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EXHIBIT 99.11
FIRST AMENDMENT TO
NOTE
THIS AGREEMENT, to be effective and dated as at the 26th day September,
1997, by and between FLEET BANK, a bank organized and existing under the laws of
the State of New York, and having its principal banking house located at 00
Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (herein called the "Lender"), and DECORA,
INCORPORATED, a Delaware corporation duly authorized to do business in the State
of New York as Decora Manufacturing and having its principal place of business
at Xxx Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000 (herein called the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower executed in favor of the Lender on March 27, 1997
a Line of Credit Note in the face amount of One Million and no/100 Dollars (the
"Note"), pursuant to the terms and conditions of which the Lender agreed, from
time to time, up to and including August 31, 1998, to make loans to the Borrower
in such amount or amounts as the Lender would determine, but not to exceed
$1,000,000.00 outstanding in the aggregate at any one time; and
WHEREAS, the Note was subject to the terms and conditions of
that certain Security Agreement (as defined in the Note); and
WHEREAS, the Lender, at the request of the Borrower, has agreed to
extend the time for making advances under the Note to August 31, 1999 and to
make certain other changes to the Note; provided, however, that the Note, as
modified, would remain subject to the terms of the Security Agreement.
NOW, THEREFORE, in consideration of the Lender agreeing to extend the
time for making additional advances under the Note, and other good and valuable
consideration, receipt of which is hereby acknowledged, it is agreed on the part
of the Borrower with the Lender as follows:
1. That the time for making loans under the Note is extended to August
31, 1999.
2. That subparagraph (g) on pages 4 and 5 of the Note under the "Event
of Default" section is hereby modified to read in its entirety as follows:
"(g) Failure by the Borrower to at all times keep proper books
and records and accounts in accordance with generally accepted
accounting principals consistently applied ("GAAP"), and provide the
following financial reporting to the Bank;
(i) within ninety five (95) days of the end of its fiscal
year, annual certified public accountant audited,
consolidated statements for the Borrower
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and Decora Industries, Inc. (which must include a
consolidating statement schedule), all prepared in
accordance with generally accepted accounting
principles ("GAAP") consistently applied, as well as
copies of the Borrower's 10-k reports;
(ii) within thirty (30) days of each calendar month end,
internally prepared financial statements for the
Borrower for the preceding month, in form acceptable to
the Bank, all prepared in accordance with GAAP;
(iii) within fifty (50) days of the end of each fiscal
quarter, 10Q reports for Decora Industries, Inc.;
(iv) within thirty (30) days of the end of each month,
separate domestic and international account receivable
aging reports concerning the Borrower in form
acceptable to the Bank;
(v) within sixty (60) days after the end of each fiscal
quarter, a compliance letter acknowledged by the Chief
Financial Officers of both the Borrower and Decora
Industries, Inc. concerning those financial covenants
referenced below in subparagraph (h); and
(vi) At the time of submittal of each Request for Advance,
but in no event less frequently than monthly, a Loan
Formula Certificate."
