SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 15, 1998
-------------
ICON Fitness Corporation
IHF Holdings, Inc.
ICON Health & Fitness, Inc.
- ---------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
333-18475 87-0566936
33-87930-01 87-0531209
Delaware 33-87930 87-0531206
------------------ ----------------- ------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
1500 South 1000 West
Logan, Utah 84321
- ---------------------------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code 435-750-5000
------------
Not Applicable
- ---------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On or about July 15, 1998 ICON Health & Fitness, Inc. amended its credit
agreement with General Electric Capital Corporation to:
1) Amend the borrowing base by increasing the categories of eligible
accounts receivable and inventory and also provided for a $5 million advance in
addition to the above increases. This amendment did not increase the total
permitted borrowings of $310 million;
2) Amend the financial covenants for the 12 month periods ending May 31,
1998, August 31, 1998, November 30, 1998 and February 28, 1999; and
3) Amend other items including changes to applicable margins through the
expiration of the credit agreement, covenants regarding Year 2000 compliance and
corrective actions, and additional representation and reporting requirements.
The amendment did not change the maturity of the revolving line of credit from
November 15, 1999.
For the year ended May 31, 1998, ICON Health & Fitness, Inc. had net sales of
$749.3 million, income from operations of $23.9 million, net loss of $9.5
million and EBITDA of $41.4 million. The following table includes unaudited
financial information for the year ended May 31, 1998.
<TABLE>
For the Year Ended May 31,
(dollars in millions)(unaudited)
----------------------------------
ICON Health IHF ICON
& Fitness, Holdings, Fitness
Inc. Inc. Corporation
1998 1998 1998
----------- --------- -----------
<S> <C> <C> <C>
Operating Data:
Net sales $749.3 $749.3 $749.3
Cost of sales 536.0 536.0 536.0
Gross profit 213.3 213.3 213.3
Operating expenses 189.4 189.4 189.4
Income from operations 23.9 23.9 23.9
Net Income/(loss) (9.5) (19.2) (27.6)
</TABLE>
<PAGE>
<TABLE>
For the Year Ended May 31,
(dollars in millions)(unaudited)
----------------------------------
ICON Health IHF ICON
& Fitness, Holdings, Fitness
Inc. Inc. Corporation
1998 1998 1998
----------- --------- -----------
<S> <C> <C> <C>
Balance Sheet Data (at 5/31/98):
Cash $ 3.9 $ 3.9 $ 3.9
Working capital 152.9 152.9 152.9
Total assets 363.1 378.1 387.9
Total indebtedness 274.5 366.5 466.8
Stockholders' deficit (20.3) (97.3) (187.8)
Other Data:
Depreciation and amortization 21.7 35.5 48.2
Capital expenditures 11.8 11.8 11.8
EBITDA (1) 41.4 41.4 41.4
Cash flow from operations 47.6 47.6 47.6
Cash flow from investing
activities 6.4 6.4 6.4
Cash flow from financing
activities (55.7) (55.7) (55.7)
</TABLE>
(1) "EBITDA" is defined herein as income before provisions for (benefit from)
income taxes, depreciation, amortization and interest expense. EBITDA is
presented because the Registrant believes it is frequently used by security
analysts in the evaluation of companies. However, EBITDA should not be
considered as an alternative to net income as a measure of operating results or
to cash flows as a measure of liquidity in accordance with generally accepted
accounting principles.
Item 7 Exhibits
(c) Exhibits
10.1B Amended and Restated Credit Agreement dated as of July 15, 1998 among
ICON Health & Fitness, Inc., the lenders named therein, and General
Electric Capital Corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ICON Fitness Corporation
IHF Holdings, Inc.
ICON Health & Fitness, Inc.
Date: August 19, 1998 By: /s/ S. Fred Beck
---------------------------
Name: S. Fred Beck
Title: Chief Financial Officer
<PAGE>
WAIVER, CONSENT AND AMENDMENT NO. 12 TO
AMENDED AND RESTATED CREDIT AGREEMENT
This WAIVER, CONSENT AND AMENDMENT NO. 12 TO AMENDED AND
RESTATED CREDIT AGREEMENT (this "Amendment No.12 or this "Amendment")
is entered into as of this 15th day of July, 1998, by and among ICON
HEALTH & FITNESS, INC., a Delaware corporation ("Borrower"), GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Agent"), for
itself as a Lender and as Agent for Lenders, and the other Lenders
signatory hereto. Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to them
in Schedule A to the Credit Agreement (as hereinafter defined).
RECITALS
WHEREAS, Borrower, Agent and Lenders have entered into that
certain Amended and Restated Credit Agreement, dated as of November
14, 1994, as amended by that certain Amendment No. 1 to the Amended
and Restated Credit Agreement, dated as of September 8, 1995, that
certain Amendment No. 2 to Amended and Restated Credit Agreement,
dated as of May 31, 1996, that certain Amendment No. 3 to Amended and
Restated Credit Agreement, dated as of June 24, 1996, that certain
Amendment No. 4 to the Amended and Restated Credit Agreement, dated
as of July 12, 1996, that certain Amendment No. 5 to the Amended and
Restated Credit Agreement, dated as of August 14, 1996
("Amendment 5"), that certain Amendment No. 6 to the Amended and
Restated Credit Agreement, dated as of August 23, 1996, that certain
Consent and Amendment No. 7 to the Amended and Restated Credit
Agreement, dated as of November 12, 1996, that certain Waiver,
Consent and Amendment No. 8 to the Amended and Restated Credit
Agreement, dated as of March 17, 1997, that certain Waiver, Consent
and Amendment No. 9 to Amended and Restated Credit Agreement dated as
of July 31, 1997, that certain Amendment No. 10 to Amended and
Restated Credit Agreement dated as of August 28, 1997, and that
certain Amendment No. 11 to Amended and Restated Credit Agreement
dated as of November 25, 1997 ("Amendment 11") (as further amended,
supplemented, restated or otherwise modified from time to time, the
"Agreement"); and
WHEREAS, Borrower has requested that Agent and Lenders enter
into certain amendments to the Agreement; and
WHEREAS, Agent and Requisite Lenders have agreed to enter into
certain amendments to the Agreement upon the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the mutual execution hereof
and other good and valuable consideration, the parties hereto agree
as follows:
Section 1. Supplemental Credit Advances. The Agreement is
amended to add the following Section 1.1A thereto:
1.1A. Supplemental Credit Advances.
