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(i) During the term of this Agreement, the Borrower must
maintain a minimum current ratio of 1.20 to 1.00
during fiscal year 1997; 1.30 to 1.00 during fiscal
year 1998; and 2.00 to 1.00 during fiscal year 1999
and thereafter. For the purposes of this
subparagraph, current ratio shall be defined as the
ratio of Borrower's current assets (including the
unused formula loan availability under the Grid Note,
as hereinafter defined) to Borrower's current
liabilities (excluding Borrower's liability to the
Lender under the Grid Note) as would be shown on each
fiscal quarter end and fiscal year end balance sheet
of the Borrower prepared in accordance with GAAP;
(ii) During the term of this Agreement, the Borrower must
maintain minimum working capital of Three Million
Five Hundred Thousand and no/100 Dollars
($3,500,000.00) as at June 30, 1996 through December
31, 1996 and Four Million and no/100 Dollars
($4,000,000.00) as at March 31, 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 Grid Note will be
excluded, and the Borrower's current assets shall be
increased by the Borrower's unused formula loan
availability under the Grid Note.
(iii) During the term of this Agreement, the Borrower must
maintain a total debt to tangible net worth ratio
during the first quarter of fiscal year 1997 through
the third quarter of fiscal year 1998 of 4.0 to 1.0;
at fiscal year end 1998 of 2.75 to 1.0; during the
first quarter of fiscal year 1999 through the third
quarter of fiscal year 1999 of 4.0 to 1.0; at fiscal
year end 1999 and thereafter of 2.75 to 1.00. For
the purposes of this Agreement, debt to tangible net
worth ratio shall be defined as the ratio of
Borrower's total liabilities (less subordinated debt)
divided by the sum of 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
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be shown on the fiscal quarter end and fiscal year
end balance sheets of the Borrower prepared in
accordance with GAAP.
(iv) During the term of this Agreement, the Borrower must
maintain a minimum debt service coverage ratio during
fiscal year 1997 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 Xxxxxxxx'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 raised
by the Borrower to finance the repayment of
indebtedness of the Borrower to CIGNA (in the form of
either debt or equity), as would be shown on the
fiscal quarter end and fiscal year end balance sheets
of the Borrower prepared in accordance with GAAP; and
(v) During the term of this Agreement, the Borrower shall
be limited to making capital expenditures in the
maximum amount of One Million Five Hundred Thousand
and no/100 Dollars ($1,500,000.00) during any fiscal
year. If required by the terms of 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."
2. Paragraph 3(g) of the Loan Agreement, as previously amended by
Amendment No. 1, is hereby amended to read in its entirety as follows:
"(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:
(1) Within one hundred twenty (120) days after the close
of each fiscal year, a consolidated and consolidating
balance sheet (which must contain a consolidating
statement schedule) truly presenting the financial
condition of the Corporate Guarantor, the Borrower,
and any other subsidiary of the Corporate Guarantor,
as of the close of each fiscal
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year and consolidated and consolidating statements of
profit and loss and surplus truly presenting the
results of operations of the Corporate Guarantor, the
Borrower, and any other subsidiary of the Corporate
Guarantor, for such fiscal year, and a statement of
changes in financial position, all prepared in
accordance with generally accepted accounting
principles consistently applied and audited as
certified statements by nationally recognized
independent certified public accountants acceptable
to the Lender;
(2) Within one hundred twenty (120) days after the close
of each fiscal year, copies of the Borrower's 10K
reports as required by SEC;
(3) Within sixty (60) days after the close of each fiscal
quarter, copies of the 10Q reports of the Corporate
Guarantor, as required by SEC;
(4) Within thirty (30) days after the close of each
calendar month, a compiled statement of financial
position truly presenting the financial condition of
the Borrower as of the close of said calendar month
and compiled statements of operations and retained
earnings truly presenting activities of the Borrower
for said calendar month, prepared by the Borrower
and/or the Corporate Guarantor (but certified by the
chief financial officer of the Corporate Guarantor)
in accordance with generally accepted accounting
principles consistently applied;
(5) Simultaneously with each delivery to the Lender of
the annual audited reports referenced to subparagraph
(1) above, a certificate of the independent certified
public accountants who certified said annual reports
stating that in making the examination necessary to
said certification of the annual reports, that they
have obtained no knowledge of any default by the
