Document:

Exhibit 10.16

 

EXECUTION COPY

 

THIRD AMENDMENT TO

INTERACTIVE HEALTH LLC CREDIT AGREEMENT AND CONSENT

 

This Third Amendment to Credit Agreement
(“Third Amendment and Consent”) is made as of this 22nd day of March, 2004 by
and among Interactive Health LLC, a Delaware limited liability company
(“Company”) and Comerica Bank, a Michigan banking corporation (“Bank”).

 

RECITALS

 

A.                                   Company and Bank entered
into that certain Interactive Health LLC Credit Agreement dated as of
December 30, 2003, as amended by that certain First Amendment dated as of
January 30, 2004 and that certain Second Amendment dated as of
February 13, 2004 (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”).

 

B.                                     Company has proposed to
(i) issue up to $100,000,000 aggregate principal amount of its senior notes
(the “Senior Notes”) in an offering exempt from the Securities Act of
1933, as amended (the “Offering”), and (ii) use the proceeds of the
issuance of the Senior Notes to (A) redeem in full the Investor Subordinated
Debt, (B) pay a dividend to the holders of Holding’s equity interests and (C)
pay transaction costs and expenses incurred in connection with the Offering,
all as described in a preliminary offering circular prepared in connection with
the Offering dated as of March 5, 2004 and attached hereto as Attachment
1, as the terms of the Offering may be subsequently modified substantially in
accordance with the terms of the Summary of Terms attached hereto as Attachment
2 (the preliminary offering circular and the Summary of Terms are collectively
referred to herein as the “Preliminary Offering Circular”; and, the
Offering, the incurrence of the Debt evidenced by the Senior Notes, the
contemplated use of proceeds thereof and all other transactions contemplated by
the Preliminary Offering Circular are referred to herein as the “Transactions”).

 

C.                                     Company has requested
that Bank consent to the Transactions and make certain amendments to the Credit
Agreement in connection therewith, and Bank is willing to do so, but only on
the terms and conditions set forth in this Third Amendment and Consent.

 

NOW, THEREFORE, in consideration of the
mutual agreements herein contained and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the Company and
the Bank agree as follows:

 

1.                                       The
Bank hereby consents to the Transactions solely on the terms set forth in the
Preliminary Offering Circular. Notwithstanding anything to the contrary herein,

 

1

 

the consent set
forth in this paragraph 1 shall be deemed to be effective on the Third
Amendment Effective Date.

 

2.                                       Section 1
of the Credit Agreement is hereby amended as follows:

 

(a)                                  The
following definitions are hereby amended and restated in their entirety as
follows:

 

“Subordination Agreement(s)” shall mean any
subordination agreement entered into from time to time in connection with any
Subordinated Debt.

 

“Subordinated Debt” shall mean any Debt of
Holdings, Company or any Subsidiary which has been subordinated in right of
payment and priority to the Indebtedness, all on terms and conditions
satisfactory to the Bank.

 

“Subordinated Debt Documents” shall mean and
include any documents evidencing any other Subordinated Debt, in each case, as
the same may be amended or otherwise modified from time to time in compliance
with the terms of this Agreement.

 

“Subordinated Notes” shall mean any other
notes or instruments evidencing Subordinated Debt as the same may be amended,
modified or supplemented from time to time in compliance with the terms of this
Agreement.

 

(b)                                 The
following definitions are hereby added to Section 1 of the Credit
Agreement to read in their entirety as follows:

 

“Indenture” shall mean an indenture among
the Company, Interactive Health Finance, Holdings and the trustee named therein
entered into in connection with the issuance of the Senior Notes.

 

“Interactive Health Finance” shall mean
Interactive Health Finance Corp., a Delaware corporation.

 

“Senior Notes” shall mean the senior
unsecured notes, due 2011, issued by the Company and Interactive Health Finance
pursuant to the Indenture in an aggregate amount not to exceed $100,000,000.

 

3.                                       Section 8
of the Credit Agreement is hereby amended as follows:

 

(a)                                  Section 8.1(h)
is hereby amended and restated as follows:

 

“(h) such other financial and other reports
as delivered to the holders of the Senior Notes pursuant to the Indenture and
the holders of any other Subordinated Debt under the applicable Subordinated
Debt Documents;”

 

(b)                                 Section 8.10
is hereby amended and restated in its entirety as follows:

 

2

 

“8.10                 Interest Coverage Ratio. Maintain as
of the end of each fiscal quarter ending during the periods specified below for
the four fiscal quarters then ending, commencing with the fiscal quarter ending
March 31, 2004, an Interest Coverage Ratio of not less than (i) 1.5 to
1.0, for each fiscal quarter ending on or before March 31, 2005, (ii) 1.75
to 1.0, for the fiscal quarters ending during the period from June 30,
2005, through March 31, 2006 and (iii) 2.0 to 1.0, for each fiscal quarter
ending on or after June 30, 2006.”

 

(c)                                  Section 8.11
is hereby amended and restated in its entirety as follows:

 

“Section 8.11 Funded Debt to EBITDA.  Maintain as of the end of each fiscal quarter
ending during the periods specified below for the four fiscal quarters then
ending, commencing with the fiscal quarter ending March 31, 2004, a Funded
Debt to EBITDA Ratio of not more than (i) 5.50 to 1.0, for each fiscal quarter
of the Company ending on or before March 31, 2005, (ii) 5.25 to 1.0, for
the fiscal quarters ending during the period from June 30, 2005 through
March 31, 2006 and (iii) 4.75 to 1.0, for each fiscal quarter ending on or
after June 30, 2006.”

 

(d)                                 The
following is hereby added as Section 8.17:

 

“8.17 Delivery of Indenture and Senior
Notes. Within five (5) days after the original issuance of the Senior
Notes, fully executed copies of the Indenture and the Senior Notes.”

