AMENDMENT NO. 3
TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Amendment"), dated as
of May 10, 1999, is entered into by and among:
(1) NU SKIN ENTERPRISES, INC., a Delaware corporation ("NSE");
(2) NU SKIN JAPAN CO., LTD., a Japanese corporation ("NSJ");
(3) The financial institutions listed in Schedule I to the
Credit Agreement described below (such financial institutions referred
to herein collectively as "Lenders"); and
(4) ABN AMRO BANK N.V., as agent for Lenders (in such
capacity, "Agent").
RECITALS
A. NSE, NSJ, Lenders and Agent are parties to a Credit Agreement dated
as of May 8, 1998, as amended by Amendment No. 1 to Credit Agreement ("Amendment
No. 1") effective as of June 30, 1998 and Amendment No. 2 to Credit Agreement
("Amendment No. 2") effective as of February 22, 1999 (such Credit Agreement, as
so amended, the "Credit Agreement").
B. NSE and NSJ (collectively, "Borrowers") have requested Lenders and
Agent to (1) amend the Credit Agreement in certain respects and (2) waive an
Event of Default arising under the Credit Agreement as a result of the failure
by NSE to comply with a financial covenant set forth therein.
C. Lenders and Agent are willing so to amend the Credit Agreement and
waive such Event of Default upon the terms and subject to the conditions set
forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Lenders and Agent hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.
2. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions set forth in Paragraph 5 below, the Credit Agreement is hereby
amended as follows:
(a) Paragraph 1.01 is amended by changing the definitions of
the terms "Fixed Charge Coverage Ratio" and "Tangible Net Worth" set
forth therein to read in their entirety as follows:
"Fixed Charge Coverage Ratio" shall mean, with
respect to either Borrower for any period, the ratio,
determined on a consolidated basis in accordance with GAAP,
of:
(a) EBITDA of such Borrower and its
Subsidiaries for such period;
to
(b) The sum of (i) all Interest Expenses of
such Borrower and its Subsidiaries for such period,
plus (ii) the current portion of the long-term
Indebtedness of such Borrower and its Subsidiaries
for such period (excluding, in the case of NSJ,
long-term Indebtedness of NSJ and its Subsidiaries to
NSE and NSE's other Subsidiaries).
"Tangible Net Worth" shall mean, with respect to NSE
or NSJ at any time, the remainder at such time, determined on
a consolidated basis in accordance with GAAP, of:
(a) The total assets of such Borrower and
its Subsidiaries at such time;
minus
(b) The sum (without limitation and without
duplication of deductions) of:
(i) The total liabilities of such
Borrower and its Subsidiaries at such time,
(ii) All reserves of such Borrower
and its Subsidiaries at such time for
anticipated losses and expenses (to the
extent not deducted in calculating total
assets in clause (a) above), and
(iii) The remainder of:
(A) All intangible assets
of such Borrower and its
Subsidiaries at such time (to the
extent included in calculating total
assets in clause (a) above),
including goodwill (including any
amounts, however designated on the
balance sheet, representing the cost
of acquisition of businesses and
investments in excess of underlying
tangible assets), trademarks,
trademark rights, trade name rights,
copyrights, patents, patent rights,
licenses, unamortized debt discount,
marketing expenses, organizational
expenses, non-compete agreements and
deferred research and development;
minus
(B) The lesser of (1) all
intangible assets arising from the
acquisition of NSI and the other
related Persons referred to in
Schedule 5.02(d) (to the extent
included in calculating all
intangible assets in clause
(b)(iii)(A) above) and (2)
$90,000,000.
(b) Subparagraph 5.01(a) is amended by changing clause (vii)
thereof to read in its entirety as follows:
(vii) As soon as available and in no event later than
ninety (90) days after the first day of each fiscal year of
each Borrower, the consolidated plan and forecast of such
Borrower and its Subsidiaries for such fiscal year, including
quarterly cash flow projections and quarterly projections of
such Borrower's compliance with each of the covenants set
forth in Paragraph 5.03;
(c) Subparagraph 5.02(d) is amended by changing clause
(iii)(B) thereof to read in its entirety as follows:
(B) The aggregate consideration paid by
Borrowers and their Subsidiaries for all such
acquisitions (excluding consideration consisting of
the Equity Securities of Borrowers or their
Subsidiaries) does not exceed $25,000,000 in the 1999
fiscal year or any fiscal year thereafter; provided
that any portion of such amount limitation not used
in any year may be carried forward in subsequent
years to increase the amount of such limitation in
such subsequent years until used.
