EXHIBIT 10.4
REVOLVING CREDIT AND TERM
LOAN AGREEMENT
BY AND AMONG
BANK OF AMERICA, N.A.,
LENDER,
AND
CHICO'S FAS, INC., CHICO'S CONCEPT, INC., CHICO'S DISTRIBUTION, INC.
AND CHICO'S MEDIA, INC.,
OBLIGORS
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DATED AS OF MAY 12, 2000
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT ("Agreement") is made and
entered into as of this May 12, 2000 by and among BANK OF AMERICA, N.A., the
successor in interest to NationsBank, N.A. ("Lender") and CHICO'S FAS, INC., a
Florida corporation ("FAS"), CHICO'S CONCEPT, INC., a Florida corporation
("Concept") CHICO'S DISTRIBUTION, INC., a Florida corporation ("Distribution")
and CHICO'S MEDIA, INC., a Florida corporation ("Media") (individually "Obligor"
and collectively, "Obligors").
BACKGROUND
WHEREAS, Obligors have requested Lender to establish a revolving credit
facility in the amount of $25,000,000.00 to be utilized for the purposes of
refinancing existing indebtedness of Obligors with Lender, for the support of
Letters of Credit for one or more Obligors and for working capital for one or
more Obligors and to restate the loan terms and adjust the interest rate on an
existing real estate term loan between Lender and FAS; and
WHEREAS, Lender has agreed to establish the revolving credit facility
and modify the real estate term loan, conditioned upon terms and conditions
acceptable to Lender; and
WHEREAS, the parties desire to set forth the mutually agreed upon terms
and conditions for the revolving credit facility and the restated real estate
term loan.
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants and conditions herein, Obligors and Lender agree as
follows:
SECTION 1. DEFINITIONS.
1.1 DEFINED TERMS. Unless the context of a particular Loan Document
otherwise provides, the terms in quotes used in the foregoing preamble and the
following terms shall have the respective meanings ascribed to them for all
purposes of the Loan Documents:
"Acceptances" means documentary banker's acceptances issued by Lender
for the account of any Obligor.
"Advance" shall mean each advance of principal outstanding under the
Revolving Credit Loan including any Letter of Credit which Lender funds.
"Advance Account" means account number 003601213648 of FAS on the books
of the Lender, to which (i) any Advance by the Lender to Obligors under the
Revolving Credit Loan shall be credited thereto by recording therein on the date
of such Advance a credit entry in the amount of such Advance; and (ii) debits
shall be made thereto if (A) there exist any funds in such account when there is
Indebtedness outstanding under the Revolving Credit Loan and the
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 1
Real Estate Loan, in which case such funds will be debited thereto and applied
to the payment, if any, then due on the Indebtedness by recording therein a
debit entry in the amount of such funds, and (B) any Advance is required to fund
a Letter of Credit draw, in which case there shall be debited thereto the amount
of such Advance by recording therein a debit entry in the amount of such Advance
on the date of such Advance. Obligors hereby agree that FAS is the designated
agent of each Obligor and is solely responsible for the making of Letter of
Credit requests and Advance requests and the subsequent disbursement of funds to
Obligors. Lender shall have no obligation to any Obligor for the misapplication
of any Loan proceeds by FAS.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with any Person. A
Person shall be deemed to control an entity if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such entity, whether through the ownership of voting securities, by
contract or otherwise.
"Authorized Officer" means any of the Chairman, President, Senior Vice
Presidents or Vice Presidents of an Obligor or, with respect to financial
matters, the Treasurer or Chief Financial Officer of an Obligor or any other
person expressly designated by the Board of Directors (or the appropriate
committee thereof) of such Obligor as an Authorized Officer for purposes of this
Agreement, as set forth from time to time in a written certificate delivered to
Lender.
"Agreement" means this Revolving Credit And Term Loan Agreement, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions hereof.
"Business Day" means a day that is not a Saturday, a Sunday, or a day
on which Lender is closed pursuant to authorization or requirement of law.
"Capital Expenditures" means, on a Consolidated Basis, for any period,
the sum of (i) the gross amount of additions to property, plant and equipment of
Obligors during such period plus (ii) with respect to any Capital Leases entered
into by Obligors during such period, the present value of the lease payments due
under such Capital Leases applying a discount rate equal to the interest rate
provided in such lease or, if not so provided, that rate of interest assumed by
Obligors' independent public accountants in connection with the preparation of
the Financial Statement, plus (iii) leasehold improvements made by Obligors.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP;
"Closing Date" shall mean the date of Closing.
"Closing" shall mean the execution and delivery to Lender of this
Agreement together with all related Loan Documents, including, but not limited
to, the Revolving Credit Note and
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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the Real Estate Note and compliance documents coincidental to closing of the
Revolving Credit Loan and modification of the Real Estate Loan.
"Consolidated Basis" shall mean the consolidation of financial
information of Obligors done in accordance with GAAP.
"Consolidated Current Assets" means on a Consolidated Basis, cash and
all other assets or resources of Obligors which are expected to be realized in
cash, sold in the ordinary course of business, or consumed within one year, all
determined in accordance with GAAP.
"Consolidated Current Liabilities" means on a Consolidated Basis, the
amount of all liabilities of Obligors which by their terms are payable within
one year (including all indebtedness payable on demand or maturing not more than
one year from the date of computation and the current portion of Indebtedness
having a maturity date in excess of one year) all determined in accordance with
GAAP.
"Consolidated Current Maturity Coverage Ratio" means on a Consolidated
Basis, with respect to Obligors for the four consecutive rolling fiscal quarters
ending as of the date of computation thereof:
NET INCOME + DEPRECIATION + AMORTIZATION + INTEREST EXPENSE
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CURRENT MATURITIES LONG TERM DEBT (EXCLUSIVE OF DEFERRED RENT) +
CURRENT MATURITIES CAPITAL LEASES +
INTEREST EXPENSE
"Consolidated Total Liabilities" means, on a Consolidated Basis, the
aggregate amount of all liabilities of Obligors as determined in accordance with
GAAP.
"Contractual Obligation" as to any Person shall mean any undertaking by
such Person represented by any agreement, to which such Person is a party or by
which it or any of its property is bound.
"Costs" shall mean all costs, expenses, losses and damages sustained or
incurred by Lender in connection with, because of, or as a result of any default
or any one or more Events of Default of any Obligor under this Agreement, the
Loan Documents or any of them, or in realizing upon, protecting, perfecting,
defending or enforcing, or any combination thereof, the rights and remedies of
Lender under this Agreement, the Loan Documents, or any of them, including,
without limitation, recording charges, documentary stamp taxes, intangible
taxes, all expert fees and all attorney's fees and costs, including paralegal
fees in all legal proceedings, including administrative, trial, appellate,
probate, bankruptcy or any other legal or administrative proceeding, regardless
of whether suit is brought.
"Debt" shall mean as to any Person (i) all obligations of borrowed
money, (ii) obligations evidenced by bonds, debentures, notes or similar
instruments, or upon which
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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interest payments are customarily made, (iii) all
obligations under conditional sale or other title retention agreements relating
to property purchased by that Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (iv) all obligations, including, without limitation, any
items, issued or assumed as the deferred purchase price of property or services
purchased (including trade debt incurred in the ordinary course of business and
regardless of the due date thereof) which would appear as liabilities on a
balance sheet, (v) all obligations under take-or-pay or similar agreements or
under commodities agreements, (vi) all Debt of others secured by (or for which
the holder of such debt has an existing right, contingent or otherwise, to be
secured by), any lien on, or payable out of the proceeds of production from,
property owned or acquired by that Person, whether or not the obligations
secured thereby have been assumed, (vii) all guaranty and other contingent or
indirect obligations, (viii) the principal portion of all obligations under
capital leases other than operating leases, (ix) all matured obligations in
respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, (x) all outstanding and
unreimbursed drafts under all letters of credit issued or banker's acceptance
facilities created for the benefit of and at the request of such Person(to the
extent unreimbursed), (xi) all preferred stock or other equity interests issued
and required by the terms thereof to be redeemed, for which mandatory sinking
fund payments are due, by a fixed date, and (xi) other off balance sheet
financing arrangements including, without limitation, synthetic leases, which,
for purposes of this Agreement, shall not include operating leases. In
determining Debt for Obligors, such determination shall be made without
duplication and shall eliminate inter-company Debt among Obligors.
"Default Rate" shall mean the interest charged on any Note or Advance
or other indebtedness of Obligors to Lender under the Loan Documents after the
occurrence of an Event of Default and the expiration of any applicable cure
periods. The Default Rate shall be the lesser of: (i) the Libor Rate plus Eight
Hundred (800) basis points (8.0%); or (ii) twenty five percent (25%) per annum,
whichever is less, but in any event, not exceeding the highest rate allowed by
law.
"EBITDA" means the sum of net income before taxes, plus interest
expense, plus depreciation, depletion and amortization.
"Environmental Assessment" shall mean that certain Environmental Phase
I report, dated February 27, 1995, prepared by W. ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates,
Inc. of the Real Estate.
"Event of Default" means any of the events specified in Section 7
hereof.
"Fiscal Year" shall mean the 52 or 53 week fiscal year of Obligors
ending on the Saturday closest to January 31 in each year.
"Financial Statement" shall mean the financial statements of Obligors
described in
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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Section 4.6.
Fixed Charge Coverage Ratio shall mean the quotient of (EBITDA plus
rental expense) all divided by the sum of (current maturities of long term debt,
plus interest expense, plus current portion of long term leases, plus rental
expense).
"Funded Debt" shall mean all outstanding indebtedness for borrowed
money and other interest-bearing indebtedness, including current and long term
indebtedness.
Funded Debt and Letter of Credit Exposure shall mean shall mean all
outstanding indebtedness for borrowed money and other interest-bearing
indebtedness, including current and long term indebtedness, plus all outstanding
Letters of Credit.
"GAAP" means generally accepted accounting principles, set forth in
Opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants or which have other substantial authoritative
support, as in effect from, time to time.
"Governmental Authority" shall mean any national, state, local or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Governmental Regulation" shall mean any law, statute, ordinance, rule
or regulation issued by or enacted by a Governmental Authority.
"Guaranty" shall mean the absolute and unconditional guarantee of all
liabilities of FAS to Lender executed by Concept, Distribution and Media.
"Hazardous Substances or Hazardous Materials" shall mean any flammable
materials (excluding wood products normally used in construction), explosives,
radioactive materials, hazardous wastes, toxic substances, or related materials,
including, without limitation, any substances defined as or included in the
definitions of "hazardous substances," "hazardous wastes," "hazardous
materials," "special wastes," "solid wastes," or "toxic substances" under any
applicable federal, state, county, regional, or local laws, ordinances,
regulations, or guidelines.
