EXHIBIT 4.6
CONFORMED COPY
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CREDIT AGREEMENT
dated as of April 30, 1998,
among
CDRJ ACQUISITION CORPORATION,
JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.,
CDRJ INVESTMENTS (LUX) S.A.,
as Guarantor and Parent of the Borrowers,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
_______________________
CREDIT SUISSE FIRST BOSTON
and
CHASE SECURITIES INC.,
as Arrangers
CHASE SECURITIES INC.,
as Syndication Agent
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms.............................................. 2
SECTION 1.02. Terms Generally............................................ 23
SECTION 1.03. Exchange Rates............................................. 23
ARTICLE II
The Credits
SECTION 2.01. Commitments................................................ 23
SECTION 2.02. Loans...................................................... 24
SECTION 2.03. Borrowing Procedure........................................ 26
SECTION 2.04. Evidence of Debt; Repayment of Loans....................... 27
SECTION 2.05. Fees....................................................... 27
SECTION 2.06. Interest on Loans.......................................... 28
SECTION 2.07. Default Interest........................................... 29
SECTION 2.08. Alternate Rate of Interest................................. 29
SECTION 2.09. Termination and Reduction of Commitments................... 30
SECTION 2.10. Conversion and Continuation of Borrowings.................. 30
SECTION 2.11. Repayment of Term Borrowings............................... 32
SECTION 2.12. Prepayment................................................. 33
SECTION 2.13. Mandatory Prepayments...................................... 34
SECTION 2.14. Requirements of Law........................................ 36
SECTION 2.15. Change in Legality......................................... 38
SECTION 2.16. Indemnity.................................................. 39
SECTION 2.17. Pro Rata Treatment......................................... 40
SECTION 2.18. Sharing of Setoffs......................................... 40
SECTION 2.19. Payments................................................... 41
SECTION 2.20. Taxes...................................................... 41
SECTION 2.21. Certain Rules Relating to the Payment of Additional
Amounts................................................... 43
SECTION 2.22. Letters of Credit.......................................... 45
SECTION 2.23. Swingline Loans............................................ 49
SECTION 2.24. Consistent Tax Treatment................................... 51
ARTICLE III
Representations and Warranties
SECTION 3.01. Financial Condition........................................ 51
SECTION 3.02. Change..................................................... 52
SECTION 3.03. Corporate Existence; Compliance with Law................... 52
SECTION 3.04. Corporate Power; Authorization; Enforceable
i
Obligations........................................... 52
SECTION 3.05. No Legal Bar............................................... 53
SECTION 3.06. No Material Litigation..................................... 53
SECTION 3.07. No Default................................................. 54
SECTION 3.08. Intellectual Property...................................... 54
SECTION 3.09. No Burdensome Restrictions; Compliance with Laws........... 54
SECTION 3.10. Taxes...................................................... 54
SECTION 3.11. Federal Regulations........................................ 54
SECTION 3.12. Employee Benefit Plans..................................... 55
SECTION 3.13. Investment Company Act; Other Regulations.................. 55
SECTION 3.14. Subsidiaries............................................... 55
SECTION 3.15. Environmental Matters...................................... 55
SECTION 3.16. Accuracy and Completeness of Information................... 56
SECTION 3.17. Solvency................................................... 57
SECTION 3.18. Senior Indebtedness........................................ 57
SECTION 3.19. Title to Properties; Possession Under Leases............... 57
SECTION 3.20. Security Documents......................................... 57
SECTION 3.21. Location of Real Property and Leased Premises.............. 58
SECTION 3.22. Labor Matters.............................................. 58
SECTION 3.23. Year 2000.................................................. 59
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events.......................................... 59
SECTION 4.02. First Credit Event......................................... 59
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements....................................... 63
SECTION 5.02. Certificates; Other Information............................ 63
SECTION 5.03. Payment of Obligations..................................... 64
SECTION 5.04. Conduct of Business and Maintenance of Existence........... 64
SECTION 5.05. Maintenance of Property.................................... 64
SECTION 5.06. Insurance.................................................. 65
SECTION 5.07. Inspection of Property; Books and Records; Discussions..... 65
SECTION 5.08. Notices.................................................... 65
SECTION 5.09. Environmental Laws......................................... 67
SECTION 5.10. Use of Proceeds............................................ 67
SECTION 5.11. Additional Collateral; Further Assurances.................. 67
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness............................................... 69
SECTION 6.02. Liens...................................................... 71
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SECTION 6.03. Investments, Loans and Advances............................ 73
SECTION 6.04. Fundamental Changes........................................ 75
SECTION 6.05. Sale of Assets............................................. 76
SECTION 6.06. Restricted Payments........................................ 77
SECTION 6.07. Transactions with Affiliates............................... 78
SECTION 6.08. Business of Parent, Borrowers and Subsidiaries............. 79
SECTION 6.09. Negative Pledge Clauses.................................... 80
SECTION 6.10. Optional Payments and Modifications of Debt
Instruments and other Material Agreements.................. 80
SECTION 6.11. Capital Expenditures....................................... 81
SECTION 6.12. Consolidated Leverage Ratio................................ 81
SECTION 6.13. Consolidated Interest Coverage Ratio....................... 82
SECTION 6.14. Fiscal Year................................................ 82
ARTICLE VII
Events of Default
SECTION 7.01. Certain Bankruptcy Events.................................. 82
SECTION 7.02. Other Events of Default.................................... 83
ARTICLE VIII
The Administrative Agent and the Collateral Agent
SECTION 8.01. Appointment................................................ 86
SECTION 8.02. Delegation of Duties....................................... 86
SECTION 8.03. Exculpatory Provisions..................................... 87
SECTION 8.04. Reliance by Agents......................................... 87
SECTION 8.05. Notice of Default.......................................... 87
SECTION 8.06. Acknowledgments and Representations by Lenders............. 88
SECTION 8.07. Expense Reimbursement; Indemnification..................... 88
SECTION 8.08. Agents in their Individual Capacities...................... 89
SECTION 8.09. Successor Agents........................................... 89
ARTICLE IX
Miscellaneous
SECTION 9.01. Amendments and Waivers..................................... 89
SECTION 9.02. Notices.................................................... 91
SECTION 9.03. No Waiver; Cumulative Remedies............................. 91
SECTION 9.04. Survival of Representations and Warranties................. 91
SECTION 9.05. Successors and Assigns..................................... 92
SECTION 9.06. Payment of Expenses and Taxes.............................. 95
SECTION 9.07. Set-off.................................................... 96
SECTION 9.08. Interest Rate Limitation................................... 96
SECTION 9.09. Counterparts............................................... 96
SECTION 9.10. Severability............................................... 96
SECTION 9.11. Integration................................................ 97
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SECTION 9.12. Headings................................................... 97
SECTION 9.13. Applicable Law............................................. 97
SECTION 9.14. Submission to Jurisdiction; Waivers........................ 97
SECTION 9.15. Acknowledgments............................................ 98
SECTION 9.16. Waivers of Jury Trial...................................... 98
SECTION 9.17. Confidentiality............................................ 98
SECTION 9.18. Judgment Currency.......................................... 99
SECTION 9.19. European Monetary Union.................................... 99
SECTION 9.20. Calculations; Computations................................. 100
SECTION 9.21. Covenant to Pay............................................ 100
SCHEDULES
Schedule 1.01(a) Inactive Subsidiaries
Schedule 1.01(b) Subsidiary Guarantors
Schedule 1.01(c) Mortgaged Properties
Schedule 2.01 Lenders; Commitments
Schedule 3.04(a) Consents, Authorizations, Notices and Filings
Schedule 3.06 Litigation
Schedule 3.08 Intellectual Property
Schedule 3.10 Tax Liens
Schedule 3.14 Subsidiaries
Schedule 3.20 UCC Filings
Schedule 3.21(a) Owned Real Property
Schedule 3.21(b) Leased Real Property
Schedule 4.02(a) Local Counsel
Schedule 4.02(i) Mortgage Filing Offices
Schedule 6.01(a) Indebtedness
Schedule 6.02(a) Liens
Schedule 6.03(a) Investments
Schedule 6.05(f) Specified Subsidiaries
Schedule 6.07(iii) Permitted Indemnification and Contribution
Schedule 6.07(iv) Affiliate Transactions
EXHIBITS
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E Form of JCI Guarantee Agreement
Exhibit F Form of JCI Subsidiary Guarantee Agreement
Exhibit G Form of JCISA Guarantee Agreement
Exhibit H Form of JCISA Subsidiary Guarantee Agreement
Exhibit I Form of Mortgage
Exhibit J Form of Parent Guarantee
Exhibit K Form of Pledge Agreement
Exhibit L Form of Security Agreement
Exhibit M-1 Form of Term Note
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Exhibit M-2 Form of Revolving Note
Exhibit N-1 Form of Opinion of Debevoise & ▇▇▇▇▇▇▇▇
Exhibit N-2 Form of Opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, S.C.
Exhibit N-3 Form of Opinion of Bonn & ▇▇▇▇▇▇▇
Exhibit N-4 Form of Opinion of ▇▇▇▇▇ Dutilh
Exhibit N-5 Form of Local Counsel Opinion
v
CREDIT AGREEMENT dated as of April 30, 1998, among CDRJ
ACQUISITION CORPORATION (to be renamed Jafra Cosmetics
International, Inc.), a Delaware corporation ("JCI"), JAFRA
COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico ("JCISA"
and, with JCI, the "Borrowers"), CDRJ INVESTMENTS (LUX) S.A., a
societe anonyme organized under the laws of Luxembourg
("Parent"), the Lenders (as defined in Article I), the Issuing
Bank (as defined in Article I) and CREDIT SUISSE FIRST BOSTON, a
bank organized under the laws of Switzerland, acting through its
New York branch, as administrative agent (in such capacity, the
"Administrative Agent") and collateral agent (in such capacity,
the "Collateral Agent") for the Lenders.
Pursuant to the Acquisition Agreement (such term and each other
capitalized term used but not immediately defined having the meaning given it in
Article I), Parent intends to acquire (directly and through one or more
subsidiaries) (the "Acquisition") the Jafra Business, including the acquisition
of the Jafra Stock, the Specified Jafra Intellectual Property and the Jafra
Assets and the assumption of the Jafra Liabilities (as each such term is defined
in the Acquisition Agreement), for aggregate cash consideration (the "Purchase
Price") of $200,000,000, subject to adjustment, all as provided in the
Acquisition Agreement.
Contemporaneously with the Acquisition, Jafra Cosmetics International,
Inc., a California corporation, is to merge with and into JCI, which is an
indirect, wholly-owned Subsidiary of Parent, with JCI to be the survivor of such
merger (the "Jafra Merger"). On or shortly after the Closing Date, Grupo Jafra,
S.A. de C.V., a Mexican sociedad anonima de capital variable, is to merge with
and into JCISA, which is an indirect, wholly-owned Subsidiary of Parent, with
JCISA to be the survivor of such merger (together with the Jafra Merger, the
"Merger"). In connection with the Merger, Parent intends to effect such
transactions as may be appropriate to consummate the Acquisition.
The Borrowers have requested the Lenders to extend credit in the form
of (a) Term Loans on the Closing Date, in an aggregate principal amount not in
excess of $25,000,000, and (b) Revolving Loans at any time and from time to time
prior to the Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $65,000,000 (or the Dollar Equivalent thereof in
Alternative Currencies). Parent and the Borrowers have requested the Swingline
Lender to extend credit, at any time and from time to time prior to the Maturity
Date, in the form of Swingline Loans in Dollars, in an aggregate principal
amount at any time outstanding not in excess of $10,000,000. Parent and the
Borrowers have requested the Issuing Bank to issue letters of credit, in an
aggregate face amount at any time outstanding not in excess of $15,000,000, to
support payment obligations incurred in the ordinary course of business by the
Borrowers and their respective Subsidiaries. The proceeds of the Term Loans are
to be used, together with the proceeds of the Subordinated Notes and the equity
contribution to be made on the Closing Date, solely to pay the Purchase Price
and related fees and expenses. The proceeds of the Revolving Loans and
Swingline Loans are to be used for general corporate purposes.
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The Lenders are willing to extend such credit to the Borrowers and the
Issuing Bank is willing to issue letters of credit for the account of the
Borrowers on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Acquisition Agreement" shall mean the Acquisition Agreement dated as
of January 26, 1998, between Parent and CDRJ Holding Company, a Cayman Islands
exempt company, and ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof and hereof.
"Active Subsidiaries" shall mean all Subsidiaries other than those
listed on Schedule 1.01(a).
"Adjusted LIBOR" shall mean, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBOR in
effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in Control of, is Controlled by or is under common
Control with, such Person.
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"Agents" shall have the meaning assigned to such term in Section 8.01.
"Aggregate Alternative Currency Revolving Credit Exposure" shall mean
the aggregate of the Lenders' Alternative Currency Revolving Credit Exposures.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective date of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively. The term
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City. The term "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Alternative Currency" shall mean (a) Sterling and Marks and (b) any
other freely available currency which is freely transferable and freely
convertible into Dollars and in which dealings in deposits are carried on in the
London interbank market, which shall be requested by either Borrower in respect
of an Alternative Currency Borrowing and approved by the Administrative Agent
and each Lender making an Alternative Currency Loan comprising a part of such
Borrowing.
"Alternative Currency Borrowing" shall mean a Borrowing comprised of
Alternative Currency Loans.
"Alternative Currency Equivalent" shall mean on any date of
determination, with respect to any amount denominated in Dollars in relation to
any specified Alternative Currency, the equivalent in such specified Alternative
Currency of such amount in Dollars, determined by the Administrative Agent
pursuant to Section 1.03 using the applicable Exchange Rate then in effect.
"Alternative Currency Loan" shall mean any Loan denominated in an
Alternative Currency.
"Alternative Currency Revolving Credit Exposure" shall mean, at any
time, the sum of (a) the Dollar Equivalent of the aggregate principal amount of
all outstanding
4
Alternative Currency Loans at such time, (b) the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Letters of Credit that are
denominated in an Alternative Currency at such time and (c) the Dollar
Equivalent of the aggregate principal amount of all L/C Disbursements in respect
of Letters of Credit that are denominated in an Alternative Currency that have
not yet been reimbursed at such time.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurocurrency Loan or ABR Loan, or with respect to the Commitment Fees, as the
case may be, the applicable percentage set forth below under the caption
"Eurocurrency Spread", "ABR Spread" or "Fee Percentage", as the case may be,
based upon the Consolidated Leverage Ratio as of the relevant date of
determination, provided that, until the date of delivery to the Administrative
Agent of Parent's financial statements pursuant to Section 5.01(b) with respect
to its fiscal quarter ended September 30, 1998, the Applicable Percentage shall
be deemed to be in Category 1:
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Eurocurrency ABR Fee
Consolidated Leverage Ratio Spread Spread Percentage
--------------------------- ------ ------ ----------
--------------------------------------------------------------------------------
Category 1
----------
Greater than or equal to 4.50 2.625% 1.625% 0.500%
to 1.00
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Category 2
----------
Less than 4.50 to 1.00 but
greater than or equal to 4.00
to 1.00 2.375% 1.375% 0.500%
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Category 3
----------
Less than 4.00 to 1.00 but
greater than or equal to 3.50
to 1.00 2.125% 1.125% 0.500%
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Category 4
----------
Less than 3.50 to 1.00 but
greater than or equal to 3.00
to 1.00 1.875% 0.875% 0.375%
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Category 5
----------
Less than 3.00 to 1.00 1.625% 0.625% 0.375%
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Each change in the Applicable Percentage resulting from a change in
the Consolidated Leverage Ratio shall be effective with respect to all Loans,
Commitments and Letters of Credit outstanding on and after the date of delivery
to the Administrative Agent of the financial statements and certificates
required by Section 5.01(a) or (b) indicating such change until the date
immediately preceding the next date of delivery of such financial statements and
certificates indicating another such change.
5
Notwithstanding the foregoing, at any time during which Parent has
failed to deliver the financial statements and certificates on or prior to the
date required by Section 5.01(a) or (b), the Consolidated Leverage Ratio shall
be deemed to be in Category 1 for purposes of determining the Applicable
Percentage until the date such financial statements are delivered by Parent.
"Assignee" shall have the meaning assigned to such term in Section
9.05(c).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date to the same Borrower and as to which a single Interest
Period is in effect.
"Borrowing Request" shall mean a request by either Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close; provided, however, that with respect to matters relating to
Eurocurrency Loans, the term "Business Day" shall also exclude any day on which
commercial banks are not open for dealings in Dollar deposits in the London
interbank market, and, when used in connection with determining any date on
which any amount is to be paid or made available in an Alternative Currency, the
term "Business Day" shall also exclude any day on which commercial banks and
foreign exchange markets are not open for business in the principal financial
center in the country of such Alternative Currency.
"Calculation Date" shall mean (a) the last Business Day of each
calendar month and (b) at any time when the sum of the Aggregate Revolving
Credit Exposure exceeds 75% of the Total Revolving Credit Commitment, the last
Business Day of each calendar week.
"Capital Expenditure" shall have the meaning assigned to such term in
Section 6.11.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents" shall mean (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States Government or any agency thereof, (b) certificates of
deposit and time deposits, bankers acceptances and overnight bank deposits of
any Lender or of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having
6
a term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (d) commercial paper of a domestic issuer rated at
least A-2 or the equivalent thereof by Standard and Poor's Ratings Service or
any successor rating agency ("S&P") or P-2 or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc. or any successor rating agency ("Moody's") (or if at
such time neither is issuing ratings, then a comparable rating of such other
nationally recognized rating agency as shall be approved by the Administrative
Agent in its reasonable judgment), (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition, (g) shares of money market mutual or similar
funds complying with the risk limiting conditions of Rule 2a-7 or any successor
rule of the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended, and (h) investments similar to any of the foregoing
denominated in foreign currencies approved by the board of directors or
comparable body of Parent or either Borrower, in each case provided in clauses
(a), (b) and (d) above, maturing within twelve months after the date of
acquisition.
"CD&R" shall mean ▇▇▇▇▇▇▇, Dublier & Rice, Inc., a Delaware
corporation.
"CD&R Group" shall have the meaning assigned to such term in the
definition of the term "Fund V".
A "Change in Control" shall be deemed to have occurred if (a) prior to
the first public offering of Parent's Voting Stock, (i) Permitted Investors
shall cease to own, beneficially and of record, at least 51% (on a fully diluted
basis) of the Voting Stock of Parent, (ii) the CD&R Group shall cease to own,
beneficially and of record, at least 40% (on a fully diluted basis) of the
Voting Stock of Parent or (iii) Permitted Investors shall fail to have the power
(whether or not exercised) to elect a majority of the board of directors of
Parent; provided, however, that it shall be a "Change in Control" if, following
such public offering, (x) any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934 as in effect on the date
hereof), other than any of the Permitted Investors, shall have acquired a
percentage of shares of Voting Stock of Parent that is greater than the
percentage that is held in the aggregate by the Permitted Investors or (y) the
Permitted Investors shall cease to hold in the aggregate at least 35% of the
outstanding Voting Stock of Parent; (b) Parent shall cease to beneficially own,
directly or indirectly, 100% of the Voting Stock of either Borrower (other than
directors' qualifying shares); or (c) a "Change of Control" (as defined in the
Subordinated Note Documents) shall occur.
"Closing Date" shall mean April 30, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
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"Collateral Release Lenders" shall mean, at any time, Lenders having
Loans (excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Revolving Credit and Term Loan Commitments representing more than 80% of the sum
of all Loans (excluding Swingline Loans) outstanding, L/C Exposure, Swingline
Exposure and unused Revolving Credit and Term Loan Commitments at such time.
For purposes of determining the Collateral Release Lenders, any amounts
denominated in an Alternative Currency shall be translated into Dollars at the
Exchange Rates in effect on the most recent Calculation Date.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Loan Commitment and Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with JCI within the meaning of
Section 4001 of ERISA or is part of a group which includes JCI and which is
treated as a single employer under Section 414(b) or 414(c) of the Code.
"Consolidated Current Assets" shall mean, at any date of
determination, all amounts (other than cash and Cash Equivalents) which would,
in conformity with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of Parent and the
Subsidiaries at such date.
"Consolidated Current Liabilities" shall mean, at any date of
determination, all amounts which would, in conformity with GAAP, be set forth
opposite the caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of Parent and the Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of Parent and the
Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness
consisting of Revolving Loans or Swingline Loans to the extent otherwise
included therein.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income or Consolidated Net Loss, as the case may be, for such period, adjusted
to exclude the following items to the extent that such items were included in
the calculation of such Consolidated Net Income or Consolidated Net Loss: (a)
depreciation and amortization (including write-offs or write-downs of
amortizable and depreciable items) for such period, (b) the amount of interest
expense (net of interest income) of Parent and the Subsidiaries, determined on a
consolidated basis in accordance with GAAP, for such period on the aggregate
principal amount of their consolidated Indebtedness, (c) the amount of tax
expense of Parent and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for such period, (d) any non-cash expenses and charges, in
each case, which represents an accrual for which no cash is expected to be paid
in the short term, (e) any gain or loss associated with the sale or write-down
of assets not in the ordinary course of business, (f) any non-cash provisions
for reserves of discontinued operations, (g) any extraordinary, unusual or non-
recurring gains or losses or charges or credits, (h) any gains or losses
relating to the repatriation of foreign currency denominated investments and (i)
total compensation from the Closing Date paid or accrued to the employees listed
on Annex C of the Transition Services Agreement dated as of April 30, 1998,
among ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CDRJ Holding Company and Parent. In the case of any
period of four consecutive fiscal quarters ending on or prior to March 31, 1999,
"Consolidated EBITDA" shall be determined on a pro
8
forma basis as if the Transactions had occurred at the beginning of any such
four fiscal quarter period.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period. For purposes of this definition, Consolidated Interest
Expense for the period of four consecutive fiscal quarters ending on December
31, 1998, shall be deemed to equal Consolidated Interest Expense for the period
commencing on May 1, 1998, and ending on December 31, 1998, multiplied by 3/2.
"Consolidated Interest Expense" shall mean, for any period, the amount
equal to the interest expense (accrued and paid or payable in cash for such
period, and in any event excluding any amortization or write-off of financing
costs otherwise included therein), net of interest income, of Parent and the
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period on the aggregate principal amount of their consolidated
Indebtedness.
"Consolidated Leverage Ratio" shall mean, as of the last day of any
fiscal quarter, the ratio of (a) Total Debt on such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters ended on such date.
"Consolidated Net Income" or "Consolidated Net Loss" shall mean, for
any period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption) or "net loss" (or any
like caption), as the case may be, on a consolidated statement of earnings of
Parent and the Subsidiaries for such fiscal period.
"Contractual Obligation" shall mean, as to any Person, any provision
of any material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property (including any Mortgaged Property) is bound.
"Control" shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"Controlling" and "Controlled" shall have meanings correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"Default" shall mean any of the events specified in Section 7.01 or
7.02, whether or not any requirement for the giving of notice (other than, in
the case of Section 7.02(e), any Default Notice), the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Dollar Equivalent" shall mean, on any date of determination, with
respect to any amount denominated in any currency other than Dollars, the
equivalent in Dollars of such amount, determined by the Administrative Agent
pursuant to Section 1.03 using the applicable Exchange Rate with respect to such
currency at the time in effect.
9
"Domestic Subsidiaries" shall mean, with respect to any Person, all
Subsidiaries of such Person that are incorporated or organized under the laws of
the United States of America, any state thereof or the District of Columbia.
"Dutch Deed of Pledge" shall have the meaning assigned to such term in
Section 9.21.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata or as otherwise defined in any Environmental Law.
"Environmental Law" shall mean any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority properly promulgated
and having the force and effect of law, or other Requirements of Law (including
common law) regulating, relating to or imposing liability or standards of
conduct concerning protection of the environment or human health as related to
the environment, as now or may at any relevant time hereafter be in effect.
"Environmental Permits" shall have the meaning assigned to such term
in Section 5.09(a).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Loan" shall mean any Eurocurrency Revolving Loan or
Eurocurrency Term Loan.
"Eurocurrency Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBOR in accordance
with the provisions of Article II.
"Eurocurrency Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"Eurocurrency Term Loan" shall mean any Term Loan bearing interest at
a rate determined by reference to the Adjusted LIBOR in accordance with the
provisions of Article II.
"Event of Default" shall mean any of the events specified in Section
7.01 or 7.02, provided that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"Excess Cash Flow" shall mean, for any fiscal year of Parent (or in
the case of the fiscal year ending December 31, 1998, the period commencing on
May 1, 1998, and ending on December 31, 1998), the amount equal to the excess,
if any, of (a) the sum of (i) Consolidated EBITDA for such fiscal year and (ii)
decreases in Working Capital for such fiscal year minus (b) the sum, without
duplication, of (i) the aggregate amount actually paid by Parent and its
Subsidiaries in cash during such fiscal year on account of (w) Capital
10
Expenditures, (x) interest expense (accrued and paid or payable in cash) on the
aggregate principal amount of their consolidated Indebtedness, (y) tax expense
and (z) any investments made pursuant to Section 6.03(e), (i), (n) or (p), (ii)
the aggregate amount of all principal payments of Indebtedness (net of any
refinancings of any such Indebtedness to the extent applied to fund such
payments) during such fiscal year resulting in permanent reductions of such
Indebtedness (excluding, in the case of the Loans, any principal payment
pursuant to Section 2.13(b), (c) or (d), except to the extent that the event
giving rise to such payment causes an increase in Consolidated EBITDA), (iii)
the Net Proceeds from any sale or other disposition of property or assets of
Parent or any of the Subsidiaries to the extent that such Net Proceeds (A)
consist of any Reinvested Amount or are otherwise applied in accordance with
Section 2.13(b) and (B) are included in the calculation of Consolidated EBITDA,
and (iv) increases in Working Capital for such fiscal year.
"Exchange Rate" shall mean, on any day, with respect to any currency
other than Dollars (for purposes of determining the Dollar Equivalent) or any
Alternative Currency (for purposes of determining the Alternative Currency
Equivalent with respect to such Alternative Currency), the rate at which such
currency may be exchanged into Dollars or the applicable Alternative Currency,
as the case may be, as set forth at approximately 11:00 a.m., New York City
time, on such date on the applicable Bloomberg Key Cross Currency Rates Page.
In the event that any such rate does not appear on any Bloomberg Key Cross
Currency Rates Page, the Exchange Rate shall be determined by reference to such
other publicly available service for displaying exchange rates reasonably
selected by the Administrative Agent for such purpose or, at the discretion of
the Administrative Agent, such Exchange Rate shall instead be the arithmetic
average of the spot rates of exchange of the Administrative Agent in the market
where its foreign currency exchange operations in respect of such currency are
then being conducted, at or about 10:00 a.m., local time, on such date for the
purchase of Dollars or the applicable Alternative Currency, as the case may be,
for delivery two Business Days later, provided that, if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Administrative Agent, with the consent of Parent (not to be unreasonably
withheld), may use any other reasonable method it deems appropriate to determine
such rate, and such determination shall be presumed correct absent manifest
error.
"Fee Letter" shall mean the Fee Letter dated January 26, 1998, among
Parent, CDRJ Holding Company, a Cayman Islands exempt company, and the
Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent's
Fees, the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any Person shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such Person.
"Financing Lease" shall mean any lease of property, real or personal,
the obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Financing Transactions" shall mean (a) the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans and the use of the proceeds thereof, (b) the
execution, delivery and performance by each Loan Party of the Subordinated Note
Documents to which it is to be
11
a party, the issuance of the Subordinated Notes and the use of the proceeds
thereof and (c) the contribution to Parent by Fund V and other Permitted
Investors of an aggregate amount of at least $77,000,000 in cash.
"Foreign Backstop Letter of Credit" shall mean any Letter of Credit
issued under this Agreement to any Person for the account of either Borrower to
provide credit support for Indebtedness of any Foreign Subsidiary to such Person
which is permitted under Section 6.01.
"Foreign Base Rate" shall mean, in respect of any Alternative Currency
Loan on any day, the rate of interest per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) determined to be the average rate charged to borrowers
of similar quality as the applicable Borrower of such Alternative Currency Loans
as reasonably determined by the Administrative Agent.
"Foreign Base Rate Loan" shall mean any Alternative Currency Loan
bearing interest at a rate determined by reference to a Foreign Base Rate in
accordance with the provisions of Article II. Notwithstanding anything to the
contrary contained herein, Loans may be made or maintained as Foreign Base Rate
Loans only to the extent specified in Section 2.02(f), 2.08 or 2.15.
"Foreign Benefit Plan" shall mean any benefit plan which under
applicable law is required to be funded through a trust or other funding vehicle
other than a trust or funding vehicle maintained exclusively by a Governmental
Authority.
"Foreign Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person that is not a Domestic Subsidiary.
"Foreign Subsidiary Holdco" shall mean any Subsidiary of Parent that
owns Capital Stock of either Borrower.
"Former Plan" shall mean any employee benefit plan in respect of which
JCI or a Commonly Controlled Entity has engaged in a transaction described in
Section 4069 or Section 4212(c) of ERISA.
"Fund V" shall mean ▇▇▇▇▇▇▇, Dubilier & Rice Fund V Limited
Partnership, a Cayman Islands exempted limited partnership managed by CD&R, and
its successors and assigns who are existing members of the CD&R Group at the
time of any such assignment. For purposes of this definition, "CD&R Group" shall
mean CD&R, any other investment fund or vehicle managed, sponsored or advised by
CD&R, or any Affiliate of or successor to CD&R, Fund V, or any such other
investment fund or vehicle.
"Funded Debt" shall mean, as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrowers, Indebtedness in respect of the
Loans.
12
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; provided that, for
purposes of determining compliance with the provisions of Section 6.12 or 6.13,
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect on December 31, 1997.
"Governmental Authority" shall mean the government of the United
States of America, and, as applicable, Mexico, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person shall mean any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement, the
JCI Guarantee Agreement, JCI Subsidiary Guarantee Agreement, the JCISA Guarantee
Agreement, the JCISA Subsidiary Guarantee Agreement and, with respect to any
other guarantee agreement to be entered into pursuant to Section 5.11(b), a
guarantee agreement in a form reasonably satisfactory to Parent, the Borrowers
and the Collateral Agent.
"Guarantors" shall mean Parent, JCI, JCISA, the JCI Subsidiary
Guarantors and the JCISA Subsidiary Guarantors.
"Hedging Agreement" shall mean any agreement or arrangement that
relates to any interest rate protection, future, option, swap, cap, collar or
hedge, or to any foreign exchange contract or currency swap or hedge, or any
other similar agreement or arrangement and is entered into, purchased or
otherwise acquired by Parent or any of its Subsidiaries in the ordinary course
of business and not for purposes of speculation.
"Indebtedness" of any Person shall mean, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all reimbursement obligations (contingent or
otherwise) of such Person in respect of letters of credit issued for the account
of such Person, (e) all obligations of such Person in respect of acceptances
created for the account of such Person, (f) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire for
value any preferred stock (or equivalent
13
equity interests) of such Person which is mandatorily redeemable prior to the
scheduled maturity of the Term Loans (other than any such stock held by
Management Investors), (g) all Guarantees by such Person of Indebtedness of
others and (h) all obligations of the types referred to in clauses (a) through
(g) above secured by any Liens on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among JCISA, the JCISA Subsidiary Guarantors and the Collateral
Agent.
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Intellectual Property" shall have the meaning assigned to such term
in Section 3.08.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurocurrency Borrowing with an Interest Period of
more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Borrowing, and, in addition, the date of any prepayment of
such Borrowing or conversion of such Borrowing to a Borrowing of a different
Type.
"Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
applicable Borrower may elect and (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of (i) the
last Business Day of each of March, June, September or December, as applicable,
(ii) the Maturity Date and (iii) the date such Borrowing is converted to a
Borrowing of a different Type in accordance with Section 2.10 or repaid or
prepaid in accordance with Section 2.11 or 2.12; provided, however, that, with
respect to Eurocurrency Loans, if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
"Investment" shall have the meaning assigned to such term in Section
6.03.
"Issuing Bank" shall mean, as the context may require, (a) Credit
Suisse First Boston, with respect to Letters of Credit issued by it, and (b) any
other Lender that may become an Issuing Bank under Section 2.22(i) or (k), with
respect to Letters of Credit issued by it.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
14
"JCI Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit E, made by JCI in favor of the Collateral
Agent for the benefit of the Secured Parties.
"JCI Subsidiary Guarantee Agreement" shall mean the Subsidiary
Guarantee Agreement, substantially in the form of Exhibit F, made by the JCI
Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties.
"JCI Subsidiary Guarantor" shall mean each Domestic Subsidiary of JCI
listed on Schedule 1.01(b), and each other Domestic Subsidiary of JCI that is or
becomes a party to a JCI Subsidiary Guarantee Agreement.
"JCISA Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit G, made by JCISA in favor of the Collateral
Agent for the benefit of the Secured Parties.
"JCISA Maximum Percentage" shall mean 50%; provided, however, that, if
the Total Revolving Credit Commitment is required to be reduced in accordance
with Section 2.09(b), then the JCISA Maximum Percentage shall be reduced so that
the maximum amount of the JCISA Revolving Credit Exposure available after giving
effect to such reduction to the Total Revolving Credit Commitment shall equal
the difference between (a) the maximum amount of the JCISA Revolving Credit
Exposure available immediately prior to such reduction and (b) the amount of
such reduction.
"JCISA Revolving Credit Exposure" shall mean, on any date, that
portion of the Aggregate Revolving Credit Exposure on such date attributable to
Loans made to, or Letters of Credit issued for the account of, JCISA.
"JCISA Subsidiary Guarantee Agreement" shall mean the Subsidiary
Guarantee Agreement, substantially in the form of Exhibit H, made by the JCISA
Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties.
"JCISA Subsidiary Guarantor" shall mean each Subsidiary of JCISA
listed on Schedule 1.01(b), and each other Subsidiary of JCISA that is or
becomes a party to a JCISA Subsidiary Guarantee Agreement.
"L/C Commitment" shall mean the commitment of the Issuing Bank to
issue Letters of Credit pursuant to Section 2.22.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
then undrawn and unexpired amount of the then outstanding Letters of Credit
denominated in Dollars, (b) the Dollar Equivalent of the aggregate then undrawn
and unexpired amount of outstanding Letters of Credit denominated in Alternative
Currencies, (c) the aggregate principal amount of all L/C Disbursements in
respect of Letters of Credit denominated in Dollars that have not then been
reimbursed or converted to Loans and (d) the Dollar Equivalent of the aggregate
principal amount of all L/C Disbursements in respect of Letters of Credit
denominated in Alternative Currencies that have not then been reimbursed or
15
converted to Loans. The L/C Exposure of any Revolving Credit Lender at any time
shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term
in Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that is a party hereto pursuant to an Assignment and Acceptance and
in compliance with Section 9.05. Unless the context indicates otherwise, the
term "Lenders" shall include the Swingline Lender.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"LIBOR" shall mean, with respect to any Eurocurrency Borrowing, the
rate per annum determined by the Administrative Agent at approximately 11:00
a.m. (London time) on the date which is two Business Days prior to the beginning
of the relevant Interest Period (as specified in the applicable Borrowing
Request) by reference to the British Bankers' Association Interest Settlement
Rates for deposits in Dollars or the relevant Alternative Currency, as
applicable (as set forth by any service selected by the Administrative Agent
which has been nominated by the British Bankers' Association as an authorized
information vendor for the purpose of displaying such rates), for a period equal
to the Interest Period applicable to such Eurocurrency Borrowing, provided that,
to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBOR" shall be the interest rate
per annum determined by the Administrative Agent to be the average of the rates
per annum at which deposits in Dollars or the relevant Alternative Currency, as
applicable, are offered for such relevant Interest Period to major banks in the
London interbank market in London, England by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date which is two Business Days
prior to the beginning of such Interest Period.
"Lien" shall mean any mortgage, pledge, hypothecation, encumbrance,
lien (statutory or other), charge or security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement and any Financing Lease having substantially the same economic effect
as any of the foregoing).
"Loan Documents" shall mean this Agreement, the Notes, the Guarantee
Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrowers, the Guarantors and the
Subsidiaries of Parent that are parties to the Pledge Agreement and the Dutch
Deed of Pledge.
"Loans" shall mean the Revolving Loans, the Term Loans and the
Swingline Loans.
"Management Investors" shall mean the officers, directors, employees
and other members of the management of Parent or any of the Subsidiaries, or
immediate family members or relatives thereof, or trusts or partnerships for the
benefit of any of the foregoing,
16
or any of their heirs, executors, successors or legal representatives, who at
any particular date shall beneficially own or have the right to acquire,
directly or indirectly, common stock of Parent.
"Management Subscription Agreements" shall mean one or more stock
subscription, stock option, grant or other agreements which have been or may be
entered into between Parent and certain Management Investors, with respect to
the issuance to or ownership by such parties of common stock of Parent or
options, warrants, units or other rights in respect of common stock of Parent,
any agreements entered into from time to time by transferees of any such stock,
options, warrants or other rights in connection with the sale, transfer or
reissuance thereof, and any assumptions of any of the foregoing by third
parties, as amended, supplemented, waived or otherwise modified from time to
time.
"Marks" and "DM" shall mean the lawful currency for the time being of
Germany.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, results of operations, property or condition (financial or
otherwise) of Parent and the Subsidiaries (after giving effect to the
Transactions), taken as a whole, or (b) the validity or enforceability of the
Loan Documents as to any Loan Parties party thereto or the rights and remedies
of the Administrative Agent, the Collateral Agent or the Lenders hereunder and
thereunder, taken as a whole.
"Material Environmental Amount" shall mean an amount payable by
Parent, either Borrower or any of the Subsidiaries in respect of or under any
Environmental Law for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof in an amount that
would reasonably be expected to have a Material Adverse Effect.
"Material of Environmental Concern" shall mean any hazardous or toxic
substances, materials, pollutants or wastes, defined or regulated as such in or
under any applicable Environmental Law, including gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Material Indebtedness" shall mean Indebtedness in an aggregate
outstanding principal amount of $5,000,000 (or the Dollar Equivalent thereof in
another currency) or more.
"Material Subsidiary" shall mean, at any date, (a) any Subsidiary of
Parent which at such date has a market value in excess of $2,500,000 or annual
revenues in excess of $2,500,000 or (b) any group of Subsidiaries of Parent,
taken as a whole, which at such date has an aggregate market value in excess of
$5,000,000 or annual revenues in excess of $5,000,000.
"Maturity Date" shall mean April 30, 2004.
"Merger" shall have the meaning assigned to such term in the preamble
to this Agreement.
17
"Mexican Financing Agreement" shall mean one or more financing
agreements or other arrangements whereby JCISA and/or its Subsidiaries may incur
Indebtedness of the type contemplated by Section 6.01(k).
"Mexican Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person that is incorporated or organized under the laws of
Mexico or any political division thereof.
"Mexico" shall mean the United Mexican States.
"Mortgaged Properties" shall mean the owned real properties and
leasehold and subleasehold interests of the Loan Parties specified on Schedule
1.01(c).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to Section 4.02(i)(i) or pursuant to Section 5.11,
each substantially in the form of Exhibit I.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any of the events referred
to in Section 2.13(b) or (d) and the defined terms used therein, (a) the gross
cash consideration, and all cash proceeds (as and when received) of non-cash
consideration (including any such cash proceeds in the nature of principal and
interest payments on account of promissory notes or similar obligations),
received by Parent and the Subsidiaries in connection with such event, minus (b)
the sum, without duplication, of (i) any taxes reasonably estimated to be
payable to any Federal, state, local or foreign taxing authority by Parent and
the Subsidiaries as a result thereof or as a result of any transfer of funds in
connection with the application of such funds in accordance with Section 2.13(b)
or (d), (ii) the amount of fees and commissions (including reasonable investment
banking fees, legal, accounting, consulting, survey, title and recording tax
expenses and other costs and expenses actually incurred in connection with such
event which are paid or payable by Parent and the Subsidiaries), (iii) the
amount of such net cash proceeds which are attributable to (and payable to)
minority interests, (iv) the amount of any reserve reasonably maintained by
Parent and the Subsidiaries with respect to indemnification obligations owing
pursuant to the definitive documentation pursuant to which such event is
consummated (with any unused portion of such reserve to constitute Net Proceeds
on the earlier of the date upon which the indemnification obligations
terminate), (v) the amount of Indebtedness (other than intercompany
Indebtedness), if any, which is required to be repaid at the time or as a result
of such event out of the proceeds thereof and (vi) with respect to the
determination of Net Proceeds from a sale or other disposition of property or
assets referred to in Section 2.13(b), appropriate amounts to be provided by
Parent and the Subsidiaries to be applied to satisfy any reasonable expenses and
liabilities associated with any such property or assets and retained by Parent
or any such Subsidiary after such sale or other disposition and other
appropriate amounts which shall be used by Parent or any of the Subsidiaries to
discharge or pay on a current basis any other liabilities associated with such
property or assets.
"Note" shall have the meaning assigned to such term in Section
2.04(e).
18
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"Parent Guarantee Agreement" shall mean the Parent Guarantee
Agreement, substantially in the form of Exhibit J, made by Parent in favor of
the Collateral Agent for the benefit of the Secured Parties.
"Participants" shall have the meaning assigned to such term in Section
9.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Investors" shall mean (a) the CD&R Group, (b) any Person
reasonably satisfactory to the Administrative Agent, (c) any Management Investor
and (d) any Person acting in the capacity of an underwriter in connection with a
public or private offering of Capital Stock of Parent.
"Person" shall mean any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" shall mean any employee pension benefit plan which is covered
by ERISA and in respect of which JCI or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit K, among Parent, the Borrowers, the Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Prepayment Account" shall have the meaning assigned to such term in
Section 2.13(g).
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Purchase Price" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Register" shall have the meaning given such term in Section 9.05(e).
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
19
"Reinvested Amount" shall mean, with respect to any sale, transfer or
other disposition of assets of Parent or any of its Subsidiaries permitted by
Section 6.05(i) or any recovery of amounts under any property insurance policies
of Parent or any of its Subsidiaries, that portion of the Net Proceeds thereof
as shall, according to a certificate of a Responsible Officer of Parent or the
applicable Borrower delivered to the Administrative Agent within 30 days of such
sale or other disposition, be reinvested in the business of Parent or such
Borrower and its Subsidiaries in a manner consistent with the requirements of
Section 6.08 and the other provisions hereof within 360 days of the receipt of
such Net Proceeds or, if such reinvestment is in a project authorized by the
board of directors or comparable body of Parent or the applicable Borrower that
will take longer than such 360 days to complete, the period of time necessary to
complete such project (so long as Parent or such Subsidiary has committed to
expend such portion of the Net Proceeds within, and is diligently pursuing such
project during, the period of 360 days from the receipt of such Net Proceeds),
provided that (i) if any such certificate of a Responsible Officer is not
delivered to the Administrative Agent on the date of such sale, transfer or
other disposition, any Net Proceeds therefrom shall be promptly (x) deposited in
a cash collateral account established with the Collateral Agent to be held as
collateral for the benefit of the Secured Parties on terms reasonably
satisfactory to the Administrative Agent and shall remain on deposit in such
cash collateral account until such certificate of a Responsible Officer is (or
is required to be) delivered to the Administrative Agent or (y) to the extent
that the applicable Borrower has indicated that no such certificate will be
delivered, used to make a prepayment of the Revolving Loans in accordance with
Section 2.12, provided that, notwithstanding anything in this Agreement to the
contrary, the Borrowers may not request any Revolving Credit Borrowing that
would reduce the aggregate amount of the unused Revolving Credit Commitments to
an amount that is less than the amount of any such prepayment until such
certificate of a Responsible Officer is delivered to the Administrative Agent,
and (ii) any Net Proceeds not so reinvested by such 360th day or later, as
applicable, shall be utilized on such day to prepay Term Loans pursuant to
Section 2.13(b).
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Material of
Environmental Concern in, into, onto or through the environment.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Repayment Date" shall have the meaning given such term in Section
2.11(a).
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .22, .23, .25, .27, .28 or .29 of PBGC Reg
(S) 4043.
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Revolving Credit and Term Loan Commitments representing more than 50% of the sum
of all Loans (excluding Swingline Loans) outstanding, L/C Exposure, Swingline
Exposure and unused Revolving Credit and Term Loan Commitments at such time.
For purposes of determining the Required Lenders, any amounts denominated in an
Alternative Currency shall be translated into Dollars at the Exchange Rates in
effect on the most recent Calculation Date.
20
"Requirement of Law" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or any
restrictions of record affecting any Mortgaged Property or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, provided that the foregoing shall not apply to
any non-binding recommendation of any Governmental Authority.
"Reset Date" shall have the meaning assigned to such term in Section
1.03(a).
"Responsible Officer" of any Person shall mean the chief executive
officer, the president or vice president, or, with respect to financial matters,
the Financial Officer of such Person or, with respect to benefits matters, the
appropriate officer of such Person.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans and/or participate in
Swingline Loans hereunder as set forth on Schedule 2.01, or in the Assignment
and Acceptance pursuant to which such Lender assumed its Revolving Credit
Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.05.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender denominated in Dollars, plus the Dollar
Equivalent of the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender that are Alternative Currency Loans, plus the
aggregate amount at such time of such Lender's L/C Exposure and Swingline
Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Loans" shall mean the revolving loans made by the Lenders
to the Borrowers pursuant to Section 2.01.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit L, among the Borrowers, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
21
"Solvent" shall mean, when used with respect to any Person, that, as
of any date of determination, (a) the amount of the assets of such Person, at a
fair valuation, will, as of such date, exceed the amount of all liabilities of
such Person, contingent or otherwise, as of such date, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the probable liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business and (d) such Person will be able to pay its debts
as they mature. For purposes of determining whether a Person is Solvent, the
amount of any contingent liability shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, represents the
amount that may reasonably be expected to become an actual or matured liability.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board or by any other Governmental Authority to which Lenders
are subject for any category of deposits or liabilities customarily used to fund
loans or by reference to which interest rates applicable to Loans are
determined. Such reserve, liquid asset or similar percentages shall include
those imposed pursuant to Regulation D of the Board (and for purposes of
Regulation D, Eurocurrency Loans denominated in Dollars shall be deemed to
constitute Eurocurrency Liabilities). Eurocurrency Loans shall be deemed to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under Regulation D or any other applicable law, rule or regulation. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Sterling" and "(Pounds)" shall mean the lawful currency for the time
being of the United Kingdom.
"Subordinated Note Documents" shall mean the indenture and other
agreements governing the Subordinated Notes or pursuant to which the
Subordinated Notes are issued.
"Subordinated Notes" shall mean the 11 3/4% Senior Subordinated Notes
Due 2008 of the Borrowers, in an original aggregate principal amount of
$100,000,000.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, controlled or held, or the management of
which is otherwise Controlled, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or "Subsidiaries" in this Agreement shall refer to
a Subsidiary or Subsidiaries of Parent.
"Subsidiary Guarantors" shall mean the JCI Subsidiary Guarantors and
the JCISA Subsidiary Guarantors.
22
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make Swingline Loans pursuant to Section 2.23 in the amount referred
to therein.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage
of the aggregate Swingline Exposure at such time.
"Swingline Lender" shall mean Credit Suisse First Boston.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to its Swingline Commitment.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed
its Term Loan Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.05.
"Term Loans" shall mean the term loans made by the Lenders to the
Borrowers pursuant to Section 2.01. Each Term Loan shall be a Eurocurrency Term
Loan or an ABR Term Loan.
"Total Debt" shall mean, as of any date of determination, without
duplication, the total Indebtedness of Parent and its Subsidiaries required to
be reflected on a consolidated balance sheet of Parent on such date in
accordance with GAAP (other than Indebtedness of the type referred to in clause
(d), (e) or (g) of the definition of the term "Indebtedness", except, in the
case of such clause (d) or (e), to the extent of any unreimbursed drawings
thereunder), net of the actual amount of any cash of any Foreign Subsidiary (up
to a maximum of $10,000,000 (or the Dollar Equivalent thereof in another
currency)) on such balance sheet on such date.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Transaction Documents" shall mean the Acquisition Agreement, this
Agreement and the other Loan Documents, the Subordinated Note Documents, the
Subordinated Notes, any purchase or registration rights agreements or offering
circular relating to the Subordinated Notes, and any subscription, registration
rights or stockholders agreement relating to the equity investment in connection
with the Transactions.
"Transactions" shall mean the Acquisition, the Merger and the
Financing Transactions.
"Transferee" shall have the meaning assigned to such term in Section
9.05(g).
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such
23
Borrowing is determined and the currency in which such Loan or the Loans
comprising such Borrowing are denominated. For purposes hereof, the term "Rate"
shall include the Adjusted LIBOR and the Alternate Base Rate, and currency shall
include Dollars and any Alternative Currency permitted hereunder.
"Underfunding" shall mean an excess of all accrued benefits under a
Plan (based on those assumptions used to fund such Plan), determined as of the
most recent annual valuation date, over the value of the assets of such Plan
allocable to such accrued benefits.
"Voting Stock" of any Person shall mean all Capital Stock entitled to
vote generally in the election of directors (or Persons performing similar
functions) of such Person.
"wholly owned", shall mean, when used to modify the term "Subsidiary",
a Subsidiary of a Person of which securities (except for directors' qualifying
shares or shares held by nominees) or other ownership interests representing
100% of the equity or 100% of the ordinary voting power or 100% of the general
partnership interests are, at the time any determination is being made, owned,
controlled or held by such Person or one or more wholly owned Subsidiaries of
such Person or by such Person and one or more wholly owned Subsidiaries of such
Person.
"Working Capital" shall mean, as of any date of determination,
Consolidated Current Assets on such date minus Consolidated Current Liabilities
on such date.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined. The
words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a) any reference in
this Agreement (or incorporated in any other Loan Document by reference to this
Agreement) to any Loan Document shall mean such Loan Document as amended,
restated, supplemented or otherwise modified from time to time and (b) all terms
of an accounting or financial nature shall be construed in accordance with GAAP.
SECTION 1.03. Exchange Rates. (a) Not later than 1:00 p.m., New
York City time, on each Calculation Date, the Administrative Agent shall
determine the Exchange Rate as of such Calculation Date to be used for
calculating relevant Dollar Equivalent and Alternative Currency Equivalent
amounts. The Exchange Rates so determined shall become effective on the first
Business Day immediately following the relevant Calculation Date (a "Reset
Date"), shall remain effective until the next succeeding Reset Date and shall
for all purposes of this Agreement (other than any provision expressly requiring
the use of a current Exchange Rate) be the Exchange Rates employed in converting
any amounts between the applicable currencies.
(b) Not later than 5:00 p.m., New York City time, on each Reset Date
and on the date of each Alternative Currency Borrowing, the Administrative Agent
shall (i) determine the Dollar Equivalent of the aggregate principal amount of
the Alternative Currency Loans then outstanding (after giving effect to any
Alternative Currency Loans
24
made or repaid on such date) and (ii) notify the Borrowers of the results of
such determination.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Term Loan to (i) JCI, in
Dollars, on the Closing Date in an aggregate principal amount not to exceed 60%
of its Term Loan Commitment and (ii) JCISA, in Dollars, on the Closing Date in
an aggregate principal amount not to exceed 40% of its Term Loan Commitment, and
(b) to make Revolving Loans to either Borrower, at any time and from time to
time on or after the Closing Date, and until the earlier of the Maturity Date
and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in Dollars or one or more Alternative
Currencies (as specified in the Borrowing Requests with respect thereto), in an
aggregate principal amount (determined as of the date of each Revolving Credit
Borrowing) that will not result in (i) such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment, (ii) the JCISA Revolving
Credit Exposure exceeding the JCISA Maximum Percentage of the Total Revolving
Credit Commitment or (iii) the Aggregate Alternative Currency Revolving Credit
Exposure exceeding $32,500,000. Within the limits set forth in clause (b) of
the preceding sentence and subject to the terms, conditions and limitations set
forth herein, each Borrower may borrow, pay or prepay and reborrow Revolving
Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan (other than a Swingline Loan)
shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their applicable Commitments; provided, however, that
the failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Except for Loans deemed made
pursuant to Section 2.02(f), Loans made pursuant to Sections 2.22 (d) and
2.23(e) and Swingline Loans, the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000 (or
the Alternative Currency Equivalent thereof) and not less than $5,000,000 (or
the Alternative Currency Equivalent thereof) or (ii) equal to the remaining
available balance of the applicable Commitments.
(b) Subject to Sections 2.02(f), 2.08, 2.10(iv) and 2.15, (i) each
Borrowing denominated in Dollars shall be comprised of ABR Loans or Eurocurrency
Loans as the applicable Borrower may request pursuant to Section 2.03 and (ii)
each Alternative Currency Borrowing shall be comprised entirely of Eurocurrency
Loans. Each Lender may at its option make any Eurocurrency Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
applicable Borrower to repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that no Borrower shall be entitled to request any
Borrowing that, if made, would result in more than 8 Eurocurrency Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods or
25
denominated in different currencies, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f),
Section 2.22(d) and Section 2.23(e), each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds to such account as the Administrative Agent may designate not
later than 10:00 a.m., New York City time, in the case of fundings to an account
in New York City, or 10:00 a.m., local time, in the case of fundings to an
account in another jurisdiction, and the Administrative Agent shall, promptly
upon receipt thereof, credit the amounts so received to an account designated by
the applicable Borrower in the applicable Borrowing Request or, if a Borrowing
shall not occur on such date because any condition precedent herein specified
shall not have been met, return the amounts so received to the respective
Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount in the required currency. If the Administrative
Agent shall have so made funds available then, to the extent that such Lender
shall not have made such portion available to the Administrative Agent, such
Lender and (if such amount is not made available by the applicable Lender within
three Business Days of the date of the applicable Borrowing) the applicable
Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon in such
currency, for each day from the date such amount is made available to such
Borrower until the date such amount is repaid to the Administrative Agent at (i)
in the case of such Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such Lender, a rate
determined by the Administrative Agent to represent its cost of overnight or
short-term funds in the relevant currency (which determination shall be
conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Eurocurrency Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.
(f) If the Issuing Bank shall not have received from the applicable
Borrower the payment required to be made by Section 2.22(e) within the time
specified in such Section, the Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Revolving Credit Lender of such L/C Disbursement and its
Pro Rata Percentage thereof. In the case of Letters of Credit denominated in
Dollars, each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day),
an amount in Dollars equal to such Lender's Pro Rata Percentage of such L/C
Disbursement (it being understood that such amount shall be deemed to constitute
an ABR Revolving Loan of such
26
Lender and such payment shall be deemed to have reduced the L/C Exposure), and
the Administrative Agent will promptly pay to the Issuing Bank amounts so
received by it from the Revolving Credit Lenders. In the case of Letters of
Credit denominated in an Alternative Currency, each Revolving Credit Lender
shall pay by wire transfer of immediately available funds to the Administrative
Agent not later than 2:00 p.m., London time, on such date (or if such Revolving
Credit Lender shall have received such notice later than 12:00 (noon), local
time in the country of the Alternative Currency, on the immediately following
Business Day), an amount in such Alternative Currency equal to such Lender's Pro
Rata Percentage of such L/C Disbursement (it being understood that such amount
shall be deemed to constitute an Alternative Currency Revolving Loan bearing
interest at the relevant Foreign Base Rate of such Lender and such payment shall
be deemed to have reduced the L/C Exposure), and the Administrative Agent will
promptly pay to the Issuing Bank amounts so received by it from the Revolving
Credit Lenders. The Administrative Agent will promptly pay to the Issuing Bank
any amounts received by it from the Borrowers with respect to the reimbursement
of any payment of a draft under a Letter of Credit prior to the time that any
Revolving Credit Lender makes any payment pursuant to this paragraph (f); any
such amounts received by the Administrative Agent thereafter from the applicable
Borrower will be promptly remitted by the Administrative Agent to the Revolving
Credit Lenders that shall have made such payments and to the Issuing Bank, as
their interests may appear. If any Revolving Credit Lender shall not have made
its Pro Rata Percentage of such L/C Disbursement available to the Administrative
Agent as provided above, such Lender and (if such amount is not made available
by the applicable Lender within three Business Days of the date of the
applicable Borrowing) the applicable Borrower agrees to pay interest on such
amount, for each day from and including the date such amount is required to be
paid in accordance with this paragraph to but excluding the date such amount is
paid, to the Administrative Agent for the account of the Issuing Bank at (i) in
the case of the Borrower, a rate per annum equal to the interest rate applicable
to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, a rate determined by the Administrative Agent to
represent its cost of overnight funds in the applicable currency, and for each
day thereafter, (x) if such L/C Disbursement is denominated in Dollars, the
Alternate Base Rate, and (y) if such L/C Disbursement is denominated in an
Alternative Currency, the applicable Foreign Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan, a deemed Borrowing pursuant to Section 2.02(f) or
a Loan made pursuant to Section 2.22(d) or Section 2.23(e), as to which this
Section 2.03 shall not apply), the applicable Borrower shall deliver to the
Administrative Agent a duly completed Borrowing Request (or telephone the
Administrative Agent, promptly confirmed with a written (including by telecopy)
and duly completed Borrowing Request) (a) in the case of a Eurocurrency
Borrowing, not later than 12:30 p.m., New York City time, three Business Days
(or, if such Borrowing is to be an Alternative Currency Borrowing, 12:30 p.m.,
New York time, four Business Days) before a proposed Borrowing, and (b) in the
case of an ABR Borrowing, not later than 12:30 p.m., New York City time, one
Business Day before a proposed Borrowing. Each Borrowing Request (including a
telephonic Borrowing Request) shall be irrevocable, shall be signed by or on
behalf of the applicable Borrower and shall specify the following information:
(i) whether the Borrowing then being requested is to be a Term Borrowing or a
Revolving Credit Borrowing; (ii) the currency of such Borrowing (which shall be
Dollars or an Alternative Currency); (iii) if such Borrowing is to be
denominated in Dollars, whether such Borrowing is to be a Eurocurrency Borrowing
or an ABR Borrowing; (iv) the date of such Borrowing (which shall be a Business
Day), (v) the number and location of the account to which funds are to be
disbursed; (vi) the amount of
27
such Borrowing (which shall be expressed in Dollars, regardless of whether such
Borrowing is an Alternative Currency Borrowing); and (vii) if such Borrowing is
to be a Eurocurrency Borrowing, the initial Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the currency of
Borrowing is specified in any such notice, then the requested Borrowing shall be
denominated in Dollars. If no election as to the Type of Borrowing is specified
in any such notice, then the requested Borrowing shall be an ABR Borrowing if
denominated in Dollars or a Eurocurrency Borrowing if denominated in an
Alternative Currency. If no Interest Period with respect to any Eurocurrency
Borrowing is specified in any such notice, then the applicable Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.03 (and the contents thereof), and of each
Lender's portion of the requested Borrowing and the account to which Loans
comprising the requested Borrowing are to be wired.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) Each
Borrower hereby unconditionally promises, severally and not jointly, to pay to
the Administrative Agent for the account of the Swingline Lender or each other
Lender entitled thereto (i) the then unpaid principal amount of each Swingline
Loan, on the last day of the Interest Period applicable to such Loan or, if
earlier, on the Maturity Date and (ii) on the dates and in the amounts provided
in Section 2.11 (subject to adjustment as specified herein), the principal
amount of each Term Loan of such Lender made to such Borrower. Each Borrower
hereby unconditionally promises, severally and not jointly, to pay to the
Administrative Agent for the account of each Lender, on the Maturity Date, the
then unpaid principal amount of each Revolving Loan of such Lender made to such
Borrower.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender to such Borrower from time
to time, including the amounts of principal and interest payable and paid to
such Lender by each such Borrower from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made to each Borrower hereunder, the Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from each Borrower or any Guarantor and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall, to the extent permitted by applicable law,
be prima facie evidence of the existence and amounts of the obligations therein
recorded absent manifest error; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the applicable
Borrower to repay the Loans to it in accordance with the terms hereof.
(e) Prior to the Closing Date (or if any Lender becomes a Lender
after the Closing Date, prior to the date such Lender becomes a Lender), any
Lender may through the Administrative Agent request that Loans made by it to a
Borrower be evidenced by a promissory note, substantially in the form of Exhibit
M-1 and/or M-2 (each, a "Note"). In
28
such event, the applicable Borrower shall execute and deliver to such Lender a
Note payable to such Lender.
SECTION 2.05. Fees. (a) The Borrowers agree, severally and not
jointly in the respective proportions set forth in the next succeeding sentence,
to pay to the Administrative Agent for the account of Revolving Credit Lenders,
on the last Business Day of March, June, September and December in each year and
on each date on which the Commitments of all Lenders shall expire or be
terminated as provided herein, a commitment fee (a "Commitment Fee") equal to
the Applicable Percentage per annum in effect from time to time on the average
daily unused amount of the Commitments (excluding the Swingline Loans) of such
Lender during the preceding quarter (or other period commencing with the Closing
Date (for purposes of this Section 2.05, the aggregate amount of the L/C
Exposure shall be deemed used Commitments) or ending with the Maturity Date or
the date on which the Commitments of all Lenders shall expire or be terminated).
JCI shall be responsible for 60% of such Commitment Fees and JCISA shall be
responsible for 40% of such Commitment Fees. All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be. The Commitment Fee due to each Lender shall
commence to accrue on the Closing Date and shall cease to accrue on the date on
which the Commitment of such Lender shall expire or be terminated as provided
herein. For purposes of calculating the Commitment Fees only, no portion of the
Revolving Credit Commitments shall be deemed utilized under Section 2.17 as a
result of outstanding Swingline Loans.
(b) The Borrowers agree, severally and not jointly in the respective
proportions set forth in the next succeeding sentence, to pay to the
Administrative Agent, for its own account, the administrative fees set forth in
the Fee Letter at the times and in the amounts specified therein (the
"Administrative Agent Fees"). JCI shall be responsible for 60% of the
Administrative Agent Fees and JCISA shall be responsible for 40% of such
Administrative Agent Fees.
(c) Each Borrower agrees, severally and not jointly, (i) to pay to
the Administrative Agent for the account of each Revolving Credit Lender, on the
last Business Day of March, June, September and December of each year and on the
date on which the Revolving Credit Commitments of all Lenders shall be
terminated as provided herein (each such date, an "L/C Fee Payment Date"), a fee
(an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of
the average daily aggregate L/C Exposure (excluding the portion thereof
attributable to unreimbursed L/C Disbursements) during the preceding quarter (or
shorter period commencing with the Closing Date hereof or ending with the
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) in respect of Letters of Credit issued for the account of such
Borrower at a rate equal to the Applicable Percentage from time to time used to
determine the interest rate on Revolving Credit Borrowings comprised of
Eurocurrency Loans pursuant to Section 2.06, (ii) to pay to the Issuing Bank a
fronting fee (the "Issuing Bank Fees") with respect to each Letter of Credit
issued by such Issuing Bank (payable in arrears), computed for the period from
and including the date of issuance of such Letter of Credit to the expiration
date of such Letter of Credit on each L/C Fee Payment Date, equal to 0.25% per
annum of the aggregate undrawn face amount of Letters of Credit outstanding
which were issued by such Issuing Bank, and (iii) to pay or reimburse the
Issuing Bank for such normal and customary costs and expenses as are incurred or
charged by such Issuing Bank in issuing, effecting payment under, amending or
otherwise administering any Letter of Credit issued by it. All L/C Participation
Fees and
29
Issuing Bank Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees and the Issuing Bank's
costs and expenses described in Section 2.05(c)(iii) shall be paid directly to
the Issuing Bank.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus the Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurocurrency Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBOR for the Interest Period in effect for such Borrowing plus
the Applicable Percentage in effect from time to time.
(c) Subject to the provisions of Section 2.07, each Foreign Base Rate
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 days) at a rate per annum equal to the Foreign Base
Rate.
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate, Adjusted LIBOR or Foreign Base Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
(e) Interest on each Alternative Currency Borrowing shall be payable
in the applicable Alternative Currency.
SECTION 2.07. Default Interest. If a Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, such Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount from the date of such defaulted payment to but excluding the date of
actual payment (to the extent lawful, after as well as before judgment) (a) in
the case of overdue principal, at the rate otherwise applicable to such Loan
pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, when determined by reference to
the Prime Rate and over a year of 360 days at all other times) equal to (i) if
such amount is payable in Dollars, the sum of the Alternate Base Rate plus 2.00%
and (ii) if such amount is payable in an Alternative Currency, the applicable
Foreign Base Rate plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, that on the
day two Business Days prior to the commencement of any Interest Period for a
Eurocurrency Borrowing the Administrative Agent shall have reasonably determined
that (a) deposits in the principal amounts of the Alternative Currency Loans
comprising such Borrowing are not
30
generally available in the London or other relevant interbank market, or (b) by
reason of circumstances affecting the relevant market, reasonable means do not
exist for ascertaining Adjusted LIBOR, the Administrative Agent shall, as soon
as practicable thereafter, give written (including telecopy) notice of such
determination to the Borrowers and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) if the conditions specified in clause (b) above exist, any request
by a Borrower for a Eurocurrency Borrowing denominated in Dollars pursuant to
Section 2.03, or to continue any Eurocurrency Borrowing denominated in Dollars
for another Interest Period or to convert an ABR Borrowing to a Eurocurrency
Borrowing pursuant to Section 2.10, shall be deemed to be a request for an ABR
Borrowing and (ii) if the conditions specified in clause (a) above exist, any
request for an Alternative Currency Borrowing shall be rejected. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City
time, on the Closing Date. The Revolving Credit Commitments, the L/C
Commitment and the Swingline Commitment shall automatically terminate on the
Maturity Date. Notwithstanding the foregoing, all the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on May 31, 1998, if
the initial Credit Event shall not have occurred by such time.
(b) Within one Business Day of entering into any Mexican Financing
Agreement, the Total Revolving Credit Commitment shall be reduced by the Dollar
Equivalent of the maximum committed amount that may be extended thereunder.
Promptly following any reduction to the Total Revolving Credit Commitment under
this Section 2.09(b), the Administrative Agent shall notify the Borrowers and
the Lenders of the amount of the Total Revolving Credit Commitment and of the
new JCISA Maximum Percentage, such determinations being conclusive absent
manifest error.
