Document:

HYBRID FUELS INC.
                         (Formerly Polo Equities, Inc.)
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                          June 30. 2000, 1999 AND 1998

                           WILLIAM J BUTCHER, CPA P.S.
                ----------Certified Public accountant-----------

                                 1620 3rd Street
                              Marysville, WA 98205
                              Phone (360) 658-8347
                              FAX - (360) 658-1165

<PAGE>
                                TABLE OF CONTENTS

Accountant's Report                                    1

Financial Statements

     Balance Sheet                                     2

     Statement's of Loss and Accumulated Deficit       3

     Statements of Cash Flows                          4

     Statements of Changes in Stockholders' Equity     5

Notes to Financial Statements                        6-8

<PAGE>
<TABLE>
<CAPTION>
                                           Hybrid Fuels, Inc.
                                     (Formerly Polo Equities, Inc.)
                                     (A Development Stage Company)
                                    Statement of Financial Position
                            for the years ended June 30, 2000, 1999 and 1998

                                              ASSETS
                                              ------

CURRENT ASSETS                                         June 30, 2000    June 30, 1999    June 30, 1998
--------------                                        ---------------  ---------------  ---------------
<S>                                                   <C>              <C>              <C>

     Cash                                             $          485   $            0   $       56,976
                                                      ---------------  ---------------  ---------------
          Total Current Assets                                   485                0           56,976

OTHER ASSETS
------------
     Deposit on Plant (Note 5)                               170,561                0                0
     Stockholder Note Receivable (Note 6)                    150,000                0                0
                                                      ---------------  ---------------  ---------------
          Total Other Assets                                 320,561                0                0

TOTAL ASSETS                                                 321,046                0           56,976
                                                      ==============  ===============  ================

                            LIABILITIES AND STOCKHOLDERS EQUITY
                            -----------------------------------

CURRENT LIABILITIES
-------------------
     Accounts Payable                                             39                0                0
     Stockholder Payable (Note 7)                            266,144          293,183          150,580
                                                      ---------------  ---------------  ---------------
          Total Current Liabilities                          266,144          293,183          150,580

STOCKHOLDERS' EQUITY
--------------------
     Common Stock 001 par value
          50,000,000 shares authorized; is, 103,420
          shares issued and outstanding at June 30,
          2000,16,923,600 shares issued and
          outstanding at June 30, 1999, 15,000,000
          shares issued and outstanding at June 30,
          1998. (Note 8)                                      18,103           16,924           15,000

     Additional Paid in Capital                              362,074           15,074            3,398
     Deficit accumulated.                                   (325,275)        (325,181)        (112,002)
                                                      ---------------  ---------------  ---------------
          Total Stockholders' Equity                          54,902         (293,183)         (93,604)

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY             $      321,046   $            0   $       56,976
                                                      ==============  ===============  ================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       -2-
<PAGE>
<TABLE>
<CAPTION>
                                              Hybrid Fuels, Inc
                                       (Formerly Polo Equities, Inc.)
                                        (A Development Stage Company)
                                 Statement of Losses and Accumulated Deficit
               for the years ended June 30, 2000, 1999 and 1998 and Inception to June 30, 2000

                                                                                                 Inception
                                                                                             February 26, 1960
                                                                                                through
                                           June 30, 2000    June 30, 1999    June 30, 1999    June 30, 2000
                                          ---------------  ---------------  ---------------  -----------------
<S>                                       <C>              <C>              <C>              <C>
REVENUE                                   $                $                $                $
     Sales                                             0                0                0                  0

