**Exhibit 4.1**

 

CREDIT AGREEMENT

 

among

 

GRUPO CASA SABA, S.A.B. DE C.V.,

as Borrower;

 

CASA SABA, S.A. DE C.V.,

DROGUEROS, S.A. DE C.V.,

FARMACIAS ABC DE MÉXICO, S.A. DE C.V.,

DALTEM PROVEE NACIONAL, S.A. DE C.V.,

PUBLICACIONES CITEM, S.A. DE C.V.,

DALTEM PROVEE NORTE, S.A. DE C.V.,

CENTENNIAL, S.A. DE C.V., and

CONTROLADORA CASA SABA, S.A. DE C.V.,

as Co-Obligors;

 

HSBC MÉXICO, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE,GRUPO FINANCIERO HSBC

 

and

 

BANCO MERCANTIL DEL NORTE, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE,GRUPO FINANCIERO BANORTE,

 

as Lenders;

 

and

 

HSBC MÉXICO, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE,GRUPO FINANCIERO HSBC,

TRUST DIVISION,

solely and exclusively as Mexican CollateralAgent

for the Lenders

 

and

 

HSBC BANK (CHILE),

solely and exclusively as Chilean CollateralAgent

for the Lenders

Dated August 30, 2010

 

 

Table of Contents

 

 

 

Exhibits

 

 

 

CREDIT AGREEMENT (THIS “AGREEMENT”)AMONG GRUPO CASA SABA, S.A.B. DE C.V. (“GCS OR THE “BORROWER”); CASA SABA, S.A. DE C.V., DROGUEROS,S.A. DE C.V., FARMACIAS ABC DE MÉXICO, S.A. DE C.V., DALTEM PROVEE NACIONAL, S. A. DE C.V., PUBLICACIONES CITEM, S.A. DEC.V., DALTEM PROVEE NORTE, S.A. DE C.V., CENTENNIAL, S.A. DE C.V. AND CONTROLADORA CASA SABA, S.A. DE C.V. (COLLECTIVELY, THE “CO-OBLIGORS”);HSBC MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC (“HSBC MÉXICO”),AND BANCO MERCANTIL DEL NORTE, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO BANORTE (“BANORTE”AND, TOGETHER WITH HSBC MÉXICO, THE “LENDERS”); AND HSBC MÉXICO, S.A., INSTITUCIÓN DE BANCAMÚLTIPLE, GRUPO FINANCIERO HSBC, TRUST DIVISION, AS MEXICAN COLLATERAL AGENT FOR THE LENDERS (THE “MEXICAN COLLATERALAGENT”), AND HSBC BANK (CHILE), AS CHILEAN COLLATERAL FOR THE LENDERS (THE “CHILEAN COLLATERAL AGENT”),PURSUANT TO THE FOLLOWING REPRESENTATIONS AND WARRANTIES AND ARTICLES.

 

Capitalized terms used hereinhave the meaning ascribed to them in Article One hereof.

 

REPRESENTATIONS AND WARRANTIES

 

 

(a)           GCS isa limited liability, publicly-traded variable-capital corporation (*sociedad anónima bursátil de capital variable*)duly organized and existing under the laws of the United Mexican States (“Mexico”); and each Co-Obligor is alimited liability, variable-capital corporation (*sociedad anónima de capital variable*) duly organized and existingunder the laws of Mexico;

 

(b)           Its corporatepurpose authorizes it to enter into and execute each of the Acquisition Documents and Loan Documents (including the PromissoryNotes) to which it is a party, and to assume and perform its obligations thereunder;

 

(c)           It hasobtained from the Governmental Authorities all such authorizations and permits as are necessary pursuant to the applicable lawsto conduct its operations and business activities as presently conducted and as conducted as of the date of this Agreement;

 

(d)           The executionby it of the Acquisition Documents and the Loan Documents (including the Promissory Notes), and the assumption and performanceof its obligations thereunder, (i) has been authorized by all the requisite corporate actions, (ii) does not violate (1) its corporatebylaws as in effect as of the date hereof or (2) any law, regulation or administrative or contractual provision of any nature whatsoever,or any judicial or administrative order or decision or arbitration award to which it is subject or by which it is bound, and (iii)will not result in the imposition of or an obligation to create any Lien, other than those contemplated by and created pursuantto the Collateral Documents or the existing Liens disclosed in Exhibit A hereto, which existing Liens shall be releasedon or before the Initial Drawdown Date;

 

(e)           The executionby it of the Acquisition Documents and the Loan Documents to which it is a party (including the Promissory Notes), the validityor enforceability thereof, and the performance of its obligations thereunder, are not subject to any consent, authorization orregistration of any nature whatsoever from or with any Governmental Authority or third party, except (i) for the Governmental Authorizationsfor the Acquisition identified in Exhibit B hereto, (ii) that the validity of each Pledge Agreement Subject to RetainedPossession is conditioned upon (1) generally, its notarization and (2) as with respect to third parties, its registration withthe Public Registry of Property and Commerce for the Federal District, in the file maintained thereby in respect of each Co-Obligor,within the term set forth in such agreement, (iii) the validity of the Share Pledge Agreement is conditioned upon (1) its notarizationin the Republic of Chile (“Chile”) and (2) the assignment of all rights to the collateral subject matter thereof,and the registration of such agreement in accordance with the specific provisions applicable thereto, and (iv) that the validityof each of the other Chilean Pledge Agreements is conditioned upon (1) its notarization in Chile, (2) the assignment of all rightsto the collateral subject matter thereof, and the registration and/or publication of such agreement in accordance with the specificprovisions applicable thereto, (3) the receipt of all corporate authorizations required in accordance with the applicable lawsand its corporate bylaws, and the consent of the holders of the Bonds in accordance with the documents governing the issuance ofthe Bonds, and (4) the satisfaction of Fasa’s obligation to create a proportionately equivalent security interest in favorof the holders of the Bonds, and to maintain the indebtedness ratio set forth in the indenture governing the issuance of the Bonds;

 

 

(f)           The validityand enforceability of each of the Acquisition Documents and the Loan Documents (including the Promissory Notes) is not conditionedupon the satisfaction of any formality under the laws of Mexico or Chile, except that the validity of (i) each Pledge AgreementSubject to Retained Possession is conditioned upon (1) generally, its notarization and (2) as with respect to third parties, itsregistration with the Public Registry of Property and Commerce for the Federal District, in the file maintained thereby in respectof each Co-Obligor, within the term set forth in such agreement, (ii) the Share Pledge Agreement is conditioned upon (1) its notarizationin Chile, and (2) the assignment of all rights to the collateral subject matter thereof, and the registration and/or publicationof such agreement in accordance with the specific provisions applicable thereto, (3) the receipt of all corporate authorizationsrequired in accordance with the applicable laws and its corporate bylaws, and the consent of the holders of the Bonds in accordancewith the documents governing the issuance of the Bonds, and (4) the satisfaction of Fasa’s obligation to create a proportionatelyequivalent security interest in favor of the holders of the Bonds, and to maintain the indebtedness ratio set forth in the indenturegoverning the issuance of the Bonds;

 

(g)           The SharePurchase Commitment (together with its exhibits) constitutes the only Acquisition Document and has been duly executed and deliveredto the Lenders together with a certificate as to its authenticity and enforceability. The Acquisition Documents and the Loan Documentsconstitute, and following their execution the Promissory Notes will constitute, valid obligations of the Borrower and each Co-Obligor,enforceable against each of them in accordance with their respective terms;

 

(h)           GCS andeach of its Subsidiaries has filed all tax, social security, workers’ housing and retirement contribution returns requiredto be filed by it (in respect of any and all periods) pursuant to the applicable laws, and has withheld and paid when due any andall taxes, duties and other charges payable by it on account of its income, sales or assets, and all social security, workers’housing and retirement contributions, except for any taxes, duties or contributions the payment of which is being contested byit in good faith through the appropriate procedures in accordance with the applicable laws and for which it has created, wherenecessary, the reserves mandated by the applicable Financial Reporting Standards, and which would not have or could not be reasonablyexpected to have, individually or in the aggregate, a Material Adverse Effect;

 

(i)            Exceptas disclosed in Exhibit C, to the best of its knowledge Fasa and its Subsidiaries: (i) have complied with their obligationsto prepare and file when due any and all of the tax returns (including those relating to social security, workers’ housingand retirement contributions) required to be filed by them pursuant to the applicable laws, and when filed each such return wastrue, complete and correct, including, as the case may be, as with respect to the determination of any tax losses; and no taxingauthority has issued any notice, demanded any payment or made any assessment in connection with any such tax return; (ii) havepaid the full amount of all taxes (including all social security, workers’ housing and retirement contributions) due andpayable by them both as direct obligors and as third-parties liable therefor pursuant to the applicable laws in effect in eachrelevant jurisdiction, except for those taxes that will become due and payable subsequent to the date of execution of the AcquisitionDocuments (and for which they have created adequate provisions in accordance with the applicable Financial Reporting Standards),and there is no pending claim in connection with the above; (iii) have not applied for any tax refund which may be contested bythe competent authority; and (iv) are not parties to any litigation or administrative proceedings, nor have they received writtennotice of the commencement or threatened commencement of any inquiry, demand for payment or assessment in respect of any tax returnor payment (including those relating to social security, workers’ housing and retirement contributions);

 

(j)            The activitiesconducted and the real and personal property owned or used by GCS and each of its Subsidiaries are in compliance with all the applicableEnvironmental Laws as currently in effect, and as of the date hereof neither GCS nor any of its Subsidiaries is required to makeany material investment in order to comply with such Environmental Laws;

 

(k)           To thebest of its knowledge, Fasa and its Subsidiaries have complied and are currently in compliance, in all respects, with all the EnvironmentalLaws applicable to them; and as of the date hereof they are not required to make any material investment in order to comply withsuch Environmental Laws;

 

 

(l)            As ofthe date of this Agreement there is no complaint, action or judicial, administrative or other proceedings pending before any court,Governmental Authority or arbitrator, including in connection with any environmental, tax or labor dispute, which could have orbe reasonably expected to have a Material Adverse Effect, or which could affect or be reasonably expected to affect the consummationof the transactions contemplated by the Acquisition Documents or the Loan Documents;

 

(m)          GCS’audited consolidated financial statements as of December 31, 2007, 2008 and 2009, and its internal consolidated financial statementsas of June 30, 2010, have been prepared in accordance with the Financial Reporting Standards, consistently applied, and accurately,sufficiently and reasonably present GCS’ consolidated financial condition as of each such date. Since June 30, 2010 and throughthe date of this Agreement, there has been no Material Adverse Effect on the financial condition reflected in such financial statements,nor has there occurred any circumstance, event or condition that may affect the consummation of the transactions contemplated bythe Acquisition Documents or the Loan Documents, or the satisfaction of the obligations of the Borrower and its Subsidiaries thereunder.Such documents, duly executed and certified by an Authorized Officer, will be delivered to the Lenders on or before the date ofexecution of this Agreement;

 

(n)          Fasa’saudited consolidated financial statements as of December 31, 2009, and its internal consolidated financial statements as of June30, 2010, have been prepared in accordance with the Financial Reporting Standards, consistently applied, and accurately, sufficientlyand reasonably present Fasa’s consolidated financial condition as of each such date. To the best of its knowledge, sinceJune 30, 2010 and through the date of this Agreement, there has been no Material Adverse Effect on the financial condition reflectedin such financial statements, nor has there occurred any circumstance, event or condition that may affect the consummation of thetransactions contemplated by the Acquisition Documents or the Loan Documents, or the satisfaction of the obligations of the Borrowerand its Subsidiaries thereunder. Such documents, duly executed and certified by an Authorized Officer, will be delivered to theLenders on or before the date hereof;

 

(o)          The bookvalue of each item comprised in the assets, sales and EBITDA of the Borrower and the Co-Obligors, exceeds 90% (ninety percent)of the total consolidated assets, sales and EBITDA of GCS and its Subsidiaries;

 

(p)          Followingthe execution of the Pledge Agreements Subject to Retained Possession, the Mexican Collateral Agent shall have a security interest(for the benefit of the Lenders) on inventories and accounts receivable with a value of Ps.4,570,687,436 (four billion five hundredseventy million six hundred eighty-seven thousand four hundred thirty-six Pesos) and Ps.6,568,692,972 (six billion five hundredsixty-eight million six hundred ninety-two thousand nine hundred seventy-two Pesos), respectively, representing at least 90% (ninetypercent) of the total consolidated inventories and accounts receivable of GCS and its Subsidiaries as of the date hereof;

 

(q)          The valueof the items of real property owned by Última del Golfo, S.A. de C.V., Capa, S.A. de C.V., Alta del Centro, S.A. de C.V.,Solo, S.A. de C.V., Estrella del Pacífico, S.A. de C.V., Medicamentos Doctorgen, S.A. de C.V., Inmuebles Visosil, S.A. deC.V., Drogueros, S.A. de C.V. and Daltem Provee Nacional, S.A. de C.V., identified in Exhibit D, which contains a descriptionand sets forth the book value of each such item of real property, equals at least 90% (ninety percent) of the aggregate book valueof all items of real property owned by the Borrower and its Subsidiaries, each of which is free and clear of any lien or ownershiprestriction;

 

(r)           All documentsand written information provided to the Lenders by or on behalf of the Borrower and the Co-Obligors for purposes of or in connectionwith this Agreement and the transactions contemplated hereby, are complete and correct in all material respects as of the dateprovided and as of the date hereof;

 

(s)           The paymentobligations of the Borrower and each Co-Obligor under this Agreement and the Promissory Notes constitute unconditional, unsubordinatedobligations of the Borrower and the relevant Co-Obligor, as the case may be, have been secured pursuant to the Collateral Documents,and rank and shall at all times rank *pari passu*with all existing and any future secured debt permitted by this Agreementto be incurred by the Borrower and each Co-Obligor (except for any payment obligation ranking senior thereto in status pursuantto the applicable laws);

 

 

(t)           As ofthe date hereof, the Borrower and each Co-Obligor is and, following the Acquisition, each Drawdown hereunder and the allocationof the proceeds hereof, will be in Good Standing;

 

(u)          Neitherthe Borrower nor any of its Subsidiaries (including the Co-Obligors) or, to the best of the Borrower’s knowledge, Fasa orany of its Subsidiaries, is in default with any payment obligation or any agreement to which it is a party or by which it is bound,except for any default under any agreement (but not with any payment obligation relating to any Indebtedness) which wouldnot have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(v)          Fasa,its Subsidiaries and the Borrower’s Subsidiaries are not subject to any legal, contractual other restriction which limitstheir ability to approve and pay dividends, whether directly or indirectly, to the Borrower (through their payment to the shareholder);

 

(w)          The Borrower,its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and its Subsidiaries, arein compliance with all applicable laws, including any specific order or directive issued by any Governmental Authority, exceptwhere their failure to comply with any such law, order or directive would not have and could not be reasonably expected to have,individually or in the aggregate, a Material Adverse Effect;

 

(x)           The Borrowerand each of its Subsidiaries (including the Co-Obligors) (i) is the lawful owner of all items of property used in connection withits activities, (ii) has obtained from all Federal, state, municipal or other authorities all such licenses, certificates and authorizationsas are necessary to conduct its business and deal with its property as presently conducted or done, except for any suchlicense, certificate or authorization the lack of which would not have and could not be reasonably expected to have, individuallyor in the aggregate, a Material Adverse Effect, and (iii) has purchased from reputable insurance companies in each relevant jurisdiction,all-risk insurance coverage in respect of its real property, in such amounts and against such risks as are consistent with customaryindustry’s practice for like companies with similar properties and engaged in the same or similar lines of business as theBorrower and its Subsidiaries, which amounts are at least equal to those required to replace the relevant items of property;

 

(y)          Exceptas disclosed in Exhibit E, to the best of its knowledge Fasa and each of its Subsidiaries (i) owns or leases pursuant tovalid and effective agreements all the items of property used in connection with its activities, (ii) has obtained all such licensesand authorizations (including health authorizations and municipal patents) as are necessary to conduct its business and deal withits property as presently conducted or done, except for any such license, certificate or authorization the lack of whichwould not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii)maintains insurance coverage in respect of its inventory, equipment, supplies, real property and fixed assets, whether owned orleased, in such terms and for such amounts as are consistent with customary industry’s practice for like companies with similarproperties and engaged in the same or similar lines of business as Fasa and its Subsidiaries, which amounts are at least equalto those required to replace the relevant items of property; and there is no pending litigation or claim by or against Fasa orany of its Subsidiaries in connection with any such policy;

 

(z)           The Borrowerwill use the proceeds of the Loans solely and exclusively for the purposes set forth in paragraph (a) of Article Eleven hereof,all of which purposes are lawful, and shall at all times refrain from using such proceeds for any unlawful purpose; it being understoodthat the Lenders shall be subject to no liability whatsoever as a result of the use of such proceeds;

 

(aa)         Any andall funds used by it to repay the principal amount of and any interest or other amounts in respect of the Loans, will be of lawfulprovenance;

 

(bb)        The Borrower,each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries,is in compliance with any and all collective bargaining agreements to which it is a party, which agreements are in full force andeffect; and it has no knowledge of any labor dispute pending or threatened against the Borrower, its Subsidiaries, Fasa or Fasa’sSubsidiaries;

 

 

(cc)         The Borrower,each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiariesis in compliance with all social security, workers’ housing, retirement and similar laws, and has no payment obligation outstandingwith any Governmental Authority or its workers on account thereof;

 

(dd)        The Borrower,each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries,has entered into and maintains in full force and effect all such contracts and agreements as are necessary to conduct its businessactivities in the ordinary course, and is not in default with or subject to any material contingency as a result of any such contractor agreement;

 

(ee)         The Borrower,each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries,has entered into and maintains in full force and effect all such lease or similar agreements as are necessary to conduct its businessactivities in the ordinary course, and is not in default with any such lease or agreement;

 

(ff)          It hassufficient market knowledge and experience to understand the scope, terms and conditions of this Agreement, the Promissory Notesand the other Loan Documents;

 

(gg)        Giventhe existing business, corporate, financial, administrative and legal relationships between the Borrower and the Co-Obligors, itis in each Co-Obligor’s interest to enter into this Agreement and become jointly and severally liable to the Lenders forthe satisfaction of each and all of the Borrower’s payment obligations under the Loan Documents (including, without limitation,the Promissory Notes), and to guarantee any and all Promissory Notes issued hereunder; and

 

(hh)        Mr. ManuelSaba Ades has sufficient authority to bind it under each of the Loan Documents (including, without limitation, the Promissory Notes),which authority has not been revoked or limited in any manner whatsoever as of the date of execution of this Agreement.

 

 

(a)          It isa retail banking institution (*institución de banca múltiple*) duly organized under the laws of Mexico, whosecorporate purpose authorizes it to enter into and execute this Agreement and to make the Loans;

 

(b)          Its legalrepresentatives have sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoeveras of the date hereof;

 

(c)          It hasthe ability to make Loans to the Borrower pursuant to this Agreement; and

 

(d)          Basedupon the representations and warranties of the Borrower and each Co-Obligor hereunder, and upon the execution by them of the otherLoan Documents, it is willing to make the Loans to the Borrower, subject to the terms and conditions set forth in this Agreement.

