Document:

exh_420.htm

Exhibit 4.20 and 10.43

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This Amendment No. 1 to Credit Agreement (this “Agreement”) is dated as of September 26, 2013, between TANDY BRANDS ACCESSORIES, INC., a Delaware corporation (“Borrower”), the Persons named on Schedule 1.01 to the Credit Agreement (defined below)(collectively, the “Guarantors”), each Lender (as defined in the Credit Agreement) from time to time party to the Credit Agreement, and SALUS CAPITAL PARTNERS, LLC, a Delaware limited liability company, as  a lender, Administrative Agent and Collateral Agent (“Agent”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Documents (defined below).

R E C I T A L S:

A. Borrower, for itself as a borrower under and for the other obligors thereunder (collectively with Borrower, the “Obligors”), Agent and Lenders are parties to that certain to Credit Agreement, dated as of July 24, 2013 (the “Credit Agreement”).

B. In connection with the Credit Agreement, Obligors executed and delivered, or caused to be executed and delivered to or for the benefit of the Agent and each Lender certain other Loan Documents, including, but not limited to, deposit account control agreements, consents, assignments, security agreements, pledge agreements, agreements, instruments, guarantees and financing statements in connection with the indebtedness referred to in the Credit Agreement (all of the foregoing, together with the Credit Agreement, are hereinafter collectively referred to as the “Loan Documents”).

C. On September 24, 2013, Borrower delivered to Agent a revised thirteen week budget reflecting the Borrower’s updated forecasts for the period covered thereby (“Budget”).

D. Pursuant to a certain letter dated August 29, 2013 (“First ROR Letter”), Agent informed Borrower that (i) it was in the process of reviewing the contents and disclosures contained in Borrower’s Compliance Certificate dated August 27, 2013, including, but not limited to, evaluating whether one or more defaults and Events of Default then existed, and (ii) pending completion of Agent’s review, the First ROR Letter served as notice to Borrowers that Agent and Lenders expressly reserved all of their rights, remedies, powers, and privileges pursuant to the Credit Agreement and the Loan Documents, and applicable Law, including, but not limited to, with respect to any defaults or Events of Default that may then exist (collectively, the “First Reservations”).

E.  Pursuant to a certain letter dated September 9, 2013 (“Second ROR Letter”, and collectively with the First ROR Letter, the “Reservation Letters”)), Agent informed Borrower that (i) it was in the process of reviewing the contents and disclosures contained in Borrower’s Compliance Certificate dated September 6, 2013, including, but not limited to, evaluating whether one or more defaults and Events of Default then existed, and (ii) pending completion of Agent’s review, the Second ROR Letter served as notice to Borrowers that Agent and Lenders expressly reserved all of their rights, remedies, powers, and privileges pursuant to the Credit Agreement and the Loan Documents, and applicable Law, including, but not limited to, with respect to any defaults or Events of Default that may then exist (the “Second Reservations”, and collectively with the First Reservations the “Reservations”).

 

F. Notwithstanding the disclosures contained in Borrower’s Compliance Certificates dated August 27, 2013, September 6, 2013, September 10, 2013, September 18, 2013 and September 25, 2013, respectively (the “Compliance Certificates”), Borrower and the other Obligors have requested that Agent and Lenders agree to amend the Credit 

 

amendment no. 1 to credit Agreement

  

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Agreement and Loan Documents, where applicable, and to forbear from exercising certain remedies available to Agent and Lenders under the Credit Agreement and other Loan Documents, and to continue to make extensions of credit to Borrower pursuant to the Credit Agreement, on the terms and subject to satisfaction of the conditions set forth in the Credit Agreement and this Agreement, respectively.

NOW, THEREFORE, in consideration of the foregoing premises, which are hereby incorporated into and made a part of this Agreement, the covenants and agreements hereinafter set forth, the sum of TEN and NO/100 DOLLARS ($10.00) cash in hand paid, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned, intending to be legally bound, does hereby agree as follows:

 

1. Definitions.  All capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Loan Documents.

 

2. Acknowledgements and Stipulations. In order to induce Agent and Lenders to enter into this Agreement, Borrower acknowledges, stipulates and agrees that:

 

a) each of the Recitals contained at the beginning of this Agreement is true and correct;

