NU SKIN ENTERPRISES, INC.
One Nu Skin Plaza
00 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
3.03% Senior Notes due October 12, 2010
October 12, 2000
TO THE PURCHASER LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Nu Skin Enterprises, Inc., a Delaware corporation (the "Company"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of JPY 9,706,500,000
aggregate principal amount of its Senior Notes due October 12, 2010 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement). The Notes shall be substantially in
the form set out in Exhibit 1, with such changes therefrom, if any, as may be
approved by you and the Company. The Notes shall at all times be guaranteed by
all current and future Material Domestic Subsidiaries of the Company (the
"Subsidiary Guarantors") pursuant to the Subsidiary Guaranty and shall at all
times be secured by a pledge of the Pledged Securities of each Material Foreign
Subsidiary pursuant to the Pledge Agreement. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement and the Collateral
Documents, the Company will issue and sell to you and you will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall occur at
the offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, at 8:00 a.m., Los Angeles time, at a closing (the "Closing")
on October 12, 2000. At the Closing
the Company will deliver to you the Notes to be purchased by you in the form of
a single Note (or such greater number of Notes in denominations of at least the
Yen-equivalent of $100,000 as you may request) dated the date of the Closing and
registered in your name (or in the name of your nominee), against delivery by
you to the Company or its order of immediately available funds in the amount of
the purchase price therefor by wire transfer of immediately available funds as
set forth in a funding instruction letter delivered by the Company to you at
least two Business Days prior to the Closing. If at the Closing the Company
shall fail to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company in this Agreement and the
Collateral Documents shall be correct in all material respects when made and at
the time of the Closing.
4.2 Performance; No Default.
The Company and its Restricted Subsidiaries shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement and the Collateral Documents required to be performed or
complied with by them prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Section 5.14) no Default or Event of Default shall have occurred
and be continuing. Neither the Company nor any Restricted Subsidiary shall have
entered into any transaction since the date of the Memorandum that would have
been prohibited by Section 10 hereof had such Section applied since such date.
4.3 Officer's Certificate.
The Company shall have delivered to you an Officer's Certificate, dated the
date of the Closing, certifying that the conditions specified in Sections 4.1,
4.2, 4.9, 4.13(a) and 4.13(b) have been fulfilled.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing (a) from Shearman & Sterling, special New York
counsel for the Company and the Subsidiary Guarantors, substantially in the form
set forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company and the Subsidiary Guarantors hereby instruct
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Xxxxxxxx & Xxxxxxxx to deliver such opinion to you), (b) from Tokyo Aoyama Law
Office, special Japanese counsel for the Company and Nu Skin Japan Co., Ltd.,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and the Company and the Subsidiary Guarantors hereby
instruct Tokyo Aoyama Law Office to deliver such opinion to you, (c) from the
Company's and the Subsidiary Guarantors' in-house counsel, substantially in the
form set forth in Exhibit 4.4(c) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its in-house counsel to deliver such opinion
to you), and (d) from O'Melveny & Xxxxx LLP, your special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(d)
and covering such other matters incident to such transactions as you may
reasonably request.
4.5 Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation T, U or
X of the Board of Governors of the Federal Reserve System), and (iii) not
subject you to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by you, you shall have received an Officer's Certificate certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6 [Reserved].
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8 Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National Association
of Insurance Commissioners) shall have been obtained for the Notes.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not have changed its
jurisdiction of incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
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4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement, the Collateral Documents and all documents and
instruments incident to such transactions shall be satisfactory to you and your
special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
4.11 Delivery of Company Documents.
On or before the date of the Closing, the Company shall have delivered to
you and your special counsel each, unless otherwise noted, dated the date of the
Closing:
(a) Certified copies of the Company's Certificate of Incorporation,
together with a good standing certificate from the Secretary of State of the
State of Delaware, each to be dated a recent date prior to the date of the
Closing;
(b) Copies of the Company's Bylaws, certified as of the date of the Closing
by its corporate secretary or an assistant secretary;
(c) Resolutions of the Board of Directors of the Company approving and
authorizing the execution, delivery and performance of the Notes, this
Agreement, the Collateral Documents to which the Company is a party and any
other documents, instruments and certificates required to be executed by the
Company in connection therewith, each certified by the Company's corporate
secretary or an assistant secretary as being in full force and effect without
modification or amendment;
(d) Signature and incumbency certificates of the officers of the Company
executing the documents referred to in item (c) above, and any other documents,
instruments and certificates required to be executed by the Company in
connection herewith or therewith; and
(e) Such other documents as you or your special counsel may reasonably
request.
4.12 Delivery of Subsidiary Guarantor Documents.
On or before the date of the Closing, each Subsidiary Guarantor shall have
delivered to you and your special counsel each, unless otherwise noted, dated
the date of the Closing:
(a) Certified copies of such Subsidiary Guarantor's Articles or Certificate
of Incorporation, together with a good standing certificate from the Secretary
of State of the State of the jurisdiction of its incorporation, each to be dated
as of a recent date prior to the date of Closing;
(b) Copies of such Subsidiary Guarantor's Bylaws, certified as of the date
of the Closing by its corporate secretary or an assistant secretary;
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(c) Resolutions of the Board of Directors of such Subsidiary Guarantor
approving and authorizing the execution, delivery and performance of the
Subsidiary Guaranty and any other documents, instruments and certificates
required to be executed by such Subsidiary Guarantor in connection therewith,
each certified by its corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment;
(d) Signature and incumbency certificates of the officers of such
Subsidiary Guarantor executing the documents referred to in item (c) above, and
any other documents, instruments and certificates required to be executed by
such Subsidiary Guarantor in connection therewith; and
(e) Such other documents as you or your special counsel may reasonably
request.
4.13 Execution and Delivery of the Subsidiary Guaranty, the Pledge
Agreement and the Collateral Agency, Intercreditor Agreement, and
the ABN Amro Release of Guarantors.
(a) On or prior to the date of the Closing, the Subsidiary Guaranty shall
have been duly executed and delivered by each Subsidiary Guarantor and shall be
in full force and effect and you shall have received an executed copy thereof.
(b) On or prior to the date of the Closing, the Pledge Agreement shall have
been duly executed and delivered by the Pledgors and the Collateral Agent and
shall be in full force and effect, you shall have received an executed copy
thereof, and all actions shall have been taken as may be necessary or desirable
to give to the Collateral Agent, for the ratable benefit of the holders of the
Notes and the other Senior Secured Creditors, a valid and perfected first
priority Lien on and security interest in the Pledged Securities.
(c) On or prior to the date of the Closing, the Collateral Agency and
Intercreditor Agreement shall have been duly executed and delivered by the
Collateral Agent, you and each of the other Senior Secured Creditors, and shall
have been acknowledged by the Company and each of its Restricted Subsidiaries,
and such agreement shall be in full force and effect and you shall have received
an executed copy thereof.
(d) On or prior to the date of the Closing, the ABN Amro Release of
Guarantors shall have been duly executed and delivered by ABN Amro N.V.,
releasing Nu Skin Korea, Co., Ltd., Nu Skin Korea, Inc. and Nu Skin Japan Co.,
Ltd. from the ABN Amro Subsidiary Guaranty.
4.14 UCC Searches.
The Company shall have delivered to the Collateral Agent certified copies
of UCC Requests for Information or copies (Form UCC-11), or a similar search
report certified by a party acceptable to the Collateral Agent, dated a recent
date prior to the Closing, listing all effective financing statements which name
the Company (under its present name and any previous names) as the debtor and
which are filed in any jurisdiction.
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4.15 UCC Financing Statements.
The Company shall have delivered to the Collateral Agent UCC financing
statements or other similar instruments or documents, duly executed by the
Company with respect to the Pledged Securities, in appropriate form for filing
under the Uniform Commercial Code as in effect in all jurisdictions as may be
necessary or, in the opinion of the Collateral Agent, desirable to perfect the
security interests created in the Pledged Securities pursuant to the Pledge
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement, the Collateral Documents to which it is a party and the Notes, and to
perform the provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement, the Notes and the Collateral Documents to which the Company
is a party have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement and each of the Collateral Documents to
which it is a party constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3 Disclosure.
The Company, through its agent, Bank of America Securities LLC, has
delivered to you a copy of a Private Placement Memorandum, dated September, 2000
(the "Memorandum"), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature of the
business and principal properties of the Company and the Restricted
Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the
Collateral Documents, the Memorandum, the documents, certificates or other
writings delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to
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make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Memorandum, the Form 10-K filed
by the Company with the Securities and Exchange Commission for the period ended
December 31, 1999 or in any Form 10-Q, Form 8-K or other report filed by the
Company with the Securities and Exchange Commission for any period subsequent to
the period ended December 31, 1999 or as expressly described in Schedule 5.3 or
in one of the documents, certificates or other writings identified therein, or
in the financial statements listed in Schedule 5.5, since December 31, 1999,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to you by or on behalf of the Company.
5.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, the percentage of
shares of each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary and whether such
Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary, and whether
such Subsidiary is a Material Subsidiary, (ii) of the Company's Affiliates,
other than Subsidiaries, and (iii) of the Company's directors and senior
officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except for Permitted Liens, directors' qualifying shares, shares required to be
owned by Persons pursuant to applicable foreign laws regarding foreign
ownership, or as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Material Subsidiary, is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Material Subsidiary to pay dividends
out of profits or make any other similar distributions of profits to the Company
or any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Material Subsidiary.
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5.5 Financial Statements.