 

 

(a)          It isa retail banking institution duly organized under the laws of Mexico, whose corporate purpose authorizes it to enter into and executethis Agreement;

 

(b)          Its trustofficer has sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoeveras of the date hereof;

 

(c)          It iswilling to accept its appointment as Mexican Collateral Agent on behalf of the Lenders pursuant to Article Twenty hereof, subjectto the terms and conditions set forth in this Agreement and in the other Loan Documents; and

 

(d)          It hasclearly and unequivocally explained to the parties the meaning, scope and legal consequences of the provisions contained in Article106(XIX) of the Law of Credit Institutions (*Ley de Instituciones de Crédito*) and Section 5.5 of Official Communication1/2005, issued by the Central Bank of Mexico, which are deemed incorporated herein by reference.

 

 

 

(a)          It isa retail banking institution (*sociedad anónima bancaria*) duly organized under the laws of Chile, whose corporatepurpose authorizes it to enter into and execute this Agreement;

 

(b)          Its legalrepresentatives have sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoeveras of the date hereof; and

 

(c)           It iswilling to accept its appointment as Chilean Collateral Agent on behalf of the Lenders pursuant to Article Twenty hereof, subjectto the terms and conditions set forth in this Agreement and in the other Loan Documents.

 

Now, therefore, the partieshereby agree to the following:

 

ARTICLES

** **

**ARTICLE ONE. Definitions.**(a) The following capitalized terms used in this agreement shall have the following meanings (which shall be applicable toboth the singular and plural forms thereof):

 

“AccelerationEvent” has the meaning assigned thereto in paragraph (A) of Article Fourteen.

 

“Acquisition”has the meaning assigned thereto in paragraph (a) of Article Eleven.

 

“Acquisition Documents”shall mean the Share Purchase Commitment, together with its amendments and exhibits, and each of the Acquisition documents identifiedin Exhibit I hereto.

 

“Affiliate”shall mean, as with respect to any Person, any other Person directly or indirectly, through one or more intermediaries, controlling,controlled by or under common control with, such Person.

 

“Agreement”has the meaning assigned thereto in the first paragraph hereof.

 

“Applicable Margin”shall mean the annual percentages set forth below in respect of the Loans, which percentages shall be added to the TIIE at whichthe Loans shall bear interest pursuant to Article Five:

 

(i)            2.50%(two point fifty percent), from the Drawdown Date for the Initial Drawdown to the Interest Payment Date occurring upon or immediatelyafter the expiration of the six-month period commencing on the Drawdown Date for the Initial Drawdown; and

 

(ii)           3.50%(three point fifty percent) from the Interest Payment Date occurring upon or immediately after the expiration of the six-monthperiod commencing on the Drawdown Date for the Initial Drawdown.

 

“Authorized Officer”shall mean, as with respect to any Person, its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or anyother officer holding a similar or equivalent position and having powers and authority to act as such Person’s legal representative.

 

“Banorte”has the meaning assigned thereto in the first paragraph hereof.

 

“Banorte CommitmentLetter” shall mean the letter of understanding dated June 18, 2010, between GCS and Banorte, as amended on August 30,2010.

 

“Banorte LoanAccount” has the meaning assigned thereto in paragraph (g) of Article Three.

 

“Bonds”shall mean the Series E and Series F bonds issued by Fasa on May 15, 2008, in the aggregate principal amounts of 1,800,000 StimulusUnits (*Unidades de Fomento*) and 2,200,000 Stimulus Units, respectively, which are registered with Chile’s Securitiesand Insurance Superintendency (*Superintendencia de Valores y Seguros*) under registration numbers 531 and 532, effectiveApril 16, 2008.

 

“Borrower”has the meaning assigned thereto in the first paragraph hereof.

 

 

“Business Day”shall mean any day in which retail banks in Mexico City, Federal District, Mexico, or in Santiago de Chile, Chile, are open forbusiness and are not authorized to remain closed; *provided,*that for purposes of this Agreement, Saturdays, Sundays andJanuary 1 and December 31 of each year shall not constitute Business Days.

 

“Capital”shall mean the paid-in capital (and related premiums), retained earnings and any mandatorily convertible subordinated debentures.

 

“Capital Expenditures”shall mean, as with respect to any Person, any and all direct or indirect capital expenditures incurred by such Person on accountof machinery and equipment, fixed assets or real property (including any improvement thereto or replacement or expansion thereof).

 

“Capital Lease”shall mean, as with respect to any Person, all rent and other payment obligations of such Person, howsoever designated, pursuantto any personal or real property lease (or other agreement conveying the use of such property), or any combination of such property,which obligations are required to be reported and accounted for as a capital lease in the balance sheet of such Person in accordancewith the Financial Reporting Standards. For purposes of this Agreement, the amount of such obligations as of any given date shallbe the capitalized amount thereof as of such date.

 

“Cash Equivalents”shall mean all cash and cash equivalents, as determined in accordance with the Financial Reporting Standards.

 

“Cash Surplus”shall mean the end-of-quarter amount obtained by adding to or subtracting from the Borrower’s consolidated EBITDA for thefour (4) full fiscal quarters immediately preceding the relevant calculation date3, less (i) the Gross Interest Expenseto be incurred over the four (4) fiscal quarters immediately following the relevant calculation date, less (ii) the principalamount of any Interest-Bearing Debt that will become due and payable during the four (4) fiscal quarters immediately followingthe relevant calculation date, less (iii) the estimated amount of all Capital Expenditures to be incurred over the four (4) fiscalquarters immediately following the relevant calculation date (which amounts shall not exceed the maximum set forth in paragraph(t)(iv) of Article Eleven), less (iv) the amount of all taxes paid over the four (4) full fiscal quarters immediately precedingthe relevant calculation date.

 

“Change in Control”shall mean the occurrence of one or more of the following events: (i) if any Person or group of Persons other than the PermittedHolders, acting in either case directly or indirectly (by any means or through any company, entity or vehicle, whether or not incorporated),shall have acquired, directly or indirectly, by any means whatsoever, title to or the possession of more than 50% (fifty percent)of the voting shares of stock of GCS (including, as the case may be, any company resulting from the merger of or other corporatetransaction involving GCS); (ii) if the Permitted Holders, either individually or as a group, shall have ceased to have the powerto appoint a majority of the members of the board of directors of GCS; (iii) if any Person or group of Persons other than the PermittedHolders, acting in either case directly or indirectly (by any means or through any company, entity or vehicle, whether or not incorporated),shall have acquired, directly or indirectly, by any means whatsoever, title to or the possession of more than 30% (thirty percent)of the voting shares of stock of GCS (including, as the case may be, any company resulting from the merger of or other corporatetransaction involving GCS), and the approval of any material decision by the shareholders or the board of directors of GCS requiresthe consent of such Person or group of Persons (whether by means of an affirmative vote or otherwise); or (iv) if Fasa or any ofits Subsidiaries shall have transferred directly or indirectly to any third party other than a Subsidiary of the Borrower, by anymeans whatsoever, either through a single transaction or a series of transactions, any Material Asset. For the avoidance of doubt,in the case of items (i), (ii) or (iii) above, no transfer among the Permitted Holders or acquisition of shares of GCS by the PermittedHolders from a third party, shall constitute a Change in Control.

 

“Chile”has the meaning assigned thereto in Section I(e) of the Representations and Warranties.

 

“Chilean CollateralAgent”, which term shall include its successors or assigns, has the meaning assigned thereto in the first paragraph hereof.

 

3Translator’s Note: *sic.*

 

 

“Chilean PledgeAgreements” shall mean (i) the Share Pledge Agreement, (ii) each of the pledge agreements subject to retained possessionto be executed substantially in the form of the document attached hereto as Exhibit H-2, pursuant to Law No. 18.112, inrespect of not less than 90% (ninety percent) of the total consolidated inventories and accounts receivable of Fasa and its Subsidiaries,and (iii) any pledge agreement subject to retained possession in respect of not less than 90% (ninety percent) of the total consolidatedinventories and accounts receivable of Fasa and its Subsidiaries, other than those referred to in (ii) above, which the applicablelaws may permit in the future, executed by the obligor and (if other than such obligor) the pledgor substantially in the form ofthe document attached hereto as Exhibit H-2, in each case as amended or supplemented from time to time.

 

“CNBV”means Mexico’s National Banking and Securities Commission (*Comisión Nacional Bancaria y de Valores*).

 

“Collateral Documents”shall mean (i) the Pledge Agreements Subject to Retained Possession, the Guaranty Trust Agreement, the Chilean Pledge Agreementsand any other document or instrument directly or indirectly related thereto or contemplated thereby, including its amendments andsupplements, and (ii) any other document intended as security for the satisfaction of the Borrower’s obligations under theother Loan Documents, including, without limitation, those referred to in paragraph (r) of Article Eleven.

 

“Commitment”shall mean, as the case may be, Banorte’s obligation to make available Tranche A-1 or HSBC México’s obligationto make available either Tranche A-2 or Tranche B, as applicable, in a principal amounts not to exceed that set forth beside thename of the relevant Lender in Exhibit 1 hereto.

 

“Commitment Letters”means, collectively, the Banorte Commitment Letter and the HSBC Commitment Letter.

 

“Control”shall mean, as with respect to any Person or group of Persons, its ability to (i) impose, directly or indirectly, any decisionat the general shareholders’ or partners’ meeting or other equivalent body of a legal entity, or to appoint or removea majority of the directors, managers or other equivalent persons thereof, (ii) exercise, directly or indirectly, voting rightsin respect of more than 50% (fifty percent) of the capital of a legal entity, and (iii) determine, directly or indirectly, thecourse of the management or the strategies or principal policies of a legal entity, whether through the ownership of securities,by contractual provision or otherwise.

 

“Co-Obligors”means the co-obligors identified in the first paragraph hereof, and any Person who may hereafter become a co-obligor pursuant toparagraph (q) of Article Eleven; provided, that each such Person shall also serve as a guarantor under the Promissory Notes.

 

“Dollars”means the legal tender of the United States of America; provided that, except as set forth in paragraph (c) of Article Three,any amount not originally denominated in Dollars but required to be calculated therein pursuant to this Agreement, shall be socalculated based on the exchange rate for the settlement of foreign-denominated obligations payable in Mexico, published by theCentral Bank of Mexico in the Official Gazette of the Federation (*Diario Oficial de la Federación*) on the last BusinessDay immediately preceding the relevant calculation date, or at the substitute exchange rate published in lieu thereof by the CentralBank of Mexico; provided, that absent such publication the relevant amount shall be calculated based on the average exchangerate obtained by the Lenders, on the relevant calculation date, by adding the preferred spot rate published by and disclosed toits clients by HSBC México on such date, plus the preferred spot rate published and disclosed to its clients by Banorteon such date, plus the spot rate published in www.bloomberg.com/markets/currencies, or any substitute page thereof in effect onsuch date, and dividing the sum thereof by three (3).

 

“Drawdown”shall mean each drawing pursuant to which the Borrower avails itself of all or a portion of the Loans.

 

“Drawdown Date”has the meaning assigned thereto in paragraph (d) of Article Three.

 

“Drawdown Notice”has the meaning assigned thereto in paragraph (d) of Article Three.

 

“Drawdown Period”shall mean the Tranche A-1 Drawdown Period, the Tranche A-2 Drawdown Period or the Tranche B Drawdown Period, as applicable.

 

 

“EBITDA”shall mean, as with respect to GCS, as of any calculation date, the sum of (a) its operating income (before taxes, interest expense,depreciation and extraordinary or unusual items) and (b) its depreciation and amortization expense for the relevant period, ineach case as determined in accordance with the Financial Reporting Standards consistently applied.

 

“EBITDA/GrossInterest Expense Ratio” shall mean, at any time and as with respect to GCS, the product of dividing its consolidatedEBITDA for the four (4) most recent fiscal quarters, by its consolidated Gross Interest Expense for the four (4) fiscalquarters immediately preceding the relevant calculation date.

 

“Effective Date”has the meaning assigned thereto in paragraph (a) of Article Thirteen.

 

“EnvironmentalLaws” shall mean the General Ecological Balance and Environmental Protection Law (*Ley General del Equilibrio Ecológicoy la Protección al Ambiente*) and any other environmental law, regulation, provision, rule or technical guideline issuedor adopted by any Governmental Authority (including without limitation, any Governmental Authority in Mexico, Chile, Brazil orPeru) and applicable to the Borrower and its Subsidiaries.

 

“Equity Interests”shall mean the shares of or partnership or other similar interests (howsoever designated) in a company’s capital, any interestin any Person (other than a company), and any and all warrants referred thereto, debentures convertible thereinto and purchaserights or options in respect thereof.

 

“Fasa”means Farmacias Ahumada S.A., a limited liability company (*sociedad anónima abierta*) organized under the laws ofChile and registered with Chile’s Securities and Insurance Superintendency under registration number 629, effective October15, 1997.

 

“Financial ReportingStandards” means (i) the financial information standards published by the Council for the Research and Development ofFinancial Reporting Standards (*Consejo para la Investigación y Desarrollo de Normas de Información Financiera,A.C.*), applicable in Mexico, or (ii) the International Financial Reporting Standards (IFRS) applicable in Chile, as the casemay be, as in effect from time to time.

 

“GCS”has the meaning assigned thereto in the first paragraph hereof.

 

“Good Standing”shall mean, at any time and as with respect to any Person, the fact that such Person has not incurred in a reorganization eventpursuant to the Corporate Reorganizations Law (*Ley de Concursos Mercantiles*) (or any successor law) or any other similar,applicable law.

 

“GovernmentalAuthority” shall mean any Federal, state or municipal executive, legislative or judicial authority, howsoever acting,any governmental agency, instrumentality or decentralized or quasi-independent body or similar entity, any state, municipality,department or other political subdivision thereof, or any other governmental body or authority (including any central bank or taxingauthority) or any entity (including any court) exercising governmental executive, legislative or judicial powers in any country(including, without limitation, Mexico, Chile, Brazil and Peru).

 

“GovernmentalAuthorizations for the Acquisition” shall mean the authorization of the Federal Competition Commission (*ComisiónFederal de Competencia*) and all other authorization required from any Governmental Authority for the consummation of the Acquisition,as set forth in Exhibit B hereto.

 

“Gross InterestExpense” for any given period shall mean, as with respect to GCS, all interest and financial expenses of any nature whatsoever,accrued by or incurred in connection with GCS’ Indebtedness, whether paid in cash or accrued but payable on a future or overa future period and recorded as a liability, plus any withholding taxes (and other related additional amounts) paid or payableby GCS.

 

“Guaranty TrustAgreement” means the Irrevocable Guaranty Trust Agreement to be executed among the shareholders of each of Últimadel Golfo, S.A. de C.V., Capa, S.A. de C.V., Alta del Centro, S.A. de C.V., Solo, S.A. de C.V., Estrella del Pacífico, S.A.de C.V., Medicamentos Doctorgen, S.A. de C.V., Inmuebles Visosil, S.A. de C.V., Drogueros, S.A. de C.V., Daltem Provee Nacional,S.A. de C.V., Casa Saba, S.A. de C.V., Farmacias ABC, S.A. de C.V, Publicaciones Citem, S.A. de C.V., Daltem Provee Norte, S.A.de C.V., Centennial, S.A. de C.V. and Controladora Casa Saba, S.A. de C.V., as settlors and second beneficiaries, The Bank of NewYork Mellon, S.A., Institución de Banca Múltiple, as trustee, and the Mexican Collateral Agent, as first beneficiaryon behalf of the Lenders, in respect of the shares of stock of each of Última del Golfo, S.A. de C.V., Capa, S.A. de C.V.,Alta del Centro, S.A. de C.V., Solo, S.A. de C.V., Estrella del Pacífico, S.A. de C.V., Medicamentos Doctorgen, S.A. deC.V., Inmuebles Visosil, S.A. de C.V., Drogueros, S.A. de C.V., Daltem Provee Nacional, S.A. de C.V., Casa Saba, S.A. de C.V.,Farmacias ABC, S.A. de C.V, Publicaciones Citem, S.A. de C.V., Daltem Provee Norte, S.A. de C.V., Centennial, S.A. de C.V. andControladora Casa Saba, S.A. de C.V., substantially in the form of the document attached hereto as Exhibit F, as amendedor supplemented from time to time.

 

 

“HSBC CommitmentLetter” shall mean the letter of understanding dated April 29, 2010, between GCS and Banorte, as amended on August 30,2010.

 

“HSBC Loan Account”has the meaning assigned thereto in paragraph (g) of Article Three.

 

“HSBC México”has the meaning assigned thereto in the first paragraph hereof.

 

“Indebtedness”shall mean, as with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) allobligations of such Person under any bonds, debentures, promissory notes or other similar instruments, regardless of their designationor governing law, issued by it, (iii) all deferred payment obligations of such Person on account of the purchase price of any goodsor services, excluding any unmatured accounts payable arising in the ordinary course consistent with past practices, maturingin less than 90 (ninety) days, (iv) all obligations of such Person as lessee under any Capital Lease or Sale-Leaseback Transaction,(v) all third-party debt guaranteed by such Person as guarantor or co-obligor, or secured by it by means of a bond or a Lien onany of its assets, up to the amount of such debt, (vi) any letter of credit obtained by such Person and its reimbursement obligationsthereunder, excluding any letter of credit issued on behalf of such Person as security for its payment obligations to anyvendor in the ordinary course consistent with past practices, until such time as such letter of credit shall have been confirmedand the relevant amount shall have been paid to the applicable vendor by such Person in the ordinary course consistent with pastpractices, and (vii) any other liability, howsoever designated, whether accrued or contingent, recorded in the balance sheet ofsuch Person in accordance with the Financial Reporting Standards.

 

“Initial Drawdown”shall mean the first Drawdown hereunder; provided, that the Drawdown of Tranche A-1 and the Drawdown of Tranche A-2 shalloccur on the same date and shall together constitute the Initial Drawdown, irrespective of whether the Drawdown of Tranche A-1occurs prior to the Drawdown of Tranche A-2 as contemplated by paragraph (a)(xvi) of Article Thirteen.

 

“Interest-BearingDebt” shall mean, as with respect to any Person, any Indebtedness accruing interest, fees or other financial expenses;provided, that factoring transactions and the extension of credit by a supplier shall not constitute Interest-Bearing Debtto the extent that the financial cost associated therewith is assumed and paid by such supplier and not by such Person.

 

“Interest PaymentDate” has the meaning assigned thereto in paragraph (f) of Article Five.

 

“Interest Period”shall mean each one (1) month period for the calculation of interest on the principal outstanding amount of the Loans; provided,that (i) the first Interest Period for each Drawdown shall run from the Drawdown Date to (but excluding) the last Business Dayof the month in which such Drawdown occurs, (ii) each subsequent Interest Period shall run from the last day of the previous InterestPeriod to (but excluding) the last day of the following month, (iii) any Interest Period ending on a date which is not a BusinessDay shall be extended to the first Business Day immediately following such date, and the applicable interest shall be determinedbased on the number of days actually elapsed through the actual Interest Payment Date, and (iv) any Interest Period otherwise endingafter the Maturity Date, shall end on the Maturity Date.

 

“Interest Rate”has the meaning assigned thereto in paragraph (a) of Article Five.

 

“Joinder”has the meaning assigned thereto in paragraph (B)(b) of Article Twenty.

 

“Late InterestRate” has the meaning assigned thereto in Article Six.

 

“Lenders”means, collectively, HSBC México, Banorte, and their respective successors and assigns.

 

“Lien”shall mean, as with respect to any item of property, any mortgage, pledge, guaranty trust, deposit, lien, guaranty, ownership restrictionor other encumbrance imposed thereon; provided, that an item of property shall be deemed subject to a Lien if it shall havebeen the subject matter of a conditional sale, transfer with withholding of title, Capital Lease or other similar arrangement,and an account payable shall be deemed subject to a Lien if assigned or made the subject matter of a factoring transaction, ineither case with recourse.

