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Exhibit 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND LAWS IS AVAILABLE.
XXXXXXXXXXXXXX.XXX, INC.
AMENDED AND RESTATED NOTE
$28,500,000 OCTOBER 1, 2000
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXXXXXX.XXX, INC., a
Delaware corporation (the "Company"), promises to pay to the order of WEIGHT
WATCHERS INTERNATIONAL, INC., a Virginia corporation (the "Holder"), on
September 30, 2003 (the "Maturity Date") the principal amount of (a)
TWENTY-EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($28,500,000.00), or, if
less, (b) the aggregate unpaid principal amount of all loans made by the Holder
to the Company pursuant to this amended and restated promissory note (this
"Note").
Until July 31, 2003, the Holder agrees, at any time or from time to
time, to loan the Company up to an aggregate principal amount of $28,500,000
(the "Commitment") within five business days of its receipt of a written request
therefor. This Note amends and restates as of the date hereof an existing
promissory note dated October 1, 2000 between the Company and the Holder (the
"Old Note") in the aggregate principal amount of $23,500,000, which included the
outstanding principal amount plus accrued interest on a pre-existing promissory
note dated November 24, 1999 for $10,000,000 between the Company and the Holder
(the "Prior Note"). As of October 1, 2000, the principal amount plus accrued
interest of the Prior Note was rolled over and subsumed into the Old Note and
the Prior Note was thereby cancelled. All loans made under this Note shall be in
an amount equal to $100,000 or an integral multiple thereof. The unpaid
principal amount of this Note from time to time outstanding since the Issuance
Date shall bear interest at a rate of 13% per annum, and such interest shall be
due and payable semi-annually in arrears on March 31 and September 30 of each
year, commencing on March 31, 2001. Interest will be computed on the basis of a
365-day year and the actual number of days elapsed including the first day but
excluding the payment date. All payments of principal of and interest on this
Note shall be payable in lawful currency of the United States of America. All
such payments shall be made by the Company to an account established by the
Holder and notified to the Company and shall be recorded on the books and
records of the Company and the Holder.
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The Company agrees to pay to the Holder a commitment fee for the period
from and including the Issuance Date to July 31, 2003, computed at a rate of
0.50% per annum on the average daily unused portion of the Commitment payable
semi-annually in arrears on March 31 and September 30 of each year, commencing
March 31, 2001.
The Company may skip the payment of the first semi-annual payment of
interest and the commitment fee without penalty. However, the amounts otherwise
due on March 31, 2001 shall then be paid on September 30, 2001 together with the
payments normally due on that date. The Company shall have the further option to
skip payment of this first semi-annual payment then otherwise due on September
30, 2001. In addition to the immediately preceding paragraph, the Company may
also skip the payment of the second semi-annual payment of interest and
commitment fee otherwise due on September 30, 2001 without penalty.
However, the amounts otherwise due on September 30, 2001 in accordance
with the immediately two preceding paragraphs shall then be paid on March 31,
2002 together with (i) interest on the amounts otherwise due on September 30,
2001 accruing at a rate of 13% per annum from September 30, 2001 (computed on
the basis of a 365-day year and the actual number of days elapsed until paid
including the first day), and (ii) the payments normally due on March 31, 2002.
If any payment on this Note becomes due and payable on a day other than
a day on which commercial banks in New York City are open for the transaction of
normal business (a "Business Day"), the maturity thereof shall be extended to
the next succeeding Business Day and, with respect to any payment of principal,
interest or commitment fees thereon, shall be payable at the then applicable
rate during such extension.
The Holder is authorized to endorse on Schedule A attached hereto and
made a part hereof, the amount of each loan made pursuant to this Note
(including the outstanding principal and interest on the Prior Note) and the
date and amount of each payment or prepayment of principal thereof. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed.
In addition to, but not in limitation of, the foregoing, the Company
further agrees to pay all expenses, including (i) the making of any loans under
this Note and (ii) reasonable attorneys' fees and legal expenses, incurred by
the Holder in connection with endeavoring to collect any amounts payable
hereunder which are not paid when due.
1. Payment Provisions.
1.1 Payments on this Note. The Company shall make payments of
principal of, interest on and the commitment fees with respect to this Note when
due.
1.2 Optional Redemption. This Note may be redeemed at the
option of the Company, at any time or from time to time, in whole or in part,
without premium or penalty, at par plus accrued and unpaid interest, plus any
accrued and unpaid commitment fees.
