AMENDED AND RESTATED ADDENDUM TO CREDIT AGREEMENT

AMENDED AND RESTATED
ADDENDUM TO CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED ADDENDUM TO CREDIT AGREEMENT (this "Addendum") is dated as of January 27, 2017, by and among (A) FRED'S, INC., a Tennessee corporation ("Parent"); (B) the Subsidiaries of Parent identified on the signature pages hereto and any other Subsidiaries of Parent which may become Borrowers under the Credit Agreement (as defined below) from time to time (together with Parent, each, a "Borrower" and, collectively, "Borrowers"); (C) the Subsidiaries of Parent identified on the signature pages hereto and any other Subsidiaries of Parent which may become Guarantors under the Credit Agreement from time to time (each, a "Guarantor" and, collectively, "Guarantors"); (D) the Lenders from time to time party to the Credit Agreement (each, a "Lender" and, collectively, "Lenders"); (E) REGIONS BANK, an Alabama bank ("Regions"), in its capacity as the Swingline Lender (as defined in the Credit Agreement) and LC Issuer (as defined in the Credit Agreement); and (F) Regions, in its capacity as administrative agent and collateral agent for Lenders, LC Issuer and the other Secured Parties (in such capacity, "Administrative Agent" or "Agent").

 

RECITALS:

 

Borrowers, Guarantors, Lenders, Swingline Lender, LC Issuer and Administrative Agent are parties to that certain Credit Agreement, dated as of April 9, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement").

 

Borrowers, Guarantors, Lenders, Swingline Lender, LC Issuer and Administrative Agent are parties to that certain Addendum to Credit Agreement, dated as of April 9, 2015 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the "Existing Addendum").

 

Borrowers have requested that Administrative Agent and Lenders amend certain provisions of the Credit Agreement as set forth in that certain Third Amendment to Credit Agreement, dated as of the date hereof (the "Third Amendment").

 

To induce Administrative Agent and Lenders to enter into the Third Amendment, Borrowers and the other Loan Parties desire to enter into an amendment and restatement of the Existing Addendum and to agree and acknowledge that the Borrowing Base Trigger Event has occurred for all purposes under this Addendum, the Credit Agreement and the other Loan Documents..

 

NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, each Loan Party, Administrative Agent, each Lender and LC Issuer, each intending to be legally bound, hereby covenant and agree as follows:

 

 

 

 

 

"Account Control Event" means (a) the occurrence of an Event of Default or (b) at any time of determination, that Excess Availability is less than the greater of (i) twelve and one-half percent (12.5%) of the Commitments and (ii) $28,125,000.

 

"Account Control Period" means the period beginning on the occurrence of an Account Control Event and ending on the first Business Day on which (a) no Event of Default has existed and (b) Excess Availability has been greater than the greater of (i) twelve and one-half percent (12.5%) of the Commitments and (ii) $28,125,000, in each case for the preceding sixty (60) days.

 

"Aggregate Revolving Obligations" means, at any time of determination, the sum (without duplication) of (a) the outstanding principal amount of all Revolving Loans plus (b) the outstanding amount of all LC Obligations.

 

"Applicable Margin" means, subject to the terms of this definition, with respect to any Type of Loan and at any time of determination, the percentage rate per annum set forth in the following table, as determined by reference to Average Excess Availability for the calendar quarter preceding each Determination Date (as defined below), as further described below:

 

 

 

 

 

 