"Indebtedness" shall mean any and all debts, obligations, and
liabilities of Obligors to Lender, whether arising out of or related to the Loan
Documents, whether principal, interest, fees, or otherwise, whether now existing
or hereafter arising, whether voluntary or involuntary, whether jointly owed
with others, whether direct or indirect, absolute or contingent, contractual or
tortious, liquidated or unliquidated, arising by operation of law or otherwise,
whether or not from time to time decreased or extinguished and later increased,
created or incurred and whether or not renewed, extended, modified, rearranged,
restructured, refinanced, or replaced, including without limitation,
modifications to interest rates or other
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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payment terms of such debts, obligations or liabilities.
"Letter of Credit" shall mean those Letters of Credits issued by Lender
for the benefit of an Obligor pursuant to Section 2.2.
"Letter of Credit Request" shall mean the written application from an
Obligor for the issuance of a Letter of Credit by Lender. Each Letter of Credit
Request shall specify the duration of the Letter of Credit, the beneficiary of
the Letter, and such other information as may be necessary to properly process
the issuance of the Letter of Credit.
"Libor Rate" for any interest period shall mean the offered rate for
deposits in United States dollars in the London Interbank market for a one month
period which appears on the Telerate Screen Page 3750 as of 11:00 a.m. (London
time) on the day that is two London Banking days (as defined herein) preceding
the first Business Day of the interest period. If at least two such offered
rates appear on the Telerate Screen Page 3750, the rate will be the arithmetic
mean of such offered rates. If the foregoing rate is unavailable from the
Telerate Screen, Lender may, in its discretion, use any other publicly available
index or reference rate showing rates offered for United States dollar deposits
in the London Interbank market as of the applicable date. In addition, the
Lender may, in its discretion, use rate quotations for daily or annual periods
in lieu of quotations for substantially equivalent monthly periods.
"Loan Fees" shall mean those fees set forth in Section 2.4 (b).
"Loans" shall mean, collectively, the Revolving Credit Loan and the
Real Estate Loan. The word, "Loan", may refer individually to either of the
Loans.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments, any Letter of Credit, the Guaranties, Acceptances, Letter of Credit
Requests, affidavits demonstrating that any Note is exempt from documentary
stamp taxes, documentary stamp tax indemnity agreement and all the other
documents, agreements, certificates, schedules, statements and opinions, however
described, referenced herein or executed or delivered pursuant hereto or in
connection with or arising with the Loans or the transactions contemplated by
this Agreement.
"Net Worth" means on a Consolidated Basis the depreciated book value
amount of all assets of Obligors, with no adjustment from and after the
Statement Date due to revaluation, depreciation, reserves or otherwise, and
after elimination of any inter-company transactions, less:
(i) intangible assets, such as (without limitation) goodwill
(whether representing the excess of cost over book value of assets acquired or
otherwise), capitalized expenses, patents, trademarks, trade names, copyrights,
franchises, licenses, and deferred charges, such as (without limitation)
unamortized costs and costs of research and development;
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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(ii) treasury stock;
(iii) advances to employees, officers, directors,
stock-holders or Affiliates of any Obligor; and
(iv) Consolidated Tot
al Liabilities.
"Notes" shall mean the Revolving Credit Note and the Real Estate Note,
and the term "Note", may refer to either of the Notes.
"Permitted Encumbrances" means and includes:
(a) liens for taxes, assessments or similar governmental
charges not in default or being contested in good faith (with all foreclosure or
execution proceedings thereon effectively stayed);
(b) workers', mechanics' and materialmen's liens and similar
liens incurred in the ordinary course of business remaining undischarged or
unstayed for not longer than 60 days after the attachment thereof;
(c) liens in respect of final judgments or awards remaining
undischarged or unstayed for not longer than 60 days after the making thereof;
(d) liens in respect of pledges or deposits under worker's
compensation laws, unemployment insurance or similar legislation and in respect
of pledges or deposits to secure bids, tenders, or statutory obligations, or in
connection with surety, appeal and similar bonds incidental to the conduct of
litigation;
(e) liens and security interests securing purchase money Debt
so long as (i) Obligors first obtain Lender's prior written consent thereto to
the extent same exceeds $500,000.00 in the aggregate; and (ii) such lien or
security interest does not extend to any property other than that acquired with
the proceeds of such Debt;
(f) the liens and security interests in favor of the Lender
created under the Loan Documents;
(g) liens in favor of Lender; and
(h) liens and encumbrances contained in the Title Policy.
"Person" means any corporation, business entity, natural person, firm,
joint venture, limited liability company, partnership, trust, unincorporated
organization, association, government, or any department or agency of any
government, and shall include the singular and the plural.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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"Potential Default" shall mean an event that but for the lapse of time
or the giving of notice, or both, would constitute an Event of Default.
"Principal Place of Business" shall mean ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Real Estate" shall mean that certain real property located in ▇▇▇
County, Florida, described in the Security Instruments, the description of which
is attached hereto as Exhibit A.
"Real Estate Loan" means the loan between FAS and Lender last amended
on October ___, 1998 in the principal amount, as of January 4, 1996, of
$5,587,500.00.
"Real Estate Loan Maturity Date" shall mean December 31, 2002.
"Real Estate Note" means that certain Renewal Promissory Note dated the
Closing Date to Lender from FAS in the original principal sum of Five Million
Two Hundred Seventy Five Thousand Five Hundred and 00/Hundredths Dollars
($5,275,500.00) and all extensions, consolidations and renewals thereof.
"Requirements of Law" shall mean as to any Person the Certificate of
Incorporation and bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule, or regulation, or a final and binding
determination of an arbitrator or a determination of a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Revolving Credit Advance Term" shall commence on May 12, 2000 and end
on June 1, 2002 or such later date as may be provided for pursuant to Section
2.4 F.
"Revolving Credit Loan" means the loan, dated the Closing Date, to
Obligors from Lender in the original principal amount of $25,000,000.00.
"Revolving Credit Loan Ceiling" is defined as the Revolving Credit Loan
Commitment less the amounts of all Letters of Credit issued and outstanding
under this Agreement.
"Revolving Credit Loan Commitment" shall mean Twenty Five Million and
no/100's Dollars ($25,000,000.00).
"Revolving Credit Loan Maturity Date" shall mean the date of the final
payment is due under the Revolving Credit Note. The Initial Revolving Credit
Loan Maturity Date shall be June 1, 2002 and the Revolving Credit Loan Maturity
Date may be extended as provided for pursuant to Section 2.4 f.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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"Revolving Credit Note" means that certain Revolving Credit Promissory
Note from Obligors to Lender dated the Closing Date in the original principal
sum of Twenty Five Million and No/Hundredths Dollars ($25,000,000.00) and all
extensions, consolidations and renewals thereof.
"Security Instruments" shall mean Mortgage And Security Agreement,
dated June 14, 1994, recorded at O.R. Book 2510, Page 3237, as amended by
instruments recorded in O.R. Book 2558, Page 1030, O.R. Book 2576, Page 0693,
O.R. Book 2641, Page 0680, Assignment in O.R. Book 2665, Page 2918, and Future
Advance And Modification in O.R. Book 2665, Page 2925, and Amended and Restated
Mortgage Security Agreement and Assignment of Rents recorded in O.R. Book 2665,
Page 2931, all of the Public Records of ▇▇▇ County, Florida, and such further
amendments and restatements, recorded in O.R. Book 2665, Page 2931, of the
Public Records of ▇▇▇ County, Florida, together with Uniform Commercial Code
filing statements associated therewith, recorded under filing statement
940000163547 with the Secretary of State, as may have been continued from time
to time, and filing statement, recorded in O.R. Book 2510, Page 3256, of the
Public Records of ▇▇▇ County, Florida, as may have been continued from time to
time, and Collateral Assignment Of Rents And Leases, dated June 14, 1994,
recorded in O.R. Book 2510, Page 3249, and modified in O.R. Book 2558, Page
1030, O.R. Book 2576, Page 0693, O.R. Book 2641, Page 680, and assigned in O.R.
Book 2665, Page 2918, all of the Public Records of ▇▇▇ County, Florida, as
further modified from time to time. Security Instruments shall further include
any and all security agreements and any and all other documents evidencing a
pledge of assets to secure the Real Estate Note.
"Statement Date" shall mean the date of the Financial Statement.
"Subsidiary" shall mean any non-natural Person, more than fifty percent
(50%) of the voting control of which is owned or controlled, directly or
indirectly, by any Obligor.
"Title Policy" shall mean Chicago Title Insurance Company Policy No.
10-2003-107-00000001 and all endorsements thereto, up to and including
endorsement No. 4.
"Total Funded Debt" shall mean on a Consolidated Basis, all Debt of
Obligors evidenced by a note or other instrument or which arise under a Capital
Lease.
"UCC" shall mean the Florida Uniform Commercial Code, Chapters 671 to
680, inclusive, as amended from time to time.
1.2 ACCOUNTING TERMS AND SPECIAL CALCULATIONS. All accounting terms used
herein shall be construed in accordance with GAAP and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with GAAP.
In performing calculations of current maturities of long term debt, Lender and
Obligors agree that if the calculations would otherwise require the inclusion of
the entire remaining principal balance of the Real Estate Loan to determine the
current maturities of long term debt, and there otherwise does not exist
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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an Event of Default under this Agreement, then, the calculation of current
maturities of long term debt shall be made as if there were an additional
calendar year added to the Real Estate Loan Maturity Date beyond the calculation
date, thereby deleting the entire principal balance of the Real Estate Loan and
in place thereof, the portion of the Real Estate Loan long term debt that was
included in the corresponding period of the preceding year shall be used to
calculate the current maturity of the Real Estate Loan. Nothing in this
paragraph shall be deemed to require Lender to actually extend the Real Estate
Loan Maturity Date beyond December 31, 2002.
1.3 OTHER DEFINITIONAL PROVISIONS. All of the terms defined in this
Agreement shall have such defined meanings when used in all the Loan Documents
unless the context shall otherwise require. All terms defined or used in this
Agreement in the singular shall have comparable meanings when used in the
plural, and vice versa. Terms defined in, or by reference to, the UCC, including
Chapter 679 of the Florida Statutes, to the extent not otherwise defined herein
shall have the respective meanings given to them in the UCC, including Chapter
679 of the Florida Statutes, with the exception of the word "document," unless
the context clearly requires such meaning. The words "hereby", "hereto",
"hereof", "herein", "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The use of "to", "until", "on", and words of
similar import in this Agreement, in indicating expiration, shall be interpreted
to include the date mentioned. The neuter genders as used herein and whenever
used shall include the masculine, feminine and neuter as well. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party unless the
context shall expressly provide otherwise.
