achievement of a better result for the company s creditors as a whole than would be likely if the company were wound up (without first being in administration) (the secondary objective); or (3) the realization of some or all of the company s property to make a distribution to one or more secured or preferential creditors (the tertiary objective). An administrator must attempt to achieve the objectives of administration in order, unless he thinks either that it is not reasonably practicable to achieve the primary objective, or that the secondary objective would achieve a better result for the company s creditors as a whole. Therefore, the administrator cannot pursue the tertiary objective unless he thinks that it is not reasonably practicable to achieve either the primary objective or the secondary objective and that it will not unnecessarily harm the interests of the creditors of the company as a whole to pursue the tertiary objective. Administrative receivership In order to empower the Security Agent to appoint an administrative receiver to an English company, the floating charge granted by the relevant English company must constitute a qualifying floating charge for the purposes of English insolvency law and the qualifying floating charge must, unless the relevant Security Document pre-dates September 15, 2003, fall within one of the exceptions of the UK Insolvency Act to the prohibition on the appointment of administrative receivers. In order to constitute a qualifying floating charge in England, the floating charge must be created by an instrument which (a) states that the relevant statutory provision applies to it, (b) purports to empower the holder to appoint an administrator of the company or (c) purports to empower the holder to appoint an administrative receiver within the meaning given by Section 29(2) of the UK Insolvency Act. The Security Agent will be the holder of a qualifying floating charge if it holds one or more debentures secured by (a) a qualifying floating charge which relates to the whole or substantially the whole of the relevant English company s property, (b) a number of qualifying floating charges which, together, relate to the whole or substantially the whole of the relevant English company s property, or (c) charges and other forms of security which, together, relate to the whole or substantially the whole of the relevant English company s property and one of the charges is a qualifying floating charge. The most relevant exception to the prohibition on the appointment of an administrative receiver is the exception relating to capital market arrangements (as defined in the UK Insolvency Act), which may apply if the issue of the Notes creates a debt of at least 50.0 million for the relevant company under the arrangement and the arrangement involves the issue of a capital markets investment (which is defined in the UK Insolvency Act, and is generally a rated, listed or traded debt instrument). Where a company is in administrative receivership, an administrator can only be 211

231 appointed by court order (and only in the limited circumstances set out in the UK Insolvency Act). The appointment of an administrator automatically dismisses any administrative receiver already appointed to the debtor, and any already appointed fixed charge receiver must resign if requested to do so by the administrator, subject to the application of the Financial Collateral Arrangements (No. 2) Regulations 2003 (as amended). Where the company is already in administration, no receiver may be appointed. Liquidation/Winding-Up Liquidation is an asset realisation and distribution procedure under which the assets of the company are realised and distributed by the liquidator to creditors in the statutory order of priority prescribed by the UK Insolvency Act. At the end of the liquidation process the company will normally be dissolved. In the case of a liquidation commenced by way of an English court order, there is a stay on the commencement or continuation of proceedings against the company except by leave of the court and subject to such terms as the court may impose (although security enforcement is not affected). Under English insolvency law, a liquidator has the power to disclaim any onerous property by serving the prescribed notice on the relevant party. Onerous property, for these purposes, is any unprofitable contract and any other property of the company which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act. A contract may be unprofitable if it imposes continuing financial obligations on the company which may be regarded as detrimental to creditors. A contract will not be unprofitable merely because it is financially disadvantageous, or because the company could have made, or could make, a better bargain. Challenges to Guarantees and Security There are circumstances under English insolvency law in which the granting by an English company of security and guarantees can be challenged. In most cases, this will only arise if the English company is placed into administration or liquidation within a specified period of the granting of the guarantee or security. Therefore, if during the specified period an administrator or liquidator is appointed to an English company, the administrator or liquidator may challenge the validity of the security or guarantee given by such company. The Issuer cannot be certain that, in the event that the onset of an English company s insolvency is within any of the requisite time periods set out below, the grant of a security interest or guarantee in respect of the Notes would not be challenged or that a court would uphold the transaction as valid. Onset of insolvency The date of the onset of insolvency, for the purposes of transactions at an undervalue, preferences and invalid floating charges (all discussed below), depends on the insolvency procedure in question. In administration, the onset of insolvency is the date on which (a) the court application for an administration order is issued or (b) the notice of intention to appoint an administrator is filed at court, or (c) otherwise, the date on which the appointment of an administrator takes effect. In a compulsory liquidation the onset of insolvency is the date the winding-up petition is presented to court, whereas in a voluntary liquidation it is the date the company passes a winding-up resolution. Where liquidation follows administration, the onset of insolvency will be as for the initial administration. Connected persons A connected person of a company granting a security interest or guarantee for the purposes of transactions at an undervalue, preferences and invalid floating charges is a party who is (i) a director of the company, (ii) a shadow director, (iii) an associate of such director or shadow director, or (iv) an associate of the relevant company. A party is associated with an individual if they are (i) a relative of the individual, (ii) the individual s husband, wife or civil partner, (iii) a relative of the individual s husband, wife or civil partner, or (iv) the husband, wife or civil partner of a relative of the individual. A party is associated with a company if they are employed by that company. A company is associated with another company if (i) the same person has control of both companies, or (ii) it is controlled by a person, that person s associates have control of the other company, or (iii) it is controlled by a group of two or more persons who also control the other company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate. 212

232 The potential grounds for challenge available under the English insolvency legislation that may apply to any security interest or guarantee granted by an English company include, without limitation, the following. Transaction at an Undervalue Under English insolvency law, a liquidator or administrator of an English company could apply to the court for an order to set aside the creation of a security interest or a guarantee if such liquidator or administrator believes that the creation of such security interest or guarantee constituted a transaction at an undervalue. It will only be a transaction at an undervalue if at the time of the transaction or in consequence of the transaction, the English company is unable to pay its debts or becomes unable to pay its debts (as defined in Section 123 of the UK Insolvency Act). The transaction can be challenged if the English company enters into liquidation or administration proceedings within a period of two years from the date the English company grants the security interest or the guarantee. A transaction might be subject to being set aside as a transaction at an undervalue if the company made a gift to a person, if the company received no consideration or if the company received consideration of significantly less value, in money or money s worth, than the consideration given by such company. However, a court will generally not intervene if it is satisfied that the company entered into the transaction in good faith and for the purpose of carrying on its business and that, at the time it did so, there were reasonable grounds for believing the transaction would benefit it. If the court determines that the transaction was a transaction at an undervalue, the court can make such order as it thinks fit to restore the company to the position it would have been in had it not entered into the transaction. In any proceedings, it is for the administrator or liquidator to demonstrate that the English company was unable to pay its debts unless a beneficiary of the transaction was a connected person (as set out above), in which case there is a presumption of insolvency and the connected person must demonstrate the solvency of the English company in such proceedings. Preference Under English insolvency law, a liquidator or administrator of an English company could apply to the court for an order to set aside the creation of a security interest or a guarantee if such liquidator or administrator believed that the creation of such security interest or such guarantee constituted a preference. It will only be a preference if at the time of the transaction or in consequence of the transaction the English company is unable to pay its debts or becomes unable to pay its debts (as defined in Section 123 of the UK Insolvency Act). The transaction can be challenged if the English company enters into liquidation or administration proceedings within a period of six months (if the beneficiary of the security or the guarantee is not a connected person) or two years (if the beneficiary is a connected person) from the date the English company takes the decision to grant the security interest or the guarantee. A transaction may constitute a preference if it has the effect of putting a creditor of the English company (or a surety or guarantor for any of the company s debts or liabilities) in a better position (in the event of the company going into insolvent liquidation) than such creditor, guarantor or surety would otherwise have been in had that transaction not been entered into. If the court determines that the transaction was a preference, the court can make such order as it thinks fit to restore the company to the position it would have been in had it not entered into the transaction. However, for the court to determine a preference, it must be shown that the English company was influenced by a desire to produce the preferential result. In any proceedings, it is for the administrator or liquidator to demonstrate that the English company was unable to pay its debts and that there was such desire to prefer the relevant creditor, unless the beneficiary of the transaction was a connected person, in which case the connected person must demonstrate in such proceedings that there was no such desire, on the part of the company, to prefer them. Transaction defrauding creditors Under English insolvency law, where it can be shown that a transaction was at an undervalue and was made for the purpose of putting assets beyond the reach of a person who is making, or may make, a claim against a company, or of otherwise prejudicing the interests of a person in relation to the claim which that person is making or may make, the transaction may be set aside by the court as a transaction defrauding creditors. This provision may be used by any person who claims to be a victim of the transaction and is not therefore limited to liquidators or administrators and, subject to certain conditions, the UK Financial Conduct Authority and the UK Pensions Regulator. There is no statutory time limit in the English insolvency legislation within which the challenge must be made and the relevant company does not need to be insolvent at the time of or as a result of the transaction. If the court determines that the transaction was a transaction defrauding creditors, the court can make such orders as it thinks fit to restore the position to what it would have been if the transaction had not been entered into and to protect the interests of the victims of the transaction. The relevant court order may affect the property of, or impose any obligation on, any person, whether or not he is the person with whom the transaction was entered into. However, such an order will not prejudice any interest in property which was acquired from a person other than the debtor company in good faith, for value and without notice of the relevant circumstances, and will not require a person who received a benefit from such transaction to pay any sum unless such person was a party to the transaction. 213

233 Extortionate Credit Transaction An administrator or a liquidator can apply to court to set aside an extortionate credit transaction. The court can review extortionate credit transactions entered into by an English company up to three years before the day on which the English company entered into administration or went into liquidation. A transaction is extortionate if, having regard to the risk accepted by the person providing the credit, the terms of it are (or were) such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit or it otherwise grossly contravened ordinary principles of fair dealing. Avoidance of floating charges Under English insolvency law, floating charges created by an English company that is unable to pay its debts at the time of (or as a result of) granting the floating charge, will be invalid, except to the extent of the value of (i) the money paid to, or (ii) the goods or services supplied to, or (iii) any discharge or reduction of any debt of, the relevant English company at the same time as or after the creation of the floating charge (plus certain interest) (the Consideration ). The requirement for an English company to be insolvent at the time of granting the floating charge or becoming insolvent as a consequence of doing so does not apply where the floating charge is granted to a connected person. If the floating charge is granted to a connected person then the floating charge is invalid except to the extent of the Consideration. The transaction can be challenged if the relevant English company enters into liquidation or administration proceedings within a period of one year (if the beneficiary is not a connected person) or two years (if the beneficiary is a connected person) for the date the relevant English company grants the floating charge. However, if the floating charge qualifies as a security financial collateral agreement under the Financial Collateral Arrangements (No. 2) Regulations 2003 (as amended), the floating charge will not be subject to challenge as described in this paragraph. An administrator or liquidator (as applicable) does not need to apply to court for an order declaring that a floating charge is invalid. Any floating charge created during the relevant time period is automatically invalid, except to the extent of the value of the Consideration, whether the relevant English company is solvent or insolvent at the time of grant. Limitation on Enforcement The grant of a guarantee or security by any of the English companies in respect of the obligations of another group company must satisfy certain legal requirements. More specifically, such a transaction must be allowed by the respective company s memorandum and articles of association. To the extent that the above do not allow such an action, there is the risk that the grant of the guarantee and the subsequent security can be found to be void and the respective creditor s rights unenforceable. Some comfort may be obtained for third parties if they are dealing with an English company in good faith; however, the relevant legislation is not without difficulties in its interpretation. Further, corporate benefit must be established for each English company in question by virtue of entering into the proposed transaction. Section 172 of the Companies Act 2006 provides that a director must act in the way that he considers, in good faith, would be most likely to promote the success of the English company for the benefit of its members as a whole. If the directors enter into a transaction where there is no or insufficient commercial benefit, they may be found as abusing their powers as directors and such a transaction may be vulnerable to being set aside by a court. Priority of Claims One of the primary functions of administration and liquidation under English law is to realize the assets of the insolvent company and to distribute realizations made from those assets to its creditors. Under the UK Insolvency Act and the Insolvency Rules 1986, creditors are placed into different classes, with the proceeds from the realization of the insolvent company s property applied in descending order of priority, as set out below. With the exception of the Prescribed Part (please see Prescribed Part below), distributions cannot be made to a class of creditors until the claims of the creditors in a prior ranking class have been paid in full. Unless creditors have agreed otherwise, distributions are made on a pari passu basis, that is, the assets are distributed in proportion to the debts due to each creditor within a class. The general priority of claims on insolvency is as follows (in descending order of priority): debtor; First ranking claims: holders of fixed charge security and creditors with a proprietary interest in assets of the Second ranking claims: expenses of the insolvent estate (there are statutory provisions setting out the order of priority in which expenses are paid); 214

234 Third ranking claims: preferential creditors. Preferential debts include (but are not limited to) debts owed by the insolvent company in relation to: (i) contributions to occupational and state pension schemes; (ii) wages and salaries of employees for work done in the four months before the insolvency date, up to a maximum of 800 per person; and (iii) holiday pay due to any employee whose contract has been terminated, whether the termination takes place before or after the insolvency date. As between one another, preferential debts rank equally; Fourth ranking claims: holders of floating charge security, according to the priority of their security. However, before distributing asset realizations to the holders of floating charges, the Prescribed Part (as defined below) must be set aside for distribution to unsecured creditors (please see Prescribed Part ); Fifth ranking claims: unsecured creditors. However, any secured creditor not repaid in full from the realization of assets subject to its security can also claim the remaining debt due to it (a shortfall) from the insolvent estate as an unsecured claim. To pay a shortfall, the officeholder can only use realization from unsecured assets, as secured creditors are not entitled to any distribution from the Prescribed Part in respect of a shortfall; Sixth ranking claims: shareholders. If after the repayment of all unsecured creditors in full, any remaining funds exist, these will be distributed to the shareholders of the insolvent company. Prescribed Part An administrator, receiver (including administrative receiver) or liquidator of the company will be required to ring-fence a certain percentage of the proceeds of enforcement of floating charge security for the benefit of unsecured creditors (the Prescribed Part ). Under current law, this applies to 50% of the first 10,000 of floating charge realizations and 20% of the remainder over 10,000, and the Prescribed Part is subject to a maximum aggregate cap of 600,000. The Prescribed Part must be made available to unsecured creditors unless the cost of doing so would be disproportionate to the resulting benefit to creditors. As noted above, the Prescribed Part will not be available for any shortfall claims of secured creditors. Foreign Currency Under English insolvency law, where creditors are asked to submit formal proofs of claims for their debts, any debt of a company payable in a currency other than pound sterling must be converted into pound sterling at the official exchange rate prevailing at the date when the company went into liquidation or administration (if the administration was immediately preceded by a winding up, on the date the company went into liquidation). This provision overrides any agreement between the parties. The official exchange rate for these purposes is the middle exchange rate on the London Foreign Exchange Market at close of business, as published for the date in question or, if no such rate is published, such rate as the court determines. Ireland The following is a general discussion of insolvency proceedings and other matters governed by Irish law for informational purposes only and does not address all the Irish legal considerations that may be relevant to holders of the Notes. EU Insolvency Regulation Pursuant to the EU Insolvency Regulation, the place of the registered office of a company is presumed to be its centre of main interests ( COMI ) in the absence of proof to the contrary. One of the Subsidiary Guarantors, Agenbite Limited, is incorporated under the laws of Ireland and has its registered office in Ireland (the Irish Guarantor ). As a result, there is a rebuttable presumption that the Irish Guarantor s COMI is in Ireland and consequently that any main insolvency proceedings applicable to such companies would be governed by Irish law. However, pursuant to the EU Insolvency Regulation, where an Irish company conducts business in another member state of the European Union, the jurisdiction of the Irish courts may be limited if the company s COMI is found to be in another Member State (please see European Union above). There are a number of factors that are taken into account to ascertain the COMI. The COMI should correspond to the place where the company conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. The point at which the COMI of a particular company falls to be determined is at the time that the relevant insolvency proceedings are opened. Ultimately it would be a matter for the relevant court to decide, based on the circumstances existing at the time when it was asked to make that decision. If the Irish Guarantor s COMI is not located in Ireland, and is held to be in a different jurisdiction within the European Union, then Irish insolvency proceedings would not be applicable to the Irish Guarantor. 215

