EXHIBIT 4.1
CONFORMED COPY
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CDRJ ACQUISITION CORPORATION
(to be renamed JAFRA COSMETICS INTERNATIONAL, INC.)
and
JAFRA COSMETICS INTERNATIONAL, S.A. de C.V.,
as several and not joint Issuers and as Note Guarantors,
CDRJ INVESTMENTS (LUX) S.A.
and the other Note Guarantors from time to time parties hereto,
as Note Guarantors
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
_____________
INDENTURE
Dated as of April 30, 1998
_____________
11 3/4% Senior Subordinated Notes Due 2008
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions.................................................................... 2
Section 102. Other Definitions.............................................................. 35
Section 103. Rules of Construction.......................................................... 37
Section 104. Incorporation by Reference of TIA.............................................. 37
Section 105. Conflict with TIA.............................................................. 38
Section 106. Compliance Certificates and Opinions........................................... 38
Section 107. Form of Documents Delivered to Trustee......................................... 39
Section 108. Acts of Noteholders; Record Dates.............................................. 39
Section 109. Notices, etc., to Trustee and Company.......................................... 42
Section 110. Notices to Holders; Waiver..................................................... 42
Section 111. Effect of Headings and Table of Contents....................................... 43
Section 112. Successors and Assigns......................................................... 43
Section 113. Separability Clause............................................................ 43
Section 114. Benefits of Indenture.......................................................... 43
Section 115. GOVERNING LAW.................................................................. 43
Section 116. Legal Holidays................................................................. 43
Section 117. No Personal Liability of Directors, Officers, Employees, Incorporators
and Stockholders............................................................... 44
Section 118. Exhibits and Schedules......................................................... 44
Section 119. Counterparts................................................................... 44
Section 120. Company as Agent for Issuers................................................... 44
ARTICLE 2
NOTE FORMS
Section 201. Forms Generally................................................................ 45
Section 202. Form of Trustee's Certificate of Authentication................................ 46
Section 203. Restrictive and Global Note Legends............................................ 47
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ARTICLE 3
THE NOTES
Section 301. Title and Terms................................................................ 49
Section 302. Denominations.................................................................. 50
Section 303. Execution, Authentication and Delivery and Dating.............................. 50
Section 304. Temporary Notes................................................................ 51
Section 305. Registration, Registration of Transfer and Exchange............................ 51
Section 306. Mutilated, Destroyed, Lost and Stolen Notes.................................... 52
Section 307. Payment of Interest Rights Preserved........................................... 53
Section 308. Persons Deemed Owners.......................................................... 54
Section 309. Cancellation................................................................... 54
Section 310. Computation of Interest........................................................ 55
Section 311. CUSIP Numbers.................................................................. 55
Section 312. Book-Entry Provisions for Global Notes......................................... 55
Section 313. Special Transfer Provisions.................................................... 57
Section 314. Payment of Additional Interest................................................. 60
ARTICLE 4
COVENANTS
Section 401. Payment of Principal, Premium and Interest..................................... 60
Section 402. Maintenance of Office or Agency................................................ 60
Section 403. Money for Payments To Be Held in Trust......................................... 61
Section 404. Additional Amounts............................................................. 62
Section 405. SEC Reports.................................................................... 64
Section 406. Statement as to Default........................................................ 65
Section 407. Limitation on Indebtedness..................................................... 65
Section 408. Limitation on Other Subordinated Indebtedness.................................. 69
Section 409. Limitation on Restricted Payments.............................................. 69
Section 410. Limitation on Restrictions on Distributions from Restricted Subsidiaries....... 73
Section 411. Limitation on Sales of Assets and Subsidiary Stock............................. 75
Section 412. Limitation on Transactions with Affiliates..................................... 78
Section 413. Limitation on Liens............................................................ 80
Section 414. Future Note Guarantors......................................................... 80
Section 415. Purchase of Notes Upon a Change in Control..................................... 81
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ARTICLE 5
SUCCESSORS
Section 501. When the Company or an Issuer May Merge, etc................................... 82
Section 502. Successor Substituted.......................................................... 83
ARTICLE 6
REMEDIES
Section 601. Events of Default.............................................................. 84
Section 602. Acceleration of Maturity; Rescission and Annulment............................. 86
Section 603. Other Remedies; Collection Suit by Trustee..................................... 87
Section 604. Trustee May File Proofs of Claim............................................... 87
Section 605. Trustee May Enforce Claims Without Possession of Notes......................... 88
Section 606. Application of Money Collected................................................. 88
Section 607. Limitation on Suits............................................................ 88
Section 608. Unconditional Right of Holders to Receive Principal, Premium and
Interest....................................................................... 89
Section 609. Restoration of Rights and Remedies............................................. 89
Section 610. Rights and Remedies Cumulative................................................. 89
Section 611. Delay or Omission Not Waiver................................................... 89
Section 612. Control by Holders............................................................. 90
Section 613. Waiver of Past Defaults........................................................ 90
Section 614. Undertaking for Costs.......................................................... 91
Section 615. Waiver of Stay, Extension or Usury Laws........................................ 91
ARTICLE 7
THE TRUSTEE
Section 701. Certain Duties and Responsibilities............................................ 91
Section 702. Notice of Defaults............................................................. 92
Section 703. Certain Rights of Trustee...................................................... 93
Section 704. Not Responsible for Recitals or Issuance of Notes.............................. 94
Section 705. May Hold Notes................................................................. 94
Section 706. Money Held in Trust............................................................ 94
Section 707. Compensation and Reimbursement................................................. 94
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Section 708. Conflicting Interests.......................................................... 95
Section 709. Corporate Trustee Required; Eligibility........................................ 95
Section 710. Resignation and Removal; Appointment of Successor.............................. 95
Section 711. Acceptance of Appointment by Successor......................................... 97
Section 712. Merger, Conversion, Consolidation or Succession to Business.................... 97
Section 713. Preferential Collection of Claims Against Issuers.............................. 98
Section 714. Appointment of Authenticating Agent............................................ 98
Section 715. Withholding Taxes.............................................................. 98
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND ISSUERS
Section 801. Issuers to Furnish Trustee Names and Addresses of Holders...................... 98
Section 802. Preservation of Information; Communications to Holders......................... 99
Section 803. Reports by Trustee............................................................. 99
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
Section 901. Without Consent of Holders..................................................... 100
Section 902. With Consent of Holders........................................................ 101
Section 903. Execution of Amendments, Supplements or Waivers................................ 102
Section 904. Revocation and Effect of Consents.............................................. 103
Section 905. Conformity with TIA............................................................ 103
Section 906. Notation on or Exchange of Notes............................................... 103
ARTICLE 10
REDEMPTION OF NOTES
Section 1001. Right of Redemption............................................................ 104
Section 1002. Applicability of Article....................................................... 105
Section 1003. Election to Redeem; Notice to Trustee.......................................... 105
Section 1004. Selection by Trustee of Notes to Be Redeemed................................... 106
Section 1005. Notice of Redemption........................................................... 106
Section 1006. Deposit of Redemption Price.................................................... 107
Section 1007. Notes Payable on Redemption Date............................................... 107
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Section 1008. Notes Redeemed in Part......................................................... 108
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 1101. Satisfaction and Discharge of Indenture........................................ 108
Section 1102. Application of Trust Money..................................................... 109
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
Section 1201. The Issuers' Option To Effect Defeasance or Covenant Defeasance................ 110
Section 1202. Defeasance and Discharge....................................................... 110
Section 1203. Covenant Defeasance............................................................ 111
Section 1204. Conditions to Defeasance or Covenant Defeasance................................ 111
Section 1205. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions.......................................... 113
Section 1206. Reinstatement.................................................................. 113
Section 1207. Repayment to Issuers........................................................... 114
ARTICLE 13
NOTE GUARANTEES
Section 1301. Guarantees Generally........................................................... 114
Section 1302. Continuing Guarantees.......................................................... 116
Section 1303. Release of Note Guarantees..................................................... 117
Section 1304. Agreement to Subordinate....................................................... 118
Section 1305. Waiver of Subrogation.......................................................... 118
Section 1306. Notation Not Required.......................................................... 118
Section 1307. Successors and Assigns of Note Guarantors...................................... 119
Section 1308. Execution and Delivery of Subsidiary Guarantees................................ 119
Section 1309. Notices........................................................................ 119
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ARTICLE 14
SUBORDINATION
Section 1401. Agreement To Subordinate....................................................... 119
Section 1402. Liquidation, Dissolution, Bankruptcy........................................... 120
Section 1403. Default on Senior Indebtedness................................................. 120
Section 1404. Acceleration of Payment of Notes............................................... 121
Section 1405. When a Distribution Must Be Paid Over.......................................... 121
Section 1406. Subrogation.................................................................... 122
Section 1407. Relative Rights................................................................ 122
Section 1408. Subordination May Not Be Impaired by Issuers................................... 122
Section 1409. Rights of Trustee and Paying Agent............................................. 122
Section 1410. Distribution or Notice to Representative....................................... 123
Section 1411. Article 14 Not To Prevent Events of Default or Limit Right To
Accelerate..................................................................... 123
Section 1412. Trust Moneys Not Subordinated.................................................. 123
Section 1413. Trustee Entitled To Rely....................................................... 123
Section 1414. Trustee To Effectuate Subordination............................................ 124
Section 1415. Trustee Not Fiduciary for Holders of Senior Indebtedness....................... 124
Section 1416. Reliance by Holders of Senior Indebtedness on Subordination
Provisions..................................................................... 124
Section 1417. Trustee's Compensation Not Prejudiced.......................................... 124
ARTICLE 15
SUBORDINATION OF NOTE GUARANTEES
Section 1501. Agreement To Subordinate....................................................... 125
Section 1502. Liquidation, Dissolution, Bankruptcy........................................... 125
Section 1503. Default on Senior Indebtedness................................................. 125
Section 1504. Acceleration of Payment of Notes............................................... 127
Section 1505. When a Distribution Must Be Paid Over.......................................... 127
Section 1506. Subrogation.................................................................... 127
Section 1507. Relative Rights................................................................ 128
Section 1508. Subordination May Not Be Impaired by Note Guarantors........................... 128
Section 1509. Rights of Trustee and Paying Agent............................................. 128
Section 1510. Distribution or Notice to Representative....................................... 129
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Section 1511. Article 15 Not To Prevent Events of Default or Limit Right To
Accelerate..................................................................... 129
Section 1512. Trust Moneys Not Subordinated.................................................. 129
Section 1513. Trustee Entitled To Rely....................................................... 129
Section 1514. Trustee To Effectuate Subordination............................................ 130
Section 1515. Trustee Not Fiduciary for Holders of Senior Indebtedness....................... 130
Section 1516. Reliance by Holders of Senior Indebtedness on Subordination
Provisions..................................................................... 130
Section 1517. Trustee's Compensation Not Prejudiced.......................................... 130
Exhibit A Form of Note
Exhibit B Form of Supplemental Indenture
Exhibit C Form of Regulation S Certificate
Exhibit D Form of Certificate of Beneficial Ownership
Exhibit E Form of First Supplemental Indenture
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Certain Sections of this Indenture relating to Sections 310 through 318
inclusive of the Trust Indenture Act of 1939:
Trust Indenture Act Section Indenture Section
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(S) 310(a)(1) ................................... 709
(a)(2) ................................... 709
(a)(3) ................................... Not Applicable
(a)(4) ................................... Not Applicable
(b) ................................... 708
(S) 311(a) ................................... 713
(b) ................................... 713
(b)(2) ................................... 803
803
(S) 312(a) ................................... 801
802
(b) ................................... 802
(c) ................................... 802
(S) 313(a) ................................... 803
(b) ................................... 803
(c) ................................... 803
803
(d) ................................... 803
(S) 314(a) ................................... 405
(a)(4) ................................... 102
406
(b) ................................... Not Applicable
(c)(1) ................................... 102
(c)(2) ................................... 102
(c)(3) ................................... Not Applicable
(d) ................................... Not Applicable
(e) ................................... 102
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Trust Indenture Act Section Indenture Section
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(S) 315(a) ................................... 701
(b) ................................... 702
803
(c) ................................... 701
(d) ................................... 701
(d)(1) ................................... 701
(d)(2) ................................... 701
(d)(3) ................................... 701
(e) ................................... 614
(S) 316(a) ................................... 101
612
(a)(1)(A) ................................... 602
612
(a)(1)(B) ................................... 613
(a)(2) ................................... Not Applicable
(b) ................................... 608
(c) ................................... 104
(S) 317(a)(1).......................................... 603
(a)(2).......................................... 604
(b)............................................. 403
(S) 318(a)............................................. 107
______________________
This cross-reference table shall not for any purpose be deemed to be part of the
Indenture.
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INDENTURE, dated as of April 30, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among CDRJ
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Acquisition Corporation, a corporation organized under the laws of the state of
Delaware (to be renamed Jafra Cosmetics International, Inc.), and Jafra
Cosmetics International, S.A. de C.V., a corporation organized under the laws of
Mexico, as several and not joint Issuers and as Note Guarantors; CDRJ
Investments (Lux) S.A., a corporation organized under the laws of Luxembourg, as
Note Guarantor; and State Street Bank and Trust Company, a Massachusetts trust
company, as Trustee.
RECITALS OF THE ISSUERS AND NOTE GUARANTORS
Each Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Notes. Each Note Guarantor party
hereto has duly authorized the execution and delivery of this Indenture to
provide for its guarantee of the Notes, as provided in this Indenture. Each Note
Guarantor party hereto has received good and valuable consideration for its
execution and delivery of the Indenture and its guarantee of the Notes.
All things necessary to make the Original Notes, when executed and
delivered by the Issuers and authenticated and delivered by the Trustee
hereunder and duly issued by the Issuers, the valid several obligations of the
Issuers, and to make this Indenture a valid agreement of the Issuers and each
Note Guarantor party hereto as of the date hereof, in accordance with the terms
of the Original Notes and this Indenture, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually agreed, for the equal and ratable benefit
of all Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
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Section 101 Definitions.
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"Acquisition" means the acquisition by the Company of the worldwide
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Jafra cosmetics business from The Gillette Company.
"Additional Assets" means (i) any property or assets that replace the
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property or assets that are the subject of an Asset Disposition; (ii) any
property or assets (other than Indebtedness and Capital Stock) to be used by the
Company or a Restricted Subsidiary in a Related Business; (iii) the Capital
Stock of a Person that is engaged in a Related Business and becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; or (iv) Capital Stock of any Person that at
such time is a Restricted Subsidiary, acquired from a third party.
"Additional Notes" means any notes issued under this Indenture in
----------------
addition to the Original Notes (other than any Notes issued pursuant to Section
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304, 305, 306, 312(c), 312(d) or 1008).
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"Affiliate" of any specified Person means any other Person, directly
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or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"all or substantially all" has the meaning given to such phrase in the
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Revised Model Business Corporation Act and commentary thereto.
"Asset Disposition" means any sale, lease, transfer or other
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disposition of shares of Capital Stock of a Restricted Subsidiary (other than
Designated Equity Interests, or (in the case of a Foreign Subsidiary) to the
extent required by applicable law), property or other assets (each referred to
for the purposes of this definition as a "disposition") by the Company or any of
its Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a disposition to the
Company or any Restricted Subsidiary, (ii) a disposition in the ordinary course
of business, (iii) the sale or discount (with or without recourse, and on
customary or commercially reasonable terms) of accounts receivable or notes
2
receivable arising in the ordinary course of business, or the conversion or
exchange of accounts receivable for notes receivable, (iv) any Restricted
Payment Transaction, (v) a disposition that is governed by Article 5, (vi) any
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Financing Disposition, (vii) any "fee in lieu" or other disposition of assets to
any governmental authority or agency that continue in use by the Company or any
Restricted Subsidiary, so long as the Company or any Restricted Subsidiary may
obtain title to such assets upon reasonable notice by paying a nominal fee,
(viii) any exchange of like property pursuant to Section 1031 (or any successor
section) of the Code, (ix) any financing transaction with respect to property
built or acquired by the Company or any Restricted Subsidiary after the Issue
Date, including any sale/leaseback transaction or asset securitization, (x) any
disposition arising from foreclosure, condemnation or similar action with
respect to any property or other assets, (xi) any disposition of Capital Stock,
Indebtedness or other securities of an Unrestricted Subsidiary, (xii) a
disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement
or other obligation with or to a Person (other than the Company or a Restricted
Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such
Restricted Subsidiary acquired its business and assets (having been newly formed
in connection with such acquisition), entered into in connection with such
acquisition, (xiii) a disposition of not more than 5% of the outstanding Capital
Stock of a Foreign Subsidiary that has been approved by the Board of Directors
or (xiv) any disposition or series of related dispositions for aggregate
consideration not exceeding $1.0 million.
"Authenticating Agent" means any Person authorized by the Trustee
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pursuant to Section 714 to act on behalf of the Trustee to authenticate Notes of
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one or more series.
"Average Life" means, as of the date of determination, with respect to
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any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means (i) any and all amounts, whether outstanding
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on the Issue Date or thereafter incurred, payable under or in respect of the
Senior Credit Facility, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company, either Issuer or any
Restricted Subsidiary whether or not a claim for post-filing interest is allowed
in such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees, other monetary obligations of any nature and all other amounts
payable thereunder or in respect thereof and (ii) all Hedging Obligations
arising in connection therewith to any party to the Senior Credit Facility (or
any affiliate thereof).
3
"Board of Directors" means the board of directors or other governing
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body of the Company or any committee thereof duly authorized to act on behalf of
such board or governing body.
"Borrowing Base" means the sum (determined as of the end of the most
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recently ended fiscal quarter for which consolidated financial statements of the
Company are available) of (1) 60% of Inventory of the Company and its Restricted
Subsidiaries and (2) 80% of Receivables of the Company and its Restricted
Subsidiaries.
"Business Day" means a day other than a Saturday, Sunday or other day
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on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Stock" of any Person means any and all shares, interests,
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rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means an obligation that is required to
----------------------------
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The Stated Maturity of any Capitalized Lease
Obligation shall be the date of the last payment of rent or any other amount due
under the related lease.
"Cash Equivalents" means any of the following: (a) securities issued
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or fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) time deposits, certificates of deposit or bankers'
acceptances of (i) any lender under the Senior Credit Agreement or (ii) any
commercial bank having capital and surplus in excess of $500,000,000 and the
commercial paper of the holding company of which is rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(or if at such time neither is issuing ratings, then a comparable rating of
another nationally recognized rating agency), (c) commercial paper rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (or if at such time neither is issuing ratings, then a
comparable rating of another nationally recognized rating agency) and (d)
investments in money market funds complying with the risk limiting conditions of
Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of
1940, as amended.
"CDR" means Clayton, Dubilier & Rice, Inc.
---
4
"CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited
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Partnership, a Cayman Islands exempted limited partnership, and any successor in
interest thereto.
"Cedel" means Cedel Bank, societe anonyme.
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"Change of Control" means:
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(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a percentage of the total voting
power of the Voting Stock of the Company that is (x) greater than the
percentage thereof that is then held in the aggregate by Permitted Holders
and (y) greater than 35% of the total voting power of the Voting Stock of
the Company (for the purposes of this clause (i), such other person shall
be deemed to beneficially own any Voting Stock of the Company held by a
parent corporation, if the Company is a Subsidiary of such parent
corporation and such other person is the beneficial owner (as defined in
this clause (i)), directly or indirectly, of a percentage of the total
voting power of the Voting Stock of the parent corporation that is (x)
greater than the percentage thereof that is then held in the aggregate by
Permitted Holders and (y) greater than 35% of the total voting power of the
Voting Stock of such parent corporation);
(ii) the Company ceases to beneficially own, directly or indirectly,
100% of the aggregate voting power of the Voting Stock of either Issuer
(excluding beneficial ownership of any other Person attributable to
Designated Equity Interests), other than in a transaction by the Company
in compliance with the provisions of Article 5 in which the Company's
---------
Successor succeeds to such beneficial ownership of the Company;
(iii) during any period of two consecutive years (during which period
the Company has been a party to this Indenture), individuals who at the
beginning of such period were members of the board of directors of the
Company (together with any new members thereof whose election by such board
of directors or whose nomination for election by holders of Capital Stock
of the Company was approved by one or more Permitted Holders or by a vote
of a majority of the members of such board of directors then still in
office who were either members thereof at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of such board of directors then in
office; or
5
(iv) the Company merges or consolidates with or into, or sells or
transfers (in one or a series of related transactions) all or substantially
all of the assets of the Company and its Restricted Subsidiaries to,
another Person (other than one or more Permitted Holders) and any "person"
(as defined in clause (i) above), other than one or more Permitted Holders,
is or becomes the "beneficial owner" (as defined in clause (i) above),
directly or indirectly, of a percentage of the total voting power of the
Voting Stock of the surviving Person in such merger or consolidation, or
the transferee Person in such sale or transfer of assets, as the case may
be, that is (x) greater than the percentage thereof that is then held in
the aggregate by Permitted Holders and (y) greater than 35% of the total
voting power of such Voting Stock (for purposes of this clause (iv), such
other person shall be deemed to beneficially own any Voting Stock of such
surviving or transferee Person held by a parent corporation, if such
surviving or transferee Person is a Subsidiary of such parent corporation
and such other person is the beneficial owner (as defined in clause (i)
above), directly or indirectly, of a percentage of the total voting power
of the Voting Stock of such parent corporation that is (x) greater than the
percentage thereof that is then held in the aggregate by Permitted Holders
and (y) greater than 35% of the total voting power of such Voting Stock).
"Change of Control Triggering Event" means the occurrence after the
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Issue Date of both (a) a Change of Control and (b) the failure of the Notes to
have, on the 30th day after such Change of Control, a rating of at least BBB-
(or equivalent successor rating) by S&P and a rating of at least Baa3 (or
equivalent successor rating) by Moody's.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" means CDRJ Investments (Lux) S.A., a Luxembourg corporation,
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and any successor in interest thereto.
"Company Request", "Company Order" and "Company Consent" mean,
--------------- ------------- ---------------
respectively, a written request, order or consent signed in the name of the
Company or the Issuers, as the case may be, pursuant to Section 120 by an
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Officer of the Company (in the case of the Company) or an Officer of each Issuer
(in the case of the Issuers).
"Consolidated Coverage Ratio" as of any date of determination means
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the ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and
its Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (ii)
Consolidated Interest Expense for such four fiscal quarters (in each case,
determined, for each fiscal quarter (or portion thereof) of the four fiscal
quarters ending prior
6
to the Issue Date, on a pro forma basis to give effect to the Acquisition as if
it had occurred at the beginning of such four-quarter period); provided, that
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(1) if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains
outstanding on such date of determination or if the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio is an Incurrence
of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on the first
day of such period (except that in making such computation, the amount of
Indebtedness under any revolving credit facility outstanding on the date of
such calculation shall be computed based on (A) the average daily balance
of such Indebtedness during such four fiscal quarters or such shorter
period for which such facility was outstanding or (B) if such facility was
created after the end of such four fiscal quarters, the average daily
balance of such Indebtedness during the period from the date of creation of
such facility to the date of such calculation),
(2) if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged any Indebtedness (each, a
"Discharge") since the beginning of the period or if the transaction giving
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rise to the need to calculate the Consolidated Coverage Ratio involves a
Discharge of Indebtedness (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid), Consolidated EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro forma
basis to such Discharge of such Indebtedness, including with the proceeds
of such new Indebtedness, as if such Discharge had occurred on the first
day of such period,
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any business or
any group of assets constituting an operating unit of a business (any such
disposition, a "Sale"), the Consolidated EBITDA for such period shall be
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reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the assets that are the subject of such Sale for such
period or increased by an amount equal to the Consolidated EBITDA (if
negative) attributable thereto for such period and Consolidated Interest
Expense for such period shall be reduced by an amount equal to (A) the
Consolidated Interest Expense attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such
Sale for such period (including through the assumption of such Indebtedness
7
by another Person) plus (B) if the Capital Stock of any Restricted
----
Subsidiary is sold, the Consolidated Interest Expense for such period
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such Sale,
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise) shall have
made an Investment in any Person that thereby becomes a Restricted
Subsidiary, or otherwise acquired any company, any business or any group of
assets constituting an operating unit of a business, including any such
Investment or acquisition occurring in connection with a transaction
causing a calculation to be made hereunder (any such Investment or
acquisition, a "Purchase"), Consolidated EBITDA and Consolidated Interest
--------
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any related Indebtedness) as if such
Purchase occurred on the first day of such period, and
(5) if since the beginning of such period any Person became a
Restricted Subsidiary or was merged or consolidated with or into the
Company or any Restricted Subsidiary, and since the beginning of such
period such Person shall have Discharged any Indebtedness or made any Sale
or Purchase that would have required an adjustment pursuant to clause (2),
(3) or (4) above if made by the Company or a Restricted Subsidiary during
such period, Consolidated EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Discharge, Sale or Purchase occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to any Sale, Purchase or other transaction, or the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred or repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged in connection therewith,
the pro forma calculations in respect thereof (including in respect of
anticipated cost savings or synergies relating to any such Sale, Purchase or
other transaction) shall be as determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness). If
any Indebtedness bears, at the option of the Company or a Restricted Subsidiary,
a rate of interest based on a prime or similar rate, a eurocurrency interbank
offered rate or other fixed or floating rate, and such Indebtedness is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated by applying such optional rate as the Company or such Restricted
Subsidiary may
8
designate. If any Indebtedness that is being given pro forma effect was Incurred
under a revolving credit facility, the interest expense on such Indebtedness
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate determined in good faith by a
responsible financial or accounting officer of the Company to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net
-------------------
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) provision for all taxes (whether or not paid,
estimated or accrued) based on income, profits or capital, (ii) Consolidated
Interest Expense and any Receivables Fees, (iii) depreciation, amortization
(including amortization of goodwill and intangibles and amortization and write-
off of financing costs) and all other non-cash charges or non-cash losses, and
(iv) any expenses or charges related to any Equity Offering, Investment or
Indebtedness permitted by this Indenture (whether or not consummated or
incurred).
"Consolidated Interest Expense" means, for any period, (i) the total
-----------------------------
interest expense of the Company and its Restricted Subsidiaries to the extent
deducted in calculating Consolidated Net Income, net of any interest income of
the Company and its Restricted Subsidiaries, including any such interest expense
consisting of (a) interest expense attributable to Capitalized Lease
Obligations, (b) amortization of debt discount, (c) interest in respect of
Indebtedness of any other Person that has been Guaranteed by the Company or any
Restricted Subsidiary, but only to the extent that such interest is actually
paid by the Company or any Restricted Subsidiary, (d) non-cash interest expense,
(e) the interest portion of any deferred payment obligation, and (f)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, plus (ii) Preferred Stock dividends
paid in cash in respect of Disqualified Stock of the Company held by Persons
other than the Company or a Restricted Subsidiary and minus (iii) to the extent
otherwise included in such interest expense referred to in clause (i) above,
Receivables Fees and amortization or write-off of financing costs, in each case
under clauses (i) through (iii) as determined on a Consolidated basis in
accordance with GAAP; provided, however, that gross interest expense shall be
-------- -------
determined after giving effect to any net payments made or received by the
Company and its Restricted Subsidiaries with respect to Interest Rate
Agreements.