The Company has delivered to you copies of the financial statements of the
Company and the Restricted Subsidiaries listed on Schedule 5.5. All of said
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the Company and the Restricted Subsidiaries as of the respective dates specified
in such Schedule and the consolidated results of their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this Agreement,
the Collateral Documents to which it is a party and the Notes will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, note
purchase or credit agreement, corporate charter or bylaws, or any other Material
agreement, lease or instrument to which the Company or any Subsidiary is bound
or by which the Company or any Subsidiary or any of their respective properties
may be bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary, or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company or any of its Restricted
Subsidiaries of this Agreement, the Collateral Documents or the Notes.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Restricted Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
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5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction (other than those tax returns
which individually or collectively are not Material), and have paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
levied upon them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (i) the amount of
which is not individually or in the aggregate Material, or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate in accordance
with GAAP. The Federal income tax liabilities of the Company and its
Subsidiaries have been resolved with the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ending on December 31,
1996.
5.10 Title to Property; Leases.
The Company and the Restricted Subsidiaries have good and sufficient title
to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Restricted Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement or the Collateral Documents. All
leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and the Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without any known Material conflict with the rights
of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material violation by
any Person of any right of the Company or any Restricted Subsidiary with respect
to any patent, copyright, service mark, trademark, trade name or other right
owned or used by the Company or any Restricted Subsidiary.
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5.12 Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be, individually or in the aggregate,
Material.
(b) Neither the Company nor any ERISA Affiliate maintains a "single
employer plan" or a Multiemployer Plan that is subject to Title IV of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material or has otherwise
been disclosed in the most recent consolidated financial statements of the
Company and its Subsidiaries referenced in Section 5.5 of this Agreement.
(e) The execution and delivery of this Agreement and the Collateral
Documents and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
first sentence of this Section 5.12(e) is made in reliance upon and subject to
the accuracy of your representation in Section 6.2 as to the sources of the
funds used to pay the purchase price of the Notes to be purchased by you.
5.13 Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the Notes
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than you and not more than 18 other Institutional Investors, each
of which has been offered the Notes or any similar securities at a private sale
for investment. Neither the Company nor anyone acting on its behalf has taken,
or will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
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5.14 Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes to repay
Indebtedness of the Company and its Subsidiaries (including repayment in full
and termination of the Existing Credit Facility) and for other general corporate
purposes (including repurchases of stock of the Company); provided that no part
of the proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, so as to involve the Company or any holder of a Note in a violation
of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR
221) or Regulation X of said Board (12 CFR 224), or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 5% of the value of the consolidated assets of the
Company and its Subsidiaries and the Company does not have any present intention
that margin stock will constitute more than 5% of the value of such assets. As
used in this Section, the term "margin stock" shall have the meanings assigned
to them in said Regulation U.
5.15 Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete and
correct list of all outstanding Indebtedness, separately listed for each such
item of Indebtedness of $2,000,000 or more, of the Company and the Restricted
Subsidiaries as of the date of the Closing.
(b) (i) Neither the Company nor any Restricted Subsidiary is in default in
the payment of any principal or interest on any Indebtedness of the Company or
such Restricted Subsidiary, and (ii) no event or condition exists with respect
to any Indebtedness of the Company or any Restricted Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment, except for
Indebtedness described in clauses (i) and (ii) which, in aggregate principal
amount, does not exceed $5,000,000.
(c) Neither the Company nor any Restricted Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 10.3.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Status under Certain Statutes.
Neither the Company nor any Restricted Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of
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1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18 Environmental Matters.
Neither the Company nor any of its Subsidiaries has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any of its Subsidiaries has knowledge of any
facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them in a manner contrary to any Environmental Laws and has not
disposed of any Hazardous Materials in a manner contrary to any Environmental
Laws, in each case in any manner that could reasonably be expected to result in
a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated by
the Company or any of its Subsidiaries are in compliance with all applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are an institutional "accredited investor" within
the meaning of subparagraphs (1), (2), (3) or (7) of Rule 501(a) promulgated
under the Securities Act. You represent that you are purchasing the Notes for
your own account or for one or more separate accounts maintained by you or for
the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
12
6.2 Source of Funds.
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" within the meaning
of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued
July 12, 1995) and there is no employee benefit plan, treating as a single plan
all plans maintained by the same employer or employee organization, with respect
to which the amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceed ten percent (10%) of the
total reserves and liabilities of such general account (exclusive of separate
account liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued July 12,
1991) and, except as you have disclosed to the Company in writing pursuant to
this paragraph (b), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment fund;
or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
13
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an Institutional
Investor:
(a) Quarterly Statements - within 60 days (or if sooner, on the date
consolidated statements are required to be delivered to any other creditor of
the Company) after the end of each quarterly fiscal period in each fiscal year
of the Company (other than the last quarterly fiscal period of each such fiscal
year), duplicate copies of,
(i) a consolidated and a consolidating balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of income, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments; provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a) to
provide consolidated financial statements so long as such Quarterly Report on
Form 10-Q includes the consolidated financial statements identified in clauses
(i) and (ii) above; provided further that such consolidating financial
statements shall show the elimination of all Unrestricted Subsidiaries and the
resultant consolidated financial statements of the Company and its Restricted
Subsidiaries;
(b) Annual Statements - within 120 days (or if sooner, on the date
consolidated statements are required to be delivered to any other creditor of
the Company) after the end of each fiscal year of the Company, duplicate copies
of,
(i) a consolidated and a consolidating balance sheet of the Company
and its Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries,
for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, which
consolidated financial statements shall be accompanied by an opinion thereon of
independent certified public accountants of
14
recognized national standing, which opinion shall state that such consolidated
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances, and which consolidating financial statements shall be
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments; provided that the delivery within the time period specified above
of the Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this Section 7.1(b) to provide consolidated
financial statements so long as such Annual Report on Form 10-K includes the
consolidated financial statements identified in clauses (i) and (ii) above;
provided further that such consolidating financial statements shall show the
elimination of all Unrestricted Subsidiaries and the resultant consolidated
financial statements of the Company and its Restricted Subsidiaries;
(c) SEC and Other Reports - promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement sent by
the Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Material Domestic
Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default - promptly, and in any event
within five days, after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters - promptly, and in any event within fifteen days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof, which could reasonably be expected to have
a Material Adverse Effect; or
15
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan,
which could reasonably be expected to have a Material Adverse Effect;
or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority - promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or
any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably
be expected to have a Material Adverse Effect; and
(g) Requested Information - with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes, including without
limitation, such information as is required by Rule 144A promulgated under
the Securities Act to be delivered to a prospective transferee of the
Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1 hereof shall be accompanied by a certificate of a
Senior Financial Officer setting forth:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.2 through Section 10.6
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default - a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and
its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
16
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder of Notes that
is an Institutional Investor:
(a) No Default - if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with the Company's officers,
and (with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Restricted Subsidiary, all at
such reasonable times during business hours and as often as may be reasonably
requested in writing; and
(b) Default - if a Default or Event of Default then exists, at the expense
of the Company to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such reasonable times and as often as may
be requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments.
The Company shall make principal prepayments on the Notes on the dates and
in the amounts set forth below:
Prepayment Date Amount
-------------------------------------------------------------
October 12, 2004 JPY1,386,642,857
October 12, 2005 JPY1,386,642,857
October 12, 2006 JPY1,386,642,857
October 12, 2007 JPY1,386,642,858
October 12, 2008 JPY1,386,642,857
October 12, 2009 JPY1,386,642,857
;provided that upon any partial prepayment of the Notes pursuant to
Section 8.2 or purchase of the Notes permitted by Section 8.5, the
principal amount of each required prepayment of the
17
Notes becoming due under this Section 8.1 on and after the date of such
prepayment or purchase, as well as the payment required at maturity, shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such prepayment or purchase.
8.2 Optional Prepayments with Make-Whole Amount.
(a) Prepayment Amount. The Company may, at its option, upon notice as
provided below, prepay on any Business Day all, or from time to time any part
of, the Notes in an amount not less than 5% of the aggregate principal amount of
the Notes then outstanding in the case of a partial prepayment, at 100% of the
principal amount so prepaid, plus accrued interest thereon, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
(b) Notice. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the Business Day fixed for such prepayment. Each such
notice shall specify the prepayment date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 8.3), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
18
8.5 Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes. The Company will promptly cancel all
Notes acquired by it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.
8.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal; provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become
or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, (i) the rate of the benchmark Japanese Government Bond
reported, as of 10:00 a.m. (New York time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal,
on the display designated as "Page 0#JPBMK=" on the Reuters Screen (or
such other display as may replace "Page 0#JPBMK=" on the Reuters
Screen) for the benchmark Japanese Government Bond having a maturity
equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or (ii) if such rate is note reported as of such
time or the rate reported is not ascertainable, the average of the
rates as determined by at least three recognized market makers in the
Japanese Government Bond market. Such rate will be determined, if
necessary, by interpolating linearly between (1) the benchmark
Japanese Government Bond with the maturity closest to and greater than
the Remaining Average life, and (2) the benchmark Japanese Government
Bond with the maturity closest to and less than the Remaining Average
Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year)
obtained by dividing
19
(i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect
to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided
that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Notes, then
the amount of the next succeeding scheduled interest payment will
be reduced by the amount of interest accrued to such Settlement
Date and required to be paid on such Settlement Date pursuant to
Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be
prepaid pursuant to Section 8.2 or has become or is declared to
be immediately due and payable pursuant to Section 12.1, as the
context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1 Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2 Insurance.
