FIRST AMENDMENT TO FINANCING AGREEMENT
Exhibit 10.4
FIRST AMENDMENT TO
FINANCING AGREEMENT
FINANCING AGREEMENT
THIS FIRST AMENDMENT TO FINANCING AGREEMENT (the “Amendment”), dated as of this 5th
day of November, 2007, is made by and among
CROWN CRAFTS, INC., a Delaware corporation (“CCI”);
XXXXXXXXX WEAVERS, INC., a Kentucky corporation (“Weavers”);
HAMCO, INC., a Louisiana corporation (“Hamco”);
CROWN CRAFTS INFANT PRODUCTS, INC., a Delaware corporation (“CCIP”; together with CCI,
Weavers and Hamco, the “Companies” and each a “Company”); and
THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation (“CIT”),
to the Financing Agreement, dated July 11, 2006 (as amended, modified, restated or
supplemented from time to time, the “Financing Agreement”), among CIT and the Companies.
All capitalized terms used herein without definition shall have the meanings ascribed to such terms
in the Financing Agreement.
RECITALS
A. Pursuant to the Financing Agreement, CIT has agreed to make loans and extend credit to the
Companies in the amounts, upon the terms and subject to the conditions contained therein.
B. The Companies have requested that CIT (i) consent to CCIP purchasing certain assets and
assuming certain liabilities of the Baby Division of Springs Global US, Inc., a Delaware
corporation (“Springs”), and (ii) increase the amount of the Revolving Line of Credit and
make a term loan to the Companies to facilitate such transactions.
C. CIT has agreed to such requests, and to accomplish the foregoing CIT and the Companies have
agreed to amend the Financing Agreement and the other Loan Documents as set forth in this
Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the
Companies and CIT hereby agree as follows:
ARTICLE I
CONSENT
Subject to the terms and conditions of the Financing Agreement and the other terms and
conditions contained in this Amendment, CIT consents to CCIP purchasing certain assets and assuming
certain liabilities of the Baby Division of Springs, pursuant to the terms and conditions of that
certain Asset Purchase Agreement, dated on or about the date hereof, between CCIP and Springs.
ARTICLE II
AMENDMENTS TO FINANCING AGREEMENT
The Financing Agreement is hereby amended as follows:
2.1 Section 1.1 of the Financing Agreement is amended as follows:
(a) The following new defined terms are added in their proper alphabetical sequence:
First Amendment Effective Date shall mean the date on which the First
Amendment to this Financing Agreement is executed and delivered by the Companies and
the conditions precedent to the effectiveness of such amendment are satisfied or
waived by CIT.
Prepayment Premium shall mean an amount equal to the product obtained
by multiplying the principal amount of the Term Loan prepaid by one percent (1%).
Springs shall mean Springs Global US, Inc., a Delaware corporation.
Springs Acquisition shall mean the purchase by CCIP of certain of the
assets of the Baby Division of Springs, and the assumption by CCIP of certain of the
liabilities of the Baby Division of Springs, all as more fully described in the
Springs Purchase Agreement.
Springs Purchase Agreement shall mean the Asset Purchase Agreement,
dated November 5, 2007, between CCIP, as purchaser, and Springs, as seller, pursuant
to which CCIP has consummated the Springs Acquisition.
Term Loan shall mean the term loan in the principal amount of
$5,000,000 made by CIT to the Companies on or about the First Amendment Effective
Date on the terms and conditions set forth in Section 4.2 of this Financing
Agreement.
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Promissory Note shall mean the note in the form of Exhibit A
attached hereto delivered by the Companies to CIT to evidence the Term Loan.
(b) The definition of “Borrowing Base” is amended by deleting the figure “$3,000,000” from the
second clause (a) therein and by substituting in lieu thereof the figure “$5,800,000.”
