Exhibit 10.2 - Amendment Number Sixteen to the Continuing Commercial Credit
Agreement dated June 27, 2003, by and among Congress Financial Corporation
(Southern) as Lender and the Company and One Price Clothing of Puerto Rico, Inc.
as Borrowers.
AMENDMENT NO. 16 TO FINANCING AGREEMENTS
June 27, 2003
One Price Clothing Stores, Inc.
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One Price Clothing of Puerto Rico, Inc.
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Gentlemen:
Congress Financial Corporation (Southern) ("Lender"), One Price
Clothing Stores, Inc. ("One Price") and One Price Clothing of Puerto Rico, Inc.
("One Price PR"; and together with One Price, individually referred to as a
"Borrower" and collectively as the "Borrowers") have entered into certain
financing arrangements pursuant to the Loan and Security Agreement, dated March
25, 1996, between the Lender and Borrowers (the "Loan Agreement"), as amended by
Amendment No. 1 to Financing Agreements, dated May 16, 1997, Amendment No. 2 to
Financing Agreements, dated June 17, 1997, Amendment No. 3 to Financing
Agreements, dated February 19, 1998, Amendment No. 4 to Financing Agreements,
dated January 31, 1999, Amendment No. 5 to Financing Agreements, dated February
23, 2000, Amendment No. 6 to Financing Agreements, dated June 30, 2000,
Amendment No. 7 to Financing Agreements, dated February 9, 2001, Amendment No. 8
to Financing Agreements, dated September 13, 2001, Amendment No. 9 to Financing
Agreements, dated November 12, 2001, Amendment No. 10 to Financing Agreements,
dated December 12, 2001, Amendment No. 11 to Financing Agreements, dated January
31, 2002, Amendment No. 12 to Financing Agreements, dated September 25, 2002,
Amendment No. 13 to Financing Agreements, dated April 2, 2003, Amendment No. 14
to Financing Agreements, dated May 16, 2003, and Amendment No. 15 to Financing
Agreements, dated as of May 30, 2003, together with various other agreements,
documents and instruments at any time executed and/or delivered in connection
therewith or related thereto (as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, collectively,
the "Financing Agreements"). All capitalized terms used herein and not herein
defined shall have the meanings given to them in the Financing Agreements.
Borrowers have requested that Lender agree to amend certain provisions
of the Loan Agreement. Lender is willing to do so on the terms and conditions
and to the extent set forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and the Loan Agreement shall be
deemed and is hereby amended to include, in addition and not in limitation of,
each of the following definitions:
(i) "Amendment No. 16" shall mean this Amendment No. 16 to Financing
Agreements by and among Borrowers and Lender, as it now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
(ii) "Change of Control" shall mean (A) the transfer (in one transaction or a
series
of transactions) of all or substantially all of the assets of any Borrower or
One Price VI to any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), other than as permitted in Section 9.7 hereof; (B) the
liquidation or dissolution of any Borrower or One Price VI or the adoption of a
plan by the stockholders of any Borrower or One Price VI relating to the
dissolution or liquidation of such Borrower or One Price VI, other than as
permitted in Section 9.7 hereof; (C) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or
more Permitted Holders, of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of any
Borrower or One Price VI or the Board of Directors of any Borrower or One Price
VI; (D) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower or
One Price VI (together with any new directors who have been appointed by any
Permitted Holder, or whose nomination for election by the stockholders of such
Borrower or One Price VI, as the case may be, was approved by a vote of at least
sixty-six and two-thirds (66 2/3%) percent of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of any Borrower or One Price VI
then still in office; or (E) the failure of One Price to own directly or
indirectly one hundred (100%) percent of the voting power of the total
outstanding Voting Stock of any other Borrower, One Price VI, or One Price
Realty.
(iii) "Credit Card Acknowledgments" shall mean, collectively, the agreements by
Credit Card Issuers or Credit Card Processors who are parties to Credit Card
Agreements in favor of Lender acknowledging Lender's first priority security
interest, for and on behalf of Lenders, in the monies due and to become due to a
Borrower or One Price VI (including, without limitation, credits and reserves)
under the Credit Card Agreements, and agreeing to transfer all such amounts to
the Blocked Accounts, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, sometimes being
referred to herein individually as a "Credit Card Acknowledgment".
(iv)
"Credit Card Receivable Eligibility Date" shall mean the date
upon which all of the following conditions have been satisfied in the
determination of Lender, so long as no Event of Default has occurred:
(A) Lender shall have completed a field review of the
Records and such other
information with respect to the Collateral, including Credit Card Receivables,
as Lender may require to determine the amount of Loans available to Borrowers,
the results of which shall be satisfactory to Lender;
(B) Lender shall have received an updated Schedule
8.9 to the Loan Agreement
reflecting all Credit Card Processors and Credit Card Issuers with whom
Borrowers and One Price VI currently do business; and
(C) Lender shall have received Credit Card
Acknowledgments in each case, duly
authorized, executed and delivered by the Credit Card Issuers and Credit Card
Processors reflected on Schedule 8.9, as revised pursuant to clause (B) above.
(v) "Eligible Credit Card Receivables" shall mean, as to each Borrower, Credit
Card Receivables of such Borrower which are and continue to be acceptable to
Lender based on the criteria set forth below. Credit Card Receivables shall be
Eligible Credit Card Receivables if:
(A) such Credit Card Receivables arise from the
actual and bona fide sale and
delivery of goods or rendition of services by such Borrower in the ordinary
course of the business of such Borrower which transactions are completed in
accordance with the terms and provisions contained in any agreements binding on
such Borrower or the other party or parties related thereto;
(B) such Credit Card Receivables are not past due
(beyond any stated applicable grace
period, if any, therefor) pursuant to the terms set forth in the Credit Card
Agreements with the Credit Card Issuer or Credit Card Processor of the credit
card or debit card used in the purchase which give rise to such Credit Card
Receivables;
(C) such Credit Card Receivables are not unpaid more
than five (5) Business Days
after the date of the sale of Inventory giving rise to such
Credit Card Receivables;
(D) all material procedures required by the Credit
Card Issuer or the Credit Card
Processor of the credit card or debit card used in the purchase which gave rise
to such Credit Card Receivables shall have been followed by such Borrower and
all documents required for the authorization and approval by such Credit Card
Issuer or Credit Card Processor shall have been obtained in connection with the
sale giving rise to such Credit Card Receivables;
(E) the required authorization and approval by such
Credit Card Issuer or Credit Card
Processor shall have been obtained for the sale giving rise to such Credit Card
Receivables;
(F) such Borrower or One Price VI, on behalf of such
Borrower, shall have submitted
all materials required by the Credit Card Issuer or Credit Card Processor
obligated in respect of such Credit Card Receivables in order for such Borrower
to be entitled to payment in respect thereof;
(G) the Credit Card Issuer or Credit Card Processor
obligated in respect of such
Credit Card Receivable has not failed to remit any monthly payment in respect of
such Credit Card Receivable;
(H) such Credit Card Receivables comply with the
applicable terms and conditions
contained in Section 7.2 of this Agreement;
(I) the Credit Card Issuer or Credit Card Processor
with respect to such Credit Card
Receivables has not asserted a counterclaim, defense or dispute and does not
have, and does not engage in transactions which may give rise to, any right of
