UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED NOVEMBER 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____.
COMMISSION FILE NUMBER:
333-12929
WEIDER NUTRITION INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 87-0563574
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
2002 SOUTH 5070 WEST 84104-4726
SALT LAKE CITY, UTAH (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code:
(801) 975-5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No__
The number of shares outstanding of the Registrant's common stock is 24,948,381
(as of December 31, 1998.)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
November 30, May 31,
ASSETS 1998 1998
--------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................... $ 1,997 $ 684
Receivables ............................................. 62,356 55,204
Inventories ............................................. 81,558 60,523
Prepaid expenses and other .............................. 5,430 3,193
Deferred taxes .......................................... 3,941 3,896
--------- ---------
Total current assets ................................ 155,282 123,500
--------- ---------
Property and equipment, net ............................... 48,802 41,962
--------- ---------
Other assets:
Intangible assets, net .................................. 53,967 24,392
Deposits and other assets ............................... 15,132 14,668
Securities available for sale ........................... 2,949 --
Notes receivable from officers related to
stock performance units ............................... 3,977 3,987
Deferred taxes .......................................... -- 1,231
--------- ---------
Total other assets .................................. 76,025 44,278
--------- ---------
Total assets .................................. $ 280,109 $ 209,740
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................ $ 28,558 $ 26,359
Accrued expenses ........................................ 17,165 6,432
Current portion of long-term debt ....................... 15,516 1,554
Income taxes payable .................................... -- 3,467
--------- ---------
Total current liabilities ........................... 61,239 37,812
--------- ---------
Long-term debt ............................................ 116,720 68,792
--------- ---------
Deferred taxes ............................................ 1,405 --
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share; shares
authorized-10,000,000; no shares issued and outstanding -- --
Class A common stock, par value $.01 per share; shares
authorized-50,000,000; shares issued and
outstanding-9,260,949 and 9,048,349 ................... 92 91
Class B common stock, par value $.01 per share; shares
Authorized-25,000,000; shares issued and
outstanding-15,687,432 ................................ 157 157
Additional paid-in capital .............................. 82,408 79,671
Unrealized loss on securities available for sale ........ (1,230) --
Foreign currency translation ............................ 1,528 (165)
Retained earnings ....................................... 17,790 23,382
--------- ---------
Total stockholders' equity .......................... 100,745 103,136
--------- ---------
Total liabilities and stockholders' equity .... $ 280,109 $ 209,740
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30,
------------------------------
1998 1997
------------ ------------
Net sales .................................. $ 83,274 $ 60,811
Cost of goods sold ......................... 54,771 40,182
------------ ------------
Gross profit ............................... 28,503 20,629
------------ ------------
Operating expenses:
Selling and marketing .................... 19,267 10,032
General and administrative ............... 6,970 3,770
Research and development ................. 1,419 853
Amortization of intangible assets ........ 809 568
Plant consolidation and transition ....... 4,034 --
Severance charges ........................ 2,500 --
------------ ------------
Total operating expenses ............. 34,999 15,223
------------ ------------
Income (loss) from operations .............. (6,496) 5,406
------------ ------------
Other income (expense):
Interest income .......................... 145 83
Interest expense ......................... (2,618) (1,135)
Other .................................... (211) (247)
------------ ------------
Total ................................ (2,684) (1,299)
------------ ------------
Income (loss) before income taxes .......... (9,180) 4,107
Provision for income taxes (benefit) ....... (3,740) 1,575
------------ ------------
Net income (loss) .......................... $ (5,440) $ 2,532
============ ============
Weighted average shares outstanding:
Basic .................................... 24,924,018 24,699,238
============ ============
Diluted .................................. 24,924,018 24,822,218
============ ============
Net income (loss) per share:
Basic .................................... $ (0.22) $ 0.10
============ ============
Diluted .................................. $ (0.22) $ 0.10
============ ============
Comprehensive income (loss) ................ $ (4,540) $ 2,659
============ ============
See notes to condensed consolidated financial statements.
-3-
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
SIX MONTHS ENDED
NOVEMBER 30,
------------------------------
1998 1997
------------ ------------
Net sales .................................. $ 151,220 $ 114,326
Cost of goods sold ......................... 99,189 75,823
------------ ------------
Gross profit ............................... 52,031 38,503
------------ ------------
Operating expenses:
Selling and marketing .................... 31,618 18,806
General and administrative ............... 12,137 7,644
Research and development ................. 2,266 1,582
Amortization of intangible assets ........ 1,433 1,069
Plant consolidation and transition ....... 4,034 --
Severance charges ........................ 2,500 --
------------ ------------
Total operating expenses ............. 53,988 29,101
------------ ------------
Income (loss) from operations .............. (1,957) 9,402
------------ ------------
Other income (expense):
Interest income .......................... 302 204
Interest expense ......................... (4,313) (2,284)
Other .................................... (389) (397)
------------ ------------
Total ................................ (4,400) (2,477)
------------ ------------
Income (loss) before income taxes .......... (6,357) 6,925
Provision for income taxes (benefit) ....... (2,624) 2,701
------------ ------------
Net income (loss) .......................... $ (3,733) $ 4,224
============ ============
Weighted average shares outstanding:
Basic .................................... 24,857,348 24,699,238
============ ============
Diluted .................................. 24,857,348 24,981,157
============ ============
Net income (loss) per share:
Basic .................................... $ (0.15) $ 0.17
============ ============
Diluted .................................. $ (0.15) $ 0.17
============ ============
Comprehensive income (loss) ................ $ (3,270) $ 4,376
============ ============
See notes to condensed consolidated financial statements.
-4-
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
NOVEMBER 30,
---------------------
1998 1997
-------- --------
Cash flows from operating activities:
Net income (loss) .................................. $ (3,733) $ 4,224
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Provision for bad debts ........................ 660 451
Deferred taxes ................................. 269 1,381
Depreciation, amortization and
asset impairment .............................. 7,559 3,656
Loss on disposition of equipment ............... 65 --
Changes in operating assets and liabilities-net
of assets acquired:
Receivables .................................... 3,977 922
Inventories .................................... (11,585) (10,326)
Prepaid expenses and other ..................... (583) 102
Deposits and other assets ...................... 2,599 375
Accounts payable ............................... (656) (2,251)
Accrued expenses ............................... (5,086) (2,262)
-------- --------
Net cash used in operating activities ........ (6,514) (3,728)
-------- --------
Cash flows from investing activities:
Issuance of common stock ........................... 139 --
Dividends paid ..................................... (1,860) (1,853)
Proceeds from long-term debt ....................... 46,135 15,583
Payments on long-term debt ......................... (1,073) (1,464)
-------- --------
Net cash provided by financing activities .... 43,341 12,266
-------- --------
Cash flows from investing activities:
Acquisition, net of cash ........................... (24,668) --
Purchase of property and equipment ................. (6,443) (5,518)
Proceeds from disposition of equipment ............. 1,364 --
Change in officers' notes receivable ............... 10 (3,388)
Investment in securities available for sale ........ (4,998) --
-------- --------
Net cash used in investing activities ........ (34,735) (8,906)
-------- --------
Effect of exchange rate changes on cash .............. (779) 285
-------- --------
Increase (decrease) in cash and cash equivalents ..... 1,313 (83)
Cash and cash equivalents, beginning of period ....... 684 1,259
-------- --------
Cash and cash equivalents, end of period ............. $ 1,997 $ 1,176
======== ========
See notes to condensed consolidated financial statements.
-5-
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION AND OTHER MATTERS
The accompanying unaudited interim consolidated financial statements
("interim financial statements") do not include all disclosures provided in the
annual consolidated financial statements. These interim financial statements
should be read in conjunction with the consolidated financial statements and the
footnotes thereto contained in the Weider Nutrition International, Inc. (the
"Company") Annual Report on Form 10-K for the year ended May 31, 1998 as filed
with the Securities and Exchange Commission. The May 31, 1998 consolidated
balance sheet was derived from audited financial statements, but all disclosures
required by generally accepted accounting principles are not provided in the
accompanying footnotes. The Company is a majority-owned subsidiary of Weider
Health and Fitness ("WHF").
In the opinion of the Company, the accompanying interim financial
statements contain all adjustments (which are of a normal recurring nature)
necessary for a fair presentation of the Company's financial position and
results of operations. Certain prior period amounts have been reclassified to
conform with the current interim period presentation.
2. SIGNIFICANT TRANSACTIONS
On July 24, 1998, the Company acquired 100% of the outstanding shares of
Haleko Hanseatisches Lebensmittle Kontor GmbH, a corporation organized under the
laws of Germany ("Haleko"). Haleko, the largest sports nutrition company in
Europe, had sales of approximately $65 million for the twelve months ending May
31, 1998. The purchase price was comprised of $25.2 million in cash, 200,000
shares of Class A common stock (@ $13.00 per share), and up to an $8 million
earnout contingent on future financial performance. In addition, $16 million in
long-term debt was assumed and $5 million in acquisition related capital costs
are expected, but not finalized, at November 30, 1998. Final determination of
these costs will occur by the end of the Company's May 31, 1999 fiscal year. The
cash portion of the purchase price was financed with funds available under the
Company's credit facility. The additional acquisition related costs will also be
financed with funds available under the credit facility.
The acquisition was accounted for as a purchase and recorded during the
Company's quarter ended August 31, 1998. The excess of the purchase price over
the estimated fair value of the acquired net assets (approximately $21.0
million) was recorded as goodwill.
The following unaudited pro forma results of operations of the Company
give effect to the acquisition of Haleko as though the transaction had occurred
on June 1, 1997.
SIX MONTHS ENDED
NOVEMBER 30,
--------------------------
1998 1997
--------- ---------
Net sales ..................................... $ 163,680 $ 142,872
Operating income (loss) ....................... (1,264) 9,635
Net income (loss) ............................. (3,716) 3,623
Diluted earnings (loss) per share ............. (0.15) 0.15
-6-
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
In September 1998, the Company announced its intention to consolidate all
capsule and tablet manufacturing into the Company's Utah facility during the
second and third quarters of fiscal 1999. This consolidation and transition was
substantially completed by November 30, 1998 and, accordingly, certain charges
associated with the consolidation were recognized during the quarter ended
November 30, 1998. Aggregate costs, including asset impairment, severance, lease
buy-out and inventory related charges, totaling $4.0 million were recognized
during the second quarter of fiscal 1999. Additional transition related costs
totaling approximately $1 million are expected in the third quarter of fiscal
1999.
In October 1998, the Company announced the resignation of
Richard B. Bizzaro as President and Chief Executive Officer. In conjunction with
this resignation, and the termination of approximately twenty employees, the
Company recognized severance related charges of approximately $2.5 million
during the second quarter of fiscal 1999.
3. RECEIVABLES
Receivables consist of the following:
November 30, May 31,
1998 1998
-------- --------
Trade accounts ............................... $ 58,283 $ 54,164
Income taxes ................................. 2,929 --
Other ........................................ 2,719 1,331
-------- --------
63,931 55,495
Less allowance for doubtful accounts ......... (1,575) (291)
-------- --------
$ 62,356 $ 55,204
======== ========
4. INVENTORIES
Inventories consist of the following:
November 30, May 31,
1998 1998
-------- --------
Raw materials ................................ $ 24,930 $ 23,226
Work in process .............................. 2,781 3,613
Finished goods ............................... 53,847 33,684
-------- --------
Total ............................ $ 81,558 $ 60,523
======== ========
Inventory totaling approximately $5.9 million, primarily consisting of two
raw materials, is included as a long-term asset in deposits and other assets in
the accompanying balance sheets. These "long-term" inventories primarily
resulted from advanced purchases of raw materials based on sales forecasts that
have not been realized at the forecasted rate. The Company believes that such
raw materials will be utilized in the ordinary course of business.
-7-
<PAGE>
5. INTANGIBLE ASSETS
Intangible assets consist of the following:
November 30, May 31,
1998 1998
-------- --------
Cost in excess of fair value
of net assets acquired (goodwill) $ 53,637 $ 28,685
Patents and trademarks ............ 10,985 4,933
Noncompete agreements ............. 228 214
-------- --------
64,850 33,832
Less accumulated amortization ..... (10,883) (9,440)
-------- --------
Total ............................. $ 53,967 $ 24,392
======== ========
Certain pre-acquisition contingent costs associated with the acquisition
of Haleko have been estimated at November 30, 1998. As these costs become
finalized, amounts allocated to goodwill may be adjusted.
6. INVESTMENT IN SECURITIES AVAILABLE FOR SALE
During the six months ended November 30, 1998, the Company invested in
certain "available-for-sale" securities. In accordance with SFAS No. 115, these
securities are recorded at fair value with the accompanying unrealized holding
losses, net of income tax benefits, reflected as a separate component of
stockholders' equity. The original cost of the investment amounted to $4,998 as
of November 30, 1998.
7. OPERATIONS BY GEOGRAPHIC AREA
As a result of the Company's recent acquisition of Haleko, the Company has
significantly expanded its operations outside the United States. The following
information has been summarized by primary geographic area of operations:
IDENTIFIABLE ASSETS
-----------------------
NOVEMBER 30, MAY 31,
1998 1998
--------- ---------
United States ........... $ 251,929 $ 212,113
Germany ................. 63,974 --
Europe-other ............ 9,030 7,698
Canada .................. 692 768
Intercompany eliminations (45,516) (10,839)
--------- ---------
$ 280,109 $ 209,740
========= =========
For the six months ended November 30:
NET SALES OPERATING INCOME(LOSS)
---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
United States .... $ 121,466 $ 108,666 $ (3,105) $ 9,540
Germany .......... 25,111 -- 1,395 --
Europe-other ..... 5,236 5,076 (56) 37
Canada ........... 449 584 (191) (175)
Intercompany
eliminations .... (1,042) -- -- --
--------- --------- --------- ---------
$ 151,220 $ 114,326 $ (1,957) $ 9,402
========= ========= ========= =========
-8-
<PAGE>
8. SALES TO MAJOR CUSTOMERS
The Company's largest customers, General Nutrition Center ("GNC"),
Wal-Mart, and Costco, accounted for approximately 12%, 16%, and 14%,
respectively, of net sales for the six months ended November 30, 1998, and 11%,
17%, and 7%, respectively, for the six months ended November 30, 1997. At
November 30, 1998 and May 31, 1998, amounts due from these customers represented
approximately 43.8% and 49.6%, respectively, of total trade accounts receivable.
9. RELATED PARTY TRANSACTIONS
Effective June 1, 1998, the Company agreed to participate in the
sponsorship of certain body builder contracts, as a marketing resource, with
WHF. The agreement amounts to $50 per quarter.
