EXHIBIT 10.24
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND LAWS IS AVAILABLE.
XXXXXXXXXXXXXX.XXX, INC.
SECOND AMENDED AND RESTATED NOTE
$34,500,000 OCTOBER 1, 2000
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXXXXXX.XXX, INC., a Delaware
corporation (the "Company"), promises to pay to the order of WEIGHT WATCHERS
INTERNATIONAL, INC., a Virginia corporation (the "Holder"), in six (6) equal
semi-annual installments on March 31 and September 30 of each year, commencing
on March 31, 2004 and ending September 30, 2006 (the "Maturity Date"), the
principal amount of (a) THIRTY FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS
($34,500,000), or, if less, (b) the aggregate unpaid principal amount as of
March 30, 2004 of all loans made by the Holder to the Company pursuant to this
second amended and restated promissory note (this "Note").
Until July 31, 2003, the Holder agrees, at any time or from time to time,
to loan the Company up to an aggregate principal amount of $ 34,500,000 (the
"Commitment") within five business days of its receipt of a written request
therefor. This Note amends and restates as of the date hereof an existing
amended and restated promissory note dated October 1, 2000 between the Company
and the Holder (the "Old Note") in the aggregate principal amount of
$28,500,000, which included the outstanding principal amount plus accrued
interest on a pre-existing promissory note dated November 24, 1999 for
$10,000,000 between the Company and the Holder (the "Prior Note"). As of October
1, 2000, the principal amount plus accrued interest of the Prior Note was rolled
over and subsumed into the Old Note and the Prior Note was thereby cancelled.
All loans made under this Note shall be in an amount equal to $100,000 or an
integral multiple thereof. The unpaid principal amount of this Note from
borrowings made under this Note from and including the Issuance Date through
September 10, 2001 shall bear interest beginning January 1, 2002 at a rate of
13% per annum, and such interest shall be due and payable semi-annually in
arrears on March 31 and September 30 of each year, commencing on March 31, 2002.
The unpaid principal amount of this Note from borrowings made under this Note
after September 10, 2001 shall bear interest at a rate of 13% per annum, and
such interest shall be due and payable semi-annually in arrears on March 31 and
September 30 of each year, commencing on March 31, 2002. Interest will be
computed on the basis of a 365-day year and the actual number of days elapsed
including the first day but excluding the payment date. All payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America. All such payments shall be made by the Company to
an account established by the Holder and notified to the Company and shall be
recorded on the books and records of the Company and the Holder.
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The Company agrees to pay to the Holder a commitment fee for the period
from and including January 1, 2002 to July 31, 2003, computed at a rate of 0.50%
per annum on the average daily unused portion of the Commitment payable
semi-annually in arrears on March 31 and September 30 of each year, commencing
March 31, 2002.
If any payment on this Note becomes due and payable on a day other than a
day on which commercial banks in New York City are open for the transaction of
normal business (a "Business Day"), the maturity thereof shall be extended to
the next succeeding Business Day and, with respect to any payment of principal,
interest or commitment fees thereon, shall be payable at the then applicable
rate during such extension.
The Holder is authorized to endorse on Schedule A attached hereto and made
a part hereof, the amount of each loan made pursuant to this Note (including the
outstanding principal and interest on the Prior Note) and the date and amount of
each payment or prepayment of principal thereof. Each such endorsement shall
constitute PRIMA FACIE evidence of the accuracy of the information endorsed.
In addition to, but not in limitation of, the foregoing, the Company
further agrees to pay all expenses, including (i) the making of any loans under
this Note and (ii) reasonable attorneys' fees and legal expenses, incurred by
the Holder in connection with endeavoring to collect any amounts payable
hereunder which are not paid when due.
1. PAYMENT PROVISIONS.
1.1 PAYMENTS ON THIS NOTE. The Company shall make payments of
principal of, interest on and the commitment fees with respect to this Note when
due.
1.2 OPTIONAL REDEMPTION. This Note may be redeemed at the option of
the Company, at any time or from time to time, in whole or in part, without
premium or penalty, at par plus accrued and unpaid interest, plus any accrued
and unpaid commitment fees.
1.3 CHANGE OF CONTROL. Upon a Change of Control, the Holder shall
have the right to require the Company to repurchase this Note at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest plus any accrued and unpaid commitment fee to the date of purchase.
