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Fax:(33-1) 4522-7976
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Mr. Henri Film

F1! #2 4926-7845
From: Laurent Adamowicz

Date: 01102193

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#qfpgg5r;mniued(mclnding cover sheet)

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Td:(33-1)452Z-8513
Fax: (33+1) 45 22-79 76

Monsieur Henri Fiiho

Clinvcst
55 boulevard Hanssmann
75008 Paris
Paris, lc 1 fvricr 1993

Cher Monsieur,

Ie vous prie de trouver ci-joint, oommc convenu, la version en Anglais de la convention de prt
aux investisseurs anotcde nos commenmircs.
Par ailleurs, vous trouvcrez ci-joint 1m "Executive Summary" rsumanx, it Pattenon dcs
investisseurs, les dirents paramtrcs dc la transaction.
Enn, je vous remercie dc me communique: ds que possible, le montant dcs primes
(1'8SSU1'3-DCC de1'enscmb1e du Groupe a.
Iai communiqu aux inveatisseurs, comme convenu, la possibiltt pour aux dc perccvoir une
commission dengagement dc 0,5 % at en lieu et place dc la commission annuelle dc 0,30 %.
Ie vous remcrcie de votre conance, ct vous prie dagrcr, Monsieur, 1'expression de mes
ceriumems d1sun'
' gus.

-_

LaurentAdamowicz
I

Socia Anonyme nu Capital dc 400.000 Frans:

Siege social : 2., rue dc la Baum: 75008 Paris, France

arm-1

RC5 I P8715 B388 950 26

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./l:0'0[*4"-Limited Recourse Loan Facility Agreement

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This agreement is made the

three

day ofFcbruary One thousand nine hundred an

BETWEN

1-

Credit Lyonnais, a socit anonyme with a share capiul ofFrf 7.075.260.720

whose registered oice is at, 18 rue de la Rpubliquc Lyon (Rhne), and whose
head ofce is at 19 boulevard des Italians Paris Zeme, registered on the regisu-e
du commerce ct des
ofLyon under n B 954 509 741,
represented by
hereinafuzr called "Credit Lyormais or the Bank"

ofthe rst part

2-

and ____i___, a company ,

represented by

hereinafter called "the Borrower

ofthe second pan

WHEREAS the Bank has agreed to make available to the Borrower a loan facility in the
principal amount of f;E,_1:_3_ upon the terms contained in this agreement.

NOW IT IS HEREBY AGREED as follows:

I- Amount of the loan, Purpose.
Credit Lyomtais and the borrower enter into an agreement relating to a loan of an
amount ofFrf
, on the terms and subject to the conditions hereinafter
I

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contained.

This
' loan 1s
' exclusively
'
to nance the acquisition by the Borrower of
shares representing
% ofAdidas International Holding Gmbh share capital
(hereinafter called; "the Shares")

...:

Il- Disbursements-Use of funds

Funds shall be available subject to condition precedent, mentioned in article XIV

hercinaer, being fully complied with.
_

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Against compliance of what is abovewriren, monies lent shall _be available to the
Borrower in one initial payment on l11S acccnmt n

wlth

Entries related to the use and llmb l of funds shall be

in a special accotmt
opened in the name of the Borrower in TM b001<5 Oi-._____C{d1l LY9IlI1141$ B1Tl31,
exclusive of any other account the Borrower has or may have with Credit Lyonnats.

hit

Reimbursment

The Borrower shall repay Credit Lyonnais ofthe arnormt in principal in one payment at
the latest on the 3] December 1997, subject to the provisions of article VIII hereinafter.

U,

IV-

Fixed interests

4-l

Interests will accrue on monies lent from the date of their initial payment until
their effective mmb daw.

