Document:

Exhibit 10.31

 

MD BEAUTY, INC.

 

THIRD AMENDMENT TO TERM LOAN
AGREEMENT

This THIRD AMENDMENT TO TERM
LOAN AGREEMENT (this “Amendment”) is dated as of March 17, 2006 and entered into by and among
BARE ESCENTUALS, INC., a Delaware
corporation, formerly known as STB Beauty, Inc. (“Holdings”),
MD BEAUTY, INC., a Delaware corporation
(the “Company”), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a “Lender” and collectively as “Lenders”),
and BNP PARIBAS (“BNP Paribas”), as
administrative agent for Lenders (in such capacity, “Administrative
Agent”). Reference is made to that certain Term Loan Agreement dated
as of February 18, 2005, as amended by the First Amendment to Term Loan
Agreement dated as of July 21, 2005, and as amended by the Second Amendment to
Term Loan Agreement dated as of October 7, 2005, by and among Holdings,
Company, the Lenders referenced therein and BNP Paribas, as Administrative
Agent (the “Credit Agreement”). Capitalized
terms used herein without definition shall have the same meanings as set forth
in the Credit Agreement, as amended hereby.

 

RECITALS

WHEREAS, Company and Lenders desire to amend the Credit Agreement to postpone
the date on which Company has to comply with hedging requirements under
subsection 6.10 of the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto agree as follows:

 

SECTION 1.           AMENDMENTS TO CREDIT AGREEMENT

Subsection 6.10 of the Credit Agreement is hereby
amended by deleting such subsection in its entirety and substituting the
following therefor:

 

6.10   Interest Rate Protection.

At all times after September 30, 2006, Company shall
maintain in effect for three years after the Closing Date one or more Interest
Rate Agreements in an aggregate notional principal amount of not less than 40%
of the aggregate principal amount of the Term Loans and the First Lien Term
Loans outstanding, each such Interest Rate Agreement to be in form and
substance satisfactory to Administrative Agent; provided that Company shall not
be obligated to maintain in effect any such Interest Rate Agreements at any
time that the Applicable Consolidated Leverage Ratio is less than or equal to
2.00:1:00. For purposes of clarification, while the above described Interest
Rate Agreements are required to be maintained during the above described
periods, each individual Interest Rate Agreement is not required to be of such
duration.”.

 

 

 

1

 

 

 

SECTION 2.           REPRESENTATIONS AND WARRANTIES

In order to induce Lenders and Administrative Agent
to enter into this Amendment, Company and Holdings each represents and warrants
to each Lender and Administrative Agent that the following statements are true,
correct and complete:

(i)          each of Company and
Holdings has all requisite corporate power and authority to enter into
this Amendment and to carry out the transactions contemplated by, and perform
its obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”);

(ii)   the execution and delivery of this Amendment
and the performance of the Amended Agreement have been duly authorized by all
necessary corporate action on the part of Company and Holdings;

(iii)  the execution and delivery by Company and
Holdings of this Amendment and the performance by Company and Holdings of the
Amended Agreement do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Holdings, Company or any of
its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Holdings, Company or any of its Subsidiaries or any order, judgment or decree
of any court or other agency of government binding on Holdings, Company or any
of its Subsidiaries, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of Holdings, Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Holdings, Company or any of its Subsidiaries (other than Liens
created under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders and other Liens permitted under the Amended Agreement), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Holdings, Company or any of its
Subsidiaries, except for with respect to the foregoing clauses (i) , (ii) and
(iv) above, such violations, conflicts, breaches, defaults or failures to
obtain approvals or consents which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;

(iv)  the execution and delivery by Company of this
Amendment and the performance by Holdings and Company of the Amended Agreement
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body, except for registrations, consents,
approvals, notices and other actions that have been obtained, given or taken,
or the failure of which to obtain, give or take have not and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;

(v)   this Amendment and the Amended Agreement have
been duly executed and delivered by Company and Holdings and are the legally
valid and binding obligations of Company and Holdings, enforceable against Company
and Holdings in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability; and

 

 

 

 

2

 

(vi)  no event has occurred and is continuing or will result from the consummation of the transactions contemplated by
this Amendment that would constitute an Event of Default or a Potential Event
of Default.

 

SECTION 3.           CONDITIONS TO EFFECTIVENESS

Except as set forth below, this Amendment shall
become effective only upon the satisfaction of the following conditions
precedent (the “Closing Conditions”):

A.            Amendment of First Lien Credit Agreement. Administrative Agent shall have received a written amendment of the
First Lien Credit Agreement executed by Holdings, Company, Requisite Lenders
under the First Lien Credit Agreement and BNP Paribas, as administrative agent,
in form and substance satisfactory to Administrative Agent, which amendment
shall be in form substantially similar to this Amendment.

 

B.            Fees and Expenses. Administrative Agent shall have received all of

Administrative
Agent’s reasonable costs and expenses as described in subsection 10.2 of the
Credit Agreement incurred by Administrative Agent (including, without
limitation, the reasonable fees and disbursements of O’Melveny & Myers LLP)
in connection with this Amendment and the documents and transactions related
hereto, and any fees separately agreed upon between Company and Administrative
Agent.

C.            Notification of Execution. Receipt by Administrative Agent and Company of written or telephonic
notice that Company, Holdings and the Requisite Lenders have executed this
Amendment and authorized its delivery.

 

SECTION 4.           MISCELLANEOUS

 

A.            Reference
to and Effect on the Credit Agreement and the Other Loan Documents.

(i)                       On and after the effective
date of this Amendment, each reference in the Credit Agreement to “this
Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring
to the Credit Agreement and each reference in the other Loan Documents to the “Credit
Agreement”, “thereunder”, “thereof” or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement as
amended hereby.

(ii)                      Except as specifically
amended by this Amendment, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed.

(iii)                     The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein,
constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of Administrative Agent or any Lender under the Credit Agreement
or any of the other Loan Documents.

 

 

 

 

3

 

 

 

 

B.               Headings. Section and subsection
headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this Amendment
for any other purpose or be given any substantive effect.