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2. DEFAULT. The entire unpaid principal of this Note, together with all
accrued and unpaid interest and any accrued and unpaid commitment fees shall
become and be immediately due and payable upon written demand of the Holder (or
in the case of an event specified in Sections 2(g) or (h), automatically without
notice), without any other notice or demand of any kind or any presentment or
protest, if any one of the following events (an "Event of Default") shall occur
and be continuing at the time of such demand, whether voluntarily or
involuntarily, or, without limitation, occurring or brought about by operation
of law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any governmental body:
a. The Company defaults in any payment of interest or any
commitment fee on this Note when the same becomes due
and payable, and such default continues for a period of
30 days;
b. The Company (i) defaults in the payment of the principal
of this Note when the same becomes due and payable at
its Stated Maturity or pursuant to the provision of
Section 1.3, (ii) defaults in the payment of the
principal of this Note when the same becomes due and
payable upon redemption, upon declaration or otherwise,
or (iii) fails to redeem or purchase the Note when
required pursuant to this Note;
c. The Company fails to comply with Section 3.8;
d. The Company or any of its Subsidiaries fail to comply
with any other provision of Section 3, and such failure
continues for 30 days after the notice specified below;
e. The Company or any of its Subsidiaries fail to comply
with any of its agreements in this Note (other than
those referred to in (a), (b), (c) or (d) above) and
such failure continues for 60 days after the notice
specified below;
f. Indebtedness of the Company or any of its Subsidiaries
is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof
because of a default and the total amount of such
Indebtedness unpaid or accelerated at any time exceeds
$1,000,000;
g. The Company or any of its Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
1. commences a voluntary case;
2. consents to the entry of an order for relief
against it in an involuntary case;
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3. consents to the appointment of a custodian of it
or for any substantial part of its property; or
4. makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any
foreign laws relating to insolvency;
h. A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
1. is for relief against the Company or any of its
Subsidiaries in an involuntary case;
2. appoints a custodian of the Company or any of its
Subsidiaries or for any substantial part of its
property; or
3. orders the winding up or liquidation of the
Company or any of its Subsidiaries;
or any similar relief is granted under any foreign laws
and the order, decree or relief remains unstayed and in
effect for 60 consecutive days;
i. Any judgment or decree for the payment of money in
excess of $1,000,000 is rendered against the Company or
any of its Subsidiaries (other than a judgment or decree
in a claim brought by any Person arising out of, or
relating to, the Company's or any of its Subsidiaries'
(A) use of the Weight Watchers trademarks, service
marks, trade names, brand names, copyrights, program
information, terminology or materials, and/or other
intellectual property as provided in any license
agreement between the Company (or any of its
Subsidiaries) and the Holder, or (B) provision of
services pursuant to any service agreement between the
Company (or any of its Subsidiaries) and the Holder) and
is not discharged and either (1) an enforcement
proceeding has been commenced by any creditor upon such
judgment or decree or (2) there is a period of 60 days
following such judgment during which such judgment or
decree is not discharged, waived or the execution
thereof stayed; or
A Default under Sections 2(d) or (e) is not an Event of Default
until the Holder notifies the Company of the Default and the Company
does not cure such Default within the time specified after receipt
of such notice.
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3. COVENANTS.
3.1 LIMITATION ON INDEBTEDNESS.
a. The Company and its Subsidiaries shall not Incur any
Indebtedness which will result in the total Indebtedness
of the Company and its Subsidiaries exceeding
$44,000,000 (including the amount of any principal and
interest outstanding on this Note) at any time that
there is any principal or interest outstanding on this
Note. Notwithstanding the foregoing, for purposes of
determining the total Indebtedness Incurred by the
Company and its Subsidiaries at any time, any
Indebtedness between the Company and any of its
Subsidiaries, or between any of the Company's
Subsidiaries, shall be excluded.
b. This Note shall be senior and have a first priority over
all other Indebtedness of the Company.
3.2 LIMITATION ON LIENS. The Company shall not, directly or
indirectly create, incur, assume or suffer to exist any Lien that secures
obligations on any asset or property of the Company and any of its Subsidiaries
or any income or profits therefrom, or assign or convey any right to receive
income therefrom except for (A) (i) Liens incurred in the ordinary course of
business for sums not overdue for a period of more than thirty (30) days (other
than Liens consented in writing by Holder), (ii) Liens incurred in the ordinary
course of business to finance the purchase, lease or improvement of property
(real or personal) or equipment, or (iii) Liens incurred with respect to this
Note or any Guarantee issued by the Holder or any Subsidiary of the Holder, or
(B) the amount of such Lien or Liens do not result in the total Indebtedness of
the Company exceeding $44,000,000 as hereinbefore provided.
