SIXTH AMENDMENT AND LIMITED WAIVER WITH RESPECT TO
CREDIT AGREEMENT
This SIXTH AMENDMENT AND LIMITED WAIVER
WITH RESPECT TO CREDIT AGREEMENT (this
"Amendment and Waiver") is dated as of
April 7, 2005 by and among ICON HEALTH
& FITNESS, INC., a Delaware corporation
("Borrower"), the other Credit Parties
signatory hereto, GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware 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 and Waiver shall
have the meanings ascribed to them in
Annex A to the Credit Agreement (as
hereinafter defined).
RECITALS
WHEREAS, the Borrower, the other Credit
Parties signatory thereto, the Agent and
the Lenders have entered into that certain
Credit Agreement, dated as of April
9, 2002 (as amended, supplemented, restated
or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, the Borrower and the other Credit
Parties have requested that the Agent
and the Requisite Lenders agree to waive
and amend certain provisions of the
Credit Agreement as set forth herein;
and
WHEREAS, the Agent and the Requisite
Lenders have agreed to amend and waive
certain provisions of the Credit Agreement
as set forth herein.
NOW THEREFORE, in consideration of the
foregoing recitals, mutual agreements
contained herein and for good and valuable
consideration, the receipt and
sufficiency of which are hereby
acknowledged, the Agent, the Requisite Lenders,
the Borrower and the other Credit Parties
agree as follows:
Section 1. Limited Waivers.
(a)
subject to the terms and conditions set forth herein, the Agent
and
the Requisite Lenders hereby waive any
breach or violation of the Credit
Agreement (and any resulting Event of
Default pursuant to Section 8.1(f) of the
Credit Agreement) which have occurred
solely as a result of Borrower's delivery
on December 25, 2004 of a Borrowing Base
Certificate which contained information
which was untrue and incorrect in a
material respect;
(b)
subject to the terms and conditions set forth herein, the Agent
and
the Requisite Lenders hereby waive any
breach or violation of Section 6.8 the
Credit Agreement (and any resulting Event
of Default) which have occurred solely
as a result of (1) the sale by Jumpking of
certain Inventory, Equipment and
other assets relating to Jumpking's
business of manufacturing, marketing and
selling of hot tubs and spas ("Spa
Business"), as more fully described on
Exhibit A hereto (collectively, "Spa
Assets"), to Keys Backyard, L.P., a Texas
limited partnership ("Buyer") pursuant to
that certain Purchase and Sale
Agreement, dated as of January 10, 2005,
between Jumpking and Buyer, for an
aggregate purchase price equal to
$4,550,000 ("Purchase Price"), which Purchase
Price was payable as follows: (x) a
$1,000,000 portion of the Purchase Price was
payable in cash at closing ("Cash Portion")
and (y) the remaining $3,550,000
portion of the Purchase Price shall be
payable pursuant to a promissory note,
dated as of January 10, 2005, issued by
Buyer to Jumpking ("Jumpking Promissory
Note"), and (2) the grant of a nonexclusive
license by Jumpking (on a limited
basis) to Buyer of certain trade names
solely for use in connection with the Spa
Business, as more fully described on
Exhibit A hereto (the transactions referred
to under items (1) and (2) above are
collectively, the "Jumpking Asset Sale").