C.               Applicable Law.                   THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

D.               Counterparts. This
Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.

 

[Remainder of this page
intentionally left blank]

 

 

 

 

 

 

 

4

 

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

 

	
  COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MD BEAUTY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie A Blodgett

  
	
   

  	
  Name:

  	
  Leslie A Blodgett

  
	
   

  	
  Title:

  	
  President, Chief Executive Officer and Secretary

  
	
   

  	
   

  	
   

  

 

	
  HOLDINGS:

  	
   

  	
   

  
	
   

  	
  BARE ESCENTUALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie A Blodgett

  
	
   

  	
  Name:

  	
  Leslie A Blodgett

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  

 

 

S-1

 

 

 

	
  LENDERS:

  	
   

  	
   

  
	
   

  	
  BNP PARIBAS,

  individually and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cecile Scherer

  
	
   

  	
  Name:

  	
  Cecile Scherer

  
	
   

  	
  Title:

  	
  Director

  Merchant Banking Group

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PJ de Filippis

  
	
   

  	
  Name:

  	
  PJ de Filippis

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  

 

 

 

S-2

 

	
   

  	
  CIT LENDING SERVICES
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael L. LaManos

  
	
   

  	
  Name:

  	
  Michael L. LaManos

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

S-3

 

	
   

  	
  FOXE BASIN CLO 2003, LTD

  
	
   

  	
  By:  

  	
  GSO Capital Partners LP as
  Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lee M. Shaiman

  
	
   

  	
  Name:

  	
  Lee M. Shaiman

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 

 

S-4

 

 

	
   

  	
  HUDSON STRAITS CLO 2004, LTD.

  
	
   

  	
  By:  

  	
  GSO Capital Partners LP as
  Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lee M. Shaiman

  
	
   

  	
  Name:

  	
  Lee M. Shaiman

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 

 

S-5

 

 

	
   

  	
  VENTURE CDO 2002, LIMITED

  
	
   

  	
  By:

  	
  its investment advisor

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

 

S-6

 

	
   

  	
  VENTURE II CDO 2002, LIMITED

  
	
   

  	
  By:

  	
  its investment advisor,

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

S-7

 

	
   

  	
  VENTURE III CDO LIMITED

  
	
   

  	
  By:

  	
  its investment advisor,

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

 

S-8

 

	
   

  	
  VENTURE IV CDO LIMITED

  
	
   

  	
  By:

  	
  its investment advisor,

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

S-9

 

	
   

  	
  VENTURE V CDO LIMITED

  
	
   

  	
  By:

  	
  its investment advisor,

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

 

S-10

 

 

	
   

  	
  VISTA LEVERAGED INCOME FUND

  
	
   

  	
  By:

  	
  its investment advisor,

  
	
   

  	
   

  	
  MJX Asset Management LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martin Davey

  
	
   

  	
  Name:

  	
  Martin Davey

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

 

 

S-11

 

	
   

  	
  BEAR STEARNS CREDIT PRODUCTS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Jeffrey Tuck

  
	
   

  	
  Name:

  	
  Jeffrey Tuck

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 

 

S-12

 

	
   

  	
  FRIEDBERGMILSTEIN PRIVATE
  CAPITAL FUND I

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Eric A. Green

  
	
   

  	
  Name:

  	
  Eric A. Green

  
	
   

  	
  Title:

  	
  Senior Partner

  

 

 

 

S-13

 

	
   

  	
  MCG Capital Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Thomas P. McLoughlin

  
	
   

  	
  Name:

  	
  Thomas P. McLoughlin

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

 

S-14

 

	
   

  	
  Loan
  Funding IV LLC

  
	
   

  	
  By:

  	
  Highland Capital
  Management, L.P. As Collateral Manager

  
	
   

  	
  By:

  	
  Strand Advisors, Inc., Its
  General Partner 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Chad Schramek

  
	
   

  	
  Name:

  	
  Chad Schramek

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  Strand Advisors, Inc. General Partner of Highland Capital Management, L.P.

  

 

 

 

S-15

 

	
   

  	
  Loan Funding VII LLC

  
	
   

  	
  By:

  	
  Highland Capital
  Management, L.P. As Collateral Manager

  
	
   

  	
  By:

  	
  Strand Advisors, Inc., Its
  General Partner 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Chad Schramek

  
	
   

  	
  Name:

  	
  Chad Schramek

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.

  

 

 

S-16

 

	
   

  	
  Southfork
  CLO, Ltd.

  
	
   

  	
  By:

  	
  Highland Capital
  Management, L.P. As Collateral Manager

  
	
   

  	
  By:

  	
  Strand Advisors, Inc., Its
  General Partner 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Chad Schramek

  
	
   

  	
  Name:

  	
  Chad Schramek

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  Strand Advisors, Inc. General Partner of Highland Capital Management, L.P.

  

 

 

S-17

 

	
   

  	
  First
  Trust/Highland Capital Floating

  
	
   

  	
  Rate
  Income Fund

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael S. Minces

  
	
   

  	
  Name:

  	
  Michael S. Minces

  
	
   

  	
  Title:

  	
  Chief Compliance Officer

  
	
   

  	
   

  	
  Highland Capital
  Management, L.P.

  

 

 

 

 

S-18

 

 

	
   

  	
  Pioneer
  Floating Rate Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael S. Minces

  
	
   

  	
  Name:

  	
  Michael S. Minces

  
	
   

  	
  Title:

  	
  Chief Compliance Officer

  
	
   

  	
   

  	
  Highland Capital
  Management, L.P.

  

 

 

 

S-19

 

	
   

  	
  Highland Floating Rate LLC

   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael S. Minces

  
	
   

  	
  Name:

  	
  Michael S. Minces

  
	
   

  	
  Title:

  	
  Chief Compliance Officer

  
	
   

  	
   

  	
  Highland Capital
  Management, L.P.

  

 

 

 

S-20

 

	
   

  	
  Highland Floating Rate Advantage Fund 

   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael S. Minces

  
	
   

  	
  Name:

  	
  Michael S. Minces

  
	
   

  	
  Title:

  	
  Chief Compliance Officer

  
	
   

  	
   

  	
  Highland Capital
  Management, L.P.