3.3 LIMITATION ON DISTRIBUTIONS AND REDEMPTIONS.
a. The Company or any Subsidiary shall not, directly or
indirectly, to (i) declare or pay any dividend or make
any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or
consolidation involving the Company) or similar payment
to the direct or indirect holders of its Capital Stock
except (1) dividends or distributions payable solely in
its Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to purchase such
Capital Stock and (2) dividends or distributions payable
solely to the Company or a Wholly Owned Subsidiary, (ii)
purchase, redeem, retire or otherwise acquire for value
any Capital Stock of the Company or any Wholly Owned
Subsidiary held by Persons other than the Company, (iii)
purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund
payments any Indebtedness (other than Indebtedness
represented by this Note and Indebtedness
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between the Company and any of its Subsidiaries, or
between Subsidiaries of the Company) or (iv) make any
Investment in any Person other than a Permitted
Investment.
b. The provisions of Section 3.3(a) shall not prohibit:
The repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the
Company held by any director, officer or employee of the
Company or any Subsidiary of the Company upon such
director ceasing to be a director or upon the
termination of such officer's or employee's employment
with the Company or any Subsidiary of the Company;
provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $1,000,000 in any
twelve-month period.
3.4 LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES.
The Company shall not, and shall not permit any Subsidiary to, create or permit
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligation owed to the
Company or any of its Subsidiaries, (ii) make any loans or advances to the
Company or any of its Subsidiaries, or (iii) transfer any of its property or
assets to the Company or any of its Subsidiaries.
3.5 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. The Company
shall not, and shall not permit any Subsidiary to, make any Asset Disposition in
excess of $10,000 unless (a) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration), of the shares and assets subject
to such Asset Disposition, (b) at least 85% of the consideration thereof
received by the Company or such Subsidiary is in the form of cash or cash
equivalents, and (c) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Subsidiary, as the case may
be) to invest in Additional Assets within 120 days of receipt thereof. On the
121st day after an Asset Disposition or on such earlier date as the Board of
Directors shall determine not to apply 100% of the Net Available Cash as set
forth in the preceding sentence, the Company shall redeem this Note, in whole or
in part, at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest with the aggregate amount of Net Available Cash which has
not been applied in accordance with the preceding sentence.
3.6 LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
a. The Company shall not, and shall not permit any
Subsidiary of the Company to, directly or indirectly,
enter into or conduct any transaction or related series
of transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any
service) with any Affiliate of the Company (an
"Affiliate Transaction") unless the terms of such
transaction are no less
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favorable to the Company or such Subsidiary, as the case
may be, than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person
who is not such an Affiliate.
b. The foregoing shall not prohibit (1) any transaction
between the Company or any of its Subsidiaries, on the
one hand, and any Permitted Holder, on the other hand,
(2) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the
Board of Directors, (3) loans or advances to employees
in the ordinary course of business, or (4) any
transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
3.7 SALE OF SUBSIDIARY CAPITAL STOCK. The Company (a) will not, and
will not permit any Subsidiary of the Company to, transfer, convey, sell, lease
or otherwise dispose of any Capital Stock of any Subsidiary to any Person (other
than the Company or a Wholly Owned Subsidiary) and (b) will not permit any
Subsidiary to issue any of its Capital Stock (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Subsidiary.