 

 

“Loan Documents”shall mean this Agreement, the Promissory Notes (as the context may require), the Commitment Letters, the Collateral Documentsand any other instrument executed and/or issued thereunder, including, as the case may be, any amendment thereto or supplementthereof.

 

“Loans”has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Majority”has the meaning assigned thereto in paragraph (a) of Article Twenty-Six.

 

“Material AdverseEffect” has the meaning assigned thereto in paragraph (A)(1) of Article Fourteen.

 

“Material Assets”shall mean (i) the registration rights to each of the “Fasa,” “Farmacias Ahumada” or “Farmacias Benavides”trademarks, in any class, in the Trademarks Registry (*Registro de Marcas Comerciales*) maintained by Chile’s Ministryof Economic Development and Reconstruction (*Ministerio de Economía, Fomento y Reconstrucción*), and (ii) anyshares of stock held by Fasa or any of its Subsidiaries, entitling it to appoint a majority of the board of directors or managersof Farmacias Benavides, S.A.B. de C.V.

 

“Maturity Date”has the meaning assigned thereto in Article Seven.

 

“Mexican CollateralAgent”, which term shall include its successors or assigns, has the meaning assigned thereto in the first paragraph hereof.

 

“Mexico”has the meaning assigned thereto in Section I(a) of the Representations and Warranties.

 

“Net Indebtedness/EBITDARatio” shall mean, at any time and as with respect to GCS, the product of dividing its consolidated Interest-BearingDebt less its consolidated Cash Equivalents for the relevant period, by its consolidated EBITDA for the four (4)fiscal quarters immediately preceding the relevant calculation date.

 

“Permitted Liens”has the meaning assigned thereto in paragraph (b) of Article Twelve.

 

“Permitted Holders”shall mean any of Manuel Saba Ades, Alberto Saba Ades or their relatives by blood or marriage in a straight or lateral line withintwo degrees, whether directly or through any trust or like arrangement established for the exclusive benefit of such persons forestate planning or other similar purposes.

 

“Person”shall mean any individual, entity, corporation, business or other trust operating on a stand-alone basis, joint venture, unregisteredentity, partnership or other business entity or Governmental authority, whether incorporated or unincorporated.

 

“Pesos”means the legal tender of Mexico.

 

“Pledge AgreementsSubject to Retained Possession” shall mean (i) the pledge agreement subject to retained possession (*contrato de prendasin transmisión de posesión*) to be executed between the Borrower and the Mexican Collateral Agent, acting onbehalf and for the benefit of the Lenders, in respect of all items of personal property used by the Borrower in connection withits primary business activity, including, without limitation, its inventory and accounts receivable, (ii) the pledge agreementsubject to retained possession to be executed between Casa Saba, S.A. de C.V. and the Mexican Collateral Agent, acting on behalfand for the benefit of the Lenders, in respect of all items of personal property used by Casa Saba, S.A. de C.V. in connectionwith its primary business activity, including, without limitation, its inventory and accounts receivable, (iii) the pledge agreementsubject to retained possession to be executed between Drogueros, S.A. de C.V. and the Mexican Collateral Agent, acting on behalfand for the benefit of the Lenders, in respect of all items of personal property used by Drogueros, S.A. de C.V. in connectionwith its primary business activity, including, without limitation, its inventory and accounts receivable, (iv) the pledge agreementsubject to retained possession to be executed between Farmacias ABC de México, S.A. de C.V. and the Mexican Collateral Agent,acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Farmacias ABC de México,S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable,(v) the pledge agreement subject to retained possession to be executed between Daltem Provee Nacional, S.A. de C.V. and the MexicanCollateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by DaltemProvee Nacional, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory andaccounts receivable, (vi) the pledge agreement subject to retained possession to be executed between Publicaciones Citem, S.A.de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personalproperty used by Publicaciones Citem, S.A. de C.V. in connection with its primary business activity, including, without limitation,its inventory and accounts receivable, (vii) the pledge agreement subject to retained possession to be executed between DaltemProvee Norte, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect ofall items of personal property used by Daltem Provee Norte, S.A. de C.V. in connection with its primary business activity, including,without limitation, its inventory and accounts receivable, (viii) the pledge agreement subject to retained possession to be executedbetween Centennial, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respectof all items of personal property used by Centennial, S.A. de C.V. in connection with its primary business activity, including,without limitation, its inventory and accounts receivable, and (ix) the pledge agreement subject to retained possession to be executedbetween Controladora Casa Saba, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders,in respect of all items of personal property used by Controladora Casa Saba, S.A. de C.V. in connection with its primary businessactivity, including, without limitation, its inventory and accounts receivable, in each case substantially in the form of the documentattached hereto as Exhibit G, as amended or supplemented from time to time.

 

 

“Principal PaymentDate” has the meaning assigned thereto in Article Seven.

 

“Promissory Note”and “Promissory Notes” have the meanings assigned thereto in paragraph (f) of Article Three.

 

“Sale-LeasebackTransaction” shall mean any arrangement pursuant to which a Person shall have sold or transferred any asset and agreedto subsequently lease such or any other asset primarily for its use in connection with the same purposes as the asset so sold ortransferred.

 

“Scotiabank Loans”shall mean the loans made pursuant to (i) the loan agreement dated March 25, 2010, among Scotiabank Inverlat, S.A., Instituciónde Banca Múltiple, Grupo Financiero Scotiabank Inverlat, as lender, Casa Saba, S.A. de C.V., as borrower, and GCS and Drogueros,S.A. de C.V., as guarantors, and (ii) the loan agreement dated May 7, 2008, among Scotiabank Inverlat, S.A., Instituciónde Banca Múltiple, Grupo Financiero Scotiabank Inverlat, as lender, Casa Saba, S.A. de C.V., as borrower, and GCS and Drogueros,S.A. de C.V., as guarantors.

 

“Share PledgeAgreement” shall mean the pledge agreement (*contrato de prenda mercantil*) to be executed by Controladora CasaSaba, S.A. de C.V., in favor of the Chilean Collateral Agent, for the benefit of the Lenders, in respect of the shares of stockof Fasa, substantially in the form of the document attached hereto as Exhibit H-1.

 

“Share PurchaseCommitment” shall mean the Share Purchase Commitment, dated May 17, 2010, among José Codner Chijner, InversionesGalia, S.A., Inversiones Los Alpes, S.A., Inversiones JCC Limitada, Asesorías e Inversiones ECD Limitada, Asesoríae Inversiones KCD Limitada, Asesoría e Inversiones DCD Limitada, and GCS.

 

“Special Majority”has the meaning assigned thereto in paragraph (a) of Article Twenty-Six.

 

“Subsequent Transaction”has the meaning assigned thereto in paragraph (s) of Article Eleven.

 

“Subsidiary”shall mean, as with respect to any Person, any company, partnership, trust, estate allocated to a specific purpose or other entityof any nature whatsoever, whether incorporated or unincorporated, howsoever designated, organized or existing, having the requisitelegal ability to enter into agreements pursuant to the laws of any jurisdiction, in (or of) which 50% (fifty percent) of (a) ifa stock company, the outstanding voting shares of stock, (b) if a limited partnership, joint venture or other similar entity, thepartnership or other interests in its capital or profits, or (c) if a trust or other similar entity, the right to participate inits estate, are held or controlled by, directly or indirectly, at any given time, by (x) such Person, (y) such Person and one ofmore of its Subsidiaries, or (z) one or more of the Subsidiaries of such Person. For the avoidance of doubt, for purposes of thisAgreement Fasa and its Subsidiaries shall be deemed to be Subsidiaries of the Lender solely and exclusively after the Acquisition.

 

“TIIE”shall mean, for purposes of any Interest Period, the 28 (twenty-eight) day Interbank Balanced Rate (*Tasa de Interés Interbancariade Equilibrio*) published by the Central Bank of Mexico on the first day of the relevant Interest Period; provided, thatif the first day of an Interest Period is not a Business Day, then the TIIE shall be the rate published on the last Business Dayimmediately preceding the commencement of such Interest Period or on the nearest Business Day.

 

 

“Tranche A-1”has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche A-1 DrawdownPeriod” has the meaning assigned thereto in paragraph (a) of Article Three.

 

“Tranche A-2”has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche A-2 DrawdownPeriod” has the meaning assigned thereto in paragraph (b) of Article Three.

 

“Tranche B”has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche B DrawdownPeriod” has the meaning assigned thereto in paragraph (c) of Article Three.

 

(b)           Except as otherwiseexpressly provided for herein, all references to any recital, representation, warranty or article, shall be deemed to refer tothe representations and warranties hereunder and the articles hereof; and all references to any exhibit shall be to the relevantexhibit hereto, which shall constitute an integral part hereof. The words “hereof”, “herein”, “hereunder”,and others of similar import, shall be deemed to refer to this Agreement as a whole and not to any specific article or provisionhereof. All references to a law or regulation shall be deemed to include its amendments and supplements, and any successor provision,law or regulation thereof.

 

(c)           Any accounting termnot otherwise defined herein, and all the financial information required to be delivered by the Borrower or any Person pursuanthereto, shall be construed, prepared, presented and, as the case may be, consolidated in accordance with the Financial ReportingStandards.

 

(d)           Unless expresslyprovided that a given period of time shall be comprised by Business Days, all periods of time set forth herein shall be comprisedby calendar days.

** **

**ARTICLE TWO. The Loans.**(a) Subject to the terms and conditions set forth herein, each Lender hereby agrees to make available to the Borrower loansin an amount not to exceed (i) in the case of Banorte, Ps.1,950,000,000 (one billion nine hundred fifty million Pesos) (“TrancheA-1”), (ii) in the case of HSBC México, Ps.5,904,000,000 (five billion nine hundred four million Pesos) (“TrancheA-2”), and (iii) also in the case of HSBC México, the Peso equivalent of $200,000,000 (two hundred million Dollars)(“Tranche B” and, together with Tranche A-1 and Tranche A-2, the “Loans”), exclusive of anyinterest on or fees and expenses incurred in connection with the Loans.

 

(b)           The amount of theLoan made by each Lender shall not exceed the amount of such Lender’s Commitment (as with respect to the Tranche identifiedin Exhibit 1).

 

(c)           All Drawdowns shallbe made by the Borrower in accordance with Article Three.

 

(d)           Any and all amountspreviously drawn and repaid by the Borrower pursuant to this Agreement shall not be subject to further disbursement.

** **

**ARTICLE THREE. Drawdowns.**(a) Tranche A-1 shall be requested by GCS and made available thereto by Banorte as a single Drawdown, within 180 (one hundredeighty) days from the Effective Date; provided, that in any event such Drawdown must occur on or before February 28, 2011(the “Tranche A-1 Drawdown Period”).

 

(b)           Tranche A-2 shallbe requested by GCS and made available thereto by HSBC México as a single Drawdown, within (one hundred eighty) days fromthe Effective Date; provided, that in any event such Drawdown must occur on or before February 28, 2011 (the “TrancheA-2 Drawdown Period”).

 

(c)           Tranche B shallbe requested by GCS and made available thereto (or to any direct or indirect Subsidiary thereof indicated in the relevant DrawdownNotice and reasonably acceptable to HSBC México) by HSBC México as a single or multiple Drawdowns in Pesos, at theexchange rate determined by HSBC México (based on market conditions) on the relevant Drawdown Date, within the period commencingon the Effective Date and ending 60 (sixty) days prior to the Maturity Date (the “Tranche B Drawdown Period”).

 

 

(d)           Each Drawdown onthe Loans shall occur on a Business Day (the “Drawdown Date”), in the case of Tranche A-1 within the TrancheA-1 Drawdown Period, in the case of Tranche A-2 within the Tranche A-2 Drawdown Period, and in the case of Tranche B within theTranche B Drawdown Period; provided, that the Borrower shall have previously delivered to each Lender a notice substantially inthe form of the document attached hereto as Exhibit J (the “Drawdown Notice”), executed by an AuthorizedOfficer of the Borrower, containing, at least, (i) the amount of the relevant Drawdown, (ii) the expected Drawdown Date, (iii)the account to which the Lender must deposit the aggregate amount of the Drawdown, and (iv) the certificates referred to in paragraph(a)(xviii) of Article Thirteen. Such Drawdown Notice must be received by each Lender at least five (5) Business Days prior to theDrawdown Date, unless the Lenders shall have agreed to a shorter notice. The relevant Lender’s obligation to make the Loansavailable in the terms set forth herein, shall remain in effect, in the case of Tranche A-1, throughout the Tranche A-1 DrawdownPeriod, in the case of Tranche A-2, throughout the Tranche A-2 Drawdown Period, and in the case of Tranche B, throughout the TrancheB Drawdown Period. Consequently, the Lenders’ obligation to make available any unused portion of Tranche A-1, Tranche A-2or Tranche B, as the case may be, shall terminate upon expiration of the relevant Drawdown Period.

 

(e)           The Initial Drawdownshall be subject to the satisfaction of the conditions precedent set forth in paragraph (a) of Article Thirteen, and each Drawdown(including, without limitation, the Initial Drawdown) shall be subject to the conditions precedent set forth elsewhere in ArticleThirteen. The determination as to whether the conditions set forth in paragraph (a) of Article Thirteen have been satisfied shallbe made by the Lenders, in their own discretion, prior to any Drawdown in respect of either Tranche A-1 or Tranche A-2, and thedetermination as to whether the conditions precedent set forth in paragraph (b) of Article Thirteen have been satisfied shall bemade by HSBC México, in its own discretion, prior to any Drawdown in respect of Tranche B.

 

(f)            Subject to the satisfaction(or waiver) of the conditions precedent for the effectiveness of this Agreement or the availability of the Drawdowns, each Drawdownshall be made in accordance with paragraph (g) below, upon delivery to the relevant Lender of a Promissory Note substantially inthe form of the document attached hereto as Exhibit K (each, a “Promissory Note” and, together, the “PromissoryNotes”), duly executed by the Borrower, as issuer, and by the Co-Obligors, as guarantors, for an amount equal to the amountof the Drawdown made available by such Lender on the relevant Drawdown Date. The parties agree that in case of conflict betweenthe provisions contained in this Agreement and the provisions contained in any Promissory Note, the provisions contained in thisAgreement shall prevail.

 

(g)           The Lenders shallcredit the amount of each Drawdown as requested by the Borrower in the relevant Drawdown Notice, in the case of HSBC to accountnumber 021180040471607755, maintained by GCS at HSBC México (the “HSBC Loan Account”) and, in the caseof Banorte, to account number 072180006504977918, maintained by GCS at Banorte (the “Banorte Loan Account”),in each case before 2:00 p.m. (Mexico City time) on the Drawdown Date.

** **

**ARTICLE FOUR. Fees.**(a) The Borrower hereby agrees to pay to each Lender and/or its Affiliates, in connection with the Acquisition, the financingof the Acquisition and the Scotiabank Loans, and any other related transaction, the fees set forth in the relevant Commitment Letteror agreed with each Lender and/or its Affiliates in a separate instrument.

 

(b)           The fees referredto in this Article Four shall be subject to the applicable value added tax.

** **

**ARTICLE FIVE. Interest.**(a) The Borrower shall pay to each Lender, in respect of each Interest Period and without need for demand, interest on theoutstanding principal amount of the Loans made available by such Lender, Period, at an annual rate equal to the TIIE for the relevantInterest Period, plus the Applicable Margin (the “Interest Rate”).

 

(b)          Ifthe Central Bank of Mexico shall have temporarily or permanently discontinued the publication of the TIIE and the rate referredto in paragraph (b) above,4 the interest rate applicable in respect of any Interest Period shall be equal to the Costof Peso-Denominated Funds (*Costo de Captación a Plazo de Pasivos Denominados en Pesos*) most recently published bythe Central Bank of Mexico in its Internet page prior to the commencement of the relevant Interest Period, plus the ApplicableMargin.

 

4 Translator’s Note: *sic.*

 

 

(c)           If the Central Bankof Mexico shall have temporarily or permanently discontinued the publication of the TIIE, the interest rate applicable in respectof any Interest Period shall be equal to the annual interest rate for new issues of 28 (twenty-eight) day Treasury Certificatesmost recently published by the Central Bank of Mexico in its Internet page prior to the commencement of the relevant Interest Period,plus the Applicable Margin.

 

(d)          If the Central Bankof Mexico shall have temporarily or permanently discontinued the publication of the TIIE and the rates referred to in paragraphs(b) and (c) above, the applicable interest rate shall be the interest rate published by the Central Bank of Mexico in lieu of theinterest rate referred to in paragraph (c) above, plus the Applicable Margin.

 

(e)          Any substitute rateapplicable pursuant to paragraphs (b), (c) and (d) above, shall cease to be in effect beginning on the first Interest Period immediatelyfollowing the date on which the Central Bank of Mexico resumes publication of the TIIE.

 

(f)           Interest shall bedue and payable on the last Business Day of each Interest Period (each such date, an “Interest Payment Date”); *provided*,that the last Interest Payment Date shall occur on the Maturity Date.

 

(g)          Any and all interestdue and payable hereunder shall be calculated based on the number of days actually elapsed in a year comprised by 360 (three hundredsixty) days, including the first but excluding the last day thereof.

** **

**ARTICLE SIX. Late Interest.**(a) If any amount due and payable hereunder or under the Promissory Notes is not paid when due, such amount shall accrue lateinterest from the date on which it became due, to the date on which it shall have been paid in full, at an annual rate equal tothe interest rate for the relevant period, multiplied by two (2) (the “Late Interest Rate”).

 

(b)          The amount of lateinterest accrued on a per-day basis by any past due amount shall be calculated by dividing the applicable Late Interest Rate by360 (three hundred sixty), which late interest shall be due and payable on demand by the Borrower based on the actual number ofdays elapsed and for so long as a default shall have occurred and be continuing.

** **

**ARTICLE SEVEN. Repayment.T**he outstanding principal amount of the Loans made by each lender shall be repaid thereto by the Borrower in a single installmenton the date occurring six (6) months after the Drawdown Date for the Initial Drawdown (the “Maturity Date”);provided, that the borrower shall be entitled to extend the Maturity Date of the Loans on a single occasion, upon writtennotice to each Lender at least 30 (thirty) days prior to the original Maturity Date, to the date which occurring 12 (twelve) monthsfrom the Drawdown Date for the Initial Drawdown; provided, further, that in the event of any such extension the Borrowershall be required the then outstanding Promissory Notes for new Promissory Notes duly executed by it and the Co-Obligors, as guarantors.

** **

**ARTICLE EIGHT. Prepaymentsof Principal.**(a)****The Borrower shall be entitled to repay the principal amount of the Loans, together with any accruedbut unpaid interest thereon and any other amounts due and payable in connection therewith pursuant to this Agreement, prior toits scheduled maturity, upon written notice to each Lender at least 10 (ten) Business Days prior to the proposed date of repaymentof such principal amount.

