September ___, 2003
FIRST AMENDMENT TO FACTORING
AGREEMENT AND WAIVER LETTER
Decorize, Inc.
1938 East Xxxxxx
Springfield, Missouri 65802
Ladies and Gentlemen:
Please refer to the Factoring Agreement between Decorize, Inc. (the
"Client") and us, dated January 30, 2003 (such Factoring Agreement, as amended,
modified, supplemented or restated from time to time, being hereinafter known as
the "Agreement"). You have advised us that based upon the most recent financial
statements and information available to you that you will not be in compliance
with the net income/loss covenant contained in Section 4.6 of the Agreement for
the fiscal year ended June 30, 2003 ("FYE 2003"). You have requested that we
waive such non-compliance to enable your accountant to issue the appropriate
financial statements.
This letter is to confirm that we hereby waive compliance with said
financial covenants solely with respect to FYE 2003 and to further confirm that
(i) the foregoing shall not constitute Defaults and/or Events of Default under
the Factoring Agreement and (ii) we hereby waive any and all rights we may have
to accelerate any of the Obligations and exercise any other remedies against you
or the Collateral as a result thereof.
Additionally, the Agreement is hereby amended as follows:
A. By deleting Section 4.6 in its entirety and substituting in lieu
thereof the following:
4.6 For your fiscal year ending June 30, 2003, your consolidated
financial statements shall show consolidated net loss (determined in
accordance with GAAP) of not greater than $150,000 and for fiscal year
ending June 30, 2004, your consolidated financial statements shall show
consolidated net loss (determined in accordance with GAAP) of not
greater than $600,000 and for each fiscal year ending thereafter your
net income (determined in accordance with GAAP) shall exceed $1 for
each such year.
In consideration of our execution of this waiver and amendment, you
agree to pay to us an accommodation fee of $5,000. Such fee shall be due and
payable on the date hereof and may (at our option) be charged to your loan
account on the respective due date thereof. Except to the extent set forth
herein, no other waiver of, or change in any of the terms, provisions or
conditions of the Agreement is intended or implied. Except to the extent set
forth herein, this agreement shall not constitute a waiver of any other existing
Defaults or Events of Default under the Agreement (whether or not we have
knowledge thereof), and shall not constitute a waiver of any future Defaults or
Events of Default whatsoever. This agreement is without prejudice to, and
specifically reserves, all of our rights and remedies against you under the
Agreement, all of which are hereby ratified and remain in full force and effect.
The undersigned guarantors hereby consent to, and agree to be bound by,
the amendment to the Agreement set forth herein and confirm that the respective
instruments of guaranty remain in full force and effect against them in
accordance with their terms.
The Client agrees to pay all costs and expenses incurred by us in
connection with the preparation of this amendment, including, without
limitation, all reasonable fees and expenses attributable to the services of our
attorneys (whether in-house or outside).
As amended hereby, the terms and conditions of the Agreement remain in
full force and effect. With respect to any period (or a portion of any period)
ending prior to the effective date hereof, amounts in respect of interest, fees,
and other amounts payable by you to us or for our account under the Agreement
shall be calculated in accordance with the provisions of the Agreement without
giving effect to this amendment.
This amendment shall be effective the date first above written.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: ___________________________________
Name: __________________________
Title: ____________________
READ AND AGREED TO:
DECORIZE, INC.
By: ______________________________
Name: ______________________
Title: _____________________
CONSENTED TO BY GUARANTORS:
FAITH WALK DESIGNS, INC.
By: ______________________________
Name: ______________________
Title: _____________________
GUILDMASTER, INC.
By: ______________________________
Name: ______________________
Title: _____________________
______________________________(SEAL)
Xxxxx X. Xxxxx
______________________________(SEAL)
Xxxxx X. Xxxxxx
______________________________(SEAL)
Xxxx Xxxxxxxxx
______________________________(SEAL)
Xxx Xxxxx