     Cost of Sales                                     0                0                0                  0
                                          ---------------  ---------------  ---------------  -----------------
     Gross Profit                                      0                0                0                  0
EXPENSES
     Accounting Fees                                   0           13,650                0             13,650
     Advertising                                       0              147                0                147
     Automobile                                        0                0              545                545
     Banking                                          55              119              261                435
     Commissions                                       0            3,307                0              3,307
     Contract Labor                                    0            1,961                0              1,961
     Executive Compensation                            0           62,818           55,757            118,575
     Filing & Registration fees                        0                0            5.000              5,000
     General & Administration                          0                0                0             18,398
     Insurance                                         0              450            2,635              3,085
     Legal Fees                                        0            8,500                0              8,500
     License & Permits                                 0              125                0                125
     Marketing                                         0            2,664            2,923              5,587
     Miscellaneous                                     0              749              400              1,149
     Office Expense                                   39            3.114              468              3,621
     Postage & Delivery                                0            6,241              431              6,671
     Printing & Reproduction                           0           11,004            6,566             17,570
     Professional Fees                                 0           70,755           12,459             83,214
     Rent                                              0           13,457            1,793             15,249
     Security                                          0            1,142              106              1,248
     Telephone                                         0           11,694            1,746             13,440
     Travel & Entertainment                            0            1,284            2,515              3,799
                                          ---------------  ---------------  ---------------  -----------------
     Total operating Expenses                         94          213,180           93,604            325,275
                                          ---------------  ---------------  ---------------  -----------------
Net (Loss)                                           (94)        (213,180)         (93,604)  $       (325,275)
                                                                                             =================
Accumulated Deficit beginning of period         (325,181)        (112,002)         (18,398)

Accumulated Deficit end of period         $     (325,275)  $      325,181   $     (112,002)
                                          ===============  ===============  ===============
</TABLE>

   The accompanying Dotes arc an integral part of these financial statements.

                                       -3-
<PAGE>
<TABLE>
<CAPTION>
                                                        Hybrid Fuels, Inc.
                                                  (Formerly Polo Equities. Inc.)
                                                   (A Development Stage Company)
                                                  Statement of Cash Flows for the
                             years ended June 30, 2000, 1999, arid 1998 and Inception to June 30, 2000

                                                                                                                     Inception
                                                                                                                 February 26, 1960
                                                                                                                      through
                                                               June 30, 2000      June 30, 1999    June 30, 1998    June 30, 2000
                                                            ------------------  ----------------  ---------------  ---------------
<S>                                                         <C>                  <C>              <C>              <C>
CASH FLOWS PROM OPERATING ACTIVITIES                                       (94)  $     (213,180)  $      (93,604)  $     (325,275)
     Net Loss
     Adjustments to reconcile net loss to cash
          used in operating activities
          Changes in assets and liabilities

               Accounts Payable                                             39                0                0               39

                    Net cash used in operating activities                  (55)        (213,180)         (93.604)        (325,236)

CASH FLOWS FROM IN VESTING ACTIVITIES

     Loan to Blue Mountain                                                  61                0                0         (170,56l)

          Net cash provided (used) by investing activities            (170,561)               0                0         (170,561)
                                                            ------------------  ----------------  ---------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Shareholder Note Receivable                                      (150,000)               0                0         (150,000)

     Shareholder Loans Payable                                         (27,078)         142,603          150,580          277,602

     Sale of common stock                                              348,179           13.600                0          368,680
                                                            ------------------  ----------------  ---------------  ---------------
          Net cash provided (used) by financing activities             171,101          156,203          150,580          496,282

NET INCREASE (DECREASE) IN CASH                                            485          (56,976)          56,976              485

CASH AT BEGINNING OF PERIOD                                                  0           56,976                0                0
                                                            ------------------  ----------------  ---------------  ---------------
CASH AT END OF PERIOD                                       $              485                0           56,976   $          485
                                                            ==================  ================  ===============  ===============
</TABLE>

      The accompanying notes are an integral part of these financial statements.

