MEAD » Topics » EBITDA Reserve means a reserve to be established and adjusted as follows:

This excerpt taken from the MEAD 8-K filed Nov 21, 2007.

EBITDA Reserve” means a reserve to be established and adjusted as follows:

 

(A) For the first two months of each fiscal quarter, beginning with the month of October 2007, a reserve will be established by the Lender by measuring for each such month the amount of the shortfall, if any, between the monthly EBITDA for that month and the Borrower’s Plan. Such measurement will be based on the Borrower’s month end financial statements for such month (the “Monthly Adjustment”).

 



 

(B) At the end of each fiscal quarter beginning with the fiscal quarter ending November 30, 2007 and in lieu of the Monthly Adjustment made to the EBITDA Reserve based on the monthly financing statements as set forth in paragraph (A) above, the Lender will establish or increase the EBITDA Reserve based on the shortfall, if any, between the Borrower’s fiscal quarter EBITDA and the Borrower’s Plan. Such measurement and adjustment will be based on the Borrower’s financial statements received by the Lender after the end of each fiscal quarter (the “Fiscal Quarter Adjustment”). In all cases, the Fiscal Quarter Adjustment made after the end of each quarter will supersede the Monthly Adjustment for such quarter. Any excess for any Fiscal Quarter in EBITDA over the Borrower’s Plan will not reduce any previously created EBITDA Reserve.

 

(C) By way of illustration, if hypothetically the EBITDA Reserve based upon the Monthly Adjustment during the fiscal quarter ending November 30, 2007 is $100,000 and the Fiscal Quarter Adjustment for the quarter ending November 30, 2007 is $75,000, the EBITDA Reserve, upon the calculation of the Fiscal Quarter Adjustment, will be $75,000. If at the end of the fiscal quarter ending February 29, 2008 the Fiscal Quarter Adjustment is $0, the EBITDA Reserve shall remain at $75,000. If the EBITDA for the fiscal quarter ending February 29, 2008 is in excess over the Borrower’s Plan, the EBITDA Reserve will remain at $75,000. If the Fiscal Quarter Adjustment for the fiscal quarter ending February 29, 2008 is $25,000, the EBITDA Reserve will be increased to $100,000.

 

Section 2.02.                             Amended Definitions. The following definitions set forth in Annex A to the Agreement are hereby amended and restated in their entirety to read as follows:

 

Adjusted Tangible Net Worth” means, at any date:  (a) the book value at which the Adjusted Tangible Assets would be shown on a consolidated balance sheet of the Borrowers at such date prepared in accordance with GAAP; plus (b) non-cash inventory write-downs incurred during October 2007 through January 2008, up to a maximum of $3,000,000; plus, but only to the extent included in Adjusted Tangible Assets, (c) non-cash write-offs of intangible assets incurred during October 2007 through January 2008, up to a maximum of $8,000,000; less (d) the amount at which the consolidated liabilities of the Borrowers and their Subsidiaries would be shown on such balance sheet.

 

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