"Consolidated Net Income" means, for any period, the net income (loss)
-----------------------
of the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP and before any reduction in respect of Preferred
Stock dividends; provided, however, that there shall not be included in such
-------- -------
Consolidated Net Income:
9
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (iii) below)
and (B) the Company's equity in the net loss of such Person shall be
included to the extent of the aggregate Investment of the Company or any of
its Restricted Subsidiaries in such Person,
(ii) any net income (loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary that is not
an Issuer or a Subsidiary Guarantor if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of similar distributions by such Restricted
Subsidiary, directly or indirectly, to the Company by operation of the
terms of such Restricted Subsidiary's charter or any agreement, instrument,
judgment, decree, order, statute or governmental rule or regulation
applicable to such Restricted Subsidiary or its stockholders (other than
(x) restrictions that have been waived or otherwise released, (y)
restrictions pursuant to the Notes or this Indenture and (z) restrictions
in effect on the Issue Date with respect to a Restricted Subsidiary and
other restrictions with respect to such Restricted Subsidiary that taken as
a whole are not materially less favorable to the Noteholders than such
restrictions in effect on the Issue Date), except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of any dividend
or distribution that was or that could have been made by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary (subject, in the case of a dividend that could have been made to
another Restricted Subsidiary, to the limitation contained in this clause)
and (B) the net loss of such Restricted Subsidiary shall be included to the
extent of the aggregate Investment of the Company or any of its other
Restricted Subsidiaries in such Restricted Subsidiary,
(iv) any gain or loss realized upon the sale or other disposition of
any asset of the Company or any Restricted Subsidiary (including pursuant
to any sale/leaseback transaction) that is not sold or otherwise disposed
of in the ordinary course of business (as determined in good faith by the
Board of Directors),
10
(v) any item classified as an extraordinary, unusual or
nonrecurring gain, loss or charge (including (a) any compensation expense
for stock options that will be cashed out, converted, exchanged or
otherwise retired in connection with the Acquisition, (b) any charge or
expense incurred for employee bonuses in connection with the Acquisition,
and (c) fees, expenses and charges associated with the Acquisition or any
acquisition, merger or consolidation after the Issue Date),
(vi) the cumulative effect of a change in accounting principles,
(vii) all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness,
(viii) any unrealized gains or losses in respect of Currency
Agreements,
(ix) any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than
the functional currency of such Person, and
(x) any non-cash compensation charge arising from any grant of
stock, stock options or other equity-based awards.
In the case of any unusual or nonrecurring gain, loss or charge not
included in Consolidated Net Income pursuant to clause (v) above in any
determination thereof, the Company will deliver an Officer's Certificate to the
Trustee promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual or nonrecurring
gain, loss or charge.
"Consolidated Total Assets" means, as of any date of determination,
-------------------------
the total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), provided that for purposes of
--------
paragraph (b) of Section 407 and the definition of "Permitted Investment,"
-----------
Consolidated Total Assets shall not be less than $258.5 million.
"Consolidation" means the consolidation of the accounts of each of the
-------------
Restricted Subsidiaries with those of the Company in accordance with GAAP;
provided, however, that "Consolidation" will not include consolidation of the
- -------- -------
accounts of any Unrestricted Subsidiary, but the interest of the Company or any
Restricted Subsidiary in any
11
Unrestricted Subsidiary will be accounted for as an investment. The term
"Consolidated" has a correlative meaning.
"Corporate Trust Office" means the office of the Trustee in the
----------------------
Borough of Manhattan, the City of New York, at which at any particular time its
corporate trust business shall be administered, which office on the Issue Date
is located at 61 Broadway, 15th Floor, New York, New York 10006.
"Currency Agreement" means, in respect of a Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement or
arrangements (including derivative agreements or arrangements), as to which such
Person is a party or a beneficiary.
"Default" means any event or condition that is, or after notice or
-------
passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
----------
successors.
"Designated Equity Interests" means (i) directors' qualifying shares,
---------------------------
or (ii) in the case of a Foreign Subsidiary, Capital Stock required by law to be
held by a Person other than the Company or any Restricted Subsidiary.
"Designated Senior Indebtedness" with respect to a Person means (i)
------------------------------
the Bank Indebtedness and (ii) any other Senior Indebtedness of such Person
that, at the date of determination, has an aggregate principal amount equal to
or under which, at the date of determination, the holders thereof are committed
to lend up to, at least $10.0 million and is specifically designated by such
Person in an agreement or instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Disinterested Director" means, with respect to any Affiliate
----------------------
Transaction, a member of the Board of Directors having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. A
member of the Board of Directors shall not be deemed to have such a financial
interest in any Affiliate Transaction by reason of such member's holding Capital
Stock of the Company or a Parent or any options, warrants or other rights in
respect of such Capital Stock.
"Disqualified Stock" means, with respect to any Person, any Capital
------------------
Stock (other than Management Stock) that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (other than following the
occurrence of a Change of Control or other similar event
12
described under such terms as a "change of control," or any Asset Disposition)
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof
(other than following the occurrence of a Change of Control or other similar
event described under such terms as a "change of control," or any Asset
Disposition), in whole or in part, in each case on or prior to the final Stated
Maturity of the Notes.
"Equity Offering" means a sale of Capital Stock (other than
---------------
Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or (y)
proceeds of which in an amount equal to or exceeding the Redemption Amount are
contributed to the Company or any of its Restricted Subsidiaries.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
Office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notes" means the Issuers' 11 3/4% Senior Subordinated Notes
--------------
Due 2008, containing terms substantially identical to the Initial Notes or any
Initial Additional Notes (except that (i) such Exchange Notes shall not contain
terms with respect to transfer restrictions and shall be registered under the
Securities Act, and (ii) certain provisions relating to an increase in the
stated rate of interest thereon shall be eliminated), that are issued and
exchanged for (a) the Initial Notes, as provided for in a registration rights
agreement relating to such Initial Notes and this Indenture, or (b) such Initial
Additional Notes as may be provided in any registration rights agreement
relating to such Additional Notes and this Indenture (including any amendment or
supplement hereto).
"Excluded Contribution" means Net Cash Proceeds, or the fair value, as
---------------------
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the Issue
Date or from the issuance or sale (other than to a Subsidiary of the Company) of
Capital Stock (other than Disqualified Stock) of the Company, in each case to
the extent designated as an Excluded Contribution pursuant to an Officer's
Certificate of the Company and not previously included in the calculation set
forth in Section 409(a)(3)(B)(x) for purposes of determining whether a
-----------------------
Restricted Payment may be made.
"Financing Disposition" means any sale, transfer, conveyance or other
---------------------
disposition of property or assets by the Company or any Subsidiary thereof to
any Receivables Entity, or by any Receivables Subsidiary, in each case in
connection with the Incurrence by a
13
Receivables Entity of Indebtedness, or obligations to make payments to the
obligor on Indebtedness, which may be secured by a Lien in respect of such
property or assets.
"First Supplemental Indenture" means the First Supplemental Indenture,
----------------------------
to be entered into substantially in the form attached hereto as Exhibit E.
---------
"Foreign Subsidiary" means (a) any Restricted Subsidiary of the
------------------
Company that is not organized under the laws of the United States of America or
any state thereof or the District of Columbia and (b) any Restricted Subsidiary
of the Company that has no material assets other than securities of one or more
Foreign Subsidiaries, and other assets relating to an ownership interest in any
such securities or Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
----
States of America as in effect on the Issue Date (for purposes of the
definitions of the terms "Consolidated Coverage Ratio," "Consolidated EBITDA,"
"Consolidated Interest Expense," "Consolidated Net Income" and "Consolidated
Total Assets," all defined terms in this Indenture to the extent used in or
relating to any of the foregoing definitions, and all ratios and computations
based on any of the foregoing definitions) and as in effect from time to time
(for all other purposes of this Indenture), including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person; provided, however, that the term "Guarantee" shall not
-------- -------
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
-------------------
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered in the Note Register.
"Holding Company Expenses" means (i) costs (including all professional
------------------------
fees and expenses) incurred by a Parent to comply with its reporting obligations
under federal or state laws or under this Indenture, including any reports filed
with respect to the Securities
14
Act, Exchange Act or the respective rules and regulations promulgated
thereunder, (ii) indemnification obligations of a Parent owing to directors,
officers, employees or other Persons under its charter or by-laws or pursuant to
written agreements with any such Person, (iii) other operational expenses of a
Parent incurred in the ordinary course of business, and (iv) expenses incurred
by a Parent in connection with any public offering of Capital Stock or
Indebtedness (x) where the net proceeds of such offering are intended to be
received by or contributed or loaned to the Company or a Restricted Subsidiary,
or (y) in a prorated amount of such expenses in proportion to the amount of such
net proceeds intended to be so received, contributed or loaned, or (z) otherwise
on an interim basis prior to completion of such offering so long as a Parent
shall cause the amount of such expenses to be repaid to the Company or the
relevant Restricted Subsidiary out of the proceeds of such offering promptly if
completed.
"Incur" means issue, assume, enter into any Guarantee of, incur or
-----
otherwise become liable for; provided, however, that any Indebtedness or Capital
-------- -------
Stock of a Person existing at the time such Person becomes a Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness) shall
be deemed Incurred at the time of original issuance of the Indebtedness at the
initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date of
------------
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed money,
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(iii) all reimbursement obligations of such Person in respect of
letters of credit or other similar instruments (the amount of such obligations
being equal at any time to the aggregate then undrawn and unexpired amount of
such letters of credit or other instruments plus the aggregate amount of
drawings thereunder that have not then been reimbursed),
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property (except Trade Payables), which purchase price is due
more than one year after the date of placing such property in final service or
taking final delivery and title thereto,
(v) all Capitalized Lease Obligations of such Person,
15
(vi) the redemption, repayment or other repurchase amount of such
Person with respect to any Disqualified Stock of such Person or (if such Person
is a Subsidiary of the Company other than an Issuer or a Subsidiary Guarantor)
any Preferred Stock of such Subsidiary, but excluding, in each case, any accrued
dividends (the amount of such obligation to be equal at any time to the maximum
fixed involuntary redemption, repayment or repurchase price for such Capital
Stock, or if less (or if such Capital Stock has no such fixed price), to the
involuntary redemption, repayment or repurchase price therefor calculated in
accordance with the terms thereof as if then redeemed, repaid or repurchased,
and if such price is based upon or measured by the fair market value of such
Capital Stock, such fair market value shall be as determined in good faith by
the Board of Directors or the board of directors or other governing body of the
issuer of such Capital Stock),
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such Person shall
-------- -------
be the lesser of (A) the fair market value of such asset at such date of
determination (as determined in good faith by the Company) and (B) the amount of
such Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person, and
(ix) to the extent not otherwise included in this definition, net
Hedging Obligations of such Person (the amount of any such obligation to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such Hedging Obligation that would be payable by such Person at
such time).
The amount of Indebtedness of any Person at any date shall be determined as set
forth above or otherwise provided in this Indenture, or otherwise shall equal
the amount thereof that would appear on a balance sheet of such Person
(excluding any notes thereto) prepared in accordance with GAAP.
"Initial Additional Notes" means Additional Notes issued in an
------------------------
offering not registered under the Securities Act.
"Initial Jafra S.A. Subsidiaries" means Consultoria Jafra, S.A. de
-------------------------------
C.V., Distribuidora Venus, S.A. de C.V., Dirsamex, S.A. de C.V., Reday, S.A. de
C.V., Qualifax, S.A. de C.V., and Jafra Cosmetics, S.R.L., each a corporation
organized under the laws of Mexico, upon their becoming Restricted Subsidiaries
of Jafra S.A. on the Issue Date.
16
"Initial Notes" means the Issuers' 11 3/4% Senior Subordinated Notes
-------------
Due 2008, issued on the Issue Date (and any Notes issued in respect thereof
pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008).
----------- --- --- ------ ------ ----
"Interest Payment Date" means, when used with respect to any Note and
---------------------
any installment of interest thereon, the date specified in such Note as the
fixed date on which such installment of interest is due and payable, as set
forth in such Note.
"Interest Rate Agreement" means, with respect to any Person, any
-----------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement (including derivative agreements or
arrangements), as to which such Person is party or a beneficiary.
"Inventory" means goods held for sale or lease by a Person in the
---------
ordinary course of business, net of any reserve for goods that have been
segregated by such Person to be returned to the applicable vendor for credit, as
determined in accordance with GAAP.
"Investment" in any Person by any other Person means any direct or
----------
indirect advance, loan or other extension of credit (other than to customers,
suppliers, directors, officers or employees of any Person in the ordinary course
of business) or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary" and Section 409, (i) "Investment" shall
-----------
include the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of any Subsidiary of the
Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
-------- -------
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (ii) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer and (iii) in each case under clause (i) or (ii) above,
fair market value shall be as determined in good faith by the Board of
Directors. Guarantees shall not be deemed to be Investments. The amount of any
Investment outstanding at any time shall be the original cost of such
Investment, reduced (at the Company's option) by any dividend, distribution,
interest payment, return of capital, repayment or other amount or value received
in respect of such Investment; provided, however, that to the extent that the
-------- -------
amount of
17
Restricted Payments outstanding at any time is so reduced by any portion of any
such amount or value that would otherwise be included in the calculation of
Consolidated Net Income, such portion of such amount or value shall not be so
included for purposes of calculating the amount of Restricted Payments that may
be made pursuant to Section 409(a).
--------------
"Investor" means CDR Fund V.
--------
"Issue Date" means the first date on which Initial Notes are issued.
----------
"Issuer" means Jafra S.A. and JCI.
------
"Jafra S.A." means Jafra Cosmetics International, S.A. de C.V., a
---------
corporation organized under the laws of Mexico, until a Successor shall have
become such pursuant to the applicable provisions of this Indenture and
thereafter means such Successor.
"Jafra S.A. Subsidiary Guarantor" means each Restricted Subsidiary of
-------------------------------
Jafra S.A. that enters into a Subsidiary Guarantee.
"JCI" means Jafra Cosmetics International, Inc., a Delaware
---
corporation (known as CDRJ Acquisition Corporation prior to the Mergers), until
a Successor shall have become such pursuant to the applicable provisions of this
Indenture and thereafter means such Successor.
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Advances" means (1) loans or advances made to directors,
-------------------
officers or employees of a Parent, the Company or any Restricted Subsidiary (x)
in respect of travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (y) in respect of moving-related expenses incurred
in connection with any closing or consolidation of any facility or (z) in the
ordinary course of business and (in the case of this clause (z)) not exceeding
$2.5 million in the aggregate outstanding at any time, (2) promissory notes of
Management Investors acquired in connection with the issuance of Management
Stock to such Management Investors, (3) Management Guarantees or (4) other
Guarantees of borrowings by Management Investors in connection with the purchase
of Management Stock, which Guarantees are permitted under Section 407.
-----------
"Management Agreements" means, collectively, the Consulting Agreement
---------------------
and the Indemnification Agreement, each dated as of April 30, 1998, each between
the Company
18
and CD&R (and its permitted successors and assigns thereunder), as each may be
amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof and of this Indenture.
"Management Guarantees" means guarantees (x) of up to an aggregate
---------------------
principal amount of $10.0 million of borrowings by Management Investors in
connection with their purchase of Management Stock or (y) made on behalf of, or
in respect of loans or advances made to directors, officers or employees of a
Parent, the Company or any Restricted Subsidiary (1) in respect of travel,
entertainment and moving-related expenses incurred in the ordinary course of
business, or (2) in the ordinary course of business and (in the case of this
clause (2)) not exceeding $2.5 million in the aggregate outstanding at any time.
"Management Investors" means the officers, directors, employees and
--------------------
other members of the management of a Parent, the Company or any of its
Subsidiaries, or family members or relatives thereof, or trusts or partnerships
for the benefit of any of the foregoing, or any of their heirs, executors,
successors and legal representatives, who at any date beneficially own or have
the right to acquire, directly or indirectly, Capital Stock of the Company or a
Parent.
"Management Stock" means Capital Stock of the Company or a Parent
----------------
(including any options, warrants or other rights in respect thereof) held by any
of the Management Investors.
"Mergers" means the merger of JCI with and into the California
-------
corporation then known as Jafra Cosmetics International, Inc., with JCI
surviving, and the merger of Jafra S.A. with and into Grupo Jafra, S.A. de C.V.,
a Mexican corporation ("Grupo Jafra"), with Jafra S.A. surviving.
-----------
"Moody's" means Moody's Investors Service, Inc., and its successors.
-------
"Net Available Cash" from an Asset Disposition means cash payments
------------------
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition (including as a consequence of any transfer of funds in connection
with the application thereof in accordance with Section 411),
-----------
19
(ii) all payments made, and all installment payments required to be made, on any
Indebtedness that is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon such assets, or that must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, or to any other Person (other than the Company or a Restricted
Subsidiary) owning a beneficial interest in the assets disposed of in such Asset
Disposition and (iv) any liabilities or obligations associated with the assets
disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition, including pension and other
post-employment benefit liabilities, liabilities related to environmental
matters, and liabilities relating to any indemnification obligations associated
with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of any
-----------------
securities of the Company or any Subsidiary by the Company or any Subsidiary, or
any capital contribution, means the cash proceeds of such issuance, sale or
contribution net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance, sale or
contribution and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Guarantee" means any of (i) the Guarantee of the Notes by the
--------------
Company, the Guarantee of the Guaranteed JCI Obligations by Jafra S.A., the
Guarantee of the Guaranteed Jafra Obligations by JCI, and the Subsidiary
Guarantees of the Initial Jafra S.A. Subsidiaries, to be entered into on the
Issue Date, as provided in Section 1301, and (ii) any Subsidiary Guarantee that
------------
may from time to time be entered into by a Restricted Subsidiary pursuant to
Section 414.
- -----------
"Note Guarantor" means any of the Company and its Restricted
--------------
Subsidiaries that enters into a Note Guarantee.
"Notes" means the Initial Notes, any Additional Notes and the Exchange
-----
Notes.
"Officer" means, with respect to the Company, an Issuer or any other
-------
obligor upon the Notes, the Chairman of the Board, the Vice Chairman of the
Board, the President, the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer, any Vice President, the Controller, the Treasurer
or the Secretary of such Person.
20
"Officer's Certificate" means, with respect to the Company, an Issuer
---------------------
or any other obligor upon the Notes, a certificate signed by one Officer of such
Person.
"Opinion of Counsel" means a written opinion from legal counsel who
------------------
is, reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, an Issuer or the Trustee.
"Original Notes" means the Initial Notes and any Exchange Notes issued
--------------
in exchange therefor.
"Outstanding" when used with respect to Notes means, as of the date of
-----------
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
------
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
in trust for the Holders of such Notes, provided that, if such Notes are to
--------
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee
has been made; and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture.
A Note does not cease to be Outstanding because an Issuer or any
Affiliate of the Issuers holds the Note, provided that in determining whether
--------
the Holders of the requisite amount of Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by an Issuer or any Affiliate of an Issuer shall be disregarded and deemed
not to be Outstanding, except that, for the purpose of determining whether the
Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which the
Trustee actually knows are so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's
right to act with respect to such Notes and that the pledgee is not an Issuer or
an Affiliate of any Issuer.
"Parent" means any Person of which the Company at any time is or
------
becomes a Subsidiary after the Issue Date.
21
"Paying Agent" means any Person authorized by either Issuer to pay the
------------
principal of (and premium, if any) or interest on any Notes on behalf of such
Issuer.
"Permitted Holder" means any of the following: (i) any of the
----------------
Investor, Management Investors, CDR and their respective Affiliates; (ii) any
investment fund or vehicle managed, sponsored or advised by CDR; (iii) any
limited or general partners of, or other investors in, any of the Investor and
its Affiliates, or any such investment fund or vehicle; and (iv) any Person
acting in the capacity of an underwriter in connection with a public or private
offering of Capital Stock of a Parent or the Company.
"Permitted Investment" means an Investment by the Company or any
--------------------
Restricted Subsidiary in, or consisting of, any of the following:
(i) a Restricted Subsidiary, the Company, or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary;
(ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(iii) Temporary Cash Investments or Cash Equivalents;
(iv) receivables owing to the Company or any Restricted Subsidiary,
if created or acquired in the ordinary course of business;
(v) any securities or other Investments received as consideration
in, or retained in connection with, sales or other dispositions of property or
assets, including Asset Dispositions made in compliance with Section 411;
-----------
(vi) securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement
of any Lien, or in satisfaction of judgments, including in connection with any
bankruptcy proceeding or other reorganization of another Person;
(vii) Investments in existence or made pursuant to legally binding
written commitments in existence on the Issue Date;
(viii) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which obligations are Incurred in compliance with Section
-------
407;
- ---
22
(ix) pledges or deposits (x) with respect to leases or utilities
provided to third parties in the ordinary course of business or (y) otherwise
described in the definition of "Permitted Liens" or made in connection with
Liens permitted under Section 413;
-----------
(x) any Investment in a joint venture or similar entity that is not
a Restricted Subsidiary, or in any Related Business, in an aggregate amount
outstanding at any time not to exceed 4% of Consolidated Total Assets;
(xi) (1) Investments in any Receivables Subsidiary, or in connection
with a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the arrangements
governing such Financing Disposition or any related Indebtedness, or (2) any
promissory note issued by the Company or a Parent to a Receivables Subsidiary;
provided that if such Parent receives cash from the relevant Receivables Entity
- --------
in exchange for such note, an equal cash amount is contributed by such Parent to
the Company;
(xii) bonds secured by assets leased to and operated by the Company
or any Restricted Subsidiary that were issued in connection with the financing
of such assets so long as the Company or any Restricted Subsidiary may obtain
title to such assets at any time by paying a nominal fee, canceling such bonds
and terminating the transaction;
(xiii) Notes;
(xiv) any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of a Parent, as
consideration;
(xv) Management Advances; and
(xvi) other Investments in an aggregate amount outstanding at any
time not to exceed 6% of Consolidated Total Assets.
"Permitted Liens" means:
---------------
(i) Liens for taxes, assessments or other governmental charges not
yet delinquent or the nonpayment of which in the aggregate would not reasonably
be expected to have a material adverse effect on the Company and its Restricted
Subsidiaries, or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or a Subsidiary thereof, as the case may be, in accordance
with GAAP;
23
(ii) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations that are not overdue for a period of more
than 60 days, or that are bonded or that are being contested in good faith and
by appropriate proceedings;
(iii) pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and other similar
legislation or other insurance-related obligations (including pledges or
deposits securing liability to insurance carriers under insurance or self-
insurance arrangements);
(iv) pledges, deposits or Liens to secure the performance of bids,
tenders, trade, government or other contracts (other than for borrowed money),
obligations for utilities, leases, licenses, statutory obligations, completion
guarantees, surety, judgment, appeal or performance bonds, other similar bonds,
instruments or obligations, and other obligations of a like nature incurred in
the ordinary course of business;
(v) easements (including reciprocal easement agreements),
rights-of-way, building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries, taken as a whole;
(vi) Liens existing on, or provided for under written arrangements
existing on, the Issue Date, or (in the case of any such Liens securing
Indebtedness of the Company or any of its Subsidiaries existing or arising under
written arrangements existing on the Issue Date) securing any Refinancing
Indebtedness in respect of such Indebtedness so long as the Lien securing such
Refinancing Indebtedness is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or under such written arrangements could secure)
the original Indebtedness;
(vii) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company or
any Restricted Subsidiary of the Company has easement rights or on any leased
property and subordination or similar agreements relating thereto and (ii) any
condemnation or eminent domain proceedings affecting any real property;
(viii) Liens securing Hedging Obligations, Purchase Money Obligations
or Capitalized Lease Obligations Incurred in compliance with Section 407;
-----------
24
(ix) Liens arising out of judgments, decrees, orders or awards in
respect of which the Company shall in good faith be prosecuting an appeal or
proceedings for review, which appeal or proceedings shall not have been finally
terminated, or if the period within which such appeal or proceedings may be
initiated shall not have expired;
(x) leases, subleases, licenses or sublicenses to third parties;
(xi) Liens securing (1) Indebtedness Incurred in compliance with
clause (b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x) of Section 407,
-----------
or clause (b)(iii) thereof (other than Refinancing Indebtedness Incurred in
respect of the Notes or Indebtedness described in paragraph (a) thereof), (2)
Bank Indebtedness, (3) commercial bank Indebtedness, (4) Indebtedness of any
Restricted Subsidiary that is not a Subsidiary Guarantor or an Issuer, (5) the
Notes or (6) Indebtedness or other obligations of any Receivables Entity;
(xii) Liens existing on property or assets of a Person at the time
such Person becomes a Subsidiary of the Company (or at the time the Company or a
Restricted Subsidiary acquires such property or assets); provided, however, that
-------- -------
such Liens are not created in connection with, or in contemplation of, such
other Person becoming such a Subsidiary (or such acquisition of such property or
assets), and that such Liens are limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under which
such Liens arose, could secure) the obligations to which such Liens relate;
(xiii) Liens on Capital Stock or other securities of an Unrestricted
Subsidiary that secure Indebtedness or other obligations of such Unrestricted
Subsidiary;
(xiv) any encumbrance or restriction (including put and call
agreements) with respect to Capital Stock of any joint venture or similar
arrangement pursuant to any joint venture or similar agreement; and
(xv) Liens securing Refinancing Indebtedness Incurred in respect of
any Indebtedness secured by, or securing any refinancing, refunding, extension,
renewal or replacement (in whole or in part) of any other obligation secured by,
any other Permitted Liens, provided that any such new Lien is limited to all or
part of the same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which the original Lien arose, could secure) the
obligations to which such Liens relate.
"Permitted Parent Payments" means loans, advances, dividends or
-------------------------
distributions to a Parent or other payments by the Company or any Restricted
Subsidiary (A) to permit such
25
Parent to satisfy obligations under the Management Agreements or (B) to pay or
permit such Parent to pay any Holding Company Expenses or any Related Taxes.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Place of Payment" means a city or any political subdivision thereof
----------------
referred to in Article 3 and initially designated under Section 402.
--------- -----------
"Predecessor Notes" of any particular Note means every previous Note
-----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in lieu of a mutilated, lost,
-----------
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preferred Stock" as applied to the Capital Stock of any corporation
---------------
means Capital Stock of any class or classes (however designated) that by its
terms is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Purchase Money Obligations" means any Indebtedness Incurred to
--------------------------
finance or refinance the acquisition, leasing, construction or improvement of
property (real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"QIB" or "Qualified Institutional Buyer" means a "qualified
--- -----------------------------
institutional buyer," as that term is defined in Rule 144A under the Securities
Act.
"Receivable" means a right to receive payment arising from a sale or
----------
lease of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
"Receivables Entity" means (x) any Receivables Subsidiary or (y) any
------------------
other Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts or other receivables, or related assets.
