1
EXHIBIT NO. 10
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (this "Amendment"), made as of
the 2nd day of June, 1997, among FABRI-CENTERS OF AMERICA, INC., an Ohio
corporation (herein the "Borrower"), the Banks (as hereinafter defined) and
KEYBANK NATIONAL ASSOCIATION (as successor by merger to Society National Bank),
as agent for the Banks (in such capacity, the "Agent") and KeyBank National
Association, as Letter of Credit Bank (the "Letter of Credit Bank"),
WITNESSETH:
-----------
WHEREAS, the Borrower has been extended certain financial
accommodations pursuant to that certain Credit Agreement, dated as of September
30, 1994, among the Borrower, the financial institutions which are a party
thereto (the "Banks"), the Agent and the Letter of Credit Bank;
WHEREAS, the Borrower, the Banks, the Agent and the Letter of Credit
Bank desire to amend the Credit Agreement as set forth herein; and
WHEREAS, the Banks which are the signatories hereto constitute all of
the Banks for the purposes of amending the Credit Agreement pursuant to Section
14.1 thereof,
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrower, the Banks, the Agent
and the Letter of Credit Bank do hereby agree as follows:
SECTION 1. DEFINED TERMS.
-------------------------
Each defined term used herein and not otherwise defined herein shall
have the meaning ascribed to such term in the Credit Agreement.
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SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT.
----------------------------------------------
2.1 AMENDMENT TO SECTION 1.1. The following definitions found in
Section 1.1 shall each be amended in its entirety to read as follows:
"APPLICABLE FEE PERCENTAGE" shall mean, on each day of any Fiscal Quarter,
with respect to any Facility Fee (as set forth in Section 3.4(a)), the annual
percentage indicated in the following table corresponding to the Borrower's
Consolidated Leverage Ratio as measured for the Fiscal Quarter immediately
preceding and ending on the applicable Fee Determination Date and the Borrower's
Consolidated Fixed Charge Coverage Ratio as measured for a Four Fiscal Quarter
Period ending as of such Fee Determination Date:
Consolidated Consolidated Fixed Charge Coverage Ratio
Leverage Ratio
===================================================================================================================================
greater than greater than greater than greater than
or equal to or equal to or equal to or equal to
1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 greater than
but less than but less than but less than but less than or equal to
1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 2.25 to 1.0 2.25 to 1.0
less than
or equal to
.50 to 1.0
but greater than
.35 to 1.0 .375% .30% .20% .20% .20%
less than
or equal to
.35 to 1.0
but greater than
.25 to 1.0 .375% .30% .20% .20% .15%
less than
or equal to
.25 to 1.0
but greater than
.15 to 1.0 .30% .30% .20% .15% .15%
less than
or equal to
.15 to 1.0
.30% .20% .15% .15% .10%
===================================================================================================================================
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"APPLICABLE LOAN PERCENTAGE" shall mean, on each day of any Interest
Period, with respect to any LIBOR Loans comprising a Revolving Credit Borrowing
or any Fed Funds Rate Loans comprising a Revolving Credit Borrowing, as the case
may be, the percentage indicated in the following table corresponding to the
Borrower's Consolidated Leverage Ratio as measured for the Fiscal Quarter
immediately preceding and ending on the Determination Date applicable to such
Interest Period and the Borrower's Consolidated Fixed Charge Coverage Ratio as
measured for a Four Fiscal Quarter Period ending as of such Determination Date:
Consolidated Consolidated Fixed Charge Coverage Ratio
Leverage Ratio
===================================================================================================================================
greater than greater than greater than greater than greater than
or equal to or equal to or equal to or equal to or equal to
1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0
but less than but less than but less than but less than
1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0
less than
or equal to
.50 to 1.0
but greater than
.35 to 1.0 1.00% 1.00% 0.75% 0.65% 0.45%
less than
or equal to
.35 to 1.0
but greater than
.25 to 1.0 0.925% 0.70% 0.65% 0.45% 0.35%
less than
or equal to
.25 to 1.0
but greater than
.15 to 1.0 0.70% 0.60% 0.45% 0.35% 0.30%
less than
or equal to
.15 to 1.0 0.60% 0.50% 0.35% 0.30% 0.25%
===================================================================================================================================
"BANKING DAY" means: (i) a day of the year on which banks are not required
or authorized to close in Cleveland, Ohio and (ii) if the applicable
Banking Day relates to LIBOR Loans, a day of the year which is a Banking
Day described in clause (i) above and which is also a day on which dealings
in Dollar deposits are carried on in the London interbank market and banks
are open for business in London.