The Applicable Margin shall be subject to reduction or increase, as applicable and as set forth in the table above, on a quarterly basis on each Determination Date, and any such reduction or increase shall be automatic and without notice to any Person.  Without limiting Administrative Agent's or Required Lenders' rights to charge Default Interest, if (a) the Borrowing Base Certificate and related reports setting forth the Borrowing Base and the basis therefor are not received by Administrative Agent on or before the applicable dates required pursuant to Section 7 of this Addendum, as applicable, or (b) an Event of Default (whether resulting from a failure to timely deliver such Borrowing Base Certificate and related reports or otherwise) occurs and, in either case, Administrative Agent or Required Lenders so elect, then, in each case, from the date such Borrowing Base Certificate or related reports were required to be delivered or the date such Event of Default occurred, as applicable, the Applicable Margin shall, at the option of Administrative Agent or the Required Lenders, be at the Level with the highest rates of interest until such time as such Borrowing Base Certificate and related reports are received by Administrative Agent and any such Event of Default is waived in accordance with the terms of the Credit Agreement; provided that, if the Applicable Margin is increased due to Loan Parties' failure to deliver such Borrowing Base Certificate and related reports setting forth the Borrowing Base and the basis therefor to Administrative Agent on or before the applicable date required pursuant to Section 7 of this Addendum, such Applicable Margin shall be reduced to the level otherwise applicable hereunder if Loan Parties deliver such Borrowing Base Certificate and related reports setting forth the Borrowing Base and the basis therefor on or before the date that is fifteen (15) days after the applicable date required pursuant to Section 7 of this Addendum as of the date immediately following such delivery.

 

 

 

 

 

Any of the foregoing to the contrary notwithstanding, from the Third Amendment Effective Date to, but not including, the first Determination Date thereafter, the Applicable Margin shall be equal to the rates set forth in Level II.  As used herein, "Determination Date" means the first day of Parent's Fiscal Quarters beginning on or about the first day of each February, May, August and November.

 

If any Borrowing Base Certificate or any other report on which Excess Availability or Average Excess Availability is determined or reported to Administrative Agent is shown to be inaccurate (regardless of whether the Credit Agreement or any Commitments are or remain in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an "Applicable Period") than the Applicable Margin actually applied for such Applicable Period, then (A) Borrowers shall immediately deliver to Administrative Agent a correct Borrowing Base Certificate or related report for the Applicable Period; (B) the Applicable Margin for such Applicable Period shall be determined by reference to such Borrowing Base Certificate or related report; and (C) Borrowers shall promptly pay Administrative Agent, ON DEMAND, the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Period and any other additional fee or charge which was based, in whole or in part, on the Applicable Margin, which payment shall be promptly applied by Administrative Agent for its own account and the account of Lenders and LC Issuer, as applicable, in accordance with the terms hereof.  If any inaccurate Borrowing Base Certificate or other report on which Excess Availability or Average Excess Availability is determined would, if corrected, have led to the application of a lower Applicable Margin for any period for which interest has already been paid, none of the Secured Parties shall be required to refund or return any portion of such interest.

 

"Average Excess Availability" means, for any period, Excess Availability for each day of such period, divided by the number of days in such period.

 

"Bank Product Reserve" means an amount determined from time to time by Administrative Agent in its discretion as a reserve for Secured Bank Product Obligations then provided to or outstanding with respect to any Loan Party or any of its Subsidiaries.

 

"Borrowing Base" means, on any date of determination, an amount, calculated in Dollars, equal to:

 

 

 

 

 

 

"Borrowing Base Certificate" means a borrowing base certificate substantially in such form as may be acceptable to Administrative Agent from time to time in its discretion.

 

"Capital Expenditures" means, with respect to any Person for any fiscal period, the aggregate amount of all expenditures incurred by such Person to acquire or repair and maintain fixed assets, plant, and equipment (including renewals and replacements) during such period, which would be required to be capitalized on the balance sheet of such Person in accordance with GAAP.

 

 

 

 

"Collection Account" means a Deposit Account established or maintained by a Borrower at Regions Bank, which Deposit Account shall be utilized solely for purposes of receiving or collecting payments made by such Borrower's Account Debtors and other Proceeds of Collateral and over which Administrative Agent shall have Control.

 

"Consolidated Cash Taxes Paid" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, the sum of all income taxes paid in cash by Parent and its Subsidiaries during such period (including, without limitation, any federal, state, local and foreign income and similar taxes) net of all income tax refunds and credits received in cash by Parent and its Subsidiaries during such period, which number for the applicable period of computation shall not be less than zero.

