Exhibit (b)(1)
ABLECO FINANCE LLC
450 Park Avenue, 28th Floor
New York, New York 10022
December 28, 2001
Mr. Kevin S. Penn
Mr. Ezra S. Field
ACI Capital Co., Inc.
900 Third Avenue, 26th Floor
New York, NY 10022
Re: Financing Commitment
Gentlemen:
An investor group formed by ACI Capital Co., Inc.("ACI Capital"
and ACI Capital together with such investor group collectively, the "Investor")
has advised Ableco Finance LLC (a special situations lending company hereinafter
referred to as the "Lender") that the Investor is directly or through a wholly
owned acquisition vehicle acquiring all of the capital stock of Jenny Craig,
Inc. ("Jenny Craig") and its subsidiaries (the "Acquisition") (Jenny Craig and
those of its subsidiaries designated by the Lender as borrowers collectively,
the "Borrower"). The Investor has also advised the Lender that the Investor
requires financing (i) to consummate the Acquisition, (ii) for the general
working capital requirements of the Borrower and (iii) to pay fees and expenses
related to the financing contemplated by this commitment letter. The Lender is
pleased to advise you that the Lender hereby commits to provide the Borrower
with a revolving credit and term loan facility totaling not more than $35
million at any one time outstanding (the "Financing Facility"), consisting of
(A) a revolving credit facility in an aggregate principal amount outstanding not
exceeding $5 million, (B) a tranche A term loan in an outstanding principal
amount of $15 million and (C) a tranche B term loan in an outstanding principal
amount of $15 million, all substantially on the terms and conditions set forth
in the Outline of Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet"). The obligations of the Borrower under the Financing Facility will be
secured by a first priority lien on, and security interest in, substantially all
assets of the Borrower and its subsidiaries, in each case subject to such
exclusions as the Lender (in its sole and absolute discretion) may agree. The
Lender's commitment to provide the Financing Facility is subject in all respects
to satisfaction of the terms and conditions contained in this commitment letter
and in the Term Sheet.
The Investor acknowledges that the Term Sheet is intended as an
outline only and does not purport to summarize all the conditions, covenants,
representations, warranties and other provisions which would be contained in
definitive legal documentation for the Financing Facility. The loan
documentation for the Financing Facility will include, in addition to the
provisions that are summarized in this commitment letter and the Term Sheet,
provisions that, in the reasonable opinion of the Lender, are customary or
typical for this type of financing
ACI Capital Co., Inc.
December 28, 2001
Page 2
transaction and other provisions that the Lender reasonably requires in the
context of the proposed transaction.
By its execution hereof and its acceptance of the commitment
contained herein, ACI Capital agrees to indemnify and hold harmless the Lender
and each of its assignees, its affiliates and its directors, members, officers,
employees and agents (each an "Indemnified Party") from and against any and all
losses, claims, damages, liabilities or other expenses to which such Indemnified
Party may become subject, insofar as such losses, claims, damages, liabilities
(or actions or other proceedings commenced or threatened in respect thereof) or
other expenses arise out of or in any way relate to or result from the
Acquisition, this commitment letter or the extension of the Financing Facility
contemplated by this commitment letter, or in any way arise from any use or
intended use of this commitment letter or the proceeds of the Financing Facility
contemplated by this commitment letter, and ACI Capital agrees to reimburse each
Indemnified Party for any legal or other expenses incurred in connection with
investigating, defending or participating in any such loss, claim, damage,
liability or action or other proceeding (whether or not such Indemnified Party
is a party to any action or proceeding out of which indemnified expenses arise),
but excluding therefrom all expenses, losses, claims, damages and liabilities
which are finally determined in a non-appealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Indemnified Party. In the event of any litigation or dispute
involving this commitment letter or the Financing Facility, the Lender shall not
be responsible or liable to the Investor, the Borrower or any other person for
any special, indirect, consequential, incidental or punitive damages. In
addition, ACI Capital agrees to reimburse the Lender for all reasonable
out-of-pocket fees and expenses (the "Expenses") incurred by or on behalf of the
Lender in connection with the negotiation, preparation, execution and delivery
of this commitment letter, the Term Sheet and any and all definitive
documentation relating hereto and thereto, including, but not limited to, the
reasonable fees and expenses of counsel to the Lender in connection with any due
diligence, collateral reviews and field examinations. The obligations of ACI
Capital under this paragraph shall remain effective whether or not definitive
documentation is executed and notwithstanding any termination of this commitment
letter, provided, that, if, after the Acquisition, the Borrower enters into
definitive documentation for the Financing Facility, the obligations of ACI
Capital under this commitment letter and the Term Sheet shall thereupon
terminate and be superseded in all respects by the obligations of the Borrower
to the Lender.
