EXHIBIT 4(d)(7) Amendment Number Seven to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as Lender and the Registrant,
One Price Clothing Stores, Inc. of Puerto Rico and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated February 9, 2001.
Congress Financial Corporation
(Southern)
000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
February 9, 2001
One Price Clothing Stores, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
One Price Clothing of Puerto Rico, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Re: Amendment No. 7 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, and
Amendment No. 6 to Financing Agreements, dated June 30, 2000 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 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:
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1. The following definitions shall be added to Section 1, Definitions, of the
Loan Agreement:
(a) "Closing Date" shall mean the date on which all the conditions
precedent in Article 4 of this Agreement are satisfied and the
Supplemental Loan pursuant to the Seventh Amendment.
(b) "Federal Tax Refund" shall mean any claim of the Borrowers for a
federal tax refund as a result of the application of net operating
loss carry-backs for the Borrowers' tax year 2000.
(c) "Gross Margin" shall mean for any fiscal period the percentage
resulting from dividing (i) the sum of net sales minus cost of goods
sold prepared in accordance with GAAP; provided however, that for
purposes of Section 9.15.3, cost of goods sold shall not include
costs related to distribution and merchandising (including the
impact of changes in capitalized distribution and merchandising
costs) by (ii) net sales.
(d) "Participant" shall mean GB Retail Funding, LLC, a Delaware limited
liability company, and its successors and assigns.
(e) "Projections" shall mean those projections attached hereto as
Exhibit 1.
(f) "Seventh Amendment" shall mean Amendment No. 7, dated February 9,
2001, by and among Lender, Borrowers and One Price VI.
(g) "Supplemental Loan Limit" shall mean $4,000,000.00.
(h) "Supplemental Loan" shall mean the loan made by the Lender to or for
the benefit of the Borrowers pursuant to Section 2.1.1 hereof.
(i) "Supplemental Loan Maturity Date": June 9, 2001.
(j) "Supplemental Loan Termination Date" shall mean the earliest of (i)
the 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 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
Supplemental Loan.
2. 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 (including the outstanding principal amount of the
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."
3. 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 $37,500,000.00."
4. Section 2.1(a) of the Loan Agreement shall be deleted and the following
shall be substituted therefor:
"2.1 Revolving Loans.
(a)(1) 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 lesser of (A) and (B):
(A) the sum of: (i) the least 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 or
(B) the sum of: (i) the lesser of: (x) eighty
three and nine tenths (83.9%) percent of the
Value of the Eligible Inventory of such
Borrower, or (y) ninety seven (97%) percent
of the Net Recovery Cost Percentage
multiplied by the Cost of the Eligible
Inventory of such Borrower minus (ii) any
Availability Reserves, minus (iii) $4,000,000
and unpaid interest in respect of the
Supplemental Loan; provided,
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however, that after all of the Obligations
arising in respect of the Supplemental Loans
have been paid in full, Section 2.1(a)(1)(B)
shall be deemed automatically deleted and the
words "the lesser of (A) and (B)" in Section
2.1(a)(1) shall be deemed deleted."
5. Section 2.1(c) is hereby amended in its entirety to read as follows:
"(c)Except in the Lender's discretion, the aggregate amount of
Revolving Loans and Letter of Credit Accommodations available
in respect of Eligible Inventory of One Price PR shall not, at
any one time outstanding, exceed an amount equal to the
product of $120,000 multiplied by the number of Retail Stores
operated in Puerto Rico by One Price PR at such time (each
sublimit, the "Puerto Rico Sublimit").
6. The following shall be added as a new Section 2.1.1 to the Loan Agreement:
"2.1.1 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
Supplemental Loan Limit.
(b) The proceeds of the 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 Supplemental Loan on the Supplemental Loan Termination
Date. The Borrowers may repay the entire principal balance of
the Supplemental Loan prior to the Supplemental Loan
Termination Date (subject to Sections 3.4.2 and 12.1.1
hereof). Any amounts prepaid on account of the Supplemental
Loan cannot be reborrowed by the Borrowers.
(d) The Borrowers shall repay the Obligations then
existing with respect to the Supplemental Loan (including any
interest, fees, costs, and expenses, including reasonable
attorney's fees, or other charges with respect thereto) with
proceeds of the Federal Tax Refund."