26
"Receivables Fees" means distributions or payments made directly or by
----------------
means of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Financing.
"Receivables Financing" means any financing of Receivables of the
---------------------
Company or any Restricted Subsidiary that have been transferred to a Receivables
Entity in a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company that (a) is
----------------------
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code as
in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
designated as a "Receivables Subsidiary" by the Board of Directors.
"Redemption Date" when used with respect to any Note to be redeemed or
---------------
purchased means the date fixed for such redemption or purchase by or pursuant to
this Indenture and the Notes.
"Redemption Price" when used with respect to any Note to be redeemed
----------------
or purchased means the price at which it is to be redeemed or purchased pursuant
to this Indenture and the Notes.
"refinance" means refinance, refund, replace, renew, repay, modify,
---------
restate, defer, substitute, supplement, reissue, resell or extend (including
pursuant to any defeasance or discharge mechanism); and the terms "refinances,"
"refinanced" and "refinancing" as used for any purpose in this Indenture shall
have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
------------------------
refinance any Indebtedness existing on the Issue Date or Incurred in compliance
with this Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary (to the extent permitted in this
Indenture) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that with respect to any
-------- -------
Refinancing Indebtedness (other than Bank Indebtedness), (i) if the Indebtedness
being refinanced is a Subordinated Obligation, the Refinancing Indebtedness has
an Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the Average
27
Life of the Indebtedness being refinanced, (ii) such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than the sum of (x)
the aggregate principal amount (or if issued with original issue discount, the
aggregate accreted value) then outstanding of the Indebtedness being refinanced,
plus (y) fees, underwriting discounts, premiums and other costs and expenses
incurred in connection with such Refinancing Indebtedness, and (iii) Refinancing
Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary that
is not a Subsidiary Guarantor or an Issuer that refinances Indebtedness of the
Company, an Issuer or a Subsidiary Guarantor that was Incurred by such Company,
Issuer or Subsidiary Guarantor pursuant to Section 407(a) or (y) Indebtedness of
--------------
the Company or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.
"Regular Record Date" for the interest payable on any Interest Payment
-------------------
Date means the date specified for that purpose in Section 301.
-----------
"Regulation S" means Regulation S under the Securities Act.
------------
"Regulation S Certificate" means a certificate substantially in the
------------------------
form attached hereto as Exhibit C.
---------
"Related Business" means those businesses in which the Company or any
----------------
of its Subsidiaries is engaged on the Issue Date, or that are related,
complementary, incidental or ancillary thereto or extensions, developments or
expansions thereof.
"Related Taxes" means (x) any taxes, charges or assessments, including
-------------
sales, use, transfer, rental, ad valorem, value-added, stamp, property,
consumption, franchise, license, capital, net worth, gross receipts, excise,
occupancy, intangibles or similar taxes, charges or assessments (other than
federal, state or local taxes measured by income and federal, state or local
withholding imposed on payments made by a Parent), required to be paid by such
Parent by virtue of its being incorporated or having Capital Stock outstanding
(but not by virtue of owning stock or other equity interests of any corporation
or other entity other than the Company or any of its Subsidiaries), or being a
holding company parent of the Company or having received Capital Stock of the
Company as a capital contribution, or receiving dividends from or other
distributions in respect of the Capital Stock of the Company, or having
guaranteed any obligations of the Company or any Subsidiary thereof, or having
made any payment in respect of any of the items for which the Company is
permitted to make payments to such Parent pursuant to Section 409, or (y) any
-----------
other U.S. or non-U.S. taxes measured by income for which such Parent is liable
up to an amount not to exceed with respect to U.S. federal taxes the amount of
any such taxes that the Company would have been required to pay on a separate
company basis or on a consolidated basis if the Company had filed a
28
consolidated return on behalf of an affiliated group (as defined in Section 1504
of the Code) of which it were the common parent, or with respect to non-U.S.
taxes and U.S. state and local taxes, on a combined basis if the Company had
filed a combined return on behalf of an affiliated group consisting only of the
Company and its Subsidiaries.
"Representative" means the trustee, agent or representative (if any)
--------------
for an issue of Senior Indebtedness.
"Resale Restriction Termination Date" means, with respect to any Note,
-----------------------------------
the date that is two years (or such other period as may hereafter be provided
under Rule 144(k) under the Securities Act or any successor provision thereto as
permitting the resale by non-affiliates of Restricted Securities without
restriction) after the later of the original issue date in respect of such Note
and the last date on which an Issuer or any Affiliate of an Issuer was the owner
of such Note (or any Predecessor Note thereto).
"Responsible Officer" when used with respect to the Trustee means the
-------------------
chairman or vice-chairman of the board of directors, the chairman or vice-
chairman of the executive committee of the board of directors, the president,
any vice president or assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller and any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payment Transaction" means any Restricted Payment
------------------------------
permitted pursuant to Section 409, any Permitted Payment, any Permitted
-----------
Investment, or any transaction (other than Guarantees) specifically excluded
from the definition of the term "Restricted Payment."
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
-------- -------
entitled to receive, at its request, and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company other than
---------------------
an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
---
29
"Secured Indebtedness" with respect to a Person means any Indebtedness
--------------------
of such Person secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Senior Credit Agreement" means the credit agreement dated as of April
-----------------------
30, 1998, among the Company, the Issuers, the lenders named therein, and Credit
Suisse First Boston, as administrative agent, as such agreement may be assumed
by any successor in interest, and as such agreement may be amended,
supplemented, waived or otherwise modified from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether with the original agent and
lenders or other agents and lenders or otherwise, and whether provided under the
original Senior Credit Agreement or otherwise).
"Senior Credit Facility" means the collective reference to the Senior
----------------------
Credit Agreement, any Loan Documents (as defined therein), any notes and letters
of credit issued pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of credit
applications and other guarantees, pledge agreements, security agreements and
collateral documents, and other instruments and documents, executed and
delivered pursuant to or in connection with any of the foregoing, in each case
as the same may be amended, supplemented, waived or otherwise modified from time
to time, or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time (whether in whole or in part, whether
with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Senior Credit Agreement or one or more
other credit agreements, indentures (including the Indenture) or financing
agreements or otherwise). Without limiting the generality of the foregoing, the
term "Senior Credit Facility" shall include any agreement (i) changing the
maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii)
adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder, (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder or (iv) otherwise altering the terms and
conditions thereof.
"Senior Indebtedness" means, with respect to either Issuer or any Note
-------------------
Guarantor, the following obligations, whether outstanding on the date of this
Indenture or thereafter issued, without duplication: (i) all Bank Indebtedness,
(ii) all obligations of such Person in respect of any Receivables Financing, and
(iii) all obligations of such Person consisting of the principal of and premium,
if any, and accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to such
Person regardless of whether post-filing interest is allowed in such proceeding)
on, and fees and other amounts owing in respect of, all other Indebtedness of
such Person,
30
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is expressly provided that the obligations in
respect of such Indebtedness are not senior in right of payment to the Notes or
the Note Guarantee of such Person; provided, however, that Senior Indebtedness
-------- -------
shall not include (1) any obligation of such Person to any Subsidiary of such
Person, (2) any liability for Federal, state, foreign, local or other taxes owed
or owing by such Person, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness of
such Person that is expressly subordinated in right of payment to any other
Indebtedness of such Person, (5) any Capital Stock of such Person or (6) that
portion of any Indebtedness of such Person that is Incurred by such Person in
violation of Section 407 (but no such violation shall be deemed to exist for
-----------
purposes of this clause (6) if any holder of such Indebtedness or such holder's
representative shall have received an Officer's Certificate of the Company to
the effect that such Incurrence of such Indebtedness does not (or that the
Incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate Section 407). If any
-----------
Senior Indebtedness is disallowed, avoided or subordinated pursuant to the
provisions of Section 548 of Title 11 of the United States Code or any
applicable state fraudulent conveyance law, such Senior Indebtedness
nevertheless will constitute Senior Indebtedness.
"Senior Subordinated Indebtedness" with respect to either Issuer or
--------------------------------
any Note Guarantor means the Notes (in the case of such Issuer) or the Note
Guarantee of such Person (in the case of such Note Guarantor) and any other
Indebtedness of such Person that ranks pari passu with the Notes or such Note
---- -----
Guarantee, as the case may be.
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted Interest means
-------------------
a date fixed by the Trustee pursuant to Section 307.
-----------
"S&P" means Standard & Poor's Ratings Service, a division of The
---
McGraw-Hill Companies, Inc., and its successors.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
31
"Subordinated Obligations" with respect to either Issuer or any Note
------------------------
Guarantor means any Indebtedness of such Person (whether outstanding on the
Issue Date or thereafter Incurred) that is expressly subordinated in right of
payment to the Notes (in the case of such Issuer) or to the Note Guarantee of
such Person (in the case of such Note Guarantor), pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association,
----------
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other equity interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person
or (ii) one or more Subsidiaries of such Person.
"Subsidiary Guarantee" means any of (i) the Guarantees of the
--------------------
Guaranteed JCI Obligations by the U.S. Subsidiary Guarantors and the Guarantees
of the Guaranteed Jafra Obligations by the Jafra S.A. Subsidiary Guarantors, to
be entered into on the Issue Date as provided in Section 1301, and (ii) any
------------
Guarantee in respect of the Notes that may from time to time be entered into by
a Restricted Subsidiary pursuant to Section 414.
-----------
"Subsidiary Guarantor" means any Restricted Subsidiary that enters
--------------------
into a Subsidiary Guarantee.
"Temporary Cash Investments" means any of the following: (i) any
--------------------------
investment in (x) direct obligations of the United States of America or any
agency or instrumentality thereof or obligations Guaranteed by the United States
of America or any agency or instrumentality thereof or (y) direct obligations of
any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization),
(ii) overnight bank deposits, and investments in time deposit accounts,
certificates of deposit, bankers' acceptances and money market deposits (or,
with respect to foreign banks, similar instruments) maturing not more than one
year after the date of acquisition thereof issued by (x) any lender under the
Senior Credit Agreement or (y) a bank or trust company that is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital and surplus
aggregating in excess of $250 million (or the foreign currency equivalent
thereof) and whose long term debt is rated at least "A" by S&P or "A-1" by
Moody's (or, in either case, the equivalent of such rating by such organization
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any nationally recognized rating organization) at the time such Investment is
made, (iii) repurchase obligations with a term of not more than 30 days for
underlying
32
securities of the types described in clause (i) or (ii) above entered into with
a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a Person (other than the Company or any of its
Subsidiaries) with a rating at the time as of which any Investment therein is
made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to
S&P (or, in either case, the equivalent of such rating by such organization or,
if no rating of S&P or Moody's then exists, the equivalent of such rating by any
nationally recognized rating organization), (v) Investments in securities
maturing not more than one year after the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of
such rating by such organization or, if no rating of S&P or Moody's then exists,
the equivalent of such rating by any nationally recognized rating organization),
(vi) Preferred Stock (other than of the Company or any of its Subsidiaries)
having a rating of "A" or higher by S&P or "A2" or higher by Moody's (or, in
either case, the equivalent of such rating by such organization or, if no rating
of S&P or Moody's then exists, the equivalent of such rating by any nationally
recognized rating organization), (vii) investment funds investing 95% of their
assets in securities of the type described in clauses (i)-(vi) above (which
funds may also hold reasonable amounts of cash pending investment or
distribution), (viii) any money market deposit accounts issued or offered by a
domestic commercial bank or a commercial bank organized and located in a country
recognized by the United States of America, in each case, having capital and
surplus in excess of $250 million (or the foreign currency equivalent thereof),
or investments in money market funds complying with the risk limiting conditions
of Rule 2a-7 (or any successor rule) of the SEC under the Investment Company Act
of 1940, as amended and (ix) similar short-term investments approved by the
Board of Directors in the ordinary course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
7bbbb) as in effect on the Issue Date.
"Trade Payables" means, with respect to any Person, any accounts
--------------
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transactions" means, collectively, the Acquisition, the Mergers, the
------------
initial equity investment by the Investor and (if applicable) one or more
Management Investors, the offering and the issuance of the Original Notes, the
initial borrowings under the Senior Credit Facility, and all other transactions
relating to the Acquisition or the financing thereof.
33
"Trust Officer" means the Chairman of the Board, the President or any
-------------
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the Person named as the "Trustee" in the first
-------
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
-----------------------
at the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Restricted Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
- -------- -------
consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated
assets greater than $1,000, then such designation would be permitted under
Section 409. The Board of Directors may designate any Unrestricted Subsidiary
- -----------
to be a Restricted Subsidiary; provided, however, that immediately after giving
-------- -------
effect to such designation either (x) the Company could incur at least $1.00 of
additional Indebtedness under Section 407(a) or (y) the Consolidated Coverage
--------------
Ratio would be greater than it was immediately prior to giving effect to such
designation. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the resolution of
the Board of Directors giving effect to such designation and an Officer's
Certificate of the Company certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligation" means (x) any security that is (i) a
--------------------------
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case under the preceding clause (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation that
is specified in clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation that is so specified
and held, provided that (except as required by law) such custodian is not
--------
authorized to make any
34
deduction from the amount payable to the holder of such depositary receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by such
depositary receipt.
"U.S. Subsidiary" means any Restricted Subsidiary of the Company other
---------------
than a Foreign Subsidiary.
"U.S. Subsidiary Guarantor" means any U.S. Subsidiary of JCI that
-------------------------
enters into a Subsidiary Guarantee.
"Vice President" when used with respect to any Person means any vice
--------------
president of such Person, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" of an entity means all classes of Capital Stock of such
------------
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
Section 102. Other Definitions.
-----------------
Defined in
Term Section
---- -------
"Act"......................................................... 108
---
"Additional Amounts".......................................... 404
------------------
"Affiliate Transaction"....................................... 412
---------------------
"Agent Members"............................................... 312
-------------
"Amendment"................................................... 410
---------
"Authentication Order"........................................ 303
--------------------
"Bankruptcy Law".............................................. 601
--------------
"Blockage Notice"............................................. 1403
---------------
"Covenant Defeasance"......................................... 1203
-------------------
"Custodian"................................................... 601
---------
"Defaulted Interest".......................................... 307
------------------
"Defeasance".................................................. 1202
----------
"Defeased Notes".............................................. 1201
--------------
"Event of Default"............................................ 601
----------------
"Excessive Additional Amounts"................................ 1001
----------------------------
"Expiration Date"............................................. 108
---------------
"Global Notes"................................................ 201
------------
"Guaranteed Jafra S.A. Obligations"........................... 1301
---------------------------------
35
"Guaranteed JCI Obligations"................................... 1301
--------------------------
"Guaranteed Note Obligations".................................. 1301
---------------------------
"Guarantor Blockage Notice".................................... 1503
-------------------------
"Guarantor Non-payment Default"................................ 1503
-----------------------------
"Guarantor Payment Blockage Period"............................ 1503
---------------------------------
"Guarantor Payment Default".................................... 1503
-------------------------
"Initial Agreement"............................................ 410
-----------------
"Initial Lien"................................................. 413
------------
"Jafra S.A. Portion"........................................... 301
------------------
"JCI Portion".................................................. 301
-----------
"Non-payment Default".......................................... 1403
-------------------
"Note Register" and "Note Registrar"........................... 305
----------------------------------
"Offer"........................................................ 411
-----
"Offshore Global Note"......................................... 201
--------------------
"Offshore Note Exchange Date".................................. 313
---------------------------
"Offshore Physical Note"....................................... 201
----------------------
"pay its Note Guarantee"....................................... 1503
----------------------
"pay the Notes"................................................ 1403
-------------
"Payment Blockage Period"...................................... 1403
-----------------------
"Payment Default".............................................. 1403
---------------
"Payor"........................................................ 404
-----
"Permitted Payment"............................................ 409
-----------------
"Physical Notes"............................................... 201
--------------
"Portion"...................................................... 301
-------
"Private Placement Legend"..................................... 203
------------------------
"Redemption Amount"............................................ 1001
-----------------
"Refinancing Agreement"........................................ 410
---------------------
"Restricted Payment"........................................... 409
------------------
"Several Share"................................................ 301
-------------
"Successor".................................................... 501
---------
"Successor Jurisdiction"....................................... 404
----------------------
"Taxes"........................................................ 404
-----
"Unitary Global Note".......................................... 201
-------------------
"U.S. Global Note"............................................. 201
----------------
"U.S. Physical Note"........................................... 201
------------------
36
Section 103. Rules of Construction. For all purposes of this
---------------------
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Indenture have the meanings assigned to
them in this Indenture;
(2) "or" is not exclusive;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof" and "hereunder" and other words of
------ ------ ---------
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(5) all references to "$" or "dollars" shall refer to the lawful
- -------
currency of the United States of America;
(6) the words "include," "included" and "including" as used herein
------- -------- ---------
shall be deemed in each case to be followed by the phrase "without
-------
limitation," if not expressly followed by such phrase or the phrase "but
----------
not limited to";
(7) words in the singular include the plural, and words in the plural
include the singular; and
(8) any reference to a Section or Article refers to such Section or
Article of this Indenture.
Section 104. Incorporation by Reference of TIA. Whenever this
---------------------------------
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. This Indenture is subject to
the mandatory provisions of the TIA, which are incorporated by reference in and
made a part of this Indenture. Any terms incorporated by reference in this
Indenture that are defined by the TIA, defined by any TIA reference to another
statute or defined by SEC rule under the TIA, have the meanings so assigned to
them therein. The following TIA terms have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
37
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, an Issuer,
any other Note Guarantor, and any other obligor on the indenture securities.
Section 105. Conflict with TIA. If any provision hereof limits,
-----------------
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provision shall be
deemed (i) to apply to this Indenture as so modified or (ii) to be excluded, as
the case may be.
Section 106. Compliance Certificates and Opinions. Upon any
------------------------------------
application or request by the Company, by the Issuers, by the Company on behalf
of the Issuers, or by any other obligor upon the Notes (including any Note
Guarantor), to the Trustee to take any action under any provision of this
Indenture, the Company or the Issuers or such other obligor (including any Note
Guarantor), as the case may be, shall furnish to the Trustee such certificates
and opinions as may be required under the TIA. Each such certificate or opinion
shall be given in the form of one or more Officer's Certificates, if to be given
by an Officer, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the TIA and any other requirements set forth in
this Indenture. Notwithstanding the foregoing, in the case of any such request
or application as to which the furnishing of any Officer's Certificate or
Opinion of Counsel is specifically required by any provision of this Indenture
relating to such particular request or application, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 406) shall include:
-----------
(1) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
38
(3) a statement that, in the opinion of such individual, he or she
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
Section 107. Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Officer or Officers to the effect that the
information with respect to such factual matters is in the possession of the
Company or an Issuer, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 108. Acts of Noteholders; Record Dates. (a) Any request,
---------------------------------
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuers or the Company, as the case may be.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
---
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient
39
for any purpose of this Indenture and (subject to Section 701) conclusive in
-----------
favor of the Trustee, the Issuers and any other obligor upon the Notes, if made
in the manner provided in this Section 108.
-----------
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by an officer of a corporation or a member of a partnership or
other entity, on behalf of such corporation or partnership or other entity, such
certificate or affidavit shall also constitute sufficient proof of such Person's
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by the Trustee, the
Issuers or any other obligor upon the Notes in reliance thereon, whether or not
notation of such action is made upon such Note.
(e) (i) The Issuers may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Notes, provided that the Issuers may not set a record date for, and
--------
the provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Notes on such record date (or their duly designated proxies), and no
other Holders, shall be entitled to take the relevant action, whether or not
such Persons remain Holders after such record date; provided that no such action
--------
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Notes on such record date. Nothing in this paragraph shall be construed to
prevent the Issuers from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Notes on the date such action is taken. Promptly after
any record date is set pursuant to this paragraph, the Issuers, at their several
expense, shall cause notice of
40
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Trustee in writing and to each Holder of Notes in the
manner set forth in Section 110.
-----------
(ii) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes entitled to join in the giving or
making of (A) any Notice of Default, (B) any declaration of acceleration
referred to in Section 602, (C) any request to institute proceedings referred to
-----------
in Section 607(2) or (D) any direction referred to in Section 612, in each case
-------------- -----------
with respect to Notes. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Notes on such record date, and no other Holders,
shall be entitled to join in such notice, declaration, request or direction,
whether or not such Holders remain Holders after such record date; provided that
--------
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Notes on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Notes on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Issuers' several expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Company in writing and to each Holder of Notes in the manner set
forth in Section 110.
-----------
(iii) With respect to any record date set pursuant to this Section
-------
108, the party hereto that sets such record dates may designate any day as the
- ---
"Expiration Date" and from time to time may change the Expiration Date to any
---------------
earlier or later day; provided that no such change shall be effective unless
--------
notice of the proposed new Expiration Date is given to the Issuers or the
Trustee, whichever such party is not setting a record date pursuant to this
Section 108(e) in writing, and to each Holder of Notes in the manner set forth
- --------------
in Section 110, on or prior to the existing Expiration Date. If an Expiration
-----------
Date is not designated with respect to any record date set pursuant to this
Section, the party hereto that set such record date shall be deemed to have
initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
(iv) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of
41
the principal amount of such Note or by one or more duly appointed agents each
of which may do so pursuant to such appointment with regard to all or any part
of such principal amount.
Section 109. Notices, etc., to Trustee and Company. Any request,
-------------------------------------
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or by the Issuers or
any other obligor upon the Notes shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee at its 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103,
Attention: Corporate Trust Department (telephone: (860) 244-1842;
telecopier: (860) 244-1869) or at any other address furnished in writing to
the Company by the Trustee, or
(2) the Company or the Issuers by the Trustee or by any Holder shall
be sufficient for every purpose hereunder if in writing and mailed, first-
class postage prepaid, to the Company or the Issuers addressed to any of
them, as the case may be, c/o Jafra Cosmetics International, Inc., 2451
Townsgate Road, Westlake Village, California 91361, Attention: Chief
Financial Officer (telephone: (805) 449-3000; telecopier: (805) 449-2949),
with copies to Debevoise & Plimpton, 875 Third Avenue, New York, New York
10022, Attention: David Brittenham, Esq. (telephone: (212) 909-6000;
telecopier: (212) 909-6836), or at any other address previously furnished
in writing to the Trustee by the Company.
Section 110. Notices to Holders; Waiver. Where this Indenture
--------------------------
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at such
Holder's address as it appears in the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
42
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail notice of any event as
required by any provision of this Indenture, then such notification as shall be
made with the approval of the Trustee (such approval not to be unreasonably
withheld) shall constitute a sufficient notification for every purpose
hereunder.
Section 111. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 112. Successors and Assigns. All covenants and agreements in
----------------------
this Indenture by the Company or an Issuer shall bind its respective successors
and assigns, whether so expressed or not.
Section 113. Separability Clause. In case any provision in this
-------------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 114. Benefits of Indenture. Nothing in this Indenture or in
---------------------
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture,
except as provided in Article 14 and Article 15.
---------- ----------
Section 115. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT
THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES
AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 116. Legal Holidays. In any case where any Interest Payment
--------------
Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of interest or principal and premium (if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment
43
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity.
Section 117. No Personal Liability of Directors, Officers, Employees,
--------------------------------------------------------
Incorporators and Stockholders. No director, officer, employee, incorporator or
- ------------------------------
stockholder, as such, of the Company, the Issuers, any Note Guarantor or any
Subsidiary of any thereof shall have any liability for any obligation of the
Company, the Issuers or any Note Guarantor under the Indenture, the Notes or any
Note Guarantee, or for any claim based on, in respect of, or by reason of, any
such obligation or its creation. Each Noteholder, by accepting the Notes,
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 118. Exhibits and Schedules. All exhibits and schedules
----------------------
attached hereto are by this reference made a part hereof with the same effect as
if herein set forth in full.
Section 119. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 120. Company as Agent for Issuers. To the extent permitted by
----------------------------
the TIA and any other applicable law, each Issuer hereby appoints the Company as
its attorney-in-fact, which appointment is coupled with an interest, to take any
action that this Indenture may require or permit such Issuer to take, including
(1) the giving of any certification, opinion, order, request or
consent (whether by Officer's Certificate, Opinion of Counsel, Company
Order, Company Request, Company Consent or otherwise),
(2) the giving of any notice (including under Section 1001), and
------------
(3) the setting of any record date,
such appointment to remain in effect until such Issuer shall otherwise notify
the Trustee in writing.
44
ARTICLE 2
NOTE FORMS
----------
Section 201. Forms Generally. (a) The Notes and the Trustee's
---------------
certificate of authentication relating thereto shall be in substantially the
forms set forth, or referenced, in this Article 2 and Exhibit A annexed hereto,
--------- ---------
which Exhibit is hereby incorporated in and expressly made a part of this
Indenture. The Notes may have such appropriate insertions, omissions,
substitutions, notations, legends, endorsements, identifications and other
variations as are required or permitted by law, stock exchange rule or
Depository rule or usage, agreements to which the Issuers are subject, if any,
or other customary usage, or as may consistently herewith be determined by the
Officers of each Issuer executing such Notes, as evidenced by such execution
(provided always that any such notation, legend, endorsement, identification or
variation is in a form acceptable to the Issuers). Each Note shall be dated the
date of its authentication. The terms of the Notes set forth in Exhibit A are
---------
part of the terms of this Indenture. Any portion of the text of any Note may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Note.
Initial Notes and any Additional Notes offered and sold in reliance on
Rule 144A under the Securities Act shall, unless the Issuers otherwise notify
the Trustee in writing, be issued in the form of one or more permanent global
Notes in substantially the form set forth in Exhibit A (each, a "U.S. Global
--------- -----------
Note"), deposited with the Trustee, as custodian for the Depositary or its
- ----
nominee, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of a U.S. Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Notes and any Additional Notes offered and sold in offshore
transactions in reliance on Regulation S under the Securities Act shall be
issued (a) in the form of one or more permanent global Notes in substantially
the form set forth in Exhibit A (each, an "Offshore Global Note"), deposited
--------- --------------------
with the Trustee, as custodian for the Depositary or its nominee, duly executed
by the Issuers and authenticated by the Trustee as hereinafter provided or (b)
at the Issuers' option, in the form of and as part of a U.S. Global Note that
has been designated by the Issuers as a "Unitary Global Note" (any U.S. Global
Note that has been so designated, a "Unitary Global Note"). The aggregate
-------------------
principal amount of an Offshore Global Note, if any, may from time to time be
increased or decreased by adjustments made in the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided. Subject to
the limitations on the issuance of certificated Notes set forth in Sections 312
------------
and 313, Initial Notes and any Initial Additional Notes issued pursuant to
---
Section 305 in exchange for or upon transfer of beneficial interests (x) in a
- ----------- -
U.S. Global Note shall be in the form of
45
permanent certificated Notes substantially in the form set forth in Exhibit A
---------
and shall contain the Private Placement Legend as set forth in Section 203 (the
-----------
"U.S. Physical Notes") or (y) in an Offshore Global Note (if any), on or after
-------------------
the Offshore Note Exchange Date with respect to such Offshore Global Note, shall
be in the form of permanent certificated Notes substantially in the form set
forth in Exhibit A (the "Offshore Physical Notes"), respectively, as hereinafter
--------- -----------------------
provided.