 

b) as of the close of business on September 25, 2013, the aggregate principal balance outstanding under the Credit Agreement totaled $14,876,168.06, plus accrued and/or accruing interest, costs fees, attorneys’ fees and other Credit Party Expenses under the Loan Documents;

 

c) all of the Loans and other Obligations are absolutely due and owing by Obligors to Lenders without any defense, deduction, offset or counterclaim (and, to the extent any Obligor had any defense, deduction, offset or counterclaim on the date hereof, the same is hereby waived by each such Obligor);

 

d) the Loan Documents executed by Borrower and the other Obligors are legal, valid and binding obligations enforceable against Borrower and the other Obligors in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in an action of law or in equity);

 

e) the liens granted by Borrower and the other Obligors to Lender in the Collateral are valid and duly perfected, first-priority liens, subject only to Permitted Liens; and

 

f) prior to executing this Agreement, Borrower consulted with and had the benefit of advice of legal counsel of its own selection and has relied upon the advice of such counsel, and in no part upon the representation of Agent or any Lender, or any counsel or advisor to Agent or any Lender, concerning the legal effects of this Agreement or any provision hereof.

 

3. Amendments to Credit Agreement.

 

a) Section 1.01 of the Credit Agreement shall be amended by adding the following new definitions:

 

“’Amendment Effective Date’ means the date of execution and delivery of Amendment No. to Credit Agreement, dated as of September 26, 2013.”

 

amendment no. 1 to credit Agreement

  

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b) Section 1.01 of the Credit Agreement shall be amended by deleting the definition of “Material Contract” in its entirety and by substituting the following in its stead”

 

“Material Contract” means with respect to any Person, each contract to which such Person is a party involving aggregate consideration payable to or by such Person of $500,000 or more in any fiscal year or otherwise material to the business, condition (financial or otherwise), operations, performance or properties of such Person, or with respect to the Borrower, otherwise designated as such by the Administrative Agent and the Borrower; provided that the KTC Financing Documents and the Licensor/Vendor Subordinated Notes shall at all times be considered Material Contracts, regardless of the amount thereof.”

 

c) Section 6.01 of the Credit Agreement shall be amended by deleting clause (a) thereof in its entirety and by substituting the following in its stead:

 

“(a)           as soon as available, but in any event within 90 days after the end of each Fiscal Year of the Borrower, a Consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year, and the related consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and unqualified opinion of a Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and, except as set forth below, shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; provided that, for the Fiscal Year ended June 30, 2013, the requirements set forth above with respect to the opinion of a Registered Public Accounting Firm that such opinion shall not be subject to any “going concern” or like qualification or exception shall not apply;”

 

d) Section 6.02(a) of the Credit Agreement shall be amended by deleting clause (a) thereof in its entirety and by substituting the following in its stead:

 

“(a)           concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its Registered Public Accounting Firm certifying such financial statements and stating that in making the examination necessary for their certification of such financial statements, such Registered Public Accounting Firm has not obtained any knowledge of the existence of any Default or Event of Default under the financial covenants set forth herein or, if any such Default or Event of Default shall exist, stating the nature and status of such event; provided that, for the financial statements required under Section 6.01(a) for the  Fiscal Year ended June 30, 2013, the requirements set forth above with respect to the certificate of its Registered Public Accounting Firm that has not obtained any knowledge of the existence of any Default or Event of Default under the financial covenants set forth herein or, if any such Default or Event of Default shall exist, stating the nature and status of such event shall not apply;”

 

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c) The Credit Agreement shall be amended by inserting the following new Section:

 

“7.21           Compliance with Budget.  Borrower’s:

 

(i)           revenues shall not be less than 90% of the projected 13-week rolling cash flow amounts set forth in the Budget;

 

(ii)           accounts receivable collections shall not be less than 90% of the projected 13-week rolling cash flow amounts set forth in the Budget;

 

(iii)           net operating cash flow shall not be less than 90% of the projected 13-week rolling cash flow amounts set forth in the Budget;

 

(iv)           actual expenses and cash expenditures, each shall not be greater than 110%  of the aggregate projected amounts set forth in the Budget;

 

(v)           Availability shall not be less than 90% of the projected 13-week rolling cash flow amounts set forth in the Budget;

 

(vi)           the ratio of accounts payable to Eligible Inventory shall not be greater than 0.25:1.00 on a weekly basis.

