EXHIBIT 10
SIXTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Sixth Amendment to Revolving Credit Agreement (this "Amendment"),
made as of the 24th of July, 1998, among LOT$OFF CORPORATION (the "Parent"),
50-OFF TEXAS STORES, L.P., 50-OFF OPERATING COMPANY, and 50-OFF MULTISTATE
OPERATIONS, INC., as Borrowers (together with the Parent, the "Borrowers"), and
GENERAL ELECTRIC CAPITAL CORPORATION, as Lender (the "Lender"),
W I T N E S S E T H
WHEREAS, the Borrowers and the Lender are parties to that certain
Revolving Credit Agreement dated as of June 16, 1997, as amended by that certain
First Amendment to Revolving Credit Agreement dated as of August 28, 1997, by
that certain Second Amendment to Revolving Credit Agreement dated as of December
22, 1997, by that certain Third Amendment to Revolving Credit Agreement dated as
of February 15, 1998, by that certain Fourth Amendment to Revolving Credit
Agreement dated as of April 17, 1998, and by that certain Fifth Amendment to
Revolving Credit Agreement dated as of June 12, 1998 (as further amended,
modified, restated or supplemented from time to time, the "Credit Agreement");
and
WHEREAS, the Parent desires to issue (i) unsecured Indebtedness in an
original principal amount not to exceed $2,000,000 in the aggregate in favor of
various purchasers of the Indebtedness (collectively, the "Subordinated
Lenders") pursuant to the terms and conditions of those certain Subordinated
Notes issued by the Parent from time to time (collectively, as to all such
Subordinated Notes, the "Subordinated Notes"), which Indebtedness shall be
subordinated to the Obligations as set forth therein, and (ii) in connection
with the issuance of the Subordinated Notes, warrants to purchase up to 400,000
shares of common stock of the Parent (collectively, "the "Warrants"); and
WHEREAS, the Borrowers have requested, and the Lender as agreed, to
amend the Credit Agreement as set forth herein and on the terms and conditions
set forth herein, in order to permit, among other things, the Parent to issue
the Indebtedness in respect to the Subordinated Notes and to issue the Warrants
and the
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shares of common stock of the Parent in connection with the exercise of the
Warrants;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
that all capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement, and further agree as follows:
1. AMENDMENTS TO ARTICLE 1.
a. Article 1 of the Credit Agreement is hereby amended by
adding the following definitions of "Sixth Amendment Date", Subordinated
Indebtedness", "Subordinated Lenders" and "Subordinated Notes" and Warrants" in
appropriate alphabetical order:
" 'SIXTH AMENDMENT DATE' shall mean July 24, 1998.
" 'SUBORDINATED INDEBTEDNESS' shall mean the Indebtedness issued under
the Subordinated Notes.
" 'SUBORDINATED LENDERS' shall mean those purchasers of the
Subordinated Notes identified on Schedule 1B to this Agreement as
supplemented by the Borrowers from time to time to reflect additional
purchasers, if any, of Subordinated Notes.
" 'SUBORDINATED NOTES' shall mean those certain Subordinated Notes
issued or to be issued by Parent in favor of the Subordinated Lenders in an
original principal amount not to exceed $2,000,000 in the aggregate, each
in substantially the form attached hereto as EXHIBIT H-1.
" 'WARRANTS' shall mean those certain Warrants, each in substantially
the form attached hereto as EXHIBIT H-2, issued or to be issued to the
Subordinated Lenders in connection with the issuance of the Subordinated
Notes, which Warrants shall be exercisable for up to an aggregate of
400,000 shares of common stock of the Parent."
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b. Article 1 of the Credit Agreement is hereby further amended
by deleting the existing definition of "Restricted Payment" and by substituting
the following in lieu thereof:
" 'RESTRICTED PAYMENT' shall mean, with respect to any Person (i)
the declaration of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or
assets in respect of such Person's Stock, (ii) any payment on account
of the purchase, redemption or other retirement of such Person's Stock
or any other payment or distribution made in respect thereof, either
directly or indirectly, (iii) any payment, loan, contribution, or
other transfer of funds or other property to any holder of Stock of
any Borrower or any Subsidiary of any such Person except for
reasonably equivalent value or (iv) any direct or indirect payment to
any Person on account of the Subordinated Indebtedness."
