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EXHIBIT 99.15
NOTE and LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 4
This Agreement dated this 26th day of September, 1997 by and between
Decora, Incorporated, a Delaware corporation authorized to do business in the
State of New York as Decora Manufacturing and having its principal place of
business at 0 Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000 (hereinafter called the
"Borrower"), Decora Industries, Inc., a Delaware corporation, successor by
merger to Utilitech, Incorporated, a California corporation, and having its
principal place of business at 0 Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000
(hereinafter called the "Corporate Guarantor") and Fleet Bank f/k/a Norstar Bank
of Upstate NY, a bank organized and existing under the laws of the State of New
York and having its principal place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 (hereinafter called the "Lender" or the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lender and the Corporate Guarantor entered
into a Loan and Security Agreement on April 18, 1990 (the "Loan Agreement")
pursuant to the terms and conditions of which the Lender agreed to lend to the
Borrower Ten Million and no/100 Dollars ($10,000,000.00), with all borrowings
evidenced on Borrower's Term Note in the face amount of Ten Million and no/100
Dollars ($10,000,000.00) executed and delivered by the Borrower to the Lender on
April 18, 1990 (the "Prior Note"); and
WHEREAS, on July 19, 1994, the Borrower and the Lender via a
Consolidated and Restated Note in the face amount of Eight Million and no/100
Dollars ($8,000,000.00) consolidated, modified and restated in full the terms of
the Prior Note with a new Demand Note in the face amount of Six Million and
no/100 Dollars ($6,000,000.00) executed by the Borrower in favor of the Lender
on said July 19, 1994 date. Said consolidated, modified and restated Eight
Million and no/100 Dollar ($8,000,000.00) Note is hereinafter called the "Prior
Note No. 2"). Said Prior Note No. 2 was subject to the terms and conditions of
the Loan Agreement, as modified pursuant to the terms of a Loan and Security
Agreement Amendment No. 1 (the "First Amendment") by and between the Borrower,
the Corporate Guarantor and the Lender dated July 19, 1994; and
WHEREAS, the Loan Agreement was further modified pursuant to the terms
of a Loan and Security Agreement Amendment No. 2 (the "Second Amendment") by and
between the Borrower, the Corporate Guarantor and the Lender dated August 13,
1996; and
WHEREAS, the on March 27, 1997 the Borrower and the Bank amended,
modified and restated in its entirety the terms of the Prior Note No. 2 pursuant
to the terms of a new note (the "New Note") in the original principal amount of
Five Million One Hundred Sixty Nine Thousand and no/100 Dollars, executed and
delivered by the Borrower in favor of the Lender on said March 27, 1997 date;
which New Note was subject to the terms and conditions of the Loan Agreement, as
modified pursuant to the terms of the First
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Amendment, the Second Amendment and a Loan and Security Agreement
Amendment No. 3 (the "Third Amendment") by and between the
Borrower, the Corporate Guarantor and the Lender dated March 27,
1996; and
WHEREAS, at the request of the Borrower, has agreed to make certain
changes to the Loan Agreement, as previously modified by the First Amendment,
the Second Amendment and the Third Amendment.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good
valuable consideration, receipt of which is hereby acknowledged, it is agreed on
the part of the Borrower and the Lender as follows:
1. Paragraph 3(d) of the Loan Agreement, as previously modified
pursuant to the terms of the First Amendment, the Second Amendment and the Third
Amendment, is hereby modified and amended to read in its entirety as follows:
"(d) The Borrower must be in 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
generally accepted accounting principles consistently applied ("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 that certain
$1,000,000.00 revolving line of credit loan previously
extended by the Bank to the Borrower [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
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.
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(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 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 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
Agreement. If required by the terms of
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the manufacturing agreement between the Borrower and
Rubbermaid, for each year during the term of this Agreement,
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; 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."
2. Paragraph 3(g) of the Loan Agreement, as previously modified
pursuant to the terms of the First Amendment, the Second Amendment and the Third
Amendment, is hereby modified and amended to read in its entirety as follows:
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"(g) The Borrower and its Corporate Guarantor will at all times keep
proper books of record and account in accordance with GAAP, and the
Borrower shall furnish to the Lender:
(i) within one ninety-five (95) days of the end of its
fiscal year, annual certified public accountant
audited, consolidated statements for the Borrower and
its Corporate Guarantor (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 the Corporate Guarantor;
(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 its
Corporate Guarantor concerning those financial
covenants referenced above in subparagraph 3(d);
(vi) with reasonable promptness upon the written request of
the Lender, such further information regarding the
business affairs at financial condition of the
Borrower and its Corporate Guarantor as the Lender may
reasonably request; and
(vii) simultaneously at the time they are so furnished, a
copy of all statements and reports furnished to
stockholders of the Borrower and its Corporate
Guarantors."
3. Paragraphs 3. (k)(1), 3. (o) and 8. (i) of the Loan Agreement are
hereby eliminated.
4. Paragraph 3. (k) (10) of the Loan Agreement is hereby revised in its
entirety to read as follows:
"(10) The Borrower has delivered, signed and pledged to the Lender all of the
Borrower's right, title and interest in and to (i) that certain
$6,000,000.00 note from the Corporate Guarantor to the Borrower dated
July 19, 1994, and (ii) that certain $15,207,000.00 note from the
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Corporate Guarantor to the Borrower dated September 26,
1997 (collectively the "Guarantor's Note")."