(a) Upon and subject to the terms and conditions hereof,
each Lender specified on the signature page of Amendment No.12 to the
Agreement as having a Supplemental Credit Loan Commitment severally
and not jointly agrees to make available, from time to time, until
the Revolving Commitment Termination Date, for Borrower's use and
upon the request of Borrower, its Pro Rata Share of advances (each a
"Supplemental Credit Advance") in an aggregate outstanding amount
which shall not at any given time exceed Five Million Dollars
($5,000,000). Until all amounts outstanding in respect of the
Supplemental Credit Loan shall become due and payable on the
Revolving Commitment Termination Date, Borrower may from time to time
borrow, repay and reborrow the Supplemental Credit Loan under this
Section 1.1(A)(a) and such repayments shall not constitute a
permanent reduction of the Supplemental Credit Loan Commitment. Each
Supplemental Credit Advance shall be made on notice by Borrower to
the individual designated by Agent from time to time as its
collateral analyst responsible for receiving such notice, such notice
to be given no later than 11:00 a.m. (New York time) on the Business
Day of the proposed Supplemental Credit Advance. All such
Supplemental Credit Advances shall bear interest by reference to the
Index Rate. Agent shall be entitled to rely upon, and shall be fully
protected under this Agreement in relying upon, any notice of
Supplemental Credit Advance believed by Agent to be genuine and to
assume that each Person executing and delivering the same was duly
authorized unless the responsible individual acting thereon for Agent
shall have, at the time of reliance thereon, actual knowledge to the
contrary.
(b) The date and amount of each Supplemental Credit
Advance and each payment of principal with respect thereto shall be
recorded on the books and records of Agent, which books and records
shall constitute prima facie evidence of the accuracy of the
information therein recorded. The entire unpaid balance of the
Supplemental Credit Loan shall be immediately due and payable on the
Revolving Commitment Termination Date.
(c)Notwithstanding any provision of the Agreement to the
contrary:
(1) Supplemental Credit Advances will bear interest
determined solely by reference to the Index Rate.
(2) Supplemental Credit Advances will bear interest
at a per annum rate equal to the Index Rate plus three percent (3%)
per annum.
(3) The making of Supplemental Credit Advances shall
be subject to the conditions set forth in Section 2.2(a) and Section
2.2(b) and to the further condition that Borrowing Availability under
the Revolving Loan shall be zero ($0) before any Supplemental Credit
Advance may be made.
(4) If Borrowing Availability exceeds zero ($0) at
any time when Supplemental Credit Advances are outstanding, Borrower
shall be deemed to have requested a Revolving Credit Advance in an
amount equal to the lesser of (x) Borrowing Availability and (y) the
outstanding principal amount of those Supplemental Credit Advances,
and the resulting Revolving Credit Advance shall be applied to the
outstanding Supplemental Credit Advances.
(5) The Supplemental Credit Loan shall, for all
purposes, including mandatory prepayments under Section 1.4 of the
Agreement, be the last Loan borrowed and the first Loan repaid;
provided that mandatory prepayments shall not result in a permanent
reduction of the Supplemental Credit Loan Commitments.
(6) The Supplemental Credit Loan Commitments shall
not increase the aggregate amount of the Revolving Credit Loan
Commitments or the amount of the Maximum Revolving Credit Loan and
each Lender's Supplemental Credit Loan Commitment shall be considered
to be included within (and shall not increase) such Lender's
Revolving Credit Loan Commitment.
Section 2. Amendments to Applicable Margins. Section 1.6(g) of
the Agreement is deleted and the following is inserted in its place:
(g) Applicable Margins.
The Applicable Margins will be as follows for the period
from the effective date hereof through March 31, 1999:
Applicable Revolver Index Margin 1.50%
Applicable Revolver LIBOR Margin 3.00%
Applicable L/C Margin 1.75%
Applicable Non-Use Fee Margin .50%
Applicable Term A Index Margin 1.75%
Applicable Term A LIBOR Margin 3.25%
Applicable Term B Index Margin 2.25%
Applicable Term B LIBOR Margin 3.75%
The Applicable Margins will be as follows for the period
from April 1, 1999 through the date on which all of the Obligations
are paid in full or otherwise satisfied:
Applicable Revolver Index Margin 1.75%
Applicable Revolver LIBOR Margin 3.25%
Applicable L/C Margin 2.00%
Applicable Non-Use Fee Margin .50%
Applicable Term A Index Margin 2.00%
Applicable Term A LIBOR Margin 3.50%
Applicable Term B Index Margin 2.50%
Applicable Term B LIBOR Margin 4.00%
Section 3. Amendments To Borrowing Base.
A. From the date hereof through January 31, 1999, Sections 1.7
and 1.8 of the Agreement shall be amended and restated to read in
their entirety as follows:
1.7 Eligible Accounts. Based on the most recent Borrowing
Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Eligible Accounts shall mean all
Accounts of Borrower and each of its domestic Subsidiaries in which
Agent on behalf of Lenders has a first priority, perfected security
interest, subject to reserves established by Agent in its reasonable
credit judgment exercised in good faith, except:
(i) Accounts due from an Affiliate of Borrower or
such domestic Subsidiary; and
(ii) Accounts that are more than ninety (90) days
past due; without duplicating the amounts resulting from the
application of clauses (i) and (ii) above, there shall be deducted
from the total amount of Eligible Accounts the allowance for doubtful
accounts determined in accordance with GAAP.