 

The foregoing shall be tested on a rolling 3-week basis commencing on Wednesday of the third (3rd) week after the Amendment Effective Date, and continuing each week thereafter following the Amendment Effective Date. Commencing on the first Wednesday after the Amendment Effective Date, and continuing each week thereafter, the Borrower shall provide the Agent with a weekly variance report, which variance report shall be prepared on both a weekly and a cumulative basis.”

 

4. Amendment to Fee Letter. Paragraph 3(b) of the Fee Letter shall be deleted in its entirety and the following shall be substituted in its place:

 

“Monitoring Fee. In addition to any other fee to be paid by the Borrower hereunder, as of the Closing Date, the Agent has earned in full, and the Borrower shall pay to the Agent, for its own account, a collateral monitoring fee in the amount of $340,000 (the "Collateral Monitoring Fee"). The Collateral Monitoring Fee payable pursuant to this Section 3(b) shall be fully earned on the Closing Date. The Collateral Monitoring Fee shall be paid in monthly installments commencing on the Closing Date, and thereafter, on the first business day after the end of each month in the following amounts:

 

	
1)  

	
 months prior to October 2013, the sum of $20,000 per month; and

 

	
2)  

	
commencing October 2013 through the Termination Date, the sum of $30,000 per month.

 

Any unpaid balance of the Collateral Monitoring Fee outstanding on the Termination Date shall be paid on the Termination Date.”

 

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5. Expenses of Lender; Lender Consultant; Appraisal.

 

a) Borrower agrees to pay, on demand, all reasonable costs and expenses incurred by Agent and any Lender in connection with the preparation, negotiation and execution of this Agreement and any other Loan Documents executed pursuant hereto and any and all Agreements, modifications, and supplements to the Credit Agreement, including, without limitation, the reasonable fees of Agent and Lenders’ legal counsel and any taxes (other than Agent and/or Lenders’ income taxes) or expenses associated with or incurred in connection with any instrument or agreement referred to herein or contemplated hereby.  Borrower acknowledges that Agent and each Lender may charge any and all such fees, costs and expenses to Borrower’s loan account in accordance with the Credit Agreement, and Agent and Lenders agree to promptly provide all invoices to Borrower related to such fees, costs and expenses after charging the loan account therefor.

 

b) Borrower acknowledges that Agent has engaged Consilium Advisors, LLC as Agent’s consultant to, inter alia, conduct evaluations of Borrower’s business, forecasts and cash flows, and further that the costs and expenses of such consulting services shall constitute Credit Party Expenses under the Credit Agreement. In accordance with the Credit Agreement, Borrower shall cooperate with Agent’s consultant in connection with any access and/or information or other requests it may present.

 

6. Licensor Consents.  Not later than 30 days after the Amendment Effective Date, the Agent shall have received licensor consent agreements with respect to each of the license agreements set forth on Schedule 4.01 of the Credit Agreement (to the extent not previously provided), which consents shall be in form satisfactory to the Agent, in its exclusive discretion, and which shall provide, at a minimum, that the applicable licensor under each such license agreement shall provide the Agent notice of any default under, or termination of, such license agreement contemporaneously with any delivery of such notice to the applicable Loan Party thereof. In the event Borrower fails to deliver a required licensor consent by the date set forth herein, any and all inventory associated with the subject licensor shall be deemed ineligible for Borrowing Base purposes.

 

7. No-Waiver.  None of this Agreement, or Agent’s or Lenders’ continued making of loans or other extensions of credit at any time extended to Borrower in accordance with this Agreement, the Credit Agreement, and the Loan Documents shall be deemed a waiver of or consent to any default or Event of Default.  Borrower agrees that any such default(s) or Event(s) of Default shall not be deemed to have been waived, released or cured by virtue of Loans or other extensions of credit at any time extended to Borrower, or by the Agent’s and/or Lenders’ execution of this Agreement.  Nothing in this Agreement shall restrict Agent’s or Lenders’ ability to take or refrain from taking or exercise any right with respect to any Subordinated Indebtedness that it is otherwise entitled to take, refrain from taking or exercise, as the case may be.