  

 

 

 

S-21

 

	
   

  	
  LATITUDE
  CLO I, LTD

   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Chauncey F. Lufkin III

  
	
   

  	
  Name:

  	
  Chauncey F. Lufkin III

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

 

S-22

 

	
   

  	
  BLACKROCK
  KELSO CAPITAL

  CORPORATION

   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Frank Gordon

  
	
   

  	
  Name:

  	
  Frank Gordon

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  

 

 

S-23

 

	
   

  	
  GLC
  CDO I, Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael Ferris

  
	
   

  	
  Name:

  	
  Michael Ferris

  
	
   

  	
  Title:

  	
  Principal, GLC Management
  LLC

  
	
   

  	
   

  	
   

  

 

 

S-24

 

	
   

  	
  FARALLON
  CAPITAL PARTNERS, L.P.,

  FARALLON
  CAPITAL INSTITUTIONAL PARTNERS, L.P.,

  FARALLON
  CAPITAL INSTITUTIONAL PARTNERS II, L.P.,

  FARALLON
  CAPITAL OFFSHORE INVESTORS II, L.P.,

  FARALLON
  CAPITAL INSTITUTIONAL PARTNERS III, L.P.,

  TINICUM PARTNERS, L.P.,

  
	
   

  	
  By:

  	
  Farallon Partners, L.L.C.,
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Derek C. Schrier

  
	
   

  	
  Name:

  	
  Derek C. Schrier

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  FARALLON CAPITAL OFFSHORE
  INVESTORS, INC.,

  
	
   

  	
  By:

  	
  Farallon Capital
  Management, L.L.C., Its Agent and Attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Derek C. Schrier

  
	
   

  	
  Name:

  	
  Derek C. Schrier

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  SEAL
  ROCK OFFSHORE FUNDING, L.L.C.

  
	
   

  	
  By:

  	
  Farallon Capital
  Management, L.L.C., Its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Derek C. Schrier

  
	
   

  	
  Name:

  	
  Derek C. Schrier

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

S-25

 

	
   

  	
  LightPoint
  CLO 2004-1, Ltd.

  
	
   

  	
  Premium
  Loan Trust I, Ltd.

  
	
   

  	
  LightPoint
  CLO III, Ltd.

  
	
   

  	
  LightPoint
  CLO IV, Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Colin Donlan

  
	
   

  	
  Name:

  	
  Colin Donlan

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  

 

 

S-26

 

	
   

  	
  CANADIAN IMPERIAL BANK OF
  COMMERCE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  John O'Dowd

  
	
   

  	
  Name:

  	
  John O'Dowd

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Shira Aschkenasy

  
	
   

  	
  Name:

  	
  Shira Aschkenasy

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 

S-27

 

	
   

  	
  HALCYON STRUCTURED ASSET
  MANAGEMENT CLO I LTD.

  
	
   

  	
  By:  Halcyon Structured Asset Management L.P.,
  as Collateral Manager under the Collateral Management Agreement dated
  September 23, 2005 between Halcyon Structured Asset Management L.P. and
  Halcyon Structured Asset Management CLO I Ltd. 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  Halcyon Structured Asset Management LLC,
  its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  James Pasquarelli

  
	
   

  	
  Name:

  	
  James Pasquarelli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  

 

 

S-28

 

	
   

  	
  HALCYON STRUCTURED OPPORTUNITIES
  FUND L.P.

  
	
   

  	
  By:  Halcyon Structured Asset Management L.P.,
  its Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  James Pasquarelli

  
	
   

  	
  Name:

  	
  James Pasquarelli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  

 

S-29

 

	
   

  	
  Apollo
  Distressed Investment Fund CQPS, L.P.

  
	
   

  	
  By:  Apollo DIF Management, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Patricia M. Navis

  
	
   

  	
  Name:

  	
  Patricia M. Navis

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  

 

 

S-30

 

	
   

  	
  Apollo
  Distressed Investment Offshore Funds

  
	
   

  	
  By:  Apollo DIF Management, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Patricia M. Navis

  
	
   

  	
  Name:

  	
  Patricia M. Navis

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  

 

 

S-31

 

	
   

  	
  Grand
  Central Asset Trust, ARL Series

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Mikus N. Kins

  
	
   

  	
  Name:

  	
  Mikus N. Kins

  
	
   

  	
  Title:

  	
  Attorney-in-fact

  
	
   

  	
   

  	
   

  

 

 

 

S-32EXHIBIT 10.32

BARE
ESCENTUALS BEAUTY, INC.

FOURTH
AMENDMENT TO TERM LOAN AGREEMENT

This FOURTH AMENDMENT TO TERM LOAN AGREEMENT (this “Amendment”) is dated as of June 7, 2006 and entered into by
and among BARE ESCENTUALS, INC., a Delaware
corporation, formerly known as STB Beauty, Inc. (“Holdings”),
BARE ESCENTUALS BEAUTY, INC., a
Delaware corporation, formerly known as MD Beauty, Inc. (the “Company”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a “Lender” and collectively as “Lenders”),
and BNP PARIBAS (“BNP Paribas”), as
administrative agent for Lenders (in such capacity, “Administrative Agent”), and solely for purposes of Section
3 hereof, the Credit Support Parties (as defined in Section 3 hereof).  Reference is made to that certain Term Loan
Agreement dated as of February 18, 2005, as amended by the First Amendment to
Term Loan Agreement dated as of July 21, 2005, the Second Amendment to Term
Loan Agreement dated as of October 7, 2005, and the Third Amendment to Term
Loan Agreement dated as of March 17, 2006, in each case by and among Holdings,
Company, the Lenders referenced therein and BNP Paribas, as Administrative
Agent (the “Credit Agreement”). Capitalized
terms used herein without definition shall have the same meanings as set forth
in the Credit Agreement, as amended hereby.

RECITALS

WHEREAS, Company and Lenders desire to amend the
Credit Agreement to:

(i)            permit Company to incur additional
Term Loans under the Credit Agreement (“2006 Additional Terms
Loans”), in the aggregate principal amount of up to $88,000,000, the
proceeds of which will be used to make a dividend to the shareholders of
Holdings;

(ii)           permit Company to incur additional
First Lien Term Loans in the aggregate principal amount which when added to the
First Lien Term Loans held by Consenting Lenders (as defined in the First Lien
Fourth Amendment), equals $359,250,000, the proceeds of which will be used to
prepay First Lien Term Loans which are held by Non-Consenting Lenders (as
defined in the First Lien Fourth Amendment), to make a dividend to the
shareholders of Holdings and to pay certain transaction costs and expenses;

(iii)          permit Holdings to issue subordinated
notes in the aggregate principal amount of up to $125,000,000, the proceeds of
which will be used to make a dividend to the shareholders of Holdings and to
pay certain transaction costs and expenses (it being understood that the notes
issued by Holdings concurrently with the execution of the original Credit
Agreement have since been prepaid in full as permitted by the First Amendment
to the Credit Agreement); and

(iv)          make certain other modifications as
set forth below.

NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:

 

 

SECTION 1.                                                    AMENDMENTS TO CREDIT AGREEMENT

1.1                               Amendments
to Subsection 1.1:  Certain Defined Terms.

A.                                    Subsection 1.1 of the Credit Agreement is
hereby amended by deleting the definition of “Maximum Consolidated Capital
Expenditures Amount” therefrom.

B.                                    Subsection 1.1 of the Credit Agreement is
hereby further amended by adding thereto the following definitions, which shall
be inserted in proper alphabetical order:

“2006 Additional Term Loan Commitment” means the commitment
of a Lender to make or maintain 2006 Additional Term Loans pursuant to the
fourth sentence of subsection 2.1A and “2006 Additional Term Loan
Commitments” means such commitments of all Lenders in the aggregate.

“2006 Additional Term Loans” means the Term Loans made by
certain Lenders to Company on or about the Fourth Amendment Effective Date
pursuant to the fourth sentence of subsection 2.1A.

“First Lien Fourth Amendment” means the Fourth Amendment to
Credit Agreement dated as of June 7, 2006 by and among Holdings, Company, the
financial institutions party thereto, and BNP Paribas, as administrative agent
for lenders thereunder.

“Fourth Amendment” means that certain Fourth Amendment to
this Agreement dated as of June 7, 2006.

“Fourth Amendment Effective Date” means the date the
conditions to the effectiveness of the Fourth Amendment, set forth in Section 4
thereof, are satisfied.

“Fourth Amendment Dividend Payment” means, collectively, (a)
the application by the Company of (i) the proceeds of the additional Term Loans
contemplated by the Fourth Amendment and a portion of the additional First Lien
Term Loans contemplated by the First Lien Fourth Amendment and (ii) certain
other funds, in each case towards a dividend by the Company to Holdings and (b)
the application by Holdings of the proceeds of the dividends described in
clause (a) and the proceeds of the Holdings Notes towards a dividend to its
shareholders, such dividends to be made on or about the Fourth Amendment
Effective Date in an aggregate amount not to exceed $341,000,000.

“IPO” means the consummation of an
initial public offering of any of Holdings’ equity Securities.

C.            Subsection 1.1 of the Credit Agreement is hereby
further amended by deleting the definitions of the terms set forth in quotation
marks below and substituting therefor the following definitions:

“Change in
Control” means any of
the following:  (a) at any time prior to
an IPO, Permitted Holders shall cease to beneficially own and control, directly
or indirectly, at least a majority of the issued and outstanding shares of
Capital Stock of Company 

 

2

 

entitled (without regard to the occurrence of
any contingency) to vote for the election of members of the Governing Body of
Company; (b) at any time after an IPO, (I) Permitted Holders shall cease to
beneficially own and control, directly or indirectly, at least 30% of the
capital stock of Company, or (II) any “person” or “group” (as such terms
are used in sections 13(d) and 14(d) of the Exchange Act, but excluding any
employee benefit plan of such person and its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), excluding Permitted Holders, shall become the
beneficial owner, directly or indirectly, of a greater percentage of the then
outstanding voting stock of the Company than that held by Permitted Holders;
(c) during any period of twelve (12) consecutive months, the Governing Body of the
Company shall not consist of a majority of the Continuing Members; (d) the failure at any time of Holdings to
legally and beneficially own and control 100% of the issued and outstanding
shares of Capital Stock of Company or the failure at any time of Holdings to
have the ability to elect all of the Governing Body of Company; or (e) the
occurrence of any “Change in Control” or similar event under the First Lien
Loan Documents or the Holdings Note Documents. 
As used herein, the term “beneficially own” or “beneficial ownership”
shall have the meaning set forth in the Exchange Act and the rules and
regulations promulgated thereunder.

“Consolidated EBITDA” means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes paid or provisions for taxes
based on income, (iv) total depreciation expense, (v) total amortization
expense, (vi) other non-cash items (including, without limitation, non-cash
effect of any purchase accounting, write-down of intangibles and marking hedges
to market), (vii) non-cash employee compensation expenses, (viii) the CEO
Payment Amount, (ix) Management Fees during such period, (x) any charges
associated with the one-time write offs related to the Emeryville Lease and the
Corporate Office Lease, provided that the aggregate amount of such charges
included in this clause (x) shall not exceed $2,000,000, (xi) Transaction Costs
and any other non-recurring or extraordinary Cash costs incurred in such
period, provided that the aggregate amount of such other non-recurring or
extraordinary Cash costs included in this clause (xi) shall not exceed
$3,000,000 in any one Fiscal Year or $9,000,000 in the aggregate from and after
the Closing Date, and (xii) reasonable and customary expenses incurred in such
period and associated with an IPO; provided that the aggregate amount of
such expenses  included in this clause
(xii) shall not exceed $2,500,000, but only, in the case of clauses (ii)-(xii),
to the extent deducted in the calculation of Consolidated Net Income, less
other non-cash items added in the calculation of Consolidated Net Income (other
than any such non-cash item to the extent it will result in the receipt of cash
payments in any future period), all of the foregoing as determined on a
consolidated basis for Company and its Subsidiaries in conformity with
GAAP.  Notwithstanding anything contained
herein to the contrary, the creation and reversal of reserves in the ordinary
course of business shall not constitute non-cash items for purposes of
calculating Consolidated EBITDA.

“Consolidated Excess Cash Flow” means, for any period, an
amount (if positive) equal to (i) the sum, without duplication, of the amounts
for such period of (a) Consolidated EBITDA (but determined by adding back
thereto, but without duplication, any amounts deducted in the calculation of
Consolidated Net Income for such period that were paid, 

 

3

 

incurred or
accrued in violation of any of the provisions of this Agreement) and (b) the
Consolidated Working Capital Adjustment minus (ii) the sum, without
duplication, of the amounts for such period of (a) voluntary and scheduled
repayments of Consolidated Total Debt (excluding repayments of First Lien
Revolving Loans or First Lien Swing Line Loans except to the extent the First
Lien Revolving Loan Commitment Amount is permanently reduced in connection with
such repayments, and repayments of Indebtedness that is not incurred in compliance
with subsection 7.1), (b) Consolidated Capital Expenditures (net of any
proceeds of any related financings with respect to such expenditures), (c) Consolidated
Cash Interest Expense in respect of Indebtedness incurred in compliance with
subsection 7.1, (d) current taxes based on income of Company and its
Subsidiaries paid in cash during such period, (e) Management Fees paid in cash
during such period to the extent permitted pursuant to subsection 7.5, (f) any
cash consideration paid during such period by Company or any of its
Subsidiaries in connection with any Permitted Acquisition (net of any amount of
Indebtedness incurred or assumed or proceeds of any equity received, in
connection therewith), and (g) Transaction Costs, expenses associated with an
IPO, and any other non-recurring or extraordinary Cash costs, in each case
incurred in such period and added to Consolidated Net Income in the calculation
of Consolidated EBITDA for such period; provided that for Fiscal Year
2006, all components of Consolidated Excess Cash Flow shall be calculated for
the period from the Fourth Amendment Effective Date to January 1, 2007.

