Exhibit 10.4
July 31, 2002
Staar Surgical Company
1911 Walker Avenue
Monrovia, California 91016
Attention: John Bily
Chief Financial Officer
Re: First Amendment to Amended and Restated Credit Agreement
Ladies and Gentlemen:
We refer to the Amended and Restated Credit Agreement dated as of March
29, 2002 (the "Credit Agreement") between Staar Surgical Company, a Delaware
corporation (the "Borrower"), and Wells Fargo Bank, National Association, a
national banking association (the "Bank"). Terms defined in the Credit Agreement
and not otherwise defined herein have the same respective meanings when used
herein.
1. Amendments to Credit Agreement. As of the effective date of this
letter amendment but subject to satisfaction of the terms and conditions
specified herein, the Credit Agreement is hereby amended as set forth below.
(a) Section 1.1(a) of the Credit Agreement is amended by
deleting the amount "$7,000,000" and substituting "$7,000,000, as such amount is
reduced from time to time pursuant to Sections 1.1(c) and 1.4(a)."
(b) Section 1.1 of the Credit Agreement is amended by adding a
new subsection (c) to read as follows:
"(c) Mandatory Reduction of Line of Credit. On each date
specified in Schedule 3, the Line of Credit shall be automatically
and permanently reduced to the amount set forth opposite such date
under the heading `Line of Credit,' but only if and to the extent that
the Line of Credit has not previously been reduced to such amount or
less pursuant to Section 1.4(a)."
(c) The table set forth in Section 1.2(c) of the Credit Agreement
is amended in full to read as follows:
Staar Surgical Company
July 31, 2002
Page 2
- --------------------------------------------------------------------------------
Level Funded Debt to EBITDA Ratio Applicable Interest Margin
- ----- --------------------------- --------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 ****0.00:1.00 but *2.00:1.00 1.00% per annum
- --------------------------------------------------------------------------------
2 ****2.00:1.00 but *4.00:1.00 2.00% per annum
- --------------------------------------------------------------------------------
3 ****4.00:1.00 but *6.00:1.00 3.00% per annum
- --------------------------------------------------------------------------------
4 ****6.00:1.00 or *0.00:1.00 4.00% per annum
- --------------------------------------------------------------------------------
(d) The table set forth in Section 1.2(f) of the Credit Agreement
is amended in full to read as follows:
- --------------------------------------------------------------------------------
Level Funded Debt to EBITDA Ratio Applicable Fee Rate
- ----- --------------------------- -------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 ****0.00:1.00 but *2.00:1.00 0.25% per annum
- --------------------------------------------------------------------------------
2 ****2.00:1.00 but *4.00:1.00 0.50% per annum
- --------------------------------------------------------------------------------
3 ****4.00:1.00 but *6.00:1.00 0.75% per annum
- --------------------------------------------------------------------------------
4 ****6.00:1.00 or *0.00:1.00 1.00% per annum
- --------------------------------------------------------------------------------
(e) Section 1.4 of the Credit Agreement is amended by adding a new
subsection (c) to read as follows:
"(c) Overadvances. If at any time the aggregate principal
amount of advances outstanding under this Agreement exceeds
the maximum amount of the Line of Credit, Borrower will immediately,
without any notice or request by Bank, repay the advances in the amount
equal to such excess."
(f) Section 4.2 of the Credit Agreement is amended by deleting the
word "June" therein and substituting "the third quarter."
(g) Section 4.3(e) of the Credit Agreement is amended by inserting
"for such month and" immediately after the second reference to "Borrower."
(h) Section 4.3 of the Credit Agreement is further amended by
deleting the word "and" immediately after the semicolon in subsection (h), by
re-lettering subsection (i) as subsection (j) and by inserting a new subsection
(i) to read as follows:
"(i) within 45 days after the end of each fiscal quarter of
Borrower, written notice in reasonable detail of (i) the filing during
such quarter of any application by or on behalf of Borrower or any
Subsidiary thereof with the United States Patent and Trademark Office,
the United States Copyright
* Represent less than
**** Represent greater than or equal to
Staar Surgical Company
July 31, 2002
Page 3
Office or any other office with respect to, or the acquisition during
such quarter by Borrower or any Subsidiary thereof of any interest in
(including, without limitation, any interest as exclusive licensee),
any patent, trademark, copyright or other intellectual property,
together with a copy of such application or the documentation
concerning such acquisition, as applicable, and (ii) in the event that
no such filing or acquisition has been made during such quarter, a
certificate executed by the Chief Financial Officer of Borrower
certifying to that effect; and."