1.4 INTEREST CALCULATIONS.
A. Except as otherwise provided herein under 1.4(d), Interest on the
Loans shall, until an Event of Default or maturity, accrue interest at the Libor
Rate as adjusted pursuant to the following performance standards schedule based
upon the ratio of Obligors' Total Funded Debt to Obligors' EBITDA on a
Consolidated Basis:
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RATIO LEVEL INTEREST RATE
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2.26 x > Default Rate
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1.51 to 2.25 x Libor Rate + 290 Basis Pts.
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1.01 to 1.50 x Libor Rate + 220 Basis Pts.
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.51 to 1.00 x Libor Rate + 150 Basis Pts.
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0 to .51 x Libor Rate + 80 Basis Pts.
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B. Any interest due on the Indebtedness under the provisions of this
Agreement shall be calculated on the outstanding principal balance for the
actual number of days which have elapsed in an interest period, on the basis of
360 days and shall accrue from the date any Advance is made pursuant to any Note
or this Agreement or any other Loan Document. The
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interest due on any date for payment of interest hereunder shall be that
interest, to the extent accrued, as of midnight on the last calendar day
immediately prior to the interest payment date.
Notwithstanding anything herein or in any Loan Document to the
contrary, the sum of all interest and all other amounts deemed interest under
Florida or other applicable law which may be collected by Lender hereunder shall
never exceed the maximum lawful interest rate permitted by such law from time to
time. Lender and Obligors intend and agree that under no circumstances shall
Obligors be required to pay interest on the Loans or on any other Indebtedness
at a rate in excess of the maximum interest rate permitted by applicable law
from time to time, and in the event any such interest is received or charged by
Lender in excess of that rate, Obligors shall be entitled to an immediate refund
of any such excess interest by a credit to and payment toward the unpaid balance
of the Indebtedness (such credit to be considered to have been made at the time
of the payment of the excess interest) with any excess interest not so credited
to be immediately paid to Obligors by Lender.
c. Any Indebtedness arising pursuant to this Agreement not paid when
due (whether at stated maturity, upon acceleration or otherwise) shall bear
interest from the Due Date until paid in full at the Default Rate. For these
purposes, the Due Date shall mean 10 days after Obligor receives written notice
from Lender as to the amount then due.
d. If existing Letter of Credit fees collected by Lender falls below
$15,000.00 during any calendar quarter, Lender may, at its option, increase the
interest rate on the Revolving Credit Loan by an additional fifty (50) basis
points (.50%), provided that if Lender so elects and provided no Event of
Default exists and remains uncured, the rate will return to the prior rate once
the fees once again exceed $15,000.00 for a calendar quarter.
e. In the event Obligors fail to maintain at least $5,000,000 average
balances either in depository accounts with Lender or Investment accounts with
Lender, to be measured by the preceding three month end average balances,
commencing July 30, 2000 and each fiscal quarter thereafter, Lender may, at its
option, increase the interest rate on the Revolving Credit Loan by and
additional fifty (50) basis points (.50%), provided that if Lender so elects,
the rate will return to the prior rate once the average balance monthly balance
once again exceeds $5,000,000.
SECTION 2. AMOUNT AND TERMS OF THE LOANS
2.1 REVOLVING CREDIT LOAN.
a. Lender agrees, upon the terms and conditions set forth in this
Agreement, and in reliance upon the representations and warranties made under
this Agreement, to make the Revolving Credit Loan available to Obligors and
allow Obligors during the Revolving Credit Advance Term to borrow, repay and
re-borrow from Lender in an amount up to, but not exceeding, the Revolving
Credit Loan Ceiling.
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b. The proceeds of the Revolving Credit Loan shall be utilized (I) for
the refinance of loan #'s 4289356-265 and 4289356-307 held by Lender, (II) to
support the issuance of Letters of Credit, (III) for working capital, and (IV)
for capital expenditures and acquisitions of business operations.
c. Lender agrees to make Advance(s) to Obligors under the Revolving
Credit Loan, from time to time, upon written request from FAS from the Closing
Date of the Revolving Credit Loan, up to but not including the Revolving Credit
Maturity Date and in accordance with the terms hereof; provided, however, that
at no time shall the total aggregate amount of Advances outstanding and total
aggregate amount of all outstanding Letters of Credit issued under this
Agreement exceed the Revolving Credit Loan Commitment. In the event Lender is
required to fund any Letter of Credit issued under this Agreement by an Advance,
interest thereon shall accrue at the rate set forth in Section 1.4 until paid.
d. Each Advance shall be in a minimum amount of $100,000.00 and
multiples thereof.
e. Advances shall be paid by credit to the Advance Account with Lender.
Lender shall give written confirmation of deposit at the Principal Place of
Business. In the alternative, Lender, may at its option, disburse an Advance
directly to FAS if directed by FAS in writing. Obligors shall deliver certified
copies of corporate resolutions evidencing those Authorized Officers authorized
to make Advance Requests. Lender shall be entitled to rely on any Advance
Request that Lender reasonably believes to be executed by a person authorized
under corporate resolutions furnished to Lender by FAS.
f. If at any time the outstanding Advances plus amounts of Letters of
Credit issued pursuant to this Agreement exceeds the Revolving Credit Loan
Commitment, Obligors shall repay such amounts as are necessary to reduce the
aggregate outstanding principal balance of the Revolving Credit Loan below the
Revolving Credit Loan Ceiling.
2.2 LETTERS OF CREDIT AND ACCEPTANCES
a. So long as no Event of Default or Potential Default exists and
remains uncured, Lender agrees, subject to the terms and conditions of this
Agreement, to issue from time to time from the date hereof to and including the
30th day immediately preceding the Revolving Credit Loan Maturity Date, its
Letters of Credit and Acceptances, for the account of Obligors in an amount
which, when added to: (i) the aggregate amount of all other outstanding Letters
of Credit at the proposed issuance date and (ii) all outstanding Advances, will
not exceed the Revolving Credit Loan Commitment.
b. The issuance by the Lender of each Letter of Credit and Acceptance
shall, in addition to the conditions precedent set forth elsewhere in this
Agreement, be subject to the
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 12
conditions that such Letter of Credit or Acceptance shall be in such form,
contain such terms, and support such transactions or obligations as shall be
reasonably satisfactory to the Lender, consistent with the Lender's then current
practices and procedures with respect to similar letters of credit or
acceptances. All Letters of Credit and Acceptances shall be issued pursuant to
and subject to the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500, and all
subsequent amendments and revisions thereto. In addition, Obligors shall pay to
the Lender such fees in connection with the issuance and maintenance of Letters
of Credit and Acceptances in accordance with Lender's fee schedule in effect
from time to time.
c. Obligors agree that the Lender may, in its sole discretion, accept
or pay, as complying with the terms of any Letter of Credit or Acceptance, any
drafts or other documents otherwise in order which may be signed or issued by an
administrator, executor, trustee in Bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, attorney in fact or other
legal representative of a party who is authorized under such Letter of Credit or
Acceptance to draw or issue any drafts or other documents.
d. No Letter of Credit may have an expiration date later than five (5)
Business Days prior to the Revolving Credit Loan Maturity Date. Each drawing
under a Letter of Credit (an "L/C Advance"), shall be payable by Obligors,
without demand or notice of any kind, in full, on the date the beneficiary of
the Letter of Credit draws on such Letter of Credit.
e. Without limiting the generality of any other provision hereof,
Obligors hereby indemnify and hold harmless Lender from and against any and all
claims and damages, losses, liabilities, Costs, or expenses which Lender may
incur (or which may be claimed against the Lender) by any Person by reason of,
or in connection with the issuance or transfer of or payment or failure to pay
under any Letter of Credit or Acceptance; provided that Obligors shall not be
required to indemnify Lender for any claims, damages, losses, liabilities,
costs, or expenses to the extent, but only to the extent, (i) caused by the
willful misconduct or gross negligence of the party to be indemnified, or (ii)
caused by the Lender's failure to pay under any Letter of Credit or Acceptance
after the presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit or Acceptance, unless such payment is
prohibited by any law, regulation, court order, or decree. This indemnity shall
survive the termination of this Agreement.
f. Obligors' obligation to pay L/C Advances shall be absolute,
irrevocable, and unconditional under any and all circumstances whatsoever and
irrespective of any setoff, counterclaim, or defense to payment that Obligors
may have or had against Lender (except such as may arise out of Lender's gross
negligence or willful misconduct hereunder) or any other Person, including,
without limitation, any setoff, counterclaim, or defense based upon or arising
out of:
(1) Any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 13
(2) Any amendment or waiver of or any consent to departure
from the terms of any Letter of Credit;
(3) The existence of any claim, setoff, defense, or other
right which any Obligor or any other Person may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting); or
(4) Any allegation that any demand, statement or any other
document presented under any Letter of Credit is forged, fraudulent, invalid, or
insufficient in any respect, excepting those instances of Lender's gross
negligence or willful misconduct where the forgery, fraudulent nature,
invalidity or insufficiency is evident from the face of the presentation; or
(5) Any statement therein being untrue or inaccurate in any
respect whatsoever or any variations in punctuation, capitalization, spelling,
or format of the drafts or any statements presented in connection with any L/C
Advance.
(6) Any lack of validity or enforceability of the Letter of
Credit or Acceptance, the obligation supported by the Letter of Credit or
Acceptance or any other agreement or instrument relating thereto (collectively,
the "Related Documents");
(7) Any amendment or waiver of or any consent to or departure
from all or any of the Related Documents;
(8) Any breach of contract or other dispute between any
Obligor and any beneficiary or any transferee of a Letter of Credit or
Acceptance (or any persons or entities for whom such beneficiary or any such
transferee may be acting) or any other person or entity; or
(9) Any delay, extension of time, renewal, compromise, or
other indulgence or modification granted or agreed to by the Lender, with or
without notice to or approval by Obligors in respect of any of Obligors'
indebtedness hereunder.
G. Until such time as the Lender shall otherwise consent in writing,
which consent shall not be unreasonably withheld, Obligors shall have available
to them under the Revolving Credit Loan, for working capital needs, for capital
expenditures, for funding acquisitions and for the refinancing of existing
indebtedness with Lender, the sum of Ten Million Dollars ($10,000,000.00). Until
Lender otherwise consents in writing, the remaining balance of the Revolving
Credit Loan shall be reserved to support Letters of Credit.