1.3 Change of Control. Upon a Change of Control, the Holder
shall have the right to require the Company to repurchase this Note at a
purchase price equal to 101% of the
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principal amount thereof plus accrued and unpaid interest plus any accrued and
unpaid commitment fee to the date of purchase.
2. Default. The entire unpaid principal of this Note, together with all
accrued and unpaid interest and any accrued and unpaid commitment fees shall
become and be immediately due and payable upon written demand of the Holder (or
in the case of an event specified in Sections 2(g) or (h), automatically without
notice), without any other notice or demand of any kind or any presentment or
protest, if any one of the following events (an "Event of Default") shall occur
and be continuing at the time of such demand, whether voluntarily or
involuntarily, or, without limitation, occurring or brought about by operation
of law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any governmental body:
a. The Company defaults in any payment of interest or
any commitment fee on this Note when the same becomes
due and payable, and such default continues for a
period of 30 days;
b. The Company (i) defaults in the payment of the
principal of this Note when the same becomes due and
payable at its Stated Maturity or pursuant to the
provision of Section 1.3, (ii) defaults in the
payment of the principal of this Note when the same
becomes due and payable upon redemption, upon
declaration or otherwise, or (iii) fails to redeem or
purchase the Note when required pursuant to this
Note;
c. The Company fails to comply with Section 3.8;
d. The Company or any of its Subsidiaries fail to comply
with any other provision of Section 3, and such
failure continues for 30 days after the notice
specified below;
e. The Company or any of its Subsidiaries fail to comply
with any of its agreements in this Note (other than
those referred to in (a), (b), (c) or (d) above) and
such failure continues for 60 days after the notice
specified below;
f. Indebtedness of the Company or any of its
Subsidiaries is not paid within any applicable grace
period after final maturity or is accelerated by the
holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated at
any time exceeds $1,000,000;
g. The Company or any of its Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
1. commences a voluntary case;
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2. consents to the entry of an order
for relief against it in an
involuntary case;
3. consents to the appointment of a
custodian of it or for any
substantial part of its property;
or
4. makes a general assignment for the
benefit of its creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
h. A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
1. is for relief against the Company
or any of its Subsidiaries in an
involuntary case;
2. appoints a custodian of the Company
or any of its Subsidiaries or for
any substantial part of its
property; or
3. orders the winding up or
liquidation of the Company or any
of its Subsidiaries;
or any similar relief is granted under any foreign
laws and the order, decree or relief remains unstayed
and in effect for 60 consecutive days;
i. Any judgment or decree for the payment of money in
excess of $1,000,000 is rendered against the Company
or any of its Subsidiaries (other than a judgment or
decree in a claim brought by any Person arising out
of, or relating to, the Company's or any of its
Subsidiaries' (A) use of the Weight Watchers
trademarks, service marks, trade names, brand names,
copyrights, program information, terminology or
materials, and/or other intellectual property as
provided in any license agreement between the Company
(or any of its Subsidiaries) and the Holder, or (B)
provision of services pursuant to any service
agreement between the Company (or any of its
Subsidiaries) and the Holder) and is not discharged
and either (1) an enforcement proceeding has been
commenced by any creditor upon such judgment or
decree or (2) there is a period of 60 days following
such judgment during which such judgment or decree is
not discharged, waived or the execution thereof
stayed; or
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A Default under Sections 2(d) or (e) is not an Event of
Default until the Holder notifies the Company of the Default
and the Company does not cure such Default within the time
specified after receipt of such notice.
3. Covenants.
3.1 Limitation on Indebtedness.
a. The Company and its Subsidiaries shall not
Incur any Indebtedness which will result in
the total Indebtedness of the Company and
its Subsidiaries exceeding $35,000,000
(including the amount of any principal and
interest outstanding on this Note) at any
time that there is any principal or interest
outstanding on this Note. Notwithstanding
the foregoing, for purposes of determining
the total Indebtedness Incurred by the
Company and its Subsidiaries at any time,
any Indebtedness between the Company and any
of its Subsidiaries, or between any of the
Company's Subsidiaries, shall be excluded.
b. This Note shall be senior and have a first
priority over all other Indebtedness of the
Company.