(i) Section 4.9 of the Credit Agreement is amended by restating
subsections (b), (c), (d), (e), (f), (g) and (h) in full to read as follows:
"(b) Tangible Net Worth, tested as of the last day of each
fiscal month commencing with August of 2002, not less than $26,500,000,
with `Tangible Net Worth' being defined as the aggregate of total
stockholders' equity plus subordinated debt less any intangible assets;
"(c) for each fiscal month of Borrower, operating cash flow
(as defined in accordance with Financial Accounting Standards Board
Statement No. 95 (`FASB 95')) to be greater than the sum of required
capitalized lease payments plus required debt repayments plus capital
expenditures (as defined in accordance with FASB 95), tested as of the
last day of each such fiscal month commencing with August of 2002;
provided, however, that, if Borrower fails to comply with the foregoing
covenant in respect of any fiscal month, then such failure shall not
constitute a default of such covenant unless Borrower fails to comply
with such covenant when applied to such fiscal month combined with the
immediately preceding fiscal month; further provided, however, that, if
Borrower fails to comply with the foregoing covenant in respect of any
fiscal month and the immediately preceding fiscal month, then such
failure shall not constitute a default of such covenant unless Borrower
fails to comply with such covenant when applied to such fiscal month
combined with the immediately preceding two fiscal months;
"(d) for each fiscal month of Borrower, negative variance
from projected revenues (based on the monthly and quarterly projections
attached hereto as Schedule 2) to be less than 15%, tested as of the
last day of each fiscal month commencing with August of 2002; provided,
however, that, if Borrower fails to comply with the foregoing covenant
in respect of any fiscal month, then such failure shall not constitute
a default of such covenant unless Borrower fails to comply with such
covenant when applied to such fiscal month combined with the
immediately preceding fiscal month; further provided, however, that, if
Staar Surgical Company
July 31, 2002
Page 4
Borrower fails to comply with the foregoing covenant in respect of any
fiscal month and the immediately preceding fiscal month, then such
failure shall not constitute a default of such covenant unless Borrower
fails to comply with such covenant when applied to such fiscal month
combined with the immediately preceding two fiscal months;
"(e) negative variance from projected net operating income
or loss (based on the monthly and quarterly projections attached hereto
as Schedule 2) for each period of three consecutive fiscal months to be
less than $250,000 in the aggregate for such months, tested as of the
last day of each fiscal month commencing with August of 2002, with `net
operating income or loss' being defined as income or loss before
interest income or expense, equity in earnings of any unconsolidated
affiliate, currency-exchange gains or losses, any other income or
expenses, taxes and minority interests in affiliates;
"(f) [Intentionally Omitted.];
"(g) [Intentionally Omitted.]; and
"(h) ratio of total liabilities to Tangible Net Worth
not more than 0.80 to 1.00, tested as of the last day of each fiscal
month commencing with August of 2002."
(j) Section 4.10 of the Credit Agreement is amended by inserting
the word "and" immediately before subsection (e) therein, by deleting the word
"and" immediately before subsection (f) therein and by deleting subsection (f)
in its entirety.
(k) Section 4.11 of the Credit Agreement is amended by adding the
following before the period at the end thereof:
"; provided, however, that, on August 7, 2002, $2,000,000 in cash
proceeds of such liquid assets shall be released from the lien in favor
of Bank and applied to the principal amount of advances outstanding
under this Agreement, and the remainder, if any, of such liquid assets
shall be subject to the instructions of Borrower."
(l) Schedule 2 to the Credit Agreement is amended in full to be in
the form attached hereto as Schedule 2.
(m) A new Schedule 3 is added to the Credit Agreement to be in the
form attached hereto as Schedule 3.
Staar Surgical Company
July 31, 2002
Page 5
(n) Exhibit A to the Credit Agreement is amended in full to be in
the form attached hereto as Exhibit A.
(o) Exhibit C to the Credit Agreement is amended in full to be in
the form attached hereto as Exhibit C.