On the date of execution hereof, ACI Capital agrees to pay to the
Lender, in immediately available funds, a commitment fee equal to $525,000 (the
"Commitment Fee"), which fee shall be earned in full and payable on the first
date on or after the date ACI Capital accepts this commitment letter and the
Term Sheet and that the Investor has executed a definitive merger agreement (the
"Merger Agreement") for the Acquisition. In addition, ACI Capital agrees to pay
to the Lender, promptly after its request, additional expense deposits if the
Lender determines that the amount of Expenses incurred or to be incurred by the
Lender in connection with the Financing Facility exceeds or will exceed the
amount of any expense deposit previously paid to the Lender.
ACI Capital Co., Inc.
December 28, 2001
Page 3
The Lender's commitment to provide the Financing Facility is
subject to (i) the negotiation, execution and delivery of definitive loan
documentation in form and substance satisfactory to the Lender, the Borrower and
their respective counsel, (ii) the satisfaction of the Lender that at all times
prior to and including the date on which the transactions referred to hereunder
close that there has not occurred or become known to the Lender any material
adverse change with respect to the condition, financial or otherwise, business,
operations, assets, liabilities or prospects of the Borrower, as determined by
the Lender in its sole discretion (a "Material Adverse Change"), (iii) the
absence of any material disruption or general adverse developments in the
financial markets, as determined by the Lender in its sole discretion, and (iv)
such other customary conditions as set forth in the Term Sheet. If at any time
the Lender shall determine (in its sole discretion exercised reasonably) that
either (A) the Investor or the Borrower will be unable to fulfill any condition
set forth in this commitment letter or in the Term Sheet or (B) any Material
Adverse Change has occurred, the Lender may terminate this commitment letter by
giving notice thereof to ACI Capital (subject to the obligation of ACI Capital
to pay all fees, costs, expenses and other payment obligations expressly assumed
by ACI Capital hereunder, which shall survive the termination of this commitment
letter).
The Investor represents and warrants that (i) all written
information and other materials concerning the Investor, the Borrower or the
Acquisition (collectively, the "Information") which has been, or is hereafter,
made available by, or on behalf of the Investor is, or when delivered will be,
when considered as a whole, complete and correct in all material respects and
does not, or will not when delivered, contain any untrue statement of material
fact or omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statement has been made and (ii) to the extent that any such Information
contains projections, such projections were prepared in good faith on the basis
of (A) assumptions, methods and tests stated therein which are believed by the
Investor or Jenny Craig, as applicable, to be reasonable and (B) information
believed by the Investor or Jenny Craig, as applicable, to have been accurate
based upon the information available to the Investor at the time such
projections were furnished to the Lender.
This commitment letter is delivered to ACI Capital upon the
condition that, prior to its acceptance of this offer and the payment of the
Commitment Fee, neither the existence of this commitment letter or the Term
Sheet, nor any of their contents, shall be disclosed by the Investor, except as
may be compelled to be disclosed in a judicial or administrative proceeding, as
otherwise required by law or, on a confidential and "need to know" basis, solely
to the directors, officers, employees, advisors and agents of the Investor or
the Borrower and its representatives. In addition, the Investor agrees that it
will (i) consult with the Lender prior to the making of any filing in which
reference is made to the Lender or the commitment contained herein, and (ii)
obtain the prior approval of the Lender before releasing any public announcement
in which reference is made to the Lender or to the commitment contained herein.
The Investor acknowledges that the Lender and its affiliates may now or
hereafter provide financing or obtain other interests in other companies in
respect of which the Investor, the Borrower or their affiliates may be business
competitors, and that the Lender and its affiliates will have no obligation to
provide to the Investor, the Borrower or any of their affiliates any
confidential
ACI Capital Co., Inc.
December 28, 2001
Page 4
information obtained from such other companies. The Lender agrees that it will
not provide confidential information obtained from the Investor or the Borrower
except (i) as may, be compelled to be disclosed in a judicial or administrative
proceedings, (ii) as otherwise required by law, or (iii) on a confidential and
"need to know" basis to its directors, officers, employees, advisors and agents
and to prospective assignees or participants, provided such persons have been
instructed to keep such information confidential.