 

4.                                       Section 9
of the Credit Agreement is hereby amended as follows:

 

(a)                                  Section 9.1
is hereby amended by deleting the word “and” appearing at the end of clause (i)
of said Section; redesignating clause (j) as clause (k); and inserting the
following new clause (j) in the proper alphanumerical order:

 

“(j) 
Debt evidenced by the Senior Notes; and”

 

(b)                                 Section 9.3
is hereby amended and restated in its entirety, as follows:

 

“9.3                        Limitation of Guarantee Obligations.  Guarantee, endorse, or otherwise become
secondarily liable for or upon the obligations of others, except (i) by
endorsement for deposit in the ordinary course of business, (ii) guarantees in
favor of Bank, (iii) guarantees existing on the Closing Date and set forth on
Schedule 9.3 hereto, (iv) guarantees made in the ordinary course of
business by Company or any of its Subsidiaries in respect of Debt incurred by
Company or any Subsidiary, as the case may be, in compliance with this
Agreement, (v) other guarantees and similar obligations not otherwise permitted
under this Section 9.3 in respect of Debt incurred by any Person, provided
that the aggregate amount of such Debt at any time outstanding does not exceed
$500,000 and (vi) guarantees of the Debt evidenced by the Senior Notes.”

 

3

 

(c)                                  Section 9.6
is hereby amended by deleting the word “and” appearing at the end of clause
(iv) of said Section; redesignating clause (v) as clause (vi); and inserting
the following new clause (v) in the proper alphanumerical order:

 

“(v) after giving effect to the redemption
of the Investor Subordinated Debt and the payment of the fees and expenses
incurred in connection with the offering of the Senior Notes, in each case
solely with the proceeds of the issuance of the Senior Notes, a dividend to
Holdings and thereafter to the holders of Holdings’ equity interests solely
from the remaining net cash proceeds from the issuance of the Senior Notes;
and”

 

(d)                                 Section 9.8
is hereby amended by deleting the word “and” appearing at the end of clause (c)  thereof; redesignating clause (d) as
clause (e); and inserting the following new clause (d) in the proper
alphanumerical order:

 

“(d) the redemption of the Investor
Subordinated Debt with the proceeds of the issuance of the Senior Notes; and”

 

(e)                                  Section 9.11
is hereby amended and restated in its entirety as follows:

 

“9.11                 Prepayment of Subordinated Debt.
Voluntarily prepay, purchase, redeem or defease any Subordinated Debt except
for (i) the redemption of the Investor Subordinated Debt with the proceeds of
the issuance of the Senior Notes and (ii) regularly scheduled interest payments
required by the documents and instruments evidencing the Subordinated Debt and
in accordance with, and only to the extent permitted by the subordination
provisions of the documents and instruments evidencing Subordinated Debt or any
applicable Subordination Agreement.”

 

(f)                                    Section 9.12
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

 

“9.12                 Amendment of Subordinated Debt Documents.  Amend, modify or otherwise alter any of the
material terms and conditions of those documents or instruments evidencing or
otherwise related to any Subordinated Debt, or waive (or permit to be waived)
any provision thereof in any material respect, without the prior written
approval of Bank; for purposes of those documents or instruments evidencing or
otherwise related to such Subordinated Debt, any increase in the original
interest rate or principal amount, any shortening of the original amortization,
any change in financial covenants which make such covenants more restrictive or
adds new covenants, any change in any default, remedial or other repayment
terms making such term more onerous or restrictive, any increase in the fees
payable after the Effective Date pursuant to the Securities Purchase Agreement
and any other change in or waiver of conditions contained therein which makes
such conditions

 

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more restrictive or onerous or adds new
conditions, shall (without reducing the scope of this Section 9.12) be
deemed to be material.”

 

(g)                                 The
following is hereby added as Section 9.17 of the Credit Agreement:

 

“9.17 
Prepayment or Amendment of Senior Notes. (a) Voluntarily prepay,
purchase, redeem or defease any Debt evidenced by the Senior Notes and the
other documents and instruments evidencing the Debt thereunder except with the
proceeds of an equity offering by Holdings, provided that no Default or Event
of Default has occurred and is continuing at the time of such proposed payment,
or purchase, redeem or defease any Debt evidenced by the Senior Notes and the
other documents and instruments evidencing the Debt thereunder with any of the
Company’s or Interactive Finance’s excess cash flow unless, at the time such
payment is made, no Default or Event of Default has occurred and is continuing;
or (b) amend, modify or otherwise alter any of the material terms and
conditions of the Indenture, the Senior Notes or any such other documents or
instruments evidencing or otherwise related to the Debt evidenced by the Senior
Notes (collectively, the “Restricted Items”), or waive (or permit to be waived)
any provision thereof in any material respect, without the prior written
approval of Bank, provided that, without limitation, any of the following shall
be deemed to a change to a material term or condition of the Restricted Items:
(i) any increase in the interest rate or other amounts payable with respect to
the Senior Notes; (ii) any change in the dates upon which payments of
principal, interest or other amounts are due on the Senior Notes or change the
principal amount of the Senior Notes (other than changes that would extend the
maturity date of such principal, interest or other amounts or reduce the amount
of such payment); and (iii) any change to add or make more restrictive any
Event of Default or covenant with respect to the Restricted Items.”

 

5.                                       Section 10
is hereby amended as follows:

 

(a)                                  Section 10.1(j)
is hereby amended and restated as follows:

 

“(j)(i) Whitney shall fail to own, directly
or indirectly, at least fifty percent (50%) by value and by voting of the
aggregate ownership interests of Holdings, (ii) the occurrence of a Change of
Control (as defined in the Indenture) or (iii) the occurrence of a change of
control under any Subordinated Debt Documents;”

 

(b)                                 The
following is added as clause (k) under Section 10.1.