setoff against such Credit Card Receivables (other than setoffs to fees and
chargebacks consistent with the practices of such Credit Card Issuer or Credit
Card Processor with such Borrower as of the date hereof or as such practices may
change as a result of changes to the policies of such Credit Card Issuer or
Credit Card Processor applicable to its customers generally and unrelated to the
circumstance of such Borrower), but the portion of the Credit Card Receivables
owing by such Credit Card Issuer or Credit Card Processor in excess of the
amount owing by such Borrower to such Credit Card Issuer or Credit Card
Processor pursuant to such fees and chargebacks may be deemed Eligible Credit
Card Receivables;
(J) the Credit Card Issuer or Credit Card Processor
with respect to such Credit Card
Receivables has not setoff against amounts otherwise payable by such Credit Card
Issuer or Credit Card Processor to such Borrower for the purpose of establishing
a reserve or collateral for obligations of such Borrower to such Credit Card
Issuer or Credit Card Processor (notwithstanding that the Credit Card Issuer or
Credit Card Processor may have setoffs for fees and chargebacks consistent with
the practices of such Credit Card Issuer or Credit Card Processor with such
Borrower as of the date hereof or as such practices may hereafter change as a
result of changes to the policies of such Credit Card Issuer or Credit Card
Processor applicable to its customers generally and unrelated to the
circumstances of such Borrower);
(K) there are no facts, events or occurrences which
would impair the validity,
enforceability or collectability of such Credit Card Receivables or reduce the
amount payable or delay payment thereunder (other than for setoffs for fees and
chargebacks consistent with the practices of such Credit Card Issuer or Credit
Card Processor with such Borrower or One Price VI as of the date hereof or as
such practices may hereafter change as a result of changes to the policies of
such Credit Card Issuer or Credit Card Processor applicable to its customers
generally and unrelated to the circumstances of such Borrower or One Price VI);
(L) such Credit Card Receivables are subject to the
first priority, valid and
perfected security interest and lien of Lender, as to such Credit Card
Receivables of such Borrower and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any security interest or lien in
favor of any person other than Lender except as otherwise permitted in this
Agreement, in each case subject to and in accordance with the terms and
conditions applicable hereunder to any such permitted security interest or lien;
(M) there are no proceedings or actions which are
pending or to the best of any
Borrower's knowledge threatened, against the Credit Card Issuers or Credit Card
Processors with respect to such Credit Card Receivables which would reasonably
be expected to result in any material adverse change in the financial condition
of any such Credit Card Issuer or Credit Card Processor;
(N) such Credit Card Receivables are owed by Credit
Card Issuers or Credit Card
Processors deemed creditworthy at all times by Lender in good faith;
(O) no event of default has occurred under the Credit
Card Agreement of such Borrower
with the Credit Card Issuer or Credit Card Processor who has issued the credit
card or debit card or handles payments under the credit card or debit card used
in the sale which gave rise to such Credit Card Receivables which event of
default gives such Credit Card Issuer or Credit Card Processor the right to
cease or suspend payments to such Borrower or One Price VI and no event shall
have occurred which gives such Credit Card Issuer or Credit Card Processor the
right to setoff against amounts otherwise payable to such Borrower, including on
behalf of a Guarantor (other than for then current fees and chargebacks
consistent with the current practices of such Credit Card Issuer or Credit Card
Processor as of the date hereof or as such practices may hereafter change as a
result of changes to the policies of such Credit Card Issuer or Credit Card
Processor applicable to its customers generally and unrelated to the
circumstances of such Borrower or One Price VI), except as may have been waived
in writing on terms and conditions reasonably satisfactory to Lender pursuant to
the Credit Card Acknowledgment by such Credit Card Issuer or Credit Card
Processor) or the right to establish reserves or establish or demand collateral,
and the Credit Card Issuer or Credit Card Processor has not sent any written
notice of default and/or notice of its intention to cease or suspend payments to
such Borrower in respect of such Credit Card Receivables or to establish
reserves or cash collateral for obligations of such Borrower to such Credit Card
Issuer or Credit Card Processor, and such Credit Card Agreements are otherwise
in full force and effect and constitute the legal, valid, binding and
enforceable obligations of the parties thereto;
(P) the terms of the sale giving rise to such Credit
Card Receivables and all
practices of such Borrower and Guarantors with respect to such Credit Card
Receivables comply in all material respects with applicable Federal, State, and
local laws and regulations; and
(Q) the customer using the credit card or debit card
giving rise to such Credit Card
Receivable shall not have returned the merchandise purchased giving rise to such
Credit Card Receivable.
Credit Card Receivables which would otherwise constitute Eligible Credit Card
Receivables pursuant to this Section will not be deemed ineligible solely by
virtue of the Credit Card Agreements with respect thereto having been entered
into by One Price VI, for the benefit of Borrowers. General criteria for
Eligible Credit Card Receivables may only be changed and any new criteria for
Eligible Credit Card Receivables may only be established by Lender in good
faith, upon notice to Borrowers, based on either: an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from a Borrower prior to the
date hereof, in either case under clause (i) or (ii) which adversely affects or
could reasonably be expected to adversely affect the Credit Card Receivables in
the good faith determination of Lender. Any Credit Card Receivables which are
not Eligible Credit Card Receivables shall nevertheless be part of the
Collateral.
(vi) "Net Amount of Eligible Credit Card Receivables" shall mean, as to any
Borrower, the gross amount of the Eligible Accounts of such Borrower less (A)
sales, excise or similar taxes included in the amount thereof and (B) returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect thereto.
(i)
(vii) "Permitted Holder" shall mean Sun Capital.
(viii) "Revolving Loan Limit" shall mean, as to each Borrower, at any time, the
amount equal to the $50,000,000.
(ix) "Sun Capital" shall mean Sun One Price, LLC, a Delaware limited liability
company, and its successors and assigns.
(x) "Sun Stock Purchase Agreements" shall mean, collectively, the following
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (A) the Stock Purchase Agreement,
dated June 18, 2003, by and between Sun Capital, as Purchaser and One Price, as
Issuer, and (B) all agreements, documents, mortgages and instruments executed
and/or delivered in connection with any of the foregoing.
(b) Amendments to Definitions.
(i) The definition of Account is hereby amended to include the
following at the end thereof :
"or (ii) consisting of Credit Card Receivables."
(ii) The language added to the definition of "Availability
Reserves" set forth in Section 1.4 of the Loan Agreement by Amendment No. 13 is
hereby amended in its entirety to read as follows:
"Commencing on the date of Amendment No. 13, Lender released
$1,500,000 of the $1,876,000 Availability Reserve being
maintained in respect of the Designated Letters of Credit in
accordance with Section 1.4(d) of the Loan Agreement (the
"Designated Availability Reserve"). As of the date of
Amendment No. 16, the Designated Availability Reserve is
$376,000. On the dates set forth in the grid below, the
Designated Availability Reserve will be increased by the
applicable amount as set forth below (and the Borrower shall
have repaid Revolving Loans to the extent necessary to prevent
the occurrence of an Event of Default) so that on May 31,
2005, the Designated Availability Reserve shall be $1,876,000.