The Company will and will cause each of the Restricted Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
20
9.3 Maintenance of Properties.
The Company will and will cause each of the Restricted Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Restricted Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.4 Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary, or (ii) the nonpayment of all such taxes and assessments and
claims in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
9.5 Corporate Existence, etc.
The Company will at all times preserve and keep in full force and effect
its corporate existence. Subject to Section 10.2, the Company will at all times
preserve and keep in full force and effect the corporate existence of each
Restricted Subsidiary (unless merged into the Company or a Restricted
Subsidiary) and all rights and franchises of the Company and the Restricted
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise could not, individually or in the aggregate, have
a Material Adverse Effect.
9.6 Security; Execution of Pledge Agreement and Subsidiary Guaranty.
(a) The Notes and other Senior Secured Indebtedness will be secured by the
Pledged Securities of each Material Foreign Subsidiary. Within 5 days after the
Company or any of its Restricted Subsidiaries acquires a Material Foreign
Subsidiary or within 5 days after the Company delivers consolidating financial
statements pursuant to Section 7.1 showing that any of Company's existing
Subsidiaries has become a Material Foreign Subsidiary, the Company shall cause
the Pledged Securities of such Material Foreign Subsidiary to be pledged
pursuant to a supplement to the Pledge Agreement (unless a pledge of such
Pledged Securities (x) is legally unobtainable or (y) the consent of a
governmental authority is required in order to obtain such
21
pledge and such consent has not been obtained after the Company's commercially
reasonable efforts to obtain such consent, and Company delivers an opinion of
outside counsel, in form and substance reasonably satisfactory to the holders of
the Notes and their counsel, to the effect that such pledge was not legally
obtainable or such consent was not obtained). The Company shall promptly take
all actions as may be necessary or desirable to give to the Collateral Agent,
for the ratable benefit of the holders of the Notes and the other Senior Secured
Creditors, a valid and perfected first priority Lien on and security interest in
the Pledged Securities of such Material Foreign Subsidiary and shall promptly
deliver to the holders of the Notes (i) a supplement to the Pledge Agreement
executed by each Pledgor of the Pledged Securities of such Material Foreign
Subsidiary, (ii) a certificate executed by the secretary or an assistant
secretary of each Pledgor as to (a) the incumbency and signatures of the
officers of such Pledgor executing the supplement to the Pledge Agreement, and
(b) the fact that the attached resolutions of the Board of Directors of such
Pledgor authorizing the execution, delivery and performance of the supplement to
the Pledge Agreement are in full force and effect and have not been modified or
rescinded, (iii) at the request of a holder of any Note, a favorable opinion of
counsel, in form and substance reasonably satisfactory to the holders of the
Notes and their counsel, as to (a) the due organization and good standing of
such Pledgor, (b) the due authorization, execution and delivery by such Pledgor
of the supplement to the Pledge Agreement, (c) the enforceability of the
supplement to the Pledge Agreement, and (d) such other matters as the Required
Holders may reasonably request, all of the foregoing to be satisfactory in form
and substance to the holders of the Notes and their counsel; provided that the
opinion described in this clause (iii) may be given by the Company's in-house
counsel and may contain reasonable assumptions, if necessary, relating to the
fact that such counsel may not be admitted to practice law in the applicable
jurisdiction, and (iv) such other assurances, certificates, documents, consents
or opinions as the Required Holders reasonably may require.
(b) Within 5 days after the Company or any of its Restricted Subsidiaries
acquires a Material Domestic Subsidiary or within 5 days after the Company
delivers consolidating financial statements pursuant to Section 7.1 showing that
any of Company's existing Subsidiaries has become a Material Domestic Subsidiary
(but not later than the time when such Material Domestic Subsidiary provides a
guaranty or co-obligor agreement to the lenders party to any Significant Credit
Facility) the Company will (x) cause such Material Domestic Subsidiary to
execute and deliver to the holders of the Notes a counterpart of the Subsidiary
Guaranty, and (y) if the lenders party to such Significant Credit Facility are
not then party to the Collateral Agency and Intercreditor Agreement (either
directly or through their agent) cause such lenders (either directly or through
their agent) to become party to the Collateral Agency and Intercreditor
Agreement. The Company shall promptly deliver to the holders of the Notes,
together with such counterpart of the Subsidiary Guaranty (i) certified copies
of such Material Domestic Subsidiary's Articles or Certificate of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation, each to be dated a recent date prior to their
delivery to the holders of the Notes, (ii) a copy of such Material Domestic
Subsidiary's Bylaws, certified by its corporate secretary or an assistant
corporate secretary as of a recent date prior to their delivery to the holders
of the Notes, (iii) a certificate executed by the secretary or an assistant
secretary of such Material Domestic Subsidiary as to (a) the incumbency and
signatures of the officers of such Material Domestic Subsidiary executing the
counterpart of the Subsidiary Guaranty, and (b) the fact that the attached
resolutions of the Board of Directors of such Material Domestic Subsidiary
22
authorizing the execution, delivery and performance of the counterpart of the
Subsidiary Guaranty are in full force and effect and have not been modified or
rescinded, (iv) at the request of a holder of any Note, a favorable opinion of
counsel to the Company and such Material Domestic Subsidiary, in form and
substance reasonably satisfactory to the holders of the Notes and their counsel,
as to (a) the due organization and good standing of such Material Domestic
Subsidiary, (b) the due authorization, execution and delivery by such Material
Domestic Subsidiary of the counterpart of the Subsidiary Guaranty, (c) the
enforceability of the counterpart of the Material Domestic Subsidiary, and (d)
such other matters as the Required Holders may reasonably request, all of the
foregoing to be satisfactory in form and substance to the holders of the Notes
and their counsel; provided, that the opinion described in clause (iv) above may
be given by the Company's in-house counsel and may contain reasonable
assumptions, if necessary, relating to the fact that counsel to the Company and
such Material Domestic Subsidiary may not be admitted to practice law in the
applicable jurisdiction, and (v) such other assurances, certificates, documents,
consents or opinions as the Required Holders reasonably may require.
9.7 Termination of the Existing Credit Facility and Related Liens.
Within 5 Business Days of the date of Closing, the Company will provide you
with satisfactory evidence that the Company has (i) repaid in full all
Indebtedness outstanding under the Existing Credit Facility, (ii) terminated any
commitments to lend or make other extensions of credit under the Existing Credit
Facility, (iii) delivered to the Collateral Agent all documents or instruments
necessary to release all Liens securing Indebtedness or other obligations of the
Company under the Existing Credit Facility, and (iv) made arrangements
satisfactory to the Collateral Agent with respect to the cancellation of any
letters of credit outstanding under the Existing Credit Facility.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1 Transactions with Affiliates.
The Company will not and will not permit any Restricted Subsidiary to enter
into, directly or indirectly, any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Restricted Subsidiary), except as
approved by a majority of the disinterested directors of the Company, and upon
fair and reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate; provided that the foregoing restrictions shall
not apply to Standard Securitization Undertakings effected as part of a
Permitted Securitization Program.
10.2 Merger, Consolidation, Sale of Assets, etc.
(a) The Company will not and will not permit any Restricted Subsidiary to
consolidate with or merge with any other Person unless immediately after giving
effect to any consolidation or merger no Default or Event of Default would exist
and:
23
(i) in the case of a consolidation or merger of a Restricted
Subsidiary, (x) the Company or another Restricted Subsidiary is the
surviving or continuing corporation, (y) the surviving or continuing
corporation is or immediately becomes a Restricted Subsidiary, or (z) such
consolidation or merger, if considered as the sale of the assets of such
Restricted Subsidiary to such other Person, would be permitted by Section
10.2(c); and
(ii) in the case of a consolidation or merger of the Company, the
successor corporation or surviving corporation which results from such
consolidation or merger (the "surviving corporation"), if not the Company,
(A) is a solvent U.S. corporation, (B) executes and delivers to each holder
of the Notes its assumption of (x) the due and punctual payment of the
principal of and premium, if any, and interest on all of the Notes, and (y)
the due and punctual performance and observation of all of the covenants in
this Agreement, the Collateral Documents and the Notes to be performed or
observed by the Company, and (C) furnishes to each holder of the Notes an
opinion of counsel, reasonably satisfactory to the Required Holders, to the
effect that the instrument of assumption has been duly authorized, executed
and delivered and constitutes the legal, valid and binding contract and
agreement of the surviving corporation enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(b) The Company will not sell, lease (as lessor) or otherwise transfer all
or substantially all of its assets in a single transaction or series of
transactions to any Person unless immediately after giving effect thereto no
Default or Event of Default would exist and:
(i) the successor corporation to which all or substantially all of the
Company's assets have been sold, leased or transferred (the "successor
corporation") is a solvent U.S. corporation, and
(ii) the successor corporation executes and delivers to each holder of
the Notes its assumption of the due and punctual payment of the principal
of and premium, if any, and interest on all of the Notes, and the due and
punctual performance and observation of all of the covenants in this
Agreement, the Collateral Documents and the Notes to be performed or
observed by the Company and shall furnish to such holders an opinion of
counsel, reasonably satisfactory to the Required Holders, to the effect
that the instrument of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding contract and
agreement of such successor corporation enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
No such conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall
24
theretofore have become such in the manner prescribed in this Section 10.2 from
its liability under this Agreement or the Notes.