1.8 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on
other information available to Agent, Eligible Inventory shall mean
all Inventory of Borrower and each of its domestic Subsidiaries in
which Agent on behalf of Lenders has a first priority, perfected
security interest (subject to Permitted Encumbrances of the type
identified in clauses (v) or (vi) of the definition of Permitted
Encumbrances) valued at the book value thereof as determined in
accordance with GAAP, subject to reserves established by Agent in its
reasonable credit judgment exercised in good faith, including without
limitation reserves equal to the amount of any Permitted Encumbrances
that are senior to Agent's security interests in the Eligible
Inventory.
B. For the period of February 1, 1999 through April 29, 1999,
Sections 1.7 and 1.8, of the Agreement shall be amended and restated
to read in their entirety as follows; provided that if the EBITDA
criterion in clause C below is met, the formulation set forth in this
clause B shall remain in effect until the Obligations are paid in
full:
1.7 Eligible Accounts. Based on the most recent Borrowing
Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit
judgment exercised in good faith determine which Accounts of Borrower
and its domestic Subsidiaries shall be "Eligible Accounts" for
purposes of this Agreement. In determining whether a particular
Account constitutes an Eligible Account, Agent shall not include any
such Account to which any of the exclusionary criteria set forth
below applies. Agent reserves the right, at any time and from time
to time to adjust any such criteria, to establish new criteria and to
establish reserves with respect to Eligible Accounts in its
reasonable credit judgment exercised in good faith. In no event
shall the criteria set forth below be changed to make more credit
available. Eligible Accounts shall not include any Account of
Borrower or its domestic Subsidiaries:
(a) which does not arise from the sale of goods or the
performance of services by Borrower or a domestic Subsidiary of
Borrower in the ordinary course of its business;
(b) upon which (i) Borrower's or its applicable domestic
Subsidiary's right to receive payment is not absolute or is
contingent upon the fulfillment of any condition whatsoever or (ii)
Borrower or the applicable domestic Subsidiary of Borrower is not
able to bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold
or used or services rendered pursuant to a contract under which the
Account Debtor's obligation to pay that invoice is subject to
Borrower's or its domestic Subsidiaries' completion of further
performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) to the extent that any defense, counterclaim,
chargeback, setoff or dispute is asserted as to, or applicable to,
such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise
sold to or services rendered and accepted by the applicable Account
Debtor and payable in Dollars;
(e) with respect to which an invoice, acceptable to Agent
in form and substance, has not been sent to the applicable Account
Debtor;
(f) that (i) is not owned by Borrower or one of its
domestic Subsidiaries or (ii) is subject to any right, claim,
security interest or other interest of any other Person, other than
Liens in favor of Agent, on behalf of itself and Lenders which shall
be first priority Liens;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of Borrower or any of its domestic
Subsidiaries;
(h) that is more than ninety (90) days past due; or
(i) that is not paid within one hundred twenty (120) days
following its original invoice date (or one hundred fifty (150) days
following its original invoice date in the case of Service
Merchandise Company).
Without duplicating the criteria set forth in clauses (h) and
(i) above, there shall be deducted from the total amount of Eligible
Accounts the allowance for doubtful accounts attributable to current
Accounts as determined in accordance with GAAP.
1.8 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on
other information available to Agent, Agent shall in its reasonable
credit judgment exercised in good faith determine which Inventory of
Borrower and its domestic Subsidiaries shall be "Eligible Inventory"
for purposes of this Agreement. In determining whether any
particular Inventory constitutes Eligible Inventory, Agent shall not
include any such Inventory to which any of the exclusionary criteria
set forth below applies. Agent reserves the right, at any time and
from time to time to adjust any such criteria, to establish new
criteria and to establish reserves with respect to Eligible Inventory
in its reasonable credit judgment exercised in good faith, including
without limitation reserves equal to the amount of any Permitted
Encumbrances that are senior to Agent's security interests in the
Eligible Inventory. In no event shall the criteria set forth below
be changed to make more credit available. Eligible Inventory shall
not include any Inventory of Borrower or its domestic Subsidiaries
that:
(a) is not owned by Borrower or one of its domestic
Subsidiaries free and clear of all Liens and rights of any other
Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure
Borrower's or one of its domestic Subsidiaries' performance with
respect to that Inventory), except the Liens in favor of Agent, on
behalf of itself and Lenders, and Permitted Encumbrances of the type
identified in clauses (v) or (vi) of the definition of Permitted
Encumbrances;
(b) is (i) not located on premises owned by Borrower or one
of its domestic Subsidiaries or (ii) is stored at leased premises or
with a bailee, warehouseman or similar Person, unless Agent has given
its prior consent thereto and unless (x) in each case, a satisfactory
bailee letter or landlord waiver has been delivered to Agent, or (y)
reserves satisfactory to Agent have been established with respect
thereto;
(c) is covered by a negotiable document of title, unless
such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of
Agent, on behalf of itself and Lenders;
(d) is Healthrider Inventory that is unsalable, shopworn,
seconds, damaged or unfit for sale as determined in accordance with
GAAP; or
(e) as to which Agent's Lien, on behalf of itself and
Lenders, therein is not a first priority perfected Lien, subject only
to Permitted Encumbrances of the type referred to in Section 1.8(a).