2. AMENDMENT TO ARTICLE 4. Article 4 of the Credit Agreement is
hereby amended by adding the following new Section 4.29 at the end thereof:
"4.29 SUBORDINATED INDEBTEDNESS. Except as set forth on
Schedule 1B attached hereto, the Parent has not issued any
Subordinated Indebtedness. The original principal amount of all
Subordinated Indebtedness issued or to be issued by the Parent, if
any, will not exceed $2,000,000 in the aggregate."
3. AMENDMENT TO SECTION 6.8. Section 6.8 of the Credit Agreement
is hereby amended by deleting such section in its entirety and by replacing it
with the following:
"6.8 AGREEMENTS. Parent shall perform and shall cause each of
its Subsidiaries to perform within all required time periods (after
giving effect of any applicable grace periods), all of its obligations
and enforce all of its rights under each agreement, including, without
limitation, leases, the Warrants and the Subordinated Notes, to which
it is a party, where the failure to so perform and enforce would have
a Material Adverse Effect. Neither Parent nor any Subsidiary of
Parent shall terminate or modify in any manner adverse to any such
company any provision of any agreement (including,
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without limitation, the Warrants and Subordinated Notes) to which it is a
party which termination or modification could have a Material Adverse
Effect. Parent shall not, without the prior written consent of Lender,
enter into any amendment of, or agree to or accept any waiver, of any of
the provisions of the Warrants or the Subordinated Notes."
4. AMENDMENT TO SECTION 6.9. Section 6.9 of the Credit Agreement is
hereby amended by adding the following sentence to the end thereof:
"Upon the issuance of any Subordinated Indebtedness subsequent to the
Sixth Amendment Date as may be permitted pursuant to Section 7.7 of
this Agreement, Borrower Representative shall also provide to Lender
executed copies of each Subordinated Note and each Warrant executed
and delivered by Parent in connection with such issuance."
5. AMENDMENT TO SECTION 7.7. Section 7.7 of the Credit Agreement
is hereby amended by deleting such section in its entirety and by replacing it
with the following:
"7.7 NEW INDEBTEDNESS. Parent shall not, and shall cause each
Subsidiary of Parent not to, create, incur, assume or permit to exist
or incur any Indebtedness except: (a) the Obligations; (b) Deferred
Taxes; (c) Capital Lease Obligations and Indebtedness secured by
purchase money Liens on Equipment permitted under clause (v) of the
definition of "Permitted Encumbrances" in a maximum aggregate amount
outstanding not to exceed $150,000 outstanding at any time; (d)
Indebtedness existing on the Closing Date and set forth in SCHEDULE
7.7 and Indebtedness permitted under Section 7.8 below; (e) unsecured
current obligations for trade debt incurred in the ordinary course of
Parent's and such Subsidiary's business, and obligations of the Parent
and its Subsidiaries for the payment of rental for any property (real,
personal or mixed, tangible or intangible) under leases, subleases or
similar arrangements (other than Capital Leases) incurred in the
ordinary course of Parent's business; and (f) from and after the Sixth
Amendment Date, unsecured Subordinated Indebtedness in an aggregate
principal amount not to exceed $2,000,000, issued by Parent to the
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Subordinated Lenders pursuant to the terms and conditions of the
Subordinated Notes."
6. AMENDMENT TO SECTION 7.13. Section 7.13 of the Credit
Agreement is hereby amended by deleting such section in its entirety and by
replacing it with the following:
"7.13 RESTRICTED PAYMENTS. Parent shall not and shall cause
each Subsidiary of Parent not to make any Restricted Payments
(including any refund or cancellation of subscriptions under the
Rights Offering which would cause the total amount received by the
Parent thereunder to be less than $3,050,000), except (a) Parent's
Subsidiaries may make Restricted Payments to Parent, (b) Parent may
pay dividends as required by the terms of its Series A preferred stock
to the holders thereof and (c) so long as no Default or Event of
Default then exists or would be caused thereby and subject to the
terms of subordination contained in the Subordinated Notes, Parent may
make payments of interest, whether accrued or scheduled, to the
Subordinated Lenders in respect of the Subordinated Indebtedness."
