Exhibit 10.4
FIRST AMENDMENT TO
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”);
     CHURCHILL 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:

 

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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/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            WEAVERS:
 
            CHURCHILL WEAVERS, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            HAMCO:
 
            HAMCO, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            CCIP:
 
            CROWN CRAFTS INFANT PRODUCTS, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO

First Amendment to Crown Crafts Financing Agreement

 

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                  CIT:    
 
                THE CIT GROUP/COMMERCIAL SERVICES, INC.
 
           
 
  By: /s/ V. R. Wells        
 
    Title:  AVP
 
         

First Amendment to Crown Crafts Financing Agreement

 

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EXHIBIT A
PROMISSORY NOTE

$5,000,000   November 5, 2007

     FOR VALUE RECEIVED, the undersigned, CROWN CRAFTS, INC., a Delaware
corporation (“CCI”), CHURCHILL 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 301 South Tryon Street, Charlotte, North
Carolina 28282, 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]

 

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              CCI:
 
            CROWN CRAFTS, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            WEAVERS:
 
            CHURCHILL WEAVERS, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            HAMCO:
 
            HAMCO, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO
 
            CCIP:
 
            CROWN CRAFTS INFANT PRODUCTS, INC.
 
       
 
  By:   /s/ Amy Vidrine Samson
 
       
 
      Amy Vidrine Samson
 
      Vice President and CFO