C. Unless Borrower's consolidated EBITDA for the twelve months
ending March 31, 1999 exceeds $58,980,000 and Borrower has delivered
financial statements to Agent and Lenders demonstrating the foregoing
by April 30, 1999, from April 30, 1999 through the date on which the
Obligations are paid in full, Sections 1.7 and 1.8 of the Agreement
shall be amended and restated to read in their entirety as follows:
1.7 Eligible Accounts. Based on the most recent Borrowing
Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit
judgment exercised in good faith determine which Accounts of Borrower
and its domestic Subsidiaries shall be "Eligible Accounts" for
purposes of this Agreement. In determining whether a particular
Account constitutes an Eligible Account, Agent shall not include any
such Account to which any of the exclusionary criteria set forth
below applies. Agent reserves the right, at any time and from time
to time to adjust any such criteria, to establish new criteria and to
establish reserves with respect to Eligible Accounts in its
reasonable credit judgment exercised in good faith. In no event
shall the criteria set forth below be changed to make more credit
available. Eligible Accounts shall not include any Account of
Borrower or its domestic Subsidiaries:
(a) which does not arise from the sale of goods or the
performance of services by Borrower or any of its domestic
Subsidiaries in the ordinary course of its business;
(b) upon which (i) Borrower's or its domestic Subsidiary's
right to receive payment is not absolute or is contingent upon the
fulfillment of any condition whatsoever or (ii) Borrower or its
domestic Subsidiaries are not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process, or
(iii) if the Account represents a progress billing consisting of an
invoice for goods sold or used or services rendered pursuant to a
contract under which the Account Debtor's obligation to pay that
invoice is subject to Borrower's or its domestic Subsidiaries'
completion of further performance under such contract or is subject
to the equitable lien of a surety bond issuer;
(c) to the extent that any defense, counterclaim,
chargeback, setoff or dispute is asserted as to, or applicable to,
such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise
sold to or services rendered and accepted by the applicable Account
Debtor and payable in Dollars;
(e) with respect to which an invoice, acceptable to Agent
in form and substance, has not been sent to the applicable Account
Debtor;
(f) that (i) is not owned by Borrower or a domestic
Subsidiary of Borrower or (ii) is subject to any right, claim,
security interest or other interest of any other Person, other than
Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of Borrower or any of its domestic
Subsidiaries;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof and is
subject to the Federal Assignment of Claims Act of 1940, unless
Agent, in its sole discretion, has agreed to the contrary in writing
or the Borrower or the applicable domestic Subsidiary of Borrower, if
necessary or desirable, has complied with the Federal Assignment of
Claims Act of 1940, and any amendments thereto, with respect to such
obligation;
(i) that is the obligation of an Account Debtor located in
a foreign country other than Canada (excluding the Maritime Provinces
of Canada) unless (I) supported by a letter of credit in form and
substance and issued by a financial institution reasonably acceptable
to Agent that is pledged, endorsed and delivered to Agent or (II)
such Account Debtor and the jurisdiction where such Account Debtor
resides are each acceptable to Agent in its sole and absolute
discretion;
(j) that is the obligation of an Account Debtor to whom
Borrower or the applicable domestic Subsidiary is liable for goods
sold or services rendered by the Account Debtor to Borrower;
provided, however, that only the portion of the Account equal to the
amount owed to such Account Debtor shall be ineligible;
(k) that arises with respect to goods which are delivered
on a cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor
is or may be conditional;
(l) other than a consumer Account covered by clause (s),
that is in default; provided, further, that, without limiting the
generality of the foregoing, an Account shall be deemed in default
upon the occurrence of any of the following:
(i) the Account is not paid within sixty (60) days past
its due date;
(ii) if any Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any
other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief
of debtors; provided, however, that Accounts of Account Debtors with
annual revenues in excess of $500,000,000 that arise while such
Account Debtors are operating under Chapter 11 of Title 11 of the
United States Code (but not Accounts arising prior thereto) shall not
be deemed to be in default unless such Accounts are not paid within
forty-five (45) days past the original invoice date.
(m) which is the obligation of an Account Debtor that is in
default (as defined in subparagraph (l)(i) above) on fifty percent
(50%) or more of the dollar amount of Accounts upon which such
Account Debtor is obligated;
(n) other than a consumer Account covered by clause(s),
which Account is by its original terms due more than one hundred
twenty (120) days from its original invoice date (or one hundred
fifty (150) days following its original invoice date in the case of
Service Merchandise Company);
(o) which arises from any bill-and-hold or other sale of
goods which remain in Borrower's or any of its domestic Subsidiaries'
possession or under Borrower's or any of its domestic Subsidiaries'
control;
(p) as to which Agent's interest, on behalf of itself and
other Lenders, is not a first priority perfected security interest;
(q) as to which any of the representations or warranties
pertaining to Accounts set forth in this Agreement or any of the
other Loan Documents is untrue in any material respect;
(r) to the extent such Account exceeds any credit limit for
such Account Debtor established by Agent, in its reasonable
discretion upon reasonable prior notice to Borrower;
(s) which are consumer Accounts in excess of $50,000,000 in
the aggregate, or to the extent two or more payments on any such
Account remain unpaid for longer than thirty (30) days; or
(t) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper.
1.8 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on
other information available to Agent, Agent shall in its reasonable
credit judgment exercised in good faith determine which Inventory of
Borrower and its domestic Subsidiaries shall be "Eligible Inventory"
for purposes of this Agreement. In determining whether any
particular Inventory constitutes Eligible Inventory, Agent shall not
include any such Inventory to which any of the exclusionary criteria
set forth below applies. Agent reserves the right, at any time and
from time to time to adjust any such criteria, to establish new
criteria and to establish reserves with respect to Eligible Inventory
in its reasonable credit judgment exercised in good faith, including
without limitation reserves equal to the amount of any Permitted
Encumbrances that are senior to Agent's security interests in the
Eligible Inventory. In no event shall the criteria set forth below
be changed to make more credit available. Eligible Inventory shall
not include any Inventory of Borrower or any domestic Subsidiary of
Borrower that:
(a) is not owned by Borrower or a domestic Subsidiary of
Borrower free and clear of all Liens and rights of any other
person, except the Liens in favor of Agent, on behalf of itself
and Lenders, and encumbrances set forth in clause (v) or (vi) of
the definition of Permitted Encumbrances;
(b)(i) is not located on premises owned by Borrower or one
of its domestic Subsidiaries or (ii) is stored at leased
premises or with a bailee, warehouseman or similar Person,
unless (x) in each case, a satisfactory bailee letter or
landlord waiver has been delivered to Agent, or (y) reserves
satisfactory to Agent have been established with respect
thereto;
(c) is covered by a negotiable document of title, unless
such document has been delivered to Agent;
(d) in Agent's reasonable opinion, is obsolete, unsalable,
shopworn, seconds, damaged or unfit for sale;
(e) consists of display items or packing or shipping
materials, work-in-progress Inventory or replacement parts for
production equipment;
(f) consists of discontinued or slow-moving items or
finished goods of substandard quality;
(g) is placed by Borrower or one of its domestic
Subsidiaries on consignment;
(h) is not of a type held for sale in the ordinary course
of Borrower's or one of its domestic Subsidiaries' business;
(i) as to which Agent's interest, on behalf of itself and
Lenders, therein is not a first priority perfected security interest;
(j) as to which any of the representations or warranties
pertaining to Inventory set forth in the Agreement or any of the
other Loan Documents is untrue in any material respect; or
(k) is Inventory in transit;
provided, however, the amount of Eligible Inventory shall be reduced
by the amount of, without limitation, any freight-in charges which
Agent reasonably determines are otherwise included in Eligible
Inventory, and provided further, that inventory that is not owned by
Borrower or one of its domestic Subsidiaries or in which the Agent
does not have a first and prior perfected security interest (subject
only to Permitted Encumbrances of the type referred to in Section
1.8(a)) shall not be deemed to be Inventory or Eligible Inventory for
any purpose.