(c) The Company will not, and will not permit any Restricted Subsidiary to,
sell, lease (as lessor), transfer, abandon or otherwise dispose of assets to any
Person; provided that the foregoing restrictions do not apply to:
(i) the sale, lease, transfer or other disposition of assets of the
Company to a Restricted Subsidiary or of a Restricted Subsidiary to the
Company or another Restricted Subsidiary;
(ii) the sale in the ordinary course of business of inventory held for
sale, or equipment, fixtures, supplies or materials that are no longer
required in the operation of the business of the Company or any Restricted
Subsidiary or are obsolete;
(iii) the sale of property of the Company or any Restricted Subsidiary
and the Company's or any Restricted Subsidiary's subsequent lease, as
lessee, of the same property, within 270 days following the acquisition or
construction of such property;
(iv) the sale of assets of the Company or any Restricted Subsidiary
for cash or other property to a Person or Persons (other than an Affiliate)
if (A) such assets (valued at net book value) do not constitute a
"substantial part" of the assets of the Company and the Restricted
Subsidiaries, (B) in the opinion of a Responsible Officer of the Company,
the sale is for fair value and is in the best interests of the Company, and
(C) immediately after giving effect to the transaction, no Default or Event
of Default would exist; or
(v) the sale of assets meeting the conditions set forth in clauses (B)
and (C) of subparagraph (iv) above, as long as the net proceeds from such
sale in excess of a substantial part of the assets of the Company and the
Restricted Subsidiaries are (x) applied within 270 days of the date of
receipt to the acquisition of productive assets useful and intended to be
used in the operation of the business of the Company or the Restricted
Subsidiaries, or (y) used to repay any Indebtedness of the Company (which
in the case of the Notes shall be with the Make-Whole Amount) or the
Restricted Subsidiaries (other than Indebtedness that is in any manner
subordinated in right of payment or security in any respect to Indebtedness
evidenced by the Notes, Indebtedness owing to the Company, any of its
Subsidiaries or any Affiliate and Indebtedness in respect of any revolving
credit or similar credit facility providing the Company or any of the
Restricted Subsidiaries with the right to obtain loans or other extensions
of credit from time to time, except to the extent that in connection with
such payment of Indebtedness the availability of credit under such credit
facility is permanently reduced not later than 270 days after the date of
receipt of such proceeds by an amount not less than the amount of such
proceeds applied to the payment of such Indebtedness).
25
(d) For purposes of Section 10.2(c), a sale of assets will be deemed
to involve a "substantial part" of the assets of the Company and the
Restricted Subsidiaries if the book value of such assets, together with all
other assets sold during such fiscal year (except those assets sold
pursuant to clauses (i) through (iii) of Section 10.2(c)), exceeds 10% of
the Consolidated Total Assets of the Company and the Restricted
Subsidiaries determined as of the end of the immediately preceding fiscal
year.
(e) The Company will not, and will not permit any Restricted
Subsidiary to, issue shares of stock (or any options or warrants to
purchase stock or other Securities exchangeable for or convertible into
stock) of any Restricted Subsidiary except (i) to the Company, (ii) to a
Wholly-Owned Restricted Subsidiary, (iii) to any Restricted Subsidiary that
owns equity in the Restricted Subsidiary issuing such equity, or (iv) with
respect to a Restricted Subsidiary that is a partnership or joint venture,
to any other Person who is a partner or equity owner if such issuance is
made pursuant to the terms of the Joint Venture Agreement or Partnership
Agreement entered into in connection with the formation of such partnership
or joint venture; provided, that Restricted Subsidiaries may issue
directors' qualifying shares and shares required to be issued by any
applicable foreign law regarding foreign ownership requirements. The
Company will not, and will not permit any Restricted Subsidiary to sell,
transfer or otherwise dispose of its interest in any stock (or any options
or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Restricted Subsidiary (except to the Company
or a Wholly-Owned Restricted Subsidiary) unless such sale, transfer or
disposition would be permitted under Section 10.2(c).
10.3 Liens.
The Company will not and will not permit any of the Restricted
Subsidiaries to directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or
with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any Restricted Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom (unless the Company makes, or
causes to be made, effective provision whereby the Notes will be equally
and ratably secured with any and all other obligations thereby secured,
such security to be pursuant to an agreement reasonably satisfactory to the
Required Holders and, in any such case, the Notes shall have the benefit,
to the fullest extent that, and with such priority as, the holders of the
Notes may be entitled under applicable law, of any equitable Lien on such
property), except for the following (which are collectively referred to as
"Permitted Liens"):
(a) Liens for taxes, assessments or other governmental charges which
are not yet delinquent or that are being contested in good faith;
(b) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', carriers', warehousemen's,
mechanics' materialmen's, and other similar Liens) and Liens to secure the
performance of bids, tenders, leases or trade contracts, or to secure
statutory obligations (including obligations under workers compensation,
unemployment insurance and other social security legislation), surety or
appeal bonds or other
26
Liens incurred in the ordinary course of business and not in connection with the
borrowing of money;
(c) Liens resulting from judgments, unless such judgments are not,
within 60 days, discharged or stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay;
(d) Liens securing Indebtedness of a Restricted Subsidiary owed to the
Company or to a Wholly-Owned Restricted Subsidiary;
(e) Liens in existence at Closing and reflected in Schedule 10.3
hereto;
(f) minor survey exceptions and the like which do not Materially
detract from the value of such property;
(g) leases, subleases, easements, rights of way, restrictions and
other similar charges or encumbrances incidental to the ownership of
property or assets or the ordinary conduct of the Company's or any of the
Restricted Subsidiaries' businesses, provided that the aggregate of such
Liens do not Materially detract from the value of such property;
(h) Liens (i) existing on property at the time of its acquisition or
construction by the Company or a Restricted Subsidiary and not created in
contemplation thereof; (ii) on property created contemporaneously with its
acquisition or within 180 days of the acquisition or completion of
construction or improvement thereof to secure the purchase price or cost of
construction or improvement thereof, including such Liens arising under
Capital Leases; or (iii) existing on property of a Person at the time such
Person is acquired by, consolidated with, or merged into the Company or a
Restricted Subsidiary and not created in contemplation thereof; provided
that such Liens shall attach solely to the property acquired or constructed
and the principal amount of the Indebtedness secured by the Lien shall not
exceed the principal amount of such Indebtedness just prior to the time
such Person is consolidated with or merged into the Company or a Restricted
Subsidiary;
(i) Liens on receivables of the Company or a Restricted Subsidiary and
the related assets of the type specified in clauses (A) through (D) in the
definition of "Permitted Securitization Program" in connection with any
Permitted Securitization Program;
(j) Liens in favor of the holders of the Notes and the other Senior
Secured Creditors party to the Collateral Agency and Intercreditor
Agreement in connection with the pledge of the Pledged Securities of each
Material Foreign Subsidiary;
(k) banker's Liens and similar Liens (including set-off rights) in
respect of bank deposits; provided, however, that any such Liens held by
parties to the Collateral Agency and Intercreditor Agreement will be
governed by and subject to the Collateral Agency and Intercreditor
Agreement;
(l) Liens in favor of customs and revenue authorities as a matter of
law to secure payment of custom duties and in connection with the
importation of goods in the ordinary course of the Company's and its
Subsidiaries' business;
27
(m) any Lien renewing, extending or replacing Liens permitted by
Sections 10.3(e), (h), and (i), provided that (i) the principal amount of
the Indebtedness secured is neither increased nor the maturity thereof
changed to an earlier date, (ii) such Lien is not extended to any other
property, and (iii) immediately after such extension, renewal or refunding,
no Default or Event of Default would exist; and
(n) other Liens securing Indebtedness not otherwise permitted by
paragraphs (a) through (m) of this Section 10.3, provided that Priority
Indebtedness shall not, at any time, exceed an amount equal to 13% of
Consolidated Net Worth.
Any Lien originally incurred in compliance with paragraph (n) of this Section
10.3 may be renewed, extended or replaced so long as the conditions set forth in
subparagraphs (i), (ii) and (iii) of paragraph (m) of this Section 10.3 are
satisfied.
10.4 Minimum Consolidated Net Worth.
The Company will not, at any time, permit Consolidated Net Worth to be less
than the sum of (i) $271,935,200, (ii) an aggregate amount equal to 60% of
Consolidated Net Income (but, in each case, only if a positive number) earned in
(a) the six months ended December 31, 2000, and (b) each complete fiscal year
thereafter, and (iii) 50% of the net proceeds realized by the Company and its
Restricted Subsidiaries from the sale of Equity Securities subsequent to
June 30, 2000, excluding issuances of Equity Securities upon exercise of
employee stock options or rights under any employee benefit plans (excluding
such exercise by any Person who owns greater than 5% of the Equity Securities of
the Company), issuances of Equity Securities in connection with acquisitions by
the Company and its Restricted Subsidiaries, and reissuances of up to
$60,000,000 of treasury securities purchased by the Company after the date of
Closing.
10.5 Limitation on Indebtedness.
(a) The Company will not permit at any time (i) the ratio of Total
Indebtedness to EBITDA for the four most recently ended fiscal quarters of the
Company to be greater than 1.85 to 1.0, or (ii) Priority Indebtedness to exceed
13% of Consolidated Net Worth.
(b) The Company will not, and will not permit any Restricted Subsidiary to,
incur, create or assume any Term Debt during the one year period immediately
following the Closing unless (i) the aggregate principal amortization of all
such Term Debt in any year does not exceed $30,000,000, and (ii) such Term Debt
has at the time of issuance a longer average life to maturity than the remaining
average life to maturity of the Notes then outstanding.
(c) The Company will not, and will not permit any Restricted Subsidiary to,
incur, assume or create any Indebtedness under any Significant Credit Facility
unless each of the lenders under such Significant Credit Facility immediately
becomes a party to the Collateral Agency and Intercreditor Agreement.