10. CONTINGENCIES
On April 24, 1997, the Company filed a lawsuit in the United States
District Court for the District of Utah (Central Division) for a declaratory
judgment that Pain Free, a joint care product, did not infringe two U.S. patents
held by Nutramax Laboratories, Inc. ("Nutramax") or, in the alternative,
declaring such patents invalid. On June 30, 1997, Nutramax filed a counterclaim
against the Company alleging that, through the manufacture and sale of a Company
product, the Company was willfully infringing on one or more U.S. patents of
Nutramax and also had contributorily and actively induced infringement on such
patents. The counterclaim seeks treble damages as a result of the claimed
willful and intentional nature of the alleged infringement. The litigation has
been transferred to the United States District Court for the District of
Maryland, where Nutramax had previously commenced litigation alleging that
twenty-two other entities had also infringed those patents, and is in discovery.
To the extent the Company does not prevail in the lawsuit, the Company could be
enjoined from the future manufacture and marketing of Pain Free, which has
become one of its best selling products, and could be required by the court to
pay damages to Nutramax, which under certain circumstances could be trebled.
Although the Company intends to vigorously oppose the counterclaim and believes
that there will be no material liability, the imposition by the court of any of
the foregoing could have a material adverse effect on the Company. On August 31,
1998, Nutramax filed a lawsuit in Maryland State Court against the Company and a
Company employee alleging breaches by the Company and the employee of claimed
confidentiality obligations the employee supposedly owed to Nutramax because
Nutramax claims the employee was a consultant to Nutramax prior to being
employed by the Company. The lawsuit was withdrawn without prejudice by
Nutramax, but was refiled in November 1998. The Company disputes the allegations
and will vigorously oppose the lawsuit.
The Company was named as one of several defendants in a suit filed in
December 1996 alleging unfair competition and false advertising under California
law. A settlement with regard to the suit was agreed to in July 1998. In August
1998, the plaintiff filed an application pursuant to the court order established
by the settlement contending that the product was not manufactured and labeled
in compliance with applicable law by virtue of the alleged inclusion of a
minimal amount of cholesterol, which application was opposed by the Company. In
November 1998, the parties resolved all matters with respect to such
application.
-9-
<PAGE>
The Company received an access letter from the Federal Trade Commission
("FTC") regarding the Company's advertising with respect to the Company's
PhenCal products. After discussions between the Company and the FTC concerning
the Company's scientific substantiation supporting the advertising claims, the
FTC forwarded a proposed consent order to the Company which provides for, among
other items, injunctive relief prohibiting the Company from making certain diet
and weight loss claims for its products without adequate scientific
substantiation. The proposed consent order is currently the subject of
negotiation between the FTC and the Company. The Company is unable to predict
whether it will be able to reach a negotiated settlement of this matter. No
assurance can be given that any imposition of injunctive relief in resolving
this matter would not have a material adverse effect on the Company.
In April 1998, Premier Direct, Inc. filed a lawsuit in the United States
District Court for the Southern District of Florida (Fort Lauderdale Division)
alleging that Pain Free, a joint care product of the Company, infringes upon
Premier Direct's alleged "Pain-Free HP" trademark, which Premier Direct uses
with respect to a topical analgesic. The lawsuit seeks to prohibit the Company
from using the name Pain Free and seeks punitive damages. In June 1998, the
lawsuit was dismissed without prejudice with leave for Premier Direct to file an
amended complaint. Premier filed an amended complaint and, after certain motions
by the parties, the Court permitted the lawsuit to continue. In November 1998,
Premier filed a motion for preliminary injunction to prevent the Company from
advertising with respect to Pain Free. The Company has until February 15, 1999
to file its opposition to Premier's motion for preliminary injunction. To the
extent the Company does not prevail in the lawsuit, the Company could be
enjoined from the future use of the name Pain Free and could be required by the
court to pay damages to Premier. Although the Company intends to vigorously
oppose the allegations by Premier, the imposition by the court of any of the
foregoing could have a material adverse effect on the Company.
In addition, the Company is involved in other claims, potential unasserted
claims and legal and administrative actions arising in the ordinary course of
business. In management's judgment, the outcome of these other matters will not
have a material adverse effect on the Company's financial position or results of
operations and cash flows.
11. SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
In connection with the acquisition of Haleko, the Company assumed
liabilities as follows:
Fair value of assets acquired . $ 38,557
Cost in excess of fair value of
net assets acquired ......... 21,053
Issuance of common stock ...... ( 2,600)
Cash paid, net of cash acquired (24,668)
--------
Liabilities assumed ........... $ 32,342
========
-10-
<PAGE>
12. RECENTLY ISSUED ACCOUNTING STANDARDS
The Company adopted SFAS No. 130, "Reporting Comprehensive Income"
effective June 1, 1998. For the six months ended November 30, 1998 and 1997,
other comprehensive income, net of tax, amounted to $463 and $152, respectively.
Other recent standards of the Financial Accounting Standards Board, which
are not required to be adopted at this date, include SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," and SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." These standards
are not expected to have a material impact on the Company's financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN THIS ANNUAL REPORT
CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT ARE BASED ON MANAGEMENT'S BELIEFS AND ASSUMPTIONS,
CURRENT EXPECTATIONS, ESTIMATES, AND PROJECTIONS. STATEMENTS THAT ARE NOT
HISTORICAL FACTS, INCLUDING WITHOUT LIMITATION STATEMENTS WHICH ARE PRECEDED BY,
FOLLOWED BY OR INCLUDE THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS,"
"MAY," "SHOULD" OR SIMILAR EXPRESSIONS ARE FORWARD-LOOKING STATEMENTS. MANY OF
THE FACTORS THAT WILL DETERMINE THE COMPANY'S FUTURE RESULTS ARE BEYOND THE
ABILITY OF THE COMPANY TO CONTROL OR PREDICT. THESE STATEMENTS ARE SUBJECT TO
RISKS AND UNCERTAINTIES AND, THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY.
THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
IMPORTANT FACTORS THAT MAY EFFECT FUTURE RESULTS INCLUDE, BUT ARE NOT
LIMITED TO: THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING, PRODUCT DEVELOPMENT,
CHANGES IN LAW AND REGULATIONS, CUSTOMER DEMAND, LITIGATION, AVAILABILITY OF
FUTURE FINANCING, UNCERTAINTY OF MARKET ACCEPTANCE OF NEW PRODUCTS, AND OTHER
RISKS DETAILED FROM TIME TO TIME IN THE COMPANY'S SEC REPORTS, COPIES OF WHICH
ARE AVAILABLE UPON REQUEST FROM THE COMPANY'S INVESTOR RELATIONS DEPARTMENT.
GENERAL
Weider Nutrition International, Inc. is a manufacturer of branded and
private label nutritional supplements. The Company manufactures a broad range of
capsules and tablets, powdered drink mixes, bottled beverages and nutrition
bars. The Company markets its branded products in four principal categories:
sports nutrition; vitamins, minerals and herbs; diet; and healthy snacks. The
Company manufactures and markets approximately 1,200 stock keeping units
("SKUs"). As a result of the Company's recent acquisition of Haleko, the Company
has significantly expanded its operations outside the United States. The
Company's principal executive offices are located at 2002 South 5070 West, Salt
Lake City, Utah 84104 and its telephone number is (801) 975-5000. As used
herein, the "Company" means Weider Nutrition International, Inc. and its
subsidiaries, except where indicated otherwise.
-11-
<PAGE>
RESULTS OF OPERATIONS (UNAUDITED)
(THREE MONTHS ENDED NOVEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
NOVEMBER 30, 1997
The following table shows selected items expressed on an actual basis and
as a percentage of net sales for the respective interim periods:
THREE MONTHS ENDED NOVEMBER 30,
--------------------------------------
1998 1997
----------------- ----------------
(dollars in thousands)
Net sales ........................ $ 83,274 100.0% $ 60,811 100.0%
Cost of goods sold ............... 54,771 65.8 40,182 66.1
-------- ----- -------- -----
Gross profit ..................... 28,503 34.2 20,629 33.9
-------- ----- -------- -----
Operating expenses ............... 28,465 34.2 15,223 25.0
Plant consolidation and
transition ..................... 4,034 4.8 -- --
Severance charges ................ 2,500 3.0 -- --
-------- ----- -------- -----
Total operating expenses ......... 34,999 42.0 15,223 25.0
-------- ----- -------- -----
Income (loss)from operations ..... (6,496) (7.8) 5,406 8.9
Other expense, net ............... 2,684 3.2 1,299 2.1
Income taxes (benefit) ........... (3,740) (4.5) 1,575 2.6
-------- ----- -------- -----
Net income (loss)................. $ (5,440) (6.5)% $ 2,532 4.2%
======== ===== ======== =====
NET SALES. Net sales for the three months ended November 30, 1998
increased $22.5 million, or 36.9%, to $83.3 million from $60.8 million for the
three months ended November 30, 1997. Sales to mass volume retailers, health
food distributors and retailers, together with international sales volume
increased during the three months ended November 30, 1998 compared to the three
months ended November 30, 1997. Beverage distributor and private label sales
decreased during the second quarter of fiscal 1999 compared to the second
quarter of fiscal 1998.
Second quarter fiscal 1999 sales to mass volume retailers increased
approximately 15.7% to $30.5 million from second quarter fiscal 1998 of $26.4
million. The increase in sales to mass volume retailers was primarily the result
of increased sales to existing accounts from the introduction of new branded
products in fiscal 1998 and 1999. Sales of Pain Free amounted to $13.4 million
for the second quarter of fiscal 1999. Sales to health food distributors and
retailers increased approximately 21.5% to $10.5 million for the fiscal 1999
second quarter compared to $8.6 million for the fiscal 1998 second quarter.
Sales to health food distributors and retailers increased primarily as a result
of increased sales of MetaForm (Registered Trademark) branded products. MetaForm
(Registered Trademark) brand product sales were $5.4 million for the three
months ended November 30, 1998 compared to $1.0 million for the three months
ended November 30, 1997.
Sales to international markets increased 446.9% to $22.2 million for the
three months ended November 30, 1998 compared to $4.1 million for the three
months ended November 30, 1997. The increase in sales to international markets
resulted primarily from the Company's acquisition of Haleko in July 1998. The
Company's financial results for the second quarter of fiscal 1999 included
Haleko's operating results for three months, which consisted of $19.5 million in
sales.
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<PAGE>
Sales to beverage distributors decreased to $5.8 million for the second
quarter of fiscal 1999 compared to $7.1 million during the second quarter of
fiscal 1998. The decrease in sales to beverage distributors resulted primarily
from the timing of certain shipments. Sales to private label customers decreased
approximately 6.3% to $13.0 million for the second quarter of fiscal 1999
compared to $13.9 million for the second quarter of fiscal 1998. The decrease in
private label sales is primarily the result of the Company's decision to limit
private label business to only those customers who have, or may in the future
have, other business relationships with the Company. The increase in other sales
was primarily attributable to increased volume with certain customers.
The following table shows comparative net sales results categorized by
distribution channel on an actual basis and as a percentage of net sales for the
respective interim periods indicated:
THREE MONTHS ENDED NOVEMBER 30,
-------------------------------------------
1998 1997
------------------ ------------------
(dollars in thousands)
Mass volume retailers ........ $30,513 36.6% $26,378 43.4%
Health food .................. 10,504 12.6 8,642 14.2
Private label ................ 13,047 15.7 13,917 22.9
Beverage distributors ........ 5,821 7.0 7,127 11.7
International markets ........ 22,199 26.7 4,059 6.7
Other ........................ 1,190 1.4 688 1.1
------- ----- ------- -----
Total .................. $83,274 100.0% $60,811 100.0%
======= ===== ======= =====
GROSS PROFIT. Gross profit increased approximately 38.2% to $28.5 million
for the quarter ended November 30, 1998 compared to the quarter ended November
30, 1997. Gross profit, as a percentage of net sales, was 34.2% for the quarter
ended November 30, 1998 compared to 33.9% for the quarter ended November 30,
1997. The gross profit percentage for the quarter ended November 30, 1997 was
impacted by unexpected startup costs and delays associated with the June 1, 1997
opening of the Company's manufacturing and distribution facility in Salt Lake
City, Utah. The gross profit percentage for the quarter ended November 30, 1998
increased to 34.2% primarily as a result of the significant increase in higher
margin international sales, offset primarily by certain unexpected sales returns
and credits, and inventory related costs. The sales returns and credits were
primarily due to the replacement of slow moving products. The inventory costs
primarily consisted of provisions for adjustments to net realizable value.
OPERATING EXPENSES. Operating expenses, including charges for plant
consolidation and transition expenses and certain severance costs, increased
approximately 129.9% to $35.0 million for the fiscal 1999 second quarter from
$15.2 million for the fiscal 1998 second quarter. During the fiscal 1999 second
quarter the Company substantially completed the consolidation of capsule and
tablet manufacturing to its Utah facility. In conjunction with the closing of
the Company's Irwindale, California capsule and tablet facility, the Company
recognized approximately $4.0 million in net consolidation and transition
related costs. In addition, during the second quarter of fiscal 1999, the
Company recognized $2.5 million in severance costs related to the departure of
the former CEO and the termination of approximately twenty employees.
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<PAGE>
Operating expenses, excluding the costs noted above, increased
approximately 87.0% to $28.5 million for the three months ended November 30,
1998 from $15.2 million for the three months ended November 30, 1997. Operating
expenses, as a percentage of net sales, were 34.2% for the quarter ended
November 30, 1998 compared to 25.0% for the quarter ended November 30, 1997. The
increase in operating expenses, as a percentage of net sales, was primarily a
result of incremental selling and marketing costs, including advertising and
promotional expenses, the impact of the unexpected sales returns, and higher
operating expenses associated with the increase in international sales due to
the acquisition of Haleko.
Selling and marketing expenses, including sales, marketing, advertising,
freight and other costs, increased approximately 92.1% to $19.3 million for the
fiscal 1999 second quarter from $10.0 million for the fiscal 1998 second
quarter. The increase in selling and marketing expenses resulted primarily from
the acquisition of Haleko, increased advertising and promotion costs associated
with new product introductions and personnel costs required to handle higher
sales volumes.
General and administrative expenses increased approximately 84.9% to $7.0
million for the quarter ended November 30, 1998 compared to $3.8 million for the
quarter ended November 30, 1997. The increase in general and administrative
expenses for the second quarter of fiscal 1999 resulted primarily from the
acquisition of Haleko, additional overhead costs associated with higher sales
volumes, and increased legal costs.
Research and development expense increased $.6 million during the quarter
ended November 30, 1998 from the quarter ended November 30, 1997, primarily as a
result of incremental product testing related costs and the acquisition of
Haleko. The increase in amortization expense resulted from the acquisition of
Haleko.
OTHER EXPENSE. Other expense, net, amounted to $2.7 million for the
quarter ended November 30, 1998 compared to $1.3 million for the quarter ended
November 30, 1997. The net increase of approximately $1.4 million resulted from
increased interest costs associated with additional indebtedness incurred in
connection with the acquisition of Haleko, purchases of property and equipment,
increased working capital and investments in securities available for sale,
together with an overall higher effective borrowing rate.