3.2 Limitation on Liens. The Company shall not, directly or
indirectly create, incur, assume or suffer to exist any Lien that secures
obligations on any asset or property of the Company and any of its Subsidiaries
or any income or profits therefrom, or assign or convey any right to receive
income therefrom except for (A) (i) Liens incurred in the ordinary course of
business for sums not overdue for a period of more than thirty (30) days (other
than Liens consented in writing by Holder), (ii) Liens incurred in the ordinary
course of business to finance the purchase, lease or improvement of property
(real or personal) or equipment, or (iii) Liens incurred with respect to this
Note or any Guarantee issued by the Holder or any Subsidiary of the Holder, or
(B) the amount of such Lien or Liens do not result in the total Indebtedness of
the Company exceeding $35,000,000 as hereinbefore provided.
3.3 Limitation on Distributions and Redemptions.
a. The Company or any Subsidiary shall not,
directly or indirectly, to (i) declare or
pay any dividend or make any distribution on
or in respect of its Capital Stock
(including any payment in connection with
any merger or consolidation involving the
Company) or similar payment to the direct or
indirect holders of its Capital Stock except
(1) dividends or distributions payable
solely in its Capital Stock (other than
Disqualified Stock) or in options, warrants
or other rights to purchase such Capital
Stock and (2) dividends or distributions
payable solely to the Company or a Wholly
Owned Subsidiary, (ii) purchase, redeem,
retire or otherwise acquire for value any
Capital Stock of the Company or any Wholly
Owned Subsidiary held by Persons other than
the
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Company, (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for
value, prior to scheduled maturity,
scheduled repayment or scheduled sinking
fund payments any Indebtedness (other than
Indebtedness represented by this Note and
Indebtedness between the Company and any of
its Subsidiaries, or between Subsidiaries of
the Company) or (iv) make any Investment in
any Person other than a Permitted
Investment.
b. The provisions of Section 3.3(a) shall not
prohibit:
The repurchase, redemption or other
acquisition or retirement for value of any
Equity Interests of the Company held by any
director, officer or employee of the Company
or any Subsidiary of the Company upon such
director ceasing to be a director or upon
the termination of such officer's or
employee's employment with the Company or
any Subsidiary of the Company; provided that
the aggregate price paid for all such
repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1,000,000
in any twelve-month period.
3.4 Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any Subsidiary to,
create or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distributions on its Capital Stock or pay any Indebtedness or other
obligation owed to the Company or any of its Subsidiaries, (ii) make any loans
or advances to the Company or any of its Subsidiaries, or (iii) transfer any of
its property or assets to the Company or any of its Subsidiaries.
3.5 Limitation on Sales of Assets and Subsidiary Stock. The
Company shall not, and shall not permit any Subsidiary to, make any Asset
Disposition in excess of $10,000 unless (a) the Company or such Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value, as determined in good faith by the Board of Directors
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition, (b) at least 85% of the consideration
thereof received by the Company or such Subsidiary is in the form of cash or
cash equivalents, and (c) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Subsidiary, as the
case may be) to invest in Additional Assets within 120 days of receipt thereof.
On the 121st day after an Asset Disposition or on such earlier date as the Board
of Directors shall determine not to apply 100% of the Net Available Cash as set
forth in the preceding sentence, the Company shall redeem this Note, in whole or
in part, at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest with the aggregate amount of Net Available Cash which has
not been applied in accordance with the preceding sentence.
3.6 Limitation on Transactions with Shareholders and
Affiliates.
a. The Company shall not, and shall not permit
any Subsidiary of the Company to, directly
or indirectly, enter into or conduct any
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transaction or related series of
transactions (including the purchase, sale,
lease or exchange of any property or the
rendering of any service) with any Affiliate
of the Company (an "Affiliate Transaction")
unless the terms of such transaction are no
less favorable to the Company or such
Subsidiary, as the case may be, than those
that could be obtained at the time of such
transaction in arm's-length dealings with a
Person who is not such an Affiliate.
b. The foregoing shall not prohibit (1) any
transaction between the Company or any of
its Subsidiaries, on the one hand, and any
Permitted Holder, on the other hand, (2) any
issuance of securities, or other payments,
awards or grants in cash, securities or
otherwise pursuant to, or the funding of,
employment arrangements, stock options and
stock ownership plans approved by the Board
of Directors, (3) loans or advances to
employees in the ordinary course of
business, or (4) any transaction between the
Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries.