 

"Consolidated EBITDA" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, the sum of Parent's and its Subsidiaries' (a) Consolidated Net Income, plus (b) without duplication, the sum of the following to the extent included in the calculation of Consolidated Net Income: (i) Consolidated Interest Expense, (ii) income tax expense (including, without limitation, any federal, state, local and foreign income and similar taxes) of Parent and its Subsidiaries for such period, (iii) depreciation and amortization expense for such period and (iv) non-cash losses, minus (c) non-cash gains; provided that any non-cash item, in the event any such item becomes a cash item in a later fiscal period, shall be added back or deducted, as applicable, to the extent such item became a cash item in such later fiscal period.

 

"Consolidated Interest Expense" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, all interest expense (including that attributable to the interest component or portion of Capital Leases) of Parent and its Subsidiaries for such period.

 

"Consolidated Interest Paid" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, all interest (including that attributable to the interest component or portion of Capital Leases) paid by Parent and its Subsidiaries in cash during such period.

 

"Consolidated Net Income" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, the net income (or net deficit) of Parent and its Subsidiaries for such period (computed without regard to any extraordinary items of gain or loss); provided that there shall be excluded from Consolidated Net Income the net income (or net deficit) of any Person (other than a Subsidiary) in which Parent or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid in cash to Parent or any of its Subsidiaries by dividend or other distribution during such period.

 

"Consolidated Unfinanced Capital Expenditures" means, for any fiscal period and determined on a consolidated basis in accordance with Applicable Law and GAAP consistently applied, all Capital Expenditures made by Parent and its Subsidiaries during such period which were not financed with the proceeds of (a) Funded Indebtedness (other than Revolving Loans) or (b) the issuance of Capital Stock.

 

"Credit Card Agreements" shall have the meaning given such term in the Security Agreement.

 

"Credit Card Issuer" shall have the meaning given such term in the Security Agreement.

 

 

 

 

"Credit Card Processor" shall have the meaning given such term in the Security Agreement.

 

"Credit Card Receivables" shall have the meaning given such term in the Security Agreement.

 

"Eligible Credit Card Receivables" means, at the time of any determination thereof, each Credit Card Receivable that at all times satisfies the criteria set forth below and which has been earned by performance and represents the bona fide amounts due to a Borrower from a Credit Card Processor and/or Credit Card Issuer, and in each case originated in the Ordinary Course of Business of such Borrower.  Without limiting the foregoing, in order to be an Eligible Credit Card Receivable, an Account shall indicate no Person other than a Borrower as payee or remittance party.  In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual fees, discounts, claims or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer, Credit Card Processor, or Credit Card Issuer pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by the Loan Parties to reduce the amount of such Credit Card Receivable.  Except as otherwise determined by Administrative Agent in its Permitted Discretion, Eligible Credit Card Receivables shall not include any Credit Card Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Eligible Inventory" means, as to Inventory owned only by Borrowers, the value of such Inventory determined on the basis of the lower of (x) cost (as determined in accordance with GAAP) or, in the case of front-store, non-pharmacy inventory located in retail store locations, retail (as determined by Borrowers and acceptable to Administrative Agent) or (y) market, calculated on a first-in, first-out basis, and excluding any portion of cost attributable to intercompany profit among Parent and its Affiliates, but excluding therefrom, without duplication, any Inventory:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Eligible Pharmacy Receivables" means, at the time of any determination thereof, each Pharmacy Receivable that at all times satisfies the criteria set forth below and which has been earned by performance, and in each case originated in the Ordinary Course of Business of such Borrower.  In determining the amount to be so included, the face amount of a Pharmacy Receivable shall be reduced by, without duplication, to the extent not reflected in such face amount, (1) any and all returns, accrued rebates, discounts (which may, at Administrative Agent's option, be calculated on shortest terms), credits, allowances or sales or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Pharmacy Receivable at such time, and (2) the aggregate amount of all customer deposits, unapplied cash, and bonding subrogation rights to the extent not Cash Collateralized.  Except as otherwise determined by Administrative Agent in its Permitted Discretion, Eligible Pharmacy Receivables shall be non-recourse and adjudicated and shall not include any Pharmacy Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Eligible Pharmacy Scripts" means, at the time of any determination thereof, each Pharmacy Script that at all times satisfies the criteria set forth below and which arises and is maintained in the Ordinary Course of Business of such Borrower and which is of a type included in an appraisal of Pharmacy Scripts received by Administrative Agent in accordance with the requirements of Administrative Agent (including Pharmacy Scripts acquired by such Borrower after the date of such appraisal).  Except as otherwise determined by Administrative Agent in its Permitted Discretion, Eligible Pharmacy Scripts shall not include any Pharmacy Script:

 

 

 

 

 

 

"Excess Availability" means, at any time of determination, the amount, if any, by which (a) the lesser of (i) the Borrowing Base and (ii) the Aggregate Revolving Commitments exceeds (b) the Aggregate Revolving Obligations.

 

"Fiscal Intermediary" shall have the meaning given such term in the Security Agreement.

 

"Fixed Charge Coverage Ratio" means, at any time of determination and determined with respect to the twelve Fiscal Months most recently ending, the ratio of (a) the sum of (i) Consolidated EBITDA; minus (ii) Consolidated Unfinanced Capital Expenditures; minus (iii) Consolidated Cash Taxes Paid; minus (iv) Restricted Payments made in such period to (b) the sum of (i) Consolidated Interest Paid for such period; plus (ii) all regularly scheduled payments of principal on Funded Indebtedness made during such period.

 

"Funded Indebtedness" means, with respect to any Person and without duplication, (a) Indebtedness arising from the lending of money by another Person to such Person (regardless of whether the same is with or without recourse to the credit of such Person); (b) Indebtedness evidenced by notes, drafts, bonds, debentures, credit documents, or similar instruments; (c) Indebtedness which accrues interest or is of a type upon which interest or finance charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business); (d) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty; (e) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances; (f) the Specified Value of all Hedging Agreements; (g) all mandatory obligations of such Person to purchase, redeem, retire, defease, or otherwise make any payment in respect of any Capital Stock of such Person; (h) Indebtedness which was issued or assumed as full or partial payment for Property or services; (i) the principal and interest portions of all rental obligations of such Person under any synthetic lease, tax retention operating lease, off-balance sheet loan, or similar off-balance sheet financing where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP; and (j) guaranties by such Person of any Indebtedness of the foregoing types owing by another Person.

 

 

 

"Health Care Laws" shall have the meaning given such term in the Security Agreement.

 

"Inventory Reserve" means, without duplication of any other reserve or any item that is otherwise addressed or excluded through eligibility criteria, an amount determined from time to time by Administrative Agent in its Permitted Discretion as a reserve for changes in the merchantability of any Eligible Inventory in the Ordinary Course of Business or such other factors that may negatively impact the value of Eligible Inventory, including changes in salability, obsolescence, seasonality, theft, shrinkage, imbalance, changes in composition or mix, markdowns, vendor chargebacks, damage, or, if such Inventory consists of Goods, the price of which is ascertainable from, published by, or quoted by one or more recognized exchanges, any decrease in any such exchange's price therefor.

 

"Maximum Credit" means, at any time of determination, the lesser of (i) the Borrowing Base and (ii) the Aggregate Revolving Commitments.

 

"NOLV" means, as to any Property, the expected dollar amount to be realized at an orderly, negotiated sale of such Property, net of all operating expenses, commissions and other liquidation expenses, as determined by Administrative Agent from time to time based on the most recent Qualified Appraisal of such Property.

 

"NOLV Percentage" means, at any time of determination, with respect to any Eligible Inventory and expressed as a percentage, the amount of the value of such Eligible Inventory expected to be realized at an orderly, negotiated sale of such Eligible Inventory, net of all operating expenses, commissions and other liquidation expenses, divided by the value of such Eligible Inventory set forth in Loan Parties' inventory perpetual listing prepared at a SKU level, as determined by Administrative Agent from time to time based on the most recent Qualified Appraisal stating the NOLV of such Eligible Inventory and, with respect to the value of such Eligible Inventory, determined on the basis of the lower of cost or retail (as applicable) and market, recognizing that different categories of Inventory may have different NOLV Percentages, including, without limitation, as a result of the impact of a category or categories being valued at the lower of cost or market, while another category or categories may be valued at the lower of retail or market.

