EXHIBIT 10.8
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Second Amendment to Revolving Credit Agreement (this
"Amendment"), made as of the 22 day of December, 1997, among LOT$OFF
CORPORATION, 50-OFF TEXAS STORES, L.P., 50-OFF OPERATING COMPANY, and 50-OFF
MULTISTATE OPERATIONS, INC., as Borrowers (collectively, 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 (as further amended, modified, restated or supplemented from time to
time, the "Credit Agreement"); and
WHEREAS, the Borrowers have requested that certain terms of the Credit
Agreement be amended, and the Lender has agreed to the requested amendments
on the terms and conditions set forth herein;
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. Article 1 of the Credit Agreement is
hereby amended by:
(a) deleting the definitions of "BORROWING BASE" and "LOAN" set forth
therein in the entirety and replacing such definitions, respectively, with
the following:
"'BORROWING BASE' shall mean, at any time, the lesser of (i) the
Commitment and (ii) the sum of:
(a) (i) from August 15 through December 15 in any year, up
to sixty-five percent (65%) of Eligible Inventory valued at the
lower of
fair market value or cost (on a first-in, first-out basis), and (ii)
from December 16 through August 14 in any year, up to sixty percent
(60%) of Eligible Inventory valued at the lower of fair market value
or cost (on a first-in, first-out basis); PLUS
(b) the Over Advance Amount as of such time; __
MINUS
(c) the sum of: (i) a sales tax reserve equal to the outstanding sales
tax liability of Borrowers as of the date of such calculation and
(ii) the Reserves.
"LOAN" shall mean the aggregate amount of Advances outstanding at
any time (including Letter of Credit Obligations and the Funded Over
Advance Amount), made on behalf of any Borrower."
(b) adding the following definitions of "ADJUSTED BORROWING BASE",
"FUNDED OVER ADVANCE AMOUNT", "LAWSUIT PROCEEDS", "MARGIN" and "OVER ADVANCE
AMOUNT", respectively, in appropriate alphabetical order, thereto:
"'ADJUSTED BORROWING BASE' shall mean, at any particular time,
the Borrowing Base MINUS the Over Advance Amount.
"FUNDED OVER ADVANCE AMOUNT" shall mean, at any particular time,
the outstanding principal balance of the Loan MINUS the Adjusted
Borrowing Base.
"LAWSUIT PROCEEDS" shall mean the aggregate amount of cash due to
the Borrowers in connection with any settlement, judgment, order or
otherwise, in favor of the Borrowers in those certain litigation cases
pending against Chase Manhattan Bank, Jefferies International, Ltd.
and Jefferies & Company, as more fully described in the definition of
"Lawsuit" set forth in the Reorganization Plan.
"MARGIN" shall mean the per annum interest rate determined in
accordance with Section 2.6(b).
"OVER ADVANCE AMOUNT" shall mean (a) from December 22, 1997
through December 31, 1997, the amount of $1,000,000; (b) from January
1, 1998 through February 15, 1998, the amount of $2,000,000; and (c)on
February 16, 1998 and at all times thereafter, zero."
(c) deleting the definition of "STATED INDEX RATE" set forth therein
in the entirety.
2. AMENDMENT TO SECTION 2.6. Section 2.6 of the Credit Agreement,
INTEREST ON LOAN, is hereby amended by deleting paragraphs (a) and (b)
thereof in the entirety and replacing such paragraphs, respectively, with the
following:
"(a) Borrowers shall be obligated to pay interest on the unpaid
principal amounts of the Loan owing to Lender from the Funding Date
until the Loan is paid in full at a floating rate per annum
equal (i) the Index Rate in effect from month to month, PLUS (ii) the
applicable Margin, payable monthly in arrears and due on the first day
of each calendar month commencing on July 1, 1997 and on the date the
Loan shall be repaid in full; provided, however, that upon the
occurrence of a Default, interest on the Loan shall be calculated at a
default rate per annum equal to (i) the Index Rate in effect from
month to month, PLUS (ii)the applicable Margin, PLUS (iii) 2.00%
per annum, and shall be payable upon demand.
(b) The Margin shall be 5.00% per annum in connection with the
Funded Over Advance Amount, and the Margin shall be 3.00% per annum in
connection with all other unpaid principal amounts of the Loan."