“First Lien Credit Agreement” means the Credit Agreement
dated as of February 18, 2005, by and among Holdings, Company, the financial
institutions party thereto and BNP Paribas, as administrative agent, as amended
by the First Amendment to Credit Agreement dated as of July 21, 2005, the First
Lien Second Amendment, the Third Amendment to Credit Agreement dated as of
March 16, 2006, the First Lien Fourth Amendment, and any replacement
agreement or facility existing at any time and permitted pursuant to the terms
hereof; provided that the lenders party to such replacement agreement or
facility expressly agree to be bound by the Intercreditor Agreement or enter
into an intercreditor agreement in form and substance satisfactory to
Administrative Agent and the Requisite Lenders.

“Holdings Note Purchase Agreement” means
that certain Note Purchase Agreement dated as of June 7, 2006 by and between
Holdings,  York Street Mezzanine
Partners, L.P., York Street Mezzanine Partners II, L.P. and certain other note
purchasers party thereto, pursuant to which the Holdings Notes are issued on June
7, 2006.

“Holdings Note Documents” means the Holdings Note Purchase
Agreement, Holdings Subordination Agreement, Holdings Notes, the management fee
subordination agreement dated as of June 7, 2006 by and among Berkshire
Partners LLC, York Street Mezzanine Partners, L.P., York Street Mezzanine
Partners II, L.P. and certain other note purchasers party thereto, the
subordination letter dated as of June 7, 2006 by and among JH Partners LLC and
York Street Mezzanine Partners, L.P., York Street Mezzanine Partners II, L.P.
and certain other note purchasers party thereto, and the Subordination
Agreement dated as of June 7, 2006 by and among Holdings, York Street Mezzanine
Partners, L.P., York Street Mezzanine Partners II, L.P., Berkshire Investors
LLC, Berkshire Fund V Limited 

 

4

 

Partnership,
Berkshire Fund VI Limited Partnership and JH MDB Investors, L.P. and certain
other note holders party thereto.

“Holdings Notes” means those certain 15.0% Senior
Subordinated Notes due June 7, 2014 issued by Holdings pursuant to the Holdings
Note Purchase Agreement.

“Holdings Subordination Agreement” means that certain
Subordination Agreement dated as of the date hereof by and among Administrative
Agent, BNP Paribas, as administrative agent under the First Lien Credit
Agreement, Holdings, York Street Mezzanine Partners, L.P., York Street
Mezzanine Partners II, L.P. and certain other note purchasers party thereto.

“Transaction Costs” means all fees, costs, expenses,
premiums, termination payments and prepayment penalties incurred by any Loan
Party (a) on, before or shortly after the Closing Date in connection with the
transactions contemplated by the Loan Documents and the Related Agreements,
including write-off of deferred financing costs and (b) on, before or shortly
after the Fourth Amendment Effective Date in connection with the transactions
contemplated by the Fourth Amendment, including write-off of deferred financing
costs.

1.2                     Amendment to Subsection 2.1A: Commitments.

                           Subsection
2.1A(i) of the Credit Agreement is hereby amended by deleting such subsection
in its entirety and substituting the following therefor:

“A.          Commitments.  Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, each Lender hereby severally agrees to make the Loans as
described in this subsection 2.1A.  As of
the Fourth Amendment Effective Date, each of the Original Term Loan Commitments
and Additional Term Loan Commitments have been funded and used for the purposes
identified in subsection 2.5A.  Each
Lender that has a 2006 Additional Term Loan Commitment severally agrees to lend
to Company on the Fourth Amendment Effective Date an amount equal to its 2006
Additional Term Loan Commitment to be used for purposes identified in
subsection 2.5A.  The amount of each
Lender’s 2006 Additional Term Loan Commitment shall be set forth in the
Register and the aggregate amount of the 2006 Additional Term Loan Commitments
is $88,000,000.  The aggregate amount of
the Term Loans after the funding of the 2006 Additional Term Loan Commitments
will be $234,000,000; provided that the Term Loan Exposure of each
Lender shall be adjusted to give effect to any assignments of such Term Loan
Commitments pursuant to subsection 10.1B. 
Amounts borrowed under this subsection 2.1A and subsequently repaid or
prepaid may not be reborrowed.”.

1.3        Amendments to Subsection 2.4A:  Scheduled Payments of Term Loans.

A.            Subsection 2.4A of the Credit Agreement
is hereby amended by deleting the table contained therein in its entirety and
substituting the following therefor:

 

5

 

	
  Date

  	
   

  	
  Scheduled Repayment

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  58,500,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  58,500,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  58,500,000

  	
   

  
	
  Stated Maturity Date

  	
   

  	
  $

  	
  58,500,000

  	
   

  
	
  TOTAL:

  	
   

  	
  $

  	
  234,000,000

  	
   

  

 

B.            Subsection 2.4B(i) of the Credit
Agreement is hereby amended by deleting the proviso to the last sentence
thereof, and substituting the following therefor:

“, except as expressly permitted by the terms of the
First Lien Credit Agreement.”

C.            Subsection 2.4B(iii)(c) of the Credit
Agreement is hereby amended by inserting the following at the end thereof:

“and (vi) Net Securities Proceeds which are applied to make a
prepayment of Holdings Notes permitted by clause (v) of subsection 7.5)”.

1.4        Amendment to Subsection 2.5: Use of Proceeds. 

             Subsection 2.5A of the Credit
Agreement is hereby amended by inserting the following at the end thereof:

“The proceeds of 2006 Additional Term Loans, together with a portion of
 the proceeds of  the additional First Lien Term Loans funded
pursuant to the First Lien Fourth Amendment, shall be applied by Company (i) to
make the Fourth Amendment Dividend Payment and (ii) to pay for fees and
expenses incurred in connection with the Fourth Amendment and the First Lien
Fourth Amendment.”.