 

“(k) the occurrence of any “Event of
Default” as defined in the Indenture;”.

 

5

 

6.                                       Replacement
Schedules.  The Replacement Schedules
referred to below (and identified as the Attachments listed below) shall
replace the existing Schedules, as applicable, in their entirety:

 

	
  Replacement
  Schedule

  	
   

  	
  Attachment

  
	
  Schedule 1.1
  (EBITDA Adjustments)

  	
   

  	
  4

  

 

7.                                       This
Third Amendment and Consent shall become effective (according to the terms
hereof) on the date (the “Third Amendment Effective Date”) that the following
conditions have been fully satisfied by the Company (the “Conditions”) (which
shall be confirmed by the Bank by the delivery and release to the Company of
its signature page to this Third Amendment and Consent):

 

(a)                                  Bank
shall have received via facsimile (followed by the prompt delivery of original
signatures) counterpart originals of this Third Amendment and Consent, in each
case duly executed and delivered by the Company and the Bank.

 

(b)                                 Bank
shall have received the Reaffirmation of Loan Documents, executed and delivered
by each Loan Party in the form attached to this Third Amendment and Consent as
Attachment 3.

 

(c)                                  Bank
shall have received a certification from the Company and each of the Loan
Parties dated as of the Third Amendment Effective Date that, after giving
effect to the amendments contained in Paragraphs 2 through 6 hereof, (a)
execution and delivery of this Third Amendment and Consent and the other Loan
Documents required to be delivered hereunder, and the performance by the Loan
Parties of their respective obligations under the Credit Agreement as amended
hereby (herein, as so amended, the “Amended Credit Agreement”) are within such
undersigned’s powers, have been duly authorized, are not in contravention of
law or the terms of its articles of incorporation or bylaws or other organic
documents of the parties thereto, as applicable, and except as have been
previously obtained do not require the consent or approval, material to the
amendments contemplated in this Third Amendment and Consent, of any
governmental body, agency or authority, and the Amended Credit Agreement and the
other Loan Documents required to be delivered hereunder will constitute the
valid and binding obligations of such undersigned parties enforceable in
accordance with its terms, except as enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium, ERISA or similar
laws affecting the enforcement of creditors’ rights generally and by general
principles of equity (whether enforcement is sought in a proceeding in equity
or at law), (b) the representations and warranties set forth in Sections 7.1
through 7.14, inclusive, of the Amended Credit Agreement are true and correct
on and as of the Third Amendment

 

6

 

Effective Date
(except to the extent such representations specifically relate to an earlier
date), and (c) on and as of the Third Amendment Effective Date, after giving
effect to this Third Amendment and Consent, no Default or Event of Default
shall have occurred and be continuing.

 

(d)                                 Each
Loan Party shall have delivered revisions or updates to the Schedules of the
Credit Agreement and the Security Agreement, or shall have provided a
certification that no change shall have occurred with respect to any such
Schedules.

 

(e)                                  Bank
shall have received a copy of the Preliminary Offering Circular (as defined in
the Recitals to this Third Amendment and Consent).

 

(f)                                    Company
shall have paid to Bank all interest, fees and other amounts, if any, owed to
the Bank and accrued to the Third Amendment and Consent Effective Date.

 

8.                                       The
parties hereby agree that if the Senior Notes have not been delivered against
payment thereon on or before April 30, 2004, the changes to the Credit
Agreement as set forth in paragraphs 2 through 6 of this Third Amendment and
Consent shall be reversed, except for the change to Schedule 1.1 (EBITDA
Adjustments) of the Credit Agreement, which shall remain effective
notwithstanding anything to the contrary in this paragraph 8.

 

9.                                       Except
as specifically set forth above, this Third Amendment and Consent shall not be
deemed to amend or alter in any respect the terms and conditions of the Credit
Agreement (including without limitation all conditions and requirements for
Advances and any financial covenants), any of the Revolving Credit Notes issued
thereunder or any of the other Loan Documents. 
Nor shall this Third Amendment and Consent constitute a waiver or
release by the Bank of any right, remedy, Default or Event of Default under or
a consent to any transaction not meeting the terms and conditions of the Credit
Agreement, any of the Revolving Credit Notes issued thereunder or any of the
other Loan Documents. Furthermore, this Third Amendment and Consent shall not
affect in any manner whatsoever any rights or remedies of the Bank with respect
to any other non-compliance by the Company with the Credit Agreement or the
other Loan Documents, whether in the nature of a Default or Event of Default,
and whether now in existence or subsequently arising, and shall not apply to
any other transaction.

 

10.                                 Company
and each other Loan Party hereby acknowledges and agrees that this Third
Amendment and Consent and the amendments contained herein do not constitute any
course of dealing or other basis for altering any obligation of the Company,
any other Loan Party or any other party or any rights, privilege or remedy of
the Bank under the Credit Agreement, any other Loan Document, any other
agreement or document, or any contract or instrument.

 

7

 

11.                                 Except
as specifically defined to the contrary herein, capitalized terms used in this
Third Amendment and Consent shall have the meanings set forth in the Credit
Agreement.

 

12.                                 This
Third Amendment and Consent may be executed in counterpart in accordance with
Section 11.11 of the Credit Agreement.

 

13.                                 This
Third Amendment and Consent shall be construed in accordance with and governed
by the laws of the State of Michigan.

 

8

 

WITNESS the due
execution hereof as of the day and year first above written.