4-2
ute

Interest will be calculated on the basis of the actual number ofdays elaps
a 360-day year.

ulgzs
7
I at

They will be calculated at a xed rare of 0,50% and will be paid on a quaterly
basis in arrears. Interest wl accrue 'om day to day.4____________,___________

Wwqiil 4~3

In accordance with what is mentioned herabove, the Borrower irrevocably

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Payment of funds will be evidenced by the Banks enn-les.

III-

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authorizes Credit Lyonnais to debit all interest paymems, incidental and out of
- - cket ex ens then due to Credit Lyonnais, against his acootmt n
opened with _i Credit Lyonnais Branch, and shall maintain sucient

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funds in the account orn the date when they are due for paymwn vmil Mir
denitive settlement.

V- Participation clause

l0

Supplementary remtmcration

On top ofthe xed interests u dened in 4-2 above, a supplementary

1-emuneration will be due by the Borrower provided the Borrower makes a

capital gain '0m the sale ofthe Shares h yacquired.

This supplementary rcmtmetation will be calculated according to the following
formula:
PV-PA- 0.2 x [PV_-(PA+I)]
where:
l

law

PV means the total consideration received by the Borrower or any third Pm) in
respect of the sale ofthe Shares
PA means the total consideration paid by the Bon-ower for the acquisition ofthe
Shares, which in the present circumstances ts equal to the amount ofthe loan.

I means a compounded interest calculated on the amount of the sums lent

at 1 year Frf-Pibor as published by TELERATE. (or any other entity which will
substitute for it ) the working day preceding the day of the instalment, and
thereafter the day of the anniversary date ofthe aforementioned instalment and
for a

starting om the initial payment date up to the date of the

reimbursrnent ofthe principal ofthe loan; interest accrued on a full year will be
compounded in accordance with article l 154 ofthc French Civil Code.

Further more it is agreed that:

so
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'

(i)

ifPV minus BA rs lower than or equal to zero (PV - PA 5 0), no

supplementary rernuncration will be paid;

(ii)

ifPVrninusPA minus I is lower than or equal to zero

(PV - (PA +1) s 0), the supplementary remuneration will
nevertheless be equal to PV - PA

C"m-m8 91 FIfPibQf rate. it 15 specied that. ifby reason of any applicable

treaty, law, reg-ulanon or ocial directive imposed on nancial institutions, or
lf at any daw , aO1'drng to Cred1tLyonnais'judgrnent , the behaviour ofthe
rnterbank market, or any event did not allow Credit Lyonnais to be able to
calculate the Fri:-Pibor, Crecut Lyonnais shall promptly give notice to the
Borrower. Credit Lyonnars and the Borrower shall negociatc with a view to
agretng upon a substitute basis for the determination ofan appropriate rate
consrderng the new circumstances.
Ifterms have not been agreed between the parties hereto, the applicable me
shall be the offerred rate proposed to Credit Lyormais on the interbank market

for the period rmder consideration, as negociated and agreed between the parties

the working day prcccdcilg. the day ofeach anniversary date of the digbmglnent
date, plus a margin of

'3

% per armum . 4--_._

Thc supplementary remuneration calculated in this manner will be payable at

the date of the reimbursement of the principal of the loan.
*

5-2

Sale ofthe Shares by the Borrower

During the life of the present loan , the Borrower shall be entitled to proceed to
only one sale ofthe Shares hereby acquired in a whole.

5818. in that case, shall mean all operation or event which will result in Adidas
hagecztrsianonal-Holdmg Gmb shares not to be part anymore of the Borrower;

WP

A11) iftiquire will have to be agreed, in accordance with Adidas lnternational

Hvliws Grab S articles ofasswavon; a written prooof ofthis agreement will

llilVC I0 ll Sll0Wll by the Borrower to the Bank, before any sale could take ,
place.
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5-3

Sale of the shares at the request ofthe Bank

At any time, as long as the loan is not reimbursed, the Bank will be entitled to
present to the Borrower a third party interested by the acquisition of the Shares
hereby acquired as a whole.