"COMMITMENT PERIOD" shall mean the period from the date hereof to May 31,
2001, as the same may be extended pursuant to Section 3.2(c) or reduced
pursuant to Section 3.2(a).
"EUROCURRENCY RESERVE PERCENTAGE" means, for any Interest Period in respect
of any LIBOR Loan, as of any date of determination, the aggregate of the
then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to
such Interest Period (if more than one such percentage is applicable, the
daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) by the Board of
Governors of the Federal Reserve System, any successor thereto, or any
other banking authority, domestic or foreign, to which the Agent or any
Bank may be subject in respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board) or in respect of any other category of liabilities including
deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that
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include the LIBOR Loans. For purposes hereof, such reserve requirements
shall include, without limitation, those imposed under Regulation D of the
Federal Reserve Board and the LIBOR Loans shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without
benefit of credits for proration, exceptions or offsets which may be
available from time to time to any Bank under said Regulation D.
"LETTER OF CREDIT BANK" shall mean KeyBank National Association, its
successors and assigns.
"LIBOR" means, for any Interest Period with respect to a LIBOR Borrowing,
the quotient (rounded upwards, if necessary, to the nearest one sixteenth
of one percent (1/16th of 1%)) of: (x) the per annum rate of interest,
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of
approximately 11:00 a.m. (London time) two Banking Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, appearing
on Page 3750 of the Telerate Service (or any successor or substitute page
of such Service, or any successor to or substitute for such Service
providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) as the rate in the London
interbank market for Dollar deposits in immediately available funds with a
maturity comparable to such Interest Period DIVIDED BY (y) a number equal
to 1.00 MINUS the Eurocurrency Reserve Percentage. In the event that such
rate quotation is not available for any reason, then the rate (for purposes
of clause (x) hereof) shall be the rate, determined by the Agent as of
approximately 11:00 a.m. (London time) two Banking Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, to be the
average (rounded upwards, if necessary, to the nearest one sixteenth of one
percent (1/16th of 1%)) of the per annum rates at which Dollar deposits in
immediately available funds in an amount comparable to KeyBank's Pro Rata
Share of such LIBOR Borrowing and with a maturity comparable to such
Interest Period are offered to prime banks by leading banks in the London
interbank market. The LIBOR shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Percentage.
"MAXIMUM AVAILABILITY AMOUNT" shall mean, during each Fiscal Year of the
Borrower: (i) One Hundred Seventy-Five Million Dollars ($175,000,000)
during the period from January 1 to and including April 30 and (ii) the
Total Commitment Amount during the period from May 1 to and including
December 31.
"QUALIFYING FINANCIAL STANDARDS" shall mean, as at any date of
determination, the condition that (a) the Borrower shall have delivered the
financial statements required by Section 8.1(a) or 8.1(b), as the case may
be, (b) the Borrower shall have delivered the certificate required to be
delivered pursuant to Section 8.1(c)(ii) evidencing that the Borrower's
Consolidated Fixed Charge Coverage Ratio for the Four Fiscal Quarter Period
ending immediately prior to such determination date is not less than 1.50
to 1.0 and that the Borrower's Consolidated Leverage Ratio for the Fiscal
Quarter ending immediately prior to such determination date is not greater
than .50 to 1.0 and (c) no Event of Default shall have occurred and be
continuing.
