EXHIBIT 10.21
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT made and entered into this 31st
day of May 1995 to be effective as of the first day of May 1, 1995
by and between UNION PLANTERS NATIONAL BANK, a national banking
association with its principal offices in Memphis, Tennessee
("Lender") and FRED'S, INC., a Tennessee corporation having its
offices at 4300 New Getwell Road, Memphis, Tennessee 38118
(referred to herein as "Borrower").
WITNESSETH:
WHEREAS, Borrower is indebted to Lender for Advances made to
Borrower pursuant to a Revolving Loan made pursuant to that certain
Revolving Loan and Credit Agreement dated May 15, 1992 (herein the
"Agreement") providing for advances up to a maximum amount of
$12,000,000.00 (the "Commitment"); and,
WHEREAS, Borrower has requested and Lender has agreed to
modify and extend the terms of the Revolving Loan.
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
1. The Agreement is amended and modified as follows:
a. Section 3.3 is deleted and replaced by the
following:
3.3 Financial Conditions. The consolidated
financial statements of Borrower for the fiscal
year ending January 28, 1995 as audited by Price
Waterhouse including any related information
heretofore furnished to Lender (collectively
hereinafter the "Financial Statements"), are true,
correct and complete and fairly present the
financial condition of the Borrower as of the date
of such statements. Other than as reflected on
such Financial Statements, Borrower has no direct
or contingent obligations or liabilities which are
or would be material to the financial condition of
the Borrower, nor any material unrealized or
unanticipated losses from any commitment of the
Borrower. All such Financial Statements furnished
to Lender have been prepared in accordance with
generally accepted accounting principles
consistently applied throughout the periods
involved. Since January 28, 1995 there has been no
material adverse change in the business or assets,
or in the condition or prospects, financial or
otherwise, of the Borrower from that set forth in
said Financial Statements.
b. Section 3.4 is amended by adding the following:
Except as heretofore disclosed to Lender, there are no
suits or proceedings pending, or to the knowledge of the
Borrower, threatened, before any court or by or before
any governmental or regulatory authority, commission,
bureau or agency or public regulatory body against or
affecting the Borrower which, if adversely determined
might have a material adverse effect on the financial
condition or business of Borrower.
c. Section 3.15 is amended by adding the following: No
financial statement or other written document furnished
to Lender by Borrower in connection with the Loan
contains any untrue statement of a material fact or omits
a material fact necessary to make the information
contained therein not misleading. There is no fact that
the Borrower has not disclosed to Lender in writing that
materially adversely affects or, so far as Borrower knows
or can now foresee, will materially adversely affect the
properties, business, prospects, profits or condition
(financial or otherwise) of Borrower or the ability of
the Borrower to perform the Agreement or pay the Note.
d. Section 4.3 is deleted and replaced by the
following: 4.3 Selection of Interest Rate. A separate
rate shall be assigned to each individual Advance
(excluding Credits issued and not drawn upon, but
including any Advance made to honor a draft presented
under any Credit) based upon the Borrower's selection of
Interest Rate at the time of funding each individual
Advance, between the following:
1. one percent (1%) less than Lender's Prime Rate
(which rate of interest is referred to herein
as the "Adjusted Prime Rate"), or
2. 150 basis points (1.50%) in excess of LIBOR
Selection of the Interest Rate by the Borrower shall
result in the accrual of interest on the subject Advance
(excluding Credits issued and not drawn upon) at the rate
so selected for a period of thirty days, at the
termination of which period all rates shall be calculated
upon the basis of the Adjusted Prime Rate. By notice to
Lender made at least 3 days prior to the end of any
calendar month, Borrower may select the LIBOR based rate
to apply to all or any portion of the outstanding
Advances (not including any Credits issued and not drawn
upon) then subject to the Adjusted Prime Rate for the
following calendar month (not to extend the maturity date
of the loan facility). Absent selection of interest rate
by the Borrower as provided herein and notice thereof
given to Lender, the interest rate shall be the Adjusted
Prime Rate.
e. Section 4.6.1 is amended by deleting "June 1, 1992"
and replacing said date with "June 1, 1995".
f. Section 4.8 is amended by deleting "$3,000,000.00"
in the first sentence of the section and replacing said
amount with $7,000,000.00".
g. Section 4.11.1 is amended by deleting "May 1, 1995"
and replacing said date with May 1, 1998.
h. Section 6.1 is amended by adding the following:
6.1.6 Promptly after the sending or filing
thereof, copies of all financial statements and
reports which the Borrower sends to its
stockholders, and copies of all regular, periodic,
and special reports and all registration statements
which the Borrower files with the Securities and
Exchange Commission or any governmental authority
which may be substituted therefor, or with any
national securities exchange.
i. Section 6.4.2 is amended by deleting
"$70,000,000.00" and replacing said amount with
"$100,000,000.00."
j. Section 8.2 is amended by adding the following:
Borrower agrees not to sign a security agreement granting
or constituting a security interest in any of its
inventory or sign any financing statement giving notice
of any of the foregoing nor grant, convey, or permit any
lien, encumbrance on or pledge of its inventory.
k. The term "Costs" as defined in section 2.1 is
amended to read: "Costs" shall mean all the expenses
required by section 6.9 to be paid by Borrower.
2. Continuation of Terms. Except as amended and modified
herein, the Agreement and the Loan Documents remain in full force
and effect and enforceable according to their terms; and all
Advances made by Lender and all other actions taken by Lender
pursuant to the Agreement prior to the date hereof are approved,
ratified and confirmed by Borrower. Borrower promises to pay the
Revolving Credit Note according to its terms.
3. Representations and Warranties of the Borrower. To
induce Lender to enter into this Modification Agreement and to make
the loans and extend the credit contemplated to be made pursuant to
the Agreement as modified by this Modification Agreement, Borrower
hereby makes the representations and warranties to Lender set forth
in sections 3.1 through 3.15 of the Agreement (as the same have
been and are modified and amended by this Modification Agreement),
all of which representations and warranties are incorporated herein
by reference and all of which shall survive the execution and
delivery of this Modification Agreement.
4. Terms. The term "Agreement" as used in the Agreement
shall mean the Agreement as modified by this Modification
Agreement. The Agreement and the Loan Documents constitute the
complete and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
5. Successors in Interest. This Modification Agreement
shall be binding upon and inure to the benefit of the parties
hereto, their respective successors, assigns, transferee and
grantees.
6. Governing Law. The interpretation and performance of
this Modification Agreement shall be governed in all respects in
accordance with the laws of the State of Tennessee.
7. Undefined Terms. All capitalized terms not defined
herein shall have the same definitions as set forth in the
Agreement.
IN WITNESS WHEREOF, the parties hereunto have executed this
Modification Agreement as of the day and year first above written.
BORROWER:
FRED'S, INC., a Tennessee
Corporation
By:
Name:________________________
Title:Chief Financial Officer
LENDER:
UNION PLANTERS NATIONAL BANK
By:
Name:________________________
Title: Vice President