                                       -4-
<PAGE>
<TABLE>
<CAPTION>
                                                Hybrid Fuels, Inc.
                                          (Formerly Polo Equities, mc,)
                                          (A Development Stage Company)
                                  Statement of Changes in Stockholders' Equity
                               for the years ended June 30, 2000, 1999 and 1998

                                                        Common Stock                         Deficit
                                                   ---------------------------              Accumulated
                                                                                 Additional  during the
                                                                   Par Value      Paid-in   development
                                                      Shares        Amount       Capital        stage     Total
                                                   -------------  -----------  ------------  ---------  ---------
<S>                                                <C>            <C>          <C>           <C>        <C>
Balance at June 30,1997                            $ 15,000,000       15,000         3,398    (18,398)         0
                                                   ============  ===========  ============  =========  ==========
Net loss June 30. 1997                                                                        (93,604)   (93,604)
                                                                                             ---------  ---------

Balance at June 30, 1998                             15,000.000       15,000         3,398   (112,002)   (93,604)
                                                   ============  ===========  ============  =========  ==========
Issuance of 1,000,000 shares common stock on
Aug 4,1998, (Note 8)                                  1,000,000        1,000        (1,000)         0          0

Issuance of 2,400 shares common stock on Sept.
19, 1998 for cash.                                        2,400            3         3,597          0       3600

Issuance of 21,200 shares common stock on Nov
24, 1998 for cash                                        21,200           21         9,979          0     10,000

Issuance of 900,000 shares common stock on
March 23, 1999, (Note 8)                                900,000          900          (900)         0          0

Net loss June 30. 1999                                                                  0    (213,180)  (213,180)
                                                   -------------  -----------  ------------  ---------  ---------

Balance at June 30, 1999                             16,923,600       16,924        15,074   (325,181)  (293,183)
                                                   ============  ===========  ============  =========  ==========

Issuance of 5,000 shares common stock on Sept 1,
1999 for cash                                             5,000            5         2,495          0      2,500

Issuance of 15,000 shares common stock on Oct 8,
1999 for cash                                            15,000           15         7,485          0      7,500

Cancellation of August 4, 1998 1,000,000 share
issuance and March 23, 1999 900,000 share
issuance (Note 8)                                    (1,900,000)      (1,900)        1,900          0          0

Issuance of 29,050 shares common stock on Jan 6,
2000 for cash                                            29,050           29        16,971          0      1,700

Issuance of 17.730 shares common stock on Feb 7,
2000 for cash                                            17,730           18        12,662          0     12,680

Issuance of 13.040 shams common stock on March
17, 2000 for cash                                        13,040           13         8,487          0      8,500

Issuance of 1,500,000 shares common stock on
February 17. 2000 pursuant to subscription
agreement                                             1,500,000        1,500       148,500          0    150,000

Issuance of 1,500,000 shares common stock on
February 17, 2000 pursuant to subscription
agreement                                             1,500,000        1,500       148,500          0    150,000

Net loss June 30, 2000                                        -            -             0        (94)       (94)
                                                   -------------  -----------  ------------  ---------  ---------

Balance at June 30,2000                              18,103,420       18,103       362,074    325,275     54,902
                                                   ============  ===========  ============  =========  ==========
</TABLE>

      The accompanying notes are an integral part of these financial statements.

                                       -5-
<PAGE>
                               HYBRID FUELS, INC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE  1.  THE  COMPANY
----------------------

The  Company was originally incorporated in the state of Florida on February 16,
1960  as  Fiberglass  industries Corporation of America. On August 29, 1966, the
Company  changed  its  name  to Rocket-Atlas Corp. and again changed its name on
November  21,  1966  to Rocket Industries, Corporation. On January 27, 1984, the
Company  changed  it's name to Polo Investment Corp. of Missouri, Inc. On August
2,  1985  the  name was changed to Medical Advanced Systems, Inc. and on June 3,
1993  the  Company  changed  its  name  to  Polo  Equities,  Inc

In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo  Equities,  Inc., (a Nevada corporation), (Polo) with authorized capital of
50,000,000  shares of $.001 par value common stock. The Company then merged with
Polo  pursuant  to  Articles  of  Merger adopted May 28, 1998 and filed with the
State  of  Nevada  on  June  10,  1998,  which  changed  its domicile to Nevada.

