REVOLVING BANK LOAN AND LONG-TERM DEBT

9 Months Ended

Oct. 01, 2011

REVOLVING BANK LOAN AND LONG-TERM DEBT

REVOLVING BANK LOAN AND LONG-TERM DEBT

9. The Company entered into a Amended and Restated Credit Agreement (the Restated Agreement) effective November 18, 2011 in order to obtain a waiver of the covenant requiring a Fixed Charge Coverage Ratio of 1.15 to 1.00 as of October 1, 2011, to extend the maturity date of the Credit Agreement, to increase the maximum amount available under the revolving credit facility to $20,000,000 and to modify certain other amounts, terms and conditions. The Restated Agreement provides for the following:

· The Fixed Charge Coverage Ratio requirement of 1.15 to 1.00 is waived for the twelve month period ended October 1, 2011. The Minimum Fixed Charge Coverage Ratio of 1.15 to 1.00 will commence with the Computation Period ending March 31, 2013.

· The Company must maintain a Minimum Tangible Net Worth as of the last day of any Computation Period of $32,000,000 plus 50% of the Consolidated Net Income for the immediately preceding Fiscal Year..

· Annual capital expenditures may not exceed $3,500,000 excluding those of Williams EcoLogix, Inc.

· Not permit the Balance Sheet Leverage Ratio as of the last day of any Computation Period to exceed 1.00 to 1.00.

· The maximum revolving credit facility line is increased to $20,000,000.

· The maturity date of the credit facility is extended to May 1, 2015.

· Interest rate pricing for the revolving credit facility is Libor plus 3.25% or Prime plus 1%. The interest on the term loan is Libor plus 3.75% or Prime plus 1.5%.

· The term loan principal repayment schedule has been revised and reduced. The table below reflects the new maturities under the Restated Agreement.

· As previously reported, WFC has entered into an agreement to distribute a product currently being developed by a third party. Should the product be successfully developed such that it results in a commercially salable product, WFC (through a newly formed subsidiary, Williams EcoLogix, Inc.) is likely to incur start-up costs and other expenses prior to the realization of revenues by this new business venture. The permitted maximum cumulative cash expenditures for this venture are $2,500,000 commencing on March 24, 2011.

· The interest rate swap transaction remains in effect.

Definitions under the Credit Agreement as amended are as follows:

· Tangible Net Worth is defined as net worth plus subordinated debt, minus intangible assets (goodwill, intellectual property, prepaid expenses, deposits and deferred charges), minus all obligations owed to the Company or any of its subsidiaries by any affiliate or any or its subsidiaries and minus all loans owed by its officers, stockholders, subsidiaries or employees. There are no loans owed by any of the referenced parties at October 1, 2011 or as of the date of this filing except for a loan of $352,000 to an officer of one of the Company’s subsidiaries made during the first quarter of fiscal 2011in conjunction with his relocation as discussed in Note 7.

· Adjusted EBITDA is defined as net income, excluding the operating results of discontinued operations,  plus interest, income taxes, depreciation, depletion and amortization plus other non-cash charges approved by the lender.

· Fixed Charge Coverage Ratio is defined as, for any computation period, the ratio of (a) the sum for such period of Adjusted EBITDA minus the sum of income taxes paid in cash and (b) all unfinanced capital expenditures to the sum for such period of interest expense plus the required payments of principal of the term debt.

· Balance Sheet Leverage Ratio is defined as the ratio of Total Debt to Tangible Net Worth.

The term loan payments under the Restated Agreement and the amortization of deferred financing fees are scheduled as follows (amounts in thousands):

			Amortization
	Term Loan		of Deferred
	Payments		Financing Fees
2011	$	1,012	$	205
2012	500		60
2013	500		—
2014	500		—
2015	3,023		—
	$	5,535	$	265