28
10.6 Minimum Fixed Charges Coverage.
The Company will not permit, as of the end of each fiscal quarter of the
Company, the ratio of Consolidated Income Available for Fixed Charges to Fixed
Charges, for the period consisting of such fiscal quarter and the preceding
three fiscal quarters, to be less than 2.75 to 1.0.
10.7 Nature of the Business.
The Company will not, and will not permit any Restricted Subsidiary, to
engage in any business if, as a result, the general nature of the business of
the Company and the Restricted Subsidiaries, taken as a whole, which would then
be engaged in by the Company and the Restricted Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and the Restricted Subsidiaries, taken as a whole, on the date of the
Closing.
10.8 Designation of Restricted and Unrestricted Subsidiaries.
The Company may designate in writing to each of the holders of the Notes
any Unrestricted Subsidiary as a Restricted Subsidiary and may designate in
writing to each of the holders of the Notes any Restricted Subsidiary as an
Unrestricted Subsidiary; provided that (i) no such designation of a Restricted
Subsidiary as an Unrestricted Subsidiary shall be effective unless (A) such
designation is treated as a transfer under Section 10.2 and such designation is
permitted by Section 10.2, and (B) such Subsidiary does not own any stock, other
equity interest or Indebtedness of the Company or a Restricted Subsidiary; and
(ii) no such designation shall be effective unless, immediately after giving
effect thereto no Default or Event of Default would exist; provided, further,
that any Subsidiary that has been designated as a Restricted Subsidiary or an
Unrestricted Subsidiary may not thereafter be redesignated as a Restricted
Subsidiary or an Unrestricted Subsidiary, as the case may be, more than once;
and provided, further, that no Securitization Entity shall be a Restricted
Subsidiary unless designated as such by the Company. Notwithstanding anything to
the contrary in this Agreement, upon any Unrestricted Subsidiary becoming a
Material Subsidiary, it shall immediately be deemed to be a Restricted
Subsidiary.
10.9 Limitation on Swap Agreements.
The Company will not, and will not permit any Restricted Subsidiary to,
have any obligations (contingent or otherwise) existing or arising under any
Swap Agreement, unless such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of mitigating risks
associated with liabilities, commitments or assets held by such Person, and not
for purposes of speculation.
10.10 Limitation on Restricted Payments.
The Company will not, and will not permit any Restricted Subsidiary to, do
any of the following if a Default or Event of Default exists or would exist
immediately after giving effect thereto:
(a) Declare or pay any dividends, either in cash or property, on any
shares of capital stock of any class of the Company or any Restricted
Subsidiary (except (i)
29
dividends or other distributions payable solely in shares of common stock, and
(ii) dividends and distributions paid by a Restricted Subsidiary solely to the
Company or a Wholly-Owned Restricted Subsidiary); or
(b) Directly or indirectly, or through any Restricted Subsidiary,
purchase, redeem or retire any shares of capital stock of any class of the
Company or any Restricted Subsidiary or any warrants, rights or options to
purchase or acquire any shares of capital stock of the Company or any
Restricted Subsidiary; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Restricted Subsidiary, in respect of capital
stock of any class of the Company or any Restricted Subsidiary (except
payments and distributions made by a Restricted Subsidiary solely to the
Company or a Wholly-Owned Restricted Subsidiary).
10.11 Most Favored Lender.
If the Company creates, incurs or assumes any Term Debt within the one year
period immediately following the Closing, and any such Term Debt has financial
or operational covenants other than as set forth in this Section 10, or more
favorable to the lender or creditor thereunder than those set forth in this
Section 10, then this Section 10 shall be deemed to be automatically amended to
include such other or more favorable covenants, such amendment to be effective
as of the date of such incurrence, creation or assumption, and such other or
more favorable covenants as incorporated into this Section 10 may not thereafter
be modified without the written consent of the Required Holders.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note or any
amount payable under Section 14.4 for more than five Business Days after the
same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any term
contained in Section 10; or
(d) the Company or any of its Subsidiaries defaults in the performance of
or compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) or in any Collateral Document
and such default is not remedied within 30 days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default, and (ii) the
Company or such Subsidiary receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section 11); or
30
(e) any representation or warranty made in writing by or on behalf of the
Company or any Subsidiary Guarantor or by any officer of the Company or any
Subsidiary Guarantor in this Agreement, the Collateral Documents or in any
writing furnished in connection with the transactions contemplated hereby or
thereby proves to have been false or incorrect in any material respect on the
date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness beyond any period
of grace provided with respect thereto, or (ii) the Company or any Restricted
Subsidiary is in default for more than 20 Business Days in the performance of or
compliance with any term of any evidence of any Indebtedness or of any mortgage,
indenture or other agreement relating thereto or any other condition exists, and
as a consequence of such default or condition (x) such Indebtedness has become,
or has been declared (or one or more Persons are entitled to declare such
Indebtedness to be) due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (y) one or more Persons have the right
to require the Company or any Restricted Subsidiary to purchase or repay such
Indebtedness, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity interests), (x) the
Company or any Restricted Subsidiary has become obligated to purchase or repay
any Indebtedness before its regular maturity or before its regularly scheduled
dates of payment, or (y) one or more Persons have exercised any right to require
the Company or any Restricted Subsidiary to purchase or repay such Indebtedness,
provided that the aggregate amount of all foregoing Indebtedness with respect to
which a payment, performance or compliance default shall have occurred or a
failure or other event causing or permitting the purchase or repayment by the
Company or any Restricted Subsidiary shall have occurred exceeds $7,500,000; or
(g) the Company or any Material Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company or any Material Subsidiary, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Material Subsidiary, or any such
petition shall be filed against the Company or any Material Subsidiary and such
petition shall not be dismissed within 60 days; or
31
(i) a final judgment or judgments for the payment of money aggregating
in excess of $10,000,000 are rendered against one or more of the Company
and any Restricted Subsidiary and which judgments are not, within 60 days
after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or
(j) the Subsidiary Guaranty ceases to be in full force and effect with
respect to any Material Domestic Subsidiary, or any Material Domestic
Subsidiary contests the validity thereof; or
(k) the Pledge Agreement ceases to be in full force and effect with
respect to any Material Foreign Subsidiary, any Pledgor contests the
validity of the Pledge Agreement, or the Collateral Agent shall fail to
have a valid, perfected and enforceable first priority security interest in
the Pledged Securities; or
(l) [Reserved.]
(m) (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any
Plan shall have been or is reasonably expected to be filed with the PBGC or
the PBGC shall have instituted proceedings under ERISA section 4042 to
terminate or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the aggregate "amount of unfunded
benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA, shall
exceed 5% of Consolidated Net Worth as of the end of the most recently
ended fiscal quarter of the Company, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any of its Subsidiaries establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a
manner that would increase the liability of the Company or any of its
Subsidiaries thereunder; and any such event or events described in clauses
(i) through (vi) above, either individually or together with any other such
event or events, could reasonably be expected to have a Material Adverse
Effect.
As used in Section 11(m), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
32
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the
time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein, in the Collateral
Documents or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences,
and at any time after any Notes have become due and payable pursuant to clause
(a) of Section 12.1, the holders of all Notes then outstanding, by written
notice to the Company, may rescind acceleration of the Notes resulting from the
occurrence of an Event of Default described in paragraph (h) of Section 11, if
in each case (i) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (ii) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such declaration
or acceleration, have been cured or have been waived pursuant to Section 17, and
(iii) no judgment or decree has been entered for the
33
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement, the Collateral Documents or by any Note upon
any holder thereof shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise. Without limiting the obligations of the Company under
Section 15, the Company will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the Company
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
the Yen-equivalent of $100,000, provided that if
34
necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than the
Yen-equivalent of $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representations set forth in Section 6 and to have become a party to
the Collateral Agency and Intercreditor Agreement. Each transferee of a Note
which was not previously a holder of the Notes under this Agreement and which is
not incorporated under the laws of the United States of America or a state
thereof shall, within three Business Days of becoming a holder, deliver to the
Company such certificate and other evidence as the Company may reasonably
request to establish that such holder is entitled to receive payments under the
Notes without deduction or withholding of any United States federal income
taxes.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $100,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in Provo, Utah
at the principal office of the Company in such jurisdiction. The Company may at
any time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of
the Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time
35
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
14.3 Obligation to Make Payments in Yen.
The obligation of the Company to make payments in Yen of the principal,
applicable Make-Whole Amount, if any, and interest becoming due and payable on
the Notes and any other amounts due hereunder or under the Notes as provided in
Section 14.2, (a) shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment, which is expressed in or converted into any
currency other than Yen, except to the extent that such tender or recovery shall
result in the actual receipt by the holders of the Notes of the full amount of
Xxx expressed to be payable in respect of the principal, applicable Make-Whole
Amount, if any, in respect of and interest on the Notes and all other amounts
due hereunder or under the Notes, (b) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in Yen the amount, if
any, by which such actual receipt shall fall short of the full amount of Yen so
expressed to be payable, and (c) shall not be affected by judgment being
obtained for any other sum due under this Agreement or on any Note.
