LIMITED WAIVER AND AMENDMENT NO. 4
This Limited Waiver and Amendment No. 4 (the "Agreement") is entered
into as of April 12, 2001 by and among:
Cybex International, Inc., a New York corporation, having a place of
business at 00 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "BORROWER");
Cybex Financial Corp., Eagle Performance Systems, Inc., General Medical
Equipment, Ltd., Lumex Bed Systems, Inc., Cybex Fitness Gerate Vertriebs
GmBH, and Tectrix Fitness Equipment, Inc. (individually, a "GUARANTOR" and
collectively, the "GUARANTORS");
The Lenders party to the Credit Agreement (defined below) (hereinafter
collectively, the "LENDERS")
First Union National Bank, as Administrative Agent for the Lenders
(hereinafter, in such capacity, the "ADMINISTRATIVE AGENT"), having a
principal place of business at One First Union Center, 000 Xxxxx Xxxxxxx
Xxxxxx, XX-0, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000;
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH:
1. BACKGROUND. On May 21, 1998, the Administrative Agent, the Lenders, the
Borrower and the Guarantors, among others, entered into a Credit Agreement,
pursuant to which the Lenders established, subject to the terms therein
contained, revolving credit, letter of credit and term loan facilities in
favor of the Borrower. The Credit Agreement was thereafter modified
pursuant to the terms of various amendments thereto (the Credit Agreement
as so amended shall hereinafter be referred to as the "CREDIT AGREEMENT").
The Borrower's Obligations to the Administrative Agent and the Lenders are
secured by perfected (x) security interests in and to all of the Borrower's
personal property, including, without limitation, all of the Borrower's
accounts, chattel paper, inventory, equipment, fixtures, general
intangibles, instruments, investment property, copyrights, trademarks, and
patents, and (y) mortgage interests in certain of the Borrower's real
estate, (all of the foregoing, collectively, the "COLLATERAL"). In
addition, the Guarantors have unconditionally guarantied the payment and
performance of the Borrower's Obligations (the "GUARANTIES") and to secure
their respective guaranties have granted the Administrative Agent for the
benefit of the Lenders perfected security interests in and to all of their
personal property, including, without limitation, all of their accounts,
chattel paper, inventory, equipment, fixtures, general intangibles,
instruments, investment
property, copyrights, trademarks, and patents (the "GUARANTORS'
COLLATERAL").
Various Events of Default have arisen under the Credit Agreement, and the
Borrower and the Guarantors have requested that the Administrative Agent
and the Lenders waive such Events of Default and further amend the Credit
Agreement, in each case on the terms set forth herein.
2. DEFINITIONS.
a. All capitalized terms used herein and not otherwise defined shall have
the same meaning herein as in the Credit Agreement.
b. "EXISTING DEFAULTS" means those Events of Defaults existing as of the
date hereof and described on SCHEDULE 1 hereto.
c. "LIMITED WAIVER PERIOD" means the period commencing on the date hereof
and ending May 1, 2002.
3. OUTSTANDING OBLIGATIONS.
a. The Borrower and the Guarantors each acknowledge and agree that, as
of April 12, 2001, they are jointly and severally obligated to the
Lenders as follows:
REVOLVING LOANS
Principal: $13,500,000.00
TERM LOAN
Principal: $16,750,000.00
b. In addition, the Borrower and Guarantors each acknowledge and agree that
they are jointly and severally obligated to the Issuing Lender and the
Lenders on account of the IRB Letter of Credit and the other Letters of
Credit listed on SCHEDULE 2 hereto, and any amounts due under the
Reimbursement Agreements relating thereto.
c. The Borrower and Guarantors each acknowledge and agree that they are
jointly and severally obligated to the Administrative Agent, the Issuing
Lender and the Lenders, as applicable, for Administrative Agent's Fees,
Commitment Fees, Letter of Credit Fees, Issuing Lender Fees, interest,
and costs and expenses,
including, without limitation, attorneys' fees, appraisal fees, and
commercial finance examination fees, all whether heretofore incurred,
accrued or now due or hereafter incurred, accruing or becoming due. The
Administrative Agent shall furnish the Borrower with an estimate of all
such third party costs and expenses as soon as reasonably practicable.
d. The Borrower and the Guarantors each further acknowledge and agree that
they do not have any offsets, defenses, or counterclaims against the
Administrative Agent, the Issuing Lender, or the Lenders with respect to
the Credit Agreement, the Guaranties, any other Credit Documents, or
otherwise. To the extent that any such offsets, defenses or
counterclaims may exist, the Borrower and each Guarantor hereby WAIVES
and RELEASES the Administrative Agent, the Issuing Lender, the Lenders
and their respective officers, representatives, counsel, trustees, and
directors from any and all actions, causes of action, claims, demands,
damages, and liabilities of whatever kind or nature, in law or in
equity, now known or unknown, suspected or unsuspected. The Borrower and
each Guarantor shall execute and deliver to the Administrative Agent,
the Issuing Lender and each Lender such releases as the Administrative
Agent, the Issuing Lender or any Lender may request to confirm the
foregoing.
e. The Borrower and each Guarantor hereby ratifies and confirms that the
Obligations (as modified hereby) are, and will continue to be, secured
by the Collateral and the Guarantor Collateral.