3.8 MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company shall not
consolidate with or merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all its assets to, any Person (in one
transaction or a series of related transactions), or permit any Person to merge
with or into the Company and the Company will not permit any of its Subsidiaries
to enter into any such transaction or series of transactions if such transaction
or series of transactions, in the aggregate, would result in the sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons without the
express written permission of the Holder, unless the principal amount of the
Note and any outstanding interest or commitment fee is paid in full prior to the
completion of any such transaction. In granting any such written permission the
Holder at a minimum will require the following:
1. the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized
and existing under the laws of the United States of
America or any state thereof and the Successor Company
(if not the Company) shall expressly assume all the
obligations of the Company under this Note;
2. immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of
the Successor Company or any Subsidiary as a result of
such transaction as having been incurred by the
Successor Company or
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such Subsidiary at the time of such transaction), no
Default or Event of Default shall have occurred and be
continuing;
3. immediately after giving effect to such transaction on a
pro forma basis, the Successor Company shall have a
Consolidated Net Worth equal to or greater than an
amount which is not less than the Consolidated Net Worth
of the Company prior to such transaction; and
4. the Company shall have delivered to the Holder an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer
complies with the terms of this Note and the Successor
Company shall have delivered to the Holder an Officer's
Certificate and an Opinion of Counsel, each stating that
the assumption of the Note has been duly approved and
authorized by the Board of Directors or Shareholders of
such Successor Company as may be required by the Holder.
3.9 PERIODIC REPORTS. The Company shall provide the Holder with
three quarterly unaudited financial statements (within forty-five (45) days of
each quarter end) and audited annual reports containing all financial
information reasonably requested by Holder (within ninety (90) days of each year
end) including, without limitation, income statement, balance sheet, and cash
flows prepared in accordance with GAAP. Notwithstanding the foregoing, audited
annual reports with respect to calendar years 1999 and 2000 shall be provided by
the Company no later than May 31, 2001.
3.10 CORPORATE EXISTENCE. The Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership, limited liability or other existence
of each of its Subsidiaries in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Subsidiary and
the rights (charter and statutory) of the Company and each of its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
existence or right if such existence or right involves a Wholly Owned
Subsidiary.
3.11 PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon it or any of its Subsidiaries or upon the income, profits or
property of it or any of its Subsidiaries and (b) all lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material Lien upon or a material liability affecting the property of it or any
of its Subsidiaries; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate provision has
been made.
3.12 MAINTENANCE OF PROPERTIES AND INSURANCE.
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(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries useful and necessary to the conduct of
its business or the business of any of its Subsidiaries to be improved or
maintained and kept in normal condition, repair and working order and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its judgment may be necessary, so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 3.12 shall prevent the
Company or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors or of
the board of directors of any Subsidiary of the Company concerned, or of an
officer (or other agent employed by the Company or of any of its Subsidiaries)
of the Company or any of its Subsidiaries having managerial responsibility for
any such property, desirable in the conduct of the business of the Company or
any Subsidiary of the Company, and if such discontinuance or disposal is not
adverse in any material respect to the Holder.
(b) To the extent available at commercially reasonable rates, the
Company shall maintain, and shall cause its Subsidiaries to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses, of similar size.
3.13 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. The Company shall
deliver to the Holder, within 90 days after the close of each quarter, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing officers with a view to determining whether it has
kept, observed, performed and fulfilled, and has caused each of its Subsidiaries
to keep, observe, perform and fulfill its obligations under this Note and
further stating, as to each such officer signing such certificate, that, to the
best of his knowledge, the Company during such preceding fiscal year has kept,
observed, performed and fulfilled, and has caused each of its Subsidiaries to
keep, observe, perform and fulfill each and every such covenant contained in
this Note and no Default occurred during such year and at the date of such
certificate there is no Default which has occurred and is continuing or, if such
signers do know of such Default, the certificate shall describe its status, with
particularity and that, to the best of his or her knowledge, no event has
occurred and remains by reason of which payments on the account of the principal
of or interest on or commitment fee with respect to this Note is prohibited or
if such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate shall
also notify the Holder should the Company elect to change the manner in which it
fixes its fiscal year end. The Company shall notify the Holder of any default or
defaults in the performance of any covenants or agreements under this Note
within five Business Days of becoming aware of any such default.
3.14 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
its Subsidiaries to comply, with all applicable statutes, rules, regulations,
orders of the relevant jurisdiction in which they are incorporated and/or in
which they carry on business, all political subdivisions thereof, and of any
relevant governmental regulatory authority, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for
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such noncompliances as would not in the aggregate have a material adverse effect
on the financial condition or results of operations of the Company and its
Subsidiaries taken as a whole.
3.15 WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the principal of and/or
interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Note, and (to the extent that it may lawfully do so) the Company hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Holder, but will suffer and permit the execution of every such power as
though no such law had been enacted.
3.16 CONDUCT OF BUSINESS. The Company shall not, and shall not
permit any Subsidiary to, engage in any business, other than a Related Business.
