EXHIBIT 10.8
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND CONSENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND CONSENT (this
"Amendment"), dated as of February 9, 2005, is entered into between CONGRESS
FINANCIAL CORPORATION (SOUTHWEST), a Texas corporation ("Lender"), and CITI
TRENDS, INC., a Delaware corporation ("Borrower").
RECITALS
A. Borrower and Lender have previously entered into that certain Loan and
Security Agreement dated April 2, 1999, as amended by that certain First
Amendment to Loan and Security Agreement dated June 22,2000, that certain Second
Amendment to Loan and Security Agreement dated November 30,2000, that certain
letter agreement dated August ____, 2001 regarding Borrower's name change, and
that certain Third Amendment to Loan and Security Agreement dated January
___, 2003 (as amended, the "Loan Agreement"), pursuant to which Lender has made
certain loans and financial accommodations available to Borrower. Terms used
herein without definition shall have the meanings ascribed to them in the Loan
Agreement.
B. Borrower desires to sell its common stock in an initial public offering
(the "IPO"). Borrower has requested that Lender consent to the IPO and amend the
Loan Agreement, and Lender is willing to provide such consent and to amend the
Loan Agreement, all upon the terms and conditions set forth below.
C. Borrower is entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of Lender's rights
or remedies as set forth in the Loan Agreement is being waived or modified by
the terms of this Amendment.
AMENDMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to Loan Agreement.
(a) Section 3.6 is hereby amended and restated in its entirety to
read as follows:
"3.6 Unused Line Fee. Borrower shall pay to Lender monthly an
unused line fee at a rate equal to three-eighths of one
percent (0.375%) per annum calculated upon the amount by which
Fifteen Million Dollars ($15,000,000) exceeds the average
daily principal balance of the outstanding Revolving Loans and
Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Obligations
are outstanding, which fee shall be payable on the first day
of each month in arrears."
(b) Section 9.15 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
"9.15 Adjusted Tangible Net Worth. Borrower shall maintain its
Adjusted Tangible Net Worth, measured as at the end of each
fiscal quarter, at an amount not less than the amount set
forth opposite such quarter:
Minimum Adjusted Tangible
-------------------------
Fiscal Quarter Ending Net Worth
--------------------- ------------
April 30, 2005 $15,000,000
July 31,2005 $17,500,000
October 31,2005 $20,000,000
January 31,2006 $25,000,000
April 30, 2006 $28,000,000
July 31,2006 $28,000,000
October 31,2006 $28,000,000
January 31,2007 $34,000,000
April 30, 2007 $37,000,000
; provided, however, if Borrower sells its common stock in an
initial public offering, Borrower and Lender will enter into
an amendment to this Agreement, in form and substance
satisfactory to Lender, to reset this minimum Adjusted
Tangible Net Worth covenant as of the last day of each fiscal
quarter of Borrower after December 31,2005 at levels as
reasonably determined by Lender based upon the Borrower's
projections for such time periods."
(c) The first sentence of Section 12.l (a) of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:
"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 April 2, 2007."
(d) Sections 12.l (c)(i) and (ii) of the Loan Agreement are hereby
amended and restated in their entirely to read as follows:
Amount Period
---------- --------
(i) 1% of the Maximum Credit from the date of this Agreement
to and including Xxxxx 0, 0000
(xx) 5% of the Maximum Credit from April 3, 2004 to and
including April 1, 2007
(c) The last paragraph of Section 12.1(c) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
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"Notwithstanding the foregoing, the early termination fee
shall be waived (a) if the termination is due to the
refinancing of the Obligations by Wachovia Bank, National
Association and if at the time of such refinancing there is no
Event of Default or event or circumstance which, with notice
or passage of time or both, would become an Event of Default
under this Agreement, or (b) if Borrower chooses to exercise
the right to terminate this Agreement and the other Financing
Agreements upon any assignment by Lender of its rights or
obligations under or related to this Agreement or the other
Financing Agreements to a non-U.S. Lender, defined as any
Lender that is not a "United States person," within the
meaning of Section 7701(a)(30) of the Code."
2. Consent. Lender hereby consents to the IPO and acknowledges and agrees
that consummation of the IPO shall not constitute an Event of Default under
Section 10.1(l) of the Loan Agreement.