PROVISION FOR INCOME TAXES (BENEFIT). The Company recognized an income tax
benefit during the second quarter of fiscal 1999 as a result of the pre-tax
loss. The Company's overall effective tax rate is higher in fiscal 1999, than in
fiscal 1998, primarily as a result of the Haleko acquisition.
(SIX MONTHS ENDED NOVEMBER 30, 1998 COMPARED TO SIX MONTHS
ENDED NOVEMBER 30, 1997)
NET SALES. Net sales for the six months ended November 30, 1998 increased
$36.9 million, or 32.3%, to $151.2 million from $114.3 million for the six
months ended November 30, 1997. Sales to mass volume retailers, health food
distributors and retailers, and sales in international markets increased during
the six months ended November 30, 1998 compared to the six months ended November
30, 1997. Sales to mass volume retailers increased approximately 24.1% to $59.1
million in the first six months of fiscal 1999 from $47.6 million for the first
six months of fiscal 1998.
-14-
<PAGE>
The increase in sales to mass volume retailers resulted primarily from sales of
new products. Sales of Pain Free amounted to approximately $29.0 million for the
first six months of fiscal 1999.
Sales to health food distributors and retailers increased approximately
34.4% to $21.5 million for the first six months of fiscal 1999 compared to $16.0
million for the first six months of fiscal 1998. The increase in sales resulted
primarily from increased "branded" product volumes with certain customers.
Comparable WNI-branded sales to GNC (excluding private label) amounted to
approximately $10.9 million and $5.6 million, respectively, for the six month
periods ended November 30, 1998 and 1997.
Sales to international markets increased 285.7% to $33.2 million for the
six months ended November 30, 1998 from $8.6 million for the six months ended
November 30, 1997. The increase in sales to international markets resulted
primarily from the Company's acquisition of Haleko.
Sales to private label customers decreased approximately 16.5% to $23.3
million for the six months ended November 30, 1998 from $27.9 million for the
six months ended November 30, 1997. The decrease in private label sales resulted
from reduced volumes with certain customers. This reduction is primarily the
result of the Company's decision to limit private label business to only those
customers who have, or may in the future have, other business relationships with
the Company. Sales to beverage distributors remained relatively constant for the
six month periods ending November 30, 1998 and 1997, respectively.
GROSS PROFIT. Gross profit increased approximately 35.1% to $52.0 million
for the six months ended November 30, 1998 from $38.5 million for the six months
ended November 30, 1997. Gross profit, as a percentage of net sales, was 34.4%
for the six months ended November 30, 1998 compared to 33.7% for the six months
ended November 30, 1997. The increase in gross profit percentage resulted
primarily from a significant increase in higher margin international sales,
offset somewhat by certain unexpected sales returns and inventory related costs.
OPERATING EXPENSES. Operating expenses increased approximately 85.5% to
$54.0 million during the six months ended November 30, 1998 from $29.1 million
for the six months ended November 30, 1997. During the second quarter of fiscal
1999, the Company, as noted previously, recognized certain costs for the
consolidation of its capsule and tablet facilities and the resignation and/or
termination of personnel. Excluding these costs, operating expenses increased
approximately $18.4 million, or 63.1%, during the first six months of fiscal
1999. Operating expenses, as a percentage of net sales, were 31.4% for the six
months ended November 30, 1998 compared to 25.5% (excluding the aforementioned
costs) for the six months ended November 30, 1997. The increase in operating
expenses, as a percentage of net sales, resulted primarily from incremental
selling and marketing costs, the acquisition of Haleko, and the impact of
unexpected sales returns and credits recognized during the first six months of
fiscal 1999.
OTHER EXPENSE. Other expense, net, amounted to $4.4 million for the six
months ended November 30, 1998 compared to $2.5 million for the six months ended
November 30, 1997. The net increase of approximately $1.9 million resulted
primarily from increased interest costs associated with greater indebtedness and
a higher overall effective borrowing rate for fiscal 1999 in comparison to
fiscal 1998.
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<PAGE>
PROVISION FOR INCOME TAXES (BENEFIT). The Company recognized an income tax
benefit for the first six months of fiscal 1999 as a result of the pretax loss.
The Company's overall effective tax rate is higher in fiscal 1999, in comparison
to fiscal 1998, primarily as a result of a greater effective tax rate associated
with Haleko's operating results.
LIQUIDITY AND CAPITAL RESOURCES. Concurrent with the Company's IPO,
effective May 1, 1997, the Company entered into an amended credit agreement (and
as subsequently amended, the "Credit Agreement") with General Electric Capital
Corporation ("GECC"). The Credit Agreement is a $130.0 million senior secured,
long-term credit facility that contains standard terms and conditions, including
subject to permitted amounts, a limitation on the ability of the Company to pay
dividends on the common stock and minimum net worth requirements. The
obligations of the Company under the Credit Agreement are secured by a first
priority lien on all owned or acquired tangible and intangible assets of the
Company and a pledge to GECC of the capital stock of the U.S. subsidiaries of
the Company, including the subsidiary that owns the Company's foreign
subsidiaries. Borrowings available under the Credit Agreement are used for
general working capital, to support capital expenditures, to effect
acquisitions, if necessary, and for other investment considerations. Borrowings
under the Credit Agreement bear interest at floating rates and mature in
February 2000. At November 30, 1998, the Company had approximately $18.8 million
of available credit under the Credit Agreement.
The Company had working capital of approximately $94.0 million at November
30, 1998 compared to $85.7 million at May 31, 1998. The increase resulted
primarily from increased inventories and accounts receivable, substantially
offset by increased short-term borrowings and other current obligations. Current
inventories increased $21.0 million to $81.6 million as of November 30, 1998.
Inventories increased primarily as a result of the acquisition of Haleko
(approximately $11.4 million), the net sales growth, and the recent and/or
planned introduction of new products. The increase in other current assets, and
in short-term borrowings and other current liabilities, resulted primarily from
the acquisition of Haleko and general growth in the Company's operations.
During the first six months of fiscal 1999, the Company's long-term
borrowings increased approximately $47.9 million to $116.7 million at November
30, 1998 primarily as a result of the acquisition of Haleko, purchases of
property and equipment, the investment in securities available for sale, and
increased working capital.
The Company expects to fund its long-term capital requirements for the
next twelve months through the use of operating cash flow supplemented as
necessary by borrowings under the Credit Agreement and, if necessary, through
debt financing or the issuance of additional equity. The Company may also enter
into strategic acquisitions as the nutritional supplements industry continues to
consolidate. The funding of future acquisitions may also require borrowings
under the Credit Agreement and/or other debt financing or the issuance of
additional equity.
-16-
<PAGE>
The Company paid a quarterly dividend of $0.0375 per share subsequent to
November 30, 1998. The dividend was declared to be payable on December 31, 1998
to holders of all classes of common stock of record at the close of business on
December 23, 1998. The Company's Board of Directors will determine dividend
policy in the future based upon, among other things, the Company's results of
operations, financial condition, contractual restrictions and other factors
deemed relevant at the time. In addition, the Credit Agreement contains certain
customary financial covenants that may limit the Company's ability to pay
dividends on its common stock. Accordingly, there can be no assurance that the
Company will be able to sustain the payment of dividends in the future.
IMPACT OF INFLATION. The Company has historically been able to pass
inflationary increases for raw materials and other costs through to its
customers and anticipates that it will be able to continue to do so in the
future.
SEASONALITY. The Company's business is seasonal, with lower sales
typically realized during the first and second fiscal quarters and higher sales
typically realized during the third and fourth fiscal quarters. The Company
believes such fluctuations in sales are the result of greater marketing and
promotional activities toward the end of each fiscal year, customer buying
patterns, and consumer spending patterns related primarily to the consumers'
interest in achieving personal health and fitness goals after the beginning of
each new calendar year and before the summer fashion season.
Furthermore, as a result of changes in product sales mix and other
factors, as discussed above, the Company experiences fluctuations in gross
profit and operating margins on a quarter-to-quarter basis.
YEAR 2000. In fiscal 1998 the Company initiated a year 2000 compliance
project (the "Year 2000 Project"). The Company identified the Year 2000 Project
as a priority and has allocated resources to it in an effort to minimize the
impact of year 2000 date related problems. The Company has assigned a senior
level manager to oversee the Year 2000 Project and has retained the services of
an outside year 2000 consulting firm. The scope of the Year 2000 Project
encompasses the Company's traditional mainframe based application software, its
midrange and personal computing platforms, and its embedded microprocessor
systems. Furthermore, the Company is conducting a year 2000 compliance
assessment of those of its suppliers, distributors and customers, whose
relationship, in the Company's business judgment, is material. Although the
Company's assessment of its year 2000 issues is not complete, the Company has
made a preliminary determination of its critical and non-critical items.
The Company's critical items include its JD Edwards accounting and
manufacturing support software and its IBM AS/400 operating system. Each of
these items has been certified by the vendor as year 2000 compliant. The Company
is conducting tests to support these claims.
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<PAGE>
Approximately $300,000 has been spent on the Year 2000 Project as of
November 30, 1998. Additional expenditures of approximately $200,000 are
estimated to complete the Year 2000 Project, although no assurance can be given
that additional expenditures will not exceed such amounts. The Company is also
in the process of evaluating year 2000 compliance by its major business
partners, and is in the process of evaluating and formulating its contingency
plans. Included in these contingency plans are backup power supply systems for
computers, facilities and manufacturing. The Company continues to formulate
these contingency plans for critical issues involving business partners,
information processing and its manufacturing process. Although the Company is
undertaking the Year 2000 Project, no assurance can be given that such a program
will be able to solve the year 2000 issues applicable to the Company or that
failure to solve will not have a material adverse effect on the Company.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On April 24, 1997, the Company filed a lawsuit in the United States
District Court for the District of Utah (Central Division) for a declaratory
judgment that Pain Free, a joint care product, did not infringe two U.S. patents
held by Nutramax Laboratories, Inc. ("Nutramax") or, in the alternative,
declaring such patents invalid. On June 30, 1997, Nutramax filed a counter claim
against the Company alleging that, through the manufacture and sale of a Company
product, the Company was willfully infringing on one or more U.S. patents of
Nutramax and also had contributorily and actively induced infringement on such
patents. The counterclaim seeks treble damages as a result of the claimed
willful and intentional nature of the alleged infringement. The litigation has
been transferred to the United States District Court for the District of
Maryland, where Nutramax had previously commenced litigation alleging that
twenty-two other entities has also infringed those patents, and is in discovery.
To the extent the Company does not prevail in the lawsuit, the Company could be
enjoined from the future manufacture and marketing of Pain Free, which has
become one of its best selling products, and could be required by the court to
pay damages to Nutramax, which under certain circumstances could be trebled.
Although the Company intends to vigorously oppose the counterclaim and believes
that there will be no material liability, the imposition by the court of any of
the foregoing could have a material adverse effect on the Company. On August 31,
1998, Nutramax filed a lawsuit in Maryland State Court against the Company and a
Company employee alleging breaches by the Company and the employee of claimed
confidentiality obligations the employee supposedly owed to Nutramax because
Nutramax claims the employee was a consultant to Nutramax prior to being
employed by the Company. The lawsuit was withdrawn without prejudice by
Nutramax, but was refiled in November 1998. The Company disputes the allegations
and will vigorously oppose the lawsuit.
The Company was named as one of several defendants in a suit filed
in December 1996 alleging unfair competition and false advertising under
California law. A settlement with regard to the suit was agreed to in July 1998.
In August 1998, the plaintiff filed an application pursuant to the court order
established by the settlement contending that the product was not manufactured
and labeled in compliance with applicable law by virtue of the alleged inclusion
of a minimal amount of cholesterol, which application was opposed by the
Company. In November 1998, the parties resolved all matters with respect to such
application.
The Company received an access letter from the Federal Trade Commission
("FTC") regarding the Company's advertising with respect to the Company's
PhenCal products. After discussions between the Company and the FTC concerning
the Company's scientific substantiation supporting the advertising claims, the
FTC forwarded a proposed consent order to the Company which provides for, among
other items, injunctive relief prohibiting the Company from making certain diet
and weight loss claims for its products without adequate scientific
substantiation. The proposed consent order is currently the subject of
negotiation between the FTC and the Company. The Company is unable to predict
whether it will be able to reach a negotiated settlement of this matter. No
assurance can be given that any imposition of injunctive relief in resolving
this matter would not have a material adverse effect on the Company.
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<PAGE>
In April 1998, Premier Direct, Inc. filed a lawsuit in the United States
District Court for the Southern District of Florida (Fort Lauderdale Division)
alleging that Pain Free, a joint care product of the Company, infringes upon
Premier Direct's alleged "Pain-Free HP" trademark, which Premier Direct uses
with respect to a topical analgesic. The lawsuit seeks to prohibit the Company
from using the name Pain Free and seeks punitive damages. In June 1998, the
lawsuit was dismissed without prejudice with leave for Premier Direct to file an
amended complaint. Premier filed an amended complaint and, after certain motions
by the parties, the Court permitted the lawsuit to continue. In November 1998,
Premier filed a motion for preliminary injunction to prevent the Company from
advertising with respect to Pain Free. The Company has until February 15, 1999
to file its opposition to Premier's motion for preliminary injunction. To the
extent the Company does not prevail in the lawsuit, the Company could be
enjoined from the future use of the name Pain Free and could be required by the
court to pay damages to Premier. Although the Company intends to vigorously
oppose the allegations by Premier, the imposition by the court of any of the
foregoing could have a material adverse effect on the Company.
In addition, the Company is involved in other claims, potential unasserted
claims and legal and administrative actions arising in the ordinary course of
business. In management's judgment, the outcome of these other matters will not
have a material adverse effect on the Company's financial position or results of
operations and cash flows.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Shareholders was held on October 29,
1998. The holders of 9,224,406 shares of Class A Common Stock and 156,874,320
shares of Class B Common Stock (10 to 1 voting rights) were entitled to vote at
the Annual Meeting. There were present, in person or by proxy, aggregate holders
of 163,779,465 shares of Common Stock (98.60% of the shares entitled to vote).
The following individuals were elected as Directors of the Company to serve
until the 1999 Annual Meeting by the following votes:
FOR WITHHELD AUTHORITY
----------- ------------------
Eric Weider 163,687,892 91,573
George Lengvari 163,688,092 91,373
Robert K. Reynolds 163,687,462 92,003
Ronald L. Corey 163,733,716 45,749
Donald G. Drapkin 163,733,716 45,749
Roger H. Kimmel 163,688,092 91,373
Richard B. Bizzaro 163,684,491 94,974
Glenn W. Schaeffer 163,733,716 45,749
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<PAGE>
The proposal to approve the Company's 1997 Equity Participation Plan, as
amended, was approved as follows (percentages are in relation to total shares
entitled to vote): 159,078,301 (95.77%) shares were cast for the proposal;
3,779,056 (2.28%) shares were cast against the proposal; and 5,430 (less than
0.01%) shares abstained.