4. LIMITED WAIVER. The Administrative Agent and the Lenders hereby waive the
Existing Defaults during the Limited Waiver Period only. The waiver provided
herein is a one-time waiver of the Existing Defaults and is not a continuing
waiver or a waiver of any other provisions of the Credit Agreement and other
Credit Documents. Nothing contained herein shall (a) obligate the
Administrative Agent or the Lenders to extend the limited waiver provided
herein beyond the Limited Waiver Period (in that regard, upon the expiration
of the Limited Waiver Period, the Existing Defaults will be immediately
reinstated and the Administrative Agent and the Lenders may exercise any or
all of their rights and remedies on account thereof), or (b) limit any other
rights of the Administrative Agent, the Issuing Lender, or the Lenders
during the Limited Waiver Period upon the occurrence of any other Event of
Default (the Administrative Agent, the Issuing Lender and the Lenders
reserving the right to take such action, at such times, on account thereof
as they deem appropriate).
5. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby amended as
follows:
a. Amendments to Section 1. The provisions of Section 1 of the Credit
Agreement are hereby amended as follows:
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i. Applicable Commitment Fee Percentage. The definition of "Applicable
Commitment Fee Percentage" is hereby deleted in its entirety and the
following substituted in its stead:
"Applicable Commitment Fee Percentage" means one-half of one
percent (0.50%) per annum.
ii. Applicable Interest Rate Percentage. The definition of "Applicable
Interest Rate Percentage" is hereby deleted in its entirety and the
following substituted in its stead:
"Applicable Interest Rate Percentage" means the following percentages
for the Loans:
Nature of Loan Applicable Interest Rate Applicable
Percentage Through Interest Rate
September 30, 2001 Percentage From
and After October
1, 2001
---------------------------------------------------------------------------------------------
Revolving Loans (excluding Overadvance) 1.00% 3.00%
---------------------------------------------------------------------------------------------
Overadvance Portion of Revolving Loans 2.00% 3.00%
---------------------------------------------------------------------------------------------
Term Loan 1.50% 3.00%
---------------------------------------------------------------------------------------------
For purposes of calculating the Applicable Interest Rate Percentage of
the Revolving Loans, the Overadvance shall be deemed to be the first
amounts advanced and the last amounts repaid.
iii. Authorized Signatory. The definition of "Authorized Signatory" is hereby
amended by deleting the names "Xxxxxxx X. Xxxxxx" and "Xxxxx Xxxxxx" and
substituting the names "Xxxx Xxxxxx" and Xxxx Xxxxxxxxx" respectively in
their stead.
iv. EBITDA. The definition of "EBITDA" is hereby deleted in its entirety and
the following substituted in its stead:
"EBITDA": of any Person for any period, net income for such
period, plus (i) Interest Expense to the extent deducted in
determining such net income, plus (ii) depreciation,
amortization
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and all other non-cash charges deducted in determining such
net income, all determined in accordance with GAAP
consistently applied, plus (iii) Restructuring Costs, minus
(iv) extraordinary non-cash income (including, for the
purposes hereof, gain from the sale of assets in the
ordinary course of business, such as obsolete equipment),
plus (v) income taxes to the extent deducted to determine
net income, plus (vi) non-cash purchase accounting
adjustments and losses from the sale of assets in the
ordinary course of business, such as obsolete equipment).
v. Excess Cash Flow. The definition of "Excess Cash Flow" is hereby deleted in
its entirety and the following substituted in its stead:
"Excess Cash Flow": with respect to any fiscal quarter of
the Borrower and Subsidiaries on a consolidated basis, an
amount equal to (i) Consolidated EBITDA for such period,
minus (ii) Consolidated Capital Expenditures for such
period, minus (iii) Consolidated Interest Expense for such
period, minus (iv) taxes actually paid during such period,
minus (v) principal payments on Consolidated Total Funded
Debt (other than voluntary or mandatory prepayments) minus
(vi) any increase in net working capital, minus (vii) any
earn-out payments paid to the Seller pursuant to Section
2(a) of the Purchase Agreement, minus (viii) Restructuring
Costs..
vi. Interest Payment Date. The definition of "Interest Payment Date" is hereby
amended by deleting clause (a) thereof and substituting the following in its
stead:
(a) as to any Base Rate Loan, the last Business Day of each
calendar month to occur while such Loan is outstanding.
vii. Leverage Ratio. The definition of "Leverage Ratio" is hereby deleted in
its entirety and the following substituted in its stead:
"Leverage Ratio": as of the last day of any fiscal quarter,
the ratio (x) of Consolidated Total Funded Debt as of the
last day of such fiscal quarter to (y) pro forma
Consolidated EBITDA for the subject fiscal year determined
by annualizing the actual Consolidated EBITDA of the subject
fiscal year to date.
viii. Net Sales Proceeds. The definition of "Net Sales Proceeds" is hereby
deleted in its entirety and the following substituted in its stead:
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"Net Sales Proceeds": the gross cash proceeds (including
cash by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when
received) received from the sale, lease, conveyance,
disposition or other transfer of assets or from a Recovery
Event, net of (i) reasonable transaction costs payable to
third parties, and (ii) Indebtedness (other than
Indebtedness of the Lenders pursuant to this Agreement and
the other Credit Documents) which is secured by first
priority Liens on the assets which are the subject of such
event to the extent such Indebtedness is paid with a portion
of the proceeds therefrom.
ix. Termination Date. The definition of "Termination Date" is hereby deleted
in its entirety and the following substituted in its stead:
"Termination Date": The earlier of (a) May 1, 2002, or (b)
the date on which the Revolving Commitments shall terminate
in accordance with the provisions of this Agreement.
x. New Definitions: The following new definitions are hereby inserted into
Section 1 of the Credit Agreement in appropriate alphabetical order:
(1) "Accounts": "Accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment (whether or not
earned by performance): for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of; for services
rendered or to be rendered; arising out of the use of a credit or
charge card or information contained on or used with that card; and
also all reclaimed, returned, rejected or repossessed Inventory (if
any) the sale of which gave rise to any Account.