If Excess If Excess Availability
Availability is is equal to or less
greater than than $4,000,000
Date $4,000,000
12/31/03 $250,000 $100,000
1/31/04 $125,000 $100,000
2/29/04 $125,000 $75,000
3/31/04 $125,000 $75,000
4/30/04 $150,000 $75,000
5/31/04 $150,000 $75,000
6/30/04 $250,000 $175,000
7/31/04 $200,000 $100,000
8/31/04 $100,000 $75,000
9/30/04 $100,000 $75,000
10/31/04 $100,000 $75,000
11/30/04 $100,000 $75,000
On December 31, 2004, Lender will re-impose the amount
necessary, such that the Designated Availability Reserve shall
be not less than $1,376,000. To the extent that the Designated
Availability Reserve is less than $1,876,000 on January 1,
2005, then on the last day of each month thereafter, $150,000
of the Designated Availability Reserve shall be re-imposed by
Lender on the last day of each calendar month until the date
that the Designated Availability Reserve is $1,876,000 (the
"Full DAR Imposition Date"). On any date that the Designated
Availability Reserve equals $1,876,000 and no Event of Default
or act, condition or event which with notice or passage of
time or both would constitute an event of default exists or
has occurred on or as of such date, Borrowers shall be deemed
to request a Revolving Loan in the amount equal to the
difference between the full amount by which the Designated
Availability Reserve could be increased on such date under the
terms hereof and the amount necessary to increase the
Designated Availability Reserve to $1,876,000 ("Excess DAR
Amount") and such Revolving Loan shall be applied to repay the
principal amount of the Second Supplemental Loan outstanding
on such date in accordance with Section 2.1.2(c) hereof in
such amount. The Designated Availability Reserve shall be
immediately reinstated in the amount of $1,876,000 upon the
occurrence of any of the following: (i) an Event of Default,
or act, condition or event which with notice or passage of
time or both would constitute an Event of Default shall exist
or have occurred at any time on or after the Second
Supplemental Loan Maturity Date, (ii) the Second ERF Letter of
Credit shall expire or cease to be in full force and effect,
(iii) the issuer of the Second ERF Letter of Credit shall fail
to perform any of the terms of the Second ERF Letter of
Credit, or fail to honor any demand for payment thereunder, or
deny it has any further liability or obligation thereunder or
revoke, terminate or purport to revoke or terminate the Second
ERF Letter of Credit prior to its stated expiry date or (iv)
any injunctive relief or restraining order is sought or
granted which does or would, if granted limit or impair the
right of Lender to receive payment under the Second ERF Letter
of Credit or for Lender to retain any funds drawn or paid
thereunder.
Each re-imposition of the Designated Availability Reserve
shall serve to reduce the stated amount of the Second ERF
Letter of Credit in a like amount. To the extent that the
imposition of any installment of the Designated Availability
Reserve causes the outstanding amount of Revolving Loans and
Letter of Credit Accommodations to exceed the amount of
Revolving Loans and Letter of Credit Accommodations available
to Borrowers pursuant to Sections 2.1 (other than Section
2.1.2) and 2.2 of the Loan Agreement (as calculated by Lender
on the date each such reserve is imposed, subject to sublimits
and Availability Reserves as provided for in the Loan
Agreement), then Borrowers shall be deemed to have requested
that the outstanding amount of the Second Supplemental Loan be
increased by the amount of such excess in accordance with
Section 2.1.2(a)(ii)(B) hereof; provided, that, all such
increases shall not exceed $1,500,000 in the aggregate."
(iii) The definition of Credit Card Receivables set forth at Section 1.16 of the
Loan Agreement is hereby amended in its entirety to read as follows:
"1.16 "Credit Card Receivables" shall mean, collectively, (a)
all present and future rights of any Borrower or Guarantor to
payment from any Credit Card Issuer, Credit Card Processor or
other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or
services using a credit or debit card and (b) all present and
future rights of any Borrower or Guarantor to payment from any
Credit Card Issuer, Credit Card Processor or other third party
in connection with the sale or transfer of Accounts arising
pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a
credit card or a debit card, including, but not limited to,
all amounts at any time due or to become due from any Credit
Card Issuer or Credit Card Processor under the Credit Card
Agreements or otherwise."
(iv) Designated Letters of Credit. The definition of
"Designated Letters of Credit" incorporated into the Loan Agreement by Amendment
No. 11 is hereby deleted and replaced as follows:
"Designated Letters of Credit" shall mean the Letter of Credit
Accommodations issued or opened by Lender for the account of
any Borrower or Obligor and listed on Exhibit A to Amendment
No. 16."
(v) Excess Availability. The definition of Excess Availability
set forth at Section 1.26 of the Loan Agreement is hereby amended to delete the
reference to "Inventory Loan Limit" and replace it with "Revolving Loan Limit".
(vi) Inventory Loan Limit. The definition of "Inventory Loan Limit" set forth at
Section 1.35 of the Loan Agreement is amended in its entirety to read as
follows:
"Inventory Loan Limit" shall mean $47,000,000."
(vii) Maximum Credit. The definition of "Maximum Credit" set
forth at Section 1.39 of the Loan Agreement is amended in its entirety to read
as follows:
"Maximum Credit" shall mean $54,650,000; provided, that, the
Maximum Credit shall permanently reduce each time Borrowers
make a principal payment in respect of the Second Supplemental
Loan, by an amount equal to the amount of such principal
payment(s)."
(viii) Second Supplemental Loan. The definition of "Second
Supplemental Loan" incorporated into the Loan Agreement by Amendment No. 8 is
hereby deleted and replaced as follows:
"Second Supplemental Loan" shall mean the loan(s), in an
amount not to exceed the Second Supplemental Loan Limit, made
by the Lender to or for the benefit of the Borrowers pursuant
to terms and conditions of Section 2.1.2 hereof, as the same
may be increased by (a) the amount of any draw by a
beneficiary under any Designated Letters of Credit which is
not immediately reimbursed by Borrowers to Lender, and (b) the
amount of any reimposition of the Designated Availability
Reserve pursuant to the terms of this Agreement which would at
anytime cause the outstanding amount of Loans and Letter of
Credit Accommodations to exceed the amount of Revolving Loans
and Letter of Credit Accommodations available to Borrowers
pursuant to Sections 2.1 and 2.2 of the Loan Agreement (as
calculated by Lender, subject to sublimits and Availability
Reserves as provided for in the Loan Agreement). As of the
date of Amendment No. 16, the outstanding principal amount of
the Second Supplemental Loan is $3,150,000."
(ix) Second Supplemental Loan Limit. The definition of "Second
Supplemental Loan Limit" incorporated into the Loan Agreement by Amendment No. 8
is hereby deleted and replaced as follows:
"Second Supplemental Loan Limit" shall mean (i) $3,150,000 as
automatically reduced by the amount of principal payments
required to be made in respect of the Second Supplemental Loan
in accordance with Section 2.1.2(c) hereof, on the date such
payment is due plus (ii) the amount of any draw by a
beneficiary under any Designated Letters of Credit which is
not immediately reimbursed by Borrowers to Lender, plus (iii)
the amount of any reimposition of the Designated Availability
Reserve pursuant to the terms of this Agreement which would at
anytime cause the outstanding amount of Loans and Letter of
Credit Accommodations to exceed the amount of Revolving Loans
and Letter of Credit Accommodations available to Borrowers
pursuant to Sections 2.1 and 2.2 of the Loan Agreement (as
calculated by Lender, subject to sublimits and Availability
Reserves as provided for in the Loan Agreement); provided,
that, the sum of (ii) plus (iii) shall not exceed $1,500,000."
(x) The definition of "Second Supplemental Loan Maturity Date"
is hereby amended to delete the reference to "July 31, 2004" and replace it with
"June 30, 2005".
(c) All references to the term "Financing Agreements" in the Loan
Agreement and in any of the other Financing Agreements shall be deemed to
include, in addition and not in limitation, this Amendment No. 16.