235 Fixed and Floating Charges Under Irish law, there are a number of ways in which fixed charge security has an advantage over floating charge security: (a) (b) (c) (d) (e) (f) an examiner (see Examinership ) appointed to the charging company can, if so authorized by an Irish court, deal with floating charge assets; a fixed charge, even if created after the date of a floating charge, may have priority as against the floating charge over the charged assets; general costs and expenses (including the liquidator s remuneration) properly incurred in a winding-up are payable out of the company s assets (including the assets that are the subject of the floating charge) in priority to floating charge claims; until the floating charge security crystallizes, a company is entitled to deal with assets that are subject to floating charge security in the ordinary course of business, meaning that such assets can be effectively disposed of by the charging company so as to give a third-party good title to the assets free of the floating charge and so as to give rise to the risk of security being granted over such assets in priority to the floating charge security; floating charge security is subject to certain challenges under Irish insolvency law (please see Grant of Floating Charge ); and floating charge security is subject to the claims of preferential creditors in a winding-up (such as certain taxes, occupational pension scheme contributions and salaries owed to employees (subject to a cap per employee) and holiday pay owed to employees), in the sense that where the assets in the winding-up are not sufficient to meet the preferential claims, then the preferential claims shall be paid out the assets subject to the floating charge. It has been held that this provision extends to a charge which was created as a floating charge, irrespective of whether the charge subsequently crystallized. (It is open to the holder of a fixed charge to release or surrender its security and claim on an unsecured basis in the liquidation, in which case its claim would rank after preferential debts.) Under Irish law, there is a possibility that a court could recharacterize fixed security interests purported to be created by a security document as floating charges; the description given to security interests by the parties is not determinative. The essence of a fixed charge is that the chargor does not have liberty to deal with the assets that are the subject matter of the security in the sense of disposing of such assets or expending or appropriating the moneys or claims constituting such assets and accordingly, if and to the extent that such liberty is given to chargor, any charge constituted by the relevant security instrument may operate as a floating, rather than a fixed charge. In particular, the Irish courts have held that in order to create a fixed charge on receivables, it is necessary to oblige the chargor to pay the proceeds of collection of the receivables into a designated bank account and to prohibit the chargor from withdrawing or otherwise dealing with the moneys standing to the credit of such account without the consent of the chargee. Depending upon the level of control actually exercised by the chargor, there is therefore a possibility that the fixed security purported to be created by the relevant security instrument would be regarded by the Irish courts as a floating charge. Where the chargor is free to deal with the secured assets without the consent of the chargee prior to crystallization, the court is likely to hold that the security interest in question constitutes a floating charge, notwithstanding that it may be described as a fixed charge in the security documents. In addition, to the extent that any of the assets which are expressed to be subject to a fixed charge are not specifically identified, the court may hold that such assets are, in fact, subject to a floating charge. Preferred Creditors under Irish Law Under Section 621 of the Irish Companies Act 2014 (the 2014 Act ), in a winding-up of an Irish company certain preferential debts are required to be paid in priority to all debts other than those secured by a fixed charge. Preferential debts therefore have priority over debts secured by a floating charge. If the assets of the relevant company available for the payment of general creditors are insufficient to pay the preferential debts, they are required to be paid out of the property subject to the floating charge. 216

236 Under Section 440 of the 2014 Act, the holder of a debenture of an Irish company secured by a floating charge, or a receiver appointed by such a chargee, who takes possession of property comprised in or subject to the floating charge when the company is not in the course of being wound up, is required to pay the preferential debts out of that property in priority to principal and interest secured by the floating charge. Such preferential debts would comprise, among other things, any amounts owed in respect of local rates and certain amounts owed to the Irish Revenue Commissioners for income/corporation/capital gains tax, value added tax ( VAT ), employee-related taxes, social security and pension scheme contributions and remuneration, salaries and wages of employees and certain contractors and the expenses of liquidation. In addition, there is a further limited category of super-preferential creditors which take priority, not only over unsecured creditors and holders of floating security, but also over holders of fixed security. These super- preferential claims include the remuneration, costs and expenses properly incurred by any examiner of the company which may include any borrowings made by an examiner to fund the company s requirements for the duration of his appointment that have been approved by the Irish courts, (see Examinership below) and any capital gains tax payable on the disposition of an asset of the company by a liquidator, receiver or mortgagee in possession. Furthermore, and as referred to above (see Fixed and Floating Charges ), in the case of the application of moneys arising from the realization of secured assets that are subject to a floating charge, or in a winding-up, the costs of the liquidation and the liquidator s fees will take priority over the claims of floating chargeholders in respect of relevant assets. The holder of a fixed security over the book debts of a company incorporated under the laws of Ireland (an Irish company ) may be required by the Irish Revenue Commissioners, by notice in writing from the Irish Revenue Commissioners, to pay to them sums equivalent to those that the holder received in payment of debts due to it by the Irish company. Where notice has been given to the Irish Revenue Commissioners of the creation of the security within 21 calendar days of its creation by the holder of the security, the holder s liability is limited to the amount of certain outstanding Irish tax liabilities of the company (including liabilities in respect of value added tax) arising after the issuance of the Irish Revenue Commissioners notice to the holder of fixed security. The Irish Revenue Commissioners may also attach any debt due to an Irish tax resident company by another person in order to discharge any liabilities of the Irish company in respect of outstanding tax, whether the liabilities are due on its own account or as an agent or trustee. The scope of this right of the Irish Revenue Commissioners has, to date, not been considered by the Irish courts, and it may override the rights of holders of security (whether fixed or floating) over the debt in question. In relation to the disposal of assets of any Irish tax resident company that are subject to security, a person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by the company on a disposal of those assets on exercise of the security. Examinership Examinership is a court procedure available under the 2014 Act to facilitate the survival of the whole or part of an Irish company or companies in financial difficulties. In circumstances where an Irish company is or is likely to be unable to pay its debts, then that company, the directors of that company, a contingent, prospective or actual creditor of that company, or shareholders of that company holding, at the date of presentation of the petition, not less than one- tenth of the voting share capital of that company are each entitled to petition the court for the appointment of an examiner to that company. Provided the company can demonstrate viability, and can satisfy certain tests, the Irish High Court appoints an independent examiner whose function is to supervise the restructuring process. (Although the following refers exclusively to the Irish High Court, the Irish Circuit Court also has jurisdiction to appoint an examiner and supervise the examinership process, if the petitioner brings its application in the relevant local Irish Circuit Court. There are criteria as to the size of the company in respect of which the Irish Circuit Court may exercise the examinership jurisdiction. Two or more of the following criteria must be met in respect of the relevant previous year: the turnover must not exceed 8.8 million; the balance sheet does not exceed 4.4 million; and/or the average number of employees of the company must not exceed 50. It is important to note that, if an examinership proceeds in the Irish Circuit Court, the powers and jurisdiction of the court will be the same as if the matter were in the Irish High Court.) 217

237 Where the Irish High Court appoints an examiner to a company, it may, at the same or any time thereafter, make an order appointing the examiner to be examiner to a related company. During the protection period the day-to-day business of the company remains under the control of the directors of the company, subject to certain rights of the examiner to apply to the Irish High Court. The examiner, once appointed, has the power to set aside contracts and arrangements entered into by the company after this appointment and, in certain circumstances, can avoid a negative pledge given by the company prior to this appointment. Furthermore, the examiner may sell assets of the company which are the subject of security. Where such assets are the subject of a fixed security interest, the examiner must account to the holders of the fixed security interest for the amount realized and discharge the amount due to the holders of the fixed security interest out of the proceeds of the sale. During the period of protection, the examiner will formulate proposals for a compromise or scheme of arrangement to assist the survival of the company, or of a related company, or both, and the whole or any part of its or their undertaking as a going concern. A scheme of arrangement may be approved by the Irish High Court, provided that at least one class of creditors who would be adversely affected by the scheme of arrangement has voted in favor of the proposals, and provided further that the Irish High Court is satisfied that such proposals are (i) fair and equitable in relation to any class of members or creditors who have not accepted the proposals and whose interests would be impaired by implementation of the scheme of arrangement and (ii) not unfairly prejudicial to the interests of any interested party. For as long as a company is under the protection of the Irish High Court, no attachment, sequestration, distress or execution shall be put into force against the property or effects of the relevant company except with the consent of the examiner. In addition, no proceedings of any sort may be commenced against a guarantor or any other person liable to pay all or any part of the debts of the company under protection in respect of the debts of that company. This moratorium under the 2014 Act runs for an initial period of 70 days from the date of the presentation of the petition to the court for the appointment of the examiner. An extension of up to 30 days can be granted on application to the court by the examiner and the period may be further extended by the court for such period as the court considers necessary to decide whether or not to confirm the proposals. Once a proposed scheme of arrangement is confirmed by the Irish High Court, the scheme is binding on the company and all its members and creditors. Primary Risks for Holders of Notes in an Examinership The primary risks to the holders of the Notes, under the laws of Ireland, if an examiner were appointed to an Irish Guarantor and/or to a company related to such an Irish company and where any amounts due under the Notes were unpaid, are as follows: (a) (b) (c) (d) (e) there may be a delay in enforcing the payment obligations of an Irish Guarantor of the Notes and of any payment obligations contained in a guarantee given by any other related company subject to the examinership proceedings; the potential for a compromise or scheme of arrangement being approved involving the writing down or rescheduling of the debt due by an Irish Guarantor to the holders of the Notes; the potential for a compromise or scheme of arrangement being approved involving the writing down or rescheduling of any payment obligations owed to the holders of the Notes by a company related to such an Irish Guarantor; the potential for the examiner to seek to set aside any negative pledge prohibiting the creation of security or the incurring of borrowings by the Irish Guarantor to enable the examiner to borrow to fund the guarantor during the protection period; and in the event that a scheme of arrangement is not approved in respect of an Irish company guarantor of the Notes and the guarantor subsequently goes into liquidation, the examiner s remuneration and expenses (including certain borrowings incurred by the examiner on behalf of the guarantor and approved by the Irish High Court) will take priority over the moneys and liabilities which from time to time are or may become due, owing or payable by it to the holders of the Notes. Challenges to Security There are circumstances under Irish insolvency law in which the granting by an Irish company of security can be challenged. In most cases this will only arise if an examiner or a liquidator is appointed to the Irish company within a 218

238 specified period (as set out in more detail below) of the granting of the security and, in addition, the company was unable to pay its debts when the security interest was granted or unable to pay its debts as a result. A company will be deemed to be unable to pay its debts if a statutory demand from one creditor for an amount in excess of 10,000 or from two or more creditors for an amount in excess of 20,000 is served on the company and remains unsatisfied for three weeks or an execution order or other process issued on a judgment, decree or order of a court in favor of a creditor is returned unsatisfied in whole or in part or it is proved to the court s satisfaction that the company is not able to pay its debts as they fall due or that the value of the company s assets is less than the amount of its liabilities (taking into account contingent and prospective liabilities). The following potential grounds for challenge may apply to security interests: Unfair Preference If a company goes into liquidation in Ireland, a liquidator may apply to the court for an order to set aside certain transactions entered into by an Irish company before the commencement of liquidation on the grounds that such transaction constituted an unfair preference. Section 604 of the 2014 Act provides that any conveyance, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts as they become due, to any creditor or any person on trust for any such creditor, within six months of the commencement of a winding-up of the Irish company, with a view to giving such creditor (or any surety or guarantor of the debt due to such creditor) a preference over its other creditors shall, if the company is at the time of the commencement of the winding-up unable to pay its debts (taking into account the contingent and prospective liabilities), be deemed an unfair preference of its creditors and be invalid accordingly. Where the conveyance, mortgage, delivery of goods, payment, execution or other action is in favor of a connected person the six-month period is extended to two years. Transaction Defrauding Creditors Under Section 443 of the 2014 Act, if in a receivership of an Irish company it can be shown to the satisfaction of the court that any property of such company of any kind whatsoever was disposed of either by way of conveyance, transfer, mortgage, security, loan or in any way whatsoever whether by act or omission, direct or indirect, and that the effect of such disposal was to perpetrate a fraud on the Irish company, its creditors or members, the court may, if it deems it just and equitable to do so, order any person who appears to have the use, control or possession of such property or the proceeds of the sale or development thereof to deliver it or to pay a sum in respect of it to the receiver under such terms or conditions as the court sees fit. In deciding whether it is just and equitable to make an order under Section 443 of the 2014 Act, the Irish High Court must have regard to the rights of persons who have bona fide and for value acquired an interest in the property the subject of the application. Section 443 does not apply to a disposal that would constitute an unfair preference for the purpose of Section 604 of the 2014 Act. It is important to bear in mind that Section 443 of the 2014 Act can apply to a transaction which puts an asset beyond the reach of the company, its liquidator and/or creditors: there is no requirement for there to necessarily have been fraud in the common law sense of that term. Grant of Floating Charge Under Irish insolvency law, if an Irish company is unable to pay its debts at the time of (or as a result of) granting a floating charge, then such floating charge can be avoided if it was granted in the period of one year ending with the onset of insolvency (except to the extent of moneys actually advanced or paid or the actual price or value of the goods or services sold or supplied to the Irish company at the time of or subsequent to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of 5% per annum). Where the floating charge is granted to a connected person the charge can be challenged if granted within two years of the onset of insolvency. General If an Irish Guarantor becomes subject to an Irish law insolvency proceeding and that company has obligations to creditors that are treated under Irish law as senior relative to the company s obligations to the Noteholders, the Noteholders may suffer losses as a result of their subordinated status during such insolvency proceeding. The validity and enforceability of a guarantee or security interest may be contested on the basis that it was entered into ultra vires the company. It is important in this regard that any Guarantor incorporated under the laws of Ireland has sufficient powers in its Memorandum of Association to give guarantees and indemnities and to create security over its assets. 219