The offer made by the Lender in this commitment letter shall
expire, unless otherwise agreed by the Lender in writing, at 5:00 p.m. (New York
City time) on January 5, 2002, unless prior thereto the Lender has received a
copy of this commitment letter, signed by ACI Capital accepting the terms and
conditions of this commitment letter and the Term Sheet. The commitment by the
Lender to provide the Financing Facility shall expire at 5:00 p.m. (New York
City time) on May 31, 2002, unless prior thereto, definitive loan documentation
shall have been agreed to in writing by all parties and the conditions set forth
therein shall have been satisfied (it being understood that the obligation of
ACI Capital to pay all amounts in respect of indemnification and Expenses shall
survive termination of this commitment letter). If after the Acquisition, the
Borrower enters into definitive documentation for the Financing Facility, the
obligations of the Investor and ACI Capital under this commitment letter and the
Term Sheet shall thereupon terminate and be superseded in all respects by the
obligations of the Borrower to the Lender.
Should the terms and conditions of the offer contained herein
meet with your approval, please indicate your acceptance by signing and
returning a copy of this commitment letter to the Lender.
ACI Capital Co., Inc.
December 28, 2001
Page 5
This commitment letter, including the attached Term Sheet (i)
supersedes all prior discussions, agreements, commitments, arrangements,
negotiations or understandings, whether oral or written, of the parties with
respect thereto, (ii) shall be governed by the law of the State of New York,
(iii) shall be binding upon the parties and their respective successors and
assigns, (iv) may not be relied upon or enforced by any other person or entity,
and (v) may be signed in multiple counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
If this commitment letter becomes the subject of a dispute, each of the parties
hereto hereby waives trial by jury. This commitment letter may be amended,
modified or waived only in a writing signed by the parties hereto.
Very truly yours,
ABLECO FINANCE LLC
By: /s/ DANIEL E. WOLF
--------------------------
Name: Daniel E. Wolf
Title: VP
Agreed and accepted as of
23 day of Dec. 2001:
ACI CAPITAL CO., INC.
By: /s/ EZRA FIELD
--------------------------
Name: Ezra Field
Title: VP
EXHIBIT A
JENNY CRAIG, INC. AND ITS SUBSIDIARIES
OUTLINE OF TERMS AND CONDITIONS FOR PROPOSED FINANCING FACILITY
This Outline of Terms and Conditions is part of the Commitment Letter, dated
December 28, 2001 (the "Commitment Letter"), addressed to ACI Capital Co., Inc.
("ACI Capital") by Ableco Finance LLC (a special situations lending company
hereinafter referred to as the "Lender") and is subject to the terms and
conditions of the Commitment Letter. Capitalized terms used herein shall have
the meanings set forth in the Commitment Letter unless otherwise defined herein.
BORROWER: Jenny Craig and certain of its subsidiaries as
required by the Lender (collectively the
"Borrower").
GUARANTORS: All subsidiaries of the Borrower that are not
a Borrower as required by the Lender (together
with the Borrower, each a "Loan Party" and
collectively, the "Loan Parties").
LENDER: The Lender or affiliates thereof, to be
designated at closing.
FINANCING FACILITY: A revolving credit and term loan facility
totaling not more than $35 million at any one
time outstanding (the "Maximum Credit"),
consisting of (i) a revolving credit facility
in an aggregate principal amount at any time
outstanding not exceeding $5 million, (ii) a
tranche A term loan in an outstanding
principal amount of $15 million (the "Term
Loan A") and (iii) a tranche B term loan in an
outstanding principal amount of $15 million
(the "Term Loan B" and, together with the Term
Loan A, the "Term Loans").
Revolving Credit Facility
Aggregate revolving credit loans under the
Financing Facility ("Revolving Loans") will be
limited to $5 million. Such Revolving Loans
will be made to the Borrower on not less than
two (2) days prior notice and shall be in
minimum amounts of $100,000.
Term Loan Facility
A term loan facility, consisting of the Term
Loan A and the Term Loan B. (The Term Loans
and the Revolving Loans are, collectively, the
"Loans".) The Term Loans will be fully funded
on the Closing Date (as defined herein).
TERM: The Financing Facility will have a term of two
(2) years (the "Maturity Date"), provided,
that, subject to the conditions set forth in
the Term Loan B Extension Fee section of this
Term Sheet, at the election of the Borrower,
the Term Loan B may be extended for a period
of one year.