7. AMENDMENT TO SECTION 9.1. Section 9.1 of the Credit Agreement
is hereby amended by deleting subsection (c) thereof in its entirety and by
replacing such subsection with the following:
"(c) (i) There shall occur any default (which default is not or
waived within any applicable cure period) under the Subordinated Notes, or
any one of them or (ii) there shall occur a default by any Borrower under
any other agreement, document or instrument to which any Borrower is a
party or by which any Borrower or its property is bound, which default is
not cured before the expiration of any applicable grace or curative period
under such agreement, document or instrument or as otherwise may be granted
to such Borrower by the obligee, and such default (x) involves the failure
to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) in respect of any Indebtedness of such Borrower in an
aggregate amount exceeding $100,000, except for payments lawfully withheld
by such Borrower as a setoff in connection with a good faith dispute
between such Borrower and the holder of such Indebtedness, or (y) causes
(or permits any holder of such Indebtedness or a trustee to cause) such
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Indebtedness, or a portion thereof in an aggregate amount exceeding
$100,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment; or"
8. AMENDMENT TO SCHEDULE 4.20. Schedule 4.20 to the Credit
Agreement is hereby modified and amended by deleting the existing schedule in
its entirety and by substituting the attached Schedule 4.20 in lieu thereof.
9. NO OTHER AMENDMENT. Except for the amendments expressly set forth
above, the text of the Credit Agreement and all other Loan Documents shall
remain unchanged and in full force and effect. The Borrowers acknowledge and
expressly agree that the Lender reserves the right to, and does in fact, require
strict compliance with all terms and provisions of the Credit Agreement and the
other Loan Documents.
10. REPRESENTATION AND WARRANTIES. Each Borrower hereby
represents and warrants in favor of the Lender as follows:
(a) Such Borrower has the corporate power and authority (i) to enter
into this Amendment and (ii) to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more authorized signatories of such Borrower, and
constitutes the legal, valid and binding obligation of such Borrower,
enforceable against it in accordance with its terms;
(c) The execution and delivery of this Amendment and performance by
such Borrower under the Credit Agreement, as amended hereby, do not and
will not require the consent or approval of any regulatory authority or
governmental authority or agency having jurisdiction over such Borrower
which has not already been obtained, nor contravene or conflict with the
charter documents of such Borrower, or the provision of any statute,
judgment, order, indenture, instrument, agreement, or undertaking, to which
such Borrower is party or by which any of its properties are or may become
bound;
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(d) The only Subordinated Indebtedness to be issued as of the
effective date hereof is as set forth on SCHEDULE 1B to the Credit
Agreement; and
(e) As of the date hereof, and after giving effect to this Amendment
(i) no Default or Event of Default exists under the Credit Agreement or is
caused by this Amendment, and (ii) to the best of the Borrowers' knowledge,
each representation and warranty set forth in Article 4 of the Credit
Agreement is true and correct in all material respects, except (x) to the
extent previously fulfilled in accordance with the terms of the Credit
Agreement, as amended hereby, or (y) to the extent relating specifically to
the Closing Date.
11. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment shall
become effective as of the date first written above upon the receipt by the
Lender of (a) a duly executed original signature page to this Amendment from the
Borrowers and (b) a fully executed copy of each Subordinated Note and each
Warrant, and all other documents, if any, related to the issuance of the
Subordinated Indebtedness, issued and outstanding as of the date hereof.
12. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Georgia, without reference to the
conflicts or choice of law principles thereof.
13. LOAN DOCUMENT. This Amendment shall be deemed to be a Loan
Document for all purposes.
14. EXPENSES. The Borrowers agree to pay all reasonable expenses of
the Lender incurred in connection with this Amendment, including, without
limitation, all fees and expenses of counsel to the Lender.
15. COUNTERPARTS. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, each of which shall
be deemed an original and all of which, taken together, shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart of
this Amendment by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof.
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IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute and deliver this
Amendment as of the day and year first written above.