239 Subject to certain exceptions, under Section 82 of the 2014 Act it is unlawful for an Irish company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of an acquisition made or to be made by any person or for any shares in the company or, where the company is a subsidiary, its holding company. Subject to a number of exceptions, under Section 239 of the 2014 Act, it is unlawful for a company to: (a) (b) (c) make a loan or a quasi loan to a director of the company or its holding company or to a person connected with such director; enter into a credit transaction as creditor for such director or a person so connected; or enter into a guarantee or provide any security in connection with a loan, quasi loan or credit transaction made by any other person for such a director or a person so connected. One of the exceptions is contained in Section 243 of the 2014 Act ( Section 243 ), which provides that a company is not prohibited from making a loan or quasi-loan to another company if that other company is its holding company, subsidiary or subsidiary of its holding company (as defined under the 2014 Act) in circumstances where the transaction would otherwise be prohibited by virtue of the companies being connected. Similarly, Section 243 provides that a company is not prohibited from entering into a guarantee or providing security in connection with any loan or quasi-loan made to a company that is its holding company, subsidiary or subsidiary of its holding company. Section 243 further provides an exception whereby credit transactions, and guarantees and securities in respect of credit transactions, can also be entered into with, and in respect of, other companies within the same group. Enforcement Process Receivership A receiver could be appointed by way of enforcement of the right of the holders of fixed or floating security interests. Receivers are appointed over assets which fall within the security granted, and not over the company itself. The appointment of a receiver could result in the costs and expenses of the receiver taking priority over any amounts otherwise owed to holders of the Notes. The basis on which a receiver may be appointed, and the powers which may be exercised by that receiver, will usually be enumerated in the relevant security instrument. A receiver may also be appointed under statute, or (rarely, and in limited circumstances, such as where the secured assets are in jeopardy but the event of default, as defined under the security instrument, has not occurred) by order of the Court. Note Guarantee There is a risk that the Note Guarantee of the Irish Guarantor may be challenged as unenforceable on the basis that there is an absence of corporate benefit on the part of the Irish Guarantor or that the Note Guarantee is not for the purpose of carrying on the business of the Irish Guarantor. The directors primary duty, strictly speaking, is to act in the best interests of their own company and not in the interest of the group as a whole. Nevertheless, it is often to the advantage of one company to support other members of the group and the Irish courts have held that corporate benefit may be established where the benefit flows to the group generally rather than specifically to the relevant Irish company providing a guarantee of another person s indebtedness. 220

240 PLAN OF DISTRIBUTION The Issuer, PEGHL, the Parent Guarantor and the Subsidiary Guarantors, and Goldman Sachs International, Deutsche Bank AG, London Branch and J.P. Morgan Securities plc as initial purchasers, entered into a purchase agreement with respect to the Notes dated June 2, 2015 (the Purchase Agreement ). Subject to the terms and conditions set forth in the Purchase Agreement, the Issuer agreed to sell to the Initial Purchasers, and the Initial Purchasers agreed to purchase from the Issuer, the entire principal amount of the Notes. The obligations of the Initial Purchasers under the Purchase Agreement, including their agreement to purchase the Notes from the Issuer, were and are several and not joint. The Purchase Agreement provides that the Initial Purchasers will purchase all of the Notes if any of them are purchased. The Initial Purchasers initially proposed to offer the Notes for resale at the issue price that appears on the front cover of this Listing Particulars. The Initial Purchasers may have changed the price at which the Notes were offered and any other selling terms at any time without notice. The Initial Purchasers may have offered and sold Notes through certain of their affiliates, including in respect of sales into the United States. The Purchase Agreement provides that the obligations of the Initial Purchasers to pay for and accept delivery of the Notes are subject to, among other conditions, the delivery of certain legal opinions by their counsel and our counsel. The Purchase Agreement also provides that, if an Initial Purchaser defaults thereunder, the purchase commitments of the non-defaulting Initial Purchaser(s) may be increased or, in some cases, the Offering may be terminated. The Purchase Agreement provides that we will indemnify and hold harmless the Initial Purchasers against certain liabilities, including liabilities under the U.S. Securities Act, and will contribute to payments that the Initial Purchasers may be required to make in respect thereof. We have agreed, subject to certain limited exceptions, that during the period from the date the Purchase Agreement is executed through and including the date that is 90 days after the date the Purchase Agreement is executed, to not, and to cause our subsidiaries to not, without having received the prior written consent provided for in the Purchase Agreement, offer, sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by us or any of our subsidiaries. Persons who purchase Notes from the Initial Purchasers may be required to pay stamp duty, taxes and other charges in accordance with the laws and practice of the country of purchase in addition to the issue price of the Notes set forth on the cover page of this Listing Particulars. The Issuer agreed to pay the Initial Purchasers certain customary fees for their services in connection with the Offering and to reimburse them for certain out-of-pocket expenses. The Notes and the Note Guarantees have not been, and will not be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of other persons, except to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the U.S. Securities Act. Resales of the Notes are restricted as described under Transfer Restrictions. Each purchaser of the Notes will be deemed to have made acknowledgments, representations and agreements as described under Transfer Restrictions. In the Purchase Agreement, the Initial Purchasers, severally and not jointly, also represented and agreed to the Issuer that: they have only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA )) received by it in connection with the issue or sale of any of the Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer or the Guarantors; and they have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes, in, from or otherwise involving the United Kingdom. No action has been taken in any jurisdiction, including the United States and England and Wales, by any of the Issuer, the Guarantors or the Initial Purchasers that would permit a public offering of the Notes or the possession, circulation or distribution of this Listing Particulars or any other material relating to the Issuer, the Guarantors or the Notes in any jurisdiction where action for this purpose is required. This Listing Particulars does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this Listing Particulars comes are advised to inform themselves about and to observe any 221

241 restrictions relating to the Offering, the distribution of this Listing Particulars and resale of Notes. See Transfer Restrictions. Each of the Issuer and the Guarantors have also agreed that they will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances in which such offer, sale, contract, pledge or disposition would cause the exemption afforded by Section 4(a)(2) of the U.S. Securities Act or the safe harbors of Rule 144A and Regulation S to cease to be applicable to the offer and sale of the Notes. The Original Senior Secured Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market thereof. The Notes are a new issue of securities for which there currently is no market. We made a successful application to list the Notes on the Official List of the Irish Stock Exchange and to admit the Notes for trading on the Irish Stock Exchange s Global Exchange Market. However, we cannot assure you that such listings will be maintained. See Risk Factors There may not be an active trading market for the Notes, in which case your ability to sell the Notes may be limited. The Initial Purchasers advised us that they intend to make a market in the Notes as permitted by applicable law. The Initial Purchasers are not obliged, however, to make a market in the Notes, and any market-making activity may be discontinued at any time at their sole discretion without notice. In addition, any such market-making activity will be subject to the limits imposed by the U.S. Securities Act and the U.S. Securities Exchange Act of 1934, as amended (the U.S. Exchange Act ). Accordingly, we cannot assure you that any market for the Notes will develop, that it will be liquid if it does develop or that you will be able to sell any Notes at a particular time or at a price which will be favorable to you. Delivery of the Notes was made against payment therefore on the Issue Date, which was the third business day following the date of pricing of the Notes (such settlement cycle being referred to herein as T+3 ). In connection with the Offering, Goldman Sachs International (the Stabilization Manager ) (or any person(s) acting on behalf of the Stabilization Manager), may over allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there can be no assurances that the Stabilization Manager (or any person(s) acting on behalf of the Stabilization Manager) will undertake any such stabilization action. Such stabilization action, if commenced, may begin on or after the date on which adequate public disclosure of the final terms of the Offering is made and may be ended at any time, but it must end no later than the earlier of 30 calendar days after the Issue Date and 60 calendar days after the date of allotment of the Notes. Any stabilization action or over allotment must be conducted by the Stabilization Manager (or any person(s) acting on behalf of the Stabilization Manager) in accordance with all applicable laws and rules. Over-allotment involves sales in excess of the relevant Offering size, which creates a short position for the Initial Purchasers. Stabilizing transactions permit bidders to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. Penalty bids permit the Initial Purchasers to reclaim a selling concession from a broker or dealer when the Notes originally sold by that broker or dealer are purchased in a stabilizing or covering transaction to cover short positions. These stabilizing transactions, covering transactions and penalty bids, may cause the price of the Notes to be higher than it would otherwise be in the absence of these transactions. These transactions, if commenced, may be discontinued at any time. The Initial Purchasers and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial investment banking, financial advising, investment management, principal investment, hedging, financing and brokerage activities. The Initial Purchasers or their respective affiliates, from time to time, have provided in the past, and may provide in the future, investment banking, financial advisory and commercial banking services to the Issuer and its affiliates in the ordinary course of business for which they have received or may receive customary fees and commissions. The Initial Purchasers acted as joint bookrunners in our offering of the Original Senior Secured Notes and the Existing Senior Notes, for which they received customary fees and commissions. In addition, the Initial Purchasers or certain of their affiliates are arrangers and/or lenders and/or agents under our Revolving Credit Facility Agreement. In connection therewith, the Initial Purchasers (and certain of their affiliates) receive customary fees and commissions. 222

242 TRANSFER RESTRICTIONS General The Notes and the Note Guarantees have not been and will not be registered under the U.S. Securities Act, or the securities laws of any other jurisdiction, and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and the securities laws of any other applicable jurisdiction. Accordingly, the Notes and the Note Guarantees were offered and sold to the Initial Purchasers for re-offer and resale only: in the United States, to qualified institutional buyers as defined in Rule 144A under the U.S. Securities Act ( QIBs ) in reliance on Rule 144A; and outside the United States, to non-u.s. persons in an offshore transaction in accordance with Regulation S. In the following description, we use the terms offshore transaction, U.S. persons and United States, respectively, with the meanings given to them in Regulation S. Important Information about the Offering If you purchase Notes, you will be deemed to have represented and agreed as follows: (1) You understand and acknowledge that the Notes and the Note Guarantees have not been and will not be registered under the U.S. Securities Act or any other applicable securities laws and that the Notes are being offered for resale in transactions not requiring registration under the U.S. Securities Act or any other securities laws, including sales pursuant to Rule 144A under the U.S. Securities Act, and, unless so registered, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the U.S. Securities Act or any other applicable securities laws, pursuant to an exemption therefrom, or in a transaction not subject thereto, and in each case in compliance with the conditions for transfer set forth in paragraph (4) below. (2) You are not an affiliate (as defined in Rule 144 under the U.S. Securities Act) of the Issuer, you are not acting on the behalf of the Issuer and you are either: (a) (b) a QIB and are aware that any sale of the Notes to you will be made in reliance on Rule 144A, and such acquisition will be for your own account or for the account of another QIB; or not a U.S. person or purchasing the Notes for the account or benefit of a U.S. person (other than a distributor), and you are purchasing Notes outside the United States in an offshore transaction in accordance with Regulation S under the U.S. Securities Act. (3) You acknowledge that none of the Issuer, the Guarantors nor the Initial Purchasers nor any other person has made any representation to you with respect to us or the offer or sale of any of the Notes, other than the information contained in this Listing Particulars, which Listing Particulars has been delivered to you and upon which you are relying in making your investment decision with respect to the Notes. You acknowledge that no person other than the Issuer makes any representation or warranty as to the accuracy or completeness of this Listing Particulars. You have had access to such financial and other information concerning, the Issuer, us and the Notes (and the Note Guarantees), including an opportunity to ask questions of, and request information from, us and any of the Initial Purchasers. (4) You are purchasing Notes for your own account, or for one or more investor accounts for which you are acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the U.S. Securities Act or any other applicable securities laws, subject to any requirement of law that the disposition of your property or the property of such investor account or accounts be at all times within your or their control and subject to your or their ability to resell such Notes pursuant to Rule 144A, Regulation S or any other available exemption from registration available under the U.S. Securities Act. You agree on your own behalf and on behalf of any investor account for which you are purchasing the Notes, and each subsequent holder of the Notes by its acceptance thereof will be deemed to agree, to offer, sell or otherwise transfer such Notes prior to the date (the Resale Restriction Termination Date ) that is one year (in the case of Notes issued in reliance on Rule 144A ( Rule 144A Notes )) or 40 days (in the case of Notes issued in reliance on Regulation S ( Regulation S Notes )) after the later of the Issue Date 223

243 and the last date on which the Issuer or any affiliate of the Issuer was the owner of such Notes (or any predecessor thereto) only: (a) (b) (c) (d) (e) to the Issuer, Guarantors or any subsidiary thereof; pursuant to a registration statement which has been declared effective under the U.S. Securities Act; for so long as the Notes are eligible for resale pursuant to Rule 144A, to a person you reasonably believe is a QIB that purchases for its own account or for the account of another QIB to whom you give notice that the transfer is being made in reliance on Rule 144A; pursuant to offers and sales that occur outside the United States in compliance with Regulation S; or pursuant to any other available exemption from the registration requirements of the U.S. Securities Act; subject, in each of the foregoing cases, to any requirement of law that the disposition of the seller s property or the property of an investor account or accounts be at all times within its or their control, and in compliance with any applicable foreign or state securities laws and any applicable local laws and regulations. You acknowledge that the Issuer and the Trustee reserve the right prior to any offer, sale or other transfer of the Notes (i) pursuant to clause (d) or clause (e) above prior to the Resale Restriction Termination Date of such Notes to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to each of them, and (ii) in each of the foregoing cases, to require that a certificate of transfer in the form appearing on the reverse of the security is completed and delivered by the transferor to the Trustee. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. You acknowledge that each Global Note will contain a legend substantially in the following form: THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT ), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT ( RULE 144A )) OR (B) IT IS A NON-U.S. PERSON ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (2) AGREES THAT IT WILL NOT, ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR FOR WHICH IT HAS PURCHASED SECURITIES TO, PRIOR TO THE DATE (THE RESALE RESTRICTION TERMINATION DATE ) WHICH IS [IN THE CASE OF THE RULE 144A NOTES: ONE YEAR] [IN THE CASE OF REGULATION S NOTES: 40 DAYS] (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY [RULE 144] [REGULATION S] UNDER THE U.S. SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER, THE GUARANTORS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL AND IN COMPLIANCE WITH ANY APPLICABLE FOREIGN OR STATE SECURITIES LAWS, AND ANY APPLICABLE LOCAL LAWS AND REGULATIONS AND FURTHER SUBJECT TO THE ISSUER S AND THE TRUSTEE S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) AND (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH 224