3.7 Sale of Subsidiary Capital Stock. The Company (a) will
not, and will not permit any Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Subsidiary to any
Person (other than the Company or a Wholly Owned Subsidiary) and (b) will not
permit any Subsidiary to issue any of its Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Subsidiary.
3.8 Merger, Consolidation or Sale of Assets. The Company shall
not consolidate with or merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all its assets to, any Person (in one
transaction or a series of related transactions), or permit any Person to merge
with or into the Company and the Company will not permit any of its Subsidiaries
to enter into any such transaction or series of transactions if such transaction
or series of transactions, in the aggregate, would result in the sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons without the
express written permission of the Holder, unless the principal amount of the
Note and any outstanding interest or commitment fee is paid in full prior to the
completion of any such transaction. In granting any such written permission the
Holder at a minimum will require the following:
1. the resulting, surviving or
transferee Person (the "Successor Company")
shall be a corporation organized and
existing under the laws of the United States
of America or any state thereof and the
Successor Company (if not the Company) shall
expressly assume all the obligations of the
Company under this Note;
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2. immediately after giving effect
to such transaction (and treating any
Indebtedness which becomes an obligation of
the Successor Company or any Subsidiary as a
result of such transaction as having been
incurred by the Successor Company or such
Subsidiary at the time of such transaction),
no Default or Event of Default shall have
occurred and be continuing;
3. immediately after giving effect
to such transaction on a pro forma basis,
the Successor Company shall have a
Consolidated Net Worth equal to or greater
than an amount which is not less than the
Consolidated Net Worth of the Company prior
to such transaction; and
4. the Company shall have delivered
to the Holder an Officers' Certificate and
an Opinion of Counsel, each stating that
such consolidation, merger or transfer
complies with the terms of this Note and the
Successor Company shall have delivered to
the Holder an Officer's Certificate and an
Opinion of Counsel, each stating that the
assumption of the Note has been duly
approved and authorized by the Board of
Directors or Shareholders of such Successor
Company as may be required by the Holder.
3.9 Periodic Reports. The Company shall provide the Holder
with three quarterly unaudited financial statements (within forty-five (45) days
of each quarter end) and audited annual reports containing all financial
information reasonably requested by Holder (within ninety (90) days of each year
end) including, without limitation, income statement, balance sheet, and cash
flows prepared in accordance with GAAP. Notwithstanding the foregoing, audited
annual reports with respect to calendar years 1999 and 2000 shall be provided by
the Company no later than May 31. 2001.
3.10 Corporate Existence. The Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership, limited liability or other
existence of each of its Subsidiaries in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and the rights (charter and statutory) of the Company and each of its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such existence or right if such existence or right involves a
Wholly Owned Subsidiary.
3.11 Payment of Taxes and Other Claims. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon it or any of its Subsidiaries or upon the income, profits or
property of it or any of its Subsidiaries and (b) all lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material Lien upon or a material liability affecting the property of it or any
of its Subsidiaries; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is
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being contested in good faith by appropriate proceedings and for which
appropriate provision has been made.
3.12 Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties owned by
or leased by it or any of its Subsidiaries useful and necessary to the conduct
of its business or the business of any of its Subsidiaries to be improved or
maintained and kept in normal condition, repair and working order and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its judgment may be necessary, so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 3.12 shall prevent the
Company or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors or of
the board of directors of any Subsidiary of the Company concerned, or of an
officer (or other agent employed by the Company or of any of its Subsidiaries)
of the Company or any of its Subsidiaries having managerial responsibility for
any such property, desirable in the conduct of the business of the Company or
any Subsidiary of the Company, and if such discontinuance or disposal is not
adverse in any material respect to the Holder.
(b) To the extent available at commercially reasonable rates,
the Company shall maintain, and shall cause its Subsidiaries to maintain,
insurance with responsible carriers against such risks and in such amounts, and
with such deductibles, retentions, self-insured amounts and co-insurance
provisions, as are customarily carried by similar businesses, of similar size.
