EXHIBIT 10AA.1
Xxxxxxxx Xxxx X.X.
Xxxxxxx Xxxxxxxxxx Xxxxxxx
XX0000
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
March 25, 2008
Xxxxxxx X. Xxxxxxx, President
Decorator Industries, Inc.
00000 Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Re: $5,000,000 Working Capital Line of Credit (Obligor Number 2239520583
Obligation Number 18)
Dear Xx. Xxxxxxx:
Reference is made to that certain LOAN AGREEMENT dated as of May 24,
2006, (the "Agreement") between BORROWER (the "Borrower") and Wachovia Bank,
National Association (the "Bank"). The Agreement and all other documents
executed and delivered in connection therewith are collectively referred to
herein as the "Loan Documents". All capitalized terms used but not defined
herein shall have the meanings assigned in the Loan Documents.
The LOAN AGREEMENT provides:
FINANCIAL COVENANTS. Borrower agrees to the following provisions from
the date hereof until the final payment in full of the Obligations, unless Bank
shall otherwise consent in writing, using the financial information for
Borrower, its subsidiaries, affiliates and its holding or parent company, as
applicable: SENIOR FUNDED DEBT TO EBITDA RATIO. Borrower shall at all times
maintain, a Senior Funded Debt to EBITDA Ratio of not more than 2.75 to 1.00.
This covenant shall be calculated quarterly, on a rolling four quarter basis.
"Senior Funded Debt to EBITDA Ratio" shall mean the sum of all Senior Funded
Debt divided by the sum of earnings before interest, taxes, depreciation and
amortization. "Senior Funded Debt" shall mean, as applied to any person or
entity, the sum of all indebtedness for borrowed money, including, without
limitation, capital lease obligations and unreimbursed drawings under letters of
credit, or any obligation evidenced by a note, bond, debenture or other
agreement of that person or entity, excluding any debt fully subordinated to
Bank on terms and conditions acceptable to Bank. This covenant will be tested
quarterly.
The Bank has determined that the Borrower has violated the
above-referenced provision due to the following: as of FYE 12/29/2007, the
Borrower's Senior Funded Debt to EBITDA Ratio is 7.65 to 1.00.
The Borrower has requested the Bank's waiver, and the Bank does hereby
waive the Borrower's default under this provision through 9/30/2008, subject to
Borrower's execution of and return of this letter, execution of an amendment to
the Bank's documents which amends the current interest rate to LIBOR Market
Index Rate plus 275 basis points, which will be effective as of the date of this
Waiver Letter or March 25, 2008 (Borrower to be responsible for all costs
associated with the aforementioned amendment), and payment of a Waiver Fee in
the amount of $11,250. The interest rate will revert back to LIBOR Market Index
Rate plus 150 basis points once the Borrower is back in compliance with the
Senior Funded Debt to EBITDA ratio. This waiver is limited to the default
recited above and shall not be construed to be a waiver of any subsequent
default under the referenced provision, or of any existing or future defaults
under any other provision of any Loan Document.
Borrower, by signature below, represents and warrants that there exist
no defaults or event of default under the Loan Documents other than those
specifically waived herein, that the Loan Documents are in full force and
effect, and that Borrower does not have any defenses to its obligations under
the Loan Documents nor any claims against Bank.
Please evidence your acceptance of the terms of this waiver by signing
and returning to the Bank a copy of this letter bearing original authorized
signature of each of the parties indicated.
Very Truly Yours,
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
ACCEPTED AND AGREED TO:
Decorator Industries, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
President