244 OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. If you purchase Notes, you will also be deemed to acknowledge that the foregoing restrictions apply to holders of beneficial interests in the Notes as well as to holders of the Notes. (5) You acknowledge that the registrar will not be required to accept for registration of transfer any Notes acquired by you, except upon presentation of evidence satisfactory to the Issuer and such registrar that the restrictions set forth therein have been complied with. (6) You acknowledge that: (a) (b) the Issuer, the Initial Purchasers and others will rely upon the truth and accuracy of your acknowledgements, representations and agreements set forth herein, and you agree that, if any of your acknowledgements, representations or agreements herein cease to be accurate and complete, you will notify the Issuer and the Initial Purchasers promptly in writing; and if you are acquiring any Notes as fiduciary or agent for one or more investor accounts, you represent with respect to each such account that: (i) (ii) you have sole investment discretion; and you have full power to make the foregoing acknowledgements, representations and agreements on behalf of each such investor account. (7) You agree that you will, and each subsequent holder is required to, give to each person to whom you transfer the Notes notice of any restrictions on the transfer of the Notes. (8) If you are a purchaser in a sale that occurs outside the United States within the meaning of Regulation S, you acknowledge that until the expiration of the distribution compliance period (as defined below), you shall not make any offer or sale of the Notes to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902 under the U.S. Securities Act. The distribution compliance period means the 40-day period following the Issue Date of the Notes. (9) You acknowledge that until 40 days after the commencement of the Offering, any offer or sale of the Notes within the United States by a dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the U.S. Securities Act. (10) You understand that no action has been taken in any jurisdiction (including the United States) by any of the Issuer, the Guarantors or the Initial Purchasers that would permit a public offering of the Notes or the possession, circulation or distribution of this Listing Particulars or any other material relating to the Issuer, the Guarantors or the Notes in any jurisdiction where action for that purpose is required. Consequently, any transfer of the Notes will be subject to the selling restrictions set forth in this section of this Listing Particulars and/or in the front of this Listing Particulars under the captions Notice to Investors, Notice to Certain European Economic Area Investors and Notice to New Hampshire Residents. (11) You represent and warrant that: (a) either (i) no portion of the assets used by you to acquire and hold the Notes constitutes assets of any employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), any plan, individual retirement account or other arrangement subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the Code ) or provisions under any federal, state, local, non-u.s. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, Similar Law ), or any entity whose underlying assets are considered to include plan assets of any such plan, or account, within the meaning of U.S. Department of Labor Regulations, 29 C.F.R , as modified by Section 3(42) of ERISA or otherwise, or (ii) the purchase and holding of the Notes will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a violation under any applicable Similar Law; and (b) you will not transfer the Notes to any person or entity, unless such person or entity could itself truthfully make the foregoing representation and warranty. 225

245 AVAILABLE INFORMATION Each purchaser of Notes from an Initial Purchaser will be furnished with a copy of this Listing Particulars and any related amendments or supplements to this Listing Particulars. Each person receiving this Listing Particulars and any related amendments or supplements to this Listing Particulars acknowledges that: (1) such person has been afforded an opportunity to request from us, and to review and has received, all additional information considered by it to be necessary to verify the accuracy and completeness of the information herein; (2) such person has not relied on any of the Initial Purchasers or any person affiliated with any of the Initial Purchasers in connection with its investigation of the accuracy of such information or its investment decision; and (3) except as provided pursuant to paragraph (1) above, no person has been authorized to give any information or to make any representation concerning the Notes or each Note Guarantee other than those contained herein and, if given or made, such other information or representation should not be relied upon as having been authorized by either us or any of the Initial Purchasers. For so long as any of the Notes remain outstanding and are restricted securities within the meaning of Rule 144(a)(3) under the U.S. Securities Act, the Issuer will, during any period in which it is neither subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act, nor exempt from the reporting requirements under Rule 12g3-2(b) of the U.S. Exchange Act, make available to any holder or beneficial owner of a Note, or to any prospective purchaser of a Note designated by such holder or beneficial owner, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the U.S. Securities Act upon the written request of any such holder or beneficial owner. Any such request in respect of the Notes, should be directed to the Issuer at its registered office, as set out under the caption Listing and General Information Legal Information. The Issuer is not currently subject to the periodic reporting and other information requirements of the U.S. Exchange Act. However, pursuant to the Indenture, and for so long as the Notes are outstanding, the Issuer has agreed to furnish periodic information to holders of the Notes. See Description of the Notes Certain Covenants Reports. 226

246 INDEPENDENT AUDITOR AND INDEPENDENT REPORTING ACCOUNTANT The consolidated financial statements of PE Holdings as of and for the 52 weeks ended June 29, 2014 included in this Listing Particulars have been audited by Pricewaterhouse Coopers LLP, independent auditors. The combined and consolidated financial information of PE Holdings as of and for each of the 52 weeks ended June 30, 2013, the 53 weeks ended July 1, 2012 and the 52 weeks ended June 26, 2011, respectively, included in this Listing Particulars, has been audited by PricewaterhouseCoopers LLP, independent reporting accountants. 227

247 LEGAL MATTERS Certain legal matters in connection with the Offering are being passed upon for us by Linklaters LLP with respect to matters of U.S. federal and New York state law and English law. Certain legal matters in connection with the Offering will be passed upon for the Initial Purchasers by Weil, Gotshal & Manges, with respect to matters of U.S. federal and New York state law and English law. 228

248 ENFORCEABILITY OF CIVIL LIABILITIES The Issuer is a public limited company incorporated under the laws of England and Wales. The Guarantors are organized or incorporated (as applicable) under the laws of England and Wales and Ireland. Almost all of the directors and executive officers of each of the Issuer and the Guarantors are non-residents of the United States. Substantially all of the assets of each of the Issuer and the Guarantors, and their respective directors and executive officers, are located outside the United States. As a result, any judgment obtained in the United States against the Issuer or a Guarantor or any such other person, including judgments with respect to the payment of principal, premium (if any) and interest on the Notes or any judgment of a U.S. court predicated upon civil liabilities under U.S. federal or state securities laws, may not be collectible in the United States. Furthermore, although each of the Issuer and the Guarantors will appoint an agent for service of process in the United States and will submit to the jurisdiction of New York courts, in each case, in connection with any action in relation to the Notes, the Note Guarantees, the Indenture, or under U.S. securities laws, it may not be possible for investors to effect service of process on the Issuer or on such other persons as mentioned above within the United States in any action, including actions predicated upon the civil liability provisions of U.S. federal securities laws. If a judgment is obtained in a U.S. court against the Issuer, any Guarantor, or any of their respective directors or executive officers, investors will need to enforce such judgment in jurisdictions where the relevant company or individual has assets. Even though the enforceability of U.S. court judgments outside the United States is described below for England, you should consult with your own advisors in any pertinent jurisdictions as needed to enforce a judgment in those countries or elsewhere outside the United States. The United States and England currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments (as opposed to arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon U.S. federal securities laws, would not automatically be recognized or enforceable in England. In order to enforce any such U.S. judgment in England, proceedings must first be initiated before a court of competent jurisdiction in England. In such an action, the English court would not generally reinvestigate the merits of the original matter decided by the U.S. court (subject to what is described below) and it would usually be possible to obtain summary judgment on such a claim (assuming that there is no good defense to it). Recognition and enforcement of a U.S. judgment by an English court in such an action is conditional upon (among other things) the following: the U.S. court having had jurisdiction over the original proceedings according to English conflicts of laws principles; the U.S. judgment being final and conclusive on the merits in the sense of being final and unalterable in the court which pronounced it and being for a definite sum of money; the U.S. judgment not being for a sum payable in respect of taxes, or other charges of a like nature or in respect of a penalty or fine; the U.S. judgment not contravening English public policy; the U.S. judgment not having been arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damages sustained and is not being otherwise in breach of Section 5 of the Protection of Trading Interests Act 1980; the U.S. judgment not having been obtained by fraud or in breach of English principles of natural justice; the U.S. judgment is not a judgment on a matter previously determined by an English court or another court whose judgment is entitled to recognition in England or conflicts with an earlier judgment of such court; or the English enforcement proceedings being commenced within the relevant limitation period). Subject to the foregoing, investors may be able to enforce in England judgments that have been obtained from U.S. federal or state courts. Notwithstanding the preceding, we cannot assure you that those judgments will be recognized or enforceable in England. In addition, we cannot assure you whether an English court would accept jurisdiction and impose civil liability if the original action was commenced in England, instead of the United States, and predicated solely upon U.S. federal securities laws. There are risks, including risks similar to those described above, in relation to enforcing judgments from a U.S. federal or state court in such jurisdictions. Accordingly, we cannot assure you that such risks do not and will not exist in other jurisdictions, including those in which the assets of some or all of our subsidiaries that may guarantee the Notes in the future are located. 229

249 LISTING AND GENERAL INFORMATION Listing The Irish Stock Exchange has approved this document as a Listing Particulars and for the Notes to be admitted to the Official List and trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. There can be no assurance that any such listing will be maintained. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. The expenses in relation to the admission of the Notes to trading on the Irish Stock Exchange s Global Exchange Market and to listing on the Official List of the Irish Stock Exchange are expected to be approximately 8,000. Irish Listing Information So long as the Notes are listed on the Official List of the Irish Stock Exchange and are admitted to trading on the Global Exchange Market of that exchange and the rules and regulations of the Irish Stock Exchange so require, the Issuer will publish or make available any notices (including financial notices) to the public in written form at places indicated by announcements to be published in a leading newspaper having a general circulation in Ireland (which is expected to be the Irish Times) or on the website of the Irish Stock Exchange ( or by any other means considered equivalent by the Irish Stock Exchange. For so long as the Notes are listed on the Official List of the Irish Stock Exchange and are admitted to trading on the Global Exchange Market of that exchange and the rules and regulations of the Irish Stock Exchange so require, electronic copies of the following documents may be inspected and obtained free of charge at the registered office of the Issuer and at the registered offices of each of the Guarantors, during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded): the organizational documents of each of the Issuer and the Guarantors; the financial statements included in this Listing Particulars; the annual and interim financial statements required to be provided under the captions Description of the Notes Certain Covenants Reports ; the Indenture (which includes the Note Guarantees and the form of the Notes); the Intercreditor Agreement; the Security Documents, which create the security interests as contemplated by the Indenture; and other material agreements described in this Listing Particulars as to which we specify that copies thereof will be made available. The Issuer has appointed Deutsche Bank AG, London Branch as Paying Agent and Deutsche Bank Luxembourg S.A. as Registrar, Listing Agent and Transfer Agent, respectively. The Issuer reserves the right to change such appointments in accordance with the terms of the Indenture and the Issuer will publish a notice of any change of any Paying Agent, the Registrar or the Transfer Agent in a newspaper having a general circulation in Ireland (which is expected to be The Irish Times) or, to the extent and in the manner permitted by the rules of the Irish Stock Exchange, post such notice on the official website of the Irish Stock Exchange ( The Issuer accepts responsibility for the information contained in this Listing Particulars. To the Issuer s best knowledge, except as otherwise noted, the information contained in this Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of this Listing Particulars. This Listing Particulars may only be used for the purposes for which it has been published. Clearing Information The Original Senior Secured Notes and the Notes will initially have a different common code and a different international securities identification number ( ISIN ). Once the Notes become freely tradeable, the Notes and the Original Senior Secured Notes will share the same common code and ISIN. The initial, temporary common code and temporary ISIN for the Notes sold pursuant to Regulation S are and XS , respectively. After the expiration of the 40-day period following the Issue Date, the 230

250 common code number and ISIN for the Notes sold pursuant to Regulation S are and XS , respectively. The initial, temporary common code and temporary ISIN for the Notes sold pursuant to Rule 144A are and XS , respectively. After the expiration of the one year period following the Issue Date, the common code number and ISIN for the Notes sold pursuant to Rule 144A are and XS , respectively. Legal Information The Issuer The Issuer is a public limited company incorporated under the laws of England and Wales. The Issuer was incorporated on July 7, The Issuer s registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom. The Issuer is registered with the Registrar of Companies for England and Wales under company number The telephone number for the Issuer is The creation and issuance of the Notes has been authorized by the Issuer s board of directors on May 20, The Parent Guarantor of the Notes PizzaExpress Financing 1 plc, the Parent Guarantor, is a public limited company incorporated under the laws of England and Wales. The Parent Guarantor was incorporated on July 4, The Parent Guarantor s registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom. The Parent Guarantor is registered with the Registrar of Companies for England and Wales under company number Subsidiary Guarantors of the Notes The Subsidiary Guarantors are direct or indirect, wholly-owned subsidiaries of the Issuer. The Subsidiary Guarantors of the Notes have the following corporate information: (a) (b) (c) (d) (e) (f) (g) (h) PizzaExpress Group Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PizzaExpress Operations Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 1 Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 2 Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 3 Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 4 Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 5 Ltd is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PandoraExpress 7 Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number

251 (i) (j) (k) (l) (m) PizzaExpress Merchandising Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PizzaExpress (Restaurants) Limited is a private limited company organized under the laws of England and Wales on March 31, Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PizzaExpress (Wholesale) Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number PizzaExpress Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, and it is registered with the Registrar of Companies for England and Wales under number Riposte Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House, Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number (n) Agenbite Limited is a private limited company organized under the laws of Ireland. Its registered office is at 38, Main Street, Swords, Co. Dublin, Ireland, and it is registered with the Companies Registration Office under number (o) PizzaExpress International Holdings Limited is a private limited company organized under the laws of England and Wales. Its registered office is at Hunton House Highbridge Estate, Oxford Road, Uxbridge, Middlesex, UB8 1LX, United Kingdom, and it is registered with the Registrar of Companies for England and Wales under number General Information Except as otherwise disclosed in this Listing Particulars: none of the Issuer, the Parent Guarantor, nor any of their respective direct or indirect subsidiaries has been involved, during the twelve months preceding the date of this Listing Particulars, in any litigation, governmental or administrative proceeding or arbitration relating to claims or amounts which may have, or have had in the recent past, a material effect on the financial position of the Issuer or any of its respective direct or indirect subsidiaries and, so far as the Issuer is aware, no such litigation, governmental or administrative proceeding or arbitration is pending or threatened; none of the members of the administrative, management or supervisory bodies of the Issuer, as may be applicable, have any conflicts of interests between any duties to the Issuer and their private interests (except as described above under Certain Relationships and Related Party Transactions ); as at the date of this Listing Particulars, there has been no material adverse change in the Group s consolidated financial or trading position since April 5, 2015; as at the date of this Listing Particulars, there has been no significant change in the financial or trading position of the Issuer since its date of incorporation. For the avoidance of doubt, any website referred to in this Listing Particulars and the information on the referenced website does not form part of this Listing Particulars prepared in connection with the Offering. Certain financial and other data on the Issuer, the Guarantors, the non-guarantors and PizzaExpress (Restaurants) Limited The Issuer accounted for million of the liabilities included within the consolidated total net liabilities (excluding goodwill) and 0.0 million (0.0%) of EBITDA, respectively, of the Parent and its consolidated subsidiaries as of and for the 52 weeks ended April 5,

252 The Guarantors accounted for million of the liabilities included within the consolidated total net liabilities (excluding goodwill) and 97.0 million (97.9%) of EBITDA, respectively, of the Parent and its consolidated subsidiaries as of and for the 52 weeks ended April 5, The non-guarantors accounted for 6.6 million of the assets included within the consolidated total net liabilities (excluding goodwill) and 2.1 million (2.1%) of EBITDA, respectively, of the Parent and its consolidated subsidiaries as of and for the 52 weeks ended April 5, PizzaExpress (Restaurants) Limited accounted for million of the assets included within the consolidated total net liabilities (excluding goodwill) and 84.1 million (84.9%) of EBITDA, respectively, of the Parent and its consolidated subsidiaries as of and for the 52 weeks ended April 5, Our restaurant business is predominantly owned and operated by PizzaExpress (Restaurants) Limited and its subsidiaries. 233