(d) Interpretation. For purposes of this Amendment, unless otherwise
defined herein, all terms used herein, including, but not limited to, those
terms used and/or defined in the recitals above, shall have the respective
meanings assigned to such terms in the Loan Agreement.
2. Amendments to Loan Agreement.
(a) Revolving Loans. Section 2.1(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"(a) Subject to, and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to
each Borrower from time to time in amounts requested by such
Borrower (or by One Price on behalf of One Price PR),
(i) the sum of:
(A) upon and after the Credit Card
Receivable Eligibility Date, the amount
equal to eighty-five (85%) percent of the
Net Amount of Eligible Credit Card
Receivables of Borrowers,
plus,
(B) up to an amount equal to the lesser of:
(x) eighty (80%) percent of the Value of the
Eligible Inventory of such Borrower, or (y)
eighty-five (85%) percent of the Net
Recovery Cost Percentage multiplied by the
Cost of the Eligible Inventory of such
Borrower,
minus
(ii) any Availability Reserves.
For purposes only of applying the Inventory Loan Limit, Lender
may treat the then undrawn amounts of outstanding Letter of
Credit Accommodations for the purpose of purchasing Eligible
Inventory as Revolving Loans to the extent Lender is in effect
basing the issuance of the Letter of Credit Accommodations on
the Value of the Eligible Inventory being purchased with such
Letter of Credit Accommodations. In determining the actual
amounts of such Letter of Credit Accommodations to be so
treated for purposes of the sublimit, the outstanding
Revolving Loans and Reserves shall be attributed first to any
components of the lending formulas set forth above that are
not subject to such sublimit, before being attributed to the
components of the lending formulas subject to such sublimit.
The amounts of Eligible Inventory of any Borrower shall, at
Lender's option, be determined based on the lesser of the
amount of Inventory set forth in the general ledger of such
Borrower or the perpetual inventory record maintained by such
Borrower."
(b) Puerto Rico Sublimit. Section 2.1 (c) of the Loan
Agreement is hereby deleted and replaced
as follows:
"(c) Except in Lender's discretion, the aggregate
amount of Revolving Loans and Letter of Credit Accommodations
available in respect of Eligible Inventory of One Price PR
shall not, at any one time outstanding, exceed an amount equal
to $5,000,000 (such sublimit, the "Puerto Rico Sublimit")."
(c) Sublimits. Section 2.1 (d) of the Loan Agreement is hereby
deleted and replaced as follows:
"(d) Except in Lender's discretion, (i) the aggregate
amount of the Revolving Loans plus the Second Supplemental
Loan plus the Letter of Credit Accommodations outstanding at
any time shall not exceed the Maximum Credit, (ii) the
aggregate amount of Revolving Loans plus Letter of Credit
Accommodations outstanding at any time shall not exceed the
Revolving Loan Limit, (iii) the principal amount of Revolving
Loans outstanding at anytime based on Eligible Inventory shall
not exceed the Inventory Loan Limit, and (iv) the principal
amount of Revolving Loans outstanding at anytime based on
Eligible Credit Card Receivables shall not exceed $3,000,000.
In the event that the outstanding amount of the Loans, or the
aggregate amount of the outstanding Revolving Loans and Letter
of Credit Accommodations, exceed the amounts available under
the lending formulas, the Revolving Loan Limit, the Inventory
Loan Limit, the sublimit for Letter of Credit Accommodations
set forth in Section 2.2(d) or the Maximum Credit, or any
other sublimits provided for herein, as applicable, such event
shall not limit, waive or otherwise affect any rights of
Lender in that circumstance or on any future occasions and
Borrowers shall, upon demand by Lender, which may be made at
any time or from time to time, immediately repay to Lender the
entire amount of any such excess(es) for which payment is
demanded."
(d) Sublimits. Section 2.2 (c) of the Loan Agreement is hereby
deleted and replaced as follows: "(c) In addition to being subject to the
satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the
other terms and conditions contained herein, no Letter of
Credit Accommodations shall be available unless each of the
following conditions precedent have been satisfied in a manner
satisfactory to Lender: (i) the Borrower requesting such
Letter of Credit Accommodation shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such
times and in such manner as such proposed issuer may require,
an application, in form and substance satisfactory to such
proposed issuer and Lender, for the issuance of the Letter of
Credit Accommodation and such other documents as may be
required pursuant to the terms thereof, and the form and terms
of the proposed Letter of Credit Accommodation shall be
satisfactory to Lender and such proposed issuer, (ii) as of
the date of issuance, no order of any court, arbitrator or
other Governmental Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or
regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the
proposed issuer of such Letter of Credit Accommodation refrain
from, the issuance of letters of credit generally or the
issuance of such Letters of Credit Accommodation; and (iii)
Excess Availability, prior to giving effect to any Reserves
with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the
proposed Letter of Credit Accommodation is for the purpose of
purchasing Eligible Inventory and the documents of title with
respect thereto are consigned to the issuer, the sum of (1)
the percentage equal to one hundred (100%) percent minus the
then applicable percentage with respect to Eligible Inventory
set forth in Section 2.1(a) hereof, multiplied by the Value of
such Eligible Inventory, plus (2) freight, taxes, duty and
other amounts which Lender estimates must be paid in
connection with such Inventory upon arrival and for delivery
to one of such Borrower's locations for Eligible Inventory
within the United States of America and (B) if the proposed
Letter of Credit Accommodation is for any other purpose or the
documents of title are not consigned to the issuer in
connection with a Letter of Credit Accommodation for the
purpose of purchasing Inventory, an amount equal to one
hundred (100%) percent of the face amount thereof and all
other commitments and obligations made or incurred by Lender
with respect thereto. Effective on the issuance of each Letter
of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or
Section 2.2(d)(iii)(B)." (e) Second Supplemental Loan. Section
2.1.2 of the Loan Agreement is hereby
deleted and replaced as follows:
"2.1.2 Second Supplemental Loan.
(a) (i) Subject to, and upon the terms and
conditions contained in the
Agreement and the other Financing Agreements, Lender agreed to
make a Second Supplemental Loan to Borrowers in the original
principal amount of $4,000,000 on the Closing Date (as such
term is defined in Amendment No.8) and the outstanding
principal balance of such Second Supplemental Loan is
$3,150,000 as of the date of Amendment No. 16. (ii) Subject
to,
and upon the terms and conditions contained in the
Agreement and the other Financing Agreements, Lender hereby
agrees to make additional advances to Borrower after the date
of Amendment No. 16 as follows (which advances, if any, shall
constitute an additional portion of the Second Supplemental
Loan): (A) in the event that a draw is honored
under any
Designated Letters of Credit which is not immediately
reimbursed by Borrowers (using the proceeds of Revolving Loans
made pursuant to Section 2.1 hereof to the extent that there
is sufficient availability for Lender to make such Revolving
Loans in accordance with Section 2.1 hereof or otherwise),
Borrowers shall be deemed to have requested an increase in the
outstanding amount of the Second Supplemental Loan in an
amount equal to the amount of any such draw; and (B) to the
extent that the imposition of any installment of the
Designated Availability Reserve in accordance with Section 1.4
hereof would at any time cause the outstanding amount of
Revolving Loans and Letter of Credit Accommodations to exceed
the amount of Revolving Loans and Letter of Credit
Accommodations available to Borrowers pursuant to Sections 2.1
(other than Section 2.1.2) and 2.2 of the Loan Agreement (as
calculated by Lender, subject to sublimits and Availability
Reserves as provided for in the Loan Agreement), then
Borrowers shall be deemed to have requested that the
outstanding amount of the Second Supplemental Loan be
increased by the amount of such excess; provided, that, all
such increases shall not exceed $1,500,000 in the aggregate.