2.3 REAL ESTATE LOAN.
a. Obligors acknowledge that FAS executed and delivered documents in
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 14
connection with a real estate loan secured by the Real Estate under a Loan
Agreement and other documents which are presently held by Lender under an
Assignment of Notes, Mortgages and Other Loan Documents, recorded on January 5,
1996 in O.R. Book 2665, Page 2918, of the Public Records of ▇▇▇ County, Florida.
Obligors acknowledge that FAS is the sole borrower under the Real Estate Loan.
In consideration of the establishment of the Revolving Credit Loan and the
adjustment of the interest rate on the Real Estate Loan, Concept, Distribution
and Media have executed absolute, unconditional and continuing Guaranties of all
Indebtedness of FAS. Obligors acknowledge that they have no offsets or defenses
to the Real Estate Loan or any of the Loan Documents associated with the Real
Estate Loan and confirm that the principal balance of the Real Estate Loan is
set forth in the Real Estate Note.
b. FAS has executed a Real Estate Note for the Indebtedness related to
the Real Estate Loan, and FAS acknowledges that the entire proceeds have already
been disbursed under the Real Estate Note. The Real Estate Loan Indebtedness
shall be payable in accordance with the terms and conditions of the Real Estate
Note, unless modified herein.
2.4 PROVISIONS APPLICABLE TO THE CREDIT FACILITIES.
a. All payments made on account of the Indebtedness shall be made by
the respective Obligors, without setoff or counterclaim, in lawful money of the
United States in immediately available funds, free and clear of and without
deduction for any taxes, fees, or other charges of any nature whatsoever imposed
by any taxing authority. Any payments must be received by the Lender by 2:00
P.M. Eastern Standard Time, on the day of payment, it being expressly agreed and
understood that if a payment is received after 2:00 P.M. by Lender, such payment
will be considered to have been made by the respective Obligors on the next
succeeding Business Day, and interest thereon shall be payable by the respective
Obligors at the applicable rate set forth herein during such extension. All
payments on account of the Indebtedness shall be made to Lender, to the extent
of funds available, by auto debit of Advance Account. If any payment required to
be made by Obligors hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then applicable rate
during such extension. All payments made in connection with the Loan shall be
applied first to Costs, then to application on any scheduled payments of
principal and/or interest then due, and if none, then to accrued interest to the
date of payment, then to application of principal on the Loans in such order as
FAS shall direct.
b. A annual loan fee of $50,000.00 shall be due and payable on each
June 1, during the Revolving Credit Advance Term, commencing on June 1, 2000. A
fee of ten (10) basis points (.10%) shall be due and payable each calendar
quarter on the unfunded principal amount of the Revolving Credit Loan calculated
as of the last Business Day preceding the calendar quarter, with the first such
fee due as of July 15, 2000, then quarterly thereafter. For purposes of this
Agreement, the unfunded principal amount of the Revolving Credit Loan shall be
the total Revolving Credit Loan Commitment, less the average amount of cash
draws for
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 15
the quarter during the period of calculation. Undrawn Letters of Credit shall
not be considered a cash draw for purposes of this calculation. Payment of the
Loan Fees shall, to the extent of funds available, be by auto debit from the
Advance Account.
c. Lender shall not be responsible for any damages to Obligors
resulting from Obligors' anticipation of funding of an Advance before such
Advance is actually funded by Lender.
d. Obligors may prepay all or any portion of the Loans in advance of
their respective maturity dates without prepayment penalty.
e. Obligors shall repay the Real Estate Loan, interest thereon and all
outstanding costs in accordance with the terms and conditions of the Real Estate
Note.
f. Principal on the Revolving Credit Note is due in full in a single
payment on the Initial Revolving Credit Loan Maturity Date. Notwithstanding the
foregoing, Lender will automatically renew the Revolving Credit Note for a
period of one year from the Initial Revolving Credit Loan Maturity Date and for
successive one year periods thereafter with a final Revolving Credit Loan
Maturity Date of April 30, 2005 unless either: (a) at least fifteen (15) days
prior to any Revolving Credit Loan Maturity Date, Lender notifies Borrower that
the Revolving Credit Note will not be renewed; or (b) Borrower is in default
under any Note or any of the Loan Documents; or (c) Lender has previously
refused to make any additional advances or reduced the availability of advances
under the Revolving Credit Note. If Lender, in its sole discretion, decides not
to renew the Revolving Credit Note, Lender will not be obligated to make any
further advances thereunder after the then applicable Revolving Credit Loan
Maturity Date, and provided that Borrower is not in default under any Note or
any of the Loan Documents, Borrower will pay the entire balance outstanding
under the Revolving Credit Note by the then applicable Revolving Credit Loan
Maturity Date. If Borrower is in default under any Note or any of the Loan
Documents, then after expiration of any applicable notice and grace periods,
Lender may demand payment of the balance outstanding under all Notes in full
immediately.
The Revolving Credit Note notwithstanding, Obligors shall repay such
outstanding advances as are necessary to reduce the outstanding principal
balance thereunder to the extent necessary so as not to exceed the Revolving
Credit Loan Ceiling.
SECTION 3. CONDITIONS OF LENDING.
3.1 CONDITIONS TO REESTABLISHMENT OF REVOLVING CREDIT LOAN AND MODIFICATION
OF THE REAL ESTATE LOAN. As conditions precedent to the obligation of the Lender
to establish the Revolving Credit Loan and to adjust the interest rate on the
Real Estate Loan:
a. DELIVERY OF DOCUMENTS. Obligors shall have delivered to Lender, in
form and substance satisfactory to the Lender and its counsel, the following:
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 16
(1) A duly executed copy of this Agreement;
(2) Duly executed copies of the other Loan Documents;
(3) A certificate of active status from the Florida Secretary
of State with respect to each Obligor;
(4) A certificate from an Authorized Officer of each Obligor
certifying that a resolution (which shall be attached to the certificate) has
been duly adopted by each Obligor and remains in full force and effect
specifically authorizing such Obligor to borrow under the Loan, and authorizing
certain named individuals to execute and deliver documents on behalf of and to
bind such Obligor;
(5) Copies of each Obligor's organizational documents filed
with the Secretary of State and all amendments thereto and copies of each
Obligor's By-Laws and all amendments thereto, all of which shall be attached to
an Authorized Officer's certificate attesting them to be true and correct
copies;
(6) Such credit applications, financial statements,
authorizations, and such information concerning each Obligor and its business,
operations and condition (financial and otherwise) as the Lender may reasonably
request prior to the date of this Agreement;
(7) An opinion of counsel for each Obligor from an
attorney-at-law licensed to practice in the State of Florida, which opinion must
be acceptable to Lender and its counsel and shall contain at least the following
opinions:
A. Each Obligor is duly organized and validly existing under
Florida law and of active status and that the execution and delivery of the Loan
Documents and the Closing of the Loan have been duly authorized by all necessary
action on the part of such Obligor.
B. Each Obligor has the right and capacity to execute and
deliver each of the Loan Documents and no Obligor has executed any documents of
any kind, including any prior loan or documents, which would prohibit the
execution and delivery of the Loan Documents.
E. The Notes and all other Loan Documents have been duly
executed and delivered by each Obligor and are the legal, binding, valid and
enforceable obligations of each Obligor in accordance with their respective
terms, except as the enforcement of them may be limited by bankruptcy,
insolvency, moratorium and other applicable debtor relief laws.
D. To such counsel's knowledge and based solely upon a written
certification from Obligors, there are no undisclosed material legal actions or
proceedings involving pending or threatened against, or with reference to any
Obligor before any court, quasi judicial or administrative body or Governmental
Authority.
E. Assuming that the collection of the interest and other
charges provided for in this Agreement and the Notes is undertaken strictly in
accordance with the terms of such documents, the aggregate interest paid by the
Obligors under this Agreement and the Notes will not be usurious under the laws
of the United States and the State of Florida.
F. To such counsel's knowledge, and based solely upon a written
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 17
certification from Obligors, the execution and delivery of the Loan Documents by
each Obligor do not violate, conflict with, result in a breach of or default
under any applicable statute, rule, order or other Governmental Regulation
applicable to such Obligor or any agreement by which such Obligor's properties
are bound, or result in the creation of any imposition of any lien, charge or
encumbrance other than as contemplated by this Agreement.
G. That the state imposes a documentary stamp tax equal to 35
cents on each $100 or fraction thereof of the indebtedness or obligation
evidenced by promissory notes, nonnegotiable notes and written obligations to
pay money made, executed, delivered, sold, transferred or assigned in the State
and on mortgages, trust deeds, security agreements or other evidences of
indebtedness filed or recorded in the State. That Counsel for Obligors
understands that neither the Notes, the Agreement nor any other document
contemplated by the Agreement (other than the Financing Statements) will be
made, executed, delivered, sold, transferred or recorded in the State except
possibly in connection with the enforcement and collection thereof and based
upon that understanding and the other assumptions set forth in their opinion,
counsel for Obligors believes that no Florida documentary stamp tax should be
due and payable in connection with the execution, delivery and performance of
the Notes, the Agreement and the other documents contemplated by the Revolving
Credit and Term Loan Agreement.
b. COMPLIANCE WITH LOAN DOCUMENTS. All acts and conditions (including,
without limitation, the obtaining of any necessary regulatory approvals and the
making of any required filings, recordings, or registrations) required to be
done and performed and to have happened precedent to the execution, delivery,
and performance of the Loan Documents and to constitute the same legal, valid,
and binding Indebtedness, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and strict
compliance with all applicable laws.
c. NO DEFAULT. A determination by Lender that there shall exist
no Event of Default or Potential Default; and there shall have occurred no
material, adverse change in the financial condition of the Obligors considered
on a consolidated basis.
dD. EXECUTED DOCUMENTATION. All documentation, including,
without limitation, documentation for corporate and legal proceedings in
connection with the transactions contemplated by the Loan Documents shall be
reasonably satisfactory in form and substance to the Lender and its counsel.
e. ADDITIONAL CERTIFICATIONS. Any and all other certificates,
affidavits, resolutions, instruments, documents and legal opinions reasonably
deemed appropriate or necessary by Lender or its counsel.