1.5       Amendments to
Subsection 6.1: Financial
Statements and Other Reports.

A.                    Subsection 6.1(ii) of the Credit
Agreement is hereby amended by inserting the following at end thereof:

“provided, however, that, with respect to any fiscal
period ended 180 days or more after an IPO, so long as Company is required to file
reports under Section 13 of the Exchange Act, the requirements of this
paragraph shall be deemed satisfied (including the requirements to deliver
monthly financial statements) by the delivery of the quarterly financials of
Company on Form 10-Q for the relevant Fiscal Quarter, signed by the duly
authorized officer or officers of Company”.

B.                    Subsection 6.1(iii) of the Credit
Agreement is hereby amended by inserting the following at end thereof:

 

6

 

“provided, however, that, with respect to any fiscal
period ended 180 days or more after an IPO, so long as Company is required to file
reports under Section 13 of the Exchange Act, the requirements of this
paragraph shall be deemed satisfied by the delivery of, the year-end financials
of Company on Form 10-K for such Fiscal Year, signed by the duly authorized
officer or officers of Company”.

C.                    Subsection 6.1(iv) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting the following therefor:

“(iv) Compliance
Certificates:  together with each
delivery of financial statements pursuant to subdivisions (ii) and (iii) above,
an Officer’s Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
Holdings and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of such Officer’s Certificate,
of any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Company
has taken, is taking and proposes to take with respect thereto;”

1.6        Amendment to Subsection 6.10: Interest Rate Protection.

                Subsection 6.10 of the Credit
Agreement is hereby amended by deleting “September 30, 2006” and replacing
same with “October 2, 2007” and by deleting “2.00:1.00” and replacing same with
“3.00:1.00.”

1.7        Amendments to Subsection 7.1: Indebtedness.

A.            Subsection 7.1 of the Credit Agreement is
hereby amended by deleting the first sentence before the semi-colon and
substituting the following therefor:

“Each of Holdings and Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty,
or otherwise become or remain directly or indirectly liable with respect to,
any Indebtedness; provided, however, that Company and/or any of
its Subsidiaries may incur Indebtedness if the Applicable Consolidated Leverage Ratio is no more than, (x) for any Indebtedness incurred
prior to June 7, 2007, 6.00:1.00 and (y) for any Indebtedness incurred on or
after June 7, 2007, 5.75:1.00 (provided, however, that for this purpose only, the Applicable Consolidated
Leverage Ratio will be calculated (A) to give pro forma effect to the proposed
incurrence of Indebtedness and to any prepayment of indebtedness to be made from
the net proceeds therefrom and (B) based on the Cash and Cash Equivalents in
existence immediately prior to the incurrence of such Indebtedness) ; provided  further that the
incurrence of such Indebtedness is not prohibited by the Holdings Note Documents.  Notwithstanding anything to the contrary,
this subsection 7.1 shall not prohibit the incurrence of the following
Indebtedness:”

 

7

 

B.            Subsection 7.1(iii) of the Credit
Agreement is hereby further amended by deleting “$15,000,000” and replacing
same with “$30,000,000.”

C.            Subsection 7.1(vi) of the Credit
Agreement is hereby further amended by deleting “$262,000,000” and replacing
same with “$384,250,000.”

D.            Subsection 7.1(viii) of the Credit
Agreement is hereby further amended by deleting “$15,000,000” and replacing
same with “$22,500,000.”

1.8          Amendment to
Subsection 7.2: Liens and Related Matters.

Subsection 7.2A(iii) of the Credit Agreement is hereby
amended by deleting “$15,000,000” and replacing same with “$30,000,000.”

1.9          Amendments to
Subsection 7.3:  Investments;
Acquisitions.

A.            Subsection 7.3(iv) of the Credit
Agreement is hereby amended by deleting the phrase “permitted by subsection 7.8”
therefrom.

B.            Subsection 7.3(x) of the Credit Agreement
is hereby amended by deleting “$20,000,000” and replacing same with “$40,000,000”
and by deleting “$7,500,000” and replacing same with “$15,000,000.”

C.            Subsection 7.3(xii) of the Credit
Agreement is hereby amended by deleting “$15,000,000” and replacing same with “$22,500,000.”

D.            Subsection 7.3(xiv) of the Credit
Agreement is hereby amended by deleting “$2,000,000” and replacing same with “$4,000,000.”

1.10        Amendments to
Subsection 7.4:  Contingent Obligations.

A.            Subsection 7.4(v) of the Credit Agreement
is hereby amended by deleting “$1,500,000” and replacing same with “$3,000,000.”

B.            Subsection 7.4(viii) of the Credit
Agreement is hereby amended by deleting “$4,000,000” and replacing same with “$8,000,000.”

C.            Subsection 7.4(ix) of the Credit
Agreement is hereby amended by deleting “$12,000,000” and replacing same with “$15,000,000.”

1.11        Amendment to Subsection 7.5:  Restricted Junior Payments.

                Subsection 7.5 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

“Neither Company nor Holdings shall, nor shall either permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that
(i) Company and Holdings may make the Fourth Amendment Dividend Payment,
(ii) Company may make Restricted Junior 

 

8

 

Payments to Holdings (a) in an aggregate amount not to exceed $300,000
in any Fiscal Year, to the extent necessary to permit Holdings to pay general
administrative costs and expenses (other than Management Fees), and (b) to the
extent necessary to permit Holdings to discharge the consolidated tax
liabilities of Holdings and its Subsidiaries, in each case so long as Holdings
applies the amount of any such Restricted Junior Payment for such purpose,
(iii) so long as no Event of Default or Potential Event of Default shall have
occurred and be continuing or shall be caused thereby, Company may make
Restricted Junior Payments to Holdings to the extent necessary to permit
Holdings to repurchase Holdings Capital Stock (or any options rights to acquire
such Capital Stock) from any former or current employee of Holdings or its
Subsidiaries so long as the aggregate amount of all such repurchases shall not
exceed $18,750,000 in the aggregate, and Holdings may repurchase such Capital
Stock using the proceeds of such Restricted Junior Payments by Company or, if
such Restricted Payments are not made by Company in sufficient amounts to
effect such repurchase, Holdings may issue promissory notes in exchange for
such Capital Stock and may subsequently redeem such promissory notes, (iv) so
long as no Event of Default under any of subsection 8.1, 8.6 or 8.7 shall have
occurred and be continuing, Company may pay Management Fees with respect to and
as provided under the terms of the Management Agreements; (v) Company may prepay the Holdings Notes with Net Securities Proceeds from the
issuance of any equity Securities of Holdings provided that the Applicable
Consolidated Leverage Ratio is 4.50:1.00 or less (provided, however, that for
this purpose only, the Applicable Consolidated Leverage Ratio will be
calculated (A) to include the amount of the then-outstanding Holdings Notes in
Consolidated Total Debt, and (B) to give pro forma effect to the prepayment of
Indebtedness to made from such Net Securities Proceeds, including the proposed
prepayment of Holdings Notes); and (vi) Company may make Restricted Junior Payments to Holdings to
the extent necessary to permit Holdings to pay transaction fees set forth in
Section 1.6 of the Holdings Note Purchase Agreement.”