The Offshore Physical Notes and the U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes". The U.S. Global Note
--------------
and the Offshore Global Note are sometimes collectively referred to as the
"Global Notes."
- -------------
Exchange Notes shall be issued substantially in the form set forth in
Exhibit A and, subject to Section 312(b), shall be in the form of one or more
- --------- --------------
Global Notes.
Section 202 Form of Trustee's Certificate of Authentication. This is
-----------------------------------------------
one of the Notes referred to in the within-mentioned Indenture.
________________________________
as Trustee
By______________________________
Authorized Officer
Dated:
If an appointment of an Authenticating Agent is made pursuant to
Section 714, the Notes may have endorsed thereon, in lieu of the Trustee's
- -----------
certificate of authentication, an alternative certificate of authentication in
the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY
___________________________________
46
As Trustee
By_________________________________,
As Authenticating Agent
By_________________________________
Authorized Officer
Dated:
Section 203. Restrictive and Global Note Legends. Each Global Note
-----------------------------------
and Physical Note shall bear the following legend set forth below (the "Private
-------
Placement Legend") on the face thereof until the Private Placement Legend is
- ----------------
removed in accordance with Section 313(4):
--------------
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND HAS NOT BEEN REGISTERED UNDER ANY STATE
--------------
SECURITIES LAWS, AND THIS NOTE (AND ANY INTEREST OR PARTICIPATION HEREIN)
MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE
TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") OR (B) IT IS NOT A U.S. PERSON AND IS
---------
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION AND (2) AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF ONLY (I) INSIDE THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING
47
THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN A
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) TO THE
ISSUERS, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND SUBJECT
TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (X) PURSUANT TO CLAUSE (II) OR (III) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (Y) IN THE CASE OF ANY OF THE FOREGOING CLAUSES (I)
THROUGH (V), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE, THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT
OF THE RESALE RESTRICTION REFERRED TO ABOVE. AS USED HEREIN, THE TERMS
"UNITED STATES," "OFFSHORE TRANSACTION" AND "U.S. PERSON" HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER OR
---
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
48
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 312 AND 313 OF THE INDENTURE.
------------ ---
ARTICLE 3
THE NOTES
---------
Section 301 Title and Terms. The aggregate principal amount of Notes
---------------
that may be authenticated and delivered and Outstanding under this Indenture is
not limited, except as provided in Section 407 and except as may be limited by
-----------
applicable law. The Original Notes will be issued in an aggregate principal
amount of $100.0 million. All the Original Notes shall vote and consent
together on all matters as one class, and none of the Original Notes will have
the right to vote or consent as a class separate from one another on any matter.
Additional Notes (including any Exchange Notes issued in exchange therefor) may
vote as a class with the other Notes and otherwise be treated as Notes for
purposes of this Indenture.
The Notes will be the several obligations of the Issuers. Of the
aggregate principal amount of Original Notes of $100.0 million, JCI will be
severally liable with respect to the payment of $60.0 million of principal,
together with interest thereon (the "JCI Portion"), and Jafra S.A. will be
-----------
severally liable with respect to the payment of $40.0 million of principal,
together with interest thereon (the "Jafra S.A. Portion," and each of the JCI
------------------
Portion and Jafra S.A. Portion, a "Portion"). Except as otherwise described
-------
herein, JCI and Jafra S.A. will be severally liable in respect of each
outstanding Note (including any Additional Notes) in the relative proportions of
the JCI Portion and the Jafra S.A. Portion, respectively (sixty percent (60%) in
the case of JCI and forty percent (40%) in the case of Jafra S.A.). With
respect to each Issuer, such relative proportion of any amount is referred to as
such Issuer's "Several Share."
-------------
The Issuers and, by acquiring the Notes, the Holders agree to treat
$400 of each $1,000 principal amount of the Notes as indebtedness of Jafra S.A.
and $600 of each $1,000 principal amount of the Notes as indebtedness of JCI for
U.S. federal, state and local and non-U.S. tax purposes.
The Notes shall be known and designated as the "11 3/4% Senior
Subordinated Notes Due 2008" of the Issuers. The final Stated Maturity of the
Notes shall be May 1, 2008.
49
Interest on the Outstanding principal amount of Notes will accrue at the rate of
11 3/4% per annum and will be payable semi-annually in arrears on May 1 and
November 1 in each year, commencing on November 1, 1998, to holders of record on
the immediately preceding April 15 and October 15, respectively (each such April
15 and October 15, a "Regular Record Date"). Interest on the Original Notes will
-------------------
accrue from the most recent date to which interest has been paid or duly
provided for or, if no interest has been paid, from the Issue Date; and interest
on any Additional Notes (and Exchange Notes issued in exchange therefor) will
accrue from the most recent date to which interest has been paid or duly
provided for or, if no interest has been paid on such Additional Notes, from the
date of issuance of such Additional Notes; provided, that if any Note is
--------
surrendered for exchange on or after a record date for an Interest Payment Date
that will occur on or after the date of such exchange, interest on the Note
received in exchange thereof will accrue from the date of such Interest Payment
Date.
The principal of, and premium, if any, and interest, on the Notes
shall be payable at the office or agency of the Issuers maintained for that
purpose in the Borough of Manhattan, The City of New York (the "Place of
--------
Payment"); provided, however, that at the option of the Issuers payment of
- -------- -------- -------
interest on a Note may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note Register.
Section 302 Denominations. The Notes shall be issuable only in
-------------
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.
Section 303 Execution, Authentication and Delivery and Dating. The
-------------------------------------------------
Notes shall be executed on behalf of each Issuer by one Officer of such Issuer.
The signature of any such Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of either Issuer shall bind such Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuers may deliver Notes executed by the Issuers to the
Trustee for authentication; and the Trustee shall authenticate and deliver (i)
Initial Notes for original issue in the aggregate principal amount not to exceed
$100,000,000 and (ii) Additional Notes from time to time for original issue in
aggregate principal amounts specified by the Issuers and (iii) Exchange Notes
from time to time for issue in exchange for a like principal amount of Initial
Notes or Initial Additional Notes, in each case specified in clauses (i) through
(iii) above, upon a written order of the Issuers in the form of an Officer's
Certificate of the Issuers (an "Authentication Order"). Such Officer's
Certificate shall specify the amount of Notes to be
50
authenticated and the date on which the Notes are to be authenticated, whether
the Notes are to be Initial Notes, Additional Notes or Exchange Notes and
whether the Notes are to be issued as one or more Global Notes or Physical Notes
and such other information as the Issuers may include or the Trustee may
reasonably request.
All Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
Section 304. Temporary Notes. Until definitive Notes are ready for
---------------
delivery, the Issuers may prepare and upon receipt of an Authentication Order
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Issuers consider appropriate for temporary Notes. If temporary Notes are
issued, the Issuers will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Issuers in a Place of Payment, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Issuers shall execute and upon receipt of an Authentication
Order the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes of the same series and tenor.
Section 305. Registration, Registration of Transfer and Exchange. The
---------------------------------------------------
Issuers shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency of the Issuers in a Place of Payment being herein sometimes collectively
referred to as the "Note Register") in which, subject to such reasonable
-------------
regulations as it may prescribe, the Issuers shall provide for the registration
of Notes and of transfers of Notes. The Trustee is hereby appointed "Note
----
Registrar" for the purpose of registering Notes and transfers of Notes as herein
- ---------
provided.
Upon surrender for transfer of any Note at the office or agency of the
Issuers in a Place of Payment, in compliance with all applicable requirements of
this Indenture and applicable law, the Issuers shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of the same series, of any authorized
denominations and of a like aggregate principal amount.
51
At the option of the Holder, Notes may be exchanged for other Notes of
the same series, of any authorized denominations and of a like tenor and
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the
Issuers shall execute, and the Trustee shall authenticate and deliver, the Notes
that the Holder making the exchange is entitled to receive.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Issuers, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
Every Note presented or surrendered for transfer or exchange shall (if
so required by the Issuers or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Issuers and the
Note Registrar duly executed, by the Holder thereof or such Holder's attorney
duly authorized in writing.
No service charge shall be made for any transfer or exchange of Notes,
but the Issuers may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Notes under this Section 305.
-----------
The Issuers shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption (or purchase) of Notes selected for
redemption (or purchase) under Section 1004 and ending at the close of business
------------
on the day of such mailing, or (ii) to transfer or exchange any Note so selected
for redemption (or purchase) in whole or in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any
-------------------------------------------
mutilated Note is surrendered to the Trustee, or the Issuers and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Issuers and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Issuers or the Trustee that such Note has been
acquired by a bona fide purchaser, the Issuers shall execute and upon receipt of
an Authentication Order the Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Issuers in their discretion may,
instead of issuing a new Note, pay such Note.
52
Upon the issuance of any new Note under this Section 306, the Issuers
-----------
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 306 in lieu of any
-----------
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuers, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and ratably with any and all other
Notes duly issued hereunder.
The provisions of this Section 306 are exclusive and shall preclude
-----------
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 307. Payment of Interest Rights Preserved. Interest on any
------------------------------------
Note that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest specified in Section 301.
-----------
Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
---------
Interest") shall forthwith cease to be payable to the registered Holder on the
- --------
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Issuer responsible therefor, at its
election in each case; as provided in clause (1) or clause (2) below:
(1) Such Issuer may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. Such Issuer shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date
of the proposed payment, and at the same time such Issuer shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
reasonably satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as provided
in this clause (1). Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
nor less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment.
53
The Trustee shall promptly notify such Issuer of such Special Record Date
and, in the name and at the expense of such Issuer, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class postage prepaid, to each Holder at such
Holder's address as it appears in the Note Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Notes (or their respective Predecessor Notes) are registered on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) Such Issuer may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by such Issuer
to the Trustee of the proposed payment pursuant to this clause (2), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 307, each Note
-----------
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Note.
Section 308. Persons Deemed Owners. The Company, the Issuers, any
---------------------
Subsidiary Guarantor, the Trustee and any agent of any of them may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any), and (subject
to Section 307) interest on, such Note and for all other purposes whatsoever,
-----------
whether or not such Note be overdue, and neither the Company, the Issuers, any
Subsidiary Guarantor, the Trustee nor any agent of any of them shall be affected
by notice to the contrary.
Section 309. Cancellation. All Notes surrendered for payment,
------------
redemption, transfer, exchange or conversion shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Issuers may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder that either Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Notes held by the Trustee shall be disposed of as
directed by a Company Order of the Issuers and in accordance with Section 313.
-----------
54
Section 310. Computation of Interest. Interest on the Notes shall be
-----------------------
computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers. The Issuers in issuing the Notes may use
-------------
"CUSIP" numbers (if then generally in use), and if so, the Trustee may use the
CUSIP numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
- -------- -------
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Notes, and that reliance may be placed only on the other identification
numbers printed on the Notes.
Section 312. Book-Entry Provisions for Global Notes. (a) Each Global
--------------------------------------
Note initially shall (i) be registered in the name of the Depositary for such
Global Note or the nominee of such Depositary and (ii) be delivered to the
Trustee as custodian for such Depositary. Neither of the Issuers nor any agent
of the Issuers shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Members of, or participants in, the Depositary ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by the Issuers, any other obligor upon the Notes, the
Trustee and any agent of any of them as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Issuers, any other obligor upon the Notes, the Trustee or any
agent of any of them from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial owner of any Note. The registered
holder of a Global Note may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action that a Holder is entitled to take under this
Indenture or the Notes.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but, subject to the immediately succeeding sentence, not
in part, to the Depositary, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may not be transferred or
exchanged for Physical Notes unless (i) the Issuers have consented thereto in
writing, or such transfer or exchange is made pursuant to the next sentence, and
(ii) such transfer or exchange is in accordance with the applicable rules and
procedures of the Depositary and the provisions of Sections 305 and 313.
------------ ---
Subject to the limitation on issuance of Physical Notes set forth in Section
-------
313(3), U.S. Physical Notes or Offshore Physical Notes shall be transferred to
- ------
all beneficial owners in exchange for their beneficial interests in the
55
relevant U.S. Global Note or the relevant Offshore Global Note, respectively, if
(i) the Depositary notifies the Issuers that it is unwilling or unable to
continue as Depositary for the applicable Global Note or the Depositary ceases
to be a "Clearing Agency" registered under the Exchange Act and a successor
depositary is not appointed by the Issuers within 90 days, (ii) the Issuers, at
their option, notify the Trustee in writing that they elect to cause the
issuance of Physical Notes under this Indenture or (iii) an Event of Default has
occurred and is continuing and the Note Registrar has received a written request
from the Depositary to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners for Physical Notes
pursuant to paragraph (b) of this Section 312, the Note Registrar shall record
-----------
on its books and records the date and a decrease in the principal amount of such
Global Note in an amount equal to the beneficial interest in the Global Note
being transferred, and the Issuers shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and principal
amount of authorized denominations.
(d) In connection with a transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 312, the applicable
-----------
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Issuers shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the applicable Global Note, an equal aggregate principal
amount at maturity of U.S. Physical Notes (in the case of any U.S. Global Note)
or Offshore Physical Notes (in the case of any Offshore Global Note), as the
case may be, of authorized denominations.
(e) The transfer and exchange of a Global Note or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth in
Section 313) and the procedures of the Depositary therefor. Any beneficial
- -----------
interest in one of the Global Notes that is transferred to a Person who takes
delivery in the form of an interest in a different Global Note will, upon
transfer, cease to be an interest in such Global Note and become an interest in
the other Global Note and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to beneficial
interests in such other Global Note for as long as it remains such an interest.
A transferor of a beneficial interest in a Global Note shall deliver to the
Registrar a written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary to be
credited with a beneficial interest in the relevant Global Note. Subject to
Section 313, the Registrar shall, in accordance with such instructions, instruct
- -----------
the Depositary to credit to the account of the Person specified
56
in such instructions a beneficial interest in such Global Note and to debit the
account of the Person making the transfer the beneficial interest in the Global
Note being transferred.
(f) Any Physical Note delivered in exchange for an interest in a
Global Note pursuant to paragraph (b) of this Section 312 shall, unless such
-----------
exchange is made on or after the Resale Restriction Termination Date applicable
to such Note and except as otherwise provided in Section 203 and Section 313,
----------- -----------
bear the Private Placement Legend.
(g) The Issuers, any other obligor upon the Notes or the Trustee, in
the discretion of any of them, may treat as the Act of a Holder any instrument
or writing of any Person that is identified by the Depositary as the owner of a
beneficial interest in the Global Note, provided that the fact and date of the
execution of such instrument or writing is proved in accordance with Section
-------
108(b).
- ------
Section 313. Special Transfer Provisions. (1) Transfers to Non-U.S.
--------------------------- ---------------------
Persons. The following provisions shall apply with respect to the registration
- -------
of any proposed transfer of a Note that is a Restricted Security to any Non-U.S.
Person: The Note Registrar shall register such transfer if it complies with all
other applicable requirements of this Indenture (including Section 305) and,
-----------
(a) if (x) such transfer is after the relevant Resale Restriction
Termination Date with respect to such Note or (y) the distribution
compliance period set forth in Regulation S has expired and the proposed
transferor has delivered to the Note Registrar a Regulation S Certificate
and, unless otherwise agreed by the Issuers and the Trustee, an opinion of
counsel, certifications and other information satisfactory to the Issuers
and the Trustee, and
(b) if the proposed transferor is or is acting through an Agent
Member holding a beneficial interest in a Global Note, upon receipt by the
Note Registrar of (x) the certificate, opinion, certifications and other
information, if any, required by clause (a) above and (y) written
instructions given in accordance with the Depositary's and the Note
Registrar's procedures;
whereupon (i) the Note Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of any Outstanding Physical
Note) a decrease in the principal amount of the relevant Global Note in an
amount equal to the principal amount of the beneficial interest in the relevant
Global Note to be transferred, and (ii) either (A) if the proposed transferee is
or is acting through an Agent Member holding a beneficial interest in a relevant
Offshore Global Note, the Trustee shall reflect on its books and records the
date and an increase in the principal amount of such Offshore Global Note in an
amount equal to the
57
principal amount of the beneficial interest being so transferred or (B)
otherwise the Issuers shall execute and the Trustee shall authenticate and
deliver one or more Physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Note that is a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): The
Note Registrar shall register such transfer if it complies with all other
applicable requirements of this Indenture (including Section 305) and,
-----------
(a) if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of such Note stating, or has
otherwise certified to the Issuers and the Note Registrar in writing, that
the sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
such Note stating, or has otherwise certified to the Issuers and the Note
Registrar in writing, that it is purchasing such Note for its own account
or an account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member, and the Note to be
transferred consists of a Physical Note that after transfer is to be
evidenced by an interest in a Global Note or consists of a beneficial
interest in a Global Note that after the transfer is to be evidenced by an
interest in a different Global Note, upon receipt by the Note Registrar of
written instructions given in accordance with the Depositary's and the Note
Registrar's procedures, whereupon the Note Registrar shall reflect on its
books and records the date and an increase in the principal amount of the
transferee Global Note in an amount equal to the principal amount of the
Physical Note or such beneficial interest in such transferor Global Note to
be transferred, and the Trustee shall cancel the Physical Note so
transferred or reflect on its books and records the date and a decrease in
the principal amount of such transferor Global Note, as the case may be.
(3) Limitation on Issuance of Physical Notes. No Physical Note shall
----------------------------------------
be exchanged for a beneficial interest in any Global Note, except in accordance
with Section 312 and this Section 313.
----------- -----------
58
A beneficial owner of an interest in a Unitary Global Note or an
Offshore Global Note shall not be permitted to exchange such interest for a
Physical Note until a date, which must be after the expiration of the
distribution compliance period set forth in Regulation S, on which the Issuers
receive a certificate of beneficial ownership substantially in the form of
Exhibit D from such beneficial owner (a "Certificate of Beneficial Ownership").
-----------------------------------
Such date, as it relates to an Offshore Global Note, is herein referred to as
the "Offshore Note Exchange Date."
---------------------------
(4) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the requested transfer is after the relevant
Resale Restriction Termination Date with respect to such Notes, or (ii) upon
written request of the Issuers after there is delivered to the Note Registrar an
opinion of counsel (which opinion and counsel are satisfactory to the Issuers
and the Trustee) to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act, (iii) with respect to an Offshore Global Note
or Offshore Physical Note only, with the agreement of the Issuers on or after
the Offshore Note Exchange Date with respect to such Note, or (iv) such Notes
are sold or exchanged pursuant to an effective registration statement under the
Securities Act.
(5) Other Transfers. The Note Registrar shall effect and register,
---------------
upon receipt of a written request from the Issuers so to do, a transfer not
otherwise permitted by this Section 313, such registration to be done in
-----------
accordance with the otherwise applicable provisions of Section 313, upon the
-----------
furnishing by the proposed transferor or transferee of a written opinion of
counsel (which opinion and counsel are satisfactory to the Issuers and the
Trustee) to the effect that, and such other certifications or information as the
Issuers may require to confirm that, the proposed transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
A Note that is a Restricted Security may not be transferred other than
as provided in this Section 313. A beneficial interest in a Global Note that is
-----------
a Restricted Security may not be exchanged for a beneficial interest in another
Global Note other than through a transfer in compliance with this Section 313.
-----------
(6) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
59
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 312 or this Section
----------- -------
313 (including all Notes received for transfer pursuant to Section 313). The
- --- -----------
Issuers shall have the right to require the Note Registrar to deliver to the
Issuers, at the Issuers' several expense, copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Note Registrar.
In connection with any transfer of any Note, the Trustee, the Note
Registrar and the Issuers shall be entitled to receive, shall be under no duty
to inquire into, may conclusively presume the correctness of, and shall be fully
protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Notes, or otherwise) received from any Holder and any transferee of any Note
regarding the validity, legality and due authorization of any such transfer, the
eligibility of the transferee to receive such Note and any other facts and
circumstances related to such transfer.
Section 314. Payment of Additional Interest. (a) Under certain
------------------------------
circumstances the Issuers will be obligated to pay certain additional amounts of
interest to the Holders of certain Initial Notes, as more particularly set forth
in such Initial Notes.
(b) Under certain circumstances the Issuers may be obligated to pay
certain additional amounts of interest to the Holders of certain Initial
Additional Notes, as may be more particularly set forth in such Initial
Additional Notes.
ARTICLE 4
COVENANTS
---------
Section 401. Payment of Principal, Premium and Interest. JCI shall
------------------------------------------
duly and punctually pay its Several Share of the principal of (and premium, if
any) and interest on the Notes, severally, in accordance with the terms of the
Notes and this Indenture.
Jafra S.A. shall duly and punctually pay its Several Share of the
principal of (and premium, if any) and interest on the Notes, severally, in
accordance with the terms of the Notes and this Indenture.
Section 402. Maintenance of Office or Agency. The Issuers shall
-------------------------------
maintain in the Borough of Manhattan, The City of New York an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for transfer or exchange and where notices and demands to or upon
the Issuers in respect of the Notes and
60
this Indenture may be served. The Issuers shall give prompt written notice to
the Trustee of the location, and of any change in the location, of such office
or agency. If at any time the Issuers shall fail to maintain such office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee. The Issuers hereby designate the
Corporate Trust Office as the initial Place of Payment and appoint the Trustee
its agent to receive all such presentations, surrenders, notices and demands so
long as such Corporate Trust Office remains the Place of Payment.
Section 403. Money for Payments To Be Held in Trust. If either Issuer
--------------------------------------
shall at any time act as its own Paying Agent, it will, on or before each due
date of the principal of (and premium, if any) or interest on, any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay its Several Share of the principal (and premium, if any)
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
If either Issuer is not acting as its own Paying Agent, it will, prior
to each due date of the principal of (and premium, if any) or interest on, any
Notes, deposit with a Paying Agent a sum sufficient to pay its Several Share of
the principal (and premium, if any) or interest, so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) each Issuer will
promptly notify the Trustee of its action or failure so to act.
If either Issuer is not acting as its own Paying Agent, such Issuer
will cause each Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section 403, that such Paying Agent
-----------
will
(1) hold all sums held by it for the payment of principal of (and
premium, if any) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Issuers (or any
other obligor upon the Notes) in the making of any such payment of
principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
61
(4) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture and TIA relating to the duties, rights and
liabilities of such Paying Agent.
The Issuers may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuers or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Issuers or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuers, in trust for the payment of the principal of (and premium, if
any) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid in the appropriate proportion to the Issuers on Company Request, or (if
then held by the Issuers) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Issuers for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuers as
trustee thereof, shall thereupon cease.
Section 404. Additional Amounts. All payments made on behalf of Jafra
------------------
S.A. under or with respect to the Notes or on behalf of any Note Guarantor
(other than JCI) under or with respect to any Note Guarantee (in any case, the
Person making such payment, a "Payor") shall be made free and clear of and
-----
without withholding or deduction for or on account of any present or future tax,
duty, levy, impost, assessment or other governmental charge (including
penalties, interest and other liabilities related thereto) imposed or levied by
or on behalf of the Governments of Mexico, Luxembourg or the jurisdiction of
incorporation, seat of management or residence for income tax purposes of any
future Jafra S.A. Subsidiary Guarantor or any successors to the Company, Jafra
S.A. or any Jafra S.A. Subsidiary Guarantor (each a "Successor Jurisdiction"),
----------------------
as the case may be, or of any territory thereof or by any authority or agency
therein or thereof having power to tax (hereinafter "Taxes"), unless the Payor
-----
is required to withhold or deduct Taxes by law or by the interpretation or
administration thereof by the relevant government authority or agency. If a
Payor is so required to withhold or deduct any amount for or on account of Taxes
from any payment made under or with respect to the Notes or a Note Guarantee,
such Payor will be required to pay such additional amounts ("Additional
----------
Amounts") as may be necessary so that the net amount received by each Holder
- -------
(including Additional Amounts) after such withholding or deduction will not be
less than the amount the Holder would have received if such Taxes had not been
62
withheld or deducted; provided, however, that no Additional Amounts will be
-------- -------
payable with respect to:
(i) any payment to a Holder which is subject to such Taxes by reason
of its (or the beneficial owner of the Notes) being connected with Mexico,
Luxembourg or any Successor Jurisdiction or any territory thereof other
than a connection arising from the mere holding of Notes or the receipt of
payments in respect of the Notes or the Note Guarantees;
(ii) any Taxes with respect to a Note presented for payment more than
30 days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for and notice thereof given
to the Holders, whichever occurs later, except to the extent that the
Holder of such Note would have been entitled to such Additional Amounts on
presenting such Note for payment on any date during such 30-day period;
(iii) Taxes that would not have been imposed but for the failure of
the Holder or beneficial owner of a Note to comply with any certification,
identification, information, or other documentation requirement under law,
regulation, administrative practice or an applicable treaty that is a
precondition to exemption from, or reduction in the rate of, the
imposition, deduction or withholding of Taxes; provided that at least 60
--------
days prior to (a) the first payment date with respect to which this clause
(iii) shall be applied and (b) in the event of a change in such
certification, identification, information or other documentation
requirement, the first payment date subsequent to such change, the Payor
shall have notified the Trustee, in writing, that the Holders or beneficial
owners of the Notes will be required to provide such information or
documentation;
(iv) estate, inheritance, gift, sales, transfer, personal property
or other similar taxes imposed with respect to such Notes;
(v) any Tax which is only payable otherwise than by withholding or
deduction from payments in respect of the Notes or the Note Guarantees; and
(vi) any combination of items (i), (ii), (iii), (iv) and (v) above.
Each Payor will also make such withholding or deduction and remit the
full amount deducted or withheld to the relevant authority as and when required
in accordance with applicable law. Each Payor will furnish to the Trustee of the
Notes, within 30 days after the date the payment of any Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by such
Payor; provided, however, that if the relevant Payor
-------- -------
63
is unable to obtain such receipt within 30 days, notwithstanding such Payor's
best efforts to obtain such receipts, the Payor will furnish such receipts to
the Trustee as soon as receipts can be obtained.
Whenever in this Indenture there is mentioned, in any context, (a) the
payment of principal, (b) purchase prices in connection with a purchase of
Notes, (c) interest or (d) any other amount payable on or with respect to any of
the Notes or a Note Guarantee, such reference shall be deemed to include payment
of Additional Amounts provided for in this section to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
Each Payor will pay any present or future stamp, court or documentary
taxes or any other similar taxes, charges or levies that arise in Mexico,
Luxembourg or any Successor Jurisdiction from the execution, delivery,
registration of, or enforcement of rights under, the Notes, the Indenture or
any other document or instrument in relation thereof.
The obligations of each Payor under this Section 404 shall survive any
-----------
termination, defeasance or discharge of the Indenture.