BORROWERS: LOT$OFF CORPORATION, a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx XX
------------------------------------------
Xxxxxxx X. Xxxxxxxx XX
President
50-OFF MULTISTATE OPERATIONS, INC., a
Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxxxx XX
------------------------------------------
Xxxxxxx X. Xxxxxxxx XX
President
50-OFF OPERATING COMPANY, a Nevada
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx XX
------------------------------------------
Xxxxxxx X. Xxxxxxxx XX
President
50-OFF TEXAS STORES, L.P., a Texas
limited partnership
By: 50-OFF Texas Management, Inc.,
a Nevada corporation,
its managing general partner
By: /s/ Xxxxxxx X. Xxxxxxxx XX
------------------------------------------
Xxxxxxx X. Xxxxxxxx XX
President
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
Senior Vice President of GE Capital
Commercial Finance, Inc., being
duly authorized
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EXHIBIT "H-1"
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY OTHER APPLICABLE SECURITIES LAWS. THIS NOTE MAY NOT BE TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND OTHER APPLICABLE SECURITIES LAWS
OR AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL TO THE COMPANY TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE PAYMENT OBLIGATIONS EVIDENCED BY THIS NOTE ARE SUBORDINATE TO THE CLAIMS OF
GENERAL ELECTRICAL CAPITAL CORPORATION AS MORE COMPLETELY SET FORTH HEREIN.
SENIOR SUBORDINATED NOTE
LOT$OFF Corporation (the "Company") promises to pay to or
registered assigns ("Holder"), the principal sum of Dollars
on August 15, 2000 as evidenced by this Senior Subordinated Note (the "Note").
1. INTEREST. The Company promises to pay interest on the principal
amount at a rate per annum equal to 9.25%. Interest will accrue from the date
on which this Note is issued and will be payable semi-annually commencing on
February 15, 1999 and at maturity. Interest will be computed on the basis of a
365-day year.
2. REDEMPTION. This Note is not redeemable at the option of either the
Company or the Holder.
3. SUBORDINATION. (a) The Holder hereby subordinates any and all claims
now or hereafter owing to it by the Company under this Note or otherwise to any
and all Senior Debt (including, without limitation, interest, fees, costs or
other payments on the Senior Debt paid or accrued at the commencement of a
bankruptcy or similar insolvency proceeding and whether or not such claims are
deemed allowable or recoverable under any such bankruptcy or similar insolvency
proceeding) and agrees that all Senior Debt due General Electric Capital
Corporation ("GECC") shall be paid in full in cash or otherwise satisfied to the
satisfaction of GECC and it's commitments to advance funds to the Company shall
be terminated before any payment may be made on amounts under this Note with
respect to principal, but not with respect to interest so long as no default or
event of default exists and is continuing under the GECC Agreements (as that
term is defined below), at which time interest and other payments may not be
paid under the Note.
(b) As used with respect to this Note, the term "Senior Debt" includes the
principal and other amounts outstanding from time to time owing by the Company
and certain of its
9
affiliates and subsidiaries to GECC as referenced by (i) that certain
$15,000,000 Revolving Credit Agreement dated as of June 16, 1997 by and among
the Company, 50-Off Texas Stores, L.P., 50-Off Multi-State Operations, Inc. and
50-Off Operating Company, as Borrowers, and GECC, as Lender, and (ii) that
certain Agreement of Limited Partnership of W3L.P. among Giant Sequoia
Corporation, as general partner, Mountain Laurel Corporation, as limited partner
and GECC, as preferred limited partner (collectively as to (i) and (ii), the
"GECC Agreements"), plus interest, fees, costs, expenses and other sums
chargeable to the Company by GECC pursuant to the GECC Agreements (including
interest, fees, costs, charges and other expenses which may accrue or may not be
paid with respect to any bankruptcy or similar insolvency proceedings which may
be filed by or against the Company irrespective of whether such interest, fees,
costs and expenses are deemed allowed or recoverable in any such proceeding),
together with any renewals, extensions, restructurings, modification, amendment,
refinancing or supplements thereto, and any other obligations owing by the
Company or its affiliates and subsidiaries to GECC under the GECC Agreements or
otherwise. The Senior Debt due GECC is secured debt. "Senior Debt" also
includes any other secured debt of the Company presently outstanding or
hereafter incurred and all renewals, extensions, refundings, restructurings,
amendments and modifications thereof.
(c) In case any funds shall be paid or delivered to the Holder in
violation of the foregoing subordination provision before the Senior Debt due
GECC shall have been paid in full in cash or otherwise satisfied to GECC s
satisfaction, such funds shall be held in trust by the Holder for and
immediately paid and delivered to GECC.
(d) The Holder agrees that the subordination of this Note to the Senior
Debt shall continue during any insolvency, receivership, bankruptcy,
dissolution, liquidation or other similar proceeding whether voluntary or
involuntary by or against the Company.
