EXHIBIT 10.1
SECOND AMENDMENT
OF
SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
This Second Amendment, dated effective as of February 10, 2003, by and
among CROWN CRAFTS, INC. (the "Company"), and BANC OF AMERICA STRATEGIC
SOLUTIONS, INC. (assignee of Bank of America, N.A.), THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, and WACHOVIA BANK, NATIONAL ASSOCIATION (successor by merger
to Wachovia Bank, N.A.) (collectively, the "Purchasers").
WHEREAS, the parties hereto have executed and delivered that certain
Subordinated Note and Warrant Purchase Agreement dated as of July 23, 2001, as
amended by First Amendment of Subordinated Note and Warrant Purchase Agreement
dated as of September 28, 2001 (as so amended, the "PURCHASE AGREEMENT");
WHEREAS, the Company has requested a modification of, among other
things, the covenants under the Purchase Agreement;
WHEREAS, the Purchasers are willing to enter into this Amendment
subject to the satisfaction of conditions and terms set forth herein;
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Purchase Agreement; and
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENTS TO PURCHASE AGREEMENT.
lA. SECTION 1.01 OF THE PURCHASE AGREEMENT. Section 1.01 of the
Purchase Agreement is amended by deleting the definitions of the following terms
in their entirety and substituting the following definitions therefor:
"CONSOLIDATED AVAILABLE FREE CASH FLOW" means, for each Annual
Period, an amount equal to 85% of Consolidated Free Cash Flow for such
Annual Period.
"CONSOLIDATED EBITDA" shall mean the sum of the following,
calculated on a consolidated basis in accordance with GAAP for the
Company and its Consolidated Subsidiaries, for the relevant fiscal
period: (i) Consolidated Net Income; plus (ii) depreciation and
amortization expenses; plus (iii) Consolidated Interest Expense; plus
(iv) income tax expense included in Consolidated Net Income; plus (v)
for the following Fiscal Quarters only, a before-tax reserve related to
the closing of the operations of Burgundy Interamericana SA de CV, not
exceeding the following amounts for the
following Fiscal Quarters (1) for the Fiscal Quarter ending December
29, 2002, $1,775,000, (2) for the Fiscal Quarter ending March 30, 2003,
$225,000 and (3) for the Fiscal Quarter ending June 29, 2003, $275,000.
lB. SECTION 8.01(a) OF THE PURCHASE AGREEMENT. Section 8.01(a) of
the Purchase Agreement is amended by deleting it in its entirety and
substituting the following therefor:
(a) Minimum EBITDA. Consolidated EBITDA shall not be less
than, for each Fiscal Quarter set forth below and the 3 immediately
preceding Fiscal Quarters, the amount set forth below corresponding to
such Fiscal Quarter:
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FISCAL QUARTER ENDING MINIMUM EBITDA
----------------------------------------- -----------------------------------
December 29, 2002 through $ 6,885,000
March 30, 2004
----------------------------------------- -----------------------------------
June 29, 2004 and each Fiscal Quarter An amount to be agreed upon in
thereafter writing by the parties, not to
exceed $8,725,000 (which amount
shall be applicable if no other
amount has been agreed upon in
writing)
----------------------------------------- -----------------------------------
lC. SECTION 8.01(b) OF THE PURCHASE AGREEMENT. Section 8.01(b) of
the Purchase Agreement is amended by deleting it in its entirety and
substituting the following therefor:
(b) Debt/EBITDA Ratio. The Debt/EBITDA Ratio will not
exceed, at the end of each Fiscal Quarter set forth below, calculated
as to Debt as of such Fiscal Quarter and calculated as to Consolidated
EBITDA for such Fiscal Quarter and the 3 immediately preceding Fiscal
Quarters, the ratio set forth below corresponding to such Fiscal
Quarter:
------------------------------------------------------------------------------------
FISCAL QUARTER ENDING MAXIMUM DEBT/EBITDA RATIO
----------------------------------------- ---------------------------------------
December 29, 2002 through March 30, 2004 4.75 to 1.0
----------------------------------------- ---------------------------------------
June 29, 2004 and each Fiscal Quarter A ratio to be agreed upon in writing by
thereafter the parties, not to exceed 3.00 to 1.0
(which ratio shall be applicable if no
other ratio has been agreed upon in
writing)
----------------------------------------- ----------------------------------------
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2. Consent to Discontinuance of Operations and Disposition of
Assets. The Company has informed the Purchasers that they desire to
discontinue the operations of Burgundy Interamericana SA de CV and
dispose of the assets thereof, having a net book value of approximately
$1,015,835 and a resale value of approximately $343,483. Pursuant to
the provisions of Section 7.02(b) of the Purchase Agreement, the
Purchasers hereby consent to such discontinuance and also to the sale
of such assets, and acknowledge and agree that the foregoing shall not
be deemed to be an Event of Default; provided that the aggregate gross
sales price thereof is not less than $300,000.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall be effective
as of February 10, 2003 (the "EFFECTIVE DATE"), upon the satisfaction
of the following conditions:
(a) the Purchasers shall have received executed originals of this
Amendment and the Third Amendment, satisfactory to the
Required Holders in all respects, to the Credit Agreement,
dated as of July 23, 2001, among the Company, Xxxxxxxxx
Weavers, Inc., Hamco, Inc. and Crown Crafts Infant Products,
Inc., as borrowers, Wachovia Bank, National Association
(successor by merger to Wachovia Bank, N.A.), as agent, and
Wachovia Bank, National Association (successor by merger to
Wachovia Bank, N.A.), Banc of America Strategic Solutions,
Inc. (assignee of Bank of America, N.A.) and The Prudential
Insurance Company of America, as lenders, each agreement being
dated the Effective Date, in form and substance satisfactory
to the Purchasers.