 

"Overadvance" means, at any time of determination, the amount, if any, by which the Aggregate Revolving Obligations exceed the Borrowing Base.

 

"Overadvance Loan" means a Base Rate Revolving Loan or, to the extent any such Overadvance Loan constitutes a Swingline Loan, an LIR Revolving Loan made when an Overadvance exists or is caused by the funding thereof.

 

"Permitted Discretion" means a determination made in good faith and in the exercise of reasonable business judgment (from the perspective of a secured, asset-based lender extending credit of similar amounts and types to similar businesses, considered without regard to any course of dealing).

 

"Permitted Location" shall have the meaning given such term in the Security Agreement.

 

"Pharmacy Receivables" shall have the meaning given such term in the Security Agreement.

 

"Pharmacy Script" shall have the meaning given such term in the Security Agreement.

 

 

 

"Pharmacy Scripts Availability" means, at any time, ten percent (10%) of the product of the average per-Pharmacy Script NOLV of Pharmacy Scripts based on the most recent Qualified Appraisal thereof,  multiplied by (ii) the number of Eligible Pharmacy Scripts for the period of twelve (12) calendar months most recently ended.

 

"Qualified Appraisal" means, with respect to any Property, an appraisal of such Property conducted in a manner and with such scope and using such methods as are acceptable to Administrative Agent by an appraiser selected by, or acceptable to, Administrative Agent, the results of which are acceptable to Administrative Agent in all respects, all in the Permitted Discretion of Administrative Agent.

 

"Rent and Charges Reserve" means (a) with respect to any leased retail store location, if the Inventory of a Loan Party located at such leased retail store location is subject to the Lien of a Third Party arising by operation of law that is pari passu or superior to the Lien of Administrative Agent, a reserve equal to two months' rent at such leased retail store location, and (b) with respect to any other location of a Loan Party, without duplication, an amount determined from time to time by Administrative Agent in its Permitted Discretion as a reserve for (i) rent, fees, Royalties, charges, and other amounts owing by a Borrower to any Third Party, unless such Person has executed and delivered a Third Party Agreement, and (ii) the amount of all accrued but unpaid or past due rent, fees, Royalties, charges, or other amounts owing by a Borrower to Third Parties.

 

"Reserves" means the sum of (without duplication) (a) the Inventory Reserve; (b) the aggregate Rent and Charges Reserve; (c) the Bank Product Reserve; (d) reserves for Royalties; (e) the aggregate amount of liabilities secured by Liens upon any Collateral which are senior to Administrative Agent's Liens (but the imposition of any such reserve shall not waive a Default or an Event of Default arising therefrom); (f) reserves for price adjustments and damages, to the extent such reserve relates to Accounts or Inventory included in Eligible Credit Card Receivables, Eligible Pharmacy Receivables or Eligible Inventory, as applicable, including returns, discounts, claims (including warranty claims), credits, and allowances of any nature which are not paid pursuant to the reduction of accounts; (g) reserves for special order goods and deferred shipment sales, to the extent such reserve relates to Accounts or Inventory included in Eligible Credit Card Receivables, Eligible Pharmacy Receivables or Eligible Inventory, as applicable; (h) reserves for accrued but unpaid ad valorem, excise, and personal property tax liability and for sale, use, or similar taxes; (i) reserves for accrued but unpaid interest on the Obligations; (j) reserves for any portion of the Obligations which Administrative Agent or any Lender pays in accordance with authority granted in any Loan Document (except to the extent such payment is made with the proceeds of a deemed Revolving Loan); (k) reserves for all customer deposits or other prepayments held by a Borrower; (l) reserves to reflect events, conditions, contingencies, or risks which, as determined by Administrative Agent, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral, its value, or the amount that might be received by Administrative Agent from the sale or other disposition or realization upon such Collateral; (ii) the obligations or liabilities of any Loan Party; or (iii) the Liens and other rights of Administrative Agent or any other Secured Party in the Collateral (including the enforceability, perfection, and priority thereof); (m) reserves to reflect Administrative Agent's belief that any collateral report or financial information furnished by or on behalf of a Loan Party to Administrative Agent is or may have been incomplete, inaccurate, or misleading in any material respect; (n) reserves in respect of any state of facts which Administrative Agent determines constitutes a Default or an Event of Default; (o) reserves to reflect testing variances identified as part of Administrative Agent's periodic field examinations or to adjust the value of any Inventory or Pharmacy Scripts based on the results of, or failure to obtain, a Qualified Appraisal; and (p) such other reserves that Administrative Agent may establish from time to time for such purposes as Administrative Agent shall deem necessary in its Permitted Discretion.  Except to the extent otherwise qualified (either in this definition or any related definition used in this definition) or otherwise expressly provided in this Addendum, Administrative Agent may implement Reserves and establish the amounts thereof (from time to time) in its Permitted Discretion.  Administrative Agent may establish Reserves as a percentage of any applicable amount or as an amount of money.