(e) Furthermore, Debt is any indebtedness, contingent or otherwise, in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of the Company or only to a portion thereof), or evidenced
by bonds, notes (including this Note), debentures or similar instruments or
letters of credit, or representing the balance deferred and unpaid of the
purchase price of any property or interest therein, except any such balance that
constitutes a trade payable, of and to the extent such indebtedness would appear
as a liability upon a balance sheet of the Company prepared on a consolidated
basis in accordance with generally accepted accounting principles.
The Company agrees, and the Holder by accepting the Note agrees, to the
subordination.
4. INDEBTEDNESS UNSECURED. All indebtedness owing pursuant to this Note
and all other indebtedness of the Company owing to the Holder shall at all times
be unsecured. The Holder agrees that if at any time it shall be in possession
of any assets or properties of the Company, the Holder shall hold such assets or
properties for the benefit of GECC with the same degree and care as the Holder
holds its own property so long as any Senior Debt due GECC remains unpaid and
until all commitments by GECC to make loans and advances to the Company are
terminated.
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5. PERSONS DEEMED OWNERS. The registered Holder of this Note may be
treated as its owner for all purposes.
6. AMENDMENTS AND WAIVERS. This Note may be amended with the consent of
the Holder, and any existing default may be waived with the consent of the
Holder. Without the consent of the Holder, this Note may be amended to cure any
ambiguity, defect or inconsistency, or to make any other change that does not
adversely affect the rights of the Holder.
7. DEFAULTS AND REMEDIES. An Event of Default is: (i) default for 30
days in payment of interest or principal (at maturity) on this Note, or (ii)
accumulation by any person or group (as such term is used in Rule 13d-5 under
the Securities Act of 1934) of persons to, as a result of a tender or exchange
offer, open market purchases, merger, privately negotiated purchases or
otherwise, become, directly or indirectly, the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of securities
having a majority or more of the ordinary voting power of then outstanding
securities of the Company. If an Event of Default occurs and is continuing, the
Holder may declare this Note to be due and payable immediately but in no event
before August 1, 1999. Any notice of such Event of Default shall be provided to
GECC at the address set forth on Schedule 1 to this Note. Holder may not
enforce this Note except as provided herein. The Company agrees to pay the
Holder's reasonable costs of collection including court costs and attorney's
fees.
8. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
stockholder, agent or representative of the Company or GECC shall have any
liability for any obligation of the Company under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation. The
Holder by accepting this Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issue of this Note.
Dated: LOT$OFF Corporation
BY:
----------------------------------------------
XXXXXXX X. XXXXXXXX XX, President
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ASSIGNMENT FORM
To Assign this Note, fill in the form below.
I or we assign and transfer this Note to:
Assignee's social security or tax I.D. number:
Print or type assignee's name, address and zip code:
and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: Your signature*:
------------------------------------
*Sign exactly as your name appears on this Note.
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EXHIBIT "H-2"
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE ON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY OTHER APPLICABLE SECURITIES LAWS. NONE OF SUCH SECURITIES MAY BE
TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND OTHER APPLICABLE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL TO THE COMPANY
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
LOT$OFF CORPORATION
WARRANT
DATED: July ____, 1998
Number of Common Shares:
Holder:
Address:
----------------------------------
THIS CERTIFIES THAT the holder of this Warrant ("Holder") is entitled to
purchase from LOT$OFF Corporation, a Delaware corporation (the "Company"), at
the average closing bid price of the Company's common stock ("Common Stock") for
the three weeks ended July 31, 1998 in no event more than $5.00 per share the
number of shares set forth above. This Warrant shall expire on the fourth
anniversary of the date of issuance.
1. Neither this Warrant nor the Common Stock issuable on exercise of
this Warrant may be transferred, sold, assigned or hypothecated, unless
registered by the Company under the Securities Act of 1933, as amended (the
"Act") and other applicable securities laws or unless the Company shall have
received a written opinion of counsel satisfactory to counsel to the Company to
the effect that registration of the Warrant or the shares of Common Stock issued
on exercise of this Warrant is not necessary in connection with such transfer,
sale, assignment or hypothecation. This Warrant and the Common Stock issued
upon exercise of this Warrant shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary in
connection with such opinion.