 

 

	
  COMERICA BANK

  	
  INTERACTIVE HEALTH LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daryl Krause

  	
   

  	
  By:

  	
  /s/ Thomas Dragotto

  	
   

  
	
   

  	
   

  
	
  Its: Managing Director

  	
  Its: Chief Financial Officer
  and Secretary

  
						

 

9

 

Attachment 1 to Third Amendment and Consent

 

Preliminary Offering Circular

 

10

 

Attachment 2 to Third Amendment and Consent

 

Summary of Terms

 

11

 

Attachment 3 to Third Amendment and Consent

 

REAFFIRMATION OF CERTAIN LOAN DOCUMENTS

 

This
Reaffirmation of Loan Documents dated as of
          , 2004
(“Reaffirmation”) executed by the undersigned is delivered in connection with
that certain Interactive Health LLC Credit Agreement (as amended or otherwise
modified from time to time, the “Credit Agreement”) dated as of
December 30, 2003 by and between the Interactive Health LLC (“Company”)
and Comerica Bank (“Bank”), and reaffirms the following documents, each
executed in favor of the Bank and dated as set forth below (collectively, the
“Reaffirmed Loan Documents”):

 

(a)                                  the
Guaranty dated as of February 13, 2004, executed by Interactive Health
Finance Corp. (“Guarantor”);

 

(b)                                 the
Parent Pledge Agreement dated as of February 13, 2004, executed by
Interactive Health, Inc. (“Holdings”) under the Revolving Credit and Term Loan
Agreement; and

 

(c)                                  the
Security Agreement dated as of February 13, 2004, executed by the Company
and Guarantor.

 

1.                                       Each
of the undersigned acknowledges that the Company and Bank have executed the
Third Amendment and Consent to the Credit Agreement dated as of
March       , 2004 (the “Third Amendment”).

 

2.                                       Each
of the undersigned hereby ratifies and confirms its obligations under the
Reaffirmed Loan Documents to which such undersigned is a party and agrees that
such Reaffirmed Loan Documents remain in full force and effect after giving
effect to the effectiveness of the Credit Agreement, as amended by the Third
Amendment and that, upon such effectiveness, all references in such Reaffirmed
Loan Documents to the “Credit Agreement” shall be references to the Credit
Agreement, as amended by the Third Amendment.

 

3.                                       This
Reaffirmation may be executed by the various parties on separate counterparts.
This Reaffirmation shall be construed in accordance with and governed by the
laws of the State of Michigan. This Reaffirmation shall be binding upon the
undersigned, the Bank and their respective successors and assigns.  This Reaffirmation shall be effective as of
the date hereof.

 

4.                                       Except
as specifically defined to the contrary herein, capitalized terms used in this
Reaffirmation shall have the meanings set forth in the Credit Agreement.

 

[SIGNATURES
FOLLOW ON SUCCEEDING PAGE]

 

12

 

WITNESS, the due
execution hereof as of the date and year first above written.

 

	
   

  	
  INTERACTIVE HEALTH LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERACTIVE HEALTH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERACTIVE HEALTH FINANCE
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  Title

  

 

13

 

ATTACHMENT 4

 

Replacement Schedule 1.1

 

(EBITDA Adjustments)

 

Schedule 1.1

 

CONSOLIDATED EBITDA

AND

EBITDA ADJUSTMENTS

 

 

Part I

 

FOR THE FISCAL QUARTERS ENDED

SEPTEMBER 30, 2003 AND DECEMBER 31, 2003

 

To the extent deducted from
Consolidated Net Income for the fiscal quarters ended September 30, 2003
and December 31, 2003, any charges, premiums or expenses incurred in
connection with the acquisition of the Company in August 2003.

 

Part II

 

FOR THE FISCAL QUARTERS ENDED
MARCH 31, 2004 AND JUNE 30, 2004

 

To the extent deducted from
Consolidated Net Income for the fiscal quarter ended March 31, 2004 or
June 30, 2004:  (i)  any non-recurring cash expenses related to
the issuance of the Senior Notes; and (ii) any charges, premiums or expenses
incurred as a result of the repayment of the Investor Subordinated Debt (as
defined in the Credit Agreement before giving effect to the Third Amendment
thereto), including, without limitation, the redemption premium to be paid in
connection therewith.

 

14Exhibit 10.17

 

GUARANTY

 

This GUARANTY is made
as of this 13th day of February, 2004 by the undersigned guarantors (each a
“Guarantor” and any and all collectively, the “Guarantors”) to Comerica Bank
(“Bank”).

 

RECITALS

 

A.                                   Pursuant
to that Interactive Health LLC Credit Agreement dated
as of December 30, 2003 (as amended or otherwise modified from time to
time, the “Credit Agreement”) by and among Interactive Health LLC, a Delaware limited liability company (“Company”) and
Comerica Bank (“Bank”), the Bank has agreed to extend credit to the Company on
the terms set forth in the Credit Agreement, with such credit consisting of (i)
the Revolving Credit in an aggregate amount, subject to the terms of the Credit
Agreement, not to exceed Twenty Million Dollars ($20,000,000) at any one time
outstanding, (ii) as part of the Revolving Credit, a facility for the issuance
of letter(s) of credit (“Letter(s) of Credit”) for the account of the Company
pursuant to Section 4 of the Credit Agreement, and (iii) as part of the Revolving
Credit, a facility for the creation and discounting of bankers acceptances
(“Acceptances”) pursuant to Section 4 of the Credit Agreement.

 

B.                                     As a
condition to entering into and performing their respective obligations under
the Credit Agreement, the Bank has required that each of the Guarantors deliver
this Guaranty to the Bank.

 

C.                                     Each
of the Guarantors desires to see the success of the Company and furthermore,
each of the Guarantors shall receive direct and/or indirect benefits from
extensions of credit made or to be made pursuant to the Credit Agreement to the
Company.

 

D.                                    The
business operations of the Company and the Guarantors are interrelated and
complement one another, and such entities have a common business purpose, with intercompany bookkeeping and accounting adjustments used to
separate their respective properties, liabilities, and transactions. To permit
their uninterrupted and continuous operations, such entities now require and
will from time to time hereafter require funds and credit accommodations for
general business purposes and the proceeds of advances under the Revolving
Credit and other credit facilities extended under the Credit Agreement will
directly or indirectly benefit the Company and the Guarantors hereunder,
severally and jointly.