AMORTIZATION: The Revolving Loans, the Term Loans (except
with respect to the amortization described
below) and other obligations outstanding under
the Financing Facility will be payable in full
on the Maturity Date. The Term Loan A will
amortize on a monthly basis in installments of
$250,000 for the first 12 months after the
Closing Date and $350,000 for months 13
through 24 after the Closing Date.
MANDATORY Customary mandatory prepayments to be included
AND OPTIONAL PREPAYMENT: in definitive loan documentation (e.g.,
issuance of equity, debt, sale of assets, tax
refunds, casualty events, etc.)., provided,
that, in the absence of a continuing event of
default, prepayments will not be required from
the proceeds of equity issuances. Mandatory
prepayments shall be applied, first, to prepay
the outstanding principal amount of the Term
Loan A (applied to installments thereof as
selected by the Borrower if no event of
default is continuing or, if an event of
default is continuing, in the inverse order of
maturity), second, to prepay the outstanding
principal amount of the Term Loan B, and,
lastly, to reduce the outstanding principal of
the Revolving Loans.
In addition, a prepayment of the Loans will be
required if the principal amount of the Loans
exceeds the cash collections of the Borrower
for a period of seventy (70) days, measured at
the end of each 70 day period (any such excess
of the principal amount of the Loans over the
cash collections is hereinafter referred to as
the "Excess"). If as a result of the
occurrence of an Excess any such payment is
required, the Borrower will have the option of
(i) prepaying the Loans to a level that would
eliminate the Excess or (ii) providing cash
collateral to the Lender for an amount equal
to the amount of the Excess. After the Excess
is eliminated and if no event of default is
continuing, the Lender shall release any cash
collateral provided to the Lender in
connection with the Excess.
Optional prepayments on the Term Loan A and
the Term Loan B will be permitted, provided
that the Term Loan A is repaid in full prior
to any optional prepayment of the Term Loan B.
Optional payments shall be applied to the
installments of the Term Loan A as selected by
the Borrower if no event of default is
continuing, or if an event of default is
continuing, in the inverse order of maturity.
Amounts repaid under the Revolving Credit
Facility may be re-borrowed. Except as
provided above, the Borrower shall be
permitted to prepay the Loans in whole or in
part at any time without penalty or premium.
Termination of the Financing Facility prior to
the Maturity Date would not result in a
prepayment fee.
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CLOSING DATE: The first date on which all definitive loan
documentation satisfactory to the Lender (the
"Loan Documents") is executed by the Loan
Parties and the Lender, which date shall not
be later than May 31, 2002, unless otherwise
agreed in writing by the Lender and the
Borrower.
COLLATERAL: All obligations of the Loan Parties to the
Lender shall be secured by a perfected, first
priority lien on and security interest in
substantially all of the now owned and
hereafter acquired assets of the Loan Parties,
including, but not limited to, accounts
receivable, inventory, real property,
machinery and equipment, trademarks and
tradenames, copyrights, patents and other
intellectual property, general intangibles,
chattel paper, all shares of all capital stock
of subsidiaries of the Loan Parties and all
proceeds thereof, and such other assets,
tangible or intangible, as may be required, in
the Lender's opinion, to fully secure the
contemplated Loans under the Financing
Facility (the "Collateral"). All borrowings by
the Borrower, all costs, fees and expenses of
the Lender and all other obligations owed to
the Lender shall be secured as described above
and shall be charged to the loan account to be
established under the Financing Facility.
INTEREST: All Revolving Loans shall bear interest at the
rate per annum equal to six percent (6%) above
the Reference Rate from time to time in
effect. The Term Loan A shall bear interest at
the rate per annum equal to seven and one-half
percent (7.5%) above the Reference Rate from
time to time in effect. The Term Loan B shall
bear interest at the rate per annum equal to
nine and one-half percent (9.5%) above the
Reference Rate from time to time in effect. At
no time shall the Reference Rate referred to
above be less than five percent (5.0%). As
used herein, "Reference Rate" means the rate
of interest publicly announced from time to
time by JP Morgan Chase Bank in New York, New
York as its prime rate. All interest and fees
shall be computed on the basis of a year of
360 days for the actual days elapsed. If any
Event of Default shall occur and be
continuing, interest shall accrue at a rate
per annum equal to 3% in excess of the rate of
interest otherwise in effect.