(iii) The Second Supplemental Loan advances described in
subsection (ii) above, together with the outstanding
$3,150,000 principal balance of the Second Supplemental Loan
(referred to in subsection (i) above) shall, collectively,
constitute the Second Supplemental Loan. (b) All of the
proceeds of any portion of the Second Supplemental Loan shall
be applied to reduce the outstanding principal balance of the
Revolving Loans. (c) On the Full DAR Imposition Date,
Borrowers shall, so long as no Event of Default or act,
condition or event which with notice or passage of time or
both would constitute an event of default exists or has
occurred on or as of such date, make a principal payment in
respect of the Second Supplemental Loan in the amount of the
Excess DAR Amount. In addition, on the first day of each
calendar month thereafter and until June 30, 2005 (at which
time the entire unpaid principal balance of the Second
Supplemental Loan shall be due and payable), Borrowers shall,
so long as no Event of Default or act, condition or event
which with notice or passage of time or both would constitute
an event of default exists or has occurred on or as of such
date, make monthly payments of principal in respect of the
Second Supplemental Loan in an amount equal to $50,000.
(d) On the last day of each calendar month,
commencing with January 1, 2004 and ending June 30, 2005,
Borrower shall be deemed to have requested Revolving Loans
pursuant to Section 2.1 hereof to pay any portion of the
Second Supplemental Loan, if any, attributable to Section
2.1.2(a)(ii)(B) above and the proceeds of such Revolving Loans
shall be applied to that portion of the Second Supplemental
Loan to the extent that (i) there is sufficient availability
for Lender to make such Revolving Loans in accordance with
Section 2.1 hereof, and (ii) on the date of any such payment,
and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or
both would constitute an event of default exists or has
occurred on or as of such date.
(e) In addition to the payments provided for in
subsection (d) above, on June 30, 2005, Borrower shall be
deemed to have requested Revolving Loans pursuant to Section
2.1 hereof to pay any increase of the Second Supplemental
Loan, if any, attributable to Section 2.1.2(a)(ii)(A) and (B)
above and the proceeds of such Revolving Loans shall be
applied to that portion of the Second Supplemental Loan to the
extent that (i) there is sufficient availability for Lender to
make such Revolving Loans in accordance with Section 2.1
hereof, and (ii) on the date of any such payment, and after
giving effect thereto, no Event of Default or act, condition
or event which with notice or passage of time or both would
constitute an event of default exists or has occurred on or as
of such date.
(f) In addition to the mandatory prepayments of the
Second Supplemental Loans set forth in Subsection (d) and (e)
above, Borrowers may prepay any portion of the Second
Supplemental Loan prior to the Second Supplemental Loan
Maturity Date (subject to Sections 3.4.4 and 12.1.2 hereof) to
the extent that on the date of any such prepayment and after
giving effect thereto no Event of Default or act, condition or
event which with notice or passage of time or both would
constitute an event of default exists or has occurred on or as
of such date; provided, that, (i) any prepayments made by
Borrowers in respect of the Second Supplemental Loan pursuant
to this subsection (f) shall be applied to the foregoing
installments in the order of their maturity, (ii) any amounts
prepaid on account of the Second Supplemental Loan pursuant to
this subsection (f) cannot be reborrowed by the Borrowers.
(g) The Borrowers shall repay the entire unpaid
balance of the Second Supplemental Loan on the Second
Supplemental Loan Maturity Date."
(f) Availability Reserves. Section 2.4 (e) is amended in its entirety
to read as follows:
"(e) that dilution with respect to the Credit Card
Receivables (based on the ratio of the aggregate amount of
non-cash reductions in Credit Card Receivables for any period
to the aggregate dollar amount of the sales of Borrowers
giving rise to Credit Card Receivables for such period) as
calculated by Lender for any period is or is reasonably
anticipated to be greater than five (5%) percent or at any
time after the occurrence and during the continuance of an
Event of Default or the occurrence of any event or existence
of any state of facts that would, with notice or passage of
time, or both, constitute an Event of Default, amounts owing
by Borrowers to Credit Card Issuers or Credit Card Processors
in connection with the Credit Card Agreements;"
(g) Unused Line Fee. Section 3.4 of the Loan Agreement is hereby
amended to delete the reference to "Inventory Loan Limit" and replace it with
"Revolving Loan Limit".
(h) Second ERF Letter of Credit Fees. Section 3.4.11of the Loan
Agreement is amended in its entirety to read as follows:
"3.4.11 Second ERF Letter of Credit Fees . Borrowers shall pay
to Lender (for the account of Participant) the following
non-refundable fees, which shall be fully earned on the dates
such fees are payable: (a) a monthly fee of one and
one-quarter (1 1/4%) percent of the average daily principal
outstanding amount of the Second ERF Letter of Credit payable,
on the first day of each month commencing July 1, 2003 and
ending on the expiration date of the Second ERF Letter of
Credit, pro-rated for partial months and (b) a fee equal to
the fees and costs charged by the issuer of the Second ERF
Letter of Credit to Participant in connection with the
issuance and maintenance of the Second ERF Letter of Credit,
due monthly in advance on the first day of each month prior to
the expiration date of the Second ERF Letter of Credit,
pro-rated for partial months."
(i) Annual Facility Fee. A new Section 3.4.12 of the Loan Agreement is
hereby added to the end of Section 3.4 as follows:
"3.4.12 Annual Facility Fee . Borrowers shall pay to Lender
(for the account of Participant) the following annual facility
fee, in an amount equal to three (3%) multiplied by the sum of
(a) the outstanding principal amount of the Second
Supplemental Loan and (b) the face amount of the Second ERF
Letter of Credit, such fee shall be fully earned and payable
in advance on each anniversary hereof so long as either of the
Second Supplemental Loan or the Second ERF Letter of Credit is
outstanding."
(j) Cash Dominion. The fourth sentence of Section 6.3(a)(iii) of the
Loan Agreement is hereby amended in its entirety to read as follows:
"Notwithstanding the foregoing, unless and until (A) the
average daily Excess Availability of Borrowers for a period of
any twenty (20) consecutive Business Days shall be less than
$2,500,000 for such period (except that during the fiscal
months of Borrowers for October and November 2003, such amount
shall be not less than $2,000,000), or (B) an Event of Default
or condition or event which, with notice or passage of time or
both, would constitute an Event of Default, then exists or has
occurred and is continuing, or (C) Borrower shall have failed
to deliver a Borrowing Base Certificate in accordance with the
provisions hereof, or (D) Lender believes in good faith that
any information contained in any Borrowing Base Certificate is
incomplete, inaccurate or misleading in any material respect
(each of the foregoing under clauses (A), (B) (C) or (D), a
"Direct Remittance Event"),"
(k) Appraisals. Section 7.3(d) of the Loan Agreement is hereby deleted
and replaced as follows:
"(d) upon Lender's request, (i) Borrowers shall, at
their expense, no more than two (2) times in any twelve (12)
month period (between March 15th and May 15th and between
October 1st and December 1st), but at any time or times as
Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals
as to the Inventory in form, scope and methodology acceptable
to Lender and by an appraiser acceptable to Lender, addressed
to Lender or upon which Lender is expressly permitted to rely
and, (ii) Borrowers shall, at the request of Lender, no
earlier than seventy-five (75) days after any appraisal
conducted in accordance with Section 7.3(d)(i) hereof, deliver
or cause to be delivered to Lender, a "desktop" appraisal
prepared by an appraiser acceptable to Lender;"
(l) Vendor Indebtedness. Section 9.9 of the Loan Agreement is hereby
amended to add an additional subsection (i) thereof, as follows:
"and (i) obligations or indebtedness existing as of the date
hereof owing by Borrowers to vendors, as set forth on Schedule
9.9(c) hereto contained in Exhibit B to Amendment No.16,
provided, that, (i) Borrowers shall have delivered to Lender,
copies of all agreements evidencing such indebtedness with
respect to outstanding accounts payable, (ii) Borrowers may
only make regularly scheduled payments of principal and
interest in respect of such indebtedness in accordance with
the terms of the agreement or instrument evidencing or giving
rise to such indebtedness as in effect on the date hereof,
(iii) such Indebtedness shall be unsecured, and (iv) Borrowers
shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such indebtedness or any agreement,
document or instrument related thereto as in effect on the
date hereof, or (B) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, and (v) Borrowers
shall furnish to Lender all notices or demands in connection
with such indebtedness either received by Borrowers or on its
behalf, promptly after the receipt thereof, or sent by
Borrowers or on its behalf, concurrently with the sending
thereof, as the case may be."