The proposal to transact such other business as may properly come before
the 1998 Annual Meeting was approved as follows (percentages are in relation to
total share entitled to vote): 161,738,900 (97.38%) shares were cast for the
proposal; 1,880,938 (1.13%) shares were cast against the proposal; and 159,627
(0.09%) shares abstained.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
5.1 Stock Purchase Agreement, dated July 9, 1998, by and among Weider
Nutrition Group, Inc. and Wolfgang Brandt and Eberhardt Schluter. (2)
5.2 Amendment Deed to Stock Purchase Agreement, dated July 24, 1998. (2)
5.3 Share Transfer Deed, dated July 24, 1998. (2)
3.1 Amended and Restated Certificate of Incorporation of Weider Nutrition
International, Inc. (1)
3.2 Amended and Restated Bylaws of Weider Nutrition International, Inc. (1)
4.1 Amended and Restated Credit Agreement dated as of May 6, 1997 among Weider
Nutrition International, Inc., certain subsidiaries, certain lenders and
General Electric Capital Corporation. (3)
4.2 First Amendment to Amended and Restated Credit Agreement dated as of
August 27, 1997 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (3)
4.3 Second Amendment to Amended and Restated Credit Agreement dated as of
February 1998 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (3)
4.4 Third Amendment to Amended and Restated Credit Agreement dated as of July
28, 1998 among Weider Nutrition International, Inc. and certain of its
affiliates and General Electric Capital Corporation and certain other
lenders. (4)
4.5 Fourth Amendment to Amended and Restated Credit Agreement dated as
December 2, 1998 of among Weider Nutrition International, Inc. and certain
of its affiliates and General Electric Capital Corporation and certain
other lenders. (4)
4.6 Fifth Amendment to Amended and Restated Credit Agreement dated as of
December 15, 1998 among Weider Nutrition International, Inc. and certain
of its affiliates and General Electric Capital Corporation and certain
other lenders. (4)
10.1 Build-To-Suit Lease Agreement, dated March 20, 1996, between SCI
Development Services Incorporated and Weider Nutrition Group, Inc. (1)
10.2 Agreement by and between Joseph Weider and Weider health and Fitness. (1)
10.3 1997 Equity Participation Plan of Weider Nutrition International, Inc. (1)
10.4 Form of Tax Sharing Agreement by and among Weider Nutrition International,
Inc. and its subsidiaries and Weider Health and Fitness and its
subsidiaries. (1)
10.5 Form of employment Agreement between Weider Nutrition International, Inc.
and Richard B. Bizzaro. (1)
10.6 Form of Employment Agreement between Weider Nutrition International, Inc.
and Robert K. Reynolds. (1)
10.7 Form of Senior Executive Employment Agreement between Weider Nutrition
International, Inc. and certain senior executives of the Company. (1)
10.8 Advertising Agreement between Weider Nutrition International, Inc. and
Weider Publications, Inc. (1)
10.9 Amended and Restated Shareholders Agreement between Weider Health and
Fitness and Hornchurch Investments Limited (1)
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<PAGE>
10.10 Amended and Restated Shareholders Agreement between Weider Health and
Fitness, Bayonne Settlement and Ronald Corey. (1)
10.11 Indemnification Agreement between Weider Nutrition Group, Inc. and Showa
Denko America. (1)
10.12 License Agreement between Mariz Gestao E Investmentos Limitada and Weider
Nutrition Group Limited. (1)
21 Subsidiaries of Weider Nutrition International, Inc. (1)
27.1 FINANCIAL DATA SCHEDULE SUMMARY (3)
- -----------------------
(1) Filed as an Exhibit to the Company's Registration Statement on From S-1
(File No. 333-12929) and incorporated herein by reference.
(2) Previously filed in the Company's Current Report on Form 8-K dated as
of July 24, 1998 and incorporated herein by reference.
(3) Previously filed in the Company's Current Report on Form 10-Q dated as of
October 14, 1998 and incorporated herein by reference.
(4) FILED HEREWITH.
(b) Reports on Form 8-K
An amendment to the Form 8-K filed on August 10, 1998 regarding the Haleko
acquisition was filed on October 8, 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEIDER NUTRITION INTERNATIONAL, INC.
Date: January 14, 1999 BY: /s/ ROBERT K. REYNOLDS
---------------------------
Robert K. Reynolds, Chief
Operating Officer, Executive
Vice President and Director
Date: January 14, 1999 BY: /s/ STEPHEN D. YOUNG
-------------------------
Stephen D. Young, Chief
Financial Officer, and
Executive Vice President
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EXHIBIT 4.4
CONSENT, WAIVER AND AMENDMENT
This CONSENT, WAIVER AND AMENDMENT dated as of July 28, 1998 (this
"AGREEMENT") is made among WEIDER NUTRITION INTERNATIONAL, INC., a Delaware
corporation ("HOLDINGS"), WEIDER NUTRITION GROUP, INC., a Utah corporation
("NUTRITION"), WNG HOLDINGS (INTERNATIONAL) LTD., a Nevada corporation
("INTERNATIONAL"; Holdings,
Nutrition and International, individually, each an "OBLIGOR" and, collectively,
"OBLIGORS"), in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, for itself, as Lender, and as Agent for Lenders (in such capacity,
"AGENT"), and the other Lenders signatory to the hereinafter defined Credit
Agreement.
RECITALS
A. Agent, Lenders and Obligors are party to certain (a) Third Amended and
Restated Credit Agreement dated May 6, 1997 (as amended, restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT") and (b) Third
Amended and Restated Stock Pledge Agreement dated as of May 6, 1997 (as amended,
restated, supplemented or otherwise modified from time to time, the "PLEDGE
AGREEMENT").
B. Nutrition has entered into Stock Purchase Agreement dated July 9, 1998
(the "PURCHASE AGREEMENT") among Nutrition, Mr. Wolfgang Brandt and Mr.
Eberhardt Schluter pursuant to which Nutrition intends to purchase all of the
issued and outstanding Stock of Haleko Hanseatisches Lebensmittel Kontor GmbH, a
corporation organized under the laws of Germany ("HALEKO").
C. Holdings intends to transfer to Nutrition all of the issued and
outstanding Stock of International in accordance with Section 351 of the
Internal Revenue Code, as amended (the "TRANSFER").
D. Nutrition intends to merge its wholly-owned subsidiaries Schiff
Products, Inc., Great American Foods, Inc. and American Nutrition Bars, Inc.,
each a Utah corporation (collectively, the "MERGED OBLIGORS"), with and into
Nutrition, with Nutrition remaining as the survivor of such mergers
(collectively, the "MERGERS").
E. International intends to restructure its foreign operations for various
tax related reasons, pursuant to which by no later than December 31, 1998,
Weider Nutrition Group Limited, a corporation organized under the laws of the
United Kingdom ("WNGL"), will be dissolved or merged into a wholly-owned
Subsidiary of International, with such Subsidiary remaining as the survivor of
such merger, and Weider Nutrition (WNI) Limited, a corporation organized under
the laws of the United Kingdom ("WNL"), will form a direct wholly-owned
Subsidiary organized under the laws of the Netherlands, to which Subsidiary
shall be transferred all of the issued and outstanding Stock of the direct
Subsidiaries of WNGL and WNL (collectively, the "RESTRUCTURING").
F. Agent and Lenders are willing to consent to the Purchase (as
hereinafter defined), the Transfer, the Mergers and the Restructuring
(collectively, the "TRANSACTIONS"), to grant certain waivers requested by
Obligors, and to amend certain Loan Documents, all on the terms and
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conditions set forth herein.
G. This Agreement shall constitute a Loan Document and these Recitals
shall be construed as part of this Agreement; capitalized terms used herein
without definition are so used as defined in Schedule A to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. REQUESTS. Obligors hereby request that Agent and Lenders consent to:
(a) the purchase, on or prior to August 31, 1998, by one or more
direct or indirect wholly-owned Subsidiaries of International of 100% of
the issued and outstanding Stock of Haleko for a maximum aggregate
purchase price (together with all related fees, costs and expenses)
consisting of (i) cash not in excess of DM 68,825,000 (and in any event
not in excess of $39,600,000), not more than (A) DM 44,850,000 (and in any
event not in excess of $26,200,000) of which may be paid upon acquisition
of the Stock of Haleko pursuant to the Purchase Agreement (the "INITIAL
AMOUNT"), (B) DM 8,975,000 (and in any event not in excess of $5,000,000)
of which may be paid on or after (but in no case after May 31, 1999)
payment of the Initial Amount in respect of all fees, costs and expenses
related to the Purchase and (C) DM 15,000,000 (and in any event not in
excess of $8,400,000) of which may consist of earnouts to be paid in
accordance with the terms of the Purchase Agreement (each, an "EARNOUT")
and (ii) not more than 200,000 shares of Class A Common Stock issued by
Holdings upon payment of the Initial Amount (collectively, the
"PURCHASE");
(b) the Transfer;
(c) the Mergers; and
(d) the Restructuring.
2. CONSENTS. Subject to the conditions set forth in this Agreement and
otherwise notwithstanding the provisions of any Loan Document, Agent and Lenders
hereby consent to:
(a) the Purchase, PROVIDED that (i) not more than $26,200,000 of
proceeds of Revolving Credit Advances may be utilized to finance the
Initial Amount, (ii) not more than 70% of the aggregate amount of each
Earnout may be financed with proceeds of Revolving Credit Advances, (iii)
the Purchase shall qualify as a Permitted Acquisition under Section 6.1 of
the Credit Agreement, except that (A) contingent obligations specified in
the Purchase Agreement may be incurred in accordance with the terms
thereof and (B) Haleko may become an indirect wholly-owned Subsidiary of
International, and (iv) from and after payment of the Initial Amount, (A)
Haleko may be obligated with respect to not more than
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<PAGE>
DM 45,000,000 (and in any event not more than $25,000,000) of Indebtedness
in the aggregate (provided that, except as otherwise expressly permitted
by the Credit Agreement as in effect prior to this Agreement, no Obligor
shall incur Guaranteed Indebtedness in respect of such Indebtedness of
Haleko); and (B) no Change of Control shall have occurred;
(b) the Transfer;
(c) the Mergers; and
(d) the Restructuring; PROVIDED that (i) no Default or Event of
Default shall have occurred and be continuing as of the date thereof, or
would result after giving effect thereto and (ii) on or prior to the date
thereof, Agent shall have received such agreements, certificates,
instruments and other documents as it may reasonably request.
3. WAIVERS. Subject to the conditions set forth in this Agreement and
otherwise notwithstanding the provisions of any Loan Document, Agent and Lenders
hereby waive:
(a) the non-compliance with Section 6.8 of the Credit Agreement
resulting solely from the barter during April, 1998 by Nutrition of not
more than $5,000,000 in the aggregate of its slow moving Inventory in
exchange for cash and advertising credits totaling at least $5,000,000 in
the aggregate;
(b) the non-compliance with Section 6.21 of the Credit Agreement,
solely to the extent that the aggregate amount of all loans (other than
those described in Section 6.21(iv) of the Credit Agreement) made to
Subsidiaries of Obligors (which Subsidiaries are not formed under the laws
of a jurisdiction located within the United States of America) did not
exceed $13,000,000 at any time outstanding; and
(c) the non-compliance with Sections 6.1 and 6.5 of the Credit
Agreement resulting solely from the formation by International of WNL, and
the failure of International to pledge to Agent, for the benefit of Agent
and Lenders, 65% of the issued and outstanding Stock of WNL.
4. AMENDMENT TO LOAN DOCUMENTS. Upon consummation of the Mergers, the Loan
Documents are hereby amended such that no definition of or reference to
"Borrower", "Borrowers", "Guarantor", "Guarantors", "Obligor" or "Obligors"
contained in any Loan Document shall include any Merged Obligor.
5. AMENDMENT TO CREDIT AGREEMENT.
(a) The following Section 3.26 is hereby inserted into the Credit
Agreement immediately after Section 3.25 thereof:
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<PAGE>
"3.26 YEAR 2000 REPRESENTATIONS. Each Obligor has completed a
Year 2000 Assessment and is constructing a Year 2000 Corrective
Plan; each Obligor has considered all material Year 2000 Corrective
Actions and commenced Year 2000 Implementation Testing. Each Obligor
shall also address all Year 2000 Problems, except where the failure
to correct the same could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate."
(b) The following Section 5.13 is hereby inserted into the Credit
Agreement immediately after Section 5.12 thereof:
"5.13 YEAR 2000 PROBLEMS. On or prior to October 31, 1998,
each Obligor shall complete and deliver to Agent a Year 2000
Corrective Plan. On or prior to December 31, 1998, each Obligor
shall implement Year 2000 Corrective Actions. On or before February
28, 1999, each Obligor shall complete Year 2000 Corrective Actions
and Year 2000 Implementation Testing. On or before April 30, 1999,
each Obligor shall eliminate all Year 2000 Problems, except where
the failure to correct the same could not reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate."
(c) The reference to "$5,000,000" in clause (v) of Section 6.21 of
the Credit Agreement is hereby deleted and replaced with "$13,000,000."
(d) The reference to "solely" is hereby deleted from Section 9.6 of
the Credit Agreement.
(e) The following definitions are hereby inserted in appropriate
alphabetic order into Annex A to the Credit Agreement:
""THIRD PARTY INTERACTIVES" shall mean all Persons with whom
any Obligor exchanges data electronically in the ordinary course of
business, including, without limitation, customers, suppliers,
third-party vendors, subcontractors, processors- converters,
shippers and warehousemen.
"YEAR 2000 ASSESSMENT" shall mean a comprehensive written
assessment of the nature and extent of each Obligor's Year 2000
Problems and Year 2000 Date- Sensitive Systems/Components,
including, without limitation, Year 2000 Problems regarding data
exchanges with Third Party Interactives.
"YEAR 2000 CORRECTIVE ACTIONS" shall mean, as to each Obligor,
all actions necessary to eliminate or otherwise sufficiently address
such Person's Year 2000 Problems so that such Year 2000 Problems do
not have a Material Adverse Effect, including, without limitation,
computer code enhancements and revisions, upgrades and replacements
of Year 2000 Date-Sensitive Systems/Components, and
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<PAGE>
coordination of such enhancements, revisions, upgrades and
replacements with Third Party Interactives.
"YEAR 2000 CORRECTIVE PLAN" shall mean, with respect to each
Obligor, a comprehensive plan to eliminate or otherwise sufficiently
address all of its Year 2000 Problems on or before April 30, 1999 so
that such Year 2000 Problems do not have a Material Adverse Effect,
including without limitation (i) computer code enhancements or
revisions, (ii) upgrades or replacements of Year 2000 Date-Sensitive
Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of specific
employees who will be responsible for planning, coordinating and
implementing each phase or subpart of the Year 2000 Corrective Plan.