f. ACCURATE REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Obligors set forth in Article 4 hereof and in each of the
other Loan Documents shall be true and correct in all material respects on and
as of the date hereof.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 18
3.2 CONDITIONS TO ADVANCES UNDER THE REVOLVING CREDIT LOAN. As conditions
precedent to the obligation of the make an Advance under the Revolving Credit
Loan or issue of a Letter of Credit under this Agreement:
a. LETTER OF CREDIT REQUIREMENTS. In the case of the issuance of
a Letter of Credit, Obligors shall have executed and delivered to the Lender
such documents in form and content reasonably acceptable to the Lender together
with such other instruments and documents as it shall reasonably request;
b. ACCURATE REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Obligors set forth in Article 4 hereof and in each of the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such Advance or other borrowing or the issuance of such Letter
of Credit, as the case may be, with the same effect as though such
representations and warranties had been made on and as of such date, except to
the extent that such representations and warranties expressly relate to an
earlier date and except that the Financial Statement referred to in Section 4.6
shall be deemed to be those financial statements most recently delivered to the
Lender pursuant to Section 4.6 hereof;
c. PAYMENT OF COSTS. Obligors have paid or have arranged to pay
all costs incurred by Lender in making an Advance including any applicable
intangible taxes, documentary stamp taxes, attorney's fees or recording costs.
d. NO DEFAULT. A determination by Lender that there shall exist
no Event of Default or Potential Default and there shall have occurred no
material, adverse change in the financial condition of the Obligors considered
on a consolidated basis.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Obligor represents and warrants to Lender (which representations
and warranties shall survive the execution and delivery of the Loan Documents)
that:
4.1 ORGANIZATION, POWERS, ETC. Each Obligor: (i) is a corporation duly
organized, validly existing and of active status under the laws of the State of
Florida; (ii) has all requisite power and authority to own its properties and
assets and to carry on its business as now conducted and proposed to be
conducted; (iii) is duly qualified to do business and is in good standing in
every jurisdiction in which the character of its properties or assets owned or
the nature of its activities conducted makes such qualification necessary,
except where the effect of such failure to qualify would not have a material
adverse effect on the financial condition of the Obligors, considered on a
consolidated basis; and (iv) has the power and authority to execute and deliver,
and to perform its obligations under the Loan Documents.
4.2 AUTHORIZATION OF LOAN FOR OBLIGORS, ETC. The execution, delivery and
performance of the Loan Documents by each Obligor: (a) has been duly authorized
by all requisite action; and (b) will not: (i) violate (A) any material
provision of law applicable to
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 19
such Obligor, any material Government Regulation applicable to such Obligor, any
material order, writ, judgment, decree, determination or award of any court,
arbitrator or Government Authority to which such Obligor is subject; (B) the
Articles of Incorporation or Bylaws of such Obligor; or (C) any provision of any
indenture, agreement or other instrument to which such Obligor is a party or by
which it or any of its properties or assets are bound, unless such violations
would not have a material adverse effect on the financial condition of the
Obligors, considered on a consolidated basis; (ii) be in material conflict with,
result in a material breach of or constitute (with due notice or lapse of time
or both) a material default under any such indenture, agreement or other
instrument; or (iii) result in the creation or imposition of any material lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of such Obligor other than the Permitted Encumbrances.
4.3 BINDING EFFECT. This Agreement is, and the Notes and the other Loan
Documents when delivered hereunder will be legal, valid and binding obligations
of each respective Obligor, enforceable against each Obligor in accordance with
their respective terms, except (a) as enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights.
4.4 TAX PAYMENTS. All federal and state tax returns and reports of each
Obligor required to be filed have been filed, and all taxes, assessments, fees
and other charges by any Government Authority upon each Obligor, or upon any
Obligor's properties, assets, including the collateral, incomes or franchises,
which are due and payable in accordance with such returns and reports, have been
paid, other than those presently: (a) payable without penalty or interest; or
(b) contested in good faith and by appropriate and lawful proceedings prosecuted
diligently. The aggregate amount of the taxes, assessments, charges and levies
so contested is not material to the condition (financial or otherwise) and
operations of the Obligors, considered on a consolidated basis. The charges,
accruals, and reserves on the books of the Obligors in respect of federal, state
and local taxes for all fiscal periods to date are adequate in all material
respects for Obligors, when considered on a consolidated basis, and no Obligor
knows of any other material unpaid assessment for additional federal, state or
local taxes for any such fiscal period or of any basis therefore.
4.5 AGREEMENTS.
a. No Obligor is a party to any agreement, indenture, lease or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule or regulation which is
reasonably likely to materially and adversely affect the business, properties,
assets, operations or condition (financial or otherwise) of the Obligors,
considered on a consolidated basis.
b. No Obligor is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of any such Obligor, any
agreement relating thereto or any other contract or agreement which restricts or
otherwise limits the incurring of the Indebtedness evidenced by the Notes.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 20
c. No Obligor is in default in the performance, observance or
fulfillment of any of the material obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party where
the effect of such default is reasonably likely to materially and adversely
affect the business, properties, assets or condition (financial or otherwise) of
the Obligors, considered on a consolidated basis.
d. Each Obligor enjoys lawful, peaceful and undisturbed possession in
all material respects to all permits, licenses, trade names, trade marks,
services marks and patents used or whose use is contemplated in the operation of
its business other than where the failure to maintain same is not reasonably
likely to materially and adversely affect the business, properties, assets or
condition (financial or otherwise) of the Obligors, considered on a consolidated
basis. Each Obligor enjoys lawful, peaceful and undisturbed possession in all
material respects under all leases as to which any such Obligor is a lessee,
other than where the failure to maintain same is not reasonably likely to
materially and adversely affect the business, properties, assets or condition
(financial or otherwise) of the Obligors, considered on a consolidated basis,
and to the knowledge of the Obligors, all such leases are valid and subsisting
and in full force and effect.
4.6 FINANCIAL STATEMENT.
a. Obligors have furnished Lender with a consolidated Financial
Statement for the period ending November 30, 1999 (herein the "Statement Date").
The Financial Statement, including any related schedules and/or notes, is true
and correct in all material respects and has been prepared in accordance with
GAAP and shows all liabilities, direct and contingent, of Obligors required to
be shown in accordance with such principles, except for year-end adjustments.
The balance sheet fairly presents the consolidated condition of Obligors as of
the Statement Date in all material respects, and the profit and loss statement
fairly presents the results of the consolidated operations of Obligors for the
periods indicated in all material respects.
b. Since the Statement Date there has been no material undisclosed
adverse change in the actual or anticipated assets, liabilities, financial
condition, business, operations, affairs or prospects (financial or otherwise)
of Obligors, considered on a consolidated basis from that set forth or
reflected in the Financial Statement, other than changes in the ordinary
course of business.
4.7 LITIGATION, ETC. Except as disclosed in the Financial Statement, there
are no undisclosed actions, proceedings or investigations pending or, to the
knowledge of any Obligor, threatened, against any Obligor or affecting any
Obligor (or any basis therefore known to any Obligor) which, either in any case
or in the aggregate, might result in any material adverse change in the
financial condition, business, prospects, affairs or operations of the Obligors,
considered on a consolidated basis or in the Obligors' properties and assets,
considered on a consolidated basis, or in any material impairment of the right
or ability of the
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 21
Obligors to carry on their consolidated operations as now
conducted or proposed to be conducted, or in any material liability on the part
of the Obligors, considered on a consolidated basis, and none which questions
the validity of this Agreement, the Notes or any of the other Loan Documents or
of any action taken or to be taken in connection with the transactions
contemplated hereby or thereby.
4.8 VIOLATION OF JUDICIAL OR GOVERNMENTAL ORDERS, LAWS, ORDINANCES OR
REGULATIONS. No Obligor has notice of any violation of any court order or of any
law, Governmental Regulation, ordinance, rule, order, code, or requirement of
any Governmental Authority having jurisdiction over any Obligor that may
materially affect the business and operation of the Obligors, considered on a
consolidated basis.
4.9 TITLE TO ASSETS. The Obligors have good and marketable title to the
Real Estate and all other material assets reflected in the Financial Statement,
and all such assets are free and clear of all liens, mortgages, pledges,
security interests, charges, title retention agreements, or other encumbrances
of any kind, except the Permitted Encumbrances. To its knowledge, each Obligor
enjoys lawful, peaceful and undisturbed possession in all material respects to
all permits, licenses, trade names, trade marks, services marks and patents used
or whose use is contemplated in and is material to the operation of the business
of the Obligors, considered on a consolidated basis. To its knowledge, each
Obligor enjoys lawful, peaceful and undisturbed possession in all material
respects under all leases as to which such Obligor is a lessee and which are
material to the business of the Obligors, considered on a consolidated basis,
and all such leases are valid and subsisting and in full force and effect.
4.10 REGULATION U. No Obligor is engaged and no Obligor will engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of such terms under Regulation U published by the
Regulations of the Board of Governors of the Federal Reserve System. No part of
the proceeds of the Loan will be used for "purchasing" or "carrying" "margin
stock" as so defined or for any purpose that violates, or that would be
inconsistent with, the provisions of Regulation U published by the Board of
Governors of the Federal Reserve System.
4.11 NO OUTSTANDING DEBT. No Obligor has any outstanding debt material to
Obligors as determined under GAAP considered on a consolidated basis, except
for: (i) the Loan; (ii) liabilities shown on the Financial Statement; (iii)
intercompany liabilities; and (iv) other obligations in the nature of trade
payables incurred by Obligors in the ordinary course of business.
4.12 TRADE NAMES AND SUBSIDIARIES . No Obligor uses any trade names other
than those set forth in the Preamble of this Agreement and Obligors' Principal
Place of Business in Florida is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Obligors shall not change their Principal Place of Business without prior
written notice to Lender. There are no Subsidiaries of any Obligor which have
not executed this Agreement.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 22
4.13 SOLVENCY. After giving effect to the funding of the Revolving Credit
Loan, the application of the proceeds thereof as contemplated by this Agreement
and the Loan Documents, the payment of all estimated banking, legal, accounting
and other fees related thereto and the guarantee of the Indebtedness of FAS, the
Obligors are solvent considered on a consolidated basis.
4.14 INVESTMENT COMPANIES ACT. No Obligor is an "investment company" or a
company "controlled" by, or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as amended). The
making of the Loan by Lender, the application of the proceeds and repayment
thereof by Obligors and the consummation of the transactions contemplated by
this Agreement will not violate any provision of such act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
4.15 RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT. No Obligor has
ever been and is not now engaged, and will not knowingly engage, directly or
indirectly, in any pattern of "racketeering activity" or in any "collection of
any unlawful debt," as each of the quoted terms or phrases is defined or used by
the Racketeer Influenced and Corrupt Organization(s) Act of either the United
States or the ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, Section 1961
ET,.SEG. and Chapter 895, Florida Statutes, respectively, as each act now exists
or is hereafter amended (the "RICO Lien Acts").