 

(b)           The principal amountof the Loans, net of any applicable taxes, shall be subject to prepayment by the Borrower in the event and with the proceeds of:

 

(i)            any sale,assignment or other transfer of assets by GCS or any of its Subsidiaries, (including the Co-Obligors) or Fasa or any of its Subsidiaries,other than (1) any sale of its inventories in the ordinary course consistent with past practices, (2) the sale, in a single transactionor a series of successive transactions, of assets representing in value less than $10,000,000 (ten million Dollars) or its equivalentin any other currency, in any fiscal year, provided that the relevant proceeds are used to purchase new assets within 180 (onehundred eighty) days from the drawdown date, and (3) as the case may be, the sale associated with the Subsequent Transaction;

 

(ii)           the issuanceof any Equity Interests or the issuance or incurrence of any Indebtedness by GCS or its Subsidiaries (including the Co-Obligors),or Fasa or its Subsidiaries, other than any Indebtedness permitted by paragraph (a) of Article Twelve, for purposes other thanrepaying the Loans;

 

 

(iii)          thetransfer of any Equity Interest in its Subsidiaries, or in Fasa or its Subsidiaries;

 

(iv)         any amountreceived by GCS or any of its Subsidiaries (including the Co-Obligors) as adjustment to the purchase price or indemnification pursuantto the Acquisition Documents;

 

(v)          any insuranceproceeds obtained as a result of the occurrence of an insured event, if such proceeds are not used to replace the relevant assets;and

 

(vi)         50% ofthe Cash Surplus (which shall be due and payable within 10 (ten) Business Days from the delivery of the quarterly financial informationreferred to in paragraph (b) of Article Eleven).

 

(c)           Any amount repaidpursuant to this Article shall be allocated on a pro rata basis to repay any Loans made available by the Lenders to the Borrowerunder Tranche A-1, Tranche A-2 and Tranche B.

 

(d)           To the extent thatany prepayment is made on an Interest Payment Date, the Borrower shall not be required to pay any fee or penalty to the Lenders.If a prepayment shall occur on a date other than an Interest Payment Date, the Borrower shall pay to each Lender any and all costsand expenses incurred by the latter in connection therewith, within 15 (fifteen) days from the receipt of demand therefor fromthe relevant Lender; provided, that such Lender shall have delivered to the Borrower a document containing a reasonably detailedbreakdown of the calculation of the relevant charges, which document shall have binding effects absent any calculation error.

 

(e)           If the Borrowerdefaults with any prepayment following the delivery of notice thereof to the Lenders, the Borrower shall pay to each Lender, upondemand, any and all costs and expenses incurred by the latter in connection with such repayment, provided that such Lender shallhave delivered to the Borrower a reasonably detailed description of such cost or expense.

** **

**ARTICLE NINE. PaymentPlace and Terms; Additional Amounts.**(a)****Any and all payments on account of the principal amount of, interest on,or fees and other amounts payable in connection with the Loans, shall be made by the Borrower net of any and all taxes, fees, contributions,withholdings, deductions, charges or other imposts applicable thereto pursuant to any Mexican or Chilean law, regulation or otherlegal provision, without offset, in immediately available funds, before 12:00 noon (Mexico City time) on the due date thereof.In the event of applicability of any tax or withholding (including any tax on any interest paid to a Lender’s funding sources),the Borrower shall pay such additional amounts as may be necessary for each Lender to receive the same amount it would have receivedabsent such tax or withholding. The above shall not be applicable to any income or other similar taxes payable by a Lender or itssuccessors or assigns under this Agreement, based on its total income or assets pursuant to the applicable laws, regulations andother legal provisions of Mexico. Each payment shall be made in Pesos, (i) in the case of HSBC, by means of its deposit to theHSBC Loan Account or to such other account as HSBC México shall have notified to the Borrower at least five (5) BusinessDays in advance, (ii) in the case of Banorte, by means of its deposit to the Banorte Loan Account or to such other account as Banorteshall have notified to the Borrower at least five (5) Business Days in advance, and (iii) in the case of any other Lender, to theaccount notified by the relevant Lender to the Borrower at least five (5) Business Days in advance. The Borrower hereby authorizeseach of HSBC México and Banorte to charge to the HSBC Loan Account and the Banorte Loan Account, respectively, any and allamounts payable to each of them by the Borrower pursuant to this Agreement.

 

(b)           Any and all partialinstallments received by the Lenders shall be allocated as follows:

 

first, to thepayment of any and all collection expenses, including attorney’s fees and litigation expenses, if any;

 

second, to reimbursethe Lenders for any and all costs and expenses remaining unpaid after the date on which they became due and payable (which shallnot be less than three (3) Business Days from the receipt of the relevant invoice by the Borrower);

 

third, to thepayment of any and all fees due and payable under the Loan Documents;

 

fourth, to thepayment of any and all accrued, unpaid late interest; and any and all of the costs and expenses referred to in paragraphs (d) and(e) of Article Eight, if any;

 

 

fifth, to thepayment of any accrued, unpaid regular interest;

 

sixth, to thepayment of the principal amount of the Loans; and

 

seventh, to thepayment of any other amount due and payable hereunder and under the other Loan Documents, if any.

 

(c)           If any of the Borrower’spayment obligations hereunder shall be due on a date which is not a Business Day or which is not included in the relevant month’scalendar, then the relevant amount shall be due and payable on the first Business Day immediately following such date

 

(d)           The parties herebyagree that any and all payments (including, without limitation, any partial installment) on account of the principal amount of,interest on, or fees or other amounts payable in connection with the Loans (except for any fees or other amounts payable to onlyone of the Lenders) shall be allocated on a pro rata basis to repay any Loans made available by the Lenders to the Borrower underTranche A-1, Tranche A-2 and Tranche B, based on each Lender’s Commitment pursuant to Exhibit 1 hereto. Each Lenderhereby covenants and agrees, in the event that it were to receive payment of an amount greater than that to which it is entitled,to distribute to the other Lenders the applicable pro rata share of such payment based on each other Lender’s Commitmentpursuant to Exhibit 1.

** **

**ARTICLE TEN. Jointand Several Obligations.**(a) Pursuant to articles 1,987 (one thousand nine hundred eighty-seven), 1,988 (one thousand ninehundred eighty-eight) and other applicable provisions of the Federal Civil Code (*Código Civil Federal*), and the correspondingarticles of the civil codes for the Federal District and all states of the Mexican Republic, each Co-Obligor hereby agrees to beheld jointly and severally liable with the Borrower for the payment, when due, of the principal amount of, interest on, and anyfees or other amounts due and payable hereunder and under the Promissory Notes and the other Loan Documents, irrespective of whethertheir joint and several obligations are expressly referred to in the relevant articles of this Agreement, the Promissory Notesor the other Loan Documents. Accordingly, the Lenders shall be entitled to demand payment of any such amount, indistinctly, tothe Borrower and/or any of the Co-Obligors, either jointly or individually.

 

(b)           In addition to itsobligations pursuant to the preceding paragraph, each Co-Obligor hereby agrees to execute, as guarantor, any and all PromissoryNotes issued hereunder.

 

(c)           If any Co-Obligorshall have paid any amount on behalf of the Borrower, the Borrower and the Co-Obligors hereby agree not to seek its recovery fromthe other Co-Obligors unless and until the Lenders shall have received payment of any and all amounts due and payable thereto pursuantto this Agreement, the Promissory Notes and the other Loan Documents.

** **

**ARTICLE ELEVEN. AffirmativeCovenants.**For so long as any amount due and payable hereunder or under the Promissory Notes and the other Loan Documentsshall remain outstanding, the Borrower and the Co-Obligors, as the case may be, hereby covenant and agree to do the following:

 

(a)           Use of Proceeds.The Borrower shall use and cause to be used (i) all of the proceeds from Tranche A-1, to (1) repay in full the Scotiabank Loans,and for other general corporate purposes, and (2) pay to Banorte the fees set forth in Article Four; (ii) all of the proceeds fromTranche A-2, to (1) finance the one-time acquisition, by Controladora Casa Saba, S.A. de C.V., through a tender offer, of at least50% (fifty percent) plus one of the outstanding shares of stock of Fasa in accordance with Title XXV of Chile’s SecuritiesMarket Law (*Ley de Mercado de Valores*) (the “Acquisition”), and (2) pay to HSBC México the feesset forth in Article Four; and (iii) all of the proceeds from Tranche B, to (i) refinance the Bonds and, as the case may be, suchliabilities of Fasa and its Subsidiaries as the Borrower and HSBC México may agree, and as may be necessary for GCS to satisfyits obligation to consummate the Subsequent Transaction in exactly the terms set forth in paragraph (s) of Article Eleven hereof,(2) pay to HSBC México the fees set forth in Article Four, and (3) pay any and all other fees payable in connection withthe transactions contemplated by this Agreement, with the Acquisition and with such other related transactions (including any financialderivative transaction) as the Borrower and HSBC México may agree.

 

 

(b)          Financial Statements;Other Reports. The Borrower shall deliver to each Lender, complete and correct copies,

 

(i)           as soonas practicable, but in any event within 130 (one hundred thirty) days from the end of each fiscal year of GCS, Fasa and each Co-Obligor,of the audited consolidated and individual financial statements of GCS and Fasa, and the individual financial statements of eachCo-Obligor for the immediately previous fiscal year, including in each case its balance sheet, income statement, statement of changesin financial condition and statement of changes in stockholders’ equity, together with the report thereon of Salles, Sainz– Grant Thorton, S.C. or any other independent accounting firm acceptable to the Lenders, and a certificate from an AuthorizedOfficer of the Borrower to the effect that no Acceleration Event has occurred and is continuing or, if an Acceleration Event shallhave occurred and be continuing, containing a description thereof and of the actions taken or proposed to be taken in connectiontherewith;

 

(ii)          as soonas practicable, but in any event within 30 (thirty) Business Days from the end of each of the first three (3) quarters of eachfiscal year of GCS, Fasa and each Co-Obligor, and within 50 (fifty) days from the end of the last quarter of each fiscal year ofGCS, Fasa and each Co-Obligor, of the consolidated and individual financial statements of GCS and Fasa, and the individual internalfinancial statements of each Co-Obligor for the immediately previous fiscal quarter, including in each case its balance sheet,income statement, statement of changes in financial condition and statement of changes in stockholders’ equity, certifiedby an Authorized Officer of GCS, Fasa and each Co-Obligor, as the case may be, as being prepared in accordance with the FinancialReporting Standards, together with a certificate from an Authorized Officer of the Borrower to the effect that the terms of thisAgreement have been complied with and no Acceleration Event has occurred and is continuing or, if an Acceleration Event shall haveoccurred and be continuing, containing a description thereof and of the actions taken or proposed to be taken in connection therewith;

 

(iii)          concurrentlywith the delivery of the financial information set forth in this Article Eleven, the Borrower shall deliver to each Lender a certificatefrom an Authorized Officer, substantially in the form of the document attached hereto as Exhibit L, containing all the informationand calculations necessary to verify the satisfaction by GCS of its obligations under paragraph (t) of this Article Eleven or,as the case may be, describing the reasons for its failure to comply therewith and a detailed description of the actions takenduring such quarter and as of the date relevant in order to comply with the Net Indebtedness/EBITDA Ratio set forth in paragraph(t)(i) of this Article Eleven; and

 

(iv)          withinthe first 20 (twenty) Business Days from the end of each quarter, the Borrower shall deliver to each Lender a certificate froman Authorized Officer as with respect to (1) the amount of consolidated accounts receivable of each Co-Obligor and, as the casemay be, any other Subsidiary required to pledge its accounts receivable pursuant to this Agreement, for the previous fiscal quarter,their age, any reserves created in respect thereof during such quarter, any change in such item as with respect to the previousquarter, and a summary of the reasons for any such change; and (2) the amount of the consolidated inventories of each Co-Obligorand, as the case may be, any other Subsidiary required to pledge its inventories pursuant to this Agreement, for the previous fiscalquarter, their age, any reserves created in respect thereof during such quarter, any change in such item as with respect to theprevious quarter, and a summary of the reasons for any such change.

 

(c)          Notices and Reports.The Borrower shall give to the Lenders, immediately upon its occurrence but in any event within five (5) Business Days therefrom,detailed, complete and correct notice of any of the following events: (i) any Acceleration Event (regardless of whether or notcontinuing after the expiration of the relevant grace period, if any, and irrespective of the delivery of the notice referred toin this paragraph (c)), in the form of a certificate from an Authorized Officer of the Borrower containing a detailed descriptionof such Acceleration Event and the actions taken or proposed to be taken by the Borrower in connection therewith; (ii) any changein the taxes, duties or other contributions payable in Mexico, Chile, Peru or Brazil, or any political subdivision thereof or taxingauthority therein, or in any provision applicable in Mexico, Chile, Peru or Brazil, which may affect any amount or the period oftime for the receipt of any amount due and payable hereunder or under the Promissory Notes or the other Loan Documents, or theobligations of the Borrower generally; (iii) any default or event of default with any contractual obligation of the Borrower, Fasaor their respective Subsidiaries, resulting or which could be reasonably expected to result, individually or in the aggregate,in a Material Adverse Effect, (iv) the commencement of any litigation, action or proceeding by or before any court, GovernmentalAuthority or arbitration tribunal, resulting or which could be reasonably expected to result, individually or in the aggregate,in a Material Adverse Effect; (v) any threatened strike or stoppage by the workers of the Borrower, Fasa or their respective Subsidiaries;and (vi) any development, event or circumstance, of any nature whatsoever, having or which could be reasonably expected to have,individually or in the aggregate, a Material Adverse Effect.

 

 

(d)          Compliance withthe Law; Satisfaction of Contractual Obligations. The Borrower and each Co-Obligor shall comply, and the Borrower shall causeeach of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to comply with (i) any and all laws, regulations, orders,decisions, awards, directives or requirements issued by any Governmental Authority (including as with respect to any license, permit,notice, registration or other governmental authorization, of any nature whatsoever, necessary for its own or hold its propertyor conduct its business, and including any antitrust, environmental (including any technical guideline and provision applicableto the management and release of hazardous materials or residues), tax, social security, pensions and corrupt practices law), and(ii) each and all of its obligations under any contract or agreement to which it is a party, or under any securities issued byit (by any means whatsoever), except where its failure to comply therewith or its default thereunder would not have or could notbe reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(e)          Payment Obligations.The Borrower and each Co-Obligor shall pay, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to pay, before the amount thereof shall become past due, (i) any and all taxes, contributions, fees and other governmentalcharges of any nature whatsoever, determined against, imposed upon or demanded from it (including, without limitation, those relatingto social security, workers’ housing or retirement contributions) and (ii) any and all lawful claims where its failure tomake the relevant payment would result or could be reasonably expected to result in the imposition of a Lien on its property; *provided,*that the neither the Borrower nor any Co-Obligor shall not be required to pay or to cause any of its Subsidiaries, Fasa orany of Fasa’s Subsidiaries to pay, any tax, fee or charge being contested by it in good faith through the appropriate proceduresin accordance with the applicable laws, for which it has created appropriate reserves in accordance with the Financial ReportingStandards or with any other generally accepted accounting principles applicable thereto, as the case may be, and which would nothave and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(f)          Insurance.

 

(i)           The Borrowerand each Co-Obligor shall maintain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiariesto maintain, in full force and effect, all-risk insurance policies in respect of all of its real property, issued by reputableinsurance companies in each relevant jurisdiction, in such amounts and against such risks as are consistent with customary industry’spractice for like companies with similar properties and engaged in the same or similar lines of business as the Borrower, its Subsidiaries(including the Co-Obligors), Fasa and Fasa’s Subsidiaries, which amounts shall be at least equal to those required to replacethe relevant items of property.

 

(ii)          Eachof the real property insurance policies set forth in Exhibit D hereto shall expressly and irrevocably designate the Lendersas preferred beneficiaries of any insurance payment made thereunder, indicate that the premium payable in respect of its effectiveperiod has been paid in full, and that such policy shall be in full force and effect during such period. The Borrower shall provideevidence of the purchase of each such policy, its effectiveness and the designation of the Lenders as beneficiaries thereof, atleast three (3) days prior to the Drawdown Date for the Initial Drawdown and within 20 (twenty) days from each anniversary of thepurchase of each such policy.

 

(g)          Conduct of Business;Continuing Existence. The Borrower and each Co-Obligor shall remain engaged, and the Borrower shall cause each of its Subsidiaries,Fasa and each of Fasa’s Subsidiaries to remain engaged primarily in the same activities and line of business as it is currentlyengaged, and shall preserve and maintain and cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to preserveand maintain its legal existence, rights, licenses, permits, notices, registrations and, generally, any material authorizationfor the conduct of its business.

 

(h)          Books and Records.The Borrower and each Co-Obligor shall keep, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to keep adequate books and accounting records, containing complete and correct entries of all of its financial transactions,assets and business, made in accordance with the Financial Reporting Standards or any other generally accepted accounting principlesapplicable to it.

 

 

(i)           Right of Inspection.The Borrower and each Co-Obligor shall allow, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to allow the representatives of each Lender (whether jointly or individually) to inspect its accounting records and/orassets. Any such review and inspection shall take place upon at least three (3) days’ written notice to the Borrower (exceptif an Acceleration Event shall have occurred and be continuing, in which case no notice shall be required). All expenses incurredwith any such review or inspection shall be borne by the Borrower, except where the number of inspections in any given year shallhave exceeded from three (3), in which case such costs shall be borne by the Lender requesting the inspection (except if an AccelerationEvent shall have occurred and be continuing, in which case such expenses shall be borne by the Borrower). Any such review or inspectionshall take place during Business Days and business hours, in a manner such that does not disrupt or interrupt the operations ofthe Borrower, its Subsidiaries, the Co-Obligors, Fasa or Fasa’s Subsidiaries, as the case may be. The Lenders shall keep(and shall cause their representatives to keep) confidential any and all information of the Borrower, its Subsidiaries, the Co-Obligors,Fasa and Fasa’s Subsidiaries obtained by them in connection with any such review or inspection, until such time as such informationshall have become publicly available by any means other than its disclosure by the Lenders or its representatives, or unless thereshall be a dispute between the Lenders and the Borrower (in which case the Lenders shall be entitled to use such information inconnection with such dispute); provided, that the Lenders shall be allowed to disclose such information to the extent requiredto comply with the applicable laws or with an order of a competent authority.

 

(j)           Maintenance ofProperty. The Borrower and each Co-Obligor shall maintain and preserve, and the Borrower shall cause each of its Subsidiaries,Fasa and each of its Subsidiaries to preserve and maintain in good order and normal condition any and all items of property usedby it in connection with or which may be useful for purposes of its business activities, ordinary wear and tear excepted, whichobligation shall not prevent the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries, fromdiscontinuing the operation and maintenance of any item of property where necessary for the conduction of its business operations,provided that such discontinuation does not have and could not be reasonably expected to have, individually or in the aggregate,a Material Adverse Effect.

 

(k)          Ranking.The Borrower and the Co-Obligors shall do all such things as may be necessary to ensure that their respective obligations hereunderand under the other Loan Documents constitute, at least, general obligations of the Borrower and the Co-Obligors and (i) rank atleast *pari passu* with all other present or future, direct and unsubordinated obligations of the Borrower and the Co-Obligors(except for any payment obligation ranking senior thereto in status pursuant to the law), and (ii) be secured by a first prioritylien on the assets subject matter of the Collateral Documents.

 

(l)           Transactionswith Affiliates. The Borrower and each Co-Obligor shall enter, and the Borrower shall cause each of its Subsidiaries, Fasaand each of Fasa’s Subsidiaries to enter into any transaction with its Affiliates, exclusively on an arm’s length basis,in terms not less favorable than those it could obtain in a similar transaction from a party other than any of its Affiliates.