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L___'
VI-

11-, that casc, the Borrower shall sell the Shares to the third party thus referred
91,. 3,; Bgf(0lVe\- -tuna 0.1- dots Opifdrt -Pnefvmd -l-Eh. {newa.c.c-o1_1~

lndetnnities for late payment

be

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a,,5;,_Q,_ 11:2, 9,9, bet um.

lfthe Borrower fails to pay any amount payable by it under this agreement on the due
date, including all expenses and outlays advanced by Credit Lyonnats under the present
'
will b e due on such overdue amount
loan agreement for any reason whatsoever, interest

-M

for the period from the due date up to the date ofthe acmal payment, at an interest rate
per annum applicable with respect to any period which will be the sum ofthe legal rate
and 1%.
That provision shall not damage payability without notice, and shall not be treated as a
settlement agreement lntcrests shall be capitalized, ifthey are due for a whole year, in
accordance with article ll54 of the French Civ Code.
\"II-

Effective global rate

To comply with the provision ofLaw n 66.1010 ofDccernber 28,1966, relating to

money loans, and to certain door step selling and advertising operations. it is herein
stated by way of example that assuming ill drawdown ofthe loan at the date of the
signing of the present agreement, the cficctivc global rate of the loan would be
/0
per annum, the periodic rate being of____% per annum and the length of the period
of

1 t V.-awn?

V1Il- Rei u

8-1

ent particulars

Total sale of the Shares

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. g uibgzghm-es acquired with the present loan are sold in agreement with the

Bank, the reb f the loan shall take place as follows:

1-

Ifthe sale price is greater than or equal to (i) the amount in_principal of
e Ioan,5(ii) xed interests possibly due and unpaid and (m)
supplementary remuneration calculated respectively as described in
articles IV and 5.1, total reimbtusemem ofthe loan shall take place two
working days after the effective payment date ofthe price ofthe
concluded sale.

Mrwe

Furthermore it is agreed between Credit Lyonnais and the %m

once the aforesaid sums are reimbursed or paid to Credit Lyo

possible surplus on the aftertax capital gains amount achieved

the sale will remain for the benet of the Borrower.

ough

M
2-

Ifthe sale price is lower than or equal to (i) the axnom_1t in principal ofthe
oa (ii) xed interests due, the sale pnoe shall be paid to Credit

Lyonnais within the two worldng days following the date of the effective
payment ofthe mds to the Borrower, and will be set offby the Bank:
-

rst against the xed interests outstanding,

and second against the amount in principal ofthe loan

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No recourse by the Bank against the the Borrower will remain

concerning the balance outstanding following the above allocation.
,

8-2
.

Final repayment
Ifat the nal maturity date, the sale of the Shares could not be aeltieved, all the
Borrowers obligations towards the Bank from the present contract will be

denitely extinguished - <3

8-3

Prepayment

No any sale ofthe Shares, and subject to Credit Lyonnais'

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-

?'=m11I the B0rr0wer will able to prepay the loan in a whole , provided
that the Borrower shall have given a ojaaadr prior irrevocable written notice
to the Bank.
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_

i,

On wp qfthc PriY_1iPa1 amount ofthe loan. the Borrower shall pay to the Bank

the unpaid xed mterests outstanding at the mmb t date, as well as an

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idfntnity equal to the amount lent multiplied by the Frf Pibor rate plus a
margin of 3% per anmnn , dened and calculated as mentioned in article 5-1,
No amount prepaid may be reborrowed.
2:.

IX-

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Payments

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All payments shall be made to ______ Credit Lyonnais Branch.

X-

Acceleration of the loan - Events of default

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If the Borrower or any ofits subsidiaries shall voltmtarily or involuntarily suspend or

dis tinue its operations, liquidate all or substantially all of its assets, become
insolvent or
', all sums paid in accordance with the present loan agreement,
in u g all intersts and related incident expenses will become immediately due and
payable in advance.