14.4 Payments Free and Clear of Taxes.
(a) Payments. The Company will pay all amounts of principal of, applicable
Make-Whole Amount, if any, and interest on the Notes, and all other amounts
payable hereunder or under the Notes, without set-off or counterclaim and free
and clear of, and without deduction or withholding for or on account of, all
present and future income, stamp, documentary and other taxes and duties, and
all other levies, imposts, charges, fees, deductions and withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority (except net income taxes and franchise taxes in lieu of net income
taxes imposed on any holder of any Note by its jurisdiction of incorporation or
the jurisdiction in which its applicable lending office is located) (all such
non-excluded taxes, duties, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called "Taxes"). If any Taxes are required to
be withheld from any amounts payable to a holder of any Notes, the amounts so
payable to such holder shall be increased to the extent necessary to yield such
holder (after payment of all Taxes) interest on any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes. Whenever any Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to each holder of the Notes, a certified copy
of an original official receipt received by the Company showing payment thereof.
If the Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to each
36
holder of the Notes the required receipts or other required documentary
evidence, the Company shall indemnify each holder of the Notes for any taxes
(including interest or penalties) that may become payable by such holder as a
result of any such failure. The obligations of the Company under this subsection
14.4(a) shall survive the payment and performance of the Notes and the
termination of this Agreement.
(b) Withholding Exemption Certificates. On or prior to the Closing Date,
each holder of the Notes which is not organized under the laws of the United
States of America or a state thereof shall deliver to the Company such
certificates and other evidence as the Company may reasonably request to
establish that such holder is entitled to receive payments under the Notes
without deduction or withholding of any United States federal income taxes. Each
such holder further agrees (i) promptly to notify the Company of any change of
circumstances (including any change in any treaty, law or regulation) which
would prevent such holder from receiving payments under the Notes without any
deduction or withholding of such taxes, and (ii) on or before the date that any
certificate or other form delivered by such holder under this subsection 14.4(b)
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent such certificate or form previously delivered by such
holder, to deliver to the Company a new certificate or form, certifying that
such holder is entitled to receive payments under the Notes without deduction or
withholding of such taxes. If any holder of the Notes which is not organized
under the laws of the United States of America or a state thereof fails to
provide to the Company pursuant to this subsection 14.4(b) (or in the case of a
transferee of a Note, Section 13.2) any certificates or other evidence required
by such provision to establish that such holder is, at the time it becomes a
holder, entitled to receive payments under the Notes without deduction or
withholding of any United States federal income taxes, such holder shall not be
entitled to any indemnification under subsection 14.4(a) for any Taxes imposed
on such holder.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the
Company will pay all costs and expenses (including reasonable attorneys' fees of
one special counsel and, if reasonably required, local or other counsel)
incurred by the Collateral Agent and you in connection with such transactions
and in connection with any amendments, waivers or consents under or in respect
of this Agreement, the Collateral Documents or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement, the
Collateral Documents or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement, the Collateral Documents or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby, by the Collateral Documents and by the Notes.
The Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
37
15.2 Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement, the Collateral Documents or the Notes, and the
termination of this Agreement and the Collateral Documents.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein and in the Collateral
Documents shall survive the execution and delivery of this Agreement, the
Collateral Documents and the Notes, the purchase or transfer by you of any Note
or portion thereof or interest therein and the payment of any Note, and may be
relied upon by any subsequent holder of a Note, regardless of any investigation
made at any time by or on behalf of you or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement or the Collateral Documents
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement, the Collateral
Documents and the Notes embody the entire agreement and understanding between
you and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement, the Collateral Documents and the Notes may be amended, and
the observance of any term hereof or thereof may be waived (either retroactively
or prospectively), with (and only with) the written consent of the Company and
the Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this
38
Section 17 to each holder of outstanding Notes promptly following the date on
which it is executed and delivered by, or receives the consent or approval of,
the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes of any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently offered, or such security is concurrently offered
to be granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and "the Collateral Documents" and references thereto shall
mean this Agreement and the Collateral Documents, respectively, as they may from
time to time be amended or supplemented.
17.4 Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(a) if to you or your nominee, to you or it at the address specified for
such communications in Schedule A, or at such other address as you or it shall
have specified to the Company in writing,
(b) if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or
39
(c) if to the Company, to the Company at Xxx Xx Xxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxx, Xxxxx, Xxxx 00000 to the attention of the Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of each
Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement, the Collateral Documents and all documents relating
thereto, including, without limitation, (a) consents, waivers and modifications
that may hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original document
so reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure (x) by the Company or any
Subsidiary, or (y) by another Person known by you to be bound by a
confidentiality agreement with the Company, or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in
40
writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process (provided that you give prompt notice to the
Company of such subpoena or legal process to the extent you are legally
permitted to do so), (y) in connection with any litigation to which you are a
party, or (z) if an Event of Default has occurred and is continuing, to the
extent you may reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the rights and
remedies under your Notes, this Agreement and the Collateral Documents. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
22. JUDICIAL PROCEEDINGS.
22.1 Consent to Jurisdiction.
The Company irrevocably submits to the non-exclusive jurisdiction of any
New York State or United States federal court sitting in New York City, and
irrevocably waives its own forum, over any suit, action or proceeding arising
out of or relating to this Agreement or any Note. The Company irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any
objection which it may have or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The Company agrees, to the fullest extent it may effectively
do so under applicable law, that a final judgment in any such suit, action or
proceeding brought in such court shall be conclusive and
41
binding upon the Company and may be enforced in the courts of the United States,
the State of New York (or any other courts to the jurisdiction of which the
Company is or may be subject) by a suit upon such judgment, provided that
service of process is effected on the Company in one of the manners specified
below or as otherwise permitted by law.
22.2 Service of Process.
The Company hereby consents to process being served in any suit, action or
proceeding of the nature referred to in Section 22.1 by the mailing of a copy
thereof by registered or certified air mail, postage prepaid, return receipt
requested, to the address of the Company set forth in Section 18. The Company
irrevocably waives, to the fullest extent it may effectively do so under
applicable law, all claim of error by reason of any such service and agrees that
such service (a) shall be deemed in every respect effective service of process
upon the Company in any such suit, action or proceeding, and (b) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon the Company.
22.3 No Limitation on Service or Suit.
Nothing in this Section 22 shall affect the right of any holder of the
Notes to serve process in any manner permitted by law or limit the right of any
holder of the Notes to bring proceedings against the Company in the courts of
any jurisdiction or jurisdictions or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
23. MISCELLANEOUS.
23.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement and the
Collateral Documents by or on behalf of any of the parties hereto or thereto
bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
23.2 Payments Due on Non-Business Days.
Anything in this Agreement, the Collateral Documents or the Notes to the
contrary notwithstanding, any payment of principal of or Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
23.3 Severability.
Any provision of this Agreement or the Collateral Documents that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof, and any such
prohibition or unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such provision in any
other jurisdiction.
42
23.4 Construction.
Each covenant contained herein shall be construed (absent express provision
to the contrary) as being independent of each other covenant contained herein,
so that compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other covenant.
Where any provision herein refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.
23.5 Counterparts.
This Agreement and the Collateral Documents may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
23.6 Governing Law.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State (other than Section
5-1401 of the New York General Obligations Law) that would require the
application of the laws of a jurisdiction other than such State.
* * * * *
43
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
NU SKIN ENTERPRISES, INC.
By: /S/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
S-1
The foregoing is hereby
agreed to as of the
date thereof.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
Name:
Title: Vice President
S-2
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"ABN Amro Facility" means the $10,000,000 credit facility evidenced by that
certain Grid Note dated as of May 24, 2000 executed by the Company in favor of
ABN Amro Bank N.V., as such Grid Note may be amended, supplemented or modified
from time to time.
"ABN Amro Release of Guarantors" means the Release of Guarantors executed
by ABN Amro Bank N.V.
"ABN Amro Subsidiary Guaranty" means that certain Subsidiary Guaranty,
dated as of July 22, 1998, executed by certain subsidiaries of the Company, in
favor of ABN Amro Bank N.V. in connection with the ABN Amro Facility.
"Affiliate" means, at any time, (a) with respect to any Person, any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) with respect to the Company and its Subsidiaries, any
Person beneficially owning or holding, directly or indirectly, 5% or more of any
class of voting or equity interests of the Company or any of its Subsidiaries or
any corporation of which the Company and its Subsidiaries beneficially own or
hold, in the aggregate, directly or indirectly, 5% or more of any class of
voting or equity interests. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in Tokyo,
Japan are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York are required or authorized
to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral Agency and Intercreditor Agreement" means the Collateral Agency
and Intercreditor Agreement, substantially in the form of Exhibit 4.13(c)
hereto, by and
Schedule B-1
among the Collateral Agent, you and each of the other Senior Secured Creditors,
and acknowledged by the Company and the Subsidiary Guarantors, as such agreement
may be amended, supplemented or modified from time to time.
"Collateral Agent" means State Street Bank and Trust Company of California,
N.A., acting in its capacity as collateral agent under the Collateral Agency and
Intercreditor Agreement, together with its successors and assigns.
"Collateral Documents" means the Pledge Agreement, the Subsidiary Guaranty,
the Collateral Agency and Intercreditor Agreement, and all other documents,
evidencing, securing or relating to the Notes, the payment of the indebtedness
evidenced by the Notes and all other amounts due from the Company or any
Restricted Subsidiary evidenced or secured by this Agreement, the Notes or the
Collateral Documents.
"Company" means Nu Skin Enterprises, Inc., a Delaware corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Income Available for Fixed Charges" means, with respect to
any period, Consolidated Net Income for such period plus all amounts deducted in
the computation thereof on account of (a) Fixed Charges, and (b) taxes imposed
on or measured by income or excess profits of the Company and the Restricted
Subsidiaries.
