Exhibit 10.7
SECOND AMENDMENT TO
FINANCING AGREEMENT
This Second Amendment to Financing Agreement (this "Amendment") is entered
into as of this 10th day of April, 2001 among FACTORY 2-U STORES, INC., a
Delaware corporation ("Company"), the Lenders who are a party to the Financing
Agreement referred to below (collectively, "Lenders") and THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation ("Agent"), in its capacity as Agent for the
Lenders, with reference to the following facts:
A. Agent, Company and Lenders previously entered into that certain
Financing Agreement dated as of March 3, 2000, as amended by that certain First
Amendment to Financing Agreement dated as of April 13, 2000 (together, the
"Financing Agreement"), pursuant to which Lenders have provided Company with
certain loans and other financial accommodations.
B. Company has requested that Agent and Lenders amend the Financing
Agreement to allow Company to repurchase shares of its own common stock from
time to time.
C. Agent and Lenders are willing to amend the Financing Agreement on the
terms and subject to the conditions set forth in this Amendment.
NOW THEREFORE, in consideration of the foregoing and the terms and
conditions hereof, the parties do hereby agree as follows, effective as of the
date set forth above:
1. Definitions. Terms used herein, unless otherwise defined herein, shall
have the meanings set forth in the Financing Agreement.
2. Amendments to Financing Agreement.
(a) The following definition shall hereby be added to Section 1 of
the Financing Agreement in proper alphabetical order:
"Free Cash Flow shall mean, for any period, EBITDA for such
period less actual interest and actual income taxes paid, capital
expenditures, dividends and debt service payments made and
consideration paid for purchases of common stock of the Company by the
Company during such period."
(b) Paragraph (g) of Section 7.9 shall hereby be amended and restated
in its entirety to read as follows:
"(g) Declare or pay any dividend of any kind on, or purchase,
acquire, redeem or retire, any of the capital stock or equity interest,
of any class whatsoever, whether now or hereafter outstanding, other
than (i) dividends paid in capital stock of the Company and (ii) during
the period commencing April 10, 2001 through and including
December 31, 2005, purchases of shares of common stock of the Company
not to exceed ten percent (10%) of the Company's then issued and
outstanding shares of common stock in the aggregate during such period;
provided however, (A) the consideration paid by Company in connection
with any such purchase of common stock, together with all consideration
paid by Company for all such previous purchases, shall not exceed the
Free Cash Flow of the Company during the twelve (12) month period
immediately prior to the date of such purchase, and (B) after giving
effect to each such purchase of common stock, Availability shall be at
least $20,000,000 and no Default or Event of Default shall be existing
or have occurred and be continuing.
3. Fee. In consideration of the foregoing amendment, Company shall pay to
Agent, on behalf of Lenders, an amendment fee of $7,500 (the "Amendment
Fee"). The Amendment Fee shall be fully earned by Agent and Lenders as of
the date hereof and shall be charged to Company's Revolving Loan Account
upon execution of this Amendment by Company.
4. Conditions Precedent. The effectiveness of the foregoing amendment
shall be, and hereby is, subject to the fulfillment to Agent's satisfaction
of the Conditions Precedent. The "Conditions Precedent" shall mean each of
the following:
(a) Receipt by Agent of this Amendment duly executed by each of the
parties hereto;
(b) Company shall have paid to Agent the Amendment Fee; and
(c) As of the date hereof, the representations and warranties
contained in Section 7 of the Financing Agreement are (before and after
giving effect to this Amendment) true and correct in all material respects
(except to the extent any such representation and warranty is expressly
stated to have been made as of a specific date, in which case it shall be
true and correct as of such specific date) and no Default or Event of
Default shall be existing or have occurred and is continuing.
5. Miscellaneous.
(a) Reference to and Effect on the Financing Agreement.
(i) Except as specifically amended by this Amendment and the
documents executed and delivered in connection herewith, the Financing
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
(ii) The execution and delivery of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any
Lender under the Financing Agreement or any agreement or document executed
in connection therewith.
(iii)Upon the Conditions Precedent being satisfied, this
Amendment shall be construed as one with the existing Financing Agreement,
and the existing Financing Agreement shall, where the context requires, be
read and construed throughout so as to incorporate this Amendment.
(b) Fees and Expenses. The Borrower acknowledges that all costs, fees
and expenses incurred in connection with this Amendment will be paid in
accordance with Section 8.5 of the Financing Agreement.
(c) Headings. Section and subsection headings in this Amendment are
included for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive effect.
(d) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Amendment shall be governed by and construed
according to the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
Company:
FACTORY 2-U STORES, INC.
By: /s/Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
Chief Financial Officer
Lenders:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/Xxxxxxx Xxxx
---------------
Name: Xxxxxxx Xxxx
Title: Assistant Vice President
FLEET RETAIL FINANCE, INC.
By: /s/Xxxx Xxxxxxxxx
-----------------
Name: Xxxx Xxxxxxxxx
Title: Assistant Vice President
Agent:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/Xxxxxxx Xxxx
---------------
Name: Xxxxxxx Xxxx
Title: Assistant Vice President