3.13 Compliance Certificate; Notice of Default. The Company
shall deliver to the Holder, within 90 days after the close of each quarter, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing officers with a view to determining whether it has
kept, observed, performed and fulfilled, and has caused each of its Subsidiaries
to keep, observe, perform and fulfill its obligations under this Note and
further stating, as to each such officer signing such certificate, that, to the
best of his knowledge, the Company during such preceding fiscal year has kept,
observed, performed and fulfilled, and has caused each of its Subsidiaries to
keep, observe, perform and fulfill each and every such covenant contained in
this Note and no Default occurred during such year and at the date of such
certificate there is no Default which has occurred and is continuing or, if such
signers do know of such Default, the certificate shall describe its status, with
particularity and that, to the best of his or her knowledge, no event has
occurred and remains by reason of which payments on the account of the principal
of or interest on or commitment fee with respect to this Note is prohibited or
if such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate shall
also notify the Holder should the Company elect to change the manner in which it
fixes its fiscal year end. The Company shall notify the Holder of any default or
defaults in the performance of any covenants or agreements under this Note
within five Business Days of becoming aware of any such default.
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3.14 Compliance with Laws. The Company shall comply, and shall
cause its Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders of the relevant jurisdiction in which they are incorporated
and/or in which they carry on business, all political subdivisions thereof, and
of any relevant governmental regulatory authority, in respect of the conduct of
their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole.
3.15 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would prohibit or forgive the Company from paying all or any portion of the
principal of and/or interest on this Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Note, and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Holder, but will suffer and permit
the execution of every such power as though no such law had been enacted.
3.16 Conduct of Business. The Company shall not, and shall not
permit any Subsidiary to, engage in any business, other than a Related Business.
3.17 Future Subsidiaries. Unless otherwise agreed to in
writing by Xxxxxx, after the Issuance Date, the Company will cause each
Subsidiary created or acquired by the Company and each of its Subsidiaries to
execute and deliver to the Holder a supplement to this Note (which shall also be
executed and delivered by the Company) pursuant to which such Subsidiary will
become a party to this Note and thereby be obligated, on a joint and several
basis, to make full and prompt payment of the principal of, premium, if any, and
interest on this Note.
3.18 Jurisdiction of Incorporation. The Company shall not
change its jurisdiction of incorporation or the jurisdiction of its tax
residency to a jurisdiction other than the United States of America or any state
thereof.
4. Certain Definitions. For purposes of this Note, unless otherwise
specifically indicated herein, the term "consolidated" with respect to any
Person refers to such Person consolidated with its Subsidiaries. In addition,
for purposes of the following definitions and this Note generally, all
calculations and determinations shall be made in accordance with GAAP and shall
be based upon the consolidated financial statements of the Company and its
Subsidiaries prepared in accordance with GAAP. As used in this Note, the
following terms shall have the following meanings:
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Subsidiary of the Company; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Subsidiary of the Company; provided, however, that, in the case of clauses
(ii) and (iii), such Subsidiary is primarily engaged in a Related Business.
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"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of business, (iii) the sale of Temporary Cash
Investments in the ordinary course of business, and (iv) a disposition of
obsolete equipment or property, or equipment or property that is no longer
useful in the business of the Company and its Subsidiaries and that is disposed
of in the ordinary course of business.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by this Note, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Bankruptcy Law" means Title 11, United States Code, or any
similar U.S. Federal and state laws relating to bankruptcy, insolvency, winding
up, administration, receivership and other similar matters.
"Board of Directors" means the Board of Directors of the
Company.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including, without limitation, any Preferred Stock and if such Person is a
partnership, partnership interests, but excluding any debt securities
convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease.
"Change of Control" means the occurrence of any of the
following events:
(i) any Person (other than a Permitted Holder) is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except that such Person shall be deemed
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to have "beneficial ownership" of all shares that any such Person has
the right to acquire, whether such right is exercisable immediately or
only after the passage of time) of more than 35% of the total voting
power of the Voting Stock of the Company;
(ii) the first day within any period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors or the board of directors of the Company (together with
any new directors whose election by such board of directors or whose
nomination for election by the shareholders of the Company or the
Company was approved by a majority of the directors of the Company,
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason (other than by voluntary resignation,
death or disability) to constitute a majority of such board of
directors then in office;
(iii) upon any merger or consolidation of the Company with or
into any Person or any sale, transfer or other conveyance of all or
substantially all of the assets of the Company, on a consolidated
basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction or series of
related transactions, any Person (other than a Permitted Holder) is or
becomes the owner, directly or indirectly, of more than 35% of the
total voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the
transferee or surviving entity;
(iv) a sale or disposition (other than a transfer to one or
more Wholly Owned Subsidiaries of the Company), whether directly or
indirectly, by the Company of all or substantially all of its assets;
or
(v) the pro rata distribution by the Company to its
stockholders of substantially all of its assets.