3. Effectiveness of this Amendment. Lender must have received the
following items, in form and content acceptable to Lender, before this Amendment
is effective, and before Lender is required to extend any credit to Borrower as
provided for by this Amendment.
(a) Amendment. This Amendment, fully executed in a sufficient number
of counterparts for distribution to all parties.
(b) Extension Fee. An amendment fee in the amount of Forty Thousand
Dollars ($40,000), which fee is fully earned as of and due and payable on the
date hereof.
(c) Representations and Warranties. The representations and
warranties set forth herein and in the Loan Agreement must be true and correct.
(d) Other Required Documentation. All other documents and legal
matters in connection with the transactions contemplated by this Amendment shall
have been delivered or executed or recorded and shall be in form and substance
satisfactory to Lender.
4. Representations and Warranties. Borrower represents and warrants as
follows:
(a) Authority. Borrower has the requisite corporate power and
authority to execute and deliver this Amendment, and to perform its obligations
hereunder and under the Financing Agreements (as amended or modified hereby) to
which it is a party. The execution, delivery and performance by Borrower of this
Amendment have been duly approved by all necessary corporate action and no other
corporate proceedings are necessary to consummate such transactions.
(b) Enforceability. This Amendment has been duly executed and
delivered by Borrower. This Amendment and each Financing Agreement (as amended
or modified hereby) is the legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms, and is in full force
and effect.
(c) Representations and Warranties. The representations and
warranties contained in each Financing Agreement (other than any such
representations or warranties that,
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by their terms, are specifically made as of a date other than the date hereof)
are correct on and as of the date hereof as though made on and as of the date
hereof.
(d) Due Execution. The execution, delivery and performance of this
Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.
(e) No Default. No event has occurred and is continuing that
constitutes an Event of Default.
(f) No Duress. This Amendment has been entered into without force or
duress, of the free will of Borrower. Borrower's decision to enter into this
Amendment is a fully informed decision and Borrower is aware of all legal and
other ramifications of such decision.
(g) Counsel. Borrower has read and understands this Amendment, has
consulted with and been represented by legal counsel in connection herewith, and
has been advised by its counsel of its rights and obligations hereunder and
thereunder.
5. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of New York (without giving effect to principals of conflicts
of law).
6. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Amendment.
7. Reference to and Effect on the Financing Agreements.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "hereof or
words of like import referring to the Loan Agreement, and each reference in the
other Financing Agreements to "the Loan Agreement", "thereof" or words of like
import referring to the Loan Agreement, shall mean and be a reference to the
Loan Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Loan Agreement and all
other Financing Agreements, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed and shall
constitute the legal, valid, binding and enforceable obligations of Borrower to
Lender.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Lender under any of the Financing Agreements, nor
constitute a waiver of any provision of any of the Financing Agreements.
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(d) To the extent that any terms and conditions in any of the
Financing Agreements shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this Amendment, such
terms and conditions are hereby deemed modified or amended accordingly to
reflect the terms and conditions of the Loan Agreement as modified or amended
hereby.
8. Ratification. Borrower hereby restates, ratifies and reaffirms each and
every term and condition set forth in the Loan Agreement, as amended hereby, and
the Financing Agreements effective as of the date hereof.
9. Estoppel. To induce Lender to enter into this Amendment and to continue
to make advances to Borrower under the Loan Agreement, Borrower hereby
acknowledges and agrees that, as of the date hereof, there exists no Event of
Default and no right of offset, defense, counterclaim or objection in favor of
Borrower as against Lender with respect to the Obligations.
10. Integration. This Amendment, together with the other Financing
Agreements, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.
11. Severability. In case any provision in this Amendment shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remainder of this Amendment and the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
[Remainder of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.
CITI TRENDS, INC.,
a Delaware corporation
By: /s/ Xxx Xxxxxx
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Name: Xxx Xxxxxx
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Title: CFO
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CONGRESS FINANCIAL CORPORATION
(SOUTHWEST),
a Texas corporation
By: /s/ Xxx X. Xxxxx
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Name: Xxx X. Xxxxx
-----------------------------------
Title: Vice President
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