D. For purposes of determining the Borrowing Base pursuant to
each of clauses A, B, and C above, to the extent that payment of an
Account has been received in Borrower's or its domestic Subsidiary's
Lock Box, such Account shall cease to be an Eligible Account,
regardless of whether or when the proceeds of that Account are
transferred to Agent.
Section 4. Amendment to Sale of Assets Provisions. Section
6.8 of the Agreement is amended to insert the phrase "or an "Asset
Sale Offer" (as defined in the documentation in connection with the
Intermediate Holdings Zero Coupon Notes)" at the end of subpart (D)
of clause (iv).
Section 5. Amendment to Sale-Leaseback Provisions.
Section 6.12 of the Agreement is amended to insert the phrase "or
Intermediate Holdings Zero Coupon Notes" at the end of the last
sentence of the Section.
Section 6. Amendment to Non-Use Fee Margin Reference.
Section 1.9(b) of the Agreement is amended to delete the term "Non-
Use Fee Margin" where it appears in the section and to insert in its
place "Applicable Non-Use Fee Margin."
Section 7. Amendment to Senior Note Repayment Provisions.
Section 6.20 (B) of the Agreement is amended by deleting the term
"(1)" in the second line of the section and by deleting the phrase
"and (2) as permitted by Section 1.4 (c)" from the seventh and eighth
lines of the section.
Section 8. Amendment to Permitted Affiliate Transactions
(Deferral of Bain Capital, Inc. Fees). Clause (iv) of Section 6.4(b)
of the Agreement is amended to delete reference to the phrase "in
excess of $800,000 in the aggregate (plus reasonable out-of-pocket
expenses)" and insert in its place "after the effective date of
Amendment No. 12 to the Agreement in excess of $400,000 in the
aggregate (plus reasonable out-of-pocket expenses when incurred, not
to exceed $100,000 in the aggregate in any 12-month period)." The
following sentence is added at the end of Section 6.4(b):
The balance of management fees in the amount of $400,000 per
annum plus any reasonable out-of-pocket expenses incurred in excess
of $100,000 per annum may continue to accrue and may be paid to Bain
Capital, Inc. only after payment in full of the Obligations.
Section 9. Section 8.1(p) of the Agreement is deleted and
the following is inserted in its place:
(p) Borrower shall cease to be a wholly-owned subsidiary of
Holdings or Holdings shall cease to be a wholly-owned subsidiary of
Intermediate Holdings or Intermediate Holdings shall cease to be a
wholly-owned subsidiary of Ultimate Holdings (other than holdings of
preferred stock).
Section 10. Amendment to Participation Requirements.
Section 9.1(a) of the Agreement is amended to delete the sum of
"$5,000,000" and replace it with the sum of "$2,500,000" as it
relates to sales of participations.
Section 11. Amendment to Indemnification. Section 9.6 of
the Agreement is amended to insert the phrase "(including reasonable
counsel fees)" immediately following the word "expenses" in the
seventh line of Section 9.6.
Section 12. Amendment to Amendment and Waiver Provisions.
Section 11.2 (b) is amended by deleting the phrase "Schedule C and
Schedule D" therein and inserting in its place "Sections 1.7 and
1.8".
Section 13. Amendments to Defined Terms (Schedule A).
Schedule A to the Agreement is amended as follows:
(a) Amendments to Existing Terms.
(i) The definition of the term "Fiscal Year" is amended to
read in its entirety as follows:
"Fiscal Year" shall mean any of the annual fiscal
accounting periods of Borrower ending on May 31 of each year.
(ii) The definition of the term "Non-Use Fee Margin" is
deleted in its entirety.
(iii) The defined term "Commitments" is amended to read in
its entirety as follows:
"Commitments" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make or hold Revolving Credit
Advances (including Supplemental Credit Advances) and Term Loans as
set forth on the signature page to Amendment No. 12 to the Agreement
or in the most recent Lender Addition Agreement executed by such
Lender, and (b) as to all Lenders, the aggregate commitment of all
Lenders to make or hold Revolving Credit Advances (including
Supplemental Credit Advances) and Term Loans, in each case, as such
amount may be adjusted, amortized, or permanently reduced from time
to time in accordance with the Agreement.
(iv) The defined term "Loans" is amended to read in its
entirety as follows:
"Loans" shall mean the Revolving Credit Loan, the
Supplemental Credit Loan and the Term Loans.
(v) The defined term "Pro Rata Share" shall be amended to
read in its entirety as follows:
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender (a) with respect to the Revolving Credit Loan,
the percentage obtained by dividing (i) the Revolving Credit Loan
Commitment of that Lender by (ii) the aggregate Revolving Credit Loan
Commitments of all Lenders, (b) with respect to the Supplemental
Credit Loan, the percentage obtained by dividing the (i) the
Supplemental Credit Loan Commitment of that Lender by (ii) the
aggregate Supplemental Credit Loan Commitments of all Lenders, and
(c) with respect to Term Loan A or Term Loan B, the percentage
obtained by dividing (i) the Term Loan A Commitment or Term Loan B
Commitment of that Lender (as the case may be) by (ii) the aggregate
Term Loan A Commitments or Term Loan B Commitments of all Lenders (as
the case may be), in each case all as such percentages may be
adjusted by assignments permitted pursuant to Section 9.1.