"Company" means XxxxxxXxxxxxxx.xxx, Inc. (the maker of this
Note).
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
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"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes.
"GAAP" means generally accepted accounting principles in the
United States in effect as of the Issuance Date.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto);
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except trade payables),
which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto
or the completion of such services;
(v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person;
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(vi) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed
by such Person; provided, however, that the amount of such Indebtedness
shall be the lesser of (A) the fair market value of such asset
at such date of determination and (B) the amount of such Indebtedness
of such other Persons;
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(ix) to the extent not otherwise included in this definition,
net obligations of such Person under Currency Agreements and Interest
Rate Agreements.
For the avoidance of doubt, the term "Indebtedness" shall not be deemed
to include the trade liabilities of any Person.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person.
"Issuance Date" means October 1, 2000.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof) whether or not
recorded, filed or otherwise perfected under applicable law.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset
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Disposition, (ii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition, and (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary of the
Company after such Asset Disposition.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements of
Section 8.5.
"Opinion of Counsel" means a written opinion from legal
counsel which and who are reasonably acceptable to, and addressed to, the Holder
complying with the requirements of Section 8.5.
"Permitted Holder" means Artal Luxembourg S.A., the Holder or
any of their respective Affiliates.
"Permitted Investment" means an Investment by the Company or
any of its Subsidiaries in:
(1) any Subsidiary or Person that will, upon the making of the
Investment, become or remain a Wholly Owned Subsidiary of the Company
(provided the primary business of such Subsidiary is a Related
Business);
(2) any Subsidiary or Person if as a result of such Investment
such other Person is merged or consolidated with or into, or transfers
or conveys all or substantially all its assets to the Company or a
Wholly Owned Subsidiary of the Company (provided such merger,
consolidation, transfer or conveyance complies with Section 3.8 above);
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms (provided that
such trade terms may include concessionary trade terms as the Company
or any Subsidiary deems reasonable under the circumstances);
(5) payroll, travel and similar advances to cover matters that
are expected at the time of such advances to be treated as expenses for
accounting purposes and that are made in the ordinary course of
business;
(6) stock, obligations or securities received in the
settlement of debts created in the ordinary course of business and
owing to the Company or any Subsidiary or in the satisfaction of
judgments;
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(7) any Person to the extent such Investment represents the
non-cash portion of the consideration received for in an Asset
Disposition as permitted pursuant to Section 3.5;
(8) Investments the payment for which consists of Capital
Stock of the Company (other than Disqualified Stock); and
(9) any Investment acquired by the Company or any of its
Subsidiaries (a) in exchange for any other Investment or accounts
receivable held by the Company or any such Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such Investment or accounts
receivable, or (b) as a result of a foreclosure by the Company or any
such Subsidiary with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default.
"Person" means any individual, corporation (including the
Company), partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company's and its Subsidiaries' (i) use
of the Weight Watchers trademarks, service marks, trade names, brand names,
copyrights, program information, terminology or materials, and/or other
intellectual property as provided in any license agreement between the Company
(or any Subsidiary) and the Holder, or (ii) provision of services pursuant to
any service agreement between the Company (or any Subsidiary) and the Holder.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof
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is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America or any state thereof having capital,
surplus and undivided profits aggregating in excess of $250 million and whose
long-term debt, or whose parent holding company's long-term debt, is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act), (iii) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause (ii)
above, (iv) Investments in commercial paper, maturing not more than 180 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Xxxxx'x Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Group, (v) Investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Group or "A" by Xxxxx'x Investors
Service, Inc., and (vi) Investments in mutual funds whose investment guidelines
restrict such funds' investments to those satisfying the provisions of clauses
(i) through (v) above.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Subsidiary of the Company
all the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly Owned Subsidiary.
6. Loss, Theft, Destruction or Mutilation.
Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Note and, in the case of such
loss, theft or destruction, upon delivery to the Company of an indemnity
undertaking reasonably satisfactory to the Company, or, in the case of any such
mutilation, upon surrender of this Note to the Company, the Company will issue a
new note, of like tenor and principal amount, in lieu of or in exchange for such
lost, stolen, destroyed or mutilated Note. Upon the issuance of any substitute
Note, the Company may require the payment to it of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other reasonable expenses in connection therewith.