(c) Upon at least three Business Days' prior irrevocable written
(including telecopy) or telephone notice to the Administrative Agent, the
Borrowers may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Term Loan Commitments or the Revolving Credit
Commitments; provided, however, that (i) each partial reduction of the Term Loan
Commitments or the Revolving Credit Commitments shall be in an integral multiple
of $1,000,000 and in a minimum amount of $5,000,000, (ii) the Total Revolving
Credit Commitment shall not be reduced to the extent that, after giving effect
thereto, the JCISA Revolving Credit Exposure would exceed the JCISA Maximum
Percentage of the Total Revolving Credit Commitment and (iii) the Total
Revolving Credit Commitment shall not be reduced to an amount that is less than
the Aggregate Revolving Credit Exposure at the time.
(d) Each reduction in the Term Loan Commitments or the Revolving
Credit Commitments hereunder shall be made ratably among the Lenders in
accordance with their respective applicable Commitments.
SECTION 2.10. Conversion and Continuation of Borrowings. Each
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:30 p.m., New York City time, one
Business Day prior to conversion, to convert any Eurocurrency Borrowing
denominated in Dollars into an ABR
31
Borrowing, (b) not later than 12:30 p.m., New York City time, three Business
Days (or in the case of an Alternative Currency Borrowing, four Business Days)
prior to conversion or continuation, to convert any ABR Borrowing into a
Eurocurrency Borrowing denominated in Dollars or to continue any Eurocurrency
Borrowing as a Eurocurrency Borrowing in the same currency for an additional
Interest Period, and (c) not later than 12:30 p.m., New York City time, three
Business Days (or in the case of an Alternative Currency Borrowing, four
Business Days) prior to conversion, to convert the Interest Period with respect
to any Eurocurrency Borrowing to another permissible Interest Period, subject in
each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b)
regarding the principal amount and maximum number of Borrowings of the
relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Loan of such Lender resulting from such conversion and reducing the Loan
(or portion thereof) of such Lender being converted by an equivalent
principal amount;
(iv) if any Eurocurrency Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the applicable Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to Section
2.16; and
(v) upon notice to the Borrower from the Administrative Agent given
at the request of the Required Lenders, after the occurrence and during the
continuance of an Event of Default (such notice stating that the Required
Lenders have determined that a conversion to, or continuance of a Borrowing
as, a Eurocurrency Borrowing is not appropriate), (x) no outstanding
Borrowing denominated in Dollars may be converted into, or continued as, a
Eurocurrency Borrowing, (y) unless repaid, each Eurocurrency Borrowing
denominated in Dollars shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto and (z) no Interest Period in excess
of one month may be selected for any Alternative Currency Borrowing.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the applicable Borrower requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a Eurocurrency
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurocurrency Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurocurrency
Borrowing, the applicable Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall advise the
Lenders of any notice given pursuant to this Section 2.10 and of each Lender's
portion of any converted or continued Borrowing. If the applicable Borrower
shall not have given notice in accordance with this Section 2.10
32
to continue any Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.10 to convert such
Borrowing), such Borrowing shall, at the end of the Interest Period applicable
thereto (unless repaid pursuant to the terms hereof), (i) in the case of a
Borrowing denominated in Dollars, automatically be continued as an ABR Borrowing
and (ii) in the case of an Alternative Currency Borrowing, automatically be
continued into a new Interest Period of one month. Notwithstanding any contrary
provisions herein, the currency of an outstanding Borrowing may not be changed
in connection with any conversion or continuation of such Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) JCI shall pay
to the Administrative Agent, for the account of the Lenders, on the dates set
forth below, or if any such date is not a Business Day, on the next preceding
Business Day, a principal amount of the Term Loans (as adjusted from time to
time pursuant to Sections 2.12(b) and 2.13(e)) made to JCI equal to the amount
set forth below opposite such date, together in each case with accrued and
unpaid interest on the principal amount to be paid to but excluding the date of
such payment:
Date Amount
---- ------
March 31, 1999 $ 375,000
June 30, 1999 375,000
September 30, 1999 375,000
December 31, 1999 375,000
March 31, 2000 500,000
June 30, 2000 500,000
September 30, 2000 500,000
December 31, 2000 500,000
March 31, 2001 625,000
June 30, 2001 625,000
September 30, 2001 625,000
December 31, 2001 625,000
March 31, 2002 750,000
June 30, 2002 750,000
September 30, 2002 750,000
December 31, 2002 750,000
March 31, 2003 1,000,000
June 30, 2003 1,000,000
September 30, 2003 1,000,000
December 31, 2003 1,000,000
March 31, 2004 1,000,000
Maturity Date 1,000,000
(ii) JCISA shall pay to the Administrative Agent, for the account of
the Lenders, on the dates set forth below or, if any such date is not a
Business Day, on
33
the next preceding Business Day (each such date referred to in this clause
(ii) and in clause (i) above being a "Repayment Date"), a principal amount
of the Term Loans (as adjusted from time to time pursuant to Sections
2.12(b) and 2.13(e)) made to JCISA equal to the amount set forth below
opposite such date, together in each case with accrued and unpaid interest
on the principal amount to be paid to but excluding the date of such
payment:
Date Amount
---- ------
March 31, 1999 $250,000
June 30, 1999 250,000
September 30, 1999 250,000
December 31, 1999 250,000
March 31, 2000 375,000
June 30, 2000 375,000
September 30, 2000 375,000
December 31, 2000 375,000
March 31, 2001 500,000
June 30, 2001 500,000
September 30, 2001 500,000
December 31, 2001 500,000
March 31, 2002 625,000
June 30, 2002 625,000
September 30, 2002 625,000
December 31, 2002 625,000
March 31, 2003 625,000
June 30, 2003 625,000
September 30, 2003 625,000
December 31, 2003 625,000
March 31, 2004 250,000
Maturity Date 250,000
(b) To the extent not previously paid, all Term Loans shall be due
and payable on the Maturity Date, together with accrued and unpaid interest on
the principal amount to be paid to but excluding the date of payment.
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Prepayment. (a) Each and either Borrower shall have
the right at any time and from time to time to prepay any Borrowing, in whole or
in part, without premium or penalty (except as provided in Section 2.16), upon
prior written or telecopy notice (or telephone notice promptly confirmed by
written (including telecopy) notice) to the Administrative Agent (i) in the case
of a prepayment of a Eurocurrency Borrowing, given
34
before 12:30 p.m., New York City time, three Business Days (or, in the case of
prepayment of an Alternative Currency Borrowing, four Business Days) before such
prepayment and (ii) in the case of a prepayment of ABR Loans or Foreign Base
Rate Loans, given before 12:30 p.m., New York City time, one Business Day before
such prepayment; provided, however, that each partial prepayment shall be in an
amount that is an integral multiple of $1,000,000 (or the Alternative Currency
Equivalent thereof) and not less than $5,000,000 (or the Alternative Currency
Equivalent thereof).
(b) Optional prepayments of Term Loans by a Borrower shall be applied
(i) first, against the remaining scheduled installments of principal due in
respect of the Term Loans of such Borrower under Section 2.11(a)(i) or (ii), as
the case may be, in the next twelve months in the order of maturity and (ii)
second, pro rata against the remaining scheduled installments of principal due
in respect of such Term Loans.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the applicable Borrower to prepay such Borrowing
by the amount stated therein on the date stated therein. All prepayments under
this Section 2.12 shall be subject to Section 2.16 but otherwise without premium
or penalty. All prepayments under this Section 2.12 shall be accompanied by
accrued interest on the principal amount being prepaid to but excluding the date
of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments pursuant to Section 2.09,
each Borrower shall repay or prepay all its outstanding Revolving Credit
Borrowings and all outstanding Swingline Loans on the date of such termination.
In the event of any partial reduction of the Revolving Credit Commitments
pursuant to Section 2.09, then at or prior to the effective date of such
reduction, the Administrative Agent shall notify the Borrowers and the Revolving
Credit Lenders of the Aggregate Revolving Credit Exposure and the Aggregate
Alternative Currency Revolving Credit Exposure after giving effect thereto and
the portion of the Aggregate Revolving Credit Exposure and the Aggregate
Alternative Currency Revolving Credit Exposure attributable to each Borrower.
If at any time, as a result of such a partial reduction or termination, as a
result of fluctuations in exchange rates or otherwise, if (i) the Aggregate
Revolving Credit Exposure would exceed the Total Revolving Credit Commitment,
(ii) the Aggregate Alternative Currency Revolving Credit Exposure would exceed
$34,125,000 or (iii) the JCISA Revolving Credit Exposure would exceed the JCISA
Maximum Percentage of the Total Revolving Credit Commitment, then the Borrowers
shall (x) on the date of such reduction or termination of Revolving Credit
Commitments or (y) within four Business Days following notice from the
Administrative Agent of any such fluctuation in exchange rate or otherwise,
repay or prepay Revolving Credit Borrowings or Swingline Loans in an amount
sufficient to eliminate such excess. For purposes of clauses (i) and (iii) in
the immediately preceding sentence, the Aggregate Alternative Revolving Credit
Exposure shall be calculated by reference to the Dollar Equivalent of each
amount denominated in an Alternative Currency, such Dollar Equivalent to be
determined as of the date such Alternative Currency liability was incurred.
(b) The Borrowers shall repay Term Loans in accordance with Section
2.13(e) by the amount equal to the aggregate amount of Net Proceeds (minus any
Reinvested Amount relating thereto) received by Parent or any of its
Subsidiaries from (i) the sale, transfer or other disposition by Parent or any
of its Subsidiaries of any property or assets of Parent or any of its
Subsidiaries to any Person (other than to the Parent or any
35
Subsidiary thereof) pursuant to Section 6.05(i) or (ii) the recovery by Parent
or any of its Subsidiaries of amounts owing to it under property insurance
policies if Parent and its Subsidiaries have not commenced replacement of the
property on account of which such amounts were paid within one year of the later
of the date of the casualty to, or condemnation of, such property or the receipt
of such Net Proceeds, provided that, notwithstanding the foregoing, any such
repayment of the Term Loans pursuant to this Section 2.13(b) shall only be
required upon any such sale or transfer or recovery to the extent the Net
Proceeds received therefrom, when aggregated with the Net Proceeds received from
all such sales or transfers or recoveries in the immediately preceding twelve-
month period and minus all applicable Reinvested Amounts relating to all such
Net Proceeds, exceed $5,000,000. The applicable Borrower shall make any
prepayment pursuant to this Section 2.13(b) as promptly as practicable (and in
any event, within three Business Days) following the date of receipt of any such
Net Proceeds (except that if any such Net Proceeds are eligible to be reinvested
in accordance with the definition of the term "Reinvested Amount" and neither
Parent nor any such Borrower has elected to reinvest such proceeds, such
prepayment shall be made on the earlier of (x) the date on which the certificate
of a Responsible Officer of Parent or such Borrower to such effect is delivered
to the Administrative Agent in accordance with such definition and (y) the last
day of the period within which a certificate setting forth such election is
required to be delivered in accordance with such definition).
(c) On the Business Day following the date on which the financial
statements with respect to a fiscal year are delivered pursuant to Section
5.01(a), the Borrowers shall prepay outstanding Term Loans in accordance with
Section 2.13(e) in an aggregate principal amount equal to 50% of Excess Cash
Flow for the fiscal year then ended (or, in the case of the fiscal year ended
December 31, 1998, the period commencing on May 1, 1998, and ending on December
31, 1998); provided, however, that no such prepayment shall be required if the
Consolidated Leverage Ratio as of the end of such fiscal year shall be less than
3.75 to 1.00.
(d) In the event that Parent or any Subsidiary shall receive Net
Proceeds from the issuance or other disposition of Indebtedness for money
borrowed (other than Indebtedness for money borrowed permitted pursuant to
Section 6.01), the Borrowers shall, as promptly as practicable upon (and in any
event not later than the third Business Day next following) the receipt of such
Net Proceeds, apply an amount equal to 100% of such Net Proceeds to prepay
outstanding Term Loans in accordance with Section 2.13(e).
(e) Each prepayment of outstanding Term Loans required to be made
pursuant to any paragraph of this Section 2.13 shall be applied (i) first
against the remaining scheduled installments of principal due in respect of the
Term Loans of the applicable Borrower under Section 2.11(a)(i) or (ii), as the
case may be, in the next twelve months in the order of maturity and (ii) second
pro rata against the remaining scheduled installments of principal due in
respect of such Term Loans. To the extent that Excess Cash Flow for any fiscal
year required to be used to prepay Term Loans pursuant to Section 2.13(c) is
attributable (as reasonably determined by Parent) to one Borrower and its
Subsidiaries (as opposed to the other Borrower and its Subsidiaries), then such
Excess Cash Flow shall be used to prepay the Term Loans of such Borrower in
accordance with this Section 2.13(e).
(f) Parent shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of Parent setting forth in reasonable detail the calculation
of the amount of such prepayment and (ii) to the extent reasonably practicable,
at least three days prior written notice of such
36
prepayment. Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. All prepayments of Borrowings under this Section
2.13 shall be subject to Section 2.16, but shall otherwise be without premium or
penalty.
(g) Unless the Borrowers otherwise elect, amounts to be applied
pursuant to this Section 2.13 to the prepayment of Term Loans and/or Revolving
Loans shall be applied, as applicable, first to reduce outstanding ABR Term
Loans and ABR Revolving Loans, as the case may be. Any amounts remaining after
each such application shall, at the option of the applicable Borrower, be
applied to prepay Eurocurrency Term Loans or Eurocurrency Revolving Loans, as
the case may be, immediately and/or shall be deposited in the Prepayment Account
(as defined below). The Administrative Agent shall apply any cash deposited in
the Prepayment Account (i) allocable to Term Loans to prepay Eurocurrency Term
Loans and (ii) allocable to Revolving Loans to prepay Eurocurrency Revolving
Loans, in each case on the last day of their respective Interest Periods (or, at
the direction of Borrowers, on any earlier date) until all outstanding Term
Loans or Revolving Loans, as the case may be, have been prepaid to the extent
required by Section 2.13 or until all the allocable cash on deposit with respect
to such Loans has been exhausted and thereupon any balance remaining in the
Prepayment Account shall be disbursed to the applicable Borrower. For purposes
of this Agreement, the term "Prepayment Account" shall mean an account
established by the Borrowers with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(g). The Administrative Agent will, at the request of Borrowers, invest amounts
on deposit in the Prepayment Account in Cash Equivalents that mature prior to
the last day of the applicable Interest Periods of the Eurocurrency Term
Borrowings or Eurocurrency Revolving Borrowings to be prepaid, as the case may
be; provided, however, that (i) the Administrative Agent shall not be required
to make any investment that, in its sole judgment, would require or cause the
Administrative Agent to be in, or would result in any, violation of any law,
statute, rule or regulation and (ii) the Administrative Agent shall have no
obligation to invest amounts on deposit in the Prepayment Account if a Event of
Default pursuant to Section 7.01 or Section 7.02(a) shall have occurred and be
continuing. Any losses that may result from such investments shall not relieve
the applicable Borrower from its obligation to prepay Eurocurrency Borrowings on
the last day of the applicable Interest Period. Other than any interest earned
on such investments, the Prepayment Account shall not bear interest. Interest
or profits, if any, on such investments shall be deposited in the Prepayment
Account and reinvested and disbursed as specified above, except to the extent
necessary to make the applicable prepayment required by Section 2.13. If the
maturity of the Loans has been accelerated pursuant to Article VII, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. Each Borrower
hereby grants to the Administrative Agent, for its benefit and the benefit of
the Secured Parties, a security interest in the Prepayment Account to secure the
Obligations.
SECTION 2.14. Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
applicable to any Lender (which term shall include the Issuing Bank in this
Section 2.14) or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof (or, if later, the date on which
such Lender becomes a Lender):
37
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to any Letter of Credit or any Eurocurrency Loan made by it or its
obligation to make Eurocurrency Loans or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
(including Non-Excluded Taxes described in Section 2.20(b) and changes in
taxes measured by or imposed upon the overall net income, or franchise
taxes, or taxes measured by or imposed upon overall capital or net worth,
or branch taxes (in the case of such capital, net worth or branch taxes,
imposed in lieu of such net income tax), of such Lender or its applicable
lending office, branch, or any affiliate thereof);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of Adjusted LIBOR hereunder; or
(iii) shall impose on such Lender any other condition excluding any
tax of any kind whatsoever;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurocurrency Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrowers from such Lender,
through the Administrative Agent, in accordance herewith, the applicable
Borrower shall promptly pay such Lender, upon its demand, any additional amount
or amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable with respect to such Eurocurrency Loans or Letters of
Credit, provided that, in any such case, such Borrower may elect to convert
Eurocurrency Loans made by such Lender hereunder to ABR Loans by giving the
Administrative Agent at least one Business Day's notice of such election, in
which case such Borrower shall promptly pay to such Lender, upon demand, without
duplication, amounts theretofore required to be paid to such Lender pursuant to
this Section 2.14(a) and such amounts, if any, as may be required pursuant to
Section 2.16. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.14(a), it shall provide prompt notice thereof to the
applicable Borrower, through the Administrative Agent, certifying (i) that one
of the events described in this Section 2.14(a) has occurred and describing in
reasonable detail the nature of such event, (ii) as to the increased cost or
reduced amount resulting from such event and (iii) as to the additional amount
demanded by such Lender and a reasonably detailed explanation of the calculation
thereof.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case, made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender) shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of such Lender's obligations hereunder or under any Letter of Credit
to a level below that which such Lender or such corporation could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time,
38
within ten Business Days after submission by such Lender to the Borrowers (with
a copy to the Administrative Agent) of a written request therefor certifying (i)
that one of the events described in this Section 2.14(b) has occurred and
describing in reasonable detail the nature of such event, (ii) as to the
reduction of the rate of return on capital resulting from such event and (iii)
as to the additional amount or amounts demanded by such Lender or corporation
and a reasonably detailed explanation of the calculation thereof, the applicable
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or corporation for such reduction.
(c) Any certificate provided pursuant to paragraph (a) or (b) above as
to any additional amounts payable pursuant to this Section 2.14 submitted by
such Lender, through the Administrative Agent, to the Borrowers shall be
conclusive in the absence of manifest error. The agreements in this Section
2.14 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, (i) any change in any
Requirement of Law or in the interpretation or application thereof shall make it
unlawful for any Lender to make or maintain any Eurocurrency Loan or to give
effect to its obligations as contemplated hereby with respect to any
Eurocurrency Loan or participations in Letters of Credit denominated in an
Alternative Currency, or shall make it unlawful for the Issuing Bank to issue
Letters of Credit denominated in an Alternative Currency, or (ii) there shall
have occurred any change in national or international financial, political or
economic conditions (including the imposition of or any change in exchange
controls) or currency exchange rates which would make it impracticable for any
Lender to make Loans denominated in such Alternative Currency to, or to issue
Letters of Credit denominated in such Alternative Currency for the account of, a
Borrower, then by prompt written notice thereof to the Borrowers and to the
Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist):
(i) such Lender may declare that Eurocurrency Loans or Alternative
Currency Loans (in the affected currency or currencies), as the case may
be, will not thereafter (for the duration of such unlawfulness) be made by
such Lender hereunder (or be continued for additional Interest Periods and
ABR Loans and Foreign Base Rate Loans will not thereafter (for such
duration) be converted into Eurocurrency Loans), whereupon any request for
a Eurocurrency Borrowing or Alternative Currency Borrowing (in the affected
currency or currencies), as the case may be (or to convert an ABR Borrowing
or a Borrowing comprised of Foreign Base Rate Loans to a Eurocurrency
Borrowing or to continue a Eurocurrency Borrowing or an Alternative
Currency Borrowing (in the affected currency or currencies), as the case
may be, for an additional Interest Period) shall, as to such Lender only,
be deemed a request for an ABR Loan (in the case of Loans denominated in
Dollars) or a Foreign Base Rate Loan (in the case of Loans denominated in
an Alternative Currency) (or a request to continue an ABR Loan as such for
an additional Interest Period or to convert a Eurocurrency Loan into an ABR
Loan or a Foreign Base Rate Loan, as the case may be), unless such
declaration shall be subsequently withdrawn;
(ii) such Lender may require that all outstanding Eurocurrency Loans
or Alternative Currency Loans (in the affected currency or currencies), as
the case may be, made by it be converted to ABR Loans (in the case of
Eurocurrency Loans denominated in Dollars) or Foreign Base Rate Loans (in
the case of Loans
39
denominated in an Alternative Currency), as the case may be, in which event
all such Eurocurrency Loans or Alternative Currency Loans (in the affected
currency or currencies), as the case may be, shall be automatically
converted to ABR Loans or Foreign Base Rate Loans, as the case may be, as
of the effective date of such notice as provided in paragraph (b) below;
and
(iii) in the case of any such change affecting the Issuing Bank's
ability to issue, or any Revolving Credit Lender's ability to acquire
participations in, Letters of Credit denominated in an Alternative
Currency, the Issuing Bank or such Lender may declare that Letters of
Credit will not thereafter be issued in the affected Alternative Currency
or Currencies, whereupon the affected Alternative Currency or Currencies
shall be deemed (for the duration of such declaration) not to constitute an
Alternative Currency for purposes of the issuance of Letters of Credit.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurocurrency Loans or Alternative Currency Loans, as the case may be,
that would have been made by such Lender or the converted Eurocurrency Loans or
Alternative Currency Loans, as the case may be, of such Lender shall instead be
applied to repay the ABR Loans or Foreign Base Rate Loans, as the case may be,
made by such Lender in lieu of, or resulting from the conversion of, such
Eurocurrency Loans or Alternative Currency Loans, as the case may be.
(b) For purposes of this Section 2.15, a notice to the Borrowers by
any Lender shall be effective as to each Eurocurrency Loan made by such Lender,
on the last day of the Interest Period currently applicable to such Eurocurrency
Loan or within such earlier period required by law; in all other cases such
notice shall be effective on the date of receipt by the applicable Borrower.
SECTION 2.16. Indemnity. Each Borrower agrees to indemnify,
severally and not jointly, each Lender against and to hold each Lender harmless
from any loss or expense (other than through such Lender's gross negligence or
willful misconduct) that such Lender may sustain or incur as a consequence of
(a) default by such Borrower in making a borrowing of, conversion into or
continuation of Eurocurrency Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by such Borrower in making any prepayment after such Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurocurrency Loans on a day which is not the last day
of an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) over (ii) the amount of interest
(as reasonably determined by such Lender) that would have accrued to such Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurocurrency market. If any Lender becomes
entitled to claim any amounts under the indemnity contained in this Section
2.16, it shall provide prompt notice thereof to the applicable Borrower, through
the Administrative Agent, certifying (i) that one of the events described in
clause (a), (b) or (c) has occurred and describing in reasonable detail the
nature of such event, (ii) as to the loss or expense
40
sustained or incurred by such Lender as a consequence thereof and (iii) as to
the amount for which such Lender seeks indemnification hereunder and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any indemnification pursuant to this Section 2.16 submitted by such
Lender, through the Administrative Agent, to the applicable Borrower shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Section 2.15,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). For purposes of determining the
available Revolving Credit Commitments of the Lenders at any time, each
outstanding Swingline Loan shall be deemed to have utilized the Revolving Credit
Commitments of the Lenders (including those Lenders which shall not have made
Swingline Loans) pro rata in accordance with such Revolving Credit Commitments.
Each Lender agrees that in computing such Lender's portion of any Borrowing to
be made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole Dollar
(or comparable unit of any applicable Alternative Currency) amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against a Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Term Loans and Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Term Loans and Revolving Loans and participations in L/C Disbursements of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Term Loans and Revolving Loans and
L/C Exposure, as the case may be of such other Lender, so that the aggregate
unpaid principal amount of the Term Loans and Revolving Loans and L/C Exposure
and participations in Term Loans and Revolving Loans and L/C Exposure held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Term Loans and Revolving Loans and L/C Exposure then outstanding
as the principal amount of its Term Loans and Revolving Loans and L/C Exposure
prior to such exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Term Loans and Revolving Loans and L/C
Exposure outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.18 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrowers and Parent expressly consent to the foregoing
41
arrangements and agree that any Lender holding a participation in a Term Loan or
Revolving Loan or L/C Disbursement deemed to have been so purchased may, to the
extent provided in Section 9.07, exercise any and all rights of banker's lien,
setoff or counterclaim with respect to any and all moneys owing by Parent or
such Borrower to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to the Borrowers in the amount of such participation.
SECTION 2.19. Payments. (a) Except as otherwise provided herein,
the applicable Borrower shall make each payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder and under any
other Loan Document not later than 1:00 p.m., New York City time or, in the case
of any payment in an Alternative Currency, 1:00 p.m., local time in the country
of the Alternative Currency), on the date when due in immediately available
funds, without setoff, defense or counterclaim. Each such payment (other than
(i) Issuing Bank Fees and amounts pursuant to Section 2.05(c)(iii), which shall
be paid directly to the Issuing Bank, and (ii) reimbursements of drafts under
Letters of Credit which shall be paid to the respective Issuing Bank) shall be
made to the Administrative Agent at its offices designated by the Administrative
Agent from time to time. Each such payment (other than principal of and
interest on Alternative Currency Loans which shall be made in the applicable
Alternative Currency) shall be made in Dollars. The Administrative Agent shall
distribute such funds to the Lenders, as the case may be, holding obligations on
account of which such amounts were paid promptly upon receipt in like funds as
received.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Except to the extent required under
applicable law, all payments made by a Borrower or any Guarantor under this
Agreement or any Loan Document shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority excluding taxes measured by or imposed upon the
overall net income of the Administrative Agent or any Lender or its applicable
lending office, or any branch or affiliate of either, and all franchise taxes,
branch taxes, taxes on doing business or taxes measured by or imposed upon the
overall capital or net worth of the Administrative Agent or any Lender or its
applicable lending office, or any branch or affiliate of either, in each case
imposed: (i) by the jurisdiction under the laws of which the Administrative
Agent or such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which the principal executive office of the
Administrative Agent or any Lender is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such tax and the
Administrative Agent or such Lender, applicable lending office, branch or
affiliate other than a connection arising from the Administrative Agent or such
Lender having executed, delivered or performed its obligations under, or
received payment under or enforced, this Agreement or any other Loan Document.
If any such non-excluded taxes, levies, imposts, duties, charges, fees
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder or
under any other Loan Document, the amounts so payable to the
42
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all Non-
Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement; provided, however, that the
applicable Borrower and Guarantor shall be entitled to deduct and withhold any
Non-Excluded Taxes and shall not be required to increase any such amounts
payable to any Lender or the Administrative Agent under the circumstances and to
the extent set forth in Section 2.20(b). Whenever any Non-Excluded Taxes are
payable by a Borrower, as promptly as possible thereafter such Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by such Borrower showing payment thereof. If a Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, such Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.20(a) shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Notwithstanding the provisions of Section 2.20(a), the
applicable Borrower or Guarantor shall be entitled to deduct and withhold Non-
Excluded Taxes and shall not be required to increase any amounts payable to a
Lender or the Administrative Agent in respect of:
(i) Non-Excluded Taxes imposed by any Governmental Authority of, or
located in, Mexico, to the extent such Non-Excluded Taxes are imposed on
payments at a rate in excess of 4.9% (such Non-Excluded Taxes in excess of
4.9%, "Excess Mexican Taxes"); provided, however, that if after the date
hereof any tax treaty to which Mexico is a party is amended, this clause
2.20(b)(i) shall not apply to any Lender or the Administrative Agent to the
extent such Lender or the Administrative Agent, as the case may be, would
not have been subject to such Excess Mexican Taxes but for such amendment;
(ii) Non-Excluded Taxes that would not have been incurred but for
the failure of such Lender or the Administrative Agent, as the case may be,
in the case of a participation pursuant to Section 9.06, the failure of the
relevant participant, to comply with any certification, identification,
information, documentation or other reporting requirement, if compliance is
required by law, regulation, administrative practice or an applicable
treaty as a precondition to exemption from, or reduction in the rate of,
Non-Excluded Taxes;
(iii) Non-Excluded Taxes imposed by the United States of America, if
such Lender or the Administrative Agent is not organized under the laws of
the United States of America or a state thereof and fails to comply with
requirements of Section 2.20(c); and
(iv) Non-Excluded Taxes imposed by any Governmental Authority of, or
located in, Mexico, as a result of the failure by any Lender (x) to provide
to the Borrowers or any Guarantor, as the case may be, upon request of the
Borrowers or any Guarantor, as the case may be, and if and when required
under applicable law, a letter specifying that the Lender is the effective
beneficiary of the interest payments under this Agreement or any other Loan
Document, as set forth in the Mexican
43
Income Tax Law (Ley del Impuesto Sobre la Renta) and the "Miscellaneous Tax
Resolution for 1998" (Resolucion Miscelanea Fiscal para 1998), as amended,
or any equivalent general rules in effect thereafter while this Agreement
shall remain in full force and effect, or (y) to maintain registration with
the Ministry of Finance and Public Credit as a foreign financial
institution for purposes of Article 154 of the Mexican Income Tax Law, as
long as such requirement remains applicable and to comply with the
requirements set forth therein.
(c) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) on or before the date of any payment by a Borrower under this
Agreement or any other Loan Document to such Lender, deliver to the
Borrowers and the Administrative Agent (A) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, and (B) an Internal Revenue Service
Form W-8 or W-9, or successor applicable form, as the case may be;
(ii) deliver to the Borrowers and the Administrative Agent two
further copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrowers or
the Administrative Agent;
unless in any such case, any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrowers and the Administrative Agent. Such Lender shall certify (i) in the
case of a Form 1001 or 4224, that it is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or a participant pursuant to Section 9.06
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms and statements required pursuant to this Section 2.20, provided
that in the case of a participant such participant shall furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.
SECTION 2.21. Certain Rules Relating to the Payment of Additional
Amounts. (a) Upon the request, and at the expense, of a Borrower or Guarantor,
each Lender or the Administrative Agent to which such Borrower or Guarantor is
required to pay any additional amount pursuant to Section 2.14 or 2.20, and any
participant of a Lender or the Administrative Agent in respect of whose
participation such payment is required, shall reasonably afford such Borrower or
Guarantor the opportunity to contest, and reasonably cooperate with such
Borrower or Guarantor in contesting, the imposition of any Non-Excluded Tax
giving rise to such payment, provided that (i) such Lender or the Administrative
Agent shall not be required to afford such Borrower or Guarantor the
44
opportunity to so contest unless the Borrower or Guarantor shall have confirmed
in writing to such Lender or the Administrative Agent its obligation to pay such
amounts pursuant to this Agreement and (ii) such Borrower or Guarantor shall
reimburse such Lender or the Administrative Agent for its reasonable attorneys'
and accountants' fees and disbursements incurred in so cooperating with such
Borrower or Guarantor in contesting the imposition of such Non-Excluded Tax.
(b) If a Lender or the Administrative Agent changes its applicable
lending office (other than pursuant to paragraph (c) below) and the effect of
the change, as of the date of the change, would be to cause a Borrower or
Guarantor to become obligated to pay any additional amount under Section 2.14 or
2.20, such Borrower or Guarantor shall not be obligated to pay such additional
amount.
(c) If a condition or an event occurs which would, or would upon the
passage of time or giving of notice, result in the payment of any additional
amount to any Lender or the Administrative Agent by a Borrower or Guarantor
pursuant to Section 2.14 or 2.20 such Lender or the Administrative Agent shall
take such steps as may reasonably be available to it and acceptable to such
Borrower or Guarantor to mitigate the effects of such condition or event (which
shall include efforts to rebook the Loans or reissue Letters of Credit held by
such Lender at another lending office, or through another branch or an
affiliate, of such Lender), provided that such Lender or the Administrative
Agent shall not be required to take any step that, in its reasonable judgment,
would be materially disadvantageous to its business or operations or would
require it to incur additional costs (unless such Borrower or Guarantor agrees
to reimburse such Lender or the Administrative Agent for the reasonable
incremental out-of-pocket costs thereof). If a condition or event occurs which
would, or would upon the passage of time or giving of notice, result in the
payment of any additional amount to any Lender or the Administrative Agent by a
Borrower or Guarantor pursuant to Section 2.14(a)(i) (i.e. increased costs for
taxes) such Lender or the Administrative Agent shall promptly notify such
Borrower or Guarantor and the Administrative Agent, provided that a failure on
the part of a Lender or the Administrative Agent to notify such Borrower or
Guarantor shall not result in any liability to such Lender or the Administrative
Agent and shall not reduce the amount of any additional amounts payable
hereunder to such Lender or the Administrative Agent to the extent that such
failure to notify such Borrower or Guarantor does not result in the payment of
any additional amount by such Borrower or Guarantor pursuant to Section
2.14(a)(i) which payment could have been avoided or reduced had the Lender or
the Administrative Agent notified the Borrower or Guarantor in accordance with
this Section 2.21(c).
(d) Except as provided in the next sentence, if a Borrower or
Guarantor shall become obligated to pay additional amounts pursuant to Section
2.14 or 2.20 and any affected Lender shall not have promptly taken steps
necessary to avoid the need for payments under Section 2.14 or 2.20, such
Borrower or Guarantor shall have the right, for so long as such obligation
remains, (i) with the assistance of the Administrative Agent, to seek one or
more substitute Lenders reasonably satisfactory to the Administrative Agent and
such Borrower to purchase the affected Loan, in whole or in part, at an
aggregate price no less than such Loan's principal amount plus accrued interest,
and assume the affected obligations under this Agreement, or (ii) to the extent
that no Default or Event of Default under Section 6.12, 6.13 or 7.02(a) shall
have occurred of which either Borrower has actual knowledge and is then
continuing, upon at least four Business Days irrevocable notice to the
Administrative Agent, to prepay the affected Loan, in whole or in part, subject
to Section 2.16 but otherwise without premium or penalty. If a Borrower or
Guarantor shall become obligated to pay
45
additional amounts pursuant to Section 2.20 in respect of Non-Excluded Taxes
imposed by Mexico, the rights of such Borrower or Guarantor pursuant to the
preceding sentence shall apply only in the event such Non-Excluded Taxes are
imposed at a rate in excess of 4.9%. In the case of the substitution of a
Lender, the Borrowers, the Administrative Agent, the affected Lender, and any
substitute Lender shall execute and deliver an appropriately completed
Assignment and Acceptance pursuant to Section 9.05 to effect the assignment of
rights to, and the assumption of obligations by, the substitute Lender. In the
case of a prepayment of an affected Loan, the amount specified in the notice
shall be due and payable on the date specified therein, together with any
accrued interest to such date on the amount prepaid. In the case of each of the
substitution of a Lender and of the prepayment of an affected Loan, the
applicable Borrower shall first pay the affected Lender any additional amounts
owing under Sections 2.14, 2.16 and 2.20 (as well as any commitment fees and
other amounts then due and owing to such Lender) prior to such substitution or
prepayment.
(e) If the Administrative Agent or any Lender receives a refund in
respect of taxes for which a Borrower or Guarantor has made additional payments
pursuant to Section 2.14(a) or 2.20(a), the Administrative Agent or such Lender,
as the case may be, shall promptly pay such refund (together with any interest
with respect thereto received from the relevant taxing authority) to such
Borrower or Guarantor; provided, however, that such Borrower and Guarantor
agrees promptly to return such refund (together with any interest with respect
thereto due to the relevant taxing authority) (free of all Non-Excluded Taxes)
to the Administrative Agent or the applicable Lender, as the case may be, upon
receipt of a notice that such refund is required to be repaid to the relevant
taxing authority. Notwithstanding anything to the contrary contained in this
Section 2.21(e), no Lender shall have any obligation to disclose to a Borrower
any of such Lender's books, records or tax filings.
(f) The obligations of the Administrative Agent and of each Lender or
participant of a Lender under this Section 2.21 shall survive the termination of
this Agreement and the payment of the Loans and all amounts payable hereunder.
(g) For the purposes of Sections 2.14 and 2.20 a change in treaty,
law, rule or regulation shall not include any change in the income tax treaty
between Luxembourg and the United States of America in effect as of the date
hereof or any change in the tax regulations of the United States of America
concerning procedures for determining entitlement to exemption from, or
reduction in the rate of, withholding taxes imposed by the United States of
America.
SECTION 2.22. Letters of Credit. (a) General. Either Borrower may
request the issuance of a Letter of Credit for its own or any of its
Subsidiaries' account, in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time while the
Revolving Credit Commitments remain in effect. This Section 2.22 shall not be
construed to impose an obligation upon the Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to
amend, renew or extend an existing Letter of Credit), the applicable Borrower
shall deliver (including by telecopy) to the Issuing Bank and the Administrative
Agent (at least five Business Days prior to the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or
46
extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
below), the amount of such Letter of Credit, the currency in which such Letter
of Credit is to be denominated (which shall be Dollars or, subject to Section
2.15, an Alternative Currency), the name and address of the beneficiary thereof
and such other information as shall be reasonably necessary to prepare such
Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit the applicable Borrower shall be deemed to represent and
warrant that, after giving effect to such issuance, amendment, renewal or
extension (A) the L/C Exposure shall not exceed $15,000,000, (B) the Aggregate
Alternative Currency Revolving Credit Exposure shall not exceed $32,500,000, (C)
the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving
Credit Commitment and (D) the JCISA Revolving Credit Exposure shall not exceed
the JCISA Maximum Percentage of the Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close
of business on the earlier of the date one year after the date of the issuance
of such Letter of Credit and the date that is three Business Days prior to the
Maturity Date, unless such Letter of Credit expires by its terms on an earlier
date; provided that any Letter of Credit may, upon the request of the applicable
Borrower, include a provision whereby such Letter of Credit shall be renewed
automatically for additional consecutive periods of 12 months or less (but not
beyond the date that is three Business Days prior to the Maturity Date) unless
the Issuing Bank notifies the beneficiary thereof at least 30 days prior to the
then-applicable expiration date that such Letter of Credit will not be renewed.
(d) Participations. (i) The Issuing Bank irrevocably agrees to grant
and hereby grants to each Revolving Credit Lender, and, to induce the Issuing
Bank to issue Letters of Credit hereunder, each Revolving Credit Lender
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Bank, on the terms and conditions hereinafter stated, for such
Revolving Credit Lender's own account and risk an undivided interest equal to
such Revolving Credit Lender's Pro Rata Percentage from time to time in effect
in the Issuing Bank's obligations and rights (other than with respect to the
Issuing Bank Fees and amounts pursuant to Section 2.05(c)(iii)) under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder. Each Revolving Credit Lender agrees with the Issuing
Bank to make the payments specified in clause (f) of Section 2.02 hereof.
(ii) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit issued by it and has received from any Revolving
Credit Lender its pro rata share of such payment in accordance with Section
2.02(f), the Issuing Bank receives any payment related to such Letter of
Credit (whether directly from a Borrower or otherwise, including proceeds
of collateral applied thereto by the Issuing Bank), or any payment of
interest on account thereof, the Issuing Bank will, (x) if with respect to
payments in Dollars, if such payment is received prior to 12:00 noon, New
York City time, on a Business Day, distribute to such Revolving Credit
Lender its pro rata share thereof prior to the end of such Business Day and
otherwise the Issuing Bank will distribute such payment on the next
succeeding Business Day and (y) if with respect to an Alternative Currency,
if such payment is received prior to 10:00 a.m., local time, on a Business
Day, distribute to such Revolving Credit Lender its pro rata share thereof
prior to the end of such Business Day and otherwise the Issuing Bank will
distribute such payment on the next succeeding Business Day;
47
provided, however, that in the event that any such payment received by the
Issuing Bank and distributed to the Revolving Credit Lenders shall be
required to be returned by the Issuing Bank, each such Revolving Credit
Lender shall return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.
(e) Reimbursement. (i) Upon payment of a draft under a Letter of
Credit, the applicable Borrower agrees to reimburse the Issuing Bank on the same
Business Day on which it receives notice that a draft presented under any Letter
of Credit issued by such Issuing Bank has been paid by such Issuing Bank,
provided such Issuing Bank provides such notice to the Borrower prior to 11:00
a.m., New York City time, on such Business Day and otherwise the Borrower will
reimburse the Issuing Bank on the next succeeding Business Day by 11:00 a.m.,
New York City time (or, in the case of any payment in an Alternative Currency,
11:00 a.m., local time in the country of the Alternative Currency); provided
further that the failure to provide such notice shall not affect the applicable
Borrower's absolute and unconditional obligation to reimburse the Issuing Bank
for any draft paid under any Letter of Credit issued by it. Any such notice
shall indicate the amount of (x) such draft so paid and (y) any taxes, fees,
charges or other costs or expenses reasonably incurred by the Issuing Bank in
connection with such payment. Each such payment shall be made to the Issuing
Bank at its address for notices specified herein in Dollars or in the applicable
Alternative Currency and in immediately available funds.
(ii) Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Administrative Agent for a borrowing
pursuant to Section 2.02 of ABR Loans in the amount of such drawing (or the
Dollar Equivalent thereof) but without any requirement for compliance with
the prior notice or minimum borrowing amount provisions of Section 2.02 or
the conditions set forth in Section 4.01. The date of Borrowing with
respect to such borrowing shall be the date of such drawing. Any such
request or borrowing shall not relieve the Issuing Bank or Revolving Credit
Lender of any liability resulting from the gross negligence or willful
misconduct of the Issuing Bank or any Revolving Credit Lender, or otherwise
affect any defenses or other right that either Borrower may have as a
result of any such gross negligence or willful misconduct.
(f) Obligations Absolute. (i) Each Borrower's obligation to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which a Borrower
may have or have had against the Issuing Bank, any Lender or any beneficiary of
a Letter of Credit, provided that this paragraph shall not relieve the Issuing
Bank or any Lender of any liability resulting from the gross negligence or
willful misconduct of the Issuing Bank or any Lender, or otherwise affect any
defense or other right that a Borrower may have as a result of any such gross
negligence or willful misconduct.
(ii) Each Borrower also agrees with the Issuing Bank that the Issuing
Bank shall not be responsible for, and such Borrower's reimbursement
obligations under Section 2.22(e) shall not be affected by, among other
things, (x) the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or (y) any dispute between or among such Borrower and
any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or (z) any claims whatsoever of such
Borrower against any beneficiary of such Letter of Credit or any
48
such transferee, provided that this paragraph shall not relieve the Issuing
Bank of any liability resulting from the gross negligence or willful
misconduct of the Issuing Bank, or otherwise affect any defense or other
right that such Borrower may have as a result of any such gross negligence
or willful misconduct.
(iii) Neither the Issuing Bank with respect to any Letter of Credit
nor any Lender with respect thereto shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with such Letter
of Credit, except for errors or omissions caused by such Person's gross
negligence or willful misconduct.
(iv) Each Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit issued by it
or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Commercial Code of the State of New York,
shall be binding on such Borrower and shall not result in any liability of
such Issuing Bank or any Lender to such Borrower.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall as promptly
as possible give telephonic notification, confirmed by telecopy, to the
Administrative Agent and the applicable Borrower of such demand for payment and
whether the Issuing Bank has made or will make an L/C Disbursement thereunder,
provided that any failure to give or delay in giving such notice shall not
relieve the applicable Borrower of its obligation to reimburse the Issuing Bank
and the Revolving Credit Lenders with respect to any such L/C Disbursement;
provided further that this paragraph shall not relieve the Issuing Bank of any
liability resulting from the gross negligence or willful misconduct of the
Issuing Bank, or otherwise affect any defense or other right that the applicable
Borrower may have as a result of any such gross negligence or willful
misconduct. The Administrative Agent shall promptly give each Revolving Credit
Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the applicable
Borrower shall reimburse such L/C Disbursement in full as specified in clause
(e) above the unpaid amount thereof shall bear interest for the account of the
Issuing Bank, for each day from and including the date of such L/C Disbursement,
to but excluding the earlier of the date of payment by the Borrower or the date
on which interest shall commence to accrue thereon as provided in Section
2.02(f), at the rate per annum that would apply to such amount if such amount
were (i) in the case of an L/C Disbursement denominated in Dollars, an ABR Loan,
and (ii) in the case of an L/C Disbursement denominated in an Alternative
Currency, a Foreign Base Rate Loan.
(i) Resignation or Removal of the Issuing Bank. The Issuing Bank
may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrowers, and may be removed at any
time by the Borrowers by notice to the Issuing Bank and the Administrative
Agent. Subject to the next succeeding paragraph, upon the acceptance of any
appointment as the Issuing Bank hereunder by a Lender that shall agree to serve
as successor Issuing Bank, such successor shall succeed to and become vested
with all the interests, rights and obligations of the retiring Issuing Bank and
the retiring Issuing Bank shall be discharged from its obligations to issue
additional Letters of Credit
49
hereunder. At the time such removal or resignation shall become effective, the
Borrowers shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii).
The acceptance of any appointment as the Issuing Bank hereunder by a successor
Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrowers and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall have
all the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "Issuing Bank" shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the resignation or removal of the
Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement and the other Loan Documents with respect to Letters of
Credit issued by it prior to such resignation or removal, but shall not be
required to issue additional Letters of Credit.
(j) Reporting Requirements of Issuing Banks. (a) Within two Business
Days following the last day of each calendar month, each Issuing Bank shall
deliver to the Administrative Agent a report detailing all activity during the
preceding month with respect to any Letters of Credit issued by such Issuing
Bank, including the face amount, the account party, the beneficiary and the
expiration date of such Letters of Credit and any other information with respect
thereto as may be requested by the Administrative Agent.
(k) Additional Issuing Banks. The Borrowers may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an issuing bank under the terms of this Agreement. Any Lender
designated as an issuing bank pursuant to this paragraph (k) shall be deemed to
be an "Issuing Bank" (in addition to being a Lender) in respect of Letters of
Credit issued or to be issued by such Lender, and, with respect to such Letters
of Credit, such term shall thereafter apply to the other Issuing Bank or Issuing
Banks and such Lender.
SECTION 2.23. Swingline Loans. (a) Swingline Commitment. Subject
to the terms and conditions and relying upon the representations and warranties
herein set forth, the Swingline Lender agrees to make loans, in Dollars, to
either Borrower at any time and from time to time on and after the Closing Date
and until the earlier of the Maturity Date and the termination of the Revolving
Credit Commitments in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of all Swingline Loans exceeding $10,000,000 in the
aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving effect
to any Swingline Loan, exceeding the Total Revolving Credit Commitment. Each
Swingline Loan shall be in a minimum amount of $250,000 or a multiple of
$100,000 in excess thereof. The Swingline Commitments may be terminated or
reduced from time to time as provided herein. Within the foregoing limits, each
Borrower may borrow, pay or prepay and reborrow Swingline Loans hereunder,
subject to the terms, conditions and limitations set forth herein.
(b) Swingline Loans. The applicable Borrower shall notify the
Administrative Agent and the Swingline Lender, by telecopy, or by telephone
(confirmed by telecopy), not later than 2:00 p.m., New York City time, on the
day of a proposed Swingline Loan. Such notice shall be delivered on a Business
Day, shall be irrevocable and shall refer to this Agreement and shall specify
the requested date (which shall be a Business Day), the account of the
applicable Borrower into which the Swingline Loan is to be deposited and the
50
amount of such Swingline Loan. The Swingline Lender will make the proceeds of
the Swingline Loan available to the Administrative Agent for further credit on
the date of such notice to the account so designated by the applicable Borrower.
(c) Prepayment. Each Borrower shall have the right at any time and
from time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephone notice promptly confirmed by written,
or telecopy notice) to the Swingline Lender and the Administrative Agent before
1:00 p.m., New York City time, on the date of prepayment at the Swingline
Lender's address for notices specified on Schedule 2.01 or as otherwise
specified in writing to the applicable Borrower. All principal payments of
Swingline Loans shall be accompanied by accrued interest on the principal amount
being repaid to the date of payment.
(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject
to the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
(e) Participations. (i) The Administrative Agent, at any time in
its sole and absolute discretion, may (or, upon the request of the Swing Line
Lender, shall), on behalf of the applicable Borrower (which hereby irrevocably
directs the Administrative Agent to act on its behalf) request that each
Revolving Credit Lender make a Revolving Credit Loan in an amount equal to such
Revolving Credit Lender's Pro Rata Percentage of the then outstanding principal
amount of Swing Line Loans (the "Refunded Swing Line Loans") on the date such
notice is given (regardless of whether the Refunded Swing Line Loans comply with
the minimum borrowing provisions of Section 2.02). In the event that the
Swingline Lender makes its request for refunding of the Swingline Loans, each
Revolving Credit Lender shall make the proceeds of its Revolving Loan available
in immediately available funds to the Administrative Agent, for the benefit of
the Swingline Lender, at the office of the Administrative Agent prior to 11:00
a.m., New York City time, on the first Business Day following such request (or,
if such request is made prior to 10:00 a.m., New York City time, on any date,
then the proceeds of such Revolving Loans shall instead be so made available to
the Administrative Agent prior to 2:00 p.m., New York City time, on the date of
such request), provided that in the event that any of the events described in
Section 7.01(a) or (b) shall have occurred and be continuing, the Revolving
Credit Lenders shall not make such Revolving Loans and the provisions of clause
(ii) below shall apply.
(ii) If, prior to the making of a Revolving Loan pursuant to clause
(i) above, one of the events described in Section 7.01(a) or (b) shall have
occurred and be continuing, each Revolving Credit Lender will, on the date
such Revolving Loan was to have been made, purchase from the Swingline
Lender an undivided participating interest in the Swingline Loan to be
refunded in an amount equal to its Pro Rata Percentage of such Swingline
Loan to be refunded. Each Revolving Credit Lender will immediately
transfer to the Administrative Agent, in immediately available funds, the
amount of its participation.
(iii) Whenever, at any time after the Swingline Lender has received
from any Revolving Credit Lender such Lender's participating interest in a
Swingline Loan to be refunded pursuant to clause (ii), the Swingline Lender
receives any payment on account thereof, the Swingline Lender will pay to
the Administrative Agent for distribution to such Revolving Credit Lender
its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding
51
and funded) in like funds as received, provided that in the event that such
payment received by the Swingline Lender is required to be returned, such
Revolving Credit Lender will return to the Swingline Lender any portion
thereof previously distributed by the Swingline Lender through the
Administrative Agent to it in like funds as such payment is required to be
returned by the Swingline Lender.
(f) Unconditional Obligation to Refund Swingline Loans. Each
Revolving Credit Lender's obligation to make Revolving Loans and to purchase
participating interests in accordance with Sections 2.23(e)(i) and (ii) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Revolving Credit Lender may have against the
Swingline Lender, either Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of any Default or Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the applicable
Borrower or any other Person; (iv) any breach of this Agreement by the Borrower
or any other Person; (v) any inability of the applicable Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement on the date upon
which such Revolving Loan is to be made or participating interest is to be
purchased; or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Revolving Credit Lender
does not make available to the Administrative Agent the amount required pursuant
to Sections 2.23(e)(i) and (ii), as the case may be, the Administrative Agent
shall be entitled to recover such amount on demand from such Revolving Credit
Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the rate applicable to ABR Loans.
SECTION 2.24. Consistent Tax Treatment. Each Borrower and each
Lender hereby agrees to treat the Loans to JCI as Indebtedness of JCI and the
Loans of JCISA as Indebtedness of JCISA for all U.S. federal, state and local
tax purposes and for all non-U.S. tax purposes.
ARTICLE III
Representations and Warranties
Each of Parent and each Borrower hereby represents and warrants as to
itself and its Subsidiaries to the Administrative Agent, the Collateral Agent,
the Issuing Bank and each Lender that:
SECTION 3.01. Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of Parent as at December 31, 1997 (including the
notes thereto) and the unaudited pro forma consolidated income statement for the
fiscal year ended December 31, 1997 (including the notes thereto) (collectively,
the "Pro Forma Financial Statements"), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect to the Transactions.
The Pro Forma Financial Statements have been prepared based on the good faith
assumptions of Parent as of the date of delivery thereof and, based on such
assumptions, present fairly in all material respects on a pro forma basis the
estimated financial position of Parent and the Subsidiaries as at December 31,
1997, assuming that the events specified in the preceding sentence had actually
occurred at such date.
52
(b) The audited combined balance sheet of Jafra Cosmetics
International (as defined in note 1 to such balance sheet, the "Audited
Company") as at December 31, 1997, and the related combined statements of income
and of cash flows for the fiscal year ended on such date, reported on by and
accompanied by an unqualified report from KPMG Peat Marwick, present fairly, in
all material respects, the combined financial conditions of the Audited Company
as at such date, and the combined results of its operations and its combined
cash flows for the fiscal year then ended. The unaudited combined balance sheet
of the Audited Company as at March 31, 1998, and the related unaudited combined
statements of income and cash flows for the three-month period ended on such
date, on the basis disclosed in the footnotes to such financial statements,
present fairly, in all material respects, the combined financial condition of
the Audited Company as at such date, and the combined results of its operations
and its combined cash flows for the three-month period then ended (subject to
the omission of certain footnotes and normal year-end audit and other
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by a
Responsible Officer, and disclosed in any such schedules and notes, and except
that such unaudited financial statements do not contain certain footnotes). All
material Guarantees, material contingent liabilities and liabilities for taxes,
or all material long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, which according to GAAP must be
reflected in such financial statements or the notes thereto are so reflected.
During the period from March 31, 1998, to and including the date hereof, there
has been no disposition by the Audited Company of any business or property that
would be material to the Audited Company, taken as a whole, other than any such
disposition which is reflected in the foregoing financial statements or in the
notes thereto, or which has otherwise been disclosed in writing to the Lenders
on or prior to the Closing Date, or which is pursuant to the Transactions.
SECTION 3.02. Change. Since December 31, 1997, there has been no
development or event relating to or affecting any Loan Party which has had or
would reasonably be expected to have a Material Adverse Effect (after giving
effect to the Transactions and the transactions related thereto).
SECTION 3.03. Corporate Existence; Compliance with Law. Each of
Parent, each Borrower and each of the Active Subsidiaries (a) is duly organized,
validly existing and, with respect to any such entity organized under the laws
of a jurisdiction of the United States of America, in good standing under the
laws of the jurisdiction of its organization, (b) has the corporate or other
organizational power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the failure
to have such legal right would not be reasonably expected to have a Material
Adverse Effect, (c) is duly qualified as a foreign entity and, if applicable, in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and, if applicable, in good standing would not be reasonably expected
to have a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.04. Corporate Power; Authorization; Enforceable
Obligations. (a) Each of Parent, each Borrower and each other Loan Party has
the corporate or other
53
organizational power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and, in the case of each
Borrower, to borrow hereunder, and has taken all necessary corporate or other
organizational action to authorize, in the case of each Borrower, the Borrowings
on the terms and conditions of this Agreement and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other similar act by or
in respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of any Loan Party or any other Subsidiary of
Parent in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
Parent, the Borrowers and each other Loan Party is a party, except for (i)
consents, authorizations, notices and filings described in Schedule 3.04(a), all
of which have been obtained or made or have the status described therein, (ii)
filings to perfect the Liens created by the Security Documents, (iii) filings
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. (S) 3737
et seq.), in respect of Accounts of the Borrowers and their Subsidiaries the
obligor in respect of which is the United States of America or any department,
agency or instrumentality thereof, (iv) recordation of the Mortgages and (v)
consents, authorizations, notices and filings which the failure to obtain or
make would not reasonably be expected to have a Material Adverse Effect.
(b) This Agreement has been, and each of the other Loan Documents and
any other agreement to be entered into by any Loan Party pursuant hereto will
be, duly executed and delivered on behalf of such Loan Party that is party
thereto. This Agreement constitutes, and each of the other Loan Documents and
any other agreement to be entered into by any Loan Party pursuant hereto will
constitute upon execution and delivery, the legal, valid and binding obligation
of such Loan Party, enforceable against such Loan Party in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 3.05. No Legal Bar. The execution, delivery and performance
of each Loan Document by each Loan Party party thereto, the incurrence or
issuance of and use of the proceeds of the Loans and of drawings under the
Letters of Credit by the Borrowers and the consummation on the Closing Date of
the other Transactions (a) will not violate any Requirement of Law or result in
a breach of any Contractual Obligation applicable to or binding upon either
Borrower, any Subsidiary or any of their respective properties or assets in any
respect that would reasonably be expected to have a Material Adverse Effect and
(b) will not result in the creation or imposition of any Lien on any of their
properties or assets pursuant to any Requirement of Law applicable to it, as the
case may be, or any of its Contractual Obligations, except for the Liens arising
under the Security Documents or permitted under Section 6.02.
SECTION 3.06. No Material Litigation. Except as disclosed on
Schedule 3.06, no litigation by, investigation by, or proceeding of or before
any arbitrator or any Governmental Authority is pending or, to the knowledge of
Parent or either Borrower, threatened by or against Parent or either Borrower or
any Subsidiary, or against any of its or their respective properties or revenues
(including after giving effect to the Transactions), which (a) is so pending or
threatened at any time on or prior to the Closing Date and relates
54
to any Loan Document or the other transactions contemplated hereby or (b) would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. No Default. None of Parent, either Borrower or any of
the Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 3.08. Intellectual Property. Parent and each of the
Subsidiaries owns, or has the legal right to use, all United States patents,
trademarks, trade names, copyrights, technology, know-how and processes
necessary for the conduct of its business substantially as currently conducted
(the "Intellectual Property"), except for those the failure to own or have such
legal right to use which would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 3.08, no claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does Parent or any Subsidiary know of any such claim
and, to the knowledge of Parent and the Subsidiaries, the use of such
Intellectual Property by Parent and the Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.09. No Burdensome Restrictions; Compliance with Laws. (a)
Except as previously disclosed to the Lenders in writing prior to the Closing
Date, no Requirement of Law applicable to or Contractual Obligation of Parent,
either Borrower or any Subsidiary would reasonably be expected to have a
Material Adverse Effect.
(b) Certificates of occupancy and permits are in effect for each
Mortgaged Property as currently constructed, except to the extent that any such
failure to be in effect would reasonably be expected to have a Material Adverse
Effect.
(c) No exchange control law or regulation materially restricts any
Loan Party from complying with its obligations in respect of any Alternative
Currency Loan or Letter of Credit denominated in an Alternative Currency.
SECTION 3.10. Taxes. Each of Parent and each of its Subsidiaries has
filed or caused to be filed all United States Federal income tax returns and all
other material tax returns which, to the knowledge of Parent and each Borrower,
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any (i) taxes, fees or other charges with
respect to which the failure to pay, in the aggregate, would not have a Material
Adverse Effect or (ii) taxes, fees or other charges the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of Parent, such Borrower or such Subsidiary, as the case may be); other
than as disclosed on Schedule 3.10, no tax Lien has been filed, and, to the
knowledge of Parent or either Borrower, no claim is being asserted, with respect
to any such tax, fee or other charge.
SECTION 3.11. Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U. If
requested by any Lender or the Administrative Agent, each Borrower will furnish
to the Administrative Agent and each
55
Lender a statement to the foregoing effect in conformity with the requirements
of FR Form U-1 referred to in Regulation U.
SECTION 3.12. Employee Benefit Plans. During the five-year period
prior to each date as of which this representation is made, or deemed made, with
respect to any Plan (or, with respect to (vi), (viii) or (xi) below, as of the
date such representation is made or deemed made), none of the following events
or conditions, either individually or in the aggregate, has resulted or is
reasonably likely to result in a liability to JCI or any of its Subsidiaries
which would be reasonably expected to have a Material Adverse Effect; (i) a
Reportable Event; (ii) an "accumulated funding deficiency" (within the meaning
of Section 412 of the Code or Section 302 of ERISA); (iii) any material
noncompliance with the applicable provisions of ERISA or the Code; (iv) a
termination of a Single Employer Plan (other than a standard termination
pursuant to Section 4041(b) of ERISA); (v) a Lien in favor of the PBGC or a
Plan; (vi) Underfunding with respect to any Single Employer Plan; (vii) a
complete or partial withdrawal from any Multiemployer Plan by JCI or any
Commonly Controlled Entity; (viii) any liability of JCI or any Commonly
Controlled Entity under ERISA if JCI or any such Commonly Controlled Entity were
to withdraw completely from all Multiemployer Plans as of the annual valuation
date most closely preceding the date on which this representation is made or
deemed made; (ix) the Reorganization or Insolvency of any Multiemployer Plan;
(x) an event or condition with respect to which JCI or any Commonly Controlled
Entity has incurred or could incur any liability in respect of a Former Plan;
and (xi) with respect to any Foreign Benefit Plan, any material noncompliance
with applicable foreign law or the incurrence of any material liability.
SECTION 3.13. Investment Company Act; Other Regulations. None of
Parent, either Borrower or any Subsidiary is an "investment company" required to
register as such under the Investment Company Act of 1940, as amended, within
the meaning of such Act. None of Parent, either Borrower or any Subsidiary is
subject to regulation under any federal or state statute or regulation (other
than Regulation X) which limits its ability to incur Indebtedness.
SECTION 3.14. Subsidiaries. On the Closing Date, the Subsidiaries
and their jurisdiction of incorporation shall be as set forth on Schedule 3.14.
SECTION 3.15. Environmental Matters. Other than exceptions to any of
the following that would not, individually or in the aggregate, reasonably be
expected to result in the payment of a Material Environmental Amount:
(a) the facilities and properties owned, leased or operated by
Parent, either Borrower or any Subsidiary (the "Properties") do not contain
any Materials of Environmental Concern in amounts or concentrations which
(i) constitute a violation of, or (ii) would reasonably be expected to give
rise to liability on the part of Parent, either Borrower or any Subsidiary
under, any applicable Environmental Law;
(b) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
applicable Environmental Law with respect to the Properties or the business
operated by Parent, either Borrower or any Subsidiary (the "Business")
which would materially interfere with the continued operation of the
Properties;
56
(c) none of Parent, either Borrower or any Subsidiary has received
any written notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with applicable Environmental Laws with regard to any of the
Properties or the Business, and none of Parent or either Borrower has
knowledge or reason to believe that any such notice will be received or is
being threatened;
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, in violation of, or in a manner or to a
location which would reasonably be expected to give rise to liability on
the part of Parent, either Borrower or any Subsidiary under, any applicable
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the
Properties, in violation of, or in a manner that would reasonably be
expected to give rise to liability on the part of Parent, either Borrower
or any Subsidiary under, any applicable Environmental Law;
(e) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Parent or either Borrower, threatened,
under any applicable Environmental Law to which Parent, either Borrower or
any Subsidiary is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any applicable
Environmental Law with respect to the Properties or the Business;
(f) there has been no Release or threatened Release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of Parent, either Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that would
reasonably be expected to give rise to liability on the part of Parent,
either Borrower or any Subsidiary under applicable Environmental Laws; and
(g) none of Parent, either Borrower or any Subsidiary has assumed or
retained, by contract or operation of law, any known or suspected
liabilities of any kind, fixed or contingent, as a result of any violation
or breach of applicable Environmental Law or with respect to any
contamination by any Materials of Environmental Concern.
SECTION 3.16. Accuracy and Completeness of Information. The factual
statements contained in the financial statements referred to in Sections 3.01(a)
and (b), the Loan Documents (including the schedules thereto, but excluding any
statements by the Administrative Agent or any Lender) and any other certificate
or document furnished by or on behalf of Parent, either Borrower or any
Subsidiary to the Administrative Agent or the Lenders from time to time in
connection with this Agreement, taken as a whole, did not, as of the Closing
Date, to the best knowledge of the Parent and the Borrowers, contain any
material misstatement of fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which the same were made, not materially misleading in their presentation
of the Transactions or the other transactions contemplated hereby or by the
other Transaction Documents or of Parent and the Subsidiaries taken as a whole;
all except as otherwise qualified herein or therein. It is understood that no
representation or warranty is made concerning any forecasts, estimates,
57
pro forma information, projections and statements as to anticipated future
performance or conditions, and the assumptions on which they were based,
contained in any such financial statements, certificates or documents except
that, as of the date such forecasts, estimates, pro forma information,
projections and statements were generated, (i) such forecasts, estimates, pro
forma information, projections and statements were based on the good faith
assumptions of the management of Parent or either Borrower and (ii) such
assumptions were believed by such management to be reasonable. Such forecasts,
estimates, pro forma information, projections and statements, and the
assumptions on which they were based, may or may not prove to be correct.
SECTION 3.17. Solvency. As of the Closing Date, immediately prior to
and after giving effect to the Transactions and the incurrence of all
Indebtedness and obligations being incurred in connection herewith and
therewith, each Loan Party will be Solvent.
SECTION 3.18. Senior Indebtedness. The monetary obligations of the
Loan Parties under this Agreement and the other Loan Documents constitute
"Senior Indebtedness" of such Person under and as defined in the Subordinated
Note Documents.
SECTION 3.19. Title to Properties; Possession Under Leases. (a)
Each Borrower and each of the Subsidiaries of either Borrower, as the case may
be, has good and marketable title to, or valid leasehold interests in, all its
material real properties (including all Mortgaged Property), except for defects
in title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes
(except with respect to such properties of the Borrowers and their Subsidiaries
which will be retitled after the Closing Date in connection with the
Transactions). All such properties are free and clear of Liens, other than
Liens expressly permitted by Section 6.02.
(b) Neither Parent nor any Borrower has received any written notice of
any pending condemnation proceeding affecting the Mortgaged Properties or any
sale or disposition thereof in lieu of condemnation.
(c) None of Parent, either Borrower or any of the Subsidiaries is
obligated under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein.
