Congress Financial Corporation
(Southern)
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September 13, 2001
One Price Clothing Stores, Inc.
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One Price Clothing of Puerto Rico, Inc.
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Re: Amendment No. 8 to Financing Agreements
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 and
Amendment No. 7 to Financing Agreements, dated February 9, 2001, 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.
Borrower has requested that Congress agree, subject to the terms of the
Financing Agreements, to establish a $4,000,000 Second Supplemental Loan term
facility. Congress has agreed to Borrower's request, subject to the terms and
conditions hereof. Accordingly, subject to the terms and conditions hereof, the
Financing Agreements shall be amended as follows:
1. The following definitions shall be added to Section 1, Definitions, of the
Loan Agreement:
(a) "Eighth Amendment" shall mean Amendment No. 8, dated September 13, 2001, by
and among Lender, Borrowers and One Price VI.
(b) "Second Supplemental Loan Limit" shall mean $4,000,000.00.
(c) "Second Supplemental Loan" shall mean the loan made by the Lender to or for
the benefit of the Borrowers pursuant to Section 2.1.2 hereof.
(d) "Second Supplemental Loan Maturity Date": July 13, 2002.
(e) "Second Supplemental Loan Termination Date" shall mean the earliest of (i)
the Second Supplemental Loan Maturity Date, (ii) the date set as the
termination date of this Agreement, (iii) the occurrence of an Event of
Default described in Sections 10.1(g) or 10.1(h), (iv) the date set by the
Lender as the termination date of the Second Supplemental Loan following
the occurrence of an Event of Default other than an Event of Default
described in Sections 10.1(g) or 10.1(h), or (v) the date on which
Borrowers repay all Obligations arising in respect of the Second
Supplemental Loan.
2. The definition of "Closing Date" in Section 1 of the Loan Agreement shall
be restated in its entirety as follows:
"Closing Date" shall mean the date on which all the conditions
precedent in Section 22 of the Eighth Amendment are satisfied.
3. The definition of "Participant" in Section 1 of the Loan Agreement shall be
restated in its entirety as follows:
"Participant" shall mean Enhanced Retail Funding, LLC, a
Delaware limited liability company, and its successors and
assigns.
4. The definition of "Excess Availability" in Section 1 of the Loan Agreement
shall be deleted and the following shall be substituted therefor:
"1.26 'Excess Availability' shall mean that amount, as
determined by the Lender, calculated at any time, equal to:
(a) the lesser of (i) the amount of the Revolving Loans
available to Borrowers as of such time based on the applicable
lending formula under Section 2.1 hereof, as determined by the
Lender, and subject to sublimits and Availability Reserves
from time to time established by Lender hereunder and (ii) the
amount equal to the Inventory Loan Limit, minus (b) the sum
of: (i) the amount of all then outstanding and unpaid
Obligations (excluding the outstanding principal amount of the
Second Supplemental Loan), plus (ii) the aggregate amount of
all trade payable of the Borrowers which are more than
forty-five (45) days past due as of such time and are not the
being disputed in good faith by the Borrowers."
5. The definition of "Maximum Credit" in Section 1 of the Loan Agreement shall
be deleted and the following substituted therefor:
"1.39 'Maximum Credit' shall mean $41,500,000."
6. Section 2.1(a) of the Loan Agreement shall be restated in its entirety as
follows:
"2.1 Revolving Loans. (a) Revolving Loans. 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), up to the amount equal to the sum of: (i)
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.
7. Section 2.1(d) is hereby amended to restate the first sentence thereof to
read as follows:
Except in Lender's discretion, 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, and the aggregate amount of Revolving Loans plus Letter of
Credit Accommodations outstanding at any time shall not exceed the
Inventory Loan Limit.
8. The following shall be added as a new Section 2.1.2 to the Loan Agreement:
"2.1.2 Second Supplemental Loan.
(a) Subject to the terms hereof, the Lender agrees to
advance to the Borrowers (or to One Price on behalf of One
Price PR) on the Closing Date amounts equal to the Second
Supplemental Loan Limit.
(b) The proceeds of the Second Supplemental Loan
shall be applied to reduce the outstanding principal balance
of the Revolving Loans.