3.17 FUTURE SUBSIDIARIES. Unless otherwise agreed to in writing by
Xxxxxx, after the Issuance Date, the Company will cause each Subsidiary created
or acquired by the Company and each of its Subsidiaries to execute and deliver
to the Holder a supplement to this Note (which shall also be executed and
delivered by the Company) pursuant to which such Subsidiary will become a party
to this Note and thereby be obligated, on a joint and several basis, to make
full and prompt payment of the principal of, premium, if any, and interest on
this Note.
3.18 JURISDICTION OF INCORPORATION. The Company shall not change its
jurisdiction of incorporation or the jurisdiction of its tax residency to a
jurisdiction other than the United States of America or any state thereof.
4. CERTAIN DEFINITIONS. For purposes of this Note, unless otherwise
specifically indicated herein, the term "consolidated" with respect to any
Person refers to such Person consolidated with its Subsidiaries. In addition,
for purposes of the following definitions and this Note generally, all
calculations and determinations shall be made in accordance with GAAP and shall
be based upon the consolidated financial statements of the Company and its
Subsidiaries prepared in accordance with GAAP. As used in this Note, the
following terms shall have the following meanings:
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Subsidiary as a result of the acquisition of such
Capital Stock by the Company or another Subsidiary of the Company; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Subsidiary of the Company; PROVIDED, HOWEVER, that, in the case of clauses
(ii) and (iii), such Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
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whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of business, (iii) the sale of Temporary Cash
Investments in the ordinary course of business, and (iv) a disposition of
obsolete equipment or property, or equipment or property that is no longer
useful in the business of the Company and its Subsidiaries and that is disposed
of in the ordinary course of business.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by this Note, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Bankruptcy Law" means Title 11, United States Code, or any similar
U.S. Federal and state laws relating to bankruptcy, insolvency, winding up,
administration, receivership and other similar matters.
"Board of Directors" means the Board of Directors of the Company.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including, without
limitation, any Preferred Stock and if such Person is a partnership, partnership
interests, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease.
"Change of Control" means the occurrence of any of the following
events:
(i) any Person (other than a Permitted Holder) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"),
except that such Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time) of
more than 35% of the total voting power of the Voting Stock of the
Company;
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(ii) the first day within any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors or the board of directors of the Company (together with any new
directors whose election by such board of directors or whose nomination
for election by the shareholders of the Company or the Company was
approved by a majority of the directors of the Company, then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason (other than by voluntary resignation, death or disability) to
constitute a majority of such board of directors then in office;
(iii) upon any merger or consolidation of the Company with or into
any Person or any sale, transfer or other conveyance of all or
substantially all of the assets of the Company, on a consolidated basis,
in one transaction or a series of related transactions, if, immediately
after giving effect to such transaction or series of related transactions,
any Person (other than a Permitted Holder) is or becomes the owner,
directly or indirectly, of more than 35% of the total voting power in the
aggregate normally entitled to vote in the election of directors,
managers, or trustees, as applicable, of the transferee or surviving
entity;
(iv) a sale or disposition (other than a transfer to one or more
Wholly Owned Subsidiaries of the Company), whether directly or indirectly,
by the Company of all or substantially all of its assets; or
(v) the pro rata distribution by the Company to its stockholders of
substantially all of its assets.
"Company" means XxxxxxXxxxxxxx.xxx, Inc. (the maker of this Note).
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most recent fiscal quarter
of the Company ending prior to the taking of any action for the purpose of which
the determination is being made, as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in
12
whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes.
"GAAP" means generally accepted accounting principles in the United
States in effect as of the Issuance Date.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be incurred by such
Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto);
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person;
(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, any Preferred Stock
(but excluding, in each case, any accrued dividends);
13
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; PROVIDED, HOWEVER, that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other
Persons;
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person; and
(ix) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and Interest Rate
Agreements.
For the avoidance of doubt, the term "Indebtedness" shall not be deemed to
include the trade liabilities of any Person.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar arrangement)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person.
"Issuance Date" means October 1, 2000.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof) whether or not recorded,
filed or otherwise perfected under applicable law.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form) therefrom,
in each case net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability under
GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint
14
ventures as a result of such Asset Disposition, and (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary of the
Company after such Asset Disposition.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements of
Section 8.5.
