Exhibit 10.3

 

EXECUTION COPY

 

FIRST AMENDMENT TO FINANCING AGREEMENT

 

THIS FIRST AMENDMENT TO FINANCING AGREEMENT, dated as of May 4, 2004 (this
“Amendment”), is made between CYBEX INTERNATIONAL, INC., a New York corporation
(the “Borrower”), and THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation (“CIT”).

 

RECITALS:

 

A. The Borrower and CIT are parties to that certain Financing Agreement, dated
as of July 16, 2003 (as the same may be further amended, modified, restated or
supplemented from time to time, (the “Financing Agreement”), pursuant to which,
among other things, CIT extended to the Borrower a loan facility.

 

B. The Borrower has requested that the Financing Agreement be amended.

 

C. CIT has agreed to such request, upon the terms and subject to the conditions
and limitations set forth herein, and, to accomplish the foregoing, the Borrower
and CIT have agreed to execute this Amendment.

 

D. All capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Financing Agreement, unless otherwise defined
herein.

 

AGREEMENTS:

 

Accordingly, in consideration of the premises and the mutual covenants contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

AMENDMENTS

 

The Financing Agreement is hereby amended as follows:

 

1.1 Section 1 of the Financing Agreement is hereby amended by adding the
following defined terms in the appropriate order alphabetically:

 

Availability Block shall mean, for each period set forth in the table below, the
corresponding amount for each such period as set forth in the table below:

 

Period

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Availability Block

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First Amendment Effective Date through November 30, 2004

   $1,000,000

December 1, 2004 and thereafter

   $1,500,000

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First Amendment Effective Date shall mean May 4, 2004.

 

1.2 Section 3.1 of the Financing Agreement is hereby amended in its entirety to
read as follows:

 

3.1 CIT agrees, subject to the terms and conditions of this Financing Agreement,
from time to time (but subject to CIT’s right to make Overadvances), to make
loans and advances to the Company on a revolving basis (i.e. subject to the
limitations set forth herein, the Company may borrow, repay and re-borrow
Revolving Loans) in the following amounts: (a) up to the lesser of (i)
$9,000,000 or (ii) the Domestic Borrowing Base less Availability Reserves; and
(b) up to the lesser of (i) $5,000,000 or (ii) the Foreign Borrowing Base less
Availability Reserves; provided, however, CIT shall be under no obligation to
make any Revolving Loan if Availability is less than an amount equal to the
Availability Block then in effect after the making of such Revolving Loan. All
requests for loans and advances must be received by an officer of CIT no later
than (i) 2:00 p.m., New York time, of the Business Day on which any such Chase
Bank Rate Loans and advances are required or (ii) three Business Days prior to
any requested LIBOR Loan. Should CIT for any reason honor requests for
Overadvances, any such Overadvances shall be made in CIT’s sole discretion and
subject to any additional terms CIT deems necessary.

 

1.3 The Financing Agreement and each of the other Loan Documents are amended to
provide that any reference to the Financing Agreement in the Loan Documents or
any of the other Loan Documents shall mean the Financing Agreement as amended by
this Amendment, and as it may be further amended, modified, restated or
supplemented from time to time.

 

ARTICLE II

 

REDUCTION, ETC. AND CONSENT

 

2.1 CIT hereby agrees to a reduction of the UM Holdings Letter of Credit to
$1,000,000. It is understood and agreed that the Borrower will obtain a letter
of credit in the amount of $2,945,722 (the “Kirila Letter of Credit”) to secure
a potential judgment against the Borrower relating to the case of Kirila v.
Cybex International, Inc. (the “Case”). The Kirila Letter of Credit shall
constitute Permitted Indebtedness under the Financing Agreement. In connection
therewith, UM Holdings, Ltd has granted a security interest in certain
collateral to secure the Borrower’s obligations under the Borrower’s
reimbursement agreement for the Kirila Letter of Credit. The Borrower’s
obligations under the reimbursement agreement for the Kirila Letter of Credit
will not be secured by assets of the Borrower. It is further understood and

 

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agreed that any amounts paid by UM Holdings, Ltd on behalf of the Borrower in
connection with the Case, may be evidenced as Subordinated Debt, provided that
there shall be no current interest or principal payable under such Subordinated
Debt without the prior written consent of CIT and Hilco.