2. Waiver of Events of Default under Credit Agreement. As of the
effective date of this letter amendment but subject to satisfaction of the terms
and conditions specified herein, the Bank hereby waives (subject, in the case of
clause (a) below, to the provisions of paragraph 5 hereof) the Events of Default
caused by the Borrower's violation of (a) the covenant contained in Section
4.3(a)(ii) of the Credit Agreement by failing to deliver a copy of a letter of
Borrower's accountants to the management of Borrower in connection with
Borrower's 2001 annual audited financial statements, (b) the covenant contained
in Section 4.9(c) of the Credit Agreement with respect to April, May, June and
July of 2002 and (c) the covenant contained in Section 4.9(e) of the Credit
Agreement with respect to April, May, June and July of 2002.
3. Representations and Warranties. The Borrower hereby represents and
warrants for the benefit of the Bank that (a) the representations and warranties
of the Borrower contained in the Loan Documents are correct in all material
respects on and as of the effective date of this letter amendment, before and
after giving effect to the same, as if made on and as of such date, and (b) no
event has occurred and is continuing, or would result from the effectiveness of
this letter amendment, that constitutes an Event of Default.
4. Conditions Precedent. This letter amendment shall become effective
as of the date first set forth above, subject to the condition subsequent set
forth in paragraph 5 below, when and if (a) the Borrower and the Bank execute
counterparts of this letter amendment and deliver them to each other, (b) the
Borrower executes a new Line of Credit Note substantially in the form of Exhibit
A to the Credit Agreement, as amended, and delivers it to the Bank, (c) the Bank
receives from the Borrower an amendment fee in the amount of $11,250 (i.e.,
0.25% of $4,500,000) and (d) the Borrower, the Bank and Wells Fargo Brokerage
Services, LLC execute counterparts of a letter substantially in the form of
Exhibit A attached hereto and deliver them to each other.
5. Condition Subsequent. The Borrower's delivery to the Bank, not
later than September 30, 2002, of a copy of the letter prepared by BDO Seidman
to the management of Borrower in connection with the Borrower's 2001 annual
audited financial statements shall be a condition subsequent to the
effectiveness of this letter amendment.
Staar Surgical Company
July 31, 2002
Page 6
6. Release of Claims. The Borrower represents and warrants to the Bank
that it has diligently and thoroughly investigated the existence of any Claim
(as defined below) and that, to its knowledge and belief, no Claim exists and no
facts exist that could give rise to or support a Claim. As additional
consideration for the Bank's entering into this letter amendment, the Borrower
and each of its agents, employees, directors, officers, attorneys, affiliates,
subsidiaries, successors and assigns (each a "Releasing Party") hereby release
and forever discharge the Bank and each of its agents, direct and indirect
shareholders, employees, directors, officers, attorneys, branches, affiliates,
subsidiaries, successors and assigns (each a "Released Party") from any and all
damages, losses, claims, demands, liabilities, obligations, actions and causes
of action whatsoever (collectively "Claims") that the Releasing Parties or any
of them may, as of the effective date of this letter amendment, have or claim to
have against any or all of the Released Parties, in each case whether currently
known or unknown or with respect to which the facts are known (or should have
been known), that could give rise to or support a Claim on account of or in any
way relating to, arising out of or based upon any Loan Document, any amendment,
waiver or other modification with respect thereto, the negotiation or
documentation hereof or thereof, any of the transactions contemplated hereby or
thereby, or any action or omission in connection with any of the foregoing,
including all such damages, losses, claims, demands, liabilities, obligations,
actions and causes of action heretofore sustained or that may arise as a
consequence of the dealings between the parties up to the effective date of this
letter amendment in connection with or in any way related to any Loan Document
or any amendment, waiver or other modification with respect thereto. Each
Releasing Party further represents and warrants that it has not heretofore
assigned, and covenants and agrees that it will not hereafter sue any Released
Party upon, any Claim released or purported to be released under this section.
Each Releasing Party will indemnify and hold harmless the Released Parties
against any loss or liability on account of any actions brought by any Releasing
Party or its assigns or prosecuted on behalf of any Releasing Party and relating
to any Claim released or purported to be released under this section. It is
further understood and agreed that any and all rights under the provisions of
Section 1542 of the California Civil Code are expressly waived by each of the
Releasing Parties. Section 1542 of the California Civil Code provides as
follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
7. Reference to and Effect on Loan Documents. On and after the
effective date of this letter amendment, (a) each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement," "thereunder,"
Staar Surgical Company
July 31, 2002
Page 7
"thereof," "therein" or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as amended by this letter
amendment, and (b) each reference in the other Loan Documents to "the Line of
Credit Note," "thereunder," "thereof," "therein" or words of like import
referring to the Line of Credit Note shall mean and be a reference to the new
Line of Credit Note executed by the Borrower in connection with this letter
amendment. The Credit Agreement, as amended by this letter amendment, is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.