1.12        Amendment to
Subsection 7.6: Financial Covenants.

                Subsection
7.6 of the Credit Agreement is hereby deleted.

1.13        Amendment to
Subsection 7.7: Restriction on Fundamental Changes; Asset Sales.

                Subsection
7.7(v) of the Credit Agreement is hereby amended by deleting “$1,000,000” and
replacing same with “$2,000,000.”

1.14        Amendment to
Subsection 7.8: Consolidated Capital Expenditures.

Subsection 7.8 of
the Credit Agreement is hereby deleted.

1.15                        Amendment
to Subsection 10.19: Confidentiality.

                Subsection 10.19 of the Credit Agreement is hereby
amended by deleting clause (f) in its entirety and replacing the following
therefor:

“(f) subject to an agreement containing provisions substantially
the same as those of this subsection 10.19, to (i) any Eligible Assignee
of or participant in, or any prospective 

 

9

 

Eligible Assignee of or Participant in, any of its rights or
obligations under this Agreement, (ii) any pledgee referred to in subsection
10.01D, or  (iii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of Company”.

1.16        Amendment to
Exhibit VII to the Credit Agreement: Compliance Certificate.

Exhibit VII “Compliance
Certificate” to the Credit Agreement is hereby amended by deleting the last
section thereof entitled “Covenants.”

SECTION 2.                                                    REPRESENTATIONS AND WARRANTIES

In order to induce
Lenders and Administrative Agent to enter into this Amendment, Company and
Holdings each represents and warrants to each Lender and Administrative Agent
that the following statements are true, correct and complete:

(i)            each of Company and
Holdings has all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”);

(ii)           the execution and
delivery of this Amendment and the performance of the Amended Agreement have
been duly authorized by all necessary corporate action on the part of Company
and Holdings;

(iii)          the execution and
delivery by Company and Holdings of this Amendment and the performance by
Company and Holdings of the Amended Agreement do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
Holdings, Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Holdings, Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Holdings, Company or any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Holdings, Company or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any Lien
upon any of the properties or assets of Holdings, Company or any of its
Subsidiaries (other than Liens created under any of the Loan Documents in favor
of Administrative Agent on behalf of Lenders and other Liens permitted under
the Amended Agreement), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings,
Company or any of its Subsidiaries, except for with respect to the foregoing
clauses (i) , (ii) and (iv)  above, such violations, conflicts,
breaches, defaults or failures to obtain approvals or consents which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;

(iv)          the execution and
delivery by Company of this Amendment and the performance by Holdings and
Company of the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, except for
registrations, 

 

10

 

consents,
approvals, notices and other actions the failure to obtain or take have not and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;

(v)           this Amendment and
the Amended Agreement have been duly executed and delivered by Company and
Holdings and are the legally valid and binding obligations of Company and
Holdings, enforceable against Company and Holdings in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability;

(vi)          the representations
and warranties contained in Section 5 of the Credit Agreement are and will be
true, correct and complete in all material respects on and as of the date
hereof and the Fourth Amendment Effective Date to the same extent as though
made on and as of such dates, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date; and

(vii)         no event has
occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Potential Event of Default.

SECTION 3.                 ACKNOWLEDGEMENT
AND CONSENT

Each Subsidiary
Guarantor (each individually a “Credit Support Party”
and collectively, the “Credit Support Parties”) has read this Amendment and
consents to the terms hereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Credit Support Party under, and the Liens granted by such Credit Support Party
as collateral security for the indebtedness, obligations and liabilities
evidenced by the Credit Agreement and the other Loan Documents pursuant to,
each of the Loan Documents to
which such Credit Support Party is a party shall not be impaired and each of
the Loan Documents to which such
Credit Support Party is a party is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.

Each of Holdings,
Company and the Subsidiary Guarantors hereby acknowledges and agrees that the
Secured Obligations under, and as defined in, the Security Agreement dated as
of February 18, 2006, by and among Holdings, Company, the Subsidiary Guarantors
and Administrative Agent (the “Security Agreement”)
will include all Obligations under, and as defined in, the Credit Agreement (as
amended hereby).

Each Subsidiary
Guarantor acknowledges and agrees that (i) notwithstanding the conditions
to effectiveness set forth in this Amendment, such Credit Support Party is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this Amendment or any
other Loan Document shall be deemed to require the consent of such Credit
Support Party to any future amendments to the Credit Agreement.

 

11

 

SECTION 4.                                                    CONDITIONS TO EFFECTIVENESS

Except as set forth
below, this Amendment shall become effective only upon the satisfaction of the
following conditions precedent (the “Closing Conditions”):

A.            Corporate
Documents.  On or before the Fourth Amendment Effective
Date, Company shall and shall cause each other Credit Support Party to deliver
to Lenders (or to Administrative Agent for Lenders with sufficient executed
copies, where appropriate, for each Lender and its counsel), with respect to
Company or such other Credit Party, as the case may be, a Secretary’s
Certificate, in form and substance reasonably satisfactory to Administrative
Agent and dated the Fourth Amendment Effective Date, certifying that (1) the
Organizational Documents of Company, (2) the resolutions of the Board of
Directors of Company and each other Credit Support Party and (3) the signature
and incumbency certificate of Company and each other Credit Support Party, in
each case, as delivered to Administrative Agent on the Closing Date, are in
full force and effect and have not been amended or modified in any respect
since the Closing Date.

B.            Opinion of Counsel. 
Lenders and their respective counsel (or Administrative Agent on behalf
of Lenders and their respective counsel) shall have received executed copies of
one or more favorable written opinions of Latham & Watkins LLP, counsel for
Loan Parties in form and substance reasonably satisfactory to Administrative
Agent and its counsel and dated as of the Fourth Amendment Effective Date.

C.            Amendment
of First Lien Credit Agreement. 
Administrative Agent shall have received a written amendment of the
First Lien Credit Agreement executed by Holdings, Company, Lenders under the
First Lien Credit Agreement and BNP Paribas, as administrative agent, in form
and substance satisfactory to Administrative Agent.