3. AMENDMENT TO SECTION 2.8. Section 2.8 of the Credit Agreement,
APPLICATION OF PAYMENTS, is hereby deleted in the entirety and replaced with
the following:
"2.8 APPLICATION OF PAYMENTS. Except to the extent that Lender
has agreed to a specific application of payments in this Agreement,
each Borrower irrevocably waives the right to direct the application
of any and all payments at any time or times hereafter received by
Lender from or on behalf of any Borrower, and each Borrower
irrevocable agrees that Lender shall have the continuing exclusive
right to apply any and all such payments against the then due and
payable Obligations of Borrowers and in repayment of the Loan and any
other Obligations of Borrowers as Lender may reasonably deem
advisable. In the absence of a specific determination by Lender with
respect thereto and except as required by Section 2.18, the same shall
be applied in the following order: (i) then due and payable fees and
expenses; (ii) then due and payable interest payments on the Loan;
(iii) then due and payable principal payments on the Loan (other than
the Funded Over Advance Amount); (iv) then due and payable Funded Over
Advance Amount; and (v) then to any other unpaid Obligations. Lender
is authorized to, and at its option may, make advances on behalf of
any Borrower for payment of all fees, expenses, charges, costs,
principal and interest incurred by any Borrower hereunder. Such
advances shall be made when and as any Borrower fails to pay promptly
such fees, expenses, charges, costs, principal and interest and, at
Lender's option and to the extent permitted by law, shall be deemed
Advances constituting part of the Loan hereunder."
4. AMENDMENT TO SECTION 2.14. Section 2.14 of the Credit Agreement,
CLOSING, ADMINISTRATION, AND NON-USE FEES, is hereby amended by adding the
following paragraph(d) at the end thereof:
"(d) As additional compensation for Lender's costs and risks in
making the total amount of the Commitment and the
Over Advance Amount available to Borrowers, and whether or not the
Borrowers ever utilize the Over Advance Amount, Borrowers hereby
agree to pay to Lender on January 1, 1998, a fee in the amount of
$125,000. Such fee shall be fully earned on December 22, 1997 and
non-refundable when paid. Additionally, the Borrowers hereby agree
to pay to the Lender on February 16, 1998, a fee in the amount of
2.5% of the Lawsuit Proceeds by executing and delivering to the
Lender on February 16, 1998, such documents and agreements
(including opinions of counsel) as may be necessary or requested
by the Lender to convey to the Lender 2.5% of the Borrowers'
right, title and interest in and to the Lawsuit Proceeds, in form
and substance satisfactory to the Lender; provided, however, the
Borrowers shall not be required to pay such fee if, on February
16, 1998, the Borrowers make the mandatory repayment of the Funded
Over Advance Amount required by Section 2.18 hereof."
5. AMENDMENT TO ARTICLE 2. Article 2 of the Credit Agreement,
AMOUNT AND TERMS OF CREDIT, is hereby amended by adding the
following Section 2.18 at the end thereof:
"2.18 MANDATORY REPAYMENT OF FUNDED OVER ADVANCE AMOUNT. On
February 16, 1997, the Borrowers shall make a mandatory repayment of
the Loan in the amount of the then outstanding principal balance of
the Funded Over Advance Amount, together with accrued interest
thereon, and such repayment shall be applied to the Funded Over
Advance Amount of the Loan."
6. 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.
7. CONSENT TO PARTICIPATION OR ASSIGNMENT. Pursuant to Section 10.10 of
the Credit Agreement, the Borrowers hereby consent to Lender's sale of
participations, assignment, transfer or other disposition, at any time or
times, of any interest in the Funded Over Advance Amount or of any portion
thereof or interest therein, including Lender's rights, title, interests,
remedies, powers or duties thereunder, whether evidenced by a writing or not.
Each Borrower agrees that it will use its best efforts to assist and
cooperate with Lender in any manner reasonably requested by Lender to effect
any such sale of participations or assignment.
8. REPRESENTATIONS 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;
(d) 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 other than as disclosed on
Schedule 1 attached hereto (and the Borrowers acknowledge that no
Default or Event of Default disclosed on such Schedule 1 has been
waived by the Lender and that the Lender reserves all rights and
remedies with respect to such Defaults or Events of Default) and, 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.
9. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment shall
become effective on the date that the Lender shall have received a duly
executed original signature page to this Amendment from the Borrowers.
10. 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.
11. LOAN DOCUMENT. This Amendment shall be deemed to be a Loan
Document for all purposes.
12. 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.
13. 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.
[Remainder of page intentionally left blank]
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
President
50-OFF MULTISTATE OPERATIONS, INC., a Nevada
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
President
50-OFF OPERATING COMPANY, a Nevada corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
President
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President
------------------------------
Schedule 1