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2.2 AMENDMENT TO DEFINITION OF "INTEREST PERIOD". The definition of
"Interest Period" shall be amended to add the following as clause (vi) thereof:
"(vi) if the Interest Period commences on a Banking Day for which there is
no numerical equivalent in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Banking Day of that
calendar month."
2.3 AMENDMENT TO SECTION 1.1 - ADDITIONS. Section 1.1 shall be amended
to add the following definitions:
"EFFECTIVE DATE" means June 2, 1997.
2.4 AMENDMENT TO SECTION 1.1 - DELETIONS. Section 1.1 shall be amended
to delete the following definitions: "Unused Commitment Fee" and "Reference
Bank".
2.5 AMENDMENT TO CREDIT AGREEMENT. Each reference to "Society" or
"Society National Bank" in the Credit Agreement shall be amended to read
"KeyBank" or "KeyBank National Association".
2.6 AMENDMENT TO SECTION 1.3. Section 1.3 shall be amended to delete
the words ";PROVIDED, HOWEVER, that, all accounting terms shall be understood as
based and determined on the "FIFO" method of valuation of inventory".
2.7 AMENDMENT TO SECTION 3.2(C). Section 3.2(c) shall be amended by
deleting the phrase "1995 Fiscal Year" and substituting "1998 Fiscal Year" in
lieu thereof.
2.8 AMENDMENT TO SECTION 3.4(B). Section 3.4(b) shall be amended by
deleting it in its entirety and substituting "Intentionally Omitted" in lieu
thereof.
2.9 AMENDMENT TO SECTION 8.8. Section 8.8 shall be amended by deleting
the proviso to the last sentence of Section 8.8 and the following shall be
substituted in lieu thereof:
"PROVIDED, that the aggregate amount of such investments by all of the
Borrower and its Subsidiaries does not exceed ten percent (10%) of the
Borrower's Consolidated Tangible Net Worth at the end of the previous
fiscal year of the Borrower."
2.10 AMENDMENT TO SECTION 8.11. Section 8.11 shall be amended by
deleting clause (iv) thereof in its entirety and substituting the following in
lieu thereof:
"(iv) so long as the Borrower and its Subsidiaries are satisfying the
Qualifying Financial Standards, loans may be obtained from financial
institutions not pursuant to this Agreement ("Outside Loans") in the
aggregate principal amount of up to Thirty Million Dollars ($30,000,000) at
any one time outstanding; PROVIDED, HOWEVER, that any such Outside Loan
obtained from any financial institution other than a Bank may not remain
outstanding for more than thirty (30) consecutive days and; PROVIDED,
FURTHER, that any such Outside Loans must be
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repaid within one (1) Banking Day following the date as of which the
Borrower and its Subsidiaries no longer satisfy such Qualifying Financial
Standards, except that, if such repayment would cause the Borrower to incur
compensation obligations resulting from the prepayment of any such Outside
Loan with a fixed rate, the Borrower shall not be required to repay such
loan until the earlier of (x) the expiration of the interest period or (y)
the date upon which repayment will not result in a compensation obligation,
2.11 AMENDMENT TO SECTION 8.17. Section 8.17 shall be deleted in its
entirety and the following substituted in lieu thereof:
"SECTION 8.17 CAPITAL EXPENDITURES. The Borrower shall not make or permit
Consolidated Capital Expenditures to exceed Fifty Million Dollars
($50,000,000) for any Fiscal Year."
2.12 AMENDMENT TO SECTIONS 8.18 AND 8.19. Sections 8.18 and 8.19 shall
be deleted in its entirety and "Intentionally Omitted" shall be substituted in
lieu thereof.