"Consolidated Net Income" means, with respect to any period, the net income
(or loss) of the Company and the Restricted Subsidiaries for such period (taken
as a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and the Restricted
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and the
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Net Worth" means, at any time, (a) the consolidated
stockholders' equity of the Company and the Restricted Subsidiaries, as defined
according to GAAP, less (b) the sum of (i) to the extent included in clause (a),
all amounts attributable to minority interests, if any, in the securities of
Restricted Subsidiaries, and (ii) the amount by which Restricted Investments
exceed 20% of the amount determined in clause (a).
"Consolidated Total Assets" means, at any date of determination, on a
consolidated basis for the Company and the Restricted Subsidiaries, total
assets, determined in accordance with GAAP.
"Credit Facility" means any credit facility providing for the borrowing of
money or the issuance of letters of credit (a) for the Company, or (b) for any
Restricted Subsidiary, if its obligations under such credit facility are
guaranteed by the Company.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
Schedule B-2
"Default Rate" means that rate of interest that is 2% per annum above the
rate of interest stated in clause (a) of the first paragraph of the Notes.
"Dollars" and the symbol "$" mean the lawful money of the United States of
America.
"Domestic Subsidiary" means, at any time, each Subsidiary of the Company
(a) which is created, organized or domesticated in the United States or under
the law of the United States or any state or territory thereof, (b) which was
included as a member of the Company's affiliated group in the Company's most
recent consolidated United States federal income tax return, or (c) the earnings
of which were includable in the taxable income of the Company or any other
Domestic Subsidiary (to the extent of the Company's and/or such other Domestic
Subsidiary's ownership interest of such Subsidiary) in the Company's most recent
consolidated United States federal income tax return.
"EBITDA" means, with respect to any period, the sum of (i) Consolidated Net
Income for such period without giving effect to extraordinary gains and losses,
gains and losses resulting from changes in GAAP and one time non-recurring
income and expenses resulting from acquisitions and similar events, plus (ii) to
the extent deducted in the calculation of Consolidated Net Income, the amount of
all interest expense, depreciation expense, amortization expense, and income tax
expense; provided that EBITDA will include or exclude, as applicable,
acquisitions and divestitures of Restricted Subsidiaries or other business units
on a pro forma basis as if such acquisitions or divestitures occurred on the
first day of the applicable period.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"Equity Securities" of any Person means (a) all common stock, Preferred
Stock, participations, shares, partnership interest, membership interest or
other equity interest in and of such Person (regardless of how designated and
whether or not voting or non-voting), and (b) all warrants, options and other
rights to acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
Schedule B-3
"Existing Credit Facility" means the $180,000,000 Credit Agreement dated as
of May 8, 1998 by and among the Company, Nu Skin Japan Co., Ltd., the lenders
named therein, and ABN Amro Bank N.V., as agent for such lenders, as such
agreement may have been amended, supplemented or modified from time to time.
"Fixed Charges" means, with respect to any period, the sum of (i) Interest
Expense for such period, and (ii) Lease Rentals for such period.
"Foreign Subsidiary" means, at any time, each Subsidiary of the Company
that is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) Japan or any political subdivision thereof, or
(iii) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
Schedule B-4
(c) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with GAAP
in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) Securitization Debt; and
(f) any Guaranty (other than the Subsidiary Guaranty) of such Person with
respect to liabilities of a type described in any of clauses (a) through (e)
hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (f) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
Schedule B-5
"Institutional Investor" means (a) any original purchaser of a Note, and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form, holding more than the Yen-equivalent of $2,000,000 of
the aggregate principal amount of the Notes then outstanding or more than 20% of
the aggregate principal amount of the Notes then outstanding.
"Interest Expense" means, with respect to the Company and the Restricted
Subsidiaries for any period, the sum, determined on a consolidated basis in
accordance with GAAP, of (a) all interest paid, accrued or scheduled for payment
on the Indebtedness of the Company and the Restricted Subsidiaries during such
period (including interest attributable to Capital Leases), plus (b) all fees in
respect of outstanding letters of credit paid, accrued or scheduled for payment
by the Company and the Restricted Subsidiaries during such period.
"Investment" means any investment, made in cash or by delivery of property,
by the Company or any Restricted Subsidiary (a) in any Person, whether by
acquisition of stock, Indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise; or (b) in any property.
"Lease Rentals" means, with respect to any period, the sum of the rental
and other obligations required to be paid during such period by the Company or
any Restricted Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases) as determined on a consolidated basis for
the Company and the Restricted Subsidiaries in accordance with GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" or "Materially" means material or materially, as the case may
be, in relation to the business, operations, affairs, financial condition,
assets, properties or prospects of the Company and the Restricted Subsidiaries
taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and the Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company and the Restricted Subsidiaries, taken as a whole, to perform their
obligations under this Agreement, the Notes and the Collateral Documents, or (c)
the validity or enforceability of this Agreement, the Notes or any of the
Collateral Documents.
"Material Domestic Subsidiary" means each Domestic Subsidiary of the
Company that also is a Material Subsidiary.
Schedule B-6
"Material Foreign Subsidiary" means each Foreign Subsidiary of the Company
that also is a Material Subsidiary.
"Material Subsidiaries" means, at any time, (a) Nu Skin Japan Co., Ltd., a
Japanese corporation, Nu Skin International, Inc., a Utah corporation, Nu Skin
Hong Kong, Inc., a Utah corporation, Nu Skin Taiwan, Inc., a Utah corporation,
and Nu Skin United States, Inc., a Delaware corporation; and (b) each other
Subsidiary of the Company which (i) had revenues during the four most recently
ended fiscal quarters equal to or greater than 5.0% of the consolidated total
revenues of the Company and its Subsidiaries during such period, or (ii) is an
obligor under any Guaranty with respect to the Indebtedness of the Company under
any Significant Credit Facility.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"New Notes" means the senior notes expected to be issued by the Company in
connection with a private placement of an additional $60,000,000 of Term Debt.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Securitization Program" means any transaction or series of
transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey or otherwise transfer to (i) a Securitization Entity (in the case of a
transfer by the Company or any Restricted Subsidiary) and (ii) any other Person
(in the case of a transfer by a Securitization Entity), or may grant a security
interest in, any receivables (whether now existing or arising or acquired in the
future) of the Company or any Restricted Subsidiary, and any assets related
thereto including (A) all collateral securing such receivables, (B) all
contracts and contract rights and all guarantees or other obligations in respect
of such receivables, (C) proceeds of such receivables, and (D) other assets
(including contract rights) that are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving receivables; provided that the resultant
Securitization Debt, together with all other Priority Indebtedness then
outstanding, shall not exceed the amount of Priority Indebtedness permitted by
Section 10.5(a)(ii).
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which
Schedule B-7
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
"Pledge Agreement" means the Pledge Agreement, in substantially the form of
Exhibit 4.13(b) hereto, dated as of the date hereof, executed and delivered by
the Pledgors and the Collateral Agent, as amended, supplemented and modified
from time to time.
"Pledged Securities" means (a) the Equity Securities described in Schedule
I attached to the Pledge Agreement and the Equity Securities of each Person that
becomes a Material Foreign Subsidiary, including all securities convertible
into, and rights, warrants, options and other rights to purchase or otherwise
acquire, any of the foregoing now or hereafter owned by such Pledgor, and the
certificates or other instruments representing any of the foregoing and any
interest of such Pledgor in the entries on the books of any securities
intermediary pertaining thereto (the "Pledged Shares"), and all dividends,
distributions, returns of capital, cash, warrants, option, rights, instruments,
right to vote or manage the business of such Person pursuant to organizational
documents governing the rights and obligations of the stockholders, and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged Shares;
provided, that the Pledged Shares shall not include any Equity Securities of
such issuer in excess of the number of shares or other equity interests of such
issuer possessing up to but not exceeding 65% of the voting power of all classes
of Equity Securities entitled to vote of such issuer, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Equity Securities; and (b) to the extent not covered by
clause (a) above, all proceeds of any or all of the foregoing.
"Pledgor" means each Person who pledges Pledged Securities under the Pledge
Agreement.
"Preferred Stock" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Priority Indebtedness" means (without duplication) the sum of (a) any
unsecured Indebtedness of the Restricted Subsidiaries other than (i) guarantees
under the Subsidiary Guaranty, (ii) Indebtedness of a Restricted Subsidiary if
(x) the Company has guaranteed such Indebtedness or is a primary obligor of such
Indebtedness, and (y) the holder of such Indebtedness becomes a party to the
Collateral Agency and Intercreditor Agreement (provided that until the holder of
such Indebtedness becomes a party to the Collateral Agency and Intercreditor
Agreement, such Indebtedness will be considered Priority Indebtedness), and
(iii) Indebtedness owed to the Company or any other Restricted Subsidiary, and
(b) Indebtedness of the Company and its Restricted Subsidiaries secured by a
Lien not permitted by paragraphs (a) through (m) of Section 10.3, and
(c) Securitization Debt.
"property" or "properties" means and includes each and every interest in
any property or asset, whether tangible or intangible and whether real, personal
or mixed.
Schedule B-8
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"Required Holders" means, at any time, the holders of more than 50% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company or its Subsidiaries with responsibility for the
administration of the relevant portion of this Agreement or the Collateral
Documents.
