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EXHIBIT 10.62
CREDIT AND REIMBURSEMENT AGREEMENT
MODIFICATION AGREEMENT NO. 3
This Credit and Reimbursement Agreement Modification Agreement No. 3
dated as of April 29, 1998 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 that certain Credit and Reimbursement
Agreement Modification Agreement No. 2 by and between the Company and the Bank
dated September 26, 1997 (the "Amendment No. 2"); and
WHEREAS, the Company and the Bank have agreed to further modify certain
terms of the Credit and Reimbursement Agreement.
WHEREAS, this agreement is made in conjunction with a loan by the Bank
to the Company pursuant to a $15,000,000 Restated Revolving Promissory Note
bearing even date.
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. The Bank hereby releases its security interest in all of
Borrower's general intangibles, goods, motor vehicles,
machinery, equipment (including without limitation, all items
identified on SCHEDULE A attached hereto), furniture and
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fixtures that can be removed without significant damage to
either realty or the article being removed, or both, as granted
pursuant to the Security Agreement (the "Original Security
Agreement") dated as of November 1, 1996 (a copy of which is
attached hereto as EXHIBIT A) securing the obligations under the
Credit and Reimbursement Agreement. The security interests set
forth in the Original Security Agreement shall continue with
respect to all of Borrower's accounts receivable, inventory,
chattel paper, contract rights, instruments and choses in
action, those fixtures which are so annexed to realty that they
cannot be removed without significant damage to either realty or
the article being removed, or both, plus all proceeds and
products thereof, if any, and all replacements, additions and
accessions thereto. The Company will substitute in place of the
security interests being released the following collateral:
(a) a mortgage on certain pieces or parcels of land with the
buildings and improvements erected thereon more
particularly described in SCHEDULE B annexed hereto and
made a part hereof (herein called "Mortgage Premises");
(b) an assignment of leases and rents concerning the
Mortgaged Premises;
(c) a first security interest in all of the Company's
accounts receivable, contract rights, inventory,
instruments, chattel paper and choses in action plus all
proceeds and products thereof and all replacements,
additions and accessions thereto;
(d) an assignment, pledge and security interest in the
lock-box account in to which the Company directs its
customers to deposit all payments on accounts
receivable.
2. "Revolving Credit Agreement" means that Restated Secured
Revolving Line of Credit Agreement dated as of April 29, 1998
between the Bank and the Company, as the same may be modified,
amended or extended from time to time.
3. 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:
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(a) within ninety-five (95) days of the end of its fiscal
year, annual certified public accountant audited,
consolidated statements for Decora, Industries, Inc.
(which must include a consolidating statement schedule),
all prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied,
along with copies of the Company's 10-K report;
(b) within ninety-five (95) days of the end of its fiscal
year, annual certified public accountant audited
statements for Company, all prepared in accordance with
generally accepted accounting principles ("GAAP")
consistently applied;
(c) within ninety-five (95) days of the end of its fiscal
year, internally prepared annual budgets for the
Company;
(d) field audits three times a year of the Company
conducted, at the Bank's option, by an independent
certified public accountant or the Bank's internal bank
personnel, at Company's expense.
(e) 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;
(f) within sixty (60) days of the end of each fiscal
quarter, 10Q reports for Decora Industries, Inc.;
(g) within thirty (30) days of the end of each month,
account receivable aging reports concerning the Company
in form acceptable to the Bank; and
(h) 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 Decora
Industries, Inc. concerning the financial covenant
referenced in paragraph 4 below.
4. 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 covenant:
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During the term of the Loans, the Company must maintain a
Minimum Fixed Charge Coverage Covenant of 1.10 to 1.00. The
covenant shall be measured quarterly on a rolling four (4)
quarters basis with the first test to occur on March 31, 1999.
The covenant is defined as follows:
EBITDA + non-cash restructuring expenses + cash from
intercompany loans and/or advances divided by interest expense +
Current Maturities of Long Term Debt (prior four quarters) +
Cash Taxes + Tangible and Intangible CAPEX (net of financed
CAPEX) + Dividends/Distributions + Repayment of Intercompany
loans or advances.
5. Section 6.02(A) of the Credit and Reimbursement Agreement
(entitled "Liens, etc.") is hereby amended to read in its
entirety as follows:
"LIENS, ETC. Create or suffer to exist any Lien, security
interest or other charge or encumbrance, or any type of
preferential arrangement, upon or with respect to the Equipment,
the Project Facility or the Existing Facility or assign any
right to receive income to secure any Indebtedness of any
Person, other than (1) Liens permitted under the Loan Documents,
or (2) prior to the making of the LC Loan pursuant to Section
2.02(A) hereof, Liens existing under the Indenture and the
Installment Sale Agreement, or (3) Permitted Encumbrances (as
defined in the Indenture, or (4) Liens, security interests, or
other charges or encumbrances as permitted by the Revolving
Credit Agreement."
6. Section 6.02(G) of the Credit and Reimbursement Agreement
(entitled "Change in Nature of Business") is hereby amended to
read in its entirety as follows:
Make any material change in the nature of its business, except
as permitted by the Revolving Credit Agreement.