2.13 AMENDMENT TO SECTION 8.20. Section 8.20 shall be deleted and the
following inserted in lieu thereof:
"SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not suffer
or permit its Consolidated Tangible Net Worth as of the Effective Date and
as at the end of any Fiscal Quarter to be less than the "Required Minimum
Amount" in effect from time to time. The "Required Minimum Amount" shall be
(i) as of the Effective Date, One Hundred Sixty-Five Million Dollars
($165,000,000) and (ii) as at the end of any Cumulative Fiscal Period
ending after the Effective Date:
(a) One Hundred Sixty-Five Million Dollars ($165,000,000) PLUS
(b) an aggregate amount equal to fifty percent (50%) of Borrower's
consolidated net earnings (if any and only to the extent a positive
number) for such Cumulative Fiscal Period, in each case calculated
after taxes and cumulating income and losses for all Fiscal Quarters
within such Cumulative Fiscal Period (such amount being "Cumulative
Fiscal Earnings") PLUS
(c) an aggregate amount equal to all Cumulative Fiscal Earnings (if any
and only to the extent a positive number) attributable to Fiscal Years
ending after the Effective Date and not including the Fiscal Year
during which said Cumulative Fiscal Period is occurring (which
aggregate amount shall not be reduced by consolidated net losses (if
any) reported for any Fiscal Year ending after the Effective Date) PLUS
(d) an amount equal to the total net proceeds received by Borrower at
any time from any stock or other equity offering or any conversion of
Subordinated Indebtedness into equity after the Effective Date
(excluding stock offerings under any employee benefit plan of the
Borrower or its Subsidiaries)."
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2.14 AMENDMENT TO SECTION 8.21. Section 8.21 shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE. The Borrower shall not
suffer or permit, as at the end of any Four Fiscal Quarter Period ending
after the Effective Date, the ratio (the "Consolidated Fixed Charge
Coverage Ratio") of: (x) Consolidated Net Pre-Tax Earnings of the Borrower
and its Subsidiaries attributable to such period PLUS Consolidated Net
Fixed Lease Charges attributable to such period PLUS Consolidated Net
Interest Expense attributable to such period PLUS depreciation and
amortization charges of the Borrower and its Subsidiaries attributable to
such period TO (y) Consolidated Net Fixed Lease Charges attributable to
such period PLUS Consolidated Net Interest Expense attributable to such
period PLUS scheduled principal payments in respect of any Long-Term
Indebtedness of the Borrower and its Subsidiaries during such period, to be
less as at such date than 1.25 to 1.00."
2.15 AMENDMENT TO SECTION 8.23. Section 8.23 shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"SECTION 8.23 CONSOLIDATED LEVERAGE RATIO. The Borrower shall not suffer or
permit, as at the end of any Fiscal Quarter, the ratio (the "Consolidated
Leverage Ratio") of: (x) Funded Senior Debt outstanding as at such date TO
(y) the sum of Funded Senior Debt outstanding as at such date PLUS the
Convertible Subordinated Debentures outstanding as at such date PLUS
Consolidated Tangible Net Worth as at such date to be greater than (i) .45
to 1.0 for the first Fiscal Quarter of each Fiscal Year, (ii) .50 to 1.0
for the second and third Fiscal Quarters of each Fiscal Year and (iii) .40
to 1.0 for the fourth Fiscal Quarter of each Fiscal Year."
2.16 AMENDMENT TO SECTION 8.24. Section 8.24 shall be deleted in its
entirety and "Intentionally Omitted" shall be substituted in lieu thereof.
2.17 AMENDMENT TO EXHIBITS. Exhibit F shall be deleted in its entirety
and Exhibit F-1 shall be substituted in lieu thereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
------------------------------------------
The Borrower hereby represents and warrants to the Banks and the Agent
as follows:
3.1 THE AMENDMENT. This Amendment has been duly and validly executed by
an authorized executive officer of the Borrower and constitutes the legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms. The Credit Agreement, as amended by this Amendment,
remains in full force and effect and remains the valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms. The
Borrower hereby ratifies and confirms the Credit Agreement as amended by this
Amendment.