(c) The definition of “Obligations” is amended by deleting the parenthetical phrase at the end
of clause (a) therein and by substituting in lieu thereof the following new parenthetical phrase:
“(including, without limitation, all Revolving Loans, the Term Loan and all obligations of CIT
under Letter of Credit Guaranties).”
(d) The definition of “Revolving Line of Credit” is amended by deleting therefrom the figure
“$22,000,000” and by substituting in lieu thereof the figure “$26,000,000.”
(e) The definition of “Termination Date” is amended by deleting the word and figure “three
(3)” and by substituting in lieu thereof the word and figure “four (4).”
2.2 Section 3.5(a) of the Financing Agreement is amended in its entirety to read as follows:
“(a) Generally. Unless this Financing Agreement expressly provides
otherwise, so long as no Event of Default shall have occurred and remain
outstanding, CIT agrees to apply (i) all Proceeds of Trade Accounts Receivable,
Wal-Mart Letters of Credit, Inventory and the Factoring Credit Balances to the
Revolving Loan Account, (ii) all Proceeds of all other Collateral, to the last
maturing installments of principal of the Term Loan until fully repaid, and (iii)
any other payment received by CIT with respect to the Obligations, in such order and
manner as CIT shall elect in the exercise of its reasonable business judgment.”
2.3 Section 4 of the Financing Agreement is amended in its entirety to read as follows:
“SECTION 4. Term Loan
4.1 Promissory Note Evidencing Term Loan. The Companies agree to
execute and deliver to CIT the Promissory Note to evidence the Term Loan to be
extended to the Companies by CIT.
4.2 Term Loan.
(a) Funding of Term Loan. Upon CIT’s receipt of the Promissory Note
evidencing the Term Loan and the satisfaction of the other conditions set forth in
Section 4.2(a) of the First Amendment to this Financing Agreement, CIT
agrees to make the Term Loan to the Companies.
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(b) Repayment of Term Loan. The principal amount of the Term Loan shall
be due and payable in twenty-four (24) consecutive monthly principal installments of
$208,333.33 each commencing on December 1, 2007 and continuing on the first day of
each month thereafter through November 1, 2009.
4.3 Provisions Regarding all Term Loans.
(a) Repayment Upon Termination. In the event this Financing Agreement
or the Revolving Line of Credit is terminated by either CIT or the Companies for any
reason whatsoever, the Term Loan, together with all accrued interest thereon and the
applicable Prepayment Premium, shall be due and payable in full on the effective
date of such termination, notwithstanding any other provision of this Financing
Agreement or the Promissory Note to the contrary.
(b) Optional Prepayments. The Companies, at their option, may prepay
the Term Loan at any time, in whole or in part, provided that on the date of
such prepayment, there shall be due and payable (i) accrued interest on the
principal so prepaid to the date of such prepayment and (ii) the Prepayment Premium
due with respect to such prepayment.
(c) Application of Prepayments. Except as CIT and the Companies shall
otherwise agree in a separate writing, each prepayment of the Term Loan (whether
voluntary or mandatory) shall be applied to the last maturing installments of
principal of the Term Loan until fully repaid.
(d) No Reborrowing. To the extent repaid, the principal amount of the
Term Loan may not be reborrowed under this Section 4.
(e) Authority to Charge Revolving Loan Account. The Companies hereby
authorize CIT, without notice to the Companies, to charge the Revolving Loan Account
with all payments due under this Section 4 as such amounts become due. Any
amount charged to the Revolving Loan Account shall be deemed a Chase Bank Rate Loan
hereunder and shall bear interest at the rate provided in Section 8.1 (or
Section 8.2, if applicable) of this Financing Agreement. The Companies
confirm that any charges which CIT may make to the Revolving Loan Account as
provided herein will be made as an accommodation to the Companies and solely at
CIT’s discretion.”
2.4 Section 7.2(c)(iii)(x) is amended in its entirety to read as follows:
“(x) In the event of any loss or damage to any Inventory by condemnation, fire
or other casualty, CIT agrees to apply the Casualty Proceeds to repay the
outstanding Revolving Loans, and then to repay the Term Loans in the manner set
forth in Section 4.3(c).”