(b) The Company shall have paid all costs and expenses (including
attorney's fees and expenses) incurred by any Purchaser
through the Effective Date, pursuant to statements submitted
to the Company (which statements may include estimates of time
and expenses to be incurred on and after the dates of posting
of actual time and expenses set forth therein, which estimated
amounts shall be subject to subsequent adjustment to reflect
actual time and expenses subsequently posted).
(c) The representations and warranties contained herein shall be
true on and as of the date hereof; there shall exist on the
date hereof, after giving effect to this Amendment, no Event
of Default or Default; there shall exist no material adverse
change in the business, properties, prospects, operations or
condition, financial or otherwise, of the Company or its
Subsidiaries since March 31, 2002 other than (i) the
discontinuance of the operations of Burgundy Interamericana SA
de CV, as set forth in Paragraph 2 hereof, or (ii) as reported
by the Company in its quarterly reports on Form 10-Q filed
with the Securities and Exchange Commission for quarterly
periods subsequent to March 31, 2002; and the Company shall
have delivered to the Purchasers a certificate signed by a
senior officer of the Company to such effect.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Company hereby restates and renews each of the
representations and warranties made by it in the Purchase
Agreement, as amended hereby, as though made on and as of the
date hereof, with each reference therein to "this
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Agreement", "hereof', "hereunder", "thereof', "thereunder" and
words of like import being deemed to be a reference to the
Purchase Agreement as amended hereby.
(b) The Company further represents and warrants as follows:
(i) The execution, delivery and performance by the
Company of this Amendment are within its corporate
powers, have been duly authorized by all necessary
corporate action and do not contravene (A) its
charter or by-laws, (B) law or (C) any legal or
contractual restriction binding on or affecting the
Company; and such execution, delivery and performance
do not or will not result in or require the creation
of any Lien upon or with respect to any of the
properties of the Company or any of its Subsidiaries.
(ii) No governmental approval is required for the due
execution, delivery and performance by the Company of
this Amendment, except for such governmental
approvals as have been duly obtained or made and
which are in full force and effect on the date hereof
and not subject to appeal.
(iii) Each of this Amendment and the Notes constitutes the
legal, valid and binding obligations of the Company
enforceable against the Company in accordance with
their respective terms.
(iv) There are no pending or threatened actions, suits or
proceedings affecting the Company or any of its
Subsidiaries or the properties of the Company or any
of its Subsidiaries before any court, governmental
agency or arbitrator, that may, if adversely
determined, materially adversely effect the financial
condition, properties, business, operations or
prospects of the Company and it Subsidiaries,
considered as a whole, or affect the legality,
validity or enforceability of the Purchase Agreement,
as amended by this Amendment.
5. MISCELLANEOUS.
5A. REFERENCE TO AND EFFECT ON THE PURCHASE AGREEMENT. (a) Upon
the effectiveness of this Amendment, on and after the date hereof each reference
in the Purchase Agreement to "this Agreement", "hereunder", "hereof' or words of
like import referring to the Purchase Agreement, and each reference in any other
document to "the Purchase Agreement", "thereunder", "thereof' or words of like
import referring to the Purchase Agreement, shall mean and be a reference to the
Purchase Agreement, as amended hereby.
(b) Except as specifically amended above, the Purchase Agreement,
and all other related documents, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any holder of a
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Note under the Purchase Agreement or the Notes, nor constitute a waiver of any
provision of any of the foregoing.
5B. COSTS AND EXPENSES. The Company agrees to pay on demand all
costs and expenses incurred by the Purchasers or any other holder of a Note in
connection with the preparation, execution and delivery of this Amendment,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel. The Company further agrees to pay on demand all costs and expenses, if
any (including, without limitation, reasonable counsel fees and expenses of
counsel), incurred by the Purchasers or any other any holder of a Note in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Amendment, including, without limitation, counsel fees and
expenses in connection with the enforcement of rights under this paragraph 4B.
5C. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
5D. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
5E. NO DEFAULT OR CLAIMS. To induce the Purchasers to enter into
this Amendment, the Company hereby acknowledges and agrees that, as of the date
hereof, and after giving effect to the terms hereof, there exists (i) no Default
or Event of Default, (ii) no right of offset, recoupment, defense, counterclaim,
claim or objection in favor of the Company arising out of or with respect to any
of the Notes or other obligations of the Company owed to any holder of a Note,
and (iii) each Purchaser has acted in good faith and has conducted its
relationships with the Company in a commercially reasonable manner in connection
with the negotiations, execution and delivery of this Amendment and in all
respects in connection with the Purchase Agreement, the Company hereby waiving
and releasing any such claims to the contrary that may exist as of the date of
this Amendment.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CROWN CRAFTS, INC.
By /s/ Xxx Xxxxxxx Xxxxxx
______________________________
Name: Xxx Xxxxxxx Samson
Title: Vice President,
Chief Financial Officer
BANC OF AMERICA STRATEGIC SOLUTIONS, INC.
(ASSIGNEE OF BANK OF AMERICA, N.A.)
By /s/ Xxxx X. Register
______________________________
Name: Xxxx X. Register
Title: Principal
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Xxxx X. Xxxxx
______________________________
Name: Xxxx X. Xxxxx
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION (SUCCESSOR BY
MERGER TO WACHOVIA BANK, N.A.)
By /s/ Xxxxxx X. Xxxx
______________________________
Name: Xxxxxx X. Xxxx
Title: Vice President
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