(m) Dividends and Redemptions. Section 9.11 of the Loan Agreement is hereby
amended in its entirety to read as follows:
"9.11 Dividends and Redemptions (a) . Neither Borrower shall,
directly or indirectly, declare or pay any dividends on
account of any shares of class of Capital Stock of either
Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or
redeem, retire, defease, purchase or otherwise acquire any
shares of any class of Capital Stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart
any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree
to do any of the foregoing.
(n) Transactions with Affiliates. Section 9.12 of the Loan Agreement is
hereby deleted and replaced as follows:
"9.12 Transactions with Affiliates. Neither Borrower shall,
directly or indirectly, (a) purchase, acquire or lease any
property from, or sell, transfer or lease any property to, any
officer, employee, shareholder, director, agent or any other
affiliate of such Borrower, except for (i) sales of Inventory
to or purchases of Inventory by a Borrower, as to which the
selling or purchase price is not less than the cost thereof to
the seller thereof, (ii) retail or sample sales to employees
in the ordinary course of business, (iii) sales of Inventory
by a Borrower to One Price VI as to which the selling or
purchase price is not less than the cost thereof to such
Borrower and the intercompany receivables arising from such
sales shall not exceed, in the aggregate, $400,000 at any
time, or (b) make any payments of management, consulting or
other fees for management or similar services, or of any
indebtedness owing to any officer, employee, shareholder,
director or other person affiliated with such Borrower except
for (i) repayments of short term loans and advances made by
one Borrower to the other Borrower otherwise permitted
hereunder, (ii) reasonable compensation to officers, employees
and directors for services rendered to such Borrower in the
ordinary course of business, (iii) termination, severance or
other similar payments to employees or officers of a Borrower
in connection with the termination of their employment with a
Borrower determined by such Borrower to be payable according
to past practices of such Borrower in the case of employees or
officers whose employment is not subject to contractual
agreements, and, in the case of employees or officers of
Borrowers whose employment is subject to contractual
agreements, according to contractual obligations of Borrowers
for such termination, severance or other similar payments
incurred when no Event of Default or event or condition which,
with notice or passage of time, or both, would constitute an
Event of Default, exists or has occurred and is continuing and
(iv) payments to Sun Capital Partners Management III, LLC in
respect of management fees pursuant to Sections 2(a), (b) and
(c) of the Management Services Agreement, dated of even date
with Amendment No. 16, by and between One Price and Sun
Capital Partners Management III, LLC (as in effect on the date
of Amendment No. 16); provided, that, on the date of any such
payment and after giving effect thereto, no Event of Default
pursuant to Section 10.1(a)(i) of the Loan Agreement exists or
has occurred and is continuing."
(o) Excess Availability. Section 9.15.1 of the Loan Agreement is hereby
deleted and replaced as follows:
"9.15.1 Excess Availability. Borrowers shall, collectively, at
all times (a) until December 31, 2004, maintain Excess
Availability of not less than $500,000 and (b) on and after
December 31, 2004, maintain Excess Availability of not less
than $1,500,000."
(p) Financial Covenants. Section 9.15.2 of the Loan Agreement is hereby amended
in its entirety to read as follows:
"9.15.2 Additional Financial Covenants. (a) EBITDA. (i) At any time
that the average daily Excess Availability of Borrowers for a period of
any twenty (20) consecutive Business Days shall be less than $2,500,000
(except during the fiscal months of Borrowers for October and November
2003, when such Excess Availability threshold shall be lowered to
$2,000,000), Borrowers shall, collectively, (i) for the fiscal quarter
ending October 4, 2003, have EBITDA for such fiscal quarter of, in the
aggregate, not less than ninety (90%) percent of EBITDA set forth in
the Projections for such period delivered by Borrowers to Lender
pursuant to Section 4(k) of Amendment No. 16, and (b) as of November 1,
2003, and each calendar month thereafter (for the period commencing
July 1, 2003 and ending on the last day of the applicable calendar
month), have EBITDA of, not less than ninety (90%) percent of the
EBITDA set forth in the Projections for such period delivered by
Borrowers to Lender pursuant to Section 4(k) of Amendment No.16, until
the month ending October 3, 2004, at which time, EBITDA shall be
measured at the end of each calendar month for the twelve (12) months
then ended. (b) Minimum Gross Margins. Intentionally Deleted. (c)
Monthly Net Sales. Intentionally Deleted. (d) Monthly Inventory
Receipts. (i) Borrowers shall, collectively, at any time that the
average daily Excess Availability of Borrowers for a period of any
twenty (20) consecutive Business Days shall be less than $2,500,000
(except during the fiscal months of Borrowers for October and November
2003, when such Excess Availability threshold shall be lowered to
$2,000,000), receive Inventory with a Value of not less than
eighty-five (85%) of the Projections for such period (delivered by
Borrowers to Lender pursuant to Section 7(g) of Amendment No. 13).
Compliance with this covenant shall be first calculated on October 4,
2003."
(q) Events of Default.
(i) Section 10.1(a)(ii)(C) of the Loan Agreement is hereby
amended in its entirety to read as
follows:
"(C) the failure to observe or perform any of the covenants or
provisions contained in Sections 9.1, 9.5, 9.7, 9.8, 9.9,
9.10, 9.11, 9.12 or 9.15 of this Agreement or any covenants or
agreements covering substantially the same matter as such
sections in any of the other Financing Agreements; or"
(ii) Section 10.1(i) of the Loan Agreement is hereby amended
in its entirety to read as
follows:
" (i) any default by either Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness
for borrowed money owing to any person other than Lender, or
any capitalized lease obligations, Retail Store operating
leases, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of
instrument in favor of any person other than Lender, in any
case involving indebtedness in an amount in excess of $500,000
with respect to defaults arising under agreements, documents
and instruments other than Retail Store operating leases, or
$500,000 with respect to defaults in current rent, additional
rent, maintenance, repair or other current lease obligations
arising under one or more Retail Store operating leases, in
each case, which default continues for more than the
applicable cure period, if any, with respect thereto, or any
default by any Borrower or any Obligor under any material
contract, lease, license or other obligation to any person
other than Lender, which default continues for more than the
applicable cure period, if any, with respect thereto; or any
Credit Card Issuer or Credit Card Processor withholds payment
of amounts otherwise payable to any Borrower or One Price VI
to fund a reserve account or otherwise hold as collateral, or
shall require any Borrower or One Price VI to pay funds into a
reserve account or for such Credit Card Issuer or Credit Card
Processor to otherwise hold as collateral, or any Borrower or
One Price VI shall, or shall be required to, provide a letter
of credit, guarantee, indemnity or similar instrument to or in
favor of such Credit Card Issuer or Credit Card Processor such
that in the aggregate all of such funds in the reserve
account, other amounts held as collateral and the amount of
such letters of credit, guarantees, indemnities or similar
instruments shall exceed $100,000;"
(iii) Section 10.1(j) of the Loan Agreement is hereby amended
in its entirety to read as follows:
"(j) any Change of Control;"
(iv) In addition to the Events of Default set forth in the
Loan Agreement and the other Financing Agreements, the failure of Borrowers to
comply with the conditions set forth in Section 7 hereof in accordance with the
terms thereof shall be deemed to constitute an additional Event of Default.