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2.5 A new Section 7.2(m) is added as follows:
“(m) Springs Acquisition. The Springs Purchase Agreement is in full
force and effect as of the First Amendment Effective Date and has not been amended
or waived by any party thereto in any material respect. All representations and
warranties of the parties to the Springs Purchase Agreement are, to the best of
CCIP’s knowledge, true and correct in all material respects as of the First
Amendment Effective Date with the same effect as though made on such date. All
requisite approvals by governmental authorities and regulatory bodies having
jurisdiction over CCIP in connection with the Springs Acquisition contemplated by
the Springs Purchase Agreement have been duly obtained and no such approvals impose
any conditions to the consummation of the transactions contemplated by the Springs
Purchase Agreement or to the conduct of the business of CCIP in the same manner as
heretofore conducted. CCIP has not been notified that legal proceedings adverse to
the transaction contemplated by the Springs Purchase Agreement are contemplated by
any person, including any governmental body or agency.”
2.6 A new Section 8.1.1 is added between Sections 8.1 and 8.2 as follows:
“8.1.1 Interest on Term Loans. Interest on the Term Loan shall be
payable monthly on the first day of each month and shall accrue at a rate per annum
equal to one half percent (0.5%) plus the Chase Bank Rate. In the event of
any change in said Chase Bank Rate, the rate set forth in the first sentence of this
Section 8.1.1 shall change, effective as of the date of such change, so as
to remain equal to one half percent (0.5%) plus the new Chase Bank Rate.
All interest rates shall be calculated based on a 360-day year and actual days
elapsed.”
2.7 Section 8.11 is amended in its entirety to read as follows:
“8.11 Early Termination Fee; Prepayment Premium. In the event the
Companies terminate the Revolving Line of Credit or this Financing Agreement on an
Early Termination Date, the Early Termination Fee, if any, shall be due and payable
in full on the date of termination. In the event the Companies voluntarily prepay
the Term Loan, in whole or in part, the Prepayment Premium applicable thereto shall
be due and payable in full on the date of such prepayment.”
2.8 Section 11 is amended by deleting the proviso at the end of the third sentence beginning
with the word “provided” and by substituting in lieu thereof the following new proviso:
“provided that the Companies pay to CIT any Early Termination Fee and Prepayment Premium
due and payable hereunder on the date of termination.”
2.9 Exhibit A attached to this Amendment is made Exhibit A to the Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Companies hereby represent and warrant to CIT that:
3.1 Compliance With the Financing Agreement. As of the execution of this Amendment,
each Company is in compliance with all of the terms and provisions set forth in the Financing
Agreement and the other Loan Documents to be observed or performed by such Company.
3.2 Representations in Financing Agreement. The representations and warranties of
each Company set forth in the Financing Agreement and the other Loan Documents are true and correct
in all material respects except to the extent that such representations and warranties relate
solely to or are specifically expressed as of a particular date or period which is past or expired
as of the date hereof.
3.3 No Event of Default. No Default or Event of Default exists.
ARTICLE IV
MODIFICATION OF LOAN DOCUMENTS; CONDITIONS PRECEDENT
4.1 Loan Documents. The Financing Agreement and the other Loan Documents are amended
to provide that any reference therein to the Financing Agreement shall mean, unless otherwise
specifically provided, the Financing Agreement as amended hereby, and as further amended, restated,
supplemented or modified from time to time.