(d) Subparagraph 5.03(b) is amended to read in its entirety as
follows:
(b) Fixed Charge Coverage Ratio. Neither Borrower
shall permit its Fixed Charge Coverage Ratio to be less than
(i) 3.00 to 1.00 for any consecutive four-quarter period
ending on the last day of any fiscal quarter through and
including December 31, 1999 or (ii) 2.25 for any consecutive
four-quarter period ending on the last day of any fiscal
quarter thereafter.
(e) Subparagraph 5.03(d) is amended to read in its entirety as
follows:
(d) Tangible Net Worth. Neither Borrower shall permit
its Tangible Net Worth on any date of determination (such date
to be referred to herein as a "determination date") which
occurs after December 31, 1998 (such date to be referred to
herein as the "base date") to be less than the sum on such
determination date of the following:
(i) Eighty-five percent (85%) of such
Borrower's Tangible Net Worth on the base date;
(ii) Sixty percent (60%) of the sum of such
Borrower's consolidated quarterly net income
(ignoring any quarterly losses and deducting, in the
case of NSJ, dividends paid by NSJ to NSE) for each
quarter after the base date through and including the
quarter ending immediately prior to the determination
date;
(iii) Seventy-five percent (75%) of the Net
Proceeds of all Equity Securities issued by such
Borrower and its Subsidiaries during the period
commencing on the base date and ending on the
determination date; and
(iv) Seventy-five percent (75%) of the
principal amount of all debt securities of such
Borrower and its Subsidiaries converted to Equity
Securities during the period commencing on the base
date and ending on the determination date.
(f) Schedule II is amended by changing the pricing grid set
forth therein to read in its entirety as follows:
APPLICABLE
APPLICABLE APPLICABLE MARGIN
NSE'S MARGIN MARGIN FOR
DEBT/ PRICING FOR FOR JAPANESE
EBITDA PERIOD BASE RATE LIBOR LOAN
RATIO LEVEL PORTIONS PORTIONS PORTIONS
Less Than 0.50 1 0% 0.700% 0.700%
Greater than or
equal to 0.50,
Less than 1.00 2 0% 0.850% 0.850%
Greater than 1.00 3 0% 1.100% 1.100%
3. Waiver. Subject to the satisfaction of the conditions set forth in
Paragraph 5 below, Lenders hereby waive any Event of Default arising under
Subparagraph 6.01(b) of the Credit Agreement as a result of the failure by NSE
to comply with the Tangible Net Worth requirement set forth in Subparagraph
5.03(d) of the Credit Agreement on March 31, 1999, provided that NSE's Tangible
Net Worth on such date was not less than $168,000,000.
4. Representations and Warranties. Each Borrower hereby represents and
warrants to Agent and Lenders that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in Paragraph 2 above and the waiver set forth in Paragraph 3 above, the
following will be true and correct on the Effective Date (as defined below):
(a) The representations and warranties of Borrowers set forth
in Paragraph 4.01 of the Credit Agreement and in the other Credit
Documents are true and correct in all material respects; and
(b) No Default has occurred and is continuing.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 4 that, on and after the date hereof, such term includes this
Amendment.)
5. Effective Date. The amendments effected by Paragraph 2 above and the
waiver effected by Paragraph 3 above shall become effective on May 10, 1999 (the
"Effective Date"), subject to receipt by Agent and Lenders on or prior to the
Effective Date of the following, each in form and substance satisfactory to
Agent, the Lenders and their respective counsel:
(a) This Amendment duly executed by Borrowers, Required
Lenders and Agent;
(b) A letter in the form of Exhibit A hereto, dated the
Effective Date and duly executed by all Material Domestic Subsidiaries
of NSE and, in the case of any such Subsidiaries that are organized
under the laws of jurisdictions outside the United States and
domesticated under the laws of Delaware (or any other state of the
United States), by the Delaware (or other state) counterparts of such
Subsidiaries;
(c) An amendment fee for each U.S. Lender equal to one tenth
of one percent (0.10%) of the outstanding principal amount of such
Lender's U.S. Loan on the Effective Date, payable in Dollars;
(d) An amendment fee for each Japanese Lender equal to one
tenth of one percent (0.10%) of the outstanding principal amount of
such Lender's Japanese Loan on the Effective Date, payable in Yen; and
(e) Such other evidence as Agent or any Lender may reasonably
request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Amendment and the other Credit Documents.