8. Execution in Counterparts. This letter amendment may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.
9. GOVERNING LAW. THIS LETTER AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.
Very truly yours,
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:_____________________________
Name:___________________________
Title:__________________________
Agreed as of the date first written above:
STAAR SURGICAL COMPANY
By: /s/ John Bily
-----------------------------
Name: John Bily
---------------------------
Title: CFO
---------------------------
SCHEDULE 2
TO AMENDED AND RESTATED CREDIT AGREEMENT
MONTHLY AND QUARTERLY PROJECTIONS
---------------------------------
SCHEDULE 3
TO AMENDED AND RESTATED CREDIT AGREEMENT
MANDATORY REDUCTION OF LINE OF CREDIT
-------------------------------------
Date Amount of Reduction Line of Credit
- ---- ------------------- --------------
August 7, 2002 $2,500,000 $4,500,000
August 30, 2002 $100,000 $4,400,000
September 30, 2002 $100,000 $4,300,000
October 31, 2002 $125,000 $4,175,000
November 29, 2002 $150,000 $4,025,000
December 31, 2002 $150,000 $3,875,000
January 31, 2003 $175,000 $3,700,000
February 28, 2003 $200,000 $3,500,000
March 31, 2003 $3,500,000 $0
EXHIBIT A
TO FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
July 31, 2002
BY TELECOPIER (213-614-2418) & COURIER
- --------------------------------------
Wells Fargo Brokerage Services, LLC
707 Wilshire Boulevard
MAC E2818-170
Los Angeles, California 90017
Attention: Annalise Lasater (Telephone 213-614-2267)
Re: Account Number 12663076 of Staar Surgical Company
at Wells Fargo Brokerage Services, LLC
Ladies and Gentlemen:
By this letter, (1) Staar Surgical Company, a Delaware corporation
("Staar"), hereby irrevocably and unconditionally instructs Wells Fargo
Brokerage Services, LLC ("WFBS") to wire-transfer $2,000,000 on August 7, 2002
from account number 12663076 (the "WFBS Account") maintained by Staar with WFBS
to account number 4159251172 (the "Bank Account") at Wells Fargo Bank, National
Association (the "Bank"), to pay down the Bank's loan to Staar, and (2) the Bank
hereby notifies WFBS that, upon the wiring of $2,000,000 to the Bank Account on
August 7, 2002, the Bank's lien on the WFBS Account shall be automatically
released, and any funds remaining in the WFBS Account shall be subject to the
instructions of Staar.
Very truly yours,
STAAR SURGICAL COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:_______________________________
Name:_____________________________
Title:____________________________
EXHIBIT A
TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------
$7,000,000.00 Monrovia, California
July 31, 2002
FOR VALUE RECEIVED, the undersigned, STAAR SURGICAL COMPANY, a Delaware
corporation ("Borrower"), promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association ("Bank"), at its office at
333 South Grand Avenue, Los Angeles, California 90071, or at such other place as
the holder hereof may designate, in lawful money of the United States of America
and in immediately available funds, the principal amount of seven million
dollars ($7,000,000.00), or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall
bear interest (computed on the basis of a 360-day year and actual days elapsed)
at a rate per annum equal at all times to the sum of the Prime Rate (as defined
in the Credit Agreement referred to below) in effect from time to time plus the
Applicable Interest Margin (as defined in the Credit Agreement).
(b) Payment of Interest. Interest accrued on this Note shall be
payable on the first business day of each calendar month, commencing on April
1, 2002.
(c) Default Interest. Upon the occurrence and during the continuation
of any Event of Default (as defined in the Credit Agreement referred to below),
the outstanding principal balance of this Note shall bear interest until paid in
full at an increased rate per annum (computed on the basis of a 360-day year and
actual days elapsed) equal to four percent (4%) above the rate of interest from
time to time otherwise applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of the Amended and Restated Credit Agreement dated as of March 29,
2002, as amended by a First Amendment to Amended and Restated Credit Agreement
dated as of July 31, 2002 (as it may be further amended, restated or otherwise
modified from time to time, the "Credit Agreement"), between
Borrower and Bank and any other document executed in connection with or
governing this Note; provided, however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated above
(subject to reduction as provided in the Credit Agreement). The unpaid principal
balance of this Note at any time shall be the total amount advanced hereunder by
the holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on March 31, 2003.