4.2 Conditions Precedent. This Amendment shall become effective and be deemed
effective as of the date hereof upon the satisfaction or waiver by CIT of the following conditions
precedent:
(a) Receipt by CIT of the following documents, each to be in form and content satisfactory to
CIT and its counsel:
(i) this Amendment, duly executed by the Companies;
(ii) the Promissory Note, duly executed by the Companies;
(iii) amendments to the CCIP Factoring Agreement and the Hamco Factoring Agreement,
duly executed by CCIP and Hamco, pursuant to which (i) CIT will agree to refund the unpaid
Minimum Factoring Fees (as defined in the CCIP Factoring Agreement and the Hamco Factoring
Agreement) charged to CCIP and Hamco by CIT for the Contract Year (as defined in the CCIP
Factoring Agreement and the Hamco Factoring Agreement) ending July 11, 2007 and (b) the
Minimum Factoring Fees owing
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by CCIP and Hamco in the Contract Year ending July 11, 2008 will be increased to
$240,000 and adjusted back to $225,000 for each Contract Year thereafter;
(iv) tax lien, judgment lien and UCC searches on Springs from all jurisdictions
reasonably required by CIT, such searches to verify that CIT will have a first priority
security interest in the Collateral to be purchased from Springs, subject only to Permitted
Encumbrances;
(v) resolutions of the Board of Directors of each Company authorizing the execution,
delivery and performance of this Amendment and the other Loan Documents to be executed by
each Company in connection with the transactions contemplated by this letter, certified by
the Secretary or Assistant Secretary of each Company as of the date thereof, together with a
certificate of such Secretary or Assistant Secretary as to the incumbency and signature of
the officer(s) executing this Amendment and such other Loan Documents on behalf of each
Company;
(vi) an executed Officer’s Certificate of each Company, satisfactory in form and
substance to CIT, certifying that as of the date thereof (x) the representations and
warranties contained herein are true and correct in all material respects, (y) each Company
is in compliance with all of the terms and provisions set forth herein and (z) no Default or
Event of Default has occurred;
(vii) all information necessary for CIT to issue wire transfer instructions on behalf
of the Companies for the loans to be made under the Agreement to finance a portion of the
cash purchase price payable to Springs in connection with the Springs Acquisition;
(viii) the favorable, written opinion of counsel to the Companies as to the
transactions contemplated by this letter;
(ix) landlord or warehouseman agreements with respect to all leased premises where the
Collateral purchased from Springs will be located and for which the Companies have not
already provided such an agreement to CIT;
(x) copies of the Springs Purchase Agreement and the other purchase documents related
thereto, accompanied by the certificate of the president of the Companies as to certain
representations and warranties contained therein and the consummation of the Springs
Acquisition;
(xi) a collateral assignment of CCIP’s rights and remedies under the Springs Purchase
Agreement, duly executed by CCIP and acknowledged and agreed to by Springs and any escrow
agent under the Springs Purchase Agreement; and
(xii) such other documents, instruments and agreements as CIT shall reasonably request
in connection with the foregoing matters.
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(b) All approvals, licenses, consents and filings necessary to permit the Springs Acquisition
and the other transactions contemplated by this Amendment shall have been obtained and made;
(c) There shall not have occurred any event, condition or state of facts which would
reasonably be expected to have a Material Adverse Effect, as reasonably determined by CIT;
(d) No Default or Event of Default shall have occurred and be continuing; and
(e) Simultaneously with the execution of the Amendment and the other Loan Documents
contemplated by the Amendment, the Springs Acquisition shall be consummated in accordance with the
terms of the Springs Purchase Agreement and other purchase documents that will be satisfactory to
CIT and its counsel; and
(f) CIT shall have satisfactorily completed its due diligence on the Springs Acquisition and
the Collateral to be purchased in connection therewith.
ARTICLE V
GENERAL
5.1 Full Force and Effect. As expressly amended hereby, the Financing Agreement and
the other Loan Documents shall continue in full force and effect in accordance with the provisions
thereof. As used in the Financing Agreement and the other Loan Documents, “hereinafter”, “hereto”,
“hereof”, or words of similar import, shall, unless the context otherwise requires, mean the
Financing Agreement or the other Loan Documents, as the case may be, as amended by this Amendment.
5.2 Applicable Law. This Amendment shall be governed by and construed in accordance
with the internal laws and judicial decisions of the State of New York.