 

(m)         Maintenance ofthe Governmental Authorizations. The Borrower and each Co-Obligor shall maintain, and the Borrower shall cause each of itsSubsidiaries, Fasa and each of Fasa’s Subsidiaries to maintain, in full force and effect, any and all authorizations fromand registrations with any Governmental Authority, necessary pursuant to the applicable laws or reasonable industry’s practiceto (i) conduct its business (including, without limitation, any financial, antitrust, environmental or health laws), except wherethe lack of any such authorization or registration would not have and could not be reasonably expected to have, individually orin the aggregate, a Material Adverse Effect, and (ii) comply with its obligation under and preserve the validity and enforceabilityof this Agreement and the other Loan Documents.

 

(n)          Taxes. TheBorrower and each Co-Obligor shall file, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiariesto file, any and all tax returns of any nature whatsoever (including those relating to payroll taxes and social security, workers’housing and retirement contributions), required to be filed by it in any jurisdiction pursuant to the applicable laws thereof,and to pay any and all taxes due and payable by it in accordance with such tax returns, on or before the date on which each suchpayment is due pursuant to the applicable laws (which payment shall be included, for purposes of this obligation, within thoserequired to be made by Borrower and the Co-Obligors pursuant to paragraph (d) of this Article Eleven), except for any such taxbeing contested by it in good faith through the appropriate procedures in accordance with the applicable laws, for which it hascreated appropriate reserves in accordance with the Financial Reporting Standards, and which would not have and could not be reasonablyexpected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

(o)          Ownership Structure;Voting Rights. GCS shall maintain, at all times during the effective term of this Agreement, (1) title to more than 50% (fiftypercent) of the voting Equity Interests of each Co-Obligor and (2) the Control of each Co-Obligor.

 

(p)          Collateral Documents.

 

(i)          The Borrowerand each Co-Obligor shall comply, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries,to the extent a party to the Collateral Documents, to comply with any and all of its obligations thereunder, execute and deliverall such documents or carry out all such acts as the Mexican Collateral Agent or the Chilean Collateral Agent, as the case maybe, may reasonably request from it in order to create, formalize, protect, preserve and maintain in full force and effect the guarantiesand liens contemplated thereby, pay any and all costs and expenses incurred in connection with the above, and defend the rightsof the Lenders, the Mexican Collateral Agent and the Chilean Collateral Agent in respect of the property and rights subject matterof the Collateral Documents.

 

(ii)         The Borrowerand each Co-Obligor shall execute and cause each of its Subsidiaries to execute the Chilean Pledge Agreements, (1) in the caseof the Share Pledge Agreement, including its formalization, within 15 (fifteen) Business Days from the date of the Initial Drawdown,and (2) in the case of the other Chilean Pledge Agreements, within 45 (forty-five) Business Days from the acquisition of 95% (ninety-fivepercent) or more of the outstanding shares of stock of Fasa by the Borrower, through any of its Subsidiaries, subject to theirformalization within an additional 30 (thirty) Business Day period; *provided,*that (y) the Borrower shall only be requiredto execute the Chilean Pledge Agreements within such 45 (forty-five) Business Day period if it shall have obtained from the holdersof the Bonds (in accordance with the provisions contained in the relevant indenture) such written consents as may be necessaryfor it to enter into and to execute the Chilean Pledge Agreements; *provided, further,*that the Borrower shall make and causeFasa to make its best efforts to obtain such consents and keep the Lenders appraised as with respect thereto, and (z) upon receiptof the consents referred to in item (ii)(y) above, the Lenders and the holders of the Bonds shall each hold a pro rata share ofthe collateral represented by Fasa’s property.

 

(q)          Additional Co-Obligors.The Borrower shall cause (i) those of its Subsidiaries (including, without limitation, Fasa and its Subsidiaries, subject to theprovisions contained hereinbelow) having a combined book value in excess of 90% (ninety percent) of the total consolidated assets,sales and EBITDA of GCS (including Fasa and its Subsidiaries), calculated in each case based on the financial information deliveredto the Lenders pursuant to paragraph (b) of this Article, and (ii) any present or future direct or indirect Subsidiary of GCS (including,without limitation, Fasa and its Subsidiaries, subject to the provisions contained hereinbelow), having a book value equal to orgreater than 10% (ten percent) of GCS’ consolidated assets, sales and EBITDA, calculated in each case based on the financialinformation delivered to the Lenders pursuant to paragraph (b) of this Article, to execute, to the Lenders’ satisfaction,any such documents as may be necessary for such Subsidiary to become a Co-Obligor under Article Ten hereof, including, withoutlimitation, this Agreement, any amendment or joinder to this Agreement, and the Promissory Notes, as guarantors, within 45 (forty-five)Business Days from the date on which such Subsidiary is first required to become a Co-Obligor; provided,**that theobligation set forth in this paragraph (q) shall be effective, as with respect to Fasa and its Subsidiaries, if and only if theBorrower shall have acquired, through any of its Subsidiaries, 95% (ninety five percent) or more of the outstanding shares of stockof Fasa; and**provided, further, that if the Borrower does not obtain from the holders of the Bonds, withinsuch period and at no cost (in accordance with the procedure set forth to such effect in the relevant indenture), all such consentsas may be necessary for Fasa and its Subsidiaries to become Co-Obligors hereunder, having made and caused Fasa to make its bestefforts to obtain such consents and having kept the Lenders appraised as to that respect, then the amount of its obligation hereundershall not exceed from that necessary to enable Fasa to maintain the maximum indebtedness ratio permitted by the indenture relatingto the Bonds.

 

 

(r)          Additional CollateralDocuments.

 

(i)          To theextent permitted by the applicable laws, the Borrower shall cause (1) those of its Subsidiaries (including, without limitation,Fasa and its Subsidiaries, solely and exclusively if the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety-fivepercent) or more of the outstanding shares of stock of Fasa) having a combined book value in excess of 90% (ninety percent) ofthe total consolidated assets, sales and EBITDA of GCS (including, subsequent to the Acquisition, Fasa and its Subsidiaries), calculatedin each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, and (2) anypresent or future direct or indirect Subsidiary of GCS (including, without limitation, Fasa and its Subsidiaries, solely and exclusivelyif the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety-five percent) or more of the outstanding sharesof stock of Fasa) having a book value equal to or greater than 10% (ten percent) of GCS’ consolidated assets, sales and EBITDA,calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article,to execute, to the Lenders’ satisfaction, any such documents as may be necessary for such Subsidiary to pledge, for the benefitof the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, in accordance with the applicable law, anyand all of the items of personal property used by it in connection with its primary business activity, including, without limitation,its inventories and accounts payable, within 45 (forty-five) Business Days from the date on which such Subsidiary is first requiredto pledge such assets; provided, as with respect to Fasa and its Subsidiaries, that (y) the Borrower shall be required tocreate (or cause the creation of) such pledge if and only if it shall have obtained from the holders of the Bonds (in accordancewith the provisions contained in the relevant indenture), at no cost and within such term, such written consents as may be necessaryfor the creation of such pledge, to which effect it shall make and cause Fasa to make its best efforts to obtain such consentsand keep the Lenders appraised as with respect thereto, and (z) upon receipt of the consents referred to in item (i)(y) above,the Lenders and the holders of the Bonds shall each hold a pro rata share of the collateral represented by Fasa’s property.

 

(ii)         To theextent permitted by the applicable laws, the Borrower shall transfer and cause each of its Subsidiaries to transfer, to the trustestablished pursuant to the Guaranty Trust Agreement, the shares of (1) those of its Mexican Subsidiaries having a combined bookvalue in excess of 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including, subsequent to theAcquisition, Fasa and its Subsidiaries), calculated in each case based on the financial information delivered to the Lenders pursuantto paragraph (b) of this Article, and (2) any Mexican Subsidiary having a book value equal to or greater than 10% (ten percent)of GCS’ consolidated assets, sales and EBITDA, calculated in each case based on the financial information delivered to theLenders pursuant to paragraph (b) of this Article; provided,**that the obligation set forth in this paragraph (r)(ii)shall be effective, as with respect to Fasa’s Mexican Subsidiaries, if and only if (y) the Borrower shall have acquired,through any of its Subsidiaries, 95% (ninety five percent) or more of the outstanding shares of stock of Fasa, and (z) the Borrowershall have obtained from the holders of the Bonds (in accordance with the procedure set forth to such effect in the relevant indenture),at no cost and within 45 (forty-five) Business Days from the date of its acquisition of 95% (ninety-five percent) of the aforementionedshares, all such consents as may be necessary to make such transfer, to which effect it shall make and cause Fasa to make its bestefforts to obtain such consents and keep the Lenders appraised as with respect thereto.

 

(s)          Subsequent Transaction.GCS shall acquire, directly or through a Subsidiary organized and existing under the laws of Mexico, all of the outstanding sharesof stock of Farmacias Benavides, S.A.B. de C.V. currently held by Fasa, or, if impractical for tax, legal or efficiency reasons(taking into consideration (i) the rights of Fasa’s minority shareholders and (ii) the cost of such acquisition based onthe opinion of a recognized independent expert), which GCS shall be required to prove to the Lenders, to their full (and reasonable)satisfaction, then GCS shall do all such reasonable things as are within its control, to ensure that all the unrestricted cashflow generated by Farmacias Benavides, S.A.B. de C.V.’s operations is used to repay the principal of, interest on, and otheramounts payable in connection with the Loans, in either case within 24 (twenty-four) months from the Drawdown Date for the InitialDrawdown (either or both such transactions, or any other equivalent transaction, the “Subsequent Transaction”);provided, that the terms of the Subsequent Transaction shall be subject to the Lenders’ consent, which consent shall be grantedif and only if, in addition to the approval of the Subsequent Transaction, the Lenders shall have received undisputable evidenceto the effect that (1) GCS has taken or will take, within such reasonable period as the parties may agree, any and all such measuresas may be necessary to comply with its payment obligations under the Loans (taking into consideration the effective periods andlong-term nature thereof, as agreed by the parties in the Commitment Letters), and (2) GCS has in place a plan (which must be sufficientlydetailed) and shall take any and all such actions as may be necessary to achieve and maintain a Net Indebtedness/EBITDA Ratio ofless than 2.5 (two point five) (including the issuance of equity for the repayment of its Indebtedness) beginning upon the expirationof the 24 (twenty-four) month period following the Drawdown Date for the Initial Drawdown.

 

 

(t)          Financial Ratios.GCS hereby covenants and agrees as follows:

 

(i)           Net Indebtedness/EBITDARatio. (1) Beginning on the first full quarter following the Drawdown Date for the Initial Drawdown, and during the effective termof this Agreement, GCS shall maintain a Net Indebtedness/EBITDA Ratio no greater than (A) 5.5 to 1, if as a result of the AcquisitionGCS shall have acquired, directly or indirectly, more than 66.7% (sixty-six point seven percent) of Fasa’s outstanding sharesof stock, and (B) 4.5 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, less than 66.7%(sixty-six point seven percent) of Fasa’s outstanding shares of stock.

 

(2)          GCS shallprepare and deliver to the Lenders a detailed plan for the achievement and maintenance, beginning upon the expiration of the 24(twenty-four) month period following the Drawdown Date for the Initial Drawdown, a Net Indebtedness/EBITDA Ratio lower than 2.50to 1. Such plan shall be detailed and shall be submitted to the Lenders (together with a progress report as with respect thereto),for their review and approval, on a quarterly basis in accordance with paragraph (b)(iii) of Article Eleven.

 

(ii)         EBITDA/GrossInterest Expense Ratio. During the effective term of this Agreement, GCS shall maintain an EBITDA/Gross Interest Expense Rationo lower than (1) 2.25 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, more than 66.7%(sixty-six point seven percent) of Fasa’s outstanding shares of stock, and (B) 2.75 to 1, if as a result of the AcquisitionGCS shall have acquired, directly or indirectly, less than 66.7% (sixty-six point seven percent) of Fasa’s outstanding sharesof stock.

 

(iii)        MinimumStockholders’ Equity. GCS shall maintain, at a minimum, a consolidated stockholders’ equity of Ps.7,000,000,000 (sevenbillion Pesos) (which initial amount was determined, for purposes of this Agreement, based on the Borrower’s internal consolidatedfinancial statements as of March 31, 2010), including any subsequent restatement thereof.

 

(iv)        CapitalExpenditures. Subject to paragraph (k) of Article Twelve, during the effective term hereof the Borrower and the Co-Obligors shallrefrain, and the Borrower shall cause each of its Subsidiaries, Fasa and Fasa’s Subsidiaries to refrain from incurring inany Capital Expenditures representing, in the aggregate, more than $45,000,000 (forty-five million Dollars) or its equivalent inany other currency.

** **

**ARTICLE TWELVE. NegativeCovenants.**For so long as any amount owed pursuant to this Agreement, the Promissory Notes and the other Loan Documentsshall remain outstanding:

 

(a)          Indebtedness.The Borrower and each Co-Obligor shall refrain from incurring, assuming or suffering the existence of any Indebtedness (in eachcase, net of all cash and investments constituting cash equivalents) of the Borrower, its Subsidiaries (including the Co-Obligors),Fasa or its Subsidiaries, with:

 

(i)          any Affiliate,except for any Indebtedness incurred by the Borrower’s Subsidiaries on an arm’s length basis and in the ordinarycourse consistent with past practices, as with respect to the Borrower; or

 

(ii)         any thirdparty, except for: (1) the Indebtedness incurred pursuant to this Agreement, the Promissory Notes and any Loan Document;(2) any Indebtedness in the form of customer deposits or advances on account of goods, received in the ordinary course consistentwith past practices; (3) any Indebtedness incurred in order to prepay the Loans (provided that such prepayment is made concurrentlywith the incurrence thereof); (4) any Indebtedness incurred by the Borrower and its Subsidiaries for working capital purposes only,provided that the amount thereof does not exceed, in the aggregate, from Ps.550,000,000 (five hundred fifty million Pesos) or itsequivalent in any other currency; and (5) any Indebtedness incurred by Fasa and its Subsidiaries, in an amount not to exceed, inthe aggregate, from $175,000,000 (one hundred seventy-five million Dollars) or its equivalent in any other currency; provided,that for purposes of this subparagraph (ii)(5), the term cash and investments constituting cash equivalents shall include the insuranceproceeds to be received by Fasa and its Subsidiaries in connection with the insurance claims relating to the earthquake experiencedby Chile on February 27, 2010.

 

 

(b)         Liens. TheBorrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to refrain from creating, assuming or suffering the existence of any Lien, of whichever nature and howsoever designated,on any of its present or future assets, except for the following (the “Permitted Liens”):

 

(i)           Liensderiving from any tax, employment or social security obligation, or mandated by law, which Liens are being contested by it in goodfaith through the appropriate procedures and/or for which it has created the requisite reserves or other provisions in accordancewith the Financial Reporting Standards, as the case may be;

 

(ii)         Liensimposed by court order or decision, to the extent that such decision is reversed or stayed by a subsequent court order within 60(sixty) days from the date thereof;

 

(iii)        Lienscreated in connection with the participation of the Borrower or its Subsidiaries in any auction sponsored by and for the benefitof any Governmental Authority, so long as any such Lien does not represent, at any time during the effective term of this Agreement,a liability or obligation in an amount greater than $5,000,000 (five million Dollars); and

 

(iv)        Lienscreated as security for the Loans granted by the Lenders to the Borrower pursuant to this Agreement, the Promissory Notes and anyLoan Document, instrumented by means of the Collateral Documents.

 

(c)          Consolidation;Merger. The Borrower, the Co-Obligors and Fasa shall refrain, except with the prior written consent of each Lender, from (i)consolidating or merging (irrespective of whether the surviving entity) with any other Person, or (ii) transferring, selling orotherwise conveying to any Person, directly or indirectly, all or substantially all of its property, in each case in a single transactionor a series of related transactions, unless, in the case of (i) and (ii) above, immediately after the consummation of suchtransaction:

 

(1)         the Personresulting from or surviving such consolidation or merger, if other than the Borrower or a Co-Obligor, or the buyer or assigneeof all or a substantial portion of the assets of the Buyer or such Co-Obligor, (i) is Controlled by GCS and (ii) shall expresslyassume, pursuant to a written instrument in terms and form satisfactory to the Lenders, the obligations of the Borrower or theCo-Obligors, as the case may be, under the Loan Documents;

 

(2)         the Borrower,any Co-Obligor or any of their respective successors, as the case may be, shall expressly agree to indemnify each Lender, the MexicanCollateral Agent and the Chilean Collateral Agent, against any tax or governmental contribution or charge, of any nature whatsoever,imposed upon any Lender, the Mexican Collateral Agent or the Chilean Collateral Agent as a result of the relevant transaction,in connection with any payment made pursuant to this Agreement, the Promissory Notes and the other Loan Documents;

 

(3)         no AccelerationEvent or other event or condition which, with the lapse of time, upon notice, or both, would constitute an Acceleration Event,shall have occurred and be continuing; and

 

(4)         the Borrowershall have delivered to the Lenders a Certificate from an Authorized Officer and a legal opinion issued by an independent law firmacceptable to the Lenders, in each case to the effect that such consolidation, merger, transfer, sale or conveyance, and the agreementsexecuted in connection therewith, are in compliance with the provisions contained in this Article Twelve.

 

(d)         Transfer of Assets.The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of its Subsidiariesto refrain from selling or otherwise disposing of any assets (including without limitation, any real property or Equity Interestsin a Subsidiary), except for:

 

(i)          salesor dispositions of inventory in the ordinary course consistent with past practices;

 

(ii)         salesor dispositions of obsolete or unused assets (excluding the real property identified in Exhibit D);

 

(iii)        salesor dispositions of assets between the Borrower’s Subsidiaries;

 

(iv)        the SubsequentTransaction; and

 

 

(v)         salesor dispositions of assets at their market value, in any subsequent fiscal year and other than in the ordinary course consistentwith past practices, with a value not in excess of $10,000,000 (ten million Dollars) or its equivalent in any other currency (excludingthe real property identified in Exhibit D), provided that the proceeds thereof are used to purchase other assets within180 (one hundred eighty) days from such disposition;

 

provided, notwithstandingthe restrictions contained in this paragraph (b), that the Borrower, its Subsidiaries, the Co-Obligors, Fasa and Fasa’s Subsidiariesshall be entitled to sell or transfer any other assets so long as the proceeds of any such sale or transfer are used to repay theLoans in accordance with paragraph (b) of Article Eight.

 

(e)          Loans. TheBorrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to refrain from guaranteeing any kind of credit or Loan, whether secured or unsecured, except for (i) any Loanbetween the Borrower and its Subsidiaries so as to satisfy any payment obligation pursuant to this Agreement, (ii) any Loan betweenthe Borrower’s Subsidiaries so as to enable the borrower thereunder to satisfy any obligation incurred in the ordinary courseconsistent with past practices, and (iii) any credit to or from customers and vendors in the ordinary course consistent with pastpractices.

 

(f)          IntercompanyPayments. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and eachof Fasa’s Subsidiaries to refrain from making any payment to its Subsidiaries or Affiliates on account of any Indebtednessor other liabilities, if such payment or distribution results or could result in a payment or distribution to a third party otherthan in the ordinary course consistent with past practices.

 

(g)          Change in Business.The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’sSubsidiaries to refrain from making any material change in its business activities, as conducted as of the date of this Agreement.

 

(h)          Dividend Payments.

 

(i)          The Borrowershall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from incurring or assuming any obligationor entering into any contractual arrangement prohibiting, restricting or seeking to prohibit, restrict or condition, directly orindirectly, the approval or payment of dividends or other distribution to its shareholders, or any Loan or credit from any of theBorrower’s Subsidiaries, Fasa or any of Fasa’s Subsidiaries, to the Borrower or the Co-Obligors.