SECTION 3.20. Security Documents. Except with respect to (a) Liens
on equipment constituting fixtures, (b) any reserved rights of the United States
government as required under law, (c) Liens upon Patents, Patent Licenses,
Trademarks and Trademark Licenses (as such terms are defined in the Security
Agreement) to the extent that (i) such Liens cannot be perfected by the filing
of financing statements under the Uniform Commercial Code or by the filing and
acceptance thereof in the United States Patent and Trademark Office or (ii) such
Patents, Patent Licenses, Trademarks and Trademark Licenses are not,
individually or in the aggregate, material to the business of Parent, the
Borrowers and the Subsidiaries taken as a whole, (d) Liens on uncertificated
securities, (e) Liens on Collateral the perfection of which requires filings in
or other actions under the laws of jurisdictions outside of the United States of
America, any state, territory or dependency thereof, Puerto Rico or the District
of Columbia (except to the extent that such filings or other actions have been
made or taken), (f) Liens on contracts or Accounts (as such term is defined in
the Security Agreement) on which the United States of America or any department,
agency, or instrumentality thereof is the obligor, (g) Liens on proceeds of
Accounts and Inventory (as such term is defined in the Security Agreement),
until transferred
58
to or deposited in the Collateral Proceeds Account (as such term is defined in
the Security Agreement) (if any), and (h) claims of creditors of Persons
receiving goods included as Collateral for "sale or return" within the meaning
of Section 2-326 of the Uniform Commercial Code of the applicable jurisdiction,
upon filing of the financing statements delivered to the Administrative Agent by
Parent, the Borrowers and the Subsidiaries on the effective date of this
Agreement in the jurisdictions listed on Schedule 3.20 (which financing
statements are in proper form for filing in such jurisdictions) and the
recording of the Mortgages (and the recording of the Security Agreement, and the
making of filings after the effective date of this Agreement in any other
jurisdiction as may be necessary under any Requirement of Law) and the delivery
to, and continuing possession by, the Administrative Agent of all Instruments,
Chattel Paper and Documents (as such terms are defined in the Security
Agreement) a security interest in which is perfected by possession, the Liens
created pursuant to each Security Document, when executed and delivered, will
constitute valid Liens on and, to the extent provided therein, perfected
security interests in the collateral referred to in such Security Document (but
as to the Copyrights and the Copyright Licenses (as defined in the Security
Agreement) and accounts arising therefrom, only to the extent the Uniform
Commercial Code of the relevant jurisdiction, from time to time in effect, is
applicable) in favor of the Administrative Agent for the benefit of the Lenders,
which Liens will be prior to all other Liens of all other Persons, except for
Liens permitted pursuant to the Loan Documents (including, without limitation,
those permitted to exist pursuant to Section 6.02), and which Liens are
enforceable as such as against all other Persons (except, with respect to goods
only, buyers in the ordinary course of business to the extent provided in
Section 9-307(1) of the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction and except to the extent that recording of an
assignment or other transfer of title to the Administrative Agent in the United
States Patent and Trademark Office or the United States Copyright Office may be
necessary for such enforceability), except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). Notwithstanding any other provision of this Agreement, capitalized
terms which are used in this Section 3.20 and not defined in this Agreement are
so used as defined in the applicable Security Document.
SECTION 3.21. Location of Real Property and Leased Premises. (a) To
the knowledge of the Parent and the Borrowers, Schedule 3.21(a) lists completely
and correctly as of the Closing Date all real property owned by the Borrowers
and the Subsidiaries and the addresses thereof.
(b) To the knowledge of the Parent and the Borrowers, Schedule 3.21(b)
lists completely and correctly as of the Closing Date all real property leased
by the Borrowers and the Subsidiaries and the addresses thereof.
SECTION 3.22. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against Parent, either Borrower or any Subsidiary
pending or, to the knowledge of Parent or the Borrowers, reasonably expected to
be commenced against Parent, either Borrower or any Subsidiary which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. The hours worked by and payments made to employees of
Parent, the Borrowers and the Subsidiaries have not been in violation of any
applicable federal, state, local or foreign law dealing with such matters,
except where such violations would not reasonably be expected to have a Material
Adverse Effect. The consummation of the Transactions will not give rise to any
right of termination or right of
59
renegotiation on the part of any union under any collective bargaining agreement
to which Parent, either Borrower or any Subsidiary is bound.
SECTION 3.23. Year 2000. The replacement of internally developed
business critical software or other solutions necessary to address the year 2000
issue in respect of internally developed business critical software is expected
to be completed by December 31, 1999. As of the Closing Date, the cost to
Parent and its Subsidiaries of such replacement or other solution, to the extent
not reflected or reserved for on the consolidated balance sheet of Parent, would
not reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including each Borrowing of a Swingline Loan, and on the date of each issuance,
amendment, renewal or extension of a Letter of Credit (each such event being
called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.02(f), 2.03 and 2.23) or, in the case of the
issuance, amendment, renewal or extension of a Letter of Credit, the Issuing
Bank and the Administrative Agent shall have received a notice requesting the
issuance, amendment, renewal or extension of such Letter of Credit as required
by Section 2.22(b) or, in the case of the Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice
requesting such Swingline Loan as required by Section 2.23(b).
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of such
Credit Event with the same effect as though made on and as of such date, except
to the extent such representations and warranties relate to an earlier date.
(c) No Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by the applicable Borrower and Parent on the date of such Credit Event
as to the matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself
and the Lenders, a favorable written opinion of each of (i) Debevoise &
▇▇▇▇▇▇▇▇, New York counsel for Parent and its Subsidiaries, substantially
to the effect set forth in Exhibit N-1, (ii) ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇,
S.C., Mexican counsel for JCISA and its subsidiaries, substantially to the
effect set forth in Exhibit N-2, (iii) Bonn & ▇▇▇▇▇▇▇, Luxembourg counsel
for Parent, substantially to the effect set forth in Exhibit N-3,
60
(iv) ▇▇▇▇▇ Dutilh, Dutch counsel for Parent and its Subsidiaries,
substantially to the effect set forth in Exhibit N-4, and (v) each local
counsel listed on Schedule 4.02(a), substantially to the effect set forth
in Exhibit N-5, in each case (A) dated the Closing Date, (B) addressed to
the Administrative Agent, the Collateral Agent and the Lenders, and (C)
covering such other matters relating to the Loan Documents and the other
transactions contemplated hereby as the Administrative Agent shall
reasonably request, and Parent and the Borrowers hereby request such
counsel to deliver such opinions.
(b) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto,
of each Loan Party, certified, if available, as of a recent date by the
Secretary of State or other Governmental Authority of the state or other
jurisdiction of its organization, and, if applicable, a certificate as to
the good standing of each Loan Party as of a recent date, from such
Secretary of State or other Governmental Authority; (ii) a certificate of
the Secretary, Assistant Secretary or officer or director, as the case may
be, of each Loan Party dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws, if any, of
such Loan Party as in effect on the Closing Date and at all times since a
date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors (or other corporate or comparable body,
as appropriate) of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such Person is a party and, in
the case of the Borrowers, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles of incorporation of
such Loan Party delivered have not been amended and (D) as to the
incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf
of such Loan Party; and (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
(c) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Responsible Officer of Parent and each
Borrower, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The Administrative Agent shall have received all fees, costs and
expenses due and payable on or prior to the Closing Date, including the
fees referred to in Sections 2.05(b).
(e) The Pledge Agreement shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full force
and effect, and all the outstanding Capital Stock of the Persons pledged
thereunder shall have been duly and validly pledged thereunder (for
purposes of U.S. law, insofar as such law may be applicable) to the
Collateral Agent for the ratable benefit of the Secured Parties and (to the
extent required to perfect the pledge of Capital Stock of any Foreign
Subsidiary thereunder) to the extent such Capital Stock is certificated,
certificates representing such shares, accompanied by instruments of
transfer and stock powers endorsed in blank, shall be in the actual
possession of the Collateral Agent, provided that (i) neither JCI nor any
Domestic Subsidiary shall be required
61
to pledge more than 65% of the Voting Stock of any Foreign Subsidiary of
such Person and (ii) no Foreign Subsidiary of JCI shall be required to
pledge the Capital Stock of any of its Foreign Subsidiaries.
(f) The Security Agreement shall have been duly executed by the Loan
Parties party thereto and shall have been delivered to the Collateral Agent
and shall be in full force and effect on such date and each document
(including each Uniform Commercial Code financing statement) required by
law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Collateral Agent
for the benefit of the Secured Parties a valid, legal and perfected first-
priority security interest in and lien on the Collateral (subject to any
Lien expressly permitted by Section 6.02) described in such agreement shall
have been delivered to the Collateral Agent.
(g) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code (or equivalent) filings made with respect to
the Loan Parties in the states (or other jurisdictions) within the United
States of America in which the chief executive office of each such Person
is located, any offices of such Persons in which records have been kept
relating to Accounts (as defined in the Security Documents) and the other
jurisdictions in which Uniform Commercial Code filings (or equivalent
filings, if any,) are to be made pursuant to such security document,
together with copies of the financing statements (or similar documents)
disclosed by such search, and accompanied by evidence reasonably
satisfactory to the Collateral Agent that the Liens indicated in any such
financing statement (or similar document) would be permitted under Section
6.02 or have been released.
(h) The Collateral Agent shall have received a Perfection Certificate
with respect to JCI dated the Closing Date and duly executed by a
Responsible Officer of JCI.
(i) (i) Each of the Mortgages, in form and substance reasonably
satisfactory to the Lenders, relating to each of the Mortgaged Properties
shall have been duly executed by the parties thereto and delivered to the
Collateral Agent and shall be in full force and effect, (ii) each of such
Mortgaged Properties shall not be subject to any Lien other than those
permitted under Section 6.02, (iii) each of such Mortgages shall have been
filed and recorded in the recording office as specified on Schedule 4.02(i)
(or a lender's title insurance policy, in form and substance reasonably
acceptable to the Collateral Agent, insuring such Mortgages as a first lien
on such Mortgaged Property (subject to any Lien permitted by Section 6.02)
shall have been received by the Collateral Agent) and, in connection
therewith, the Collateral Agent shall have received evidence satisfactory
to it of each such filing and recordation and (iv) the Collateral Agent
shall have received such other documents, including a policy or policies of
title insurance issued by a nationally recognized title insurance company,
together with such endorsements, coinsurance and reinsurance as may be
reasonably requested by the Collateral Agent and the Lenders, insuring the
Mortgages as valid first liens on the Mortgaged Properties, free of Liens
other than those permitted under Section 6.02, together with such surveys,
abstracts and appraisals required to be furnished pursuant to the terms of
the Mortgages or this Agreement.
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(j) Each of the Guarantee Agreements shall have been duly executed by
the parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect.
(k) The Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by the parties thereto, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
Section 5.06 and the applicable provisions of the Security Documents, each
of which shall be endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable endorsement and to name the Administrative
Agent as additional insured, in form and substance reasonably satisfactory
to the Administrative Agent.
(m) The Acquisition shall have been, or substantially simultaneously
with the first Credit Event shall be, consummated in accordance with the
Acquisition Agreement, and the Acquisition Agreement shall not have been
amended, modified or waived in any material respect, except with respect to
any amendment, modification or waiver approved by the Administrative Agent.
(n) The Borrowers shall have received at least $100,000,000 in gross
cash proceeds from the issuance of the Subordinated Notes.
(o) Parent shall have received net cash proceeds of not less than
$77,000,000 from Fund V and certain members of management of Parent and the
Borrowers.
(p) After giving effect to the Transactions and the other transactions
contemplated hereby, none of Parent, either Borrower or any Subsidiary
shall have outstanding any Indebtedness or preferred stock other than (A)
the extensions of credit under this Agreement, (B) the Subordinated Notes
and (C) the Indebtedness listed on Schedule 6.01(a) and the other
Indebtedness permitted by Section 6.01.
(q) Parent, each Borrower and their respective Subsidiaries shall have
obtained all consents and approvals of Governmental Authorities and third
parties necessary in connection with the Transactions and the continuing
operations of Parent and its Subsidiaries (after giving effect to the
Transactions), except to the extent that the failure to obtain such
consents and approvals would not reasonably be expected to have a Material
Adverse Effect; all such consents and approvals shall be in full force and
effect and all applicable waiting periods under applicable law shall have
expired without any governmental or judicial action being taken that has
had or would reasonably likely to have the effect of restraining,
preventing or imposing materially burdensome conditions on the Transactions
and the other transactions contemplated hereby.
ARTICLE V
Affirmative Covenants
63
Each of Parent and each Borrower hereby agrees that, from and after
the Closing Date, so long as any Commitments shall remain in effect, and
thereafter until all outstanding Letters of Credit have been canceled or
expired, payment in full of the Loans, all reimbursement obligations under any
L/C Disbursement then due and owing, and any other amount then due and owing, to
any Lender or the Administrative Agent hereunder or under any Note, each of
Parent and each Borrower shall and (except in the case of delivery of financial
information) shall cause each of its Subsidiaries to:
SECTION 5.01. Financial Statements. Furnish to the Administrative
Agent and each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Parent, a copy of the consolidated balance sheet
of Parent as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for such
fiscal year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of
the audit, by Deloitte & Touche LLP or other independent certified public
accountants of nationally recognized standing; and
(b) as soon as available, but in any event (i) not later than 60 days
after the end of each of the quarterly periods of the fiscal year of Parent
ended December 31, 1998 and (ii) not later than 45 days after the end of
each of the first three quarterly periods of each subsequent fiscal year of
Parent, the unaudited consolidated balance sheet of Parent as at the end of
such fiscal quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flows of Parent for such fiscal
quarter and the portion of the fiscal year through the end of such fiscal
quarter, setting forth in each case in comparative form the figures for the
previous fiscal year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit and other
adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by a Responsible Officer and disclosed therein, and
except, in the case of any financial statements delivered pursuant to Section
5.01(b), for the absence of certain notes).
SECTION 5.02. Certificates; Other Information. Furnish to the
Administrative Agent and each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.01(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that, in
making the audit necessary therefor, no knowledge was obtained of any
Default or Event of Default, insofar as the same relates to any financial
accounting matters covered by their audit, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 5.01(a) and (b), a certificate of Parent, executed
on behalf of Parent by a Responsible Officer of Parent, stating that, to
the best of such Responsible Officer's knowledge, during such period (i) no
Subsidiary has been formed or acquired (or, if
64
any such Subsidiary has been formed or acquired, either Borrower has
complied with the requirements of Section 5.11 with respect thereto), (ii)
neither Borrower nor any other Loan Party has changed its name, its
principal place of business, its chief executive office or the location of
any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto and (iii) to the best of such Responsible Officer's knowledge, each
Borrower and each of the other Loan Parties has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it (and including therein a reasonably detailed
calculation of the covenants set forth in Sections 6.11, 6.12 and 6.13 and,
in the case of the annual financial statements, of Excess Cash Flow as of
the last day of such period), and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except, in each
case, as specified in such certificate;
(c) not later than 90 days after the beginning of each fiscal year of
Parent, a copy of the projections by Parent of the operating budget and
cash flow budget of Parent and the Subsidiaries for such fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to
the effect that such Responsible Officer believes such projections have
been prepared on the basis of reasonable assumptions;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which Parent or either Borrower sends to
its public stockholders, and within five Business Days after the same are
filed, copies of all financial statements and reports which Parent, either
Borrower or any Subsidiary of either Borrower may make to, or file with,
the Securities and Exchange Commission or any successor or analogous
Governmental Authority; and
(e) promptly, such additional financial and other information as the
Administrative Agent or any Lender (acting through the Administrative
Agent) may from time to time reasonably request.
SECTION 5.03. Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Parent or the applicable Subsidiary, as the case may
be.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted by
Parent, the Borrowers and their respective Subsidiaries, taken as a whole, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of the business of Parent, the
Borrowers and the Subsidiaries, taken as a whole, except as otherwise permitted
pursuant to Section 6.04 or in connection with the Transactions, provided that
none of Parent, either Borrower or any of their Subsidiaries shall be required
to maintain any such rights, privileges and franchises, if the failure to do so
would not reasonably be expected to have a Material Adverse Effect; and comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
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SECTION 5.05. Maintenance of Property. Keep all property useful and
necessary in the business of the Borrowers and the Subsidiaries of the
Borrowers, taken as a whole, in good working order and condition.
SECTION 5.06. Insurance. (a) Maintain with financially sound and
reputable insurance companies insurance on all its property material to the
business of Parent, the Borrowers and their respective Subsidiaries, taken as a
whole, in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business; and furnish to the Administrative Agent, upon written request,
full information as to the insurance carried.
SECTION 5.07. Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, complete and correct
entries in conformity with all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Administrative Agent or any Lender (acting through the
Administrative Agent), at any reasonable time, upon reasonable notice, and as
often as may reasonably be desired, to visit and inspect any of its properties
and examine and, to the extent reasonable, make abstracts from any of its books
and records and to discuss the business, operations, properties and financial
and other condition of Parent and its Subsidiaries with officers and employees
of Parent and its Subsidiaries and with their independent certified public
accountants, in each case, (a) at the expense of Parent and the Borrowers (i)
with respect to any such actions by a Lender during the continuance of a Default
or an Event of Default or as otherwise required by Section 9.06 or (ii) with
respect to any such actions by the Administrative Agent and (b) at the expense
of the relevant Lender in any other case.
SECTION 5.08. Notices. Promptly give notice to the Administrative
Agent, the Issuing Bank and each Lender of:
(a) as soon as possible after a Responsible Officer of Parent or
either Borrower knows or reasonably should know thereof, the occurrence of
any Default or Event of Default;
(b) as soon as possible after a Responsible Officer of Parent or
either Borrower knows or reasonably should know thereof, any (i) default or
event of default under any Contractual Obligation of Parent, either
Borrower or any of their respective Subsidiaries other than as previously
disclosed to the Lenders, or (ii) litigation, investigation or proceeding
which may exist at any time between Parent, either Borrower or any of the
Subsidiaries of the Borrowers and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the case may be,
would reasonably be expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of Parent or
either Borrower knows or reasonably should know thereof, any litigation or
proceeding which has a reasonable possibility of an adverse determination
which would result in a judgment against Parent, either Borrower or any of
their respective Subsidiaries of $5,000,000 or more and which is not
covered by insurance, or in which injunctive or similar relief is sought
that would reasonably be expected to have a Material Adverse Effect;
66
(d) the following events, as soon as possible and in any event within
30 days after a Responsible Officer of Parent or either Borrower knows or
reasonably should know thereof: (i) the occurrence or expected occurrence
of any Reportable Event with respect to any Single Employer Plan (other
than a Reportable Event described in Section 4043(c)(9) of ERISA), a
failure to make any required contribution to a Single Employer Plan or
Multiemployer Plan, the creation of any Lien on the property of Parent,
either Borrower or any of the Subsidiaries in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan, if, as a result thereof, Parent, either
Borrower or any of the Subsidiaries would reasonably be expected to incur
any material liability; (ii) the existence of an Underfunding under a
Single Employer Plan that exceeds 10% of the value of the assets of such
Single Employer Plan, determined as of the most recent annual valuation
date of such Single Employer Plan on the basis of the actuarial assumptions
used to determine the funding requirements of such Single Employer Plan as
of such date; (iii) the institution of proceedings or the taking of any
other formal action by the PBGC or Parent, either Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single
Employer Plan or Multiemployer Plan if, as a result thereof, Parent, either
Borrower or any of the Subsidiaries would reasonably be expected to incur
any material liability; (iv) the occurrence or expected occurrence of any
event or condition under which Parent, either Borrower or any Commonly
Controlled Entity has incurred or would reasonably be expected to incur any
liability in respect of a Former Plan; or (v) with respect to any Foreign
Benefit Plan, the occurrence of any material noncompliance with applicable
foreign law or the incurrence by either Borrower or any other Loan Party of
any material liability;
(e) as soon as possible after a Responsible Officer of Parent or
either Borrower knows, and except as would not, individually or in the
aggregate, reasonably be expected to result in the payment of a Material
Environmental Amount, that (i) any Governmental Authority has identified
Parent, either Borrower or any of the Subsidiaries as a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or any similar Environmental Law
for the cleanup of Materials of Environmental Concern at any location,
whether or not owned, leased or operated by Parent, either Borrower or any
of the Subsidiaries; (ii) any Governmental Authority may revoke any permit
pursuant to Environmental Law held by Parent, either Borrower or any of the
Subsidiaries of the Borrowers, or deny or refuse to renew any such permit
sought by Parent, either Borrower or any of the Subsidiaries of the
Borrowers; or (iii) any property owned, leased, or operated by Parent,
either Borrower or any of the Subsidiaries of the Borrowers is being listed
on, or proposed for listing on, the National Priorities List ("NPL") or the
Comprehensive Environmental Response, Compensation, and Liability
Information System ("CERCLIS") maintained by the U.S. Environmental
Protection Agency or any similar list maintained by any Governmental
Authority; and
(f) as soon as possible after a Responsible Officer of Parent or
either Borrower knows or reasonably should know thereof, any development or
event which as had or would reasonably be expected to have a material
adverse change in the business, operations, property or condition
(financial or otherwise) of Parent, either Borrower and the Subsidiaries,
taken as a whole.
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Each notice pursuant to this Section 5.08 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Parent or the applicable Borrower proposes to
take with respect thereto.
SECTION 5.09. Environmental Laws. (a) Comply substantially with all
Environmental Laws applicable to it, and obtain, comply substantially with and
maintain any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws (collectively, "Environmental
Permits"); and (b) take all reasonable efforts to ensure that all of its
tenants, subtenants, contractors, subcontractors and invitees comply
substantially with all Environmental Laws, and obtain, comply substantially with
and maintain any and all Environmental Permits applicable to any of them insofar
as any failure to so comply, obtain or maintain reasonably would be expected to
adversely affect Parent, either Borrower or any of the Subsidiaries of the
Borrowers. For purposes of this Section 5.09(a), noncompliance shall be deemed
not to constitute a breach of this covenant, provided that, upon learning of any
actual or suspected noncompliance, Parent or the applicable Borrower shall in a
timely manner undertake all reasonable efforts to achieve substantial
compliance, and provided further that, in any case, such noncompliance, and any
other such noncompliance with any Environmental Law or Environmental Permit,
individually or in the aggregate, would not reasonably be expected to give rise
to the payment of a Material Environmental Amount.
SECTION 5.10. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.11. Additional Collateral; Further Assurances. (a) With
respect to any owned real property or fixtures located on owned real property,
in each case with a purchase price or a fair market value of at least
$1,000,000, in which either Borrower or a Domestic Subsidiary of JCI or any
Subsidiary of JCISA acquires ownership rights at any time after the Closing
Date, promptly grant to the Administrative Agent, for the benefit of the
Lenders, a Lien of record on all such owned real property and fixtures, upon
terms reasonably satisfactory in form and substance to the Administrative Agent
and in accordance with any applicable requirements of any Governmental Authority
(including, without limitation, any appraisals of such property under the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 which the
Administrative Agent reasonably deems to be required by law), provided that (i)
nothing in this Section 5.11(a) shall defer or impair the attachment or
perfection of any security interest in any Collateral covered by any of the
Security Documents which would attach or be perfected pursuant to the terms
thereof without action by either Borrower, any of its Subsidiaries or any other
Person and (ii) no such Lien shall be required to be granted as contemplated by
this Section 5.11(a) on any owned real property or fixtures the acquisition of
which is financed, or is to be financed within any time period permitted by
Section 6.01, until such Indebtedness is repaid in full (and not refinanced as
permitted by Section 6.01) or, as the case may be, the Borrowers determine not
to proceed with such financing or refinancing. In connection with any such
grant to the Administrative Agent, for the benefit of the Lenders, of a Lien of
record on any such real property in accordance with this Section 5.11, the
applicable Borrower or such Subsidiary shall deliver or cause to be delivered to
the Administrative Agent any surveys, title insurance policies, environmental
reports and other documents in connection with such grant of such Lien obtained
by it in connection with the acquisition of such ownership rights in such real
property or as the Administrative Agent shall reasonably request (in light of
the value of such real property and the cost and availability of such surveys,
title insurance
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policies, environmental reports and other documents and whether the delivery of
such surveys, title insurance policies, environmental reports and other
documents would be customary in connection with such grant of such Lien in
similar circumstances).
(b) With respect to any Person that, subsequent to the Closing Date,
becomes (i) a Domestic Subsidiary of Parent, (ii) a Foreign Subsidiary Holdco or
(iii) a Subsidiary of JCISA, promptly upon the request of the Administrative
Agent: (x) execute and deliver to the Administrative Agent, for the benefit of
the Secured Parties, a new pledge agreement or a supplement to the Pledge
Agreement as the Administrative Agent shall reasonably deem necessary or
reasonably advisable to grant to the Collateral Agent, for the benefit of the
Secured Parties, a Lien on the Capital Stock of such Subsidiary which, with
respect to any Domestic Subsidiary, is owned by Parent or any of its
Subsidiaries or, with respect to any Subsidiary of JCISA, owned by JCISA or any
of its Subsidiaries, (y) deliver to the Collateral Agent the certificates (if
any) representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the applicable
Borrower or such Subsidiary, as the case may be, and (z) cause such new
Subsidiary (if it is a Subsidiary of either Borrower) (A) to become a party to
the applicable Security Documents and Guarantee Agreements, in each case
pursuant to documentation which is in form and substance reasonably satisfactory
to the Administrative Agent, and (B) to take all actions reasonably deemed by
the Administrative Agent to be necessary or reasonably advisable to cause the
Lien created by the applicable Security Documents to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements in such jurisdictions as may be
reasonably requested by the Administrative Agent.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Foreign Subsidiary and which has Voting Stock which is owned directly
by (i) JCI or (ii) a Domestic Subsidiary of Parent, promptly upon the request of
the Administrative Agent: (A) JCI or such Domestic Subsidiary shall execute and
deliver to the Administrative Agent a new Pledge Agreement or a supplement to
the Pledge Agreement as the Administrative Agent shall reasonably deem necessary
or reasonably advisable to grant to the Collateral Agent, for the benefit of the
Secured Parties, a Lien on the Capital Stock of such Foreign Subsidiary which is
owned directly by JCI or any such Domestic Subsidiary of Parent (provided that
in no event shall more than 65% of the Voting Stock of any such Foreign
Subsidiary be required to be so pledged) and (ii) to the extent reasonably
deemed advisable by the Administrative Agent to perfect such security interest,
deliver to the Administrative Agent certificates (if any) representing such
Voting Stock, together with undated stock powers executed and delivered in blank
by a duly authorized officer of JCI or such Domestic Subsidiary of Parent, as
the case may be.
(d) Notwithstanding anything to the contrary contained herein, no
Subsidiary shall be required to comply with the provisions of this Section 5.11
until such date as either (i) the consolidated gross revenues of such Subsidiary
and its Subsidiaries for the most recently completed period of four consecutive
fiscal quarters or (ii) the consolidated assets of such Subsidiary and its
Subsidiaries, exceed $2,500,000 (it being understood that any such Subsidiary
which achieves such assets or revenues after the date hereof shall be deemed,
for purposes of this Section 5.11 only, to have been newly acquired by Parent or
the applicable Borrower on the date upon which such assets or revenues, as the
case may be, are achieved).
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ARTICLE VI
Negative Covenants
Each of Parent and each Borrower hereby agrees that, so long as the
Revolving Credit Commitments remain in effect, and thereafter until all
outstanding Letters of Credit have been canceled or expired, payment in full of
the Revolving Loans and the Term Loans, all L/C Disbursements then due and
owing, and any other amount then due and owing hereunder or under any Note to
any Lender, each of Parent and each Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
SECTION 6.01. Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and
set forth on Schedule 6.01(a);
(b) Indebtedness created hereunder and under the other Loan
Documents;
(c) Indebtedness of the Borrowers on account of the Subordinated
Notes;
(d) Guarantees:
(i) of the Subordinated Notes, provided that (x) such Guarantees
are subordinated to the Obligations to the same extent as the
Subordinated Notes and (y) no Subsidiary shall Guarantee all or any
part of the Subordinated Notes unless such Subsidiary also Guarantees
the Obligations;
(ii) in connection with up to an aggregate principal amount of
$10,000,000 of Indebtedness outstanding at any time incurred by any
Management Investors in connection with any Management Subscription
Agreements or other purchases by them of Capital Stock of Parent or
any of its Subsidiaries, and any refinancings, refundings, extensions
or renewals thereof, provided that such amount shall be reduced by the
aggregate then outstanding principal amount of loans and advances made
in reliance upon the provisions of Section 6.03(k);
(iii) in respect of third-party loans and advances to officers
or employees of Parent or any of its Subsidiaries (x) for travel and
entertainment expenses incurred in the ordinary course of business,
(y) for relocation expenses incurred in the ordinary course of
business or (z) for other purposes, and in the case of this clause
(z), in an aggregate amount (as to Parent and all its Subsidiaries) of
up to $1,500,000 outstanding at any time;
(iv) by any Subsidiary (other than a Foreign Subsidiary Holdco)
in respect of Indebtedness of a Person in connection with joint
ventures or similar arrangements in respect of which no other co-
investor or other Person has a greater legal or beneficial ownership
interest than Parent and its Subsidiaries, and as to all of such
Persons does not at any time exceed $7,500,000 in aggregate principal
amount, provided that (x) such amount shall be increased by an amount
equal to $1,000,000 on each anniversary of
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the Closing Date, commencing on the second anniversary of the Closing
Date, so long as no Default or Event of Default shall have occurred
and be continuing on any date on which such amount is to be increased
and (y) such amount and any increase in such amount permitted by
clause (x) shall be reduced by the aggregate amount of Investments
permitted by Section 6.03(i);
(v) of Parent and its Subsidiaries under any Hedging Agreements;
and
(vi) other than those described in clauses (i) through (v) of
this paragraph (d), by any Subsidiary (other than a Foreign Subsidiary
Holdco) in an aggregate amount not to exceed $2,500,000;
(e) to the extent that any Indebtedness may be incurred or arise
thereunder, Indebtedness of Parent and any of its Subsidiaries under any
Hedging Agreements;
(f) Indebtedness of Parent to any wholly owned Subsidiary and
Indebtedness of any Subsidiary to Parent or any other wholly owned
Subsidiary of Parent;
(g) additional Indebtedness of Parent or any of its Subsidiaries
which is subordinated to the obligations of the Loan Parties hereunder not
exceeding $20,000,000 in aggregate principal amount at any one time
outstanding, provided that any such Indebtedness shall have terms and
conditions which are not materially more burdensome to the Loan Parties
than, and subordination provisions substantially similar to, the
Subordinated Notes;
(h) Indebtedness of any Subsidiary (other than any Foreign Subsidiary
Holdco) incurred to finance or refinance the purchase price of, or
Indebtedness of any Subsidiary (other than any Foreign Subsidiary Holdco)
assumed in connection with, any Permitted Acquisition permitted by Section
6.03(n), provided that (i) such Indebtedness is incurred prior to,
substantially simultaneously with or within six months after such
acquisition or in connection with a refinancing thereof, (ii) if such
Indebtedness is owed to a Person, other than the Person from whom such
acquisition is made or any Affiliate thereof, such Indebtedness shall have
terms and conditions reasonably satisfactory to the Required Lenders and
shall not exceed 60% of the purchase price of such acquisition (including
any Indebtedness (excluding subordinated Indebtedness) assumed in
connection with such acquisition but excluding any Indebtedness under this
Agreement incurred to finance such acquisition), (iii) immediately after
giving effect to such acquisition no Default or Event of Default shall have
occurred and be continuing and (iv) the aggregate principal amount of
Indebtedness which may be incurred pursuant to this paragraph (h) shall not
exceed $10,000,000 during the term of this Agreement; and any refinancing,
refunding, renewal or extension of any such Indebtedness; provided further
that, the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to
the premium or other amounts paid, and fees and expenses incurred, in
connection with such refinancing, refunding, renewal or extension;
(i) Indebtedness of a Person that becomes a Subsidiary of either
Borrower after the date hereof, provided that (i) such Indebtedness existed
at the time such
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Person became a Subsidiary and was not created in anticipation thereof,
(ii) immediately after giving effect to the acquisition of such Person by
the applicable Borrower, no Default or Event of Default shall have occurred
and be continuing and (iii) the aggregate principal amount of Indebtedness
which may be incurred pursuant to this paragraph (i) shall not exceed
$15,000,000 during the term of this Agreement; and any refinancing,
refunding, renewal or extension of any such Indebtedness;
(j) Indebtedness of any Subsidiary (other than any Foreign Subsidiary
Holdco) incurred to finance or refinance the acquisition of fixed or
capital assets (whether pursuant to a loan, a Financing Lease or otherwise)
and any other Financing Leases in an aggregate principal amount not
exceeding as to the Borrowers and all Subsidiaries $10,000,000 at any time
outstanding;
(k) Indebtedness of JCISA and its Mexican Subsidiaries incurred in
the ordinary course of business to finance the working capital needs of
JCISA and such Subsidiaries, provided that the aggregate principal amount
of any such Indebtedness pursuant to this paragraph (k) shall not exceed
$5,000,000 (or the equivalent thereof in Mexican Pesos);
(l) Indebtedness of Foreign Subsidiaries (other than Mexican
Subsidiaries and Foreign Subsidiary Holdcos) of Parent incurred in the
ordinary course of business to finance the working capital needs of such
Foreign Subsidiaries;
(m) Indebtedness of Parent or any of its Subsidiaries incurred to
finance insurance premiums in the ordinary course of business;
(n) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds, provided that such
Indebtedness is extinguished within two Business Days of its incurrence;
(o) Indebtedness of any Foreign Subsidiary (other than any Foreign
Subsidiary Holdco) of Parent fully supported on the date of the incurrence
thereof by a Foreign Backstop Letter of Credit;
(p) Indebtedness arising from performance, appeal, judgment, replevin
and similar bonds and suretyship arrangements, all in the ordinary course
of business; and
(q) additional Indebtedness of Subsidiaries (other than Foreign
Subsidiary Holdcos) of Parent, provided that the aggregate principal amount
of any such Indebtedness incurred pursuant to this paragraph (q) (i) by all
such Subsidiaries shall not exceed $10,000,000 (or the equivalent thereof
in the applicable foreign currencies) and (ii) by Domestic Subsidiaries and
Mexican Subsidiaries of Parent shall not exceed $2,000,000 (or the
equivalent thereof in applicable foreign currencies);
SECTION 6.02. Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, now owned or hereafter
acquired by it, except:
(a) Liens existing on the date hereof and set forth on Schedule
6.02(a);
(b) Liens created pursuant to the Loan Documents;
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(c) Liens for taxes, assessments and similar charges not yet
delinquent or the nonpayment of which in the aggregate would not reasonably
by expected to have a Material Adverse Effect, or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of Parent or the
Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
of relevant Foreign Subsidiaries of Parent, generally accepted accounting
principles in effect from time to time in their respective jurisdictions of
incorporation);
(d) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance and other social security benefits or
other insurance related obligations (including pledges or deposits or other
Liens securing liability to insurance carriers under insurance or self-
insurance arrangements);
(e) Liens to secure the performance of bids, trade contracts (other
than for borrowed money), obligations for utilities, leases, statutory
obligations, surety and appeal bonds, performance bonds, judgment and like
bonds, replevin and similar bonds and other obligations of a like nature
incurred in the ordinary course of business;
(f) zoning restrictions, easements, rights-of-way, restrictions,
other similar encumbrances incurred in the ordinary course of business and
minor irregularities of title which do not materially interfere with the
ordinary conduct of the business of Parent and its Subsidiaries taken as a
whole;
(g) Liens securing Indebtedness of Parent and its Subsidiaries
permitted by Section 6.01(h) or Section 6.01(j), provided that (i) such
Liens shall be created prior to, substantially simultaneously with or
within six months of the acquisition thereby financed or the date of the
incurrence or assumption of such Indebtedness and (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness;
(h) Liens on the property or assets of a Person which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by Section
6.01(i), provided that (i) such Liens existed at the time such Person
became a Subsidiary and were not created in anticipation thereof and (ii)
any such Lien is not spread to cover any property or assets of such Person
after the time such Person becomes a Subsidiary;
(i) Liens of landlords or of mortgagees of landlords arising by
operation of law or pursuant to the terms of real property leases, provided
that the rental payments secured thereby are not yet due and payable;
(j) Liens arising by reason of any judgment, decree or order of any
court or other Governmental Authority, if appropriate legal proceedings
which may have been duly initiated for the review of such judgment, decree
or order, are being diligently prosecuted and shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired;
(k) Liens existing on assets or properties at the time of the
acquisition thereof by Parent or any of the Subsidiaries which do not
materially interfere with the use, occupancy, operation and maintenance of
structures existing on the property subject
73
thereto or extend to or cover any assets or properties of Parent or such
Subsidiary other than the assets or property being acquired;
(l) any encumbrance or restriction (including, without limitation,
put and call agreements) with respect to the Capital Stock of any joint
venture or similar arrangement pursuant to the joint venture or similar
agreement with respect to such joint venture or similar arrangement,
provided that no such encumbrance or restriction affects in any way the
ability of Parent or any of the Subsidiaries to comply with the provisions
of Section 5.11;
(m) Liens on property of any Foreign Subsidiary of Parent securing
Indebtedness of such Foreign Subsidiary of Parent permitted by Sections
6.01(d)(iv), 6.01(l) and 6.01(q);
(n) Liens securing Guarantees permitted under Section 6.01(d)(ii) or
(iii);
(o) Liens on the accounts receivable and inventory of the Mexican
Subsidiaries of Parent to secure Indebtedness permitted by Section 6.01(k),
provided that such Liens secure only such Indebtedness and do not extend to
the assets of Parent or any other Subsidiary;
(p) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(q) Liens on the assets of Parent or its Subsidiaries (not otherwise
permitted hereunder) which secure obligations not exceeding (as to the
Borrowers and the Subsidiaries in the aggregate) $2,500,000 in aggregate
amount at any time outstanding; and
(r) Liens on Intellectual Property and foreign patents, trademarks,
trade names, copyrights, technology, know-how and processes to the extent
such Liens arise from the granting of licenses to use such Intellectual
Property and foreign patents, trademarks, trade names, copyrights,
technology, know-how and processes to any Person in the ordinary course of
business of Parent and its Subsidiaries.
SECTION 6.03. Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment (each an "Investment") in, any
Person, except:
(a) Investments existing on the Closing Date and set forth on
Schedule 6.03(a);
(b) Investments in cash and Cash Equivalents;
(c) Investments constituting Capital Expenditures permitted pursuant
to Section 6.11;
(d) extensions of trade credit in the ordinary course of business;
74
(e) loans and advances to officers, directors or employees of Parent
or its Subsidiaries (i) for travel, entertainment and relocation expenses
in the ordinary course of business, (ii) for other purposes in an aggregate
amount for Parent and its Subsidiaries not to exceed $1,500,000 at any one
time outstanding and (iii) relating to indemnification or reimbursement of
any officers, directors or employees in respect of liabilities relating to
their serving in any such capacity or as otherwise specified in Section
6.07;
(f) Investments in Parent, either Borrower or any wholly owned
Subsidiary;
(g) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of
business or otherwise described in Section 6.02(d), (e) or (i);
(h) Investments representing non-cash consideration received by
Parent or any of its Subsidiaries in connection with any sale or other
disposition of the property of Parent or any of its Subsidiaries permitted
by Section 6.05;
(i) Investments by Parent or any of its Subsidiaries in one or more
Persons in connection with joint ventures or similar arrangements in
respect of which no other co-investor or other Person has a greater legal
or beneficial ownership interest than Parent or such Subsidiary, in an
aggregate amount, when added to the amount of Permitted Acquisitions made
pursuant to paragraph (n) below, not to exceed $25,000,000 at any one time
outstanding;
(j) Investments representing evidences of Indebtedness, securities or
other property received from another Person in connection with any
bankruptcy proceeding or other reorganization of such other Person or as a
result of foreclosure, perfection or enforcement of any Lien or exchange
for evidences of Indebtedness, securities or other property of such other
Person, provided that any such securities or other property received by any
Loan Party party to any Security Document is pledged to the Collateral
Agent for the benefit of the Secured Parties pursuant to the Security
Documents;
(k) loans and advances to Management Investors in connection with the
purchase by such Management Investors of Capital Stock of Parent or any of
its Subsidiaries of up to $10,000,000 outstanding at any time, provided
that such amount shall be reduced by the aggregate principal amount of
Indebtedness in respect of Guarantees permitted by Section 6.01(d)(ii);
(l) Investments in the Capital Stock of Parent which (i) is held by
Parent as treasury stock and is restored to unissued status or is
eliminated from authorized shares, or options in respect thereof or (ii) is
purchased by JCI in connection with the exercise of management stock
options issued by JCI to officers, directors and employees of Parent and
its Subsidiaries;
(m) Investments of Parent and its Subsidiaries under any Hedging
Agreements;
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(n) the acquisition of all or substantially all of the business or
assets or the Capital Stock of any Person or any business unit thereof (a
"Permitted Acquisition"), provided that:
(i) such acquisition is expressly permitted by Section 6.04;
and
(ii) the aggregate consideration (including cash and any
Indebtedness assumed in connection with such acquisitions) for all
such acquisitions made pursuant to this paragraph (n), when added to
the amount of Investments permitted pursuant to paragraph (i) above,
does not exceed $25,000,000 at any time outstanding;
provided in each case that, (A) the target of such acquisition has positive
Consolidated EBITDA, calculated on a pro forma basis after giving effect to
such acquisition (such calculation to be made in a manner reasonably
satisfactory to the Administrative Agent and to be evidenced by a
certificate in form and substance reasonably satisfactory to the
Administrative Agent signed by a Responsible Officer of each Borrower and
delivered to the Administrative Agent (which shall promptly deliver copies
to each Lender) at least three Business Days prior to the consummation of
such acquisition) and (B) after giving effect thereto, no Default or Event
of Default shall occur as a result of such acquisition;
(o) Investments in notes receivable and other instruments and
securities obtained in connection with transactions permitted by Section
6.05(d); and
(p) additional Investments in an aggregate amount not to exceed
$10,000,000 at any one time outstanding.
SECTION 6.04. Fundamental Changes. Enter into any merger
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Subsidiary of Parent or either Borrower may be merged or
consolidated with or into Parent or such Borrower (provided that Parent or
such Borrower shall be the continuing or surviving corporation) or with or
into any one or more wholly owned Subsidiaries of Parent (provided that any
such wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation);
(b) any Subsidiary of Parent or either Borrower may liquidate or
sell, lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to such Parent or Borrower or any
other wholly owned Subsidiary of Parent or such Borrower (provided that no
Loan Party shall sell or otherwise dispose of any Collateral (other than
inventory in the ordinary course of business and, to the extent permitted
by Sections 6.03, 6.06 and 6.08, cash and Cash Equivalents) pursuant to
this clause (b) to any Subsidiary that is not a Loan Party);
(c) Parent may consolidate or merge with or into or transfer all or
substantially all its assets to an Affiliate incorporated or organized for
the purpose of reincorporating or reorganizing Parent in another
jurisdiction in the United States of America, the Cayman Islands,
Luxembourg or the Kingdom of the Netherlands
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(including the Netherlands Antilles) or any other member of the European
Union, or changing its legal structure to a corporation or other entity,
provided that (i) no such action shall be taken if to do so would adversely
affect the Secured Parties and (ii) any such successor entity to Parent
shall execute or otherwise agree in a writing reasonably satisfactory to
the Administrative Agent to be bound by all applicable Loan Documents to
which Parent is a party and take all actions reasonably requested by the
Administrative Agent to comply with Section 5.11, including the delivery of
legal opinions reasonably satisfactory to the Administrative Agent;
(d) pursuant to the Transactions; and
(e) as permitted by Section 6.05.
SECTION 6.05. Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person other than Parent or any wholly owned Subsidiary of Parent,
except:
(a) the sale or other disposition of inventory, or of surplus,
obsolete or worn out property or assets, whether now owned or hereafter
acquired, in the ordinary course of business;
(b) the sale or other disposition of any other property or assets in
the ordinary course of business (it being understood that this shall not
include the sale or other disposition of all or substantially all of any
business unit);
(c) the sale or other disposition of any property or assets (other
than assets described in clauses (a) and (b) above), provided that the
aggregate market value of all assets so sold or disposed of in any period
of twelve consecutive months shall not exceed $5,000,000;
(d) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the
conversion or exchange of accounts receivable into or for notes receivable
in connection with the compromise or collection thereof, provided that, in
the case of any Foreign Subsidiary, any such sale or discount may be with
recourse if such sale or discount is consistent with customary practice in
such Foreign Subsidiary's country of business;
(e) the sale or other disposition of any assets or property by Parent
or any of its Subsidiaries to Parent, either Borrower or any wholly owned
Subsidiary thereof (provided that no Loan Party shall sell or otherwise
dispose of any Collateral (other than inventory in the ordinary course of
business and, to the extent permitted by Sections 6.03, 6.06 and 6.08, cash
and Cash Equivalents) pursuant to this clause (e) to any Subsidiary that is
not a Loan Party);
(f) the sale of the Capital Stock or all or substantially all of the
assets of the Subsidiaries set forth on Schedule 6.05(f);
(g) as permitted by Section 6.04(b), (c) or (d);
77
(h) the abandonment, sale or other disposition of patents, trademarks
or other intellectual property that are, in the reasonable judgment of
Parent or either Borrower, no longer economically practicable to maintain
or useful in the conduct of the business of Parent, the Borrowers and the
Subsidiaries thereof taken as a whole;
(i) any sale or other disposition of the property of Parent or any of
its Subsidiaries, so long as the Net Proceeds of any such sale or other
disposition do not exceed $10,000,000 in the aggregate after the Closing
Date, provided that an amount equal to 100% of the Net Proceeds of such
sale or other disposition less the Reinvested Amount is applied in
accordance with Section 2.13(b); and
(j) any issuance, sale or other disposition of preferred stock (or
equivalent equity interest) of any Subsidiary constituting Indebtedness
created, incurred, assumed or existing in compliance with Section 6.01.
SECTION 6.06. Restricted Payments. Declare or pay any dividend
(other than dividends payable solely in common stock of Parent or options,
warrants or other rights to purchase common stock of Parent) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of Parent that is not Indebtedness or
any warrants or options to purchase any such stock, whether now or hereafter
outstanding, or make any other distribution (other than dividends payable solely
in the common stock of Parent or options, warrants or other rights to purchase
common stock of Parent) in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Parent (such declarations,
payments, setting apart, purchases, redemptions, defeasance, retirements,
acquisitions and distributions being herein called "Restricted Payments"),
except that:
(a) either Borrower and any other Subsidiary may pay cash dividends
in an amount sufficient to allow Parent to pay, and Parent may pay, its
obligations to CD&R under any agreement with CD&R for the rendering of
management consulting or financial advisory services, provided that such
amount shall not exceed in the aggregate $500,000 per annum plus reasonable
out-of-pocket expenses;
(b) either Borrower and any other Subsidiary may, and may pay cash
dividends in an amount sufficient to allow Parent to and Parent may,
repurchase shares of its common stock or rights, options or units in
respect thereof, from Management Investors, including as contemplated by
any Management Subscription Agreements, for an aggregate purchase price not
to exceed $10,000,000 plus $1,000,000 multiplied by the number of calendar
years that have commenced since the Closing Date, provided that such amount
shall be increased by an amount equal to the proceeds of any resales or new
issuances of shares and options to any such Management Investors, at any
time after the initial issuances to any Management Investors, together with
the aggregate amount of deferred compensation owed by Parent, or any of its
Subsidiaries to any such Management Investor that shall thereafter have
been canceled, waived or exchanged in connection with the grant to such
Management Investor of the right to receive or acquire shares of Parent's
or any Subsidiary's common stock; and
78
(c) Parent and its Subsidiaries may enter into and consummate the
Transactions, and may pay cash dividends in an amount sufficient to allow
Parent to, and Parent may, pay all fees and expenses incurred in connection
with the Transactions and perform its obligations under or in connection
with the Transactions and (ii) to permit Parent to pay its Guarantee on
account of interest on the Subordinated Notes and the Subordinated Note
Documents, to the extent that the payment of such Guarantee does not
violate the subordination provisions contained in the Subordinated Notes or
the Subordinated Note Documents.
SECTION 6.07. Transactions with Affiliates. Enter into any
transaction, including any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate of Parent unless such transaction
(a) is otherwise permitted under this Agreement and (b) either (i) is upon terms
no less favorable to Parent, the applicable Borrower or its Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person that is not such an Affiliate, or (ii) has been approved by a majority
of the Disinterested Directors of Parent, or in the event that at the time of
any such transaction, there are no Disinterested Directors serving on the board
of directors or comparable body of Parent, such transaction shall be approved by
a nationally recognized expert with expertise in appraising the terms and
conditions of the type of transaction for which approval is required, provided
that nothing contained in this Section 6.07 shall be deemed to prohibit:
(i) Parent or any of its Subsidiaries from entering into or
performing any consulting, management or employment agreements or other
compensation arrangements with a director, officer or employee of Parent or
any of its Subsidiaries, provided that in the case of any such agreement or
arrangement with any director, such agreement or arrangement provides for
annual aggregate base compensation not in excess of $150,000 for such
director, in his capacity as such;
(ii) the payment of transaction expenses in connection with this
Agreement and the Transactions;
(iii) Parent or any of its Subsidiaries from entering into, making
payments pursuant to and otherwise performing an indemnification and
contribution agreement in favor of any of the Persons listed on Schedule
6.07(iii) and their Affiliates, any Management Investor and each Person who
is or becomes a director, officer, agent or employee of Parent or any of
the Subsidiaries, in respect of liabilities (A) arising under the
Securities Act of 1933, the Securities Exchange Act of 1934 and any other
applicable securities laws or otherwise, in connection with any offering of
securities by Parent or any of the Subsidiaries, (B) incurred to third
parties for any action or failure to act of Parent or any of the
Subsidiaries, predecessors or successors, (C) arising out of the
performance by CD&R of management consulting or financial advisory services
provided to Parent or any of the Subsidiaries, (D) arising out of the fact
that any indemnitee was or is a director, officer, agent or employee of
Parent or any of the Subsidiaries, or is or was serving at the request of
any such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or enterprise or (E) to the
fullest extent permitted by Delaware or other applicable state law, arising
out of any breach or alleged breach by such indemnitee of his or her
fiduciary duty as a director or officer of Parent or any of the
Subsidiaries;
79
(iv) Parent or any of the Subsidiaries from performing any agreements
or commitments with or to any Affiliate existing on the Closing Date and
described on Schedule 6.07(iv); or
(v) any transaction (including entering into and performing any
agreement with respect thereto) permitted under Section 6.01(d), 6.02(n),
6.03(e), 6.03(k), 6.04, 6.06 or 6.08, or any transaction with a wholly
owned Subsidiary of Parent.
For purposes of this Section 6.07, "Disinterested Director" shall mean, with
respect to any Person and transaction, a member of the board of directors or
comparable body of such Person who does not have any material direct or indirect
financial interest in or with respect to such transaction (other than by virtue
of such member's ownership of Capital Stock of Parent or any Subsidiary of
Parent).
SECTION 6.08. Business of Parent, Borrowers and Subsidiaries. (a)
Enter into any business, either directly or through any Subsidiary, except for
those businesses of the same general type as those in which Parent and the
Subsidiaries are engaged on the Closing Date or which are related thereto.
(b) In the case of Parent or any Foreign Subsidiary Holdco, engage in
any business or business activity other than (i) the Transactions and other
transactions contemplated by the Loan Documents and the provision of
administrative, legal, accounting and management services to or on behalf of
Parent or any of its Subsidiaries, (ii) holding the Capital Stock, directly or
indirectly, of the Borrowers or any Subsidiary (including any Subsidiary formed
or acquired after the Closing Date) and the issuance, sale or transfer of
Capital Stock of such Foreign Subsidiary Holdco or any Subsidiary to Parent or
any wholly owned Subsidiary thereof, and the exercise of rights and the
performance of obligations in connection therewith, (iii) the entry into, and
exercise of rights and performance of obligations in respect of, (A) the Loan
Documents to which Parent or such Foreign Subsidiary Holdco, as the case may be,
is a party, and any other agreement to which Parent or such Foreign Subsidiary
Holdco, as the case may be, is a party on the date hereof, in each case, as
amended, supplemented, waived or otherwise modified from time to time, and any
refinancings, refundings, renewals or extensions thereof, (B) contracts and
agreements with officers, directors and employees of Parent or such Foreign
Subsidiary Holdco, as the case may be, or a Subsidiary thereof relating to their
employment or directorships, (C) insurance policies and related contracts and
agreements and (D) equity subscription agreements, registration rights
agreements, voting and other stockholder agreements, engagement letters,
underwriting agreements and other agreements in respect of its equity securities
or any offering, issuance or sale thereof, including but not limited to in
respect of Management Subscription Agreements, (iv) with respect to Parent only,
the offering, issuance and sale of its equity securities, (v) with respect to
Parent only, the filing of registration statements, and compliance with
applicable reporting and other obligations, under federal, state or other
securities laws, (vi) with respect to Parent only, the listing of its equity
securities and compliance with applicable reporting and other obligations in
connection therewith, (vii) the retention of counsel, accountants and other
advisory and consultants, and, with respect to Parent only, transfer agents,
private placement agents and underwriters, (viii) the performance of obligations
under and compliance with its certificate of incorporation and by-laws, or any
applicable law, ordinance, regulation, rule, order, judgment, decree or permit,
(ix) the incurrence and payment of its operating and business expenses and any
taxes for which it may be liable, (x) making loans to or other Investments in,
or borrowing money from, other Subsidiaries or Parent, (xi) owning Intellectual
Property and foreign patents,
80
trademarks, trade names, copyrights, technology, know-how and processes and
licensing such Intellectual Property and foreign patents, trademarks, trade
names, copyrights, technology, know-how and processes to other subsidiaries of
Parent, (xii) paying dividends and other distributions on account of its Capital
Stock (to the extent permitted by Section 6.06) and (xiii) other activities
incidental or related to any of the foregoing.
SECTION 6.09. Negative Pledge Clauses. Enter into any agreement
which prohibits or limits the ability of Parent or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure the Obligations or,
in the case of any Guarantor, its Obligations under the applicable Guarantee
Agreement, other than (a) this Agreement and the other Loan Documents and any
related documents, (b) any industrial revenue or development bonds, agreements
governing any purchase money Liens, acquisition agreements or Financing Leases
or operating leases of real property entered into in the ordinary course of
business otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed, acquired or
leased thereby) or (c) as otherwise permitted by any Security Document.
SECTION 6.10. Optional Payments and Modifications of Debt Instruments
and other Material Agreements. (a) Make any optional payment, prepayment,
repurchase or redemption of the Subordinated Notes or make any optional payments
on account of or for a sinking or other analogous fund for the repurchase,
redemption, defeasance or other acquisition thereof (other than mandatory
payments of principal and interest and payments of, in each case, fees and
expenses required by the Subordinated Notes or the Subordinated Note Documents,
only to the extent permitted under the subordination provisions, if any,
applicable thereto), (b) make any amendment, supplement, modification or waiver
of any of the terms of the Subordinated Notes or the Subordinated Note Documents
(i) which amends or modifies the subordination provisions contained in the
Subordinated Notes and the Subordinated Note Documents; (ii) which shortens the
fixed maturity or increases the principal amount of, or increases the rate or
shortens the time of payment of interest on, or increases the amount or shortens
the time of payment of any principal or premium payable whether at maturity, at
a date fixed for prepayment or by acceleration or otherwise of the Indebtedness
evidenced by the Subordinated Notes or increases the amount of, or accelerates
the time of payment of, any fees or other amounts payable in connection
therewith to any holder of the Subordinated Notes; (iii) which relates to any
material affirmative or negative covenants or any events of default or remedies
thereunder and the effect of which is to subject Parent or any Subsidiary to any
more onerous or more restrictive provisions; or (iv) which otherwise adversely
affects the interests of the Lenders as senior creditors with respect to the
Subordinated Notes or the interests of the Lenders hereunder in any material
respect or (c) in the event of the occurrence of a Change in Control, repurchase
the Subordinated Notes, unless the Borrowers shall have (i) made payment in full
of the Loans, all L/C Disbursements and any other amounts then due and owing to
any Secured Party hereunder and cash collateralized the obligations of the
Borrowers in respect of Letters of Credit on terms reasonably satisfactory to
the Administrative Agent and Issuing Bank or (ii) made an offer to pay the
Loans, all L/C Disbursements and any amounts then due and owing to each Secured
Party hereunder and to cash collateralize the obligations of the Borrowers in
respect of Letters of Credit in respect of each Lender and shall have made
payment in full thereof to each such Lender or the Administrative Agent which
has accepted such offer and cash collateralized such obligations in respect of
Letters of Credit of each such Issuing Bank which has accepted such offer.
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SECTION 6.11. Capital Expenditures. Make any expenditure (a "Capital
Expenditure") in respect of the purchase or other acquisition of fixed or
capital assets (excluding (i) any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations and
(ii) any Permitted Acquisition permitted by Section 6.03(n)) except for (x)
Capital Expenditures described in the immediately preceding parenthetical and
(y) additional Capital Expenditures, in the case of this clause (y) not
exceeding, in the aggregate for Parent and its Subsidiaries, during any fiscal
year of Parent the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
1998 $15,000,000
1999 17,500,000
2000 17,500,000
2001 17,500,000
2002 17,500,000
2003 20,000,000
; provided that any portion of such amount which is not so expended in the
fiscal year for which it is permitted above may be carried over to increase the
amount permitted for the next fiscal year of Parent and shall be deemed to be
the first amounts expended in such next fiscal year; provided, however, that
none of the amounts set forth in the table above shall be increased by more than
50% of such amount by virtue of any such carry-over.
SECTION 6.12. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio on the last day of any fiscal quarter of Parent ending during any
period set forth below to be in excess of the ratio set forth below for such
period:
Period Ratio
------ -----
From and including September 30, 1998 6.25 to 1.00
through and including December 30,
1998
From and including December 31, 1998 5.90 to 1.00
through and including December 30,
1999
From and including December 31, 1999 5.00 to 1.00
through and including December 30,
2000
From and including December 31, 2000 4.25 to 1.00
through and including December 30,
2001
From and including December 31, 2001 3.75 to 1.00
through and including December 30,
2002
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Thereafter 3.50 to 1.00
SECTION 6.13. Consolidated Interest Coverage Ratio. Permit, for any
period of four consecutive fiscal quarters of Parent ending during any period
set forth below, the Consolidated Interest Coverage Ratio at the last day of
such four fiscal quarter period to be less than the ratio set forth below
opposite such period:
Period Ratio
------ -----
From and including December 31, 1998 1.50 to 1.00
through and including December 30,
1999
From and including December 31, 1999 1.75 to 1.00
through and including December 30,
2000
From and including December 31, 2000 2.50 to 1.00
through and including December 30,
2001
From and including December 31, 2001 2.75 to 1.00
through and including December 30,
2002
Thereafter 3.00 to 1.00
SECTION 6.14. Fiscal Year. Permit the fiscal year of Parent to end on
a day other than December 31.
ARTICLE VII
Events of Default
SECTION 7.01. Certain Bankruptcy Events. If any of the following
events shall occur and be continuing:
(a) Parent, either Borrower or any Material Subsidiary shall commence
any case, proceeding or other action (i) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or Parent, either Borrower or any
Material Subsidiaries shall make a general assignment for the benefit of
its creditors;
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(b) there shall be commenced against Parent, either Borrower or any
Material Subsidiary any case, proceeding or other action of a nature
referred to in clause (a) above which (i) results in the entry of an order
for relief or any such adjudication or appointment or (ii) remains
undismissed, undischarged or unbonded for a period of 60 days;
(c) there shall be commenced against Parent, either Borrower or any
Material Subsidiary any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
(d) Parent, either Borrower or any Material Subsidiary shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (a), (b) or (c) above;
or
(e) Parent, either Borrower or any Material Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;
then, and in any such event:
(A) if such event is an Event of Default specified in clause (a) or
(b) of this Section 7.01 with respect to Parent or either Borrower, the
Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
(including all amounts of obligations under Letters of Credit, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become due
and payable; and
(B) if such event is any other Event of Default specified in this
Section 7.01, any or all of the following actions may be taken: (i) with
the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrowers, declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall,
by notice to the Borrowers, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing on account thereof under this
Agreement (including all amounts due in respect of Letters of Credit,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and
payable.
SECTION 7.02. Other Events of Default. If any of the following
events shall occur and be continuing:
(a) either Borrower shall fail to pay in the applicable currency any
principal of any Loan or the reimbursement obligation with respect to any
L/C Disbursement when due in accordance with the terms thereof or hereof
(it being understood that any
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conversion of a reimbursement obligation under a Letter of Credit into a
borrowing pursuant to Section 2.22(e) shall not constitute a failure to
make a payment in satisfaction of such reimbursement obligation) or either
Borrower shall fail to pay in the applicable currency any interest on any
Loan, or any other amount payable, within five days after any such interest
or other amount becomes due in accordance with the terms thereof or hereof;
(b) any representation or warranty made or deemed made by either
Borrower or any other Loan Party herein or in any other Loan Document or
that is contained in any certificate furnished by it at any time under or
pursuant to this Agreement or any such other Loan Document shall prove to
have been incorrect in any material respect on or as of the date deemed
made;
(c) Parent, either Borrower or any Subsidiary shall default in the
observance or performance of any agreement contained in Article VI or
Section 4.07, 4.08, 4.09 or 4.10 of the Security Agreement;
(d) either Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section 7.02), and such default shall continue
unremedied for a period ending on the earlier of (i) the date 30 days after
a Responsible Officer of Parent or either Borrower shall have discovered or
should have discovered such default and (ii) the date 15 days after written
notice has been given to the Borrowers by the Administrative Agent;
(e) Parent, either Borrower or any of the Borrowers' Subsidiaries
shall (i) default in any payment in the applicable currency of principal of
or interest on any Material Indebtedness (other than the Loans and the
reimbursement obligations under the Letters of Credit), beyond the period
of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Material
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Material Indebtedness (or a
trustee or Administrative Agent on behalf of such holder or holders) to
cause, with the giving of notice or lapse of time if required, such
Material Indebtedness to become due prior to its stated maturity (an
"Acceleration"), and such time shall have lapsed and, if any notice (a
"Default Notice") shall be required to commence a grace period or declare
the occurrence of an Event of Default before notice of Acceleration may be
delivered, such Default Notice shall have been given;
(f) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of
Parent, either Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is reasonably
likely to
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result in the termination of such Plan for purposes of Title IV of ERISA
(other than a standard termination pursuant to Section 4041(b) of ERISA),
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) Parent, either Borrower or any Commonly Controlled Entity shall,
or is reasonably likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan, (vi) the occurrence or expected occurrence of any event or condition
which results or is reasonably likely to result in Parent, either Borrower
or any Commonly Controlled Entity becoming responsible for any liability in
respect of a Former Plan, (vii) with respect to any Foreign Benefit Plans,
any material noncompliance with applicable foreign law or the incurrence of
any material liability, or (viii) any other event or condition shall occur
or exist with respect to a Plan; and in each case in clauses (i) through
(viii) above, such event or condition, together with all other such events
or conditions, if any, would be reasonably expected to result in liability
which would have a Material Adverse Effect;
(g) one or more judgments or decrees shall be entered against Parent,
either Borrower or any of its Active Subsidiaries involving in the
aggregate a liability (net of any insurance or indemnity payments actually
received in respect thereof prior to or within 60 days from the entry
thereof, or to be received in respect thereof, in the event any appeal
thereof shall be unsuccessful) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof;
(h) (i) any of the Security Documents or Guarantee Agreements shall
cease, for any reason, to be in full force and effect other than pursuant
to the terms hereof or thereof, or Parent, either Borrower or any other
Loan Party which is a party to any of the Security Documents or Guarantee
Agreements shall so assert in writing or (ii) the Lien created by any of
the Security Documents shall cease to be enforceable and of the same effect
as to perfection and priority purported to be created thereby with respect
to any significant portion of the Collateral (other than in connection with
any termination of such Lien in respect of any Collateral as permitted
hereby or by any Security Document), and such failure of such Lien to be
perfected and enforceable with such priority shall have continued
unremedied for a period of 20 days;
(i) the Subordinated Notes, for any reason, shall not be or shall
cease to be validly subordinated as provided therein and in the
Subordinated Note Documents to the obligations of any Loan Party under this
Agreement and the other Loan Documents;
(j) a cash equity contribution (including from the sale of any
capital stock of Parent) to Parent shall fail to be made within 120 days
after the Closing Date in an amount at least equal to the difference
between (i) $80,000,000 and (ii) the cash equity contribution made to
Parent on the Closing Date; or
(k) a Change in Control shall have occurred;
then, and in any such event, either or both of the following actions may be
taken:
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(i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrowers, declare
the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and
(ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrowers, declare
the Loans hereunder (with accrued interest thereon) and all other
amounts owing on account thereof under this Agreement (including all
amounts due in respect of Letters of Credit, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and
payable.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
SECTION 8.01. Appointment. Each of the Lenders and the Issuing Bank
hereby irrevocably designates and appoints each of the Administrative Agent and
the Collateral Agent (for purposes of this Article VIII, the Administrative
Agent and the Collateral Agent are referred to collectively as the "Agents") as
the agents of such Lender under this Agreement and the other Loan Documents, and
each such Lender irrevocably authorizes the Agents to take such action on behalf
of such Lender or the Issuing Bank under the provisions of this Agreement and
the other Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agents by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Agents shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agents. The Administrative Agent is hereby
expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and the
Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders and the Issuing Bank hereunder, and promptly to distribute to each
Lender or the Issuing Bank its proper share of each payment so received, (b) to
give notice on behalf of each of the Lenders to the Borrowers of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder, and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrowers or any other Loan Party pursuant to this
Agreement or the other Loan Documents as received by the Administrative Agent.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases) with
respect to the Collateral and the rights of the Secured Parties with respect
thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents.
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SECTION 8.02. Delegation of Duties. Each of the Agents may execute
any and all of their respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to the
advice of counsel concerning all matters pertaining to such duties. Neither
Agent shall be responsible for the negligence or misconduct of any agent or
attorney-in-fact selected by it with reasonable care.
SECTION 8.03. Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by Parent, either Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by, either Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of Parent or either Borrower to perform its obligations
hereunder or thereunder. Neither Agent shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Parent, either
Borrower or any other Loan Party.