5. Paragraph 3. (n) of the Loan Agreement is hereby revised in its
entirety to read as follows:
"(n) If a Change in Control (as hereinafter defined) shall occur, the Lender
shall have the right, by written notice given to the Borrower not
earlier than ten nor later than twenty-five days after the first to
occur of (i) receipt by the Lender from the Borrower of written notice
of the occurrence of such Change in Control or (ii) the date on which
Lender, having otherwise obtained actual knowledge of such Change of
Control, notifies the Borrower thereof, to demand that the Borrower
prepay the Note, the $1,000,000.00 Note and/or the Grid Note. Five (5)
business days after receipt by the Borrower of demand for the
prepayment of the Note, the $1,000,000.00 Note and/or the Grid Note,
the Borrower shall pay to the Lender all principal and accrued interest
on the Note, the $1,000,000.00 Note and/or the Grid Note. Promptly
after obtaining knowledge of the occurrence of any Change of Control
(or any proposed or attempted Change of Control), the Borrower will
notify the Lender thereof, specifying in reasonable detail the facts
and circumstances surrounding such event. As used in this subparagraph
(n) a "Change in Control" shall be deemed to have occurred upon the
occurrence of any of the following:
(i) The Corporate Guarantor shall fail to own, of record and
beneficially, with full power to vote, shares of capital stock
entitling the Corporate Guarantor to cast at least 80% of the
votes for the election of directors of the Borrower at any
meeting of the shareholders of the Borrower;
(ii) Any person or group of related persons for purposes of
Section 13(d) of the Securities Exchange Act (a "Group")
either (A) is or becomes, by purchase, tender offer, exchange
offer, open market purchases, privately negotiated purchases
or otherwise, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act, whether or
not applicable, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable
immediately or after the passage of time only, directly or
indirectly, of more than 30% of the total then outstanding
voting stock of the Corporate Guarantor (for the purposes of
this clause (ii), such person or Group will be deemed to
"beneficially own" (determined as aforesaid) any voting stock
of a corporation (the "specified corporation") held by any
other corporation (the
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"parent corporation") if such person or Group "beneficially
owns", directly or indirectly, a majority of the voting power
of the voting stock of such parent corporation), or (B)
otherwise has the ability to elect, directly or indirectly, a
majority of the members of the Board of Directors of the
Corporate Guarantor;
(iii) The Corporate Guarantor consolidates with or merges into
another person and the stockholders immediately prior to such
merger or consolidation hold less than a majority of the
voting stock of the resulting entity;
(iv) With respect to the Borrower, Xxxxxxx X. Xxxxxxx shall
fail to be substantially involved in the management and
operations of the Borrower; and
(v) With respect to the Corporate Guarantor, if Xxxxxx Xxxxxxx
shall fail to be substantially involved in the management and
operations of the Corporate Guarantor;
provided, however, that a Change in Control shall not be deemed to
have occurred if, with respect to Xxxxxxx X. Xxxxxxx and Xxxxxx
Xxxxxxx, either shall fail to be substantially involved in the
management and operation of the Borrower and the Corporate
Guarantor, respectively, and the Borrower and/or the Corporate
Guarantor, as the case may be, shall within ninety (90) days of such
failure replace Xxxxxxx and/or Hevrony, as the case may be, with a
person acceptable to the Lender."
6. Paragraph 8. (l) of the Loan Agreement is hereby modified to read in
its entirety as follows:
"(l) Except for (i) those management fees referred to in paragraph 8 (k)
hereof; (ii) those income taxes payable by the Borrower to the
Corporate Guarantor pursuant to the terms of the Tax Sharing
Agreement; and (iii) the loaning by the Borrower to the Corporate
Guarantor of the $15,207,000.00 being received by the Borrower in
connection with that certain Note executed by the Borrower in favor
of the "Purchasers" (as defined in that certain Note and Warrant
Purchase Agreement among the Borrower, the Corporate Guarantor,
Xxxxxxxx Street Capital Advisors, L.L.C, as Agent and the Purchasers
named therein) on September 26, 1997, during the term of this
Agreement, the Borrower shall be prohibited from advancing, loaning
or upstreaming any funds to the Corporate Guarantor."
7. A new paragraph 9. (n) is hereby added to the Loan Agreement as
follows:
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"(n) Upon the occurrence of an "Event of Default" as such term is defined
in that certain Note and Warrant Purchase Agreement among the
Borrower, the Corporate Guarantor, Xxxxxxxx Street Capital Advisors,
L.L.C., as Agent and the Purchasers named therein, dated as of
September 26, 1997."
8. The Borrower and the Corporate Guarantor hereby warrant and covenant
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
Prior Note, the New Note, the Loan Agreement as previously amended by the First
Amendment, the Second Amendment and the Third Amendment, any instrument of
collateral security referred to in the Loan Agreement, or any other documents
executed in connection herewith or therewith or the obligations represented or
evidenced hereby or thereby.
9. Except as expressly modified hereunder, all the remaining terms and
conditions of the Loan Agreement, as previously modified pursuant to the terms
of the First Amendment, the Second Amendment and the Third Amendment, shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the day and year first above
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written.
Decora, Incorporated d/b/a Fleet Bank
Decora Manufacturing
By: ________________________________ By: _________________________________
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxx
Vice President Finance Vice President
Decora Industries, Inc.
By: ________________________________
Xxxxxxx X. Xxxxxxx
Executive Vice President
Finance and Administration
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