Section 405. SEC Reports. Notwithstanding that the Company may not be
-----------
required to be or remain subject to the reporting requirements of Section 13(a)
or 15(d) of the Exchange Act applicable to a "foreign private issuer" (as such
term is defined in Rule 3b-4 under the Exchange Act), from and after the date on
which the Company first becomes subject to such reporting requirements, the
Company shall file with the SEC (unless such filing is not permitted under the
Exchange Act or by the SEC), so long as Notes are outstanding, the following
reports by the dates indicated (or, in the case of the first such report, if
later, the date that is 45 days after the effectiveness of a registration
statement in respect of Initial Notes or Exchange Notes exchanged therefor, as
the case may be): (i) within 120 days from the end of each fiscal year, an
annual report on Form 20-F (or any successor form) containing the information
required to be contained therein for such fiscal year, and (ii) within 60 days
after the end of each of the first three quarters in each fiscal year, quarterly
reports on Form 6-K containing unaudited financial statements (including a
balance sheet and statement of income, changes in stockholders' equity and cash
flows) and Management's Discussion and Analysis of Financial Condition and
Results of Operations for and as of the end of such quarters (with comparable
financial statements for such quarter of the immediately preceding fiscal year).
The Company will also, within 15 days after the date on which the Company files
such reports, transmit by mail to all Holders, as their names and addresses
appear in the Note Register, and to the Trustee copies of any such information,
documents and reports (without exhibits) (or, in lieu of one or more of the
quarterly reports for fiscal 1998, a registration statement filed with the SEC
under the Securities Act or any amendment thereto, provided
64
such registration statement or amendment contains the information that would
have been included in each such report). The Company will be deemed to have
satisfied such requirements if a Parent files and provides reports, documents
and information of the types otherwise so required to be filed by the Company,
or of the types required to be filed by a U.S. issuer with the SEC pursuant to
Section 13(a) or 15(d) of the Exchange Act, in each case within the applicable
time periods, and the Company is not required to file such reports, documents
and information separately under the applicable rules and regulations of the SEC
(after giving effect to any exemptive relief) because of the filings by such
Parent. The Company (and, to the extent required under the TIA, any other
obligor upon the Notes) also shall comply with the other provisions of TIA (S)
314(a).
Section 406. Statement as to Default. Each Issuer shall deliver to
-----------------------
the Trustee, within 120 days after the end of each fiscal year of such Issuer
ending after the date hereof, an Officer's Certificate, to the effect that to
the best knowledge of the signer thereof such Issuer is or is not in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if such Issuer shall be in default, specifying all such
defaults and the nature and status thereof of which such signer may have
knowledge. To the extent required by the TIA, each Note Guarantor shall comply
with TIA (S) 314(a)(4). The individual signing any certificate given by any
Person pursuant to this Section 406 shall be the principal executive, financial
-----------
or accounting officer of such Person, in compliance with TIA (S) 314(a)(4).
Section 407. Limitation on Indebtedness. (a) The Company shall not,
--------------------------
and shall not permit any Restricted Subsidiary to, Incur any Indebtedness;
provided, however, that the Company, either Issuer or any Subsidiary Guarantor
- -------- -------
may Incur Indebtedness if on the date of the Incurrence of such Indebtedness,
after giving effect to the Incurrence thereof, the Consolidated Coverage Ratio
would be greater than 2.00:1.00 if such Indebtedness is Incurred prior to May 1,
2001 or 2.25:1.00 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to the Senior Credit Facility
(including in respect of letters of credit or bankers' acceptances issued
or created thereunder) and Indebtedness of any Foreign Subsidiary Incurred
other than under the Senior Credit Facility, and (without limiting the
foregoing), in each case, any Refinancing Indebtedness in respect thereof,
in a maximum principal amount which, when taken together with the amount of
all Indebtedness Incurred pursuant to this clause (i) and then outstanding,
does not exceed the amount equal to (A) $100.0 million, plus (B) the
----
amount, if any, by which the Borrowing Base exceeds $65.0 million, plus (C)
----
in the
65
case of any refinancing of the Senior Credit Facility or any portion
thereof, the aggregate amount of fees, underwriting discounts, premiums and
other costs and expenses incurred in connection with such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary issued to and
held by the Company or (B) of the Company or any Restricted Subsidiary
issued to and held by any Restricted Subsidiary; provided, however, that
-------- -------
any subsequent issuance or transfer of any Capital Stock of such Restricted
Subsidiary to which such Indebtedness is owed, or any other event, that
results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of such Indebtedness (except to the
Company or a Restricted Subsidiary) will be deemed, in each case, an
Incurrence of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes (other than any
Additional Notes), any Indebtedness (other than the Indebtedness described
in clause (i) or (ii) above) outstanding on the Issue Date and any
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iii) or paragraph (a) above;
(iv) Purchase Money Obligations and Capitalized Lease Obligations,
and any Refinancing Indebtedness with respect thereto, in an aggregate
principal amount at any time outstanding not exceeding an amount equal to
6% of Consolidated Total Assets at any time outstanding;
(v) Indebtedness of any Foreign Subsidiary Incurred for working
capital purposes;
(vi) (A) Guarantees by the Company or any Restricted Subsidiary of
Indebtedness or any other obligation or liability of the Company or any
Restricted Subsidiary (other than Indebtedness Incurred in violation of
this Section 407) or (B) Indebtedness of the Company or any Restricted
-----------
Subsidiary arising by reason of any Lien granted by or applicable to such
Person securing Indebtedness of the Company or any Restricted Subsidiary
(other than Indebtedness Incurred in violation of this Section 407);
-----------
(vii) Indebtedness of the Company or any Restricted Subsidiary (A)
arising from the honoring of a check, draft or similar instrument of such
Person drawn against insufficient funds, provided that such Indebtedness is
extinguished within five Business Days of its incurrence, or (B) consisting
of guarantees, indemnities, obligations in respect of earnouts or other
purchase price adjustments, or similar obligations, Incurred
66
in connection with the acquisition or disposition of any business, assets
or Person (including pursuant to the Acquisition);
(viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers' acceptances or other similar
instruments or obligations issued, or relating to liabilities or
obligations incurred, in the ordinary course of business (including those
issued to governmental entities in connection with self-insurance under
applicable workers' compensation statutes), or (B) completion guarantees,
surety, judgment, appeal or performance bonds, or other similar bonds,
instruments or obligations, provided, or relating to liabilities or
obligations incurred, in the ordinary course of business, or (C) Hedging
Obligations entered into for bona fide hedging purposes in the ordinary
course of business, or (D) Management Guarantees or (E) the financing of
insurance premiums in the ordinary course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a Lien on
all or part of the assets disposed of in, or otherwise incurred in
connection with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company or
any Restricted Subsidiary in connection with its acquisition of assets from
such Person or any Affiliate thereof or is issued and outstanding on or
prior to the date on which such Person was acquired by the Company or any
Restricted Subsidiary or merged or consolidated with or into the Company or
any Restricted Subsidiary (other than Indebtedness Incurred to finance, or
otherwise in connection with, such acquisition); provided, however, that on
-------- -------
the date of such acquisition, merger or consolidation, after giving effect
thereto, (x) with respect to any such Indebtedness of the Company, either
-
Issuer or any Subsidiary Guarantor, (A) the Company could Incur at least
-
$1.00 of additional Indebtedness pursuant to paragraph (a) above or (B) the
-
Consolidated Coverage Ratio is greater than it was on such date immediately
prior to giving effect to such acquisition and (y) with respect to any such
-
Indebtedness of any Restricted Subsidiary that is not a Subsidiary
Guarantor or an Issuer, the Company could Incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) above; and any
Refinancing Indebtedness with respect to any such Indebtedness;
(xi) Indebtedness in an amount at any time outstanding not exceeding
twice the amount of Excluded Contributions made after the Issue Date;
provided, however, that the proceeds of such Indebtedness and the related
-------- -------
amount of such Excluded Contributions are used to finance the acquisition
of assets of any Person in a Related Business or the merger or
consolidation of such a Person into or with the Company or any Restricted
Subsidiary (including payment of any related fees and expenses), or to
67
refinance any such acquisition, merger or consolidation with such
Indebtedness being Incurred for such refinancing within nine months of the
closing of such acquisition, merger or consolidation; and any Refinancing
Indebtedness with respect to any such Indebtedness; and
(xii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount which, when taken together with the amount of
all Indebtedness Incurred pursuant to this clause (xii) and then
outstanding, does not exceed an amount equal to 11.5% of Consolidated Total
Assets at any time outstanding.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 407 (i) any other obligation of the obligor on
-----------
such Indebtedness (or of any other Person who could have Incurred such
Indebtedness under this Section 407) arising under any Guarantee, Lien or letter
-----------
of credit, bankers' acceptance or other similar instrument or obligation
supporting such Indebtedness shall be disregarded to the extent that such
Guarantee, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation secures the principal amount of such Indebtedness; (ii)
in the event that Indebtedness meets the criteria of more than one of the types
of Indebtedness described in paragraph (b) above, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses; and
(iii) the amount of Indebtedness issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.
(d) For purposes of determining compliance with any Dollar-
denominated restriction on the Incurrence of Indebtedness denominated in a
foreign currency, the Dollar-equivalent principal amount of such Indebtedness
Incurred pursuant thereto shall be calculated based on the relevant currency
exchange rate in effect on the date that such Indebtedness was Incurred, in the
case of term Indebtedness, or first committed, in the case of revolving credit
Indebtedness, provided that (x) the Dollar-equivalent principal amount of any
--------
such Indebtedness outstanding on the Issue Date shall be calculated based on the
relevant currency exchange rate in effect on the Issue Date, (y) if such
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable Dollar-
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such Dollar-denominated
restriction shall be deemed not to have been exceeded so long as the principal
amount of such refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced and (z) the Dollar-equivalent principal
amount of Indebtedness denominated in a foreign currency and Incurred pursuant
to the Senior Credit Facility shall be calculated based on the relevant currency
exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii)
any date
68
on which any of the respective commitments under the Senior Credit Facility
shall be reallocated between or among facilities or subfacilities thereunder, or
on which such rate is otherwise calculated for any purpose thereunder, or (iii)
the date of such Incurrence. The principal amount of any Indebtedness Incurred
to refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency
exchange rate applicable to the currencies in which such respective Indebtedness
is denominated that is in effect on the date of such refinancing.
Section 408. Limitation on Other Subordinated Indebtedness. The
---------------------------------------------
Company shall not permit either Issuer to Incur any Indebtedness that is
expressly subordinated in right of payment to any Senior Indebtedness of such
Issuer, unless such Indebtedness so Incurred ranks pari passu in right of
---- -----
payment with, or is subordinated in right of payment to, such Issuer's
Indebtedness with respect to the Notes. The Company shall not Incur any
Indebtedness that is expressly subordinated in right of payment to any Senior
Indebtedness of the Company, unless such Indebtedness so Incurred ranks pari
----
passu in right of payment with the Company's Note Guarantee, or is subordinated
- -----
in right of payment to the Company's Note Guarantee. The Company shall not
permit any Subsidiary Guarantor to Incur any Indebtedness that is expressly
subordinated in right of payment to any Senior Indebtedness of such Subsidiary
Guarantor, unless such Indebtedness so Incurred ranks pari passu in right of
---- -----
payment with such Subsidiary Guarantor's Subsidiary Guarantee, or is
subordinated in right of payment to such Subsidiary Guarantee. Unsecured
Indebtedness shall not be deemed to be subordinate or junior to secured
Indebtedness merely because it is unsecured, and Indebtedness that is not
guaranteed by a particular Person shall not be deemed to be subordinate or
junior to Indebtedness that is so guaranteed merely because it is not so
guaranteed.
Section 409. Limitation on Restricted Payments. (a) The Company
---------------------------------
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any such payment in connection with any
merger or consolidation to which the Company is a party) except (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and (y) dividends or distributions payable to the Company or any
Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making
such dividend or distribution, to other holders of its Capital Stock on no more
than a pro rata basis, measured by value), (ii) purchase, redeem, retire or
--- ----
otherwise acquire for value any Capital Stock of the Company held by Persons
other than the Company or a Restricted Subsidiary (other than any acquisition of
Capital Stock deemed to occur upon the exercise of options if such Capital Stock
represents a portion of the exercise price thereof), (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than a purchase, redemption, defeasance or other
acquisition or retirement for value in anticipation of satisfying
69
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of such acquisition or retirement) or (iv) make
any Investment (other than a Permitted Investment) in any Person (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition or retirement or Investment being herein referred to as a
"Restricted Payment"), if at the time the Company or such Restricted Subsidiary
------------------
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness pursuant to Section 407(a); or
--------------
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
as determined in good faith by the Board of Directors, whose determination
shall be conclusive) declared or made subsequent to the Issue Date and then
outstanding would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from April 30, 1998 to the end of
the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which consolidated financial statements of the
Company are available (or, in case such Consolidated Net Income shall
be a negative number, 100% of such negative number);
(B) the aggregate Net Cash Proceeds, and fair value (as
determined in good faith by the Board of Directors) of property or
assets, received (x) by the Company as capital contributions to the
Company after the Issue Date or from the issuance or sale (other than
to a Restricted Subsidiary) of its Capital Stock (other than
Disqualified Stock) after the Issue Date (other than Excluded
Contributions) or (y) by the Company or any Restricted Subsidiary from
the issuance and sale by the Company or any Restricted Subsidiary
after the Issue Date of Indebtedness that shall have been converted
into or exchanged for Capital Stock of the Company (other than
Disqualified Stock), plus the amount of cash, property or assets
----
(determined as provided above) received by the Company or any
Restricted Subsidiary upon such conversion or exchange;
(C) the aggregate amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from (i) dividends,
distributions, interest payments, return of capital, repayments of
Investments or other transfers of
70
assets to the Company or any Restricted Subsidiary from any
Unrestricted Subsidiary, or (ii) the redesignation of any Unrestricted
Subsidiary as a Restricted Subsidiary (valued in each case as provided
in the definition of "Investment"), not to exceed in the case of any
such Unrestricted Subsidiary the aggregate amount of Investments
(other than Permitted Investments) made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary after the Issue
Date; and
(D) in the case of any disposition or repayment of any
Investment constituting a Restricted Payment (without duplication of
any amount deducted in calculating the amount of Investments at any
time outstanding included in the amount of Restricted Payments), an
amount in the aggregate equal to the lesser of the return of capital,
repayment or other proceeds with respect to all such Investments and
the initial amount of all such Investments.
(b) The provisions of Section 409(a) will not prohibit any of the
--------------
following (each, a "Permitted Payment"):
-----------------
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or Subordinated
Obligations made by exchange (including any such exchange pursuant to the
exercise of a conversion right or privilege in connection with which cash
is paid in lieu of the issuance of fractional shares) for, or out of the
proceeds of the substantially concurrent issuance or sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary) or a substantially concurrent capital
contribution to the Company; provided, however, that the Net Cash Proceeds
-------- -------
from such issuance, sale or capital contribution shall be excluded in
subsequent calculations under Section 409(a)(3)(B);
--------------------
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (x) made by exchange
for, or out of the proceeds of the substantially concurrent issuance or
sale of, Indebtedness of either Issuer or any Note Guarantor or Refinancing
Indebtedness Incurred in compliance with Section 407, (y) from Net
-----------
Available Cash to the extent permitted under Section 411 or (z) to the
-----------
extent required by the agreement governing such Subordinated Obligations,
following the occurrence of a Change of Control (or other similar event
described therein as a "change of control"), but only if the Company shall
have complied with Section 415 and, if required, purchased all Notes
-----------
tendered pursuant to the offer to repurchase all the Notes required
thereby, prior to purchasing or repaying such Subordinated Obligations;
71
(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 409(a);
--------------
(iv) Investments or other Restricted Payments in an aggregate amount
outstanding at any time not to exceed the amount of Excluded Contributions;
provided, however, that such Excluded Contributions shall not include any
-------- -------
Excluded Contribution the proceeds of which were used to finance the
acquisition of assets from any Person in a Related Business or the merger
or consolidation of such a Person into or with the Company or any
Restricted Subsidiary pursuant to Section 407(b)(xi);
------------------
(v) payments by the Company to repurchase or otherwise acquire
Capital Stock (including any options, warrants or other rights in respect
thereof), from Management Investors (including loans, advances, dividends
or distributions by the Company to a Parent to permit such Parent to make
any such repurchase or other acquisition), such payments, loans, advances,
dividends or distributions not to exceed an amount (net of repayments of
any such loans or advances) equal to (1) $10.0 million, plus (2) $2.0
- ---- -
million multiplied by the number of calendar years that have commenced
since the Issue Date, plus (3) the Net Cash Proceeds received by the
---- -
Company since the Issue Date from, or as a capital contribution from, the
issuance or sale to Management Investors of Capital Stock (including any
options, warrants or other rights in respect thereof), to the extent such
Net Cash Proceeds are not included in any calculation under clause Section
-------
409(a)(3)(B)(x);
---------------
(vi) the payment of (or loans, advances, dividends or distributions
by the Company to a Parent to pay) dividends on the common stock or equity
of the Company (or such Parent) following a public offering of such common
stock or equity, in an amount not to exceed in any fiscal year 6% of the
aggregate gross proceeds received by the Company in or from such public
offering;
(vii) Restricted Payments (including loans or advances) in an
aggregate amount which, when taken together with all Restricted Payments
made pursuant to this clause (vii) and then outstanding, net of repayments
of any such loans or advances, does not exceed $5.0 million at any time
outstanding;
(viii) payments by the Company or any Restricted Subsidiary to satisfy
obligations under the Management Agreements and Permitted Parent Payments;
(ix) dividends or other distributions of Capital Stock, Indebtedness
or other securities of Unrestricted Subsidiaries; and
72
(x) the Transactions;
provided, that (A) in the case of clauses (iii), (vi) and (vii), the net amount
- --------
of any such Permitted Payment shall be included in subsequent calculations of
the amount of Restricted Payments, (B) in the case of clause (v), at the time of
any calculation of the amount of Restricted Payments, the net amount of
Permitted Payments that have then actually been made under clause (v) that is in
excess of 50% of the total amount of Permitted Payments then permitted under
clause (v) shall be included in such calculation of the amount of Restricted
Payments, (C) in all cases other than pursuant to clauses (A) and (B)
immediately above, the net amount of any such Permitted Payment shall be
excluded in subsequent calculations of the amount of Restricted Payments and (D)
solely with respect to clause (vii), no Default or Event of Default shall have
occurred or be continuing at the time of any such Permitted Payment after giving
effect thereto.
Section 410. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company shall not, and shall not permit any
- -----------------------
Restricted Subsidiary to, create or otherwise cause to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its property
or assets to the Company, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or entered
into on the Issue Date (including the Senior Credit Facility), this
Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or relating
to Indebtedness or Capital Stock of a Person, which Person is acquired by
or merged or consolidated with or into the Company or any Restricted
Subsidiary, or which agreement or instrument is assumed by the Company or
any Restricted Subsidiary in connection with an acquisition of assets from
such Person, as in effect at the time of such acquisition, merger or
consolidation (except to the extent that such Indebtedness was incurred to
finance, or otherwise in connection with, such acquisition, merger or
consolidation); provided, however, that for purposes of this clause (2), if
-------- -------
a Person other than the Company or the relevant Issuer is the Successor,
any Subsidiary thereof or agreement or instrument of such Person or any
such Subsidiary shall be deemed acquired or assumed, as the case may be, by
the Company or a Restricted Subsidiary, as the case may be, when such
Person becomes the Successor;
(3) pursuant to an agreement or instrument (a "Refinancing
-----------
Agreement") effecting a refinancing of Indebtedness Incurred pursuant to,
---------
or that otherwise extends,
73
renews, refunds, refinances or replaces, an agreement or instrument
referred to in clause (1) or (2) of this Section 410 or this clause (3) (an
-----------
"Initial Agreement") or contained in any amendment, supplement or other
-----------------
modification to an Initial Agreement (an "Amendment"); provided, however,
--------- -------- -------
that the encumbrances and restrictions contained in any such Refinancing
Agreement or Amendment are not materially less favorable to the Holders of
the Notes taken as a whole than encumbrances and restrictions contained in
the Initial Agreement or Initial Agreements to which such Refinancing
Agreement or Amendment relates (as determined in good faith by the
Company);
(4) (A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any lease,
license or other contract, (B) by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or
assets of the Company or any Restricted Subsidiary not otherwise prohibited
by this Indenture, (C) contained in mortgages, pledges or other security
agreements securing Indebtedness of a Restricted Subsidiary to the extent
restricting the transfer of the property or assets subject thereto, (D)
pursuant to customary provisions restricting dispositions of real property
interests set forth in any reciprocal easement agreements of the Company or
any Restricted Subsidiary, (E) pursuant to Purchase Money Obligations that
impose encumbrances or restrictions on the property or assets so acquired,
(F) on cash or other deposits or net worth imposed by customers under
agreements entered into in the ordinary course of business, (G) pursuant to
customary provisions contained in agreements and instruments entered into
in the ordinary course of business (including leases and joint venture and
other similar agreements entered into in the ordinary course of business)
or (H) that arises or is agreed to in the ordinary course of business and
does not detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or such
Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its property
or assets) imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the Capital Stock
or assets of such Restricted Subsidiary (or the property or assets that are
subject to such restriction) pending the closing of such sale or
disposition;
(6) required by any applicable law, rule, regulation or order or by
any regulatory authority having jurisdiction over the Company or any
Restricted Subsidiary or any of their businesses; or
74
(7) pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant
to the provisions of Section 407, if the Company determines that such
-----------
encumbrance or restriction will not cause the Issuers not to have the funds
necessary to pay the principal of or interest on the Notes, (B) relating to
any sale of receivables by a Foreign Subsidiary or (C) relating to
Indebtedness of or a Financing Disposition to or by any Receivables Entity.
Section 411 Limitation on Sales of Assets and Subsidiary Stock. (a)
--------------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary to, make
any Asset Disposition unless
(i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person
assuming responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the fair market value
of the shares and assets subject to such Asset Disposition, as such fair
market value may be determined (and shall be determined, to the extent such
Asset Disposition or any series of related Asset Dispositions involves
aggregate consideration in excess of $5.0 million) in good faith by the
Board of Directors, whose determination shall be conclusive (including as
to the value of all noncash consideration);
(ii) in the case of any Asset Disposition (or series of related
Asset Dispositions) having a fair market value of $2.5 million or more, at
least 75% of the consideration therefor (excluding any consideration by way
of relief from, or by any other Person assuming responsibility for, any
liabilities, contingent or otherwise, that are not Indebtedness) received
by the Company or such Restricted Subsidiary is in the form of cash, and
provided that this clause (ii) shall not apply to any Asset Disposition (or
--------
series of related Asset Dispositions), involving assets that accounted for
less than two percent of Consolidated EBITDA during the period of the most
recent four consecutive fiscal quarters ending prior to the date of such
Asset Disposition for which consolidated financial statements of the
Company are available; and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or any Restricted Subsidiary,
as the case may be) as follows:
(A) first, either (x) to the extent the Issuers elect (or to the
-----
extent required by the terms of any Senior Indebtedness or any
Indebtedness of a Restricted Subsidiary), to prepay, repay or purchase
Senior Indebtedness or
75
such Indebtedness of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or a Restricted Subsidiary) within
365 days after the date of such Asset Disposition, or (y) to the
extent the Company or such Restricted Subsidiary elects, to reinvest
in Additional Assets (including by means of an investment in
Additional Assets by a Restricted Subsidiary with Net Available Cash
received by the Company or another Restricted Subsidiary) within 365
days from the date of such Asset Disposition or, if such reinvestment
in Additional Assets is a project that is authorized by the Board of
Directors and committed to by the Company or any Restricted Subsidiary
and will take longer than such 365 days to complete, the period of
time necessary to complete such project;
(B) second, to the extent of the balance of such Net Available
------
Cash after application in accordance with clause (A) above (such
balance, the "Excess Proceeds"), to make an offer (or to cause the
---------------
Issuers to make an offer) to purchase Notes and (to the extent the
Issuers elect, or to the extent required by the terms thereof) to
purchase, redeem or repay any other Senior Subordinated Indebtedness,
pursuant and subject to Section 411(b) and Section 411(c) and the
-------------- --------------
agreements governing such other Indebtedness; and
(C) third, to the extent of the balance of such Net Available
-----
Cash after application in accordance with clauses (A) and (B) above,
to fund (to the extent consistent with any other applicable provision
of this Indenture) any general corporate purpose (including the
repurchase, repayment or other acquisition or retirement of any
Subordinated Obligations);
provided, however, that in connection with any prepayment, repayment or purchase
- -------- -------
of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 411, the
-----------
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 411 except to the extent that the
-----------
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 411 exceeds $10.0 million. If the aggregate
-----------
principal amount of Notes and Senior Subordinated Indebtedness validly tendered
and not withdrawn (or otherwise subject to purchase, redemption or repayment) in
connection with an offer pursuant to clause (B) above exceeds the Excess
Proceeds, the Excess Proceeds will be apportioned between the Notes and such
Senior Subordinated Indebtedness,
76
with the portion of the Excess Proceeds payable in respect of the Notes to equal
the lesser of (x) the Excess Proceeds amount multiplied by a fraction, the
numerator of which is the outstanding principal amount of the Notes and the
denominator of which is the sum of the outstanding principal amount of the Notes
and the outstanding principal amount of the relevant Senior Subordinated
Indebtedness, and (y) the aggregate principal amount of Notes validly tendered
and not withdrawn.
For the purposes of clause (ii) of paragraph (a) above, the following
are deemed to be cash: (1) Temporary Cash Investments and Cash Equivalents, (2)
the assumption of Indebtedness of the Company (other than Disqualified Stock of
the Company) or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on payment of the principal amount of
such Indebtedness in connection with such Asset Disposition, (3) Indebtedness of
any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result
of such Asset Disposition, to the extent that the Company and each other
Restricted Subsidiary are released from any Guarantee of payment of the
principal amount of such Indebtedness in connection with such Asset Disposition,
(4) securities received by the Company or any Restricted Subsidiary from the
transferee that are converted by the Company or such Restricted Subsidiary into
cash and (5) consideration consisting of Indebtedness of the Company or any
Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the purchase
of Notes pursuant to Section 411(a)(iii)(B), the Issuers shall purchase (on a
----------------------
several basis in proportion to each Issuer's Several Share in respect of the
Notes) Notes tendered pursuant to an offer by the Issuers for the Notes (the
"Offer"), at a purchase price of 100% of their principal amount plus accrued and
-----
unpaid interest to the date of purchase, in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
-------
411(c). If the aggregate purchase price of the Notes tendered pursuant to the
- ------
Offer is less than the Net Available Cash allotted to the purchase of Notes, the
remaining Net Available Cash will be available to the Company and its Restricted
Subsidiaries for use in accordance with Section 411(a)(iii)(B) (to repay Senior
----------------------
Subordinated Indebtedness) or Section 411(a)(iii)(C). The Issuers shall not be
----------------------
required to make an Offer for Notes pursuant to this Section 411 if the Net
-----------
Available Cash available therefor (after application of the proceeds as provided
in Section 411(a)(iii)(A)) is less than $10.0 million for any particular Asset
----------------------
Disposition (which lesser amounts shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) The Issuers shall, not later than 45 days after the Issuers
become obligated to make an Offer pursuant to this Section 411, mail a notice to
-----------
each Holder with a copy to the Trustee stating: (1) that an Asset Disposition
that requires the purchase of a portion of the Notes has occurred and that such
Holder has the right (subject to the prorating described
77
below) to require the Issuers, on a several basis in proportion to each Issuer's
Several Share in respect of the Notes, to purchase a portion of such Holder's
Notes at a purchase price in cash equal to 100% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase (subject to
Section 307); (2) the circumstances and relevant facts and financial information
- ------------
regarding such Asset Disposition; (3) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed); (4) the instructions determined by the Issuers, consistent with this
Section 411, that a Holder must follow in order to have its Notes purchased; and
- -----------
(5) the amount of the Offer. If, upon the expiration of the period for which the
Offer remains open, the aggregate principal amount of Notes surrendered by
Holders exceeds the amount of the Offer, the Issuers shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000 or
integral multiples thereof, shall be purchased).