"YEAR 2000 DATE-SENSITIVE SYSTEM/COMPONENT" shall mean, as to
any Person, any system software, network software, applications
software, data base, computer file, embedded microchip, firmware or
hardware that accepts, creates, manipulates, sorts, sequences,
calculates, compares or outputs calendar-related data accurately;
such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer
workstations, routers, hubs, other network-related hardware, and
other computer-related software, firmware or hardware and
information processing and delivery systems of any kind and
telecommunications systems and other communications processors,
security systems, alarms, elevators and HVAC systems.
"YEAR 2000 IMPLEMENTATION TESTING" shall mean, as to each
Obligor, (i) the performance of test and validation procedures
regarding Year 2000 Corrective Actions on a unit basis and on a
systemwide basis; (ii) the performance of test and validation
procedures regarding data exchanges among the Obligors' Year 2000
Date-Sensitive Systems/Components and data exchanges with Third
Party Interactives, and (iii) the design and implementation of
additional Corrective Actions, the need for which has been
demonstrated by test and validation procedures.
"YEAR 2000 PROBLEMS" shall mean, with respect to each Obligor,
limitations on the capacity or readiness of any such Obligor's Year
2000 Date-Sensitive Systems/Components to accurately accept, create,
manipulate, sort, sequence, calculate, compare or output calendar
date information with respect to calendar year 1999 or any
subsequent calendar year beginning on or after January 1, 2000
(including leap year computations), including, without limitation,
exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Obligors and exchanges of information
among the Obligors and Year 2000 Date-Sensitive Systems/Components
of Third Party Interactives and functionality of peripheral
interfaces, firmware and embedded microchips."
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<PAGE>
(f) The following paragraph (a) hereby replaces in its entirety
paragraph (a) of Annex G of the Credit Agreement:
"(a) MAXIMUM CAPITAL EXPENDITURES. Holdings and its
Subsidiaries on a consolidated basis shall not make Capital
Expenditures during any Fiscal Year set forth below that exceed the
amount set forth opposite such Fiscal Year:
FISCAL YEAR AMOUNT
Fiscal Year 1999 $11,000,000
Fiscal Year 2000 $10,000,000
Fiscal Year 2001 and each $ 8,000,000
Fiscal Year thereafter"
(g) The following paragraph (c) hereby replaces in its entirety
paragraph (c) of Annex G of the Credit Agreement:
"(c) MINIMUM INTEREST COVERAGE RATIO. Holdings, on a
consolidated basis, shall have at the end of each Fiscal Quarter
described below a ratio of (i) the sum of (A) EBITDA LESS (B)
Capital Expenditures LESS (C) taxes paid in cash to (ii) Gross
Interest Charges, in each case for the 12 month period then ended,
equal to or greater than the ratio set forth opposite such Fiscal
Quarter:
FISCAL QUARTER RATIO
Fiscal Quarter ending August 31, 1998 2.10 to 1.00
Fiscal Quarter ending November 30, 1998 2.10 to 1.00
Fiscal Quarter ending February 28, 1999 2.30 to 1.00
Fiscal Quarter ending May 31, 1999 2.40 to 1.00
Fiscal Quarter ending August 31, 1999 2.50 to 1.00
Fiscal Quarter ending November 30, 1999 2.60 to 1.00
Fiscal Quarter ending February 29, 2000 2.80 to 1.00
and each Fiscal Quarter thereafter"
(h) The following paragraph (d) hereby replaces in its entirety
paragraph (d) of Annex G of the Credit Agreement:
"(d) MAXIMUM FUNDED DEBT TO EBITDA RATIO. Holdings, on a
consolidated basis, shall have at the end of each Fiscal Quarter
described below a ratio of (i) Funded Debt to (iii) EBITDA, in each
case for the 12 month period then ended, less than or equal to the
ratio set forth opposite such Fiscal Quarter:
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<PAGE>
FISCAL QUARTER RATIO
Fiscal Quarter ending August 31, 1998 3.50 to 1.00
Fiscal Quarter ending November 30, 1998 3.25 to 1.00
Fiscal Quarter ending February 28, 1999 3.00 to 1.00
Fiscal Quarter ending May 31, 1999 3.00 to 1.00
Fiscal Quarter ending August 31, 1999 2.50 to 1.00
and each Fiscal Quarter thereafter"
6. ACKNOWLEDGMENT. Each of the Obligors hereby acknowledges that:
(a) ANNEX A attached hereto hereby replaces in its entirety Schedule
3.10 of the Credit Agreement and ANNEX B attached hereto hereby replaces
in its entirety Schedule 1 of the Pledge Agreement. Each of the Obligors
hereby agrees that the shares listed on ANNEX B shall hereby continue to
constitute and become the "Pledged Collateral" (as defined in the Pledge
Agreement) referred to in the Pledge Agreement and shall hereby continue
to secure all "Secured Obligations" (as defined in the Pledge Agreement)
referred to therein.
(b) For purposes of calculating or otherwise measuring compliance
with the covenants, prohibitions, limitations, restrictions and other
provisions contained in the Credit Agreement and the other Loan Documents
from and after the date hereof (other than clause (v) of Section 6.21 of
the Credit Agreement), the Transactions will be included in such
calculations and other measurements (it being understood that the
Transactions, to the extent permitted in accordance with the terms of this
Agreement, will not, in and of themselves, be deemed a breach or other
non-compliance with such covenants, prohibitions, limitations,
restrictions or other provisions).
7. ASSUMPTION. Upon consummation of the Mergers, Nutrition fully and
completely succeeds to, assumes, and agrees to pay, perform and discharge, in
accordance with their respective terms, all Obligations and other liabilities of
the Merged Obligors arising under or otherwise pursuant to the Loan Documents.
8. REPRESENTATIONS AND WARRANTIES.
(a) As of the date of this Agreement and, after giving effect to
this Agreement, the Transactions and the other transactions contemplated
hereby (i) no Default or Event of Default shall have occurred or be
continuing and (ii) the representations and warranties of Obligors
contained in the Loan Documents are true, accurate and complete in all
respects on and as of the date hereof to the same extent as though made on
and as of such date, except to the extent such representations and
warranties specifically relate to an earlier date.
(b) No Obligor and no other Person party to any agreement,
certificate, instrument or other document contemplated by the Transactions
(collectively, the
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<PAGE>
"TRANSACTION DOCUMENTS") is in default in the performance or compliance
with any provisions thereof. Each Transaction Document complies with, and
the Transactions to be consummated as of or about the Effective Date, have
been consummated in accordance with, all applicable laws. Each Transaction
Document is in full force and effect as of the effective date hereof, and
has not been terminated, rescinded or withdrawn. All requisite approvals
by Governmental Authorities having jurisdiction over any Obligor or other
Person referenced therein, with respect to the Transactions to be
consummated as of or about the Effective Date, have been obtained, and no
such approvals impose any conditions to the consummation of such
Transactions or to the conduct by any Obligor of its business thereafter.
None of the representations or warranties in the Transaction Documents
contain any untrue statement of a material fact or omit any fact necessary
to make the statements therein not misleading and each of such
representations and warranties is true and correct in all material
respects.
(c) Obligors jointly and severally represent and warrant to Agent
and Lenders that the execution, delivery and performance, as the case may
be, by each Obligor of this Agreement, the related Loan Documents, the
Transactions and the documents and transactions contemplated by each of
the foregoing are within each such Person's corporate powers, have been
duly authorized by all necessary corporate action (including, without
limitation, all necessary shareholder approval) of each such Person, have
received all necessary governmental approvals, and do not and will not
contravene or conflict with any provision of law applicable to any such
Person, the certificate or articles of incorporation or bylaws of any such
Person, or any order, judgment or decree of any court or other agency of
government or any contractual obligation binding upon any such Person; and
this Agreement, the Credit Agreement, the Pledge Agreement and each other
Loan Document is the legal, valid and binding obligation of each Obligor
enforceable against each such Person in accordance with its terms.
9. CONDITIONS. This Consent shall become effective on the date first set
forth above, PROVIDED that each of the following items shall have been received
by Agent or satisfied (in the case of paragraphs (h) and (i)), all in form and
substance satisfactory to Agent:
(a) AGREEMENT. This Agreement, duly executed by each Obligor, Agent
and Requisite Lenders.
(b) ANNEXES. Each of the Annexes to this Agreement, completed by
Obligors.
(c) FINANCIAL INFORMATION. The pro forma financial information and
Borrowing Availability certificate referred to in Section 6.1(j) of the
Credit Agreement (indicating at least $30,000,000 of Borrowing
Availability after giving effect to the Transactions), together with the
projected financial information requested by Agent.
(d) STOCK PLEDGES. Duly executed stock certificates representing all
of the issued and outstanding Stock of International and 65% of the issued
and outstanding Stock of WNL,
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<PAGE>
together with undated stock powers therefor duly endorsed in blank by
Nutrition and International, as applicable.
(e) INTELLECTUAL PROPERTY ASSIGNMENTS. Duly executed assignments of
all Patents, Copyrights, Trademarks and Licenses of the Merged Obligors,
in form sufficient to evidence as of record Nutrition's ownership of such
intellectual property, together with corresponding Amendments or
Supplements to the Patent Security Agreement, Copyright Security Agreement
and Trademark Security Agreement of Nutrition, as applicable.
(f) TRANSACTIONS DOCUMENTS. Copies of all material documents
executed or delivered in connection with the Transactions, including
copies of all certified documents recorded with governmental authorities
in connection therewith, all of the foregoing certified as true, correct
and complete by the Secretary of Holdings.
(g) YEAR 2000 ASSESSMENT. A Year 2000 Assessment for Holdings and
each of the other Obligors.
(h) FEE LETTER. A Fee letter, duly executed by Agent and Obligors.
(i) NO DEFAULT. After giving effect to this Agreement, no Default or
Event of Default shall have occurred and be continuing as of the effective
date hereof, or would result after giving effect to the Transactions.
(j) WARRANTIES AND REPRESENTATIONS. The warranties and
representations of each Obligor contained in this Agreement shall be true
and correct as of the effective date hereof.
10. EFFECT ON LOAN DOCUMENTS. This Agreement is limited to the specific
purpose for which it is granted and, except as specifically set forth above (a)
shall not be construed as a consent, waiver or other modification with respect
to any term, condition or other provision of any Loan Document and (b) each of
the Loan Documents shall remain in full force and effect and are each hereby
ratified and confirmed.
11. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of Obligors, Agent, Lenders and their
respective successors and assigns; PROVIDED that no Obligor may assign its
rights, obligations, duties or other interests hereunder without the prior
written consent of Agent and Lenders. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of Obligors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement.
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<PAGE>
(b) ENTIRE AGREEMENT. This Agreement, including all documents
attached hereto, incorporated by reference herein or delivered in
connection herewith, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter
hereof.
(c) FEES AND EXPENSES. As provided in Section 11.3 of the Credit
Agreement, Obligors agree to pay on demand all fees, costs and expenses
incurred by Agent in connection with the preparation, execution and
delivery of this Agreement, together with all fees, costs and expenses
incurred by Agent prior to the date hereof which are payable by Obligors
pursuant to Section 11.3 of the Credit Agreement.
(d) INCORPORATION OF CREDIT AGREEMENT. The provisions contained in
Sections 11.9 and 11.14 of the Credit Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
(e) ACKNOWLEDGMENT. Each Obligor hereby represents and warrants that
there are no liabilities, claims, suits, debts, liens, losses, causes of
action, demands, rights, damages or costs, or expenses of any kind,
character or nature whatsoever, known or unknown, fixed or contingent
(collectively, the "CLAIMS"), which any Obligor may have or claim to have
against Agent or any Lender, or any of their respective affiliates,
agents, employees, officers, directors, representatives, attorneys,
successors and assigns (collectively, the "LENDER RELEASED PARTIES"),
which might arise out of or be connected with any act of commission or
omission of the Lender Released Parties existing or occurring on or prior
to the date of this Agreement, including, without limitation, any Claims
arising with respect to the Obligations or any Loan Documents. In
furtherance of the foregoing, each Obligor hereby releases, acquits and
forever discharges the Lender Released Parties from any and all Claims
that any Obligor may have or claim to have, relating to or arising out of
or in connection with the Obligations or any Loan Documents or any other
agreement or transaction contemplated thereby or any action taken in
connection therewith from the beginning of time up to and including the
date of the execution and delivery of this Agreement. Each Obligor further
agrees forever to refrain from commencing, instituting or prosecuting any
lawsuit, action or other proceeding against any Lender Released Parties
with respect to any and all Claims.
(f) CAPTIONS. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
(g) SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
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<PAGE>
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
[signature pages follow]
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<PAGE>
IN WITNESS WHEREOF, this Consent, Waiver and Amendment has been duly
executed and delivered as of the day and year first above written.
WEIDER NUTRITION INTERNATIONAL, INC.
WEIDER NUTRITION GROUP, INC.
WNG HOLDINGS (INTERNATIONAL) LTD.
For each of the foregoing:
By: _______________________________
Title:_____________________________
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: _______________________________
Title: Duly Authorized Signatory
<PAGE>
FIRST UNION NATIONAL BANK, successor by merger to
Corestates Bank, N.A.
By: _______________________________
Title:_____________________________
<PAGE>
LASALLE NATIONAL BANK
By: _______________________________
Title:_____________________________
<PAGE>
THE BANK OF NOVA SCOTIA
By: _______________________________
Title:_____________________________
<PAGE>
CREDITANSTALT CORPORATE FINANCE, INC.
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
ZIONS FIRST NATIONAL BANK
By: _______________________________
Title:_____________________________
<PAGE>
ANNEX A
Replacement Schedule 3.10
to
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
[attached]
<PAGE>
ANNEX B
Replacement Schedule 1
to
THIRD AMENDED AND RESTATED PLEDGE AGREEMENT
[attached]
EXHIBIT 4.5
WAIVER, CONSENT AND FOURTH AMENDMENT
This WAIVER, CONSENT AND FOURTH AMENDMENT dated as of December 2, 1998 and
effective as of June 26, 1998 (the "EFFECTIVE DATE") (this "AGREEMENT") is made
among WEIDER NUTRITION INTERNATIONAL, INC., a Delaware corporation ("HOLDINGS"),
WEIDER NUTRITION GROUP, INC., a Utah corporation ("NUTRITION"), WNG HOLDINGS
(INTERNATIONAL) LTD., a Nevada corporation ("INTERNATIONAL"; Holdings, Nutrition
and International, individually, each an "OBLIGOR" and, collectively,
"OBLIGORS"), in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, for itself, as Lender, and as Agent for Lenders (in such capacity,
"AGENT"), and the other Lenders signatory to the hereinafter defined Credit
Agreement.
RECITALS
A. Agent, Lenders and Obligors are party to that certain Third Amended and
Restated Credit Agreement dated May 6, 1997 (as amended, restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT") and that
certain Third Amended and Restated Stock Pledge Agreement dated as of May 6,
1997 (as amended, restated, supplemented or otherwise modified from time to
time, the "PLEDGE AGREEMENT").