 

2.2 CIT hereby consents to the amendment to the Hilco Loan Agreement attached
hereto as Schedule A.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower hereby represents and warrants to CIT as follows:

 

3.1 Compliance with Financing Agreement and Other Loan Documents. After giving
effect to this Amendment, the Borrower is in compliance with all of the terms
and provisions set forth in the Financing Agreement and in the other Loan
Documents to be observed or performed by the Borrower.

 

3.2 Representations in Financing Agreement and Other Loan Documents. The
representations and warranties of the Borrower set forth in the Financing
Agreement and the other Loan Documents are true and correct in all material
respects except for changes in the Borrower’s business or operations that have
occurred after the date the Financing Agreement became effective, so long as CIT
has consented to such changes or such changes are not prohibited by the terms of
the Financing Agreement.

 

3.3 No Event of Default. No Default or Event of Default exists under the
Financing Agreement and the other Loan Documents.

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

This Amendment shall become effective and be deemed effective as of the date
hereof upon the satisfaction by the Borrower or waiver by CIT of the following
conditions precedent:

 

(a) Receipt by CIT of this Amendment, duly executed by the Borrower, and
consented to by each of the Guarantors;

 

(b) Receipt of evidence satisfactory to CIT that Hilco shall have approved this
Amendment;

 

(c) Receipt by Moore & Van Allen, PLLC, of its fees and expenses in connection
with the preparation of this Amendment, which shall be charged to the Revolving
Loan Account as of the date hereof; and

 

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(d) Receipt by CIT of such other documents, instruments, and agreements as CIT
and its counsel may reasonably request.

 

ARTICLE V

 

MISCELLANEOUS

 

5.1 Full Force and Effect. As expressly amended hereby, the Financing Agreement
shall continue in full force and effect in accordance with the provisions
thereof. As used in the Financing Agreement, “hereinafter”, “hereto”, “hereof”
or words of similar import, shall, unless the context otherwise requires, mean
the Financing Agreement as amended by this Amendment.

 

5.2 Applicable Law. This Amendment shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of North
Carolina.

 

5.3 Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute but one and the same instrument.

 

5.4 Headings. The headings in this Amendment are for the purpose of reference
only and shall not affect the construction of this Amendment.

 

5.5 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
BORROWER AND CIT EACH WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AMENDMENT, THE FINANCING AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.

 

CYBEX INTERNATIONAL, INC.

By:

 

/s/ Arthur W. Hicks, Jr.

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Name:

 

Arthur W. Hicks, Jr.

Title:

 

Chief Financial Officer

THE CIT GROUP/BUSINESS CREDIT, INC.

By:

 

/s/ Robert H. Newman

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Name:

 

Robert H. Newman

Title:

 

Vice President

 

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CONSENT OF GUARANTORS

 

Each of the undersigned (individually, a “Guarantor” and, collectively, the
“Guarantors”), a Guarantor of all of the indebtedness, obligations or
liabilities of Cybex International, Inc., a New York corporation, to The CIT
Group/Business Credit, Inc., a New York corporation (“CIT”), pursuant to that
certain Guaranty, dated July 16, 2003, executed by each of the Guarantors in
favor of CIT, does hereby acknowledge receipt of a copy of the within and
foregoing First Amendment to Financing Agreement, dated as of the same date
hereof, and, in connection therewith, hereby consents to the execution, delivery
and performance thereof and agrees that nothing contained therein nor in any
document, instrument or other agreement required or contemplated thereby, shall
alter, discharge, release, cancel or impair the duties and obligations of such
Guarantor under the Guaranty and that the Guaranty shall continue to remain in
full force and effect, enforceable against such Guarantor in accordance with its
terms, without any right of offset, deduction, defense or counterclaim in favor
of such Guarantor against CIT.

 

IN WITNESS WHEREOF, each of the Guarantors has executed this Consent under seal
as of the day and year first above written.

 

CYBEX CAPITAL CORPORATION

By:

 

/s/ Arthur W. Hicks, Jr.

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Name:

 

Arthur W. Hicks, Jr.

Title:

 

Chief Financial Officer

TECTRIX FITNESS EQUIPMENT, INC.

By:

 

/s/ Arthur W. Hicks, Jr.

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Name:

 

Arthur W. Hicks, Jr.

Title:

 

Chief Financial Officer

Signed as a deed by CYBEX INTERNATIONAL UK

LIMITED acting by:

    /s/ Arthur W. Hicks, Jr.

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Director

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Director

 

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SCHEDULE A

 

[Hilco Amendment]

 

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