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2. The Holder is entitled to certain registration rights as set forth
under a Letter Agreement dated the date hereof.
3. Any permitted assignment of this Warrant shall be effected by the
Holder by (i) executing an appropriate form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel referred to above, and (iii) delivery to the Company of
certain statements and representations by the transferee (in a form acceptable
to the Company and its counsel) including, without limitation, a representation
to the effect that such Warrant is being acquired by the Holder for investment
only and not with a view to its distribution or resale; whereupon the Company
shall issue, in the name or names specified by the Holder (including the Holder,
if applicable) new Warrants representing, in the aggregate, rights to purchase
the same number of shares of Common Stock as are purchasable under the Warrant
surrendered. The transferor will pay all relevant transfer taxes. Replacement
warrants shall bear the same legend as is borne by this Warrant.
4. The term "Holder" shall be deemed to include any permitted record
transferee of this Warrant.
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon exercise hereof will, upon payment of the exercise price and
issuance, be duly and validly issued, fully paid and non-assessable. The
Company further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock for issuance upon
exercise of this Warrant and all other Warrants issued in replacement hereof.
6. This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.
7. In the event that as a result of a recapitalization, stock split,
stock dividend or like transaction, the outstanding shares of Common Stock of
the Company are at any time increased or decreased or changed into or exchanged
for a different number or kind of share or other security of the Company, then
appropriate adjustments in the number and kind of such securities then subject
to this Warrant shall be made effective as of the date of such occurrence. Such
adjustment shall be made successively whenever any event listed above shall
occur, and the Company will notify the Holder of the Warrant of each such
adjustment. Any fraction of a share resulting from any adjustment shall be
eliminated, and the price per share of the remaining shares subject to this
Warrant adjusted accordingly.
8. This Warrant may be exercised at any time prior to its expiration by
(i) surrender of this Warrant (with appropriate purchase form properly executed)
at the principal executive office of the Company (or such other office of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); (ii) payment to the Company
of the exercise price (in cash or like principal amount of Senior Subordinated
Notes of the Company) for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any; and (iii) the
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delivery to the Company of certain statements and representations by the Holder
(in a form acceptable to the Company and its counsel) including, without
limitation, a representation to the effect that such shares of Common Stock are
being acquired by the Holder for investment only and not with a view to their
distribution or resale.
The certificates for the Common Stock so purchased shall be delivered
to the Holder within a reasonable time, not exceeding ten (10) business days
after all requisite documentation has been provided, after this Warrant shall
have been so exercised and shall bear a restrictive legend consistent with
applicable securities laws.
9. This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware. The Delaware courts shall have exclusive
jurisdiction over this instrument and the enforcement thereof. Service of
process shall be effective if by certified mail, return receipt requested. All
notices shall be in writing and shall be deemed given upon receipt by the party
to whom addressed.
IN WITNESS WHEREOF, LOT$OFF Corporation has caused this Warrant to be
signed by its duly authorized officer and to be dated as of the date set forth
above.
LOT$OFF Corporation
By:
---------------------------------------------
XXXXXXX X. XXXXXXXX XX, President
In the presence of:
--------------------------------------------------
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SCHEDULE 1B
--------------------------------------------------------
SUB DEBT HOLDER AMOUNT
--------------------------------------------------------
Company #1 $250,000
Individual #1 225,000
Trust #1 200,000
Individual #2 150,000
Company #2 100,000
Company #3 50,000
Individual #3 100,000
Company #4 250,000
Individual #4 10,000
Trust #2 10,000
Trust #3 30,000
Individual #5 50,000
Trust #4 20,000
--------------------------------------------------------
Total $1,445,000
--------------------------------------------------------
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SCHEDULE 4.20
There are no issued and outstanding shares of voting Stock of Parent held by any
holder who or which holds at least five percent (5%) of such issued and
outstanding shares on the date hereof other than the Depository Trust Company.
Outstanding rights, options, warrants, or agreements pursuant to which Parent
may be required to issue or sell Stock:
1. Options to purchase up to 800,000 shares of Common Stock granted or to be
granted under the Stock Option Plan of LOT$OFF Corporation
2. Warrants to acquire up to 400,000 shares of Common Stock issued or to be
issued in connection with the Subordinated Indebtedness
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