(d) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 411. To the extent that the provisions of any securities laws or
- -----------
regulations conflict with provisions of this Section 411, the Issuers shall
-----------
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 411 by virtue
-----------
thereof.
Section 412. Limitation on Transactions with Affiliates. (a) The
------------------------------------------
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
---------
Transaction") unless (i) the terms of such Affiliate Transaction are not
- -----------
materially less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could be obtained at the time in a transaction with
a Person who is not such an Affiliate, and (ii) if such Affiliate Transaction
involves aggregate consideration in excess of $5.0 million, the terms of such
Affiliate Transaction have been approved by a majority of the Disinterested
Directors. For purposes of this Section 412(a) any Affiliate Transaction shall
--------------
be deemed to have satisfied the requirements set forth in this Section 412(a) if
--------------
(x) such Affiliate Transaction is approved by a majority of the Disinterested
Directors or (y) in the event there are no Disinterested Directors, a fairness
opinion is provided by a nationally recognized appraisal or investment banking
firm with respect to such Affiliate Transaction.
78
(b) The provisions of Section 412(a) will not apply to:
--------------
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan, program
or arrangement, related trust agreement or any other similar arrangement
for or with any employee, officer or director heretofore or hereafter
entered into in the ordinary course of business, including vacation,
health, insurance, deferred compensation, severance, retirement, savings or
other similar plans, programs or arrangements, (2) the payment of
compensation, performance of indemnification or contribution obligations,
or any issuance, grant or award of stock, options, other equity-related
interests or other securities, to employees, officers or directors in the
ordinary course of business, (3) the payment of fees to directors of the
Company or any of its Restricted Subsidiaries, (4) any transaction with an
officer or director in the ordinary course of business not involving more
than $100,000 in any one case, or (5) Management Advances and payments in
respect thereof,
(iii) any transaction with the Company, any Restricted Subsidiary or
any Receivables Entity,
(iv) any transaction arising out of agreements or instruments in
existence on the Issue Date, and any payments made pursuant thereto,
(v) execution, delivery and performance of the Management
Agreements, including (1) payment to CDR or any Affiliate of CDR of a fee
of $2.7 million plus out-of-pocket expenses in connection with the
Transactions, and (2) payment to CDR or any Affiliate of CDR of fees of up
to $1.0 million in any fiscal year plus all out-of-pocket expenses incurred
by CDR or any such Affiliate in connection with its performance of
management consulting, monitoring, financial advisory or other services
with respect to the Company and its Restricted Subsidiaries,
(vi) the Transactions, all transactions in connection therewith
(including the financing thereof), and, without duplication of clause (v)
above, all fees or expenses paid or payable in connection with the
Transactions,
(vii) any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant Restricted
Subsidiary than those that could be obtained at the time in a transaction
with a Person who is not an Affiliate of the Company, and
79
(viii) any transaction in the ordinary course of business, or approved
by a majority of the Board of Directors, between the Company or any
Restricted Subsidiary and any Affiliate of the Company controlled by the
Company that is a joint venture or similar entity; provided, however, that
-------- -------
no other Affiliate of the Company (other than a Restricted Subsidiary) has
any Investment in such joint venture or similar entity.
Section 413. Limitation on Liens. The Company shall not, and shall
-------------------
not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock of any other Person), whether owned on the Issue
Date or thereafter acquired, securing any Indebtedness of either Issuer or any
Note Guarantor that by its terms is expressly subordinated in right of payment
to or ranks pari passu in right of payment with the Notes or such Note
---- -----
Guarantor's Note Guarantee (the "Initial Lien"), unless contemporaneously
------------
therewith effective provision is made to secure the Indebtedness of such Issuer
or Note Guarantor due under this Indenture and the Notes or, in respect of Liens
on any Restricted Subsidiary's property or assets, any Note Guarantee of such
Restricted Subsidiary, equally and ratably with such obligation for so long as
such obligation is so secured by such Initial Lien. Any such Lien thereby
created in favor of the Notes or any such Note Guarantee will be automatically
and unconditionally released and discharged upon (i) the release and discharge
of the Initial Lien to which it relates, or (ii) any sale, exchange or transfer
to any Person not an Affiliate of the Company of the property or assets secured
by such Initial Lien, or of all of the Capital Stock held by the Company or any
Restricted Subsidiary in, or all or substantially all the assets of, any
Restricted Subsidiary creating such Lien.
Section 414. Future Note Guarantors. Except as described below, the
----------------------
Company shall cause each U.S. Subsidiary of JCI that is organized or acquired by
JCI after the Issue Date to execute and deliver to the Trustee a supplemental
indenture or other instrument pursuant to which such Subsidiary will guarantee
payment of the Guaranteed JCI Obligations, whereupon such Subsidiary will become
a Subsidiary Guarantor. The Company shall also cause each Restricted Subsidiary
of Jafra S.A. that is organized or acquired by Jafra S.A. after the Issue Date
to execute and deliver to the Trustee a supplemental indenture or other
instrument pursuant to which such Subsidiary will guarantee payment of the
Guaranteed Jafra S.A. Obligations, whereupon such Subsidiary will become a
Subsidiary Guarantor. The Company will not be required to cause any U.S.
Subsidiary of JCI to become a Subsidiary Guarantor unless and until such time as
such Subsidiary, together with any other U.S. Subsidiary of JCI that has not
then become a Subsidiary Guarantor, accounts for two percent or more of
Consolidated Total Assets. In addition, the Company may cause any Subsidiary
thereof that is not a Subsidiary Guarantor so to guarantee payment of the
Guaranteed Note Obligations of either Issuer and become a Subsidiary Guarantor.
80
Section 415. Purchase of Notes Upon a Change in Control. (a) Upon a
------------------------------------------
Change in Control Triggering Event, each Holder will have the right to require
the Issuers to repurchase, on a several basis in proportion to each Issuer's
Several Share in respect of the Notes, all or any part of such Holder's Notes at
a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase (subject to
Section 307); provided, however, that the Issuers shall not be obligated to
- ----------- -------- -------
repurchase Notes pursuant to this Section 415 in the event that they have
-----------
exercised their right to redeem all the Notes as provided in Article 10.
----------
(b) In the event that, at the time of such Change of Control
Triggering Event, the terms of the Bank Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this Section 415, then prior to the mailing of
-----------
the notice to Holders provided for in Section 415(c) but in any event not later
--------------
than 30 days following the date the Company obtains actual knowledge of any
Change of Control Triggering Event (unless the Issuers have exercised their
right to redeem all the Notes as provided in Article 10), the Issuers shall (i)
----------
repay in full all Bank Indebtedness or offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has accepted
such offer or (ii) obtain the requisite consent under the agreements governing
the Bank Indebtedness to permit the repurchase of the Notes as provided for in
Section 415(c). The Issuers shall first comply with the provisions of the
- --------------
immediately preceding sentence before they shall be required to repurchase Notes
pursuant to the provisions set forth below in this Section 415. The Issuers'
-----------
failure to comply with the provisions of this Section 415(b) or the provisions
--------------
of Section 415(c) shall constitute an Event of Default under Section 601(4) and
-------------- --------------
not Section 601(2).
--------------
(c) Unless the Issuers have exercised their right to redeem all the
Notes under Article 10, the Issuers shall, not later than 30 days following the
----------
date the Company obtains actual knowledge of any Change of Control Triggering
Event having occurred, mail a notice to each Holder with a copy to the Trustee
stating: (1) that a Change of Control Triggering Event has occurred or may
occur and that such Holder has, or upon such occurrence will have, the right to
require the Issuers, severally in proportion to their respective obligations in
respect of the Notes, to purchase such Holder's Notes at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on a record date to receive interest on the relevant interest payment
date); (2) the circumstances and relevant facts and financial information
regarding such Change of Control; (3) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed); (4) the instructions determined by the Issuers, consistent with this
Section 415, that a Holder must follow in order to have its Notes purchased; and
- -----------
(5) if such notice is mailed prior to the occurrence of a Change of Control or
Change of Control Triggering Event, that such offer is conditioned on the
occurrence of such Change of Control Triggering Event.
81
(d) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 415. To the extent that the provisions of any securities laws or
- -----------
regulations conflict with provisions of this Section 415, the Issuers shall
-----------
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 415 by virtue
-----------
thereof.
ARTICLE 5
SUCCESSORS
----------
Section 501 When the Company or an Issuer May Merge, etc. The
---------------------------------------------
Company shall not, and shall not permit either Issuer to, consolidate with or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor")
---------
will be a Person organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia, or (in the case
of the Company only) the Cayman Islands, Luxembourg, Kingdom of the
Netherlands (including the Netherlands Antilles) or any other member of the
European Union, or (in the case of Jafra S.A. only) Mexico, and the
Successor (if not the Company or such Issuer) will expressly assume all the
obligations of the Company or such Issuer under the Company's Note
Guarantee (in the case of the Company) or the Notes (in the case of such
Issuer) and this Indenture by executing and delivering to the Trustee a
supplemental indenture or one or more other documents or instruments in
form reasonably satisfactory to the Trustee;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor or such Restricted Subsidiary at the time of such
transaction), no Default will have occurred and be continuing;
(iii) immediately after giving effect to such transaction, either (A)
the Company (or, if applicable, its Successor) could Incur at least $1.00
of additional Indebtedness pursuant Section 407(a) or (B) the Consolidated
--------------
Coverage Ratio of the Company (or, if applicable, its Successor) would
equal or exceed the Consolidated Coverage Ratio of the Company immediately
prior to giving effect to such transaction;
82
(iv) each Note Guarantor (other than any party to any such
consolidation or merger) shall have delivered a supplemental indenture or
other document or instrument in form reasonably satisfactory to the
Trustee, confirming its Note Guarantee; and
(v) the Company will have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel, each to the effect
that such consolidation, merger or transfer complies with the provisions
described in this paragraph of this Section 501; provided that (x) in
----------- --------
giving such opinion such counsel may rely on an Officer's Certificate of
the Company as to compliance with the foregoing clauses (ii) and (iii) and
as to any matters of fact, and (y) no Opinion of Counsel will be required
for a consolidation, merger or transfer described in the last paragraph of
this Section 501.
-----------
Any Indebtedness that becomes an obligation of the Company or any
Restricted Subsidiary (or that is deemed to be Incurred by any Restricted
Subsidiary that becomes a Restricted Subsidiary) as a result of any such
transaction undertaken in compliance with this Section 501, and any Refinancing
-----------
Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with Section 407.
-----------
Clauses (ii) and (iii) of the first paragraph of this Section 501 will
-----------
not apply to any transaction in which (1) any Restricted Subsidiary consolidates
with, merges into or transfers all or part of its properties and assets to the
Company or an Issuer or (2) the Company consolidates or merges with or into or
transfers all or substantially all its assets to (x) an Affiliate incorporated
or organized for the purpose of reincorporating or reorganizing the Company in
another jurisdiction in the United States of America, Cayman Islands, Luxembourg
or Kingdom of the Netherlands (including the Netherlands Antilles) or any other
member of the European Union, or changing its legal structure to a corporation
or other entity or (y) a Restricted Subsidiary of the Company so long as all
assets of the Company and the Restricted Subsidiaries immediately prior to such
transaction (other than Capital Stock of such Restricted Subsidiary) are owned
by such Restricted Subsidiary and its Restricted Subsidiaries immediately after
the consummation thereof. The first paragraph of this Section 501 will not
-----------
apply to the Mergers.
Section 502. Successor Substituted. Upon any transaction involving
---------------------
the Company or either Issuer in accordance with Section 501, in which the
-----------
Company or the relevant Issuer is not the Successor, the Successor will succeed
to, and be substituted for, and may exercise every right and power of, the
Company or the relevant Issuer under this Indenture, and thereafter the
predecessor Company or the relevant Issuer shall be relieved of all obligations
and covenants under this Indenture.
83
ARTICLE 6
REMEDIES
--------
Section 601 Events of Default. An "Event of Default" occurs if:
-----------------
(1) the Issuers default in any payment of interest on any Note when
due, whether or not such payment shall be prohibited by Article 14, and
----------
such default continues for a period of 30 days;
(2) the Issuers default in the payment of the principal of any Note
when the same becomes due at its Stated Maturity, upon optional redemption,
upon required purchase, upon declaration of acceleration or otherwise,
whether or not such payment shall be prohibited by Article 14;
----------
(3) the Company or an Issuer fails to comply with Article 5;
---------
(4) the Company fails to comply with Section 407, 408, 409, 410, 411,
----------- --- --- --- ---
412, 413, 414 or 415 (other than a failure to purchase the Notes) and such
--- --- --- ---
failure continues for 30 days after the notice specified in the penultimate
paragraph of this Section 601;
-----------
(5) the Company fails to comply with any of its agreements in the
Notes or this Indenture (other than those referred to in (1), (2), (3) or
(4) above) and such failure continues for 60 days after the notice
specified in the penultimate paragraph of this Section 601;
(6) any Subsidiary Guarantor fails to comply with its obligations
under any Subsidiary Guarantee and such failure continues for 30 days after
the notice specified in the penultimate paragraph of this Section 601;
-----------
(7) the Company, either of the Issuers or any Significant Subsidiary
fails to pay any Indebtedness within any applicable grace period after
final maturity or the acceleration of any such Indebtedness by the holders
thereof because of a default if the total amount of such Indebtedness
unpaid or accelerated exceeds $10,000,000 or its foreign currency
equivalent;
(8) the Company, either of the Issuers or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
84
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company, either of the Issuers or
any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, either of the Issuers
or any Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the Company, either
of the Issuers or any Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days;
(10) the rendering of any judgment or decree for the payment of money
in an amount (net of any insurance or indemnity payments actually received
within 90 days from the entry thereof, or to be received in respect thereof
in the event any appeal thereof shall be unsuccessful) in excess of
$10,000,000 or its foreign currency equivalent against the Company, either
of the Issuers or any Significant Subsidiary by a court or other
adjudicatory authority of competent jurisdiction that is not discharged, or
bonded or insured by a third Person, if such judgment or decree remains
outstanding for a period of 90 days following such judgment or decree and
is not discharged, waived or stayed; or
(11) the failure of any Note Guarantee by the Company or by a
Subsidiary Guarantor that is a Significant Subsidiary to be in full force
and effect (except as contemplated by the terms thereof or of this
Indenture) or the denial or disaffirmation - in writing by the Company or
any Subsidiary Guarantor that is a Significant Subsidiary of its
obligations under its Note Guarantee (other than by reason of the
termination of this Indenture or such Note Guarantee or the release of such
Note Guarantee in accordance with such Note Guarantee of this Indenture),
if such Default continues for 10 days.
85
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
-------------- ------------------
similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
---------
similar official under any Bankruptcy Law.
A Default under clause (4), (5) or (6) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify the Company (and the Trustee in the case of a notice by Holders) of
the Default and the Company does not cure such Default within the time specified
therein after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default".
When a Default or an Event of Default is cured, it ceases.
The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any Event of Default under clause (7) or (10) and any event that with the giving
of notice or the lapse of time would become an Event of Default under clause
(4), (5) or (6), its status and what action the Issuers are taking or propose to
take with respect thereto.
Section 602 Acceleration of Maturity; Rescission and Annulment. If
--------------------------------------------------
an Event of Default (other than an Event of Default specified in Section 601(8)
--------------
or Section 601(9) with respect to an Issuer) occurs and is continuing, the
--------------
Trustee by notice to the Issuers, or the Holders of at least a majority in
principal amount of the outstanding Notes by notice to the Issuers and the
Trustee, in either case specifying in such notice the respective Event of
Default and that such notice is a "notice of acceleration," may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable, provided that so long as any Designated Senior Indebtedness of an
Issuer shall be outstanding, such acceleration shall not be effective until the
earlier to occur of (x) five Business Days following delivery of a written
notice of such acceleration of the Notes to the Issuers and the holders of all
such Designated Senior Indebtedness or each Representative thereof and (y) the
acceleration of any such Designated Senior Indebtedness. Upon the effectiveness
of such a declaration, such principal and interest will be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
Section 601(8) or Section 601(9) with respect to an Issuer occurs and is
- -------------- --------------
continuing, then the principal of and any accrued interest on all the
Outstanding Notes will ipso facto become and be immediately due and payable
---- -----
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the Outstanding Notes by notice
to the Company and the Trustee may rescind an acceleration and
86
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
non-payment of principal or interest that has become due solely because of such
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
Notwithstanding the foregoing, in the event an Event of Default
specified in Section 601(7) shall have occurred and be continuing, such Event of
--------------
Default and all consequences thereof (including without limitation any
acceleration or resulting payment default) shall be annulled, waived and
rescinded automatically and without any action by the Trustee or the Holders and
be of no further effect if within 30 days after such Event of Default (x) the
Indebtedness that is the subject of such Event of Default has been discharged or
paid in full, or (y) the holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such Event of
Default, or (z) the default in respect of such Indebtedness that is the basis
for such Event of Default has been cured.
Section 603. Other Remedies; Collection Suit by Trustee. If an Event
------------------------------------------
of Default occurs and is continuing, the Trustee may, but is not obligated under
Section 603 to pursue any available remedy to collect the payment of principal
- -----------
of or interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture. If an Event of Default specified in Section 601(1)
--------------
or 601(2) occurs and is continuing, the Trustee may recover judgment in its own
------
name and as trustee of an express trust against each Issuer for its respective
Several Share of the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful with respect to such Several Share) and
the amounts provided for in Section 707.
-----------
Section 604. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to either Issuer or any other obligor upon the
Notes, its creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 707.
-----------
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof
87
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 605. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 606. Application of Money Collected. Any money collected by
------------------------------
the Trustee pursuant to this Article 6 shall be applied in the following order,
---------
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
----- -------
707;
---
Second: To holders of Senior Indebtedness of the Issuers to the
------
extent required by Article 14.
----------
Third: To the payment of the amounts then due and unpaid upon the
-----
Notes for principal (and premium, if any) and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any) and interest,
respectively; and
Fourth: to the Issuers.
------
Section 607. Limitation on Suits. No Holder may pursue any remedy
-------------------
with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee written notice that
an Event of Default is continuing;
(2) Holders of at least 25% in principal amount of the Outstanding
Notes have requested the Trustee in writing to pursue the remedy;
(3) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against any loss, liability or expense;
88
(4) the Trustee has not complied with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Outstanding
Notes have not given the Trustee a direction inconsistent with the request
during such 60-day period.
A Holder may not use this Indenture to affect, disturb or prejudice
the rights of another Holder, to obtain a preference or priority over another
Holder or to enforce any right under this Indenture except in the manner herein
provided and for the equal and ratable benefit of all Holders.
Section 608. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest. Notwithstanding any other provision in this Indenture,
- --------------------
the Holder of any Note shall have the absolute and unconditional right to
receive payment of the principal of and all (subject to Section 307) interest on
-----------
such Note on the respective Stated Maturity or Interest Payment Dates expressed
in such Note and to institute suit for the enforcement of any such payment on or
after such respective Stated Maturity or Interest Payment Dates, and such right
shall not be impaired without the consent of such Holder.
Section 609. Restoration of Rights and Remedies. If the Trustee or
----------------------------------
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture or any Note and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Issuers, any other obligor upon the
Notes, the Trustee and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 610. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 611. Delay or Omission Not Waiver. No delay or omission of
----------------------------
the Trustee or of any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of
89
Default or an acquiescence therein. Every right and remedy given by this Article
-------
6 or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
Section 612. Control by Holders. The Holders of not less than a
------------------
majority in aggregate principal amount of the Outstanding Notes shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or, subject to Section 701, that the Trustee
-----------
determines is unduly prejudicial to the rights of other Holders or would involve
the Trustee in personal liability; provided, however, that the Trustee may take
-------- -------
any other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action under this Indenture, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action. This
Section 612 shall be in lieu of (S) 316(a)(1)(A) of the TIA, and such (S)
- -----------
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
Section 613 Waiver of Past Defaults. The Holders of not less than a
-----------------------
majority in aggregate principal amount of the Outstanding Notes may on behalf of
the Holders of all the Notes waive any past Default hereunder and its
consequences, except a Default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note (which may only be waived with the consent of each
Holder of Notes affected), or
(2) in respect of a covenant or provision hereof that pursuant to the
second paragraph of Section 902 cannot be modified or amended without the
-----------
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of
90
Default or impair any right consequent thereon. In case of any such waiver, the
Issuers, any other obligor upon the Notes, the Trustee and the Holders shall be
restored to their former positions and rights hereunder and under the Notes,
respectively. This paragraph of this Section 613 shall be in lieu of (S)
-----------
316(a)(1)(B) of the TIA and such (S) 316(a)(1)(B) of the TIA is hereby expressly
excluded from this Indenture and the Notes, as permitted by the TIA.
Section 614. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture or the Notes, or
in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant. This Section 614 shall not
-----------
apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Note on or after the respective Stated Maturity or Interest Payment Dates
expressed in such Note.
Section 615. Waiver of Stay, Extension or Usury Laws. Each of the
---------------------------------------
Issuers (to the extent that it may lawfully do so) shall not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other similar law
wherever enacted, now or at any time hereafter in force, that would prohibit or
forgive such Issuer from paying all or any portion of its respective portions of
the principal of (or premium, if any) or interest on the Notes contemplated
herein or in the Notes or that may affect the covenants or the performance of
this Indenture; and each of the Issuers (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and shall
not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE 7
THE TRUSTEE
-----------
Section 701. Certain Duties and Responsibilities. (a) Except during
-----------------------------------
the continuance of an Event of Default,
91
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture, but need not verify the
contents thereof.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that (i) this paragraph does not
limit the effect of paragraph (a) of this Section 701; (ii) the Trustee shall
-----------
not be liable for any error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in ascertaining the pertinent
facts; and (iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 612.
-----------
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 701 and 703 hereof.
- ---------------------------
Section 702. Notice of Defaults. Within 90 days after the occurrence
------------------
of any Default, the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, notice of such Default
hereunder known to the Trustee unless such Default shall have been cured or
waived; provided, however, that, except in the case of a
-------- -------
92
Default in the payment of the principal of, premium, if any, or interest on any
Note, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
Section 703. Certain Rights of Trustee. Subject to the provisions of
-------------------------
Section 701:
- -----------
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company or the Issuers mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order thereof, and any resolution of any Person's board of directors shall
be sufficiently evidenced if certified by an Officer of such Person as
having been duly adopted and being in full force and effect on the date of
such certificate;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate of the Company or
an Issuer;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report,
93
notice, request, direction, consent, order, bond, note, other evidence of
indebtedness or other paper or document; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 704. Not Responsible for Recitals or Issuance of Notes. The
-------------------------------------------------
recitals contained herein and in the Notes, except the Trustee's certificates of
authentication, shall be taken as the statements of the Company, the Issuers and
any Subsidiary Guarantors, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes, except that the Trustee represents that it is duly authorized to execute
and deliver this Indenture, authenticate the Notes and perform its obligations
hereunder and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Issuers and any other obligor upon the
Notes in connection with the registration of any Notes and any Note Guarantees
issued hereunder are and will be true and accurate subject to the qualifications
set forth therein. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Notes or the proceeds
thereof.
Section 705. May Hold Notes. The Trustee, any Authenticating Agent,
--------------
any Paying Agent, any Note Registrar or any other agent of the Issuers, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to Section 708 and Section 713, may otherwise deal with an Issuer or its
----------- -----------
Affiliates with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Note Registrar or such other agent.
Section 706. Money Held in Trust. Money held by the Trustee in trust
-------------------
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Issuers.
Section 707. Compensation and Reimbursement. Each Issuer severally
------------------------------
agrees,
(1) to pay to the Trustee from time to time such Issuer's Several
Share of reasonable compensation for all services rendered by the Trustee
hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
94
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for such Issuer's Several Share of all reasonable
out-of-pocket expenses incurred by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
such Issuer's Several Share of any loss, liability or expense incurred
without negligence or bad faith on the Trustee's part, arising out of or in
connection with the administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
An Issuer need not pay for any settlement made without its consent.
Section 708. Conflicting Interests. If the Trustee has or shall
---------------------
acquire a conflicting interest within the meaning of the TIA, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the TIA and this Indenture. To
the extent permitted by such Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Original Notes and Additional Notes, or a trustee under any other
indenture between the Company and the Trustee.
Section 709. Corporate Trustee Required; Eligibility. There shall at
---------------------------------------
all times be one (and only one) Trustee hereunder. The Trustee shall be a
Person that is eligible pursuant to the TIA to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the TIA, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
-------
709, it shall resign immediately in the manner and with the effect hereinafter
- ---
specified in this Article.
Section 710. Resignation and Removal; Appointment of Successor. No
-------------------------------------------------
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 711.
-----------
95
The Trustee may resign at any time by giving written notice thereof to
the Issuers. If the instrument of acceptance by a successor Trustee required by
Section 711 shall not have been delivered to the Trustee within 30 days after
- -----------
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 708 after written
-----------
request therefor by the Issuers or by any Holder who has been a bona fide
Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 709 and
-----------
shall fail to resign after written request therefor by the Issuers or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Issuers may remove the Trustee, or (B) subject
to Section 614, any Holder who has been a bona fide Holder of a Note for at
-----------
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuers
shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of Section 711. If, within one year after such resignation,
-----------
removal or incapability, or the occurrence of such vacancy, a successor Trustee
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Notes delivered to the Issuers and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 711,
-----------
become the successor Trustee and to that extent supersede the successor Trustee
appointed by the Issuers. If no successor Trustee shall have been so appointed
by the Issuers or the Holders and accepted appointment in the manner required by
Section 711, then, subject to Section 614, any Holder who has been a bona fide
- ----------- -----------
Holder of a Note for at least six months may, on behalf of himself and all
others
96
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 110. Each notice shall include the name of the
-----------
successor Trustee and the address of its Corporate Trust Office.
Section 711. Acceptance of Appointment by Successor. In case of the
--------------------------------------
appointment hereunder of a successor Trustee, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Issuers and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Issuers or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Issuers shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to above.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article 7.
