SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made and
entered into by and between USANA Health Sciences, Inc., a Utah corporation
("Borrower") and Bank of America, N.A., a national banking association ("Bank").
Recitals
A. Borrower and Bank are parties to that certain Credit Agreement dated
March 26, 2001, as amended by that certain letter agreement dated January 25,
2002, by that certain letter agreement dated May 8, 2002, by that certain First
Amendment to Credit Agreement dated as of April 17, 2002 and by that certain
letter agreement dated July 23, 2002 (as amended or otherwise modified, the
"Credit Agreement") pursuant to which, among other things, Bank made available a
revolving line of credit in the amount of $12,500,000 and a term loan to
Borrower in the amount of $10,000,000.
B. Borrower has requested that Bank reduce the amount of the revolving
line of credit to $10,000,000 and extend the maturity thereof to September 1,
2004 and to make certain other changes to the Credit Agreement, which Bank has
agreed to do on the terms and conditions herein contained.
NOW THEREFORE, in consideration of the foregoing, Borrower and Bank
agree as follows:
Agreement
1. DEFINED TERMS. Capitalized terms not otherwise defined herein shall
have the meanings given in theCredit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Loan Agreement is amended as
follows:
(a) Amendment to Section 1.6. Section 1.6 is amended and
restated to read as follows:
1.6 Credit Limit shall mean $10,000,000.
(b) Amendment to Section 1.23. Section 1.23 is amended and
restated to read as follows:
1.23 Termination Date shall mean September 1, 2004,
or such earlier date upon which Bank's commitment to make
Advances or issue Letters of Credit is terminated pursuant to
Subsection 10.2(a).
(c) Amendment to Section 8.2. Section 8.2 is amended and
restated to read as follows:
8.2 Tangible Net Worth. Maintain as of the end of
each of Borrower's fiscal quarters, a Tangible Net Worth of
not less than the sum of (a) $12,000,000, plus (b) 50% of the
cumulative net income of Borrower for all fiscal quarters
ended after December 31, 2000, in which Borrower's net income
was greater than zero, plus (c) 100% of the amount, if any, by
which the shareholders' equity of Borrower has increased since
December 31, 2000 as a result of the issuance of capital stock
or the conversion of debt securities into capital stock, minus
(d) the aggregate amount of Borrower's capital stock
purchased, retired, or redeemed by Borrower during the period
commencing September 1, 2002 and ending December 31, 2003 up
to a maximum amount of $5,000,000 minus (e) the aggregate
amount of (i) Borrower's capital stock purchased, retired, or
redeemed by Borrower plus (ii) cash dividends paid by Borrower
on its capital stock, in each case after December 31, 2003, up
to a maximum amount equal to 25% of the cumulative net income
of Borrower for all fiscal quarters ended after December 31,
2003.
(d) Amendment to Section 9.6. Section 9.6 is amended and
restated to read as follows:
9.6 Capital Structure. Purchase, retire, or redeem
any of its capital stock or otherwise effect any change in
Borrower's capital structure, except that (a) at any time
during the period commencing September 1, 2002 and ending
December 31, 2003, Borrower may purchase, retire, or redeem
its capital stock in an aggregate amount not to exceed
$5,000,000 and (b) at any time after December 31, 2003,
Borrower may purchase, retire, or redeem its capital stock in
an aggregate amount not to exceed the sum of (i) 25% of the
cumulative net income of Borrower for all fiscal quarters
ended after December 31, 2003 minus (ii) the cumulative amount
of cash dividends paid by Borrower on its capital stock after
December 31, 2003.
(e) Amendment to Section 9.7. Section 9.7 is amended and
restated to read as follows:
9.7 Dividends. Declare or pay any dividend on any
class of Borrower's capital stock, except dividends payable in
the form of its capital stock, except that at any time after
December 31, 2003, Borrower may declare and pay cash dividends
on its capital stock in an aggregate amount not to exceed the
sum of (i) 25% of the cumulative net income of Borrower for
all fiscal quarters ended after December 31, 2003 minus (ii)
the cumulative amount of Borrower's capital stock purchased,
retired, or redeemed by Borrower after December 31, 2003.
3. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not become effective until each of
the following conditions is fully and simultaneously satisfied:
(a) Delivery of Amendment. Borrower and Lender shall have
executed and delivered counterparts of this Amendment to each other;
(b) Corporate Authority. Lender shall have received such
evidence of corporate authority and action as Lender shall request
demonstrating that the execution, delivery and performance of this
Amendment has been duly authorized by Borrower;
(c) Amendment Fee. Lender shall have received payment of
an amendment fee in the amount of $15,000, which fee shall be deemed
fully earned when due and non-refundable when paid;
(d) Representations True; No Default. The representations of
Borrower as set forth in Article 7 of the Credit Agreement shall be
true on and as of the date of this Amendment with the same force and
effect as if made on and as of this date. No Event of Default and no
event which, with notice or lapse of time or both, would constitute an
Event of Default, shall have occurred and be continuing or will occur
as a result of the execution of this Amendment; and
(e) Other Documents. Lender shall have received such
other documents, instruments, and undertakings as Lender may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to
Lender that each of the representations and warranties set forth in Article 7 of
the Credit Agreement is true and correct in each case as if made on and as of
the date of this Amendment and Borrower expressly agrees that it shall be an
additional Event of Default under the Credit Agreement if any representation or
warranty made hereunder shall prove to have been incorrect in any material
respect when made.
5. NO FURTHER AMENDMENT. Except as expressly modified by this Agreement,
the Credit Agreement and the other Loan Documents shall remain unmodified and in
full force and effect and the parties hereby ratify their respective obligations
thereunder.
2
6. RESERVATION OF RIGHTS. Borrower acknowledges and agrees that the
execution and delivery by Bank of this Agreement shall not be deemed to create a
course of dealing or otherwise obligate Bank to forbear or execute similar
amendments under the same or similar circumstances in the future.
7. MISCELLANEOUS.
(a) This Agreement comprises the entire agreement of the
parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements, representations or commitments.
(b) This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same Agreement.
(c) This Agreement and the rights and obligations of the
parties hereto shall be construed and interpreted in accordance with
the internal laws of the State of Washington.
EXECUTED AND DELIVERED by the duly authorized officers of the parties
as of the date first above written.
Dated as of August 21, 2002.
Borrower: Bank:
USANA HEALTH SCIENCES, INC. BANK OF AMERICA, N.A.
By /s/ Xxxxxxx X. Xxxxxx By /s/ Xxxx X. Xxxxxxxx
------------------------------- -------------------------------------
Xxxxxxx X. Xxxxxx, SVP & CFO Xxxx X. Xxxxxxxx, Senior Vice President
3