(b) Advances. Advances hereunder, to the total amount of the principal
amount stated above (subject to reduction as provided in the Credit Agreement),
may be made by the holder at the oral or written request of (i) those persons
who are authorized from time to time by Borrower (as evidenced by such documents
as Bank may require) to request advances and direct the disposition of any
advances, until written notice of the revocation of such authority is received
by the holder at the office designated above, or (ii) any person, with respect
to advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower.
(c) Application of Payments. Each payment made on this Note shall be
credited, first, to any interest then due and, second, to the outstanding
principal balance hereof.
CREDIT AGREEMENT:
This Note is made pursuant to, and is subject to the terms and
conditions of, the Credit Agreement.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all amounts of principal and
interest outstanding hereunder to be immediately due and payable, without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder, immediately
upon demand, the full amount of all payments, advances, charges, costs and
expenses, including, without limitation, reasonable attorneys' fees (to include,
without limitation, outside counsel fees and all allocated costs of the holder's
in-house counsel), expended or incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of any
action in any way related to this Note, including, without limitation, any
action for declaratory relief, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including, without limitation,
any of the foregoing incurred in connection with any bankruptcy proceeding
(including, without limitation, any
2
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower
shall be joint and several.
(c) Governing Law. This Note shall be governed by, and construed
in accordance with, the laws of the State of California.
(d) Amendment and Restatement. This Note amends and restates the
Revolving Line of Credit Note dated March 29, 2002 made by Borrower in favor of
Bank.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
STAAR SURGICAL COMPANY
By:__________________________
Name:________________________
Title:_______________________
2
EXHIBIT C
COMPLIANCE CERTIFICATE
----------------------
__________, 200_
Reference is made to the Amended and Restated Credit Agreement dated as
of March 29, 2002, as amended by a First Amendment to Amended and Restated
Credit Agreement dated July 31, 2002 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), between Staar Surgical Company, a Delaware corporation
("Borrower"), and Wells Fargo Bank, National Association, a national banking
association ("Bank"). Capitalized terms used and not otherwise defined herein
have the meanings assigned thereto in the Credit Agreement.
The undersigned hereby certifies as of the date hereof that he/she is
the Chief Financial Officer of Borrower, that, as such, he/she is authorized to
execute and deliver this Certificate to Bank on behalf of Borrower and that:
1. Attached as Schedule 1 hereto is (a) a correct and complete copy of
the unaudited consolidating and consolidated balance sheets of Borrower as of
the end of the month ended on __________, 200_, (b) a correct and complete copy
of the unaudited consolidated and consolidating statements of income and cash
flows of Borrower for such month and for the period commencing at the end of the
preceding fiscal year and ending with the end of such month and (c) a narrative
discussion and analysis by the undersigned concerning the financial performance
of Borrower, and any variance of more than 10% from Borrower's projections
attached as Schedule 2 to the Credit Agreement, evidenced by such financial
statements.
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of Borrower during the accounting period covered by the attached
financial statements.
3. The attached financial statements have been prepared in accordance
with generally accepted accounting principles (subject to normal year-end audit
adjustments and the absence of footnotes) on a basis consistent with prior
periods (except as approved by such officer and disclosed therein) and fairly
state the financial position and results of operations of Borrower.
4. To the best of the undersigned's knowledge, no Event of Default and
no condition, event or act exists that, with the giving of notice or the passage
of time or both, would constitute an Event of Default.
5. The following financial covenant analyses and information set
forth on Schedule 2 attached hereto are true and accurate on and as of the
date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________, 200_.
