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EXHIBIT 99.13
CREDIT AND REIMBURSEMENT AGREEMENT
MODIFICATION AGREEMENT NO. 2
This Credit and Reimbursement Agreement Modification Agreement No. 2
dated as of September 26, 1997 by and between Decora, Incorporated, a business
corporation organized and existing under the laws of the State of Delaware and
authorized to do business in the State of New York under the name Decora
Manufacturing, having an office for the transaction of business located at 0
Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000 (hereinafter referred to as the
"Company") and Fleet Bank, a banking corporation organized and existing under
the laws of the State of New York having an office for the transaction of
business located at 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the "Bank").
W I T N E S S E T H:
WHEREAS, as of November 1, 1996, the Company executed in favor of the
Bank a Credit and Reimbursement Agreement (the "Credit and Reimbursement
Agreement") in connection with that certain letter of credit issued by the Bank
in favor of Mellon Bank, FSB, as Trustee, concerning the issuance by the
Counties of Xxxxxx and Washington Industrial Development Agency of Two Million
Four Hundred Sixty Thousand and no/100 Dollars ($2,460,000.00) aggregate
principal amount industrial development revenue bonds (Decora, Incorporated
Project, Series 1996), which Credit and Reimbursement Agreement was modified
pursuant to the terms of that certain Credit and Reimbursement Agreement
Modification Agreement No. 1 by and between the Company and the Bank dated March
27, 1997 (the "Amendment No. 1"); and
WHEREAS, the Company and the Bank have agreed to further modify certain
terms of the Credit and Reimbursement Agreement.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good
and valuable consideration, the receipt of which is acknowledged by the parties,
the Company and the Bank hereby agree as follows:
1. Section 6.01(G) of Article VI of the Credit and Reimbursement
Agreement entitled "Reporting Requirements" is hereby amended,
modified and restated in its entirety to read as follows:
"(G) REPORTING REQUIREMENTS. Furnish, or cause to be
furnished, to the Bank:
(1) within ninety five (95) days of the end of its
fiscal year, annual certified public accountant
audited, consolidated statements for the Company
and its Guarantor (which must include a
consolidating statement schedule), all prepared
in accordance with generally
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accepted accounting principles ("GAAP")
consistently applied, as well as copies of the
Company's 10-k reports;
(2) within thirty (30) days of each calendar month
end, internally prepared financial statements
for the Company for the preceding month, in form
acceptable to the Bank, all prepared in
accordance with GAAP;
(3) within fifty (50) days of the end of each fiscal
quarter, 10Q reports for the Guarantor;
(4) within thirty (30) days of the end of each
month, separate domestic and international
account receivable aging reports concerning the
Company in form acceptable to the Bank;
(5) within sixty (60) days after the end of each
fiscal quarter, a compliance letter acknowledged
by the Chief Financial Officers of both the
Company and its Guarantor concerning those
financial covenants referenced below in
subparagraph (H);
(6) promptly after the commencement thereof, but in
any event not later than ten (10) days after
service of process with respect thereto on the
Company or its Guarantor, notice of all actions,
suits or proceedings before any court or
governmental department, commission, board,
bureau, agency or instrumentality which could
materially adversely effect the Company's or its
Guarantor's financial condition or operations;
and
(7) such other information with respect to the
condition or operations, financial or otherwise,
of the Company, its Guarantor or of any entity
which is a Related Person thereto."
2. Section 6.01(H) of Article VI of the Credit and Reimbursement
Agreement entitled "Financial Covenants" is hereby amended,
modified and restated in its entirety as follows:
(H) FINANCIAL COVENANTS. The Company shall maintain the following
financial covenants:
(i) a minimum current ratio of 1.30 to 1.00 during fiscal
year 1998 and 1.50 to 1.00 during fiscal year 1999 and
thereafter. For the purposes of this Agreement, current
ratio shall be defined as the ratio of the Company's
current assets (including the unused formula
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loan availability under that certain $6,000,000.00
revolving line of credit loan extended by the Bank to
the Company and that certain $1,000,000.00 revolving
line of credit loan extended by the Bank to the Company
[collectively the "Revolver Loans"]) to the Company's
current liabilities (excluding the aforementioned
Revolver Loans) as would be shown on the fiscal quarter
end and fiscal year end balance sheets of the Company
prepared in accordance with GAAP;
(ii) a minimum working capital of Four Million and no/100
Dollars ($4,000,000.00) as at September 30, 1997
through December 31, 1997 and Five Million Five Hundred
Thousand and no/100 Dollars ($5,500,000.00) as at March
31, 1998. During fiscal year 1999 and thereafter, the
Company must maintain a minimum working capital of
Seven Million and no/100 Dollars ($7,000,000.00), all
as would be shown on the fiscal quarter end and fiscal
year end balance sheets of the Company prepared in
accordance with GAAP. For the purposes of determining
working capital, the Company's liability to the Bank
pursuant to the Revolver Loans will be excluded, and
the Company's current assets shall be increased by the
Company's unused formula loan availability under the
Revolver Loans.