(2) "Borrowing Base": As of any date of determination, an amount equal to
the sum of (a) fifty percent (50%) (or such lesser percentage as the
Administrative Agent may establish from time to time to reflect its
review of the results of any commercial finance examination and other
factors as it deems appropriate which in the judgment of the
Administrative Agent indicates a deterioration of the Borrower's
financial condition or Inventory) of the lesser of cost or market value
(determined in accordance with GAAP) of the Borrower's Eligible
Inventory, minus such reserves as the Administrative Agent may
reasonably establish, plus (b) seventy-five percent (75%) (or such
lesser percentage as the Administrative Agent may establish from time
to time to reflect its review of the results of any commercial finance
examination and other factors as it deems appropriate which in the
judgment of the Administrative
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Agent indicates a deterioration of the Borrower's financial condition
or Accounts) of the face amount of the Borrower's Eligible Accounts,
plus (c) the Overadvance, plus (d) the Temporary A/R O/A.
(3) "Eligible Accounts": Those of the Borrower's Accounts in which the
Administrative Agent and the Lenders have a valid and perfected first
priority security interest and which the Administrative Agent deems
eligible for borrowing, but excluding, without limitation, each of the
following Accounts:
(a) Any Account which has been outstanding for more
than ninety (90) days from its invoice date.
(b) Any Account which is owed by any account debtor if
twenty-five percent (25%) or more of the Accounts due from
such account debtor exceed the limitations on eligibility
described in Subparagraph (a), above.
(c) Any Account to the extent that the subject account
debtor claims any offset or contra or is otherwise disputed.
(d) Any Account as to which the principal place of
business of the subject account debtor is not within the
United States of America unless such Account is supported by
a letter of credit from a financial institution and
otherwise on terms acceptable to the Administrative Agent..
(e) Any Account which arises out of any sale made on a
basis other than upon terms usual to the business of the
Borrower.
(f) Any Account which is owed by any Subsidiary or
other Affiliate of the Borrower.
(g) Any Account as to which the account debtor has
filed a petition for relief under the Bankruptcy Code or
made an assignment for the benefit of creditors; or if any
petition or other application for relief under the
Bankruptcy Code has been filed against the account debtor;
or if the account debtor has failed, suspended its business
operations, become insolvent, or suffered a receiver or
trustee to be appointed for any of its assets or affairs; or
if the account debtor is generally not paying its debts as
they become due.
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(h) Any Account which is on a xxxx-and-hold, sale and
return, sale on approval, consignment, or any other
repurchase or return basis.
(i) Any Account as to which the Administrative Agent
believes the collection of such Account is insecure or that
such Account may not be paid by reason of the account
debtor's financial inability to pay.
(j) Any Account as to which the account debtor is the
United States of America or any department, agency, or
instrumentality thereof.
(4) "Eligible Inventory": Such of the Borrower's inventory (other than
packaging, advertising, shipping materials, supplies, and work-in-process)
in which the Administrative Agent and the Lenders have a valid and
perfected first priority security interest, which is not obsolete or
unmerchantable, and which the Administrative Agent from time to time deems
eligible for borrowing in its reasonable discretion.
(5) "Inventory": "Inventory" as defined in the UCC and also all: (a) goods
which are leased by a Person as lessor; are held by a Person for sale or
lease or to be furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw materials, work in
process, or materials used or consumed in a business; and (b) packaging,
advertising, and shipping materials related to any of the foregoing.
(6) "Overadvance": Subject to reduction as required under Section 2.7(b)(ii)
hereof, the following amounts for the periods indicated:
Period Overadvance
-------------------------------------------------------------------------
Through December 30, 2001 $6,578,081.00
-------------------------------------------------------------------------
December 31, 2001 through March 30, 2002 $5,578,081.00
-------------------------------------------------------------------------
March 31, 2002 through April 30, 2002 $4,578,081.00
-------------------------------------------------------------------------
From and after May 1, 2002 $ 0
-------------------------------------------------------------------------
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(7) "Restructuring Costs": Costs and expenses incurred by the Borrower in
connection with or pursuant to Limited Waiver and Amendment No. 4 for
amendment fees, appraisal fees, consultant fees, commercial finance
examination fees, and attorney's fees.
(8) "Temporary A/R O/A": At any time of calculation, an amount equal to the
lesser of (a) $2,000,000.00 or (b) (i) the difference between (A)
$8,600,000.00 and (B) the "Advances against Eligible Accounts" reflected on
Line 5 of the Borrowing Base Certificate minus (ii) any increase after
March 31, 2001 in the "Advances against Eligible Accounts" reflected on
Line 5 of the Borrowing Base Certificate, provided that any reduction in
the Temporary A/R O/A from that existing as of March 31, 2001 by virtue of
an increase after March 31, 2001 in the "Advances against Eligible
Accounts" shall be a permanent reduction and the Temporary A/R O/A shall
not thereafter be increased.