 

(ii)         GCS shallrefrain from paying any dividend or making any distribution to its shareholders, including through the reduction of their EquityInterests.

 

(iii)        TheBorrower shall do any and all such things as may be necessary to cause its Subsidiaries, to the extent they have reported availableprofits, to declare and pay to it dividends in such amounts as may be necessary to enable it to satisfy in full and when due itspayment obligations in respect of the Loans, including any mandatory dividend payment pursuant to the applicable laws of Chile.

 

(i)          Liquidation,Dissolution, Reorganization. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries,Fasa and each of Fasa’s Subsidiaries to refrain from approving any resolution as with respect to its dissolution or liquidation(or from entering liquidation or dissolution proceedings), bankruptcy or reorganization (*concurso mercantil*), except if(i) the relevant Subsidiary is immaterial and (ii) in the Lenders’ opinion, such dissolution and liquidation does not materiallyaffect the Borrower’s obligations hereunder and under the other Loan Documents.

 

(j)          Prepayments ofIndebtedness. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa andeach of Fasa’s Subsidiaries to refrain from prepaying any Indebtedness, unless such prepayment includes the pro rata prepaymentof the Loans.

 

(k)         Acquisition ofAssets. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and eachof Fasa’s Subsidiaries to refrain from acquiring any asset other than as necessary for the conduct of its business (includingany real property used primarily in connection with the development of its business activities), or any shares of any company otherthan a Subsidiary engaged in the same line of business as the Borrower, or in any supplemental line of business; provided,that the Acquisition shall not be limited by the provisions contained in this paragraph (k).

** **

** **

**ARTICLE THIRTEEN. ConditionsPrecedent for the Loans.**

 

(a)          Conditions forAll Drawdowns. Each Lender’s obligation to make the Loans available to the Borrower, and the Borrower’s right tomake any Drawdown, shall be subject to the prior receipt by the Lenders, in form and substance reasonably acceptable to them, ofthe following documents and information, or the occurrence of the following events, subject to any such information, document orevent having been waived by all Lenders (and the second Business Day following the date on which any and all such documents andinformation shall have been received and any and all such events shall have occurred or been waived by the Lenders, shall be referredto herein as the “Effective Date”):

 

(i)          this Agreement,duly executed by the Borrower, each Co-Obligor and the other parties, including the ratification of the signatures of the Borrowerand each Co-Obligor before a notary public, and subsequently legalized by Chile’s Consul in Mexico, and registered (formalized)by a notary public in Chile;

 

(ii)         certifiedcopies of all the corporate authorizations and third-party consents necessary for the Acquisition, this Agreement and the otherLoan Documents to be valid, effective and enforceable against the Borrower and each Co-Obligor;

 

(iii)        irrevocableinstructions to each Lender, duly executed by the Borrower, authorizing such Lender to charge to the account used by it for purposesof the disbursement of the Initial Drawdown, the amount of any and all fees, expenses (including such Lender’s legal expenses)and taxes incurred on or before the Drawdown Date for the Initial Drawdown pursuant to this Agreement and the other Loan Documents;provided, that such irrevocable instructions may be contained in the Drawdown Notice delivered to each Lender;

 

(iv)        certifiedcopies of the notarial instruments containing (1) the corporate bylaws of the Borrower and each Co-Obligor as currently in effect,and (2) the powers of attorney of the individuals executing this Agreement, the Promissory Notes and the other Loan Documents (including,without limitation, the Collateral Documents) on behalf of the Borrower and each Co-Obligor.

 

(v)         (1) Fasa’saudited individual and consolidated financial statements as of December 31, 2007, 2008 and 2009, and GCS’s and Fasa’sinternal individual and consolidated financial statements as of June 30, 2010, and (2) the audited individual financial statementsof each Co-Obligor as of December 31, 2007, 2008 and 2009, and its internal financial statements as of June 30, 2010, in each casetogether with a certificate of authenticity executed by an Authorized Officer of the Borrower;

 

(vi)        (1) afavorable legal opinion issued by Mijares, Angoitia, Cortés y Fuentes, S.C., Mexican counsel to the Borrower and the Co-Obligors,and (2) a favorable legal opinion issued by Carey y Cía., Chilean counsel to the Borrower and the Co-Obligors, in each casein form and substance satisfactory to a Majority of the Lenders;

 

(vii)       (1)a favorable legal opinion issued by Ritch Mueller, S.C., Mexican counsel to the Lenders, and (2) a favorable legal opinion issuedby Claro y Cía., Chilean counsel to the Lenders, in each case in form and substance satisfactory to a Majority of the Lenders;

 

(viii)      thepublic instruments containing the Pledge Agreements Subject to Retained Possession, duly executed by the Borrower and each Co-Obligor,which shall be valid and enforceable in accordance with their terms, together with evidence to the effect that such instrumentshave been filed for registration with the Public Registry of Property and Commerce for the Federal District;

 

(ix)        a certificatedissued by the Public Registry of Property and Commerce for the Federal District, to the effect that there is no lien recorded inthe files maintained thereby in respect of the Borrower and each Co-Obligor;

 

 

(x)         the publicinstrument containing the Guaranty Trust Agreement, duly executed by all parties thereto, together with evidence as to the transferof the shares subject matter thereof, to the trustee thereunder;

 

(xi)        the disclosureto the Lenders by the Borrower, in Exhibit M hereto, of any all credit agreements representing any Indebtedness (whetherdrawn down or available) in an amount equal to or in excess of $3,000,000 (three million Dollars) or its equivalent in any othercurrency, which may be then in effect as with respect to the Borrower, its Subsidiaries (including the Co-Obligors), or Fasa andits Subsidiaries;

 

(xii)       theHSBC Loan Account and the Banorte Loan Account shall have been created and be available for purposes of making deposits;

 

(xiii)      evidence,to the Lenders’ satisfaction, of the receipt of all Governmental Authorizations for the Acquisition and any other consentor authorization required in connection with the Acquisition, together with a copy of each such authorization, certified by anAuthorized Officer of GCS;

 

(xiv)      evidencein the form of a certificate from (1) an Authorized Officer of the Borrower, to the effect that the transactions contemplated bythe Acquisition Documents shall be consummated concurrently or successively in accordance with the applicable practices and lawsof Chile, within five (5) Business Days from the Effective Date, and (2) an Authorized Officer of the Borrower, and from a legalrepresentative of the Chilean intermediary for the transaction, of the acquisition of at least 50% (fifty percent) plus one ofthe voting shares of Fasa;

 

(xv)       (1) irrevocablewritten instructions to Banorte, duly executed by the Borrower, authorizing Banorte to charge to the Banorte Loan Account suchamounts as may be necessary to prepay in full the Scotiabank Loans (including the principal thereof, interest thereon and otherancillary amounts), containing a breakdown of such amounts and the account or accounts to which the relevant payments are to bemade; provided, that such irrevocable instructions may be included in the Drawdown Notice delivered to Banorte, and (2)written evidence of the transfer of the relevant funds by Banorte and their receipt by Scotiabank Inverlat, S.A., Instituciónde Banca Múltiple, Grupo Financiero Scotiabank Inverlat, together with an acknowledgement and acceptance of such transfer,duly executed by the Borrower, in each case to the Lenders’ reasonable satisfaction; provided, that the Tranche A-1Drawdown and the prepayment of the Scotiabank Loans shall occur prior to, but on the same Business Day as the Tranche A-2 Drawdown;

 

(xvi)      theBorrower shall have delivered to each Lender, on the relevant Drawdown Date, a Promissory Note in the amount of such Drawdown,duly executed by the Borrower and guaranteed by the Co-Obligors pursuant to paragraph (c) of Article Three;

 

(xvii)     theBorrower shall have delivered to each Lender the relevant Drawdown Notice, duly executed by an Authorized Officer of the Borrowerwho is also a legal representative thereof pursuant to Article Three, containing, in addition, a certificate as to the satisfactionof the conditions set forth in this paragraph (a) of Article Thirteen;

 

(xviii)    noevent constituting an Acceleration Event (or which, with the lapse of time, upon notice, or both, would constitute an AccelerationEvent) or having a Material Adverse Effect, shall have occurred or will occur as a result of the Drawdown;

 

(xix)       therepresentations of the Borrower hereunder shall remain true and correct as of the relevant Drawdown Date;

 

(xx)        noneof the events set forth in Exhibit N shall have occurred;

 

 

(xxi)       eachbeneficiary and the trustee of Trust No. F-790, established by Messrs. Isaac Saba Raffoul (deceased), Alberto Isaac Saba Ades,Manuel Saba Ades and Beki Ades Tawil, and Ixe Banco, S.A., Institución de Banca Múltiple, Ixe Grupo Financiero, onMay 8, 2008, shall have entered into an agreement with binding effect upon all parties thereto, to the Lenders’ satisfaction,granting to the Mexican Collateral Agent, for the benefit of the Lenders, the unconditional right to vote all the outstanding sharesof stock of GCS constituting the estate of such trust (which shares shall in no event represent less than 51% (fifty-one percent)of the outstanding shares of stock of GCS), at any general shareholders’ meeting held by GCS to consider, or which may considerand approve, any of the following matters: (i) the commencement by GCS of reorganization (*concurso mercantil*), bankruptcyor other similar proceedings pursuant to the applicable laws of Mexico or any other jurisdiction; (ii) the dissolution or liquidationof GCS; (iii) the payment by GCS of any dividend or similar distribution to its shareholders; (iv) any capital decrease, redemptionof shares or other similar event as with respect to GCS, (v) the disposition by GCS of any assets, including any shares, with avalue equal to or in excess of $5,000,000 (five million Dollars) or its equivalent in any other currency, in a single transactionor a series of concurrent or successive transactions, within any 360 (three hundred sixty) day period, except for any dispositionpermitted pursuant to paragraph (d) of Article Twelve; and (vi) any merger, spin-off or other similar transaction as with respectto GCS; provided, that (1) such agreement shall terminate effective as of the date on which the Borrower shall have repaidto the Lenders an amount equal to or greater than Ps.1,950,000,000 (one billion nine hundred fifty million Pesos), so long as theBorrower or any Co-Obligor shall have not incurred in an event of default under the Loan Documents, (2) the parties acknowledgethat the terms of such agreement shall be subject to public disclosure in accordance with the Securities Market Law (*Ley delMercado de Valores*) and other applicable provisions, (3) the exercise of certain rights under such agreement may be subjectto the exceptions agreed by the parties, and (4) each member of the technical committee of such trust shall have acknowledged (includingby means of the adoption of resolutions by unanimous consent) that he or she is not entitled to vote in respect of the aforementionedmatters, and that the Mexican Collateral Agent shall be entitled to exercise any and all voting rights in respect of any such matter;and

 

(xxii)      neitherthe execution of the Loan Documents nor any other transaction contemplated by the Loan Documents or the Acquisition Documents shallconflict with or be in violation or give rise to the acceleration of any agreement or instrument to which the Borrower, any ofits Subsidiaries, the Co-Obligors, Fasa or any of Fasa’s Subsidiaries is a party.

 

(b)          Conditions Precedentfor the Tranche B Drawdowns. In addition to the conditions set forth in paragraph (a) of this Article Thirteen and subjectto the occurrence of the Effective Date, HSBC México’s obligation to make Tranche B available to the Borrower pursuantto this Agreement, and the Borrower’s right to make any Drawdown as with respect to Tranche B, shall be subject to the satisfactionof the following conditions to HSBC México’s satisfaction:

 

(i)          the InitialDrawdown as with respect to each of Tranche A-1 and Tranche A-2 shall have occurred;

 

(ii)         the Lendersand the Borrower shall have reached an agreement as with respect to the liabilities of Fasa that will be refinanced as part ofthe Subsequent Transaction, and the terms of such refinancing; and

 

(iii)        theconditions agreed with the Lenders as with respect to the Subsequent Transaction pursuant to paragraph (s) of Article Eleven, shallhave been satisfied.

** **

**ARTICLE FOURTEEN. AccelerationEvents.**(A) Each Lender shall have the individual right to (i) accelerate the due date for the repayment of the Loans andany accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all Lenders any and all amountsoutstanding under the Loans, including any accessories thereof, or (ii) discontinue its obligation to disburse any amount otherwiseavailable under the Loans, if any, in which case all Commitments shall cease to be in effect, in each of (i) and (ii) above, uponwritten notice to the Borrower and the Co-Obligors, in any of the following events (each, an “Acceleration Event”),without need for demand, resolution, court action or other notice of any nature whatsoever, which is hereby waived by the Borrowerand the Co-Obligors:

 

(a)         PaymentDefaults. If the Borrower or any Co-Obligor shall have failed to pay when due any principal, interest or other amounts (includingany fees) payable by it pursuant to this Agreement, the Promissory Notes or any of the other Loan Documents, and, in the case ofany interest or fees, such default remains uncured for a period of five (5) Business Days as of the date on which the relevantamount became due.

 

(b)         Representationsand Information. If any of the representations of the Borrower or any Co-Obligor hereunder or under any of the Loan Documents,or in any certificate, financial statement or other document provided or delivered pursuant to this Agreement or any Loan Document,or any information or document provided by the Buyer or any Co-Obligor pursuant to this Agreement or any Loan Document, shall proveincomplete, incorrect, false or misleading in any material respect.

 

 

(c)         SpecificDefaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations under paragraphs (a),(c)(i), (c)(v), (g), (k), (o), (p), (q) or (r) of Article Eleven, or paragraphs (a), (b), (c), (d), (e), (g), (h), (i), (j) or(k) of Article Twelve hereof.

 

(d)         OtherDefaults. If the Borrower or any Co-Obligor shall have incurred in default with its obligations under paragraphs (b)(i), (b)(ii),(b)(iii) or (b)(iv) of Article Eleven, and such default shall have remained uncured for a period of 30 (thirty) days, paragraph(d) thereof, and such default shall have remained uncured for a period of 30 (thirty) days, paragraph (e) thereof, and such defaultshall have remained uncured for a period of 5 (five) days, paragraph (f) thereof, and such default shall have remained uncuredfor a period of 15 (fifteen) days, paragraph (h) thereof, and such default shall have remained uncured for a period of 30 (thirty)days, paragraph (m) thereof, and such default shall have remained uncured for a period of 30 (thirty) days, or paragraph (n) thereof,and such default shall have remained uncured for a period of 15 (fifteen) days, or with any of its other obligations hereunder(other than those referred to in paragraphs (a) or (c) above) or under the other Loan Documents, and such default shall have remaineduncured for a period of 30 (thirty) days, in each such case from the earlier of (i) the date on which any Authorized Officer ofthe Borrower acquired knowledge of such default or (ii) the delivery of a notice of default by any Lender to the Borrower.

 

(e)         Defaultswith Other Indebtedness. (i) If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiariesshall have incurred in default or an event of default under any indenture, agreement, credit or other similar instrument relatingto any Indebtedness incurred by them (other than the Indebtedness incurred pursuant to this Agreement, the Promissory Notes andthe other Loan Documents) in an amount equal to or in excess of $5,000,000 (five million Dollars) or its equivalent in any othercurrency, which default or event of default could give rise to the acceleration of such Indebtedness, or (ii) if the Borrower,any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have failed to pay when due the principalof, interest on, or any other amount payable by it in connection with any Indebtedness incurred by any of them (other than theIndebtedness incurred pursuant to this Agreement, the Promissory Notes and the other Loan Documents).

 

(f)          Defaultswith Authorities. If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shallhave incurred in default with any obligation with any Governmental Authority, including, without limitation, the Ministry of Financeand Public Credit (*Secretaría de Hacienda y Crédito Público*), the Internal Revenue System (*Sistemade Administración Tributaria*), the Mexican Institute of Social Security (*Instituto Mexicano del Seguro Social*),the Institute for the National Workers’ Housing Fund (*Instituto del Fondo Nacional para la Vivienda de los Trabajadores*)or the Retirement Savings System (*Sistema de Ahorro para el Retiro*), in an amount exceeding, individually or in the aggregate,$5,000,000 (five million Dollars) or its equivalent in any other currency, and such default shall have remained uncured for a periodof 15 (fifteen) days.

 

(g)         DefaultsUnder Other Agreements. If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiariesshall have incurred in default or an event of default with any payment obligation to its suppliers, in an amount exceeding, individuallyor in the aggregate, $10,000,000 (ten million Dollars) or its equivalent in any other currency, whether in a single occurrenceor during any given year.

 

(h)         Authorizations.If any governmental or other license, consent, registration, concession, permit or authorization necessary for the Borrower, anyof its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries to conduct its business as conducted as of the datethis Agreement, or for the execution and performance by it or the validity or enforceability of this Agreement, the PromissoryNotes or any of the other Loan Documents, shall have not been obtained or maintained, shall have been revoked or amended, or shallhave ceased to be valid.

 

 

(i)          Insolvency.(i) If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have filed for orentered reorganization (*concurso mercantil*), insolvency, bankruptcy or debtor relief proceedings seeking (A) to be adjudicatedunder reorganization, bankrupt, insolvent, under dissolution or liquidation, or subject to court relief as with respect of itselfor its debts, under any present or future law of any country (whether in Mexico or abroad), or (B) the appointment of a receiver,mediator, intervenor, visitator, custodian, administrator, conservator or other similar officer, in respect of all or a substantialportion of its assets, or shall have made a general assignment for the benefit of its creditors; (ii) if any of the actions orproceedings referred to in (i) above shall have been commenced against the Borrower, any of its Subsidiaries, any Co-Obligor, Fasaor any of Fasa’s Subsidiaries, and such action or proceeding (A) shall have resulted in the issuance of a court relief, reorganization(*concurso mercantil*), insolvency or other similar order, or in the appointment of an officer responsible of performing anyduties associated with such court relief or insolvency, and (B) such action or proceeding shall have remained undismissed or unstayedfor a period of 60 (sixty) days; or (iii) if any action or proceeding seeking the issuance of an order of attachment, executionor other similar process in respect of all or a substantial portion of its assets, shall have resulted in the issuance of any suchorder, and such order shall have remained unrevoked or unstayed for a period of 60 (sixty) days from its date of issue; or (iv)if the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall be generally unable orshall have acknowledged in writing its general inability to pay its debts upon their maturity; or (v) if any decision as with respectto the dissolution or liquidation of the Borrower any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries,shall have been issued.

 

(j)          CourtDecisions. If any court shall have issued against the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of itsSubsidiaries, a final, non-appealable decision requiring it to pay an amount of money in excess, whether individually or in theaggregate, of $10,000,000 (ten million Dollars) or its equivalent in any other currency, and such decision shall have remainedunrevoked or unsatisfied for a period of 60 (sixty) days from its date of issue, except where its obligations thereunder have beenadequately secured or the enforcement of such order has been stayed or is being contested by it through the appropriate recoursesavailable to it under the applicable laws, and where it has created adequate reserves in respect thereof in accordance with theFinancial Reporting Standards.

 

(k)         Validityof this Agreement and the Loan Documents. (i) If the Borrower, any of its Subsidiaries, any Co-Obligor, de Fasa or any of itsSubsidiaries shall have challenged the validity or enforceability of any Loan Document or (ii) if any judicial, arbitration oradministrative proceedings challenging the validity or enforceability of any Loan Document shall have been commenced.

