FOURTH AMENDMENT TO CREDIT AGREEMENT
Execution Copy
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) made as of the
30th day of September, 2005, by and among TANDY BRANDS ACCESSORIES, INC.
(“Borrower”), XXXXX FARGO HSBC TRADE BANK, N. A. (“Agent”), and the lenders
specified herein (“Lenders”).
WHEREAS, Borrower, Agent and certain lenders entered into a Credit Agreement dated as of June
27, 2001 (the “Original Credit Agreement”), as amended by that First Amendment to Credit
Agreement dated as of June 28, 2002, (the “First Amendment”); as amended by that Second
Amendment to Credit Agreement dated as of June 26, 2003 (the “Second Amendment”); as
amended by that Third Amendment to Credit Agreement dated as of August 26, 2004 (the “Third
Amendment”); the Original Credit Agreement, the First Amendment, the Second Amendment and the
Third Amendment together, the “Credit Agreement”); and
WHEREAS, Borrower has requested that Agent and Lenders make certain amendments to the Credit
Agreement, and Agent and Lenders are willing to do so subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. Defined Terms. All capitalized terms used but not otherwise defined in this
Amendment shall have the meaning ascribed to them in the Credit Agreement. Unless otherwise
specified, all section references herein refer to sections of the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended as follows:
2.1 Definitions
(a) Applicable Commitment Fee. The chart in clause (b) in the
definition of “Applicable Commitment Fee Percentage” is revised to read as follows:
| APPLICABLE | ||||
| TOTAL FUNDED INDEBTEDNESS | COMMITMENT FEE | |||
| TO EBITDA RATIO | PERCENTAGE | |||
Less than 1.00 to 1.00 |
0.20 | % | ||
Greater than or equal to 1.00 to 1.00 but
less than 2.00 to 1.00 |
0.25 | % | ||
Greater than or equal to 2.00 to 1.00, but
less than 2.50 to 1.00 |
0.30 | % | ||
Greater than or equal to 2.50 to 1.00, but
less than 3.00 to 1.00 |
0.375 | % | ||
Greater than or equal to 3.00 to 1.00 |
0.375 | %* | ||
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| * | Applicable from Effective Date of Fourth Amendment through Review Date. |
(b) Applicable Margin. The definition of “Applicable Margin” is
revised to read as follows:
“‘Applicable Margin’ means, the following percentages per annum,
which percentages shall be added to the applicable interest rates
for purposes of calculating the interest rates payable to the
Lenders, as more fully described by Section 2.8:
(a) For the period from the Effective Date of the Fourth
Amendment until receipt and satisfactory review of the
financial statements for the fiscal quarter ending March 31,
2006 (the “Review Date”), the Applicable Margin for
Alternate Base Borrowings shall be 0.0%, the Applicable
Margin for Eurodollar Borrowings shall be 2.00%, and the
Applicable Commitment Fee Percentage shall be 0.375%.
(b) Following the Review Date, (i) the Applicable Margin
for Alternate Base Borrowings shall be 0.0%; and (ii) the
following Applicable Margins per annum for Eurodollar
Borrowings shall apply, and shall be determined as a function
of the Total Funded Indebtedness to EBITDA Ratio, as set
forth on the most recent certificate showing compliance
delivered to the Agent by the Borrower pursuant to
Section 9.1(b), as follows:
| APPLICABLE | ||||
| MARGIN FOR | ||||
| TOTAL FUNDED INDEBTEDNESS | EURODOLLAR | |||
| TO EBITDA RATIO | BORROWINGS | |||
Less than 1.00 to 1.00 |
1.000 | % | ||
Greater than or equal to 1.00 to 1.00 but
less than 1.50 to 1.00 |
1.125 | % | ||
Greater than or equal to 1.50 to 1.00 but
less than 2.00 to 1.00 |
1.250 | % | ||
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| APPLICABLE | ||||
| MARGIN FOR | ||||
| TOTAL FUNDED INDEBTEDNESS | EURODOLLAR | |||
| TO EBITDA RATIO | BORROWINGS | |||
Greater than or equal to 2.00 to 1.00, but
less than 2.50 to 1.00 |
1.500 | % | ||
Greater than or equal to 2.50 to 1.00, but
less than 3.00 to 1.00 |
1.75 | % | ||
Greater than or equal to 3.00 to 1.00 |
2.00%” | * | ||
| * | Applicable from Effective Date of Fourth Amendment through Review Date. |
(c) Effective Date of Fourth Amendment. The definition of “Effective
Date of the Fourth Amendment” is added to the Credit Agreement as follows:
“‘Effective Date of the Fourth Amendment’ means the date on which
the Borrower satisfies the conditions set forth in Section 3
of the Fourth Amendment to Credit Agreement dated as of September
30, 2005.”