(9) "UCC": The Uniform Commercial Code in effect from time to time under the
laws of the State of New Jersey.
b. Amendments to Section 2. The provisions of Section 2 of the Credit
Agreement are hereby amended as follows:
i. The provisions of Section 2.1(a) are hereby deleted in their entirety and
the following substituted in their stead:
(a) Commencing April 24, 2001 and thereafter during the
remainder of the Commitment Period, subject to the terms and
conditions hereof, each Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to
time for the purposes hereinafter set forth; provided, however,
that (i) with regard to each Lender individually, the sum of such
Lender's share of outstanding Revolving Loans plus such Lender's
LOC Commitment Percentage of LOC Obligations shall not exceed
such Lender's Revolving Committed Amount, and (ii)with regard to
the Lenders collectively, the sum of the aggregate amount of
outstanding Revolving Loans plus LOC Obligations shall not exceed
the lesser of (x) $20,125,530.00 (as such aggregate maximum
amount may be reduced from time to time as provided herein, the
"Revolving Committed Amount"), or (y) the Borrowing Base.
Revolving Loans may be repaid and reborrowed in accordance with
the provisions hereof.
ii. The provisions of Section 2.1(c) are hereby amended by adding the
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following additional sentences at the beginning thereof :
The principal balance of the Revolving Loans shall be repaid
on April 12, 2001 by an amount equal to the Borrower's then
cash and cash equivalents. The amounts so repaid may,
subject to the terms hereof, be reborrowed. Thereafter,
commencing April 24, 2001, the Borrower shall cause all
amounts deposited in the accounts described in Section 5.20
hereof (other than no more than $50,000.00 which may remain
in the deposit account established with any institution
which has executed and delivered a blocked account agreement
with the Administrative Agent pursuant to said Section 5.20)
to be transferred daily to such account as the
Administrative Agent may direct for application to the then
outstanding Revolving Loans; any amounts so applied to the
Revolving Loans may, subject to the other terms of this
Agreement, be reborrowed.
iii. Elimination of LIBOR Rate Loans. The Credit Agreement is hereby amended to
provide that from and after the date hereof, the Borrower shall not be
entitled to elect to have any portion of the Loans bear interest by
reference to the LIBOR Rate. Rather all Loans shall be Base Rate Loans.
Any existing LIBOR Rate Loans shall immediately convert to Base Rate Loans
and the Borrower shall pay `breakage costs", in accordance with the
provisions of Section 2.15 of the Credit Agreement, for any Loans which
are converted to Base Rate Loans on a day other than the last day of an
Interest Period.
iv. The provisions of Section 2.2(b) with respect to periods after March 31,
2001 are hereby deleted in their entirety and the following substituted in
their stead:
-----------------------------------------------------------------------------------------
Payment Date Principal Payment
-----------------------------------------------------------------------------------------
April 30, 2001 and the last day of each month $416,667.00
thereafter until the Termination Date
Termination Date Entire Outstanding Balance
-----------------------------------------------------------------------------------------
v. The provisions of Section 2.3(a) are hereby amended
(1) by deleting clause (i) of the proviso and substituting the following in its
stead:
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(i) the aggregate amount of LOC Obligations shall not exceed
$5,625,530.06 (the "LOC Committed Amount")
(2) by deleting clause (ii)
of the proviso and substituting the following in its stead:
(ii) the sum of the aggregate amount of Revolving Loans plus
LOC Obligations shall not at any time exceed the lesser of
the Revolving Committed Amount or the Borrowing Base then in
effect;
vi. The provisions of Section 2.6(b) are hereby deleted in their entirety and
the following substituted in their stead:
(b) Upon the occurrence of an Event of Default, at the
election of the Lenders, all Obligations shall bear interest
at a rate per annum which is two percent (2%) in excess of
the rate which otherwise would be applicable thereto (as
well as after and before judgment).
vii. The provisions of Section 2.7(a) are hereby amended by deleting the
proviso in the first sentence thereto and substituting the following in
its stead:
provided that after giving effect to any such voluntary
reduction, the sum of the Revolving Loans and LOC
Obligations then outstanding shall not exceed the lesser of
the Aggregate Revolving Committed Amount, as reduced or the
Borrowing Base then in effect.
viii. The provisions of Section 2.7(b)(i) are hereby deleted in their entirety
and the following substituted in their stead:
(i) Net Sales Proceeds. The Borrower shall make a
prepayment of the Loans in an amount equal to 100% of the
Net Sales Proceeds
from Asset Dispositions. Any such required prepayment of
Net Sales Proceeds shall be made on the date of receipt
thereof by the Borrower and shall be applied, first, to the
outstanding principal balance on the Term Loan (in inverse
order of maturity) and second, to the outstanding principal
balance of the Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations.
ix. The provisions of Section 2.7(b)(ii) are hereby deleted in their entirety
and the following substituted in their stead:
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(ii) Excess Cash Flow. On the date 60 days after the end of
each fiscal quarter, commencing with the fiscal quarter
ending June 30, 2001, the Borrower shall make a prepayment
of the Loans in an amount equal to one hundred percent
(100%) of Excess Cash Flow in excess of $250,000.00 for the
immediately preceding fiscal quarter. Any such prepayment
of Excess Cash Flow shall be applied FIRST to the
Overadvance in permanent reduction thereof, and SECOND,
after the Overadvance has been repaid in full to the
outstanding principal balance of the Term Loan (in inverse
order of maturity).