7. Section 2.2 (c) of the Loan Agreement shall be amended as follows: The
reference to "Section 2.1(a)(i)" shall be deleted and "Section
2.1(a)(1)(A)(i)" shall be substituted therefor. The reference to "Section
2.1(a)(i)(A)" shall be deleted and "Section 2.1(a)(1)(A)(i)(x)" shall be
substituted therefor. The reference to "Section 2.1(a)(i)(B)" shall be
deleted and "Section 2.1(a)(1)(A)(i)(y)" shall be substituted therefor.
The reference to "Section 2.1(a)(i)(C)" shall be deleted.
8. The following shall be added as a new Section 3.1.1 to the Loan Agreement.
"3.1.1 Interest on the Supplemental Loan.
(a)The Supplemental Loan shall bear interest, until
repaid, fixed at fourteen (14%) 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 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 3.1.1 as a Revolving Loan without further notice to or
request by the Borrowers."
9. The following shall be added as a new Section 3.4.1 to the Loan Agreement.
"3.4.1 Supplemental Loan Closing Fee.
The Borrowers shall pay to the Lender a Closing Fee in
the amount of $80,000.00, 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."
10. A new Section 3.4.2 shall be added to the Loan Agreement which reads as
follows:
"3.4.2 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 $90,000.00, payable upon the
Supplemental Loan Termination Date. The Exit Fee shall be
fully earned as of the date of the execution of this
Agreement. The Borrowers shall not be entitled to any credit,
rebate, or repayment of the Exit Fee notwithstanding
termination of this Agreement."
11. A new Section 10.1(n) shall be added to the Loan Agreement which reads as
follows:
"(n)any act, condition or event shall exist or have occurred
that results in the Lender's designated representative being
divested of the ability or right to receive the Federal Tax
Refund directly from the IRS."
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12. A new Section 11.1.1 shall be added to the Loan Agreement which reads as
follows:
(a) In the event that the Participant becomes the Lender
hereunder, the validity, interpretation, and enforcement of
this Agreement and the other Financing Agreements and any
dispute arising out the relationship of the parties hereto,
whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the Commonwealth of
Massachusetts (without giving effect to principles of
conflicts of laws).
(b) In the event that the Participant becomes the Lender
hereunder, each Borrower and the Lender irrevocably consent
and submit to the non-exclusive jurisdiction of the state
courts sitting in Suffolk County, Commonwealth of
Massachusetts and the United States District Court for the
Eastern District of Massachusetts and waive any objection
based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any
of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties
thereto in respect to this Agreement or any of the other
Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise,
and agree that any dispute with respect to any such matters
shall be heard only in the courts described above (except that
the Lender shall have the right to bring any action or
proceeding against the Borrowers or their property in the
courts of any other jurisdiction which the Lender deems
necessary or appropriate in order to realize on the Collateral
or to otherwise enforce its rights against the Borrowers or
their property).
13. A new Section 8.14 shall be added to the Loan Agreement which reads as
follows:
"8.14 Federal Tax Refund.
Borrowers represent and warrant that the Federal Tax
Refund shall equal at least $1,300,000.00 and, to the best of
the Borrowers' knowledge after due investigation, such refund
is not subject to offset of any kind, nature or description by
any governmental body. Borrowers further represent and warrant
that they shall diligently take all such action as may be
reasonably necessary to complete and file their federal tax
returns and other forms by March 31, 2001 in order to recover
the Federal Tax Refund. In the event that the Borrowers fail
to file their federal tax return and other related forms by
March 31, 2001, the Borrowers hereby acknowledge and agree
that Lender shall have the right to specific performance to
compel Borrowers to file their federal tax returns and other
forms in order to recover the Federal Tax Refund."
14. A new Section 12.1.1 shall be added to the Loan Agreement which reads as
follows:
"12.1.1 Yield Maintenance Fee.
Upon the occurrence of the Supplemental Loan Termination
Date, for any reason, the Borrowers shall pay to the Lender a
"Supplemental Loan Yield Maintenance Fee" equal to the
difference between $325,000 and the combined sum of all
interest and fees actually paid to the Lender on account of
the Supplemental Loan from the Closing Date to the
Supplemental Loan Termination Date, but in no event shall the
Supplemental Loan Yield Maintenance Fee be less than zero. The
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 Supplemental Loan and not
as a penalty."
15. Clause (ii) of the proviso set forth in Section 9.10(e) of the Loan
Agreement is hereby further amended by deleting the number $2,000,000
appearing therein, and substituting therefor, $4,000,000. In addition, the
term "advances" as used in Section 9.10(e), shall be deemed to include all
standby letters of credit issued for account of the Borrowers and the
benefit of vendors of Inventory.