(d) Fixed Charge Coverage Ratio. The definition of “Fixed Charge
Coverage Ratio” is amended to read as follows:
“‘Fixed Charge Coverage Ratio’, means, for the four consecutive
fiscal quarterly periods ending on the date of determination for
Borrower and its Subsidiaries, the ratio of (a) EBITDA determined on
a consolidated basis minus Capital Expenditures
minus federal, state, local and foreign income taxes
divided by (b) Interest Expense plus payments made
in respect of Capitalized Lease Obligations plus any cash
dividend made by Borrower or any of its Subsidiaries, plus
any payments made by Borrower or any of its Subsidiaries in respect
of the redemption, retirement, acquisition, or prepayment of any
Borrower’s capital stock, or any other equity interest during the
term of this Agreement, plus, for any determination based on
the quarterly period ending September 30, 2004 and thereafter,
implied principal payments in an amount equal to one-fifth (1/5th)
of Revolving Credit Loans in excess of $20,000,000 outstanding on
the last day of each such quarterly period, plus any
Investments in Xxxxxxx.”
2.2 Leverage Ratio
Section 10.14 is amended to read as follows:
“10.14 Leverage Ratio. Borrower shall not permit the ratio of (a)
Total Funded Indebtedness, on a consolidated basis, as of the last
day of each fiscal quarter of the Borrower to (b) EBITDA, on a
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consolidated basis, for the four (4) fiscal quarters ending on
September 30, 2005 to exceed 3:50 to 1:00; for the four (4) fiscal
quarters ending on December 31, 2005 to exceed 3.25 to 1.00; and for
any fiscal quarter thereafter to exceed 3.00 to 1.00.”
2.3 Fixed Charge Coverage Ratio
Section 10.15 is amended to read as follows:
“10.15 Fixed Charge Coverage Ratio. Borrower shall not permit the
Fixed Charge Coverage Ratio as of the last day of each fiscal
quarter of Borrower to be less than 1.05:1.00 for the fiscal quarter
ending on September 30, 2005; and 1.25 to 1.00 for any fiscal
quarter thereafter.”
3. Effectiveness of Amendment. This Amendment shall be effective upon receipt by
Agent of:
(a) A copy or copies of this Amendment signed by
each of the parties hereto;
(b) A Confirmation of Guaranty executed by each
Guarantor (other than Xxxxxxx);
(c) A Compliance Certificate executed by Borrower;
and
(d) Payment for all other fees and expenses due and
owing by the Borrower.
4. Ratifications, Representations and Warranties.
(a) The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Credit Agreement and, except as expressly
modified and superseded by this Amendment, the terms and provisions of
the Credit Agreement are ratified and confirmed and shall continue in
full force and effect. Borrower, Agent and Lenders agree that the
Credit Agreement and the Loan Documents, as amended hereby, shall
continue to be legal, valid, binding and enforceable in accordance with
their respective terms.