 

8. Release of Claims. To induce Agent and each Lender to enter into this Agreement, Borrower and each Obligor hereby waives, remises, acquits, releases and forever discharges Agent and each Lender and its respective predecessors, successors, assigns, affiliates, shareholders, directors, officers, directors, accountants, attorneys, employees, agents, representatives and servants of, from and against any and all claims, actions, causes of action, suits, proceedings, contracts, judgments, damages, accounts, reckonings, executions, and liabilities whatsoever of every name and nature, whether known or unknown, whether or not well founded in fact or in law, and whether in law, or at equity, which Borrower or any Obligor ever had or now has for or by reason of any matter, cause or anything whatsoever to this date relating to or arising out of any of the Loan Documents or otherwise, including, without limitation, any actual or alleged act or omission of or on behalf of Agent and each Lender with respect to the Loan Documents and any security interest, liens or collateral in connection therewith, or the enforcement of any of Agent and Lenders’ rights or remedies thereunder.  Borrower and each Obligor represent and warrant 

 

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to Lender that neither Borrower nor any Obligor has transferred or assigned to any person any claim that Borrower or such Obligor ever had or claimed to have against Agent or any Lender.  The terms of this Section shall survive the termination of the Loan Documents.

 

9. Representations and Warranties.  In consideration of the execution and delivery of this Agreement by Agent, Borrower hereby represents and warrants in favor of the Agent and each Lender as follows:

 

i. Borrower has the corporate power and authority (i) to enter into this Agreement and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by Borrower;

 

ii. Borrower has the power and has taken all necessary action, corporate or otherwise, to authorize it to execute, deliver, and perform this Agreement in accordance with the terms hereof and to consummate any transactions contemplated hereby;

 

iii. The execution and delivery by Borrower of this Agreement and the performance of the obligations of Borrower hereunder and the consummation by Borrower of any transactions contemplated hereby: (i) are not in contravention of the terms of the organizational documents of Borrower or of any material agreement or undertaking to which Borrower is a party or by which Borrower or its property is bound; (ii) do not require the consent, registration or approval of any governmental authority or any other person (except such as have been duly obtained, made or given, and are in full force and effect and except for consents of persons (other than a governmental authority) that are not material); (iii) do not contravene in any material respect any statute, law, ordinance regulation, rule, order or other governmental restriction applicable to or binding upon Borrower; and (iv) will not result in the imposition of any liens upon any property of Borrower except Permitted Liens;

 

iv. This Agreement has been duly executed and delivered by Borrower and each Obligor, and is a legal, valid and binding obligation of Borrower and such Obligor, enforceable in accordance with its terms except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditor’s rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law);

 

v. Other than the matters addressed in the Reservation Letters and the Compliance Certificates, no default or Event of Default exists under the Credit Agreement or the other Loan Documents;

 

vi. Except as disclosed to the Agent prior to the Amendment Effective Date and except as would not reasonably be expected to have a Material Adverse Effect, the Loan Parties are not in breach of or in default under, in any material respect, any Material Contract (which breach or default is continuing beyond any applicable cure periods or which has not been waived) and have not received any notice of the intention of any other party thereto to terminate any Material Contract; and

 

vii. On and as of the date hereof, all representations and warranties of Borrower set forth in the Credit Agreement and the other Loan Documents are true, correct and complete in all respects as though made on and as of such date, except to the extent that: (i) such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true, correct and complete on and as of such earlier date); or (ii) the matters addressed in the Reservation Letters or the Compliance Certificates would render any of such representations and warranties untrue.

 

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10. Reaffirmation of Secured Obligations.  Borrower and each Obligor hereby ratifies and reaffirms the Loan Documents and all of its obligations and liabilities thereunder, including all of the Obligations.

 

11. Application of Proceeds. Borrower hereby waives the right, if any, to direct the manner in which Agent and/or any Lender applies any payments, collections or Collateral proceeds to the Obligations and agrees that Agent and Lenders may apply and reapply all such payments, collections or proceeds to the Obligations as Agent and Lenders, in their sole and absolute discretion, elect from time to time.

 

12. Conditions Precedent to Effectiveness.  This Agreement shall be effective as of the date first written above upon satisfaction of the following:

 

	
i.  

	
Agent’s receipt of a counterpart hereof duly executed by Borrower; and

 

ii. Agent’s receipt of such other information, documents, instruments and approvals as Agent’s counsel may reasonably require.