STAAR SURGICAL COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
2
Date: ________________________________
For the month ended on __________, 200_
SCHEDULE 2
to Compliance Certificate
($ in 000's, consolidated)
- --------------------------------------------------------------------------------------
(a) Current Ratio
- --------------------------------------------------------------------------------------
(i) Total current assets $____________
- --------------------------------------------------------------------------------------
(ii) Total current liabilities $____________
- --------------------------------------------------------------------------------------
(iii) Line (i) divided by line (ii) ____________
- --------------------------------------------------------------------------------------
(iv) If line (iii) is 1.10 or more,
indicate "Yes - Comply"; if line
(iii) is less than 1.10, indicate
"No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(b) Tangible Net Worth
- --------------------------------------------------------------------------------------
(i) Stockholders' equity $____________
plus Subordinated debt ____________
minus Intangible assets ____________
Tangible net worth $____________
- --------------------------------------------------------------------------------------
(ii) If line (i) equals or exceeds
$26,500,000, indicate "Yes - Comply";
if less than $26,500,000, indicate
"No - In Default" ____________
- --------------------------------------------------------------------------------------
(c) Operating Cash Flow to Sum of Capitalized
Lease Payments, Debt Repayments and Capital
Expenditures for Month
- --------------------------------------------------------------------------------------
Date: ________________________________
For the month ended on __________, 200_
- -------------------------------------------------------------------------------------
(i) Operating cash flow (as defined in
accordance with FASB 95) $____________
- --------------------------------------------------------------------------------------
(ii) Required capitalized lease payments $____________
Required debt repayments
____________
Capital expenditures (as defined in
accordance with FASB 95) ____________
Subtotal $____________
- --------------------------------------------------------------------------------------
(iii) Line (i) minus line (ii) $____________
- --------------------------------------------------------------------------------------
(iv) If line (iii) is positive, indicate
"Yes - Comply"; if line (iii) is negative,
continue to line (v) ____________
- --------------------------------------------------------------------------------------
(v) Operating cash flow for previous month $____________
Operating cash flow from line (i) ____________
Subtotal (two-month operating cash
flow) $____________
- --------------------------------------------------------------------------------------
(vi) Required capitalized lease payments for
previous month $____________
Required debt repayments for previous
month
Capital expenditures for previous month ____________
Add subtotal from line (ii) ____________
____________
Subtotal (two-month capitalized lease
payments, debt repayments and capital
expenditures) $____________
- --------------------------------------------------------------------------------------
- 2 -
Date: ________________________________
For the month ended on __________, 200_
- --------------------------------------------------------------------------------------
(vii) Line (v) minus line (vi) $____________
- --------------------------------------------------------------------------------------
(viii)If line (vii) is positive, indicate
"Yes - Comply"; if line (vii) is
negative, continue to line (ix) ____________
- --------------------------------------------------------------------------------------
(ix) Operating cash flow for second preceding $____________
month
Add subtotal from line (v) ____________
Subtotal (three-month operating
cash flow) $____________
- --------------------------------------------------------------------------------------
(x) Required capitalized lease payments for $____________
second preceding month
Required debt repayments for second ____________
preceding month
Capital expenditures for second
preceding month ____________
Add subtotal from line (vi) ____________
Subtotal (three-month capitalized $____________
lease payments, debt repayments and
capital expenditures)
- --------------------------------------------------------------------------------------
(xi) Line (ix) minus line (x) $____________
- --------------------------------------------------------------------------------------
(xii) If line (xi) is positive, indicate
"Yes - Comply"; if line (xi) is
negative, indicate "No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(d) Revenues to Projections
- --------------------------------------------------------------------------------------
(i) Revenues for month $____________
- --------------------------------------------------------------------------------------
(ii) Projected revenues for month as $____________
provided in Schedule 2 to Credit
Agreement
- --------------------------------------------------------------------------------------
- 3 -
Date: ________________________________
For the month ended on __________, 200_
- --------------------------------------------------------------------------------------
(iii) 85% of line (ii) $____________
- --------------------------------------------------------------------------------------
(iv) If line (i) is greater than line
(iii), indicate "Yes - Comply"; if
line (i) is less than or equal to
line (iii), continue to line (v) ____________
- --------------------------------------------------------------------------------------
(v) Revenues for previous month $____________
Revenues from line (i) ____________
Subtotal (two-month revenues) $____________
- --------------------------------------------------------------------------------------
(vi) Projected revenues for previous month $____________
as provided in Schedule 2 to Credit
Agreement
Projected revenues from line (ii) ____________
Subtotal (two-month projected
revenues) $____________
- --------------------------------------------------------------------------------------
(vii) 85% of line (vi) $____________
- --------------------------------------------------------------------------------------