(b) To induce Agent and Lenders to enter into this Amendment, Borrower
ratifies and confirms each representation and warranty set forth in the
Credit Agreement as if such representations and warranties were made on the
even date herewith, (except to the extent that such representations and
warranties related solely to an earlier date and except to the extent that
the facts upon which such representations are based have been changed by the
transactions contemplated in the Credit Agreement) and further represents
and warrants (i) that there has occurred since the
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date of the last
financial statements delivered to Agent and Lenders no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Change, (ii) that after giving effect to this Amendment no Event of
Default exists on the date hereof after giving effect to this Amendment,
(iii) that Borrower is fully authorized to enter into this Amendment, and
(iv) that the Guarantors signing the Confirmation of Guaranty attached
hereto are all of the Borrower’s Subsidiaries as of the date of this
Amendment (other than Xxxxxxx).
5. Benefits. This Amendment shall be binding upon and inure to the benefit and
Borrower, Agent and Lenders and their respective successors and assigns; provided, however, that
Borrower may not, without the prior written consent of Agent and Lenders, assign any rights,
powers, duties or obligations under this Amendment, the Credit Agreement or any of the other Loan
Documents.
6. Construction. This Amendment shall be governed by and construed in accordance with
the laws of the State of Texas.
7. Invalid Provisions. If any provision of this Amendment is held to be illegal,
invalid or unenforceable under present or future laws, such provision shall be fully several and
the remaining provisions of this Amendment shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance.
8. Entire Agreement. The Credit Agreement, as amended by this Amendment, contains the
entire agreement among the parties regarding the subject matter hereof and supersedes all prior
written and oral agreements and understandings among the parties hereto regarding same.
9. Reference to Credit Agreement. The Credit Agreement and any and all other
agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are hereby amended so
that any reference in the Credit Agreement to the Credit Agreement shall mean a reference to the
Credit Agreement as amended hereby.
10. Counterparts. This Amendment may be separately executed in any number of
counterparts, each of which shall be an original, but all of which, taken together, shall be deemed
to constitute one and the same agreement.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.
| BORROWER: | ||||||
| TANDY BRANDS ACCESSORIES, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| AGENT: | ||||||
| XXXXX FARGO HSBC TRADE BANK, N.A. | ||||||
| By: Name: |
/ s/ Xxxxxx Xxxx
|
|||||
| Title: | Senior Relationship Manager | |||||
| XXXXX FARGO BANK, N. A. | ||||||
| By: Name: |
/s/ Xxxx Xxxxxxx
|
|||||
| Title: | Senior Vice President | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| LENDERS: | ||||||
| XXXXX FARGO HSBC TRADE BANK, N. A. | ||||||
| By: | /s / Xxxxxx Xxxx | |||||
| Name: | Xxxxxx Xxxx | |||||
| Title: | Senior Relationship Manager | |||||
| Address: | 0000 Xxxx Xxxxxx, Xxxxx 000 | |||||
| Xxxxxx, XX 00000 | ||||||
| Attention: | Xxxxxx Xxxx | |||||
| Fax No.: | 000-000-0000 | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| COMERICA BANK | ||||||
| By: | / s/ Xxxxx X. Xxxxxx | |||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Title: | Vice President — Texas Division | |||||
| Address: | 0000 Xxxxxxxx, Xxxxx 000 | |||||
| Xxxxxx, XX 00000 | ||||||
| Attention: | ||||||
| Fax No.: | ||||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| BANK OF AMERICA, N.A. | ||||||
| By: | / s/ Xxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxx | |||||
| Title: | Senior Vice President | |||||
| Address: | 000 Xxxx Xxxxxx | |||||
| 00xx Xxxxx | ||||||
| Xxxxxx, Xxxxx 00000 | ||||||
| Attention: | ||||||
| Fax No. | ||||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| JPMORGAN CHASE BANK | ||||||
| By: | / s/ Xxxxx Xxxxxx | |||||
| Name: | Xxxxx Xxxxxx | |||||
| Title: | Vice President | |||||
| Address: | 000 X. Xxxxxx | |||||
| X.X. Xxx 000 | ||||||
| Xxxxxxxxx, Xxxxx 00000-0000 | ||||||
| Attention: | ||||||
| Fax No. | ||||||
Tandy Brands Accessories, Inc. — Fourth Amendment
CONFIRMATION OF GUARANTY
Reference is made to the Credit Agreement dated as of June 27, 2001 (as amended, the
“Credit Agreement”) among Tandy Brands Accessories, Inc. (“Borrower”), Xxxxx Fargo
HSBC Trade Bank, N. A. (“Agent”), and the lenders specified therein (“Lenders”).