 

NOW, THEREFORE, to
induce Bank to enter into and perform its obligations under the Credit
Agreement, each of the Guarantors has executed and delivered this guaranty (as
amended and otherwise modified from time to time, this “Guaranty”).

 

1

 

1.                                       Definitions.
Unless otherwise provided herein, all capitalized terms in this Guaranty shall
have the meanings specified in the Credit Agreement. The term “Bank” as used
herein shall include any successors or assigns of the Bank in accordance with
the Credit Agreement.

 

2.                                       Guaranty.
Each of the Guarantors, hereby, jointly and severally, guarantees to the Bank
the due and punctual payment to the Bank when due, whether by acceleration or
otherwise, of all amounts, including, without limitation, principal, interest
(including interest accruing on or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding by or against the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such a proceeding), and all other
liabilities and obligations, direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter incurred, which may arise under, out of,
or in connection with all Indebtedness under or in connection with the Credit
Agreement or the other Loan Documents, whether such Indebtedness is now
existing or hereafter arising including but not limited to:

 

(a)                                  all of
Company’s obligations contained in or arising under or in connection with the
Credit Agreement and the Revolving Credit Notes issued by it from time to time
pursuant to the Credit Agreement, and all obligations of Company contained in
or arising under the other Loan Documents executed by it;

 

(b)                                 any
Letters of Credit issued or to be issued pursuant to the Credit Agreement, and
any Acceptances created or to be created pursuant to the Credit Agreement and
all of Company’s obligations contained in arising under any and all
applications, agreements or other documentation executed or to be executed in
connection therewith;

 

(c)                                  the
obligations of Company for payment of all sums loaned, paid out, expended or
advanced by or for the account of the Bank under the terms of the Credit
Agreement or the other Loan Documents, in connection with the collateral or any
of the documents or instruments described in Guaranty, the Credit Agreement or
the other Loan Documents;

 

(d)                                 all
other Indebtedness (as defined in the Credit Agreement) of the Company, any Guarantor
and/or any other Loan Party, under or in connection with the Credit Agreement
or the other Loan Documents, whether such Indebtedness is now existing or
hereafter arising; and

 

(e)                                  all extensions, renewals and amendments of or to any of the
foregoing, or such other Indebtedness;

 

whether on account of principal, interest, reimbursement
obligations, fees, indemnities, and reasonable costs and expenses (including
without limitation, all reasonable fees and disbursements of counsel to the
Bank) or otherwise, and each of the Guarantors hereby jointly and severally
agrees that if the Company shall fail to pay any of such amounts when and as
the same shall be due and payable, whether by acceleration or otherwise
(subject to any applicable periods of grace or cure), each of such Guarantors,
will forthwith pay to the Bank, an amount equal to any such amount or cause the
Company to do so, and will pay any and all reasonable

 

2

 

expenses, including reasonable attorneys’
fees, that may be incurred by the Bank in collecting any of the foregoing
obligations.

 

3.                                       Unconditional
Character of Guaranty. The obligations of each of the Guarantors under this
Guaranty shall be absolute and unconditional, and shall be a guaranty of
payment and not of collection, irrespective of the validity, regularity or
enforceability of the Credit Agreement, the Letters of Credit (and any
application or related documentation in connection therewith), the Acceptances
(and any related documentation in connection therewith) or any of the other
Loan Documents, or any provision thereof, the absence of any action to enforce
the same, any waiver or consent with respect to or any amendment of any
provision thereof (provided that any amendment of this Guaranty shall be in
accordance with the terms hereof), the recovery of any judgment against any
Person or action to enforce the same, any failure or delay in the enforcement
of the obligations of the Company under the Credit Agreement, or any of the other
Loan Documents, or any setoff, counterclaim, recoupment,
limitation, defense or termination whether with or without notice to the
Guarantors. Each of the Guarantors hereby waives diligence, demand for payment,
filing of claims with any court, any proceeding to enforce any provision of the
Credit Agreement, the Letters of Credit (and any application or related
documentation in connection therewith), the Acceptances (and any related
documentation in connection therewith) or any of the other Loan Documents, any
right to require a proceeding first against the Company, or against any other
guarantor or other party providing collateral, or to exhaust any security for
the performance of the obligations of the Company, any protest, presentment,
notice or demand whatsoever, and each Guarantor hereby covenants that this
Guaranty shall not be terminated, discharged or released except, subject to
Section 5.8 hereof, upon final payment in full of all Indebtedness due and
to become due from the Company as and to the extent described above, and only
to the extent of any such payment, performance and discharge. Each Guarantor
hereby further covenants that no security now or subsequently held by the Bank
for the payment of the Indebtedness of the Company to the Bank under the Credit
Agreement, the Letters of Credit (and any application or related documentation
in connection therewith), the Acceptances (and any related documentation in
connection therewith) or the other Loan Documents (including, without
limitation, any security for any of the foregoing), whether in the nature of a
security interest, pledge, lien, assignment, setoff, suretyship,
guaranty, indemnity, insurance or otherwise, and no act, omission or other
conduct of the Bank in respect of such security, shall affect in any manner
whatsoever the  unconditional obligations
of this Guaranty, and that the Bank in its sole discretion and without notice
to any of the Guarantors, may release, exchange, enforce, apply the proceeds of
and otherwise deal with any such security without affecting in any manner the
unconditional obligations of this Guaranty.