(c) The Borrowers shall repay the entire unpaid
balance of the Second Supplemental Loan on the Second
Supplemental Loan Termination Date. The Borrowers may repay
the entire principal balance of the Second Supplemental Loan
prior to the Second Supplemental Loan Termination Date
(subject to Sections 3.4.4 and 12.1.2 hereof). Any amounts
prepaid on account of the Second Supplemental Loan cannot be
reborrowed by the Borrowers.
9. The following shall be added as a new Section 3.1.2 to the Loan Agreement.
"3.1.2 Interest on the Second Supplemental Loan.
(a) The Second Supplemental Loan shall bear interest,
until repaid, fixed at fifteen (15%) percent per annum
(determined based upon a 360-day year and actual days elapsed),
and shall be payable by the Borrowers to the Lender monthly in
arrears not later than the first day of each calendar month.
Following the occurrence and during the continuance of any
Event of Default (and whether or not the Lender exercises its
rights and remedies on account thereof), the Second
Supplemental Loan shall bear interest, at the rate of eighteen
(18%) percent per annum, and such interest shall be payable
upon demand. The Lender is authorized to charge interest due
pursuant to this Section 3.1.2 as a Revolving Loan without
further notice to or request by the Borrowers."
10. The following shall be added as a new Section 3.4.3 to the Loan Agreement.
"3.4.3 Second Supplemental Loan Closing Fee.
The Borrowers shall pay to the Lender a Closing Fee
in the amount of $120,000.00, which shall be fully earned as
of and payable on the Closing Date. The Borrowers shall not be
entitled to any credit, rebate, or repayment of the Closing
Fee notwithstanding termination of this Agreement."
11. A new Section 3.4.4 shall be added to the Loan Agreement which reads as
follows:
"3.4.4 Second Supplemental Loan Exit Fee.
As compensation for the Lender's commitment
hereunder, the Lender shall have earned by its execution of
this Agreement, an Exit Fee of $80,000.00, payable upon the
Second Supplemental Loan Termination Date. The Exit Fee shall
be fully earned as of the date of the execution of the Eighth
Amendment. The Borrowers shall not be entitled to any credit,
rebate, or repayment of the Exit Fee notwithstanding
termination of this Agreement."
12. A new Section 3.4.5 shall be added to the Loan Agreement, to read as
follows:
"3.4.5 Second Supplemental Loan Monitoring Fee.
As compensation for the Lender's agreements
hereunder, the Lender shall have earned by its execution of
this Agreement, a Second Supplemental Loan Monitoring Fee of
$500 per month, payable in arrears on the first day of each
month for each month that any portion of the Second
Supplemental Loan remains outstanding (and which shall be
pro-rated based on a 30-day month and actual days elapsed for
any partial month during which any portion of the Second
Supplemental Loan remains outstanding). The Second
Supplemental Loan Monitoring Fee shall be fully earned as of
the date of the execution of the Eighth Amendment. The
Borrowers shall not be entitled to any credit, rebate, or
repayment of the Second Supplemental Loan Monitoring Fee
notwithstanding termination of this Agreement."
13. A new Section 3.4.6 shall be added to the Loan Agreement, to read as
follows:
"3.4.6 Loan Monitoring Fee.
As compensation for the Lender's agreements
hereunder, the Lender shall have earned by its execution of
this Agreement, an additional Loan Monitoring Fee of $21,000
per month, payable in arrears on the first day of each month
for each month that any portion of the Second Supplemental
Loan remains outstanding (and which shall be pro-rated based
on a 30-day month and actual days elapsed for any partial
month during which any portion of the Second Supplemental Loan
remains outstanding). The Loan Monitoring Fee shall be fully
earned as of the date of the execution of the Eighth
Amendment. The Borrowers shall not be entitled to any credit,
rebate, or repayment of the Loan Monitoring Fee
notwithstanding termination of this Agreement."
14. Section 9.15.1 of the Loan Agreement is hereby restated in its entirety as
follows:
"9.15.1 Excess Availability.
At all times prior to the payment of all Obligations
arising in respect of the Second Supplemental Loans, Borrowers
shall, for the period commencing from the Closing Date
maintain Excess Availability of at least $1,500,000.00."
15. The reference to "Inventory Loan:" in clause (iii) of the first sentence of
Section 12.1(c) is hereby deemed a reference to "Inventory Loan Limit."