 

 

 

"Royalties" means all royalties, fees, expense reimbursement and other amounts payable by a Borrower under a License.

 

"Specified Value" means, for any Hedging Agreement and on any date of determination, an amount equal to:

 

 

 

 

"Third Party" shall have the meaning given such term in the Security Agreement.

 

"Third Party Agreement" shall have the meaning given such term in the Security Agreement.

 

"Third Party Payor" shall have the meaning given such term in the Security Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notwithstanding anything to the contrary set forth in Section 9(a), (b) or (c), Administrative Agent shall not exercise dominion over any Collection Account or related lockbox unless an Account Control Period exists.  During an Account Control Period, the collected balance in the Collection Accounts as of the end of each Business Day shall, at the beginning of the next Business Day, be applied, first, to the principal balance of the Revolving Loans (unless such funds are otherwise required to be applied to some other portion of the Obligations in accordance with the Credit Agreement) and then, to other Obligations, as determined by Administrative Agent.  Each Loan Party irrevocably waives the right to direct the application of any Payment Items or Proceeds of Collateral during an Account Control Period and agrees that Administrative Agent shall have the continuing, exclusive right during an Account Control Period to apply, reverse and reapply the same against the Obligations, in such order or manner as Administrative Agent deems advisable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURES ON FOLLOWING PAGES.]

 

 

 

 

 

IN WITNESS WHEREOF, this Addendum has been executed and delivered under seal as of the date set forth above.

 

	BORROWERS:
	FRED'S, INC., a Tennessee corporation,
	as "Borrower Agent" and a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]
	FRED'S STORES OF TENNESSEE, INC.,
	a Tennessee corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]
	FRED'S DOLLAR STORE OF ▇▇▇▇▇▇, INC.,
	a Mississippi corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]
	FRED'S CAPITAL FINANCE INC.,
	a Delaware corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]

 

 

 

[Signatures continue on following pages.]

 

 

 

	FRED'S CAPITAL MANAGEMENT COMPANY,
	a Delaware corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]
	NATIONAL PHARMACEUTICAL NETWORK,
	INC., a Florida corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]
	▇▇▇▇▇▇-▇▇▇▇ DRUG STORE, INC.,
	a Tennessee corporation, as a "Borrower"
	By:	/s/ ▇▇▇▇ ▇▇▇▇
	Name:	▇▇▇▇ ▇▇▇▇
	Title:	Chief Financial Officer
	[CORPORATE SEAL]

 

 

 

[Signatures continue on following pages.]

 

 

 

 

	ADMINISTRATIVE AGENT, LC ISSUER AND
	LENDERS:
	REGIONS BANK, an Alabama bank,
	as "Administrative Agent", "Swingline Lender",
	"LC Issuer" and a "Lender"
	By:	/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
	Name:	▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
	Title:	Managing Director

 

[Signatures continue on following page.]

 

 

 

 

 

 

 

	BANK OF AMERICA, N.A., a national banking
	association, as a "Lender"
	By:	/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
	Name:	▇▇▇▇▇ ▇▇▇▇▇▇
	Title:	Director