253 INDEX TO FINANCIAL STATEMENTS Page Unaudited Condensed Consolidated Interim Financial Information for the 33 weeks ended April 5, 2015 of PizzaExpress Group Holdings Limited (1) Condensed Consolidated Profit and Loss Account... F-2 Condensed Consolidated Statement of Total Recognised Gains and Losses... F-3 Condensed Consolidated Balance Sheet... F-4 Condensed Consolidated Cash Flow Statement... F-5 Notes to the Condensed Consolidated Interim Financial Information... F-6 Consolidated Financial Information for the 52 weeks ended June 29, 2014 of Balcombe Street Holdings Limited (formerly PizzaExpress Holdings Limited) (1) Independent Auditors Report... F-17 Consolidated Profit and Loss Account... F-19 Consolidated Statement of Total Recognised Gains and Losses... F-20 Consolidated Balance Sheet... F-21 Company Balance Sheet... F-22 Consolidated Cash Flow Statement... F-23 Consolidated Reconciliation of Movements in Shareholders Deficit... F-24 Company Reconciliation of Movements in Shareholders (Deficit)/Funds... F-25 Notes to the Financial Statements... F-26 Combined and Consolidated Financial Information for the 52 weeks ended June 30, 2013; for the 53 weeks ended July 1, 2012; and for the 52 weeks ended June 26, 2011 of PizzaExpress Holdings Limited (1)(2) Independent Accountant s Report... F-42 Combined and Consolidated Profit and Loss Accounts... F-44 Combined and Consolidated Statements of Total Recognised Gains and Losses... F-45 Combined and Consolidated Balance Sheets... F-46 Combined and Consolidated Cash Flow Statements... F-47 Combined and Consolidated Reconciliation of Movements in Shareholders Deficit. F-48 Notes to the Combined and Consolidated Financial Information... F-49 (1) Any page references contained in the body of this financial information are as per the original financial information documents that are reproduced here for the purposes of this Listing Particulars. (2) References to the Notes are to the Original Senior Secured Notes and the Existing Senior Notes. F-1

254 PIZZAEXPRESS GROUP HOLDINGS LIMITED Interim financial report Condensed consolidated profit and loss account for the 33 weeks ended 5 April 2015 Unaudited 33 weeks ended Note 5 April 2015 m Turnover Cost of sales... (126.8) Gross profit Administrative expenses... 5 (115.5) Operating profit Net interest payable and similar charges... (51.2) Loss on ordinary activities before taxation... (23.1) Tax on loss on ordinary activities... 6 (7.8) Loss for the financial period... (30.9) The results above all relate to acquired and continuing operations. F-2

255 PIZZAEXPRESS GROUP HOLDINGS LIMITED Interim financial report Condensed consolidated statement of total recognised gains and losses for the 33 weeks ended 5 April 2015 Unaudited 33 weeks ended 5 April 2015 m Loss for the financial period... (30.9) Exchange losses offset in reserves... (0.8) Total recognised losses... (31.7) F-3

256 PIZZAEXPRESS GROUP HOLDINGS LIMITED Interim financial report Condensed consolidated balance sheet as at 5 April 2015 Note Unaudited 5 April 2015 m Fixed assets Intangible assets Tangible assets Current assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year... (74.4) Net current liabilities... (9.8) Total assets less current liabilities Creditors: amounts falling due after one year (916.7) Provisions for liabilities and charges (13.0) Net liabilities... (27.1) Capital and reserves Called up share capital Share premium Profit and loss account (31.6) Total shareholders deficit (27.1) This financial report was approved by the board and authorised for issue on 29 May, 2015 /s/ A PELLINGTON A Pellington Finance Director F-4

257 PIZZAEXPRESS GROUP HOLDINGS LIMITED Interim financial report Condensed consolidated cash flow statement for the 33 weeks ended 5 April 2015 Note Unaudited 33 weeks ended 5 April 2015 m Net cash inflow from operating activities (a) 63.7 Returns on investments and servicing of finance Interest received Interest paid... (22.5) Facility arrangement fee... (0.6) Debt issue costs... (21.9) Net cash outflow from returns on investments and servicing of finance... (44.8) Taxation paid... (1.9) Capital expenditure and financial investment Purchase of tangible fixed assets... (19.1) Net cash outflow from capital expenditure and financial investment... (19.1) Acquisitions and disposals Purchase of subsidiary undertakings... (625.3) Repayment of Gondola Group liability... (278.5) Cash acquired with subsidiary undertakings Net cash outflow from acquisitions and disposals... (863.1) Net cash outflow before use of liquid resources and financing... (865.2) Financing Repayment of Gondola Group liability... (25.6) Senior Notes and Senior Secured Notes issued Shareholder Loan Notes issued New share capital subscribed Net cash inflow from financing Foreign exchange movement on cash... (0.2) Increase in cash (b), (c) 31.1 F-5

258 PIZZAEXPRESS GROUP HOLDINGS LIMITED 1 General information PizzaExpress Group Holdings Limited (the Company ) and its subsidiaries (together the PizzaExpress Group or the Group ) comprise the largest casual dining restaurant operator in the United Kingdom by number of locations, with a menu focusing on pizza and other Italian cuisine served in contemporary surroundings. On 12 July 2014, PizzaExpress Financing 2 plc, a wholly owned subsidiary of PizzaExpress Group Holdings Limited, entered into an acquisition agreement with Balcombe Street Holdings Limited (formerly PizzaExpress Holdings Limited) to acquire all of the issued share capital of PizzaExpress Franchises Limited, Gondola Investments Limited (now PizzaExpress Operations Limited) and PizzaExpress Greater China Limited (together, the New PizzaExpress Group ) from the Gondola Group with the effective completion date being 18 August As part of the financing and recapitalisation of the New PizzaExpress Group, Hony Capital made a contribution of million represented by the purchase of 4.5 million ordinary shares and the issue of million Shareholder Loan Notes. PizzaExpress Financing 1 plc and PizzaExpress Financing 2 plc issued the 200 million Senior Notes and the 410 million Senior Secured Notes, respectively on 31 July For the purposes of the unaudited condensed consolidated interim financial information, the New PizzaExpress Group was created on 18 August 2014 and the unaudited condensed consolidated interim financial information is presented for the 33 week period from 18 August 2014 to 5 April 2015 with no previous period comparison presented. For previous period comparisons, a 40 week pro forma condensed consolidated profit and loss account and balance sheet are voluntarily provided in note 3. 2 Basis of preparation This financial information is the unaudited condensed consolidated interim financial information (hereafter the Interim Financial Information ) of PizzaExpress Group Holdings Limited and its subsidiaries for the 33 week period ended 5 April The Interim Financial Information has been prepared in accordance with ASB statement Half Yearly Reports and applicable accounting standards in the United Kingdom (UK GAAP). Whilst the ASB statement of half years is withdrawn, as the new UK standard 104 requires compliance with New UK GAAP and the directors have not yet decided on the basis of preparation for their first financial statements, it remains the most appropriate framework. The Interim Financial Information does not comprise statutory accounts within the meaning of section 434 of the Companies Act The Interim Financial Information was approved for issue on 29 May Basis of consolidation The consolidated balance sheet includes all the assets and liabilities of all subsidiaries including those acquired during the period. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. All transactions and balances between the Group companies have been eliminated in the preparation of the consolidated financial information. All subsidiaries, excluding PizzaExpress Beijing Limited have coterminous period ends. The year end for PizzaExpress Beijing Limited is 31 December. Going concern The directors have prepared the Interim Financial Information on a going concern basis. Whilst the Group has net current liabilities of 9.8 million and total net liabilities of 27.1 million at 5 April 2015, management has prepared future cash flow forecasts from the period end date, which indicate that the Group will be able to meet its liabilities when they fall due for the foreseeable future. Turnover The principal accounting policies used in the preparation of the interim financial information are as follows: Turnover represents net invoiced sales of food and beverages, royalties from retail sales and franchise fees, all excluding value added tax. Turnover of restaurant services is recognised when the goods have been provided. Royalties from retail sales are recognised in turnover on product delivery or when due under the terms of the relevant retail sales F-6

259 agreements. Franchise fees arising outside the United Kingdom are recognised when they fall due under the terms of the relevant franchise agreements. Allocation of costs Cost of sales includes the cost of goods sold and direct labour costs. Operating expenses include restaurant overheads, central and area management, administration and head office costs. Tangible assets Tangible assets are stated at historical purchase cost less accumulated depreciation. Cost includes the purchase price of the asset, together with directly attributable costs incurred to bring it into its working condition for intended use. Depreciation is provided at the following annual rates in order to write down to estimated residual values the cost of each asset over its estimated useful economic life on a straight-line basis: Plant... 20% per annum Fixtures & fittings... 10% per annum IT equipment... 20% per annum Short leasehold properties are depreciated over the length of the lease except where the anticipated renewal or extension of the lease is sufficiently certain so that a longer estimated useful life is appropriate. Terms of the lease contracts are such that the vast majority of leases are readily extendable by an additional 14 years at the Group s option. The maximum depreciation period for short term leasehold properties is 30 years. Assets under construction comprise tangible fixed assets acquired for restaurants under construction, including costs directly attributable to bringing the asset into use. Assets are transferred to short leaseholds, plant and fixtures when the restaurant opens. No depreciation is provided on assets under construction, as these assets have not been brought into working condition for intended use. Impairment of fixed assets The carrying values of fixed assets are reviewed for impairment by the directors at each balance sheet date or where events or changes in circumstances indicate that the carrying value may not be recoverable. Any impairment in the value of assets below depreciated historical cost is charged to the profit and loss account within operating profit. A reversal of an impairment loss is recognised in the profit and loss account up to the extent that the original loss was recognised. Onerous lease provisions Onerous lease provisions are recognised when the Group has an empty property, a sublet property for which the Group s lease obligation cannot be met in full, or where a restaurant is loss-making for an extended period of time and the assets have been impaired. An estimate is made of the period of time and the extent to which the lease obligations cannot be fulfilled and a provision made accordingly. Pre-opening costs Exceptional costs Pre-opening costs, which comprise site operating costs, are expensed as incurred. Exceptional items are material items of profit and expense that, because of the unusual nature and expected infrequency of the events giving rise to them, merit separate presentation to allow an understanding of the Group s financial performance. Stocks Raw materials and consumables are valued at the lower of cost and net realisable value. Cost is based on the purchase cost on a first-in, first-out basis. F-7

260 Taxation The charge for taxation has been accrued using the estimated effective rate of taxation calculated using the expected full year result. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date which are due to transactions or events which have occurred at that date and which will result in an obligation to pay more, or a right to pay less, tax in the future. Resultant deferred tax assets are recognised only to the extent that it is considered more likely than not that there will be suitable taxable profits from which the deferred tax assets resulting from the underlying timing differences can be recovered. Deferred tax is measured on an undiscounted basis at the average tax rates that are expected to apply in the years in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Goodwill Goodwill represents the difference between the cost of an acquired entity and the aggregate of the fair values of that entity s identifiable assets and liabilities. Goodwill on the acquisition of a business is capitalised and amortised over its useful economic life. The useful economic life is a maximum of 20 years and this is the rate that has been applied to the goodwill in these financial statements. Goodwill is subject to an impairment review at the end of the first full year following an acquisition and at any other time when the directors believe that an impairment indicator has occurred. Changes in provision for impairment are taken to the profit and loss account. Foreign currency transactions Transactions denominated in foreign currencies are recorded at the spot rate applicable at the date of the transaction. Monetary assets and liabilities expressed in foreign currencies held at the balance sheet date are translated at the closing rate. The resulting exchange gain or loss is dealt with in the profit and loss account. The results of foreign subsidiaries are translated at the average rate. The balance sheets of foreign subsidiaries are translated at the closing rate. The resulting exchange differences are dealt with through reserves and are reported in the consolidated statement of total recognised gains and losses. Operating leases Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the term of the lease. The benefit of lease incentives are taken to the profit and loss account on a straight line basis over the shorter of the lease term or the period until the first rent review. Contributions received from landlords as an incentive to enter into a lease are treated as deferred income within creditors. Pension costs Contributions to defined contribution personal pension schemes are charged to the profit and loss account in the period in which they become payable. Share-based payments The Group operates an Executive Share Scheme (ESS) under which shares are granted to certain employees. The ESS meets the definition of an equity-settled share-based payment scheme. The costs of equity-settled transactions are measured at fair value at the date of grant and are expensed on a straight line basis over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of share that are expected to vest. Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and at bank and deposits repayable on demand, less overdrafts payable on demand. F-8

261 Rebates receivable from suppliers Where a rebate agreement with a supplier covers more than one period the rebates are recognised in the financial statements in the period in which they are earned. Financial instruments Debt finance The Group does not hold or issue derivative financial instruments for trading purposes. All borrowings are initially stated at the fair value of consideration received after deduction of issue costs. The issue costs and interest payable on borrowings are charged to the profit and loss account over the term of the borrowing, or over a shorter period where it is more likely than not that the lender will require earlier repayment or where the borrower intends or is required to redeem early. Facility fees on revolving credit facilities are included within prepayments and amortised over the term of the facility. 3 Pro forma financial information of the Group As outlined in note 1, the Group was acquired from 18 August 2014 and as a result, the Interim Financial Information is presented for the 33 week period from 18 August 2014 to 5 April 2015 without comparatives. To facilitate prior period comparison, this note is voluntarily disclosed to provide the pro-forma condensed consolidated profit and loss account and balance sheet results of the New Pizza Express Group for the 40 week period from 30 June 2014 to 5 April 2015 with prior period comparatives of the Old PizzaExpress Group. The Old PizzaExpress Group is considered to be the consolidated results of PizzaExpress Franchises Limited, Gondola Investments Limited (now PizzaExpress Operations Limited) and PizzaExpress Greater China Limited. The pro forma financial information represents 7 weeks trading of the Old PizzaExpress Group (up to and including 17 August 2014) followed by 33 weeks trading of the New PizzaExpress Group (up to and including 5 April 2015). Prior period information represents the position of the Old PizzaExpress Group at the relevant date prepared under consistent accounting policies as set out in note 2. F-9

262 3 Pro forma financial information of the Group PIZZAEXPRESS GROUP HOLDINGS LIMITED Pro forma condensed consolidated profit and loss account for the 40 weeks ended 5 April 2015 Unaudited 40 weeks ended 5 April 2015 Unaudited 40 weeks ended 6 April 2014 m m Group turnover Cost of sales... (153.6) (143.8) Gross profit Administrative expenses*... (134.2) (102.2) Operating profit Net interest payable and similar charges... (52.9) (13.8) (Loss) / profit on ordinary activities before taxation... (13.7) 39.1 Tax on profit on ordinary activities... (8.7) (5.9) (Loss) / profit for the financial period... (22.4) 33.2 * Included within administrative expenses are 0.3 million (40 weeks ended 6 April 2014: 0.2 million) of one-off post-acquisition completion related costs and a share based payment charge of 0.1 million (40 weeks ended 6 April 2014: Nil million). Pro forma condensed consolidated balance sheet as at 5 April 2015 Unaudited 5 April 2015 Unaudited 6 April 2014 m m Fixed assets Intangible assets Tangible assets Current assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year... (74.4) (517.8) Net current liabilities... (9.8) (465.2) Total assets less current liabilities (273.4) Creditors: amounts falling due after one year... (916.7) Provisions for liabilities and charges... (13.0) (14.9) Net liabilities... (27.1) (288.3) Total shareholders deficit... (27.1) (288.3) 4 Turnover Business sector analysis The Group has operated in one business sector in the period, being the sale of food and beverages. Geographical sector analysis Turnover by destination and by origin from countries other than the United Kingdom and Republic of Ireland in all financial periods was not sufficiently material in the financial period to warrant separate disclosure. The international operations of the Group are an increasingly important area of focus for management and we would expect the geographical split of our turnover to change over time as our international business grows. F-10

