THE CIT GROUP/ BUSINESS CREDIT, INC.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dated as of
January 17, 2003
Re: Amendment Number Seven
to Financing Agreement and Loan Documents
TWIN LABORATORIES INC.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
Reference is made to the Financing Agreement between The CIT
Group/Business Credit, Inc. as lender and agent thereunder ("Agent"), the other
lenders party thereto ("Lenders"), and Twin Laboratories Inc. ("Twinlab") and
certain of its subsidiaries, as borrowers thereunder (collectively, the
"Companies"), dated as of March 29, 2001 (as amended and modified, from time to
time, the "Financing Agreement"). Initially capitalized terms used herein and
not otherwise defined herein shall have the meanings ascribed to such terms in
the Financing Agreement.
As of the date of this Amendment, Twinlab is repaying $5,000,000 of
outstanding Revolving Loans with the proceeds from the sale by Xxxxxxx of the
Acquired Assets (as such term is defined in that certain Consent Letter, dated
January 17, 2003, from the Agent to Xxxxxxx and Xxxxxxx Nutritionals, LLC (the
"Consent")), and the aggregate commitment of the Lenders under the Financing
Agreement is being reduced by such amount.
In light of the forgoing, Agent, Lenders and the Companies wish to amend
certain provisions of the Loan Documents.
Therefore, pursuant to mutual agreement, it is hereby agreed as follows:
I. AMENDMENT TO CLAUSE (D) OF THE DEFINITION OF AVAILABILITY
RESERVE. Clause (d) of the definition of "Availability Reserve" set forth in
Section 1 of the Financing Agreement is hereby amended to read as follows:
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"(d) $5,000,000, throughout the term hereof unless otherwise agreed
by Agent, in its discretion;"
II. AMENDMENT TO DEFINITION OF EBITDA. The definition of "EBITDA" set
forth in Section 1 of the Financing Agreement is hereby amended to read as
follows:
"EBITDA shall mean, in any period, all consolidated earnings of the
Companies and their consolidated Subsidiaries before all (i) interest and
tax obligations, (ii) depreciation, and (iii) amortization for said
period, all determined in accordance with GAAP on a consistent basis with
the latest audited financial statements of the Companies, but excluding
(a) the effect of extraordinary and/or non-reoccurring gains or losses for
such period, (b) for the period commencing September 1, 2002 through
December 31, 2002, reclamation charges to the extent actually recorded in
an amount not to exceed $8,800,000, and (c) for the period commencing
January 1, 2002 through November 30, 2002, Restructuring Charges, to the
extent actually recorded, in an amount not to exceed $19,500,000, and for
the period commencing December 1, 2002 through March 31, 2004,
Restructuring Charges, to the extent actually recorded, in an amount not
to exceed $4,000,000."
III. AMENDMENT TO DEFINITION OF LINE OF CREDIT. The definition of "Line of
Credit" set forth in Section 1 of the Financing Agreement is hereby amended to
read as follows:
"LINE OF CREDIT shall mean the aggregate commitment of the Lenders
to (a) make Revolving Loans pursuant to Section 3 of this Financing
Agreement, (b) assist any of the Companies in opening Letters of Credit
pursuant to Section 14 of this Financing Agreement, and (c) make the Term
Loan pursuant to Section 4 of this Financing Agreement, in the aggregate
amount equal to $45,000,000, provided that nothing herein shall be deemed
to increase any Lender's commitment hereunder, which commitment shall be
set forth opposite such Lender's name on the signature pages hereof, or in
the Assignment and Transfer Agreement executed by such Lender by which it
becomes a Lender hereunder, as such pro rata share may be adjusted
pursuant to Assignment and Transfer Agreements executed pursuant to
Section 12.9 hereof."
IV. AMENDMENT TO ADD DEFINITION OF RESTRUCTURING CHARGES. A new definition
of "Restructuring Charges" is hereby added to Section 1 of the Financing
Agreement and shall read as follows:
"RESTRUCTURING CHARGES shall mean, on a consolidated basis for the
Companies and their consolidated Subsidiaries, all (i) asset impairment
charges; (ii) severance and related benefits payable to any of the
Blechmans; (iii) professional fees; (iv) rents; (v) clean up costs,
repairs, maintenance and supplies; (vi) freight costs incurred to move
inventory and equipment; (vii) contract labor/training costs; (viii)
travel expenses; (ix) severance, relocation costs,
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bonuses, and overtime premiums; (x) out-placement fees; (xi) expenses
relating to plant shutdown (i.e., arising in connection with equipment
leases, IT communication lines, property taxes, insurance, utilities,
security deposits and lease)."
