SIXTH MODIFICATION AGREEMENT Exhibit 10.18
OF THE REVOLVING LOAN AND CREDIT AGREEMENT
THIS SIXTH MODIFICATION AGREEMENT OF THE REVOLVING LOAN AND CREDIT
AGREEMENT (hereafter the "Sixth Modification") made and entered into this 29th
day of July, 2005, to be effective as of the 29th day of July, 2005, by and
among REGIONS BANK, successor in interest to UNION PLANTERS BANK NATIONAL
ASSOCIATION, with its principal office at 6200 Poplar Avenue, Memphis, Tennessee
("Lender"); SUNTRUST BANK, a Georgia banking corporation with its principal
office at 850 Ridge Lake Blvd., Fourth Floor, Memphis, Tennessee 38120 (the
"Documentation Agent"); FRED'S, INC., a Tennessee corporation having its
principal offices at 4300 New Getwell Road, Memphis, Tennessee (the "Borrower");
and FRED'S STORES OF TENNESSEE, INC. (the "Guarantor").
WHEREAS, Borrower is justly indebted to Lender for Advances made to
Borrower evidenced by that certain Promissory Note dated April 3, 2000 (the
"Note"), in the original principal amount of Forty Million Dollars ($40,000,000)
and that certain Credit Agreement dated March 28, 2000, effective April 3, 2000
(herein the "Credit Agreement"), providing for advances up to a maximum of Forty
Million Dollars ($40,000,000);
WHEREAS, Borrower and Lender entered into a Modification Agreement (the
"First Modification") dated May 26, 2000, providing, among other things, that
the Note, originally payable on demand, would mature and be due and payable on
April 3, 2003;
WHEREAS, Borrower and Lender entered into a second Modification Agreement
(the "Second Modification") dated April 30, 2002, providing, among other things,
that the Note would be due and payable on March 31, 2004;
WHEREAS, Borrower and Lender entered into a third Modification Agreement
(the "Third Modification") dated July 31, 2003, providing, among other things,
that the Note would be due and payable on July 31, 2006;
WHEREAS, Borrower and Lender entered into a fourth Modification Agreement
(the "Fourth Modification") dated June 28, 2004, providing, among other things,
that the Note would be increased to Fifty Million and 00/100 Dollars
($50,000,000.00) until December 15, 2004, at which time it will revert to
$40,000,000.00 until July 31 2006;
WHEREAS, Borrower and Lender entered into a fifth Modification Agreement
(the "Fifth Modification") dated October 19, 2004, effective October 20, 2004,
in which Lender granted Borrower an additional temporary increase in the
Commitment, in the amount of Ten Million and 00/100 Dollars ($10,000,000.00) (in
addition to and having the same maturity as the increase created by the Fourth
Modification) (the "Temporary Overline"), causing the Commitment to temporarily
increase from Forty Million and 00/100 Dollars ($40,000,000.00) to Sixty Million
and 00/100 Dollars ($60,000,000.00); and
WHEREAS, Borrower and Lender desire to amend the Credit Facility, to
increase the Commitment, in the amount of Ten Million and 00/100 Dollars
($10,000,000.00) (the "Increase"), causing the Commitment to increase from Forty
Million and 00/100 Dollars ($40,000,000.00) to Fifty Million and No/100
($50,000,000.00); to extend the Maturity Date from July 31, 2006 to July 31,
2009; to amend Section 6.1.1.2 to include a reporting date equal to sixty (60)
days after the end of the fiscal quarter; and to amend Section 7.1 to increase
the other indebtedness from not exceeding Five Million and 00/100 Dollars
($5,000,000.00) to not exceeding Twenty Million and 00/100 Dollars
($20,000,000.00).
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 agree as follows:
1. Increase of Commitment: Borrower, Lender and Documentation Agent
each agree that the Commitment shall be increased by the amount of
the Increase, effective July 31, 2005, and that the Commitment,
which includes the Increase, shall be immediately due and payable as
of July 31, 2009 (such period of time to be referred to as the
"Maturity Date").
2. Other Indebtedness: Borrower, Lender and Documentation Agent each
agree that Borrower shall not incur any other Indebtedness in excess
of Twenty Million and 00/100 Dollars ($20,000,000.00), which
increases the other Indebtedness allowed by Fifteen Million and
00/100 Dollars ($15,000,000.00).
3. Notation: Lender and Documentation Agent covenant and agree to make
a notation upon their respective records showing that the Note and
Agreement has been modified as set forth herein.
4. Origination Fee. In consideration of the grant of the Increase by
Lender, Borrower shall pay an origination fee ("Origination Fee") in
an amount equal to six and a quarter basis points (6.25 bp) of the
Commitment, equaling the sum of Thirty One Thousand Two Hundred
Fifty and 00/100 Dollars ($31,250.00). The amount shall be pro rated
based upon the Participation and the Credit Facility. SunTrust shall
receive Thirty Seven and One Half Percent (37.5%) of the $31,250.00,
while Regions shall receive Sixty Two and One Half (62.5%) of the
$31,250.00.
5. Continuation of Terms. All of the terms, covenants and conditions of
the Note, as modified by the First Modification, the Second
Modification, Third Modification, Fourth Modification, and Fifth
Modification and the Credit Agreement or any other document executed
in connection therewith, are, to the extent not inconsistent with
the terms herein, hereby incorporated herein by reference. It is
expressly understood and agreed that the terms, covenants and
conditions of all instruments evidencing or securing the
indebtedness evidenced by the Note shall remain in full force and
effect, and shall in no manner be affected by the execution of this
Sixth Modification except as the same are expressly modified herein.