SECTION 8.04. Reliance by Agents. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
Parent or either Borrower), independent accountants and other experts selected
by the Administrative Agent. Each Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Each Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or such larger number of Lenders as may be explicitly required
hereunder), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
SECTION 8.05. Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender, Parent or either Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders,
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with
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respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
SECTION 8.06. Acknowledgments and Representations by Lenders. Each
Lender expressly acknowledges that neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by either Agent hereinafter
taken, including any review of the affairs of Parent or either Borrower, shall
be deemed to constitute any representation or warranty by such Agent to any
Lender. Each Lender represents to each other party hereto that it has,
independently and without reliance upon the Agents or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of Parent and the Borrowers
and made its own decision to make its Loans hereunder and enter into this
Agreement. Each Lender also represents to each other party hereto that it will,
independently and without reliance upon either Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of Parent and the Borrowers. Each Lender represents to each
other party hereto that it is a bank, savings and loan association or other
similar savings institution, insurance company, investment fund or company or
other financial institution that makes or acquires commercial loans in the
ordinary course of its business, that it is participating hereunder as a Lender
for such commercial purposes, and that it has the knowledge and experience to be
and is capable of evaluating the merits and risks of being a Lender hereunder.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
Parent or either Borrower which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
SECTION 8.07. Expense Reimbursement; Indemnification. Each Lender
agrees (a) to reimburse the Agents, on demand, in the amount of its pro rata
share (based on its Commitments hereunder) of any expenses incurred for the
benefit of the Lenders by the Agents, including counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrowers and (b) to indemnify and hold
harmless each Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by or asserted against it in its capacity as Agent
or any of them in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by it or any of them under
this Agreement or any other Loan Document, to the extent the same shall not have
been reimbursed by the Borrowers or any other Loan Party, provided that no
Lender shall be liable to an Agent or any such other indemnified Person for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements as are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Agent or any of its
directors, officers, employees or agents.
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Each Revolving Credit Lender agrees to reimburse each of the Issuing Bank and
its directors, employees and agents, in each case, to the same extent and
subject to the same limitations as provided above for the Agents.
SECTION 8.08. Agents in their Individual Capacities. Each of the
Agents and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Parent, either Borrower or any Subsidiary or
Affiliate thereof as though such Agent were not an Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, each of the Agents
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not such
Agent and the terms "Lender" and "Lenders" shall include each of the Agents in
its respective individual capacity.
SECTION 8.09. Successor Agents. Subject to the appointment and
acceptance of a successor Agent as provided below, the Administrative Agent may
resign upon ten days' notice to the Lenders by notifying the Lenders and the
Borrowers. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent (provided that, to the extent that no Default or
Event of Default is continuing at the time of such appointment, such Agent shall
have been approved by the Borrowers). If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a Lender and be a bank with an office in New York, New York,
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as the Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder. After an Agent's
resignation hereunder, the provisions of this Article and Section 9.06 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent. Without the consent of the
Borrowers, the Administrative Agent and the Collateral Agent may not be
different Persons.
(b) Upon appointment of the retiring Collateral Agent (the "Retiring
Collateral Agent"), such Retiring Collateral Agent shall promptly (i) deliver to
the new Collateral Agent all Collateral held by such Retiring Collateral Agent,
(ii) execute and file uniform commercial code financing statements, naming the
new Collateral Agent as assignee, in each jurisdiction financing statements have
been filed in connection with any Loan Document, (iii) take all such actions
required or requested by either Borrower to name the new Collateral Agent as
mortgagee under the Mortgages and (iv) take all such other actions required or
requested by either Borrower to perfect the pledge or lien pursuant to the
Security Documents in the name of the new Collateral Agent.
ARTICLE IX
Miscellaneous
SECTION 9.01. Amendments and Waivers. (a) Neither this Agreement
nor any other Loan Document, nor any terms hereof or thereof may be waived,
amended, supplemented or modified except in accordance with the provisions of
this Section 9.01.
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(b) Except as set forth in the succeeding paragraphs of this Section
9.01, the Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (i) enter into with
the Loan Parties written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive at any
Loan Party's request on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences (any such amendment, supplement,
modification or waiver, a "Specified Change"); provided, however, that (x)
without the written consent of the Issuing Bank, no Specified Change shall
amend, supplement or otherwise modify any provisions of or directly applicable
to any Letter of Credit, (y) without the written consent of the Swingline
Lender, no Specified Change shall amend, modify or waive any provision of
Section 2.23 or any other provision of this Agreement governing the rights or
obligations of the Swingline Lender, and (z) without the written consent of the
then Administrative Agent and Collateral Agent, no Specified Change shall amend,
modify or waive any provision of Article VIII, or, without the prior written
consent of the then Administrative or the then Collateral Agent, as applicable,
no Specified Change shall amend, modify or waive any other provision of this
Agreement governing the rights or obligations of the Administrative Agent or the
Collateral Agent.
(c) Without the written consent of the Required Lenders, no Specified
Change shall (i) waive any of the conditions precedent to the funding of the
initial Loans and extensions of credit set forth in Section 4.02 (except that
the making of the initial extensions of credit by any Lender on the Closing Date
shall be deemed to constitute a waiver of such conditions precedent by such
Lender), (ii) waive any Default or Event of Default under Section 7.01 and its
consequences or (iii) amend, supplement or otherwise modify any provisions of
Section 7.01.
(d) Without the written consent of the Collateral Release Lenders, no
Specified Change shall take any action which has the effect of releasing all or
substantially all of the Collateral, Parent or either Borrower from its
Guarantee or all or substantially all of the Subsidiary Guarantors from their
Guarantees in respect hereof (except as permitted hereby or by any Security
Document).
(e) Without the written consent of each Lender directly affected
thereby, no Specified Change shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, (ii) reduce the
stated rate of any interest or fee payable or extend the scheduled date of any
payment thereof, (iii) increase the amount or extend the expiration date of any
Lender's Commitments or (iv) amend, modify or waive any provision of this
Section 9.01.
(f) Without the written consent of all the Lenders, no Specified
Change shall amend or modify the pro rata requirements of Section 2.17 or reduce
the percentage specified in the definition of "Required Lenders".
(g) Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Lenders and shall be binding upon the
Lenders, the Administrative Agent, all future holders of the Loans and the Loan
Parties signatories thereto. In the case of any waiver, each of the Loan
Parties, the Lenders and the
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Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
SECTION 9.02. Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, first class postage prepaid, (c) in the case of delivery
by a nationally recognized overnight courier, when received, or (d) in the case
of delivery by facsimile transmission, when sent and receipt has been confirmed,
addressed as follows in the case of Parent, either Borrower, the Administrative
Agent, the Collateral Agent or the Issuing Bank, and in the case of a Lender, to
it at its address (or facsimile number) set forth on Schedule 2.01 or in the
Assignment and Acceptance pursuant to which such Lender shall have become a
party hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Loans:
Parent, JCI and JCISA: c/o Jafra Cosmetics International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of notices Debevoise & ▇▇▇▇▇▇▇▇
to Parent, JCI or JCISA, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to: ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Administrative Agent, Credit Suisse First Boston
Collateral Agent and Eleven Madison Avenue
Issuing Bank: ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.03, 2.09(c), 2.10, 2.12(a), 2.17, 2.22(b)
or 2.23(b), shall not be effective until received.
SECTION 9.03. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent, the Issuing
Bank, any Lender or any Loan Party, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
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powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 9.04. Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any certificate delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
SECTION 9.05. Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of Parent, each Borrower, the Lenders, the
Issuing Bank, the Collateral Agent, the Administrative Agent and their
respective successors and assigns, except that neither Parent nor either
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender and any attempted
assignment without such consent shall be null and void.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents, provided that (unless
the Borrowers, the Administrative Agent and, in the case of any assignment of a
Revolving Credit Commitment, the Issuing Bank and the Swingline Lender otherwise
consent in writing) no such participating interests shall be in an aggregate
principal amount of less than $5,000,000 in the aggregate (or, if less, the full
amount of such selling Lender's Loans and Commitments). In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Loan
Parties, the Administrative Agent, the Issuing Bank and the Collateral Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. Any agreement pursuant to which any Lender shall sell any such
participating interest shall provide that such Lender shall retain the sole
right and responsibility to exercise such Lender's rights and enforce Parent's
and each Borrower's respective obligations hereunder, including the right to
consent to any amendment, supplement, modification or waiver of any provision of
this Agreement or any of the other Loan Documents, and no Lender shall be
entitled to create in favor of any Participant, in the participation agreement
pursuant to which such Participant's participating interest shall be created or
otherwise, any right to vote on, consent to or approve any matter relating to
this Agreement or any other Loan Document, provided that such participation
agreement may provide that, without the consent of the Participant, such Lender
will not agree to any amendment, supplement, modification or waiver, specified
in Section 9.01(e) or (f). The Borrowers also agree that each Lender shall be
entitled to the benefits of Sections 2.14, 2.16 and 2.20 without regard to
whether it has granted any participating interests, and that all amounts payable
to a Lender under Sections 2.14, 2.16 and 2.20 shall be determined as if such
Lender had not granted any such participating interests.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to (i) any Lender or any Affiliate thereof or (ii) with the prior
written consent of the Administrative Agent and the Borrowers (and, in the case
of any assignment of a Revolving Credit Commitment, the Issuing Bank and the
Swingline Lender) (which, in each case, shall not be
93
unreasonably withheld), to any additional bank or financial institution (any
such assignee described in clause (i) or (ii), an "Assignee") all or any part of
its rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance executed by such Assignee, such
assigning Lender and the Administrative Agent (and, to the extent required
pursuant to clause (ii) above, by the Borrowers, the Swingline Lender and the
Issuing Bank) and delivered to the Administrative Agent for its acceptance and
recording in the Register (as defined below), provided that (x) unless the
Borrowers, the Administrative Agent and, in the case of any assignment of a
Revolving Credit Commitment, the Issuing Bank and the Swingline Lender otherwise
consent in writing, no such assignment shall be in an aggregate principal amount
of less than $5,000,000 in the aggregate (or, if less, the full amount of such
selling Lender's Loans and Commitments), (y) any assignment of all or any
portion of a Lender's Revolving Credit Commitment or Term Loans shall be
accompanied by the assignment to the same Assignee of a ratable share of the
other and (z) if any Lender assigns all or any part of its rights and
obligations under this Agreement to one of its Affiliates in connection with or
in contemplation of the sale or other disposition of its interest in such
Affiliate, the Borrowers' prior written consent shall be required for such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding the foregoing, no Assignee,
which as of the date of any assignment to it pursuant to this Section 9.05(c)
would be entitled to receive any greater payment under Section 2.14 or 2.20 than
the assigning Lender would have been entitled to receive as of such date under
such Sections with respect to the rights assigned, shall be entitled to receive
such payments unless the Borrowers have consented in writing to the assignment
and agreed in writing to waive the benefit of this sentence.
(d) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of either Borrower or any Subsidiary or the
performance or observance by either Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such Assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.01(b) or delivered pursuant to Section 5.01 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and
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decision to enter into such Assignment and Acceptance; (v) such Assignee
confirms the Lender acknowledgements and representations set forth in Section
8.06; (vi) such Assignee appoints and authorizes the Administrative Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent
and the Collateral Agent, respectively, by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such Assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(e) The Administrative Agent, on behalf of the Borrowers, shall maintain
at the address of the Administrative Agent referred to in Section 9.02 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive and the Borrowers,
the Administrative Agent, the Issuing Bank, the Collateral Agent and the Lenders
may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation hereunder
not evidenced by a Note shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available for
inspection by the Borrowers, the Collateral Agent or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of (i) an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Borrowers, the Administrative
Agent, the Issuing Bank or the Swingline Lender, as applicable), (ii) a duly
completed Administrative Questionnaire, (iii) payment to the Administrative
Agent of a registration and processing fee of $3,500 and (iv) all necessary
written consents to such assignment, the Administrative Agent shall (x) promptly
accept such Assignment and Acceptance, (y) on the effective date determined
pursuant thereto record the information contained therein in the Register and
(z) give notice of such acceptance and recordation to the Borrowers. On or prior
to such effective date, the assigning Lender shall surrender any outstanding
Notes held by it all or a portion of which are being assigned, and the
Borrowers, at their own expense, shall, upon the request to the Administrative
Agent made at the time of such assignment by the assigning Lender or the
Assignee, as applicable, execute and deliver to the Administrative Agent (in
exchange for the outstanding Notes of the assigning Lender) a new Note to the
order of such Assignee in an amount equal to (i) in the case of an assigned
Revolving Loan, the lesser of (A) the amount of such Assignee's Revolving Credit
Commitment and (B) the aggregate principal amount of all Revolving Loans made by
such Assignee and (ii) in the case of an assigned Term Loan, the amount of such
Assignee's Term Loan, in each case with respect to the relevant Loan after
giving effect to such Assignment and Acceptance and, if the assigning Lender has
retained a Loan hereunder, a new Note, as the case may be, to the order of the
assigning Lender in an amount equal to (i) in the case of a retained Revolving
Credit Loan, the lesser of (A) the amount of such Lender's Revolving Credit
Commitment and (B) the aggregate principal amount of all Revolving Loans made by
such Lender and (ii) in the case of a retained Term Loan, the amount of such
Lender's Term Loan, in each case with respect to the relevant Loan after giving
effect to such Assignment and Acceptance. Any such new Notes shall be dated the
Closing Date and shall otherwise be in the form of the Note replaced
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thereby. Any Notes surrendered by the assigning Lender shall be returned by the
Administrative Agent to the applicable Borrower marked "canceled".
(g) Each Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, subject to the
provisions of Section 9.17, any and all financial information in such Lender's
possession concerning the Borrowers and their Affiliates which has been
delivered to such Lender by or on behalf of the Borrowers pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrowers in connection with such Lender's credit evaluation of the Borrowers
and their Affiliates prior to becoming a party to this Agreement. No assignment
or participation made or purported to be made to any Transferee shall be
effective without the prior written consent of the Borrowers if it would require
the Borrowers to make any filing with any Governmental Authority or qualify any
Loan or Note under the laws of any jurisdiction, and the Borrowers shall be
entitled to request and receive such information and assurances as it may
reasonably request from any Lender or any Transferee to determine whether any
such filing or qualification is required or whether any assignment or
participation is otherwise in accordance with applicable law.
(h) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 9.05 concerning assignments of Loans and
Notes do not prohibit any pledge by a Lender of any Loan or Note to any Federal
Reserve Bank in accordance with applicable law, provided that no such assignment
shall release a Lender from any of its obligations hereunder or substitute any
such Bank for such Lender as a party hereto.
SECTION 9.06. Payment of Expenses and Taxes. Each Borrower agrees
(a) to pay or reimburse each of the Administrative Agent, the Collateral Agent
and the Issuing Bank for all reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of, and any amendment,
supplement, modification to, or waiver of the provisions of, this Agreement and
the other Loan Documents and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees and disbursements
of counsel (including local counsel) to the Administrative Agent and the
Collateral Agent, (b) to pay or reimburse each Lender, the Administrative Agent
and the Collateral Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
reasonable fees and disbursements of any local counsel to the Administrative
Agent, the Collateral Agent and the several Lenders, (c) to pay, indemnify and
hold each Lender, the Collateral Agent, the Issuing Bank and the Administrative
Agent (each such Person being called an "Indemnitee") harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of or
any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents and (d) except as provided in Section
8.09(b), to pay, indemnify and hold each Indemnitee harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents or the use of the proceeds of the Loans and other extensions of credit
hereunder, including any of the foregoing relating to the
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violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of either Borrower, any of the Subsidiaries or any
of the Properties (all the foregoing in this clause (d) collectively the
"Indemnified Liabilities"), provided that Borrowers shall have no obligation
hereunder to any Indemnitee with respect to Indemnified Liabilities arising from
(i) the gross negligence or willful misconduct of any Indemnitee (or any of
their respective directors, trustees, officers, employees, agents, successors
and assigns) or (ii) claims made or legal proceedings commenced against any
Indemnitee by any securityholder or creditor thereof arising out of and based
upon rights afforded any such securityholder or creditor solely in its capacity
as such. Notwithstanding the foregoing, except as provided in clauses (b) and
(c) above, the Borrowers shall have no obligation under this Section 9.06 to any
Indemnitee with respect to any tax, levy, impost, duty, charge, fee, deduction
or withholding imposed, levied, collected, withheld or assessed by any
Governmental Authority.
The agreements in this Section 9.06 shall survive repayment of the
Loans and all other amounts payable hereunder.
SECTION 9.07. Set-off. In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right, without prior notice
to Parent and the Borrowers (any such notice being expressly waived by the
Borrowers to the extent permitted by applicable law), upon the occurrence of an
Event of Default under Section 7.02(a) to set off and appropriate and apply
against any amount then due and payable any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of either Borrower. Each Lender agrees promptly to notify Parent, the
Borrowers and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
SECTION 9.08. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan
or participation in any L/C Disbursement, together with all fees, charges and
other amounts which are treated as interest on such Loan or participation in
such L/C Disbursement under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan or
participation in accordance with applicable law, the rate of interest payable in
respect of such Loan or participation hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan or participation but were not payable as a result of the operation
of this Section 9.08 shall be cumulated and the interest and Charges payable to
such Lender in respect of other Loans or participations or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 9.09. Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be delivered to Parent,
the Borrowers and the Administrative Agent.
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SECTION 9.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.11. Integration. This Agreement and the other Loan
Documents represent the agreement among the parties with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by any of the parties hereto relative to the subject matter hereof
not expressly set forth or referred to herein or in the other Loan Documents.
SECTION 9.12. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.13. Applicable Law. THIS AGREEMENT AND ANY NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS
OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
SECTION 9.14. Submission to Jurisdiction; Waivers. Each party
hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient forum and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Parent,
either Borrower or the applicable Lender at its address set forth in
Section 9.02 or at such other address of which the Administrative Agent,
any such Lender, Parent and the Borrowers shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
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(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 9.14 any punitive damages.
SECTION 9.15. Acknowledgments. Each of Parent and each Borrower
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) none of the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender has any fiduciary relationship with or duty to
Parent or either Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Administrative Agent, the Collateral Agent, the Issuing Bank and the
Lenders, on the one hand, and Parent and the Borrowers, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Parent, the Borrowers and the Lenders.
SECTION 9.16. Waivers of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
SECTION 9.17. Confidentiality. Each Lender (including the Swingline
Lender), the Administrative Agent, the Collateral Agent and the Issuing Bank
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees, agents, advisors and representatives) to keep confidential any
Confidential Information (as defined below), and in connection therewith comply
with their customary procedures for handling confidential information of this
nature and with safe and sound banking practices, provided that nothing herein
shall limit its disclosure of any such information (a) to such of its respective
officers, directors or employees as need to know such Confidential Information,
(b) to the extent required by statute, rule, regulation or judicial process, (c)
to counsel for any of the Lenders or such Lender's auditors or accountants, (d)
to bank examiners or insurance commissioners having jurisdiction over the
disclosing Lender, (e) to the Administrative Agent, the Collateral Agent, the
Issuing Bank or any other Lender, (f) by the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender to an Affiliate thereof, (g) in
connection with any enforcement of any of the Loan Documents or (h) to any
Transferee, or prospective Transferee that agrees to comply with this Section
9.17 and (in the case of any such Person that at the time of such disclosure has
not yet become a Lender) executes and delivers to Parent and the Borrowers a
written instrument in favor of Parent and the Borrowers confirming such
agreement, in form and substance reasonably satisfactory to Parent and the
Borrowers, provided that (i) in the case of the preceding clauses (b) and (d),
such Lender shall, to the extent legally permissible, notify the Borrowers of
the proposed disclosure as far in advance as is reasonably practicable under the
circumstances, (ii) in the case of the preceding clause (c), such Lender shall
inform each such counsel, auditor or accountant of the agreement under this
Section 9.17 and take reasonable actions to cause compliance by
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any such Person with this agreement (including, where appropriate, to cause any
such Person to acknowledge its agreement to be bound by the agreement under this
Section 9.17) and (iii) in the case of the preceding clause (f), such Lender,
the Collateral Agent, the Issuing Bank or the Administrative Agent shall be
responsible for any failure by such Affiliate of the Lender, the Collateral
Agent, the Issuing Bank or the Administrative Agent to comply with this Section
9.17. For purposes of this Section 9.17, "Confidential Information" shall mean,
with respect to the Administrative Agent, the Collateral Agent, the Issuing Bank
or any Lender (each an "Affected Party"), information delivered to such Affected
Party by or on behalf of Parent, either Borrower or any Subsidiary, the
Administrative Agent or any other Lender in connection with the transactions
contemplated by or otherwise pursuant to this Agreement or information obtained
by the Affected Party in the course of any review of the books or records of
Parent, either Borrower or any Subsidiary, provided that such term shall not
include information (i) that was publicly known or otherwise known to such
Affected Party prior to the time of such disclosure on a nonconfidential basis
without a duty of confidentiality to Parent, either Borrower or any Subsidiary
being violated, (ii) that subsequently becomes publicly known through no act or
omission by any Affected Party or any Person acting on the Affected Party's
behalf, (iii) that becomes known to such Affected Party on a nonconfidential
basis without a duty of confidentiality to Parent, either Borrower or any
Subsidiary being violated and, other than through disclosure by or on behalf of
Parent or either Borrower or (iv) that constitutes financial information
delivered to any Affected Party that is otherwise publicly available through no
act or omission of any Affected Party or Person acting on such Affected Party's
behalf.
SECTION 9.18. Judgment Currency. (a) If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in one currency into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding the day on which final judgment is given.
(b) The obligations of Parent and the Borrowers in respect of this
Agreement, the other Loan Documents and any Note due to any party hereto shall,
notwithstanding any judgment in a currency (the "judgment currency") other than
the currency in which the sum originally due to such party is denominated (the
"original currency"), be discharged only to the extent that on the Business Day
following receipt by such party of any sum adjudged to be so due in the judgment
currency such party may in accordance with normal banking procedures purchase
the original currency with the judgment currency; if the amount of the original
currency so purchased is less than the sum originally due to such party in the
original currency, Parent or such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party against such loss,
and if the amount of the original currency so purchased exceeds the sum
originally due to any party to this Agreement, such party, agrees to remit to
Parent or such Borrower, as applicable, such excess. This covenant shall
survive the termination of this Agreement and payment of the Loans and all other
amounts payable hereunder.
SECTION 9.19. European Monetary Union. If, as a result of the
implementation of European monetary union, (a) any currency ceases to be lawful
currency of the nation issuing the same and is replaced by a European common
currency, then any amount payable hereunder by any party hereto in such currency
shall instead be payable in the European common currency and the amount so
payable shall be determined by translating the amount payable in such currency
to such European common currency at the
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exchange rate recognized by the European Central Bank for the purpose of
implementing European monetary union, or (b) any currency and a European common
currency are at the same time recognized by the central bank or comparable
authority of the nation issuing such currency as lawful currency of such nation,
then (i) any Loan made at such time shall be made in such European common
currency and (ii) any other amount payable by any party hereto in such currency
shall be payable in such currency or in such European common currency (in an
amount determined as set forth in clause (a)), at the election of the obligor.
Prior to the occurrence of the event or events described in clause (a) or (b) of
the preceding sentence, each amount payable hereunder in any currency will
continue to be payable only in that currency. Parent and each Borrower agrees,
at the request of the Required Lenders, and the Lenders, the Issuing Bank and
the Administrative Agent agree, at the request of the Borrowers, at the time of
or at any time following the implementation of European monetary union, to enter
into an agreement amending this Agreement in such manner as the Required Lenders
or the Borrowers, as the case may be, shall reasonably request in order to avoid
any unfair burden or disadvantage resulting from the implementation of such
monetary union and to place the parties hereto in the position they would have
been in had such monetary union not been implemented, the intent being that
neither party will be adversely affected economically as a result of such
implementation and that reasonable provisions may be adopted to govern the
borrowing, maintenance and repayment of Loans denominated in any Alternative
Currency or a European common currency after the occurrence of the event or
events described in clause (a) or (b) of the preceding sentence.
SECTION 9.20. Calculations; Computations. Except as otherwise
expressly provided herein, to the extent that the determination of compliance
with any covenant contained herein or other provision hereof requires the
conversion to Dollars of foreign currency amounts, such Dollar amount shall be
the Dollar Equivalent of the amount of such foreign currency at the time such
item is to be calculated or is to be or was incurred, created or suffered or
permitted to exist or assumed or transferred or sold for purposes of this
Agreement (except if such item was incurred, created or assumed, or suffered or
permitted to exist or transferred prior to the date hereof, such conversion
shall be made based on the Dollar Equivalent of the amounts of such foreign
currency at the date hereof).
SECTION 9.21. Covenant to Pay. In order to effect the pledge of (a)
the shares of CDRJ Europe Holding Company, B.V. by JCI and (b) the shares of
CDRJ Latin America Holding Company, B.V. by CDRJ North Atlantic (Lux) Sarl, a
Deed of Pledge (the "Dutch Deed of Pledge") governed by the laws of The
Netherlands will be executed and will be issued in favor of the Collateral
Agent. Solely in connection with the Dutch Deed of Pledge:
(i) for value received, the Borrowers agree and covenant (the
"Covenant to Pay") that they shall pay to the Collateral Agent (for its own
account and as agent for the Lenders) on demand all amounts that the
Borrowers are now or may at any time and from time to time hereafter be
obligated to pay to the Collateral Agent, the Lenders or any one or more of
them, pursuant to this Agreement or the other Loan Documents, if and when
such amounts become due and payable; and
(ii) the Borrowers and the Collateral Agent agree and acknowledge
that the Borrowers' obligations under the Covenant to Pay consist of
obligations and liabilities of the Borrowers to the Collateral Agent,
separate and independent from and without prejudice to the underlying
liabilities and obligations that the Borrowers have or may have at any time
to the Lenders or the Collateral Agent under any other
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provisions of this Agreement or the other Loan Documents or otherwise,
provided that any payment by either Borrower of any portion of the
Borrowers' obligations under the Covenant to Pay shall discharge and
satisfy a like amount of such underlying liabilities and obligations.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CDRJ ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice Chairman and EVP
JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP
CDRJ INVESTMENTS (LUX) S.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice Chairman and EVP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Director
CREDIT SUISSE FIRST BOSTON, individually and as
Administrative Agent, Collateral Agent and
Swingline Lender
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
VICE PRESIDENT
103
THE CHASE MANHATTAN BANK,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
MANAGING DIRECTOR
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NATIONAL TRUST AND SAVINGS
ASSOCIATION,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Managing Director
▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
by /s/ ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇.▇. ▇▇▇▇▇▇▇▇
Relationship Manager
106
MARINE MIDLAND BANK,
by /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ N.A.,
by /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
by /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Vice President
SCHEDULE 1.01(a)
Inactive Subsidiaries
---------------------
None
SCHEDULE 1.01(b)
Subsidiary Guarantors
---------------------
JCI Subsidiary Guarantors
-------------------------
None
JCISA Subsidiary Guarantors
---------------------------
Reday, S.A. de C.V.
Distribuidora Venus, S.A. de C.V.
Dirsamex, S.A. de C.V.
Qualifax, S.A. de C.V.
Jafra Cosmetics, S. de ▇.▇. de C.V.
Consultoria Jafra, S.A. de C.V.
SCHEDULE 1.01(c)
Mortgaged Properties
--------------------
Title Holder Country Location Type
------------ ------- -------- ----
Reday, S.A. de C.V. Mexico Bld. M. ▇▇▇▇▇ ▇▇▇▇▇▇▇, 515 Office
Col. Tlacopac
San Angel, Mexico, ▇.▇.
▇▇▇▇▇, S.A. de C.V. Mexico Victoria #25 Manufacturing
Fracc. Industrial
▇▇▇▇ ▇▇▇▇▇▇
Col. Industrial
Naucalpan, Edo. de Mexico
Jafra Cosmetics U.S.A. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Office/Manufacturing
International, Inc. Westlake Village, CA
SCHEDULE 2.01
COMMITMENTS
-----------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF CONTACT PERSON, TELEPHONE AND COMMITMENTS
------------------- ----------------------------- -----------
LENDER TELECOPY NUMBERS
------ ----------------
-----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Contact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ R/C: $10,833,333.34
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 4,166,666.66
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Secondary Contact: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank Contact: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ R/C: $10,472,222.22
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 4,027,777.78
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
Bank of America National Trust Contact: ▇▇▇▇▇ ▇▇▇▇▇▇ R/C: $9,750,000.00
& Savings Association Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 3,750,000.00
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
The Bank of Nova Scotia Contact: ▇▇▇ ▇▇▇▇▇▇▇▇ R/C: $9,750,000.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 3,750,000.00
Suite 2100 Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
Marine Midland Bank Contact: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R/C: $9,750,000.00
▇▇▇ ▇▇▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 3,750,000.00
▇▇▇ ▇▇▇▇▇ Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
Union Bank of California, N.A. Contact: ▇▇▇▇▇ ▇▇▇▇▇▇ R/C: $7,222,222.22
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 2,777,777.78
16th Floor Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
The Bank of New York Contact: ▇▇▇▇ ▇▇▇▇▇ R/C: $7,222,222.22
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Term: 2,777,777.78
15th Floor Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL R/C: $65,000,000.00
-----
TERM: 25,000,000.00
TOTAL 90,000,000.00
-----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 3.04(a)
Consents, Authorizations, Notices and Filings
---------------------------------------------
None
SCHEDULE 3.06
Litigation
----------
None
SCHEDULE 3.08
Intellectual Property
---------------------
None
SCHEDULE 3.10
Tax Liens
---------
None
SCHEDULE 3.14
Subsidiaries
------------
After giving effect to the Transactions:
Subsidiary Jurisdiction of Incorporation
---------- -----------------------------
CDRJ North Atlantic (Lux) Sarl Luxembourg
Jafra Cosmetics International, Inc. Delaware
CDRJ Europe Holding Company B.V. Netherlands
Jafra Cosmetics Handelsgesellschaft mbH Austria
Jafra Cosmetics A.G. Switzerland
Jafra Cosmetics S.p.A. Italy
CDRJ Europe Holding Company GmbH Germany
Jafra Cosmetics International B.V. Netherlands
CDRJ Germany Holding Company GmbH Germany
Jafra Cosmetics GmbH Germany
CDRJ Latin America Holding Company B.V. Netherlands
Latin Cosmetics Holdings B.V. Netherlands
Regional Cosmetics Holding B.V. Netherlands
Southern Cosmetics Holdings B.V. Netherlands
CDRJ Mexico Holding Company B.V. Netherlands
Jafra Cosmetics, Ltda. Brazil
CDRJ Latin America Holding Company GmbH Germany
Jafra Poland, Sp. zo.o. Poland
Jafra Cosmetics S.R.L. Argentina
Jafra Cosmetics International, S.A. de C.V. Mexico
Jafra Cosmetics Colombia, S.A. Colombia
Jafra Cosmetics Venezuela, S.A. Venezuela
Jafra Cosmetics, S. de ▇.▇. de C.V. Mexico
Consultoria Jafra, S.A. de C.V. Mexico
Distribuidora Venus, S.A. de C.V. Mexico
Dirsamex, S.A. de C.V. Mexico
Reday, S.A. de C.V. Mexico
Qualifax, S.A. de C.V. Mexico
SCHEDULE 3.20
UCC Filings
-----------
STATE FILING OFFICE
----- -------------
California Secretary of State
California Ventura County
New Jersey Secretary of State
New Jersey Gloucester County
SCHEDULE 3.21(a)
Owned Real Property
-------------------
Title Holder Country Location Type
------------ ------- -------- ----
Reday, S.A. de C.V. Mexico Bld. M. ▇▇▇▇▇ ▇▇▇▇▇▇▇, 515 Office
Col. Tlacopac
San Angel, Mexico, ▇.▇.
▇▇▇▇▇, S.A. de C.V. Mexico Victoria #25 Manufacturing
Fracc. Industrial
▇▇▇▇ ▇▇▇▇▇▇
Col. Industrial
Naucalpan, Edo. de Mexico
Jafra Cosmetics U.S.A. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Office/Manufacturing
International, Inc. Westlake Village, CA
SCHEDULE 3.21(b)
Leased Real Property
--------------------
Tenant Country Location Type
------ -------- -------- ----
Jafra Cosmetic S.R.L. Argentina ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2262 (1426) Office
Capital Federal (Buenos Aires)
Jafra Cosmetics Austria Wienerbergstrasse ▇, ▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇ - ▇▇▇▇ ▇▇▇▇
mbH [Vienna]
Jafra Cosmetics Columbia ▇▇▇▇▇ ▇▇ ▇▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇.▇.
Jafra Cosmetics Columbia ▇▇▇▇▇▇▇ ▇▇ ▇▇. ▇▇-▇▇ Offices 101, 201, 202,
Columbia, S.A. Santa Fe de Bogota D.C. 301, 302, 401 & other
premises & parking
pursuant to 8 different
leases
Jafra Cosmetics Columbia ▇▇▇▇▇▇▇ ▇▇ ▇▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇.▇.
Jafra Cosmetics Columbia ▇▇▇▇▇▇▇ ▇▇ ▇▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇.▇.
[Jafra Cosmetics Columbia Transv. 39A No. 71-93, P.2
Columbia, ▇.▇. ▇▇▇▇▇▇▇▇]
Jafra Cosmetics Columbia Cra. ▇▇ ▇▇. ▇▇-▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, S.A.
Jafra Cosmetics Columbia Cra. 44 No.5A-3?, Cali
Columbia, S.A.
Jafra Cosmetics GmbH Germany Munich Office
Jafra Cosmetics GmbH Germany Kaufbeuren Warehouse and Office
Jafra Cosmetics S.p.A. Italy ▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ Office (Sublease)
Jafra Cosmetics S.p.A. Italy Via Como no. 25/27, Rovellasca Warehouse
Dirsamex, S.A. de C.V. Mexico Avenida ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Office
▇▇▇▇▇▇ No. 2400, Colonia Los
Doctores, Monterrey, Nuevo
▇▇▇▇
Tenant Country Location Type
------ ------- -------- ----
Dirsamex, S.A. de C.V. Mexico Avenida ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3,447, Office
Sector Juarez, Guadalajara,
Jalisco
Dirsamex, S.A. de C.V. Mexico (Avenida Paseo Tabasco No. Office
1000, Colonia ▇▇▇▇▇ ▇▇▇▇▇▇,
Villa Hermosa, Tabasco
Reday, de C.V. Mexico ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Manufacturing
Blanco Suburb, Naucalpan de Plant
Juarez, State of Mexico
Grupo Jafra, S.A. de Mexico Various storage leases throughout Mexico
C.V. or one of its
subsidiaries
Jafra Cosmetics Netherlands ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ Office
International B.V
Jafra Cosmetics A.G. Switzerland Riedstrasse 5, ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
International, Inc. New Jersey
Jafra Cosmetics Venezuela Boleita Norte, Avenida Office
Venezuela, ▇.▇. ▇▇▇▇▇▇▇▇▇▇ con Calle Miraima,
Edifcio Draza floors 1&2,
Caracas, Miranda State
Jafra Cosmetics Venezuela Inside the storage facilities Office sublease inside
Venezuela, S.A. located in Parcela No 318, storage area
▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ Cumaca de
Paracotos, Estado Miranda
SCHEDULE 4.02(a)
Local Counsel
-------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇ LLP
Suite 1800
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SCHEDULE 4.02(i)
Mortgage Filing Offices
-----------------------
Property Filing Office
-------- -------------
Mexican Office Facility Public Registry of Property, Federal District
Mexican Manufacturing Facility Public Registry of Property, State of Mexico
Westlake Village, CA Office/Manufacturing Facility Ventura County Recorder's Office
SCHEDULE 6.01(a)
Indebtedness
------------
JCISA is the primary obligor with respect to an employee credit card
program in Mexico.
SCHEDULE 6.02(a)
Liens
-----
None
SCHEDULE 6.03(a)
Investments
-----------
None
SCHEDULE 6.05(f)
Specified Subsidiaries
----------------------
None
SCHEDULE 6.07(iii)
Permitted Indemnification and Contribution
------------------------------------------
CD&R, Fund V and their respective Affiliates.
SCHEDULE 6.07(iv)
Affiliate Transactions
----------------------
1. Registration and Participation Agreement, dated as of the Closing
Date, by and between Parent, CD&R Fund V, and each Management Investor.
2. Stock Subscription Agreement, dated as of the Closing Date, between
Parent and CD&R Fund V relating to the purchase of shares in Parent by CD&R Fund
V.
3. Consulting Agreement, dated as of the Closing Date, among CD&R, JCI,
JCISA, and Parent
4. Indemnification Agreement, dated as of the Closing Date, among CD&R,
CD&R Fund V, CD&R Associates V Limited Partnership, CD&R Investment Associates
II, Inc. members of the boards of directors of Parent, and certain other parties
5. Registration Rights Agreement, dated on or about the Closing Date,
among JCI, JCISA, the other Guarantors and the Initial Purchasers (as defined in
the Confidential Preliminary Offering Circular prepared in connection with the
Subordinated Notes).
6. Repurchase rights of CD&R Group in connection with stock offerings by
Parent.
7. The sale by Parent and its Subsidiaries of CDRJ Brazil Holding Company
B.V. to an affiliate of CD&R.
8. The contribution by Fund V of CDRJ Holding Company to Parent and its
Subsidiaries.
9. The purchase by an Affiliate of CD&R of CDRJ Worldwide (Lux) Sarl.
EXHIBIT A
to CREDIT AGREEMENT
CREDIT FIRST
SUISSE BOSTON
ADMINISTRATIVE DETAILS - JAFRA COSMETICS
-----------------------------------------------------------------------------------------------------
LENDING INSTITUTION:_________________________________________________________________________________
Name for Signature Pages:____________________________________________________________________________
Will sign Credit Agreement: [X]
Will come in via Assignment: [X] Number of Days post Closing: ____________
Name for Publicity: ____________________________________________________________________________
Address: ____________________________________________________________________________
____________________________________________________________________________
Main Telephone: ____________________________ Telex No./Answerback: ________________________
-----------------------------------------------------------------------------------------------------
U.S. DOLLAR CONTACT INFORMATION
-----------------------------------------------------------------------------------------------------
CONTACT - Credit Name:__________________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________
Telephone:__________________________________________________________________
Fax:__________________________________________________________________
CONTACT - Operations Name:__________________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________
Telephone:__________________________________________________________________
Fax:__________________________________________________________________
U.S. DOLLAR WIRE INSTRUCTIONS
Bank Name: ____________________________________________________________________________
ABA/Routing No. ____________________________________________________________________________
Account Name: ____________________________________________________________________________
Account Number: ____________________________________________________________________________
For further credit: ____________________________________________________________________________
Account Number: ____________________________________________________________________________
Attention: ____________________________________________________________________________
Reference: ____________________________________________________________________________
Page 1 of 3
CREDIT FIRST
SUISSE BOSTON
--------------------------------------------------------------------------------
POUND STERLING - CONTACT INFORMATION
--------------------------------------------------------------------------------
CONTACT - Credit Name:________________________________________________
Address:________________________________________________
________________________________________________
Telephone:________________________________________________
Fax:________________________________________________
CONTACT - Operations Name:________________________________________________
Address:________________________________________________
________________________________________________
Telephone:________________________________________________
Fax:________________________________________________
POUND STERLING - WIRE INSTRUCTIONS
Bank Name: ____________________________________________________________
Bank Address: ____________________________________________________________
____________________________________________________________
Routing Number: ____________________________________________________________
Beneficiary: ____________________________________________________________
Account Number: ____________________________________________________________
Attention: ____________________________________________________________
Reference: ____________________________________________________________
--------------------------------------------------------------------------------
DEUTSCHE ▇▇▇▇ - CONTACT INFORMATION)
--------------------------------------------------------------------------------
CONTACT - Credit Name:________________________________________________
Address:________________________________________________
________________________________________________
Telephone:________________________________________________
Fax:________________________________________________
CONTACT - Operations Name:________________________________________________
Address:________________________________________________
________________________________________________
Telephone:________________________________________________
Fax:________________________________________________
DEUTSCHE ▇▇▇▇ - WIRE INSTRUCTIONS
Bank Name: ____________________________________________________________
Bank Address: ____________________________________________________________
____________________________________________________________
Routing Number: ____________________________________________________________
Beneficiary: ____________________________________________________________
Account Number: ____________________________________________________________
Attention: ____________________________________________________________
Reference: ____________________________________________________________
Page 2 of 3
--------------------------------------------------------------------------------
CREDIT SUISSE FIRST BOSTON ADMINISTRATIVE DETAILS
--------------------------------------------------------------------------------
CREDIT SUISSE FIRST BOSTON Account Administrator Secondary Contact
--------------------- -----------------
11 Madison Avenue ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Main Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Instructions: The Agent's wire instructions will be disclosed at the time
of closing.
Page 3 of 3
EXHIBIT B
to CREDIT AGREEMENT
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of April 30, 1998 (the
"Credit Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe
anonyme, Jafra Cosmetics International, Inc. (formerly named CDRJ Acquisition
Corporation), a Delaware corporation ("JCI"), Jafra Cosmetics International,
S.A. de C.V., a sociedad anonima de capital variable organized under the laws of
the United Mexican States ("JCISA" and together with JCI, the "Borrowers"), the
lenders from time to time party thereto (the "Lenders"), the Issuing Bank (as
defined therein) and Credit Suisse First Boston, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), as swingline lender (in
such capacity, the "Swingline Lender") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders. Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (the "Effective
Date") (provided that the provisions of Section 9.05 of the Credit Agreement are
complied with), the interests set forth below (the "Assigned Interest") in the
Assignor's rights and obligations under the Credit Agreement and the other Loan
Documents, including, without limitation, the amounts and percentages set forth
below of (i) the Commitments of the Assignor on the Effective Date, (ii) the
Loans owing to the Assignor which are outstanding on the Effective Date and
(iii) participations in Letters of Credit and Swingline Loans which are
outstanding on the Effective Date. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 9.05(d) of the Credit Agreement, a copy of which
has been received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is organized under the laws of a
jurisdiction outside the United States, the forms specified in Section 2.20(c)
of the Credit Agreement, duly completed and executed by such Assignee, (ii) if
the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit A to the Credit Agreement
and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
2
Percentage Assigned of
Applicable Facility/Commitment
(set forth, to at least 8 decimals,
as a percentage of the Facility
Principal and the aggregate Commitments
Facility/Commitment Amount Assigned /1/ of all Lenders thereunder)/1/
------------------- ------------------- ----------------------------------
Term Loan to JCI $ %
Term Loan to JCISA $
Revolving Credit Commitment
Assigned $
U.S.$ Revolving Loans to JCI: $
U.S.$ Revolving Loans to $
JCISA:
Alternative Currency Loans to
JCI:/2/
Alternative Currency Loans to
JCISA:/2/
_______________________
/1/ Percentage Assigned must be the same for each Loan and Commitment listed in
the left-most column.
/2/ Each Alternative Currency Loan assigned should be listed separately and
denominated in the applicable Alternative Currency.
3
The terms set forth above are
hereby agreed to: Accepted
_________________, as Assignor, CREDIT SUISSE FIRST BOSTON,
as Administrative Agent, Collateral Agent
and Swingline Lender,*/
-
by___________________________ by_________________________
Name: Name:
Title: Title:
by_________________________
Name:
Title:
_________________, as Assignee, CREDIT SUISSE FIRST BOSTON, [Other Lender]
as Issuing Bank,*/
-
by_________________________
by___________________________ Name:
Name: Title:
Title:
[JAFRA COSMETICS INTERNATIONAL, INC.,*/
-
by_________________________
Name:
Title:]
[JAFRA COSMETICS INTERNATIONAL, S.A. DE
C.V.,*/
-
by_________________________
Name:
Title:]
_________________________
*/ If required by Section 9.05(b) of the Credit Agreement.
-
EXHIBIT C
to CREDIT AGREEMENT
FORM OF BORROWING REQUEST
Credit Suisse First Boston, as Administrative Agent for
the Lenders referred to below,
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[Date]
Ladies and Gentlemen:
The undersigned, [Jafra Cosmetics International, Inc.] [Jafra Cosmetics
International, S.A. de C.V.] (the "Company"), refers to the Credit Agreement
dated as of April 30, 1998 (the "Credit Agreement"), among CDRJ Investments
(Lux) S.A., the Company, [Jafra Cosmetics International, S.A. de C.V.
("JCISA"),] [CDRJ Acquisition Corporation ([to be] renamed Jafra Cosmetics
International, Inc., ("JCI")),] the lenders from time to time party thereto (the
"Lenders"), the Issuing Bank (as defined therein) and Credit Suisse First
Boston, as administrative agent for the Lenders (in such capacity, the "Agent"),
as swingline lender and as collateral agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The Company hereby gives you notice pursuant to Section
2.03 of the Credit Agreement that it requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such
Borrowing is requested to be made:
(A) Date of Borrowing
(which is a Business Day) _______________________
(B) Currency of Borrowing 1/ _______________________
-
(C) Principal Amount of
Borrowing 2/ _______________________
-
(D) Interest Rate Basis 3/ _______________________
-
(E) Interest Period and the last
day thereof 4/ ______________________
-
_______________________________
1/ Specify Dollars or an Alternative Currency.
-
2/ Specify amount of Borrowing in Dollars, even if an Alternative Currency
-
Borrowing is requested. Not less than $5,000,000 (or the Alternative Currency
Equivalent thereof) and in an integral multiple of $1,000,000 (or the
Alternative Currency Equivalent thereof).
3/ Specify (a) Term Borrowing or Revolving Credit Borrowing and (b)
-
Eurocurrency Borrowing or ABR Borrowing.
4/ Which shall be subject to the definition of "Interest Period" and end
-
not later than the Maturity Date (applicable only for Eurocurrency Borrowings).
2
(F) Funds are requested to be disbursed to the Company's account with:
Bank Name: ___________________
Bank Address: ___________________
Account Number: ___________________
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Company shall be deemed to have represented and
warranted that the conditions to lending specified in Sections 4.01(b) and (c)
of the Credit Agreement have been satisfied.
[JAFRA COSMETICS INTERNATIONAL,
INC.] [JAFRA COSMETICS INTERNATIONAL,
S.A. DE C.V.],
by______________________________
Name:
Title:
EXHIBIT D
to CREDIT AGREEMENT
INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT dated as
of April 30, 1998, among JAFRA COSMETICS INTERNATIONAL, S.A. DE
C.V., a sociedad anonima de capital variable organized under the
laws of the United Mexican States ("JCISA"), each Subsidiary of
JCISA listed on Schedule I hereto (the "Guarantors") and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, as collateral
agent (in such capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of April 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
CDRJ Acquisition Corporation (to be renamed Jafra Cosmetics International,
Inc.), a Delaware corporation ("JCI"), JCISA (together with JCI, the
"Borrowers"), the lenders from time to time party thereto (the "Lenders"), the
Issuing Bank (as defined therein) and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent, and (b) the JCISA
Subsidiary Guarantee Agreement dated as of April 30, 1998, among the Guarantors
and the Collateral Agent (the "JCISA Subsidiary Guarantee Agreement").
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to JCISA and the Issuing Bank has
agreed to issue Letters of Credit for the account of JCISA pursuant to, and upon
the terms and subject to the conditions specified in, the Credit Agreement. The
Guarantors have guaranteed such Loans and the other Obligations (as defined in
the Guarantee Agreement) of JCISA pursuant to the JCISA Subsidiary Guarantee
Agreement; certain Guarantors have granted Liens on and security interests in
certain of their assets to secure such guarantees. The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are
conditioned on, among other things, the execution and delivery by JCISA and the
Guarantors of an agreement in the form hereof.
Accordingly, JCISA, each Guarantor and the Collateral Agent agree as
follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), JCISA agrees that (a) in the event a payment shall be
made by any Guarantor under the JCISA Subsidiary Guarantee Agreement, JCISA
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event any
assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party, JCISA shall indemnify such Guarantor in an
amount equal to the greater of the book value or the fair market value of the
assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing
Guarantor") agrees (subject to Section 3) that, in the event a payment shall be
made by any other Guarantor under the Guarantee Agreement or assets of any other
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not
have been fully indemnified by JCISA as provided in Section 1, the Contributing
Guarantor shall indemnify the Claiming Guarantor in an amount equal to the
amount of such payment or the greater of the book value or the fair market value
of such assets, as the case may be, in each case multiplied by a fraction of
which the numerator shall be the net worth of the Contributing Guarantor on the
date hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 12, the date of the Supplement hereto executed and
delivered by such Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 2
2
shall be subrogated to the rights of such Claiming Guarantor under Section 1 to
the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Sections 1 and 2 and all
other rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations. No failure on the part of JCISA or any Guarantor to
make the payments required by Sections 1 and 2 (or any other payments required
under applicable law or otherwise) shall in any respect limit the obligations
and liabilities of any Guarantor with respect to its obligations hereunder, and
each Guarantor shall remain liable for the full amount of the obligations of
such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full force
and effect so long as any Obligation is outstanding and has not been paid in
full, and so long as the L/C Exposure has not been reduced to zero or any of the
Commitments under the Credit Agreement have not been terminated, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of JCISA, any Guarantor or otherwise. Notwithstanding the
foregoing, at the time any Guarantor is released from its obligations under the
Guarantee Agreement in accordance with such Guarantee Agreement or the Credit
Agreement, such Guarantor will cease to have any rights or obligations under
this Agreement.
SECTION 5. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent, JCISA or any Guarantor to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Collateral Agent or any Guarantor preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law. None of the Collateral Agent, JCISA and the Guarantors shall
be deemed to have waived any rights hereunder unless such waiver shall be in
writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between JCISA,
the Guarantors and the Collateral Agent, with (if required by the Credit
Agreement) the prior written consent of the Required Lenders.
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the JCISA Subsidiary Guarantee Agreement and
addressed as specified therein or with respect to JCISA as provided in the
Credit Agreement.
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
Neither JCISA nor any Guarantor may assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Collateral
Agent.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by JCISA and each Guarantor herein shall survive the making by
the Lenders of the Loans and the issuance of the Letters of Credit by the
Issuing Bank.
3
(b) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 10. Counterparts. This Agreement may be executed by one or more
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement shall be
effective with respect to any Guarantor when a counterpart bearing the signature
of such Guarantor shall have been delivered to the Collateral Agent.
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.11 of the Credit
Agreement, certain Subsidiaries of JCISA are required to become parties to the
JCISA Subsidiary Guarantee Agreement and this Agreement. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such Subsidiary of
an instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor hereunder. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
JAFRA COSMETICS INTERNATIONAL, S.A.
DE C.V.,
by_______________________________________
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I, as a Guarantor,
by_____________________________________
Authorized Officer:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by_____________________________________
Name:
Title:
by_____________________________________
Name:
Title:
SCHEDULE I
to the Indemnity, Subrogation
and Contribution Agreement
Guarantors
----------
Name Address
---- -------
Reday, S.A. de C.V. [DEBEVOISE TO PROVIDE]
Distribuidora Venus, S.A. de C.V.
Dirsamex, S.A. de C.V.
Qualifax, S.A. de C.V.
Jafra Cosmetics, S. de RL. de C.V.
Consultoria Jafra, S.A. de C.V.
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of , to the Indemnity,
Subrogation and Contribution Agreement dated as of April 30, 1998
(as the same may be amended, supplemented or otherwise modified
from time to time, the "Indemnity, Subrogation and Contribution
Agreement"), among JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V., a
sociedad anonima de capital variable organized under the laws of
the United Mexican States ("JCISA"), each Subsidiary of JCISA
listed on Schedule I thereto (the "Guarantors"), and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland acting through its New York branch, as collateral
agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of April 30,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe
anonyme, CDRJ Acquisition Corporation ([to be] renamed Jafra Cosmetics
International, Inc.), a Delaware corporation ("JCI"), JCISA (together with JCI,
the "Borrowers"), the lenders from time to time party thereto (the "Lenders"),
the Issuing Bank (as defined therein) and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent, and (b) the JCISA
Subsidiary Guarantee Agreement dated as of April 30, 1998, among the Guarantors
and the Collateral Agent (the "JCISA Subsidiary Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. JCISA and the Guarantors have entered into the Indemnity, Subrogation
and Contribution Agreement in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit. Pursuant to Section 5.11 of the Credit
Agreement, certain Subsidiaries of JCISA are required to become parties to the
JCISA Subsidiary Guarantee Agreement and this Agreement. Section 12 of the
Indemnity, Subrogation and Contribution Agreement provides that additional
Subsidiaries of JCISA may become Guarantors under the Indemnity, Subrogation and
Contribution Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary of JCISA (the "New Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and the Issuing Bank to issue additional Letters of Credit and as consideration
for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation and
Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or similar laws relating to or affecting creditors'
rights generally and by
2
general equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 3. This Supplement may be executed by one or more parties to this
Supplement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This Supplement shall become effective
when the Collateral Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Guarantor and the
Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 6. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name of New Guarantor],
by_____________________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by_____________________________________
Name:
Title:
Address:
by_____________________________________
Name:
Title:
Address:
SCHEDULE I
to Supplement No.___ to the Indemnity,
Subrogation and Contribution Agreement
Guarantors
----------
Name Address
---- -------
EXHIBIT E
to CREDIT AGREEMENT
JCI GUARANTEE AGREEMENT dated as of April 30, 1998, between
CDRJ ACQUISITION CORPORATION (to be renamed Jafra Cosmetics
International, Inc.), a Delaware corporation (the "Guarantor"),
and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its New York branch, as collateral
agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
the Guarantor, Jafra Cosmetics International, S.A. de C.V., a sociedad anonima
de capital variable organized under the laws of the United Mexican States
("JCISA" and, together with the Guarantor, the "Borrowers"), the lenders from
time to time party thereto (the "Lenders"), the Issuing Bank (as defined
therein) and Credit Suisse First Boston, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), as swingline lender and as
Collateral Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantor acknowledges that it will derive substantial benefit
from the making of the Loans by the Lenders and the issuance of the Letters of
Credit by the Issuing Bank. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit are conditioned on, among other
things, the execution and delivery by the Guarantor of a Guarantee Agreement in
the form hereof. As consideration therefor and in order to induce the Lenders
to make Loans and the Issuing Bank to issue Letters of Credit, the Guarantor is
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, all obligations of JCISA:
(a) under the Credit Agreement, including (a) the due and punctual
payment of (i) the principal of and premium, if any, and interest
(including interest accruing at the applicable rate provided in the Credit
Agreement during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in
such proceeding) on the Loans to JCISA, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by JCISA under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements and interest thereon
and (iii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of JCISA to the Secured Parties
under the Credit Agreement and the other Loan Documents;
(b) for the due and punctual performance of all covenants, agreements,
obligations and liabilities of JCISA under or pursuant to the Credit
Agreement and the other Loan Documents;
(c) unless otherwise agreed upon in writing by the counterparty
thereto, for the due and punctual payment and performance of all
obligations of JCISA, monetary or otherwise,
2
under each Hedging Agreement entered into with a counterparty (whether or
not a Lender or an Affiliate thereof); and
(d) for the due and punctual payment and performance of all guarantee
obligations of JCISA referred to in Section 6.01(d)(ii) of the Credit
Agreement as to which any Lender or any Affiliate thereof is originally a
beneficiary (all the monetary and other obligations referred to in the
preceding clauses (a) through (d) being collectively called the
"Obligations");
provided, however, that no legal proceedings or other remedial actions to
enforce the guarantee of the Obligations hereunder may be initiated or taken
until the earlier to occur of (a) 30 days after written demand for payment or
performance thereof has been made by the Collateral Agent to the Guarantor and
(b) an event specified in Section 7.01 of the Credit Agreement with respect to
the Guarantor.
The Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to JCISA of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of the Guarantor hereunder shall
not be affected by (a) the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce or exercise any right or
remedy against JCISA or any other guarantor of the Obligations under the
provisions of the Credit Agreement, any other Loan Document or otherwise, (b)
any rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of this Agreement, any other Loan Document, any
Guarantee or any other agreement, including with respect to any other guarantor
of the Obligations or (c) the failure to perfect any security interest in, or
the release of, any of the security held by or on behalf of the Collateral Agent
or any other Secured Party.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent, for
the ratable benefit of the Secured Parties, to (a) take and hold security
pursuant to the terms of the Credit Agreement, the Pledge Agreement and the
other Security Documents for the payment of this guarantee and the Obligations
and exchange, enforce, waive and release any such security, (b) apply such
security and direct the order or manner of sale thereof pursuant to the terms
of the Credit Agreement, the Pledge Agreement and the other Security Documents
and (c) release or substitute any one or more endorsees, other guarantors or
other obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of JCISA or any other
Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the performance or payment
in full of the Obligations, as the case may be), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or set off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any
3
other act or omission that may or might in any manner or to any extent vary the
risk of the Guarantor or that would otherwise operate as a discharge of the
Guarantor as a matter of law or equity (other than the performance or payment in
full of all the Obligations, as the case may be).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, the Guarantor waives any defense based on or arising out of
any defense of JCISA or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of
JCISA, other than the performance or payment in full of the Obligations then due
and owing. The Collateral Agent, for the ratable benefit of the Secured
Parties, may, at its election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with JCISA or any other guarantor or
exercise any other right or remedy available to them against JCISA or any other
guarantor, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Obligations then due and owing have
been fully paid.
SECTION 7. Agreement to Pay; Subrogation. In furtherance of the foregoing
and not in limitation of any other right that the Collateral Agent or any other
Secured Party has at law or in equity against the Guarantor by virtue hereof,
upon the failure of JCISA or any other Loan Party to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
of prepayment or otherwise, the Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Collateral Agent the amount of such unpaid
Obligations. Upon payment by the Guarantor of any sums to the Collateral Agent
as provided above, all rights of the Guarantor against JCISA arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior payment in full of all the Obligations. If any amount shall
erroneously be paid to the Guarantor on account of such subrogation,
contribution, reimbursement, indemnity or similar right, such amount shall be
held in trust for the benefit of the Secured Parties and shall forthwith be paid
to the Collateral Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of JCISA's financial condition and assets, and
of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall terminate
when all the Obligations have been paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the L/C Exposure has been reduced
to zero and the Issuing Bank has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or the Guarantor upon the bankruptcy or reorganization of JCISA, the Guarantor
or otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Guarantor that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective when a
counterpart hereof executed on behalf of the Guarantor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon the
Guarantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of the Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
the Guarantor shall not have the right to assign its
4
rights or obligations hereunder or any interest herein except with the written
consent of the Collateral Agent (and any such attempted assignment shall be
void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
SECTION 13. Notices. All communications and notices hereunder shall be in
writing (including by facsimile transmission) and given as provided in Section
9.02 of the Credit Agreement.
SECTION 14. Survival of Agreement. All covenants and agreements made by
the Guarantors herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit by the Issuing Bank.
SECTION 15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 17. Integration. This Agreement represents the agreement between
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by any of the parties
hereto relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
5
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
JAFRA COSMETICS INTERNATIONAL, INC.,
as Guarantor,
by_____________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by_____________________________________
Name:
Title:
by_____________________________________
Name:
Title:
EXHIBIT F
to CREDIT AGREEMENT
JCI SUBSIDIARY GUARANTEE AGREEMENT dated as of April 30,
1998, between [_________] (each such subsidiary individually, a
"Guarantor" and collectively, the "Guarantors") of CDRJ
ACQUISITION CORPORATION (to be renamed Jafra Cosmetics
International, Inc.), a Delaware corporation ("JCI"), and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, as collateral
agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
JCI, Jafra Cosmetics International, S.A. de C.V., a sociedad anonima de capital
variable organized under the laws of the United Mexican States ("JCISA" and,
together with JCI, the "Borrowers"), the lenders from time to time party thereto
(the "Lenders"), the Issuing Bank (as defined therein) and Credit Suisse First
Boston, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as swingline lender and as Collateral Agent.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors is a wholly owned Domestic Subsidiary of JCI
and acknowledges that it will derive substantial benefit from the making of the
Loans by the Lenders and the issuance of the Letters of Credit by the Issuing
Bank. The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit are conditioned on, among other things, the execution
and delivery by the Guarantors of a Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit, the Guarantors are willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees,
severally, as a primary obligor and not merely as a surety, all obligations of
JCI:
(a) under the Credit Agreement and the JCI Guarantee Agreement,
including (a) the due and punctual payment of (i) the principal of and
premium, if any, and interest (including interest accruing at the
applicable rate provided in the Credit Agreement during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans
to JCI, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to
be made by JCI under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements and interest thereon and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether
direct, contingent, fixed or otherwise(including monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in
such proceeding), of JCI to the Secured Parties under the Credit Agreement,
the JCI Guarantee Agreement and the other Loan Documents,
(b) for the due and punctual performance of all covenants, agreements,
obligations and liabilities of JCI under or pursuant to the Credit
Agreement, the JCI Guarantee Agreement and the other Loan Documents,
2
(c) for unless otherwise agreed upon in writing by the counterparty
thereto, the due and punctual payment and performance of all obligations of
JCI, monetary or otherwise, under each Hedging Agreement entered into with
a counterparty (whether or not a Lender or an Affiliate thereof) and
(d) for the due and punctual payment and performance of all guarantee
obligations of JCISA referred to in Section 6.01(d)(ii) of the Credit
Agreement as to which any Lender or any Affiliate thereof is originally a
beneficiary (all the monetary and other obligations referred to in the
preceding clauses (a) through (d) being collectively called the
"Obligations"). Each Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to JCI or Affiliates of
JCI to the extent that such indebtedness would be discharged in an amount equal
to the amount paid by such Guarantor hereunder and (b) under any Guarantee of
senior unsecured indebtedness or Indebtedness subordinated in right of payment
to the Obligations which Guarantee contains a limitation as to maximum amount
similar to that set forth in this paragraph, pursuant to which the liability of
such Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Guarantor pursuant to (i) applicable law or (ii) any agreement
providing for an equitable allocation among such Guarantor and other Affiliates
of JCI of obligations arising under Guarantees by such parties.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to JCI of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of each Guarantor hereunder shall
not be affected by (a) the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce or exercise any right or
remedy against the Borrower or any other Guarantor under the provisions of the
Credit Agreement, any other Loan Document or otherwise, (b) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of this Agreement, any other Loan Document, any Guarantee or any
other agreement, including with respect to any other Guarantor under this
Agreement or (c) the failure to perfect any security interest in, or the release
of, any of the security held by or on behalf of the Collateral Agent or any
other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent to (a) take and hold security pursuant to the terms of the Credit
Agreement, the Pledge Agreement and the other Security Documents for the payment
of this guarantee and the Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of
sale thereof pursuant to the terms of the Credit Agreement, the Pledge Agreement
and the other Security Documents and (c) release or substitute any one or more
endorsees, other guarantors of other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for
3
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of JCI or
any other Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the performance or payment
in full of the Obligations, as the case may be), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
performance or payment in full of all the Obligations, as the case may be).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of JCI or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of JCI,
other than the performance or payment in full of the Obligations then due and
owing. The Collateral Agent may, at its election, foreclose on any security
held by one or more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Obligations, make any other accommodation with JCI or any other
guarantor or exercise any other right or remedy available to them against JCI or
any other guarantor, without affecting or impairing in any way the liability of
any Guarantor hereunder except to the extent the Obligations then due and owing
have been fully paid.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of JCI or any other Loan Party to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor hereby promises to and
will forthwith pay, or cause to be paid, to the Collateral Agent in cash the
amount of such unpaid Obligations. Upon payment by any Guarantor of any sums to
the Collateral Agent or any other Secured Party as provided above, all rights of
such Guarantor against JCI arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior payment in
full of all the Obligations. If any amount shall erroneously be paid to any
Guarantor on account of such subrogation, contribution, reimbursement, indemnity
or similar right, such amount shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that none of the Collateral
Agent or the other Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
4
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been paid in full and the Lenders have
no further commitment to lend under the Credit Agreement, the L/C Exposure has
been reduced to zero and the Issuing Bank has no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Secured Party or any Guarantor upon the bankruptcy or reorganization of JCI,
any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void), except with the written consent of the
Collateral Agent. If all of the capital stock of a Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.04 of the Credit Agreement, such Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall
be construed as a separate agreement with respect to each Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Collateral Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).
SECTION 13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
5
SECTION 14. Notices. All communications and notices hereunder shall be in
writing (including facsimile transmission) and given as provided in Section 9.02
of the Credit Agreement. All communications and notices hereunder to each
Guarantor shall be given to it in care of JCI.
SECTION 15. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Guarantors herein shall survive the making by the Lenders
of the Loans and the issuance of the Letters of Credit by the Issuing Bank.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Integration. This Agreement represents the agreement between
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by any of the parties
hereto relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
SECTION 19. Jurisdiction; Consent to Service of Process. Each party hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient forum and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the applicable party at
the address specified in Section 7.01 or at such other address of which the
parties hereto shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 19 any punitive damages.
6
SECTION 20. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 21. Additional Guarantors. Pursuant to Section 5.11 of the Credit
Agreement, certain Domestic Subsidiaries of JCI are required to become
Subsidiary Guarantors hereunder. Upon execution and delivery after the date
hereof by the Collateral Agent and such Domestic Subsidiary of an instrument in
the form of Annex 1, such Domestic Subsidiary shall become a Guarantor hereunder
with the same force and effect as if originally named as a Guarantor herein.
The execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any other Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
SECTION 22. Right of Setoff. If an Event of Default under Section 7.02(a)
of the Credit Agreement shall have occurred and be continuing, each Secured
Party shall have the right to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Secured Party to or for the credit or the
account of such Guarantor against any or all the obligations of such Guarantor
now or hereafter existing under this Agreement and the other Loan Documents held
by such Secured Party, irrespective of whether or not such Secured Party shall
have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured. Each Secured Party agrees promptly
to notify the Borrowers, the Administrative Agent and the applicable Guarantor
after any such set-off and application made by such Secured Party, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Secured Party under this Section 22 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
7
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
[_________________],
by_________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by_________________________________
Name:
Title:
by_________________________________
Name:
Title:
EXHIBIT G
to CREDIT AGREEMENT
JCISA GUARANTEE AGREEMENT dated as of April 30, 1998,
between JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad
anonima de capital variable organized under the laws of the
United Mexican States (the "Guarantor") and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
CDRJ Acquisition Corporation (to be renamed Jafra Cosmetics International,
Inc.), a Delaware corporation ("JCI" and, together with the Guarantor, the
"Borrowers"), the Guarantor, the lenders from time to time party thereto (the
"Lenders"), the Issuing Bank (as defined therein) and Credit Suisse First
Boston, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as swingline lender and as Collateral Agent.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantor acknowledges that it will derive substantial benefit
from the making of the Loans by the Lenders and the issuance of the Letters of
Credit by the Issuing Bank. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit are conditioned on, among other
things, the execution and delivery by the Guarantor of a Guarantee Agreement in
the form hereof. As consideration therefor and in order to induce the Lenders
to make Loans and the Issuing Bank to issue Letters of Credit, the Guarantor is
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, all obligations of JCI:
(a) under the Credit Agreement, including (a) the due and punctual
payment of (i) the principal of and premium, if any, and interest
(including interest accruing at the applicable rate provided in the Credit
Agreement during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in
such proceeding) on the Loans to JCI, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise,
(ii) each payment required to be made by JCI under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in
respect of reimbursement of disbursements and interest thereon and (iii)
all other monetary obligations, including fees, costs, expenses and
indemnities, whether direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of JCI to the Secured Parties
under the Credit Agreement and the other Loan Documents;
(b) for the due and punctual performance of all covenants,
agreements, obligations and liabilities of JCI under or pursuant to the
Credit Agreement and the other Loan Documents;
(c) for unless otherwise agreed upon in writing by the counterparty
thereto, the due and punctual payment and performance of all obligations of
JCI, monetary or otherwise,
2
under each Hedging Agreement entered into with a counterparty (whether or
not a Lender or an Affiliate thereof); and
(d) for the due and punctual payment and performance of all guarantee
obligations of JCI referred to in Section 6.01(d)(ii) of the Credit
Agreement as to which any Lender or any Affiliate thereof originally is a
beneficiary (all the monetary and other obligations referred to in the
preceding clauses (a) through (d) being collectively called the
"Obligations");
provided, however, that no legal proceedings or other remedial actions to
enforce the guarantee of the Obligations hereunder may be initiated or taken
until the earlier to occur of (a) 30 days after written demand for payment or
performance thereof has been made by the Collateral Agent to the Guarantor and
(b) an event specified in Section 7.01 of the Credit Agreement with respect to
the Guarantor.
The Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to JCI of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of the Guarantor hereunder shall
not be affected by (a) the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce or exercise any right or
remedy against JCI or any other guarantor of the Obligations under the
provisions of the Credit Agreement, any other Loan Document or otherwise, (b)
any rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of this Agreement, any other Loan Document, any
Guarantee or any other agreement, including with respect to any other guarantor
of the Obligations or (c) the failure to perfect any security interest in, or
the release of, any of the security held by or on behalf of the Collateral Agent
or any other Secured Party.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent, for
the ratable benefit of the Secured Parties, to (a) take and hold security for
the payment of this guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of JCI or any other
Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the performance or payment
in full of the Obligations, as the case may be), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor
3
or that would otherwise operate as a discharge of the Guarantor as a matter of
law or equity (other than the performance or payment in full in cash of all the
Obligations, as the case may be).
SECTION 6. Defenses of JCI Waived. To the fullest extent permitted by
applicable law, the Guarantor waives any defense based on or arising out of any
defense of JCI or the unenforceability of the Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of JCI, other
than the performance or payment in full of the Obligations then due and owing.
The Collateral Agent, for the ratable benefit of the Secured Parties, may, at
its election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with JCI or any other guarantor or exercise any other right
or remedy available to them against JCI or any other guarantor, without
affecting or impairing in any way the liability of the Guarantor hereunder
except to the extent the Obligations then due and owing have been fully paid.
SECTION 7. Agreement to Pay; Subrogation. In furtherance of the foregoing
and not in limitation of any other right that the Collateral Agent or any other
Secured Party has at law or in equity against the Guarantor by virtue hereof,
upon the failure of JCI or any other Loan Party to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
of prepayment or otherwise, the Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Collateral Agent in cash the amount of such
unpaid Obligations. Upon payment by the Guarantor of any sums to the Collateral
Agent as provided above, all rights of the Guarantor against JCI arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full of all the Obligations. If any amount
shall erroneously be paid to the Guarantor on account of such subrogation,
contribution, reimbursement, indemnity or similar right, such amount shall be
held in trust for the benefit of the Secured Parties and shall forthwith be paid
to the Collateral Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of JCI's financial condition and assets, and
of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall terminate
when all the Obligations have been paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the L/C Exposure has been reduced
to zero and the Issuing Bank has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or the Guarantor upon the bankruptcy or reorganization of JCI, the Guarantor or
otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Guarantor that are contained in this Agreement
shall bind and inure to the benefit of each party hereto and their respective
successors and assigns. This Agreement shall become effective when a counterpart
hereof executed on behalf of the Guarantor shall have been delivered to the
Collateral Agent and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon the Guarantor and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of the Guarantor, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns, except that the Guarantor
shall not have the right to assign its
4
rights or obligations hereunder or any interest herein except with the written
consent of the Collateral Agent (and any such attempted assignment shall be
void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
SECTION 13. Notices. All communications and notices hereunder shall be in
writing (including by facsimile transmission) and given as provided in Section
9.02 of the Credit Agreement.
SECTION 14. Survival of Agreement. All covenants and agreements made by
the Guarantors herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit by the Issuing Bank.
SECTION 15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 17. Integration. This Agreement represents the agreement between
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by any of the parties
hereto relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
5
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V., as
Guarantor,
by ______________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by ______________________________________
Name:
Title:
by ______________________________________
Name:
Title:
EXHIBIT H
to CREDIT AGREEMENT
JCISA SUBSIDIARY GUARANTEE AGREEMENT dated as of April 30,
1998, among each of the subsidiaries listed on Schedule I hereto
(each such subsidiary individually, a "Guarantor" and
collectively, the "Guarantors") of Jafra Cosmetics International,
S.A. de C.V., a sociedad anonima de capital variable organized
under the laws of the United Mexican States ("JCISA"), and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, as collateral
agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
CDRJ Acquisition Corporation (to be renamed Jafra Cosmetics International,
Inc.), a Delaware corporation ("JCI"), JCISA (together with JCI, the
"Borrowers"), the lenders from time to time party thereto (the "Lenders"), the
Issuing Bank (as defined therein) and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors is a wholly owned Subsidiary of JCISA and
acknowledges that it will derive substantial benefit from the making of the
Loans by the Lenders and the issuance of the Letters of Credit by the Issuing
Bank. The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit are conditioned on, among other things, the execution
and delivery by the Guarantors of a Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit, the Guarantors are willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees,
severally, as a primary obligor and not merely as a surety, all obligations of
JCISA:
(a) under the Credit Agreement and the JCISA Guarantee Agreement,
including the due and punctual payment of (i) the principal of and premium,
if any, and interest (including interest accruing at the applicable rate
provided in the Credit Agreement during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans to JCISA, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by JCISA
under the Credit Agreement in respect of any Letter of Credit, when and as
due, including payments in respect of reimbursement of disbursements and
interest thereon and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of JCISA to
the Secured Parties under the Credit Agreement, the JCISA Guarantee
Agreement and the other Loan Documents;
(b) for the due and punctual performance of all covenants, agreements,
obligations and liabilities of JCISA under or pursuant to the Credit
Agreement and the other Loan Documents;
2
(c) unless otherwise agreed upon in writing by the applicable
counterparty thereto, for the due and punctual payment and performance of
all obligations of JCISA, monetary or otherwise, under each Hedging
Agreement entered into with a counterparty (whether or not a Lender or an
Affiliate thereof); and
(d) the due and punctual payment and performance of all guarantee
obligations of JCISA referred to in Section 6.01(d)(ii) of the Credit
Agreement as to which any Lender or any Affiliate thereof originally is a
beneficiary (all the monetary and other obligations referred to in the
preceding clauses (a) through (d) being collectively called the
"Obligations").
Each Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state or foreign law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to JCISA or Affiliates of
JCISA to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by such Guarantor hereunder and (b) under any Guarantee
of senior unsecured indebtedness or Indebtedness subordinated in right of
payment to the Obligations which Guarantee contains a limitation as to maximum
amount similar to that set forth in this paragraph, pursuant to which the
liability of such Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, contribution, reimbursement,
indemnity or similar rights of such Guarantor pursuant to (i) applicable law or
(ii) any agreement providing for an equitable allocation among such Guarantor
and other Affiliates of JCISA of obligations arising under Guarantees by such
parties (including the Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to JCISA of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of each Guarantor hereunder shall
not be affected by (a) the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce or exercise any right or
remedy against the Borrower or any other Guarantor under the provisions of the
Credit Agreement, any other Loan Document or otherwise, (b) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of this Agreement, any other Loan Document, any Guarantee or any
other agreement, including with respect to any other Guarantor under this
Agreement or (c) the failure to perfect any security interest in, or the release
of, any of the security held by or on behalf of the Collateral Agent or any
other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent to (a) take and hold security pursuant to the terms of the Credit
Agreement, the Pledge Agreement and the other Security Documents for the payment
of this guarantee and the Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of
sale thereof pursuant to the terms of the Credit Agreement, the Pledge Agreement
and the other Security Documents and (c) release or substitute any one or more
endorsees, other guarantors of other obligors.
3
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of JCISA or any other
Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the performance or payment
in full of the Obligations, as the case may be), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
performance or payment in full of all the Obligations, as the case may be).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of JCISA or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
JCISA, other than the performance or payment in full of the Obligations then due
and owing. The Collateral Agent may, at its election, foreclose on any security
held by one or more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Obligations, make any other accommodation with JCISA or any
other guarantor or exercise any other right or remedy available to them against
JCISA or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations then
due and owing have been fully paid.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of JCISA or any other Loan Party to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor hereby promises to and
will forthwith pay, or cause to be paid, to the Collateral Agent in cash the
amount of such unpaid Obligations. Upon payment by any Guarantor of any sums to
the Collateral Agent as provided above, all rights of such Guarantor against
JCISA arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior payment in full of all the Obligations.
If any amount shall erroneously be paid to any Guarantor on account of such
subrogation, contribution, reimbursement, indemnity or similar right, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that none of the Collateral
Agent or the other Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such
circumstances or risks.
4
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
SECTION 10. Termination. The Guarantees made hereunder (a) shall terminate
when all the Obligations have been paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the L/C Exposure has been reduced
to zero and the Issuing Bank has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or any Guarantor upon the bankruptcy or reorganization of JCISA, any Guarantor
or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void), except with the written consent of the
Collateral Agent. If all of the capital stock of a Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.04 of the Credit Agreement, such Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall
be construed as a separate agreement with respect to each Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Collateral Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).
SECTION 13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR
5
RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 14. Notices. All communications and notices hereunder shall be in
writing (including by facsimile transmission) and given as provided in Section
9.02 of the Credit Agreement. All communications and notices hereunder to each
Guarantor shall be given to it in care of JCI.
SECTION 15. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Guarantors herein shall survive the making by the Lenders
of the Loans and the issuance of the Letters of Credit by the Issuing Bank.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Integration. This Agreement represents the agreement between
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by any of the parties
hereto relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
SECTION 19. Jurisdiction; Consent to Service of Process. Each party hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient forum and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the applicable party at
the address specified in Section 7.01 or at such other address of which the
parties hereto shall have been notified pursuant thereto.
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
6
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 19 any punitive damages.
SECTION 20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 21. Additional Guarantors. Pursuant to Section 5.11 of the Credit
Agreement, certain Subsidiaries of JCISA are required to become Subsidiary
Grantors hereunder. Upon execution and delivery after the date hereof by the
Collateral Agent and such Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Guarantor hereunder with the same force and
effect as if originally named as a Guarantor herein. The execution and delivery
of any instrument adding an additional Guarantor as a party to this Agreement
shall not require the consent of any other Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
SECTION 22. Right of Setoff. If an Event of Default under Section 7.02(a)
of the Credit Agreement shall have occurred and be continuing, each Secured
Party shall have the right to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Secured Party to or for the credit or the
account of such Guarantor against any or all the obligations of such Guarantor
now or hereafter existing under this Agreement and the other Loan Documents held
by such Secured Party, irrespective of whether or not such Secured Party shall
have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured. Each Secured Party agrees promptly
to notify the Borrowers, the Administrative Agent and the applicable Guarantor
after any such set-off and application made by such Secured Party, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Secured Party under this Section 22 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
7
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO,
by_____________________________
Authorized Officer:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by_____________________________
Name:
Title:
by_____________________________
Name:
Title:
Schedule I to the
Guarantee Agreement
Guarantor Address
--------- -------
Reday, S.A. de C.V. [DEBEVOISE TO PROVIDE]
Distribuidora Venus, S.A. de C.V.
Dirsamex, S.A. de C.V.
Qualifax, S.A. de C.V.
Jafra Cosmetics, S. de RL. de C.V.
Consultoria Jafra, S.A. de C.V.
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the JCISA
Subsidiary Guarantee Agreement dated as of April 30, 1998, among
each of the subsidiaries listed on Schedule I thereto (each such
subsidiary individually, a "Guarantor" and collectively, the
"Guarantors") of Jafra Cosmetics International, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of
the United Mexican States ("JCISA"), and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of April 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme,
CDRJ Acquisition Corporation ([to be] renamed Jafra Cosmetics International,
Inc.), a Delaware corporation ("JCI"), JCISA (together with JCI, the
"Borrowers"), the lenders from time to time party thereto (the "Lenders"), the
Issuing Bank (as defined therein) and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guarantee Agreement and the
Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.11 of the Credit Agreement, certain Subsidiaries
of JCISA are required to become Subsidiary Guarantors hereunder. Section 21 of
the Guarantee Agreement provides that additional Subsidiaries of JCISA may
become Guarantors under the Guarantee Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary of JCISA
(the "New Guarantor") is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Guarantor under the Guarantee
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 21 of the Guarantee Agreement, the
New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof.
Each reference to a "Guarantor" in the Guarantee Agreement shall be deemed to
include the New Guarantor. The Guarantee Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed by one or more parties to this
Supplement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This
2
Supplement shall become effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together, bear the signatures
of the New Guarantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 6. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the
Borrowers.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Guarantee Agreement as of the day and year first
above written.
[Name Of New Guarantor],
by_____________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by_____________________________
Name:
Title:
by_____________________________
Name:
Title:
EXHIBIT I
to CREDIT AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
______________________________________________________________________
DEED OF TRUST, WITH ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING
AND SECURITY AGREEMENT
______________________________________________________________________
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND
SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
FIXTURE FILING AND SECURITY AGREEMENT dated as of April 30,
1998 (this "Deed of Trust"), by Jafra Cosmetics
-------------
International, Inc., a Delaware corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Grantor"), to TitleServ Agency of New York City,
-------
Inc., as trustee ("Trustee") for the benefit of Credit
-------
Suisse First Boston, a bank organized under the laws of
Switzerland, acting through its New York branch (the
"Beneficiary"), having an office at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
-----------
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as
Collateral Agent under the Credit Agreement (as defined).
W I T N E S S E T H T H A T :
A. Reference is made to the Credit Agreement dated as of April
30, 1998, (and as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among CDRJ
----------------
Investments (Lux) S.A., a Luxembourg societe anonyme (the "Parent"),
------
Grantor, Jafra Cosmetics International, S.A. de C.V., a company
organized under the laws of the United Mexican States (the "Other
Borrower"), Beneficiary and such other respective entities that from
time to time become parties thereto pursuant to which Grantor has
requested that Beneficiary make term loans and revolving credit loans
in an aggregate principal amount of $90,000,000 (the "Loans") to
-----
Grantor and the Other Borrower for the purpose of (a) financing the
Acquisition, (b) providing funds for the payment of certain fees and
expenses incurred in connection therewith and (c) general corporate
expenses. Each term used herein and not otherwise defined herein shall
have the meaning given to it in the Credit Agreement.
B. The obligations of the Beneficiary to make the Loans under the
Credit Agreement are conditioned upon, among other things, the
execution and delivery by the Grantor of this Deed of Trust in the
form hereof, to secure (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, to the extent permitted
under Applicable Law) on the Loans to Grantor when and as due, whether
at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, to the extent
permitted under Applicable
2
Law), of the Grantor under the Credit Agreement, this Deed of Trust
and the other Loan Documents to which the Grantor is or is to be a
party, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Grantor under or
pursuant to the Credit Agreement, this Deed of Trust and the other
Loan Documents, and (c) the payment of such additional sums and the
performance of all other obligations now or hereafter owing from
Grantor to Beneficiary, whether otherwise secured or not, payable to
or otherwise acquired by Beneficiary, when the document evidencing
such obligation specifically recites the recording information
appearing on this Deed of Trust and that it is intended to be secured
hereby (all the obligations referred to in this paragraph B being
referred to collectively, as the "Obligations").
-----------
C. This Deed of Trust secures not only existing indebtedness, but
also future or additional advances made pursuant hereto or to the
Credit Agreement, whether such advances are obligatory or optional and
whether such advances are readvances after payments permitted under
the Credit Agreement.
D. Pursuant to the requirements of the Credit Agreement, the
Grantor is entering into this Deed of Trust to create a security
interest in the Trust Property (as defined herein) to secure the
performance and payment by the Grantor of the Obligations. The Credit
Agreement also requires the granting by Borrowers (other than Grantor)
of deeds of trust creating security interests in certain property
(other than the Trust Property) to secure the performance of the
Obligations.
3
Granting Clauses
----------------
NOW THEREFORE, IN CONSIDERATION OF the foregoing and in order to
secure (A) the due and punctual payment and performance of the
Obligations, (B) the due and punctual payment by the Grantor of all
real estate taxes and insurance premiums relating to the Trust
Property and (C) all disbursements made by Beneficiary for the payment
of real estate taxes, common area charges or insurance premiums, all
fees, expenses or advances in connection with or relating to the Trust
Property pursuant to the Credit Agreement and the other Loan
Documents, and interest on such disbursements and other amounts not
timely paid in accordance with the terms of the Credit Agreement, this
Deed of Trust and the other Loan Documents, (D) the due and punctual
payment and performance of the Grantor's obligations under the Fee and
Guarantee Agreement, dated as of the date hereof, among The Chase
Manhattan Bank, the Grantor and related entities and (E) unless
otherwise agreed to in writing by the applicable counterparty thereto,
the due and punctual payment and performance of all obligations of the
Grantor under each Hedging Agreement entered into with any
counterparty (whether or not a Lender or an Affiliate thereof) (the
obligations specified in clauses (a) through (E), collectively, the
"Mortgaged Obligations"), Grantor hereby grants, conveys, mortgages,
---------------------
assigns and pledges to the Trustee, IN TRUST FOREVER, with power of
sale, for the benefit of Beneficiary, a security interest in, all the
following described property, excluding any and all property and
assets excluded from the definition of "Collateral" (and each defined
----------
term used in the definition of such term) in the Security Agreement
(the "Trust Property") whether now owned or held
--------------
or hereafter acquired:
(1) all Grantor's right, title and interest in all the fee
estate in the land more particularly described on Exhibit A
hereto (the "Land"), together with all rights appurtenant
----
thereto, including the easements over certain other adjoining
land granted by any easement agreements,
4
covenant or restrictive agreements, if any, and all air rights,
mineral rights, water rights, oil and gas rights and development
rights, if any, of every kind and description relating thereto,
including, without limitation, any water rights, and also
together with all of the other easements, rights, privileges,
interests, hereditaments and appurtenances thereunto belonging or
in anyway appertaining and all of the estate, right, title,
interest, claim or demand whatsoever of Grantor therein and in
the streets and ways adjacent thereto, either in law or in
equity, in possession or expectancy, now or hereafter acquired
(the "Premises");
--------
(2) all Grantor's right, title and interest in all
buildings, improvements, structures, paving, parking areas,
roads, utilities, walkways, landscaping and other infrastructure
and betterments now or hereafter erected or located upon the
Land, and all fixtures of every kind and type affixed to the
Premises or attached to or forming part of any structures,
buildings or improvements and replacements thereof now or
hereafter erected or located upon the Land (the "Improvements");
------------
(3) all Grantor's right, title and interest in all
apparatus, movable appliances, building materials, equipment,
fittings, furnishings, furniture, machinery and other articles of
tangible personal property of every kind and nature, and
replacements thereof, now or at any time hereafter placed upon or
used in any way in connection with the use, enjoyment, occupancy
or operation of the Improvements or the Premises, including all
of Grantor's books and records relating thereto and including all
pumps, tanks, goods, machinery, tools, equipment, lifts
(including fire sprinklers and alarm systems, fire prevention or
control systems, cleaning rigs, air conditioning, heating,
boilers, refrigerating, electronic monitoring, water, loading,
unloading,
5
lighting, power, sanitation, waste removal, entertainment,
communications, computers, recreational, window or structural,
maintenance, truck or car repair and all other equipment of every
kind), restaurant, bar and all other indoor or outdoor furniture
(including tables, chairs, booths, serving stands, planters,
desks, sofas, racks, shelves, lockers and cabinets), bar
equipment, glasses, cutlery, uniforms, linens, memorabilia and
other decorative items, furnishings, appliances, supplies,
inventory, rugs, carpets and other floor coverings, draperies,
drapery rods and brackets, awnings, venetian blinds, partitions,
chandeliers and other lighting fixtures, freezers, refrigerators,
walk-in coolers, signs (indoor and outdoor), computer systems,
cash registers and inventory control systems, and all other
apparatus, equipment, furniture, furnishings, and articles used
in connection with the use or operation of the Improvements or
the Premises, excluding any and all property and assets excluded
from the definition of "Collateral" (and each defined term used
----------
in the definition of such term) in the Security Agreement, it
being understood that the enumeration of any specific articles of
property shall in no way result in or be held to exclude any
items of property not specifically mentioned (the property
referred to in this subparagraph (3), the "Personal Property");
-----------------
(4) all Grantor's right, title and interest in all general
intangibles relating to design, development, operation,
management and use of the Premises or the Improvements, all
certificates of occupancy, entitlements, tract maps, zoning
variances, building, use or other permits, approvals,
authorizations and consents obtained from and all materials
prepared for filing or filed with any Governmental Authority in
connection with the development, use, operation or management of
the Premises and Improvements, all construction, service,
engineering, consulting,
6
leasing, architectural and other similar contracts concerning the
design, construction, management, operation, occupancy and/or use
of the Premises and Improvements, all architectural drawings,
plans, specifications, soil tests, feasibility studies,
appraisals, environmental studies, engineering reports and
similar materials relating to any portion of or all of the
Premises and Improvements, all payment and performance bonds or
warranties or guarantees relating to the Premises or the
Improvements, all to the extent assignable (the "Permits, Plans
--------------
and Warranties");
--------------
(5) Grantor's interest in and rights under any and all now
or hereafter existing leases or licenses (under which Grantor is
landlord or licensor) and subleases (under which Grantor is
sublandlord), concession, management, mineral or other agreements
of a similar kind that permit the use or occupancy of the
Premises or the Improvements for any purpose in return for any
payment, or the extraction or taking of any gas, oil, water or
other minerals from the Premises in return for payment of any
fee, rent or royalty, including the leases described in Schedule
A to this Deed of Trust (collectively, "Leases"), and all
------
agreements or contracts for the sale or other disposition of all
or any part of the Premises or the Improvements, now or hereafter
entered into by Grantor, together with all charges, fees, income,
issues, profits, receipts, rents, revenues or royalties payable
thereunder ("Rents");
-----
(6) all Grantor's right, title and interest in and to all
real estate tax refunds and all proceeds of the conversion,
voluntary or involuntary, of any of the Trust Property into cash
or liquidated claims ("Proceeds"), including Proceeds of
--------
insurance maintained by the Grantor and condemnation awards, any
awards that may become due by reason of the taking by eminent
domain or any transfer in lieu thereof of the whole or any part
of the Premises or Improvements
7
or any rights appurtenant thereto, and any awards for change of
grade of streets, together with any and all moneys now or
hereafter on deposit for the payment of real estate taxes,
assessments or common area charges levied against the Trust
Property, unearned premiums on policies of fire and other
insurance maintained by the Grantor covering any interest in the
Trust Property or required by the Credit Agreement;
(7) all choses in action and causes of action and other
intangible personal property of the Grantor, of every kind and
nature, including corporate or other business records,
indemnification claims, contract rights, goodwill, registrations,
franchises and any letter of credit, guarantee, claim, security
interest or other security held by or granted to the Grantor to
secure payment by any Person of any of the accounts receivable or
the performance by any purchaser or tenant under any lease of
Trust Property or any contract or other agreement for the sale of
Trust Property; and
(8) all Grantor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land,
the Premises, the Improvements, the Personal Property, the
Permits, Plans and Warranties, the Leases, and any of the other
tangible or intangible property described above, whether now
owned or hereinafter acquired by or released to the Grantor or
constructed, assembled or placed by the Grantor on the Land, the
Premises or the Improvements, and all conversions of the security
constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case
may be, and in each such case, without any further mortgage, deed
of trust, conveyance, assignment or other act by the Grantor, all
of which shall become subject to the lien of this
8
Deed of Trust as fully and completely, and with the same effect,
as though now owned by the Grantor and specifically described
herein.
TO HAVE AND TO HOLD the Trust Property unto the Trustee, its
successors and assigns, for the benefit of Beneficiary, forever,
subject only to the liens set forth in Schedule 6.02(a) of the Credit
Agreement (the "Permitted Encumbrances") and to satisfaction and
----------------------
cancelation as provided in Section 3.04. IN TRUST NEVERTHELESS, upon
the terms and trust herein set forth for the benefit and security of
the Beneficiary.
ARTICLE I
Representations, Warranties and Covenants of Grantor
----------------------------------------------------
Grantor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. Title. (a) Grantor has insurable title to an
------
indefeasible fee estate in the Land and Improvements subject to no
lien, charge or encumbrance other than the Permitted Encumbrances, and
this Deed of Trust is and will remain a valid and enforceable first
and prior lien on the Premises, Improvements and the Rents subject
only to, in each case, the Permitted Encumbrances. The Permitted
Encumbrances do not materially interfere with the current use,
enjoyment or operation of the Trust Property.
(b) Except as set forth on Schedule A hereto, there are no leases
affecting Trust Property. Each Lease is in full force and effect, and,
except as set forth on Schedule A hereto or in any Tenant Estoppel
Certificate, Grantor has not given, nor to Grantor's knowledge has it
received, any uncured or unwaived notice of default with respect to
any material obligation under any Lease. Each Lease is subject to no
lien, charge or encumbrance other than this Deed of Trust and the
Permitted Encumbrances. Grantor has not
9
received any written notice of any pending condemnation proceeding
affecting the Trust Property or any sale or disposition thereof in
lieu of condemnation except as would not reasonably be expected to
have a material adverse effect on the Trust Property. Grantor is not
obligated under any right of first refusal, option or other
contractual right to sell, assign or otherwise dispose of any Trust
Property or any interest therein.
(c) All easement agreements, covenant or restrictive agreements,
supplemental agreements and any other instruments hereinabove referred
to and mortgaged hereby (collectively, the "Agreements") are and will
----------
remain valid, subsisting and in full force and effect, unless the
failure to remain valid, subsisting and in full force and effect,
individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on the Trust Property, and Grantor is
not in default thereunder and has fully performed the material terms
thereof required to be performed through the date hereof, and has no
knowledge of any default thereunder or failure to fully perform the
terms thereof by any other party, nor of the occurrence of any event
that after notice or the passage of time or both will constitute a
default thereunder. Except as otherwise permitted by the Credit
Agreement, Grantor is in compliance, and shall comply, with all
Agreements and requirements of law (including land use and zoning
ordinances, regulations and restrictions) affecting the Trust
Property, except where the absence of such compliance could not
reasonably be expected to have a material adverse effect on the Trust
Property.
(d) Grantor has good and lawful right and full power and
authority to mortgage the Trust Property and will forever warrant and
defend its title to the Trust Property, the rights of Beneficiary
therein under this Deed of Trust and the validity and priority of the
lien of this Deed of Trust thereon against the claims of all persons
and parties except those permitted under the Credit Agreement.
10
(e) This Deed of Trust, when duly recorded in the appropriate public
records and when financing statements are duly filed in the appropriate public
records, will create a valid, perfected and enforceable lien upon and security
interest in all the Trust Property and there are not as of the date hereof,
defenses or offsets to this Deed of Trust that will be asserted by Grantor or
its Affiliates (or any third party defense or offset now known to Grantor or its
Affiliates).
SECTION 1.02. Credit Agreement; Certain Amounts. (a) This Deed of Trust is
----------------------------------
given pursuant to the Credit Agreement. Each and every term and provision of
the Credit Agreement including the rights, remedies, obligations, covenants,
conditions, agreements, indemnities, representations and warranties of the
parties thereto shall be considered as if a part of this Deed of Trust and are
incorporated herein by this reference and to the extent there is a specific
conflict between the terms hereof and the terms of the Credit Agreement, the
terms of the Credit Agreement shall control.
(b) If any remedy or right of Trustee or Beneficiary pursuant hereto is
acted upon by Trustee or Beneficiary or if any actions or proceedings (including
any bankruptcy, insolvency or reorganization proceedings) are commenced in which
Trustee or Beneficiary is made a party and is obliged to defend or uphold or
enforce this Deed of Trust or the rights of Trustee or Beneficiary hereunder or
the terms of any Lease, or if a condemnation proceeding is instituted affecting
the Trust Property, Grantor will pay all reasonable sums, including reasonable
attorneys' fees and disbursements, incurred by Trustee or Beneficiary related to
the exercise of any remedy or right of Trustee or Beneficiary pursuant hereto or
for the reasonable expense of any such action or proceeding together with all
statutory or other costs, disbursements and allowances, interest thereon from
the date of demand for payment thereof at the applicable rate specified in
Section 2.07 of the Credit Agreement
11
(the "Default Interest Rate"), and such sums and the interest thereon shall, to
---------------------
the extent permissible by law, be a lien on the Trust Property prior to any
right, title to, interest in or claim upon the Trust Property attaching or
accruing subsequent to the recording of this Deed of Trust and shall be secured
by this Deed of Trust to the extent permitted by law. Any payment of amounts due
under this Deed of Trust not made on or before the due date for such payments
shall accrue interest daily without notice from the due date until paid at the
Default Interest Rate, and such interest at the Default Interest Rate shall be
immediately due upon demand by Trustee or Beneficiary.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a) Except as may be
-----------------------------------
permitted by the Credit Agreement, Grantor will pay and discharge from time to
time prior to the time when the same shall become delinquent, and before any
interest or penalty accrues thereon or attaches thereto, all taxes of every kind
and nature, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents, all vault charges, and all other public
charges, and all service charges, common area charges, private maintenance
charges, utility charges and all other private charges, whether of a like or
different nature, in all cases, if imposed upon or assessed against the Trust
Property or any part thereof or upon the Rents from the Trust Property or
arising in respect of the occupancy, use or possession thereof.
(b) In the event of the passage of any state, Federal, municipal or other
governmental law, order, rule or regulation subsequent to the date hereof (i)
deducting from the value of real property for the purpose of taxation any lien
or encumbrance thereon or in any manner changing or modifying the laws now in
force governing the taxation of this Deed of Trust or debts secured by mortgages
or deeds of trust (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by Beneficiary, either directly or indirectly, on this Deed of Trust or
12
any payments due hereunder or to require an amount of taxes to be withheld or
deducted herefrom, Grantor will promptly notify Beneficiary of such event. In
such event Grantor shall (i) agree to enter into such further instruments as may
be reasonably necessary or desirable to obligate Grantor to make any applicable
additional payments and (ii) Grantor shall make such additional payments.
(c) At any time that an Event of Default shall occur hereunder and be
continuing, or if required by any law applicable to Grantor or to Beneficiary,
Beneficiary shall have the right to direct Grantor to make an initial deposit on
account of real estate taxes and assessments, insurance premiums and common area
charges, levied against or payable in respect of the Trust Property in advance
and thereafter semi-annually, each such deposit to be equal to one-half of any
such annual charges estimated in a reasonable manner by Beneficiary in order to
accumulate with Beneficiary sufficient funds to pay such taxes, assessments,
insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Except as otherwise set forth in
-------------------------
the Credit Agreement, Grantor shall pay all costs in connection with, relating
to or arising out of the preparation, execution and recording of this Deed of
Trust, including title company premiums and charges, inspection costs, survey
costs, recording fees and taxes, reasonable attorneys', engineers', and
consultants' fees and disbursements and all other similar reasonable expenses of
every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Grantor will not,
-----------------------------
without the written consent of Beneficiary (i) alter or demolish or remove in
whole or in part any Improvements or (ii) erect any additions to the existing
Improvements, except where such alterations, removals, or additions, as the case
may be, would not reasonably be expected to have a material adverse effect on
the Trust Property. Grantor will not commit any waste on the Trust Property or
make any alteration to, or change in the use of, the Trust
13
Property except as may be permitted under the Credit Agreement and where such
waste, alteration or change would not reasonably be expected to have a material
adverse effect on the Trust Property. Grantor will maintain and operate the
Improvements and Personal Property in good repair, working order and condition,
reasonable wear and tear excepted.
(b) To the extent the same exist on the date hereof or are obtained in
connection with Improvements permitted by the Credit Agreement, Grantor shall
maintain a complete set of final plans, specifications, blueprints and drawings
for the Trust Property either at the Trust Property or in a particular office at
the headquarters of Grantor within the continental United States.
SECTION 1.06. Insurance. Grantor will keep or cause to be kept the Trust
----------
Property insured against such risks, and in the manner, required by Section 5.06
of the Credit Agreement.
SECTION 1.07. Casualty and Condemnation. (a) Except as provided in clause
-------------------------
(b) below and subject to the following sentence, in connection with any casualty
or condemnation of any Trust Property, the Grantor shall have all rights to
negotiate and settle, and receive the proceeds of, any claim or award in
connection therewith. Notwithstanding the foregoing sentence, the Grantor agrees
to comply with the provisions of Section 2.13 of the Credit Agreement in
connection with any mandatory prepayment of the Loans.
(b) Upon the happening and during the continuance of an Event of
Default, the Beneficiary shall have the right (i) to negotiate and settle any
claim or award in connection with any casualty or condemnation of the Trust
Property and (ii) to receive the proceeds of any claim or award in connection
with a casualty or condemnation of the Trust Property. After the occurrence and
during the continuance of an Event of Default, if the Grantor shall receive any
award or claim in connection with a condemnation or taking of
14
the Trust Property, the Grantor shall hold such funds in trust for the benefit
of the Beneficiary and shall promptly turn such proceeds over to the Beneficiary
in the form received. The Beneficiary shall apply such proceeds to the payment
in full of the Mortgaged Obligations.
SECTION 1.08. Assignment of Leases and Rents. (a) Grantor hereby
-------------------------------
irrevocably and absolutely grants, transfers and assigns to the Trustee for the
benefit of Beneficiary all of its right title and interest in all Leases,
together with any and all extensions and renewals thereof for purposes of
securing and discharging the performance by Grantor of the Mortgaged
Obligations. Grantor has not assigned or executed any assignment of, and will
not assign or execute any assignment of, any Lease or the Rents payable
thereunder to anyone other than to the Trustee for the benefit of Beneficiary.
(b) Without Beneficiary's prior written consent, not to be unreasonably
withheld, conditioned or delayed, unless otherwise permitted under the Credit
Agreement, Grantor will not (i) enter into any Lease, (ii) modify, amend,
terminate or consent to the cancelation or surrender of any Lease or (iii)
consent to an assignment of any tenant's interest in any Lease or to a
subletting thereof.
(c) Subject to Section 1.08(d), Grantor hereby assigns and transfers to the
Trustee for the benefit of Beneficiary all of Grantor's right, title and
interest in and to the Rents now or hereafter arising from each Lease heretofore
or hereafter made or agreed to by Grantor, it being intended that this
assignment establish, subject to Section 1.08(d), an absolute transfer and
assignment of all Rents and all Leases to Beneficiary and not merely to grant a
security interest therein. Subject to Section 1.08(d), Beneficiary may in
Grantor's name and stead (with or without first taking possession of any of the
Trust Property personally or by receiver as provided herein) operate the Trust
Property and rent, lease or let all or any
15
portion of any of the Trust Property to any party or parties at such rental and
upon such terms as Beneficiary shall, in its sole discretion, determine, and may
collect and have the benefit of all of said Rents arising from or accruing at
any time thereafter or that may thereafter become due under any Lease.
(d) So long as an Event of Default shall not have occurred and be
continuing, Beneficiary will not exercise any of its rights under Section
1.08(c), and Grantor is hereby granted a revocable license to receive and
collect the Rents accruing under any Lease; but after the happening and during
the continuance of any Event of Default, Beneficiary may, at its option, revoke
such license and receive and collect all Rents to be held as additional
collateral and applied as set forth in Section 2.08. Grantor hereby irrevocably
authorizes and directs each tenant, if any, and each successor, if any, to the
interest of any tenant under any Lease, respectively, to rely upon any notice of
a claimed Event of Default sent by Beneficiary to any such tenant or any of such
tenant's successors in interest, and thereafter to pay Rents to Beneficiary
without any obligation or right to inquire as to whether an Event of Default
actually exists and even if some notice to the contrary is received from the
Grantor, who shall have no right or claim against any such tenant or successor
in interest for any such Rents so paid to Beneficiary. Each tenant or any of
such tenant's successors in interest from whom Beneficiary or any officer,
agent, attorney or employee of Beneficiary shall have collected any Rents, shall
be authorized to pay Rents to Grantor only after such tenant or any of their
successors in interest shall have received written notice from Beneficiary that
the Event of Default is no longer continuing, unless and until a further notice
of an Event of Default is given by Beneficiary to such tenant or any of its
successors in interest.
(e) Beneficiary will not become a mortgagee in possession as a result of
its exercise of any of its rights or remedies under this Section 1.08 with
respect
16
to the Leases or Rents. In addition, Beneficiary shall not be responsible or
liable for performing any of the obligations of the landlord under any Lease,
for any waste by any tenant, or others, for any dangerous or defective
conditions of any of the Trust Property, for negligence in the management,
upkeep, repair or control of any of the Trust Property or any other act or
omission by any other person.
(f) Grantor shall furnish to Beneficiary, within 30 days after a request by
Beneficiary to do so, a written statement containing the names of all tenants,
subtenants and concessionaires of the Premises or Improvements, the terms of any
Lease, the space occupied and the rentals or license fees payable thereunder.
SECTION 1.09. Restrictions on Transfers and Encumbrances. Except as
-------------------------------------------
permitted by the Credit Agreement, Grantor shall not, directly or indirectly,
sell, convey, alienate, assign, lease, sublease, license, mortgage, pledge,
encumber or otherwise transfer any interest in the Land or the Improvements or
create, consent to or suffer the creation of any lien (other than the Permitted
Encumbrances), charges or any form of encumbrance upon any interest in or any
part of the Trust Property, or be divested of its title to the Trust Property or
any interest therein in any manner or way, whether voluntarily or involuntarily
(other than resulting from a condemnation), or engage in any common,
cooperative, joint, time-sharing or other congregate ownership of all or part of
the Trust Property.
SECTION 1.10. Security Agreement. This Deed of Trust is both a mortgage
-------------------
of real property and a grant of a security interest in personal property, and
shall constitute and serve as a "Security Agreement" and a "fixture filing"
within the meaning of the uniform commercial code as adopted in the state
wherein the Premises are located ("UCC"). Grantor has hereby granted unto
---
Beneficiary a security interest in and to all the Trust Property described in
this Deed of Trust
17
that is not real property as further security for the payment and performance of
the Mortgaged Obligations, and this Deed of Trust shall constitute a financing
statement under the UCC, with Grantor as the "debtor" and Beneficiary as the
"secured party". Simultaneously with the recording of this Deed of Trust,
Grantor has filed or will file UCC financing statements, and will file
continuation statements prior to the lapse thereof, at the appropriate offices
in the state in which the Premises are located to perfect the security interest
granted by this Deed of Trust in all the Trust Property that is not real
property. Grantor hereby appoints Beneficiary as its true and lawful attorney-in
-fact and agent, for Grantor and in its name, place and stead, in any and all
capacities, to execute any document and to file the same in the appropriate
offices to perfect the security interest contemplated by the preceding sentence
(to the extent it may lawfully do so), and to perform each and every act and
thing reasonably requisite and necessary to be done to perfect the security
interest contemplated by the preceding sentence. Prior to the occurrence of an
Event of Default, Beneficiary shall provide Grantor with the reasonable ability
to take the actions required by the previous sentence before acting pursuant to
the power of attorney granted pursuant hereto. Beneficiary shall have all rights
with respect to the part of the Trust Property that is the subject of a security
interest afforded by the UCC in addition to, but not in limitation of, the other
rights afforded Beneficiary hereunder and under the Security Agreement.
SECTION 1.11. Filing and Recording. Grantor will cause this Deed of
---------------------
Trust, any other security instrument creating a security interest in or
evidencing the lien hereof upon the Trust Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien hereof upon, and the security interest
of Beneficiary in, the Trust Property. Grantor will pay all filing,
registration or recording fees, and all reasonable expenses incidental
18
to the execution and acknowledgment of this Deed of Trust, any mortgage
supplemental hereto, any security instrument with respect to the Personal
Property, and any instrument of further assurance and all Federal, state, county
and municipal recording, documentary or intangible taxes and other taxes,
duties, imposts, assessments and charges arising out of or in connection with
the execution, delivery and recording of this Deed of Trust, any mortgage
supplemental hereto, any security instrument with respect to the Personal
Property or any instrument of further assurance.
SECTION 1.12. Further Assurances. Upon demand by Beneficiary, Grantor
-------------------
will, at the cost of Grantor and without expense to Trustee or Beneficiary, do,
execute, acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers and assurances as
Beneficiary shall from time to time reasonably require for the better assuring,
conveying, assigning, transferring and confirming unto Beneficiary the property
and rights hereby conveyed or assigned or intended now or hereafter so to be, or
which Grantor may be or may hereafter become bound to convey or assign to
Beneficiary, or for carrying out the intention or facilitating the performance
of the terms of this Deed of Trust, or for filing, registering or recording this
Deed of Trust, and on demand, Grantor will also execute and deliver and hereby
appoints Beneficiary as its true and lawful attorney-in-fact and agent, for
Grantor and in its name, place and stead, in any and all capacities, to execute
and file to the extent it may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments reasonably requested by
Beneficiary to evidence more effectively the lien hereof upon the Personal
Property and to perform each and every act and thing requisite and necessary to
be done to accomplish the same.
SECTION 1.13. Additions to Trust Property. All right, title and interest
----------------------------
of Grantor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
19
appurtenances to, the Trust Property hereafter acquired by or released to
Grantor or constructed, assembled or placed by Grantor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Grantor, shall become subject
to the lien and security interest of this Deed of Trust as fully and completely
and with the same effect as though now owned by Grantor and specifically
described in the grant of the Trust Property above, but at any and all times
Grantor will execute and deliver to Beneficiary any and all such further
assurances, mortgages, conveyances or assignments thereof as Beneficiary may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien and security interest of this Deed of Trust.
SECTION 1.14. No Claims Against Trustee or Beneficiary. Nothing contained
-----------------------------------------
in this Deed of Trust shall constitute any consent or request by Trustee or
Beneficiary, express or implied, for the performance of any labor or services or
the furnishing of any materials or other property in respect of the Trust
Property or any part thereof, nor as giving Grantor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Trustee or Beneficiary in respect
thereof.
SECTION 1.15. Fixture Filing. Certain of the Trust Property is or will
---------------
become "fixtures" (as that term is defined in the UCC) on the Land, and this
Deed of Trust upon being filed for record in the real estate records of the
county wherein such fixtures are situated shall operate also as a financing
statement filed as a fixture filing in accordance with the applicable provisions
of said UCC upon such of the Trust Property that is or may become fixtures.
20
ARTICLE II
Defaults and Remedies
---------------------
SECTION 2.01. Events of Default. Any Event of Default under the Credit
-----------------
Agreement (as such term is defined therein) shall constitute an Event of Default
under this Deed of Trust.
SECTION 2.02. Demand for Payment. If an Event of Default shall occur and
------------------
be continuing, then, upon written demand of Beneficiary, Grantor will pay to
Beneficiary all amounts due hereunder and such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
attorneys' fees, disbursements and expenses incurred by Trustee or Beneficiary
and Trustee or Beneficiary shall be entitled and empowered to institute an
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, to prosecute any such action or proceedings to judgment or final
decree, to enforce any such judgment or final decree against Grantor and to
collect, in any manner provided by law, all moneys adjudged or decreed to be
payable.
SECTION 2.03. Rights To Take Possession, Operate and Apply Revenues. (a)
-----------------------------------------------------
If an Event of Default shall occur and be continuing, Grantor shall, upon demand
of Beneficiary, forthwith surrender to Beneficiary actual possession of the
Trust Property and, if and to the extent not prohibited by applicable law,
Beneficiary itself, or by such officers or agents as it may appoint, may then
enter and take possession of all the Trust Property without the appointment of a
receiver or an application therefor, exclude Grantor and its agents and
employees wholly therefrom, and have access to the books, papers and accounts of
Grantor.
(b) If Grantor shall for any reason fail to surrender or deliver the Trust
Property or any part thereof after such demand by Beneficiary, Beneficiary may
to the extent not prohibited by applicable law, obtain a judgment or decree
conferring upon Beneficiary
21
the right to immediate possession or requiring Grantor to deliver immediate
possession of the Trust Property to Beneficiary, to the entry of which judgment
or decree Grantor hereby specifically consents. Grantor will pay to
Beneficiary, upon demand, all reasonable expenses of obtaining such judgment or
decree, including reasonable compensation to Beneficiary's attorneys and agents
with interest thereon at the Default Interest Rate subject to Section 2.07 of
the Credit Agreement; and all such expenses and compensation shall, until paid,
be secured by this Deed of Trust.
(c) Upon every such entry or taking of possession, Beneficiary may, to the
extent not prohibited by applicable law, hold, store, use, operate, manage and
control the Trust Property, conduct the business thereof and, from time to time,
(i) make all necessary and proper maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon, (ii) purchase or
otherwise acquire additional fixtures, personalty and other property, (iii)
insure or keep the Trust Property insured, (iv) manage and operate the Trust
Property and exercise all the rights and powers of Grantor to the same extent as
Grantor could in its own name or otherwise with respect to the same, or (v)
enter into any and all agreements with respect to the exercise by others of any
of the powers herein granted Beneficiary, all as may from time to time be
directed or determined by Beneficiary to be in its best interest and Grantor
hereby appoints Beneficiary as its true and lawful attorney-in-fact and agent,
for Grantor and in its name, place and stead, in any and all capacities, to
perform any of the foregoing acts. Following and during the continuance of an
Event of Default, Beneficiary may collect and receive all the Rents, issues,
profits and revenues from the Trust Property, including those past due as well
as those accruing thereafter, and, after deducting (i) all expenses of taking,
holding, managing and operating the Trust Property (including reasonable
compensation for the services of all persons employed for such purposes),
22
(ii) the reasonable costs of all such maintenance, repairs, renewals,
replacements, additions, betterments, improvements, purchases and acquisitions,
(iii) the reasonable costs of insurance, (iv) such taxes, assessments and other
similar charges as Beneficiary may at its option pay, (v) other proper charges
upon the Trust Property or any part thereof and (vi) the reasonable
compensation, expenses and disbursements of the attorneys and agents of
Beneficiary, Beneficiary shall apply the remainder of the moneys and proceeds so
received first to the payment of the Beneficiary for the satisfaction of the
Mortgaged Obligations, and second, if there is any surplus, to Grantor, subject
to the entitlement of others thereto under applicable law.
SECTION 2.04. Right To Cure Grantor's Failure to Perform. Should Grantor
------------------------------------------
fail in the payment, performance or observance of any term, covenant or
condition required by this Deed of Trust or the Credit Agreement (with respect
to the Trust Property), subject to the terms of the Credit Agreement,
Beneficiary may pay, perform or observe the same, and all payments made or costs
or expenses incurred by Beneficiary in connection therewith shall be secured
hereby and shall be, without demand, immediately repaid by Grantor to
Beneficiary with interest thereon at the Default Interest Rate, subject to
Section 2.07 of the Credit Agreement. Beneficiary shall be the judge using
reasonable discretion of the necessity for any such actions and of the amounts
to be paid. Beneficiary is hereby empowered to enter and to authorize others to
enter upon the Premises or the Improvements or any part thereof for the purpose
of performing or observing any such defaulted term, covenant or condition
without having any obligation to so perform or observe and without thereby
becoming liable to Grantor, to any person in possession holding under Grantor or
to any other person.
SECTION 2.05. Right to a Receiver. If an Event of Default shall have
-------------------
occurred and be continuing, Beneficiary, as a matter of right and without notice
to
23
Grantor or to anyone claiming under Grantor, and without regard to the then
value of the Trust Property or any other security in favor of Beneficiary or the
interest of Grantor therein, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers of the Trust Property, or any
portion thereof, and Grantor hereby irrevocably consents to such appointment and
waives notice of any application therefor. Grantor shall pay to Beneficiary
upon demand all reasonable expenses, including receiver's fees, reasonable
attorneys' fees and disbursements, costs and agents' compensation incurred
pursuant to the provisions of this Section 2.05; and all such expenses shall be
secured by this Deed of Trust and shall be, without demand, immediately repaid
by Grantor to Beneficiary with interest thereon at the Default Interest Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of Default shall occur
--------------------
and be continuing, Beneficiary may commence a judicial action to foreclose this
Deed of Trust or commence procedures to foreclose this Deed of Trust non-
judicially in accordance with the procedures of the State of California.
(b) Should Beneficiary elect to foreclose by exercise of the power of
sale contained herein, Beneficiary shall notify Trustee and shall, if
required, deposit with Trustee the original or a certified copy of this
Deed of Trust, and such other documents, receipts and evidences of
expenditures made and secured hereby as Trustee may require.
(c) Upon receipt of such notice from Beneficiary, Trustee shall cause
to be recorded and delivered to Grantor such notice as may then be required
by law and by this Deed of Trust. Trustee shall, without demand on Grantor,
after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been
given as required by law, sell the Trust Property at the
24
time and place of sale fixed by it in said notice of sale, either as a
whole or in separate lots or parcels or items as Trustee shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to the purchaser or purchasers at such
sale its good and sufficient deed or deeds conveying the property so sold,
but without any covenant or warranty, express or implied. The recitals in
such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Grantor,
Trustee or Beneficiary, may purchase at such sale, and Grantor hereby
covenants to warrant and defend the title of such purchaser or purchasers.
(d) Trustee may postpone the sale of all or any portion of the Trust
Property from time to time in accordance with the laws of the State of
California.
(e) To the fullest extent allowed by law, Grantor hereby expressly
waives any right which it may have to direct the order in which any of the
Trust Property shall be sold in the event of any sale or sales pursuant to
this Deed of Trust.
(f) Beneficiary may from time to time rescind any notice of default
or notice of sale before any Trustee's sale as provided above in accordance
with the laws of the State of California. The exercise by Beneficiary of
such right of rescission shall not constitute a waiver of any breach or
default then existing or subsequently occurring, or impair the right of
Beneficiary to execute and deliver to Trustee, as above provided, other
declarations or notices of default to satisfy the obligations of this Deed
of Trust or secured hereby, nor otherwise affect any provision, covenant or
condition of any other Loan Document or any of the rights, obligations or
25
remedies of Trustee or Beneficiary hereunder or thereunder.
(g) Any foreclosure or other sale of less than the whole of the Trust
Property or any defective or irregular sale made hereunder shall not
exhaust the power of foreclosure or of sale provided for herein; and
subsequent sales may be made hereunder until the Mortgaged Obligations have
been satisfied, or the entirety of the Trust Property has been sold.
(h) If an Event of Default shall occur and be continuing, Trustee or
Beneficiary may instead of, or in addition to, exercising the rights
described in Section 2.06(a) above and either with or without entry or
taking possession as herein permitted, proceed by a suit or suits in law or
in equity or by any other appropriate proceeding or remedy (i) to
specifically enforce payment of some or all of the Mortgaged Obligations,
or the performance of any term, covenant, condition or agreement of this
Deed of Trust or any other Loan Document or any other right, or (ii) to
pursue any other power, right or remedy under applicable law whether or not
specifically or generally granted or described in this Deed of Trust.
Nothing contained herein shall be construed to impair or to restrict such
powers, rights and remedies or to preclude any procedures or process
otherwise available to trustees or beneficiaries under deeds of trust in
the State of California. Trustee and Beneficiary, and each of them, shall
be entitled to enforce the payment and performance of any indebtedness or
obligations secured hereby and to exercise all rights and powers under this
Deed of Trust or under any other Loan Document or other agreement or any
laws now or hereafter in force, notwithstanding the fact that some or all
of the indebtedness and obligations secured hereby may now or hereafter be
otherwise secured, whether by mortgage, deed of trust, pledge, lien,
assignment or otherwise. Neither the acceptance of this Deed
26
of Trust nor its enforcement, whether by court action or pursuant to the
power of sale or other powers contained herein, shall prejudice or in any
manner affect Trustee's or Beneficiary's right to realize upon or enforce
any other rights or security now or hereafter held by Trustee or
Beneficiary. Trustee and Beneficiary, and each of them, shall be entitled
to enforce this Deed of Trust and any other rights or security now or
hereafter held by Beneficiary or Trustee in such order and manner as they
or either of them may in their absolute discretion determine.
SECTION 2.07. Other Remedies. (a) In case an Event of Default shall occur
---------------
and be continuing, Beneficiary may also exercise, to the extent not prohibited
by law, any or all of the remedies available to a secured party under the UCC.
(b) In connection with a sale of the Trust Property or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Beneficiary shall be entitled to enforce payment of and to receive up to
the principal amount of the Mortgaged Obligations, plus all other charges,
payments and costs due under this Deed of Trust, and to recover a deficiency
judgment against Grantor only (to the extent permitted by law) for any portion
of the aggregate principal amount of the Mortgaged Obligations remaining unpaid,
with interest at the rates set forth in the Credit Agreement.
SECTION 2.08. Application of Sale Proceeds and Rents. After any
---------------------------------------
foreclosure sale of all or any of the Trust Property, Trustee or Beneficiary
shall receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Trustee or Beneficiary shall apply the proceeds
of the sale together with any Rents that may have been collected
27
and any other sums that then may be held by Trustee or Beneficiary under this
Deed of Trust as follows:
FIRST, to the payment of the reasonable costs and expenses of such
sale, including compensation to Trustee or to Beneficiary's attorneys and
agents, and of any judicial proceedings wherein the same may be made, and
of all expenses, liabilities and advances made or incurred by Beneficiary
under this Deed of Trust, together with interest at the Default Interest
Rate on all advances made by Beneficiary, including all taxes or
assessments (except any taxes, assessments or other charges subject to
which the Trust Property shall have been sold) and the cost of removing any
encumbrance (except any Lien permitted under the Credit Agreement);
SECOND, to the Beneficiary for the satisfaction of the Mortgaged
Obligations; and
THIRD, to the person or persons legally entitled thereto.
The Beneficiary shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Deed of Trust.
Upon any sale of the Trust Property by the Trustee or Beneficiary (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Trustee or Beneficiary or of the officer making the sale
shall be a sufficient discharge to the purchaser or purchasers of the Trust
Property so sold and such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid over to the Trustee or
Beneficiary or such officer or be answerable in any way for the misapplication
thereof.
SECTION 2.09. Grantor as Tenant Holding Over. If after any foreclosure
-------------------------------
sale by Trustee or Beneficiary Grantor remains in possession of any of the Trust
Property, at Beneficiary's election Grantor shall be
28
deemed a tenant holding over and shall forthwith surrender possession to the
purchaser or purchasers at such sale or be summarily dispossessed or evicted
according to provisions of law applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay, Extension and
------------------------------------------------------
Redemption Laws. Grantor waives, to the extent not prohibited by law and
----------------
subject to the Credit Agreement, (i) the benefit of all laws now existing or
that hereafter may be enacted providing for any appraisement of any portion of
the Trust Property, (ii) the benefit of all laws now existing or that may be
hereafter enacted in any way extending the time for the enforcement or the
collection of amounts due under any of the Mortgaged Obligations or creating or
extending a period of redemption from any sale made in collecting said debt or
any other amounts due Beneficiary, (iii) any right to at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any appraisement, homestead exemption, valuation, stay,
statute of limitations, extension or redemption, or sale of the Trust Property
as separate tracts, units or estates or as a single parcel in the event of
foreclosure or notice of deficiency, and (iv) all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of or each of the Mortgaged Obligations and marshalling in
the event of foreclosure of this Deed of Trust.
SECTION 2.11. Discontinuance of Proceedings. In case Trustee or
------------------------------
Beneficiary shall proceed to enforce any right, power or remedy under this Deed
of Trust by foreclosure, entry or otherwise, and such proceedings shall be
discontinued or abandoned for any reason, or shall be determined adversely to
Trustee or Beneficiary, then and in every such case Grantor, Trustee and
Beneficiary shall be restored to their former positions and rights hereunder,
and all rights, powers and remedies of Trustee or Beneficiary shall continue as
if no such proceeding had been taken.
29
SECTION 2.12. Suits To Protect the Trust Property. Trustee and/or
------------------------------------
Beneficiary shall have power (a) to institute and maintain suits and proceedings
to prevent any impairment of the Trust Property by any acts that may be unlawful
or in violation of this Deed of Trust, (b) to preserve or protect its interest
in the Trust Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Trustee or Beneficiary
hereunder.
SECTION 2.13. Filing Proofs of Claim. In case of any receivership,
-----------------------
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Grantor, Beneficiary shall, to the extent permitted
by law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Beneficiary allowed in
such proceedings for the Mortgaged Obligations secured by this Deed of Trust at
the date of the institution of such proceedings and for any interest accrued,
late charges and additional interest or other amounts due or that may become due
and payable hereunder after such date.
SECTION 2.14. Possession by Beneficiary. Notwithstanding the appointment
--------------------------
of any receiver, liquidator or trustee of Grantor, any of its property or the
Trust Property, Beneficiary shall be entitled, to the extent not prohibited by
law, to remain in possession and control of all parts of the Trust Property now
or hereafter granted under this Deed of Trust to Beneficiary in accordance with
the terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by Trustee or Beneficiary
-------
to exercise any right, power or remedy accruing upon any breach or Event of
Default shall exhaust or impair any such right, power or remedy
30
or be construed to be a waiver of any such breach or Event of Default or
acquiescence therein; and every right, power and remedy given by this Deed of
Trust to Trustee or Beneficiary may be exercised from time to time and as often
as may be deemed expedient by Trustee or Beneficiary. No consent or waiver by
Beneficiary to or of any breach or default by Grantor in the performance of the
Mortgaged Obligations shall be deemed or construed to be a consent or waiver to
or of any other breach or Event of Default in the performance of the same or any
other Mortgaged Obligations by Grantor hereunder. No failure on the part of
Beneficiary to complain of any act or failure to act or to declare an Event of
Default, irrespective of how long such failure continues, shall constitute a
waiver by Beneficiary of its rights hereunder or impair any rights, powers or
remedies consequent on any future Event of Default by Grantor.
(b) Even if Beneficiary (i) grants some forbearance or an extension of time
for the payment of any sums secured hereby, (ii) takes other or additional
security for the payment of any sums secured hereby, (iii) waives or does not
exercise some right granted herein or under the Loan Documents, (iv) releases a
part of the Trust Property from this Deed of Trust, (v) agrees to change some of
the terms, covenants, conditions or agreements of any of the Loan Documents,
(vi) consents to the filing of a map, plat or replat affecting the Premises,
(vii) consents to the granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement subordinating Beneficiary's
lien on the Trust Property hereunder; no such act or omission shall preclude
Beneficiary from exercising any other right, power or privilege herein granted
or intended to be granted in the event of any breach or Event of Default then
made or of any subsequent default; nor, except as otherwise expressly provided
in an instrument executed by Trustee and Beneficiary, shall this Deed of Trust
be altered thereby. In the event of the sale or transfer by operation of law or
otherwise of all or part of the Trust Property, Beneficiary is hereby authorized
and
31
empowered to deal with any vendee or transferee with reference to the Trust
Property secured hereby, or with reference to any of the terms, covenants,
conditions or agreements hereof, as fully and to the same extent as it might
deal with the original parties hereto and without in any way releasing or
discharging any liabilities, obligations or undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or remedy conferred
--------------------
upon or reserved to Trustee or Beneficiary by this Deed of Trust is intended to
be exclusive of any other right, power or remedy, and each and every such right,
power and remedy shall be cumulative and concurrent and in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or
in equity or by statute.
SECTION 2.17 Substitution of Trustee. Beneficiary may, from time to time
------------------------
by written instrument executed and acknowledged by Beneficiary and recorded in
the county or counties where the Property is located, and by otherwise complying
with the provisions of any applicable statutes, substitute a successor or
successors for the Trustee named herein or acting hereunder.
SECTION 2.18 Trust Irrevocable; No Offset. The Trust created hereby is
----------------------------
irrevocable by Grantor. No offset or claim that Grantor now has or may in the
future have against Beneficiary shall relieve Grantor from paying the amounts or
performing the obligations contained herein or secured hereby.
ARTICLE III
Miscellaneous
-------------
SECTION 3.01. Partial Invalidity. In the event any one or more of the
-------------------
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the
32
option of Beneficiary, not affect any other provision of this Deed of Trust, and
this Deed of Trust shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.
SECTION 3.02. Notices. All notices and communications hereunder shall be
--------
in writing and given to Grantor, Beneficiary and Trustee in accordance with the
terms of applicable law and the Credit Agreement at the address set forth on the
first page of this Deed of Trust or as otherwise set forth in this Credit
Agreement.
SECTION 3.03. Successors and Assigns. All of the grants, covenants,
-----------------------
terms, provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Grantor and the successors and assigns of Beneficiary.
SECTION 3.04. Satisfaction and Cancelation. (a) The conveyance to Trustee
-----------------------------
of the Trust Property as security, created and consummated by this Deed of Trust
shall be null and void when all the Mortgaged Obligations have been indefeasibly
paid in full in accordance with the terms of the Loan Documents and Beneficiary
has no further commitment to make Loans under the Credit Agreement.
(b) In connection with any termination or release pursuant to paragraph
(a), this Deed of Trust shall be marked "satisfied" by the Beneficiary and/or
Trustee, and this Deed of Trust shall be canceled of record at the request and
at the expense of the Grantor. Beneficiary and Trustee shall execute any
documents reasonably requested by Grantor to accomplish the foregoing or to
accomplish any release contemplated by paragraph (b) and Grantor will pay all
costs and expenses, including reasonable attorneys' fees, disbursements and
other charges, incurred by Beneficiary and Trustee in connection with the
preparation and execution of such documents.
33
SECTION 3.05. Definitions. As used in this Deed of Trust, the singular
------------
shall include the plural as the context requires and the following words and
phrases shall have the following meanings: (a) "including" shall mean "including
---------
but not limited to"; (b) "provisions" shall mean "provisions, terms, covenants
----------
and/or conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
----
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
----------
duty, covenant and/or condition"; and (e) "any of the Trust Property" shall mean
"the Trust Property or any part thereof or interest therein". Any act that
Trustee or Beneficiary is permitted to perform hereunder may be performed at any
time and from time to time by Trustee or Beneficiary or any person or entity
designated by Trustee or Beneficiary. Any act that is prohibited to Grantor
hereunder is also prohibited to all lessees of any of the Trust Property. Each
appointment of Trustee or Beneficiary as attorney-in-fact for Grantor under the
Deed of Trust is irrevocable, with power of substitution and coupled with an
interest. Subject to the applicable provisions hereof, Beneficiary has the right
to refuse to grant its consent, approval or acceptance or to indicate its
satisfaction, in its sole discretion, whenever such consent, approval,
acceptance or satisfaction is required hereunder.
SECTION 3.06. Governing Law. This Deed of Trust shall be governed by and
--------------
construed in accordance with the internal law of the State of California.
SECTION 3.07. Full Reconveyance. Upon written request of Beneficiary
-----------------
stating that all sums secured hereby have been paid, upon surrender to Trustee
of the original or a certified copy of this Deed of Trust for cancelation and
retention, and upon payment of its fees, Trustee shall fully reconvey, without
warranty, the entire remaining Property then held hereunder. The recitals in
such reconveyance of any matters of facts shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto".
34
SECTION 3.08. Sale of Loans. Subject to the terms of the Credit
-------------
Agreement, Beneficiary, at any time and without the consent of Borrower, may
grant participations in or sell, transfer, assign and convey all or any portion
of its right, title and interest in and to the Loans, this Deed of Trust and the
other Loan Documents, guaranties given in connection with the Loans and any
collateral given to secure the Loans.
SECTION 3.09. Trustee's Powers and Liabilities. (a) Trustee, by acceptance
---------------------------------
hereof, covenants faithfully to perform and fulfill the trusts herein created,
being liable, however, only for gross negligence, bad faith or wilful
misconduct, and hereby waives any statutory fee and agrees to accept reasonable
compensation, in lieu thereof, for any services rendered by it in accordance
with the terms hereof. All authorities, powers and discretions given in this
Deed of Trust to Trustee and/or Beneficiary may be exercised by either, without
the other, with the same effect as if exercised jointly.
(b) Trustee may resign at any time upon giving 30 days' notice in writing
to Grantor and to Beneficiary.
(c) Beneficiary may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal, resignation,
refusal to act, inability to act or absence of Trustee from the state in which
the premises are located, or in its sole discretion for any reason whatsoever,
Beneficiary may, upon notice to the Grantor and without specifying the reason
therefor and without applying to any court, select and appoint a successor
trustee, and all powers, rights, duties and authority of the former Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of his
duties unless required by Beneficiary. Such substitute trustee shall be
appointed by written instrument duly recorded in the county where the Land is
located. Grantor hereby ratifies and confirms any and all acts that the herein
named Trustee, or his
35
successor or successors in this trust, shall do lawfully by virtue hereof.
Grantor hereby agrees, on behalf of itself and its heirs, executors,
administrators and assigns, that the recitals contained in any deed or deeds
executed in due form by any Trustee or substitute trustee, acting under the
provisions of this instrument, shall be prima facie evidence of the facts
recited, and that it shall not be necessary to prove in any court, otherwise
than by such recitals, the existence of the facts essential to authorize the
execution and delivery of such deed or deeds and the passing of title thereby.