B. On and subject to the terms and conditions hereof, Obligors have
requested from Agent and Lenders, and Agent and Lenders are willing to grant,
waivers of certain Events of Default (such Events of Default being collectively
referred to herein as the "SPECIFIED EVENTS OF DEFAULT") arising under the
Credit Agreement solely and directly as a result of (i) the acquisition by
Holdings, during the period from June 26, 1998 through September 1, 1998, of
shares of common stock (such shares so acquired being collectively referred to
herein as "SPECIFIED MARGIN SHARES" and each such share a "SPECIFIED MARGIN
SHARE"), (ii) certain Restricted Payments made by Nutrition to Holdings on or
prior to September 1, 1998 in an aggregate amount not in excess of $4,998,082.33
for the sole purpose of Holding's payment of the purchase price for the
Specified Margin Shares (such Restricted Payments in the aggregate amount of
$4,998,082.33 being collectively referred to herein as the "SPECIFIED RESTRICTED
PAYMENTS") and (iii) the failure of Holdings to pledge to Agent, for the benefit
of Agent and Lenders, such Specified Margin Shares prior to the date hereof.
C. This Agreement shall constitute a Loan Document and these Recitals
shall be construed as part of this Agreement; capitalized terms used herein
without definition are so used as defined in Annex A to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. WAIVERS. Subject to the conditions and effectiveness of this Agreement
and otherwise notwithstanding the provisions of any Loan Document, Agent and
Lenders hereby waive the Specified Events of Default. The waivers granted in
this SECTION 1 only apply to the Specified Events
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<PAGE>
of Default, and do not constitute a waiver of, or consent to, any other Default
or Event of Default (whether now existing or hereafter arising, whether similar
or not, or whether now or hereafter known to Agent or any Lender). Without
limiting the immediately preceding sentence, nothing in this Agreement shall be
deemed in any way to be a waiver of, or consent to, (i) any acquisition of
common stock (other than the acquisition of the Specified Margin Shares by
Holdings on or prior to September 1, 1998) or any other Stock, (ii) any
Restricted Payment (other than the Specified Restricted Payments made by
Nutrition to Holdings on or prior to September 1, 1998), or (iii) the failure to
pledge to Agent, for the benefit of Agent and Lenders, any Specified Shares
after the date hereof.
2. AMENDMENTS. Subject to the conditions and effectiveness of this
Agreement:
(a) The Credit Agreement is hereby amended by inserting immediately
after the reference to "CLAUSE (A) above" contained in Section 1.3(b)
thereof the text "or SECTION 1.17".
(b) The Credit Agreement is hereby amended by inserting immediately
after Section 1.16 thereof the following new Section 1.17:
"1.17 REGULATION U. (a) The Loans made by each Lender shall,
commencing from June 26, 1998 and ending on the date on which none
of the Loans is considered "purpose credit" within the meaning of
Regulation T, U or X of the Federal Reserve Board, be treated for
purposes of Regulation U as two separate extensions of credit (the
"Y CREDIT" and the "Z CREDIT" of such Lender and, collectively, the
"Y CREDITS" and the "Z CREDITS"), as follows:
(i) the aggregate amount of the Y Credit of such Lender
shall be an amount equal to such Lender's Pro Rata Share of
the maximum loan value (as determined in accordance with
Regulation U of the Federal Reserve Board) of the Specified
Margin Shares; and
(ii) the aggregate amount of the Z Credit of such Lender
shall be an amount equal to such Lender's Pro Rata Share of
all Loans outstanding under this Agreement MINUS such Lender's
Y Credit.
In the event that any Specified Margin Share is sold, the amount of
the Y Credit of such Lender shall be adjusted (if necessary), to the
extent necessary through prepayment by Nutrition (with a
contemporaneous contribution by Holdings to Nutrition in the amount
of such prepayment) pursuant to SECTION 1.3(B), to be an amount
equal to such Lender's Pro Rata Share of the maximum loan value
(determined in accordance with Regulation U of the Federal Reserve
Board as of the date of such sale) of the Specified Margin Shares
immediately after giving effect to such sale.
(b) Each Lender will maintain its records to identify the Y
Credit of such Lender and the Z Credit of such Lender, and, solely
for the purposes of complying
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<PAGE>
with Regulation U of the Federal Reserve Board, the Y and Z Credits
shall be treated as separate extensions of credit. Each Lender
hereby represents and warrants that the loan value of the Collateral
(other than the Specified Margin Shares) is sufficient for such
Lender to lend its Pro Rata Share of the Z Credit.
(c) The benefits of the security in the Specified Margin
Shares created by the applicable Stock Pledge Agreement shall be
allocated FIRST to the benefit and security of the payment of the
principal of and interest on the Y Credits of Lenders and of all
other amounts payable by Holdings under this Agreement in connection
with the Y Credits (collectively, the "Y CREDIT AMOUNTS") and
SECOND, only after the payment in full of the Y Credit Amounts, to
the benefit and security of the payment of the principal of and
interest on the Z Credits of Lenders and of all other amounts
payable by Holdings under this Agreement in connection with Z
Credits (collectively, the "Z CREDIT AMOUNTS"). The benefits of the
security in the Collateral other than the Specified Margin Shares
created by the Security Documents and the benefits of the indirect
security in Collateral other than the Specified Margin Shares
created by this Agreement, shall be allocated FIRST to the benefit
and security of the payment of the Z Credit Amounts and SECOND, only
after the payment in full of the Z Credit Amounts, to the benefit
and security of the payment of the Y Credit Amounts.
(d) Holdings shall furnish to Agent and any Lender at the time
of each sale of any Specified Margin Share such information and
documents as Agent or such Lender, as applicable, may require to
determine the Y and Z Credits, and at any time and from time to
time, such other information and documents as Agent or such Lender
may reasonably require to determine compliance with Regulation U of
the Federal Reserve Board.
(e) Each Lender shall be responsible for its own compliance
with and administration of the provisions of this SECTION 1.17 and
Regulation U of the Federal Reserve Board, and Agent shall have no
responsibility for any determinations or allocations made or to be
made by any Lender as required by such provisions. Each Lender shall
transmit to Holdings (with a copy to Agent) any requests made by
such Lender pursuant to subsection (d) of this SECTION 1.17 and
Holdings shall transmit to each Lender all information requested by
such Lender pursuant to subsection (d) of this SECTION 1.17 or
otherwise required to be delivered by Holdings to such Lender
pursuant to this SECTION 1.17.
(f) Notwithstanding anything to the contrary, nothing in this
SECTION 1.17 shall be deemed to permit the acquisition or
disposition of any Stock."
(c) The Credit Agreement is hereby amended by deleting Section 3.12
thereof in its entirety and replacing it with the following new Section
3.12:
- 3 -
<PAGE>
"3.12 MARGIN REGULATIONS. No Obligor or Subsidiary thereof is
engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (each such quoted term
used herein as defined in Regulation U of the Board of Governors of
the Federal Reserve System (the "FEDERAL RESERVE BOARD") as now and
from time to time hereafter in effect). No Obligor or Subsidiary
thereof owns any margin stock (except for the ownership by Holdings
of the Specified Margin Shares acquired by Holdings on or prior to
September 1, 1998), and the proceeds of the Revolving Credit
Advances will not be used, directly or indirectly, for the purpose
of purchasing (except for the Specified Restricted Payments made by
Nutrition to Holdings prior to September 1, 1998) or carrying any
margin stock, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin stock or for any other purpose which might cause any of the
loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulation T, U
or X of the Federal Reserve Board. No Obligor or Subsidiary thereof
will take or permit any agent acting on its behalf to take any
action which might cause this Agreement or any other Loan Document
or any document or instrument delivered pursuant hereto to violate
any regulation of the Federal Reserve Board."
(d) The Credit Agreement is hereby amended by replacing the text of
clause (d) of Section 6.2 of the Credit Agreement with the following text:
"any other type of investment (including the acquisition by
Holdings, during the period from June 26, 1998 through September 1,
1998, of the Specified Margin Shares), loan or advance not exceeding
$5,000,000 in the aggregate at any time outstanding; provided that
(i) each such investment in 5% or more of the ownership interests of
any Person (other than the acquisition by Holdings, during the
period from June 26, 1998 through September 1, 1998, of the
Specified Margin Shares) shall have been approved by the board of
directors of such Person and shall otherwise be consensual and (ii)
any such investment which is otherwise a transaction described in
SECTION 6.1 shall be subject to the provisions of SECTION 6.1 (it
being understood that nothing herein shall be deemed to permit the
disposition of any Stock constituting Collateral except in
accordance with the express terms of this Agreement and the other
Loan Documents)"
(e) The Credit Agreement is hereby amended by inserting immediately
after Section 6.22 thereof the following new Section 6.23:
"6.23 SPECIFIED MARGIN SHARES. Notwithstanding anything to the
contrary, no Obligor (other than Holdings) may own, legally or
beneficially, any Specified Margin Shares and, upon the sale or
other disposition of any Specified Margin Shares by Holdings, no
Obligor (including Holdings) may at any time thereafter own, legally
or beneficially, any of those Specified Margin Shares which have
been so sold
- 4 -
<PAGE>
or transferred. Nothing contained herein shall be deemed to permit
the acquisition or disposition of any Stock."
(f) The Credit Agreement is hereby amended by inserting in
alphabetical order into Annex A thereto the following defined terms:
"SPECIFIED MARGIN SHARES" shall mean and be limited to the
shares of the common Stock acquired by Holdings from June 26, 1998
through September 1, 1998, and "SPECIFIED MARGIN SHARE" shall mean,
any of such shares.
"SPECIFIED RESTRICTED PAYMENTS" shall mean and be limited to
those certain Restricted Payments made by Nutrition to Holdings on
or prior to September 1, 1998 in an aggregate amount not in excess
of $4,998,082.33 for the sole purpose of Holding's payment of the
purchase price for the Specified Margin Shares."
(g) The Credit Agreement is hereby amended by replacing Schedule
3.10 thereto with ANNEX A attached hereto.
(h) The Pledge Agreement is hereby amended by deleting from Section
2(c) thereof the text "who, after the date of this Agreement, becomes, as
a result of any occurrence, a directly owned Subsidiary of Pledgor".
(i) The Pledge Agreement is hereby amended by replacing Schedule 1
thereto with ANNEX B attached hereto.
3. ACKNOWLEDGMENT. Each of the Obligors hereby acknowledges that:
(a) except as expressly set forth in SECTION 1 of this Agreement
with respect to the Specified Margin Shares, no Obligor may hold, acquire,
receive or otherwise possess any Specified Margin Share, any other share
of Nutraceuticals International Corp. or any other "margin stock" (as
defined in Regulation U of the Federal Reserve Board); and
(b) for purposes of calculating or otherwise measuring compliance
with the covenants, prohibitions, limitations, restrictions and other
provisions contained in the Credit Agreement and the other Loan Documents
from and after the date hereof, there shall be included in such
calculations and other measurements in accordance with the terms of the
Credit Agreement and the other Loan Documents, the acquisitions by
Holdings of Specified Margin Shares and the Specified Restricted Payments
made by Nutrition to Holdings.
4. REPRESENTATIONS AND WARRANTIES.
(a) As of the date of this Agreement and, after giving effect to
this Agreement, the transactions contemplated hereby (i) no Default or
Event of Default shall have occurred or be continuing and (ii) the
representations and warranties of Obligors contained in the Loan
- 5 -
<PAGE>
Documents are true, accurate and complete in all respects on and as of the
date hereof to the same extent as though made on and as of such date,
except to the extent such representations and warranties specifically
relate to an earlier date.
(b) Obligors jointly and severally represent and warrant to Agent
and Lenders that the execution, delivery and performance, as the case may
be, by each Obligor of this Agreement, the related Loan Documents, and the
other documents and transactions contemplated by each of the foregoing are
within each such Person's corporate powers, have been duly authorized by
all necessary corporate action (including, without limitation, all
necessary shareholder approval) of each such Person, have received all
necessary governmental approvals, and do not and will not contravene or
conflict with any provision of law applicable to any such Person, the
certificate or articles of incorporation or bylaws of any such Person, or
any order, judgment or decree of any court or other agency of government
or any contractual obligation binding upon any such Person; and this
Agreement, the Credit Agreement, the Pledge Agreement and each other Loan
Document is the legal, valid and binding obligation of each Obligor
enforceable against each such Person in accordance with its terms.
5. CONDITIONS PRECEDENT. This Agreement shall become effective on the
Effective Date, PROVIDED that each of the following items shall have been
received by Agent or satisfied (in the case of paragraphs (f) and (g) below),
all in form and substance satisfactory to Agent:
(a) AGREEMENT. This Agreement, duly executed by each Obligor, Agent
and Requisite Lenders.
(b) ANNEXES. ANNEX A and ANNEX B to this Agreement, completed by
Obligors.
(c) STOCK COLLATERAL. For all Specified Margin Shares represented by
share certificates, duly executed stock certificates evidencing such
shares, together with undated stock powers therefor duly endorsed in blank
by Holdings.
(d) CONTROL LETTERS. For all Specified Margin Shares not represented
by share certificates, a control letter, duly executed by Holdings, Credit
Suisse First Boston Corporation and Agent.
(e) PURPOSE STATEMENTS. For each non-bank Lender, an original Form
FR G-3 purpose statement, and for each bank Lender, an original Form FR
U-1 purpose statement, in each case fully completed and duly executed by
Holdings.
(f) NO DEFAULT. After giving effect to this Agreement, no Default or
Event of Default shall have occurred and be continuing as of the date
hereof, or would result after giving effect to the transactions
contemplated hereby.
(g) WARRANTIES AND REPRESENTATIONS. The warranties and
representations of each Obligor contained in this Agreement shall be true
and correct as of the date hereof.
- 6 -
<PAGE>
6. EFFECT ON LOAN DOCUMENTS. This Agreement is limited to the specific
purpose for which it is granted and, except as specifically set forth above (a)
shall not be construed as a consent, waiver or other modification with respect
to any term, condition or other provision of any Loan Document and (b) each of
the Loan Documents shall remain in full force and effect and are each hereby
ratified and confirmed.
7. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of Obligors, Agent, Lenders and their
respective successors and assigns; PROVIDED that no Obligor may assign its
rights, obligations, duties or other interests hereunder without the prior
written consent of Agent and Lenders. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of Obligors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement.
(b) ENTIRE AGREEMENT. This Agreement, including all documents
attached hereto, incorporated by reference herein or delivered in
connection herewith, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter
hereof, including that certain Waiver and Consent dated as of October 15,
1998 among Obligors, Agent and Lenders.
(c) FEES AND EXPENSES. As provided in Section 11.3 of the Credit
Agreement, Obligors agree to pay on demand all fees, costs and expenses
incurred by Agent in connection with the preparation, execution and
delivery of this Agreement, together with all fees, costs and expenses
incurred by Agent prior to the date hereof which are payable by Obligors
pursuant to Section 11.3 of the Credit Agreement.