---------
Section 712. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business. Any corporation into which the Trustee may be merged or converted or
- --------
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article 7,
---------
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
97
Section 713. Preferential Collection of Claims Against Issuers. If
-------------------------------------------------
and when the Trustee shall be or become a creditor of the Issuers (or any other
obligor upon the Notes), the Trustee shall be subject to the provisions of the
TIA regarding the collection of claims against the Issuers (or any such other
obligor).
Section 714. Appointment of Authenticating Agent. The Trustee may
-----------------------------------
appoint an Authenticating Agent acceptable to the Company to authenticate the
Notes. Any such appointment shall be evidenced by an instrument in writing
signed by a Trust Officer, a copy of which instrument shall be promptly
furnished to the Company. Unless limited by the terms of such appointment, an
Authenticating Agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication (or execution of a
certificate of authentication) by the Trustee includes authentication (or
execution of a certificate of authentication) by such Authenticating Agent. An
Authenticating Agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
Section 715. Withholding Taxes. Notwithstanding any other provision
-----------------
of this Agreement, the Trustee, as agent for the Issuers and the Note
Guarantors, shall exclude and withhold from each payment of principal and
interest and other amounts due hereunder or under the Notes or the Note
Guarantees any and all withholding taxes applicable thereto as required by law.
The Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Notes or
the Note Guarantees, to withhold such amounts and timely pay the same to the
appropriate authority in the name of and on behalf of the Holders, that it will
furnish to the Holders such forms or certificates as are necessary or
appropriate to provide the certification, identification, information or
documentation described in Section 404(iii), that it will file any necessary
----------------
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each Holder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Holders may reasonably request from time to time.
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND ISSUERS
-----------------------------
Section 801. Issuers to Furnish Trustee Names and Addresses of
-------------------------------------------------
Holders. The Issuers will furnish or cause to be furnished to the Trustee
- -------
98
(1) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuers of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
- -------- -------
Registrar, no such list need be furnished pursuant to this Section 801.
-----------
Section 802. Preservation of Information; Communications to Holders.
------------------------------------------------------
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list, if any,
furnished to the Trustee as provided in Section 801 and the names and addresses
-----------
of Holders received by the Trustee in its capacity as Note Registrar; provided,
--------
however, that if and so long as the Trustee shall be the Note Registrar, the
- -------
Note Register shall satisfy the requirements relating to such list. None of the
Company, the Issuers, any Subsidiary Guarantor or the Trustee or any other
Person shall be under any responsibility with regard to the accuracy of such
list. The Trustee may destroy any list furnished to it as provided in Section
-------
801 upon receipt of a new list so furnished.
- ---
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the TIA.
Every Holder of Notes, by receiving and holding the same, agrees with
the Issuers and the Trustee that neither the Issuers nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the TIA.
Section 803. Reports by Trustee. The Trustee shall transmit to
------------------
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the TIA at the times and in the manner provided
pursuant thereto. A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Notes are listed, with the SEC and with the Issuers. The Issuers will
notify the Trustee when any Notes are listed on any stock exchange.
99
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
-------------------------------
Section 901. Without Consent of Holders. Without the consent of the
--------------------------
Holders of any Notes, the Company, the Issuers, the Trustee and (as applicable)
any Subsidiary Guarantor may enter into one or more indentures supplemental
hereto, for any of the following purposes:
(1) to cure any ambiguity, omission, defect or inconsistency,
(2) to provide for the assumption by a successor of the obligations
of the Company or an Issuer under the Indenture,
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes,
(4) to add Guarantees with respect to the Notes, to secure the Notes,
to confirm and evidence the release, termination or discharge of any
Guarantee or Lien with respect to or securing the Notes when such release,
termination or discharge is provided for under this Indenture,
(5) to add to the covenants of the Company or an Issuer for the
benefit of the Holders or to surrender any right or power conferred upon
the Company or an Issuer,
(6) to provide that any Indebtedness that becomes or will become an
obligation of a Successor or a Note Guarantor pursuant to a transaction
governed by Article 5 (and that is not a Subordinated Obligation) is Senior
---------
Subordinated Indebtedness for purposes of this Indenture,
(7) to make any change that does not adversely affect the rights of
any Holder under the Notes or this Indenture,
(8) to provide for or confirm the issuance of Additional Notes; or
(9) to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA or otherwise.
Notwithstanding the foregoing provisions of this Section 901 and
-----------
Section 902, on or after the date hereof (but after the execution and delivery
- -----------
of this Indenture and the
100
issuance of the Notes and after or concurrently with consummation of the
Mergers), the Company, the Issuers, the Initial Jafra S.A. Subsidiaries and the
Trustee may execute and deliver the First Supplemental Indenture, in each case
without notice to or consent of any Holder.
Section 902. With Consent of Holders. Subject to Section 608, the
----------------------- -----------
Company, the Issuers, the Trustee and (if applicable) each Subsidiary Guarantor
may amend or supplement this Indenture or the Notes with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes), and the Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes by written notice to the
Trustee (including consents obtained in connection with a tender offer or
exchange offer for Notes) may waive any existing Default or Event of Default or
compliance by the Company or any Subsidiary Guarantor with any provision of this
Indenture, the Notes or any Subsidiary Guarantee.
Notwithstanding the provisions of this Section 902, without the
-----------
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 613, may not:
-----------
(i) reduce the principal amount of the Notes whose Holders must
consent to an amendment or waiver;
(ii) reduce the rate of or extend the time for payment of interest
on any Notes;
(iii) reduce the principal or extend the Stated Maturity of any
Notes;
(iv) reduce the premium payable upon the redemption of any Note or
change the date on which any Note may be redeemed as described in Section
-------
1001;
----
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in Article 14 or Article 15 that adversely
---------- ----------
affects the rights of any Holder in any material respect;
(vii) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Notes on or after the due dates therefor
or to institute suit for the enforcement of any payment on or with respect
to such Holder's Notes; or
101
(viii) make any change in the amendment or waiver provisions
described in this sentence.
In addition, without the consent of the Holders of 75% in principal
amount of the Notes then Outstanding, no amendment may release the Company or
either Issuer from any of its obligations under its Note Guarantee, except in
compliance with the terms thereof or of this Indenture.
Notwithstanding Section 901 and the foregoing provisions of this
-----------
Section 902, no amendment to Article 14 or Article 15 of this Indenture or the
- ----------- ---------- ----------
definitions relating thereto that adversely affects the rights of any Holder of
Senior Indebtedness at the time outstanding (which Senior Indebtedness has been
previously designated in writing by the Company to the Trustee for this purpose)
may be made unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent in writing to such
amendment.
It shall not be necessary for the consent of the Holders under this
Section 902 to approve the particular form of any proposed amendment, supplement
- -----------
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 902
-----------
becomes effective, the Issuers shall mail to the Holders of each Note affected
thereby, with a copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of the Issuers to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any supplemental indenture or effectiveness of any such amendment, supplement or
waiver.
Section 903. Execution of Amendments, Supplements or Waivers. The
-----------------------------------------------
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment, supplement or waiver does not adversely affect
---------
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment, supplement or waiver, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel to the effect that the execution of such amendment,
supplement or waiver has been duly authorized, executed and delivered by the
Issuers and that, subject to applicable bankruptcy, insolvency, fraudulent
transfer, fraudulent conveyance, reorganization, moratorium and other laws now
or hereinafter in effect affecting creditors' rights or remedies generally and
the general principles of equity (including standards of materiality, good
faith, fair dealing and reasonableness), whether considered in a proceeding at
law or at equity, such
102
amendment, supplement or waiver is a valid and binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms.
Section 904. Revocation and Effect of Consents. Until an amendment,
---------------------------------
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of that Note or any
Note that evidences all or any part of the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note. Subject to the
following paragraph of this Section 904, any such Holder or subsequent Holder
-----------
may revoke the consent as to such Holder's Note by notice to the Trustee or the
Issuers received by the Trustee or the Issuers, as the case may be, before the
date on which the Trustee receives an Officer's Certificate certifying that the
Holders of the requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver. The
Issuers may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or
waiver as set forth in Section 108.
-----------
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder of Notes, unless it makes a change described in any of clauses
(i) through (viii) of the second paragraph of Section 902. In that case, the
-----------
amendment, supplement or waiver shall bind each Holder of a Note who has
consented to it and every subsequent Holder of such Note or any Note that
evidences all or any part of the same debt as the consenting Holder's Note.
Section 905. Conformity with TIA. Every amendment or supplemental
-------------------
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
Section 906. Notation on or Exchange of Notes. If an amendment,
--------------------------------
supplement or waiver changes the terms of a Note, the Trustee shall (if required
by the Issuers and in accordance with the specific direction of the Issuers)
request the Holder of the Note to deliver it to the Trustee. The Trustee shall
(if required by the Issuers and in accordance with the specific direction of the
Issuers) place an appropriate notation on the Note about the changed terms and
return it to the Holder. Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.
103
ARTICLE 10
REDEMPTION OF NOTES
-------------------
Section 1001. Right of Redemption. (a) Except as set forth in this
-------------------
Section 1001, the Notes will not be redeemable at the option of the Issuers
- ------------
prior to May 1, 2003. Thereafter, the Notes will be redeemable, at the Issuers'
option, in whole or in part, and from time to time on and after May 1, 2003 and
prior to maturity; provided, however, that any such optional redemption may only
-------- -------
be effected concurrently by both of the Issuers on a pro rata basis as between
their respective Portions, based on the relative proportions of the JCI Portion
and the Jafra S.A. Portion. Such redemption may be made upon notice mailed by
first-class mail to each Holder's registered address in accordance with Section
-------
1005. Any such redemption and notice may, in the Issuers' discretion, be
- ----
subject to the satisfaction of one or more conditions precedent. The Notes will
be so redeemable at the following Redemption Prices (expressed as a percentage
of principal amount), plus accrued interest, if any, to the relevant Redemption
Date (subject to Section 307), if redeemed during the 12-month period commencing
-----------
on May 1 of the years set forth below:
REDEMPTION
PERIOD PRICE
------ ----------
2003...................................... 105.875%
2004...................................... 103.917
2005...................................... 101.958
2006 and thereafter....................... 100.000
(b) In addition, at any time and from time to time prior to May 1,
2001, the Issuers at their option may concurrently redeem the Notes, on a pro
rata basis as between their respective Portions (based on the relative
proportions of the JCI Portion and the Jafra S.A. Portion), in an aggregate
principal amount equal to up to 35% of the original aggregate principal amount
of the Notes (including the principal amount of any Additional Notes), with
funds in an aggregate amount (the "Redemption Amount") not exceeding the
-----------------
aggregate cash proceeds of one or more Equity Offerings, at a Redemption Price
(expressed as a percentage of principal amount thereof) of 111.75% plus accrued
interest, if any, to the Redemption Date (subject to Section 307); provided,
----------- --------
however, that an aggregate principal amount of the Notes equal to at least 65%
- -------
of the original aggregate principal amount of the Notes (including the principal
amount of any Additional Notes) must remain outstanding after each such
redemption. The Issuers may make such redemption upon notice mailed by first-
class mail to each Holder's registered address in accordance with Section 1005
------------
(but in no event more than 180 days after the completion of the related Equity
Offering). Any such notice may be given
104
prior to the completion of the related Equity Offering, and any such redemption
or notice may, at the Issuers' discretion, be subject to the satisfaction of one
or more conditions precedent, including the completion of the related Equity
Offering.
(c) [Intentionally omitted]
(d) The Jafra S.A. Portion of the Notes may be redeemed, at the
option of Jafra S.A., at any time as a whole but not in part, on not less than
30 nor more than 60 days' notice in accordance with Section 1005, at a
------------
Redemption Price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest (if any) to the date of redemption (subject to Section 307), in
-----------
the event Jafra S.A., any successor to Jafra S.A. or any current or future Note
Guarantor of such Jafra S.A. Portion has become or would become obligated to
pay, on the next date on which any amount would be payable with respect to the
Notes, and such obligation cannot be avoided by such Person's taking reasonable
measures available to it, any Additional Amounts in excess of Additional Amounts
that Jafra S.A., such successor or such Note Guarantor would be required to pay
if payments by Jafra S.A., such successor or such Note Guarantor were subject to
a 15% Mexican withholding tax as a result of a change in or an amendment to
applicable treaties or laws (including any regulations promulgated thereunder)
of Mexico (or any political subdivision or taxing authority thereof or therein),
or any change in or amendment to any official position regarding the application
or interpretation of such treaties, laws or regulations, which change or
amendment is announced or becomes effective on or after April 30, 1998
("Excessive Additional Amounts"); provided, however, that no such notice of
- ------------------------------ -------- -------
redemption may be given earlier than 60 days prior to the earliest date on which
Jafra S.A., such successor or such Note Guarantor would, but for such
redemption, be obligated to pay such Excessive Additional Amounts. Prior to the
publication of any notice of redemption pursuant to this provision, Jafra S.A.,
any successor to Jafra S.A. or any Note Guarantor will deliver to the Trustee
(a) a certificate duly signed by an officer of Jafra S.A., such successor or
such Note Guarantor stating that Jafra S.A., such successor or such Note
Guarantor is entitled to effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right of Jafra S.A., such
successor or such Note Guarantor so to redeem have occurred and (b) a written
opinion of Mexican legal counsel reasonably acceptable to the Trustee to the
effect that Jafra S.A., such successor or such Note Guarantor has or will become
obligated to pay such Excessive Additional Amounts as a result of an amendment
or change referred to in this provision.
Section 1002. Applicability of Article. Redemption or purchase of
------------------------
Notes as permitted by Section 1001 shall be made in accordance with this Article
------------ -------
10.
- --
Section 1003. Election to Redeem; Notice to Trustee. In case of any
-------------------------------------
redemption at the election of the Issuers of less than all of the Notes, the
Issuers shall, at least
105
30 days prior to the Redemption Date initially fixed by the Issuers (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed.
Section 1004. Selection by Trustee of Notes to Be Redeemed. In the
--------------------------------------------
case of any partial redemption, selection of the Notes for redemption will be
made not more than 60 days prior to the Redemption Date by the Trustee on a pro
rata basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Note of $1,000 in original
principal amount or less will be redeemed in part.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note that has been or is to be redeemed.
Section 1005. Notice of Redemption. Notice of redemption or purchase
--------------------
as provided in Section 1001 shall be given by first class mail, postage prepaid,
------------
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Notes to be redeemed, at such Holder's address appearing in the
Note Register.
Any such notice shall state:
(1) the expected Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note, and that, unless the Issuers default in
making such redemption payment or the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture, interest
thereon shall cease to accrue from and after said date, and
106
(5) the place where such Notes are to be surrendered for payment of
the Redemption Price.
In addition, if such redemption, purchase or notice is subject to satisfaction
of one or more conditions precedent, as permitted by Section 1001, such notice
------------
shall describe each such condition, and if applicable, shall state that, in the
Issuers' discretion, the Redemption Date may be delayed until such time as any
or all such conditions shall be satisfied, or such redemption or purchase may
not occur and such notice may be rescinded in the event that any or all such
conditions shall not have been satisfied by the Redemption Date, or by the
Redemption Date as so delayed.
Notice of such redemption or purchase of Notes to be so redeemed or
purchased at the election of the Issuers shall be given by the Issuers or, at
the Issuers's request, by the Trustee in the name and at the several expense of
the Issuers.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
Section 1006. Deposit of Redemption Price. On or prior to any
---------------------------
Redemption Date, the Issuers shall deposit with the Trustee or with a Paying
Agent (or, if either Issuer is acting as its own Paying Agent, such Issuer shall
segregate and hold in trust as provided in Section 403) an amount of money
-----------
sufficient to pay the Redemption Price of, and any accrued and unpaid interest
on, all the Notes or portions thereof which are to be redeemed on that date.
Section 1007. Notes Payable on Redemption Date. Notice of redemption
--------------------------------
having been given as provided in this Article 10, the Notes so to be redeemed
----------
shall, on the Redemption Date, become due and payable at the Redemption Price
herein specified and from and after such date (unless either of the Issuers
shall default in the payment of the Redemption Price or the Paying Agent is
prohibited from paying the Redemption Price pursuant to the terms of this
Indenture) such Notes shall cease to bear interest. Upon surrender of such
Notes for redemption in accordance with such notice, such Notes shall be paid by
the Issuers at the Redemption Price. Installments of interest whose Interest
Payment Date is on or prior to the Redemption Date shall be payable to the
Holders of such Notes registered as such on the relevant Regular Record Dates
according to their terms and the provisions of Section 307.
-----------
On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and any accrued and unpaid interest on Notes called for
redemption shall have been
107
made available in accordance with Section 1006, the Notes (or the portions
------------
thereof) called for redemption will cease to accrue interest and the only right
of the Holders of such Notes (or portions thereof) will be to receive payment of
the Redemption Price of and subject to the last sentence of the preceding
paragraph, any accrued and unpaid interest on such Notes (or portions thereof)
to the Redemption Date. If any Note (or portion thereof) called for redemption
shall not be so paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate borne by the Note (or portion thereof).
Section 1008. Notes Redeemed in Part. Any Note that is to be
----------------------
redeemed only in part shall be surrendered at the Place of Payment (with, if the
Issuers or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuers and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Issuers shall execute and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
In the event of any partial redemption (other than a redemption under
Section 1001(d)), the several obligation of each Issuer for each Note that
- ---------------
remains outstanding shall continue in the same proportion as the relative
proportions of the JCI Portion and the Jafra S.A. Portion, respectively.
ARTICLE 11
SATISFACTION AND DISCHARGE
--------------------------
Section 1101. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion or transfer or exchange of Notes herein expressly provided for),
and the Trustee, on demand of and at the several expense of the Issuers, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 306, and (ii) Notes for whose payment money
-----------
has theretofore been deposited in trust or segregated and held in trust by
the Issuers and thereafter repaid to the Issuers or
108
discharged from such trust, as provided in Section 403) have been delivered
-----------
to the Trustee cancelled or for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee cancelled
or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the several
expense, of the Issuers,
(2) the Issuers have deposited or caused to be deposited with the
Trustee an amount in United States dollars, U.S. Government Obligations, or
a combination thereof, sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee
cancelled or for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Notes that have become
due and payable), or to the Stated Maturity or Redemption Date, as the case
may be;
(3) the Issuers have paid or caused to be paid all other sums then
payable hereunder by the Issuers; and
(4) the Issuers have delivered to the Trustee an Officer's
Certificate of the Issuers and an Opinion of Counsel each to the effect
that all conditions precedent provided for in this Section 1101 relating to
------------
the satisfaction and discharge of this Indenture have been complied with,
provided that any such counsel may rely on any Officer's Certificate as to
--------
matters of fact (including as to compliance with the foregoing clauses (1),
(2) and (3)).
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of each Issuer to the Trustee under Section 707 and, if money shall
-----------
have been deposited with the Trustee pursuant to subclause (2) of this Section
-------
1101, the obligations of the Trustee under Section 1102, shall survive.
- ---- ------------
Section 1102. Application of Trust Money. Subject to the provisions
-----------------------------------------
of the last paragraph of Section 403, all money deposited with the Trustee
-----------
pursuant to Section 1101 shall
------------
109
be held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including either Issuer acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal (and premium,
if any) and interest on the Notes; but such money need not be segregated from
other funds except to the extent required by law.
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
---------------------------------
Section 1201. The Issuers' Option To Effect Defeasance or Covenant
----------------------------------------------------
Defeasance. The Issuers may, concurrently (and not separately) at their option,
- ----------
at any time, elect to have terminated the obligations of the Issuers with
respect to Outstanding Notes and to have terminated the obligations of any or
all Note Guarantors, with respect to the Note Guarantees, in each case, as set
forth in this Article 12, and elect to have either Section 1202 or Section 1203
---------- ------------ ------------
be applied to all of the Outstanding Notes (the "Defeased Notes"), upon
--------------
compliance with the conditions set forth below in Section 1204. Either Section
------------ -------
1202 or Section 1203 may be applied to the Defeased Notes to any Redemption Date
- ---- ------------
or the Stated Maturity of the Notes. Either option may be exercised to any
Redemption Date or to the Stated Maturity of the Notes.
Section 1202. Defeasance and Discharge. Upon the Issuers' exercise
------------------------
under Section 1201 of the option applicable to this Section 1202, the Issuers
------------ ------------
shall be deemed to have been released and discharged from their several
obligations with respect to the Defeased Notes on the date the relevant
conditions set forth in Section 1204 below are satisfied (hereinafter,
------------
"Defeasance"). For this purpose, such Defeasance means that the Issuers shall
- -----------
be deemed to have paid and discharged their respective Several Shares of the
entire indebtedness represented by the Defeased Notes, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 1205 and the other
------------
Sections of this Indenture referred to in clauses (a) and (b) below, and the
Issuers and each of the Note Guarantors shall be deemed to have satisfied all
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the several expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following, which
shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of Defeased Notes to receive, solely from the trust fund
described in Section 1204 and as more fully set forth in such Section, payments
------------
in respect of the principal of and premium, if any, and interest on such Notes
when such payments are due, (b) the Issuers' obligations with respect to such
Defeased Notes under Sections 304, 305, 306, 402, 403 and 404, (c) the rights,
------------ --- --- --- --- ---
powers, trusts, duties and immunities of the Trustee hereunder, including the
Trustee's rights under Section 707, and
-----------
110
(d) this Article 12. Subject to compliance with this Article 12, the Issuers
---------- ----------
may, at their option and at any time, exercise their option under this Section
-------
1202 notwithstanding the prior exercise of their option under Section 1203 with
- ---- ------------
respect to the Notes.
Section 1203. Covenant Defeasance. Upon the Issuers' exercise under
-------------------
Section 1201 of the option applicable to this Section 1203, (a) the Issuers and
- ------------ ------------
the Note Guarantors shall be released from their respective obligations under
any covenant or provision contained in Section 405 and Sections 407 through 415
----------- ------------ ---
and the provisions of clauses (iii), (iv) and (v) of Section 501 shall not
-----------
apply, and (b) the occurrence of any event specified in clause (3) (with respect
to clauses (iii), (iv) and (v) of Section 501), (4) through (6) (with respect to
-----------
Section 405, Sections 407 through 415, inclusive, and any such covenants
- ----------- ------------------------
provided pursuant to Section 901(5)), inclusive, (7), (8) or (9) (with respect
--------------
to Subsidiaries), or (10) of Section 601 shall be deemed not to be or result in
-----------
an Event of Default, in each case with respect to the Defeased Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not to be
-------------------
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with
such covenants or provisions, but shall continue to be deemed "Outstanding" for
all other purposes hereunder. For this purpose, such Covenant Defeasance means
that, with respect to the Outstanding Notes, the Company, the Issuers and the
Subsidiary Guarantors may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant or
provision, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or provision or by reason of any reference in any
such covenant or provision to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 601, but, except as specified above, the remainder of
-----------
this Indenture and such Outstanding Notes shall be unaffected thereby.
Section 1204. Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of either Section 1202 or
------------
Section 1203 to the Outstanding Notes:
- ------------
(1) The Issuers shall have irrevocably deposited or caused to be
deposited with the Trustee in trust cash, in United States dollars, or U.S.
Government Obligations or a combination thereof, in amounts as will be
sufficient, in the opinion of a nationally recognized accounting or
investment banking firm expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the principal of, and
premium, if any, and interest on the Defeased Notes on the Stated Maturity
or relevant Redemption Date in accordance with the terms of this Indenture
and the Notes;
111
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 601(8) or
--------------
601(9) is concerned, at any time during the period ending on the ninety-
------
first day after the date of such deposit;
(3) Such deposit shall not result in a breach or violation of, or
constitute a Default or Event of Default under, this Indenture or any other
material agreement or instrument to which either Issuer or the Company is a
party or by which it is bound;
(4) In the case of an election under Section 1202, the Issuers shall
------------
have delivered to the Trustee an Opinion of Counsel from Debevoise &
Plimpton or other counsel in the United States to the effect that (x) the
Company or the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling or (y) since the Issue Date, there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm to the
effect that, the Holders of the Outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Defeasance had not occurred;
(5) In the case of an election under Section 1203, the Issuers shall
------------
have delivered to the Trustee an Opinion of Counsel from Debevoise &
Plimpton or other counsel in the United States to the effect that the
Holders of the Outstanding Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; and
(6) The Issuers shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that all
conditions precedent provided for in this Section 1204 relating to either
------------
the Defeasance under Section 1202 or the Covenant Defeasance under Section
------------ -------
1203, as the case may be, have been complied with. In rendering such
----
Opinion of Counsel, counsel may rely on any Officer's Certificate as to
compliance with the foregoing clauses (1), (2) and (3) of this Section 1204
------------
or as to any matters of fact.
From and after the time of any deposit pursuant to clause (1) of the
first paragraph of this Section 1204, the money or U.S. Government Obligations
------------
so deposited shall not be subject to the rights of the holders of Senior
Indebtedness of the Issuers pursuant to the subordination provisions of Article
-------
14 or Article 15.
- -- ----------
112
Section 1205. Deposited Money and U.S. Government Obligations To Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
- ---------------------------------------------
last paragraph of Section 403, all money and U.S. Government Obligations
-----------
(including the proceeds thereof) deposited with the Trustee (or such other
Person that would qualify to act as successor trustee under Article 7,
---------
collectively and solely for purposes of this Section 1205, Section 1412 and
------------ ------------
Section 1512, the "Trustee") pursuant to Section 1204 in respect of the Defeased
- ------------ ------- ------------
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including either Issuer acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Issuers shall pay and indemnify the Trustee and its agents and
hold them harmless against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to Section 1204 or
------------
the principal, premium, if any, and interest received in respect thereof, other
than any such tax, fee or other charge that by law is for the account of the
Holders of the Defeased Notes.
Anything in this Article 12 to the contrary notwithstanding, the
----------
Trustee shall deliver to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1204
------------
hereof that, in the opinion of a nationally recognized accounting or investment
banking firm expressed in a written certification thereof to the Trustee, are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Defeasance or Covenant Defeasance. Subject to Article 7,
---------
the Trustee shall not incur any liability to any Person by relying on such
opinion.
Section 1206. Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with Section
-------
1202 or 1203, as the case may be, by reason of any order or judgment of any
- ---- ----
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the obligations of the Issuers and each of the Note
Guarantors under this Indenture, the Notes and the Note Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to Section
-------
1202 or 1203, as the case may be, until such time as the Trustee or Paying Agent
- ---- ----
is permitted to apply all such money and U.S. Government Obligations in
accordance with Section 1202 or 1203, as the case may be; provided, however,
------------ ---- -------- -------
that if either Issuer or any Note Guarantor makes any payment of principal,
premium, if any, or interest on any Note following the reinstatement of its
obligations, such Issuer or Note Guarantor, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money and U.S. Government Obligations held by the Trustee or Paying
Agent.
