<PAGE>
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.
<PAGE>
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