4.16 ERISA REQUIREMENT. No Obligor has incurred any material accumulated
funding deficiency within the meaning of ERISA or incurred any material
liability to the Pension Benefit Guaranty Corporation established under ERISA
(or any successor thereto under ERISA) in connection with any employee pension
benefit plan established or maintained by the Obligor or by any person under
common control with the Obligor (within the meaning of Section 414(c) of the
Internal Revenue Code of 1986, as amended, or of Section 4001 (b) of ERISA) , or
in which employees of any of them are entitled to participate. No Reportable
Event (as defined in ERISA) in connection with any such plan has occurred or is
continuing.
4.17 HAZARDOUS MATERIAL. No Obligor has generated, stored, or disposed of
any Hazardous Material on any portion of any property occupied by it, including
the Real Estate, or transferred any Hazardous Material from the property
occupied by it, including the Real Estate, to any other location in violation of
any applicable Environmental Laws which has not been fully remedied. To the best
of each Obligor's knowledge after due investigation, each Obligor is in
compliance in all material respects with all applicable Environmental Laws and
has not been notified of any action, suit, proceeding or investigation which
calls into question compliance by any Obligor with any Environmental Laws or
which seeks to suspend, revoke or terminate any license, permit or approval
necessary for the generation, handling, storage, treatment or disposal of any
Hazardous Material with the exception of noncompliances that are not reasonably
likely to have a material adverse effect on the condition (financial or
otherwise) of the Obligors, considered on a consolidated basis.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 23
4.18 FAIR LABOR STANDARDS ACT. Each Obligor has complied with, and will
continue to comply with, in all material respects, the provisions of the Fair
Labor Standards Act of 1938, 29 U.S.C. Section 200, et seq., as amended from
time to time (the "FLSA"), including specifically, but without limitation, 29
U.S.C. Section 215(a) with the exception of noncompliances that are not
reasonably likely to have a material adverse effect on the condition (financial
or otherwise) of the Obligors, considered on a consolidated basis. This
representation and warranty, and each reconfirmation hereof, shall constitute
written assurance from each Obligor, given as of the date hereof and as of the
date of each reconfirmation, that each Obligor has complied, in all material
respects, with the requirements of the FLSA, in general, and 29 U.S.C. Section
215(a)(1) thereof, in particular.
4.19 OCCUPATIONAL SAFETY HAZARDS ACT. Each Obligor has complied with, and
will continue to comply with, in all material respects, the provisions of the
Occupational Safety Hazards Act, as amended from time to time ("OSHA") with the
exception of noncompliances that are not reasonably likely to have a material
adverse effect on condition (financial or otherwise) of the Obligors, considered
on a consolidated basis.
4.20SECURITIES AND EXCHANGE COMMISSION COMPLIANCE. Each Obligor has
complied with, and will continue to comply with, all Federal Securities laws and
all rules, regulations, and orders of the Securities And Exchange Commission, as
amended from time to time with the exception of noncompliances that are not
reasonably likely to have a material adverse effect on condition (financial or
otherwise) of the Obligors, considered on a consolidated basis.
4.21REGULATORY COMPLIANCE. Each Obligor has in the past complied with and
is presently complying in all material respects with all other laws and
Governmental Regulations applicable to such Obligor's business with the
exception of noncompliances that are not reasonably likely to have a material
adverse effect on condition (financial or otherwise) of the Obligors, considered
on a consolidated basis.
4.22 USURY. The amounts to be received by Lender which are or which may be
deemed to be interest under any of the Loan Documents or otherwise in connection
with the transactions described herein constitute lawful interest and are not
usurious or illegal under the laws of the State of Florida, and no aspect of the
transaction contemplated by this Agreement is or will be usurious.
4.23 OBLIGOR SETOFFS. No Obligor has, as of the date hereof, any defenses,
counterclaims, or setoffs with respect to any sums to be advanced under this
Agreement, the Real Estate Loan, or under any other loan between any Obligor and
Lender.
4.24 ENVIRONMENTAL. Obligors hereby reaffirm the terms and conditions of
that certain covenant and warranties concerning hazardous substances, dated
January 4, 1996,
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 24
executed by FAS (the "Environmental Agreement"). Concept, Distribution and Media
hereby agree to indemnify Lender in accordance with the terms and conditions of
the Environmental Agreement as if Concept, Distribution and Media had fully
executed the Environmental Agreement. Obligors hereby warrant that the
Environmental Assessment does not contain any untrue statement of material fact
or omit any material fact necessary to make the conclusions therein not
misleading, and, since the effective date of the Environmental Assessment, no
event has occurred to change the nature of the Real Estate which would alter the
conclusions contained in the Environmental Assessment.
4.25 STATUS OF TITLE. Obligors acknowledge that Lender is the insured under
the Title Policy. Obligors hereby represent and warrant that no change has
occurred in the fee simple ownership of the Real Estate since the effective date
of the Title Policy and the last endorsement thereto (being Endorsement No. 4),
nor has any Obligor further encumbered the Real Estate, except as set forth in
the Title Policy. The liens held by Lender are perfected first liens in and upon
the Real Estate, and other than non-material liens which shall be removed or
otherwise bonded off within 60 days from the filing thereof, there are no other
liens or other Security Interests in the Real Estate, except as set forth in the
Title Policy. Except for the Permitted Encumbrances, the Real Estate shall
remain free clear of all liens and other adverse claims of any nature, and FAS
shall keep good and marketable fee simple title to the Real Estate and bond any
and all lien claims off pursuant to Section 5.6.
4.26 DISCLOSURE AND NO REPRESENTATION, WARRANTY OR DOCUMENT UNTRUE. No
representation or warranty made by any Obligor contained herein, the Loan
Documents, or in any certificate or other document furnished or to be furnished
by any Obligor pursuant hereto, or which will be made by any Obligor from time
to time in connection with the Loan Documents (a) contains or will contain any
misrepresentation or untrue statement of fact, or (b) omits or will omit to
state any material fact necessary to make the statements therein not misleading,
measured against the Obligors, considered on a consolidated basis, unless
otherwise disclosed in writing to Lender. There is no fact known to any Obligor
which materially and adversely affects, or which is reasonably likely in the
future to materially and adversely affect, the business, assets, properties or
condition, financial or otherwise, of the Obligors, considered on a consolidated
basis, except as set forth or reflected in the Loan Documents or otherwise
disclosed in writing to Lender.
4.27 GOVERNMENTAL PERMITS, ETC. All material governmental permits,
approvals, consents and other authorizations required in connection with the use
of the Real Estate have been obtained. The Real Estate has access to a publicly
dedicated road right-of-way.
4.28 SURVIVAL. All of the representations and warranties set forth in this
Agreement shall survive until all Indebtedness is satisfied in full.
SECTION 5. AFFIRMATIVE COVENANTS.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 25
Each Obligor covenants and agrees that, from the date of this Agreement
until payment in full of all Indebtedness and termination of all present or
future credit facilities established hereunder, unless Lender shall otherwise
consent in writing which consent will not be unreasonably withheld, each Obligor
will fully comply with the following provisions:
5.1 FINANCIAL REPORTS AND OTHER DATA. Each Obligor shall deliver or cause
to be delivered to Lender the following financial information, prepared in
accordance with GAAP, as applicable:
a. As soon as practicable and in any event within forty-five (45) days
after the end of each fiscal quarter during the term of this Agreement,
internally prepared quarterly and year-to-date management consolidated financial
statements of FAS, prepared in accordance with GAAP and including a balance
sheet, income statement, a statement of cash flows, and containing comparative
information for the corresponding quarter and year-to-date of the prior fiscal
year, all in form and content reasonably acceptable to Lender and certified by
the Authorized Officer of FAS, which statements shall contain such documentation
and information to enable Lender to verify compliance with the financial
covenants contained in this Agreement.
b. As soon as practicable and in any event within one hundred twenty
(120) days after each Fiscal Year end of Obligors, audited consolidated
Financial Statement of FAS (i) audited in accordance with GAAP by independent
certified public accountants of recognized standing reasonably acceptable to
Lender; (ii) prepared in reasonable detail in comparative form to the prior
fiscal year; (iii) accompanied by a report of such accountants containing an
opinion in form and content reasonably acceptable to the Lender; and (iv)
including a balance sheet, an income statement, a statement of retained
earnings, a statement of cash flows, and all notes and schedules relating
thereto.
c. Together with each delivery of those items required in clauses (a)
and (b) above, Obligors shall deliver or cause to be delivered to Lender
compliance certificates executed by the Authorized Officer of FAS, certifying
Obligors' compliance with the terms and conditions of the Loan Agreement and
specifically including the financial covenants. The certifications shall contain
computations indicting compliance with the financial covenant ratios contained
in this Agreement and, stating that to the best such officer's knowledge, each
Obligor has kept, observed, performed and fulfilled in all material respects
each and every Agreement binding upon it contained in the Loan Documents, and is
not at the time in default in any material respect of the keeping, observance,
performance or fulfillment of any of the terms, provisions and conditions
thereof.
d. Lender is hereby authorized to deliver a copy of any financial
statements or any other information relating to the business, operations, or
financial condition of any Obligor which may be furnished to it or come to its
attention pursuant to the Loan Documents or otherwise, to any participating
lender, regulatory body or agency having jurisdiction over Lender or to any
Person which shall, or shall have the right or obligation to, succeed to all or
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 26
any part of Lender's interest in the Loan Documents.
e. Within thirty (30) days after the same are sent, Obligors shall
provide copies of all reports and other financial information which any Obligor
sends to its public stockholders, and within ten (10) days after filing, copies
of all financial statements and non-confidential reports, including, but not
limited to, 10-K and 10-Q filings, which any Obligor may make to, or file with,
the Securities and Exchange Commission or any successor or analogous Government
Authority.
f. Within thirty (30) days after the end of each fiscal year of FAS,
FAS shall deliver a summary, if any exist, of all interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements entered into by any Obligor with sufficient detail to enable Lender
to determine all potential exposures of any Obligor thereunder.
5.2 PAYMENT OF INDEBTEDNESS TO LENDER; PERFORMANCE OF OTHER COVENANTS;
PAYMENT OF OTHER OBLIGATIONS. (a) Obligors will make full and timely payment of
the principal and interest on the Notes; (b) each Obligor will duly comply with
all the terms and covenants contained in the Loan Documents; and (c) Obligors
will make full and timely payment of all other Indebtedness of Obligors to
Lender, whether now existing or hereafter arising.
5.3 MAINTENANCE OF PROPERTY. Each Obligor will maintain its fee simple real
estate and its material leaseholds and personal property in good order and
repair and, from time to time, make all needful and proper repairs, renewals,
replacements, additions, and improvements thereto, so that the business carried
on may be properly and advantageously conducted at all times in accordance with
prudent business management.