(d) Trustee shall not be required to see that this Deed of Trust is
recorded, nor liable for its validity or its priority as a first deed of trust,
or otherwise, nor shall Trustee be answerable or responsible for performance or
observance of the covenants and agreements imposed upon Grantor or Beneficiary
by this Deed of Trust or any other agreement. Trustee, as well as Beneficiary,
shall have authority in their respective discretion to employ agents and
attorneys in the execution of this trust and to protect the interest of the
Beneficiary hereunder, and to the extent permitted by law they shall be
compensated and all reasonable expenses relating to the employment of such
agents and/or attorneys, including expenses of litigations, shall be paid out of
the proceeds of the sale of the Trust Property conveyed hereby should a sale be
had, but if no such sale be had, all sums so paid out shall be recoverable to
the extent permitted by law by all remedies at law or in equity.
(e) At any time, or from time to time, without liability therefor and with
10 days' prior written notice to Grantor, upon written request of Beneficiary
and without affecting the effect of this Deed of Trust upon the remainder of the
Trust Property, Trustee may (i) reconvey any part of the Trust Property, (ii)
consent in writing to the making of any map or plat thereof, so long as Grantor
has consented thereto, (iii) join in granting any easement thereon, so long as
Grantor has consented thereto, or (iv) join in any
36
extension agreement or any agreement subordinating the lien or charge hereof.
SECTION 3.10. Limitation on Beneficiary's or Trustee's Responsibility. No
--------------------------------------------------------
provision of this Deed of Trust shall operate to place any obligation or
liability for the control, care, management or repair of the Trust Property upon
Beneficiary or Trustee, nor shall it operate to make Beneficiary or Trustee
responsible or liable for any waste committed on the Trust Property by the
tenants or any other parties, or for any dangerous or defective condition of the
Trust Property, or for any negligence in the management, upkeep, repair or
control of the Trust Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Beneficiary a "mortgagee in possession" absent the
actual taking of possession of the Trust Property by Beneficiary.
SECTION 3.11. Hold Harmless. Neither Beneficiary or Trustee shall be
--------------
obligated to perform or discharge, and do not undertake hereby to perform nor to
discharge, any obligation, duty or liability with respect to the Trust Property
or the Leases solely by reason of this Deed of Trust, and Trustor shall and does
hereby agree to defend, indemnify, hold harmless and protect Beneficiary or
Trustee from and against any and all claims, losses, expenses, damage and
liabilities (including, without limitation, reasonable attorneys' fees) which
may arise or be incurred or accrue in connection therewith, except, in each
case, to the extent incurred as a result of the negligence or misconduct of
Beneficiary or Trustee, as the case may be, or the failure of Beneficiary or
Trustee, as the case may be, to comply in all material respects with Applicable
Laws. Should Beneficiary or Trustee incur any such liability, loss or damage,
the amount thereof, including all reasonable attorneys' fees and reasonable
costs and expenses associated with actions taken by Beneficiary, as the case may
be, in defense thereof, or otherwise in protecting its interests hereunder,
shall be part of the Mortgaged Obligations and shall be secured hereby, and
Trustor covenants and agrees to reimburse Beneficiary therefor promptly
following demand. Should Trustee incur any such liability, loss or damage, the
amount thereof including all reasonable attorneys' fees and reasonable costs and
expenses
37
associated with actions taken by Trustee in defense thereof, shall be reimbursed
by Trustor promptly after demand therefor.
SECTION 3.12. Marshalling; Payments Set Aside. Beneficiary and Trustee
--------------------------------
shall not be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Trustor or
any other party or against or in payment of any or all of the Mortgaged
Obligations hereby secured. To the extent that Trustor makes a payment or
payments to Beneficiary or Trustee, or Beneficiary or Trustee enforces its lien
or exercises any rights or setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or Federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all such liens and rights and remedies therefor, shall be revived and
continue in full force and effect as if such payment had not been made or such
enforcement or setoff has not occurred.
SECTION 3.13. Waiver of Jury Trial; Consent to Jurisdiction. (a) TO THE
----------------------------------------------
EXTENT PERMITTED UNDER APPLICABLE LEGAL REQUIREMENTS, GRANTOR AND BENEFICIARY
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS DEED OF TRUST, OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS DEED OF TRUST. THE SCOPE OF THIS WAIVER IS INTENDED TO
ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. GRANTOR AND BENEFICIARY EACH ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO THIS DEED OF TRUST, AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALING. GRANTOR AND
BENEFICIARY EACH FURTHER WARRANT AND REPRESENT THAT EACH OF THEM HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT EACH OF THEM KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY
38
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
DEED OF TRUST OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION.
IN THE EVENT OF LITIGATION, THIS DEED OF TRUST MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
(b) GRANTOR AND BENEFICIARY HERETO CONSENT FOR THEMSELVES AND IN
RESPECT OF THEIR PROPERTIES, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, TO THE
NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF
CALIFORNIA WITH RESPECT TO ANY PROCEEDING TO FORECLOSE THE LIEN OF THIS DEED OF
TRUST OR TO ENFORCE BENEFICIARY'S REMEDIES HEREUNDER. GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT IN CONNECTION WITH
ANY OF THE AFORESAID PROCEEDINGS IN ACCORDANCE WITH THE RULES APPLICABLE TO SUCH
PROCEEDINGS. GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
HAVE OR HAVE IN THE FUTURE TO THE LAYING OF VENUE IN RESPECT OF ANY OF THE
AFORESAID PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO ABOVE AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF BENEFICIARY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW
OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST GRANTOR IN ANY
JURISDICTION.
SECTION 3.14. Lien Absolute, Multisite Real Estate and Multiple Collateral
------------------------------------------------------------
Transaction. Grantor acknowledges that this Deed of Trust and other Security
------------
Documents together secure the Mortgaged Obligations. Grantor agrees that the
lien of this Deed of Trust and all obligations of Grantor hereunder shall be
absolute and unconditional and shall not in any manner be affected or impaired
by:
(a) any lack of validity or enforceability of any other Security
Documents, any agreement with respect to any of the Mortgaged Obligations
or any other agreement or instrument relating to any of the foregoing;
(b) any acceptance by Beneficiary or Trustee of any security for or
guarantees of any of the Mortgaged Obligations hereby secured, including
but not limited to any of the Security Documents;
39
(c) any failure, neglect or omission on the part of Beneficiary or
Trustee to realize or protect any of the Mortgaged Obligations hereby
secured or any collateral security therefor, or due to any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, Trustor in respect of the Mortgaged Obligations of this Deed
of Trust;
(d) any extension, renewal, compromise of, or change in the time,
manner or place of payment or, or in any other term of, all or any of the
Mortgaged Obligations;
(e) any release (except as to the property released), sale, pledge,
surrender, compromise, settlement, nonperfection, renewal, extension,
indulgence, alteration, exchange, modification or disposition of any of the
Mortgaged Obligations hereby secured or of any of the collateral security
therefor;
(f) any amendment or waiver of or any consent to any departure from
this Deed of Trust, or any other Security Document, and Trustee or
Beneficiary may in its discretion foreclose, exercise any power of sale, or
exercise any other remedy available to it under any of the other Loan
Documents without first exercising or enforcing any of its rights and
remedies hereunder; and
(g) any exercise of the rights or remedies of Beneficiary or Trustee
hereunder or under any or all of the other Loan Documents.
40
IN WITNESS WHEREOF, this Deed of Trust has been duly executed and
delivered to Trustee and Beneficiary by Grantor on the date of the
acknowledgment attached hereto.
JAFRA COSMETICS
INTERNATIONAL, INC., a
Delaware corporation,
by:
Name:
Title:
41
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
On _________________, before me,
________________,
a Notary Public, personally appeared ______________________
____________________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_____________________________________
Print Name ___________________
My Commission Expires
____________________.
[Seal]
42
Exhibit A
to Deed of Trust
Legal Description
-----------------
FILE NO. 65889-RD
THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF VENTURA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
---------
Parcels 1 and 2 of LD-613, in the City of Thousand Oaks, County of Ventura,
State of California, as shown on a parcel map filed in Book 52, Pages 43 and 44
of Parcel Maps, in the office of the County Recorder of said county.
EXCEPT all oil, gas, hydrocarbon substances lying within and under that portion
of said land lying below a depth of 500 feet, measured vertically from the
surface of said land, without, however, any right to enter upon the surface of
said land, nor into that portion of the subsurface thereof lying above a depth
of 500 feet, measured vertically from said surface.
PARCEL B:
---------
▇▇▇ ▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇-▇, in the City of Thousand Oaks, as per map recorded in Book
51, Pages 85 to 88 inclusive of maps, in the office of the County Recorder of
said county.
EXCEPT all oil, gas, hydrocarbon substances lying within and under that portion
of said land lying below a depth of 500 feet measured vertically from the
surface of said land, without, however, any right to enter upon the surface of
said land nor into that portion of the subsurface thereof, lying above a depth
of 500 feet measured vertically from said surface.
RD/jd
Schedule A
to Deed of Trust
Leases of Trust Property
------------------------
NONE
EXHIBIT J
to CREDIT AGREEMENT
PARENT GUARANTEE AGREEMENT dated as of April 30, 1998,
between CDRJ INVESTMENTS (LUX) S.A., a Luxembourg societe anonyme
(the "Guarantor") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting through its New
York branch, as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to
below).
Reference is made to the Credit Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Guarantor, CDRJ Acquisition Corporation (to be renamed
Jafra Cosmetics International, Inc.), a Delaware corporation ("JCI"), Jafra
Cosmetics International, S.A. de C.V., a sociedad ano'nima de capital variable
organized under the laws of the United Mexican States (together with JCI, the
"Borrowers"), the lenders from time to time party thereto (the "Lenders"), the
Issuing Bank (as defined therein) and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. As the indirect owner of all of the issued and outstanding capital
stock of, or other equity interests in, the Borrowers, the Guarantor
acknowledges that it will derive substantial benefit from the making of the
Loans by the Lenders and the issuance of the Letters of Credit by the Issuing
Bank. The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit are conditioned on, among other things, the execution
and delivery by the Guarantor of a Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit, the Guarantor is willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, all obligations of the Borrowers:
(a) under the Credit Agreement, including the due and punctual
payment of (i) the principal of and premium, if any, and interest
(including interest accruing at the applicable rate provided in the Credit
Agreement during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in
such proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each payment required to be made by the Borrowers under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements and interest thereon
and (iii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrowers to the Secured
Parties under the Credit Agreement and the other Loan Documents;
(b) for the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrowers under or pursuant
to the Credit Agreement and the other Loan Documents; and
(c) unless otherwise agreed upon in writing by the counterparty
thereto, the due and punctual payment and performance of all obligations of
the Borrowers, monetary or
2
otherwise, under each Hedging Agreement entered into with a counterparty
(whether or not a Lender or an Affiliate thereof) (all the monetary and
other obligations referred to in the preceding clauses (a) through (c)
being collectively called the "Obligations").
The Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of the Guarantor
hereunder shall not be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against either Borrower or any other guarantor of the
Obligations under the provisions of the Credit Agreement, any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of this Agreement, any other
Loan Document, any Guarantee or any other agreement, including with respect to
any other guarantor of the Obligations or (c) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent, for
the ratable benefit of the Secured Parties, to (a) take and hold security
pursuant to the terms of the Credit Agreement, the Pledge Agreement and the
other Security Documents for the payment of this guarantee and the Obligations
and exchange, enforce, waive and release any such security, (b) apply such
security and direct the order or manner of sale thereof pursuant to the terms of
the Credit Agreement, the Pledge Agreement and the other Security Documents and
(c) release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of either Borrower or
any other Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the performance or payment
in full of the Obligations, as the case may be), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor or that would otherwise operate as
a discharge of the Guarantor as a matter of law or equity (other than the
performance or payment in full of all the Obligations, as the case may be).
SECTION 6. Defenses of Borrowers Waived. To the fullest extent permitted
by applicable law, the Guarantor waives any defense based on or arising out of
any defense of either Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
either Borrower, other than the performance or payment in full of the
Obligations then due and owing. The Collateral Agent, for the ratable benefit
of the Secured Parties, may, at its election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or
3
adjust any part of the Obligations, make any other accommodation with either
Borrower or any other guarantor or exercise any other right or remedy available
to them against either Borrower or any other guarantor, without affecting or
impairing in any way the liability of the Guarantor hereunder except to the
extent the Obligations then due and owing have been fully paid.
SECTION 7. Agreement to Pay; Subrogation. In furtherance of the foregoing
and not in limitation of any other right that the Collateral Agent or any other
Secured Party has at law or in equity against the Guarantor by virtue hereof,
upon the failure of either Borrower to pay any Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, the Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Collateral Agent in cash the amount of such
unpaid Obligations. Upon payment by the Guarantor of any sums to the Collateral
Agent as provided above, all rights of the Guarantor against the Borrowers
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior payment in full of all the Obligations.
If any amount shall erroneously be paid to the Guarantor on account of such
subrogation, contribution, reimbursement, indemnity or similar right, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition and assets of the
Borrowers, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall terminate
when all the Obligations have been paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the L/C Exposure has been reduced
to zero and the Issuing Bank has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or the Guarantor upon the bankruptcy or reorganization of the Borrowers, the
Guarantor or otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Guarantor that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective when a
counterpart hereof executed on behalf of the Guarantor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon the
Guarantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of the Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
the Guarantor shall not have the right to assign its rights or obligations
hereunder or any interest herein except with the written consent of the
Collateral Agent (and any such attempted assignment shall be void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance
4
and for the purpose for which given. No notice or demand on the Guarantor in any
case shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
SECTION 13. Notices. All communications and notices hereunder shall be in
writing (including by facsimile transmission) and given as provided in Section
9.02 of the Credit Agreement.
SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall survive the making by the Lenders of the Loans
and the issuance of the Letters of Credit by the Issuing Bank.
SECTION 15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
Section 17. Integration. This Agreement represents the agreement between
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by any of the parties
hereto relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
CDRJ INVESTMENTS (LUX) S.A., as Guarantor,
by____________________________________
Name:
Title:
5
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by____________________________________
Name:
Title:
by____________________________________
Name:
Title:
EXHIBIT K
to CREDIT AGREEMENT
PLEDGE AGREEMENT dated as of April 30, 1998, among CDRJ
INVESTMENTS (LUX) S.A., a Luxembourg socie'te' anonyme
("Parent"), CDRJ NORTH ATLANTIC (LUX) SARL, a Luxembourg societe
a re'sponsibilite' limite'e ("Lux SARL"), CDRJ LATIN AMERICA
HOLDING COMPANY B.V., LATIN COSMETICS HOLDINGS B.V., REGIONAL
COSMETICS HOLDING B.V., SOUTHERN COSMETICS HOLDINGS B.V. and CDRJ
MEXICO HOLDING COMPANY B.V., each a legal entity in the form of a
"besloten vennootschap met beperkte aansprakelijkheid" organized
under the laws of The Netherlands (collectively, the "Dutch
HoldCos"), CDRJ ACQUISITION CORPORATION (to be renamed JAFRA
COSMETICS INTERNATIONAL, INC.), a Delaware corporation ("JCI"),
JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad ano'nima
de capital variable organized under the laws of the United
Mexican States ("JCISA" and, together with JCI, the "Borrowers"),
upon consummation of the Transactions, each Subsidiary of the
Borrowers listed on Schedule I hereto (each such Subsidiary
individually a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Borrowers, Parent, Lux SARL, the Dutch
HoldCos and the Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting through its New
York branch as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below). Capitalized terms used
herein without definition shall have the respective meanings
ascribed thereto in the Credit Agreement referred to below.
Reference is made to (a) the Credit Agreement dated as of April 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Parent, the Borrowers, the lenders from time to time party
thereto (the "Lenders"), the Issuing Bank and Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent, (b) the Parent Guarantee
Agreement, (c) the JCI Guarantee Agreement, (d) the JCISA Guarantee Agreement
(together with the JCI Guarantee Agreement, the "Cross Guarantee Agreements"),
(e) the JCI Subsidiary Guarantee Agreement and (f) the JCISA Subsidiary
Guarantee Agreement (together with the JCI Subsidiary Guarantee Agreement, the
"Subsidiary Guarantee Agreements").
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. As set forth in the respective Guarantee Agreements, the Guarantors
have agreed to guarantee, among other things, the obligations of the Borrowers
under the Credit Agreement. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Pledgors of a Pledge Agreement in the
form hereof to secure:
(a) in the case of each Borrower, (i) the due and punctual payment by
it of (A) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on its Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (B) each payment required to be made by it under the Credit
Agreement in respect of any Letter of Credit issued for its benefit, when
and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral
and (C) all other monetary obligations, including fees, costs, expenses and
indemnities, whether direct, contingent, fixed or otherwise (including
monetary obligations incurred
2
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) if it to the Secured Parties under the Credit Agreement and the
other Loan Documents, (ii) the due and punctual performance of all
covenants, agreements, obligations and liabilities of it under or pursuant
to the Credit Agreement, its respective Cross Guarantee Agreement and the
other Loan Documents to which it is a party, (iii) unless otherwise agreed
to in writing by the counterparty thereto, the due and punctual payment and
performance of all its obligations under each Hedging Agreement entered
into with any counterparty, (whether or not a Lender or an Affiliate
thereof), and (iv) the due and punctual payment and performance of all
guarantee obligations of such Borrower referred to in Section 6.01(d)(ii)
of the Credit Agreement as to which any Lender or any Affiliate thereof is
originally a beneficiary (in the case of JCI, the "JCI Secured Obligations"
and in the case of JCISA, the "JCISA Secured Obligations"; the JCI Secured
Obligations and the JCISA Secured Obligations are referred to collectively
as the "Borrower Secured Obligations");
(b) in the case of Parent, the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities
of Parent under or pursuant to the Parent Guarantee Agreement and the other
Loan Documents (the "Parent Secured Obligations");
(c) in the case of each Subsidiary Pledgor, the due and punctual
payment and performance of all the covenants, agreements, obligations and
liabilities of such Subsidiary Pledgor under or pursuant to the applicable
Subsidiary Guarantee Agreement and the other Loan Documents to which it is
a party (in the case of each such Subsidiary Pledgor, the "Individual
Subsidiary Pledgor Secured Obligations"; all Individual Subsidiary Pledgor
Secured Obligations are referred to collectively as the "Subsidiary Pledgor
Secured Obligations");
(d) in the case of Lux SARL, the due and punctual payment and
performance by each Borrower of such Borrower's Borrower Secured
Obligations (the "SARL Secured Obligations"); and
(e) in the case of each Dutch HoldCo, the due and punctual payment and
performance by JCISA of all the JCISA Secured Obligations (in the case of
each such Dutch HoldCo, the "Individual Dutch HoldCo Secured Obligations";
all Individual Dutch HoldCo Secured Obligations are referred to
collectively as the "Dutch HoldCo Secured Obligations"; and the Borrower
Secured Obligations, the Parent Secured Obligations, the Subsidiary Pledgor
Secured Obligations, the SARL Secured Obligations and the Dutch HoldCo
Secured Obligations are referred to collectively hereinafter as the
"Obligations", such term when used with reference to a specific Pledgor
being understood to refer to such Pledgor's respective monetary and other
obligations referred to in the preceding clauses (a) through (e)).
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself and
each Secured Party (and each of their respective successors or assigns), hereby
agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of its respective Obligations, each Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Collateral Agent, its successors and assigns, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in and lien on all of the
Pledgor's right, title and interest in, to and under (a) the shares of capital
stock or other equity interests owned by it (assuming consummation of the
Transactions) and listed on Schedule II hereto and any shares of capital stock
of, or other equity interests in, the respective issuers listed on Schedule II
and, upon acquisition thereof, any other shares required to be pledged by a
Pledgor pursuant to Section 5.11 of the Credit Agreement obtained in the future
by the Pledgor and the certificates representing all such shares (the "Pledged
Stock"), provided that the Pledged Stock shall not include (i) more than 65% of
the issued and outstanding shares of stock of any Foreign Subsidiary of JCI or
of any Foreign Subsidiary of a Domestic Subsidiary of
3
Parent, (ii) directors' qualifying shares or shares held by nominees, or (iii)
the capital stock of any after acquired or organized Subsidiary of a Pledgor
until such time as such stock is required to be pledged pursuant to Section 5.11
of the Credit Agreement; (b)(i) the debt securities listed opposite the name of
the Pledgor on Schedule II hereto, (ii) any debt securities in the future issued
to a Pledgor (other than intercompany debt securities) and (iii) the promissory
notes and any other instruments evidencing such debt securities (the "Pledged
Debt Securities"); (c) all other property that may be delivered to and held by
the Collateral Agent pursuant to the terms hereof; (d) subject to Section 5, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the securities referred to
in clauses (a) and (b) above; (e) subject to Section 5, all rights and
privileges of the Pledgor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Collateral"). Upon delivery to the Collateral
Agent, (a) any Pledged Stock or Pledged Debt Securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be accompanied by
stock powers duly executed in blank (or in the case of shares of Mexican
companies, the endorsement in guaranty of each share certificate in favor of the
Collateral Agent in accordance with Mexican law) or other instruments of
transfer reasonably satisfactory to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may reasonably request and (b)
all other property comprising part of the Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Pledgor and
such other instruments or documents as the Collateral Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule II and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Pledged Securities. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent any and all
(i) Pledged Stock that is certificated and (x) issued by an entity organized
under the laws of the United States of America or a State thereof or (y) issued
by an entity organized under the laws of a jurisdiction other than the United
States or a State or territory thereof, to the extent required to perfect the
security interest in such Pledged Stock and (ii) all Pledged Debt Securities
which are evidenced by a promissory note.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to the
Pledgor by any Person [(other than intercompany debt)] that is evidenced by a
duly executed promissory note to be pledged and delivered to the Collateral
Agent pursuant to the terms thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:
(a) assuming consummation of the Transactions, on the date hereof the
Pledged Stock represents that percentage as set forth on Schedule II of the
issued and outstanding shares of each class of the capital stock of the
issuer with respect thereto;
(b) except for the security interest granted hereunder and except as
permitted under Section 6.02, 6.04 or 6.05 of the Credit Agreement, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on Schedule
II, (ii) holds the same free and clear of all Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to
exist any security interest in or other Lien on, the Pledged Securities,
other than pursuant hereto;
4
(c) the Pledgor (i) has the power and authority to pledge the Pledged
Securities in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement or as otherwise permitted by the
Credit Agreement), however arising, of all Persons whomsoever;
(d) on the date hereof when the Pledged Stock which is certificated
and governed by the law of a State of the United States of America,
together with stock powers, and the Pledged Debt Securities evidenced by
notes, together with bond powers, are delivered to the Collateral Agent
(assuming the continued possession of such Pledged Stock and Pledged Debt
Securities by the Collateral Agent), the Collateral Agent will obtain a
valid and perfected first lien upon and security interest in the Pledged
Stock and Pledged Debt Securities;
(e) all of the Pledged Stock has been duly authorized and validly
issued and is fully paid and nonassessable;
(f) all information set forth herein relating to the Pledged Stock is
accurate and complete in all material respects as of the date hereof;
(g) upon the acquisition of any stock of a Subsidiary acquired after
the Closing Date that is required to be pledged pursuant to Section 5.11 of
the Credit Agreement, the respective Pledgor shall deliver a schedule of
such additional stock to the Collateral Agent and such information shall be
made a part of Schedule II hereof and such stock shall be deemed Pledged
Stock; and
(h) on the date hereof, the Collateral Agent will have a perfected
pledge in the shares of any Mexican companies whose shares have been
pledged, as applicable, when the share certificates of such Mexican
companies are (i) in the possession of the Collateral Agent, (ii) duly
endorsed in guaranty in its favor and (iii) the pledge of shares of any
Mexican companies hereunder has been duly registered in the Shareholders
Registry Book of the relevant company or, in the case of Jafra Cosmetics,
S. de ▇.▇., the security interests will be perfected by means of (i)
corporate approval of pledge, (ii) the delivery of certificates evidencing
ownership of interests therein to the Collateral Agent and (iii) notations
thereof in the corporate records.
SECTION 4. Registration in Nominee Name; Denominations. If an Event of
Default shall occur and be continuing and the Collateral Agent shall give notice
of its intent to exercise the rights specified herein to the relevant Pledgor or
Pledgors, the Collateral Agent, on behalf of the Secured Parties, shall have the
right (in its sole and absolute discretion) to hold the Pledged Securities in
its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or
the name of the Pledgors, endorsed or assigned in blank or in favor of the
Collateral Agent.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent has given notice as specified in clause (b) or (c) below:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose; provided, however, that
such Pledgor will not be entitled to exercise any such right (other than in
connection with a transaction permitted by the Credit Agreement) which
would result in any violation of any provision of the Credit Agreement,
this Agreement or any other Loan Document.
(ii) The Collateral Agent shall promptly execute and deliver to each
Pledgor, or cause to be promptly executed and delivered to each Pledgor,
all such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling
5
such Pledgor to exercise the voting and/or consensual rights and powers it
is entitled to exercise pursuant to subparagraph (i) above and to receive
the cash dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Pledged Securities to
the extent such cash dividends, interest and principal are permitted by the
Credit Agreement. All noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return of
capital, capital surplus or paid-in surplus, and all other distributions
(other than distributions referred to in the preceding sentence) made on or
in respect of the Pledged Securities, whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the Collateral,
and, if received by any Pledgor, shall not be commingled by such Pledgor
with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral
Agent and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default
and subsequent notice by the Collateral Agent to the relevant Pledgor or
Pledgors of its intent to exercise such rights, all rights of any Pledgor to
dividends, interest or principal that such Pledgor is authorized to receive
pursuant to paragraph (a)(iii) above shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to receive and retain such dividends, interest or
principal. All dividends, interest or principal received by any Pledgor
contrary to the provisions of this Section 5 shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default
and subsequent notice by the Collateral Agent to the relevant Pledgor or
Pledgors of its intent to exercise such rights, all rights of any Pledgor to
exercise the voting and consensual rights and powers it is entitled to exercise
pursuant to paragraph (a)(i) of this Section 5, and the obligations of the
Collateral Agent under paragraph (a)(ii) of this Section 5, shall cease, and all
such rights shall thereupon become vested in the Collateral Agent, which shall
have the sole and exclusive right and authority to exercise such voting and
consensual rights and powers, provided that, unless otherwise directed by the
Required Lenders, the Collateral Agent shall have the right from time to time
following and during the continuance of an Event of Default to permit the
Pledgors to exercise such rights. After all Events of Default have been cured
or waived, such Pledgor will have the right to exercise the voting and
consensual rights and powers that it would otherwise be entitled to exercise
pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem
6
appropriate. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to Persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of any
Pledgor, and, to the extent permitted by applicable law, the Pledgors hereby
waive all rights of redemption, stay, valuation and appraisal any Pledgor now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
The Collateral Agent shall give a Pledgor at least 10 days' prior written
notice (which each Pledgor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Pledgor's Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid in
full by the purchaser or purchasers thereof, but the Collateral Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay
or appraisal on the part of any Pledgor (all said rights being also hereby
waived and released), the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
it from such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Pledgor therefor. For purposes hereof,
(a) a written agreement to purchase the Collateral entered into with a Person
(other than a Lender or an affiliate thereof) or any portion thereof shall be
treated as a sale thereof, (b) the Collateral Agent shall be free to carry out
such sale pursuant to such agreement and (c) such Pledgor shall not be entitled
to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose upon the Collateral and to sell the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 6 shall be deemed
to conform to the commercially reasonable standards as provided in Section 9-
504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
Certain rights and remedies of the Collateral Agent hereunder, may with
respect to Collateral issued by a Person not organized under the laws of a
jurisdiction of the United States of America, be limited. The Collateral Agent,
with respect to such Collateral, acknowledges such limitations and agrees to
comply with applicable laws with respect thereto.
7
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
may, in the sole discretion of the Collateral Agent, be applied by the
Collateral Agent against the respective Obligations of the relevant Pledgor then
due and owing in the following order of priority:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations of the relevant Pledgor, including all court costs and the
reasonable fees and expenses of the Collateral Agent's agents and legal
counsel, the repayment of all advances made by the Collateral Agent
hereunder or under any other Loan Document on behalf of such Pledgor and
any other reasonable costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations of the relevant
Pledgor (the amounts so applied to be distributed among the Secured Parties
pro rata in accordance with the amounts of such Obligations owed to them on
the date of any such distribution); and
THIRD, to the relevant Pledgor, its successors or assigns or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may reasonably
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest; provided that the Collateral Agent
agrees not exercise such power except upon the occurrence and during the
continuance of an Event of Default. Without limiting the generality of the
foregoing, the Collateral Agent shall have the right, upon the occurrence and
during the continuance of an Event of Default, with full power of substitution
either in the Collateral Agent's name or in the name of such Pledgor, to ask
for, demand, ▇▇▇ for, collect, receive and give acquittance for any and all
moneys due or to become due under and by virtue of any applicable Collateral, to
endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or,
except as otherwise provided herein, to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
8
SECTION 9. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Collateral Agent and the Pledgor or Pledgors with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.01 of the Credit Agreement.
SECTION 10. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
and agrees that in light of such restrictions and limitations, the Collateral
Agent, in its sole and absolute reasonable discretion, (a) may proceed to make
such a sale whether or not a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have been filed under
the Federal Securities Laws and (b) may approach and negotiate with a single
potential purchaser to effect such sale. Each Pledgor acknowledges and agrees
that any such sale might result in prices and other terms less favorable to the
seller than if such sale were a public sale without such restrictions. In the
event of any such sale, the Collateral Agent shall incur no responsibility or
liability for selling all or any part of the Pledged Securities at a price that
the Collateral Agent, in its reasonable discretion, may in good ▇▇▇▇▇ ▇▇▇▇
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 10 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
SECTION 11. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent shall determine to sell any of the Pledged Stock
of the respective Pledgor at a public sale, it will, at any time and from time
to time, upon the written request of the Collateral Agent, use its reasonable
best efforts to take or to cause the issuer of such Pledged Stock to (a) execute
and deliver, and use its best efforts to cause the directors and officers of
such issuer to execute and deliver, all such instruments and documents, and do
or cause to be done all such other acts as may be, in the reasonable opinion of
the Collateral Agent, necessary or advisable to register such Pledged Stock, or
that portion thereof to be sold, under the provisions of the Federal Securities
Laws, (b) use its best efforts to cause the
9
registration statement relating thereto to become effective and to remain
effective for a period of not more than one year from the date of the first
public offering of such Pledged Stock, or that portion thereof to be sold and
(c) make all amendments thereto and/or to the related prospectus which, in the
reasonable opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Federal Securities Laws and the rules
and regulations of the Securities and Exchange Commission applicable thereto.
The respective Pledgor further agrees, upon such written request referred to
above, to use its reasonable best efforts to qualify, file or register, or cause
the issuer of such Pledged Stock to qualify, file or register, any of the
Pledged Stock under the Blue Sky or other securities laws of such states of the
United States as may be reasonably requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations. Each Pledgor will bear all costs and expenses of carrying out its
obligations under this Section 11. Each Pledgor acknowledges that there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section 11 and that such failure would not be adequately compensable in damages,
and therefore agrees that its agreements contained in this Section 11 may be
specifically enforced.
SECTION 12. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of its Obligations or in respect of this Agreement (other than the
performance or payment in full of all the Obligations, as the case may be).
SECTION 13. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been paid
in full and the Lenders have no further commitment to lend under the Credit
Agreement, the L/C Exposure has been reduced to zero and the Issuing Bank has no
further obligation to issue Letters of Credit under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any Person (unless sold or
transferred to a Person that is required to pledge such Collateral to the
Collateral Agent pursuant to Section 5.11 of the Credit Agreement), or, upon the
effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 9.01(d) of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.
(c) If all of the capital stock of a Pledgor is sold, transferred or
otherwise disposed of to a Person that is not an Affiliate of the Borrowers
pursuant to a transaction permitted by Section 6.05 of the Credit Agreement,
such Pledgor shall be released from its obligations under this Agreement without
further action and the security interest in the Collateral of such Pledgor shall
be automatically released.
(d) In connection with any termination or release pursuant to paragraph
(a), (b) or (c), the Collateral Agent shall execute and deliver to any Pledgor,
at such Pledgor's expense, all documents that such Pledgor shall reasonably
request to evidence such termination or release and shall deliver to such
Pledgor all related Collateral of such Pledgor held by the Collateral Agent.
Any execution and delivery of documents pursuant to this Section 13 shall be
without recourse to or warranty by the Collateral Agent.
10
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.02 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of the applicable Borrower.
SECTION 15. Further Assurances. Each Pledgor agrees to do such further
reasonable acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Collateral Agent
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Collateral Agent its
rights and remedies hereunder.
SECTION 16. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except with the consent of the Collateral Agent or as expressly contemplated by
this Agreement or the other Loan Documents. This Agreement shall be construed
as a separate agreement with respect to each Pledgor and may be amended,
modified, supplemented, waived or released with respect to any Pledgor without
the approval of any other Pledgor and without affecting the obligations of any
other Pledgor hereunder
SECTION 17. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein shall
survive the making by the Lenders of the Loans and the issuance of the Letters
of Credit by the Issuing Bank.
(b) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 18. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
SECTION 19. Counterparts. This Agreement may be executed by one or more
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument, and shall become effective as
provided in Section 16. Delivery of an executed counterpart of a signature page
to this Agreement by facsimile transmission shall be as effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 20. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
11
SECTION 21. Jurisdiction; Consent to Service of Process. Each party
hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient forum and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the applicable party at
its address set forth in Section 14 or at such other address of which the
parties hereto shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 21 any punitive damages.
SECTION 22. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 23. Additional Pledgors. Pursuant to Section 5.11 of the Credit
Agreement, the stock (or a portion thereof) of certain Subsidiaries that were
not Subsidiaries on the Closing Date must be pledged to the Collateral Agent for
the benefit of the Secured Parties. Upon execution and delivery by the
Collateral Agent and such holder of stock of an instrument in the form of Annex
1, such holder shall become a Pledgor and, if applicable, a Subsidiary Pledgor
hereunder with the same force and effect as if originally named as a Pledgor
and, if applicable, a Subsidiary Pledgor herein. The execution and delivery of
such instrument shall not require the consent of any Pledgor hereunder. The
rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Pledgor and, if applicable, a
Subsidiary Pledgor as a party to this Agreement.
SECTION 24. Execution of Financing Statements. Pursuant to Section 9-402 of
the Uniform Commercial Code as in effect in the State of New York or its
equivalent in other jurisdictions, each Pledgor authorizes the Collateral Agent
to file financing statements with respect to the Collateral owned by it without
the signature of such Pledgor in such form and in such filing offices as the
Collateral Agent reasonably determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. A carbon, photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction. Promptly upon any such filing, the
Collateral Agent shall deliver a copy of such filing to the respective Pledgor.
SECTION 25. Integration. This Agreement represent the agreement among the
parties with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by any of the parties hereto
relative to the subject matter hereof not expressly set forth or referred to
herein.
12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
CDRJ INVESTMENTS (LUX) S.A.,
by________________________________________
Name:
Title:
CDRJ NORTH ATLANTIC (LUX) SARL,
by________________________________________
Name:
Title:
CDRJ LATIN AMERICA HOLDING COMPANY B.V.,
by________________________________________
Name:
Title:
LATIN COSMETICS HOLDINGS B.V.,
by________________________________________
Name:
Title:
REGIONAL COSMETICS HOLDING B.V.,
by________________________________________
Name:
Title:
SOUTHERN COSMETICS HOLDINGS B.V.,
by________________________________________
Name:
Title:
CDRJ MEXICO HOLDING COMPANY B.V.,
by________________________________________
Name:
Title:
CDRJ ACQUISITION CORPORATION (to be renamed
JAFRA COSMETICS INTERNATIONAL, INC.),
by________________________________________
Name:
Title:
13
JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.,
by__________________________________________
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED ON SCHEDULE I,
by__________________________________________
Authorized Officer:
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by__________________________________________
Name:
Title:
by__________________________________________
Name:
Title:
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
---- -------
Reday, S.A. de C.V. [Debevoise to complete]
Distribuidora Venus, S.A. de C.V.
Dirsamex, S.A. de C.V.
Qualifax, S.A. de C.V.
Jafra Cosmetics, S. de ▇.▇. de C.V.
Consultoria Jafra, S.A. de C.V.
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number of Registered Number and Percentage of
Issuer Certificate Owner Class of Shares Shares
------ ----------- ---------- --------------- -------------
[Debevoise to complete]
DEBT SECURITIES
Principal
Issuer Amount Payee Date of Note Maturity Date
------ --------- ----- ------------ -------------
[Debevoise to complete]
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE AGREEMENT
dated as of April 30, 1998, among CDRJ INVESTMENTS (LUX) S.A., a
Luxembourg socie'te' anonyme ("Parent"), CDRJ NORTH ATLANTIC
(LUX) SARL, a Luxembourg socie'te' a' responsibilite' limite'e
("Lux SARL"), CDRJ LATIN AMERICA HOLDING COMPANY B.V., LATIN
COSMETICS HOLDINGS B.V., REGIONAL COSMETICS HOLDING B.V.,
SOUTHERN COSMETICS HOLDINGS B.V. and CDRJ MEXICO HOLDING COMPANY
B.V., each a legal entity in the form of a "besloten vennootschap
met beperkte aansprakelijkheid" organized under the laws of The
Netherlands (collectively, the "Dutch HoldCo's"), JAFRA COSMETICS
INTERNATIONAL, INC., a Delaware corporation ("JCI"), JAFRA
COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad ano'nima de
capital variable organized under the laws of the United Mexican
States ("JCISA" and, together with JCI, the "Borrowers"), each
subsidiary of the Borrowers listed on Schedule I hereto (each
such subsidiary individually a "Subsidiary Pledgor" and
collectively, the "Subsidiary Pledgors"; the Borrowers, Parent,
Lux SARL, the Dutch HoldCo's and the Subsidiary Pledgors are
referred to collectively herein as the "Pledgors") and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, as collateral
agent (in such capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below).
Capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement
referred to below.
A. Reference is made to (a) the Credit Agreement dated as of April 30,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Parent, the Borrowers, the lenders from time to time
party thereto (the "Lenders"), the Issuing Bank and Credit Suisse First Boston,
as administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), as swingline lender and as Collateral Agent, (b) the Parent Guarantee
Agreement, (c) the JCI Guarantee Agreement, (d) the JCISA Guarantee Agreement
(together with the JCI Guarantee Agreement, the "Cross Guarantee Agreements"),
(e) the JCI Subsidiary Guarantee Agreement and (f) the JCISA Subsidiary
Guarantee Agreement (together with the JCI Subsidiary Guarantee Agreement, the
"Subsidiary Guarantee Agreements").
B. The Pledgors have entered into the Pledge Agreement in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit.
Pursuant to Section 5.11 of the Credit Agreement, the stock (or a portion
thereof) of certain Subsidiaries that were not Subsidiaries on the Closing Date
must be pledged to the Collateral Agent for the benefit of the Secured Parties,
and the Subsidiary which owns such stock (if not already a party) is required to
enter into the Pledge Agreement as a Pledgor, and if applicable, a Subsidiary
Pledgor. Section 23 of the Pledge Agreement provides that such Subsidiaries may
become Pledgors, and if applicable, Subsidiary Pledgors under the Pledge
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Pledgor under the Pledge Agreement in order to induce the Lenders
to make additional Loans and the Issuing Bank to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 23 of the Pledge Agreement, the New
Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with
the same force and effect as if originally named therein as a Pledgor and the
New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
2
warrants that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, the New Pledgor, as security for the payment and performance in
full of its respective Obligations (as defined in the Pledge Agreement), does
hereby create and grant to the Collateral Agent, its successors and assigns, for
the benefit of the Secured Parties, their successors and assigns, a security
interest in and lien on all of the New Pledgor's right, title and interest in
and to the Collateral (as defined in the Pledge Agreement) of the New Pledgor.
Each reference to a "Subsidiary Pledgor" or a "Pledgor", as applicable, in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.
[If New Pledgor is not a Subsidiary Pledgor, add relevant information with
respect to its "Obligations" and incorporate such into the definition of
"Obligations" in the Pledge Agreement.]
SECTION 2. The New Pledgor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or similar laws relating to or affecting creditors'
rights generally, general equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that, on the
date hereof, set forth on Schedule I attached hereto is a true and correct
schedule of all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforce able, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
3
SECTION 8. All communications and notices hereunder shall be in writing
(including by facsimile transmission) and given as provided in Section 14 of the
Pledge Agreement. All communications and notices hereunder to the New Pledgor
shall be given to it in care of JCI.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by ________________________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by ________________________________________
Name:
Title:
by ________________________________________
Name:
Title:
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
-------------------------------------
CAPITAL STOCK
Number of Registered Number and Percentage of
Issuer Certificate Owner Class of Shares Shares
------ ----------- ----------- --------------- -------------
DEBT SECURITIES
Principal
Issuer Amount Payee Date of Note Maturity Date
------ --------- ----- ------------ -------------
EXHIBIT L
to CREDIT AGREEMENT
SECURITY AGREEMENT dated as of April 30, 1998, among CDRJ
ACQUISITION CORPORATION (to be renamed JAFRA COSMETICS
INTERNATIONAL, INC.), a Delaware corporation ("JCI" or the
"Grantor"), each subsidiary of JCI listed on Schedule I hereto
(each such subsidiary individually a "Subsidiary Grantor" and
collectively, the "Subsidiary Grantors"; the Subsidiary Grantors
and JCI are referred to collectively herein as the "Grantors")
and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its New York branch, as collateral
agent (in such capacity, the "Collateral Agent") for the Secured
Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of April 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg socie'te' anonyme
("Parent"), JCI, Jafra Cosmetics International, S.A. de C.V., a sociedad
ano'nima de capital variable organized under the laws of Mexico ("JCISA" and,
together with JCI, the "Borrowers"), the lenders from time to time party thereto
(the "Lenders"), the Issuing Bank (as defined therein) and Credit Suisse First
Boston, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as swingline lender and as Collateral Agent and (b) the
JCI Guarantee Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrowers pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. JCI has agreed to guarantee, among other things, all the obligations
of JCISA under the Credit Agreement. The JCI Subsidiary Grantors will agree to
guarantee, among other things, all the obligations of JCI under the Credit
Agreement and the JCI Guarantee Agreement. The obligations of the Lenders to
make Loans and of the Issuing Bank to issue Letters of Credit are conditioned
upon, among other things, the execution and delivery by the Grantors of an
agreement in the form hereof to secure their respective obligations under the
Credit Agreement, the JCI Subsidiary Guarantee Agreement and the other Loan
Documents, including (a) in the case of JCI, (i) the due and punctual payment by
JCI of (A) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans of JCI, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (B) each payment required to be made by JCI under the Credit
Agreement in respect of any Letter of Credit issued for its benefit, when and as
due, including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (C) all other monetary
obligations, including fees, costs, expenses and indemnities, whether direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
JCI to the Secured Parties under the Credit Agreement, the JCI Guarantee
Agreement and the other Loan Documents, (ii) the due and punctual performance of
all covenants, agreements, obligations and liabilities of JCI under or pursuant
to the Credit Agreement, the JCI Guarantee Agreement and the other Loan
Documents, (iii) unless otherwise agreed to in writing by the applicable
counterparty thereto, the due and punctual payment and performance of all
obligations of JCI under each Hedging Agreement entered into with any
counterparty (whether or not a Lender or an Affiliate thereof) and (iv) the due
and punctual payment and performance of all guarantee obligations of JCI
referred to in Section 6.01(d)(ii) of the Credit Agreement as to which any
Lender or any Affiliate thereof is originally a beneficiary (all the monetary
and other obligations described in the preceding clauses (i) through (iv) being
collectively called the "JCI Obligations") and (b) in the case of any Subsidiary
Grantor, its respective obligations under the JCI Subsidiary Guarantee Agreement
and the other Loan Documents to which such Subsidiary Grantor is a party (the
"Subsidiary Grantor Obligations" and, together with the JCI Obligations, the
"Obligations").
2
Accordingly, each Grantor and the Collateral Agent, on behalf of itself and
each Secured Party (and each of their respective successors or assigns), hereby
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement and all references to the Uniform
Commercial Code shall mean the Uniform Commercial Code in effect in the State of
New York as of the date hereof.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Accounts" shall have the meaning set forth in the Uniform Commercial Code.
"Chattel Paper" shall have the meaning set forth in the Uniform Commercial
Code.
"Collateral" shall mean, with respect to each Grantor, all (a) Accounts,
(b) Contracts, (c) Documents, (d) Equipment, (e) General Intangibles, (f)
Inventory, (g) cash and cash accounts, (h) Intellectual Property, (i) Investment
Property, (j) Instruments, (k) Chattel Paper and (l) Proceeds of the foregoing,
excluding the Pledged Securities (as defined in the Pledge Agreement), and all
properties and assets excluded from the definition of Pledged Securities in the
Pledge Agreement (including, without limitation, any Capital Stock of any
Foreign Subsidiary in excess of 65% of any series of such stock and intercompany
indebtedness).
"Contracts" shall mean, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which such Grantor is a party or under which such Grantor has any right, title
or interest or to which such Grantor or any property of such Grantor is subject,
as the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (a) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of such Grantor to damages arising thereunder and (c)
all rights of such Grantor to perform and to exercise all remedies thereunder.
"Copyright Licenses" shall mean, with respect to any Grantor, all United
States written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary providing for the grant by such Grantor of any right
to use any Copyright of such Grantor, subject, in each case, to the terms of
such license agreements, and the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter covered by such licenses.
"Copyrights" shall mean, with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States copyrights, whether or not
the underlying works of authorship have been published or registered, United
States copyright registrations and copyright applications and (a) all renewals
thereof, (b) all income, royalties, damages and payments now and hereafter due
and/or payable with respect thereto, including payments under all licenses
entered into in connection therewith, and damages and payments for past, present
or future infringements thereof and (c) the right to ▇▇▇ or otherwise recover
for past, present and future infringements thereof.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
3
"Documents" shall have the meaning set forth in the Uniform Commercial
Code.
"Equipment" shall have the meaning set forth in the Uniform Commercial Code
(other than all cars, trucks, trailers, construction and earth moving equipment
and other vehicles covered by a certificate of title law of any state and all
liens and other appurtenances to any of the foregoing).
"General Intangibles" shall have the meaning specified in the Uniform
Commercial Code, excluding the Pledged Securities (as defined in the Pledge
Agreement) all properties and assets excluded from the definition of Pledged
Securities in the Pledge Agreement.
"Instruments" shall have the meaning specified in the Uniform Commercial
Code, excluding the Pledged Securities (as defined in the Pledge Agreement) and
all properties and assets excluded from the definition of Pledged Securities in
the Pledge Agreement.
"Intellectual Property" shall mean, with respect to any Grantor, the
collective reference to such Grantor's Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trade Secrets, Trademarks and Trademark Licenses.
"Inventory" shall mean, with respect to any Grantor, all inventory (as
defined in the Uniform Commercial Code) of such Grantor.
"Investment Property" shall have the meaning specified in the Uniform
Commercial Code, excluding the Pledged Securities (as defined in the Pledge
Agreement) and all the properties and assets excluded from the definition of
Pledged Securities in the Pledge Agreement.
"IP Collateral" shall mean, with respect to any Grantor, the collective
reference to such Grantor's Patents, Patent Licenses, Trademarks, Trademark
Licenses, General Intangibles connected with the use of or symbolized by the
Trademarks and Patents and, to the extent not otherwise included, all Proceeds
and products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
"License" shall mean any Patent License, Trademark License or Copyright
License to which any Grantor is a party, including those listed on Schedule II.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent Licenses" shall mean with respect to any Grantor, all United States
written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Patents of such Grantor
or such other Person's patents, whether such Grantor is a licensor or a licensee
under any such agreement, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such licenses.
"Patents" shall mean with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States patents, patent
applications and patentable inventions, including all patents and patent
applications identified in Schedule III and including (a) all inventions and
improvements described and claimed therein, (b) the right to ▇▇▇ or otherwise
recover for any and all past, present and future infringements thereof, (c) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including payments under all licenses entered into
in connection therewith, and damages and payments for past, present or future
infringements thereof) and (d) all other rights corresponding thereto in the
United States and all reissues, divisions, continuations, continuations-in-part,
substitutes, renewals, and extensions thereof, all improvements thereon and all
other rights of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto.
4
"Perfection Certificate" shall mean a certificate substantially in the form
of Annex 2 hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of JCI.
"Proceeds" shall have the meaning set forth in the Uniform Commercial Code.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent, (d) the Issuing Bank, (e) unless otherwise agreed to
in writing by the applicable counterparty thereto, each counterparty to a
Hedging Agreement entered into with JCI (whether or not a Lender or an Affiliate
of a Lender) at the time the Hedging Agreement was entered into, (f) the
beneficiaries of each indemnification obligation undertaken by any Grantor under
any Loan Document and (g) the successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in Section
2.01.
"Trade Secrets" shall mean, with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States trade secrets,
including know-how, processes, formulae, compositions, designs and confidential
business and technical information, and all rights of any kind whatsoever
accruing thereunder or pertaining thereto, including (a) all income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto,
including payments under all licenses, non-disclosure agreements and memoranda
of understanding entered into in connection therewith and damages and payments
for past or future misappropriations thereof and (b) the right to ▇▇▇ or
otherwise recover for past, present or future misappropriations thereof.
"Trademark Licenses" shall mean, with respect to any Grantor, all United
States written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Trademarks of such
Grantor or such other Person's names or trademarks, whether such Grantor is a
licensor or a licensee under any such agreement, subject, in each case, to the
terms of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
"Trademarks" shall mean with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States trademarks, service marks,
trade names, trade dress or other indicia of trade origin or business
identifiers, trademark and service ▇▇▇▇ registrations, and applications for
trademark or service ▇▇▇▇ registrations (except for "intent to use" applications
for trademark or service ▇▇▇▇ registrations filed pursuant to Section 1(b) of
the ▇▇▇▇▇▇ Act, 15 U.S.C. (S) 1051, unless and until an Amendment to Allege Use
or a Statement of Use under Sections 1(c) and 1(d) of said Act has been filed),
and any renewals thereof, including each registration and application identified
in Schedule IV, and including (a) the right to ▇▇▇ or otherwise recover for any
and all past, present and future infringements or dilutions thereof, (b) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including payments under all licenses entered into
in connection therewith, and damages and payments for past, present or future
infringements thereof) and (c) all other rights corresponding thereto in the
United States and all other rights of any kind whatsoever of such Grantor
accruing thereunder or pertaining thereto in the United States, together in each
case with the goodwill of the business connected with the use of, and symbolized
by, each such trademark, service ▇▇▇▇, trade name, trade dress or other indicia
of trade origin or business identifiers.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
5
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. Subject to Section 2.03, each Grantor,
as security for the payment or performance, as the case may be, in full of the
Obligations, hereby grants to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, a security interest in, all of
such Grantor's right, title and interest in, to and under its respective
Collateral (the "Security Interest"). Without limiting the foregoing, the
Collateral Agent is hereby authorized to file one or more financing statements,
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office) or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor, without the signature
of such Grantor, and naming such Grantor as debtor and the Collateral Agent as
secured party (in each case, to the extent permitted by applicable law). The
Collateral Agent shall provide copies of each such filing to the Grantors
promptly upon the filing or recordation of any such filing.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
SECTION 2.03. Certain Exceptions. No Security Interest is or will be
granted pursuant hereto in (and the term "Collateral" shall not include) - the
right, title and interest of any Grantor under or in:
(a) any Instruments, Contracts, Chattel Paper, Documents, General
Intangibles, Licenses or other contracts or agreements with or issued by Persons
other than Parent, the Subsidiaries or the Borrowers (collectively, "Excluded
Agreements") that would otherwise be included in the Collateral (and such
Excluded Agreements shall not be deemed to constitute a part of the Collateral)
for so long as, and to the extent that, the granting of such a Security Interest
pursuant hereto would result in a breach, default or termination of such
Excluded Agreements;
(b) any Equipment that would otherwise be included in the Collateral
(and such Equipment shall not be deemed to constitute a part of the Collateral)
if such Equipment is subject to a Lien permitted by Section 6.02(g) of the
Credit Agreement; or
(c) any Pledged Securities (as such term is defined in the Pledge
Agreements), and all properties and assets excluded from the definition of
Pledged Securities in the Pledge Agreement (including, without limitation, any
Capital Stock of any Foreign Subsidiary in excess of 65% of any series of such
stock and intercompany indebtedness).
ARTICLE III
Representations and Warranties
Each Grantor represents and warrants to the Collateral Agent and the
Secured Parties that:
SECTION 3.01. Title and Authority. Such Grantor has good and valid rights
in and title to its Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained.
6
SECTION 3.02. Perfected Liens. (a) This Agreement is effective to create,
as collateral security for the Obligations of such Grantor, valid and
enforceable Liens on such Grantor's Collateral in favor of the Collateral Agent,
for the benefit of the Secured Parties, except as enforceability may be affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(b) Except with regard to Liens (if any) on Specified Assets, upon
the completion of the Filings, and the delivery to and continuing possession by
the Collateral Agent of all Instruments, Chattel Paper and Documents, a security
interest in which is perfected by possession, the Liens created pursuant to this
Agreement will constitute valid Liens on and (to the extent provided herein) a
perfected Security Interest in such Grantor's Collateral in favor of the
Collateral Agent for the benefit of the Secured Parties, and will be prior to
all other Liens of all other Persons other than Permitted Liens, and which Liens
are enforceable as such as against all other Persons other than Ordinary Course
Buyers, except to the extent that the recording of an assignment or other
transfer of title to the Collateral Agent or the recording of other applicable
documents in the United States Patent and Trademark Office, the United States
Copyright Office or the Commonwealth of Puerto Rico may be necessary for
perfection or enforceability, and except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law) or by an implied covenant of good faith and fair dealing. As used in
this Section 3.02, the following terms shall have the following meanings:
(i) "Filings" shall mean the filing or recording of the Financing
Statements, the Mortgages, and this Agreement as set forth in Section 3.20
of the Credit Agreement, and any filings after the Closing Date in any
other jurisdiction as may be necessary under any Requirement of Law.
(ii) "Financing Statements" shall mean the financing statements
delivered to the Collateral Agent by each Grantor on the Closing Date for
filing in the jurisdictions listed on Schedule 3.20 to the Credit Agreement
(which Financing Statements are in proper form for filing in such
jurisdictions).
(iii) "Ordinary Course Buyers" shall mean, with respect to goods
only, buyers in the ordinary course of business to the extent provided in
Section 9-307(1) of the Uniform Commercial Code as in effect from time to
time in the applicable jurisdiction.
(iv) "Permitted Liens" shall mean Liens permitted pursuant to the
Loan Documents, including those permitted to exist pursuant to Section 6.02
of the Credit Agreement.
(v) "Specified Assets" shall mean the following property and assets
of each Grantor:
(A) Equipment constituting Fixtures;
(B) Patents, Patent Licenses, Trademarks and Trademark Licenses to
the extent that (1) Liens thereon cannot be perfected by the filing of
financing statements under the Uniform Commercial Code or by the filing and
acceptance thereof in the United States Patent and Trademark Office or (2)
such Patents, Patent Licenses, Trademarks and Trademarks Licenses as are
not, individually or in the aggregate, material to the business of the
Parent, the Borrowers and the Subsidiaries taken as a whole;
(C) Copyrights and Copyright Licenses and Accounts or receivables
arising therefrom only to the extent that the Uniform Commercial Code as in
effect from time to time in the relevant jurisdiction is not applicable to
the creation or perfection of Liens thereon;
(D) uncertificated securities;
7
(E) Collateral for which the perfection of Liens thereon requires
filings in or other actions under the laws of jurisdictions outside the
United States of America, any State, territory or dependency thereof or the
District of Columbia;
(F) Contracts, Accounts or receivables on which the United States
of America or any department, agency or instrumentality thereof is the
obligor, and property or assets subject to any rights reserved in favor of
the United States government as required under law;
(G) goods included in Collateral received by any Person for "sale
or return" within the meaning of Section 2-326 of the Uniform Commercial
Code of the applicable jurisdiction, to the extent of claims of creditors
of such Person; and
(H) Proceeds of Accounts or Inventory until transferred to the
Collateral Agent.
SECTION 3.03. IP Collateral. Schedules II, III and IV together list all
material Trademarks and Patents in each case registered in the United States
Patent and Trademark Office and owned by such Grantor in its own name as of the
date hereof, and all material Trademark Licenses and Patent Licenses (including
material Trademark Licenses for registered Trademarks and Patent Licenses for
registered Patents) owned by such Grantor in its own name as of the date hereof.
SECTION 3.04. Farm Products. None of such Grantor's Collateral
constitutes, or is the Proceeds of, Farm Products.
SECTION 3.05. Accounts. The amount represented by such Grantor to the
Collateral Agent or the other Secured Parties from time to time as owing by each
account debtor or by all account debtors in respect of such Grantor's Accounts
will at such time be the correct amount, in all material respects, actually
owing by such account debtor or debtors thereunder, except to the extent that
appropriate reserves therefor have been established on the books of such Grantor
in accordance with GAAP. Unless otherwise indicated in writing to the
Collateral Agent, each Account of such Grantor arises out of a bona fide sale
and delivery of goods or rendition of services by such Grantor. Such Grantor
has not given any account debtor any deduction in respect of the amount due
under any such Account, except in the ordinary course of business or as such
Grantor may otherwise advise the Collateral Agent in writing.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its properties
to the extent that any financing statement filed in connection with this
Agreement would become seriously misleading, (ii) in the location of its chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in its identity or corporate
structure to the extent that any financing statement filed in connection with
this Agreement would become seriously misleading or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees to make all filings (other than in
the Commonwealth of Puerto Rico) under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a perfected security interest in all the
Collateral (other than Specified Assets).
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in
8
accordance with such prudent and standard practices used in industries that are
the same as or similar to those in which such Grantor is engaged.
SECTION 4.02. Protection of Security. Each Grantor shall, at its own cost
and expense, take any and all reasonable actions necessary to defend title to
the Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral as a perfected security interest having at
least the priority described in Section 3.02 against any Lien not permitted
pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.03. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
SECTION 4.04. Inspection and Verification. At any time during the
occurrence and continuance of an Event of Default, the Collateral Agent and such
Persons as the Collateral Agent may reasonably designate shall have the right,
at each Grantor's own cost and expense, to inspect such Grantor's Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of such Grantor's Collateral is located, to
discuss - such Grantor's affairs with the officers of such Grantor and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, such Grantor's Collateral, excluding, however, in the case of
Accounts or Collateral in the possession of any third Person, by contacting
Account Debtors or the third Person possessing such Collateral for the purpose
of making such a verification. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or verification
with any Lender (it being understood that any such information shall be deemed
to be "Confidential Information" subject to the provisions of Section 9.17 of
the Credit Agreement).
SECTION 4.05. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
that are not permitted pursuant to the Credit Agreement, and may pay for the
maintenance and preservation of any Grantor's Collateral to the extent such
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor severally agrees to reimburse the Collateral Agent on demand
for any reasonable payment made or any reasonable expense incurred by the
Collateral Agent pursuant to the foregoing authorization on such Grantor's
behalf; provided, however, that nothing in this Section 4.05 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
SECTION 4.06. Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral.
SECTION 4.07. Use and Disposition of Collateral. None of the Grantors
shall grant any Lien in respect of the Collateral, except as permitted by the
Credit Agreement. Each Grantor agrees that if any Inventory is in the
possession or control of any warehouseman, bailee, agent or processor and the
Collateral Agent reasonably requests, such Grantor shall inform such
warehouseman, bailee, agent or processor of the Security Interest and shall use
good faith efforts to obtain from such
9
warehouseman, bailee, agent or processor its agreement to hold the Inventory
subject to the Security Interest and to waive and release any Lien held by it
with respect to such Inventory (unless such Lien is permitted by the Credit
Agreement or other Loan Document), whether arising by operation of law or
otherwise.
SECTION 4.08. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any Person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, releases,
discounts, compromises or settlements granted that would not reasonably be
expected to materially adversely affect the value of the Accounts constituting
Collateral taken as a whole.
SECTION 4.09. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage in
accordance with Section 5.06 of the Credit Agreement. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default specified in Section 7.01(a) or 7.02(a), of making,
settling and adjusting claims in respect of such Grantor's Collateral under
policies of insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that any Grantor at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of such Grantor hereunder, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Collateral Agent
reasonably deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.09, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the respective Grantor to the Collateral Agent and shall be
additional Obligations secured hereby.
SECTION 4.10. Covenants Regarding Copyrights, Patents, and Trademarks.
(a) Within 90 days after the end of each calendar year, such Grantor will notify
the Collateral Agent of any acquisition by such Grantor of any registration of
any material Copyright, Patent or Trademark or any exclusive right under a
material License, in each case constituting Collateral and shall take such
actions as may be reasonably requested by the Collateral Agent (but only to the
extent such actions are within such Grantor's control) to perfect the Security
Interest granted to the Collateral Agent and the other Secured Parties therein
to the extent provided in respect of Copyrights, Patents or Trademarks
constituting Collateral on the date hereof (including without limitation by (x)
the execution and delivery of a Security Agreement (or amendments to any such
agreement previously executed or delivered by such Grantor) and/or (y) the
making of appropriate filings in the United States Patent and Trademark Office
or the United States Copyright Office and/or appropriate Uniform Commercial Code
filings).
(b) Except as permitted in the Loan Documents, such Grantor agrees to take
all reasonably necessary steps, including in the United States Patent and
Trademark Office or in any court, to (i) maintain each trademark registration
and each Trademark License identified on Schedule II or IV hereto, as the case
may be, and (ii) pursue each trademark application now or hereafter identified
in Schedule V hereto, including, without limitation, the filing of responses to
office actions issued by the United States Patent and Trademark Office, the
filing of applications for renewal, the filing of affidavits under Sections 8
and 15 of the United States Trademark Act, and the participation in opposition,
cancelation, infringement and dilution proceedings, except, in each case in
which such Grantor has reasonably determined that any of the foregoing is not of
material economic value to it. Such Grantor agrees to take corresponding steps
with respect to each new or acquired trademark or service ▇▇▇▇ registration, or
application for trademark or service ▇▇▇▇ registration, or any rights obtained
under any Trademark License, in each case, to which it is now or later becomes
entitled,
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except in each case in which such Grantor has reasonably determined that any of
the foregoing is not of material economic value to it. Any expenses incurred in
connection with such activities shall be borne by such Grantor.
(c) Except as permitted in the Loan Documents, such Grantor agrees to take
all necessary steps, including in the United States Patent and Trademark Office
or in any court, to (i) maintain each patent and each Patent License identified
on Schedule II or III, as applicable, and (ii) pursue each patent application,
now or hereafter identified in Schedule III including the filing of divisional,
continuation, continuation-in-part and substitute applications, the filing of
applications for reissue, renewal or extensions, the payment of maintenance
fees, and the participation in interference, reexamination, opposition or
infringement and misappropriation proceedings, except, in each case in which
such Grantor has reasonably determined that any of the foregoing is not of
material economic value to it. Such Grantor agrees to take corresponding steps
with respect to each new or acquired patent, patent application, or any rights
obtained under any Patent License, in each case, which it is now or later
becomes entitled, except in each case in which such Grantor has reasonably
determined that any of the foregoing is not of material economic value to it.
Any expenses incurred in connection with such activities shall be borne by such
Grantor.
(d) Except as provided in subsection (f) hereof, such Grantor shall take
all additional steps not set forth in subsections (b) and (c) hereof which it or
the Collateral Agent deems reasonably appropriate under the circumstances to
preserve and protect its material Copyrights, Copyright Licenses, Trademarks,
Trademark Licenses, Patents and Patent Licenses.
(e) Such Grantor shall not abandon any trademark registration, patent or
any pending trademark or patent application, in each case listed on Schedule III
or IV, without the written consent of the Collateral Agent, unless such Grantor
shall have previously determined that such use or the pursuit or maintenance of
such trademark registration, patent or pending trademark or patent application
is not of material economic value to it, in which case, such Grantor will, at
least annually, give notice of any such abandonment to the Collateral Agent in
writing, in reasonable detail, at its address set forth in the Credit Agreement.
(f) In the event that any Grantor becomes aware that any of such Grantor's
IP Collateral which such Grantor has reasonably determined to be material to its
business is infringed or misappropriated by a third party, which infringement or
misappropriation would reasonably be expected to have a Material Adverse Effect,
such Grantor shall notify the Collateral Agent promptly and in writing, in
reasonable detail, at its address set forth in the Credit Agreement, and shall
take such actions as such Grantor or the Collateral Agent deems reasonably
appropriate under the circumstances to protect such IP Collateral including
suing for damages and/or for an injunction against such infringement or
misappropriation. Any expense incurred in connection with such activities shall
be borne by such Grantor. Such Grantor will advise the Collateral Agent
promptly and in writing, in reasonable detail, at its address set forth in the
Credit Agreement, of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any proceeding in
the United States Patent and Trademark Office or any court) regarding any item
of such Grantor's IP Collateral which could reasonably result in a Material
Adverse Effect.
(g) Such Grantor shall ▇▇▇▇ its products with the trademark registration
symbol (R), the numbers of all appropriate patents, the common law trademark
symbol (TM), or the designation "patent pending", as the case may be, to the
extent that it is reasonably and commercially practicable.
(h) Such Grantor will not create, incur or permit to exist, will defend
such Grantor's IP Collateral against, and will take such other action as is
reasonably necessary to remove, any material Lien or material adverse claim on
or to any of such Grantor's IP Collateral other than Liens created hereby and
other than as permitted pursuant to the Loan Documents (including any Liens
permitted to exist on such Grantor's IP Collateral pursuant to Section 6.02 of
the Credit Agreement), and will defend the right, title and interest of the
Collateral Agent and the other Secured Parties in and to any
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of the IP Collateral against the claims and demands of all Persons whomsoever,
except where failure to defend would not have a Material Adverse Effect.
(i) Without the prior written consent of the Collateral Agent, such
Grantor will not sell, assign, transfer, exchange or otherwise dispose of, or
grant any option with respect to, such Grantor's IP Collateral, or attempt,
offer or contract to do so, except with respect to licenses in the ordinary
course of business or as permitted by this Agreement or the Loan Documents.