16. A new Section 12.1.2 shall be added to the Loan Agreement which reads as
follows:
"12.1.2 Yield Maintenance Fee.
Upon the occurrence of the Second Supplemental Loan
Termination Date, for any reason, the Borrowers shall pay to
the Lender a "Second Supplemental Loan Yield Maintenance Fee"
equal to the difference between $550,000 and the combined sum
of all interest and fees actually paid to the Lender on
account of the Second Supplemental Loan from the Closing Date
to the Second Supplemental Loan Termination Date, but in no
event shall the Second Supplemental Loan Yield Maintenance Fee
be less than zero. The Second Supplemental Loan Yield
Maintenance Fee shall be paid as liquidated damages for the
loss by the Lender of the benefit of its bargain with respect
to the Second Supplemental Loan and not as a penalty. In the
event that the Borrower elects to make a partial prepayment of
the Second Supplemental Loan, the Borrower shall pay a
proportional amount of the Second Supplemental Loan Yield
Maintenance Fee equal to (a) (i) a fraction, the numerator of
which is equal to the principal amount prepaid and the
denominator of which is equal to $4,000,000, times (ii)
$550,000 less (b) the sum of (i) interest paid to Lender to
date on account of the Second Supplemental Loan, (ii) the
Second Supplemental Loan Closing Fee and (iii) the Second
Supplemental Loan Exit Fee (but in no event shall such
proportional amount of the Second Supplemental Loan Yield
Maintenance Fee be less than zero)."
17. The Second Supplemental Loan, and all interest, fees, costs, expenses
(including reasonable attorney's fees incurred by the Participant), and
other charges which arise from or in connection therewith or are in any way
related thereto shall be deemed additional "Obligations" under the terms of
the Financing Agreements and be secured by all of the Collateral.
18. At any time prior to the Second Supplemental Loan Maturity Date, the
Participant, at the expense of the Borrowers, may participate in and/or
observe each physical count and/or inventory of so much of the Collateral
as consists of Inventory which is undertaken by or on behalf of the
Borrowers.
19. The Borrowers, at their own expense, shall cause each location at which
Inventory is located to have not less than one (1) physical inventory prior
to the Second Supplemental Loan Maturity Date to be undertaken, consistent
with current practice, (the scheduling of which shall be subject to the
Participant's discretion), conducted by such inventory takers as are
satisfactory to the Participant and following such methodology as may be
satisfactory to the Participant. The Borrowers shall provide the
Participant with a copy of the preliminary result of each such inventory
(as well as any other physical inventory undertaken by the Borrowers)
within ten (10) days after its completion. The Borrowers shall provide the
Participant with a reconciliation of the results of each such inventory (as
well as any other physical inventory undertaken by the Borrowers) to the
Borrowers' books and records within thirty (30) days following the
completion of such inventory. The Participant, in its discretion, following
the occurrence of an Event of Default, may cause such additional
inventories to be taken as the Participant determines (each at the expense
of the Borrowers.
20. The Participant may, in its discretion, conduct commercial finance audits
(at the Borrower's expense) of the Borrower's books and records during the
period in which the Second Supplemental Loan is outstanding.
21. The Borrowers shall simultaneously deliver to the Participant copies of all
financial statements, certificates, reports, notices and other documents
(including without limitation collateral reports required by Section 7.1 of
the Loan Agreement) when the Borrowers deliver such financial statements,
certificates, reports notices and other documents to the Lender. The
Borrowers further agree that it shall afford the Participant access to its
books, records, premises and the Collateral to the same extent and with
such frequency as is afforded to the Lender pursuant to the Loan Agreement.
In addition, the Borrowers shall promptly provide the Participant, upon
request, such other and additional information concerning the Borrowers,
the Collateral, the operation of the Borrowers' business, and the
Borrowers' financial condition, including financial reports and statements,
as the Participant may from time to time request from the Borrowers.
22. The following shall be conditions precedent to the effectiveness of the
Eighth Amendment:
(a) Each of the conditions and contained in Sections
4.1 and 4.2 of the Loan Agreement are satisfied as of the date
hereof and updated to take into account the Second
Supplemental Loan. Each of the representations made by or on
behalf of the Borrowers in this Agreement or in any other
Financing Agreements or in any other report, statement,
document or other paper provided by or on behalf of the
Borrowers to the Lender or the Participant shall be true and
complete as of the date as of which such representation or
warranty was made.
