ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 4(k) Amendment Number Three to the Loan and Security Agreement by
and between Congress Financial Corporation (Southern) as Lender
and the Registrant, One Price Clothing of Puerto Rico, Inc. and
One Price Clothing - U.S. Virgin Islands, Inc. as Borrowers
dated February 19, 1998.
AMENDMENT NO. 3 TO FINANCING AGREEMENTS
February 19, 1998
One Price Clothing Stores, Inc.
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One Price Clothing of Puerto Rico, Inc.
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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, and by Amendment
No. 2 to Financing Agreements, dated June 17, 1997, 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.
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Borrowers have requested that Lender (a) agree to a temporary increase
in one of the components of the lending formula with respect to Eligible
Inventory, as supported by the results of an updated appraisal of the Inventory
of Borrowers obtained by Lender prior to the date hereof, (b) agree to lower the
amount of Adjusted Net Worth required to be maintained by Borrowers, (c) agree
to increase the maximum outstanding amount of advances permitted to be made by
Borrowers to vendors as deposits against purchase orders, (d) waive for a
limited period, Lender's rights to establish certain Availability Reserves by
reason of, and Lender's rights to treat as a Direct Remittance Event, Borrowers'
failure to maintain Excess Availability in the applicable amounts specified in
the Loan Agreement, (e) agree to extend the Renewal Date to March 31, 2001 and
amend the early termination fee provisions in connection therewith, and (f)
consent to certain proposed modifications to the Carolina Bank Agreements.
Lender is willing to do so on the terms and conditions and to the extent set
forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Temporary Waiver. Lender hereby waives (a) Lender's rights to
establish Availability Reserves pursuant to Section 2.4(d) of the Loan Agreement
by reason of the failure of Borrowers to maintain Excess Availability of at
least $3,000,000 at any time or times during the Temporary Waiver Period (as
defined below) or prior thereto, and (b) Lender's rights to treat as a Direct
Remittance Event under Section 6.3 of Loan Agreement, the failure by Borrowers
to maintain Excess Availability of at least $2,500,000 at any time or times
during the Temporary Waiver Period or prior thereto. As used herein, the term
"Temporary Waiver Period" shall mean the period from the date hereof to and
including June 30, 1998; provided, however, that the Temporary Waiver Period
shall terminate automatically, without notice, upon the occurrence of any Event
of Default or any event or existence of any state of facts that would, with
notice or passage of time, or both, constitute an Event of Default.
2. Temporary Increase in Component of Lending Formula. Clause (i)(A) of
Section 2.1(a) of the Loan Agreement is hereby amended on a temporary basis,
effective only during the Temporary Increase Period (as defined below), by
substituting the phrase "sixty-five (65%) percent" for the phrase "sixty (60%)
percent" otherwise provided in said clause. As used herein, the term "Temporary
Increase Period" shall mean the period commencing as of January 30, 1998 and
ending on June 30, 1998; provided, however, that the Temporary Increase Period
shall terminate automatically, without notice, upon the occurrence of an Event
of Default or any event or existence of any state of facts that would, with
notice or passage of time, or both, constitute an Event of Default. The
temporary increase in one of the components of the lending formula in respect of
Eligible Inventory provided for herein during the Temporary Increase Period
shall nevertheless be subject to Lender's rights to establish and revise
Availability Reserves, as well as the sublimits and other rights and remedies of
Lender pursuant to the Loan Agreement and other Financing Agreements. Upon the
termination of the Temporary Increase Period, the percentage set forth in clause
(i)(A) of Section 2.1(a) shall automatically revert to sixty (60%) percent.
3. Adjusted Net Worth Covenant. Section 9.14 of the Loan Agreement is
hereby amended by deleting the number "$34,000,000" appearing therein, and
substituting therefor, the number "$25,000,000", effective as of January 30,
1998.
4. Permitted Advances to Vendors. Clause (ii) of the proviso set forth
in Section 9.10(e) of the Loan Agreement is hereby amended by deleting the
number "$1,000,000" appearing therein, and substituting therefor, the number
"$2,000,000", effective as of the date hereof.
5. Term.
(a) The first sentence of Section 12.1(a) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor, effective
as of January 30, 1998:
"(a) 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 March 31,
2001 (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof."
(b) The first sentence of Section 12.1(c) of the Loan Agreement (as
previously amended) is hereby amended, effective as of January 30, 1998, by
deleting Sections 12.1(c)(i), (ii) and (iii) thereof in their entirety, and
substituting therefor, the following Sections 12.1(c)(i) and 12.1(c)(ii):
"(i) .75% of the Inventory March 26, 1997 to and
Loan Limit including ▇▇▇▇▇ ▇▇, ▇▇▇▇
(▇▇) .25% of the Inventory March 31, 1999 to and
Loan Limit including March 31, 2000."
6. Carolina First Bank.
(a) Lender hereby consents to an extension of the term of the
Carolina Bank Documents for a period not to exceed an additional one
year and an increase in the line of credit available for letters of
credit issued for One Price's account thereunder from $3,000,000 to
$4,000,000.
(b) Lender's consent pursuant to Section 6(a), shall, however,
be conditioned upon Lender's receipt, in form and substance
satisfactory to Lender, of the written agreements between One Price and
Carolina Bank setting forth the foregoing modifications, together with,
if required by Lender, a written confirmation by Carolina Bank of the
continued effectiveness of the Intercreditor Agreement, dated May 16,
1997, between Lender and Carolina Bank, in form and substance
satisfactory to Lender and accompanied by the written agreement and
acknowledgment of One Price.
7. Conditions Precedent. The effectiveness of the consent, waiver and
amendments set forth herein are further conditioned upon the satisfaction of
each of the following conditions precedent in a manner satisfactory to Lender:
(a) No Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred; and
(b) Lender shall have received an original of this Amendment,
duly authorized, executed and delivered by Borrowers and One Price VI.
8. Fee. As partial consideration for Lender's entering into this
Amendment, Borrowers agree to pay Lender a fee in the amount of $10,000, which
fee is fully earned and payable as of the date hereof, and may be charged by
Lender directly to Borrowers' Revolving Loan Account maintained by Lender.
9. Miscellaneous.
(a) Entire Agreement; Ratification and Confirmation of the
Financing Agreements. This Amendment contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous term sheets, proposals, discussions, negotiations,
correspondence, commitments and communications between or among the parties
concerning the subject matter hereof. This Amendment may not be modified or any
provision waived, except in writing signed by the party against whom such
modification or waiver is sought to be enforced. Except for those provisions
specifically modified or waived pursuant hereto, subject, nevertheless to the
periods of effectiveness of the temporary waiver and temporary amendment set
forth, respectively, in Sections 1 and 2 hereof, the Financing Agreements are
hereby ratified, restated and confirmed by the parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the Financing Agreements, the terms of this Amendment shall
control.
(b) Governing Law. This Amendment and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the internal laws of the State of
Georgia, without regard to principles of conflicts of law.
(c) Binding Effect. This Amendment shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns.
(d) Counterparts. This Amendment may be executed in any number
of counterparts, but all of 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.
By the signature hereto of each of their duly authorized officers, all
of the parties hereto mutually covenant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: First Vice President
AGREED AND ACCEPTED:
ONE PRICE CLOTHING STORES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive VP & CFO
ONE PRICE CLOTHING OF PUERTO RICO, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇
Title: Treasurer
CONSENTED TO AND AGREED:
ONE PRICE CLOTHING - U.S. VIRGIN ISLANDS, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇
Title: Treasurer