 

Without limiting the
generality of the foregoing, the obligations of the Guarantors under this
Guaranty, and the rights of the Bank to enforce the same by proceedings, whether
by action at law, suit in equity or otherwise, shall not be in any way affected
to the extent permitted by applicable law, by (i) any insolvency, bankruptcy,
liquidation, reorganization, readjustment, composition, dissolution, winding up
or other proceeding involving or affecting the Company, any or all of the
Guarantors or any other person including any discharge of, or bar or stay
against collecting, all or any of the Indebtedness in or as a result of any
such proceeding; (ii) any change in the ownership of any of the capital stock
(or other ownership interests) of the Company or any or all of the Guarantors,
or any other party providing collateral for any Indebtedness of the Company
covered by this Guaranty, or any of their respective Affiliates; (iii) the
election by the

 

3

 

Bank,
in any bankruptcy proceeding of any person, to apply or not apply
Section 1111(b)(2) of the Bankruptcy Code; (iv) any extension of credit or
the grant of any security interest or lien under Section 363 of the
Bankruptcy Code; (v) any agreement or stipulation with respect to the provision
of adequate protection in any bankruptcy proceeding of any person; (vi) the
avoidance of any security interest or lien in favor of the Bank for any reason;
or (vii) any action taken by the Bank that is authorized by this paragraph or
any other provision of this Guaranty.

 

Each Guarantor assumes
the risk of keeping itself informed concerning the financial condition of the
Company and all other circumstances bearing upon the risk of nonpayment of the
Indebtedness of the Company in favor of the Bank arising under the Loan
Documents.

 

Each of the Guarantors
hereby waives to the fullest extent possible under applicable law:

 

(a)                                  any defense based upon the doctrine of marshaling of assets
or upon an election of remedies by the Bank, including, without limitation, an
election to proceed by non-judicial rather than judicial foreclosure;

 

(b)                                 any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal;

 

(c)                                  any
duty on the part of the Bank to disclose to such Guarantor any facts the Bank
may now or hereafter know about the Company, regardless of whether the Bank has
reason to believe that any such facts materially increase the risk beyond that
which such Guarantor intends to assume or has reason to believe that such facts
are unknown to such Guarantor or has a reasonable opportunity to communicate
such facts to such Guarantor, since such Guarantor acknowledges that it is
fully responsible for being and keeping informed of the financial condition of
the Company and of all circumstances bearing on the risk of non-payment of any Indebtedness
hereby guaranteed;

 

(d)                                 any and
all claims for reimbursement, contribution, exoneration, indemnity or
subrogation, or any other similar claim, which such Guarantor may have or
obtain against the Company, by reason of the existence of this Guaranty, or by
reason of the payment by such Guarantor of any Indebtedness or the performance
of this Guaranty or of any other Loan Documents, until the Indebtedness has
been repaid and discharged in full and no commitment to extend any credit under
the Credit Agreement or any of the Loan Documents (whether optional or
obligatory), or any Letter of Credit or Acceptance remains outstanding, and any
amounts paid to such Guarantor on account of any such claim at any time shall
be held by such Guarantor in trust for the Bank, segregated from other funds of
such Guarantor, and forthwith upon receipt by such Guarantor shall be turned
over to Bank in the exact form received by such Guarantor (duly endorsed to
Bank by such Guarantor, if required), to be applied to such Guarantor’s
obligations under this Guaranty, whether matured or unmatured,
in such order and manner as Bank may determine; and

 

(e)                                  any other event or action (excluding compliance by such
Guarantor with the provisions hereof or the payment and satisfaction in full of
the Indebtedness and the termination or expiration of any commitments by the
Bank to extend any credit under the Credit

 

4

 

Agreement
or any of the other Loan Documents, whether optional or obligatory) that would
result in the discharge by operation of law or otherwise of such Guarantor from
the performance or observance of any obligation, covenant or agreement
contained in this Guaranty.

 

Each of the Guarantors
acknowledges and agrees that this is a knowing and informed waiver of the
undersigned’s rights as discussed above and that the Bank is relying on this
waiver in extending credit to the Company.

 

The Bank may deal with
the Company and any security held by them for the obligations of the Company in
the same manner and as freely as if this Guaranty did not exist and the Bank
shall be entitled, without notice to any of the Guarantors, among other things,
to grant to the Company such extension or extensions of time to perform any act
or acts as may seem advisable to the Bank at any time and from time to time,
and to permit the Company to incur additional indebtedness to the Bank without
terminating, affecting or impairing the validity or enforceability of this
Guaranty or the obligations of the Guarantors hereunder. Each Guarantor waives
all rights to participate in any security now or hereafter held by the Bank
except until such time as it is entitled to exercise rights in connection with
any claims for reimbursement, contribution, exoneration, indemnity or
subrogation, or any other similar claim, as set forth in clause (d) of
Section 3.

 

The Bank may proceed,
in its own name or otherwise, to protect and enforce any or all of its rights
under this Guaranty by suit in equity, action at law or by other appropriate
proceedings, or to take any action authorized or permitted under applicable
law, and shall be entitled to require and enforce the performance of all acts
and things required to be performed hereunder by the Guarantors. Each and every
remedy of the Bank shall, to the extent permitted by law, be cumulative and
shall be in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity.

 

No waiver or release
shall be deemed to have been made by the Bank of any of its rights hereunder
unless the same shall be in writing and signed by or on behalf of the Bank as
determined pursuant to the Credit Agreement, and any such waiver shall be a
waiver or release only with respect to the specific matter and Guarantor or
Guarantors involved, and shall in no way impair the rights of the Bank or the
obligations of the Guarantors under this Guaranty in any other respect at any
other time.

 

At the option of the
Bank, any or all of the Guarantors may be joined in any action or proceeding
commenced by the Bank against the Company or any of the other parties providing
collateral for any Indebtedness covered by this Guaranty in connection with or
based upon the Credit Agreement, the Letters of Credit (and any application or
related documentation in connection therewith), the Acceptances (and any
related documentation in connection therewith) or any of the other Loan
Documents or other Indebtedness, or any provision thereof, and recovery may be
had against any or all of the Guarantors in such action or proceeding or in any
independent action or proceeding against any of them, without any requirement
that the Bank first assert, prosecute or exhaust any remedy or claim against
the Company and/or any of the other parties providing collateral for any
Indebtedness covered by this Guaranty.