(b) Addition of Additional Terms. The following terms are
added to Schedule A so that they appear in alphabetical order:
"Applicable Non-Use Fee Margin" shall mean the percentage
margin as determined by reference in Section 1.6(g).
"Supplemental Credit Advance" shall have the meaning
ascribed thereto in Section 1.1A of the Agreement (added by Amendment
No. 12 to the Agreement.).
"Supplemental Credit Loan" shall mean the aggregate of all
Supplemental Credit Advances to be made available pursuant to
Amendment No. 12 to the Agreement.
"Supplemental Credit Loan Commitments" shall mean (a) as
to any Lender with a Supplemental Credit Loan Commitment, the
commitment of such Lender to make Supplemental Credit Advances as set
forth on the signature page to Amendment No. 12 to the Agreement, and
(b) as to all Lenders with a Supplemental Credit Loan Commitment, the
aggregate commitment of all such Lenders to make Supplemental Credit
Advances, which aggregate commitment shall not exceed $5,000,000, in
each case, as such commitments may be adjusted, or reduced by
assignments, in accordance with the terms of the Agreement.
"Third Party Interactives" shall mean all Persons with
whom Borrower or any of its Subsidiaries 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 Borrower's and any of its
Subsidiaries' 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 Borrower
and each of its Subsidiaries, all actions necessary to eliminate such
Person's Year 2000 Problems, including, without limitation, computer
code enhancements and revisions, upgrades and replacements of Year
2000 Date-Sensitive Systems/Components, and coordination of such
enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to
Borrower and each of its Subsidiaries, a comprehensive plan to
eliminate all of its Year 2000 Problems on or before June 30, 1999
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
Borrower and each of its Subsidiaries, (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 Borrower's
and any of its Subsidiaries' 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 Borrower
and each of its Subsidiaries, limitations on the capacity or
readiness of any such Person'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
Borrower and its Subsidiaries and exchanges of information among
Borrower and each of its Subsidiaries and Year 2000 Date-Sensitive
Systems/Components of Third Party Interactives and functionality of
peripheral interfaces, firmware and embedded microchips.
Section 14. Amendment to Collateral Reports (Weekly
Borrowing Base Certificate). Schedule H to the Agreement (Collateral
Reports) is amended as follows: (i) sections (b) through (f) are
amended to become sections (c) through (g), respectively; (ii) former
section (a) (i) is deleted in its entirety; (iii) sections (a) (ii)
and (a) (iii) are amended to become sections (b) (i) and (b) (ii),
respectively; and (iii) a new section (a) is added as follows:
(a) To Agent, on a weekly basis or more frequently as may be
requested by Agent from time to time, a Borrowing Base Certificate,
in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion;
Section 15. Amendments to Financial Covenants (Schedule I).
Schedule I is hereby amended to delete existing Schedule I in its
entirety and to replace it with Schedule I attached hereto.
Notwithstanding any provision of this Amendment No. 12 to the
contrary, the amendment of the Financial Covenants as of May 31, 1998
and for the twelve-month period then ended shall be effective as of
May 31, 1998.
Section 16. References to Holdings and Zero Coupon Notes. All
references in Sections 1.5, 3.1, 6.6 and 8.1 of the Agreement, and in
subparagraph h of Schedule G to the Agreement, to "Holdings" shall be
deemed to include Holdings and Intermediate Holdings. All references
in Sections 1.5 and 6.6 of the Agreement to the "Zero Coupon Notes"
shall be deemed to include the Zero Coupon Notes and the Intermediate
Holdings Zero Coupon Notes.
Section 17. Appraisals of Inventory and Equipment. Borrower
shall provide to appraisers selected by Agent access to Borrower's
Inventory and Equipment and to Borrower's books and records relating
to such Inventory and Equipment and shall cooperate fully with such
appraisers to enable such appraisers to prepare appraisals of
Borrower's Inventory and Equipment as promptly as is practicable.
Borrower agrees to reimburse Agent for all reasonable fees, costs,
and expenses incurred in connection with such appraisals in
accordance with Section 11.3 of the Agreement.
Section 18. Delivery of Draft Annual Financials. Borrower
covenants and agrees that Borrower shall cause Borrower's accountants
to deliver to Agent by August 7, 1998 a draft of Borrower's annual
financial statements for the Fiscal Year ended May 31, 1998, which
draft financial statements shall contain the same level of detail as
the annual audited financial statements required to be delivered
pursuant to Section 4.1 (a) of the Agreement. Borrower further
covenants and agrees that such draft financial statements shall be
accompanied by the certification of the Chief Executive Officer or
Chief Financial Officer of Borrower that all such draft financial
statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows of
Borrower and its Subsidiaries on a consolidated basis, as at the end
of such Fiscal Year and for the period then ended, and that there
shall not be any material adjustments made to such draft financial
statements in the course of preparing the final audited financial
statements to be delivered pursuant to Section 4.1(a) of the
Agreement.
Section 19. Waiver of Specified Defaults. Agent and
Lenders hereby waive those certain Defaults and Events of Default
arising solely out of the matters identified on Exhibit "A" hereto
(which Defaults and Events of Default are referred to herein as the
"Specified Defaults"). This waiver is based on the understanding of
the Agent and the Requisite Lenders that the Specified Defaults are
the only Defaults or Events of Default that will exist after giving
effect to this Amendment, and shall not apply to any Default or Event
or Default other than the Specified Defaults. Borrower acknowledges
and agrees that each of the Specified Defaults exists as of the
effective date of this Amendment.
Section 20. Covenants Regarding Year 2000 Problems.