5.3 Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall constitute an original, but all of which when taken together shall constitute but one
and the same instrument.
5.4 Further Assurances. The Companies shall execute and deliver to CIT such
documents, certificates and opinions as CIT may reasonably request to effect the amendments
contemplated by this Amendment.
5.5 Headings. The headings of this Amendment are for the purpose of reference only
and shall not effect the construction of this Amendment.
5.6 Expenses. The Companies shall reimburse CIT for CIT’s legal fees and expenses
incurred in connection with the preparation, negotiation, execution and delivery of this Amendment
and all other agreements and documents contemplated hereby.
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5.7 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
COMPANY AND CIT WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE FINANCING
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
[signatures continued on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers to be effective on the day and year first above written.
| CCI: | ||||
| CROWN CRAFTS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| WEAVERS: | ||||
| XXXXXXXXX WEAVERS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| HAMCO: | ||||
| HAMCO, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| CCIP: | ||||
| CROWN CRAFTS INFANT PRODUCTS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
First
Amendment to Crown Crafts Financing Agreement
| CIT: | ||||||
| THE CIT GROUP/COMMERCIAL SERVICES, INC. | ||||||
| By: | /s/ X. X. Xxxxx | |||||
| Title: | AVP | |||||
First
Amendment to Crown Crafts Financing Agreement
EXHIBIT A
PROMISSORY NOTE
| $5,000,000 | November 5, 2007 |
FOR VALUE RECEIVED, the undersigned, CROWN CRAFTS, INC., a Delaware corporation
(“CCI”), XXXXXXXXX WEAVERS, INC., a Kentucky corporation (“Weavers”), HAMCO, INC.,
a Louisiana corporation (“Hamco”), and CROWN CRAFTS INFANT PRODUCTS, INC., a Delaware
corporation (“CCIP”; together with CCI, Weavers and Hamco, the “Companies” and each
a “Company”), promises to pay to the order of THE CIT GROUP/COMMERCIAL SERVICES, INC., a
New York corporation (“CIT”), at its office located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000, in lawful money of the United States of America and in immediately available
funds, the principal amount of Five Million and No/100 Dollars ($5,000,000), in twenty-four (24)
equal principal installments of $208,333.33. The first such installment shall be due and payable
on December 1, 2007 and subsequent installments (including the final installment) shall be due and
payable on the first day of each month thereafter until this Note is paid in full.
The Companies further agree to pay interest at said office, in like money, on the unpaid
principal amount owing hereunder from time to time from the date hereof on the dates and at the
rates specified in Section 8 of the Financing Agreement, dated as of July 11, 2006, among
the Companies and CIT (the “Financing Agreement”). Capitalized terms used in this Note and
defined in the Financing Agreement shall have the meanings given to such terms in the Financing
Agreement unless otherwise specifically defined herein.
This Note is the Promissory Note referred to in the Financing Agreement, evidences the Term
Loan made to the Companies thereunder, and is subject to, and entitled to, all provisions and
benefits thereof, including optional and mandatory prepayment, in whole or in part, as provided
therein.
Notwithstanding any other provision of this Note to the contrary, upon the occurrence of any
Event of Default specified in the Financing Agreement, or upon termination of the Financing
Agreement for any reason, all amounts then remaining unpaid on this Note may become, or be declared
to be, at the sole election of CIT, immediately due and payable as provided in the Financing
Agreement.
[signatures appear on next page]
| CCI: | ||||
| CROWN CRAFTS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| WEAVERS: | ||||
| XXXXXXXXX WEAVERS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| HAMCO: | ||||
| HAMCO, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
| CCIP: | ||||
| CROWN CRAFTS INFANT PRODUCTS, INC. | ||||
| By: | /s/ Xxx Xxxxxxx Xxxxxx | |||
| Xxx Xxxxxxx Xxxxxx | ||||
| Vice President and CFO | ||||