 

13. Full Force and Effect; No Further Agreement.  Except as expressly set forth in this Agreement, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of, Agent and/or any Lender under the Credit Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents.  Except as expressly set forth in this Agreement, the text of the Credit Agreement and all other Loan Documents shall remain unchanged and in full force and effect and Borrower hereby ratifies and confirms its obligations thereunder.  Except as expressly provided herein, this Agreement shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent and/or any Lender at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except as expressly set forth herein.  Borrower acknowledges and expressly agrees that, Agent and each Lender reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents, as amended herein.  Borrower does not have any knowledge of any challenge to Agent and/or any Lender’s claim(s) arising under the Loan Documents or to the effectiveness of the Loan Documents.

 

14. Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement.  In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought.  Any signatures delivered by a party by facsimile or other electronic method of transmission shall be deemed an original signature hereto.

 

15. Reference to and Effect on the Loan Documents.  Upon the effectiveness of this Agreement, on and after the date first written above, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby.

 

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16. No Novation, etc.  This Agreement is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction and the Credit Agreement and the other Loan Documents shall remain in full force and effect.

 

17. Fraud.  Borrower represents and warrants that Borrower has not committed any act of fraud or deceit in connection with the transactions involving Lender, including, without limitation, knowingly furnishing of any materially false information, financial or non-financial, knowingly withholding of any material information, financial or non-financial, or knowingly making of any warranties or representations which are materially untrue as of the date hereof.

 

18. Relationship of Parties; No Third Party Beneficiaries.  Nothing in this Agreement shall be construed to alter the existing debtor-creditor relationship among Borrower, Agent and the Lenders, nor is this Agreement intended to change or affect in any way the relationship among Agent and/or any Lender and Borrower to one other than a debtor-creditor relationship.  This Agreement is not intended, nor shall it be construed, to create a partnership or joint venture relationship between or among any of the parties hereto.  No Person other than a party hereto is intended to be a beneficiary hereof and no Person other than a party hereto shall be authorized to rely upon or enforce the contents of this Agreement.

 

19. Section Titles.  The section titles contained in this Agreement are included for the sake of convenience only, shall be without substantive meaning or content of any kind whatsoever, and are not a part of the agreement between the parties.

 

20. Entire Agreement.  This Agreement and the other Loan Documents constitute the entire agreement and understanding between the parties hereto with respect to the transactions contemplated hereby and thereby and supersede all prior negotiations, understandings and agreements between such parties with respect to such transactions.

 

21. GOVERNING LAW.  THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

22. JURY TRIAL WAIVER.  BORROWER, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THIS AGREEMENT IN RESPECT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE RELATED TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS OF BORROWER AND ANY GUARANTOR, THE COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION, COLLECTION OR ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  BORROWER, GUARANTORS, AGENT AND EACH LENDER EACH HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SUCH BORROWER PARTY, AGENT AND/OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO A TRIAL BY JURY.

 

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23. Loan Document.  This Agreement shall be deemed to be a Loan Document for all purposes.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above.

	 	
BORROWER:

	 	 	 
	  	
TANDY BRANDS ACCESSORIES, INC.

	 	 	 	 	 
	 	 	 	 	 
	 	By:	 	 
	 	 	 Name:	 	 
	  	 	 Title:	 	 
	 	 	 
	 	 	 
	 	
AGENT/LENDER:

	 
	 	 	 
	  	
SALUS CAPITAL PARTNERS, LLC

	 	 	 	 	 
	 	 	 	 	 
	 	By:	 	 
	 	 	Name: Kyle Shonak
	 	 	Title:   Senior Vice President-Special Opportunities

 

	
ACKNOWLEDGED AND CONSENTED TO:

	 	 
	
H.A. SHELDON CANADA LTD.,

	
As a Guarantor

	 	 	 
	 	 	 
	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 
	 

 

	
TBAC INVESTMENT TRUST,

	
As a Guarantor

	 
	 	 	 
	 	 	 
	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 
	 

amendment no. 1 to credit Agreement

 

Page 10 of 10exh_1034.htm

Exhibit 10.33

 

NON-EMPLOYEE DIRECTOR

 

RESTRICTED STOCK AWARD AGREEMENT

 

pursuant to the

TANDY BRANDS ACCESSORIES, INC. 2012 OMNIBUS PLAN

This NON-EMPLOYEE DIRECTOR RESTRICTED STOCK AWARD AGREEMENT is made as of this ____ day of _____, 2013 (the "Date of Grant"), between Tandy Brands Accessories, Inc., a Delaware corporation (the "Company"), and ___________, a non-employee member of the Board of Directors of the Company ("Director"). Capitalized terms used in this Agreement shall have the meaning ascribed under the Tandy Brands Accessories, Inc. 2012 Omnibus Plan (the "Plan") unless expressly provided herein.