H-.
The sums aforementioned will moreover become payable ifone of the following events
occms:
l-

The Boncwer or any of its subsidiaries shall default in the due performance or
observance of any ofits material obligations in respect of the present agreernent,

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and in paruicular shall not pay at maturity any amount due for payment.

W H rail;

2:3
9

Any representation, warranty or statement made or deemed to be made by the

or in connection with this agreement prove to have been.incorrect in any

material respect when made or deemed to be made, and If the Borrower would
not b e abl c to?-Jusufy
' ' 0 f an appropnate
' use of th e funds which have been

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Borrower in this agreement or in any document delivered by the Borrower under

wn om
3-

e present loan.

if for any reason, the guarantee hereby gm efenw to in the present

agreement under article XVQbecomes void or disappears.

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defa

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Upon occurcnce of one of these evens, Credit Lyonnais wl be entitled to demand the

payment of all sums due, and this 8 days following a simple notice sent by registered
mail to the Borrower at the address hereinafter mentioned. This letter would mention

that the Bank intends to take advantage ofthc present clause- lt will have no other
formality to comply with, nor ask for the court to declare the acceleration of the loan.
Subsequent payments or rcgularizations to this notice shall not impede this payabihty.

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Furthermore, ifacceleration of the loan is declared, Credit Lyonnais will perceive, as a

penalty glans; a 511111 of an arnotmt equal to the amount o_fthe supplementary
3-gmungrgqn mgmjongd m p3ragn1phS-1 ,

calculated in accordance with details Of

the aforesaid article except for the_leng1-h Wbmh W171 Sim 5"! T-11 Paymml 5-31 f*3"
loan to the Borrower up to the rc1mburs@tt date ofthe loan.

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XI Information

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During the whole length of the loan, the borrower shall inform Credit Lyonnais, by

whale

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providing all written proof ofall transformations, concerning the Company's form,
nature, or capacity (in particular change ofname, merger, or transformation into an
other type of company, registered office transfer, opening ofa procedure de
"redressementjudiciaire", out of court liquidation, winding up,...) and of all material
events
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modify the importance or the value of its assets or to
increase dramatically the volume ofits commitments.

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This type of information shall have to be received within 3 weeks following that event.
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XII- Undertakings of the Borrower

12-1

For so long as this agreement is in effect and any amount payable under this
agreement is outstanding, the Borrower hereby undertakes to :

5W

furnish to the Bank. as soon as they are available in accordance with

legal and statutory dates and terms, certied copies ofits annual balance

sheets, prot and loss accounts and documents attached, as well as all
minutes ofordinary and extraodinazy shareholders meetings, and all

*9
as
.

b_
a-

21-

information, reports or statements that the Bank could reasonably request

at any time,

notify without delay any event of default or any event which could

become an event ofdefault following notication, or after a certain delay

or both and stating the facts concerning this event,
e-

inform Credit Lyonnais prior to any sale ofthe Shares hereby acquired,
at the latest 15 wocing days before the date of the sale of the Shares.

12-2 Furthermore, the Borrower undertakes that the Shares hereby acquired be sold
prior to any other shares issued by Adidas International Holding Gmbh which
could be held by the Borrower, and up to the amount hereby owed by the

Borrower to Credit Lyonnais, and until total Mmb of the loan

ugh -nil?

)ZlII- Taxes
My dl.15i$ {N1 WM. whether present or future, and more generally, all expenses in

be paidby e;=ntt'alnas":tu'@%naiars*htensahvlteaitMm lee.-sell

Lyonnats; for this purpose they will be added to the principal amount of the loan and

treated as such.
XIV Condition Precedent
This agreement is conditional upon:
-

deliyery to Credit Lyonnais of a letter from Maitre

(notaire),
certifying that the Shares hereby nanced are duly pledged in favour of Credit
.
Lyonnais m the rst place and without
competition. C7)
d

XV- Governing Law and Jurisdiction

This agrement shall be governed by and construed in accordance with the laws ofthe
French Republic.