On  May 29, 1998 the Company changed its name to Hybrid Fuels, Inc., the current
name.

In  May  of  1998,  in  a  stock for stock exchange, the Company acquired Hybrid
Fuels,  USA,  Inc.  and 330420 B.C. Ltd., which changed its name to Hybrid Fuels
(Canada)  Inc.,  As part of the acquisition, the Company acquired the technology
necessary for the Company's current operations. The Company operates through its
wholly  owned subsidiaries, Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc.

Prior to the acquisition of Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc.  the  Company  had  no  significant  operations  and was seeking a business
opportunity.

NOTE  2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
--------------------------------------------------------

This  summary  of  significant  accounting  policies  of Hybrid Fuels, Inc. (the
Company)  is  presented  to  assist  in  understanding  the  Company's financial
statements.  The  financial  statements  and  notes  are  representations of the
Company's  management  who  is  responsible for their integrity and objectivity.
These  accounting  policies  conform to generally accepted accounting principles
and  have  been  consistently  applied  in  the  preparation  of  the  financial
statements.

NATURE  OF  OPERATIONS
----------------------

See  The  Company  above

CASH  AND  CASH  EQUIVALENTS
----------------------------

For  purposes  of  the  statement  of  cash  flows,  the  Company  considers all
short-term  debt securities purchased with a maturity of three months or less to
be  cash  equivalents.

PROPERTY  AND  EQUIPMENT
------------------------

Property  and  equipment  are  stated at the lower of cost or fair market value.
Depreciation is computed for financial statement purposes as well as for federal
income  tax purposes using the MACRS (Modified Accelerated Cost Recovery System)
method  of  depreciation.  Equipment is depreciated over five years. Software is
amortized  over  five  years.

INCOME  TAXES
-------------

The Company has not filed any tax returns. It is anticipated that if tax returns
were  filed, the company would have net operating losses. The current deficit of
$325,275 at June 30, 2000 would potentially create a similar net operating loss,
which  could  begin  expiring  for  tax  purposes  in  2004.

                                       -6-
<PAGE>
                               HYBRID FUELS, ]NC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

USE  OF  ESTIMATES
------------------

The  preparation  of  financial  statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect  certain  reported  amounts  and disclosures. Accordingly, actual results
could  differ  from  those  estimates.

FOREIGN  EXCHANGE
-----------------

Some financial activity was based on Canadian dollars and translated on June 30.
2000  using  the  rate  of  (C$/US$)  1.468  or  a  multiplier  of  .6812.

NOTE  3.  GOING  CONCERN
------------------------

Because  of  a  deficiency  in working capital and significant operating losses,
there  is doubt about the ability of the Company to continue in existence unless
additional working capital is obtained. The Company currently has plans to raise
sufficient  working capital through equity financing and through the acquisition
of  companies having sufficient assets and cash flow to enable the Company to be
self-sufficient and profitable. The Company has acquired an option to purchase a
Beef  Packing  Plant  which  it  anticipates  will  begin  operations  about the
beginning  of  November,  2000.  See  NOTE  5

NOTE  4.  COMPANY  FACILITIES
-----------------------------

The  Company  currently  uses office space at #214-2791 Hwy 97 N, Kelowna, B.C.,
VIX4J8,  which  is  provided  by  a  shareholder  at no cost to the Company. The
President  also  maintains  an  office  in  his  home at no cost to the Company.

