Exhibit 10.5
FIRST AMENDMENT TO FINANCING AGREEMENT
THIS FIRST AMENDMENT TO FINANCING AGREEMENT (this
"Amendment"), dated as of April 13, 2000, is entered into by and between FACTORY
2-U STORES, INC., a Delaware corporation (the "Company"), and THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation ("CITBC"), in its capacity
as Lender and Agent under the Financing Agreement referred to below, with
reference to the following facts:
RECITALS
A. The Company and CITBC, in its capacity as Lender and Agent,
are parties to that certain Financing Agreement, dated as of March 3, 2000 (the
"Financing Agreement"), pursuant to which CITBC as Lender and Agent have
provided the Company with certain secured loans.
B. The Company, and CITBC, in its capacity as Lender and
Agent, wish to amend the Financing Agreement (i) to change the definition of
Required Lenders, (ii) to require the Company to undertake an annual physical
inventory, and (iii) to restrict the Agent's ability to make overadvances, all
as further described below.
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. All initially capitalized terms used
in this Amendment without definition shall have the respective meanings assigned
thereto in the Financing Agreement.
2. Amendment to Definition of "Required Lenders". The
definition of "Required Lenders" as described in Section 1of the Financing
Agreement is hereby amended such that the definition shall read in full as
follows:-
"Required Lenders shall mean Lenders holding more
than fifty percent (50%) of the outstanding loans, advances, extensions
of credit and commitments to the Company hereunder, except that where
there are one or more Lenders not affiliated with Agent, it shall
include at least one Lender which is not also the Agent or an affiliate
of the Agent."
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3. Additional Duties of the Company. Section 7.13 of the
Financing Agreement is hereby amended to add the following additional language
to the end of Section 7.13:
"In addition, the Company agrees to undertake not
less than one physical inventory per year. The Company will provide to
the Agent the results of the physical inventory."
4. Restriction on the Agent's Ability to make Overadvances
Section 14.10(e) of the Financing Agreement is amended to read in full as
follows:
"(e) intentionally make any Revolving Credit Loan or
assist in opening any Letter of Credit hereunder if after giving effect
thereto the total of Revolving Loans and Letters of Credit hereunder
for the Company would exceed 100% of the maximum amount available under
Section 3 hereof, provided, however, the Agent, without the consent of
all Lenders, for not more than one 60 consecutive day period during any
180 consecutive day period, may make such loans or assist in the
opening of such Letters of Credit where the total of Revolving Loans
and Letters of Credit hereunder for the Company during such period does
not exceed 110% of the maximum amount available under Section 3
hereof."
5. Condition Precedent. The effectiveness of this
Amendment shall be subject to the prior satisfaction of the following condition:
(a) Execution and Delivery of this Amendment. CITBC
shall have received this Amendment, duly executed by the Company.
7. Otherwise Not Affected. Except as expressly amended hereby, the
Financing Agreement shall remain unaltered and in full force and effect.
8. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall constitute an original, and all of which,
taken together, shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment
by their respective duly authorized officers as of the date first set forth
above.
FACTORY 2-U STORES, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
By /s/ Xxxx X. Xxxxxxx
Title: Assistant Secretary
THE CIT GROUP/BUSINESS CREDIT, INC., as
Agent and Lender
By /s/ Xxxx Xxxx
Title: Assistant Vice President
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