It being acknowledged and agreed by the
parties hereto that, upon the
consummation of the Jumpking Asset Sale,
(1) the Cash Portion was applied to the
Revolving Loan notwithstanding the
provisions of Section 1.3 of the Credit
Agreement, (2) Jumpking shall pledge and
deliver to Agent of an original copy of
the Jumpking Promissory Note endorsed to
Agent as additional security for the
Obligations (it being understood and agreed
that the principal, interest and
other amounts paid by Buyer to Jumpking
pursuant to the Jumpking Promissory Note
shall be paid and applied to the Revolving
Loan notwithstanding Section 1.3 of
the Credit Agreement), and (3) all security
interests held by Agent and the
Lenders in and to the Spa Assets were
deemed released;
(c)
subject to the terms and conditions set forth herein, the Agent
and
the Requisite Lenders hereby waive any
breach or violation of the Credit
Agreement (and any resulting Event of
Default) which have occurred solely as a
result of Borrower's failure to deliver to
Agent prompt written notice of the
voluntary product recall by Jumpking of
approximately 1,000,000 pieces of the
trampolines manufactured by Jumpking and
approximately 296,000 pieces of
"FunRing" enclosures, as required pursuant
to clause (m) of Annex E to the
Credit Agreement;
(d)
subject to the terms and conditions set forth herein, the Agent
and
the Requisite Lenders hereby waive any
breach or violation of the Credit
Agreement (and any resulting Event of
Default) which have occurred solely as a
result of the incurrence by Borrower of
Guaranteed Indebtedness in connection
with guaranteeing certain financing
obtained by certain of Borrower's customers
relating to certain fitness Equipment
manufactured and leased by Borrower to
such customers;
(e)
subject to the terms and conditions set forth herein, the Agent
and
the Requisite Lenders hereby waive the
provisions of Section 6.15 of the Credit
Agreement to the extent, and solely to the
extent, necessary to permit ICON
Cayman to change its corporate name from
"ICON China OS, Inc." to "World Fitness
Sales"; provided that Agent shall receive,
in form and substance satisfactory to
Agent, (1) a certificate executed by the
corporate secretary or an assistant
secretary (or equivalent thereof) of ICON
Cayman attaching and certifying
revised articles of organization and bylaws
(or equivalent thereof) of ICON
Cayman reflecting the foregoing corporate
name change together with evidence of
any registrations as may be necessary or
appropriate to effectuate the foregoing
corporate name change under the laws of The
Cayman Islands, (2) a good standing
certificate (including verification of tax
status) (or applicable equivalent)
for ICON Cayman certified by the applicable
authorized Governmental Authority re
flecting the foregoing corporate name
change, and (3) an original copy of the
share certificate representing the Stock of
ICON Cayman reflecting the new
corporate name of ICON Cayman together with
related undated stock power executed
in blank in replacement of the share
certificate of ICON Cayman and stock power
that were previously delivered to Agent;
and
(f)
the Events of Default described in clauses (a)-(d) above are
referred
to herein as the "Specified Defaults".
Section 2. Amendments.
(a)
Section 5 of the Credit Agreement is hereby amended by adding
the
following new Subsection 5.14 at the end
thereto:
"5.14 Consultant. On
or prior to May 13, 2005, Agent shall engage, at
Borrower's expense, a consultant, on behalf
of Agent and the Lenders, to perform
various analyses requested by Agent, and
Borrower shall fully cooperate with
such consultant in connection with its
performance of any such analyses."
(b)
Clause (i) of Section 6.2 of the Credit Amendment is hereby
amended
and restated to read in its entirety as
follows:
"(i) Borrower may make investments in Xiamen Subsidiary not to
exceed
$12,000,000 in the aggregate (the "Xiamen
Subsidiary Investments") on or prior
to June 10, 2005, as follows: (a) Borrower
has already made the first portion of
the Xiamen Subsidiary Investments in the
amount of $5,000,000 on or prior to
April 15, 2004; (b) Borrower has already
made the second portion of the Xiamen
Subsidiary Investments in the amount of
$5,000,000 on or prior to December 31,
2004 (and prior to such investment Agent
has received, in form and substance
satisfactory to Agent, written evidence
that Ming-Tsung Johnny Lee has provided
an additional cash equity contribution of
not less than $2,000,000 to the Xiamen
Subsidiary); and (c) Borrower may make the
third portion of the Xiamen
Subsidiary Investments in the amount not to
exceed $2,000,000 on or prior to
June 10, 2005"
(c)
Clause (xi) of Section 6.3(a) of