NOTE  5.  DEPOSIT
-----------------

The  Company  deposited  $250,000  Canadian  Dollars  ($170,561 USD), in a trust
account,  pursuant  to an agreement to purchase a beef processing plant owned by
Mega Holdings, Ltd. The Company has agreed to purchase the beef processing plant
facility  including  land,  buildings  and  equipment  for  $3,000,000  Canadian
Dollars. The property, buildings and related equipment were appraised in 1996 at
a  replacement  value of $4,990,000 Canadian Dollars, during a time in which the
plant  was  dormant  and  in  need of repair. The purchase agreement requires an
additional  payment  of  $150,000 Canadian Dollars within 45 days of acceptance,
which  made  it  due  on  June  24,  2000, the parties have agreed to extend the
deadline  for  the  payment.  See  NOTE  9.

NOTE  6.  STOCK  HOLDERS  LOAN  RECEIVABLE
------------------------------------------

On  February  17,  2000  the  Company executed a subscription agreement and note
whereby  the  Company  would receive $150,000 for 1,500,000 shares common stock.
The  note  was  interest  free  and is to be received within one (1) week of the
Company  being  re-listed  on  the  OTC:BB  or  other  suitable  exchange.

NOTE  7.  STOCKHOLDERS  LOAN  PAYABLE
-------------------------------------

There  are no notes. The money was advanced to the Company with no specific term
of  repayment.  The  money  was  advanced  by the controlling shareholder of the
Company.

                                       -7-
<PAGE>
                               Hybrid FUELS, Inc.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8. STOCKHOLDERS EQUITY
---------------------------

The  issuer was originally incorporated in Florida as Fiberglass Industries Corp
of America in February 1960 with authorized capital of 500,000 shares with a par
value  of  $.l0  per  share.

In  October, 1964 the Company changed its authorized capital to 1,500,000 shares
of  common  stock  with  a  par  value  of  $.10  per  share

On  November  21,  1966  the  Company  changed  its  name  to Rocket Industries,
Corporation.  and  at  that  time  authorized capital was increased to 3,000,000
shares  and  par  value  was  changed  to  $.05  per  share.

On  January  27,  1984  the  Company changed its name to Polo Investment Corp of
Missouri  Inc.  and  increased  its  authorized  capital  to  30,000,000 shares.

On  June  3,  1993  the  Company  changed  its  name  to Polo Equities, Inc. and
increased  its  authorized  capital to 50,000,000 shares common stock with a par
value  of  $.001  per  share.

In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo  Equities, Inc., ( a Nevada corporation), (Polo) with authorized capital of
50,000,000  shares of $.00l par value common stock. The Company then merged with
Polo  pursuant  to  Articles  of  Merger adopted May 28, 1998 and filed with the
State  of  Nevada  on  June  10,  1998,  which  changed  its domicile to Nevada.

On  May 29, 1998 the Company changed its name to Hybrid Fuels, Inc., the current
name.

In  accordance  with  the  terms  of an acquisition agreement, 12,000,000 of the
15,000,000 shares outstanding at the time, were canceled end 12,000,000 treasury
shares  were issued in a share for share exchange by which the issuer became the
owner  of all of the issued and outstanding shares of Hybrid Fuels, USA Inc. and
330420 B.C. LTD. That Company changed it's name to Hybrid Fuels (Canada) Inc. By
acquiring  control  of  that  company,  this  Company  gained  control  of  the
Intellectual  Property

On  August  4,  1998 the Company's Board of Directors authorized the issuance of
1,000,000 shares common stock to individuals without consideration. On March 23,
1999 the Company's Board of Directors issued an additional 900,000 shares common
stock,  also  without  consideration.  On August 21, 1999 the Board of Directors
resolved that share certificates numbered 10166 through 10174 totaling 1,000,000
shares  common  stock  and  certificates  numbered  10212 through 10220 totaling
900,00 shares common stock were issued without adequate consideration being paid
to the Company and were therefore not fully paid and non-assessable. The Company
cancelled  the  share  certificates and indemnified the transfer agent, Standard
Registrar  and  Transfer Company Inc. for any costs or liability it may incur in
any  way  arising  out of the cancellation of such shares and the transfer agent
removed the 1,900,000 shares from the stockholder list effectively reversing the
issuance.  Six  of the canceled certificates, totaling 550,000 shares, have been
endorsed  and  returned  to  the  Company  for  cancellation.