"Opinion of Counsel" means a written opinion from legal counsel
which and who are reasonably acceptable to, and addressed to, the Holder
complying with the requirements of Section 8.5.
"Permitted Holder" means Artal Luxembourg S.A., the Holder or any
of their respective Affiliates.
"Permitted Investment" means an Investment by the Company or any of
its Subsidiaries in:
(1) any Subsidiary or Person that will, upon the making of the
Investment, become or remain a Wholly Owned Subsidiary of the Company
(provided the primary business of such Subsidiary is a Related Business);
(2) any Subsidiary or Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to the Company or a Wholly
Owned Subsidiary of the Company (provided such merger, consolidation,
transfer or conveyance complies with Section 3.8 above);
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms (provided that such trade terms
may include concessionary trade terms as the Company or any Subsidiary
deems reasonable under the circumstances);
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(6) stock, obligations or securities received in the settlement of
debts created in the ordinary course of business and owing to the Company
or any Subsidiary or in the satisfaction of judgments;
(7) any Person to the extent such Investment represents the non-cash
portion of the consideration received for in an Asset Disposition as
permitted pursuant to Section 3.5;
15
(8) Investments the payment for which consists of Capital Stock of
the Company (other than Disqualified Stock); and
(9) any Investment acquired by the Company or any of its
Subsidiaries (a) in exchange for any other Investment or accounts
receivable held by the Company or any such Subsidiary in connection with
or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such Investment or accounts receivable,
or (b) as a result of a foreclosure by the Company or any such Subsidiary
with respect to any secured Investment or other transfer of title with
respect to any secured Investment in default.
"Person" means any individual, corporation (including the Company),
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company's and its Subsidiaries' (i) use
of the Weight Watchers trademarks, service marks, trade names, brand names,
copyrights, program information, terminology or materials, and/or other
intellectual property as provided in any license agreement between the Company
(or any Subsidiary) and the Holder, or (ii) provision of services pursuant to
any service agreement between the Company (or any Subsidiary) and the Holder.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
16
"Temporary Cash Investments" means any of the following: (i) any
Investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $250 million and whose long-term
debt, or whose parent holding company's long-term debt, is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act), (iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Xxxxx'x Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Group, (v) Investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Xxxxx'x Investors Service, Inc., and
(vi) Investments in mutual funds whose investment guidelines restrict such
funds' investments to those satisfying the provisions of clauses (i) through (v)
above.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Subsidiary of the Company all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
6. LOSS, THEFT, DESTRUCTION OR MUTILATION.
Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note and, in the case of such loss,
theft or destruction, upon delivery to the Company of an indemnity undertaking
reasonably satisfactory to the Company, or, in the case of any such mutilation,
upon surrender of this Note to the Company, the Company will issue a new note,
of like tenor and principal amount, in lieu of or in exchange for such lost,
stolen, destroyed or mutilated Note. Upon the issuance of any substitute Note,
the Company may require the payment to it of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other reasonable expenses in connection therewith.
5. NOTICES AND DEMANDS.
All notices, demands and other communications provided for in this
Note or made under this Note shall be in writing and shall be deemed to have
been duly given if delivered by
17
hand (whether by overnight courier or otherwise) or sent by registered or
certified mail, return receipt requested, postage prepaid, to the Person to whom
it is directed:
(a) If to Holder, to it at the following address:
Weight Watchers International, Inc.
000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: General Counsel
(b) If to the Company, to it at the following
address:
XxxxxxXxxxxxxx.xxx, Inc.
000 Xxxxxxx Xxx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
If a party desires to change its address for the purpose of receipt of notice,
or to change the person to receive a copy of notice, such notice or change of
address or recipient shall be given in the manner specified herein.
6. PRESENT INTENT. By acceptance of this Note, the Holder acknowledges
that this Note is being acquired without a present intention of resale or
distribution, and that this Note will not be transferred, pledged or otherwise
disposed of by the Holder in the absence of an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or an
opinion of counsel (including in-house counsel) reasonably satisfactory to the
Company that such registration is, under the circumstances, not required.
7. MISCELLANEOUS PROVISIONS.
7.1 NO ORAL MODIFICATIONS. Neither this Note nor any term of this
Note may be changed, waived, discharged or terminated orally, but may only be
amended or modified by an instrument in writing signed by the Holder and the
Company.