x. The provisions of Section 2.7(b)(iii) are hereby deleted in their entirety
and the following substituted in their stead:
(iii) Debt Issuance; Equity Transaction. Immediately upon
receipt by the Borrower of net cash proceeds from any Debt
Issuance (other than any Debt Issuance relating to
Indebtedness permitted by Section 6.1) or Equity
Transaction (other than any Equity Transaction relating to
the exercise of employee stock options in the ordinary
course of business), the Borrower shall make a prepayment of
the Loans in an amount equal to one hundred percent (100%)
of such proceeds. Any such prepayments shall be applied,
first, to the outstanding principal balance on the Term Loan
(in inverse order of maturity) and second, to the
outstanding principal balance of the Revolving Loans and
(after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations.
xi. The first sentence of Section 2.7(b)(iv) are hereby deleted in their
entirety and the following substituted in their stead:
If, at any time, the aggregate amount of Revolving Loans and
LOC Obligations then outstanding shall exceed the lesser of
the Aggregate Revolving Committed Amount, as reduced from
time to time or the Borrowing Base then in effect, the
Borrower shall immediately make payment on the Revolving
Loans in an amount sufficient to eliminate the excess and
(after all Revolving Loans have been repaid) cash
collateralize the LOC Obligations, in an amount sufficient
to eliminate such excess.
xii. Section 2.7(b) is hereby amended by adding the following new subsection:
(v) The aggregate Revolving Committed Amount shall be
reduced by the following amounts at the following times:
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Date Reduction
----------------------------------------------------------------------------------------
December 31, 2001 $1,000,000.00
----------------------------------------------------------------------------------------
March 31, 2002 $1,000,000.00
----------------------------------------------------------------------------------------
April 30, 2002 $1,000,000.00
----------------------------------------------------------------------------------------
xiii. The provisions of Section 2.8(a) are hereby amended
(1) by deleting the word "quarter" wherever it appears in the first
sentence and substituting the word "month" in its stead.
(b) by deleting the last sentence in its entirety and substituting the
following therefor:
The Commitment Fee shall be payable monthly in arrears
on the last Business Day of each month and on the
Termination Date.
xiv. The provisions of Section 2.8(b) are hereby deleted in their entirety and
the following substituted in their stead:
(b) Letter of Credit Fee. In consideration of the LOC
Commitments, the Borrower agrees to pay to the Agent (for
the ratable benefit of the Lenders) a fee (the "Letter of
Credit Fee") equal to three and one-half percent (3.50%) per
annum calculated on the average daily maximum amount
available to be drawn under each Letter of Credit from the
date of issuance to the date of expiration thereof. The
Agent shall promptly pay to the Lenders their pro rata
portion of the Letter of Credit Fee. The Letter of Credit
Fee shall be payable monthly in arrears on the last Business
Day of each month and on the Termination Date.
xv. The provisions of Section 2.8(c) are hereby amended by deleting the second
sentence thereof in its entirety and substituting the following in its
stead:
The fronting fee shall be payable monthly in arrears on the
last Business Day of each month and on the Termination Date.
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xvi. The provisions of Section 2.8 are hereby amended by adding the following
new subsection:
(d) Amendment Fees. On or before April 12, 2001, in
consideration of the Lenders' entering into the Limited
Waiver and Amendment of that date, the Borrower shall pay to
the Administrative Agent for the ratable benefit of the
Lenders an amendment fee in the sum of $90,000.00. The
amendment fee is fully earned and is not subject to refund
or rebate under any circumstances. In addition, on October
1, 2001, unless all Obligations have been repaid in full,
all LOC Obligations cash collateralized to the satisfaction
of the Administrative Agent, and all Commitments of the
Lenders terminated, the Borrower shall pay a supplemental
amendment fee to the Administrative Agent for the ratable
benefit of the Lenders in an amount equal to two percent
(2.00%) of the sum of the Aggregate Revolving Committed
Amount and the principal balance of the Term Loan
immediately, in each case determined after giving effect to
the Limited Waiver and Amendment No. 4, provided that if the
Lenders shall have received a prepayment of the Term Loan in
the principal amount of at least $10,000,000.00 (in addition
to regularly scheduled installments) prior to October 1,
2001, the supplemental amendment fee shall be in an amount
equal to two percent (2.00%) of the sum of the Aggregate
Revolving Committed Amount and the principal balance of the
Term Loan, in each case as in effect on October 1, 2001. The
supplemental amendment fee is also fully earned and shall
not be subject to refund or rebate under any circumstances
except as provided in the preceding sentence.
c. Amendments to Section 5. The provisions of Section 5 of the Credit
Agreement are hereby amended as follows:
i. The provisions of Section 5.1(c) are hereby deleted in their entirety
and the following substituted in their stead:
(c) Annual Budget Plan. As soon as available, but in any
event no more than 30 days prior to the end of each fiscal
year, a copy of the detailed annual budget or plan for the
next fiscal year set out by fiscal month, in form and detail
reasonably acceptable to the Administrative Agent and the
Majority Lenders, together with a summary of the material
assumptions made in the preparation of the budget or plan;
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ii. The provisions of Section 5.1 are hereby amended by adding the following
new subparagraphs:
(d) Monthly Statements. On or before the 15th day of each
month, (i) a balance sheet, income statement, and cash flow
statement for the immediately preceding month, prepared on a
consolidated basis, each of which shall include a comparison
of the actual results to the Borrower's budgeted
projections, and (ii) an accounts receivable aging and
inventory report.