(viii)If line (v) is greater than line (vii),
indicate "Yes - Comply"; if line (v) is
less than or equal to line (vii),
continue to line (ix) ____________
- --------------------------------------------------------------------------------------
(ix) Revenues for second preceding month $____________
Add subtotal from line (v) ____________
Subtotal (three-month revenues) $____________
- --------------------------------------------------------------------------------------
(x) Projected revenues for second preceding $____________
month as provided in Schedule 2 to
Credit Agreement
Add subtotal from line (vi) ____________
Subtotal (three-month projected
revenues) $____________
- --------------------------------------------------------------------------------------
(xi) 85% of line (x) $____________
- --------------------------------------------------------------------------------------
(xii)If line (ix) is greater than line (xi),
indicate "Yes - Comply"; if line (ix)
is less than or equal to line (xi), indicate ____________
"No - In Default"
- --------------------------------------------------------------------------------------
- 4 -
Date: ________________________________
For the month ended on __________, 200_
- --------------------------------------------------------------------------------------
(e) Net Operating Income (or Loss) to Projection
- --------------------------------------------------------------------------------------
(i) Net operating income (or loss) for:
Test month $____________
Preceding month ____________
Second preceding month ____________
Total $____________
- --------------------------------------------------------------------------------------
(ii) Projected net operating income (or loss)
as provided in Schedule 2 to Credit
Agreement for:
Test month $____________
Preceding month ____________
Second preceding month ____________
Total $____________
- --------------------------------------------------------------------------------------
(iii) Positive variance or negative variance $____________
- --------------------------------------------------------------------------------------
(iv) If positive variance, indicate
"Yes - Comply"; if negative variance
greater than $250,000, indicate
"No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(f) Total Liabilities to Tangible Net Worth
- --------------------------------------------------------------------------------------
(i) Total liabilities $____________
- --------------------------------------------------------------------------------------
(ii) Tangible net worth from line (i) of (b) above $____________
- --------------------------------------------------------------------------------------
(iii) Line (i) divided by line (ii) ____________
- --------------------------------------------------------------------------------------
- 5 -
Date: ________________________________
For the month ended on __________, 200_
- --------------------------------------------------------------------------------------
(iv) If line (iii) is 0.80 or less, indicate
"Yes - Comply"; if line (iii) is more than
0.80, indicate "No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(g) Capital Expenditures
- --------------------------------------------------------------------------------------
(i) Aggregate amount of capital expenditures
(as defined in accordance with FASB 95)
made by Borrower and its Subsidiaries in
current fiscal year to date $____________
- --------------------------------------------------------------------------------------
(ii) If line (i) is equal to or less than
$2,000,000, indicate "Yes - Comply";
if line (i) is more than $2,000,000,
indicate "No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(h) Operating Lease Expense
- --------------------------------------------------------------------------------------
(i) Aggregate amount of operating lease
expenses incurred by Borrower and its
Subsidiaries in current fiscal
year to date $____________
- --------------------------------------------------------------------------------------
(ii) If line (i) is equal to or less than
$1,000,000, indicate "Yes - Comply";
if line (i) is more than $1,000,000,
indicate "No - In Default" ____________
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(i) Liabilities of Swiss Sub to UBS AG
- --------------------------------------------------------------------------------------
(i) Liabilities of Swiss Sub
to UBS AG Swiss Francs
____________
- --------------------------------------------------------------------------------------
(ii) If line (i) is equal to or less ____________
than Swiss Francs 5,000,000,
indicate "Yes - Comply"; if line
(i) is more than Swiss Francs
5,000,000, indicate "No - In
- --------------------------------------------------------------------------------------
- 6 -
Date: ________________________________
For the month ended on __________, 200_
- --------------------------------------------------------------------------------------
Default"
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(j) Purchase-Money Indebtedness and Capitalized Leases
- --------------------------------------------------------------------------------------
(i) Aggregate amount of outstanding
purchase-money indebtedness and
capitalized leases incurred in
connection with purchase or lease $____________
of equipment by Borrower and its
Subsidiaries
- --------------------------------------------------------------------------------------
(ii) If line (i) is equal to or less than
$1,000,000, indicate "Yes - Comply";
if line (i) is more than $1,000,000, ____________
indicate "No - In Default"
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(k) Loans to Foreign Subsidiaries
- --------------------------------------------------------------------------------------
(i) Aggregate amount of outstanding
loans, advances and other extensions
of credit (including, without
limitation, for products sold) made by
Borrower to its foreign Subsidiaries $____________
- ---------------------------------------------------------------------------------------
(ii) If line (i) is equal to or less
than $8,500,000, indicate "Yes -
Comply"; if line (i) is more
than $8,500,000, indicate "No - In
Default" ____________
- --------------------------------------------------------------------------------------
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