16. A new Section 9.15.1 shall be added to the Loan Agreement which shall read
as follows:
"9.15.1 Excess Availability.
At all times prior to the payment of all Obligations
arising in respect of the Supplemental Loans, Borrowers shall,
for the period commencing from the Closing Date through and
including March 9, 2001, to maintain Excess Availability of at
least $1,000,000.00, and thereafter, the Borrowers shall,
until the Supplemental Loan is irrevocably repaid in full,
maintain Excess Availability of at least $1,300,000.00."
17. A new Section 9.15.2 shall be added to the Loan Agreement which shall read
as follows:
"9.15.2 Minimum Inventory Purchases.
At all times prior to the payment of all Obligations
arising in respect of the Supplemental Loans, the Borrowers
shall not suffer or permit their purchases of Inventory, for
any fiscal month (commencing March 5, 2001), to be less than
90% of such purchases, for that month, as calculable from the
Projections."
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18. A new Section 9.15.3 shall be added to the Loan Agreement which shall read
as follows:
"9.15.3 Gross Margin.
At all times prior to the payment of all Obligations arising
in respect of the Supplemental Loan, the Borrowers shall not
suffer or permit their Gross Margin determined monthly at
month end on an average quarterly rolling basis (commencing
with the fiscal quarter period ending May 5, 2001, as reported
to Lender on or before May 18, 2001) to be more than a 1%
negative variance from the projected Gross Margin set forth in
the Projections.
19. The 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.
20. At any time prior to the 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.
21. 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 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.
22. 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 Supplemental Loan is outstanding.
23. 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.
24. The following shall be conditions precedent to the effectiveness of the
Seventh 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 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) Borrower has executed and delivered to the Lender a
Power of Attorney and Appointment of Representative on IRS
Form 2848 and such other documents and certificates as the
Lender may require to perfect and realize upon the Federal Tax
Refund.
(e) An opinion of counsel to the Borrower.
(f) The Participant has received an updated appraisal of
the Borrowers' Inventory, in form and substance acceptable to
it in its sole discretion.
(g) There exists Excess Availability as of the Closing
Date of at least $1,000,000.00.
(h) Reserved.
(i) 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
Supplemental Loan contemplated hereby (including the fees and
expenses of counsel to the
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Lender and the Participant) shall have been paid in full.
(j) No Event of Default shall then exist.
(k) Satisfactory completion of all due diligence by the
Participant (including without limitation, commercial finance
examinations and appraisals of Inventory), and the Participant
is satisfied (in its sole discretion) with the results of such
due diligence in all respects.
(l) 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.
(m) One Price shall have executed and delivered a
Warrant Purchase Agreement in favor of the Participant for the
purchase of 60,000 shares of One Price, in such form and
substance as is acceptable to the Participant in its sole
discretion.
(n) The Closing Date shall have occurred on or before
February 12, 2001.
25. In consideration of the amendments and supplements set forth herein,
Borrowers shall on the date hereof, pay to the Lender or the Lender, at
its option, may charge the account of the Borrowers maintained by the
Lender, an amendment fee in the amount of $10,000 which fee is fully
earned as of the date hereof and shall constitute part of the Obligations.
26. 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.
27. 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.
28. This Amendment and the rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted in accordance Section
11.1 or 11.1.1 of the Loan Agreement, as the case may be.
29. 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.
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Executed under seal on the date set forth above.
ATTEST: ONE PRICE CLOTHING STORES, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ C. Xxxx Xxxxx
---------------------------- --------------------------------------
Name: C. Xxxx Xxxxx
--------------------------------
Title: Vice President & Treasurer
--------------------------------
ONE PRICE CLOTHING OF PUERTO RICO, INC.
By: /s/ H. Xxxx Xxxxxxxx
--------------------------------------
Name: H. Xxxx Xxxxxxxx
------------------------------------
Title: Sr. Vice President and C.F.O.
------------------------------------
CONSENTED TO BY:
ONE PRICE CLOTHING US VIRGIN ISLANDS, INC.
By: /s/ C. Xxxx Xxxxx
--------------------------------------
Name: C. Xxxx Xxxxx
------------------------------------
Title: Vice President & Treasurer
------------------------------------
Accepted in Georgia
on February 9, 2001
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------
Title: Senior Vice President
-----------------------------
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