CASH MANAGEMENT: All proceeds of Collateral shall be deposited
in cash management accounts under the sole
dominion and control of the Lender. In the
absence of a continuing event of default and
if availability under the Revolving Credit
Facility and unencumbered cash are greater
than or equal to an amount to be agreed upon,
all funds deposited in such cash management
accounts shall be permitted to be transferred
to the operating accounts of the Borrower and
used by the Borrower in the
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ordinary course of its business. At any time
an event of default is continuing or if
availability under the Revolving Credit
Facility and unencumbered cash are less than
an amount to be agreed upon, the Lender may
require that thereafter all funds deposited in
such cash management accounts will be
transferred to the Lender on each business day
and applied to repay the outstanding Revolving
Loans. Collections will be credited to the
obligations on the day received in the cash
management accounts conditional on final
payment to the Lender.
FEES: Closing Fee: 3% of the Maximum Credit,
earned in full,
non-refundable and payable on
the Closing Date less the
amount of the Commitment Fee
paid pursuant to the
Commitment Letter.
Facility Fee: 1.25% of the outstanding
amount of the Term Loan B
will be earned in full,
non-refundable and payable at
the end of each period of 90
days after the Closing Date
(i.e. payable on the 90th
day, 180th day, 270th day,
etc.).
Term Loan B 3% of the then outstanding
Extension Fee: Term Loan B earned in full,
non-refundable and payable
upon the Borrower's election
to extend the Term Loan B for
a period of one year. Such
extension shall be subject to
(i) the Borrower's compliance
with the terms and conditions
of the Financing Facility and
(ii) the repayment of all
Revolving Loans and the Term
Loan A on or prior to the
Maturity Date.
USE OF PROCEEDS: The Loans under the Financing Facility will be
used, in conjunction with $42,500,000 in cash
equity or other securities acceptable to the
Lender, solely (i) to consummate the
Acquisition, (ii) for the general working
capital requirements of the Borrower and (iii)
to pay fees and expenses related to the
financing contemplated by the Commitment
Letter.
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CONDITIONS PRECEDENT: The obligation of the Lender to make any Loans
under the Financing Facility will be subject
to customary conditions precedent including,
without limitation, the following initial
conditions precedent:
(a) Execution and delivery of appropriate
legal documentation in form and
substance satisfactory to and required
by the Lender and its counsel
(including, without limitation, the
financing agreement, the security and
pledge agreements, the mortgages and
title insurance policies, the
guaranties, the block account agreements
and the landlord waivers (for the
headquarters of the Borrower), and the
satisfaction of the conditions precedent
contained therein.
(b) There shall have occurred no event or
condition which has had, or is
reasonably likely to have, a Material
Adverse Change.
(c) The Lender's completion of its legal due
diligence, including, without
limitation, all ERISA, environmental,
tax, accounting and labor matters, with
results are satisfactory to the Lender;
all necessary governmental and third
party consents and approvals necessary
in connection with the Financing
Facility and the transactions
contemplated thereby shall have been
obtained (without the imposition of any
conditions that are not reasonably
acceptable to the Lender) and shall
remain in effect; and no law or
regulation shall be applicable in the
reasonable judgment of the Lender that
restrains, prevents or imposes
materially adverse conditions upon the
Financing Facility or the transactions
contemplated thereby.
(d) The Lender shall have been granted a
perfected, first priority lien on all
Collateral, and shall have received UCC,
tax and judgment lien searches and other
appropriate evidence (including title
reports and surveys relating to all
owned real property comprising
Collateral), evidencing the absence of
any other liens on the Collateral,
except existing liens acceptable to the
Lender.
(e) Opinions from the Loan Parties' counsel
as to such matters as the Lender and
counsel to the Lender may reasonably
request.
(f) The Lender shall be satisfied with the
cash management system of the Borrower.
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(g) Insurance satisfactory to the Lender;
such insurance to include liability
insurance for which the Lender will be
named as an additional insured and
property insurance with respect to the
Collateral for which the Lender will be
named as loss payee.
(h) There shall exist no claim, action,
suit, investigation, litigation or
proceeding, pending or threatened in any
court or before any arbitrator or
governmental instrumentality which
relates to the Acquisition or the
Financing Facility or which, in the
opinion of the Lender, has any
reasonable likelihood of having a
Material Adverse Change.
(i) The Borrower shall have, on the Closing
Date, unrestricted cash balances of at
least $7,500,000, after giving effect to
(A) the Term Loans made on the Closing
Date and (B) the payment of all fees and
expenses related to the Financing
Facility and no Revolving Loans shall be
made on the Closing Date.