(e) Weekly Projections. On or before Wednesday of each
week, a rolling weekly cash flow projection, prepared on a
consolidated basis, for the subsequent thirteen week period.
(f) Borrowing Base Certificates. On or before Wednesday of
each week, a Borrowing Base Certificate satisfactory in form
and substance to the Administrative Agent as of the end of
the immediately preceding week.
iii. The provisions of Section 5.1 are hereby amended by adding the following
at the end thereof:
All financial information furnished pursuant to this Section
5.1 or otherwise under this Agreement shall be certified by
an Authorized Signatory as being true, accurate, and
complete.
iv. The provisions of Section 5.2(b) are hereby amended be adding the words
"and 5.1(d)" after the words "and 5.1(b)" in the second line thereof.
v. The provisions of Section 5.6 are hereby amended by deleting the words "(at
the Borrower's expense after the occurrence of a Default of Event of
Default)" in the fourth and fifth lines thereof and substituting the words
"(at the Borrower's expense whether or not a Default of Event of Default
has occurred)" in their stead. The Administrative Agent shall furnish the
Borrower with an estimate of all such costs and expenses as soon as
reasonably practicable prior to the incurrence thereof.
vi. The provisions of Section 5.8 are hereby amended by adding the following
new subparagraph:
(d) Permit the Administrative Agent and the Lenders to
undertake environmental site assessments of the Borrower's
properties (at the
15
Borrower's expense whether or not a Default of Event of
Default has occurred) at such times, with such frequency
and, by Persons acceptable to the Administrative Agent and
the Lenders; and to reasonably cooperate with, and furnish
assistance to such Persons performing such site assessments.
vii. The provisions of Section 5.9 are hereby deleted in their entirety for all
periods from and after December 31, 2000 and the following substituted in
their stead:
(a) Leverage Ratio. The Borrower will maintain, as of the end of
each fiscal quarter shown, a Leverage Ratio of not greater than:
Period Ratio
-----------------------------------------------------------------------
March 31, 2001 4.75:1.0
-----------------------------------------------------------------------
June 30, 2001 4.50:1.0
-----------------------------------------------------------------------
September 30, 2001 4.25:1.0
-----------------------------------------------------------------------
December 31, 2001 2.50:1.0
-----------------------------------------------------------------------
The required Leverage Ratios for quarters ending after December
31, 2001 shall be established by the Administrative Agent based
upon the annual budget to be furnished pursuant to Section 5.1(c)
hereof.
(b) Consolidated EBITDA. The Borrower will achieve Consolidated
EBITDA, calculated on a cumulative basis, of at least the
following amounts for the periods indicated:
Period Minimum Cumulative
Consolidated EBITDA
------------------------------------------------------------------------
Quarter ending March 31, 2001 $ 2,200,000
------------------------------------------------------------------------
Two quarters ending June 30, 2001 $ 4,075,000
------------------------------------------------------------------------
Three quarters ending September 30, 2001 $ 6,165,000
------------------------------------------------------------------------
Four quarters ending December 31, 2001 $13,020,000
------------------------------------------------------------------------
Five quarters ending March 31, 2002 $15,000,000
------------------------------------------------------------------------
16
(c) Capital Expenditures. The Borrower and its Subsidiaries
shall not make Capital Expenditures, calculated on a cumulative
basis, in excess of the following amounts for the periods
indicated:
Period Maximum Cumulative
Capital Expenditures
------------------------------------------------------------------------
Quarter ending March 31, 2001 $ 250,000
------------------------------------------------------------------------
Two quarters ending June 30, 2001 $ 750,000
------------------------------------------------------------------------
Three quarters ending September 30, 2001 $1,250,000
------------------------------------------------------------------------
Four quarters ending December 31, 2001 $2,500,000
------------------------------------------------------------------------
Five quarters ending March 31, 2002 $3,000,000
------------------------------------------------------------------------
viii. The provisions of Section 5.13 are hereby amended by deleting the words
"(except with respect to the Medway Facility)" in the last sentence
thereof.
ix. The provisions of Section 5.15 are hereby amended by adding the following
at the end thereof:
Without limiting the foregoing, on or before April 23, 2001, the
Borrower and the Guarantors shall (a) deliver, or cause to be
delivered, to the Administrative Agent such landlord's and
warehouseman's waivers as the Administrative Agent may request,
and (b) cause to be filed appropriate UCC financing statements at
all locations where goods of the Borrower and/or Guarantors are
17
on consignment. The Borrower warrants and represents that all
locations of the Borrower and Guarantors or where any property of
the Borrower or Guarantors is located are set forth on Exhibit A
to the Limited Waiver and Amendment No. 4.
x. The provisions of Section 5 are hereby amended by adding the following new
sections:
5.18 ENGAGEMENT OF CONSULTANTS.
(a) On or before April 12, 2001, engage a business
consultant reasonably acceptable to the Lenders to provide
financial and business assistance to the Borrower and
Guarantors (including, without limitation to review, and
assist the Borrower in the preparation of, its business
plan). The Borrower shall furnish the Administrative Agent
with a copy of the engagement letter with such Person and
the terms and scope of employment of such Person shall be
reasonably acceptable to the Lenders. Without limiting the
foregoing, the engagement shall authorize the manager or
consultant to communicate directly with the Lenders and to
furnish the Lenders with such information as they may
reasonably request.