 

(l)          MaterialAdverse Effect. If there shall have occurred any circumstance, event or condition which could have a material and adverse effecton (a) the activities, condition (financial or otherwise), business operations, property or prospects of the Borrower, any of itsSubsidiaries, any Co-Obligor, Fasa or Fasa’s Subsidiaries, whether individually or as a whole, or (b) the validity or enforceabilityof any Loan Document or the rights of any Lender thereunder, or the ability of the Borrower or any of the Co-Obligors to satisfyits obligations hereunder or under the Promissory Notes and the other Loan Documents (each, a “Material Adverse Effect”).

 

(m)        Collateral.If any security interest on the property and rights subject matter of the Collateral Documents shall have ceased to be in fullforce and effect, or to constitute a duly perfected, first priority guaranty in favor of the Mexican Collateral Agent, the ChileanCollateral Agent or the Lenders, as with respect to any other creditor of the Borrower, the Co-Obligors or the parties who providedthe relevant guaranty.

 

(n)         Expropriation.If any Governmental Authority shall have nationalized, seized, assumed the control of or otherwise expropriated all or a substantialportion of the property of or any shares of stock issued or held by the Borrower, any of its Subsidiaries, any Co-Obligor, Fasaor any of Fasa’s Subsidiaries, or shall have taken any action (including any of the above) which prevents the Borrower orany of the Co-Obligors from performing its obligations hereunder or under the Promissory Notes or the other Loan Documents, otherthan thenationalization, seizure, assumption of control or expropriation of any property with a market value of less than10,000,000 (ten million Dollars) or its equivalent in any other currency.

 

(o)         Changein Control. If a Change in Control shall have occurred.

 

(B)         Accelerationby a Majority. The Lenders, by Majority, shall have the right to (i) accelerate the due date for the repayment of the Loansand any accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all the Lenders any andall of the amounts outstanding under the Loans, including any accessories, or (ii) discontinue its obligation to disburse any amountotherwise available under the Loans, if any, in which case all the Commitments shall cease to be in effect, in each of the eventsset forth in (i) and (ii) above, upon written notice to the Borrower and the Co-Obligors, in any of the following AccelerationEvents, without need for demand, resolution, court action or other notice of any nature whatsoever, which is hereby waived by theBorrower and the Co-Obligors:

 

 

(a)         SpecificDefaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations under paragraphs (c)(ii),(i) or (l) of Article Eleven, or paragraph (f) of Article Twelve.

 

(b)         OtherDefaults. If the Borrower or any of the Co-Obligors shall have incurred in default with its obligations under paragraph (j)of Article Eleven, and such default shall have remained uncured for a period of 30 (thirty) days from the earlier of (i) the dateon which any Authorized Officer of the Borrower acquired knowledge of such default or (ii) the delivery of a notice of defaultby any Lender or Co-Obligor to the Borrower.

 

(c)         ExchangeControls. If any Governmental Authority shall have approved, issued or implemented any provision which limits or restricts,in a material adverse manner, the ability to convert Chilean pesos to Pesos (where necessary), or the ability of the Borrower orany Co-Obligor to make payments outside of Mexico or Chile.

 

(C)         Accelerationby a Special Majority. The Lenders, by Special Majority, shall have the right to (i) accelerate the due date for the repaymentof the Loans and any accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all the Lendersany and all of the amounts outstanding under the Loans, including any accessories, or (ii) discontinue its obligation to disburseany amount otherwise available under the Loans, if any, in which case all the Commitments shall cease to be in effect, in eachof the events set forth in (i) and (ii) above, upon written notice to the Borrower and the Co-Obligors, in any of the followingAcceleration Events, without need for demand, resolution, court action or other notice of any nature whatsoever, which is herebywaived by the Borrower and the Co-Obligors:

 

(a)         SpecificDefaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations pursuant to paragraphs(c)(iii), (c)(iv), (s) or (t) of Article Eleven.

 

(b)         Lossof Control of Fasa. If GCS shall have ceased to hold, directly or indirectly, the shares of Fasa acquired by it through ControladoraCasa Saba, S.A. de C.V. in connection with the Acquisition, or shall have lost the Control of Fasa.

** **

**ARTICLE FIFTEEN. Legality;Increased Costs.**

 

(a)          If as a result ofthe amendment of any law, regulation, rule or other provision applicable to any Lender or office thereof responsible for managingand funding the Loans, or of any change in the interpretation of any of the above by any competent court or Governmental Authority,in each case subsequent to the date of execution of this Agreement, it shall become illegal for such Lender to make or maintainin effect the Loans, the Borrower, upon request of such Lender, shall immediately and without being subject to any penalty prepayto such Lender, directly, the outstanding amount of its Loans, together with any and all interest accrued thereby, any other amountpayable in connection therewith, and the amount of any additional costs or expenses incurred by such Lender as a result of suchprepayment.

 

(b)          If as a result ofthe amendment of any law, regulation, rule or other provision applicable to any Lender or office thereof responsible for managingand funding the Loans (including, without limitation, as with respect to any capitalization, reserves or deposit requirement, ordinaryor extraordinary contribution (payable to a Governmental Authority), taxes or other conditions applicable to such Lender, but excludingany provision as with respect to the income taxes or other similar taxes payable by such Lender (or by its successors, participantsor assignees pursuant to Article Sixteen hereof) based on its total income or assets pursuant to the laws, regulations and otherprovisions applicable to such Lender), or of any change in the interpretation of any of the above by any competent court or GovernmentalAuthority, in each case subsequent to the date of execution of this Agreement, the cost for such Lender of making or maintainingin effect the Loans shall have increased, or the amounts received or receivable by such Lender shall have decreased, the Borrower,upon request of such Lender, shall pay thereto, on the last day of the then current Interest Period or the date occurring 10 (ten)Business Days from the Lender’s request, whichever occurs later, any and all such reasonable and properly documented amountsas may be necessary to compensate such Lender for such cost increase or revenue decrease. The Lender’s request shall includea description of the reasons of such increased costs or reduced income, and all relevant calculations; provided, that absent anycalculation error the determination made by such Lender shall be conclusive and binding upon the Borrower.

 

 

(c)          The Lenders herebyagree to make reasonable efforts to avoid incurring in any of the legal violations, cost increases or revenue decreases referredto in this Article Fifteen, including, exclusively and to the extent practicable, by reassigning the administration of the Loansto a different office, but provided that such reassignment does not involve a material cost for the relevant Lender.

** **

**ARTICLE SIXTEEN. Discount;Assignment.**(a) The Lenders shall be authorized to assign, grant participations in or otherwise negotiate all or any portionof the Loans granted by them pursuant to this Agreement or any Promissory Note (or their respective rights under the Loan Documents),including prior to the expiration of this Agreement or the maturity date of any Promissory Note, upon written notice to the Borrower,the other Lenders, the Mexican Collateral Agent and the Chilean Collateral Agent; provided, that (i) any such assignmentor participation is made or granted in respect of at least Ps.10,000,000 (ten million Pesos) and multiples of Ps.5,000,000 (fivemillion Pesos) in excess thereof, and (ii) in the event of any assignment, participation or negotiation prior to the occurrenceof an Acceleration Event (but not thereafter, in which case any such assignment shall be subject to no restriction whatsoever),los Lenders shall only be entitled to assign, grant participations in or negotiate all or any portion of the Loans and any PromissoryNote with (1) Mexican retail or specialty banking institutions, (2) banks organized and authorized to operate as such under thelaws of Chile, (3) Mexican multiple purpose financial entities (*sociedades financieras de objeto múltiple*), (4) Mexicanlimited purpose financial entities (*sociedades financieras de objeto limitado*), (5) Mexican corporations or partnerships,of any nature whatsoever, controlled by any of the entities referred to in (1), (3) and (4) above, and (6) foreign financial institutions,of any nature whatsoever, registered with the Registry of Foreign Banks, Financing Entities, Pension Funds and Investment Funds(*Registro de Bancos, Entidades de Financiamiento, Fondos de Pensiones y Jubilaciones y Fondos de Inversión del Extranjero*)maintained by the Internal Revenue System.

 

(b)          The Borrower andeach Co-Obligor hereby agree to exchange, at the request of the relevant Lender, any Promissory Note issued hereunder, followingany assignment or participation by such Lender pursuant to this Article. Notwithstanding the above, the Borrower and the Co-Obligorsshall not be required to make any such exchange except upon the surrender of the relevant Promissory Note.

 

(c)          No assignment orparticipation pursuant to this Article shall constitute a novation of the Loans made available hereunder. Following any such assignmentor negotiation, the relevant assignee or participant shall be considered a “Lender” for purposes hereof andof the other Loan Documents.

 

(d)          Neither the Borrowernor any Co-Obligor may assign its rights or obligations hereunder or under the Promissory Notes or any of the other Loan Documents,except with the prior written consent of the Lenders, which consent shall not be unreasonably withheld; provided, that noreason to withhold such consent shall be deemed to exist if, following any such assignment, GCS and any direct or indirect Subsidiariesthereof representing more than 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including, subsequentto the Acquisition, Fasa and its Subsidiaries) are the Borrower and Co-Obligors hereunder, and any present or future direct orindirect Subsidiary of GCS, representing 10% (ten percent) or more of GCS’ consolidated assets, sales and EBITDA, is theBorrower or a Co-Obligor hereunder.

** **

**ARTICLE SEVENTEEN. Compensation.**(a) To the extent permitted by the applicable laws, the Borrower hereby irrevocably authorizes and empowers the Lenders, inthe event of its failure to pay when due any amount owed to the Lenders pursuant to this Agreement, the Promissory Notes or theother Loan Documents, to (1) charge to any account maintained with them by the Borrower, including, without limitation, any deposit,demand, term, savings, temporary, permanent, investment or other account, and (2) compensate against any amount owed by the Lendersto the Borrower for any reason whatsoever, an amount not to exceed that which is owed by the Borrower to the Lenders, without needfor demand, notice or requirement of any nature whatsoever.

 

(b)          The relevant Lendershall give the Borrower and the other Lenders, as soon as practicable, notice of any charge or compensation made by it in accordancewith this Article; provided, that the failure to give such notice shall not affect in any manner whatsoever the validityof such charge or compensation. The right of the Lenders under this Article shall be in addition to any other right (includingother compensation rights) available thereto.

 

 

(c)          If any Lender shallhave charged or compensated an amount greater than that to which it is entitled pursuant to this Agreement, the Lenders herebyacknowledge and agree that the Lender who made such charge or compensation shall be required to distribute to the other Lendersa percentage of the relevant proceeds equal to each Lender’s share of the Commitments described in Exhibit 1, unlessa Lender shall have not yet disbursed the amount of a Drawdown, in which case the relevant percentages shall be adjusted accordingly.

** **

**ARTICLE EIGHTEEN. CreditReports.**(a) In order to comply with the provisions contained in the Law for the Regulation of Credit Bureaus (*Ley paraRegular las Sociedades de Información Crediticia*), by their execution of this Agreement the Borrower and the Co-Obligorsauthorize the Lenders to submit from time to time, to any credit bureau, inquiries with respect to the credit scores of the Borrower,its Subsidiaries, the Co-Obligors, Fasa and Fasa’s Subsidiaries, and to provide to any credit bureau any information in connectionwith any such Person.

 

(b)          In addition to thepersons and authorities referred to in Articles 93 and 117 de la Law of Credit Institutions, the Borrower and the Co-Obligors herebyauthorize the Lenders to disclose any information pertaining to the transactions contemplated by this Agreement and the other LoanDocuments, to (i) any other financial institution that is a member of the same financial group as the relevant Lender, and to suchLender’s direct or indirect parent company, (ii) the regulatory authorities responsible for overseeing such Lender and itsparent company, (iii) the Central Bank of Mexico, (iv) any other person with whom the Lender may enter into any contract, particularlypursuant to Article Sixteen hereof, and (v) such other persons as the parties may agree.

** **

**ARTICLE NINETEEN. ExpeditedExecution.**This Agreement, together with the account statement certified by relevant Lender’s accountants, qualifiesfor expedited execution pursuant to Article 68 of the Law of Credit Institutions.

** **

**ARTICLE TWENTY. Agency;the Mexican Collateral Agent and the Chilean Collateral Agent.**

 

(A)         The Mexican Collateral Agent.

 

(a)          Agency Agreement.Pursuant to Chapter One of Title Three of the Commerce Code (*Código de Comercio*), the Lenders hereby grant to HSBCMéxico, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Trust Division, and the latter herebyaccepts, a mandate to serve as Mexican Collateral Agent on behalf of the Lenders, and to carry out, in such capacity, through itslegal representatives, any and all acts relating to the Collateral Documents in accordance with the terms set forth herein andin the Collateral Documents, in Mexico and any other jurisdiction.

 

(b)          Appointment ofthe Mexican Collateral Agent. Each Lender party to this Agreement upon its execution and, in the event of any assignment hereof,the assignor and any assignee, hereby appoint HSBC México, S.A., Institución de Banca Múltiple, Grupo FinancieroHSBC, Trust Division, as “Mexican Collateral Agent” and authorize it to act as their agent, in their name andon their behalf, exclusively in accordance with the terms of this Agreement and the other Collateral Documents or, absent any specificprovision in this Agreement, in accordance with the express, written instructions of the Lenders.

 

(B)         The Chilean Collateral Agent.

 

(a)          Appointment ofthe Chilean Collateral Agent. The Lenders party to this Agreement upon its execution and, in the event of any assignment hereof,the assignor and any assignee, hereby grant to HSBC Bank (Chile) a commercial mandate pursuant to Article 18 of Chile’s LawNo. 20.190, enacted June 5, 2007, the provisions as with respect to such mandates contained in the Chile’s Commerce Code(*Código de Comercio*) and Civil Code (*Código Civil*), and the provisions of this Agreement, in orderfor it to act as “Chilean Collateral Agent,” represent them in connection with the creation, amendment or terminationof the Chilean Pledge Agreements, exercise their rights under the Chilean Pledge Agreements and, absent any specific provisionin this Agreement, proceed in accordance with the express, written instructions of the Lenders. Notwithstanding the above, theChilean Collateral Agent shall not be precluded from being a Lender hereunder for any reason whatsoever, and shall be entitledto act as any other Lender.

 

 

(b)          Joinder.Any Person who may subsequently become a Lender hereunder as a result of any assignment (or other transfer) made specifically inaccordance with the provisions of this Agreement, shall become a secured party under the Chilean Pledge Agreements upon deliveryof written notice thereof (a “Joinder”) to the Chilean Collateral Agent and its execution by the Chilean CollateralAgent, effective as of the date of execution of such Joinder by the Chilean Collateral Agent; provided, in any event, that:

 

(i)          any Joinderexecuted in Chile shall be contained in a public or private instrument, subject, in the latter event, to the authorization of therelevant signatures by a notary public for the relevant jurisdiction;

 

(ii)         any Joinderexecuted outside of Chile shall be subject to the confirmation of the relevant signatures;

 

(iii)        anyJoinder so executed, authorized and/or confirmed, as the case may be, shall be notarized; and a Chilean notary public shall makenote thereof on the margin of the public instrument containing this Agreement. The Chilean Collateral Agent shall retain in itsfiles a copy of any such Joinder, together with evidence of such notation; and

 

(iv)        thelack of the marginal note referred to in paragraph (b)(iii) above shall not affect the validity of the Joinder not shall it preventit from becoming fully effective as of its date of execution by the Chilean Collateral Agent.

 

(c)          Acceptance bythe Chilean Collateral Agent. The Chilean Collateral Agent hereby accepts its appointment and mandate by and from the Lendersparty to this Agreement, subject to the terms and conditions set forth herein.

 

(d)          Obligations ofthe Chilean Collateral Agent. Without prejudice of the obligations of the Chilean Collateral Agent under paragraph (C) of thisArticle Twenty, the Chilean Collateral Agent shall have broad and express powers and authority, including to enter into any contractwith itself, to do the following in the name and on behalf of the Lenders:

 

(i)          receiveand keep custody of any stock certificates, partnership interests, contracts or other documents required to be delivered or receivedby the Lenders for purposes of the creation and full formalization of the Chilean Pledge Agreements, and keep custody of and executeor endorse any promissory notes. Without prejudice of the above, the Chilean Collateral Agent shall not be required to serve ascustodian of any guaranty document, debt instrument or other document relating to any property intended to serve as collateral,unless otherwise required by such guaranty in accordance with the applicable laws. In any event, the Chilean Collateral Agent shallbe entitled to entrust the custody of any such document to a bank or any third party designated by it to such effect;

 

(ii)         enterinto and execute any and all such agreements, carry out any and all such acts, issue any and all such public or private documents,obtain any and all such registrations and make any and all such publications as may be necessary and/or advisable for the creationand full and lawful formalization of all the Chilean Pledge Agreements or other guaranties granted pursuant to the Loan Documents,including the authority to request from a notary public the issuance of any and all such notices, registrations, publications and/ornotations as may be advisable to such effect in accordance with the applicable laws, and to request or delegate the authority todemand any and all such recordations, preventive registrations and publications as may be necessary or advisable;

 

(iii)        carryout any and all such judicial or extrajudicial acts and comply with any and all such procedures as may be necessary or advisablefor purposes of the execution of the Chilean Pledge Agreements. The Chilean Collateral Agent shall execute the Chilean Pledge Agreementsin accordance with the provisions contained in the documents relating to the creation of such collateral, and with the Lenders’instructions. Absent such instructions, the Chilean Collateral Agent shall be entitled to proceed as it may deem advisable giventhe nature of its duties, giving primary regard to the interests of the Lenders but without being required to observe, as a result,any specific conduct;

 

 

(iv)        representthe Lenders, to the extent necessary or advisable, in any and all trials and proceedings relating to the Chilean Pledge Agreements,held before any regular, special, arbitration, administrative or other tribunal, in which the Lenders have or could have an interest,acting therein as plaintiff, defendant or third party until the enforcement in full of the relevant decision, with full authorityto file any ordinary, executive, special, non-litigious, or other action of any nature whatsoever. For purposes of the exerciseof this judicial power in connection with the execution of the Chilean Pledge Agreements, the Chilean Collateral Agent shall haveall the ordinary and extraordinary powers referred to in both paragraphs of Article Seven of Chile’s Code of Civil Procedures(*Código de Procedimiento Civil*) to represent the Lenders, each of which is deemed incorporated herein by reference,including, without limitation, the power to file complaints and other litigious and non-litigious actions, accept counterpartycomplaints, withdraw any motion, waive any recourse or term limit, submit to depositions, submit to arbitration and appoint arbitrators,enter into settlements, approve any agreement and receive payments; it being expressly understood that the authority to settleshall include the power to enter into off-court settlements, receive payments and appoint sponsoring attorneys and attorneys-in-factvested with all the powers set forth herein. The Chilean Collateral Agent shall be entitled to delegate and resume its powers,in whole or in part, as many times as it may deem necessary or advisable;

 

(v)         refrainfrom taking or refuse to take any action in connection with this Agreement if (1) in the Chilean Collateral Agent’s discretionsuch action would be in violation of the applicable law or the terms hereof, or (2) the Chilean Collateral Agent does not havethe cooperation of the Lenders, except to the extent that such cooperation is not required pursuant to this Agreement. The ChileanCollateral Agent shall have no liability as a result of any action taken or omitted by it in connection with this Agreement basedon the instructions of the Lenders, and any such act or omission shall have binding effects solely upon the Lenders.

 

(vi)        the ChileanCollateral Agent shall refrain from exercising any right or recourse, or from entering into any agreement intended to amend, modify,supplement or waive any provision of this Agreement, unless otherwise instructed by the Lenders pursuant to this Agreement andthe other Loan Documents;

 

(vii)       eachLender, the Borrower and/or each Co-Obligor shall provide to the Chilean Collateral Agent any and all such information as the ChileanCollateral Agent may reasonably deem necessary or advisable and request from them in writing, so as to perform its duties in accordancewith the law.