Borrower covenants and agrees to deliver to Agent a Year 2000
Assessment and Year 2000 Corrective Plan by August 15, 1998. On or
prior to December 31, 1998, Borrower and each of its Subsidiaries
shall implement Year 2000 Corrective Actions. On or before February
28, 1999 Borrower and each of its Subsidiaries shall complete Year
2000 Corrective Actions and Year 2000 Implementation Testing. On or
before June 30, 1999 Borrower and each of its Subsidiaries 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.
Section 21. Success Fee. Borrower shall pay to Agent for
the benefit of all Lenders a success fee in the amount of
$834,285.00. Such fee shall be due and payable on the earlier to
occur of the date on which the Obligations are paid in full or the
Revolving Loan Commitment Termination Date and shall be paid to the
Persons that are Lenders as of the date hereof (or their successors
and assigns) in accordance with their Pro Rata Shares as of the date
hereof.
Section 22. Miscellaneous Amendments. The Agreement is
further amended by adding the following provisions:
(a) All Loans and all other Obligations arising under this
Agreement and the other Loan Documents shall constitute one general
obligation of Borrower secured ratably by all of the Collateral.
(b) Any Event of Default with respect to any Financial
Covenant contained in Schedule I shall be deemed to have occurred on
the last day of the applicable measuring period for that Financial
Covenant or otherwise on the date of determination thereof by Agent,
rather than on the date on which Financial Statements evidencing such
Event of Default are delivered by Borrower.
(c) For purposes of determining Borrowing Availability, 50%
of all Letter of Credit Obligations relating to documentary letters
of credit issued to suppliers to assure payment for finished goods
Inventory shall be deducted from the Borrowing Base; 100% of stand-by
Letter of Credit Obligations shall be deducted from the Borrowing
Base; and 100% of all Letter of Credit Obligations shall be deducted
from the Maximum Revolving Credit Loan.
Section 23. Additional Unsecured Indebtedness. Clause
(xii) of Section 6.3 is amended to read in its entirety as follows:
(xii) other unsecured Indebtedness not exceeding
$20,000,000 in the aggregate at any time outstanding, incurred on
terms reasonably satisfactory to Requisite Lenders.
Section 24. Waiver and Release. Borrower hereby waives and
releases any and all claims it may have against Agent and each Lender
arising under, or in connection with, the Agreement, any of the other
Loan Documents or any transactions in connection therewith.
Section 25. Representations And Warranties Of Borrower.
Borrower represents and warrants that:
(a) the execution, delivery and performance by Borrower
of this Amendment has been duly authorized by all necessary corporate
action and this Amendment is a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms,
except as the enforcement thereof may be subject to (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law);
(b) each of the representations and warranties contained
in the Agreement is true and correct in all material respects on and
as of the date hereof as if made on the date hereof, except to the
extent that such representations and warranties expressly relate to
an earlier date;
(c) neither the execution, delivery and performance of
this Amendment nor the consummation of the transactions contemplated
hereby does or shall contravene, result in a breach of, or violate
(i) any provision of Borrower's certificate or articles of
incorporation or bylaws, (ii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any
indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Ultimate Holdings, Intermediate Holdings,
Holdings, Borrower or any of its Subsidiaries is a party or by which
any of their property is bound; and
(d) after giving effect to this Amendment, no Default or
Event of Default shall have occurred and be continuing under the
Agreement.
Section 26. Conditions To Effectiveness. This Amendment
shall be effective upon satisfaction of the following conditions
precedent:
(a) Execution and delivery of this Amendment by Requisite
Lenders (including each Lender having a Supplemental Credit Loan
Commitment) and Borrower.
(b) Execution and delivery to Agent of such UCC-1s, UCC-3s and
other documents as Agent may request.
(c) The representations and warranties contained herein shall be
true and correct in all respects.
(d) Execution and delivery to Agent of a Reaffirmation of
Guaranty by ICON International Holdings, Inc., JumpKing, Inc. and
Universal Technical Services.
(e) Execution and delivery to Agent of such Trademark Security
Agreements as Agent may request, in form and substance acceptable to
Agent.
(f) Delivery to Agent of a duly executed opinion of in-house
counsel to Borrower, in form and substance satisfactory to Agent and
its counsel, opining as to the due authorization, execution and
delivery of this Amendment and the absence of any conflict between
this Amendment and any other agreements or obligations of Ultimate
Holdings, Intermediate Holdings, Holdings or Borrower.
(g) Delivery to Agent of a duly executed opinion of outside
counsel to Borrower, in form and substance satisfactory to Agent and
its counsel, opining as to the absence of any conflict between this
Amendment and any other agreements of Ultimate Holdings, Intermediate
Holdings, Holdings or Borrower relating to the Zero Coupon Notes, the
Senior Notes, or other Indebtedness.
(h) Delivery to Agent as of the effective date of this Amendment
or within thirty (30) days thereafter of such landlord waivers as
Agent shall request.
Section 27. Reference To And Effect Upon The Agreement.
(a) Except as specifically amended above, the Agreement and the
other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Agent
or any Lender under the Agreement or any Loan Document, nor
constitute a waiver of any provision of the Agreement or any Loan
Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in the Agreement to
"this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to the Agreement as amended
hereby.
Section 28. Costs And Expenses. As provided in Section
11.3 of the Agreement, Borrower agrees to reimburse Agent for all
fees, costs and expenses, including the reasonable fees, costs and
expenses of counsel or other advisors for advice, assistance, or
other representation in connection with this Amendment.
Section 29. Governing Law. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.
Section 30. Headings. Section headings in this Amendment
are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purposes.
Section 31. Counterparts. This Amendment may be executed
in any number of counterparts, each of which when so executed shall
be deemed an original, but all such counterparts shall constitute one
and the same instrument.
(signature page follows)
IN WITNESS WHEREOF, the parties hereto hereupon set their hands
as of the date first written above.
ICON HEALTH & FITNESS, INC.