(b) Without limiting the provisions of Sections 5.6,
5.18(a), and 9.5 of the Credit Agreement, the Administrative
Agent and the Lenders may engage a consultant (at the
Borrower's expense whether or not a Default of Event of
Default has occurred) to assist the Administrative Agent and
the Lenders in the review of the Borrower's and the
Guarantors' business plan, projections, results of
operations and such other matters as the Administrative
Agent and the Lenders may require. The Borrower shall, and
shall cause the Guarantors to, reasonably cooperate with any
such consultant.
5.19 APPRAISALS.
Permit the Administrative Agent and the Lenders to undertake
appraisals of the Borrower's properties (at the Borrower's
expense whether or not a Default or Event of Default has
occurred), at such times, with such frequency and, by
Persons acceptable to the Administrative Agent and the
Lenders; and to reasonably cooperate with, and furnish
assistance to such Persons performing such appraisals.
18
5.20 CASH MANAGEMENT
Maintain all deposit accounts of the Borrower and the
Guarantors solely with a Lender or with a financial
institution which has executed and delivered to the
Administrative Agent a blocked account agreement the terms
of which are satisfactory to the Administrative Agent (such
blocked account agreement to permit an amount not to exceed
$50,000.00 to be maintained in each such blocked account);
and deposit, or cause to be deposited, all cash receipts
solely into an account maintained in accordance with the
provisions of this Section; provided that an Event of
Default shall not be deemed to have arisen hereunder by
virtue of the Borrower's and the Guarantors' failure to have
complied with the foregoing requirements if, (x) by April
30, 2001, the Borrower and the Guarantors shall have either
closed all deposit accounts not maintained with a Lender
and/or delivered such blocked account agreements to the
Administrative Agent, and (y) pending the satisfaction of
the provisions of clause (x), the amounts maintained in each
deposit account not maintained with a Lender do not exceed
$50,000.00 at any time. Notwithstanding the foregoing, the
Borrower may maintain a payroll account (specifically so
designated and to be used for no other purpose) for its
Owatonna, Minnesota facility and may maintain a balance
therein for the then current payroll expense.
d. Amendments to Section 6. The provisions of Section 6 of the Credit
Agreement are hereby amended as follows:
i. The provisions of Section 6.1 of the Credit Agreement are hereby
amended:
(1) to add the words "except that no such Indebtedness may be incurred
from April 12, 2001 through the Termination Date" at the end of
clauses (g) and (h) thereof.
(2) to delete the provisions of clause (d) thereof and substitute the
following in its stead:
(d) Capital Leases for the financing of equipment which,
together with other Capital Expenditures made or incurred,
do not result in a breach of the provisions of Section
5.9(c) hereof.
ii. The provisions of Section 6.2 of the Credit Agreement are hereby
amended to add the words "provided that no Permitted Liens pursuant to
clauses (iii) or (x) of the definition of Permitted Liens may be
granted or
19
arise from April 12, 2001 through the Termination Date" at the end
thereof.
iii. The provisions of Section 6.5(a) of the Credit Agreement are hereby
amended to add the words "provided that no transaction described in
clauses (a)(ii) or (a) (iv) may be consummated or agreed to from April
12, 2001 through the Termination Date" immediately prior to the last
sentence of Section 6.5(a).
iv. The provisions of Section 6.5(b) of the Credit Agreement are
hereby amended to add the words "provided that no transaction
described in clauses (b)(iii) or (b)(v) may be consummated or agreed
to from April 12, 2001 through the Termination Date" at the end of
said Section 6.5(b).
v. The provisions of Section 6.11 are hereby amended by deleting
clause (iii) in its entirety.
e. Miscellaneous Amendments.
i. The provisions of Section 8.9 are hereby amended to delete (A) the
words "which successor agent shall be approved by the Borrower" in the
fifth and sixth lines thereof, and (B) the words "with the approval of
the Borrower" in the eighth line thereof.
ii. The provisions of Section 9.2 are hereby amended to modify the
Person to whom notices are to be furnished at the Administrative Agent
to read:
Attn: Xxx Xxxxxxxx
Telecopier:(000) 000-0000
Telephone: (000) 000-0000
iii. The provisions of Section 9.5 are hereby amended to delete the words
"in an amount not to exceed $40,000" at the end of subparagraph (a)
thereof.
iv. The provisions of Section 9.6(c) are hereby amended to delete the
words "and, so long as no Event of Default has occurred and is
continuing, with the consent of the Borrower" in the third fourth
lines thereof.
v. Schedule 2.1(a) is hereby deleted in its entirety and a new
Schedule 2.1(a) reflecting the reduced Commitments of the Lenders
shall be substituted in its stead.