113
Section 1207. Repayment to Issuers. The Trustee shall pay to the
--------------------
Issuers upon Company Request any money held by it for the payment of principal
or interest that remains unclaimed for two years. After payment to the Issuers,
Holders entitled to money must look to the Issuers for payment as general
creditors unless an applicable abandoned property law designates another Person
and all liability of the Trustee or Paying Agent with respect to such money
shall thereupon cease.
ARTICLE 13
NOTE GUARANTEES
---------------
Section 1301. Guarantees Generally. (a) Guarantee of the Company.
-------------------- ------------------------
The Company, as primary obligor and not merely as surety, hereby irrevocably and
fully and unconditionally Guarantees, on a senior subordinated basis, the
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all monetary obligations of each Issuer under this Indenture and
the Notes, whether for principal of or interest on the Notes, expenses,
indemnification or otherwise (all such obligations of each Issuer being herein
called the "Guaranteed Note Obligations").
---------------------------
(b) Guarantee of Each Issuer. JCI, as primary obligor and not merely
------------------------
as surety, hereby Guarantees, on a senior subordinated basis, the punctual
payment when due, whether at Stated Maturity, by acceleration or otherwise, of
all Guaranteed Note Obligations of Jafra S.A. under this Indenture and the Notes
with respect to the Jafra S.A. Portion. Jafra S.A., as primary obligor and not
merely as surety, hereby Guarantees, on a senior subordinated basis, the
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all Guaranteed Note Obligations of JCI under this Indenture and
the Notes with respect to the JCI Portion. Proceedings or other actions to
enforce either such Note Guarantee of either Issuer may not be initiated or
taken until the earlier of (i) 30 days after written demand for payment has been
made thereunder by the Trustee or the Holders in accordance with the terms of
this Indenture and (ii) the occurrence of an event specified in Section 601(8)
--------------
or 601(9) with respect to such Issuer.
------
(c) Guarantee of Each Subsidiary Guarantor. Any U.S. Subsidiary
--------------------------------------
Guarantor from time to time party hereto, as primary obligor and not merely as
surety, hereby jointly and severally, irrevocably and fully and unconditionally
Guarantees, on a senior subordinated basis, the punctual payment when due,
whether at Stated Maturity, by acceleration or otherwise, of all Guaranteed Note
Obligations of JCI under this Indenture and the Notes (all such Guaranteed Note
Obligations being herein called the "Guaranteed JCI Obligations"). Each Jafra
--------------------------
S.A. Subsidiary Guarantor from time to time party hereto, as primary obligor and
114
not merely as surety, hereby jointly and severally, irrevocably and fully and
unconditionally Guarantees, on a senior subordinated basis, the punctual payment
when due, whether at Stated Maturity, by acceleration or otherwise, of all
Guaranteed Note Obligations of Jafra S.A. under this Indenture and the Notes
(all such Guaranteed Note Obligations being herein called the "Guaranteed Jafra
----------------
S.A. Obligations").
- ----------------
Any term or provision of this Indenture notwithstanding, each
Subsidiary Guarantee shall not exceed the maximum amount that can be guaranteed
by the applicable Subsidiary Guarantor without rendering the Subsidiary
Guarantee, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
For the avoidance of doubt, notwithstanding any other provision of
this Indenture, Grupo Jafra shall not be required to enter into a Note
Guarantee.
(d) Further Agreements of Each Note Guarantor. (i) Each Note
-----------------------------------------
Guarantor hereby agrees that (to the fullest extent permitted by law) its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of this Indenture, the Notes or the obligations of
the Issuers or any other Note Guarantor to the Holders or the Trustee hereunder
or thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, any
release of any other Note Guarantor, the recovery of any judgment against the
Issuers, any action to enforce the same, whether or not a notation concerning
its Note Guarantee is made on any particular Note, or any other circumstance
that might otherwise constitute a legal or equitable discharge or defense of a
guarantor.
(ii) Each Note Guarantor hereby waives (to the fullest extent
permitted by law) the benefit of diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Issuers, any right to require a proceeding first against the Issuers, protest,
notice and all demands whatsoever and covenants that (except as otherwise
provided in Section 1303) its Note Guarantee will not be discharged except by
------------
complete performance of the obligations contained in the Notes, this Indenture
and this Note Guarantee. Such Note Guarantee is a guarantee of payment and not
of collection. Each Note Guarantor further agrees (to the fullest extent
permitted by law) that, as between it, on the one hand, and the Holders of Notes
and the Trustee, on the other hand, subject to this Article 13 and Article 15,
---------- ----------
(1) the maturity of the obligations guaranteed by its Note Guarantee may be
accelerated as and to the extent provided in Article 6 for the purposes of such
---------
Note Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by such
Note Guarantee, and (2) in the event of any acceleration of such obligations as
provided in Article 6, such obligations (whether or not due
---------
115
and payable) shall forthwith become due and payable by such Note Guarantor in
accordance with the terms of this Section 1301 for the purpose of such Note
------------
Guarantee. Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Guaranteed Note Obligations or against the Issuers or any other
Person or any property of the Issuers or any other Person before the Trustee is
entitled to demand payment and performance by any or all Note Guarantors of
their obligations under their respective Note Guarantees or under this
Indenture.
(iii) Until terminated in accordance with Section 1303, each Note
------------
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the relevant Issuer for liquidation
or reorganization, should the relevant Issuer become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the relevant Issuer's assets, and
shall, to the fullest extent permitted by law, continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Notes are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on such Notes, whether as a
"voidable preference," "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Notes shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
(e) Each Note Guarantor that makes a payment or distribution under
its Note Guarantee shall have the right to seek contribution from the relevant
non-paying Issuer or any non-paying Note Guarantor that has also Guaranteed the
relevant Guaranteed Note Obligations in respect of which such payment or
distribution is made, so long as the exercise of such right does not impair the
rights of the Holders under this Note Guarantee.
(f) Each Note Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that its Note Guarantee, and the waiver set forth in Section 1305 is
------------
knowingly made in contemplation of such benefits.
(g) Each Note Guarantor also hereby agrees to pay any and all
reasonable out-of-pocket expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the Holders in enforcing any rights under
its Note Guarantee.
Section 1302. Continuing Guarantees. Each Note Guarantee shall be a
---------------------
continuing Guarantee and shall (i) remain in full force and effect until payment
in full of the principal amount of all outstanding Notes (whether by payment at
maturity, purchase,
116
redemption, defeasance, retirement or other acquisition) and all other relevant
Guaranteed Note Obligations then due and owing, unless earlier terminated as
provided in Section 1303, (ii) be binding upon such Note Guarantor and (iii)
------------
inure to the benefit of and be enforceable by the Trustee, the Holders and their
permitted successors, transferees and assigns.
Section 1303. Release of Note Guarantees. Notwithstanding the
--------------------------
provisions of Section 1302, Note Guarantees will be subject to termination and
------------
discharge under the circumstances described in this Section 1303:
------------
(1) The Company will automatically and unconditionally be released
from all obligations under its Note Guarantee, and such Note Guarantee
shall thereupon terminate and be discharged and of no further force or
effect, (i) with respect to the predecessor Company, as and when provided
in Section 502, (ii) pursuant to the terms of its Note Guarantee, (iii)
-----------
upon Defeasance or Covenant Defeasance of the relevant Issuer's
obligations, or satisfaction and discharge of this Indenture, as provided
in Article 11 or Article 12, and (iv) subject to Section 1301(d)(iii), upon
---------- ---------- --------------------
payment in full of the aggregate principal amount of all Notes then
outstanding for which the relevant Issuer is liable and all other
Guaranteed Note Obligations of such Issuer then due and owing.
(2) An Issuer will automatically and unconditionally be released from
all obligations under its Note Guarantee with respect to an Issuer or the
Issuers, as the case may be and such Note Guarantee shall thereupon
terminate and be discharged and of no further force or effect, (i) with
respect to the relevant predecessor Issuer, as and when provided in Section
-------
502, (ii) pursuant to the terms of its Note Guarantee, (iii) upon
---
Defeasance or Covenant Defeasance of the other Issuer's obligations, or
satisfaction and discharge of this Indenture, as provided in Article 11 or
----------
Article 12, and (iv) subject to Section 1301(d)(iii), upon payment in full
---------- --------------------
of the aggregate principal amount of all Notes then outstanding for which
the other Issuer is liable and all other Guaranteed Note Obligations of the
other Issuer then due and owing.
(3) Any Subsidiary Guarantor will automatically and unconditionally
be released from all obligations under its Subsidiary Guarantee, and such
Subsidiary Guarantee shall thereupon terminate and be discharged and of no
further force or effect, (i) concurrently with any sale or disposition (by
merger or otherwise) of any Subsidiary Guarantor or any interest therein in
accordance with the terms of this Indenture (including Section 411) by the
-----------
Company or a Restricted Subsidiary, following which such Subsidiary
Guarantor is no longer a Restricted Subsidiary of the Company, (ii)
pursuant to the terms of its Subsidiary Guarantee, (iii) at any time that
such Subsidiary Guarantor is released from all its obligations under all
its Guarantees of
117
payment by the relevant Issuer of Indebtedness (other than Bank
Indebtedness) of such Issuer, (iv) upon the merger or consolidation of such
Subsidiary Guarantor with and into the Company, an Issuer or another
Subsidiary Guarantor that is the surviving Person in such merger or
consolidation, (v) upon Defeasance or Covenant Defeasance of the relevant
Issuer's obligations, or satisfaction and discharge of this Indenture, as
provided in Article 11 or Article 12, and (vi) subject to Section
---------- ---------- -------
1301(d)(iii), upon payment in full of the aggregate principal amount of all
------------
Notes then outstanding for which the relevant Issuer is liable and all
other Guaranteed Note Obligations of such Issuer then due and owing.
Upon any such occurrence specified in this Section 1303, the Trustee shall
------------
execute any documents reasonably required in order to evidence such release,
discharge and termination in respect of such Note Guarantee.
Section 1304. Agreement to Subordinate. Each Note Guarantee is, to
------------------------
the extent and in the manner set forth in Article 15, subordinated and subject
----------
in right of payment to the prior payment in full of all Senior Indebtedness of
the Note Guarantor giving such Note Guarantee and each Note Guarantee is made
subject to such provisions of this Indenture.
Section 1305. Waiver of Subrogation. Each Note Guarantor hereby
---------------------
irrevocably waives any claim or other rights that it may now or hereafter
acquire against either Issuer that arise from the existence, payment,
performance or enforcement of such Issuer's obligations under the Notes and this
Indenture or such Note Guarantor's obligations under its Note Guarantee and this
Indenture, including any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Notes against the Company, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, until this Indenture
is discharged and all of the Notes are discharged and paid in full. If any
amount shall be paid to any Note Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Note Guarantor for the benefit of, and
held in trust for the benefit of, the Holders of the Notes, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be credited and
applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture.
Section 1306. Notation Not Required. Neither the Issuers nor any Note
---------------------
Guarantor shall be required to make a notation on the Notes to reflect any Note
Guarantee or any such release, termination or discharge thereof.
118
Section 1307. Successors and Assigns of Note Guarantors. All
-----------------------------------------
covenants and agreements in this Indenture by each Note Guarantor shall bind its
respective successors and assigns, whether so expressed or not.
Section 1308. Execution and Delivery of Subsidiary Guarantees. (a)
-----------------------------------------------
The Company shall cause each Initial Jafra S.A. Subsidiary, promptly upon
becoming a Restricted Subsidiary of Jafra S.A. on the Issue Date, to execute and
deliver to the Trustee the First Supplemental Indenture substantially in the
form set forth in Exhibit E to this Indenture, providing for its Subsidiary
---------
Guarantee.
(b) The Company shall cause each Restricted Subsidiary that is
required to become a Subsidiary Guarantor pursuant to Section 414, and each
-----------
Subsidiary of the Company that the Company causes to become a Subsidiary
Guarantor pursuant to Section 414, to promptly execute and deliver to the
-----------
Trustee a supplemental indenture substantially in the form set forth in Exhibit
-------
B to this Indenture, or otherwise in form and substance reasonably satisfactory
- -
to the Trustee, evidencing its Subsidiary Guarantee on substantially the terms
set forth in this Article 13. Concurrently therewith, the Company shall deliver
----------
to the Trustee an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee to the effect that such supplemental indenture has
been duly authorized, executed and delivered by such Restricted Subsidiary and
that, subject to the applicable bankruptcy, insolvency, fraudulent transfer,
fraudulent conveyance, reorganization, moratorium and other laws now or
hereafter in effect affecting creditors' rights or remedies generally and the
general principles of equity (including standards of materiality, good faith,
fair dealing and reasonableness), whether considered in a proceeding at law or
at equity such supplemental indenture is a valid and binding agreement of such
Restricted Subsidiary, enforceable against such Restricted Subsidiary in
accordance with its terms.
Section 1309. Notices. Notice to any Note Guarantor shall be
-------
sufficient if addressed to such Note Guarantor care of the Company at the
address, place and manner provided in Section 109.
-----------
ARTICLE 14
SUBORDINATION
-------------
Section 1401. Agreement To Subordinate. The Issuers agree, and each
------------------------
Noteholder by accepting a Note agrees, that the Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 14, to the prior payment in full (when due) of all
----------
existing and future Senior Indebtedness of the
119
Issuers and that the subordination is for the benefit of and enforceable by the
holders of Senior Indebtedness of the Issuers. The Notes shall in all respects
rank pari passu with all other Senior Subordinated Indebtedness of the Issuers
---- -----
and only Indebtedness of the Issuers that is Senior Indebtedness shall rank
senior to the Notes in accordance with the provisions set forth herein. All
provisions of this Article 14 shall be subject to Section 1412.
---------- ------------
Section 1402. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of an Issuer upon a total or partial liquidation
or dissolution or reorganization of or similar proceeding relating to such
Issuer or its property, or in a bankruptcy, insolvency, receivership or similar
proceeding relating to such Issuer or its property,
(i) the holders of Senior Indebtedness of such Issuer will be
entitled to receive payment in full of such Senior Indebtedness before the
Noteholders are entitled to receive any payment from such Issuer, and
(ii) until the Senior Indebtedness of such Issuer is paid in full,
any payment or distribution from such Issuer to which Noteholders would be
entitled but for this Article 14 will be made to holders of such Senior
----------
Indebtedness as their interests may appear except that Noteholders may
receive shares of stock and any debt securities that are subordinated to
such Senior Indebtedness to at least the same extent as the Notes.
Section 1403. Default on Senior Indebtedness. Neither Issuer may pay
------------------------------
principal of, or premium (if any) or interest on, the Notes or make any deposit
pursuant to the provisions of Article 12 and may not otherwise purchase, redeem
----------
or otherwise retire any Notes (collectively, "pay the Notes") if (i) any Senior
-------------
Indebtedness of such Issuer is not paid when due or (ii) any other default on
Senior Indebtedness of such Issuer occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms (either such event, a
"Payment Default") unless, in either case, (x) the Payment Default has been
---------------
cured or waived and any such acceleration has been rescinded in writing or (y)
such Senior Indebtedness has been paid in full; provided, however, an Issuer may
-------- -------
pay the Notes without regard to the foregoing if such Issuer and the Trustee
receive written notice approving such payment from the Representative for the
Designated Senior Indebtedness with respect to which the Payment Default has
occurred and is continuing.
In addition, during the continuance of any default (other than a
Payment Default) with respect to any Designated Senior Indebtedness of an Issuer
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace period (a "Non-payment
-----------
Default"), such Issuer may not pay the Notes for the period specified as follows
- -------
120
(a "Payment Blockage Period"). The Payment Blockage Period shall commence upon
-----------------------
the receipt by the Trustee (with a copy to such Issuer) of written notice (a
"Blockage Notice") of such Non-payment Default from the Representative for such
---------------
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and shall end on the earliest to occur of the following events:
(i) 179 days shall have elapsed since such receipt of such Blockage Notice, (ii)
the Non-payment Default giving rise to such Blockage Notice is no longer
continuing (and no other Payment Default or Non-payment Default is then
continuing), (iii) such Designated Senior Indebtedness shall have been
discharged or repaid in full or (iv) such Payment Blockage Period shall have
been terminated by written notice to the Trustee and such Issuer from the Person
or Persons who gave such Blockage Notice. An Issuer shall promptly resume
payments on the Notes, including any missed payments, after such Payment
Blockage Period ends, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders have accelerated the maturity of such
Designated Senior Indebtedness, or any Payment Default otherwise exists. Not
more than one Blockage Notice to the Issuers in the aggregate may be given in
any 360 consecutive day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period, except that if any
Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than Bank Indebtedness, a
Representative of holders of Bank Indebtedness may give another Blockage Notice
within such period. In no event may the total number of days during which any
Payment Blockage Period is in effect extend beyond 179 days from the date of
receipt by the Trustee of the relevant Blockage Notice, and there must be a 181
consecutive day period during any 360 consecutive day period during which no
Payment Blockage Period is in effect.
Section 1404. Acceleration of Payment of Notes. If payment of the
--------------------------------
Notes is accelerated because of an Event of Default, the Issuers or the Trustee
shall promptly notify the holders of the Designated Senior Indebtedness of the
Issuers (or the Representative of such holders) of the acceleration. If any
Designated Senior Indebtedness of an Issuer is outstanding, such acceleration
will not be effective with respect to such Issuer until the time specified in
Section 602, and such Issuer may not pay the Notes until five Business Days
- -----------
after such holders or the Representative of each Designated Senior Indebtedness
of such Issuer receive notice of such acceleration and, thereafter, such Issuer
may pay the Notes only if this Article 14 otherwise permits payment at that
----------
time.
Section 1405. When a Distribution Must Be Paid Over. If a
-------------------------------------
distribution from an Issuer is made to Holders that because of the provisions of
this Article 14 should not have been made to them, the Holders who receive the
----------
distribution shall hold it in trust for holders of Senior Indebtedness of such
Issuer and pay it over to them as their interests may appear.
121
Section 1406. Subrogation. After all Senior Indebtedness of an Issuer
-----------
is paid in full and until the Notes are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness of such Issuer to
receive distributions applicable to such Senior Indebtedness. For purposes of
such subrogation, a distribution made under this Article 14 to holders of Senior
----------
Indebtedness of an Issuer that otherwise would have been made to Holders is not,
as between such Issuer, its creditors other than the holders of such Senior
Indebtedness and Holders, a payment by such Issuer on such Senior Indebtedness,
it being understood that the provisions of this Article 14 are and are intended
----------
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of Senior Indebtedness of the Issuers, on the other
hand.
Section 1407. Relative Rights. This Article 14 defines the relative
--------------- ----------
rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(i) impair, as between the Issuers and Holders, the obligation of the
Issuers which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms; or
(ii) prevent the Trustee or any Holder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Holders.
Section 1408. Subordination May Not Be Impaired by Issuers. No right
--------------------------------------------
of any holder of Senior Indebtedness of an Issuer to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by either Issuer or by its failure to comply with this Indenture.
Section 1409. Rights of Trustee and Paying Agent. The Issuers shall
----------------------------------
give prompt written notice to the Trustee of any fact known to the Issuers that
would prohibit the making of any payment to or by the Trustee in respect of the
Notes. Failure to give such notice shall not affect the subordination of the
Notes to Senior Indebtedness of the Issuers. Notwithstanding Section 1403, the
------------
Trustee or Paying Agent may continue to make payments on the Notes and shall not
be charged with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than two Business Days prior to the
date of such payment, a Trust Officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article 14. The
----------
Issuers, the Registrar or co-registrar, the Paying Agent, a Representative or a
holder of Senior Indebtedness may give the notice; provided, however, that, if
-------- -------
an issue of Senior Indebtedness has a Representative, only the Representative
may give the notice. The Trustee shall be entitled to rely on the delivery to
it of a written notice by a Person representing himself or itself to be a holder
of any Senior
122
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or Representative
thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 14 with respect to any Senior Indebtedness that may at any time be held
- ----------
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
---------
holder. Nothing in this Article 14 shall apply to claims of, or payments to,
----------
the Trustee under or pursuant to Section 707.
-----------
Section 1410. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
Section 1411. Article 14 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Notes by
- -------------------
reason of any provision in this Article 14 shall not be construed as preventing
----------
the occurrence of a Default. Subject to Section 1404, nothing in this Article
------------ -------
14 shall have any effect on the right of the Holders or the Trustee to
- --
accelerate the maturity of the Notes.
Section 1412. Trust Moneys Not Subordinated. Notwithstanding anything
-----------------------------
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article 12 by the Trustee for the
----------
payment of principal of and premium, if any, and interest on the Notes shall not
be subordinated to the prior payment of any Senior Indebtedness of the Issuers
or subject to the restrictions set forth in this Article 14, and none of the
----------
Holders shall be obligated to pay over any such amount to either Issuer or any
holder of Senior Indebtedness of either Issuer or any other creditor of either
Issuer.
Section 1413. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article 14, the Trustee and the Holders shall be
----------
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1402
------------
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Senior Indebtedness
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Issuers, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 14. In the event that the Trustee determines, in good faith,
----------
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to
123
participate in any payment or distribution pursuant to this Article 14, the
----------
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article 14, and, if such evidence is not furnished, the Trustee may
----------
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 701 and 703
------------ ---
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 14.
----------
Section 1414. Trustee To Effectuate Subordination. Each Holder by
-----------------------------------
accepting a Note authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Holders and the holders of Senior Indebtedness of
the Issuers as provided in this Article 14 and appoints the Trustee as attorney-
----------
in-fact for any and all such purposes.
Section 1415. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Senior Indebtedness of the Issuers and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or the
Issuers or any other Person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 14 or otherwise. With
----------
respect to the holders of Senior Indebtedness of the Issuers, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article 14 or Article 15 and no implied
---------- ----------
covenants or obligations with respect to holders of Senior Indebtedness of the
Issuers shall be read into this Indenture against the Trustee.
Section 1416. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Holder by accepting a Note acknowledges and
- ------------------------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Issuers, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Section 1417. Trustee's Compensation Not Prejudiced. Nothing in this
-------------------------------------
Article 14 shall apply to amounts due to the Trustee pursuant to other Sections
- ----------
of this Indenture.
124
ARTICLE 15
SUBORDINATION OF NOTE GUARANTEES
--------------------------------
Section 1501. Agreement To Subordinate. Each Note Guarantor agrees,
------------------------
and each Noteholder by accepting a Note agrees, that all payments pursuant to
such Note Guarantor's Note Guarantee made by or on behalf of such Note Guarantor
are subordinated in right of payment, to the extent and in the manner provided
in this Article 15, to the prior payment in full (when due) of all existing and
----------
future Senior Indebtedness of such Note Guarantor and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness of such
Note Guarantor. Such Note Guarantee shall in all respects rank pari passu with
---- -----
all other Senior Subordinated Indebtedness of such Note Guarantor and only
Indebtedness of such Note Guarantor that is Senior Indebtedness shall rank
senior to such Note Guarantee in accordance with the provisions set forth
herein. All provisions of this Article 15 shall be subject to Section 1512.
---------- ------------
Section 1502. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of a Note Guarantor upon a total or partial
liquidation or dissolution or reorganization of or similar proceeding relating
to such Note Guarantor or its property, or in a bankruptcy, insolvency,
receivership or similar proceeding relating to such Note Guarantor or its
property,
(i) the holders of Senior Indebtedness of such Note Guarantor will be
entitled to receive payment in full of such Senior Indebtedness before the
Noteholders are entitled to receive any payment from such Note Guarantor;
and
(ii) until the Senior Indebtedness of such Note Guarantor is paid in
full, any payment or distribution from such Note Guarantor to which
Noteholders would be entitled but for this Article 15 will be made to
----------
holders of such Senior Indebtedness as their interests may appear except
that Noteholders may receive shares of stock and any debt securities that
are subordinated to such Senior Indebtedness to at least the same extent as
the Note Guarantee of such Note Guarantor.
Section 1503. Default on Senior Indebtedness. No Note Guarantor may
------------------------------
make any payment pursuant to its Note Guarantee and may not otherwise purchase,
redeem or otherwise retire or defease any Notes (collectively, "pay its Note
------------
Guarantee") if (i) any Senior Indebtedness of such Note Guarantor is not paid
- ---------
when due or (ii) any other default on Senior Indebtedness of such Note Guarantor
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms (either such event, a "Guarantor Payment Default") unless, in
-------------------------
either case, (x) the Guarantor Payment Default has been cured or waived and any
125
such acceleration has been rescinded in writing or (y) such Senior Indebtedness
has been paid in full; provided, however, a Note Guarantor may pay its Note
-------- -------
Guarantee without regard to the foregoing if such Note Guarantor and the Trustee
receive written notice approving such payment from the Representative for the
Designated Senior Indebtedness with respect to which the Guarantor Payment
Default has occurred and is continuing.
In addition, no Note Guarantor may pay its Note Guarantee during the
continuance of a Payment Blockage Period after receipt by the Issuers and the
Trustee of a Blockage Notice under Section 1403. Notwithstanding the provisions
------------
described in the immediately preceding sentence (but subject to the provisions
of the first paragraph of this Section 1503), a Note Guarantor shall promptly
------------
resume payments, if any are required, pursuant to its Note Guarantee, including
any missed payments, after such Payment Blockage Period ends, unless the holders
of such Designated Senior Indebtedness or the Representative of such holders
have accelerated the maturity of such Designated Senior Indebtedness, or any
Payment Default otherwise exists.
In addition, during the continuance of any default (other than a
Guarantor Payment Default) with respect to any Designated Senior Indebtedness of
a Note Guarantor pursuant to which the maturity thereof may be accelerated
immediately without further notice except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace period (a
"Guarantor Non-payment Default"), such Note Guarantor may not pay its Note
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Guarantee for the period specified as follows (a "Guarantor Payment Blockage
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Period"). The Guarantor Payment Blockage Period shall commence upon the receipt
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by the Trustee (with copy to such Note Guarantor) of written notice (a
"Guarantor Blockage Notice") of such Guarantor Non-payment Default from the
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Representative for such Designated Senior Indebtedness specifying an election to
effect a Guarantor Payment Blockage Period and shall end on the earliest to
occur of the following events: (i) 179 days shall have elapsed since such
receipt of such Guarantor Blockage Notice, (ii) the Guarantor Non-payment
Default giving rise to such Blockage Notice is no longer continuing (and no
other Guarantor Payment Default or Guarantor Non-payment Default is then
continuing), (iii) such Designated Senior Indebtedness shall have been
discharged or repaid in full or (iv) such Guarantor Payment Blockage Period
shall have been terminated by written notice to the Trustee and such Note
Guarantor from the Person or Persons who gave such Guarantor Blockage Notice. A
Note Guarantor may pay its Note Guarantee, after such Guarantor Payment Blockage
Period ends, unless the holders of such Designated Senior Indebtedness or the
Representative of such holders have accelerated the maturity of such Designated
Senior Indebtedness, or any Guarantor Payment Default otherwise exists. Not
more than one Guarantor Blockage Notice to a Note Guarantor in the aggregate may
be given in any 360 consecutive day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness of such Note Guarantor
during such period, except that if any Guarantor Blockage Notice within such
360-day period is given by or on behalf of
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