 

5

 

4.                                       Representations
and Warranties. Each Guarantor (i) ratifies, confirms and, by reference
thereto (as fully as though such matters were expressly set forth herein),
represents and warrants with respect to itself those matters set forth in
Section 7 of the Credit Agreement to the extent applicable to such
Guarantor and those matters set forth in the recitals, and such representations
and warranties shall be deemed to be true and correct in all material respects
on or as of the date hereof; and (ii) agrees not to engage in any action or
inaction, the result of which would cause a violation of any term or condition
of the Credit Agreement.

 

5.                                       Miscellaneous.

 

5.1                                 Governing
Law. This Guaranty has been delivered in Michigan and shall be interpreted
and the rights of the parties hereunder shall be determined under the laws of,
and be enforceable in, the State of Michigan.

 

5.2                                 Severability. If any term or provision of this
Guaranty or the application thereof to any circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Guaranty, or the application
of such term or provision to circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Guaranty shall be valid and enforceable to the fullest extent
permitted by law.

 

5.3                                 Notice.
All notices or other communications to be made or given pursuant to this Guaranty
shall be sufficient if made or given as provided in Section 8.5 of the
Credit Agreement; or at such other addresses as directed by any of such parties
to the others, as applicable, in compliance with this paragraph.

 

5.4                                 Right
of Offset. Each of the Guarantors acknowledges the rights of the Bank,
subject to the applicable terms and conditions of the Credit Agreement, to
offset against the Indebtedness of any Guarantor to the Bank under this
Guaranty, any amount owing by the Bank to such Guarantors, whether represented
by any deposit of such Guarantors (or any of them) with the Bank or otherwise.

 

5.5                                 Right
to Cure. Each of the Guarantors shall have the right to cure any Event of
Default under the Credit Agreement or the other Loan Documents with respect to
obligations of the other Guarantors thereunder;
provided that such cure is effected within the applicable grace period or
period for cure thereunder, if any; and provided
further that such cure can be effected in compliance with the Credit
Agreement.  Except to the extent of
payments of principal, interest and/or other sums actually received by the Bank
pursuant to such cure, the exercise of such right to cure by any Guarantor
shall not reduce or otherwise affect the liability of any other Guarantor under
this Guaranty.

 

5.6                                 Amendments.
The terms of this Guaranty may be waived, altered, modified, amended,
supplemented or terminated only by an instrument in writing signed by the
parties, except as provided herein and in accordance with the Credit Agreement.
In accordance with Section 8.16 of the Credit Agreement, future
Subsidiaries (as defined in the Credit Agreement) shall become obligated as
Guarantors hereunder (each as fully as though an original signatory hereto) by
executing and delivering to the Bank that certain joinder
agreement in the form attached to this Guaranty as Exhibit “A”.

 

6

 

5.7                                 Joint
and Several Obligation, etc. The obligation of each of the Guarantors under
this Guaranty shall be several and also joint, each with all and also each with
any one or more of the others, and may be enforced against each severally, any
two or more jointly, or some severally and some jointly. Any one or more of the
Guarantors may be released from its obligations hereunder with or without
consideration for such release and the obligations of the other Guarantors
hereunder shall be in no way affected thereby. The Bank may fail or elect not
to prove a claim against any bankrupt or insolvent Guarantor and thereafter,
the Bank may, without notice to any Guarantors, extend or renew any part or all
of any Indebtedness of the Company under the Credit Agreement or otherwise, and
may permit any such Person to incur additional Indebtedness, without affecting
in any manner the unconditional obligation of each of the Guarantors hereunder.
Such action shall not affect any right of contribution among the Guarantors.

 

5.8                                 Release.  Upon the termination or expiration of the
commitment of the Bank to extend credit to the Company under the Credit
Agreement or any other Loan Document and the satisfaction of the obligations of
the Guarantors hereunder, or when none of the Guarantors is subject to any
obligation hereunder or under the Credit Agreement or any of the other Loan
Documents, the Bank shall deliver to such Guarantors, upon written request
therefor, (i) a written release of this Guaranty and (ii) appropriate
discharges of any collateral provided by the Guarantors for this Guaranty;
provided however that, the effectiveness of this Guaranty shall continue or be
reinstated, as the case may be, in the event: (x) that any payment received or
credit given by the Bank is returned, disgorged, rescinded or required to be recontributed to any party as an avoidable preference,
impermissible setoff, fraudulent conveyance, restoration of capital or
otherwise under any applicable state, federal or law of any jurisdiction,
including laws pertaining to bankruptcy or insolvency, and this Guaranty shall
thereafter be enforceable against the Guarantors as if such returned,
disgorged, recontributed or rescinded payment or
credit has not been received or given by the Bank, and whether or not the Bank
relied upon such payment or credit or changed its position as a consequence
thereof or (y) that any liability is imposed, or sought to be imposed against
the Bank relating to the environmental condition of any of property mortgaged
or pledged to the Bank by any Guarantor, Company or any other party as
collateral (in whole or part) for any indebtedness or obligation evidenced or
secured by this Guaranty, whether such condition is known or unknown, now
exists or subsequently arises (excluding only conditions which arise after
acquisition by the Bank or any Bank of any such property, in lieu of
foreclosure or otherwise, due to the wrongful act or omission of the Bank, or
any person other than the Company, the Subsidiaries, or Affiliates of the
Company or the Subsidiaries), and this Guaranty shall thereafter be enforceable
against the Guarantors to the extent of all such liabilities, costs and
expenses (including reasonable attorneys’ fees) incurred by the Bank as the
direct or indirect result of any such environmental condition but only for
which the Company is obligated to the Bank pursuant to the Credit Agreement.
For purposes of this Guaranty “environmental condition” includes, without
limitation, conditions existing with respect to the surface or ground water,
drinking water supply, land surface or subsurface strata and the ambient air.