(d) INCORPORATION OF CREDIT AGREEMENT. The provisions contained in
Sections 11.9 and 11.14 of the Credit Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
(e) ACKNOWLEDGMENT. Each Obligor hereby represents and warrants that
there are no liabilities, claims, suits, debts, liens, losses, causes of
action, demands, rights, damages or costs, or expenses of any kind,
character or nature whatsoever, known or unknown, fixed or contingent
(collectively, the "CLAIMS"), which any Obligor may have or claim to have
against Agent or any Lender, or any of their respective affiliates,
agents, employees, officers, directors, representatives, attorneys,
successors and assigns (collectively, the "LENDER RELEASED PARTIES"),
which might arise out of or be connected with any act of commission or
omission of the Lender Released Parties existing or occurring on or prior
to the date of this Agreement, including, without limitation, any Claims
arising with respect to the Obligations or any Loan Documents. In
furtherance of the foregoing, each Obligor hereby releases, acquits and
forever discharges the Lender Released Parties from any and all Claims
that any Obligor may have or claim to have, relating to or arising out of
or in
- 7 -
<PAGE>
connection with the Obligations or any Loan Documents or any other
agreement or transaction contemplated thereby or any action taken in
connection therewith from the beginning of time up to and including the
date of the execution and delivery of this Agreement. Each Obligor further
agrees forever to refrain from commencing, instituting or prosecuting any
lawsuit, action or other proceeding against any Lender Released Parties
with respect to any and all Claims.
(f) CAPTIONS. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
(g) SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement
by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
[signature pages follow]
- 8 -
<PAGE>
IN WITNESS WHEREOF, this Waiver, Consent and Fourth Amendment has been
duly executed and delivered as of the day and year first above written.
WEIDER NUTRITION INTERNATIONAL, INC.
WEIDER NUTRITION GROUP, INC.
WNG HOLDINGS (INTERNATIONAL) LTD.
For each of the foregoing:
By:________________________________
Title:_____________________________
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: _______________________________
Title: Duly Authorized Signatory
<PAGE>
FIRST UNION NATIONAL BANK, successor by merger to
Corestates Bank, N.A.
By: _______________________________
Title:_____________________________
<PAGE>
LASALLE NATIONAL BANK
By: _______________________________
Title:_____________________________
<PAGE>
THE BANK OF NOVA SCOTIA
By: _______________________________
Title:_____________________________
<PAGE>
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
ZIONS FIRST NATIONAL BANK
By: _______________________________
Title:_____________________________
<PAGE>
ANNEX A
Replacement Schedule 3.10
to
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
[TO BE SUPPLIED BY OBLIGORS]
<PAGE>
ANNEX B
Replacement Schedule 1
to
THIRD AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
[TO BE SUPPLIED BY OBLIGORS]
EXHIBIT 4.6
FIFTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This FIFTH AMENDMENT dated as of December 15, 1998 and effective as of
November 30, 1998 (this "AGREEMENT") is made among WEIDER NUTRITION
INTERNATIONAL, INC., a Delaware corporation ("HOLDINGS"), WEIDER NUTRITION
GROUP, INC., a Utah corporation ("NUTRITION"), WNG HOLDINGS (INTERNATIONAL)
LTD., a Nevada corporation ("INTERNATIONAL"; Holdings, Nutrition and
International, individually, each an "OBLIGOR" and, collectively, "OBLIGORS"),
in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, for
itself, as Lender, and as Agent for Lenders (in such capacity, "AGENT"), and the
other Lenders signatory to the hereinafter defined Credit Agreement.
RECITALS
A. Agent, Lenders and Obligors are party to that certain Third Amended and
Restated Credit Agreement dated May 6, 1997 (as amended, restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT").
B. On and subject to the terms and conditions hereof, Obligors have
requested from Agent and Lenders, and Agent and Lenders are willing to grant,
amendments to certain provisions of the Credit Agreement to change certain
financial covenants, revise certain interest and fee provisions and make other
changes mutually agreeable to Agent, Lenders and Obligors.
C. This Agreement shall constitute a Loan Document and these Recitals
shall be construed as part of this Agreement; capitalized terms used herein
without definition are so used as defined in Annex A to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMENDMENTS. Subject to the conditions and effectiveness of this
Agreement:
(a) The Credit Agreement is hereby amended by deleting the pricing
grid contained in Section 1.5(a) and replacing it with the following
pricing grid:
<TABLE>
<CAPTION>
RATIO OF FUNDED REVOLVING CREDIT LOAN
DEBT TO EBITDA LIBOR MARGIN INDEX MARGIN
--------------- ------------ ---------------------
<S> <C> <C>
less than or equal to 3.75 3.25 1.75
less than or equal to 3.00 but < 3.75 3.00 1.50
less than or equal to 2.50 but < 3.00 2.50 1.00
less than or equal to 2.00 but < 2.50 2.25 0.75
less than or equal to 1.50 but < 2.00 1.75 0.25
< 1.5 1.50 0.00
</TABLE>
- 1 -
<PAGE>
(b) The Credit Agreement is hereby amended by deleting the third
sentence of Section 1.5(a) in its entirety and replacing it with the
following sentence:
"Thereafter, determinations of each Margin will be based on a
calculation of the ratio of Funded Debt to EBITDA, in each case for
the twelve month period then ended."
(c) The Credit Agreement is hereby amended by deleting the fourth
sentence of Section 1.5(e) in its entirety and replacing it with the
following sentence:
"Holdings, on behalf of Borrowers, shall have the option to (1)
convert at any time all or any portion of the Revolving Credit Loan
bearing interest at a rate determined by reference to one basis to a
rate determined by reference to an alternate basis or (2) upon the
expiration of any LIBOR Period applicable to a LIBOR Loan, to
continue all or any portion of the Revolving Credit Loan as a LIBOR
Loan and the succeeding Period(s) of such continued portion of the
Revolving Credit Loan shall commence on the last day of the LIBOR
Period of the portion of the Revolving Credit Loan to be continued;
PROVIDED that (A) except as permitted in clause (B) below, any
Revolving Credit Loan to be continued as, or converted into, a LIBOR
Loan must be in a minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of such amount, (B) the aggregate
amount of all Revolving Credit Loans to be made or continued as, or
converted into, LIBOR Loans commencing on the same date and having
the same LIBOR Period may be in a minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount, (C) LIBOR
Loans may only be converted into Index Rate Loans on the expiration
date of a LIBOR Period applicable thereto and (D) no portion of the
Revolving Credit Loan may be continued as, or be converted into, a
LIBOR Loan when any Event of Default or Default has occurred and is
continuing."
(d) The Credit Agreement is hereby amended by deleting Section 1.6
thereof in its entirety and replacing it with the following new Section
1.6:
" 1.6 FEES. As additional compensation for Lenders' costs and risks
in making the Revolving Credit Loan available to Borrowers,
Borrowers agree to pay to Agent, for the ratable benefit of Lenders,
in arrears, on the first Business Day of each month prior to the
Revolving Commitment Termination Date or such earlier date as the
Lenders' obligations to make Revolving Credit Advances terminate or
the Revolving Credit Loan becomes due and payable, and on the
Revolving Commitment Termination Date or such earlier date as the
Lenders' obligations to make Revolving Credit Advances terminate or
the Revolving Credit Loan becomes due and payable, a fee for
Borrowers' non-use of available funds (the "NON-USE FEE") in an
amount equal to (i) the applicable rate per annum (calculated on the
basis of a 360 day year and actual days elapsed) set forth in the
following grid (the "NON-USE FEE MARGIN") multiplied by (ii) the
difference between the respective daily averages of (A) the Maximum
Revolving Credit Loan (as it may be adjusted from time to time
hereunder)
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<PAGE>
and (B) the amount of the Revolving Credit Loan outstanding during
the period for which the Non-Use Fee is due:
Ratio of Funded Non-use
DEBT TO EBITDA FEE MARGIN
> 2.0 0.375
< 2.0 0.250
The effective Non-Use Fee Margin shall be based on the ratio of
Funded Debt to EBITDA, in each case for the twelve month period then
ended, and shall be determined and adjusted in a manner identical to
that in which the effective Margin with respect to the Revolving
Credit Loan is determined and adjusted pursuant to SECTION 1.5 of
the Agreement."
(e) The Credit Agreement is hereby amended by deleting Section 6.2
thereof in its entirety and replacing it with the following revised
Section 6.2:
" 6.2 INVESTMENTS; LOANS AND ADVANCES. Except (I) as otherwise
permitted by SECTION 6.1, 6.3, 6.4, or 6.21 and (II) for advances to
suppliers on an arm's length basis in connection with purchases in
the ordinary course of business, no Obligor shall, or shall cause or
permit any Subsidiary thereof to, make any investment in, or make or
accrue loans or advances of money to any Person, through the direct
or indirect lending of money (including, without limitation, the
guarantee of any letters of credit issued for the benefit of such
Person), holding of securities or otherwise, other than (a)
Accounts, (b) investments in Obligors which are Subsidiaries of
Holdings, (c) investments in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one
year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc., (iii) certificates of deposit,
maturing no more than one year from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and
undivided profits of not less than $300,000,000 and having a senior
secured rating of "A" or better by a nationally recognized rating
agency, provided that the aggregate amount invested in such
certificates of deposit shall not at any time exceed $100,000 for
any one such certificate of deposit and $200,000 for any one such
bank, (iv) time deposits, maturing no more than 30 days from the
date of creation thereof with commercial banks or savings banks or
savings and loan associations each having membership either in the
Federal Deposit Insurance Corporation or in the Federal Savings and
Loan Insurance Corporation and in amounts not exceeding the maximum
amounts of insurance thereunder, (v) money market funds and (vi) in
accordance with paragraph (d) of ANNEX C, (d) from and after receipt
by Agent of documentation in form and substance acceptable to Agent
evidencing (i) the obligation of one or more
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<PAGE>
financial institutions reasonably acceptable to Agent to extend
credit of at least DM10,000,000 but not more than DM20,000,000 to
Haleko (in excess of Indebtedness of Haleko outstanding as of
November 30, 1998, as indicated on the most recent balance sheet
delivered pursuant to Annex G which includes such date) and (ii) the
drawing of at least DM10,000,000 of funds thereunder (an "ACCEPTABLE
HALEKO CREDIT FUNDING"), contributions by Obligors to the capital of
Haleko that shall not at any time exceed $3,000,000 in aggregate at
any time outstanding and (e) any other type of investment (including
the acquisition by Holdings, during the period from June 26, 1998
through September 1, 1998, of the Specified Margin Shares), loan or
advance not exceeding $5,000,000 in the aggregate at any time
outstanding; provided that (i) each such investment in 5% or more of
the ownership interests of any Person (other than the acquisition by
Holdings, during the period from June 26, 1998 through September 1,
1998, of the Specified Margin Shares) shall have been approved by
the board of directors of such Person and shall otherwise be
consensual and (ii) any such investment which is otherwise a
transaction described in SECTION 6.1 shall be subject to the
provisions of SECTION 6.1 (it being understood that nothing herein
shall be deemed to permit the disposition of any Stock constituting
Collateral except in accordance with the express terms of this
Agreement and the other Loan Documents)."
(f) The Credit Agreement is hereby amended by deleting Section 6.3
thereof in its entirety and replacing it with the following revised
Section 6.3:
" 6.3 INDEBTEDNESS. No Obligor shall, or shall cause or permit any
Subsidiary thereof to, create, incur, assume or permit to exist any
Indebtedness, except (i) obligations of Borrowers or Subsidiaries
thereof in connection with Letter of Credit Obligations, (ii)
Indebtedness secured by Liens permitted under SECTION 6.7, (iii) the
Revolving Credit Loan and the other Obligations, (iv) deferred
taxes, (v) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (vi) existing Indebtedness set
forth on SCHEDULE 6.3 and refinancings thereof on terms and
conditions acceptable to Agent, in its reasonable discretion,
determined in a timely manner, which shall in any event be on terms
no less favorable to Agent, any Lender and the applicable Obligors,
(vii) obligations under or in connection with foreign exchange
forward purchase agreements for purposes of hedging Inventory
purchases, (viii) lease payment obligations under leases which an
Obligor or Subsidiary thereof is permitted to enter into under the
Loan Documents, (ix) Indebtedness of Haleko which shall not exceed
the amount of the Indebtedness of Haleko outstanding on November 30,
1998 (as indicated on the most recent balance sheet delivered
pursuant to Annex G which includes such date) by DM20,000,000 in the
aggregate from time to time outstanding, (x) other unsecured
Indebtedness which, when taken together with (a) all Guaranteed
Indebtedness described in clause (iv) of SECTION 6.6 and (b) all
Indebtedness secured by Liens described in clause (v) of SECTION
6.7, does not exceed $1,000,000 in principal amount in the aggregate
outstanding at any one time,
- 4 -
<PAGE>
(xi) unsecured Indebtedness not exceeding $3,000,000 in the
aggregate at any time outstanding assumed in connection with
Permitted Acquisitions and subordinated in right of payment to the
Obligations on terms and conditions satisfactory to Agent and (xii)
intercompany loans made in accordance with SECTION 6.21."
(g) The Credit Agreement is hereby amended by adding the following
to the end of Section 6.11:
" and (e) the aggregate fair market value of the assets subject to
Sale-Leaseback Transactions does not exceed $1,000,000."
(h) The Credit Agreement is hereby amended by replacing subclauses
(B), (C) and (D) of clause (iii) of Section 6.13 thereof with the
following text:
"(B) all such Restricted Payments made during any Fiscal Quarter
shall be made during the fifteenth (15th) through the twentieth
(20th) (except, the fortieth (40) day, in the case of such a
Restricted Payment made during the third Fiscal Quarter of Fiscal
Year 1999) consecutive day immediately following the end of the
immediately preceding Fiscal Quarter, (C) at least five (5) days
prior to such Restricted Payment (except, one (1) day, in the case
of such a Restricted Payment made during the third Fiscal Quarter of
Fiscal Year 1999), Agent shall have received preliminary versions of
the Financial Statements to be delivered to Agent pursuant to ANNEX
E for the immediately preceding Fiscal Quarter, together with an
attached certificate of the Chief Financial Officer of Holdings (on
behalf of itself and each Borrower) to the effect that (1) the final
Financial Statements to be delivered to Agent for such immediately
preceding Fiscal Quarter will not differ in any material respect
from such preliminary Financial Statements and (2) no Default or
Event of Default had occurred or been continuing as of the end of
the period covered by such Financial Statements (other than as of
the end of the second Fiscal Quarter of Fiscal Year 1999), has
occurred or is continuing as of the date of such certificate or
would result from the making of such Restricted Payment, (D) the
aggregate amount of all such Restricted Payments made during (1)
each of the first and second Fiscal Quarter of Fiscal Year 1998
shall not exceed $0.0375 per each share of Holdings' common stock,
(2) each of the third and fourth Fiscal Quarters of Fiscal Year 1999
shall not exceed $0.0375 per each share of Holdings' common stock
and (3) each other Fiscal Quarter shall not exceed the lesser of (I)
$0.0625 per each share of Holdings' common stock and (II) the
product of 7.5% of the sum of (x) the actual consolidated Net Income
of Holdings for that portion of the then-current Fiscal Year ending
as of the close of such immediately preceding Fiscal Quarter, based
on the Financial Statements described in clause (C) above for such
period (except, as received, based on Financial Statements delivered
pursuant to ANNEX E for any portion of such period) plus (y) the
projected consolidated Net Income of Holdings for the remaining
portion of such Fiscal Year, based on the Projections delivered to
Agent pursuant to ANNEX E for such period and"
- 5 -
<PAGE>
(i) The Credit Agreement is hereby amended by deleting the first and
second sentences of Section 9.9(a)(i) in their entirety and replacing them
with the following:
"By 1:00 p.m. (New York time) on the date of Agent's receipt of a
Notice of Revolving Credit Advance or, at Agent's option, on any
succeeding day on or prior to the next Settlement Date (as defined
below) following the date of Agent's receipt of such notice, Agent
shall notify Revolving Credit Lenders thereof by telecopy, telephone
or other similar form of transmission. Each Lender shall make the
amount of such Lender's Pro Rata Share of each Revolving Credit
Advance available to Agent in same day funds by wire transfer to
Agent's account as set forth in ANNEX H, not later than 2:30 p.m.