 

WITNESSETH:

 

WHEREAS, the Company desires to carry out the purposes of the Plan by awarding Director with shares of the common stock, $1.00 par value per share ("Common Stock"), of the Company.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Grant of Award.  Pursuant to the Plan, the Committee hereby grants ___________ shares of Common Stock (the "Restricted Shares") to Director to be issued as hereinafter provided in Director's name subject to certain restrictions thereon as hereinafter set forth.  Director shall not be required to pay any consideration (the "Purchase Price") to the Company for the Restricted Shares.  If the outstanding shares of Common Stock shall at any time be changed or exchanged by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split, combination of shares or other event described in the Plan, then the aggregate number of shares subject to this Agreement shall be automatically adjusted such that Director's proportionate interest shall be maintained as before the occurrence of such event.  The determination of any such adjustment by the Committee shall be final, binding and conclusive.

 

2. Issuance and Delivery of Restricted Shares.  The Restricted Shares shall be issued upon acceptance and execution hereof by Director (and, if applicable, full payment of the Purchase Price) and shall be delivered to Director upon vesting pursuant to the terms of this Agreement.  Prior to vesting, the certificates representing the Restricted Shares awarded hereunder shall be held in escrow by the Assistant Secretary of the Company as provided in Section 10.

 

3. Vesting of Restricted Shares.

 

(a) Subject to Section 4 below, one-third of the Restricted Shares shall become fully vested and shall no longer be subject to forfeiture on the first anniversary of the Date of Grant, an additional one-third of the Restricted Shares shall become fully vested and shall no longer be subject to forfeiture on the second anniversary of the Date of Grant and the remaining one-third of the Restricted Shares shall become fully vested and shall no longer be subject to forfeiture on the third anniversary of the Date of Grant.

 

  

  

  

(b) Notwithstanding anything to the contrary in this Agreement, 100% of the Restricted Shares shall become fully vested and shall no longer be subject to forfeiture

 

(i) upon the death or Total and Permanent Disability of Director during Director's term as a member of the Board; (ii) upon Director's Termination of Service as a result of not being nominated for or elected to a new term as a member of the Board; or (iii) upon Director's involuntary resignation as a member of the Board at the request and for the convenience of the Company other than for Cause.  For purposes of this Agreement, "Cause" shall mean, in the determination of the remaining members of the Board,  (i) Director's willful, material and irreparable breach of any agreement that governs the terms and conditions of his or her service to the Company; (ii) Director's breach of any fiduciary or other material duty to the Company or its stockholders; (iii) Director's gross negligence or gross incompetence in the performance or intentional nonperformance (continuing for ten (10) days after receipt of written notice of such negligence from the Company) of any of Director's material duties and responsibilities; (iv) Director's dishonesty, fraud or willful misconduct with respect to the business or affairs of the Company or any of its subsidiaries; or (v) Director's conviction of a felony crime.

 

4. Forfeiture of Restricted Shares. Upon Director's Termination of Service prior to the vesting dates specified in Section 3(a) above, for any reason except as a result of (i) Director's death or Total and Permanent Disability; (ii) Director's not being nominated for or elected to a new term as a member of the Board or (iii) Director's resignation as a member of the Board at the request and for the convenience of the Company other than for Cause, all nonvested Restricted Shares held by Director shall, immediately upon the occurrence of such event, be forfeited and, except as provided in Section 5 below, no compensation or other amounts shall be paid to Director with respect thereto.  Such forfeited Restricted Shares shall cease to be outstanding and shall no longer confer on Director any rights as a stockholder with respect to the forfeited Restricted Shares as of the date of forfeiture and upon such forfeiture, Director shall cease to have any further rights or claims with respect to such forfeited Restricted Shares.

 

5. Repurchase of Shares in Case of Forfeiture.

 

(a) In the event Director has paid a Purchase Price to the Company for the Restricted Shares, upon Director's forfeiture of Restricted Shares as a result of an event described in Section 4 hereof, the Company shall repurchase all of such forfeited Restricted Shares and each such forfeited Restricted Share shall be returned to the Company as contemplated by the Plan.  The repurchase price of the Restricted Shares to be sold to the Company under this Section 5 (the "Repurchase Price") shall be equal to the Purchase Price paid by Director for the Restricted Shares that have been forfeited.