263 5 Administrative expenses Included within administrative expenses are 0.3 million of one-off post-acquisition completion related costs, 23.1m of goodwill amortisation and a share based payment charge of 0.1 million. 6 Tax on loss on ordinary activities Corporation tax expense is recognised using management s estimate of the Group s expected weighted average corporation tax rate for the full financial year adjusted for the change in tax rate applicable to deferred tax. The estimated average rate for the period to 5 April 2015 is per cent. The primary factor driving the tax rate higher than the standard rate of corporation tax in the UK is the interest costs disallowed for tax purposes. 7 Acquisitions Details of the deferred tax balance at period end are included within note 11. On 12 July 2014, PizzaExpress Financing 2 plc, a wholly owned subsidiary of PizzaExpress Group Holdings Limited, entered into an acquisition agreement with PizzaExpress Holdings Limited to acquire all of the issued share capital of PizzaExpress Franchises Limited, Gondola Investments Limited (now PizzaExpress Operations Limited) and PizzaExpress Greater China Limited from the Gondola Group with the effective completion date being 18 August The fair values of the identifiable assets and liabilities of the business as at the date of acquisition were: Book value Fair value movement Fair value m m m Tangible assets Cash at bank and in hand Trade debtors Other debtors Stocks (0.1) 10.2 Trade creditors... (8.8) (8.8) Other creditors... (46.8) (0.3) (47.1) Corporation tax... (0.8) (0.8) Loans and borrowings... (25.6) (25.6) Provisions for liabilities and charges... (1.1) (1.0) (2.1) Deferred tax liability... (13.7) 2.8 (10.9) Net assets Goodwill arising on acquisition (provisional) Total Discharged by: Cash consideration Repayment of intercompany payable to Gondola Group Costs associated with the acquisition Total At the date of acquisition, a net intercompany payable to Gondola Group of 25.6 million became a third party trade creditor. This balance is recognised in the loans and borrowings balance above. Upon completion of the acquisition of the New PizzaExpress Group, the balance payable to Gondola Group was repaid in full. The total cash consideration paid for the share capital of the New PizzaExpress Group and to discharge the Gondola liability was million (including acquisition related costs) at the date of completion. Provisional fair value adjustments resulting in a net increase in assets identified amounting to 1.0 million have been recognised, predominantly driven by a 2.8 million reduction in the deferred tax liability. This reduction is a result of a 0.4 reduction in the deferred tax liability in relation to capital allowances due to the fair value adjustment to tangible assets and the recognition of a 2m deferred tax asset in relation to bought forward tax losses. Expenses directly attributable to the transaction of 9.3 million have been added to the cost of the acquisition and recognised as goodwill in the balance sheet. At the balance sheet date these costs had been fully settled in cash. F-11

264 Profit before tax for the acquired Group for the pre-acquisition period from 30 June 2014 to 17 August 2014 was 9.5m. Profit before tax for the previous financial year ending 29 June 2014 was 51.0m. 8 Intangible assets Group Goodwill m Cost On acquisition and at 5 April Amortisation At 18 August Charge for the period At 5 April Net book value At 5 April Tangible assets Assets under construction Short leaseholds Fixtures and fittings, equipment m m m m Cost Fair value at acquisition Foreign exchange movement... (0.6) (0.3) (0.9) Additions Transfers... (17.5) At 5 April Accumulated depreciation Fair value at acquisition... Foreign exchange movement... (0.3) (0.2) (0.5) Charge for the period At 5 April Net book value At 5 April Total F-12

265 PIZZAEXPRESS GROUP HOLDINGS LIMITED 9 Tangible assets The Group considers each trading outlet to be an income generating unit (IGU) and each IGU is reviewed annually for indicators of impairment. In assessing whether an asset has been impaired, the carrying value of the IGU is compared to its recoverable amount. The recoverable amount is the higher of its fair value and its value in use. The Group estimates value in use using a discounted cash flow model. Future cash flows are based on assumptions from the business plans and cover a five year period. Cash flows beyond the budget period are extrapolated using a 2.5% growth rate. This rate does not exceed long term growth rates for the relevant markets. 10 Creditors: amounts falling due after one year m Shareholder Loan Notes unsecured Senior Notes and Senior Secured Notes secured At 5 April Total Unsecured Shareholder Loan Notes The unsecured Shareholder Loan Notes of million accrue interest at a compound fixed rate of 10% per annum and are due for repayment at the maturity date in August Interest of 19.4 million was accrued against these loan notes during the period. Interest shall accrue and be aggregated with the principal balance until such time that the Shareholder Loan Notes are repaid. Senior Notes and Senior Secured Notes The Secured Senior Notes of 200 million carry interest at a fixed rate of 8.625% and are due for repayment at the maturity date in August Interest is paid in arrears every 6 months. The Senior Secured Notes of 410 million carry interest at a fixed rate of 6.625% and are due for repayment at the maturity date in August Interest is paid in arrears every 6 months. Interest of 30.1 million has been recognised during the period on Senior Notes and Senior Secured Notes of which 22.3m was paid in the period and 7.8m has been recognised in short term creditors. The first interest payment of to the investors of the Notes of 22.3m was made on 2 February Debt issue costs of 21.9 million were borne in the period. These costs have been capitalised and offset against the Senior Notes and Senior Secured Notes principal balance on a proportional basis. The issue costs are being amortised over the term to maturity and at 5 April 2015, unamortised issue costs amounted to 20.3 million. The Senior Secured Notes are secured by a security accession deed and asset list comprising of the share capital and asset base of 12 PizzaExpress Group companies. 11 Provision for liabilities and charges Deferred taxation Onerous leases and dilapidation provision m m m On acquisition Utilised in period... Credit to profit and loss account... At 5 April Total Provisions for liabilities and charges include an onerous lease and dilapidation provision of 2.1 million representing operating leases on properties no longer in use, until the end of their leases or until the Directors estimate the properties can be sublet, as well as an estimate of dilapidations payable on leases held by the Group. This provision is expected to be utilised within the next five years. F-13

266 The Group has recognised a net deferred tax balance of 10.9 million comprising a deferred tax liability of 12.9 million which relates to capital allowances in excess of depreciation offset by a 2.0 million asset arising from brought forward tax losses acquired. 12 Called up share capital 5 April 2015 Allotted, issued and fully paid 1 ordinary shares of Reserves Share premium Profit and loss m m m At 18 August New share capital subscribed Profit for the financial period... (30.9) (30.9) Share based payment charge Foreign exchange loss... (0.8) (0.8) At 5 April (31.6) (27.1) Total 14 Notes to cash flow statement a) Reconciliation of operating profit to operating cash flows 33 weeks ended 5 April 2015 m Operating profit Share based payment charge Depreciation of tangible fixed assets Amortisation of goodwill Increase in stock... (0.7) Increase in debtors... (2.7) Increase in creditors Net cash inflow from operating activities b) Reconciliation of net cash flow to movement in net debt 33 weeks ended 5 April 2015 m Increase in cash Increase in loans and borrowings... (870.1) Change in net debt resulting from cash flows... (838.8) Acquired with subsidiaries... (25.6) Foreign exchange movement on cash... (0.2) Other non-cash changes... (21.0) Net debt at beginning of period... Net debt at end of period... (885.6) c) Analysis of changes in net debt At 18 August 2014 Acquired with subsidiaries Cash flow Foreign exchange movement on cash Non-cash changes At 5 April 2015 m m m m m m Cash at bank and in hand (0.2) 31.1 Loans and borrowings... (25.6) (870.1) (21.0) (916.7) F-14

267 Total net debt... (25.6) (838.8) (0.2) (21.0) (885.6) Other non-cash changes represent accrued interest on the Shareholder Loan Notes of 19.4 million and amortised issue costs of 1.6 million. 15 Related party transactions No separate disclosure of transactions and balances between companies in the Group that have been eliminated in the preparation of the Interim Financial Information is required, as is permitted by FRS 8 Related Party transactions. Transactions with other 100% owned subsidiaries of the ultimate parent company have also not been disclosed. Transactions and balances with other related parties of the Group are disclosed below. Transactions with directors As part of the acquisition, the total balance outstanding on the loan of 228,000 to R Hodgson was assigned and transferred to PizzaExpress Group Limited, a subsidiary of PizzaExpress Group Holdings Limited. During the period, PizzaExpress Group Limited made an additional loan of 497,000 to R Hodgson bringing his total loan to 725,000. No interest is accrued on the loan which is repayable on demand. The loan outstanding at the end of the period is 725,000 and is disclosed within other debtors. 16 Post balance sheet events On 7 May 2015, PizzaExpress International Holdings Limited (a wholly owned subsidiary of PizzaExpress Group Holdings Limited) completed the acquisition of 49% of the issued share capital of Jordana Restaurants LLC, equating to a beneficial interest of 100%, for a purchase price of 4.5m. Jordan Restaurants LLC operates seven restaurants in the United Arab Emirates, which were previously operated under a franchise agreement with PizzaExpress (Franchises) Limited. On 12 May 2015, PizzaExpress Group Limited entered into a sale and purchase agreement with The Greater China Restaurant Company Limited to acquire all of the issued share capital of PizzaExpress (Hong Kong) Limited, a company incorporated in Hong Kong, and its subsidiaries, for a purchase price of HK$745 million. The acquisition is expected to complete in June The acquired companies operate 27 restaurants in China which were previously operated under a franchise agreement with PizzaExpress (Franchises) Limited. There have been no other events since the balance sheet date requiring alteration or disclosure within the Interim Financial Information. 17 Statement of Directors responsibility The directors confirm that, to the best of their knowledge, the Interim Financial Information relating to the Group for the 33 week period ended 5 April 2015 has been prepared in accordance with pronouncements by the Accounting Standards Board ( ASB ). F-15

268 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Independent auditors report to the members of Balcombe Street Holdings Limited (formerly PizzaExpress Holdings Limited) Report on the financial statements Our opinion In our opinion the financial statements, defined below: give a true and fair view of the state of the group s and of the company s affairs as at 29 June 2014 and of the group s profit and cash flows for the period then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act This opinion is to be read in the context of what we say in the remainder of this report. What we have audited The group financial statements and company financial statements (the financial statements ), which are prepared by PizzaExpress Holdings Limited, comprise: the consolidated and company balance sheets as at 29 June 2014; the consolidated profit and loss account and consolidated statement of total recognised gains and losses for the period then ended; the consolidated cash flow statement for the period then ended; the consolidated reconciliation of movement in shareholders deficit and the company reconciliation of movement in shareholders (deficit)/funds for the period then ended; and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ( ISAs (UK & Ireland) ). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group s and the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. F-16

269 In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors Report for the financial period for which the financial statements are prepared is consistent with the financial statements. Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion: we have not received all the information and explanations we require for our audit; or adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or the company financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Directors remuneration Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors remuneration specified by law are not made. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the directors As explained more fully in the Directors Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. /s/ ROSEMARY SHAPLAND Rosemary Shapland (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Gatwick 18 November 2014 F-17

270 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Consolidated profit and loss account for the period ended 29 June 2014 Note 52 weeks ended 29 June weeks ended 30 June Turnover discontinued operations , ,467 Less: Share of joint venture turnover... (190) (92) Total Group Turnover discontinued operations , ,375 Cost of sales discontinued operations... (296,353) (283,707) Gross profit... 93,952 85,668 Administrative expenses (excluding exceptional costs) discontinued operations... (22,925) (22,568) Operating exceptional costs discontinued operations... 5 (1,863) (716) Total administrative expenses... (24,788) (23,284) Operating profit discontinued operations ,164 62,384 Share of joint venture operating loss (1,793) (380) Operating profit including share of joint venture loss... 67,371 62,004 Loss on disposal of fixed assets... (204) (484) Profit on ordinary activities before interest and taxation... 67,167 61,520 Net interest payable and similar charges... 7 (17,993) (20,092) Profit on ordinary activities before taxation... 49,174 41,428 Tax on profit on ordinary activities... 8 (7,634) (15,090) Profit for the financial period ,540 26,338 There is no material difference between the profit on ordinary activities before taxation and the profit for the financial period stated above and their historical cost equivalents. As permitted by Section 408 of the Companies Act 2006, a profit and loss account for Balcombe Street Holdings Limited has not been presented in these financial statements. For the 52 weeks ended 29 June 2014 the Company made a loss of 5,408,074 (the 52 week period ended 30 June 2013: loss of 5,132,166). F-18

271 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Consolidated statement of total recognised gains and losses for the period ended 29 June weeks ended 29 June weeks ended 30 June Profit for the financial period... 41,540 26,338 Exchange gains offset in reserves Total recognised gains since last financial period... 42,466 26,771 F-19

272 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Consolidated balance sheet as at 29 June 2014 Note 29 June June Fixed assets Intangible assets ,449 3,594 Tangible assets , ,176 Investments , , ,574 Current assets Stocks ,450 9,806 Debtors , ,701 Cash at bank and in hand... 41,835 53, , ,750 Creditors: amounts falling due within one year (683,285) (689,657) Net current liabilities... (480,482) (512,907) Total assets less current liabilities... (284,064) (325,333) Provisions for liabilities and charges (14,872) (16,069) Net liabilities... (298,936) (341,402) Capital and reserves Called up share capital Share premium account ,762 12,762 Other reserves (11,425) (11,425) Profit and loss account (300,273) (342,739) Total shareholders deficit... (298,936) (341,402) The financial statements on pages 9 to 33 were approved by the Board of Directors on 18 November 2014 and signed on their behalf by /s/ N. CARTER /s/ H. SMYTH N. Carter H. Smyth Director Director Company registration number: F-20

273 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Company balance sheet as at 29 June 2014 Note 29 June June Fixed assets Investments , ,017 Current assets Debtors ,349 97,396 Cash at bank and in hand ,401 97,396 Creditors: amounts falling due within one period (291,198) (272,785) Net current liabilities... (180,797) (175,389) Total assets less current liabilities... (3,780) 1,628 Net (liabilities)/assets... (3,780) 1,628 Capital and reserves Called up share capital Share premium account ,762 12,762 Profit and loss account (16,542) (11,134) Total shareholders (deficit )/funds... (3,780) 1,628 The financial statements on pages 9 to 33 were approved by the Board of Directors on 18 November 2014 and signed on their behalf by /s/ N CARTER N Carter Director Company registration number: F-21