(New York time) on the funding date requested by Agent, in the case
of an Index Rate Loan, and not later than 11:00 a.m. (New York time)
on the funding date requested by Agent, in the case of a LIBOR
Loan."
(j) The Credit Agreement is hereby amended by deleting the first
sentence of Section 9.9(b) in its entirety and replacing it with the
following:
"Agent may assume that each Lender will make its Pro Rata Share of
each Revolving Credit Advance available to Agent on the funding date
requested by Agent."
(k) The following definitions are hereby inserted in appropriate
alphabetic order into Annex A to the Credit Agreement:
""ACCEPTABLE HALEKO CREDIT FUNDING" has the meaning assigned
in SECTION 6.2.
"DEUTCHMARK" or "DM" shall mean the lawful currency of
Germany; PROVIDED, that each amount so denominated will be converted
and redenominated into any successor currency upon common use and
acceptance of such currency.
"HALEKO" shall mean Haleko Hanseatisches Lebensmittelkontor
GmbH, a corporation organized under the laws of Germany."
(l) The last sentence of subclause (1) of paragraph (d) of Annex B
of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:
"The effective L/C Margin will be based on the ratio of Funded Debt
to EBITDA, in each case for the twelve month period then ended, and
shall be determined and adjusted in a manner identical to that in
which the effective Margin with respect to the Revolving Credit Loan
is determined and adjusted pursuant to SECTION 1.5 of the Agreement;
and"
(m) Clause (a) and clause (b) of Annex E of the Credit Agreement are
hereby amended by inserting after each reference to "on a consolidated and
consolidating basis" the
- 6 -
<PAGE>
text "(which consolidating portion shall separately reflect the
appropriate information for each operating entity)."
(n) Annex E of the Credit Agreement is hereby amended by appending
the following section to the end of such Annex E:
" (i) To Agent and Lenders, accompanying each set of financial
information delivered pursuant to CLAUSE (B) hereof, (i) a
comparison of the actual financial results included in such
quarterly report to the budget and projections for the applicable
Fiscal Quarter and (ii) a management discussion and analysis
discussing actual performance for such Fiscal Quarter relative to
the budget and projections for such Fiscal Quarter."
(o) The Credit Agreement is hereby amended to change the maximum
Capital Expenditure allowed in paragraph (a) of Annex G in Fiscal Year
1999 from $11,000,000 to $13,000,000.
(p) Annex G of the Credit Agreement is hereby amended to delete
paragraph (c) of Annex G in its entirety and to replace it with the
following:
" (c) MINIMUM INTEREST COVERAGE RATIO. Holdings, on a consolidated
basis, shall have at the end of each Fiscal Quarter described below
a ratio of (i) the sum of (A) EBITDA LESS (B) Capital Expenditures
LESS (C) taxes paid in cash PLUS (D) for the period from September
1, 1998 through August 31, 1999, $4,000,000 PLUS (E) for the period
from December 1, 1998 through November 30, 1999, $1,000,000 to (ii)
Gross Interest Charges, in each case for the twelve month period
then ended, equal or greater to the ratio set forth opposite such
Fiscal Quarter:
(I) if an Acceptable Haleko Credit Funding has not
occurred:
FISCAL QUARTER RATIO
Fiscal Quarter ending November 30, 1998 1.00 to 1.00
Fiscal Quarter ending February 28, 1999 1.10 to 1.00
Fiscal Quarter ending May 31, 1999 1.40 to 1.00
Fiscal Quarter ending August 31, 1999 1.70 to 1.00
Fiscal Quarter ending November 30, 1999 2.40 to 1.00
Fiscal Quarter ending February 29, 2000 2.40 to 1.00
and each Fiscal Quarter thereafter; or
(II) if an Acceptable Haleko Credit Funding has occurred:
- 7 -
<PAGE>
FISCAL QUARTER RATIO
Fiscal Quarter ending November 30, 1998 1.00 to 1.00
Fiscal Quarter ending February 28, 1999 1.10 to 1.00
Fiscal Quarter ending May 31, 1999 1.35 to 1.00
Fiscal Quarter ending August 31, 1999 1.65 to 1.00
Fiscal Quarter ending November 30, 1999 2.35 to 1.00
Fiscal Quarter ending February 29, 2000 2.40 to 1.00
and each Fiscal Quarter thereafter."
(q) Annex G of the Credit Agreement is hereby amended to delete
paragraph (d) of Annex G in its entirety and to replace it with the
following:
" (d) MAXIMUM FUNDED DEBT TO EBITDA RATIO. Holdings, on a
consolidated basis, shall have at the end of each Fiscal Quarter
described below a ratio of (i) Funded Debt to (ii) the sum of (A)
EBITDA PLUS (B) for the period from September 1, 1998 through August
31, 1999, $4,000,000 PLUS (C) for the period from December 1, 1998
through November 30, 1999, $1,000,000, where EBITDA and Funded Debt
shall be determined for the twelve month period then ended, less
than or equal to the ratio set forth opposite such Fiscal Quarter:
(I) if an Acceptable Haleko Credit Funding has not occurred:
FISCAL QUARTER RATIO
Fiscal Quarter ending November 30, 1998 4.20 to 1.00
Fiscal Quarter ending February 28, 1999 4.10 to 1.00
Fiscal Quarter ending May 31, 1999 3.90 to 1.00
Fiscal Quarter ending August 31, 1999 3.60 to 1.00
Fiscal Quarter ending November 30, 1999 3.00 to 1.00
Fiscal Quarter ending February 29, 2000 2.80 to 1.00
and each Fiscal Quarter thereafter; or
(II) if an Acceptable Haleko Credit Funding has occurred:
FISCAL QUARTER RATIO
Fiscal Quarter ending November 30, 1998 4.50 to 1.00
Fiscal Quarter ending February 28, 1999 4.30 to 1.00
Fiscal Quarter ending May 31, 1999 4.20 to 1.00
Fiscal Quarter ending August 31, 1999 3.75 to 1.00
Fiscal Quarter ending November 30, 1999 3.10 to 1.00
Fiscal Quarter ending February 29, 2000 2.80 to 1.00
and each Fiscal Quarter thereafter."
- 8 -
<PAGE>
2. REPRESENTATIONS AND WARRANTIES.
(a) As of the date of this Agreement and, after giving effect to
this Agreement, the transactions contemplated hereby (i) no Default or
Event of Default shall have occurred or be continuing and (ii) the
representations and warranties of Obligors contained in the Loan Documents
are true, accurate and complete in all respects on and as of the date
hereof to the same extent as though made on and as of such date, except to
the extent such representations and warranties specifically relate to an
earlier date.
(b) Obligors jointly and severally represent and warrant to Agent
and Lenders that the execution, delivery and performance, as the case may
be, by each Obligor of this Agreement, the related Loan Documents, and the
other documents and transactions contemplated by each of the foregoing are
within each such Person's corporate powers, have been duly authorized by
all necessary corporate action (including, without limitation, all
necessary shareholder approval) of each such Person, have received all
necessary governmental approvals, and do not and will not contravene or
conflict with any provision of law applicable to any such Person, the
certificate or articles of incorporation or bylaws of any such Person, or
any order, judgment or decree of any court or other agency of government
or any contractual obligation binding upon any such Person; and this
Agreement, the Credit Agreement and each other Loan Document is the legal,
valid and binding obligation of each Obligor enforceable against each such
Person in accordance with its terms.
3. CONDITIONS PRECEDENT. This Agreement shall become effective on the date
first set forth above (the "EFFECTIVE DATE"), PROVIDED that each of the
following items shall have been received by Agent or satisfied (in the case of
paragraphs (b) and (c) below), all in form and substance satisfactory to Agent:
(a) AGREEMENT. This Agreement, duly executed by each Obligor, Agent
and Requisite Lenders.
(b) NO DEFAULT. After giving effect to this Agreement, no Default or
Event of Default shall have occurred and be continuing as of the Effective
Date, or would result after giving effect to the transactions contemplated
hereby.
(c) WARRANTIES AND REPRESENTATIONS. The warranties and
representations of each Obligor contained in this Agreement shall be true
and correct as of the Effective Date.
(d) FEES, COSTS AND EXPENSES. Agent shall have received (at Agent's
option, by payment or as a charge against the Revolving Loan) (i) for the
ratable benefit of the Lenders signatory to this Agreement, a commitment
fee of $325,000, which fee shall be fully earned on the effective date
hereof and shall be non-refundable when paid, and (ii) all other fees,
costs and expenses, including reasonable attorneys' fees, due pursuant to
the Loan Documents, including as incurred by Agent in connection herewith.
- 9 -
<PAGE>
4. EFFECT ON LOAN DOCUMENTS. This Agreement is limited to the specific
purpose for which it is granted and, except as specifically set forth above (a)
shall not be construed as a consent, waiver or other modification with respect
to any term, condition or other provision of any Loan Document and (b) each of
the Loan Documents shall remain in full force and effect and are each hereby
ratified and confirmed.
5. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of Obligors, Agent, Lenders and their
respective successors and assigns; PROVIDED that no Obligor may assign its
rights, obligations, duties or other interests hereunder without the prior
written consent of Agent and Lenders. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of Obligors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement.
(b) ENTIRE AGREEMENT. This Agreement, including all documents
attached hereto, incorporated by reference herein or delivered in
connection herewith, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter
hereof.
(c) FEES AND EXPENSES. As provided in Section 11.3 of the Credit
Agreement, Obligors agree to pay on demand all fees, costs and expenses
incurred by Agent in connection with the preparation, execution and
delivery of this Agreement, together with the fees, costs and expenses set
forth in SECTION 3(D) hereof and all other fees, costs and expenses
incurred by Agent prior to the date hereof which are payable by Obligors
pursuant to Section 11.3 of the Credit Agreement.
(d) INCORPORATION OF CREDIT AGREEMENT. The provisions contained in
Sections 11.9 and 11.14 of the Credit Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
(e) ACKNOWLEDGMENT. Each Obligor hereby represents and warrants that
there are no liabilities, claims, suits, debts, liens, losses, causes of
action, demands, rights, damages or costs, or expenses of any kind,
character or nature whatsoever, known or unknown, fixed or contingent
(collectively, the "CLAIMS"), which any Obligor may have or claim to have
against Agent or any Lender, or any of their respective affiliates,
agents, employees, officers, directors, representatives, attorneys,
successors and assigns (collectively, the "LENDER RELEASED PARTIES"),
which might arise out of or be connected with any act of commission or
omission of the Lender Released Parties existing or occurring on or prior
to the date of this Agreement, including, without limitation, any Claims
arising with respect to the Obligations or any Loan Documents. In
furtherance of the foregoing, each Obligor hereby releases, acquits and
forever discharges the Lender Released Parties from any and all Claims
that any Obligor may have or claim to have, relating to or arising out of
or in connection with the
- 10 -
<PAGE>
Obligations or any Loan Documents or any other agreement or transaction
contemplated thereby or any action taken in connection therewith from the
beginning of time up to and including the date of the execution and
delivery of this Agreement. Each Obligor further agrees forever to refrain
from commencing, instituting or prosecuting any lawsuit, action or other
proceeding against any Lender Released Parties with respect to any and all
Claims which might arise out of or be connected with any act of commission
or omission of the Lender Released Parties existing or occurring on or
prior to the date of this Agreement, including, without limitation, any
Claims arising with respect to the Obligations or any Loan Documents.
(f) CAPTIONS. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
(g) SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement
by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
[signature pages follow]
- 11 -
<PAGE>
IN WITNESS WHEREOF, this Fifth Amendment has been duly executed and
delivered as of the day and year first above written.
WEIDER NUTRITION INTERNATIONAL, INC.
WEIDER NUTRITION GROUP, INC.
WNG HOLDINGS (INTERNATIONAL) LTD.
For each of the foregoing:
By:________________________________
Title:_____________________________
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: _______________________________
Title: Duly Authorized Signatory
<PAGE>
FIRST UNION NATIONAL BANK, successor by merger to
Corestates Bank, N.A.
By: _______________________________
Title:_____________________________
<PAGE>
LASALLE NATIONAL BANK
By: _______________________________
Title:_____________________________
<PAGE>
THE BANK OF NOVA SCOTIA
By: _______________________________
Title:_____________________________
<PAGE>
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By: _______________________________
Title:_____________________________
By: _______________________________
Title:_____________________________
<PAGE>
ZIONS FIRST NATIONAL BANK
By: _______________________________
Title:_____________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF WEIDER NUTRITION INTERNATIONAL, INC. AS OF,
AND FOR THE SIX MONTHS ENDING NOVEMBER 30, 1998, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<CASH> 1,997
<SECURITIES> 2,949
<RECEIVABLES> 63,931
<ALLOWANCES> 1,575
<INVENTORY> 81,558
<CURRENT-ASSETS> 155,282
<PP&E> 62,808
<DEPRECIATION> 14,006
<TOTAL-ASSETS> 280,109
<CURRENT-LIABILITIES> 61,239
<BONDS> 116,720
0
0
<COMMON> 249
<OTHER-SE> 100,496
<TOTAL-LIABILITY-AND-EQUITY> 280,109
<SALES> 151,220
<TOTAL-REVENUES> 151,220
<CGS> 99,189
<TOTAL-COSTS> 99,189
<OTHER-EXPENSES> 53,988
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,313
<INCOME-PRETAX> (6,357)
<INCOME-TAX> (2,624)
<INCOME-CONTINUING> (3,733)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,733)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