5.4 RIGHT OF INSPECTION; DISCUSSIONS. Each Obligor will permit any person
designated by Lender, at Lender's expense, during normal business hours, and
upon reasonable notice, to visit and inspect any of the properties, books,
records, papers, and financial reports of such Obligor, including the making of
any copies thereof and abstracts therefrom, and to discuss such Obligor's
affairs, finances, and accounts with such Obligor's agents, all at such
reasonable times and as often as Lender may reasonably request. .
5.5 NOTICES. FAS will promptly give written notice to Lender of:
a. The occurrence of any Event of Default or Potential Default
hereunder or under any other obligation of a Obligor to which this Agreement
refers, in which case such notice shall specify the nature thereof, the period
of existence thereof, and the action that the Obligors or any of them propose to
take with respect thereto;
b. The occurrence of any material casualty to any material facility or
property of the Obligors, considered on a consolidated basis, or any force
majeure (including, without
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 27
limitation, any strike or other labor disturbance) materially affecting the
operation or value of any such facility or property (specifying whether or not
such casualty or force majeure is covered by insurance); and
c. The commencement of, or any material change in, the nature or status
of any actual or potential litigation in excess of $500,000.00, whether direct
or contingent, or any actual or potential dispute or proceeding, whether direct
or contingent, that may involve a claim for damages, injunctive relief,
enforcement, or other relief pending, being instituted, or threatened by,
against or involving any Obligor, or any attachment, levy, execution or other
process being instituted by or against any assets of any Obligor, which might
impair the conduct of the Obligors' business, considered on a consolidated
basis, or might affect financially, or otherwise, the Obligors' business,
operations, assets, properties, prospects, or condition in excess of
$500,000.00.
d. Notification of any violation notices received from the Securities
and Exchange Commission, including copies of such notices.
5.6 PAYMENT OF TAXES; LIENS. Each Obligor will promptly pay, or cause to be
paid, all taxes, assessments and other governmental charges which may lawfully
be levied or assessed (i) upon the income or profits of such Obligor, (ii) upon
any fee simple owned real property and all material leases and material personal
property, belonging to such Obligor, or upon any part thereof, or (iii) by
reason of any lawful claims for labor, material and supplies which, if unpaid,
might become a lien or charge against the property of such Obligor; provided,
however, such Obligor shall not be required to pay any such tax, assessment,
charge, levy, or claim so long as the validity thereof shall be actively
contested in good faith by appropriate proceedings and such Obligor shall have
set aside on its books adequate reserves with respect to any such tax,
assessment, charge, levy, or claim so contested; but provided further that any
such tax, assessment, charge, levy, or claim shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same and the
failure to promptly thereafter bond off such lien within 60 days after the
filing thereof.
5.7 INSURANCE OF PROPERTIES. Each Obligor will keep its business and
properties insured at all times by insurance companies reasonably acceptable to
Lender against the risks for which provision for such insurance is usually made
by other Persons engaged in a similar business similarly situated (including
without limitation, insurance for fire, flood, and other hazards, insurance
against liability on account of damage to persons or property, business
interruption insurance, and insurance under all applicable ▇▇▇▇▇▇▇'▇
compensation laws) and to the same extent thereto and carry such other types and
amounts of insurance as usually carried by Persons engaged in the same or a
similar business similarly situated, and upon request deliver to Lender a
certificate from the insurer setting forth the nature of the risks covered by
such insurance, the amount carried with respect to each risk, and the name of
the insured. Lender shall be named as an additional insured on all policies
relating to the Real Estate. The obligations of Obligors to provide insurance
coverage may be further amplified under the terms and conditions of the Security
Instruments.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 28
5.8 APPLICATION OF INSURANCE AND OTHER PROCEEDS. So long as the Real
Estate Loan is outstanding, FAS shall comply with the requirements of the
Security Instruments and Lender shall be entitled to exercise all of its rights
to insurance proceeds, condemnation awards and other proceeds from the Real
Estate as provided in the Security Instruments.
5.9 TRUE BOOKS. FAS will keep proper and true books of record and account,
reasonably satisfactory to Lender, in which full, true, and correct entries, in
all material respects, will be made of FAS' dealings and transactions, and
establish on FAS' books such reserves as may be required, by GAAP, with respect
to all taxes, assessments, charges, levies and claims, and with respect to FAS'
businesses in general, and will include such reserves in any interim as well as
year-end financial statements.
5.10 FINANCIAL COVENANTS. So long as any Indebtedness is outstanding
Obligors shall comply with the following financial covenants:
a. Until January 31, 2001, Obligors shall maintain, on a Consolidated
Basis, a minimum Net Worth of $52,000,000.00 annually. As of January 31, 2001,
Obligors shall achieve and thereafter maintain a Net Worth of no less than
$65,000,000.00 measured on each Fiscal Year End beginning with the Fiscal Year
End ending on the Saturday closest to January 31, 2001.
b. To maintain on a Consolidated Basis a ratio of Funded Debt to
EBITDA, excluding other income and expense and extraordinary items, not
exceeding 2.25 as measured at the end of each fiscal quarter, with EBITDA
calculated on a rolling four (4) quarter basis:
PERIOD RATIO
------ -----
Quarterly 2.25/1.0.
c. To maintain a Consolidated Current Maturity Coverage Ratio of not
less than 3.00 in any quarter, calculated on a rolling four (4) quarter basis.
d. To maintain, on a Consolidated Basis, a Funded Debt and Letter of
Credit Exposure to EBITDA ratio of not greater than 2.00 to 1.00 calculated on a
rolling four (4) quarter basis.
e. To maintain a Fixed Charge Coverage Ratio of at least 2.0 to be
tested on an annual basis measured on each Fiscal Year End beginning with the
Fiscal Year End ending on the Saturday closest to January 31, 2001
The ratios in b., c. and d. shall be calculated at the end of each fiscal
quarter, using the results of that fiscal quarter and each of the 3 immediately
preceding fiscal quarters.
FAS shall be responsible for procuring the submission of all necessary
data to
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 29
demonstrate compliance with these covenants.
5.11 OBSERVANCE OF LAWS. Each Obligor will conform to and duly observe all
material laws, regulations, and other valid requirements of any governmental
authority with respect to the conduct of its business and operations, except
where the effect of any nonobservance would not have a material adverse effect
on the business and operations of the Obligors, considered on a consolidated
basis.
5.12 MAINTENANCE OF LEGAL EXISTENCE: COMPLIANCE WITH LAWS. Each Obligor
shall at all times preserve and maintain in full force and effect its legal
existence, powers, rights, licenses, permits and franchises in the jurisdiction
of its organization; continue to conduct and operate its business substantially
as conducted and operated during the present and preceding Fiscal Year of such
Obligor; operate in full compliance with all applicable laws, statutes,
regulations, certificates of authority and orders in respect of the conduct of
its business; and qualify and remain qualified as a foreign organization in each
jurisdiction in which such qualification is necessary or appropriate in view of
its business and operations, except where in each case, the effect of the
failure to preserve and maintain, the failure to continue to conduct and
operate, and the failure to fully comply or failure to qualify and remain
qualified would not have a material adverse effect on the business and
operations of the Obligors, considered on a consolidated basis.
5.13 FURTHER ASSURANCES. Each Obligor will, at the cost of Obligors, and
without expense to Lender, promptly upon the request of Lender: (a) correct any
defect, error or omission which may be discovered in the contents of any Loan
Documents or in the execution or acknowledgment thereof; (b) execute,
acknowledge, deliver and record or file such other and further instruments
(including, without limitation, mortgages, deeds or trusts, security agreements,
financing statements and specific assignments of rents or leases) and do such
further acts, in either case as may be necessary, desirable or proper in
Lender's opinion to carry out more effectively the purposes of the Loan
Documents. Each Obligor hereby appoints Lender as its attorney-in-fact, coupled
with an interest, to take the above actions and to perform such obligations on
behalf of such Obligor, at Obligors' sole expense, if any Obligor fails to
comply with its obligations under this paragraph.
5.14 REAPPRAISAL. If at any time and for any reason Lender, reasonably
determines that the value of the Real Estate may have declined or be less than
Lender previously anticipated, or Lender is required to reappraise the Real
Estate pursuant to regulation or direction from any Governmental Authority
regulating Lender, then, within sixty (60) days from Lender's written request,
Obligors shall, at Obligors' sole expense, provide to Lender a current appraisal
of the Real Estate, from an appraiser reasonably acceptable to Lender and in
form and content as required by Lender. Obligors shall cooperate fully with such
appraiser and provide all documents and information as the appraiser may
reasonably request in connection therewith.
5.15 NEGATIVE PLEDGE. No Obligor shall create, assume, or suffer to exist
any lien
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 30
upon its assets, whether now owned or hereafter acquired, except for liens for
taxes not yet due and payable or which are being actively contested in good
faith by appropriate proceedings and Permitted Encumbrances. Lender may require
Obligors to execute nontaxable agreements not to encumber property in a form and
in content reasonably acceptable to Lender which shall not be recorded in any
public records.
SECTION 6. NEGATIVE COVENANTS.
Each Obligor covenants and agrees that, from the date of this Agreement
until payment in full of the Indebtedness and all advances hereunder and of all
other present or future indebtedness hereunder and termination of all present or
future credit facilities established for Obligor's benefit, unless Lender shall
otherwise consent in writing, which consent will not be unreasonably withheld,
each Obligor will fully comply with the following provisions:
6.1 LIMITATIONS OF MORTGAGES, LIENS, ETC. No Obligor shall lien, mortgage,
pledge or otherwise encumber any of such Obligor's assets, except for Permitted
Encumbrances.
6.2 LIMITATIONS ON GUARANTIES. No Obligor shall directly or indirectly,
guarantee, assume, endorse, become a surety or accommodation party for, or
otherwise in any way extend credit or become responsible for or remain liable or
contingently liable in connection with any indebtedness or other obligations of
any other Person, except guaranties and endorsements made in connection with the
deposit of negotiable instruments and other items for collection and credit
extended to Obligor in the ordinary course of business and except as part of the
permitted Debt set forth in Section 6.8.
6.3 TRANSFER OF ASSETS. No Obligor shall, directly or indirectly, sell,
transfer, assign, lease, or otherwise, dispose of any of its fee simple real
estate or its material personal property to third parties, including, but not
limited to, trusts and individuals, other than in the ordinary course of
business where the effect of such disposition is reasonably likely to have a
material adverse effect on the business and operations of the Obligors
considered on a consolidated basis.