7.2 BINDING EFFECT. This Note shall be binding upon and inure to the
benefit of the Company, the Holder of this Note and their respective heirs,
successors and assigns.
7.3 GOVERNING LAW, JURISDICTION; JURY TRIAL WAIVER. This Note shall
be governed by, and construed and interpreted in accordance with, the law of the
State of New York. The Company hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York located in the borough of Manhattan in the City of New York, or, if
such court does not have jurisdiction, the Supreme Court of the State of New
York, New York County, for the purposes of any suit, action or other proceeding
arising out of this Note. The Company hereby further agrees that service of any
process, summons, notice or document by U.S. registered mail to its address set
forth in Section 6 shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
the parties hereto irrevocably and unconditionally waives, to the extent
permitted by applicable
18
law, any objection to the laying of venue of any action, suit or proceeding
arising out of this Note in (a) the United States District Court for the
Southern District of New York or (b) the Supreme Court of the State of New York,
New York County, and hereby further irrevocably and unconditionally waives, to
the extent permitted by applicable law, and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. To the extent permitted by applicable
law, the Company waives the right to trial by jury in any such action or
proceeding.
7.4 RECOURSE. Recourse under this Note shall be to the assets of the
Company only and in no event to the officers, directors or stockholders of the
Company.
7.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate
or opinion with respect to compliance with a condition or covenant provided for
in this Note shall include:
(1) statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, such Person has
made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
7.6 ASSIGNABILITY. The Holder may sell, assign, transfer or
otherwise hypothecate ("Transfer") this Note to any other Person. If any
interest in this Note is Transferred in compliance with this Section 8.6, this
Note shall be cancelled and the Company shall execute and deliver a new note (in
substantially the form of this Note) to each Person to whom an interest in this
Note has been Transferred in an aggregate principal amount equal to such
Person's interest in this Note.
7.7 COSTS. The Company will pay all reasonable costs and expenses of
collection, including attorneys' fees and disbursements, appraiser's fees and
court costs, incurred or paid by the Holder in enforcing this Note, to the
extent permitted by law, including all costs and reasonable attorneys' fees
incurred in any appeal, bankruptcy proceeding, or other proceeding.
19
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name by its duly authorized officer as of this 10th day of September,
2001.
XXXXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Agreed and Accepted:
WEIGHT WATCHERS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
20
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Note as of the Issuance Date
was $10,355,503. The following decreases/increases in the principal amount of
this Note have been made:
-------------------------------------------------------------------------------
Decrease Increase Total Principal Notation
Date of in in Amount at Made by
Decrease Principal Principal Maturity or on
Increase Amount at Amount at Following such behalf
Maturity Maturity Decrease/Increase of Holder
-------------------------------------------------------------------------------
10/16/00 $200,000 $10,555,503
-------------------------------------------------------------------------------
10/25/00 $300,000 $10,855,503
-------------------------------------------------------------------------------
11/1/00 $2,700,000 $13,555,503
-------------------------------------------------------------------------------
11/29/00 $2,500,000 $16,055,503
-------------------------------------------------------------------------------
12/18/00 $1,100,000 $17,155,503
-------------------------------------------------------------------------------
1/5/01 $900,000 $18,055,503
-------------------------------------------------------------------------------
1/22/01 $2,000,000 $20,055,503
-------------------------------------------------------------------------------
2/15/01 $1,300,000 $21,355,503
-------------------------------------------------------------------------------
3/16/01 $1,000,000 $22,355,503
-------------------------------------------------------------------------------
4/6/01 $600,000 $22,955,503
-------------------------------------------------------------------------------
4/23/01 $544,497 $23,500,000
-------------------------------------------------------------------------------
5/9/01 $700,000 $24,200,000
-------------------------------------------------------------------------------
6/6/01 $800,000 $25,000,000
-------------------------------------------------------------------------------
7/9/01 $700,000 $25,700,000
-------------------------------------------------------------------------------
8/24/01 $500,000 $26,200,000
-------------------------------------------------------------------------------
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-------------------------------------------------------------------------------
21
-------------------------------------------------------------------------------
Decrease Increase Total Principal Notation
Date of in in Amount at Made by
Decrease Principal Principal Maturity or on
Increase Amount at Amount at Following such behalf
Maturity Maturity Decrease/Increase of Holder
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