(b) All Accounts are within stated invoice terms or
with terms acceptable to the Participant, in its sole
discretion.
(c) The Lender and the Participant have entered into
a Participation Agreement on such terms and conditions as are
acceptable to each in its sole discretion.
(d) An opinion of counsel to the Borrower in form and
content acceptable to Lender and Participant has been
delivered, along with corporate resolutions and charter
documents as requested by Lender or Participant.
(e) There exists Excess Availability as of the
Closing Date of at least $1,500,000.00.
(f) All fees due at or immediately after the Closing
Date and all costs and expenses incurred by the Lender and the
Participant in connection with the establishment of the Second
Supplemental Loan contemplated hereby (including the fees and
expenses of counsel to the Lender and the Participant) shall
have been paid in full.
(g) No Event of Default shall then exist.
(h) Satisfactory completion of all due diligence by
the Participant, and the Participant is satisfied (in its sole
discretion) with the results of such due diligence in all
respects.
(i) Completion of the legal due diligence
investigation by counsel to the Lender and the Participant,
with results satisfactory to each such counsel, in their sole
discretion in all respects.
(j) One Price shall have executed and delivered a
Warrant Purchase Agreement in favor of the Participant for the
purchase of 20,000 shares of One Price, in such form and
substance as is acceptable to the Participant in its sole
discretion.
(k) Borrower shall have delivered an updated
financial plan for fiscal year 2001 and the six-month period
ending July 31, 2002 reflecting the Second Supplemental Loan,
along with a schedule of capital expenditures for fiscal year
2001 and the six-month period ending July 31, 2002.
(l) Borrower shall have agreed to use reasonable
efforts to deliver to Lender a stock pledge agreement in favor
of Lender with respect to its stock in One Price Realty, Inc.
(m) The Closing Date shall have occurred on or before
September 14, 2001.
23. Borrower confirms and agrees that (a) all representations and warranties
contained in the Financing Agreements are on the date hereof true and
correct in all material respects and (b) it is unconditionally and jointly
and severally liable for the punctual and full payment of all Obligations,
including, without limitation, all charges, fees, expenses and costs
(including attorneys' fees and expenses) under the Financing Agreements,
and that Borrower has no defenses, counterclaims or setoffs with respect to
full, complete and timely payment of all Obligations.
24. The Borrowers confirm that the Financing Agreements remain in full force
and effect without amendment or modification of any kind, except for the
amendments explicitly set forth herein. The undersigned further confirm
that no Event of Default or events which with notice or the passage of time
or both would constitute an Event of Default have occurred and are
continuing, other than the covenant default waived by Congress herein. The
execution and delivery of this Amendment by Lender shall not be construed
as a waiver by Lender of any Event of Default under the Financing
Agreements. This Amendment shall be deemed to be a Financing Agreement and,
together with the other Financing Agreements, constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior dealings, correspondence, conversations or
communications between the parties with respect to the subject matter
hereof. This Agreement may be executed in any number of counterparts, but
all 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.
25. This Amendment and the rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted in accordance with
Section 11.1 or 11.1.1 of the Loan Agreement, as the case may be.
26. This Amendment shall be binding upon and inure to the benefit of each of
the parties hereto and their respective successor, assigns and the
Participant.
Executed under seal on the date set forth above.
ATTEST: ONE PRICE CLOTHING STORES, INC.
/s/ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ By: /s/ C. ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇'▇▇▇▇▇▇ Name: C. ▇▇▇▇ ▇▇▇▇▇
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Assistant Secretary Title: Vice President & Treasurer
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ONE PRICE CLOTHING OF PUERTO RICO, INC.
/s/ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ By: /s/ C. ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇'▇▇▇▇▇▇ Name: C. ▇▇▇▇ ▇▇▇▇▇
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Assistant Secretary Title: Vice President & Treasurer
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CONSENTED TO BY:
ONE PRICE CLOTHING US VIRGIN ISLANDS, INC.
/s/ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ By: /s/ C. ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇'▇▇▇▇▇▇ Name: C. ▇▇▇▇ ▇▇▇▇▇
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Assistant Secretary Title: Vice President & Treasurer
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Accepted on September 13, 2001
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Senior Vice President
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