 

(b) The Company shall repurchase the Restricted Shares as soon as is administratively practical (but in any event within five (5) business days after the event of forfeiture) by the tender to Director of the Repurchase Price.  Tender of the Repurchase Price to Director shall be effected by delivery via certified mail of a check in the amount of the Repurchase Price.

 

(c) The Repurchase Price shall be paid to Director only after the Company has received from Director all necessary assignments (including the Assignment Separate From Certificate in the form of Exhibit A), endorsements, certificates of authority, tax releases, consents to transfer, instruments and evidences of title as may be reasonably required by the Company and its counsel.

 

  

-2-

  

(d) If the Company (or its assignees) shall make available, at the time and place and in the amount and form provided in this Agreement, the Repurchase Price for the Restricted Shares to be repurchased in accordance with the provisions of this Section 5, then from and after such time, the person from whom such Restricted Shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such Repurchase Price in accordance with this Section 5 and the Plan), and such shares shall be deemed purchased in accordance with the applicable provisions hereof and the Company (or its assignees) shall be deemed the owner and holder of such Restricted Shares, whether or not the certificates therefor have been delivered as required by this Agreement.

 

6. Restrictions on Transfer.

 

(a) The Restricted Shares may not be resold, pledged as security or otherwise transferred, assigned or encumbered by Director prior to the date such Restricted Shares are no longer subject to forfeiture, unless specifically agreed in writing by the Company.

 

(b) Director hereby agrees that Director shall make no disposition of the Restricted Shares unless and until:

 

(1) The forfeiture restrictions applicable to such Restricted Shares have lapsed;

 

(2) Director shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition, unless there is then in effect a registration statement under the Securities Act of 1933 (the "Securities Act") covering such proposed disposition and such disposition is made in accordance with such registration statement;

 

(3) Director shall have complied with all requirements of this Agreement applicable to the disposition of the Restricted Shares; and

 

(4) If reasonably requested by the Company, Director shall have provided the Company an opinion of counsel in form and substance satisfactory to the Company, that (A) the proposed disposition does not require registration of the Restricted Shares under the Securities Act or (B) all appropriate action necessary for compliance with the registration requirements of the Securities Act or with any exemption from registration available under the Securities Act (including Rule 144) has been taken; provided, however, that in no event shall an opinion of counsel be required if there is then in effect a registration statement under the Securities Act covering such proposed disposition.

 

(c) The Company shall not be required (i) to transfer on its books any Restricted Shares that have been sold or transferred in violation of the provisions of this Section 6, or (ii) to treat as the owner of the Restricted Shares, or otherwise to accord voting or dividend rights to, any transferee to whom the Restricted Shares have been transferred in contravention of this Agreement.  References herein to Director shall include, where applicable, a permitted transferee.

 

  

-3-

  

7. Restrictive Legend.  In order to reflect the restrictions on transfer of the Restricted Shares, the stock certificates for the Restricted Shares will be endorsed with the following legend:

 

On the face of the certificate:

 

"Transfer of this stock is restricted in accordance with conditions printed on the reverse of this certificate."

 

On the reverse:

 

"The shares of stock evidenced by this certificate are subject to and transferable only in accordance with that certain Tandy Brands Accessories, Inc. 2012 Omnibus Plan, a copy of which is on file at the principal office of the Company in Dallas, Texas.  No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan."

 

8. Investment Representations.  In connection with the grant of the Restricted Shares, Director represents to the Company the following:

 

(a) Director is accepting the Restricted Shares for Director's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Director has no present intention of selling, granting any participation in, or otherwise distributing the shares.  By executing this Agreement, Director further represents that Director does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person with respect to any of the Restricted Shares.

 

(b) Director understands that the Restricted Shares are characterized as "restricted securities" under the Securities Act and may not be resold or transferred unless the Restricted Shares are first registered under the federal securities laws or unless an exemption from such registration is available.  Accordingly, Director hereby acknowledges that Director is prepared to hold the Restricted Shares for an indefinite period and that Director is aware that Rule 144 of the Securities and Exchange Commission promulgated under the Securities Act is not presently available to exempt the sale of the Restricted Shares from the registration requirements of the Securities Act.