 

(e)          Liability.

 

(i)          The dutiesof the Chilean Collateral Agent shall be limited to those expressly set forth in this Agreement and the Chilean Collateral Agentshall not be attributed any implied obligation hereunder.

 

(ii)         The ChileanCollateral Agent shall not be liable (1) for any fault, error or omission in the creation, formalization or protection of the ChileanPledge Agreements, (2) as a result of any act or omission in connection with the Chilean Pledge Agreements, not attributable toit, and (3) to the Lenders, in any manner whatsoever, for any representation made or information provided by the Borrower, theCo-Obligors and/or any other party or its representatives, contained in any certificate, report, communication, representationor other notice relied upon or received by the Chilean Collateral Agent pursuant to or in connection with any of the Loan Documents,other than as a result of the Chilean Collateral Agent’s gross fault, willful misconduct or bad faith.

 

(iii)        Neitherthe Chilean Collateral Agent nor any Lender shall be liable to the Borrower or the Co-Obligors for the execution or lack of executionof, or the maximization of the execution proceedings applicable to, the Chilean Pledge Agreements.

 

(iv)        In anyevent, the Chilean Collateral Agent shall be required to render a report on its performance upon expiration of its commission.

 

(C)          Common Provisions.

 

(a)          Liability ofthe Mexican Collateral Agent and the Chilean Collateral Agent.

 

(i)          For purposesof the transactions contemplated by this Agreement and the Collateral Documents, the Mexican Collateral Agent and the Chilean CollateralAgent shall at all times act solely and exclusively in accordance with the instructions of the Lenders. The Mexican CollateralAgent or the Chilean Collateral Agent shall give the Lenders immediate notice of the receipt of any notice, complaint or informationregarding the agency or mandate incorporated into this Agreement.

 

 

(ii)         The MexicanCollateral Agent or the Chilean Collateral Agent, as the case may be, shall give the Lenders, immediately upon acquiring knowledgethereof, notice of any matter demanding urgent action or the occurrence of any event not contemplated by the Collateral Documentsto which the Mexican Agent is a party and where its failure to take immediate action would be clearly detrimental to it, whereuponthe Mexican Collateral Agent shall be entitled to proceed as provided by the applicable laws.

 

(iii)        TheMexican Collateral Agent and the Chilean Collateral Agent shall not be liable for any act carried out by them in accordance withthis Agreement, the other Collateral Documents or the instructions of the Lenders. The Mexican Collateral Agent and the ChileanCollateral Agent shall not be responsible for overseeing the Borrower’s performance, or for verifying, analyzing or reviewingthe terms of the Loans or any communication received from the Buyer or any third party in connection with this Agreement.

 

(iv)        Neitherthe Mexican Collateral Agent nor the Chilean Collateral Agent makes any representation whatsoever as with respect to the validity,value or legitimacy of the Loans, nor shall it be liable for the contents, legality, validity, effectiveness or enforceabilityof any document issued by any authority or any party to this Agreement, including the Borrower or the Co-Obligors, as a means forthe resolution of any dispute; and each of the Mexican Collateral Agent and the Chilean Collateral Agent shall be entitled to actbased solely upon the contents of any such document, without any liability.

 

(v)         Neitherthe Mexican Collateral Agent nor the Chilean Collateral Agent shall be required to investigate or ascertain whether a default oran Acceleration Event has occurred. In addition, neither the Mexican Collateral Agent nor the Chilean Collateral Agent shall beattributed direct or indirect knowledge of any potential event of default or Acceleration Event hereunder or under the other LoanDocuments, unless the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, shall have received noticethereof from the Borrower, the Co-Obligors or any of the Lenders. In the event of receipt of any such notice, the Mexican CollateralAgent or the Chilean Collateral Agent, as the case may be, shall immediately forward such notice to the Lenders and proceed inaccordance with their instructions.

 

(vi)        Neitherthe Mexican Collateral Agent nor the Chilean Collateral Agent shall be liable for (1) the rights or title of any Person to therelevant item of property or the sufficiency of any collateral, (2) the seniority, ranking or formalization of any guaranty, or(3) the existence of any other right which may affect any item of property pledged or assigned in trust hereunder.

 

(b)         Indemnification.The Borrower, the Co-Obligors and the Lenders, by reason of their respective roles as such, hereby agree to indemnify the Lenders(in proportion to the Loans made available by them), the Mexican Collateral Agent, the Chilean Collateral Agent and their respectivetrust officers, employees, officers, representatives, attorneys and agents against, and to hold them free and harmless from, anyloss, liability, claim, damage, lost profits or expenses suffered or incurred by the Mexican Collateral Agent or the Chilean CollateralAgent as a result of any act or omission hereunder or under the other Loan Documents, or in connection with any claim, proceeding,litigation, complaint, action or decision (including any threatened proceeding or action) filed, commenced, issued or imposed byany person or competent authority in Mexico and/or abroad, against or upon the Mexican Collateral Agent, the Chilean CollateralAgent and/or their respective trust officers, employees, officers, attorneys and agents, other than as a result of the gross negligence,bad faith or willful misconduct of the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be. Neither theMexican Collateral Agent nor the Chilean Collateral Agent shall be required to incur in any expense using its own funds, or toincur in any financial liability other than those assumed by it in its capacity as agent or representative in compliance with theprovisions contained in this Agreement and the Collateral Documents. The obligations of the Borrower and the Co-Obligors underthis paragraph (C)(b) of Article Twenty shall survive the termination of this Agreement.

 

(c)         Fees and Expenses.The Borrower hereby agrees to pay any and all of the fees and reasonable, documented expenses incurred by the Mexican CollateralAgent or the Chilean Collateral Agent pursuant to Exhibit O hereto.

 

(d)         Resignation.The Mexican Collateral Agent and the Chilean Collateral Agent may resign their appointments upon not less than 60 (sixty) BusinessDays’ written notice to all the Lenders. In such event, the Lenders shall appoint, by Majority, a new Mexican CollateralAgent. The Mexican Collateral Agent and the Chilean Collateral Agent shall not be released from their duties until the substituteagent shall have assumed its duties.

 

 

(e)          Tax Obligations.The parties expressly agree that any and all taxes, contributions, fees or charges of any nature whatsoever, arising in connectionwith the performance of the Mexican Collateral Agent or the Chilean Collateral Agent under the Collateral Documents to which itis a party, shall be the sole and exclusive responsibility of the Lenders and the Borrower, as applicable in accordance with thelaw and such Collateral Documents; provided, that at no time shall the Mexican Collateral Agent or the Chilean CollateralAgent be liable for the calculation, withholding or payment of any amount, contribution or fee of a tax nature and, accordingly,the Lenders and the Borrower hereby expressly release the Mexican Collateral Agent and the Chilean Collateral Agent from any liabilitytherefor.

 

(f)          InstructionsFollowing the Occurrence of an Acceleration Event. The Lenders hereby agree that, except as otherwise determined by all Lenders,in the event of occurrence of an Acceleration Event hereunder, any and all actions commenced against the Borrower or the Co-Obligorsas a result of their default with their obligations under any of the Loan Documents shall be brought, whether jointly or individually,by a Majority pursuant to articles Fourteen and Twenty-Six hereof, and the Lenders, either jointly or individually, shall be entitledto instruct the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, to sell the collateral provided pursuantto the Collateral Documents; provided, that (i) no Lender shall be liable for any action commenced individually by any other Lenderand (ii) the proceeds of the sale of any collateral provided pursuant to the Collateral Documents shall inure to the benefit ofall Lenders in accordance with Article Nine.

 

(g)         InstructionsGenerally. The Lenders hereby agree that all instructions, notices and other communications required or permitted to be givenhereunder and under the Collateral Documents shall be in writing and shall become effective upon their receipt by the Lenders,the Borrower, the Co-Obligors, the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, at the addressset forth in Article Twenty-One hereof, and in the Collateral Documents. The original of any such instruction may be deliveredby certified mail, return receipt requested, or transmitted via facsimile or other means of communication (including e-mail, inPDF Acrobat format, duly executed and signed), subject to the satisfaction of the provisions contained in this Article. The Lenders,aware of the risks associated with the delivery of instructions by electronic means, including errors, lack of safety and confidentiality,and the potential for fraud, have agreed with the Mexican Collateral Agent and the Chilean Collateral Agent that any and all instructionsrelating to this Agreement shall be delivered in the manner set forth in the preceding paragraph. Accordingly, the Lenders herebyauthorize the Mexican Collateral Agent and the Chilean Collateral Agent to abide by any instructions received by them through suchmeans, and hereby release them from any and all liability in connection with any such transmission and agree to indemnify themin accordance with paragraph (C) of this Article Twenty. The Mexican Collateral Agent shall not be required to verify the authenticityof any instruction or notice, or the identity of the person issuing or confirming it, so long as it is delivered by a duly authorizedofficer. Accordingly, the Lenders shall be bound by any instruction or notice sent on their behalf and accepted by the MexicanCollateral Agent or the Chilean Collateral Agent.

 

(h)         Effective Term.Unless revoked by the Lenders, the agency and authority hereby established and granted shall remain in effect until such time asall the payment obligations that gave rise to the execution of the Collateral Documents, shall have been performed in full to theLenders’ satisfaction.

 

(i)          Conflicts ofInterest. The parties hereto have accepted and agreed that HSBC México and the Mexican Collateral Agent shall be oneand the same entity (although its banking and Loan division and its trust division are not directly dependent upon or subordinatedto one another) and, accordingly, the parties have taken all such measures as they have deemed necessary or advisable to addressany potential conflict of interests, which measures have been or shall be reproduced in this Article and in the Collateral Documentsto their fullest satisfaction. Accordingly, each party to this Agreement and, in particular, the Borrower, hereby agrees as follows:

 

(i)          it understandsand agrees with the content and legal consequences of this paragraph (C)(i);

 

(ii)         notwithstandingthat one and the same entity shall serve as principal and agent for purposes of this Agreement and the Collateral Documents, theparties hereby recognize and acknowledge the separate nature of its duties as Lender and Mexican Collateral Agent, and hereby expresslyauthorize HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, to execute the transactionssubject matter of this Agreement (including the Collateral Documents), through its authorized officers and trust officers, respectively;and

 

 

(iii)        pursuantto this Article, each and all of the obligations of the Mexican Collateral Agent shall be performed solely and exclusively by itstrust division and no such obligation shall terminate by reason of the above.

 

Lastly, if but only ifa competent authority were to determine that the execution of this Agreement by different members of a single financial group constitutesa potential conflict of interests, the parties shall replace the agent in accordance with the terms and conditions set forth herein.

 

(j)          Acknowledgment.The parties hereby acknowledge and agree that the Mexican Collateral Agent has clearly and unequivocally explained to them themeaning, scope and legal consequences of Article 106(XIX) of the Law of Credit Institutions and Section 5.5 of Official Communication1/2005, issued by the Central Bank of Mexico, which are deemed incorporated herein by reference.

 

(k)          Identification.Based upon the preceding paragraphs of this Article, the Borrower, the Lenders, the Mexican Collateral Agent and the Chilean CollateralAgent hereby agree to assign identification number C/301515 to the agency agreement incorporated into this Agreement.

** **

**ARTICLE TWENTY-ONE.     Notices.**(a) The parties hereby designate the following addresses for purposes of any notices hereunder:

 

The Borrower and the Co-Obligors:

Paseo de la Reforma 215, Piso 4

Col. Lomas de Chapultepec

11000 Mexico, D.F.

Att: Alejandro Sadurni

Tel: (55) 5284-6669

E-mail: asadurni@casasaba.com

 

The Lenders:

 

HSBC México:

 

HSBC México, S.A., Instituciónde Banca Múltiple,

Grupo FinancieroHSBC

Paseo de la Reforma 347

Col. Cuauhtémoc

06500 Mexico, D.F.

Att: Oswaldo Suárez Floresand/or

Antonio GarciaBada González

Tel: (52)(55) 5721-6366

E-mail:   oswaldo.suarez@hsbc.com.mx

antonio.garciabada@hsbc.com.mx

 

Banorte:

 

Banco Mercantil del Norte, S.A., Instituciónde Banca

Múltiple,Grupo Financiero Banorte

 

Prolongación Paseo de la Reforma1230

Col. Cruz Manca

05300 Mexico, D.F.

Tel.: (55) 5268-1649

 

 

 

The Mexican Collateral Agent:

 

HSBC México, S.A., Instituciónde Banca Múltiple,

Grupo FinancieroHSBC, Trust Division

Paseo de la Reforma 355, Anexo B, Piso8

Col. Cuauhtémoc

06500 Mexico, D.F.

Att: División Fiduciaria

Tel.: (52)(55) 5721-2738

E-mail: miguel.navarrob@hsbc.com.mx

 

The Chilean Collateral Agent:

 

HSBC Bank (Chile)

Av. Isidora Goyenechea 2800, Piso 23

Las Condes

Santiago, Chile

 

(b)          All notices hereundershall be in writing and shall be delivered via courier, facsimile, e-mail or in person, and shall become effective upon their receiptby their addressee or, if transmitted by facsimile or e-mail, upon receipt of confirmation of such transmission.

 

(c)          Absent written noticeof a change of address, all judicial and extrajudicial notices or communications served or delivered at the above addresses, shallbe fully effective.

** **

**ARTICLE TWENTY-TWO. ApplicableLaw.** This Agreement shall be governed by and construed in accordance with the laws of Mexico.

** **

**ARTICLE TWENTY-THREE.Jurisdiction.**For purposes of the interpretation and enforcement of this Agreement, the parties hereby submit to thejurisdiction of the competent courts in the Federal District of Mexico, waiving any other jurisdiction to which they may be nowor hereafter entitled.

** **

**ARTICLE TWENTY-FOUR. Costsand Expenses.**The Borrower shall reimburse to the Lenders any and all reasonable and properly documented costs and expenses,including attorney’s fees and expenses, incurred by the Lenders in connection with the preparation and execution of thisAgreement, any Promissory Note or any Loan Document. In addition, the Borrower shall reimburse to the Lenders, within 30 (thirty)days from the receipt of demand therefor, any and all reasonable and properly documented attorney’s fees and expenses incurredin connection with any amendment to this Agreement, any Promissory Note or any of the other Loan Documents, and any reasonableand justified costs and expenses, if any, incurred in connection with the performance or enforcement of any Loan Document.

** **

**ARTICLE TWENTY-FIVE. Indemnity.**The Borrower and the Co-Obligors hereby agree to indemnify the Lenders and their respective directors, officers, employees,advisors and agents, against, and to hold them free and harmless from, any loss, liability, claim, damage or expense incurred bythem as a result of any litigation or proceeding (including any threatened litigation or proceeding) relating to this Agreementor any of the Loan Documents or the Acquisition Documents, including, without limitation, any attorneys’ fees and expensesincurred in connection with such litigation or proceeding, including the preparation or analysis thereof (but excluding any loss,liability, claim, damage or expense incurred as a result of the gross negligence, bad faith or willful misconduct of the Personotherwise entitled to such indemnification, as determined by a final decision issued by a competent court). The obligations ofthe Borrower and the Co-Obligors under this Article Twenty-Five shall survive the termination of this Agreement.

** **

** **

**ARTICLE TWENTY-SIX. CollectiveDecisions; Amendment and Waiver.**(a)****Any decision required to be made by the Lenders as a group pursuant to thisAgreement, shall be made (i) if prior to the Initial Drawdown, by the Lenders whose Commitments represent, in the aggregate, atleast 78% (seventy-eight percent) of all Commitments, (ii) if subsequent to the Initial Drawdown, by the Lenders representing atleast 78% (seventy-eight percent) of the aggregate outstanding amount of the Loans as of the relevant date, except (1) inthe event set forth in paragraph (c) of this Article Twenty-Six, in which case the decision shall be made by the Lenders representingthe aggregate amount of all Loans or (2) as otherwise expressly provided in this Agreement (and for purposes of this Agreement,the applicable percentage or aggregate amount, as the case may be, shall constitute a “Majority”), and (iii)if subsequent to the Initial Drawdown, in the events expressly set forth in this Agreement, by the Lenders representing at least85% (eighty-five percent) of the aggregate outstanding amount of all Loans as of the relevant date (a “Special Majority”).

 

(b)          Any amendment tothis Agreement, the Promissory Notes or the other Loan Documents shall only be valid if evidenced by a written instrument executedby the Lenders representing the percentages set forth in this Article Twenty-Six, the Borrower and the Co-Obligors. The waiverof any right hereunder shall only be valid if evidenced by a written instrument executed by the requisite number of Lenders pursuantto this Article Twenty-Six, the Borrower and the Co-Obligors. A Lender’s failure to exercise or delay in the exercise ofany of its rights hereunder or under any Promissory Note or Loan Document shall not be construed as a waiver by such Lender ofany of its rights hereunder or thereunder.

 

(c)          Any amendment tothis Agreement, the Promissory Notes or the other Loan Documents shall be subject to the consent of Lenders representing and holdingat least a Majority of the aggregate principal amount outstanding under all Loans; provided, that the amendment of any ofthe following terms shall be subject to the consent of Lenders representing 100% (one hundred percent) of the aggregate principalamount outstanding under all Loans:

 

(i)          the amendmentof the aggregate amount of the Loans;

 

(ii)         the amendmentof the Interest Payment Dates or the Maturity Date;

 

(iii)        thereduction of the outstanding amount of all Loans, or the reduction of any other amount due and payable by the Borrower and theCo-Obligors pursuant to this Agreement or the Promissory Notes (including the interest rate applicable thereto);

 

(iv)        the termsand conditions for the calculation of the interest payable on the outstanding principal amount of the Loans;

 

(v)         the releaseor cancellation of, or any material amendment to, the Collateral Documents; and

 

(vi)        the amendmentof this Article Twenty-Six.

 

(d)          Any amendment tothis Agreement, the Promissory Notes or any other Loan Document, as with respect to the obligations, liability or powers and authorityof the Mexican Collateral Agent or the Chilean Collateral Agent, shall be subject to the prior written consent of the Mexican CollateralAgent or the Chilean Collateral Agent, as the case may be.

 

(e)          The Lenders shallbe entitled to such fees in connection with any waiver in respect of or amendment to any of the Loan Documents requested by theBorrower, as the Lenders may determine and agree with the Borrower prior to the granting of such waiver or the execution of suchamendment.

** **

**ARTICLE TWENTY-SEVEN.Counterparts.**This Agreement may be executed in such number of counterparts as the parties may determine by mutual consent,all of which shall constitute one and the same Agreement.

** **

**ARTICLE TWENTY-EIGHT.Headings.**The parties agree that the headings of the articles hereof are for reference purposes only and shall not affectthe meaning or interpretation of this Agreement.

** **

**ARTICLE TWENTY-NINE. Exhibits.**The parties agree that the exhibits hereto constitute an integral part hereof and are deemed incorporated herein by reference,and this Agreement shall be interpreted taking into consideration the contents of each such exhibit.

** **

**ARTICLE THIRTY. SpecialWaiver.**To the extent applicable, the parties hereby irrevocably waive their right to file action to rebalance their obligationshereunder and under the Loan Documents pursuant to articles 1796 and 1796-Bis of the Civil Code for the Federal District and thecorresponding articles of the civil codes for all states of the Mexican Republic.

 

 

[*The next page is the signatures page*.]

 

 

This Credit Agreement isexecuted in Mexico City, Federal District, this 30th day of August, 2010.