(j) Such Grantor will advise the Collateral Agent promptly and in writing,
in reasonable detail, at its address set forth in the Credit Agreement, (i) of
any Lien (other than Liens created hereby or permitted under the Loan Documents,
including, without limitation, any Liens permitted to exist on such Grantor's
Patents or Trademarks pursuant to Section 6.02 of the Credit Agreement) on any
of such Grantor's IP Collateral and (ii) of the occurrence of any other event
which would reasonably be expected in the aggregate to have a material adverse
effect on the aggregate value of the IP Collateral as a whole or the Liens
created hereunder.
Section 4.13. Protection of Trade Secrets. Such Grantor shall take
all steps which it deems commercially reasonable to preserve and protect the
secrecy of all material Trade Secrets of such Grantor.
ARTICLE V
Collections
SECTION 5.01. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers and employees of
the Collateral Agent designated by the Collateral Agent) as such Grantor's true
and lawful agent and attorney-in-fact, and in such capacity the Collateral Agent
shall have the right, with power of substitution for each Grantor and in each
Grantor's name or otherwise, for the use and benefit of the Collateral Agent and
the Secured Parties, but only upon the occurrence and during the continuance of
an Event of Default (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to such Grantor's Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of such Grantor's Collateral; (c) to sign the name of such Grantor
on any invoice or ▇▇▇▇ of lading relating to any of such Grantor's Collateral;
(d) to send verifications of such Grantor's Accounts to any Account Debtor; (e)
to commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of such Grantor's Collateral or to enforce any rights in respect of
any such Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of such Grantor's
Collateral; (g) to notify, or to require such Grantor to notify, Account Debtors
to make payment directly to the Collateral Agent; and (h) subject to any
existing reserved rights or licenses, to use, sell, assign, transfer, pledge,
make any agreement with respect to or otherwise deal with all or any of such
Grantor's Collateral, and to do all other acts and things necessary to carry out
the purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of such Grantor's Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or, except as otherwise provided
herein, to take any action with respect to the Collateral or any part thereof or
the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or to any claim or action against
the Collateral Agent. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of each Grantor for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document
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with respect to the such Grantor's Collateral or any part thereof or, such
Grantor's impose any obligation on the Collateral Agent or any Secured Party to
proceed in any particular manner with respect to the Collateral or any part
thereof, or, except as otherwise provided herein, in any way limit the exercise
by the Collateral Agent or any Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise. Anything in this Section 5.01 to
the contrary notwithstanding, the Collateral Agent agrees that it will not
exercise any rights under the power of attorney provided for in this Section
5.01 unless an Event of Default shall have occurred and be continuing.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees that the Collateral
Agent shall have the right to take any of or all the following actions at the
same or different times: (a) in the case of any Copyright, Patent or Trademark
constituting Collateral of such Grantor, execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's and the other Secured
Parties' security interest in such Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby and, subject to any existing reserved rights or licenses, assign any
Copyright, Patent or Trademark constituting Collateral of such Grantor (along
with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine, and (b)
with or without legal process and with or without prior notice or demand for
performance, to take possession of such Grantor's Collateral and without
liability for trespass to enter any premises where such Grantor's Collateral may
be located for the purpose of taking possession of or removing such Grantor's
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of such
Grantor's Collateral, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall reasonably deem appropriate. The Collateral Agent shall
be authorized at any such sale of any Grantor's Collateral subject to
restrictions on sales under the Securities Act of 1933, as amended (if it
reasonably deems it advisable to do so), to restrict the prospective bidders
or purchasers to Persons who will represent and agree that they are purchasing
such Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors at least 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Grantor's Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may in its sole and absolute
discretion determine. The
13
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall reasonably determine not to do so, regardless of the fact that notice of
sale of such Collateral shall have been given. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
such Grantor's Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Secured Party from such Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to such Grantor
therefor. For purposes hereof, a written agreement with any Person (other than a
Secured Party or affiliate thereof) to purchase the Collateral or any portion
thereof shall be treated as a sale thereof; the Collateral Agent shall be free
to carry out such sale pursuant to such agreement and no Grantor shall be
entitled to the return of such Grantor's Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a court-
appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent may, in the
sole discretion of the Collateral Agent, apply the proceeds of any collection or
sale of the Collateral, as well as any Collateral consisting of cash against the
respective Obligations of the relevant Grantor then due and owing in the
following order of priority:
FIRST, to the payment of all reasonable costs and reasonable expenses
incurred by the Collateral Agent hereunder in connection with such
collection or sale or otherwise in connection with this Agreement or any of
the Obligations of the relevant Grantor then due and owing, including all
court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all reasonable advances made by the Collateral
Agent hereunder on behalf of such Grantor and any other reasonable costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder;
SECOND, to the payment in full of the Obligations of the relevant
Grantor then due and owing (the amounts so applied to be distributed among
the Secured Parties pro rata in accordance with the amounts of such
Obligations then due and owing to them on the date of any such
distribution); and
THIRD, to the relevant Grantor, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers
14
shall not be obligated to see to the application of any part of the purchase
money paid over to the Collateral Agent or such officer or be answerable in any
way for the misapplication thereof.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.02 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Grantor shall be given to it in care of JCI.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants and agreements, made
by any Grantor herein shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein except with
the consent of the Collateral Agent or as contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each Grantor and may be amended, modified, supplemented, waived
or released with respect to any Grantor without the approval of any other
Grantor and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO
THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
15
SECTION 7.07. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Grantor or Grantors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.01 of the Credit Agreement.
SECTION 7.08. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
SECTION 7.09. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 7.10. Counterparts. This Agreement may be executed by one or more
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument and shall become effective as
provided in Section 7.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
SECTION 7.11. Headings. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.12. Jurisdiction; Consent to Service of Process. Each party
hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient forum and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form
16
of mail), postage prepaid, to applicable party at the address specified in
Section 7.01 or at such other address of which the parties hereto shall
have been notified pursuant thereto.
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 7.12 any punitive damages.
SECTION 7.13. Termination. This Agreement shall terminate and the
Security Interest shall be automatically released, all without delivery of any
instrument or performance of any act by any party, (a) when all the Obligations
have been paid in full, the Lenders have no further commitment to lend, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further commitment
to issue Letters of Credit under the Credit Agreement, at which time the
Collateral Agent shall execute and deliver to the Grantors, at the Grantors'
expense, all Uniform Commercial Code termination statements and similar
documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent, (b) upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement to any Person (unless
such sold Collateral is to a Person that is required to pledge such Collateral
to the Collateral Agent pursuant to Section 5.11 of the Credit Agreement) or (c)
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.01(d) of the
Credit Agreement. A Subsidiary Grantor shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Grantor shall be automatically released in the event that all the
capital stock of such Subsidiary Grantor shall be sold, transferred or otherwise
disposed of to a Person that is not an Affiliate of JCI in accordance with the
terms of the Credit Agreement.
SECTION 7.14. Additional Grantors. Pursuant to Section 5.11 of the Credit
Agreement, certain Domestic Subsidiaries of JCI are required to become
Subsidiary Grantors hereunder. Upon execution and delivery by the Collateral
Agent and such Domestic Subsidiary of an instrument in the form of Annex 2
hereto, such Domestic Subsidiary shall become a Subsidiary Grantor hereunder
with the same force and effect as if originally named as a Subsidiary Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
JAFRA COSMETICS INTERNATIONAL, INC.,
by ______________________________
Name:
Title:
17
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by ______________________________
Name:
Title:
by ______________________________
Name:
Title:
SCHEDULE I
to the Security Agreement
SUBSIDIARY GRANTORS
SCHEDULE II
to the Security Agreement
LICENSES
SCHEDULE III
to the Security Agreement
PATENTS
SCHEDULE IV
to the Security Agreement
TRADEMARKS
Annex 1
to the Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of April 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe anonyme
("Parent"), CDRJ Acquisition Corporation (to be renamed Jafra Cosmetics
International, Inc.), a Delaware corporation ("JCI"), Jafra Cosmetics
International, S.A. de C.V., a sociedad anonima de capital variable organized
under the laws of the United Mexican States ("JCISA" and together with JCI, the
"Borrowers"), the lenders from time to time party thereto (the "Lenders"), the
Issuing Bank (as defined therein), Credit Suisse First Boston, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), as
swingline lender and as Collateral Agent, and (b) the JCI Guarantee Agreement
dated as of April 30, 1998 (as amended, supplemented or otherwise modified from
time to time, the "JCI Guarantee Agreement") between JCI and the Collateral
Agent.
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Security Agreement, dated as of April 30, 1998,
as amended, modified or supplemented from time to time, among JCI, the
Subsidiary Grantors and the Collateral Agent.
The undersigned, an Officer of JCI, hereby certifies (as of the
consummation of the Transactions and thereafter) to the Collateral Agent as
follows:
1. Names. (a) The exact corporate name of JCI, as such name appears in
its certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name JCI has had in the past
five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, JCI has not changed its
identity or corporate structure in any material way within the past year.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or
similar appellations) used by JCI or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past year:
2
(e) Set forth below is the Federal Taxpayer Identification Number of JCI:
2. Current Locations. (a) The chief executive office of JCI is located at
the address set forth opposite its name below:
Grantor Mailing Address County State
------- --------------- ------ -----
(b) Set forth below opposite the name of JCI are all locations where JCI
maintains any books or records relating to any Accounts:
Grantor Mailing Address County State
------- --------------- ------ -----
(c) Set forth below opposite the name of JCI are all the places of
business of JCI not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
------- --------------- ------ -----
(d) Set forth below opposite the name of JCI are all the locations where
JCI maintains any Collateral not identified above:
Grantor Mailing Address County State
------- --------------- ------ -----
(e) Set forth below opposite the name of JCI are the names and addresses
of all Persons other than JCI that have possession of any of the Collateral of
JCI:
Grantor Mailing Address County State
------- --------------- ------ -----
3. Unusual Transactions. All Accounts have been originated by the Grantor
and all Inventory has been acquired by the Grantor in the ordinary course of
business.
4. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where the Grantor has
Collateral as identified in Section 2 hereof.
5. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings pursuant to the Uniform Commercial
Code, each filing and the filing office in which such filing is to be made.
6. Stock Ownership. Attached hereto as Schedule 6 is a true and correct
list of all the duly authorized issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule
6 is each equity Investment of Parent and each Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.
3
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on
this 30th day of April, 1998.
JAFRA COSMETICS INTERNATIONAL, INC.,
by ______________________________
Name:
Title:
Annex 2
to the Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security Agreement
dated as of April 30, 1998, among JAFRA COSMETICS INTERNATIONAL,
INC. (formerly named CDRJ Acquisition Corporation), a Delaware
corporation ("JCI"), each subsidiary of JCI listed on Schedule I
thereto (each such subsidiary individually a "Subsidiary Grantor"
and collectively, the "Subsidiary Grantors"; the Subsidiary
Grantors and JCI are referred to collectively herein as the
"Grantors"), and CREDIT SUISSE FIRST BOSTON, a bank organized
under the laws of Switzerland, acting through its New York
branch, as collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined herein).
A. Reference is made to (a) the Credit Agreement dated as of April 30,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among CDRJ Investments (Lux) S.A., a Luxembourg societe
anonyme ("Parent"), JCI, Jafra Cosmetics International, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of the United Mexican
States ("JCISA" and, together with JCI, the "Borrowers"), the lenders from time
to time party thereto (the "Lenders"), the Issuing Bank (as defined therein) and
Credit Suisse First Boston, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), as swingline lender and as Collateral
Agent and (b) the JCI Guarantee Agreement dated as of April 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "JCI
Guarantee Agreement"), between JCI and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of the Security Agreement provides that additional Domestic
Subsidiaries of JCI may become Grantors under the Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Domestic Subsidiary (the "New Grantor") is executing this Supplement
in accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement, the
New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of its respective Obligations (as defined in the Security
Agreement), does hereby grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in all of the New Grantor's right, title and interest in and
to the Collateral (as defined in the Security Agreement) of the New Grantor.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include the New Grantor. The Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally,
2
general equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor. Such information, to the extent applicable, shall be
added to the Schedules to the Security Agreement.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 7. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 7.01 of the Security Agreement. All communications
and notices hereunder to the New Grantor shall be given to it care of JCI.
3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by _____________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by _____________________________
Name:
Title:
by _____________________________
Name:
Title:
SCHEDULE I
to Supplement No.___
to the Security Agreement
LOCATION OF COLLATERAL
----------------------
Description Location
----------- --------
EXHIBIT M-1
to CREDIT AGREEMENT
FORM OF TERM NOTE
$[ ] New York, New York
[ ]
FOR VALUE RECEIVED, the undersigned, [CDRJ ACQUISITION CORPORATION (to
be renamed JAFRA COSMETICS INTERNATIONAL, INC.), a Delaware corporation] [JAFRA
COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of the United Mexican States] (the "Borrower"), hereby
unconditionally promises to pay to the order of [ ] (the "Lender") and
its successors and assigns at the office of Credit Suisse First Boston located
at Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in lawful money of the
United States of America and in immediately available funds, the principal
amount of [ ] ($[ ]) or, if less, the aggregate unpaid principal amount
of all Term Loans made by the Lender to the Borrower pursuant to Section 2.02 of
the Credit Agreement.
The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at
the rates and on the dates specified in Sections 2.06 and 2.10 of such Credit
Agreement.
The holder of this Term Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of the Term
Loans and the date and amount of each payment or prepayment of principal with
respect thereto, each conversion of all or a portion thereof to another Type,
each continuation of all or a portion thereof as the same Type and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto.
Each such endorsement shall constitute prima facie evidence of the accuracy of
the information endorsed. The failure to make any such endorsement or any error
in any such endorsement shall not affect the obligations of the Borrowers in
respect of such Term Loan.
This Term Note (a) is given in connection with the Credit Agreement
dated as of April 30, 1998 (the "Credit Agreement"), among CDRJ Investments
(Lux) S.A., CDRJ Acquisition Corporation (to be renamed Jafra Cosmetics
International, Inc.), Jafra Cosmetics International, S.A. de C.V., the lenders
from time to time party thereto (the "Lenders") and Credit Suisse First Boston,
as administrative agent for the Lenders, swingline lender and collateral agent,
(b) is subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Term Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Term Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Term Note shall become, or may be declared to be, immediately due and payable,
all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Term Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind with respect to
matters relating to this Term Note.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
2
THIS TERM NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS TERM NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[CDRJ ACQUISITION CORPORATION (to be renamed
JAFRA COSMETICS INTERNATIONAL, INC.)] [JAFRA
COSMETICS INTERNATIONAL, S.A. DE C.V.],
by __________________________________
Name:
Title:
Schedule A
to Term Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
----------------------------------------------------------------------------------------------------------
Amount of ABR Amount Converted to Amount of Principal of Amount of ABR Loans
Date Loans ABR Loans ABR Loans Repaid Converted to Eurodollar Loans
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Unpaid Principal Balance Notation Made
Date of ABR Loans By
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Schedule B
to Term Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
------------------------------------------------------------------------------------------------------------------------------------
Amount of
Eurodollar
Amount of Amount Converted Interest Period and Amount of Principal Loans Unpaid Principal
Eurodollar to Eurodollar Eurodollar Rate with of Eurodollar Loans Converted to Balance of Eurodollar
Date Loans Loans Respect Thereto Repaid ABR Loans Loans
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Notation Made
Date By
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EXHIBIT M-2
to CREDIT AGREEMENT
FORM OF
REVOLVING NOTE
$[ ] New York, New York
[ ]
FOR VALUE RECEIVED, the undersigned, [CDRJ ACQUISITION CORPORATION (to
be renamed JAFRA COSMETICS INTERNATIONAL, INC.), a Delaware corporation] [JAFRA
COSMETICS INTERNATIONAL, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of the United Mexican States] (the "Borrower"), hereby
unconditionally promises to pay to the order of [ ] (the "Lender") and
its successors and assigns, at the office of Credit Suisse First Boston located
at Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or as otherwise provided in
the Credit Agreement, as hereinafter defined, in lawful money of the United
States and in immediately available funds, the principal amount of [ ]
($[ ]) or, if less, the aggregate unpaid principal amount of the Revolving Loans
made by the Lender to the Borrower pursuant to Section 2.02 of the Credit
Agreement; provided, however, that with respect to any such Revolving Loan
denominated in an Alternative Currency, the Borrower shall make all payments of
principal and interest on the dates specified above therefor in such Alternative
Currency.
The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at
the rates and on the dates specified in Sections 2.06 and 2.10 of such Credit
Agreement.
The holder of this Revolving Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Type, currency
and amount of the Revolving Loans and the date and amount of each payment or
prepayment of principal with respect thereto, each conversion of all or a
portion thereof to another Type, each continuation of all or a portion thereof
as the same Type and, in the case of Eurocurrency Revolving Loans, the length of
each Interest Period with respect thereto. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
The failure to make any such endorsement or any error in any such endorsement
shall not affect the obligations of the Borrowers in respect of such Revolving
Loan.
This Revolving Note (a) is given in connection with the Credit
Agreement dated as of April 30,1998 (the "Credit Agreement"), among CDRJ
Investments (Lux) S.A., CDRJ Acquisition Corporation (to be renamed Jafra
Cosmetics International, Inc.), Jafra Cosmetics International, S.A. de C.V., the
lenders from time to time party thereto (the "Lenders") and Credit Suisse First
Boston, as administrative agent for the Lenders, swingline lender and collateral
agent, (b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as provided in
the Credit Agreement. This Revolving Note is guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Revolving Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Revolving Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.
2
All parties now and hereafter liable with respect to this Revolving
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind with
respect to matters relating to this Revolving Note.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS REVOLVING NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS REVOLVING NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[CDRJ ACQUISITION CORPORATION
(to be renamed JAFRA COSMETICS INTERNATIONAL,
INC.)] [JAFRA COSMETICS INTERNATIONAL, S.A. DE
C.V.],
by
_____________________________
Name:
Title:
Schedule A
to Revolving Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS (DOLLAR-DENOMINATED ONLY)
----------------------------------------------------------------------------------------------------------
Amount of ABR Amount Converted to Amount of Principal of Amount of ABR Loans
Date Loans ABR Loans ABR Loans Repaid Converted to Eurocurrency Loans
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Unpaid Principal Balance Notation Made
Date of ABR Loans By
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Schedule B
to Revolving Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EUROCURRENCY LOANS
------------------------------------------------------------------------------------------------------------------------------------
Amount of
Amount of and Eurocurrency
Currency of Amount Converted Interest Period and Amount of Principal Loans Unpaid Principal
Eurocurrency to Eurocurrency Eurocurrency Rate with of Eurocurrency Loans Converted to Balance of Eurocurrency
Date Loans Loans Respect Thereto Repaid ABR Loans Loans
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Date By
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EXHIBIT N-1 TO
CREDIT AGREEMENT
[DEBEVOISE & ▇▇▇▇▇▇▇▇ LETTERHEAD]
April 30, 1998
Credit Suisse First Boston,
Administrative Agent and Collateral Agent
under the Credit Agreement referred to below
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Each of the Lenders named in Annex A
attached hereto that are parties
to the Credit Agreement referred
to below
We have acted as special counsel to CDRJ Investments (Lux) S.A., a
Luxembourg societe anonyme (the "Parent"), CDRJ Acquisition Corporation, a
Delaware corporation to be renamed Jafra Cosmetics International, Inc. ("JCI"),
and Jafra Cosmetics International, S.A. de C.V., a sociedad anonima de capital
variable organized under the laws of the United Mexican States ("JCISA" and,
with JCI, the "Borrowers"), in connection with (a) the preparation, and the
-
execution and delivery today, of (i) the Credit Agreement, dated as of April 30,
-
1998 (the "Credit Agreement"), among the Parent, JCI, JCISA, the several banks
and other financial institutions parties thereto named on the signature pages
thereof (collectively, the "Lenders"), Credit Suisse First Boston, as
administrative agent for the Lenders (in such capacity, the "Administrative
Credit Suisse First Boston,
Administrative Agent
and Collateral Agent
Each of the Lenders
named in Annex A -2- April 30, 1998
Agent") and as Collateral Agent (the "Collateral Agent", and together with the
Lenders, the "Secured Parties") and (ii) the other Loan Documents (as
--
hereinafter defined), and (b) the consummation today of the Merger (as
-
hereinafter defined) and the other transactions contemplated by the Loan
Documents.
The opinions expressed below are furnished to you pursuant to
subsection 4.02(a)(i), of the Credit Agreement. Unless otherwise defined herein
or in any Schedule hereto, capitalized terms defined in the Credit Agreement are
used herein as defined therein. As used herein, the following terms shall have
the following meanings: The term "DGCL" means the General Corporation Law of
the State of Delaware. The term "Subsidiary Parties" means those Subsidiaries
of the Parent listed in Schedule 1 hereto. The term "Loan Parties" means the
----------
Parent, JCI, JCISA and the Subsidiary Parties. The term "Material Adverse
Effect" means a material adverse effect on the business, operations, property or
condition (financial or otherwise) of Parent and its Subsidiaries taken as a
whole. The term "UCC" means the Uniform Commercial Code as in effect in the
State of New York on the date hereof.
In arriving at the opinions expressed below,
(1) we have examined and relied on the following (including, but not
limited to, the representations and warranties contained therein):
(a) originals, or copies certified or otherwise identified to our
satisfaction, of (i) the Credit Agreement, (ii) the forms of Notes to be
- --
issued pursuant to the Credit Agreement, (iii) the Parent Guarantee
---
Agreement, dated as of April 30, 1998 (the "Parent Guarantee Agreement")
between the Parent and the Collateral Agent, the JCI Guarantee Agreement,
dated as of April 30, 1998 (the "JCI Guarantee Agreement"), between JCI and
the Collateral Agent, the JCISA Guarantee Agreement, dated as of April 30,
1998 (the "JCISA Guarantee Agreement"), between JCISA and the
Collateral Agent, and the JCISA Subsidiary Guarantee Agreement, dated as
of April 30, 1998 (the "JCISA Subsidiary Guarantee Agreement" and
collectively with the others, the "Guarantee Agreements"), among each
Subsidiary of JCISA named on Schedule I thereto, (iv) the Security
--
Agreement, dated as of April 30, 1998 (the "Security Agreement"), between
JCI and the Collateral Agent, (v) the Pledge Agreement,
-
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -3- April 30, 1998
dated as of April 30, 1998 (the "Pledge Agreement"), among the Parent, CDRJ
North Atlantic (Lux) S. a ▇.▇., CDRJ Latin America Holding Company B.V.,
Latin Cosmetics Holdings B.V., Southern Cosmetics Holdings B.V., CDRJ
Mexico Holding Company B.V., JCI, JCISA, the Subsidiary Pledgors named on
Schedule I thereto, and the Collateral Agent and (vi) the Indemnity,
--
Subrogation and Contribution Agreement, dated as of April 30, 1998 (the
"Contribution Agreement"), among JCISA, each Subsidiary of JCISA listed on
Schedule I thereto and the Collateral Agent (the Contribution Agreement,
together with the Credit Agreement, the Guarantee Agreements, the Security
Agreement and the Pledge Agreement, the "Loan Documents"),
(b) originals or copies certified or otherwise identified to our
satisfaction of the contracts and agreements to which the Parent, JCI or
JCISA is today a party that are listed in Schedule 2 hereto (collectively,
----------
the "Contracts"),
(c) such corporate documents and records of the Parent and its
Subsidiaries and such other instruments and certificates of public
officials, officers and representatives of the Parent and its Subsidiaries
and other Persons as we have deemed necessary or appropriate for the
purposes of this opinion; and
(2) we have made such investigations of law as we have deemed appropriate
as a basis for this opinion.
In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (a) the authenticity
-
of all documents submitted to us as originals, (b) the genuineness of all
-
signatures, (c) the conformity to authentic originals of documents submitted to
-
us as certified, conformed or photostatic copies, (d) the effectiveness of the
-
Merger, and (e) the due authorization, execution and delivery of each of the
-
Loan Documents by each party thereto (other than JCI).
Based upon and subject to the foregoing and the qualifications
hereinafter set forth, we are of the opinion that:
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -4- April 30, 1998
1. JCI (i) is duly incorporated, validly existing and in good
-
standing under the laws of the State of Delaware, and (ii) has the corporate
--
power and authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged.
2. JCI has the corporate power and authority to make, deliver and
perform its obligations under each of the Loan Documents to which it is a party
and to borrow under the Credit Agreement. JCI has taken all necessary corporate
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party, and to authorize its borrowings on the terms
and conditions of the Credit Agreement. Except for (a) any consents,
-
authorizations, approvals, notices and filings that have been obtained or made,
(b) filings in the United States Patent and Trademark Office, the United States
-
Copyright Office, and appropriate offices under any applicable state trademark
laws, (c) filings and other actions to perfect the security interests created by
-
the Security Agreement or the Pledge Agreement, and (d) those consents,
-
authorizations, approvals, notices and filings that if not made, obtained or
done, would not, to our knowledge, have a Material Adverse Effect, to our
knowledge no consent or authorization of, approval by, notice to, or filing
with, any Federal, New York State or Delaware (insofar as the DGCL is concerned)
court or governmental authority is required to be obtained or made on or prior
to the date hereof by the Parent, JCI, JCISA or any Subsidiary Party in
connection with its execution, delivery or performance of the Loan Documents to
which it is a party or with the borrowings under the Credit Agreement on the
Closing Date, or in connection with the validity or enforceability against it of
the Loan Documents to which it is a party.
3. The Credit Agreement and the other Loan Documents to which JCI is
a party have been duly executed and delivered on behalf of JCI. The Credit
Agreement constitutes the legal, valid and binding obligation of the Parent, JCI
and JCISA, enforceable against each such Person in accordance with its terms.
Each of the Loan Documents (other than the Credit Agreement) constitutes the
legal, valid and binding obligation of each Loan Party party thereto, as the
case may be, enforceable against each such Person in accordance with its
respective terms.
In giving the opinion set forth in this paragraph 3, we have assumed,
with your permission, that (a) each Subsidiary Party is duly incorporated or
-
organized and
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -5- April 30, 1998
validly existing under the laws of its state or other jurisdiction of
incorporation or organization, has the requisite corporate or other power and
authority to execute, deliver and perform the Loan Documents, has duly
authorized the Loan Documents to which it is a party and has duly executed and
delivered such Loan Documents; (b) the Parent is duly incorporated or organized
-
and validly existing under the laws of Luxembourg, has the requisite corporate
or other power and authority to execute, deliver and perform the Loan Documents
to which it is a party, has duly authorized the Loan Documents to which it is a
party and has duly executed and delivered the Loan Documents to which it is a
party; and (c) JCISA is duly incorporated or organized and validly existing
-
under the laws of the United Mexican States, has the requisite corporate or
other power and authority to execute, deliver and perform the Loan Documents to
which it is a party, has duly authorized the Loan Documents to which it is a
party and has duly executed and delivered the Loan Documents to which it is a
party.
4. The execution and delivery by each Loan Party of the Loan
Documents to which it is a party, the performance by such Loan Party of its
obligations thereunder, the borrowings by JCI and JCISA under the Credit
Agreement on the Closing Date and the creation and perfection of any security
interest upon or with respect to any of the properties of JCI, all as provided
therein, (x) will not violate (i) the certificate of incorporation and bylaws of
- -
JCI, (ii) any existing Federal, New York State or DGCL law, rule or regulation
--
applicable to any Loan Party, (iii) any existing judgment, order or decree known
---
to us of any arbitrator, court or other governmental authority binding upon any
Loan Party or to which any Loan Party is subject or (iv) any Contract to which
--
any Loan Party is a party, except, in the case of clauses (ii), (iii) and (iv),
for such violations that to our knowledge would not have a Material Adverse
Effect, and (y) will not result in, or require, the creation or imposition of
-
any Lien (other than under the Loan Documents) on any of the properties or
revenues of any Loan Party, by operation of any law, rule, regulation, judgment,
order or decree referred to in the preceding clause (x) or pursuant to any such
Contract.
5. (a) The provisions of the Security Agreement are effective to
create valid security interests in favor of the Collateral Agent, for the
benefit of the Secured Parties, in all of the collateral described therein that
is of the type in which a security interest can be created under Article 9 of
the UCC (the "Article 9 Collateral"), to the extent the UCC is applicable to the
creation of such security interests.
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -6- ▇▇▇▇▇ ▇▇, ▇▇▇▇
(▇) Upon the delivery of the Article 9 Collateral in which a security
interest may be perfected by possession pursuant to the UCC to (and provided
that the same remains in the possession of) the Collateral Agent in the State of
New York, the Collateral Agent will have a perfected security interest, for the
benefit of the Secured Parties, in such Article 9 Collateral.
(c) The Collateral Agent will have a valid and perfected security
interest, for the benefit of the Secured Parties, in the Pledged Stock (as
defined in the Pledge Agreement) upon the execution and delivery of the Pledge
Agreement, and the delivery of certificates representing such Pledged Stock
either in bearer form or registered form (issued or endorsed in each case in the
name of the Administrative Agent or in blank) to (and retention of control (as
defined in Section 8-106 of the UCC) thereof by) the Collateral Agent. Assuming
the Collateral Agent (i) acquires its security interest in such Pledged Stock
-
without notice of any adverse claim (as defined in Sections 8-102(a)(1) and 8-
105 of the UCC) and (ii) takes control (as so defined) of each certificate
--
representing such Pledged Stock, the Collateral Agent will acquire its security
interest in such Pledged Stock free of adverse claims (as so defined) governed
by the UCC.
6. None of the Parent or any of its Subsidiaries is (a) an
"investment company" required to register as such under the Investment Company
Act of 1940, as amended, within the meaning of such Act or (b) a "holding
company" as defined in, or otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
7. Neither JCI nor JCISA is subject to regulation under any Federal
or New York State statute or regulation (other than Regulation X of the Board of
Governors of the Federal Reserve System) that limits its ability to borrow under
the Credit Agreement.
8. The making of Loans to the Borrowers and the application of the
proceeds thereof by the Borrowers pursuant to the terms of the Credit Agreement
will not violate Regulation U of the Board of Governors of the Federal Reserve
System.
Our opinion set forth in paragraphs 2, 3, and 5 above is subject to
the effects of (a) bankruptcy, insolvency, fraudulent conveyance, fraudulent
-
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -7- April 30, 1998
or remedies generally, and (b) general equitable principles (whether considered
-
in a proceeding in equity or at law). Our opinion set forth in paragraphs 2, 3,
and 5 above is also subject to the effects of (i) an implied covenant of good
-
faith, reasonableness and fair dealing, (ii) applicable state laws and
--
interpretations which may affect the validity or enforceability of certain
remedies provided for in the Loan Documents, which limitations, however, do not,
in our opinion, make the remedies provided for therein inadequate for the
practical realization of the rights and benefits intended to be provided thereby
(subject to the other qualifications expressed herein), and (iii) limitations on
---
enforceability of rights to indemnification under Federal or state securities
laws or regulations or to the extent any indemnification would violate public
policy. We express no opinion as to (1) the enforceability of any waiver of any
-
statutory right, (2) Section 9.14 of the Credit Agreement, Section 19 of the
-
JCISA Subsidiary Guarantee Agreement, Section 7.12 of the Security Agreement or
Section 21 of the Pledge Agreement, and any similar provision in any other Loan
Document, insofar as such provisions relate to the subject matter jurisdiction
of the United States District Court for the Southern District of New York to
adjudicate any controversy, (3) the waiver of inconvenient forum set forth in
-
Section 9.14 of the Credit Agreement, Section 19 of the JCISA Subsidiary
Guarantee Agreement, Section 7.12 of the Security Agreement or Section 21 of the
Pledge Agreement, and any similar provision in any Loan Document, or (4) the
-
enforceability of Section 9.18 or 9.21 of the Credit Agreement.
We express no opinion as to the validity or perfection of any security
interest, or the validity, binding effect or enforceability of any Loan Document
to the extent that such Loan Document grants or purports to grant a security
interest, (i) that is not governed by the UCC (including but not limited to any
-
such security interest with respect to (x) shares of stock or other rights or
-
interests in any Foreign Subsidiary, (y) Copyrights, Copyright Licenses,
--
Patents, Patent Licenses, Trademarks and Trademark Licenses, as such terms are
defined in the Security Agreement, and (z) any deposit accounts and insurance
-
policies), (ii) in any Pledged Stock that is not a "certificated security" (as
--
such term is defined in Section 8-102(a)(4) of the UCC), (iii) in any collat-
---
eral of a type described in Section 9-401(1)(a) or (b) of the UCC, or (iv) in
--
any collateral that contains or is governed by provisions that purport to void
or prohibit the assignment thereof, or that are otherwise violated, if it is
assigned pursuant to the Security Agreement or the Pledge Agreement, including,
without limitation, any Accounts (as defined in the Security Agreement) the
obligor for which is the United States of
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -8- April 30, 1998
America or any department, agency or instrumentality thereof. No security
interest will exist with respect to after-acquired property of the Parent or any
Subsidiary until such party has rights therein within the meaning of Section 9-
203 of the UCC. We express no opinion herein as to the title or any other
interest of the Parent, JCI, JCISA or any Subsidiary in or to any of the
collateral described in the Loan Documents.
Except as set forth in paragraph 5 above, we express no opinion as to
the validity or perfection of the security interests purported to be created by
the Loan Documents. We express no opinion as to the validity or perfection of
such security interests:
(i) with respect to collateral sold, exchanged or otherwise
disposed of by a Loan Party;
(ii) to the extent such security interests may be affected by (A)
-
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code, under which a bankruptcy
court has discretion as to the extent to which post-petition proceeds may
be subject to a lien arising from a security agreement entered into by the
debtor before the commencement of the case, or (B) Section 547(b) of the
-
United States Bankruptcy Code, relating to the power to avoid a preference;
(iii) with respect to proceeds, to the extent of limitations under
Section 9-306 of the UCC on the perfection of a security interest in
proceeds;
(iv) as to any collateral acquired by the party granting such
security interest more than four months after such party changes its name,
identity or corporate structure so as to make the relevant financing
statements seriously misleading, unless new appropriate financing
statements indicating the new name, identity or corporate structure of such
party are properly filed before the expiration of such four months; and
(v) as to any securities, to the extent of limitations under
Section 9-115 of the UCC on the creation, perfection and continuation of a
security interest therein.
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -9- April 30, 1998
We call to your attention that Sections 8-105 and 8-107 of the UCC may in
certain circumstances limit the rights of a secured party in respect of any
unauthorized endorsement with respect to certificated securities constituting
collateral under the Loan Documents not registered in the name of or issued to
the Collateral Agent and not originally issued in bearer form.
We express no opinion as to the priority of the security interests
purported to be created by the Loan Documents. Our opinion in paragraph 5 above
with respect to the Pledged Stock is subject to the effects of the attachment
provisions of Section 324 of the DGCL (to the extent applicable) and comparable
provisions of the law of any jurisdiction (other than the State of Delaware)
where an issuer of Pledged Stock may be organized. In rendering the opinion set
forth in paragraph 5(b) above, we have assumed, with your consent, that all
Article 9 Collateral in which a security interest may be perfected only by
possession will be held at all times by the Collateral Agent in the State of New
York. In rendering the opinion set forth in paragraph 5(c) above, we have
assumed, with your consent, that all of the Pledged Stock will be held at all
times by the Collateral Agent in the State of New York.
We express no opinion as to the validity, binding effect or
enforceability of any provision of the Loan Documents that purports (i) to
-
waive, release or vary any right of, or any duties owing to, any Loan Party, to
the extent limited by Section 1-102(3) or 9-501(3) of the UCC or other
provisions of applicable law, (ii) to prohibit any Loan Party from transferring
--
its respective rights in the collateral described in the Loan Documents or any
proceeds thereof, as a result of the operation of Section 9-311 of the UCC, or
(iii) to permit the Collateral Agent to vote or otherwise exercise any rights
---
with respect to any of the collateral under the Loan Documents absent compliance
with the requirements of applicable laws and regulations as to the voting of or
other exercise of rights with respect to such collateral.
We express no opinion as to the effect of, or compliance with, any
Federal or State laws regarding fraudulent transfers or conveyances, or
provisions of Delaware or New York law restricting dividends, loans or other
distributions by a corporation to or for the benefit of its stockholders, or any
Federal or State securities laws, rules or regulations, including without
limitation as to the effect thereof on the validity, binding effect or
enforceability of any of the Loan Documents.
Credit Suisse First Boston,
Administrative Agent
and collateral Agent
Each of the Lenders
named in Annex A -10- April 30, 1998
We express no opinion as to the laws of any jurisdiction other than
the laws of the State of New York, the General Corporation Law of the State of
Delaware and those Federal laws of the United States of America which, in our
experience, are generally applicable to transactions of this type. In
particular (and without limiting the generality of the foregoing) we express no
opinion as to the laws of any country (other than the Federal laws of the United
States of America) or as to the effect of such laws (whether limiting,
prohibitive or otherwise) on any of the rights or obligations of any Loan Party
or of any other party to or beneficiary of any of the Loan Documents. In giving
the foregoing opinion, we express no opinion as to the effect (if any) of any
law of any jurisdiction (except the State of New York) in which any Lender is
located which limits the rate of interest that such Lender may charge or
collect.
The opinions expressed herein are solely for your benefit and, without
our prior consent, neither our opinion nor this opinion letter may be disclosed
publicly to or relied upon by any other person.
Very truly yours,
Annex A
-------
LENDERS
-------
Credit Suisse First Boston
The Chase Manhattan Bank
Bank of America National Trust & Savings Association
The Bank of Nova Scotia
Marine Midland Bank
Union Bank of California, N.A.
The Bank of New York
Schedule 1
----------
SUBSIDIARY PARTIES
------------------
1. Pledgors
--------
CDRJ North Atlantic (Lux) S. a ▇.▇.
CDRJ Latin America Holding Company B.V.
Latin Cosmetics Holdings B.V.
Regional Cosmetics Holdings B.V.
Southern Cosmetics Holdings B.V.
CDRJ Mexico Holding Company B.V.
2. Mexican Subsidiary Guarantors
-----------------------------
Reday, S.A. de C.V.
Distribuidora Venus, S.A. de C.V.
Dirsamex, S.A. de C.V.
Qualifax, S.A. de C.V.
Jafra Cosmetics, S. de ▇.▇. de C.V.
Consultoria Jafra, SA. de C.V.
Schedule 2
----------
CONTRACTS
---------
1. Acquisition Agreement, dated as of January 26, 1998, by and between ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), Parent and CDRJ Holding Company
("CaymanCo"), as amended by the Letter Agreement, dated March 23, 1998,
from ▇▇▇▇▇▇▇▇ to Parent and CaymanCo, and Amendment No. 2, dated as of
April 30, 1998, among ▇▇▇▇▇▇▇▇, Parent, CaymanCo, Jafra Cosmetics
International, Inc., a California corporation ("Jafra, Inc."), and JCI.
2. Certificate of Merger, dated April 30, 1998, of Jafra, Inc., and JCI.
3. Indenture, dated as of April 30, 1998, among JCI and JCISA, as Issuers
(the "Issuers"), Parent and State Street Bank and Trust Company, as
Trustee, relating to the Issuers' 11 3/4 Senior Subordinated Notes due
2008.
EXHIBIT N.2
to CREDIT AGREEMENT
[LETTERHEAD OF ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, S.C. APPEARS HERE]
April 30, 1998
Credit Suisse First Boston,
as Administrative Agent,
Issuing Bank and Collateral Agent
Eleven Madison Avenue
New York, N.Y. 10010;
The Chase Manhattan Bank,
as Lender under the Fee and
Guarantee Agreement
referred to below; and
The Lenders party to the Credit Agreement
referred to below (all of the addressees
hereof, collectively, the "Creditors")
---------
Ladies and Gentlemen:
We have acted as special Mexican counsel to Jafra Cosmetics International,
S.A. de C.V., a sociedad anonima de capital variable organized under the laws of
the United Mexican States (the "Borrower"), in connection with the execution and
--------
delivery of, and the consummation of the transactions contemplated by, the
Credit Agreement dated as of April 30, 1998 (the "Credit Agreement"), among CDRJ
----------------
Investments (Lux) S.A., a Luxembourg societe anonyme ("Parent"), Jafra Cosmetics
------
International, Inc., a Delaware corporation ("JCI"), the Borrower, the financial
---
institutions party thereto as lenders (the "Lenders"), the Issuing Bank (as
-------
defined therein) and Credit Suisse First Boston, as administrative agent (in
such capacity, the "Administrative Agent"), as swingline lender and as
--------------------
collateral agent (in such capacity, the "Collateral Agent"). This opinion is
----------------
delivered pursuant to Section 4.02(a)(ii) of the Credit Agreement. Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents:
2
1. a copy of the estatutos sociales of the Borrower and each
------------------
JCISA Subsidiary Guarantor;
2. resolutions of the Extraordinary Shareholders' Meeting of
the Borrower and of the Ordinary Shareholders' Meeting of
each JCISA Subsidiary Guarantor authorizing the Loan
Documents and certain persons to execute and deliver the
Loan Documents to which it is a party;
3. the Credit Agreement;
4. the JCISA Guarantee Agreement dated as of April 30, 1998 by
and between each of the entities specified to be signatory
thereto and the Collateral Agent;
5. the JCISA Subsidiary Guarantee Agreement dated as of April
30, 1998 by and between each of the entities specified to be
signatory thereto and the Collateral Agent;
6. the Pledge Agreement dated as of April 30, 1998 by and
between each of the entities specified to be signatory
thereto and the Collateral Agent;
7. the Indemnity, Subrogation and Contribution Agreement dated
as of April 30, 1998 by and between each of the entities
specified to be signatory thereto and the Collateral Agent;
8. the mortgages dated April 30, 1998 granted by Reday, S.A. de
C.V. in respect of certain real estate owned thereby in
favor of the Collateral Agent (the "Mexican Mortgages"); and
-----------------
9. the Fee and Guarantee Agreement dated the date hereof
entered into by and between The Chase Manhattan Bank
("Chase"), JCI, the Borrower and the Parent (the "Fee
----- ---
and Guarantee Agreement")
-----------------------
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents, and have
3
made such other investigations, as we have deemed necessary for the purpose of
this opinion. We have assumed, without any independent investigation or
verification of any kind, (i) the due authorization, execution and delivery by
the Administrative Agent, the Collateral Agent, the Arrangers, the Syndication
Agent, the Lenders, JCI, the Parent, Chase and any other non-Mexican party, of
the Loan Documents (which term shall include for purposes of this opinion, the
Fee and Guarantee Agreement) as well as the power and authority and legal right
of the Administrative Agent, the Collateral Agent, the Arrangers, the
Syndication Agent, the Lenders, JCI, the Parent, Chase and any other non-Mexican
party under all applicable laws and regulations to enter into, execute, deliver
and perform its obligations under the Loan Documents (including, without
limitation, the Credit Agreement); (ii) the validity, binding effect and
enforceability of the Loan Documents under the laws of the State of New York of
the United States of America or any laws other than the laws of the United
Mexican States ("Mexico"); (iii) the genuineness of all signatures and the
------
authenticity of all opinions, documents and papers submitted to us and (iv) that
copies of all opinions, documents and papers submitted to us are complete and
conform to the originals thereof.
As to questions of fact material to the opinions hereafter expressed, we
have, when relevant facts were not independently established by us, relied upon
certificates of the Borrower and/or the JCISA Subsidiary Guarantors or their
respective officers.
Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that:
1. The Borrower and each JCISA Subsidiary Guarantor (a) is a corporation
duly organized and validly existing under the laws of Mexico, (b) has all
requisite corporate power and authority to own its property and assets and to
carry on its business as presently conducted and as proposed to be conducted,
and (c) has the corporate power and authority to execute, deliver and perform
its obligations under each of the Loan Documents to which it is a party and, in
the case of the Borrower, to borrow under the Credit Agreement.
2. As evidenced by the stock registry book of each such company, all of
the shares representing the capital stock of the Borrower and of each JCISA
Subsidiary Guarantor have been duly and validly authorized and issued, are fully
paid and non-assessable and, except as set forth on Schedule 3.08 to the Credit
Agreement, and with respect to each JCISA Subsidiary Guarantor, are owned by the
Borrower, directly or
4
indirectly, free and clear of all Liens (other than Liens created under the Loan
Documents). To the best of our knowledge, after due inquiry, no authorized but
unissued or treasury shares of capital stock of any Subsidiary are subject to
any option, warrant, right to call or commitment of any kind. To the best of our
knowledge, after due inquiry, none of the Borrower or any Subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any securities convertible into or
for shares of its capital stock. To the best of our knowledge, after due
inquiry, none of the Borrower or any JCISA Subsidiary Guarantor is a party to
any agreement restricting the transfer or voting of any shares of any capital
stock of the Borrower or any JCISA Subsidiary Guarantor (except as contemplated
in the Loan Documents).
3. The execution, delivery and performance of each of the Mortgages and
the Loan Documents by the borrower and each JCISA Subsidiary Guarantor party
thereto, the borrowing thereunder, the issuances of the Letters of Credit and
the creation of the security interests contemplated thereby (a) have been duly
authorized by all requisite corporate and, if necessary, stockholder action of
the Borrower and each JCISA Subsidiary Guarantor and (b) will not (i) violate
(A) any provision of the estatutos sociales of the Borrower or any JCISA
------------------
Subsidiary Guarantor, (B) any law, statute, rule or regulation applicable to the
Borrower or any JCISA Subsidiary Guarantor or their properties or (C) any
provision of any indenture or other material agreement or other material
instrument known to us to which the Borrower or any JCISA Subsidiary Guarantor
is a party or by which any of them or any of their property is bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument known to us or (iii) result in
the creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the Borrower or any JCISA Subsidiary
Guarantor (other than any Lien created under the Mortgages and the Loan
Documents).
4. Each Loan document to which it is a party has been duly executed and
delivered by each of the Borrower and the JCISA Subsidiary Guarantors, as
applicable, and constitutes the legal, valid and binding obligation of each of
such company, in each case enforceable against each such company in accordance
with its respective terms (subject to the qualifications set forth below).
5
5. Each of the Loan Documents to which it is a party is in proper legal
form for the enforcement thereof against each of the Borrower and the JCISA
Subsidiary Guarantors under the laws of Mexico, and to ensure the legality,
validity, enforceability, priority or admissibility in evidence of each of the
Loan Documents is not necessary that it or any other document be filed,
registered or recorded with, or executed or notarized before, any court or other
authority in Mexico or that any registration charge or stamp or similar tax be
paid on or in respect of the Loan Documents, except in respect of the
notarization and recordation of the Mortgages with the Public Registry of
Property and Commerce corresponding to the location of the property.
6. (a) None of the Borrower or the JCISA Subsidiary Guarantors are in
default, nor any event has occurred which with notice or lapse of time or both
would constitute such a default, in the due performance or observance of any
term, covenant, or condition contained in (i) any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to us, if any, to
which it is a party or by which it is bound or to which any of its property,
revenues or assets is subject or (ii) the Mortgages and the Loan Documents and
(b) none of the Borrower or the JCISA Subsidiary Guarantors are in violation of
any law, ordinance, government rule or regulation or judgment or order known to
us which it or its property, revenues or assets may be subject.
7. There are not any actions, suits or proceedings by or before any
Governmental Authority now pending or, to our knowledge, threatened against or
affecting the Borrower or any JCISA Subsidiary Guarantor or any business,
property or rights of any such person (a) that involve any of the Loan Documents
or the transactions contemplated thereby or (b) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
8. No action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be required in connection
with the execution, delivery and performance of the Mortgages and the Loan
Documents by the Borrower and the JCISA Subsidiary Guarantors or the
consummation of the transactions contemplated thereby, other than (i) the
recordation of the Mortgages and (ii) such authorizations and approvals as have
already been obtained and are in full force and effect.
6
9. It is not necessary under the laws of Mexico (i) to enable any of the
Creditors (INCLUDING CHASE) to enforce its respective rights under the Loan
---------------
Documents or (ii) by reason of their enforcement, that any of them should be
licensed, qualified or entitled to carry on business in Mexico. None of the
Creditors will be deemed resident, domiciled, carrying on business or subject to
taxation in Mexico solely by reason of its respective execution, delivery,
performance or enforcement of the Loan Documents to which it is a party.
10. The Mortgages are in proper form under applicable laws of Mexico (a)
(i) to be accepted for recording by the Public Registry of Commerce of Mexico
City, Federal District, and Naucalpan, Estado de Mexico, as the case may be, and
(ii) to be enforceable against the mortgagor named therein in accordance with
their respective terms, and (b) (i) to create and constitute valid first place,
legal, binding and enforceable mortgage liens on the real property described
therein (the "Real Property") and on the personal property, identified therein
-------------
(the "Personal Property").
-----------------
11. The recordation of Mortgages with the public registries described
above are the only actions, recordings or filings necessary to perfect the
Mortgages under Mexican law.
12. The transfer of all or any portion of the Mortgaged Property in
connection with the exercise of any remedy under the Mortgages, including,
without limitation, by way of judicial foreclosure, will not restrict, affect or
impair the liability of the Borrower and each Material Subsidiary with respect
to the indebtedness secured thereby or mortgagee's rights or remedies relating
thereto, including the foreclosure or enforcement of any other security interest
or liens securing such indebtedness and the laws of Mexico do not require a
lienholder to elect to pursue its remedies either against mortgaged real
property or personal property where such lienholder holds security interests and
liens on both real and personal property of a debtor.
13. The Pledge Agreement, together (i) with possession by the Collateral
agent of the stock certificates evidencing the Mexican Pledged Securities (as
defined in the Pledge Agreement), (ii) the endorsement in guaranty (endoso en
---------
garantia) thereof in favor of the Collateral Agent and (iii) the notation
--------
thereof in the stockholders, registry book of each of the issuers of the Mexican
Pledged Securities, creates in favor of the Collateral Agent for the benefit of
the Secured parties a valid and perfected security pledge of the Pledged
Securities under Mexican law, subject to no equal or prior security interest of
any other creditor.
7
14. The Collateral Agent has the power, without naming all the Creditors
in any applicable legal proceeding, to exercise remedies under the Mortgages and
Security Agreements for the realization of any of the Mortgaged Property or the
Collateral in its own name, as collateral agent.
15. No taxes or other charges, including, without limitation, documentary
stamp taxes, mortgage or recording taxes, transfer taxes or similar charges, are
payable to Mexico to any jurisdiction therein on account of the execution or
delivery or recording or filing of the Mortgages or any of the Loan Documents or
the creation of the indebtedness evidenced or secured by any of the Loan
Documents, as applicable, except for filing or recording fees and any taxes
payable as a result of the transfer of the Mortgaged Property in the event of
foreclosure or other enforcement thereof.
16. Under the laws of Mexico, none of the Borrower or JCISA Subsidiary
Guarantors would be entitled to invoke immunity from jurisdiction, suit,
execution, attachment or other legal process in respect of any action arising
out of its obligations under the Mortgages or the Loan Documents.
17. The choice of New York law as the governing law of the Loan Documents
(except for the Mortgages which are governed by Mexican law) is a valid choice
of law.
18. Any judgment obtained in a state or Federal court sitting in the
Borough of Manhattan, City of New York, State of New York, arising out of or in
relation to the obligations of the Borrower and its Subsidiaries under the Loan
Documents (except for the Mortgages in respect of which the parties have
submitted to the jurisdiction of the courts of Mexico City, Federal District)
would be enforceable in Mexico against the Borrower pursuant to Articles 569 and
571 of the Federal Code of Civil Procedure of Mexico and Article 1347A of the
Commerce Code, which provide, inter alia, that any judgment rendered outside
Mexico may be enforced by Mexican courts, provided that:
--------
(i) such judgment is obtained in compliance with legal requirements
of the jurisdiction of the court rendering such judgment and in compliance
with all legal requirements of the Loan Documents;
(ii) such judgment is strictly for the payment of a certain sum of
money, based on an in personam (as opposed to an in rem) action;
8
(iii) service of process has been made personally on the Borrower
and/or its JCISA Subsidiary Guarantors, as the case may be, or on the
appropriate process agent;
(iv) such judgment does not violate Mexican law, public policy of
Mexico (orden publico), international treaties or agreements binding upon
Mexico or generally accepted principles of international law;
(v) the applicable procedure under the laws of Mexico with respect
to the enforcement of foreign judgments (including issuance of letters
rogatory by the competent authority of such jurisdiction requesting
enforcement of such judgment and the certification of such judgment as
authentic by the corresponding authorities of such jurisdiction in
accordance with the laws thereof) is complied with;
(vi) such judgment is final in the jurisdiction where obtained;
(vii) the action in respect of which such judgment is rendered is not
the subject matter of a lawsuit among the same parties, pending before a
Mexican court; and
(viii) the courts of such jurisdiction recognize the principles of
reciprocity in connection with enforcement of Mexican judgments in such
jurisdiction.
20. The appointment by the Borrower and the JCISA Subsidiary Guarantors of
JCI as their agent for service of process under the Credit Agreement is legal,
valid and binding.
The foregoing opinion is subject to the following qualifications:
(a) enforcement of the Loan Documents against the Borrower and/or the
JCISA Subsidiary Guarantors may be limited by bankruptcy, suspension of
payments, insolvency, liquidation, reorganization, moratorium, labor, tax and
other similar laws of general application relating to or affecting the rights of
creditors generally;
(b) in any proceedings brought in the courts of Mexico for the enforcement
of any of the Loan Documents against the Borrower and/or the JCISA Subsidiary
Guarantors, a Mexican court would apply Mexican procedural law;
9
(c) in the event that proceedings are brought in Mexico seeking
performance of the obligations of the Borrower and/or the JCISA Subsidiary
Guarantors in Mexico, pursuant to the Mexican Monetary Law, the Borrower and/or
the JCISA Subsidiary Guarantors, as the case may be, may discharge their
obligations by paying any sum due in a currency other than Mexican currency, in
Mexican currency at the rate of exchange prevailing in Mexico on the date when
payment is made, and, consequently, any currency indemnity provision of the Loan
Documents may not be enforceable in Mexico;
(d) provisions of the Agreement granting discretionary authority to any of
the Administrative Agent, the Collateral Agent, the Arrangers, the Syndication
Agent or the Lenders cannot be exercised in a manner inconsistent with relevant
facts nor defeat any requirement from a competent authority to produce
satisfactory evidence as to the basis of any determination; in addition, under
Mexican law, the Borrower and/or the JCISA Subsidiary Guarantors will have the
right to contest in court any notice or certificate of any such person or any
Lender purporting to be conclusive and binding;
(e) in the event that any legal proceedings are brought to the courts of
Mexico, a Spanish translation of the documents required in such proceedings
prepared by a court-approved translator would have to be approved by the court
after the defendant had been given an opportunity to be heard with respect to
the accuracy of the translation, and proceedings would thereafter be based upon
the translated documents;
(f) in any bankruptcy proceeding initiated in Mexico pursuant to the laws
of Mexico, labor claims, claims of tax authorities for unpaid taxes, Social
Security quotas, Workers' Housing Fund quotas and Retirement Fund quotas will
have priority over claims of the Administrative Agent, the Collateral Agent, the
Arrangers, the Syndication Agent or the Lenders;
(g) with respect to provisions contained in the Loan Documents in
connection with service of process, it should be noted that service of process
by mail does not constitute personal service of process under Mexican law and,
since such service is considered to be a basic procedural requirement, if for
purposes of proceedings outside Mexico service of process is made by mail, a
final judgment based on such process would not be enforced by the courts of
Mexico;
(h) Mexican law does not permit the collection of interest-on-interest
and, consequently, relevant provisions of
10
the Loan Documents relating to the payment of interest-on-interest may not be
enforceable in Mexico;
(i) covenants of the Borrower and/or the JCISA Subsidiary Guarantors which
purport to bind it on matters reserved by law to shareholders, or which purport
to bind shareholders to vote or refrain from voting their shares issued by the
Borrowers and/or the JCISA Subsidiary Guarantors or their subsidiaries, are not
enforceable, under Mexican law, through specific performance;
(j) we express no opinion in respect of the enforceability under Mexican
law of the extra-judicial foreclosure or enforcement by the Collateral Agent of
the security interest on the Mexican Pledged Securities in the terms of the
Pledge Agreement; and
(k) we note that a Mexican court could hold that the consent to
jurisdiction provisions contained in the Loan Documents do not comply with
Mexican legal requirements to be considered valid and, therefore, a Mexican
court could deny the enforcement in Mexico of a foreign judgment issued against
the Borrower and/or the JCISA Subsidiary Guarantors under the Loan Documents.
We express no opinion as to any other than the laws of Mexico.
This opinion is addressed to you solely for your benefit and it is not to
be transmitted to anyone else or is it to be relied upon by anyone else or for
any other purpose or quoted or referred to in any public document or filed with
anyone without our express consent.
Very truly yours,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, S.C.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ Grande ▇▇▇▇▇▇▇,
a partner
11
Schedule A
----------
SUBSIDIARIES
Jafra Cosmetics, S. de ▇.▇. de C.V.
Dirsamex, S.A. de C.V.
Distribuidora Venus, S.A. de C.V.
Consultoria Jafra, S.A. de C.V.
Qualifax, S.A. de ▇.▇.
▇▇▇▇▇, S.A. de C.V.
EXHIBIT N-3
to CREDIT AGREEMENT
[LETTERHEAD OF BONN & ▇▇▇▇▇▇▇ APPEARS HERE]
CREDIT SUISSE FIRST BOSTON
as Administrative Agent, Issuing Bank
and Collateral Agent
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------
The Lenders party to the Credit
Agreement referred to below
THE CHASE MANHATTAN BANK, as
Lender under the Fee and Guarantee
Agreement dated the date hereof
April 30, 1998
Ladies and Gentlemen,
We have acted as counsel to CDRJ Investments (Lux) S.A., a Luxembourg
societe anonyme (the "COMPANY") and CDRJ North Atlantic (Lux) S.A.R.L., a
Luxembourg societe a responsabilite limitee ("LUX SARL"), in connection with the
execution and delivery today of, and the consummation of the transactions
contemplated by, the Credit Agreement dated as of April 30, 1998 (the "CREDIT
AGREEMENT"), among the Company, Jafra Cosmetics International, Inc., a Delaware
corporation ("JCI"), Jafra Cosmetics International, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of the United Mexican
States ("JCISA" and together with JCI, the "BORROWERS"), the financial
institutions party thereto as lenders (the "LENDERS"), the Issuing Bank (as
defined therein) and Credit Suisse First Boston, as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT"), as swingline lender (in such
capacity, the "SWINGLINE LENDER"), and as collateral agent (in such capacity,
the "COLLATERAL AGENT") and the other Credit Documents. This opinion is
delivered pursuant to Section 4.02(a) of the Credit Agreement. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
2
In connection with the opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents:
1. the articles of incorporation of the Company and Lux SARL;
2. resolutions of the board of directors and of the shareholders of
the Company and Lux SARL authorizing the Transactions and certain
persons to execute and deliver the Credit Documents;
3. the Credit Agreement;
4. the Parent Guarantee Agreement dated as of April 30, 1998 by and
between each of the entities specified to be signatory thereto
and the Collateral Agent (the "PARENT GUARANTEE");
5. the PLEDGE AGREEMENT dated as of April 30, 1998 by and between
each of the entities specified to be signatory thereto and the
Collateral Agent; and
6. the fee and guarantee agreement dated April 30, 1998 by and
between CDRJ Acquisition Corporation (to be renamed Jafra
Cosmetics International, Inc.), Jafra Cosmetics International,
S.A., de C.V. and CDRJ Investments (Lux) S.A. (the "FEE AND
GUARANTEE AGREEMENT")
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents, and have made such other investigations, as we
have deemed necessary for the purpose of this opinion.
The Credit Agreement, the Parent Guarantee, the Pledge Agreement and
the Fee and Guarantee Agreement are together referred to as the "CREDIT
DOCUMENTS".
For the purposes of this opinion, we have assumed:
a) that the execution and delivery of the Credit Documents are within the
capacity, power and authority of the parties thereto, other than the
Company, and that these Credit Documents have been duly authorized,
executed and delivered by, and are binding upon, all such parties,
other than the Company;
3
b) the genuineness of all signatures on all documents and the
completeness, and the conformity to original documents, of all copies
submitted to us;
c) that all authorizations and consents of any public authority of any
country other than the Grand-Duchy of Luxembourg which may be required
in connection with the execution and delivery of the Credit Documents
have been or will be obtained;
d) that the documents are substantially in the form of the drafts or
copies we have examined; and
e) the legality, validity and enforceability of the Credit Documents and
all other documents related to this transaction under their governing
laws (other than the laws of Luxembourg).
On the basis of the foregoing and subject to the qualifications listed
below, we are, as of the date hereof, of the opinion that:
1. Each of the Company and Lux SARL (a) is a corporation duly
organized and validly existing under the laws of Luxembourg, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted and (c) has the power
and authority to execute, deliver and perform its obligations under each of the
Credit Documents to which it is a party.
2. All shares of capital stock of, or other equity interests in Lux
SARL have been duly and validly authorized and issued, are fully paid and non-
assessable, are owned by the Company and are not pledged (otherwise than
pursuant to the Credit Documents). Our opinion as to the absence of pledge is
based solely on a review of Lux SARL's register.
3. All shares of capital stock of, or other equity interests in the
Company have been duly and validly authorized and issued, and will be fully paid
and non-assessable if and when restructuring of the share capital of the Company
as contemplated in the Company's board resolutions of same date will be
completed.
4. The execution, delivery and performance of each of the Credit
Documents to which it is a party by the Company and Lux SARL and the creation of
the security interests contemplated thereby (a) have been duly authorized by all
requisite corporate and stockholder action of the Company and Lux SARL and (b)
will not (i) violate (A)
4
any provision of the articles of incorporation of the Company or Lux SARL, (B)
any law, statute, rule or regulation of any Governmental Authority applicable to
the Company or Lux SARL or their properties or (ii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned
or hereafter acquired by the Company or Lux SARL (other than any Lien Created
under the Loan Documents).
5. Each Credit Document to which it is a party has been duly
executed and delivered by the Company and Lux SARL, as the case may be, and
constitutes the legal, valid and binding obligation of the Company and Lux SARL,
as the case may be, in each case enforceable against the Company and Lux SARL,
as the case may be, in accordance with its terms;
6. The Pledge Agreement creates a valid first priority right of
pledge in the shares of Lux SARL for the benefit of the Lenders, as security for
the payment and performance of the Company's obligations under the Credit
Documents, and are the legal, valid and binding obligations of the Company,
provided that the Pledge Agreement has been registered in the register of Lux
SARL and that either the Pledge Agreement has been notified to Lux SARL or that
Lux SARL has accepted the Pledge Agreement.
7. Each of the Credit Documents to which it is a party is in proper
legal form for the enforcement thereof against the Company and Lux SARL, as the
case may be, under the laws of Luxembourg, and to ensure the legality, validity,
enforceability, priority or admissibility in evidence of each of the Credit
Documents it is not necessary that it or any other document be filed, registered
or recorded with, or executed or notarized before, any court or other authority
in Luxembourg or that any registration charge or stamp or similar tax be paid on
or in respect of the Credit Documents save that registration may be ordered and
a registration fee of 0.24 per cent on the total amount involved might become
payable if the Credit Documents were to be exhibited before a Luxembourg Court
or a Luxembourg official authority (autorite constituee); in practice, the
registration is very rarely ordered. The only effect of such registration would
be the obligation to pay the fee.
8. No action, consent or approval of, registration of filing with or
any other action by any Governmental Authority is or will be required in
connection with the execution, delivery and performance of the Credit Documents
by the Loan Parties party thereto or the consummation of the transactions
contemplated thereby.
5
9. There is no income, stamp or other tax, fee or charge of the
Government of Luxembourg, or any taxing authority thereof or therein, imposed by
or in the nature of withholding or otherwise, which is imposed on any payment to
be made pursuant to the Credit Documents, or imposed on or by virtue of the
execution, delivery or enforcement of the Credit Documents (such payments may
however constitute taxable income in the hands of recipients resident in
Luxembourg and/or recipients not resident in Luxembourg but having a permanent
establishment or a permanent representative in Luxembourg).
10. Each of the Company and Lux SARL is subject to civil and
commercial law with respect to its obligations under the Credit Documents, and
the execution, delivery and performance by each of the Company and Lux SARL
constitute and will constitute private and commercial acts rather than public or
Governmental acts. Each of the Company and Lux SARL has validly given its
consent to be sued in respect of its obligations under the Credit Documents to
which it is a party.
11. (a) The governing law clause set forth in the Credit Documents,
subjecting the Credit Documents to New York law, is legal, valid and binding
under the laws of Luxembourg and any political subdivision thereof and would be
recognized and given effect by the courts of Luxembourg and any political
subdivision thereof and (b) the courts of Luxembourg would award a judgment in
dollars to the extent provided in the Credit Documents.
12. Assuming that the Credit Documents were governed by the laws of
Luxembourg for the purpose of rendering the opinion set forth in this paragraph
12, the use of counterpart copies of any of the Credit Documents does not affect
the enforceability of any of the Credit Documents.
13. It is not necessary under the laws of Luxembourg in order to
enable the Administrative Agent, the Collateral Agent or any Lender to enforce
its rights under the Credit Documents that it should be licensed, qualified or
entitled to do business in Luxembourg.