By:
Title:
Revolving Credit Loan GENERAL ELECTRIC CAPITAL
CORPORATION,Commitment: $177,500,000,as Agent and Original Lender
(including a Supplemental
Credit Loan Commitment By:
of $______________)
Term Loan A: $2,277,607.68 Title:
Revolving Credit Loan PILGRIM AMERICA PRIME RATE TRUST
Commitment: $0, (including a
Supplemental Credit Loan By:
Commitment of $____________)
Term Loan B: $15,739,374.33 Title:
Revolving Credit Loan THE FIRST NATIONAL BANK OF CHICAGO
Commitment: $23,500,000,(assignee of NBD Bank)
(including a Supplemental
Credit Loan Commitment of By:
$________________)
Term Loan A: $683,441.80 Title:
Revolving Credit Loan BANKBOSTON, N.A.
Commitment: $18,000,000,
(including a Supplemental
Credit Loan Commitment By:
of $_______________)
Term Loan A: $455,362.04 Title:
Revolving Credit Loan NATIONSBANK OF TEXAS, N.A.
Commitment: $17,500,000,
(including a Supplemental By:
Credit Loan Commitment
of $_______________) Title:
Revolving Credit Loan ZIONS FIRST NATIONAL BANK
Commitment: $9,000,000,
(including a Supplemental
Credit Loan Commitment By:
of $______________)
Term Loan A: $455,362.04 Title:
Revolving Credit Loan THE CIT GROUP/BUSINESS CREDIT, INC.
Commitment: $15,500,000,
(including a Supplemental
Credit Loan Commitment By:
of $________________)
Term Loan A: $455,362.04 Title:
[Signature Page to Waiver, Consent and Amendment No. 12]
Revolving Credit Loan UNION BANK
Commitment: $13,000,000,
(including a Supplemental
Credit Loan Commitment By:
of $________________)
Term Loan A: $683,441.80 Title:
Revolving Credit Loan CITICORP USA, INC.
Commitment: $29,250,000,
(including a Supplemental
Credit Loan Commitment By:
of $________________)
Term Loan A: $2,622,119.76 Title:
Revolving Credit Loan THE PROVIDENT BANK
Commitment: $6,750,000,
(including a Supplemental
Credit Loan Commitment By:
of $________________)
Term Loan A: $342,119.64 Title:
Revolving Credit Commitment (including
$5,000,000 Supplemental Credit Loan
Commitment): $310,000,000.00
Term Loans: $ 23,714,191.13
Total $333,714,191.13
[Signature Page to Waiver, Consent and Amendment No. 12]
SCHEDULE I (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in
accordance with GAAP with purchase accounting adjustments the same as
in the documents in connection with the Senior Notes, consistently
applied:
(a) Maximum Capital Expenditures. Borrower and its
Subsidiaries on a consolidated basis shall not make Capital
Expenditures during the following periods that exceed in the
aggregate the amounts set forth opposite each of such periods:
Maximum Capital
Period Expenditures per Period
Each Fiscal Year $15,000,000
provided that Capital Expenditures with respect to new Healthrider
retail stores shall not exceed $1,000,000 in each Fiscal Year.
(b) Minimum Adjusted Net Worth. Borrower and its
Subsidiaries on a consolidated basis shall maintain at all times
Adjusted Net Worth, excluding any impact of write-offs of deferred
tax assets made after the effective date of Amendment No. 12 to the
Credit Agreement, equal to or greater than:
$75,000,000 as of May 31, 1998;
$59,550,000 as of August 31, 1998;
$67,080,000 as of November 30, 1998;
$75,000,000 as of February 28, 1999;
$75,000,000 as of May 31, 1999 and as of the last day of
each Fiscal Quarter ending thereafter.
(c)Minimum Interest Coverage Ratio. Borrower and its
Subsidiaries on a consolidated basis shall have at the end of each
Fiscal Quarter set forth below, a ratio of (i) EBITDA (excluding
deferred management fees payable to Bain Capital, Inc.) to (ii)
Interest Charges for the 12-month period then ended of not less than
the following:
1.10 for the Fiscal Quarter ending May 31, 1998;
1.10 for the Fiscal Quarter ending August 31, 1998;
1.30 for the Fiscal Quarter ending November 30, 1998;
1.46 for the Fiscal Quarter ending February 28, 1999; and
1.70 for the Fiscal Quarter ending May 31, 1999 and each
Fiscal Quarter ending thereafter.
(d) Minimum Debt Service Coverage Ratio. Borrower and its
Subsidiaries shall have on a consolidated basis at the end of each
Fiscal Quarter, a ratio of (i) EBITDA (excluding deferred management
fees payable to Bain Capital, Inc.) to (ii) Debt Service, in each
case, for the 12-month period then ended of not less than the
following:
1.00 for the Fiscal Quarter ending May 31, 1998;
1.00 for the Fiscal Quarter ending August 31, 1998;
1.12 for the Fiscal Quarter ending November 30, 1998;
1.26 for the Fiscal Quarter ending February 28, 1999;
1.30 for the Fiscal Quarter ending May 31, 1999 and each
Fiscal Quarter ending thereafter.
(e) Maximum Funded Debt to Adjusted Net Worth Ratio.
Borrower and its Subsidiaries on a consolidated basis shall have and
shall maintain at all times from and after the Closing Date a ratio
of (i) Funded Debt to (ii) Adjusted Net Worth, excluding any impact
of write-offs of deferred tax assets made after the effective date of
Amendment No. 12 to the Credit Agreement, of not more than the
following:
4.00 as of May 31, 1998;
4.89 as of August 31, 1998;
5.00 as of November 30, 1998;
4.56 as of February 28, 1999;
4.00 as of May 31, 1999 and
as of the last day of
each Fiscal Quarter thereafter
(f) Current Ratio. Borrower and its Subsidiaries on a
consolidated basis shall have and shall maintain at all times from
and after the Closing Date a ratio of Current Assets to Current
Liabilities of not less than 2.0 to 1.0.
Exhibit "A"
SPECIFIED DEFAULTS
[To be Completed by Borrower]