"Restricted Investments" means all Investments except any of the following:
(i) property to be used in the ordinary course of business; (ii) assets arising
from the sale of goods and services in the ordinary course of business; (iii)
Investments in one or more Restricted Subsidiaries or any Person that
immediately becomes a Restricted Subsidiary; (iv) Investments existing at the
date of Closing; (v) Investments in obligations, maturing within one year,
issued by or guaranteed by the United States of America, or an agency thereof,
or Canada, or any province thereof; (vi) Investments in tax-exempt obligations,
maturing within one year, which are rated in one of the top two rating
classifications by at least one national rating agency; (vii) Investments in
certificates of deposit or banker's acceptances maturing within one year issued
by Bank of America or other commercial banks which are rated in one of the top
two rating classifications by at lest one national rating agency; (viii)
Investments in commercial paper, maturing within 270 days, rated in one of the
top two rating classifications by at least one national rating agency; (ix)
Investments in repurchase agreements; (x) treasury stock; (xi) Investments in
money market instrument programs which are classified as current assets in
accordance with GAAP; (xii) Investments in foreign currency risk hedging
contracts used in the ordinary course of business; and (xiii) Investments in
Securitization Entities.
"Restricted Subsidiary" means any Subsidiary (a) at least a majority of the
voting securities of which are owned by the Company and/or one or more
Wholly-Owned Restricted Subsidiaries, and (b) which the Company has not
designated as an Unrestricted Subsidiary in accordance with Section 10.8;
provided that upon any Unrestricted Subsidiary becoming a Material Subsidiary,
it shall immediately be deemed to be a Restricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Security" has the meaning set forth in section 2(l) of the Securities Act.
"Securitization Debt" for the Company and the Restricted Subsidiaries shall
mean, in connection with any Permitted Securitization Program, (a) any amount as
to which any Securitization Entity or other Person has recourse to the Company
or any Restricted Subsidiary with respect to such Permitted Securitization
Program by way of a Guaranty and (b) the amount of any reserve account or
similar account or asset shown as an asset of the Company or a Restricted
Subsidiary under GAAP that has been pledged to any Securitization Entity or any
other Person in connection with such Permitted Securitization Program.
Schedule B-9
"Securitization Entity" means a wholly-owned Subsidiary (other than a
Restricted Subsidiary) of the Company (or another Person in which the Company or
any of its Subsidiaries makes an investment and to which the Company or any of
its Subsidiaries transfers receivables and related assets) that engages in no
activities other than in connection with the financing of receivables and that
is designated by the Board of Directors of the Company (as provided below) as a
Securitization Entity (i) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of which (A) is guaranteed by the Company
or any of its Subsidiaries (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (B) is recourse to or obligates the Company or any of its
Subsidiaries in any way other than pursuant to Standard Securitization
Undertakings, or (C) subjects any property or asset of the Company or any other
Subsidiary of the Company, directly or indirectly, continently or otherwise, to
the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings, (ii) with which neither the Company nor any of its Subsidiaries
has any material contract, agreement, arrangement or understanding other than on
terms no less favorable to the Company or such Subsidiary than those that might
be obtained at the time from Persons that are not Affiliates of the Company,
other than fees payable in the ordinary course of business in connection with
servicing receivables of such entity, and (iii) to which neither the Company nor
any of its Subsidiaries has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain levels of operating
results.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Senior Secured Creditor" means (a) each holder of a Note, (b) each holder
of a New Note, and (c) each lender under a Significant Credit Facility,
including the lenders under the ABN Amro Facility.
"Senior Secured Indebtedness" means the Indebtedness of the Company under
(a) this Agreement and the Notes, (b) the New Notes, and (c) any Significant
Credit Facility (including, without limitation, Indebtedness of the Company
under the ABN Amro Facility.
"Significant Credit Facility" means (a) any Credit Facility that has at
least $7,500,000 available to be borrowed and/or outstanding at any time, and
(b) any Credit Facility if the aggregate amount available to be borrowed and/or
outstanding under all of the Credit Facilities exceeds $25,000,000 at any time;
provided that the term "Significant Credit Facility" shall not include any
Priority Indebtedness to the extent that such Priority Indebtedness is permitted
by Section 10.5(a)(ii), any Indebtedness secured by a Lien permitted by Section
10.3(h), or any Indebtedness secured by a Xxxx xxxxxxxx, extending or replacing
Liens as described in Section 10.3(m).
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any of its Subsidiaries
that are reasonably customary in a receivables securitization transaction.
"Subsidiary" means, as to any Person, (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital
Schedule B-10
stock of any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its Subsidiaries or by one or more of such Person's other Subsidiaries, (b) any
partnership, joint venture, limited liability company or other association of
which more than 50% of the equity interest having the power to vote, direct or
control the management of such partnership, joint venture, limited liability
company or other association is at the time owned and controlled by such Person,
by such Person and one or more of the other Subsidiaries or by one or more of
such Person's other Subsidiaries, or (c) any other Person included in the
financial statements of such Person on a consolidated basis.. Unless the context
otherwise clearly requires, any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.
"Subsidiary Guarantors" means all current and future Material Domestic
Subsidiaries of the Company.
"Subsidiary Guaranty" means that certain Subsidiary Guaranty, substantially
in the form of Exhibit 4.13(a) hereto, dated as of the date hereof, executed and
delivered by the Subsidiary Guarantors, as amended, supplemented and modified
from time to time.
"Swap Agreement" means (a) any and all rate swap transactions, basis swaps,
forward rate transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), provided
that any such transaction is governed by or subject to a Master Agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement published by any successor organization
thereto (any such master agreement, together with any related schedules, as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, a "Master Agreement"), including any such obligations or
liabilities under any Master Agreement.
"Taxes" is defined in Section 14.4(a).
"Term Debt" means any Indebtedness of Company or any Restricted Subsidiary
other than (a) Credit Facilities providing for the borrowing of money or the
issuance of letters of credit on a revolving basis or for working capital, (b)
Priority Indebtedness, and (c) Indebtedness secured by Xxxxx permitted by
paragraphs (a) through (m) of Section 10.3.
"Total Indebtedness" means, at any date of determination, the sum of
(i) the total of all Indebtedness of the Company and the Restricted Subsidiaries
outstanding on such date, after eliminating all offsetting debits and credits
between the Company and the Restricted Subsidiaries and all other items required
to be eliminated in the course of the preparation of consolidated financial
statements of the Company and the Restricted Subsidiaries in accordance with
GAAP, plus (ii) the aggregate amount of Indebtedness of the Company to any of
its Restricted Subsidiaries that is not subordinated to the Notes pursuant to a
subordination agreement substantially in the form set forth in Exhibit 2.
Schedule B-11
"Unrestricted Subsidiary" means any Subsidiary which is designated as an
Unrestricted Subsidiary on Schedule 5.4 attached hereto or is designated as such
in writing by the Company to each of the holders of the Notes pursuant to
Section 10.8; provided that no Material Subsidiary shall be an Unrestricted
Subsidiary.
"Wholly-Owned Restricted Subsidiary" means, at any time, (a) with respect
to Domestic Subsidiaries, any Restricted Subsidiary one hundred percent (100%)
of all of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company's
other wholly-owned Restricted Subsidiaries at such time, and (b) with respect to
Foreign Subsidiaries, any Restricted Subsidiary ninety-five percent (95%) of all
of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company's
other Wholly-Owned Restricted Subsidiaries at such time.
"Yen" and "Y" mean the lawful currency of Japan and, in relation to any
payment under this Agreement, same day or immediately available funds.
Schedule B-12
EXHIBIT 1
[FORM OF NOTE]
NU SKIN ENTERPRISES, INC.
____% SENIOR NOTE DUE OCTOBER 12, 2010
No. __ ____________, _____
JPY_______ PPN: 67018T A* 6
FOR VALUE RECEIVED, the undersigned, NU SKIN ENTERPRISES, INC. (herein
called the "Company"), a corporation organized and existing under the laws of
Delaware, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
or registered assigns, the principal sum of _______________________________
JAPANESE YEN on October 12, 2010, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of ____% per annum from the date hereof, payable semi-annually, on the 12th
day of April and October in each year, commencing with the April or October next
succeeding the date hereof, until the principal hereof shall have become due and
payable; provided that the rate of interest on this Note will be increased to
(i) ___% per annum if, within the one year period following the date hereof, (x)
the New Notes are rated BBB (or equivalent), or (y) if the Company does not
issue the New Notes, any other Indebtedness which the Company proposes to issue
is rated BBB (or equivalent), or (ii) ___% per annum if, within the one year
period following the date hereof, (x) the New Notes are rated BBB- (or
equivalent) or lower, or (y) if the Company does not issue the New Notes, any
other Indebtedness which the Company proposes to issue is rated BBB- (or
equivalent) or lower, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable semi-annually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to 2% per annum above the rate of interest set
forth in clause (a) above.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of Japan at The Bank of New
York in New York City or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreement referred to below.
This Note is one of the Senior Notes (herein called the "Notes") issued
pursuant to separate Note Purchase Agreement, dated as of October 12, 2000 (as
from time to time amended, the "Note Purchase Agreement"), between the Company
and the Purchaser named therein and is entitled to the benefits thereof. Each
holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement, (ii) to have become a party to the Collateral Agency and
Intercreditor Agreement (as defined in the Note Purchase Agreement), and (iii)
to have made the representations set forth in Section 6 of the Note Purchase
Agreement.
Exhibit 1-1
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such xxxxxx's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates and in
the amounts specified in the Note Purchase Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, at the times and
on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State (other than Section
5-1401 of the New York General Obligations Law) that would require the
application of the laws of a jurisdiction other than such State.
NU SKIN ENTERPRISES, INC.
By: _________________________
Name:
Title:
Exhibit 1-2
NU SKIN ENTERPRISES, INC.
JPY9,706,500,000
3.03% Senior Notes due October 12, 2010
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NOTE PURCHASE AGREEMENT
------------------
Dated October 12, 2000