(j) The Lender shall be satisfied with the
terms of the cash equity contribution
(or other securities acceptable to the
Lender) of at least $42,500,000 which
will fund the Acquisition. The Lender
shall be satisfied with the terms of the
Merger Agreement.
(k) The Lender's loan origination costs
including, without limitation, audit
fees, attorneys' fees, search fees,
title fees, documentation and filing
fees, shall have been paid by the
Borrower.
(l) The Lender shall have received such
financial and other information
regarding the Loan Parties as the Lender
may reasonably request.
REPRESENTATIONS Usual representations and warranties,
AND WARRANTIES: including, but not limited to, corporate
existence and good standing, authority to
enter into loan documentation, governmental
approvals, non-violation of other agreements,
financial statements, litigation, compliance
with environmental, pension and other laws,
taxes, insurance, absence of Material Adverse
Change, absence of default or unmatured
default under the Financing Facility and
priority of the Lender's liens.
COVENANTS: Usual covenants, including, but not limited
to, provision of financial statements, notices
of litigation, defaults and unmatured defaults
and other information, compliance with
pension, environmental and other laws,
inspection of properties, books and records,
maintenance of insurance, limitations with
respect
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to liens and encumbrances, dividends and
retirement of capital stock, guarantees, sale
and lease back transactions, consolidations
and mergers, investments, capital
expenditures, loans and advances,
indebtedness, operating leases, transactions
with affiliates, prepayment of other
indebtedness and amendments to material
agreements.
The financial covenants for the Financing
Facility shall be as set forth on Annex I
attached hereto.
Financial reporting to include: (i) annual,
audited financial statements, (ii) quarterly,
internally prepared, financial statements,
(iii) monthly, internally prepared, financial
statements, (iv) annual projections, including
monthly balance sheet, profit and loss and
cash flow figures, and (v) other reporting as
required by the Lender.
EVENTS OF DEFAULT: Usual events of default, including, but not
limited to, payment, cross-default, violation
of covenants, breach of representations or
warranties, bankruptcy or insolvency,
judgment, ERISA, environmental and change of
control.
GOVERNING LAW: All documentation in connection with the
Financing Facility shall be governed by the
laws of the State of New York.
ASSIGNMENTS,
PARTICIPATIONS: The Lender may sell or assign its loans or
commitments under the Financing Facility
without the consent of the Loan Parties. The
Lender may also sell participations in its
loans and commitments under the Financing
Facility without the consent of the Loan
Parties, provided that such participants shall
be limited to customary voting rights.
OUT-OF-POCKET EXPENSES: All fees, including reasonable legal fees,
costs and expenses of counsel to the Lender,
and all reasonable out-of-pocket expenses
associated with the transaction, are to be
paid by the Loan Parties.
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ANNEX I
Financial Covenants
2nd Quarter Out/
At Close 1st Quarter Out Holding Level
- ----------------------------------------------------------------------------------------
Minimum Adjusted EBITDA $13.9 $13.9 $13.9
Leverage Ratio 2.35x 2.30x 2.25x
Fixed Charge Coverage 1.6x(*) 1.6x(*) 1.7x(*)
Ratio ("FCCR")
Adjusted EBITDA EBITDA for the latest twelve months, treating
any management fees and/or Jenny Craig
consulting fees actually paid (after close) as
operating expenses, and subject to the
following adjustments:
(i) Trailing adjustments - litigation
judgment, excess executive
compensation, and public company
costs;
(ii) Pro Forma adjustments from closing
- litigation judgment, middle-east
refund and Y2K expense.
Net Interest Expense ("NIE") Interest on the Term Loans plus quarterly
extension fee on the Term Loan B, net of
interest income on cash.
Scheduled Principal Payments Amortization on Term Loan A of $250,000 for
months 1 through 12, and $350,000 for months
13 through 24.
Total Debt Includes capital lease obligation ($1.5 mm),
the Term Loans, and funded portion of
Revolving Loans, if any.
Net Debt Total Debt less cash on the balance sheet.
Leverage Ratio Net Debt divided by Adjusted EBITDA.
Fixed Charge Coverage Ratio Adjusted EBITDA less maintenance capital
expenditures for the latest twelve months,
divided by NIE plus Scheduled Principal
Payments ("SPP"). For the purpose of this
covenant, NIE and SPP during the first four
(4) quarters after the Transaction closes
shall be calculated on an annualized basis and
thereafter on a trailing basis.
- ------------------------------
(*) Notwithstanding the headings of the covenant table, the FCCR shall be 1.6x
for the first four quarters, and then 1.7x thereafter.
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