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3.2 NONWAIVER. The execution, delivery, performance and effectiveness
of this Amendment shall not operate nor be deemed to be nor construed as a
waiver (i) of any right, power or remedy of the Banks or the Agent under the
Credit Agreement, nor (ii) of any term, provision, representation, warranty or
covenant contained in the Credit Agreement or any other documentation executed
in connection therewith. Further, none of the provisions of this Amendment shall
constitute, be deemed to be or construed as, a waiver of any Default or Event of
Default under the Credit Agreement as amended by this Amendment.
3.3 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. Upon the
Effectiveness of this Amendment, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof", "herein", or words of like import shall mean
and be a reference to the Credit Agreement, as amended by this Amendment and
each reference to the Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended by this
Amendment.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS
------------------------------------------------
OF THIS AMENDMENT NO. 1.
------------------------
In addition to all of the other conditions and agreements set forth
herein, the effectiveness of this Amendment is subject to the following
conditions precedent:
4.1 THE AMENDMENT. The Banks, the Agent and the Letter of Credit Bank
shall have received this Amendment No. 1 to Credit Agreement, executed and
delivered by a duly authorized officer of the Borrower.
4.2 ACKNOWLEDGEMENT OF GUARANTORS. The Banks, the Agent and the Letter
of Credit Bank shall have received the Acknowledgement of Guarantors attached to
this Amendment, executed and delivered by a duly authorized officer of each of
the Guarantors of the indebtedness of the Borrower to the Banks and the Agent.
4.3 BORROWER'S CERTIFICATE. The Banks and the Agent shall have received
a certificate, in form and substance satisfactory to the Agent, executed for and
on behalf of the Borrower by either the President or Vice President of the
Borrower and by either the Secretary or Assistant Secretary of the Borrower (one
of which certifying officers shall not be a signatory of this Amendment) and
dated as of the date of this Amendment, certifying that (i) this Amendment, and
each document or other instrument executed in connection with the Amendment has
been authorized, (ii) the names and signatures of the officers signing this
Amendment on behalf of the Borrower, and (iii) compliance by the Borrower with
all representations, warranties, covenants and conditions under the Credit
Agreement as amended by this Amendment.
4.4 OTHER DOCUMENTS. The Banks and the Agent shall have received each
additional document, instrument or piece of information reasonably requested by
the Agent.
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SECTION 5. MISCELLANEOUS.
-------------------------
5.1 GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.2 SEVERABILITY. In the event any provision of this Amendment should
be invalid, the validity of the other provisions hereof and of the Credit
Agreement shall not be affected thereby.
5.3 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when taken together, shall constitute but one and
the same agreement.
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower has caused this Amendment No. 1 to
Credit Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.
FABRI-CENTERS OF AMERICA, INC.
/s/ Samuel R. Gaston
-----------------------------------
By: Samuel R. Gaston
--------------------------------
Title: Executive Vice President
-----------------------------
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ACCEPTED AND AGREED as of the date and year first above written by:
KEYBANK NATIONAL ASSOCIATION, as a
Bank, the Letter of Credit Bank and as Agent
/s/ David J. Janus
- --------------------------------------
By: David J. Janus
-----------------------------------
Title: Senior Vice President
--------------------------------
NATIONAL CITY BANK,
as a Bank
/s/ Donald B. Hayes, Jr.
- --------------------------------------
By: Donald B. Hayes, Jr.