274 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Consolidated cash flow statement for the period ended 29 June 2014 Note 52 weeks ended 29 June weeks ended 30 June Net cash inflow from operating activities ,516 77,897 Returns on investments and servicing of finance Interest received Interest paid... (4) Net cash inflow from returns on investments and servicing of finance Taxation received/(paid) (827) Capital expenditure and financial investment Investment in joint venture (1,615) (150) Purchase of intangible fixed assets... 9 (55) (30) Purchase of tangible fixed assets... (27,251) (15,969) Sale of tangible fixed assets Intercompany funding to Gondola Companies... (65,788) (42,083) Net cash outflow from capital expenditure and financial investment... (94,709) (57,495) Net cash (outflow)/inflow before use of liquid resources and financing... (11,408) 19,717 Financing Finance lease capital repaid... (101) Net cash outflow from financing... (101) (Decrease )/increase in cash (b), (c) (11,408) 19,616 F-22

275 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Consolidated reconciliation of movements in shareholders deficit for the period ended 29 June June June Profit for the financial period... 41,540 26,338 Foreign exchange gains Net increase in shareholders deficit... 42,466 26,771 Opening shareholders deficit... (341,402) (368,173) Closing shareholders deficit... (298,936) (341,402) F-23

276 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Company reconciliation of movements in shareholders (deficit)/funds for the period ended 29 June June June Loss for the financial period... (5,408) (5,132) Opening shareholders funds... 1,628 6,760 Closing shareholders (deficit)/funds... (3,780) 1,628 F-24

277 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Notes to the financial statements 1 Basis of preparation The consolidated financial information presented is in respect of Balcombe Street Holdings Limited, together with its subsidiaries described in note 23 for the 52 weeks ended 29 June The comparative Company and Group financial information presented is for the 52 week period ended 30 June The financial information has been prepared under the historical cost convention and in accordance with applicable accounting standards in the United Kingdom and with the Companies Act The most significant accounting policies, which have been applied consistently throughout the period, are described below. 2 Accounting policies Going concern The directors have prepared the financial statements on a going concern basis. Whilst the Group has net current liabilities of 480,482,064 and total net liabilities of 298,936,255 at 29 June 2014 a significant event has occurred post year end, as described in note 24, which significantly changed this position and enables the Group to be able to meet its liabilities when they fall due in the foreseeable future. Basis of Consolidation The consolidated balance sheet includes all the assets and liabilities of all subsidiaries including those acquired during the period. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. All transactions and balances between the Company s businesses have been eliminated in the preparation of the consolidated financial information. All subsidiaries have coterminous period ends and follow uniform accounting policies. Entities in which the Group holds an interest on a long-term basis and which are jointly controlled by the Group and one or more other ventures under a contractual arrangement are treated as joint ventures. In the Group financial statements, joint ventures are accounted for using the gross equity method. Turnover Turnover represents net invoiced sales of food and beverages, royalties from retail sales and franchise fees, all excluding value added tax. Turnover of restaurant services is recognised when the goods have been provided. Royalties from retail sales are recognised in turnover on product delivery or when due under the terms of the relevant retail sales agreements. Franchise fees arising outside the United Kingdom are recognised when they fall due under the terms of the relevant franchise agreements. Allocation of costs Cost of sales includes all direct costs incurred in restaurants. Administrative expenses include central and area management, administration and head office costs, together with goodwill amortisation. Rental Income Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. It is netted off against rental costs and is recognised within administrative expenses. Tangible assets Tangible assets are stated at historic purchase cost less accumulated depreciation. Cost includes the purchase price of the asset, together with incidental expenses incurred. Depreciation is provided at the following annual rates in F-25

278 order to write down to estimated residual values the cost of each asset over its estimated useful economic life on a straight-line basis: Plant... 20% per annum Fixtures & fittings... 10% per annum IT equipment... 20% per annum Short leasehold properties are depreciated over the length of the lease except where the anticipated renewal or extension of the lease is sufficiently certain so that a longer estimated useful life is appropriate. Current legislation and the terms of the lease contracts are such that the vast majority of leases are readily extendible by an additional 14 years. The maximum depreciation period for short term leasehold properties is 30 years. The cost of freehold and leasehold properties is depreciated over the lesser of 50 years or the outstanding term of the lease. Assets under construction comprise tangible fixed assets acquired for restaurants under construction, including costs directly attributable to bringing the asset into use. Assets are transferred to short leaseholds, plant and fixtures when the restaurant opens. No depreciation is provided on assets under construction, as these assets have not been brought into working condition for intended use. Sales of properties are recognised in the financial statements when unconditional contracts are exchanged. Impairment of fixed assets The carrying values of fixed assets are reviewed for impairment by the Directors at each balance sheet date and in periods where events or changes in circumstances indicate that the carrying value may not be recoverable. Any impairment in the value of assets below depreciated historical cost is charged to the profit and loss account within operating profit. A reversal of an impairment loss is recognised in the profit and loss account up to the extent that the original loss was recognised. Onerous lease provisions Onerous lease provisions are recognised when the Group has an empty property, a sublet property for which the Group s lease obligation cannot be met in full, or where a restaurant is loss-making for an extended period of time. An estimate is made of the period of time and the extent to which the lease obligations cannot be fulfilled and a provision made accordingly. Pre-opening costs Pre-opening costs, which comprise site operating costs, are expensed as incurred. Exceptional costs The Group presents a total net figure, on the face of the profit and loss account, for exceptional items. Exceptional items are material items of profit and expense that, because of the unusual nature and expected infrequency of the events giving rise to them, merit separate presentation to allow an understanding of the Group s financial performance. Stocks Raw materials and consumables are valued at the lower of cost and net realisable value. Cost is based on the purchase cost on a first-in, first-out basis. Deferred taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date which are due to transactions or events which have occurred at that date and which will result in an obligation to pay more, or a right to pay less, tax in the future. F-26

279 Resultant deferred tax assets are recognised only to the extent that it is considered more likely than not that there will be suitable taxable profits from which the deferred tax assets resulting from the underlying timing differences can be recovered. Deferred tax is measured on an undiscounted basis at the average tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Goodwill Goodwill represents the difference between the fair value of the purchase consideration and the fair value of the separable net assets acquired. Goodwill on the acquisition of a business is capitalised and amortised over its useful economic life. The useful economic life is a maximum of 20 periods. Goodwill is subject to an impairment review at the end of the first full period following an acquisition and at any other time when the directors believe that impairment may have occurred. Changes in provision for impairment are taken to the profit and loss account. Foreign currency transactions Transactions denominated in foreign currencies are recorded at the spot rate applicable at the date of the transaction. Monetary assets and liabilities expressed in foreign currencies held at the balance sheet date are translated at the closing rate. The resulting exchange gain or loss is dealt with in the profit and loss account. The results of foreign subsidiaries are translated at the average rate. The balance sheets of foreign subsidiaries are translated at the closing rate. The resulting exchange differences are dealt with through reserves and are reported in the consolidated statement of total recognised gains and losses. Operating leases Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the term of the lease. The benefit of lease incentives are taken to the profit and loss account on a straight line basis over the shorter of the lease term or the period until the first rent review. Contributions received from landlords as an incentive to enter into a lease are treated as deferred income within creditors. Pension costs Contributions to defined contribution personal pension schemes are charged to the profit and loss account in the period in which they become payable. Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand. Rebates receivable from suppliers Where a rebate agreement with a supplier covers more than one period the rebates are recognised in the financial statements in the period in which they are earned. Financial instruments Investments The Group does not hold or issue derivative financial instruments for trading purposes. Investments are held at cost less any provisions for impairment. Fixed asset investments In the Company s financial statements, investments in subsidiary undertakings and joint ventures are stated at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed by the directors when there has been an indication of potential impairment. F-27

280 3 Turnover Business sector analysis The Group has operated in one business sector in the period, being the sale of food and beverages. Geographical sector analysis Turnover by destination and by origin from countries other than the United Kingdom and Republic of Ireland in all financial periods was not sufficiently material in the financial year to warrant separate disclosure. 4 Operating profit Group operating profit is stated after charging/ (crediting): 52 weeks ended 29 June weeks ended 30 June Shown within cost of sales discontinued operations: Employee costs (note 6) , ,892 Depreciation of tangible assets (note 10): Plant, fixtures, IT equipment and motor vehicles... 7,777 7,656 IT equipment held under finance leases Short leasehold properties... 9,401 9,309 Impairment short leasehold properties (note 10)... 2,314 Operating lease rentals: Hire of plant and machinery Short leasehold properties... 34,944 33,759 Rental income... (1,206) (1,062) 52 weeks ended 29 June weeks ended 30 June Shown within administrative expenses : Employee costs (note 6)... 8,212 7,125 Amortisation of goodwill (note 9) Depreciation of tangible assets (note 10): Plant, fixtures, IT equipment and motor vehicles Short leasehold properties Impairment: short leasehold properties (note 10)... Operating lease rentals: Short leasehold properties Other Rental income... (732) (731) Auditors remuneration: Statutory audit fees and expenses Advisory services Taxation services Operating exceptional costs 52 weeks ended 29 June weeks ended 30 June Shown within operating exceptional costs: Exceptional costs Onerous lease Professional fees... 1,383 Restructuring costs Total operating exceptional costs... 1, During the period ended 29 June 2014, exceptional costs were incurred as follows: F-28

281 Professional fees of 1,382,966 were incurred for advice in relation to the sale of the Group s subsidiaries. Restructuring costs of 479,718 relate to staff restructuring costs and brand closure costs. During the period ended 30 June 2013, exceptional costs were incurred as follows: An entity which had previously been an affiliate of the Group prior to its acquisition by the Cinven Funds (see note 22), operated the Pizza Marzano business in Spain and became insolvent in March The Group had previously provided guarantees on certain properties in Spain and has potential liability for rental costs and/or early lease termination fees. The Group has provided against the costs of these onerous leases during the financial period. Restructuring costs of 115,981 relate to staff restructuring costs and brand closure costs for Soho Pizzeria. 6 Employees and Directors 52 weeks ended 29 June weeks ended 30 June a) Employee costs: Wages and salaries , ,278 Social security costs... 7,527 7,423 Other pension costs , ,017 Disclosed within: Cost of sales , ,892 Administrative expenses... 8,212 7, , ,017 Number Number b) Employee numbers (including directors) The monthly average number of persons employed by the Group during the period was: Restaurants and distribution... 9,571 9,139 Administration ,728 9,325 The Company has no employees (2013: nil). Total directors remuneration in the period was as follows: 52 weeks ended 29 June weeks ended 30 June Aggregate emoluments... 1, Pension contributions of 16,035 (2013: 9,000) were paid into individual personal pension plans in relation to two (2013: one) director. Emoluments in respect of the highest paid director were as follows: 52 weeks ended 29 June weeks ended 30 June Aggregate emoluments Pension contributions N Carter and H Smyth are directors of Gondola Holdings Limited, the intermediate parent company, and are remunerated by that company in respect of their role as directors of the Gondola group of companies. It is not possible to make an accurate apportionment of their emoluments in respect of each of the companies. The Company does not operate a defined benefit pension scheme. No directors had any interests in any options for shares in the Company. F-29

282 7 Net interest payable and similar charges BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Notes to the financial statements Note 52 weeks ended 29 June weeks ended 30 June Interest payable on bank loans and overdrafts Bank interest... (4) Other interest payable... (20,913) (23,738) (20,917) (23,738) Interest receivable and similar charges Bank interest Other interest receivable... 2,698 3,504 2,924 3,646 Net interest payable and similar charges... (17,993) (20,092) 8 Tax on profit on ordinary activities 52 weeks ended 29 June weeks ended 30 June Current tax United Kingdom corporation taxation... 11,951 15,433 Overseas corporation taxation (Over)/under provision in respect of prior periods... (3,746) 275 Total current tax charge... 8,382 15,815 Deferred tax Origination and reversal of timing differences (275) Effect of change in rate of taxation... (1,258) (616) Under provision in respect of prior periods Foreign exchange... 5 Total deferred tax credit (Note 15)... (748) (725) Tax charge on ordinary activities... 7,634 15,090 The tax charge for the period is different to (2013: is different to) the standard rate of corporation tax in the UK of 22.50% (2013: 23.75%). The differences are explained below: 52 weeks ended 29 June weeks ended 30 June Profit on ordinary activities before tax... 49,174 41,428 Profit on ordinary activities multiplied by standard rate of Corporation tax in the UK of 22.5% (2013: 23.75%)... 11,064 9,839 Effects of: Expenses not deductible for tax purposes ,641 Effect of overseas tax at lower rate... (697) (443) Accelerated capital allowances and impairment... (497) 275 Unused tax losses carried forward... 1, (Over)/under provision in respect of prior periods... (3,746) 275 Total current tax... 8,382 15,815 Factors that may affect future tax charges The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April Accordingly, the Group s profits for this accounting period are taxed at an effective rate of 22.5%. Based on current capital investment plans, the Group expects to continue to be able to claim capital allowances in excess of depreciation in future periods. F-30

283 9 Intangible assets Group Trademarks Goodwill Total Cost At 1 July ,048 4,140 Additions At 29 June ,048 4,195 Accumulated Amortisation At 1 July Charge for the period At 29 June Net book value At 29 June ,302 3,449 At 30 June ,502 3,594 Goodwill arising on the acquisition of PizzaExpress (Franchises) Limited is being amortised over a period of 20 years on the basis of the strength of the brand and the long-term international growth opportunities. Additional trademarks for the international use of the PizzaExpress and Pizza Marzano names were acquired during the period. Company The Company has no intangible assets. F-31

284 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Notes to the financial statements 10 Tangible assets Group Assets under construction Freehold properties Short leasehold properties Plant, fixtures and fittings, equipment Cost At 1 July , , , ,404 Foreign exchange movement... (18) (593) (191) (802) Additions... 19, ,232 26,989 Transfers... (14,838) 9,608 5,230 Disposals... (1,314) (533) (1,847) At 29 June , , , ,744 Accumulated depreciation At 1 July ,881 71, ,228 Foreign exchange movement... (398) (151) (549) Charge for the period... 9,489 8,402 17,891 Disposals... (1,228) (415) (1,643) At 29 June ,744 79, ,927 Net book value At 29 June , ,045 37, ,817 At 30 June , ,213 34, ,176 Included above are assets held under finance leases with a net book value of 434 (2013: 176,987). Depreciation of 176,553 was charged in respect of these assets (2013: 208,137). The Company considers each trading outlet to be an income generating unit (IGU) and each IGU is reviewed annually for indicators of impairment. In assessing whether an asset has been impaired, the carrying value of the IGU is compared to its recoverable amount. The recoverable amount is the higher of its fair value and its value in use. The Company estimates value in use using a discounted cash flow model. Future cash flows are based on assumptions from the business plans and cover a three period. Cash flows beyond the budget period are extrapolated using a 2.5% growth rate (2013: 2.5%). This rate does not exceed long term growth rates for the relevant markets. 11 Investments The discount rate used for 2014 is 9.5% (2013: 9.5%). Group 1 July 2013 Additional Investment Impairment Total Share of loss including foreign exchange 29 June Investment in joint venture ,615 (1,229) (38) 1,152 Share of gross assets... 1,683 Share of gross liabilities... (531) Share of Net Assets... 1,152 The Group established a joint venture agreement with Gourmet Investments Private Limited to operate the PizzaExpress brand in India. PizzaExpress Asia Holdings Pte. Ltd., incorporated in Singapore, holds a 50% interest in Atrium Restaurants India Private Limited ( Atrium ), an unlisted company incorporated in India. The registered office is in New Delhi, India. The Company injected additional investment into Atrium of 1,615,095 during the financial year. The investment in Atrium has been impaired by 1,229k (2013: nil) as the joint venture is currently a loss-making business. The Group s share of the 50% loss for the year including impairment was 1,793k (2013: 380k). F-32