6. CONDITIONS TO EFFECTIVENESS. This Limited Waiver and Amendment No. 4shall
not be effective until each of the following conditions precedent have been
fulfilled to the
20
satisfaction of the Administrative Agent and the Lenders:
a. This Limited Waiver and Amendment No. 4 shall have been duly executed and
delivered by the respective parties hereto and shall be in form and
substance satisfactory to the Administrative Agent and each of the Lenders.
b. All action on the part of the Borrower and each Guarantor necessary for the
valid execution, delivery and performance by the Borrower and each Guarantor
of this Limited Waiver and Amendment No. 4 shall have been duly and
effectively taken and evidence thereof satisfactory to the Administrative
Agent and the Lenders shall have been provided to the Administrative Agent
and each of the Lenders.
c. The Borrower shall have paid to the Administrative Agent and Lenders all
expenses (including reasonable attorneys fees, appraisal fees, environmental
site assessment fees, and commercial finance examination fees) and other
amounts then due and owing pursuant to this Limited Waiver and Amendment No.
4 and the Credit Documents for which invoices have been presented as of the
date of execution hereof.
d. The Administrative Agent shall have received, and there shall have been
filed and recorded, a mortgage or deed of trust on the Borrower's real
property in Owatonna, Minnesota granting a first priority Lien thereon to
secure the Obligations, in form and substance satisfactory to the
Administrative Agent.
e. Except for the Existing Defaults, no Default or Event of Default shall have
occurred and be continuing.
f. The Borrower and the Guarantors shall have provided such additional
instruments and documents to the Administrative Agent and the Lenders as the
Administrative Agent and the Administrative Agent's counsel may have
reasonably requested.
7. GENERAL.
a. This Limited Waiver and Amendment No. 4 shall be binding upon the Borrower
and the Guarantors and their respective successors and assigns and shall
enure to the benefit of the Administrative Agent, the Lenders, and their
respective successors and assigns.
b. Any determination that any provision of this Limited Waiver and Amendment
No. 4 or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Limited Waiver
and Amendment No. 4.
21
c. No delay or omission by the Administrative Agent or any Lender in exercising
or enforcing any of its rights and remedies shall operate as, or constitute,
a waiver thereof. No waiver by the Administrative Agent or any Lender of any
of its rights and remedies on any one occasion shall be deemed a waiver on
any subsequent occasion, nor shall it be deemed a continuing waiver.
d. This Limited Waiver and Amendment No. 4 and all other documents,
instruments, and agreements executed in connection herewith incorporate all
discussions and negotiations among the Borrower, the Guarantors, the
Administrative Agent and the Lenders, either express or implied, concerning
the matters included herein and in such other instruments, any custom,
usage, or course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings shall limit,
modify, or otherwise affect the provisions hereof. No modification,
amendment, or waiver of any provision of this Limited Waiver and Amendment
No. 4 or of any provision of any other agreement between the Borrower, the
Guarantors, the Administrative Agent or any Lender shall be effective unless
executed in writing by the party to be charged with such modification,
amendment and waiver.
e. Except as modified hereby, all terms and conditions of the Credit Agreement
and the other Credit Documents remain in full force and effect and the
Borrower and Guarantors shall continue to comply therewith.
f. This Limited Waiver and Amendment No. 4 shall be deemed to constitute a
"Credit Document" for all purposes under the Credit Agreement.
g. The Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Administrative Agent and the
Lenders, in entering into this Limited Waiver and Amendment No. 4, are
relying thereon. THE BORROWER AND EACH GUARANTOR, TO THE EXTENT OTHERWISE
ENTITLED THERETO, HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF
THE BORROWER OR ANY SUCH GUARANTOR TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE ADMINISTRATIVE AGENT OR ANY LENDER IS OR BECOMES A
PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
ADMINISTRATIVE AGENT OR ANY LENDER OR IN WHICH THE ADMINISTRATIVE AGENT OR
ANY LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES
OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE BORROWER, ANY
GUARANTOR OR ANY SUCH PERSON AND THE ADMINISTRATIVE AGENT OR ANY LENDER.
h. The Borrower and each Guarantor shall execute such instruments and documents
22
as the Administrative Agent and the Lenders may from time to time request in
connection with the Credit Agreement and the other Credit Documents, this
Agreement and the arrangements contemplated hereby.
It is intended that this Agreement take effect as a sealed instrument.
CYBEX INTERNATIONAL, INC.
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
EAGLE PERFORMANCE SYSTEMS, INC.
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
GENERAL MEDICAL EQUIPMENT, LTD.
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
LUMEX BED SYSTEMS, INC.
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
23
CYBEX FITNESS GERATE VERTRIEBS, GMBH
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
TECTRIX FITNESS EQUIPMENT, INC.
By s/ Xxxx Xxxxxxxxx
---------------------------
Print Name: Xxxx Xxxxxxxxx
--------------------------
Title: Chairman
---------------------------------
AGREED AND ACCEPTED BY
FIRST UNION NATIONAL BANK
By: s/ Xxx X. Xxxxxxxx
------------------
Print Name: Xxx X. Xxxxxxxx
-----------------
Title: Senior Vice President
----------------------
FLEET NATIONAL BANK
By: s/ Xxxxx X. Xxxxx
------------------------
Print Name: Xxxxx X. Xxxxx
---------------
Title: Vice President
-----------------
24
FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT
By: s/ Xxx X. Xxxxxxxx
---------------------
Print Name: Xxx X. Xxxxxxxx
--------------------
Title: Senior Vice President
---------------------
25
SCHEDULE 1
Existing Events of Default
Failure to comply with Sections 5.9(a), 5.9(b), and 5.9(c) of the Credit
Agreement as of December 31, 2000.
26
SCHEDULE 2
Existing Letters of Credit
Letter of Credit in the amount of $2,772,106.00
Letter of Credit in the amount of $2,553,424.06
27