3. That subparagraph (h) on pages 4 and 5 of the Note under the "Event
of Default" section is hereby modified to read in its entirety as follows:
"(h) Failure by the Borrower to maintain compliance with the following
financial covenants, as would be shown on the quarterly and fiscal year
end financial statements of the Borrower prepared in accordance with
GAAP:
(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 Borrower's current assets
(including the unused formula loan availability under that
certain $6,000,000.00 revolving line of credit loan previously
extended by the Bank to the Borrower and under this Note
[collectively the "Revolver Loans"]) to the Borrower's current
liabilities (excluding the aforementioned Revolver Loans) as
would be shown on each fiscal quarter end and fiscal year end
balance sheets of the Borrower 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
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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 Borrower 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 Borrower
prepared in accordance with GAAP. For the purposes of
determining working capital, the Borrower's liability to the
Bank pursuant to the Revolver Loans will be excluded, and the
Borrower's current assets shall be increased by the Borrower'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 Borrower's total
liabilities (less subordinated debt) divided by the sum of the
Borrower's tangible net worth plus subordinated debt less the
amount of the outstanding principal balance of the notes
receivable from Decora Industries, Inc. (the "Corporate
Guarantor"), as would be shown on the fiscal quarter end and
fiscal year end balance sheets of the Borrower 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 Borrower, its Corporate
Guarantor and Decora Industries Deutscheland GmbH which reduce
the Borrower'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 Borrower's earnings
before interest, taxes, depreciation and amortization minus
the Borrower's cash capital expenditures (net of financed
capital expenditures) divided by the sum of Borrower's
trailing four quarters debt service payments (principal and
interest) less funds used to repay the Borrower'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 Borrower prepared in
accordance with GAAP. For the purposes of this Agreement, the
calculation for fiscal
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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
Borrower, the Corporate Guarantor and Decora Industries
Deutscheland GmbH which reduce the Borrower's consolidated
stockholders equity;
(v) the Borrower 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 Note. If
required by the terms of the manufacturing agreement between
the Borrower and Rubbermaid, for each year during the term of
this Note, the Borrower must provide evidence, satisfactory to
the Bank, that the Borrower 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 Borrower'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 Borrower as
of March 31, 1998 shall not be less 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 Borrower, the
Corporate Guarantor and Decora Industries Deutscheland GmbH
which reduce the Borrower's consolidated stockholders equity
(such remainder the "1998 Borrower Net Worth"); the
consolidated stockholders equity of the Borrower at March 31,
1999 shall not be less than the sum of the 1998 Borrower Net
Worth plus $2,500,000.00; the consolidated stockholders equity
of the Borrower at March 31, 2000 shall not be less than the
sum of the 1998 Borrower Net Worth plus $6,500,000.00; and at
each fiscal year end thereafter, the consolidated stockholders
equity of the Borrower shall not be less than the sum of
consolidated stockholders equity of the Borrower 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 Corporate
Guarantor at March 31, 1999 shall not be less than the sum of
the consolidated stockholders equity of the Corporate
Guarantor at March 31, 1998 (the "1998 Guarantor Net Worth")
plus $4,000,000.00; the consolidated stockholders equity of
the Corporate Guarantor at March 31, 2000 shall not be less
than the sum of the 1998 Guarantor Net Worth plus
$10,000,000.00;
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and at each fiscal year end thereafter, the consolidated
stockholders equity of the Corporate 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."
4. That a new subparagraph (i) - under "Event of Default" is added on
page 6 of the Note as follows:
"(i) In the event the Borrower is in default pursuant to the terms of
that certain Note and Warrant Purchase Agreement dated as of September
26, 1997 among the Borrower, Decora Industries, Inc., Xxxxxxxx Street
Capital Advisors, L.L.C., as Agent and the Purchasers named therein or
any of the "Loan Documents" as that term is defined therein."
5. That all of the other terms and conditions of the Note shall remain
in full force and effect, except as modified by the terms of this Agreement.
6. The Borrower hereby warrants and covenants to the Lender that as of
the date of this Agreement, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Note, the Security
Agreement, this Agreement or any of the documents executed in connection
herewith or therewith or the obligations represented or evidenced hereby or
thereby.
7. By signing this Agreement, the Corporate Guarantor, Decora
Industries, Inc., hereby consents to all the provisions of this Agreement and
ratifies and affirms its obligations to the Lender pursuant to the Guaranty
Agreement (the "Guaranty") previously executed by it and modifies, confirms and
approves of this First Amendment to Note and hereby warrants and covenants to
the Lender that as of the date of this First Amendment to Note that there are no
disputes, offsets, claims or counterclaims of any kind or nature whatsoever
under the Guaranty or any of the documents executed herewith or therewith or the
obligations represented or evidenced hereby or thereby.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed by their duly authorized officers as of the effective date above
written.
DECORA, INCORPORATED d/b/a FLEET BANK
DECORA MANUFACTURING
By: ________________________________ By: _______________________________
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxx
Vice President, Finance Vice President
CONSENT OF UNCONDITIONAL GUARANTOR:
DECORA INDUSTRIES, INC.
By: ________________________________
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Xxxxxxx X. Xxxxxxx
Executive Vice President,
Finance and Administration
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