Borrower or the Corporate Guarantor in the
performance of any of the covenants, conditions,
agreements or warranties under this Agreement, the
Note, any Instrument of Collateral Security delivered
in connection herewith, the $6,000,000.00 Restated
Promissory Note (Revolving Line of Credit) of the
Borrower to the Lender dated August 13, 1996 (the
"Grid Note"), the Secured Revolving Line of Credit
Agreement dated April 18, 1990 between the Borrower
and the Lender, as amended (the "Line of Credit
Agreement"), a $1,000,000.00 Promissory Note
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of the Borrower to the Lender dated July 19, 1994
(the "$1,000,000.00 Note"), the Loan and Security
Agreement dated July 19, 1994 between the Borrower
and the Lender concerning the $1,000,000.00 Note (the
"Loan and Security Agreement") and/or any other note
or loan document from the Borrower to the Lender, or
any amendments, modifications, extensions or renewals
of any of the foregoing; or if they shall have
obtained knowledge of any such default, the nature
thereof;
(6) With reasonable promptness upon the written request
of the Lender, such further information regarding the
business affairs and financial condition of the
Borrower and its Corporate Guarantor as the Lender
may reasonably request;
(7) Simultaneously at the time they are so furnished, a
copy of all statements and reports furnished to
stockholders of the Borrower and its Corporate
Guarantor;
(8) Within sixty (60) days of the after the close of each
fiscal quarter, a certificate signed by the Chief
Financial Officer of the Borrower and the Corporate
Guarantor stating that to the best of their knowledge
and belief, the Borrower and the Corporate Guarantor
have fulfilled all of their obligations under this
Agreement and the Instruments of Collateral Security
identified herein, the Line of Credit Agreement, the
Loan and Security Agreement, the Note, the
$1,000,000.00 Note and the Grid Note, and that
neither the Borrower nor the Corporate Guarantor,
upon the date of such certificate or at any time
since the date of the last certificate, is in default
under any provision of this Agreement or the
Instruments of Collateral Security identified herein,
the Line of Credit Agreement, the Loan and Security
Agreement, the Note, the $1,000,000.00 Note or the
Grid Note; and that said Chief Financial Officer has
no knowledge of any condition or event that, except
for notice or the passage of time or both, would
constitute an event of default under any provision of
this Agreement or the Instruments of Collateral
Security identified herein, the Line of Credit
Agreement, the Loan Agreement, the Note, the
$1,000,000.00 Note or the Grid Note (a "Default
Condition") - or if they shall have knowledge of such
default or default condition, the nature and
specifics thereof;
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(9) Within thirty (30) days after the close of each
calendar month, account receivable aging reports
concerning the Borrower, in form acceptable to the
Lender;
(10) Within sixty (60) days after the close 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 in paragraph 3(d) hereof, in
form acceptable to the Lender; and
(11) The Borrower certifies that as of the date of this
Agreement, the Borrower currently owns 423 print
cylinders currently in use in connection with the
production of product for Rubbermaid Incorporated and
214 print cylinders which are not currently used in
production. In addition, the Borrower is currently
using in production 190 additional print cylinders
owned by Rubbermaid Incorporated. A detailed list of
the aforementioned cylinders is attached hereto as
Exhibit "A" and made a part hereof. Within
forty-five (45) days after the close of each fiscal
year, the Borrower shall submit to the Bank a
detailed summary of all print cylinders owned by the
Borrower and used in production, owned by the
Borrower and not used in production and owned by
Rubbermaid Incorporated and used in production."
3. 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 Note, the Grid Note, the $1,000,000.00 Note, the Loan Agreement, as
previously amended by Amendment No. 1, any Instrument of Collateral Security,
the Environmental Agreement, the Line of Credit Agreement or the Loan and
Security Agreement or any of the documents executed in connection herewith or
therewith or the obligations represented or evidenced hereby or thereby.
4. Except as expressly modified hereunder, all the remaining
terms and conditions of the Loan Agreement, as previously modified by Amendment
No. 1, shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereby have caused this instrument to
be duly executed as of the day and year first above written.
DECORA, INCORPORATED d/b/a
DECORA MANUFACTURING
By: ________________________
Name: ______________________
Title: ______________________
DECORA INDUSTRIES, INC.
By: ________________________
Name: ______________________
Title: ______________________
FLEET BANK
By: _________________________
Xxxxx X. Xxxxxx
Vice President
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