6.4 LOANS. No Obligor shall directly or indirectly, make or have
outstanding a loan or advance to any Person, except for loans existing at the
date of this Agreement which have been disclosed in writing to and approved by
Lender. The foregoing notwithstanding, Obligors shall have the right to make the
following classes of loans:
a. Loans to their employees so long as such loans do not exceed
$250,000.00 in the aggregate;
b. Intercompany loans among Obligors
c. Advances to Obligors vendors in the ordinary course of Obligors'
business, provided, however, that outstanding advances to any one vendor shall
never be more than
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 31
$500,000.00.
6.5 MAINTAIN ASSETS. No Obligor shall conceal, remove or permit to be
concealed or removed any part of its fee simple real estate or its material
personal properties, with the intent to hinder, delay or defraud its creditors
or any of them, or made or suffered a transfer of its fee simple real estate or
its material personal properties which may be fraudulent under any Bankruptcy,
fraudulent conveyance or similar law or shall have made any transfer of its fee
simple real estate or its material personal properties to or for the benefit of
a creditor at a time when other creditors similarly situated have not been paid,
or shall have suffered or permitted, while insolvent, any creditor to obtain a
lien on any of its fee simple real estate or its material personal properties
through legal proceedings or distraint which is not vacated within sixty (60)
days from the date thereof.
6.6 CHARACTER OF BUSINESS/MANAGEMENT. The Obligors shall not change the
general character of the consolidated business as conducted at the date hereof,
nor engage in any type of business not reasonably related to their consolidated
business as presently conducted.. Obligors shall at all times maintain two of
the following three persons in key management roles for Obligors:
a. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; b. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and c. ▇▇▇▇▇ ▇▇▇▇▇▇▇
6.7 SUSPENSION OF BUSINESS. No Obligor may liquidate, suspend, dissolve or
cease operation during the term of the Loan unless the operations of such
Obligor are continued thereafter by one of the other Obligors.
6.8 ADDITIONAL DEBT. Without the prior written consent of Lender, Obligors
will not incur, create, assume or permit to exist any Debt except:
a. Debt to the Lender;
b. Purchase money Debt incurred in connection with acquisitions, so long
as such Debt is
subordinated to the Indebtedness;
c. Debt disclosed in the Financial Statement which shall be paid in
accordance with its terms as they exist on the date hereof;
d. Purchase money Debt to FAS' franchisees in connection with FAS'
repurchase of franchises in an aggregate amount not to exceed $2,500,000.00
e. Debt incurred in the ordinary course of business so long as such Debt
does not exceed $500,000.00 annually.
SECTION 7. EVENTS OF DEFAULT.
The following shall be considered an Event of Default:
7.1 The failure of Obligors to pay any installment of principal or interest
in accordance
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 32
with the terms and conditions of the Notes or any guaranty or the failure of
Obligors to pay any Loan Fees and such other sums due under the Loan Documents
and such failure to pay continues for a period of ten (10) days after notice
thereof from Lender;
7.2 The failure of any Obligor to perform any of the terms and conditions
of the Notes, any Guaranty and this Agreement other than the failure to pay
money and such failure shall not have been remedied within thirty (30) days
after written notice thereof to Obligors from the Lender;
7.3 The failure of any Obligor to perform or observe any of the obligations
contained in any other Loan Document other than the failure to pay money and
such failure shall not have been remedied within thirty (30) days after written
notice thereof to Obligors from the Lender;
7.4 Any warranty or representation made by any Obligor hereunder at the
time of execution of this Agreement or at the time of a request for any
additional advance shall prove to be untrue or incorrect in any material
respect;
7.5 The failure of Obligors, considered on a consolidated basis, generally
to pay their debts as such debts become due in the normal course of business;
the execution of a general assignment for the benefit of creditors by any
Obligor; the institution by or against any Obligor of any bankruptcy proceeding
remaining undismissed for 60 days after filing; the liquidation, winding up,
reorganization, or adjustment of debts of FAS; the suffering of a final monetary
judgment against any Obligor in excess of $500,000.00 which is not bonded off or
discharged within 60 days from its entry; or the execution of any such judgment
exceeding $500,000.00 against property owned by any Obligor.
7.6 Default, after giving effect to any and all applicable grace periods,
by any Obligor under any other loan between any Obligor or any Affiliate or
Subsidiary of any Obligor and Lender (or any Affiliate or Subsidiary of Lender).
SECTION 8. REMEDIES
Upon the occurrence or continuing of any Event of Default, Lender shall
have and may exercise any or all of the rights set forth herein (provided,
however, Lender shall be under no duty or obligation to do so):
8.1 ACCELERATION. To declare the indebtedness evidenced by any or all
Notes and all other Indebtedness to be forthwith due and payable, whereupon the
Notes and all other Indebtedness shall become forthwith due and payable, both as
to principal and interest, without presentment, demand, protest or any other
notice or grace period of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes or in such other Indebtedness to the
contrary notwithstanding, and, upon such acceleration, the unpaid principal
balance and accrued interest upon the Notes shall from and after such date of
acceleration bear interest at the Default Rate.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 33
8.2 RIGHT OF SETOFF. To exercise any rights of setoff granted by law or
under this Agreement or the Loan Documents.
8.3 UNIFORM COMMERCIAL CODE. To exercise from time to time any and all
rights and remedies of a secured creditor under the UCC and any and all rights
and remedies available to it under any other applicable law.
8.4 FORECLOSURE. Foreclose any Security Instrument by instituting a
foreclosure suit in any court having jurisdiction thereof.
8.5 OTHER RIGHTS. To exercise such other rights as may be permitted under
any of the Loan Documents or applicable law.
8.6 CURE OF DEFAULTS. Cure any Event of Default without releasing any
Obligor from any obligation hereunder or under the Loan Documents. In connection
with exercising its right to cure an Event of Default, Lender may enter upon any
Place of Business and do such acts and things as Lender deem necessary or
desirable to protect the collateral pledged under any Security Instrument,
including, without limitation: (i) paying, purchasing, contesting or
compromising any encumbrance, charge, lien, claim of lien, tax, assessment,
fine, or other imposition; (ii) paying any insurance premiums and (iii)
employing counsel, accountants, contractors and other appropriate persons to
assist Lender in the foregoing.
8.7 COLLATERALIZE OUTSTANDING LETTERS OF CREDIT. Lender may demand and
within five business days thereof, Obligors shall provide, cash collateral for
any outstanding Letter of Credit, whether or not funded, in the amount of the
outstanding Letter of Credit issued by Lender for the benefit of any Obligor.
8.8 INTEREST RATE ADJUSTMENT. In the event any Obligor defaults in the
performance of this Agreement and Lender elects not to accelerate the
Indebtedness, whether or not Lender elects not to accelerate the entire balance
of the outstanding Indebtedness to immediate maturity, then, to the extent
permitted by law, the rate of interest on the unpaid principal of the
Indebtedness under the Notes and this Agreement shall be increased at Lender's
discretion to the Default Rate. The provisions herein for a Default Rate shall
not be deemed to extend the time for any payment hereunder or to constitute a
"grace period" giving any Obligor a right to cure any default. At Lender's
option, any accrued and unpaid interest, fees or charges may, for purposes of
computing and accruing interest on a daily basis after the due date of any Note
or any installment thereof, be deemed to be a part of the principal balance, and
interest shall accrue on a daily compounded basis after such date at the Default
Rate provided in this Agreement until the entire outstanding balance of
principal and interest is paid in full.
8.9 NO WAIVER. The failure of Lender to exercise any of its rights granted
hereunder shall not be deemed a waiver thereof nor shall Lender be estopped from
asserting such rights for any subsequent defaults. The remedies provided herein
are cumulative and are not exclusive to any remedies that Lender may otherwise
be provided by law or any Loan Documents.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
PAGE 34
SECTION 9. MISCELLANEOUS
9.1 Each Obligor agrees to pay and save Lender harmless against liability
for the payment of all reasonable out of pocket expenses in connection with this
transaction, including documentary stamp taxes or other taxes which may be
determined to be payable in respect to the execution and delivery of any loan
documents executed in connection with this agreement, and the reasonable fees
and expenses of Lender's counsel.
9.2 This Agreement shall not be amended or modified unless in writing and
signed by all the parties hereto.
9.3 All notices to be mailed to Lender shall be sent to:
Bank Of America, N.A.
ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Suite 415, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and collectively to Obligors at:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
with copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Atty.
Trenam, Kemker, Scharf, Barkin, Frye,
▇'▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
STE ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
For purposes of this Agreement, delivery to any party shall be complete
upon actual delivery to such party or their agent or employee, either by hand
delivery or overnight courier service, or upon the expiration of five (5) days
after posting the writing in the mails by certified mail or registered mail,
return receipt requested, with sufficient postage to reach its destination.
9.4 In the event any action becomes necessary to enforce the terms and
conditions of this Agreement or to foreclose on any Security Instrument or any
Note, Obligors shall pay all costs incurred in connection therewith, including a
reasonable attorney's fee, whether or not preceding litigation and whether at
trial, or in any bankruptcy proceeding, and at any appellate level. As used
herein attorney's fees shall be deemed to include a separate award for paralegal
or legal assistant fees.
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9.5 This Agreement may not be assigned by any Obligor, however, Lender
reserves the right to assign this Agreement or to participate this Agreement and
the Loans.
9.6 This Agreement shall be governed by and construed in accordance with
the laws of Florida.
9.7 In the event that any provision of this Agreement is declared
unenforceable by a court of competent jurisdiction, then such unenforceable
provision shall not affect the remaining provisions hereunder.
9.8 As the context requires, the singular shall include the plural and the
plural the singular, and any one gender shall include all genders.
9.9 This Agreement and all Loan Documents may be executed in counter parts
and each shall be deemed an original.
9.10 This Agreement supercedes the previous loan agreement between Lender
and FAS for the Real Estate Loan and the previous loan agreement between Lender
and Obligors for the revolving credit facility and constitutes the sole
remaining loan agreement between Lender and Obligors for all credit facilities
existing at the date of this Agreement.
9.11 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY
OF ANY OBLIGOR'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL,
IN THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, AT TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION LENDER WILL SERVE.
ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
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LOAN AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A.
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B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION
AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW;
OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES
SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER
THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
OBLIGORS:
CHICO'S FAS, INC., a Florida corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ----------------------
Print name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Witness as to all
CHICO'S CONCEPT, INC., a Florida corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
CHICO'S DISTRIBUTION, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: President
CHICO'S MEDIA, INC., a Florida corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
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PAGE 37
LENDER:
BANK OF AMERICA, N.A.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- ---------------------
Print name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Vice-president
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