(r) Term. Section 12.1 of the Loan Agreement is hereby amended in its
entirety to read as follows:
"12.1 Term.
----
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first
page hereof and shall continue in full force and effect for a
term ending on July 31, 2006 (the "Renewal Date"), and from
year to year thereafter, unless sooner terminated pursuant to
the terms hereof. Lender may, at its option (or shall at the
direction of any Lender in writing received by Lender at least
ninety (90) days prior to the Renewal Date or the anniversary
of any Renewal Date, as the case may be), terminate this
Agreement and the other Financing Agreements, or One Price may
terminate this Agreement and the other Financing Agreements,
in each case, effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the
other party at least sixty (60) days prior written notice;
provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. In addition,
Borrowers may terminate this Agreement at any time upon ten
(10) days prior written notice to Lender (which notice shall
be irrevocable) and Lender may, at its option, terminate this
Agreement at any time on or after an Event of Default. Upon
the Renewal Date or any other effective date of termination of
the Financing Agreements, Borrowers shall pay to Lender all
outstanding and unpaid Obligations and shall furnish cash
collateral to Lender (or at Lender's option, a letter of
credit issued for the account of Borrowers and at Borrowers'
expense, in form and substance satisfactory to Lender, by an
issuer acceptable to Lender and payable to Lender as
beneficiary) in such amounts as Lender determines are
reasonably necessary to secure Lenders from loss, cost, damage
or expense, including attorneys' fees and expenses, in
connection with any contingent Obligations, including issued
and outstanding Letter of Credit Accommodations and checks or
other payments provisionally credited to the Obligations
and/or as to which Lender has not yet received final and
indefeasible payment and any continuing obligations of Lender
pursuant to any Deposit Account Control Agreement. The amount
of such cash collateral (or letter of credit, as Lender may
determine) as to any Letter of Credit Accommodations shall be
in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount
of any fees and expenses payable in connection therewith
through the end of the latest expiration date of such Letter
of Credit Accommodations. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire
transfer in Federal funds to the Payment Account or such other
bank account of Lender, as Lender may, in its discretion,
designate in writing to One Price for such purpose. Interest
shall be due until and including the next Business Day, if the
amounts so paid by Borrowers to the Payment Account or other
bank account designated by Lender are received in such bank
account later than 12:00 noon, Georgia time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge any Borrower
or Guarantor of its respective duties, obligations and
covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally
discharged and paid, and Lender's continuing security interest
in the Collateral and the rights and remedies of Lender
hereunder, under the other Financing Agreements and applicable
law, shall remain in effect until all such Obligations have
been fully and finally discharged and paid. Accordingly, each
Borrower and Guarantor waives any rights it may have under the
UCC to demand the filing of termination statements with
respect to the Collateral and Lender shall not be required to
send such termination statements to Borrowers or Guarantors,
or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its
terms and all Obligations paid and satisfied in full in
immediately available funds.
(c) If for any reason this Agreement is terminated prior to
the Renewal Date, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrowers agree to
pay to Lender, upon the effective date of such termination, an
early termination fee in the amount equal to:
Amount
(i) .75% of Maximum Credit Period From the date hereof
to and including the first
anniversary of the date hereof
(ii) .50% of Maximum Credit From and after the first
anniversary of the date
hereof to and including the
second anniversary of the
date hereof
Such early termination fee shall be presumed to be the amount
of damages sustained by Lender as a result of such early
termination and Borrowers and Guarantors agree that it is
reasonable under the circumstances currently existing.
Notwithstanding the foregoing, Lender shall not be entitled to
such early termination fee in the event that the Financing
Agreements are terminated in accordance with the terms hereof
upon the occurrence of an Event of Default which Lender
determines not to waive. The early termination fee provided
for in this Section 12.1 shall be deemed included in the
Obligations."
3. Amendment Fee. In consideration of the foregoing, Borrower agrees to
pay Lender, in addition to all other fees, charges, interest and expenses
payable by Borrower to Lender hereunder and under the terms of the Loan
Agreement, a fee for entering into this Amendment in the amount of $200,000,
which shall be fully earned on the date hereof and which shall be payable as
follows: $100,000 on the date hereof ($75,000 of which shall be paid to
Participant), and $100,000 ($50,000 of which shall be paid to Participant) of
which shall be due and payable on December 1, 2003; such amendment fee may be
charged directly to the loan account of Borrowers maintained by Lender.
4. Conditions Precedent. The effectiveness of the amendments set forth
herein are further conditioned upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Lender:
(a) No Event of Default, or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred;
(b) except as set forth in Section 5(g), Lender shall have received a
true and correct copy of any consent, waiver or approval to or of this Amendment
and the Sun Stock Purchase Agreements, which any Borrower or One Price VI is
required to obtain from any other Person, and such consent, approval or waiver
shall be in form and substance satisfactory to Lender;
(c) Lender shall have received copies of the Sun Stock Purchase
Agreements, duly authorized, executed and delivered by each Borrower, One Price
VI or Sun Capital as the case may be, which agreements shall be in form and
substance satisfactory to Lender and shall not provide, among other things,
that, Borrowers shall be required to pay any cash dividends or repurchase or
redeem such Capital Stock or make any other payments in respect thereof, except
as otherwise permitted in Section 9.11 of the Loan Agreement, and the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall include any terms that include any limitation on the right of any
Borrower to request or receive Loans or Letter of Credit Accommodations or the
right of any Borrower and Guarantor to amend or modify any of the terms and
conditions of this Agreement or any of the other Financing Agreements or
otherwise in any way relate to or affect the arrangements of Borrowers and
Guarantors with Lender or are more restrictive or burdensome to any Borrower or
Guarantor than the terms of any Capital Stock in effect on the date hereof;
(d) Lender shall have received evidence, in form and substance
satisfactory to Lender, that One Price has received not less than $7,000,000 in
immediately available funds in exchange for capital stock of One Price pursuant
to the terms of the Sun Stock Purchase Agreements (as in effect on the date
hereof) and, except as Lender may otherwise agree in writing, all of the
proceeds of the sale and issuance of such Capital Stock shall be paid to Lender
for application to the Obligations in such order and manner as Lender may
determine;
(e) Lender shall have received an original of the amendment and
consent, duly authorized and delivered by Enhanced Retail Funding, LLC, in form
and substance satisfactory to Lender, agreeing to its consent to this Amendment;
(f) Lender shall have received an original of the Junior Participation
Agreement, dated on or about the date hereof, by and between Participant and Sun
Capital, duly authorized, executed and delivered by Participant and Sun Capital;
(g) Lender shall have received an original of the letter agreement,
dated on or about the date hereof, by and among Borrowers, Guarantor and Lender,
duly authorized, executed and delivered by Borrowers and Guarantors, authorizing
Lender to pay certain loan proceeds to specified third parties;
(h) the Excess Availability as determined by Lender, as of the date
hereof, shall be not less than $4,000,000 after giving effect to stock purchase
referred to in Section 4(e) hereof;
(i) Lender shall have received, in form and substance satisfactory to
Lender, (A) Borrowers' on-going plan for repayment of outstanding accounts
payable owing to suppliers of inventory, trade goods and services, (B) copies of
all agreements with trade creditors with respect to outstanding accounts
payable, and (C) evidence that Borrowers have restructured the repayment of
outstanding accounts payable owing to suppliers of inventory, trade goods and
services on the terms and conditions set forth on Schedule 6.1(u) of the Sun
Stock Purchase Agreement and the aggregate Total Owed Amount (as defined in such
Schedule 6.1(u)) of all of the agreements from such suppliers shall be equal or
greater than $15,000,000;
(j) Lender shall have received the fee referred to in Section 3 hereof;
(k) Lender shall have received, in form and substance satisfactory to
Lender, true, correct and complete copies of the Projections attached hereto as
Exhibit C; and
(l) Lender shall have received an original of this Amendment, duly
authorized, executed and delivered by each Borrower and One Price VI.