-----------------------------------
Title: Vice President
--------------------------------
NBD Bank, as a Bank
/s/ Christina D. Zautcke
- --------------------------------------
By: Christina D. Zautcke
-----------------------------------
Title: Vice President
--------------------------------
COMERICA BANK, as a Bank
/s/ Jeffrey J. Judge
- --------------------------------------
By: Jeffrey J. Judge
-----------------------------------
Title: Assistant Vice President
--------------------------------
THE HUNTINGTON NATIONAL BANK,
as a Bank
/s/ Timothy M. Ward
- --------------------------------------
By: Timothy M. Ward
-----------------------------------
Title: Assistant Vice President
--------------------------------
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PNC BANK, NATIONAL ASSOCIATION, as a Bank
/s/ C. J. Richardson
- --------------------------------------
By: C. J. Richardson
-----------------------------------
Title: Vice President
--------------------------------
BANK ONE, NA (as successor by merger to Bank One, Akron, NA),
as a Bank
/s/ Susan D. Steiger
- --------------------------------------
By: Susan D. Steiger
-----------------------------------
Title: Vice President
--------------------------------
THE FIFTH THIRD BANK, as a Bank
/s/ R. C. Lanctot
- --------------------------------------
By: R. C. Lanctot
-----------------------------------
Title: Vice President
--------------------------------
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ACKNOWLEDGEMENT OF GUARANTORS
-----------------------------
Each of the undersigned, each of which being a guarantor of
indebtedness of the Borrower to the Banks, the Agent and the Letter of Credit
Bank, hereby acknowledges and agrees to the terms of the foregoing Amendment No.
1 to Credit Agreement. Each of the undersigned represents and warrants to the
Banks, the Agent and the Letter of Credit Bank that the respective Guaranty of
Payment (as amended), executed and delivered by each of the undersigned, each
dated as of September 30, 1994, remain the valid and binding obligations of each
of the undersigned, respectively, enforceable against it in accordance with
their terms.
FCA FINANCIAL, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FABRI-CENTERS OF SOUTH DAKOTA, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FABRI-CENTERS OF CALIFORNIA, INC.
/s/Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FCA OF OHIO, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
Executed: June 5, 1997
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EXHIBIT F-1
FORM OF
COMPLIANCE CERTIFICATE
----------------------
[BORROWER LETTERHEAD]
QUARTER-ANNUAL COMPLIANCE CERTIFICATE
Certified on this ___ day of __________________, 19__
("this date") as of ___________________, 19__
(the "Report Date")
pursuant to Section 8.1(c)(ii) of the Credit Agreement (as hereinafter defined).
Reference is hereby made to that certain Credit Agreement, dated as of
September 30, 1994 (as amended from time to time, the "Credit Agreement"), among
Fabri-Centers of America, Inc. (the "Borrower"), certain banks which are
signatories thereto (the "Banks"), and KeyBank National Association, as agent
for the Banks (the "Agent"). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed to such terms in the Credit
Agreement.
Pursuant to Section 8.1(c)(ii) of the Credit Agreement, I certify to
the Banks that I am the _____________________ [responsible financial officer] of
the Borrower and further certify to the Banks, on behalf of the Borrower, to the
best of my knowledge and belief, as follows:
1. The conclusions below, together with the attached calculations, indicate the
Borrower's compliance or non-compliance with certain sections of the Credit
Agreement:
SECTION 8.17 CAPITAL EXPENDITURES.
Maximum Permitted Actual
Consolidated Capital Consolidated Capital
Period Expenditures Expenditures
- ----------------------------------------------------------------------------------------------------------------------
[FY ____ $50,000,000 $_______________]
======================================================================================================================
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SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH.
Req. Minimum Actual
Consolidated Consolidated
Tangible Net Tangible Net
Worth Worth
- ------------------------------------------------------ ---------------------- -----------------------
1. AS OF THE EFFECTIVE DATE:
$165,000,000 $
2. AS AT THE END OF ANY CUMULATIVE FISCAL
PERIOD ENDING AFTER THE EFFECTIVE DATE:
$165,000,000
PLUS (0.5 X consolidated net earnings for
FY in which Report Date falls (1))
PLUS (aggregate Cumulative Fiscal +$
Earnings attributable to FY's ending after -----------
the Effective Date(but not FY in which
Report Date falls)(2)
PLUS total net proceeds rec'd by Borrower + $
at any time from any stock or other equity -----------
offering or any conversion of Subordinated
Indebtedness to equity after the Effective
Date(3)
CONSOLIDATED TANGIBLE NET WORTH:
+ $ $
----------- ==============
(actual)
$===============
(required min.)