285 Company 29 June June Cost and net book value , , Stocks The directors believe the carrying value of the investment is supported by the underlying assets. A list of the principal subsidiary companies is provided in note 23. Group 29 June June Raw materials and consumables... 10,450 9, Debtors There is no material difference between the replacement cost and book value of stock. The Company holds no stock. Group Company 29 June June June June Trade debtors... 6,085 1,211 Amounts owed by Gondola Group undertakings ,746 94, ,087 97,246 Corporation tax ,570 Other debtors... 3,373 5, Prepayments and accrued income... 11,032 10, , , ,349 97,396 All of the debtors stated above are due within one period. Amounts owed by group companies accrue interest at 4 per cent per annum on balances at period end over 10 million and are repayable on demand. 14 Creditors: amounts falling due within one year Group Company 29 June June June June Trade creditors... 16,392 9,024 Amounts owed to Gondola Group undertakings , , , ,785 Taxation and social security... 11,881 10,288 Other creditors... 7,355 11,138 Accruals and deferred income... 28,288 21, , , , ,785 Amounts owed to group companies accrue interest at 4 per cent per annum on balances at period end over 10 million and are repayable on demand. F-33

286 15 Provisions for liabilities and charges BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Notes to the financial statements Deferred taxation Onerous leases Total At 1 July ,555 1,514 16,069 Utilised in period... (449) (449) Credit to profit and loss account... (748) (748) At 29 June ,807 1,065 14,872 Onerous leases The brought forward onerous lease provision represents operating leases on properties no longer in use, until the end of their leases or until the Directors estimate the properties can be sublet. It has been discounted at Gondola Group Limited, the ultimate parent company s weighted average cost of capital of 9.5% (2013: 9.5%). Deferred taxation As at 29 June 2014, the Group has unrecognised deferred tax assets of nil (2013: nil) arising from brought forward tax losses. The deferred tax liability of 13,807,219 (2013: 14,555,000) relates to accelerated capital allowances. A number of changes continue to the UK Corporation Tax system. The main rate of corporation tax, currently at 21% as at 29 June 2014, will reduce to 20% from 1 April The Company has no provisions for liabilities and charges. 16 Called up share capital Group and Company 29 June June 2013 Allotted, issued and fully paid Equity 100 (2013: 100) ordinary A shares of 1 each Reserves Group Share premium Other Reserve Profit and loss Total At 1 July ,762 (11,425) (342,739) (341,402) Profit for the financial period... 41,540 41,540 Foreign exchange gains At 29 June ,762 (11,425) (300,273) (298,936) Following the application of merger accounting, the other reserve is the difference between the value of the share capital and share premium account in Gondola Investments Limited of 1,337,000 and the value of the investment of 12,762,000 that the Company received from Gondola Holdings Limited for consideration of 25,623,499 Ordinary shares in the Company. Company Share premium Profit and loss Total At 1 July ,762 (11,134) 1,628 Loss for the financial period... (5,408) (5,408) At 29 June ,762 (16,542) (3,780) F-34

287 18 Notes to cash flow statement a) Reconciliation of operating profit to operating cash flows Discontinued operations 52 weeks ended 29 June weeks ended 30 June Operating profit... 69,164 62,384 Depreciation and impairment of tangible fixed asset... 17,891 20,099 Amortisation of goodwill Increase in stock... (644) (292) (Increase)/decrease in debtors... (38,105) 1,028 Increase /(decrease) in creditors... 34,010 (5,522) Total net cash inflow from discontinued operating activities... 82,516 77,897 b) Reconciliation of net cash flow to movement in net cash 52 weeks ended 29 June weeks ended 30 June (Decrease)/increase in cash... (11,408) 19,616 Cash inflow from movement in finance lease creditor Change in net cash resulting from cash flows... (11,408) 19,717 Net cash at beginning of period... 53,243 33,526 Net cash at end of period... 41,835 53,243 c) Analysis of changes in net cash At 1 July 2013 Cash flow Non-cash changes At 29 June Cash at bank and in hand... 53,243 (11,408) 41,835 Total net cash... 53,243 (11,408) 41, Operating lease commitments The Group has annual commitments under non-cancellable operating leases which expire as follows: 29 June June Land and buildings Within one year... 1,565 1,030 In the second to fifth years inclusive... 3,451 3,555 Over five years... 31,837 30,295 36,853 34,880 Other Within one year In the second to fifth years inclusive The financial commitments for operating lease amounts payable as a percentage of turnover have been based on the minimum payment that is required under the terms of the relevant lease. As a result, the amounts charged to the profit and loss account may be different to the financial commitment at the period-end. F-35

288 BALCOMBE STREET HOLDINGS LIMITED (formerly PizzaExpress Holdings Limited) Notes to the financial statements 20 Contingent liabilities On 22 December 2006, certain of the Company s subsidiaries, fellow subsidiaries and parent companies (together the Senior and Mezzanine Guarantors ) became guarantors to a Senior Credit Facilities Agreement and a Mezzanine Facility Agreement (together the Agreements ) between Gondola Acquisitions Limited, Gondola Finance 2 Limited and Bank of Scotland plc. The amounts outstanding at the balance sheet dates for these loans were million (2013: 465.3million) under the Senior Facilities and nil million (2013: 80.2 million) under the Mezzanine facility, including accrued interest. Each Senior and Mezzanine Guarantor irrevocably and unconditionally jointly and severally: Guarantees to each finance party the punctual performance of each borrower, guarantor and charger (each an obligor) of all such obligor s obligations under the Agreements; Undertakes with each finance party that whenever an obligor does not pay any amount when due under or in connection with any Senior Finance Document, that the guarantor shall immediately on demand pay that amount as if it was the principal obligor; and Indemnifies each finance party immediately on demand against any cost, loss or liability suffered by that finance party as a result of the guarantee being unenforceable, invalid or illegal. The same companies have also provided security for all indebtedness, liabilities and obligations of any member of the Company under the Agreements. The security comprises floating charges over all assets and undertakings of the Senior and Mezzanine Guarantors. During the period, the Mezzanine Facility was repaid in full using proceeds from the disposal of a fellow Gondola subsidiary, Byron Hamburgers Limited. The Senior Facility was also repaid in full following the period-end balance sheet date (see note 24), therefore these contingent liabilities have subsequently ceased. 21 Related party transactions No separate disclosure of transactions and balances between companies in the Balcombe Street Holdings Limited Group (formerly PizzaExpress Holdings Group) that have been eliminated in the preparation of these financial reports is required, as is permitted by FRS 8 Related Party transactions. All other transactions and balances with related parties of the Group are detailed below. Transactions with joint venture investment entities During the period, the Group invested an additional 1,615,095 (2013: 150,000) into Atrium Restaurants India Private Limited, a 50% joint venture with Gourmet Investments Private Limited. The Group s 50% interest is held by PizzaExpress Asia Holdings Pte. Ltd. During the year, Group companies invoiced 60,000 (2013: 160,000) to the joint venture, of which 220,000 was outstanding at year end (2013: 160,000). Transactions with Gondola Group entities During the period, intercompany transactions occurred within the Group with fellow Gondola groupcompanies. The company is exempt under the terms of paragraph 3(c) of Financial Reporting Standard 8, Related Party Disclosure, from disclosing related party transactions with entities that are part of the Gondola group. Transactions with directors During the financial period the Company made a loan of 75,000 (2013: 150,000) to R Hodgson. The loan is disclosed within other debtors (note 13). Interest was accrued on the loan at the official rate set each year by HMRC F-36

289 (currently 4%) and is repayable on demand. During the period interest of 2,293 (2013: 1,003) was accrued and the loan amount outstanding at the end of the period was 225,000 (2013: 150,000). Following the sale of Gondola Investments and its subsidiaries (see note 24) the total balance outstanding on the loan of 227,569, including accrued interest, was assigned and transferred to PizzaExpress Restaurants Limited. 22 Ultimate parent undertakings The immediate parent company of Balcombe Street Holdings Limited is Gondola Holdings Limited. Gondola Holdings Limited is an indirect subsidiary of Gondola Group Limited, a limited company under the laws of England and Wales and the largest and smallest group for which consolidated financial statements are prepared. The financial statements of Gondola Group Limited are available from the Company Secretary, 4th Floor, 2 Balcombe Street, London, NW1 6NW. The Company s ultimate parent undertakings are Fourth Cinven Fund (No.1) LP, Fourth Cinven Fund (No.2) LP, Fourth Cinven Fund (No.3 VCOC) LP, Fourth Cinven Fund (No.4) LP, Fourth Cinven Fund (UBTI) LP, Fourth Cinven Fund Co-Investment Partnership, Fourth Cinven (MACIF) Partnership and Fourth Cinven Fund FCPR (together the Cinven Funds ), being funds managed by Cinven Limited, a company incorporated under the laws of England and Wales. Accordingly, the directors consider the Company s ultimate controlling party to be Cinven Limited, the manager of the Cinven Funds. Cinven is a leading European private equity firm that acquires companies that require an equity investment of 100 million or more. Cinven was founded in 1977 and has been responsible for many buyout industry firsts, including the first 1 billion plus buyouts in France, the Netherlands, Spain and the UK. Cinven focuses on six sectors across Europe: business services, consumer, financial services, healthcare, industrials, and TMT (technology, media and telecoms) and has offices in Guernsey, London, Paris, Frankfurt, Milan, Luxembourg and Hong Kong. Cinven acquires successful, high-quality companies, working closely with them to help them grow and develop, using its proven value creation strategies. Typically, Cinven holds its investments for between four and six periods and it takes a responsible approach towards its portfolio companies, their employees, suppliers and local communities, the environment and society. 23 Principal subsidiary undertakings The principal subsidiary undertakings of Balcombe Street Holdings Limited for the period ended 29 June 2014 were as follows: F-37 Country of incorporation Proportion of ordinary voting shares held and interest in allotted capital Holding Principal activity PizzaExpress Limited... Ordinary** Holding Company UK 100% PizzaExpress (Restaurants) Limited... Ordinary** Restaurants UK 100% Bookcash Trading Limited... Ordinary** Restaurants UK 100% PizzaExpress (Wholesale) Limited... Ordinary** Distribution UK 100% Agenbite Limited... Ordinary** Restaurants Ireland 100% PizzaExpress Merchandising Limited... Ordinary** Branded Sales UK 100% PizzaExpress (Jersey) Limited... Ordinary** Restaurants Jersey 100% Al Rollo Limited... Ordinary** Restaurants UK 100% PizzaExpress Operations Limited(formerly Gondola Investments Limited)... *Ordinary** Holding Company UK 100% PandoraExpress 7 Limited(formerly Gondola Finance Limited)... Ordinary** Holding Company UK 100% PandoraExpress 2 Limited... Ordinary** Holding Company UK 100% Riposte Limited... Ordinary** Holding Company UK 100%

290 Balcombe Street Asia Holdings Pte. Ltd. (formerly PizzaExpress Asia Holdings Pte. Ltd.)... *Ordinary Holding Company Singapore 100% PandoraExpress 3 Limited... Ordinary** Holding Company UK 100% PandoraExpress 4 Limited... Ordinary** Holding Company UK 100% PandoraExpress 5 Limited (formerly GondolaExpress Limited)... Ordinary** Holding Company UK 100% PizzaExpress (Franchises) Limited... *Ordinary** International Franchised Restaurants UK 100% PizzaExpress Beijing Limited... Ordinary** Restaurants Peoples Republic of China 100% PizzaExpress Greater China Limited... *Ordinary** Holding company Hong Kong 100% * Directly owned ** Sold post year end 24 Events occurring after the Balance Sheet Date On 12 July 2014, Balcombe Street Holdings Limited entered into an agreement with TwinkleExpress Financing 2 PLC (formerly Twinkle Pizza Plc), on behalf of private equity funds managed/advised by Hony Capital, relating to the sale of Gondola Investments Limited and its subsidiaries, PizzaExpress (Franchises) Limited and PizzaExpress Greater China Limited, which represent the majority of the PizzaExpress business. The Company received proceeds of million for the sale which completed on 18 August m Cash consideration Less: Net liabilities disposed Less: Goodwill disposed... (299.6) Less: Intercompany loan settlement... (304.1) Less: Transaction costs... (5.2) Profit on disposal Following receipt of the above proceeds, there was a mandatory prepayment and cancellation of the outstanding senior debt facilities. On 18 August 2014 the Gondola group repaid all outstanding bank debt of million plus accrued interest and fees. F-38

291 The Directors PizzaExpress Holdings Limited Hunton House Highbridge Industrial Estate Oxford Road Uxbridge UB8 1LX 21 July 2014 Dear Sirs Independent assurance report to the directors of PizzaExpress Holdings Limited (the Company ) on the Company s combined and consolidated financial information covering the 52 weeks ended 30 June 2013, 53 weeks ended 1 July 2012 and 52 weeks ended 30 June 2011 We report on the combined and consolidated financial information of the Company covering the 52 weeks ended 30 June 2013, 53 weeks ended 1 July 2012 and 52 weeks ended 30 June 2011 prepared on the basis of the accounting policies set out in note 1 (the Combined and Consolidated Financial Information ). The Combined and Consolidated Financial Information has been prepared for inclusion in the listing particulars ( Listing Particulars ) that will list the senior secured notes of Twinkle Pizza plc and the senior notes of Twinkle Pizza Holdings plc (together the Notes ) on the Official List of the Irish Stock Exchange. An application will be made to list the Notes on the Official List of the Irish Stock Exchange. This report is prepared for the directors of the Company in order that they may satisfy item 2A.11.1 and Appendix 1.3 of the Listing Rules published by the Irish Stock Exchange and for no other purpose. Responsibilities The Directors of the Company are responsible for preparing the Combined and Consolidated Financial Information in accordance with accounting principles generally accepted in the United Kingdom and on the basis of the accounting policies set out in note 1. It is our responsibility to form an opinion as to whether the Combined and Consolidated Financial Information gives a true and fair view, for the purposes of the Listing Particulars to list the Notes on the Official List of the Irish Stock Exchange and to report our opinion to the directors of the Company. Save for our responsibility to the directors and the Company in respect of that purpose, to the fullest extent permitted by law we do not accept or assume any responsibility or liability for any other purpose or to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with our work or this report. Basis of opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the Combined and Consolidated Financial Information. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the Combined and Consolidated Financial Information and whether the accounting policies are appropriate to the Company s circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Combined and Consolidated Financial Information is free from material misstatement whether caused by fraud or other irregularity or error. F-39