NOTE  9.  SUBSEQUENT  EVENTS
----------------------------

The  Company  deposited  funds  in  a  trust account pursuant to an agreement to
purchase  a  beef  processing  plant  in  Salmon Arm, B.C., Canada owned by Mega
Holdings,  Ltd.  Upon completion of the purchase this beef processing plant will
be  operated  by Blue Mountain Packers, Ltd., The Company intends to acquire the
issued  and  outstanding  Shares  of  stock  of  Blue Mountain Packers, Ltd. and
operate  this  corporation  as a wholly owned subsidiary. Blue Mountain Packers,
Ltd.  recently  received certification by the Canadian Food Inspection Agency of
the  Government  of  Canada,  Department  of  Agriculture  for the processing of
Canadian  beef.

                                       -8-
<PAGE>NU SKIN ENTERPRISES, INC.
                                One Nu Skin Plaza
                              75 West Center Street
                                Provo, Utah 84601

                     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  & Myers LLP,  400 South Hope  Street,  Los  Angeles,
California  90071,  at 8:00 a.m., Los Angeles time, at a closing (the "Closing")
on October 12, 2000. At the Closing

<PAGE>

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

                                       2

<PAGE>

Shearman & Sterling 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 & Myers 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.

                                       3

<PAGE>

        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;

                                       4

<PAGE>

     (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.

                                        5

<PAGE>

        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

                                       6

<PAGE>

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.

                                       7

<PAGE>

        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.

                                       8

<PAGE>

        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.

                                       9

<PAGE>

        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.

                                       10

<PAGE>

        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

                                       11

<PAGE>

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

<PAGE>

        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

<PAGE>

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

<PAGE>

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

<PAGE>

               (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

<PAGE>

     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

<PAGE>

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

<PAGE>

        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

<PAGE>

               (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

<PAGE>

        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

<PAGE>

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

<PAGE>

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

<PAGE>

          (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

<PAGE>

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

<PAGE>

          (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

<PAGE>

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

<PAGE>

          (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

<PAGE>

        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)

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<PAGE>

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

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<PAGE>

     (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

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<PAGE>

          (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.

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<PAGE>

          (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

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<PAGE>

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

<PAGE>

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

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<PAGE>

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
Yen 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

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<PAGE>

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

<PAGE>

        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

<PAGE>

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

<PAGE>

     (c) if to the Company,  to the Company at One Nu Skin Plaza, 75 West Center
Street, Provo, Utah 84601 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

<PAGE>

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

<PAGE>

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

<PAGE>

        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

<PAGE>

     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/ Corey B. Lindley
                                     Name:   Corey B. Lindley
                                     Title:  Executive Vice President and
                                             Chief Financial Officer

                                      S-1

<PAGE>

The foregoing is hereby
agreed to as of the
date thereof.

THE PRUDENTIAL INSURANCE COMPANY
 OF AMERICA

By:
      Name:
      Title:  Vice President

                                      S-2

<PAGE>

                                                                      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

<PAGE>

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

<PAGE>

     "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

<PAGE>

     "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

<PAGE>

     (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

<PAGE>

     "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

<PAGE>

     "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

<PAGE>

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

<PAGE>

     "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

<PAGE>

     "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 Lien renewing,  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

<PAGE>

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 Liens  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

<PAGE>

     "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

<PAGE>

                                                                      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

<PAGE>

     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  holder'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

<PAGE>

                            NU SKIN ENTERPRISES, INC.

                                JPY9,706,500,000

                     3.03% Senior Notes due October 12, 2010

                               ------------------

                             NOTE PURCHASE AGREEMENT

                               ------------------

                             Dated October 12, 2000

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