<FN>
- --------
(1) ONLY IF GREATER THAN ZERO, CALCULATED AFTER
TAXES AND CUMULATING INCOME AND LOSSES FOR
ALL FISCAL QUARTERS WITHIN THE APPLICABLE
CUMULATIVE FISCAL PERIOD.
(2) ONLY IF GREATER THAN ZERO; THIS FIGURE
SHALL NOT BE REDUCED BY CONSOLIDATED NET
LOSSES (IF ANY) REPORTED FOR ANY FISCAL
YEAR ENDING AFTER THE EFFECTIVE DATE.
(3) EXCLUDING STOCK OFFERINGS UNDER ANY EMPLOYEE
BENEFIT PLAN OF THE BORROWER OR ITS
SUBSIDIARIES.
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SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE.
As of the Report Date, and as determined for each period set forth below:
Consolidated Net Pre-Tax Earnings: $
-----------------
Consolidated Net Interest Expense: +$
-----------------
Consolidated Net Fixed Lease Charges: +$
-----------------
depreciation and amortization charges: +$
-----------------
(A) $
-----------------
Consolidated Net Fixed Lease Charges: $
-----------------
Consolidated Net Interest Expense: + $
-----------------
scheduled principal payments
on Long-Term Indebtedness: + $
-----------------
(B) $
Actual Consolidated Fixed Charge Ratio: to 1.0
-------------------
(Ratio of (A) to (B))
Minimum Required Consolidated Fixed Charge Ratio: 1.25 to 1.00
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SECTION 8.22 CONSOLIDATED CURRENT FUNDED INDEBTEDNESS.
AS OF THE REPORT DATE:
- ----------------------
(A) Consolidated Current Assets: $
--------------------
Consolidated Current Liabilities: $ (4)
--------------------
Funded Senior Debt: + $
--------------------
(B) $
Actual Ratio (Ratio of (A) to (B)): to 1.0
--------------------
MINIMUM REQUIRED CONSOLIDATED CURRENT FUNDED INDEBTEDNESS RATIO:
- ----------------------------------------------------------------
As at the end of any of the first three FQ's of any FY: 1.15 to 1.0
As at the end of any FY: 1.25 to 1.0
- --------
(4) Exclusive of the sum of (a) the aggregate outstanding balance of
Revolving Credit Loans PLUS (b) the aggregate outstanding Negotiated Bid Loans
not in excess of the Total Commitment Amount.
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SECTION 8.23 CONSOLIDATED LEVERAGE RATIO.
AS OF THE REPORT DATE, AND FOR EACH PERIOD SET FORTH BELOW:
- -----------------------------------------------------------
(A) Outstanding Senior Funded Debt: $
--------------------
Consolidated Tangible Net Worth: $ (4)
--------------------
Outstanding Subordinated Debt + $
--------------------
Outstanding Funded Senior Debt: + $
--------------------
(B) $
--------------------
Actual Consolidated Leverage Ratio ((A) to (B)): TO 1.0
--------------------
MAXIMUM PERMITTED CONSOLIDATED LEVERAGE RATIO:
- ----------------------------------------------
FISCAL QUARTER RATIO
-------------- -----
First Fiscal Quarter of each Fiscal Year .45 to 1.00
Second Fiscal Quarter of each Fiscal Year .50 to 1.00
Third Fiscal Quarter of each Fiscal Year .50 to 1.00
Fourth Fiscal Quarter of each Fiscal Year .40 to 1.00
I further certify that:
Enclosed herewith are Borrower's [unaudited quarterly/audited annual]
financial statements as required by Section 8.1 of the Credit Agreement.
No Possible Default or Event of Default existed as at the Report Date,
nor does any exist at this date.*
*- If this certification cannot be given, substitute a brief description
of the Possible Default(s) or Event of Default(s) and Borrower's
intentions in respect thereof.
FABRI-CENTERS OF AMERICA, INC.
on behalf of itself and its
Subsidiaries
- ------------------------------
By:
---------------------------
Its:
--------------------------
Dated:
------------------------
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