The Borrower irrevocably agrees that any proceedings arising out of or connection
with this agreement may be bmught in any court of competent _]u1lSdlCDOIl, m the

jurisdiction ofu Cour d'Appd do Paris.

XVl- Choice of Residence

For the execution of the present agreement , parties decide to choose as residence:
'

Credit Lyonnais,.

The Borrower, in its head ofce

Executed in Paris on_________, in two originals on stamped paper.

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_,

The a. Group
Executive Summary

CL is
a selective group ofinvestors to participate in the $600 Million acquisition ofthe
a. Group by n prominent new manager. The a G1-nup is a leading spoiling goods company
headquartered in Germany with worldwide operations. In 1992, it generated sales of
approximately $1.9 Billion The brand is one ofthe ten most recognized brands worldwide.

pa, mum-, ly Qgplgjngd below, CL is oering participants a very attractive investment

PPr1=w=iY with
Fmaneial terms eanbe summarized as follows:
For each $1.00 invested in the transaction, CL provides a loan of $1.00 to the investor
at the nominal rate of 0.5% per annum with a prot participation scheme as explained
below.
There are three scenarios for exit: (See attached tables )
(i) ThernanegermayexerciseacallbyIuly31,l994 ontheinvestofs sharesa.ta4-0%
premium on each $1.00 mvested. In that ease, approximately 35 % are paid to CL
and 5 % to the investor.
(ii) CL may nd a buyer or organize an IPO after July 31, 1994 and prior to Deeanber
31, 1997 in which case the investor shall be requested by CL to sell his investment.
Capitalgainsshallthenbesplit, 80 %to CLand2.0 %totheinvestorprn'suantto a
preferred return of capital Prot potential to the investor by 1997 is estimated at
5 % to 45 % on each $1.00 invested. Such mwinding by CL provides that any
p0l8llZ1 losses on the invesunent shall be deducted by the investor from the
principal ofthe loan (100% Guarantee).

(iii)Aer July 31, 1994, the investor may prepay the loan with a prepayment penalty
equal to the equivalent FF interbank rite plus 3 % per annum and have ill disposal
of the shares- In that ease, the prot potential to the investor by 1997 is estimated
at 25 % to 225 % on each $1.00 invested (up to 35 % IRR). Ifthe investor decides

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to prepay the loan, and in that case only, he then bears all the downside risk
associated with the investment along with 100 % of the upside. Under any other

ckomstwws. there is

AIG has been approached to invest up to $120 Million (20 % ofthe equity) in this very rmique
transaction.

Mmof340%ofcost:

It depends on the scenarios described above as well as the exit value (see attached exhibit l for
sensitivity analysis).

Under scmario (i):

$6.6 Million (with zero nancial risk) or 5.5 %.

Under scenario (ii):

Up to S54 Million (with zero nancial risk) or up to 45 %.

Under soenario (iii): Up to $270 Million (with nancial downside in the longer term)
or 2.25%.
| \
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Reasons for CL's very attractive terms of olfen

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l./ Short time frame: rm commitment requested om investors by Monday February 8, 1993 .

El!

2.! A diversied group of international investors backing the new manager provides a better
prole to the transaction and improves the odds ofsuccess.

,1!

3.! CL does not want to appear as the conuolling shareholder of the a. Group because it is a

1_

major lender to the operating company. CL wants to limit its overall debt exposure and
avoid being a potential target ofunions in the event oflayoffs and/or a wage eeze.

4] CIJAGF (French Government) do not want to appear as the sole buyers ofBT's shares in
the a Group. BI is currently Minister of city planning in the French Government.

fill

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Additional business opportunities to AIG:

1./ Bid on Property Casualty insurance ofthe a Group worldwide, possibly as co-insurer with
AGF.

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2.! Provide key-man insurance to the shareholders ofthe a_ Group regarding the new manager.
3! Potentially help the a. Group penetrate certain markets such as China etc...

Alli

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