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5. Notices and Demands.
All notices, demands and other communications provided for in
this Note or made under this Note shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or
otherwise) or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Person to whom it is directed:
(a) If to Holder, to it at the following address:
Weight Watchers International, Inc.
000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: General Counsel
(b) If to the Company, to it at the following address:
XxxxxxXxxxxxxx.xxx, Inc.
000 Xxxxxxx Xxx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
If a party desires to change its address for the purpose of receipt of notice,
or to change the person to receive a copy of notice, such notice or change of
address or recipient shall be given in the manner specified herein.
6. Present Intent. By acceptance of this Note, the Holder acknowledges
that this Note is being acquired without a present intention of resale or
distribution, and that this Note will not be transferred, pledged or otherwise
disposed of by the Holder in the absence of an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or an
opinion of counsel (including in-house counsel) reasonably satisfactory to the
Company that such registration is, under the circumstances, not required.
7. Miscellaneous Provisions.
7.1 No Oral Modifications. Neither this Note nor any term of
this Note may be changed, waived, discharged or terminated orally, but may only
be amended or modified by an instrument in writing signed by the Holder and the
Company.
7.2 Binding Effect. This Note shall be binding upon and inure
to the benefit of the Company, the Holder of this Note and their respective
heirs, successors and assigns.
7.3 Governing Law, Jurisdiction; Jury Trial Waiver. This Note
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York located in the borough of Manhattan in the City of New
York, or, if such court does not have jurisdiction, the Supreme Court of the
State of New York, New York County, for the purposes of any suit, action or
other proceeding arising out of this Note. The Company hereby further agrees
that service of any process, summons, notice or
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document by U.S. registered mail to its address set forth in Section 6 shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. Each of the parties hereto
irrevocably and unconditionally waives, to the extent permitted by applicable
law, any objection to the laying of venue of any action, suit or proceeding
arising out of this Note in (a) the United States District Court for the
Southern District of New York or (b) the Supreme Court of the State of New York,
New York County, and hereby further irrevocably and unconditionally waives, to
the extent permitted by applicable law, and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. To the extent permitted by applicable
law, the Company waives the right to trial by jury in any such action or
proceeding.
7.4 Recourse. Recourse under this Note shall be to the assets
of the Company only and in no event to the officers, directors or stockholders
of the Company.
7.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Note shall include:
(1) statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, such
Person has made such examination or investigation as is necessary to
enable such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
7.6 Assignability. The Holder may sell, assign, transfer or
otherwise hypothecate ("Transfer") this Note to any other Person. If any
interest in this Note is Transferred in compliance with this Section 8.6, this
Note shall be cancelled and the Company shall execute and deliver a new note (in
substantially the form of this Note) to each Person to whom an interest in this
Note has been Transferred in an aggregate principal amount equal to such
Person's interest in this Note.
7.7 Costs. The Company will pay all reasonable costs and
expenses of collection, including attorneys' fees and disbursements, appraiser's
fees and court costs, incurred or paid by the Holder in enforcing this Note, to
the extent permitted by law, including all costs and reasonable attorneys' fees
incurred in any appeal, bankruptcy proceeding, or other proceeding.
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IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its corporate name by its duly authorized officer as of this 3rd day of May,
2001.
XXXXXXXXXXXXXX.XXX, INC.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Agreed and Accepted:
WEIGHT WATCHERS INTERNATIONAL, INC.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
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SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Note as of the Issuance
Date was $10,355,503. The following decreases/increases in the principal amount
of this Note have been made:
Decrease in Increase in Notation Made
Principal Principal Total Principal Amount by or on
Date of Decrease Amount at Amount at at Maturity Following behalf of
Increase Maturity Maturity such Decrease/Increase Holder
--------- ----------- ----------- ---------------------- -------------
10/16/00 $ 200,000 $10,555,503
10/25/00 $ 300,000 $10,855,503
11/1/00 $ 2,700,000 $13,555,503
11/29/00 $ 2,500,000 $16,055,503
12/18/00 $ 1,100,000 $17,155,503
1/5/01 $ 900,000 $18,055,503
1/22/01 $ 2,000,000 $20,055,503
2/15/01 $ 1,300,000 $21,355,503
3/16/01 $ 1,000,000 $22,355,503
4/6/01 $ 600,000 $22,955,503
4/23/01 $ 544,497 $23,500,000
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