It is further expressly understood and agreed that the Participation
Period of Documentation Agent, as set forth in that certain
Participation Agreement, by and between the parties, dated as of
March 28, 2000, shall be extended and remain in full force and
effect, and shall terminate on July 31, 2009, as modified by the
Modification to Participation Agreement, dated the 29th day of July,
2005, effective the 29th day of July, 2005. Furthermore, Borrower
presently covenants, represents and warrants that it is full and
current compliance with all covenants, representations and
warranties contained in the Credit Agreement.
6. Reporting Requirements. Borrower will provide Lender with a copy of
its Form 10-Q filed with the Securities Exchange Commission for the
same quarter within sixty (60) days of the end of each quarter.
7. Incorporation by Reference. The parties hereby incorporate by
reference the Credit Agreement, First Modification, Second
Modification, Third Modification, Fourth Modification, Fifth
Modification, and Participation Agreement.
8. No Discharge. The execution and delivery of this Sixth Modification
does not discharge the obligors, sureties, endorsers or guarantors
of the Note, and all rights of the Lender against any and all of
same are expressly reserved.
9. Successors in Interest. This Sixth Modification shall be binding
upon and inure to the benefit of the parties hereto, their
respective successors and assigns, transferees and grantees.
10. Governing Law: This Sixth Modification shall be construed in
accordance with the laws of the State of Tennessee and the parties
hereto subject themselves to the jurisdiction of Tennessee and venue
of the Courts of Shelby County, Tennessee for the resolution of any
dispute hereunder.
11. Undefined Terms: All capitalized terms not defined herein shall have
the same definitions as set forth in the Credit Agreement.
12. Guarantor: The undersigned Guarantor joins and agrees with the terms
of this Sixth Modification and recognizes its continued obligation
to pay the entire indebtedness as hereby amended and under the terms
of its original Guaranty.
[Remainder of page left intentionally blank.]
IN WITNESS WHEREOF, the parties have executed this Sixth Modification
Agreement of the Revolving Loan and Credit Agreement as of the day and year
first above written.
BORROWER:
FRED'S INC., a Tennessee corporation
By: /s/Jerry A. Shore
----------------------
Name: Jerry A. Shore
Title: EVP and Chief Financial Officer
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me personally appeared, Jerry A. Shore, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence) and who, upon
oath, acknowledged himself to be the EVP and CFO of FRED'S, INC., a Tennessee
corporation, and that he as such officer being duly authorized so to do,
executed the foregoing instrument for the purpose therein contained by signing
the name of the company by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL, at office this 28th day of July 2005.
Terri L Johnson
Notary Public
My Commission Expires:
December 28, 2008
IN WITNESS WHEREOF, the parties have executed this Sixth Modification
Agreement of the Revolving Loan and Credit Agreement as of the day and year
first above written.
GUARANTOR AND SUBSIDIARY OF BORROWER:
FRED'S STORES OF TENNESSEE, INC.,
a Tennessee corporation
By: /s/Jerry A. Shore
-----------------------------------
Name: Jerry A. Shore
Title: Vice President
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me personally appeared, Jerry A. Shore, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence) and who, upon
oath, acknowledged himself to be the Vice President of FRED'S STORES OF
TENNESSEE, INC., a Tennessee corporation, and that he as such officer being duly
authorized so to do, executed the foregoing instrument for the purpose therein
contained by signing the name of the company by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL, at office this 28th day of July 2005.
Terri L Johnson
Notary Public
My Commission Expires:
December 28, 2008
IN WITNESS WHEREOF, the parties have executed this Sixth Modification
Agreement of the Revolving Loan and Credit Agreement as of the day and year
first above written.
LENDER:
REGIONS BANK, successor in interest to
UNION PLANTERS BANK NATIONAL ASSOCIATION
By: /s/ James Gummel
------------------------------------
James Gummel
Senior Vice President
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me personally appeared, James Gummel, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence) and who, upon
oath, acknowledged himself to be a SVP of REGIONS BANK, successor in interest to
UNION PLANTERS BANK NATIONAL ASSOCIATION, and that he as such officer being duly
authorized so to do, executed the foregoing instrument for the purpose therein
contained by signing the name of the bank by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL, at office this 29th day of July 2005.
Lasandra Cleaves
Notary Public
My Commission Expires:
December 30, 2007
IN WITNESS WHEREOF, the parties have executed this Sixth Modification
Agreement of the Revolving Loan and Credit Agreement as of the day and year
first above written.
DOCUMENTATION AGENT:
SUNTRUST BANK, a Georgia banking corporation
By: /s/ Bryan W. Ford
----------------------------------------
Name: Bryan W. Ford
Title: Director
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me personally appeared, Bryan W. Ford, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence) and who, upon
oath, acknowledged himself to be a Director of SUNTRUST BANK, a Georgia banking
corporation, and that he as such officer being duly authorized so to do,
executed the foregoing instrument for the purpose therein contained by signing
the name of the bank by himself as such officer.
WITNESS MY HAND AND OFFICIAL SEAL, at office this 29th day of July 2005.
Judy B. Carmichael
Notary Public
My Commission Expires:
September 19, 2007