The opinions expressed herein are subject to the following
qualifications:
(a) the obligations of the Company and of Lux SARL under the Credit
Documents and the enforceability of the Credit Documents will be
subject to and may be limited by any applicable bankruptcy,
liquidation, insolvency or other laws of
6
similar effect relating to or affecting the enforcement of creditors'
rights generally;
(b) the enforcement of the Credit Documents and the rights and obligations
of the parties thereto will be subject to the general statutory
principles of Luxembourg law and no opinion is given herein as to the
availability of any specific performance remedy, other than monetary
damages, for the enforcement of any obligation of the Company and of
Lux SARL and this opinion should not be taken to imply that a
Luxembourg Court will necessarily grant any remedy, in particular,
orders for specific performance and injunctions will not be available;
(c) where any obligations are to be performed or observed or are based
upon a matter arising in a jurisdiction outside Luxembourg, they may
not be enforceable under Luxembourg law if and to the extent such
performance or observance would be unlawful, unenforceable, or
contrary to public policy under the laws of such jurisdiction;
(d) a Luxembourg Court may refuse to give effect to a purported
contractual obligation to pay costs imposed upon another party in
respect of the costs of any unsuccessful litigation brought against
that party before a Luxembourg Court and a Luxembourg Court may not
award by way of costs all of the expenditure incurred by a successful
litigant in proceedings brought before the Court;
(e) whilst, in the event of any proceedings being brought in a Luxembourg
Court in respect of a monetary obligation expressed to be payable in a
currency other than Luxembourg francs, a Luxembourg Court would have
power to give judgment expressed as an order to pay a currency other
than Luxembourg francs, enforcement of the judgment against the
Company in Luxembourg would be available only in Luxembourg francs and
for such purposes all claims or debts are converted into Luxembourg
francs normally at the prevailing exchange rate on the date of
payment;
(f) claims may become barred under the statutory limitation period rules
or may be or become subject to defenses of set-off or counterclaims;
(g) any determination or certificates made or given pursuant to the
provisions of the Credit Documents which provide for such
determination or certificate to be final, conclusive or binding might
not necessarily be held under Luxembourg law to be final, conclusive
or binding;
7
(h) we express no opinion as to whether any provision in the Credit
Documents conferring a right of set-off or similar right would be
effective against a bankruptcy receiver, liquidator or a creditor;
(i) a contractual provision conferring or imposing a remedy, an obligation
or penalty consequent upon default may not be fully enforceable if it
were construed by a Luxembourg Court as constituting an excessive
pecuniary remedy.
This opinion is strictly limited to the matters of Luxembourg law
stated herein and is not to be read as extending by implication to any other
matters. It may be relied upon by each of you, by any successors and assigns of
the Administrative Agent, the Collateral Agent and the Issuing Bank, and any
participant, assignee or successor to the interests of the Lenders under the
Loan Documents.
This opinion is governed by Luxembourg law and the Luxembourg Courts
have exclusive jurisdiction in respect thereto.
Yours faithfully,
/s/ Bonn & ▇▇▇▇▇▇▇
BONN & ▇▇▇▇▇▇▇
EXHIBIT N-4
to CREDIT AGREEMENT
[LETTERHEAD OF ▇▇▇▇▇ DUTILH]
Credit Suisse First Boston
As Administrative Agent,
Issuing Bank and
Collateral Agent
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Lenders party to the Credit
Agreement referred to below
Amsterdam, April 30, 1998
Ladies and Gentlemen,
This opinion is rendered pursuant to Section 4.02(a) of a credit agreement
dated as of April 30, 1998 among CDRJ Investments (Lux) S.A., Jafra Cosmetics
International, Inc., Jafra Cosmetics International, S.A. de C.V., the financial
institutions party thereto as lenders (the "Lenders"), the Issuing Bank (as
defined therein) and Credit Suisse First Boston as Administrative Agent, as
Issuing Bank and as Collateral Agent (the "Collateral Agent"), providing for a
US$90 million credit facility (the "Credit Agreement").
Capitalized terms used herein will have the meanings ascribed to them in the
Credit Agreement, unless otherwise defined herein.
-2-
For the purposes of this opinion I have solely examined and relied on the
following documents:
(a) a copy of the deed of incorporation, including the articles of association
(in Dutch: "statuten"), of CDRJ Europe Holding Company B.V. ("Europe
Holding"), dated March 24, 1998 (the "Europe Holding Deed of
Incorporation"), stating that the statement of no objection from the
Minister of Justice in the Netherlands was obtained on March 20, 1998 with
number B.V. 626.298;
(b) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam, relating to Europe
Holding (the "Europe Holding Extract") confirmed to me by telephone to be
correct on April 29, 1998;
(c) a copy of the deed of incorporation, including the articles of association,
of CDRJ Latin America Holding Company B.V. ("Latin America Holding"), dated
March 24, 1998 (the "Latin America Holding Deed of Incorporation"), stating
that the statement of no objection from the Minister of Justice in the
Netherlands was obtained on March 20, 1998 with number B.V. 626-299;
(d) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and industry in Amsterdam, relating to Latin
America Holding (the "Latin America Holding Extract"), confirmed to me by
telephone to be correct on April 29, 1998;
(e) a copy of the deed of incorporation, including the articles of association,
of Latin Cosmetics Holdings B.V. ("Latin Cosmetics"), dated April 6, 1998
(the "Latin Cosmetics Deed of Incorporation"), stating that the statement
of no objection from the Minister of Justice in
-3-
the Netherlands was obtained an March 25, 1998 with number B.V.
627.996;
(f) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam, relating to Latin
Cosmetics (the "Latin Cosmetics Extract"), confirmed to me by telephone to
be correct on April 29, 1998;
(g) a copy of the deed of incorporation, including the articles of association,
of Regional Cosmetics Holding B.V. ("Regional Cosmetics"), dated April 6,
1998 (the "Regional Cosmetics Deed of Incorporation"), stating that the
statement of no objection from the Minister of Justice in the Netherlands
was obtained on March 25, 1998 with number B.V. 627.999;
(h) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam, relating to Regional
Cosmetics (the "Regional Cosmetics Extract"), confirmed to me by telephone
to be correct on April 29, 1998;
(i) a copy of the deed of incorporation, including the articles of association,
of Southern Cosmetics Holdings B.V. ("Southern Cosmetics"), dated April 6,
1998 (the "Southern Cosmetics Deed of Incorporation"), stating that the
statement of no objection from the Minister of Justice in the Netherlands
was obtained on March 25, 1998 with number B.V. 627.998;
(j) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam, relating to Southern
Cosmetics (the "Southern Cosmetics Extract"), confirmed to me by telephone
to be correct on April 29, 1998;
-4-
(k) a copy of the deed of incorporation, including the articles of association,
of CDRJ Mexico Holding company B.V. ("Mexico Holding"), dated April 6, 1998
(the "Mexico Holding Deed of incorporation"), stating that the statement of
no objection from the Minister of Justice in the Netherlands was obtained
on March 25, 1998 with number B.V. 627.997;
(l) a copy of an extract dated April 9, 1998 from the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam, relating to Mexico
Holding (the "Mexico Holding Extract"), confirmed to me by telephone to be
correct on April 29, 1998;
(m) a copy of a draft of the Credit Agreement dated April 29, 1998;
(n) a draft copy of a pledge agreement dated as of April 30, 1998 among CDRJ
Investments (Lux) S.A., CDRJ North Atlantic (Lux) S.a.r.l., Latin America
Holding, Latin Cosmetics, Regional Cosmetics, Southern Cosmetics and Mexico
Holding, Jafra cosmetics International, Inc., Jafra Cosmetics
International, S.A. de C.V., the Subsidiary Pledgors as defined therein,
and Credit Suisse First Boston (the "Pledge Agreement");
(o) a copy of the notarial Share Pledge Deed dated April 30, 1998 between Jafra
Cosmetics International, Inc. as Pledgor I, CDRJ North Atlantic (Lux)
S.a.r.l. as Pledgor II, Europe Holding, Latin America Holding, and the
Collateral Agent as Pledgee (for itself and on behalf of the Lenders) with
respect to 65% of the shares of Europe Holding and 100% of the shares of
Latin America Holding (the "Share Pledge Deed");
(p) copies of the powers of attorney dated April 29, 1998
-5-
from Jafra Cosmetics International, Inc., CDRJ North Atlantic (Lux)
S.a.r.l., the Collateral Agent, Europe Holding and Latin America Holding
respectively, to all lawyers of ▇▇▇▇▇ Dutilh to sign the Share Pledge Deed
on their behalves (the "Powers of Attorney");
(q) copies of the board resolutions dated April 29, 1998 of Latin America
Holding, Latin Cosmetics, Regional Cosmetics, Southern Cosmetics and Mexico
Holding with respect to the execution of the Pledge Agreement (the "Board
Resolutions"); and
(r) the shareholders registers of Europe Holding and Latin America Holding (the
"Shareholders Registers").
Europe Holding, Latin America Holding, Latin Cosmetics, Regional Cosmetics,
Southern Cosmetics and Mexico Holding are hereinafter also referred to as the
"Dutch Companies". Europe Holding and Latin America Holding are hereinafter also
referred to as the "Share Pledge Deed Companies". Latin America Holding, Latin
Cosmetics, Regional Cosmetics, Southern Cosmetics and Mexico Holding are
hereinafter also referred to as the "Pledge Agreement Companies". The Europe
Holding Deed of Incorporation, the Latin America Holding Deed of Incorporation,
the Latin Cosmetics Deed of Incorporation, the Regional Cosmetics Deed of
incorporation, the Southern Cosmetics Deed of Incorporation and the Mexico
Holding Deed of Incorporation are hereinafter also referred to as the "Deeds of
Incorporation". The Europe Holding Extract, the Latin America Holding Extract,
the Latin Cosmetics Extract, the Regional Cosmetics Extract, the Southern
Cosmetics Extract and the Mexico Holding Extract are hereinafter also referred
to as the "Extracts".
The following opinion is limited in ail respects to the laws, statutes and
governmental regulations of the Netherlands with general applicability as they
stand at the present time and as
-6-
they are interpreted under published case law of the courts of the Netherlands
at the date hereof. I do not express any opinion on tax laws of the Netherlands
or on public international law or on the rules of or promulgated under or by any
treaty or organization.
This opinion shall be governed by and shall be construed and have effect in
accordance with the laws of the Netherlands.
In rendering this opinion I have assumed that:
(a) all documents submitted to me and the signatures and initials thereon are
genuine and that all documents submitted to me as photocopies or faxed
copies are in conformity with the originals and that all documents have
been or, as the case may be, will be executed in the form of the drafts
submitted to me;
(b) the Credit Agreement and the Pledge Agreement constitute, under the laws of
the State of New York, the legal, valid and binding obligations of all the
parties thereto, enforceable in accordance with their terms;
(c) the Share Pledge Deed has been duly executed on behalf of all parties
thereto other than the Share Pledge Deed Companies; such other parties than
the Share Pledge Deed Companies have the corporate power and authority to
enter into the Share Pledge Deed and to perform their obligations
thereunder;
(d) the Pledge Agreement will be executed on behalf of the Pledge Agreement
Companies by their managing director, CDRJ Holding Company;
(e) the Powers of Attorney and the Board Resolutions have not been revoked,
amended or terminated;
-7-
(f) the warranties set forth in Section 5 of the Share Pledge Deed are
true and correct;
(g) the contents of the Shareholders Registers, other than the entries
therein relating to the Share Pledge Deed, are complete and correct; and
(h) the Pledge Agreement Companies are the sole owners of the entire
issued share capital in Jafra Cosmetics International, S.A. de C.V.
Based upon and subject to the foregoing and subject to the qualifications listed
below and to any matters not disclosed to me, I am of the following opinion:
1. Each of the Dutch Companies has been duly incorporated and is validly
existing under the laws of the Netherlands as a legal entity in the form of
a "besloten vennootschap met beperkte aansprakelijkheid". The Extracts and
our inquiries made yesterday by telephone with the Commercial Register of
the Chamber of Commerce and Industry in Amsterdam and the bankruptcy
registrar (in Dutch: faillissementsgriffie) of the District Court in
Amsterdam have revealed no information that any of the Dutch Companies has
been dissolved (in Dutch: ontbonden), granted a suspension of payments (in
Dutch: surseance van betaling) are declared bankrupt (in Dutch: failliet
verklaard).
2. All shares of each of the Share Pledge Deed Companies have been validly
issued, are fully paid up and are free and clear of any Liens (other than
the rights of pledge created under the Share Pledge Deed).
3. Each of the Pledge Agreement Companies has the corporate power and has
taken all corporate action as required by its Articles of Association or by
Netherlands law to sign
-8-
the Pledge Agreement, to create the security interests contemplated thereby
and to perform its obligations thereunder. The Pledge Agreement, if and
when executed, has been duly executed on behalf of each of the Pledge
Agreement Companies. The execution of the Pledge Agreement does not violate
(i) any provision of the Articles of Association of any of the Pledge
Agreement Companies or (ii) any law, statute or governmental regulation of
the Netherlands with general applicability to which such company is
subject.
4. Each of the Share Pledge Deed Companies has the corporate power and has
taken all corporate action as required by its Articles of Association or by
Netherlands law to enter into the Share Pledge Deed, to create the security
interests contemplated thereby and to perform its obligations thereunder.
The Share Pledge Deed has been duly executed on behalf of each of the Share
Pledge Deed Companies. The execution of the Share Pledge Deed does not
violate (i) any provision of the Articles of Association of any of the
Share Pledge Deed Companies or (ii) any law, statute or governmental
regulation of the Netherlands with general applicability to which such
company is subject.
5. The Share Pledge Deed creates a valid first priority right of pledge
("eerste pandrecht") in the Shares (as defined therein) for the benefit of
the Collateral Agent, as security for the payment of the Obligations (as
defined therein), enforceable in the Netherlands in accordance with its
terms; to the extent the Share Pledge Deed provides for any obligations of
the Pledgor defined therein in addition and subsequent to the granting of
the pledge pursuant thereto, such obligations are the legal, valid and
binding obligations of such Pledgor, enforceable in the Netherlands in
accordance with their terms.
-9-
6. No consents or approvals and no licences or orders from or notices to any
Netherlands court, government department or other regulatory body are
required for the entering into by the parties thereto of the Share Pledge
Deed or for the performance by the parties of their obligations under the
Share Pledge Deed, which, if not obtained or made, would affect the
validity thereof.
7. It is not necessary to ensure the validity or enforceability in the
Netherlands of the Share Pledge Deed that it be filed with or registered in
any public office or register kept by any governmental authority or
regulatory body in the Netherlands.
8. It is not necessary under the laws of the Netherlands in order to enable
the Collateral Agent to enforce its rights under the Share Pledge Deed that
it should be licensed, qualified or entitled to do business in the
Netherlands.
9. The choice of the law of the State of New York to govern the Pledge
Agreement is valid and shall be recognized and given effect by the courts
of the Netherlands. The courts of the Netherlands would award a judgment in
U.S. Dollars to the extent provided in the Pledge Agreement.
10. The use of counterpart copies does not affect the enforceability in
the Netherlands of the Pledge Agreement.
The opinions expressed above are subject to the following qualifications:
(i) The term "enforceable", used in this opinion means that the relevant
obligations are generally enforced by the courts In the Netherlands;
it does not mean that the relevant obligations will be specifically
-10-
enforceable or that injunctive relief will be available as a remedy
for the enforcement of such obligations under all circumstances.
(ii) This opinion is limited by any applicable bankruptcy, insolvency and
other similar laws affecting the rights of creditors in general.
(iii) The enforcement of the obligations under the Share Pledge Deed are
limited by rules of "force majeure", reasonableness and fairness,
unforeseen circumstances, set-off and other defences afforded by
Netherlands law to obligors generally.
(iv) With respect to the opinion expressed in paragraph 2 above it should
be noted that I have relied on the contents of the Europe Holding
Extract, the Latin America Extract and the Shareholders Registers,
which do not, however, provide conclusive evidence of the correctness
of such opinion.
(v) With respect to the opinion expressed in paragraph 3 above the
following should be noted:
Under article 2.7 of the Netherlands Civil Code a transaction entered
into by a legal entity can be annulled if the objects of the entity
are thereby exceeded and the other party was or should, without making
its own enquiries, have been aware thereof. Only the legal entity can
invoke this ground for annulment.
There is uncertainty as to when the objects of a legal entity are
exceeded (i.e. when a transaction is ultra ▇▇▇▇▇). The Netherlands
Supreme Court has ruled that in determining whether a certain transac-
-11-
tion is ultra ▇▇▇▇▇ all circumstances must be taken into account and
that the manner in which the objects have been defined in the
company's articles of association is not the only decisive factor. The
fact that the company forms part of a group of companies may be
another relevant factor. Other relevant factors have so far not been
identified by the Supreme Court.
Several legal writers take the view that the acts of a company should
be in the actual interest of that company in the sense that they are
conducive to the realisation of the objects of the company as laid
down in its articles of association. A number of those writers are of
the opinion that granting security for the debt of a third party is in
principle - in the absence of circumstances which indicate the
contrary - ultra ▇▇▇▇▇. Such contrary circumstances may exist in the
situation where a company forming part of a group of companies
directly or indirectly benefits from the fact that another company
forming part of the same group incurs a debt for which the former
company gives a guarantee or grants security. Case law and literature
do not provide much guidance as to the nature or the extent of the
required benefit.
In my opinion the fact that the objects clause in the Articles of
Association of the Pledge Agreement Companies expressly includes the
granting of security for the obligations of group companies diminishes
the risk that the security provided by the Pledge Agreement Companies
pursuant to the Pledge Agreement would be considered ultra ▇▇▇▇▇. The
fact that the security provided by the Pledge Agreement Companies
pursuant to the Pledge Agreement is
-12-
granted for the obligations of inter alia Jafra Cosmetics
----------
International, S.A. de C.V. of which the Pledge Agreement Companies
are the shareholders, and that Jafra Cosmetics International, S.A. de
C.V. is one of the Borrowers under the Credit Agreement, are relevant
circumstances to support the position that the Pledge Agreement is not
ultra ▇▇▇▇▇.
(vi) With respect to the opinion expressed in paragraph 3 above the
following should be noted:
Article 3:45 of the Netherlands Civil Code provides that when a debtor
who enters into a transaction without being legally obliged to do so,
and knew or should have known that the possibilities for one or more
at its creditors to seek recourse against its assets would be
negatively affected thereby, any creditor whose possibilities to
recover his claim have been prejudiced has the right to nullify such
transaction if certain conditions are met ("Actio Pauliana"). Pursuant
to certain provisions of the Netherlands Bankruptcy Act a trustee in
bankruptcy can exercise the right of nullification on behalf of the
bankrupt's estate in similar situations.
In this connection it must be noted that no legal obligation exists
prior to the execution of the Pledge Agreement for the giving of the
pledges referred to herein. Whether this will cause the pledges
created pursuant to the Pledge Agreement to be subject to possible
nullification on the basis of the Actio Pauliana will therefore inter
-----
alia depend on whether there is reason to believe that the
----
possibilities of other creditors to recover their claims will be
negatively affected by the giving of the pledges. In this connection
the elements men-
-13-
tioned in the last paragraph under (v) above will be relevant
circumstances to support the position that no knowledge exists that
the giving of the pledges would negatively affect the possibilities of
creditors to recover their claims.
(vii) With respect to the opinion expressed in paragraph 5 above the
following should be noted:
(a) I have assumed, with your consent, that the obligations of the
Borrowers under the Covenant to Pay (as defined in the Credit
Agreement) constitute under the law of the State of New York the
legal, valid and binding obligations of the Borrowers to the
Collateral Agent as creditor, enforceable by the Collateral
Agent;
(b) It is untested under Netherlands law whether a Netherlands court
will accept the Covenant to Pay as valid reason for creating the
rights of pledge on the basis of the Share Pledge Deed. In theory
it would be possible that the relevant pledgor may challenge the
relevant pledges on the grounds that the Collateral Agent, under
Netherlands law, may not be seen as a creditor in its own right
under the Covenant to Pay. However, I have no reason to believe
that a Netherlands court will for this reason invalidate the
rights of pledge created pursuant to the Share Pledge Deed, as
the Covenant to Pay would be deemed under New York law to be an
obligation of the Borrowers to the Collateral Agent as creditor,
enforceable by the
-14-
Collateral Agent.
(viii) The enforcement of the Share Pledge Deed and the pledges created
thereunder in the Netherlands will be subject to the rules of civil
procedure as applied by the Netherlands courts.
(ix) It is uncertain under Netherlands law whether upon the enforcement of
a judgment for a sum of money expressed in foreign currency against
assets of the debtor situated in the Netherlands proceeds can be
obtained in such foreign currency or whether proceeds can only be
obtained in Netherlands currency which subsequently has to be
converted into such foreign currency.
(x) Our inquiries with the Commercial Register of the Chamber of Commerce
and Industry in Amsterdam and with the bankruptcy registrar of the
District Court in Amsterdam, which had to be made yesterday since the
date hereof is a public holiday in the Netherlands, do not provide
conclusive evidence that Europe Holding and Latin America Holding have
not been dissolved, granted a suspension of payments or declared
bankrupt;
(xi) In accordance with Netherlands law any power of attorney or mandate
will terminate upon the bankruptcy or become ineffective upon the
suspension of payments of the issuer thereof.
(xii) When applying the law of the State of New York as the chosen law to
govern the Pledge Agreement, the courts of the Netherlands may give
effect to mandatory rules of the Netherlands law or any other country
with which the situation has a close connection,
-15-
if and in so far as, under the law of such country, those rules must
be applied whatever the law applicable to the contract. In addition,
the courts of the Netherlands may refuse the application of a rule of
the laws of the State of New York if such application is manifestly
incompatible with the public policy ("ordre public") of the
Netherlands. On the face of the Pledge Agreement I have no reason to
believe that (a) any provisions thereof are likely to be inconsistent
with the public policy of the Netherlands or (b) any such mandatory
rules would be applicable thereto.
(xiii) It should be noted that any replacement of the Collateral Agent by a
successor agent pursuant to Section 8.09 of the Credit Agreement will
require the execution of new versions of the Share Pledge Deed in
order to maintain the security provided to the Lenders thereunder.
(xiv) As it is uncertain and has not been determined in published case law
whether such right of pledge of shares can be created in advance, no
opinion is rendered in respect of Section 3.2 of the Share Pledge
Deed, insofar as it refers to the pledge in advance of any additional
shares, shares receivable or received by virtue of a stock split, or
any other shares receivable or received in exchange for any and all of
the Shares I and Shares II respectively.
-16-
Without my prior written consent this opinion may not be disclosed to or relied
upon by any person other than each of you, any successors and assigns of the
Administrative Agent, the Collateral Agent and the Issuing Bank, and any
participant, assignee and successor to the interests of the Lenders under the
Loan Documents. I have no obligation to modify, amend or update the opinions set
forth herein for any reason.
Yours faithfully,
/s/ H.M. de Mol van ▇▇▇▇▇▇▇▇
▇.▇. de Mol van Otterloo
EXHIBIT N-5
to CREDIT AGREEMENT
[LETTERHEAD OF LOEB & LOEB]
Writer's Direct Dial Number
▇▇▇-▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
April 30, 1998
Credit Suisse First Boston,
as Administrative Agent, Issuing Bank and Collateral Agent
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees,
collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as special counsel in the State of California (the "State")
to Jafra Cosmetics International, Inc., a Delaware corporation ("JCI") and Jafra
Cosmetics International, S.A. de C.V., a company organized under the laws of the
United Mexican States ("JCISA" and, together with JCI, the "Borrowers"), in
connection with the execution and delivery today of, and the consummation of the
transactions contemplated by, the Credit Agreement dated as of April 30, 1998
(the "Credit Agreement"), among the Borrowers, CDRJ Investments (Lux) S.A., a
Luxembourg societe anonyme, the financial institutions party thereto as lenders
(the "Lenders") and Credit Suisse First Boston, as administrative agent (in such
capacity, the "Administrative Agent"), as issuing bank (in such capacity, the
"Issuing Bank") and as collateral agent (in such capacity, the "Collateral
Agent"). This opinion is delivered pursuant to Section 4.02(a) of the Credit
Agreement. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
(i) the Credit Agreement;
(ii) the Parent Guarantee Agreement;
LOEB&LOEB LLP
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April 30, 1998
Page 2
(iii) the JCI Guarantee Agreement;
(iv) the JCISA Guarantee Agreement;
(v) the JCI Subsidiary Guarantee Agreement;
(vi) the JCISA Subsidiary Guarantee Agreement;
(vii) the Security Agreement and the Perfection Certificates
identified therein;
(viii) the Pledge Agreement;
(ix) the Indemnity, Subrogation and Contribution Agreement;
(x) the Mortgages; and
(xi) UCC-1 financing statements, copies of which are attached
as Exhibit A (the "Financing Statements").
In addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records, agreements, instruments and
other documents, and have made such other investigations, as we have deemed
necessary for the purpose of this opinion.
References in this opinion to the "UCC" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State.
In rendering this opinion to you, we have assumed that:
(a) there has occurred due execution and delivery of the Documents;
(b) except as otherwise set forth in the applicable Security
Documents, the Borrowers and each Guarantor, as applicable, owns such of
the Mortgaged Property (as defined in [the] [each] Mortgage) and each
Grantor and each Pledgor, as applicable, owns the Collateral (as defined in
the Security Agreement and the Pledge Agreement);
(c) each party to execute the Documents that is not an individual has
been or will be organized, validly existing and, where applicable, in good
standing under the laws of the state of its organization and, if required
to do so under State law with respect to activities other than its
participation in the Financing Transactions, has been
LOEB&LOEB LLP
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April 30, 1998
Page 3
duly qualified or licensed to conduct intrastate business in the State, is
in good standing in the State and has filed all required franchise tax
returns and has paid all required franchise taxes due and payable by it to
date;
(d) the performance by each party signatory to the Documents will be
within the power granted to it by its organizational documents;
(e) the Documents to which the Administrative Agent and the other
Creditors are parties constitute their legal, valid and binding obligations
enforceable against them in accordance with their respective terms;
(f) the execution, delivery and performance of the Documents to which
the Collateral Agent or the other Creditors are parties will not violate
any law, rule, regulation, writ or order to which they are subject;
(g) the Documents have been negotiated in New York;
(h) the closing of the Loans will occur in New York;
(i) the funds disbursed to the Borrowers pursuant to the Documents
will be disbursed at the direction of the Administrative Agent in New York;
(j) repayments to the Administrative Agent for itself or on behalf of
the other Creditors of any amounts contemplated by the Documents will be
made in New York;
(k) all actions or proceedings arising in connection with the
Documents, other than procedural remedies or a Judicial foreclosure of the
Mortgages, shall be tried and litigated only in the state and federal
courts located in New York;
(l) the New York choice of law rules allow the parties to the
Documents to designate the law of the State of New York to govern the
Transactions;
(m) New York will have personal jurisdiction over the Borrowers,
Administrative Agent and the other Creditors at the time of any action;
(n) the Documents do not contain provisions which violate fundamental
State policies, such as policies against unconscionability or restraint of
trade;
(o) the Administrative Agent is licensed to maintain an office in New
York;
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Page 4
(p) there are no agreements or understandings among the Administrative
Agent or the other Creditors that would expand, modify or otherwise
materially affect the terms of the Documents, to the extent we are opining
on such terms, or the respective rights or obligations of the parties
thereunder; and
(q) the description of the Collateral is legally sufficient to enable
a subsequent purchaser or encumbrancer to identify said property.
Subject to the foregoing assumptions, we are of the opinion that:
1. None of the Collateral Agent or the other Creditors is required (a) to
be qualified to do business, file any designation for service of process or file
any reports or pay any taxes in the State, or (b) to comply with any statutory
or regulatory requirement applicable only to financial institutions chartered or
qualified or required to be chartered or qualified to do business in the State,
in each case solely by reason of the execution and delivery or filing or
recording, as applicable, of any of the Documents, or solely by reason of the
participation in any of the transactions under or contemplated by the Documents,
including, without limitation, the extension of any credit contemplated thereby,
the making and receipt of payments pursuant thereto and the exercise of any
remedy thereunder. If it were determined that such qualification and filing
were required, the validity of the Documents would not be affected thereby, but
(a) if the Collateral Agent were not qualified it would be precluded from
enforcing its rights as collateral agent on behalf of the Creditors in the
courts of the State until such time as it is admitted to transact business in
the State or (b) assuming the Creditors would institute remedies without the
Collateral Agent, they would be precluded from enforcing their rights in the
courts of the State until such time as they were admitted to transact business
in the State. However, the lack of qualification would not result in any waiver
of rights or remedies pending such qualification.
2. The execution, delivery, filing or recording, as applicable, and
performance by the Borrowers and each Guarantor of each of the Documents to
which each of them is a party (i) will not violate any existing law,
governmental rule or regulation of the State and (ii) do not require any
license, permit, authorization, consent or other approval of, any exemption by,
or any registration, recording or filing with any court, administrative agency
or other Governmental Authority of the State.
3. Assuming that the Security Agreement and the Pledge Agreement were
governed by the law of the State for the purpose of rendering the opinion set
forth in this paragraph, each of the Security Agreement and the Pledge Agreement
is in proper form under the applicable laws of the State to (i) be enforceable
against the grantors or pledgors named
LOEB&LOEB LLP
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Page 5
therein in accordance with its terms and (ii) create and constitute a valid
security interest in, lien on or pledge of the Collateral.
4. The Mortgage is in proper form under applicable laws of the State (a)
(i) to be accepted for recording by the Recorder of Ventura County and (ii) to
be enforceable against the Borrowers and each Guarantor, as applicable, in
accordance with its terms, and (b) (i) to create and constitute a valid, legal,
binding and enforceable mortgage lien on the real property described therein
(the "Real Property"), and (ii) to create and constitute valid, legal, binding
and enforceable perfected security interests in such of the Mortgaged Property
(the "UCC Property") as is subject to the provisions of Article 9 of the UCC.
5. The Financing Statements relating to the Mortgage and the Security
Agreement (a) are in proper form under the applicable laws of the State for
filing and (b) are required to be filed with the Office of the Secretary of
State of the State. Upon the filing of the Financing Statements, the Collateral
Agent for the benefit of the Creditors will have a valid and duly perfected
security interest in and lien on the UCC Property and Collateral (including
after-acquired property) described in the Mortgage and the Security Agreement,
respectively.
6. The recording of the Mortgage and the filing of the Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Mortgage and Security Agreement, except (i) that continuation statements under
the UCC are required to be filed within six months prior to the expiration of
five years from the date of filing of the Financing Statements, and (ii) that a
security interest in or pledge of money or instruments, other than money or
instruments constituting chattel paper, cannot be perfected by filing Financing
Statements or recording a Mortgage, but must be perfected by taking physical
possession thereof.
7. Subject to appropriate continuation or perfection under the UCC as set
forth the preceding paragraph, the priority of the security interest in, lien on
or pledge of the Collateral created by the Security Agreement and the Pledge
Agreement with respect to any extension of credit (each, a "Further Advance")
made or deemed to have been made by the Creditors after the date (the
"Perfection Date") on which the security interest in, lien on or pledge of the
Collateral shall have been perfected will be the same as the priority of the
security interest, lien on or pledge of the Collateral with respect to all
extensions of credit made or deemed to have been made by the Creditors on or
before the Perfection Date, and such priority will not, solely by virtue of the
fact that it relates to a Further Advance, be affected by the rights in and to
the Collateral of any third party whose Interest in the Collateral attached
thereto after the Perfection Date but prior to the date of such Further Advance,
provided that the Further
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April 30, 1998
Page 6
Advance is made by the Creditors pursuant to a "commitment", within the meaning
of Section 9312(7) of the UCC.
8. The Collateral Agent has the power without naming all the Creditors in
any applicable legal proceeding to exercise remedies under the Security
Documents for the realization of any of the Mortgaged Property or the Collateral
in its own name, as collateral agent.
9. No taxes or other charges, including, without limitation, intangible
or documentary stamp taxes, mortgage or recording taxes, transfer taxes or
similar charges, are payable to the State or to any jurisdiction therein on
account of the execution or delivery or recording or filing of the Mortgage or
any of the other Documents or the creation of the indebtedness evidenced or
secured by any of the Documents, as applicable, except for nominal filing or
recording fees.
10. With respect to the enforcement of remedies under the applicable
Security Documents, the Collateral Agent may do any of the following: (a)
proceed, in any sequence (i) in accordance with the Lender's rights and remedies
in respect of the Real Property and (ii) in accordance with the UCC as to the
UCC Property and fixtures; (b) proceed in any sequence, as to both some or all
of the Real Property and some or all of the UCC Property or fixtures in
accordance with the Lender's rights and remedies in respect of the Real
Property, by including the portion of the UCC Property or fixtures selected by
the Collateral Agent in the judicial or nonjudicial foreclosure of the Real
Property in accordance with the procedures applicable to real property. A power
of sale under the Mortgage is exercisable with respect to both the Real Property
and the UCC Property or fixtures being sold and the sale may be conducted by the
trustee under the Mortgage. The Collateral Agent and the Lenders shall not be
deemed to have elected irrevocably to proceed as to both real property and
personal property or fixtures as provided in the UCC with respect to any
particular property, unless and until that particular property actually has been
disposed of pursuant to a unified sale (judicial or nonjudicial) conducted in
accordance with the procedures applicable to real property, and then only as to
the property so sold.
11. A state court or a federal court applying the choice of law principals
prevailing under the laws of the State to which the question is presented should
give effect to the provisions in the Documents selecting the laws of the State
of New York as the governing law thereof except that the courts may apply the
internal law of the State to determine the perfection and effect of perfection
of the liens created under the Documents and the application of remedies in
enforcing such liens with respect to the Mortgaged Property and the Collateral.
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April 30, 1998
Page 7
12. Assuming that the Documents were governed by the law of the State for
the purpose of rendering the opinion set forth in this paragraph, the use of
counterpart copies of any of the Documents does not affect the enforceability of
any of the Documents.
The foregoing opinions are qualified as follows:
The opinion expressed at Paragraph 1 above as to the nonwaiver of rights or
remedies pending qualification and filing is subject to the qualification that,
in accordance with California Corporations Code Section 2203, a foreign
corporation which transacts intrastate business in the State without qualifying
to do business in the State (a "nonqualifying foreign corporation") is subject
to certain monetary penalties and may not maintain an action in the State with
respect to such business until such nonqualification is cured. Further,
pursuant to California Revenue and Taxation Code Section 23304.1(b), the
California contracts of a nonqualifying foreign corporation which fails to file
a tax return required under the California Revenue and Taxation Code are
voidable by the other party to the transaction. California Revenue and Taxation
Code Section 23304.5, however, specifies that such contracts may be declared
void only if determined by a final judgment of a court of competent jurisdiction
and only if the nonqualifying foreign corporation first has been allowed a
reasonable opportunity to cure the voidability by making the tax filings and
payments required in accordance with California Revenue and Taxation Code
Section 23305.1. Except as provided in Paragraph I above, we express no opinion
whether the Collateral Agent and the Creditors, or any of them, are obligated to
qualify to do business in the State or whether the Documents may be voidable in
accordance with the foregoing statutory provisions.
In rendering the opinion expressed at Paragraph 2 above as to compliance
with certain statutes, rules and regulations, we have assumed, with your
permission, that none of the Borrowers or the Guarantors is engaged in a
business which makes it subject to a regulatory body of the State whose consent,
approval or other authorization is required before such Borrower or Guarantor
may execute, deliver or perform the Documents to which it is a party. Further,
we render no opinion as to compliance with the California Subdivision Map Act or
any zoning, land use or environmental laws which may be applicable to the Real
Property.
The opinions expressed at Paragraphs 5, 6 and 7 above are subject to the
qualification that we express no opinion as to any security interest, lien or
pledge the creation, perfection or priority of which is not governed exclusively
by the UCC. In particular, we express no opinion as to the creation, perfection
or priority of security interests in vehicles, aircraft, vessels and other
property for which a state or federal statute or treaty provides for
registration or certification of title or which specifies a place of filing
different than that specified in the UCC, nor as to the creation, perfection or
priority of security interests in farm products, crops, timber, minerals and the
like (including oil and gas) or accounts resulting from the sale
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April 30, 1998
Page 8
thereof, or letters of credit, patents, copyrights or trademarks; nor do we
express any opinion with respect to the creation, perfection or priority of any
security interest in any account receivable, contract right or general
intangible with respect to which the account debtor is the United States of
America, or any State of the United States, or any department, agency or
instrumentality thereof, unless such account receivable or contract right or
general intangible has been assigned to the Collateral Agent pursuant to the
Federal Assignment of Claims Act of 1940, as amended, or other applicable state
law; nor do we express any opinion as to the creation, perfection or priority of
any security interest in any other collateral specified in Section 9104 of the
UCC. Furthermore, we express no opinion as to the creation, perfection or
priority of security interests in deposit accounts, insurance policies or
beneficial interests in a trust or in a decedent's estate.
The opinions expressed at Paragraphs 5 and 6 above are also subject to the
following additional qualifications:
(a) We express no opinion as to the priority of any security interest
in, lien upon or pledge of any of the Collateral.
(b) We have assumed, with your permission, that the Collateral
consisting of Pledged Stock and Pledged Debt Securities and any other Collateral
in which the Collateral Agent's security interest is perfected by possession
will be validly delivered to the Collateral Agent in its capacity as secured
party and that such Collateral will continue in the possession of the Collateral
Agent or its successors in interest.
(c) To the extent that the Collateral consisting of Pledged Stock and
Pledged Debt Securities consists of the stock or debt securities of any entity
organized under the laws of any foreign jurisdiction, we express no opinion as
to the effect of the laws of that foreign jurisdiction upon the conclusions
expressed herein.
(d) We have assumed, with your permission, that none of the Collateral
consists of stock or debt securities in, or property of, an entity engaged in a
business which makes it subject to the jurisdiction of a regulatory body (such
as, for example, the California Department of Insurance or the Public Utilities
Commission) whose consent is required before such stock or debt securities may
be subjected to a valid lien.
(e) We have assumed, with your permission, that none of the Grantors
is a "retail merchant" for purposes of Section 9102(5) of the UCC.
In addition, in administering the Security Agreement and the Pledge
Agreement, please note that:
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April 30, 1998
Page 9
(a) In the case of the issuance of additional Pledged Stock or Pledged
Debt Securities, the lien of the Pledge Agreement therein will be perfected only
by the Collateral Agent taking possession or control thereof or causing an
appropriate financing statement to be filed, in each case under the applicable
provision of the UCC.
(b) Under certain circumstances described in Section 9306 of the UCC,
the right of a secured party to enforce a perfected security interest in the
cash proceeds of, and collections pursuant to, any Collateral may be limited,
and in order to perfect a security interest in noncash proceeds of the
Collateral, it may be necessary to file a financing statement within ten days
after any such proceeds are received by the debtor.
(c) Under certain circumstances described in Sections 9307, 9308 and
9309 of the UCC, certain purchasers of collateral may acquire such collateral
free of the secured party's security interest therein.
(d) Under certain circumstances described in Section 9103 of the UCC,
the removal of certain forms of collateral from California will cause a secured
party's security interest therein to lapse unless appropriate steps are taken,
and a change in location of the debtor to another state will cause a secured
party's security interest in certain forms of collateral to lapse unless
appropriate steps are taken.
(e) Under certain circumstances described in Section 9402 of the UCC,
changes in the debtor's name, identity or corporate structure which render a
previously filed financing statement or fixture filing seriously misleading may
cause such financing statement to become ineffective as to collateral thereafter
acquired by the debtor unless appropriate steps are taken.
We note that the Documents select the laws of the State of New York as the
governing law thereunder. There have been very few recent California court
decisions regarding the enforceability of a choice of law provision contained in
a foreign (other state) loan transaction in which some or all of the security is
California real property. Moreover, these decisions have been at the
intermediate appellate court level, and, consequently, the California Supreme
Court has yet to determine this issue definitively. However, in the case of
Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (1992), the California
-------------------------------------
Supreme Court did analyze a contract, not involving California real property,
which contained a choice of law clause providing that the contract was to be
governed by Hong Kong law. The Court held that the choice of law clause was
fully enforceable and applicable to claims for breach of the implied covenant of
good faith since Hong Kong had substantial connection with the parties and the
transaction and enforcement would not contravene any fundamental policy of
California.
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April 30, 1998
Page 10
If an out-of-state debtor is sued personally in another state prior to
foreclosure of the California real estate security, a money judgment entered in
that state may release the California security under California Code of Civil
Procedure 726, although the judgment would be valid in California. (See, Ould v.
---- -------
▇▇▇▇▇▇▇▇, 54 Cal. 613 (1880)).
--------
We call your attention to United Bank of Denver v. K & W Trucking Co., 147
-------------------------------------------
Cal.App.3d 217, 195 Cal.Rptr.49 (1983) and ▇▇▇▇▇▇▇ v. Title Ins. and Trust Co.,
-----------------------------------
147 Cal.App.3d 225, 195 Cal.Rptr.53 (1983), in which the court analyzed whether
a Colorado lender that had obtained a deficiency judgment in Colorado, following
the non-judicial sale of California real property security for a note governed
by Colorado law, could enter the judgment in California pursuant to the Sister
State Money-Judgments Act (California Code of Civil Procedure Section 1710.10 et
--
seq.). The court concluded that it was required to give full faith and credit to
---
the Colorado judgment, even though such a judgment could not have been obtained
in California because of California Code of Civil Procedure Section 580d which
prohibits any deficiency judgment after the sale of a parcel of real property
under a power of sale contained in a mortgage or deed of trust given to secure a
note. According to the court, the "judgment" entered in California under the
Sister State Money-Judgments Act is not the type of "judgment" proscribed by
Section 580d. The court concluded that the rare exceptions to the application of
the full faith and credit clause arise only when there is a violation of some
fundamental state public policy, or where the California court determines that
the foreign court lacked jurisdiction over the parties or the subject matter.
(Accord, Mencor Enterprises, Inc. v. Hets Equities Corp., 190 Cal.App.3d 432,
------ -----------------------------------------------
435, 235 Cal.Rptr. 464, 466 (1987) - "The parties to a contract may specify the
law to be followed in matters governing the contract and a California court will
apply the law so selected if enforcement of the contract does not result in an
evasion of settled public policy or California law protective of the rights of
its citizens.")
There is no clear definition of which California statutes and court
decisions constitute "fundamental state public policies" for purposes of
enforcing choice of law provisions. Under United Bank of Denver and ▇▇▇▇▇▇▇,
--------------------- -------
discussed above, the court held that deficiency judgments are only statutorily
limited and are not inherently objectionable, and thus are not so offensive as
to constitute an exception to the full faith and credit clause.
The United Bank of Denver and ▇▇▇▇▇▇▇ cases arguably stand for the
--------------------- -------
proposition that California will enforce a sister-state civil money judgment so
long as enforcement does not violate a fundamental policy of California and so
long as the sister-state court had jurisdiction over the parties and the subject
matter. Not decided by these cases, and still possibly open in California, are
the applicability of the fair value hearing requirements under California Code
of Civil Procedure Sections 580a and 726 if the lender, relying on the foreign
state choice of law provision, tries to bring suit in California for the
deficiency judgment. Section 726 provides that any action to recover on a debt
or other rights secured by a mortgage or deed
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April 30, 1998
Page 11
of trust on real property must be an action to foreclose such mortgage or deed
of trust, thus prohibiting a direct action on the debt, and this Section has
been interpreted by the California courts to require a lender to exhaust all
real property security for a debt in a single action. Because of Section 726, it
is doubtful that a suit can be brought directly on a note in a California court
when the note is secured by California real property, even if there is a foreign
state choice of law provision in the note and the foreign state permits direct
actions on the note, and even if one or more of the parties are domiciled in the
foreign state and the note is to be paid in the foreign state.
We call your attention to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 210 Cal.App.3d 1215, 258
----------------
Cal.Rptr. 780 (1989), in which the court acknowledged that the full faith and
credit clause of the Federal Constitution requires a California court to
recognize a judgment of another state as res judicata even if the judgment could
not have been obtained in California. However, in this case, the court held
that the full faith and credit clause did not require a California court to
honor a Colorado judgment that was inconsistent with a prior California
judgment. Following foreclosure of real property located in Colorado that had
been mortgaged as security for a Colorado loan, the lender first brought suit in
California for a deficiency judgment. After it realized that California law
prohibited such a deficiency judgment (California Code of Civil Procedure
Section 580b relating to purchase money mortgages), the lender allowed a summary
judgment to be entered against it and subsequently obtained a judgment in
Colorado for the deficiency. When the lender sought to enter the judgment in
California pursuant to the Sister State-Money Judgments Act, the court refused
to enter the Colorado judgment because the lender had chosen to first bring the
deficiency suit in California and had allowed California law to be applied.
We also call your attention to Allstate Ins. ▇. ▇▇▇▇▇, ▇▇▇ ▇.▇. ▇▇▇, 312-
----------------------
313, 101 S.Ct. 633, 640 (1981), in which the United States Supreme Court held
that "... for a States substantive law to be selected in a constitutionally
permissible manner, that State must have a significant contact or significant
aggregation of contacts, creating state interests, such that the choice of its
law is neither arbitrary nor fundamentally unfair."
By the use of the term "enforceable", we mean that, in the event of a
material breach of a material provision of the Documents, you have a right to
foreclose on the Collateral in accordance with California law and, subject to
the anti-deficiency judgment legislation referred to below, and the provisions
of California Code of Civil Procedure Sections 726.5 and 736 with respect to any
environmental indemnity, a right to recover damages in an action at law, but we
are expressing no opinion with respect to the availability of specific
performance or other equitable remedies. We advise you also that enforcement of
your rights and remedies under the Documents (i) must be undertaken in a
reasonable manner, (ii) may be limited by bankruptcy, insolvency, liquidation,
receivership, reorganization, moratorium or other similar
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April 30, 1998
Page 12
laws and court decisions relating to, limiting or affecting the rights of
creditors generally (including, without limitation, any law pertaining to
preferences, automatic stays, avoiding powers, limitations on ipso facto and
anti-assignment clauses, the coverage of pre-petition security agreements
applicable to property acquired after a petition is filed, or fraudulent
transfers and obligations), (iii) is subject to the availability of equitable
defenses (e.g. waiver, laches and estoppel) against a party seeking enforcement,
----
and (iv) is subject to general legal and equitable principles of good faith,
fair dealing and equity, as the same may be construed in the context of emerging
judicial doctrines of lender liability or otherwise.
We further advise you that certain rights, remedies and waivers contained
in the Documents and certain provisions contained therein may be limited or
rendered ineffective by applicable California laws or judicial decisions
governing such provisions. While California statutory and case law on the
subject is extensive and varied, such statutory and case law does not render the
Documents invalid as a whole, and there exists, in the Documents or pursuant to
applicable law but subject to the qualifications and limitations set forth in
this opinion, legally adequate remedies for a substantial realization of the
principal benefits and/or security intended to be provided by the Security
Documents.
With respect to the enforcement of your rights and remedies under the
Documents generally, we call your attention to the provisions of Sections
580(a), 580(d) and 726 of the UCC. Sections 580(a) and 726 limit the size of a
deficiency judgment after a foreclosure of real property to either (i) the
amount by which the entire amount of the indebtedness due at the time of sale
exceeded the fair value of the foreclosed property at the time of sale, or (ii)
the difference between the amount for which the property was sold and the entire
amount of the indebtedness secured by the deed of trust or mortgage, whichever
is smaller. Section 580(d) prohibits any deficiency judgement after the sale of
real property under a power of sale contained in a mortgage or deed of trust
given to secure a note. Section 726 provides that any action to recover on a
debt or other rights secured by a mortgage or deed of trust on real property
must be an action to foreclose such mortgage or deed of trust, thus prohibiting
a direct action on the debt or the exercise of other rights by the holder of
such mortgage or deed of trust, and has been interpreted by the California
courts to require a lender to exhaust all collateral security for a debt in a
single action. (But see California Uniform Commercial Code Section 9501(4)(b)
-------
with respect to the applicability of Section 726 to personal property collateral
and California Code of Civil Procedure Sections 726.5 and 736 (discussed below)
with respect to the applicability of Section 726 to environmentally impaired
real property collateral and to breaches by a borrower of environmental
provisions in real property secured loan documents.)
With respect to any provisions of the Documents that relate to the
application of insurance proceeds, we call your attention to ▇▇▇▇▇▇▇▇▇▇▇ v.
--------------
▇▇▇▇, 81 Cal. App. 3d 75, 146
----
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Page 13
Cal. ▇▇▇▇. ▇▇ (1978), in which the court examined provisions in a deed of trust
(i) requiring the trustor to restore the property if damaged and (ii)
authorizing the beneficiary to apply insurance proceeds either to restore the
property or to reduce the indebtedness. The court concluded that the deed of
trust was subject to an implied covenant requiring good faith and fair dealing
on the part of the beneficiary, and held that the right of a beneficiary to
apply insurance proceeds to reduce the balance of a note secured by a deed of
trust must be performed in good faith and with fair dealing and that, to the
extent the security is not impaired, the beneficiary must permit those proceeds
to be used for the costs of rebuilding. Accord, Kreshek ▇. ▇▇▇▇▇▇▇▇, 157 Cal.
-------------------
App. 3d 279, 204 Cal. ▇▇▇▇. ▇▇ (1984). See also California Civil Code Section
--- ----
2924.7.
With respect to any provisions of the Documents that relate to the
application of condemnation proceeds, we call your attention to Section 1265.225
of the California Code of Civil Procedure, which provides that, where there is a
partial taking of property encumbered by a lien, the lienholder may share in the
award only to the extent determined by the court to be necessary to prevent an
impairment of the security, and the lien shall continue upon the part of the
property not taken as security for the unpaid portion of the indebtedness.
Accord, ▇▇▇▇▇▇▇▇ v. Security Pacific National Bank, 27 Cal. App. 3d 482, 103
------------------------------------------
Cal. ▇▇▇▇. ▇▇ (1972). The lienholder and the property owner may agree, however,
at any time after commencement of the condemnation proceeding, that some or all
of the award shall be apportioned to the lienholder on the indebtedness.
With respect to any provisions of the Documents that relate to impounds, we
call your attention to Section 2954.1 of the California Civil Code, which
provides that no lender or person who purchases obligations secured by real
property, or any agent of such lender or purchaser, who maintains an impound,
trust or other type of account for the payment of taxes and assessments on real
property, insurance premiums or other purposes relating to such property shall
do either of the following: (i) require the borrower or vendee to deposit in
such account in any month a sum in excess of the amount that would be permitted
in connection with a federally related mortgage loan pursuant to Section 10 of
the Real Estate Settlement Procedures Act of 1974, as amended, or (ii) require
the sums maintained in such account to exceed at any time the amount or amounts
reasonably necessary to pay such obligations as they become due. Any sum held
in excess of the reasonable amount shall be refunded within thirty (30) days,
unless the parties mutually agree to the contrary. Such an agreement may be
rescinded at any time by any party.
Section 1717 of the California Civil Code provides that, in any action on a
contract where such contract specifically provides that attorneys' fees and
costs incurred to enforce the provisions of such contract shall be awarded
either to one of the parties or to the prevailing party, the prevailing party,
whether or not it is the party specified in the contract, shall be
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April 30, 1998
Page 14
entitled to an award of reasonable attorneys' fees in addition to an award of
costs and necessary disbursements.
Sections 2924 and 2924b of the California Civil Code provide that a power
of sale contained in a deed of trust or mortgage shall not be exercised until
recordation of a notice of default (identifying the mortgage or deed of trust
and containing a statement that a default has occurred, and setting forth, among
other things, the nature of the default and of the election to sell), and that
within ten (10) days following recordation of the notice of default, a copy of
such notice shall be delivered to each trustor or mortgagor and to any party
that previously filed a request for such a copy.
Section 2924c of the California Civil Code provides that, whenever the
maturity of an obligation secured by a deed of trust or mortgage is accelerated
by reason of a default in the payment of interest or of any installment of
principal or other sums secured thereby, the trustor and certain other entitled
persons have the night, at any time within the period commencing with the date
of recordation of the notice of default until five (5) business days prior to
the date of sale set forth in the initial recorded notice of sale, if the power
of sale therein is to be exercised, or otherwise at any time prior to the entry
of the decree of foreclosure, to cure such default by paying the entire amount
then due (including certain reasonable costs and expenses incurred in enforcing
such obligations, but excluding any amount that otherwise would not be due but
for such acceleration) and thereby reinstate such deed of trust and the
obligations secured thereby to the same effect as if no such acceleration had
occurred.
Section 564 of the California Code of Civil Procedure describes and limits
the types of litigation in which receivers can be appointed. Under Section
564(b)(10), a receiver may be appointed in an action "by a secured lender for
specific performance of an assignment of rents provision in a deed of trust" and
"may be continued after entry of a judgment for specific performance in that
action, if appropriate to protect, operate, or maintain real property encumbered
by the deed of trust" or "to collect the rents therefrom while a pending
nonjudicial foreclosure under power of sale in the deed of trust or mortgage is
being completed".
With respect to any provisions of the Documents that relate to late payment
charges, we call your attention to Section 2954.5 of the California Civil Code,
which provides that before the first late payment charge may be assessed by any
lender on a delinquent payment of a loan secured by real property, the borrower
shall either (i) be notified in writing and given at least ten (10) days from
mailing of such notice in which to cure the delinquency, or (ii) be informed, by
a billing or notice sent for each payment due on the loan, of the date after
which such a charge will be assessed. Said notice shall contain the amount of
such charge or the method by which it is calculated. If a subsequent payment
becomes delinquent, the
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April 30, 1998
Page 15
borrower shall be notified in writing, before the late charge is to be imposed,
that the charge will be imposed if payment is not received, or the borrower
shall be notified at least semiannually of the total amount of late charges
imposed during the period covered by the notice. The failure of the lender to
comply therewith does not excuse or defer the borrower's performance of any
obligation incurred in the loan transaction other than its obligation to pay a
late charge.
With respect to any provisions of the Documents that purport to waive any
statutes of limitations, we call your attention to Section 360.5 of the
California Code of Civil Procedure, which provides that no waiver executed prior
to the expiration of the time limited for the commencement of the action shall
be effective for a period exceeding four (4) years from the date of expiration
of the time limited for commencement of the action, unless renewed for a further
period not exceeding four (4) years from the expiration of the immediately
preceding waiver.
With respect to any provisions of the Documents that purport to waive
marshaling of assets, you should be aware that such a waiver would not affect
the rights of a third party junior creditor.
We advise you that although the power of sale is created by contract, its
exercise in a given case may still be subject to judicial scrutiny. Various
limitations have been imposed by California law and court decisions upon the
strict enforcement of certain covenants in debt instruments absent a showing of
damage to the lender, impairment of the value of collateral or impairment of the
borrower's ability to pay (such covenants may include, without limitation,
covenants to provide reports or notices, covenants to comply with requirements
of law, covenants to maintain and repair, covenants with respect to alterations
and additions, and covenants relating to the rights or remedies of a lessor
under a lease that may constitute collateral for a loan); e.g., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
---- ---------------
181 Cal.App.3d 791 (1986); Kreshek ▇. ▇▇▇▇▇▇▇▇, supra; ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
------------------- -------------------
supra; ▇▇▇▇▇▇▇▇ v. Security Pacific National Bank, supra. In addition, a
------------------------------------------
California court might refuse to give strict and literal effect to provisions
accelerating indebtedness under certain circumstances if it concluded that
enforcement of such provisions, on the basis of the facts and circumstances then
before such court, was not reasonably necessary to protect against impairment of
a lender's security or the risk of default. Depending on the particular facts
then before the court, such refusal might rest on one or more public policies as
expressed in the statutes and appellate authorities in California disfavoring
forfeitures, penalties and restraints against, or the imposition of burdens
upon, the alienation of property. We also note the effect of case authority
indicating that a lender may be preliminarily enjoined from exercising its
remedies under a deed of trust pending a judicial determination of the
underlying merits if a court determines that the quantum of harm suffered by a
lender as a result of being so enjoined is outweighed by the quantum of harm
that would
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April 30, 1998
Page 16
be suffered by a debtor as a result of such exercise. See e.g., Baypoint
------- --------
Mortgage Corp. v. Crest Premium Real Estate Investments Retirement Trust, 168
------------------------------------------------------------------------
Cal.App.3d 818 (1985). If such sale is not enjoined or set aside, the lender may
be liable for wrongful foreclosure following a non-judicial sale of the
property.
To the extent that the Documents purport to assign to you certain
governmental permits and licenses or to grant to you a security interest in such
]licenses and permits or to require the Borrowers or some other party to
transfer such licenses or permits incident to any foreclosure, we express no
opinion whatsoever as to the transferability of any such permits or licenses or
the enforceability of any such provisions.
The exercise or attempted exercise of any right or remedy provided in the
Documents relating to California Collateral covered by the UCC is subject to the
limitations set forth in the California Commercial Code. Without limiting the
generality of the foregoing, we call your attention to Section 9501 of the
California Commercial Code which relates to the enforcement and foreclosure of
security interests and to Section 9504(3) of the California Commercial Code
which requires that a secured party act in good faith and in a commercially
reasonable manner in any sale or lease of collateral. We call your attention
to the fact that the California courts have repeatedly held that the sanction
for a secured party's failure to fulfill its burden of acting in a commercially
reasonable manner is the loss of any right whatsoever to recover a deficiency
judgment. See e.g. ▇▇▇▇▇ v. Summit Sports, 173 Cal.App.3d 965 (1985); Atlas
------------------------------- -----
Thrift ▇. ▇▇▇▇▇, 27 Cal.App.3d 999 (1972). Section 9504(3) of the California
---------------
Commercial Code also provides that a secured party may not purchase collateral
at a private sale unless the collateral is customarily sold in a recognized
market or is the subject of widely or regularly distributed standard price
quotations.
Under certain circumstances, contractual provisions respecting various
self-help or summary remedies without notice or opportunity for hearing or
correction, including, without limitation, sales not in compliance with Sections
9504-9506 of the California Commercial Code, may be unenforceable especially if
their operation would work a substantial forfeiture or impose a substantial
penalty upon the burdened party.
Under the case of Karoutas v. HomeFed Bank, 232 Cal.App.3d 767 (1991), if
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you learn of any material defects in the California Mortgage Property, you may
be required to disclose such defects to prospective purchasers in any
foreclosure sale.
Under certain circumstances, the following provisions may be unenforceable:
(a) provisions waiving (i) vaguely or broadly stated rights, (ii) unknown future
rights (including without limitation a waiver of the right to trial by jury),
(iii) unknown future defenses, (iv) rights to damages, or (v) the benefits of
statutory, regulatory, or constitutional rights, unless
LOEB&LOEB LLP
Credit Suisse First Boston,
April 30, 1998
Page 17
and to the extent the statute, regulation or constitution explicitly allows
waiver; and (b) provisions stating (i) that rights or remedies are not
exclusive, (ii) that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, or (iii) that the election of
some particular remedy or remedies does not preclude recourse to one or more
others; provided, however, that the unenforceability of such provisions will not
prevent the practical realization of the benefits intended to be granted by the
Mortgages.
The collectability of interest under the Documents, to the extent that
interest computed at the rate set forth in the Documents based upon a 360-day
year exceeds interest that would accrue at the same rate but computed upon a
365-day year, is subject to certain judicial precedents in California, including
but not limited to Fletcher v. Security National Bank, 23 Cal. 3d 442 (1979),
----------------------------------
which indicate that a California court would enjoin collection of such interest
and award restitution thereof to a borrower, if, on the basis of the facts and
circumstances then before the court, the court determined that such relief was
necessary to prevent the use or employment of an unfair trade practice.
With respect to the enforceability of any environmental provisions of the
Documents, provisions that provide protection or indemnification for
environmentally related liabilities may be unenforceable or limited by
applicable law. We call your attention to Section 736 of the California Code of
Civil Procedure which limits the damages a secured lender may recover against a
borrower for breach of any environmental provisions relating to real property
security to reimbursement or indemnification of the following: (a) if not
pursuant to an order of any federal, state or local governmental agency relating
to the cleanup, remediation or other response action required by applicable law,
those costs relating to a reasonable and good faith response action concerning a
release or threatened release of hazardous substances which is anticipated by
the environmental provision; (b) if pursuant to such an order of any
governmental agency, all amounts reasonably advanced in good faith by the
secured lender in connection therewith, provided the lender negotiated, or
attempted to negotiate, in good faith to minimize the amounts it was required to
advance under the order; (c) all liabilities of the secured lender to any third
party relating to the breach and not arising from acts, omissions or other
conduct which occur after the borrower is no longer an "owner or operator" (as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sec. 9601, et seq.)) of the real property
security, and provided the secured lender is not responsible for the
environmentally impaired condition of the real property security; and (d)
attorney's fees and costs incurred by the secured lender relating to the breach.
See also Section 726.5 of the California Code of Civil Procedure which limits a
--- ----
lender's right to waive its lien against "environmentally impaired" or
"affected" collateral (as such terms are therein defined).
LOEB&LOEB LLP
Credit Suisse First Boston,
April 30, 1998
Page 18
Various restrictions have been established by California statutory and case
law upon the enforceability of waivers contained in indemnity agreements where
such waivers purport to waive generally various statutory and other rights
accorded to indemnitors and other sureties under California law, including,
without limitation, the provisions of Civil Code Sections 2787 through 2855,
inclusive. Without limiting the generality of the foregoing, we expressly note
the effect of California Civil Code Sections 2809, which provides that the
obligations of a surety may not exceed or be more burdensome than those of the
principal obligor, 2819 providing that, unless otherwise consented to by a
surety, a surety is exonerated by any act of a creditor which alters the
principal's obligations or impairs or suspends any rights or remedies of such
creditor against a principal obligor, 2825 indicating that any intervention or
omission by a creditor which discharges the principal obligor by operation of
law will exonerate a surety, 2845 authorizing a surety to require its creditor
to proceed against the principal obligor or pursue other remedies within the
creditor's power and providing for exoneration of a surety to the extent that a
surety is prejudiced by the creditor's failure to so proceed, and 2848 and 2849
which, respectively, grant subrogation rights to a surety and entitle a surety
to the benefit of any security held by a creditor for performance of the
principal's obligations. We also call your attention to the judicially created
exoneration defenses accorded to a surety in any setting in which a creditor
proceeds against the principal obligor or any security in a manner which impairs
a surety's right of reimbursement under Civil Code Sections 2848 and 2849. See
---
e.g., ▇▇▇▇▇▇▇ v. Bank of America, 145 Cal.App.3d 204 (1983); Union Bank v.
--- -------------------------- -------------
Gradsky, 265 Cal.App.2d 40 (1968). We also note the effect of California Civil
-------
Code Section 3268, which provides, in essence, that statutory protections
available by law under Part 4 of Division III of the Civil Code to contracting
parties can be waived, unless such waiver would be against public policy.
We express no opinion as to (a) the validity or enforceability of any
provision of any of the Documents which provides for any penalty, prepayment
fee, late charge, acceleration of future amounts due (other than principal)
without appropriate discount to present value, or an increase in the rate of
interest due after a default on the Loan; (b) the enforceability of the
appointment of, and the rights of, a lender or other parties as attorney-in-fact
of any debtor under any of the Documents; (c) the indemnification provisions of
any of the Documents, to the extent such provisions might be violative of public
policy; (d) the survivability or severability provisions of any of the
Documents; (e) any provision in any of the Documents which provides that oral
modifications to such Documents will be unenforceable or which limits the
applicability of the doctrine of promissory estoppel; (f) any liquidated damage
provision in any of the Documents to the extent the same may be deemed
unreasonable; (g) any provision which prohibits assignment by operation of law
or in any other respect which may be deemed unreasonable under the
circumstances, or (h) time-is-of-the-essence clauses.
LOEB&LOEB LLP
Credit Suisse First Boston,
April 30, 1998
Page 19
Please note that, under certain circumstances, claims and interests of
senior creditors have been equitably subordinated to claims and interests of
junior creditors and/or treated as unsecured claims and interests as a result of
acts, conduct or omissions (including actual or constructive knowledge thereof)
by such senior creditors. Accordingly, our opinion with respect to
enforceability of the security interests granted by the Documents is also
subject to the effect of any laws and rulings which may be applicable as a
result of your acts, conduct, or omissions (including actual or constructive
knowledge thereof).
We express no opinion with respect to any savings clause set forth in the
Documents.
We express no opinion as to the remedies available to the parties for non-
material violations or breaches of the Documents.
We express no opinion as to the validity or enforceability of any
provisions of the Documents which (a) prohibit the Borrower from further
encumbering the Collateral or (b) permit the acceleration of the indebtedness
secured by the Collateral in the event of any breach of any provision against
further encumbrances by the Loan Party thereto.
California Civil Code Section 882.020, provides that a deed of trust or
similar instrument becomes unenforceable: (1) ten years after the last date for
performance of the obligations secured thereby ascertainable from the record; or
(2) if the last date for performance cannot be ascertained from the record, then
sixty years after being recorded, in either case subject to certain other
provisions more fully set forth in the statute.
Section 1670.5 of the California Civil Code provides that if a court as a
matter of law finds a contract or any clause of a contract to be
"unconscionable" at the time it was made, the court may refuse to enforce the
contract, or the court may enforce the remainder of the contract without the
"unconscionable" clause so as to avoid an "unconscionable" result. That section
also permits parties to present evidence as to the commercial setting, purpose
and effect of any contract or clause thereof claimed to be "unconscionable" to
aid the court in making its determination.
Certain provisions of the California Code of Civil Procedure (including but
not limited to Sections 726(e) and 729.010 through 729.090, inclusive) grant to
the judgment debtor and its successor in interest certain rights of redemption
in the event of a judicial foreclosure of a deed of trust or mortgage.
To the extent that any of the Documents provide that, upon default
thereunder, the Collateral Agent or the other Creditors may apply any sums
deposited with them by the Borrowers to cover amounts secured thereby and to the
extent they do not have a perfected
LOEB&LOEB LLP
Credit Suisse First Boston,
April 30, 1998
Page 20
security interest in such sums, we call your attention to Security Pacific
----------------
National Bank ▇. ▇▇▇▇▇, 51 Cal.3d 991, 275 Cal. ▇▇▇▇. ▇▇▇ (1990), in which the
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California Supreme Court held that the lender was prevented under Section 726 of
the California Code of Civil Procedure (discussed above) from foreclosing under
its deed of trust because the lender's action to set off against a general
deposit account of the borrower the amount due and owing by said borrower under
a note secured by the lender's deed of trust violated the "security-first" rule
embodied in Section 726, which requires a secured creditor to proceed against
the real property security before enforcing the underlying debt or else be held
to have waived its lien on the real property security.
We are admitted to practice in the State. We express no opinion as to
matters under or involving the laws of any jurisdiction other than laws of the
United States and the State and its political subdivisions.
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent, the Collateral Agent or the Issuing Bank,
and any participant, assignee or successor to the interests of the Lenders under
the Documents but may not be relied upon by any other "person" for any other
purpose.
Very truly yours,
Loeb & Loeb LLP