6. Effect of this Amendment. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
affirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Lenders or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
7. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
(d) NSE Guaranty. In its capacity as the guarantor under the
NSE Guaranty, NSE hereby (i) consents to Amendment Xx. 0, Xxxxxxxxx Xx.
0 and this Amendment (collectively, the "Amendments"), (ii) agrees that
the Amendments in no way affect or alter the rights, duties, or
obligations of NSE, Agent or Lenders under the NSE Guaranty, (iii)
agrees its consent to the Amendments shall not be construed (A) to have
been required by the terms of the NSE Guaranty or any other document,
instrument or agreement relating thereto or (B) to require the consent
of NSE in its capacity as guarantor in connection with any future
amendment of the Credit Agreement or any other Credit Document.
[The first signature page follows.]
IN WITNESS WHEREOF, Borrowers, Agent and Lenders have caused this
Amendment to be executed as of the day and year first above written.
BORROWERS: NU SKIN ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: CFO
NU SKIN JAPAN CO., LTD.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Auditor
AGENT: ABN AMRO BANK N.V.
By:
Name:
Title:
By:
Name:
Title:
LENDERS: ABN AMRO BANK N.V.
By:
Name:
Title:
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By:
Name:
Title:
BANK ONE, UTAH, NATIONAL ASSOCIATION
By:
Name:
Title:
BANQUE NATIONALE DE PARIS
By:
Name:
Title:
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
Name:
Title:
By:
Name:
Title:
NATIONSBANK, N.A.
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
ZIONS FIRST NATIONAL BANK
By:
Name:
Title:
EXHIBIT A
GUARANTOR CONSENT LETTER
May 10, 1999
TO: ABN AMRO Bank N.V.,
As Agent for the Lenders under the Credit Agreement referred to below
1. Reference is made to the following:
(a) The Credit Agreement dated as of May 8, 1998 (the "Credit
Agreement") among Nu Skin Enterprises, Inc., ("NSE") Nu Skin Japan Co.,
Ltd. ("NSJ"), the financial institutions listed in Schedule I thereto
("Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such
capacity, "Agent");
(b) The Guaranty dated as of May 8, 1998 (the "Subsidiary
Guaranty") executed by the undersigned ("Guarantors") in favor of Agent
for the benefit of Lenders;
(c) The Amendment No. 1 to Credit Agreement effective as of
June 30, 1998 ("Amendment No. 1") among NSE, NSJ, Lenders and Agent;
(d) The Amendment No. 2 to Credit Agreement effective as of
February 22, 1999 ("Amendment No. 2") among NSE, NSJ, Lenders and
Agent; and
(e) Amendment No. 3 to Credit Agreement dated as of May 10,
1999 ("Amendment No. 3") among NSE, NSJ, Lenders and Agent.
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings given to those terms in the Credit Agreement.
2. Each Guarantor hereby consents to Amendment Xx. 0, Xxxxxxxxx Xx. 0
and Amendment No. 3 (collectively, the "Amendments"). Each Guarantor expressly
agrees that the Amendments shall in no way affect or alter the rights, duties,
or obligations of such Guarantor, Lenders or Agent under the Subsidiary
Guaranty.
3. From and after the date hereof, the term "Credit Agreement" as used
in the Subsidiary Guaranty shall mean the Credit Agreement, as amended by the
Amendments.
4. No Guarantor's consent to the Amendments shall be construed (i) to
have been required by the terms of the Subsidiary Guaranty or any other
document, instrument or agreement relating thereto or (ii) to require the
consent of such Guarantor in connection with any future amendment of the Credit
Agreement or any other Credit Document.
A-1
IN WITNESS WHEREOF, each Guarantor has executed this Guarantor Consent
Letter as of the day and year first written above.
NU SKIN JAPAN COMPANY LIMITED,
a Delaware Corporation
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Vice President
NU SKIN JAPAN CO., LTD.,
a Japanese Corporation
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Auditor
NU SKIN KOREA, INC.,
a Delaware Corporation
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Vice President
NU SKIN KOREA, LTD.,
a South Korean Corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Representative Director
NU SKIN INTERNATIONAL, INC.,
a Utah Corporation
By: /s/ Xxxxxx Xxxx
Name: Truamn Xxxx
Title: Vice President
A-2
NU SKIN TAIWAN, INC.,
a Utah Corporation
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Vice President
NU SKIN HONG KONG, INC.,
a Utah Corporation
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Vice President
A-3