 

5.9                                 Consent
to Jurisdiction. Each of the Guarantors hereby irrevocably submits
to the non-exclusive jurisdiction of any United States federal or Michigan
state court sitting in Detroit in any action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents and Guarantors
hereby irrevocably agree that all claims in respect of such action or

 

7

 

proceeding may be heard and determined in any such United
States federal or Michigan state court. Each of the Guarantors irrevocably
consents to the service of any and all process in any such action or proceeding
brought in any court in or of the State of Michigan (and to the receipt of any
and all notices hereunder) by the delivery of copies of such process to
Guarantors at their respective addresses specified in Section 5.3 hereof
in the manner set forth therein.

 

5.10                           JURY TRIAL
WAIVER. EACH OF THE GUARANTORS (AND THE BANK BY ACCEPTING THE BENEFITS
HEREOF) HEREBY IRREVOCABLY AGREES TO WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN WHICH THE BANK, ON ONE HAND,
AND THE COMPANY OR ANY OF THE GUARANTORS, ON THE OTHER HAND, ARE PARTIES,
WHETHER OR NOT SUCH ACTIONS OR PROCEEDINGS ARISE OUT OF THIS GUARANTY OR THE
OTHER LOAN DOCUMENTS OR OTHERWISE.

 

5.11                           Limitation
under Applicable Insolvency Laws. Notwithstanding anything to the contrary
contained herein, it is the intention of the Guarantors and the Bank that the
amount of the respective Guarantor’s obligations hereunder shall be in, but not
in excess of, the maximum amount thereof not subject to avoidance or recovery
by operation of applicable law governing bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (collectively,
“Applicable Insolvency Laws”).  To that
end, but only in the event and to the extent that the Guarantor’s respective
obligations hereunder or any payment made pursuant thereto would, but for the operation
of the foregoing proviso, be subject to avoidance or recovery under Applicable
Insolvency Laws, the amount of the Guarantor’s respective obligations hereunder
shall be limited to the largest amount which, after giving effect thereto,
would not, under Applicable Insolvency Laws, render the Guarantor’s respective
obligations hereunder unenforceable or avoidable or subject to recovery under
Applicable Insolvency Laws.  To the
extent any payment actually made hereunder exceeds the limitation contained in
this Section 5.11, then the amount of such excess shall, from and after
the time of payment by the Guarantors (or any of them), be reimbursed by the
Bank upon demand by such Guarantors.  The
foregoing proviso is intended solely to preserve the rights of the Bank
hereunder against the Guarantors to the maximum extent permitted by Applicable
Insolvency Laws and neither the Company nor any Guarantor nor any other Person
shall have any right or claim under this Section 5.11 that would not
otherwise be available under Applicable Insolvency Laws.

 

[SIGNATURES FOLLOW ON
SUCCEEDING PAGES]

 

8

 

IN WITNESS WHEREOF,
each of the undersigned Guarantors has executed this Guaranty as of the date
first above written.

 

	
   

  	
  INTERACTIVE HEALTH FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas Dragotto

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Chief Financial Officer

  

 

9

 

	
   

  	
  Exhibit A

  	
   

  
	
   

  	
  to

  	
   

  
	
   

  	
  Guaranty

  	
   

  

 

Joinder
Agreement

 

THIS JOINDER AGREEMENT is dated as of
                                                   ,
                     
by
                                                                        
(“New Guarantor”).

 

WHEREAS,
pursuant to Section 8.16 of that certain Interactive Health LLC Credit Agreement dated as of December 30, 2003 (as
amended or otherwise modified from time to time, the “Credit Agreement”) by and
among Interactive Health LLC, a Delaware limited
liability company (“Company”) and Comerica Bank (“Bank”), and pursuant to
Section 5.6 of that certain Guaranty dated as of February 13, 2004
(as amended or otherwise modified from time to time, the “Guaranty”) executed
and delivered by the Guarantors named therein (“Guarantors”) in favor of the
Bank, the New Guarantor must execute and deliver a Joinder
Agreement in accordance with the Credit Agreement and the Guaranty.

 

NOW THEREFORE,
as a further inducement to the Bank to continue to provide credit
accommodations to the Company, New Guarantor hereby covenants and agrees as
follows:

 

1.                                       All
capitalized terms used herein shall have the meanings assigned to them in the
Credit Agreement unless expressly defined to the contrary.

 

2.                                       New
Guarantor hereby enters into this Joinder Agreement
in order to comply with Section 8.16 of the Credit Agreement and
Section 5.6 of the Guaranty and does so in consideration of the
Indebtedness existing from time to time under the Credit Agreement (and the
other Loan Documents, as defined in the Credit Agreement), from which New
Guarantor shall derive direct and indirect benefit as with the other Guarantors
(all as set forth and on the same basis as in the Guaranty).

 

3.                                       New
Guarantor shall be considered, and deemed to be, for all purposes of the Credit
Agreement, the Guaranty and the other Loan Documents, a Guarantor under the
Guaranty and hereby ratifies and confirms its obligations under the Guaranty,
all in accordance with the terms thereof.

 

4.                                       No
Default or Event of Default (each such term being defined in the Credit
Agreement) has occurred and is continuing under the Credit Agreement.

 

5.                                       This
Joinder Agreement shall be governed by the laws of
the State of Michigan and shall be binding upon New Guarantor and its
successors and assigns.

 

 

IN WITNESS WHEREOF,
the undersigned New Guarantor has executed and delivered this Joinder Agreement as of
                                     ,
               .

 

 

	
   

  	
  [NEW GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
   

  	
   

  

 

2

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