5. Additional Representations, Warranties and Covenants. Each Borrower
represents, warrants and covenants with and to Lender as follows, which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, and the truth and accuracy of, or compliance with
each, together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making of Loans by
Lender to Borrower:
(a) All of the representations and warranties set forth in the Loan
Agreement and the other Financing Agreements, each as amended hereby, are true
and correct in all material respects on and as of the date hereof as if made on
the date hereof, except to the extent any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct as of such date.
(b) No Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default exists or has
occurred as of the date of this Amendment (after giving effect to the amendments
to the Financing Agreements made by this Amendment).
(c) This Amendment and the Sun Stock Purchase Agreements has been duly
executed and delivered by each Borrower and each is in full force and effect as
of the date hereof and the agreements and obligations of each Borrower contained
herein and therein constitute legal, valid and binding obligations of such
Borrower enforceable against such Borrower in accordance with their respective
terms.
(d) Each Borrower and One Price VI do not have and shall not have any
property or other interest in the Second ERF Letter of Credit or in any funds
available or drawn thereunder.
(e) Borrowers and One Price VI shall take such steps and execute and
deliver, and cause to be executed and delivered, to Lender, such additional UCC
financing statements and termination statements, and other and further
agreements, documents and instruments as Lender may require in order to more
fully evidence, perfect and protect Lender's security interest in the Collateral
of One Price VI.
(f) None of the transactions contemplated by this Amendment and the Sun
Stock Purchase Agreements violate or will violate any applicable law or
regulation, or do or will give rise to a default or breach under any agreement
to which any Borrower or One Price VI is a party or by which any of their
property is bound (except for the defaults created by the failure to obtain the
consents described in Section 5(g) below).
(g) Borrowers have delivered true, correct and complete copies of any
and all consents, waivers or approvals to or of this Amendment and the Sun Stock
Purchase Agreements, which any Borrower or One Price VI is required to obtain
from any other Person (other than the consents required under certain lease
agreements, for which the Borrowers shall use reasonable commercial efforts to
obtain).
(h) Borrowers and One Price VI are not aware of the existence or
occurrence of any act, condition or event which would permit the beneficiary
under the Designated Letter of Credit identified on Exhibit A hereto to make a
draw thereunder and such beneficiary has not advised Borrowers or One Price VI
on or prior to the date hereof that it intends to make any draw thereunder.
6. Additional Items to Be Delivered. Borrowers agree that, in addition
to all other terms, conditions and provisions set forth in the other Financing
Agreements, Borrowers shall deliver or cause to be delivered to Lender, the
following, in form and substance satisfactory to Lender, as soon as possible,
but in any event, by no later than the dates listed below:
(a) by July 1, 2003, the original Amendment to the Second ERF Letter of
Credit which extends the expiry date thereof to July 15, 2005;
(b) by July 11, 2003, a field review of the Records and such other
information with respect to the Collateral as Lender may require to determine
the amount of Loans available to Borrower (including, without limitation,
roll-forwards of Accounts and Inventory through the date of such field
examination, together with such supporting documentation as may be necessary or
appropriate, and other documents and information that will enable Lender to
accurately identify and verify the Collateral), the results of which in each
case shall be satisfactory to Lender,
(c) by July 31, 2003, an original written acknowledgment of Carolina
Bank, as duly authorized, executed and delivered by Carolina Bank, in form and
substance satisfactory to Lender, acknowledging this Amendment, and
(d) by August 31, 2003, an Amended and Restated Loan and Security
Agreement by and among Borrowers, One Price VI and Lender and such other amended
and restated Financing Agreements or related deliveries as Lender may request.
7. Miscellaneous.
(a) Additional Events of Default. The parties hereto acknowledge,
confirm and agree that the failure of Borrowers or One Price VI to comply with
any of the covenants, conditions and agreements contained herein shall
constitute an Event of Default under the Financing Agreements.
(b) Entire Agreement; Ratification and Confirmation of the Financing
Agreements. This Amendment contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior or contemporaneous
term sheets, proposals, discussions, negotiations, correspondence, commitments
and communications between or among the parties concerning the subject matter
hereof. This Amendment may not be modified or any provision waived, except in
writing signed by the party against whom such modification or waiver is sought
to be enforced. Except for those provisions specifically modified or waived
pursuant hereto, the Financing Agreements are hereby ratified, restated and
confirmed by the parties hereto as of the effective date hereof. To the extent
of conflict between the terms of this Amendment and the Financing Agreements,
the terms of this Amendment shall control.
(c) Governing Law. This Amendment and the rights and obligations
hereunder of each of the parties hereto shall be governed by and interpreted and
determined in accordance with the internal laws of the State of Georgia but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of Georgia.
(d) Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
(e) Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
By the signature hereto of each of their duly authorized officers, all
of the parties hereto mutually covenant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Title: Vice President
--------------------------------------
AGREED AND ACCEPTED:
ONE PRICE CLOTHING STORES, INC.
By: /s/C. ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Title: Vice President - Finance & Treasurer
ONE PRICE CLOTHING OF PUERTO RICO, INC.
By: /s/C. ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Title: Vice President - Finance & Treasurer
CONSENTED TO AND AGREED:
ONE PRICE CLOTHING - U.S. VIRGIN ISLANDS, INC.
By: /s/C. ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Title: Vice President - Finance & Treasurer
EXHIBIT A
TO
AMENDMENT NO. 16 TO FINANCING AGREEMENTS
Designated Letters of Credit
LC Number LC Expiry Date LC Amount
--------- -------------- ---------
SM411241P January 01, 2010 $1,876,000
EXHIBIT B
TO
AMENDMENT NO. 16 TO FINANCING AGREEMENTS
Schedule 9.9(c)
[See Attached]
EXHIBIT C
TO
AMENDMENT NO. 16 TO FINANCING AGREEMENTS
New Projections
[See Attached]