D.            Holdings
Note Documents.  Administrative Agent shall have received a
copy of each of the fully executed and final Holdings Note Documents, in form
and substance satisfactory to Administrative Agent.

E.             Litigation. 
No action, suit, investigation, litigation or proceeding by any entity
(private or governmental) before any court, arbitration or governmental
authority shall be pending or, to the knowledge of Holdings, Company or their
respective Subsidiaries, threatened with respect to this Amendment, any other
Loan Document, any other Related Agreement or any other documentation executed
in connection herewith or with respect to the transactions contemplated hereby,
or which could reasonably be expected to have a Material Adverse Effect.

F.             Certificate
Regarding Financial Conditions.  On the Fourth
Amendment Effective Date, Company shall have delivered to Administrative Agent
an Officer’s Certificate executed by the chief financial officer of Company
certifying that (i) the ratio of (A) Consolidated Total Debt immediately after
giving effect to the transactions contemplated by this Fourth Amendment to (B)
Consolidated EBITDA for the twelve month period ending April 30, 2006, does not
exceed 5.50:1.00, together with calculations demonstrating the foregoing in
form and substance reasonably satisfactory to Administrative Agent, and (ii) no
Potential Event of Default or Event of Default has occurred and is continuing.

 

12

 

G.            Solvency Assurances. 
On the Fourth Amendment Effective Date, Administrative Agent and Lenders
shall have received an Officer’s Certificate of Company dated the Fourth
Amendment Effective Date, substantially in the form of Exhibit A
annexed hereto and with appropriate attachments, in each case demonstrating
that, after giving effect to the consummation of the transactions contemplated
by this Fourth Amendment, the First Lien Fourth Amendment and the Holdings Note
Documents, (i) Holdings and its Subsidiaries on a consolidated basis will be
Solvent and (ii) Company and its Subsidiaries on a consolidated basis will be
Solvent.

H.            Completion of
Proceedings.  All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.

I.                Fees and Expenses. 
Administrative Agent shall have received all of Administrative Agent’s
reasonable costs and expenses as described in subsection 10.2 of the Credit
Agreement incurred by Administrative Agent (including, without limitation, the
reasonable fees and disbursements of O’Melveny & Myers LLP) in connection
with this Amendment and the documents and transactions related hereto, and any
fees separately agreed upon between Company and Administrative Agent.

J.             No Material Adverse
Effect; No Default.  Since December 31, 2005, there
shall not have occurred (i) a material adverse effect upon the business,
operations, properties, assets, liabilities, condition (financial or otherwise)
or prospects of Holdings, Company and its subsidiaries, taken as a whole or
(ii) a material adverse effect on the ability of Holdings, Company or any of
its subsidiaries executing a Loan Document to perform, or of Administrative
Agent or any Lender to enforce, the obligations under the Loan Documents.  No event shall have occurred and be
continuing or would result from the consummation of the borrowing contemplated
by this Fourth Amendment that would constitute an Event of Default or a
Potential Event of Default.

K.            Notification
of Execution.  Receipt by Administrative Agent and Company
of written or telephonic notice that Company, Holdings, the Requisite Lenders
(including Lenders providing 2006 Additional Term Loan Commitments aggregating
$88,000,000) and each of the Credit Support Parties has executed this Amendment
and authorized its delivery.

SECTION 5.                                                     MISCELLANEOUS

A.            Reference
to and Effect on the Credit Agreement and the Other Loan Documents.

(i)            On
and after the effective date of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like
import referring to the Credit Agreement and each reference in the other Loan
Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like
import 

 

13

 

referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended hereby.

(ii)           Except
as specifically amended by this Amendment, the Credit Agreement and the other
Loan Documents shall remain in full force and effect and are hereby ratified
and confirmed.

(iii)          The
execution, delivery and performance of this Amendment shall not, except as
expressly provided herein, constitute a waiver of any provision of, or operate
as a waiver of any right, power or remedy of Administrative Agent or any Lender
under the Credit Agreement or any of the other Loan Documents.

B.            Headings.  Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.

C.            Name
Change.  Lenders hereby waive compliance with the provisions of
Section 6(b) of the Security Agreement, to the extent and only to the extent of
its requirement of 30 days’ prior written notice requirement of the Company’s
name change from “MD Beauty, Inc.” to “Bare Escentuals Beauty, Inc.”

D.            Intercreditor
Agreement.  Lenders hereby authorize Administrative Agent
to enter into the Acknowledgement of Intercreditor Agreement with BNP Paribas,
as administrative agent under the First Lien Credit Agreement and Company.

E.             Applicable
Law.  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK).

F.             Counterparts.  This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.

[Remainder of this page intentionally left blank]

 

14

 

                                IN WITNESS
WHEREOF, the
parties hereto have caused this Amendment to be duly executed and delivered by
their respective officers thereunto duly authorized as of the date first
written above.

	
  COMPANY:

  	
   

  	
   

  
	
   

  	
  BARE
  ESCENTUALS BEAUTY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Leslie A. Blodgett

  
	
   

  	
  Name: 

  	
  Leslie A Blodgett

  
	
   

  	
  Title:

  	
  President, Chief Executive
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
  HOLDINGS:

  	
   

  	
   

  
	
   

  	
  BARE
  ESCENTUALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Leslie A. Blodgett

  
	
   

  	
  Name: 

  	
  Leslie A Blodgett

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  

 

 

 

S-1

 

	
  CREDIT
  SUPPORT PARTIES:

  	
   

  	
   

  
	
  (for purposes of
  Section 3)

  	
  BIOCEUTIX INC.

  
	
   

  	
  ID
  DIRECT, INC.

  
	
   

  	
  MD
  BEAUTY SALES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie A. Blodgett

  
	
   

  	
  Name:

  	
  Leslie A Blodgett

  
	
   

  	
  Title:

  	
  President, Chief Executive
  Officer and Secretary

  

 

 

S-2

 

 

	
   

  	
   

  	
   

  
	
  LENDERS:

  	
  BNP PARIBAS,

  
	
   

  	
  individually
  and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amy Kirschner

  
	
   

  	
  Name:

  	
  AMY KIRSCHNER

  
	
   

  	
  Title:

  	
  DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Cecile Scherer

  
	
   

  	
  Name:

  	
  CECILE SCHERER

  
	
   

  	
  Title:

  	
  Director Merchant Banking
  Group

  
	
   

  	
   

  	
   

  

 

 

S-3

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