V. AMENDMENT OF SECTION 6.11(A). Section 6.11(a) of the Financing
Agreement is hereby amended to read as follows:
"(a) maintain at the end of each month, on a rolling, trailing
12-month basis, EBITDA of not less than the amounts set forth below for
the applicable period:
PERIOD AMOUNT
------ ------
Calculated as of month-end, January, 2003 $1,875,000
Calculated as of month-end, February, 2003 $2,050,000
Calculated as of month-end, March, 2003 $3,175,000
Calculated as of month-end, April, 2003 $3,517,000
Calculated as of month-end, May, 2003 $2,958,000
Calculated as of month-end, June, 2003 $3,500,000
Calculated as of month-end, July, 2003 $3,308,000
Calculated as of month-end, August, 2003 $3,617,000
Calculated as of month-end, September, 2003 $5,975,000
Calculated as of month-end, October, 2003 $6,667,000
Calculated as of month-end, November, 2003 $7,558,000
Calculated as of month-end, December, 2003 $8,150,000
Calculated as of each month end thereafter $15,000,000
VI. CONSENT TO SALE OF CERTAIN EQUIPMENT. Lenders consent to the
Companies' proposed sale of certain obsolete equipment, as more particularly set
forth on Exhibit "A" attached hereto (the "Obsolete Equipment"), located at the
Companies' facilities in Ronkonkoma, New York and Bohemia, New York. Lenders
further agree that upon the effective date of this Amendment, all liens, claims
and encumbrances of Agent and the Lenders upon the Obsolete Equipment shall be
released and of no further force and effect, and Agent shall, at the Companies'
cost and expense, execute and deliver any and all such lien releases, UCC-1
financing statement termination statements and other instruments and agreements
as reasonably requested by the Companies to effect such release of liens, claims
and encumbrances.
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VII. CONSENT TO DISSOLUTION OF CERTAIN SUBSIDIARIES. Lenders consent to
the dissolution of the following direct and indirect subsidiaries of Twinlab:
Twinlab Mail Order, Inc. (formerly P.R. Nutrition, Inc.); Twinlab Direct, Inc.
(formerly Changes International, Inc.); Twinlab Catalog Corp. (formerly Xxxxxxx
Laboratories, Inc.); Twinlab FSC Inc.; Tempe Manufacturing Corp. (formerly
Health Factors International, Inc.); and Changes International (UK) Ltd.
VIII. RATIFICATION OF CONSENT. Each of the Lenders do hereby ratify and
approve any and all acts of Agent done or made heretofore in connection with the
sale by Xxxxxxx of the Acquired Assets, including, without limitation, Agent's
delivery to Xxxxxxx of the Consent.
IX. CONFIRMATION OF GUARANTIES. By execution below, the Companies and the
other parties constituting Guarantors (other than Mailorder, Direct and Xxxxxxx)
hereby each confirm that each of their respective guaranties executed and
delivered in connection with the Financing Agreement remains in full force and
effect notwithstanding the execution, delivery and performance by the Companies
of this Amendment and the Financing Agreement as amended hereby.
X. AMENDMENT OF LOAN DOCUMENTS TO REMOVE XXXXXXX. The Financing Agreement
and the other Loan Documents are hereby amended such that Xxxxxxx is no longer a
party thereto, each and every reference to Xxxxxxx therein is deleted, each
reference to the Companies does not include Xxxxxxx, and Xxxxxxx is released
from all obligations under the Financing Agreement and the other Loan Documents.
XI. GENERAL TERMS.
1. To the extent any of the terms and provisions of the Financing
Agreement and/or the Loan Documents conflict or are inconsistent with the terms
hereof, the terms of this Amendment shall govern.
2. The effectiveness of this Amendment is conditioned upon receipt
by Agent of:
(a) an executed counterpart of this Amendment executed by each
Company and Guarantor;
(b) evidence of notification, in writing, by Agent or Twinlab
to the Blechmans of the terms and execution of this Amendment; and
(c) payment to Agent for application against the obligation,
of all proceeds resulting from the sale of the Obsolete Equipment.
3. This Amendment may be executed in two or more counterparts, each
of which shall constitute an original but all of which when taken together shall
constitute but one agreement, and shall become effective when copies hereof
which, when taken together, bear the original signatures of each of the parties
hereto are delivered to Agent.
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4. Except as set forth herein no other change in the terms or
provisions of the Financing Agreement or any other Loan Document is intended or
implied. If the foregoing is inaccordance with your understanding, please so
indicate by signing and returning the enclosed copy of this Amendment.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
---------------------------------
Title:
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AGREED AND ACCEPTED BY:
CONGRESS FINANCIAL CORPORATION,
a Lender
By:
---------------------------------
Title:
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GMACC COMMERCIAL CREDIT, LLC,
a Lender
By:
---------------------------------
Title:
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TWIN LABORATORIES INC.,
a Utah corporation,
a Company
By:
---------------------------------
Title:
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TWINLAB CORPORATION,
a Delaware corporation,
a Company
By:
---------------------------------
Title:
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