The undersigned Guarantors hereby confirm that their guaranty under the Subsidiary Guaranty dated
as of June 27, 2001 for the benefit of Agent, Lenders, and Xxxxx Fargo Bank, N. A., continues in
full force and effect notwithstanding the Fourth Amendment to Credit Agreement dated as of
September 30, 2005, which Fourth Amendment is hereby accepted and consented to by each Guarantor.
In accordance herewith, the aforesaid guaranty shall be deemed to cover and support the Obligations
at any time due from Borrower to Lenders pursuant to the Credit Agreement as the latter has been
modified by the Fourth Amendment. This Confirmation of Guaranty shall be governed by and construed
in accordance with the laws of the State of Texas.
Dated as of the 30th day of September, 2005.
| ACCESSORY DESIGN GROUP, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| AMITY/XXXXX, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| TANDY BRANDS ACCESSORIES HANDBAGS, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC INVESTMENTS, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC GENERAL MANAGEMENT COMPANY | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC MANAGEMENT COMPANY L.P. | ||||||
| By: TBAC General Management Company, its general partner | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC PRINCE XXXXXXX, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| STAGG INDUSTRIES, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC — TOREL, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC — MASS MERCHANT QUALITY CONTROL, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC INVESTMENT TRUST | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| SUPERIOR MERCHANDISE COMPANY | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
| TBAC — ACQUISITION, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
| ACCEPTED as of the date first written above. | ||||
| BORROWER: | ||||
| TANDY BRANDS ACCESSORIES, INC. | ||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||
| Title: | Chief Financial Officer | |||
Tandy Brands Accessories, Inc. — Fourth Amendment
COMPLIANCE CERTIFICATE
As of September 30, 2005
Reference is made to that certain Credit Agreement dated as of June 27, 2001 among Tandy
Brands Accessories, Inc. (“Borrower”), Xxxxx Fargo HSBC Trade Bank, N. A. (“Agent”), and the
lenders specified therein (“Lenders”), by and among Borrower, Agent, and Lenders (as amended, the
“Credit Agreement”). Terms which are defined in the Credit Agreement and which are used but not
defined herein shall have the meanings given them in the Credit Agreement. The undersigned, Xxxx
X. Xxxxxxxx, Borrower’s Chief Financial Officer, hereby certifies in the name, and on behalf, of
Borrower that Borrower has made a thorough inquiry into all matters certified herein and based upon
such inquiry, experience, and the advice of counsel, does hereby further certify that:
1. All representations and warranties made by Borrower in any Loan Document delivered on or
before the date hereof (including, without limitation, the representations and warranties contained
in Section 4 of the Fourth Amendment to Credit Agreement of even date herewith [“Fourth Amendment])
are true in all material respects on and as of the date hereof (except to the extent that such
representations and warranties related solely to an earlier date and except to the extent that the
facts upon which such representations are based have been changed by the transactions contemplated
in the Credit Agreement) as if such representations and warranties had been made as of the date
hereof.
2. After giving effect to the Fourth Amendment no Event of Default exists on the date hereof.
3. Borrower has performed and complied with all agreements and conditions required in the Loan
Documents to be performed or complied with by it on or prior to the date hereof.
IN WITNESS WHEREOF, this instrument is executed by the undersigned as of the date first above
written.
| TANDY BRANDS ACCESSORIES, INC. | ||||||
| By: Name: |
/ s/ Xxxx X. Xxxxxxxx
|
|||||
| Title: | Chief Financial Officer | |||||
Tandy Brands Accessories, Inc. — Fourth Amendment