(iii) a total debt to tangible net worth ratio at fiscal year
end March 31, 1998 of 5.00 to 1.00, at fiscal year end
March 31, 1999 of 4.00 to 1.00, at fiscal year end
March 31, 2000 of 3.00 to 1.00 and at fiscal year end
March 31, 2001 and thereafter at each March 31 fiscal
year end of 2.50 to 1.0. For the purposes of this
Agreement, debt to tangible net worth ratio shall be
defined as the ratio of the Company's total liabilities
(less subordinated debt) divided by the sum of the
Company's tangible net worth plus subordinated debt
less the amount of the outstanding principal balance of
the notes receivable from the Guarantor, as would be
shown on the fiscal quarter end and fiscal year end
balance sheets of the Company prepared in accordance
with GAAP. For the purposes of this Agreement, the
calculation for fiscal year end March 31, 1998 shall
exclude the one time charge to earnings from September
26, 1997 to and including December 31, 1997, in an
amount not to exceed $750,000.00, for efficiencies
realized as a result of "right sizing" of the business
of
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the Company, its Guarantor and Decora Industries
Deutscheland GmbH which reduce the Company's
consolidated stockholders equity;
(iv) a minimum debt service coverage ratio during fiscal
year 1998 of 1.15 to 1.00 and during fiscal year 1999
and thereafter of 1.20 to 1.00. For the purposes of
this Agreement, debt service coverage ratio will be
calculated using the trailing four quarters of the
Company's earnings before interest, taxes, depreciation
and amortization minus the Company's cash capital
expenditures (net of financed capital expenditures)
divided by the sum of Company's trailing four quarters
debt service payments (principal and interest) less
funds used to repay the Company's indebtedness owed to
CIGNA (whether in the form of debt or equity) minus
amortization of non-cash debt discount associated with
subordinated debt, as would be shown on the fiscal
quarter end and fiscal year end balance sheets of the
Company prepared in accordance with GAAP. For the
purposes of this Agreement, the calculation for fiscal
year end March 31, 1998 shall exclude the one time
charge to earnings from September 26, 1997 to and
including December 31, 1997, in an amount not to exceed
$750,000.00, for efficiencies realized as a result of
"right sizing" of the business of the Company, the
Guarantor and Decora Industries Deutscheland GmbH which
reduce the Company's consolidated stockholders equity;
(v) the Company shall be limited to making annual capital
expenditures in the maximum amount of One Million Five
Hundred and no/100 Dollars during fiscal year 1998 and
One Million and no/100 Dollars during the balance of
the term of this Agreement. If required by the terms of
the manufacturing agreement between the Company and
Rubbermaid, for each year during the term of this
Agreement, the Company must provide evidence,
satisfactory to the Bank, that the Company has received
the consent of Rubbermaid to make capital expenditures
exceeding One Million and no/100 Dollars
($1,000,000.00) in said year;
(vi) the Company's expenditures for management fees shall
not exceed Eight Hundred Thousand and no/100 Dollars
($800,000.00) per annum;
(vii) the consolidated stockholders equity of the Company as
of March 31, 1998 shall not be less
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than the remainder of $14,415,000.00 minus the lesser
of (a) $750,000.00 or (b) the one time charge to
earnings from September 26, 1997 to and including
December 31, 1997 for efficiencies realized as a result
of "right sizing" of the business of the Company, the
Guarantor and Decora Industries Deutscheland GmbH which
reduce the Company's consolidated stockholders equity
(such remainder the "1998 Company Net Worth"); the
consolidated stockholders equity of the Company at
March 31, 1999 shall not be less than the sum of the
1998 Company Net Worth plus $2,500,000.00; the
consolidated stockholders equity of the Company at
March 31, 2000 shall not be less than the sum of the
1998 Company Net Worth plus $6,500,000.00; and at each
fiscal year end thereafter, the consolidated
stockholders equity of the Company shall not be less
than the sum of consolidated stockholders equity of the
Company required to be maintained at the end of the
immediately prior fiscal year plus $6,000,000.00; and
(viii) the consolidated stockholders equity of the Guarantor
at March 31, 1999 shall not be less than the sum of the
consolidated stockholders equity of the Guarantor at
March 31, 1998 (the "1998 Guarantor Net Worth") plus
$4,000,000.00; the consolidated stockholders equity of
the Guarantor at March 31, 2000 shall not be less than
the sum of the 1998 Guarantor Net Worth plus
$10,000,000.00; and at each fiscal year end thereafter,
the consolidated stockholders equity of the Guarantor
shall not be less than the sum of consolidated
stockholders equity of the Guarantor required to be
maintained at the end of the immediately prior fiscal
year plus $8,000,000.00."
3. Except as expressly modified pursuant to the terms hereof, all the
remaining terms of the Credit and Reimbursement Agreement, as
previously modified pursuant to Amendment No. 1, remain in full
force and effect without modification.
4. The Company hereby warrants and covenants to the Bank that as of
the date of this Credit and Reimbursement Agreement Modification
Agreement No. 2, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Credit and
Reimbursement Agreement, Amendment No. 1 or any of the documents
executed herewith or therewith or the obligations represented or
evidenced hereby or thereby.
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5. By signing this Credit and Reimbursement Agreement Modification
Agreement No. 2, Decora Industries, Inc. (the "Guarantor") hereby
consents to all the provisions of this Credit and Reimbursement
Agreement Modification Agreement No. 2 and ratifies and affirms its
obligations to the Bank pursuant to that certain Guaranty Agreement
also dated as of November 1, 1996, executed by the Guarantor in
favor of the Bank (the "Guaranty") and ratifies, confirms and
approves of this Credit and Reimbursement Agreement Modification
Agreement No. 2 and hereby warrants and covenants to the Bank that
as of the date of this Credit and Reimbursement Agreement
Modification Agreement No. 2 there are no disputes, offsets, claims
or counterclaims of any kind or nature whatsoever under the
Guaranty or any of the documents executed in connection herewith or
therewith or the obligations represented or evidenced hereby or
thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Credit and
Reimbursement Agreement Modification Agreement No. 2 the day and year first
above written.
Fleet Bank
By: ______________________________
Xxxxx X. Xxxxxx, Vice President
Decora, Incorporated d/b/a Decora
Manufacturing
By: ________________________________
Xxxxxxx X. Xxxxxxx,
Vice President - Finance
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Decora Industries, Inc.
By: ________________________________
Xxxxxxx X. Xxxxxxx,
Executive Vice President -
Finance and Administration
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