7. Section 6.02(H) of the Credit and Reimbursement Agreement
(entitled "No Pledge") is hereby amended to read in its entirety
as follows:
Pledge any of its assets (realty, personalty or otherwise)
without the Bank's prior written consent, except as permitted by
the Revolving Credit Agreement.
8. Section 6.02(I) of the Credit and Reimbursement Agreement
(entitled "Limitation on Contingent Obligations) is hereby
amended to read in its entirety as follows:
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"LIMITATION ON CONTINGENT OBLIGATIONS. Agree to, or assume,
guarantee, endorse or otherwise in any way be or become
responsible or liable, directly or indirectly for the
obligations of any Person or for any obligations pursuant to any
document or arrangement which is the economic equivalent of a
guarantee (all such transactions being herein called
"Guarantees"), whether through an agreement, contingent or
otherwise, to purchase or repurchase such obligations, or to
purchase, sell or lease (as lessee or lessor) any property or
services primarily for the purposes of enabling the debtor to
make payment of such obligations or to assure the owner of the
obligations against loss, or to advance or supply funds to or to
invest in any other manner in the debtor (whether through
purchasing stock, making a loan, advance or capital contribution
or by means of agreeing to maintain or cause such Person to
maintain, a minimum working capital or net worth of such Person,
or otherwise), except (a) Guarantees by endorsement of
instruments for deposit or collection in the ordinary course of
business, (b) Guarantees by the Company or any Subsidiary
pursuant to the Bonds, (c) any Guarantees already existing or
hereafter guarantee to the Bank by the Company, or (d)
Guarantees permitted by the Revolving Credit Agreement.
9. Section 6.02(J) of the Credit and Reimbursement Agreement
(entitled "Rubbermaid Agreement") is hereby deleted in its
entirety.
10. Section 6.02(L) of the Credit and Reimbursement Agreement
(entitled "No Transfer of Assets") is hereby amended to read in
its entirety as follows:
Sell, lease or otherwise dispose of all or any substantial part
of its assets to any other person, firm or corporation.
11. Section 6.02(M) of the Credit and Reimbursement Agreement
(entitled Prohibition on Fundamental Changes) is hereby deleted
in its entirety.
Bank acknowledges and agrees that Decora Industries, Inc. shall
no longer be a guarantor of the obligations of Borrower under
this Agreement. The Credit and Reimbursement Agreement (entitled
"Events of Default") is also hereby amended to delete therefrom
the reference to "Guarantor" wherever such term appears.
12. Article VIII Section 8.01 Event of Default shall be modified to
add the following paragraph M as an additional Event of Default.
M. In the event the $15,000,000.00 Restated Revolving
Promissory Note is replaced by a loan from a lender
other than the Bank,
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13. 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, and
Amendment No. 2, remain in full force and effect without
modification.
14. The Company hereby warrants and covenants to the Bank that as of
the date of this Credit and Reimbursement Agreement Modification
Agreement No. 3, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Credit
and Reimbursement Agreement, Amendment Xx. 0, Xxxxxxxxx Xx. 0 or
any of the documents executed herewith or therewith or the
obligations represented or evidenced hereby or thereby.
15. WAIVER OF TRIAL BY JURY. COMPANY AND THE BANK MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THE CREDIT AND REIMBURSEMENT
AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE
OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY TO THE FULLEST EXTENT ALLOWED BY LAW. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS
CREDIT AND REIMBURSEMENT AGREEMENT MODIFICATION NO. 3 AND MAKE
THE $15,000,000.00 LOAN.
16. PLEDGING OF RIGHTS. Bank may at any time pledge all or any
portion of its rights under the loan documents including any
portion of the Letter of Credit to any of the twelve (12)
Federal Reserve Banks organized under section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release Company from its obligations
under any of the loan documents.
17. PARTICIPATIONS.
The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the
Company to grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in
Bank's obligation to lend hereunder and/or any or all of the
loans held by Bank hereunder. In the event of any such grant by
Bank of a participating interest to a Participant, whether or
not upon notice to Company, Bank shall remain responsible for
the performance of its obligations hereunder
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and Company shall continue to deal solely and directly with Bank
in connection with Bank's rights and obligations hereunder.
Bank may furnish any information concerning Company in its
possession from time to time to prospective Assignees and
Participants, provided that Bank shall require any such
prospective Assignee or Participant to agree in writing to
maintain the confidentiality of such information.
18. SETOFF. Company hereby grants to Bank, a lien, security interest
and right of setoff as security for all liabilities and
obligations to Bank, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property,
now or hereafter in the possession, custody, safekeeping or
control of Bank or any entity under the control of Fleet
Financial Group, Inc., or in transit to any of them. At any
time, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation
of Company even though unmatured and regardless of the adequacy
of any other collateral securing the loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR
OTHER PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
IN WITNESS WHEREOF, the parties hereto have executed this Credit and
Reimbursement Agreement Modification Agreement No. 3 the day and year first
above written.
Fleet National Bank
By: ______________________________
Xxxxx X. Xxxxxx, Vice President
Decora, Incorporated d/b/a Decora Manufacturing
By: ________________________________
Xxxxxxx X. Xxxxxxx,
Vice President
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SCHEDULE A
REAL PROPERTY DESCRIPTION OF ONE MILL STREET, FORT XXXXXX, N.Y.