 

9. Stockholder Rights.  Unless and until such time as the Restricted Shares are forfeited by Director pursuant to Section 4, Director shall have all the rights of a stockholder, including voting and dividend rights, with respect to the Restricted Shares, including the Restricted Shares held in escrow under Section 10, subject, however, to the transfer restrictions of Section 6.

 

  

-4-

  

10. Escrow.

 

(a) Deposit.  Upon issuance, the certificates for the Restricted Shares shall be deposited in escrow with the Assistant Secretary of the Company to be held in accordance with the provisions of this Section 10.  Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form of Exhibit A.  The deposited certificates, together with any other assets or securities that may be deposited from time to time with the Company pursuant to the requirements of the Plan, shall remain in escrow until such time or times as the certificates (or other assets or securities) are to be released or otherwise surrendered for cancellation in accordance with the Plan.  Upon delivery of the certificates (or other assets or securities) in escrow, Director shall be issued an instrument of deposit acknowledging the number of Restricted Shares (or other assets or securities) delivered in escrow to the Assistant Secretary of the Company.

 

(b) Release or Surrender.  The Restricted Shares, together with any other assets or securities held in escrow hereunder, shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Company for repurchase and/or cancellation:

 

(1) As the interest of Director in the Restricted Shares (or any other assets and securities issued with respect thereto) vests in accordance with Section 3, the certificates for such vested shares (as well as all other assets and securities issued with respect thereto) shall be released from escrow and delivered to Director within five (5) business days following the date such Restricted Shares become so vested.

 

(2) Upon Director's Termination of Service (as defined in the Plan), any escrowed Restricted Shares (or other assets and securities issued with respect thereto) in which Director is at the time vested shall be promptly released from escrow.

 

(3) Should Director forfeit Restricted Shares pursuant to Section 4, then the escrowed certificates for such forfeited Restricted Shares (as well as all other assets and securities issued with respect thereto) shall be surrendered to the Company for cancellation concurrently with such forfeiture.  Should the Company be required to repurchase the forfeited Restricted Shares pursuant to Section 5, then, concurrently with such cancellation, the Company shall remit payment of the Repurchase Price to Director for such forfeited Restricted Shares (and all other assets and securities issued with respect thereto).  To facilitate the performance or observance by Director of this Section 10(b)(3), Director hereby irrevocably appoints (which appointment is coupled with an interest) the Company as the attorney-in-fact of Director to transfer any Restricted Shares (as well as other assets and securities issued with respect thereto) so forfeited to the Company, and Director agrees that the transfer of stock certificates (as well as all other assets and securities issued with respect thereto) with respect to forfeited Restricted Shares shall be specifically performable by the Company in a court of equity or law.

 

  

-5-

  

11. Section 83(b) Election.  Director understands that under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), the Fair Market Value of the Restricted Shares on the date any forfeiture restrictions applicable to such Restricted Shares lapse, less the Purchase Price paid, if any, will be reportable as ordinary income at that time.  Director understands that Director may, instead, elect to be taxed at the time the Restricted Shares are issued hereunder.  By filing an election under Section 83(b) of the Code with the I.R.S. within thirty (30) days after the Date of Grant, the Fair Market Value of the Restricted Shares on the Date of Grant, less the Purchase Price, if any, will be reportable as ordinary income as of the Date of Grant.  Director understands that it may be advisable to file such election even if the Fair Market Value of the Restricted Shares at the Date of Grant equals the Purchase Price paid (and thus no tax is payable).  The form for making this election is attached as Exhibit B hereto.  Director understands that failure to make this filing within the 30-day period will result in the recognition of additional ordinary income by Director (in the event the Fair Market Value of the Restricted Shares increases after the Date of Grant) as the forfeiture restrictions lapse.  DIRECTOR ACKNOWLEDGES THAT IT IS DIRECTOR'S SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF DIRECTOR REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON DIRECTOR'S BEHALF.  DIRECTOR IS RELYING SOLELY ON DIRECTOR'S ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE AN 83(b) ELECTION AND NOT ON THE REPRESENTATIONS OF THE COMPANY OR ANY OF ITS EMPLOYEES OR AGENTS.  DIRECTOR AGREES TO PROVIDE THE COMPANY A COPY OF ANY 83(b) ELECTION FILED WITH RESPECT TO THE RESTRICTED SHARES ISSUED UNDER THIS AGREEMENT.

 

12. Miscellaneous Provisions.

 

(a) Director Undertaking.  Director hereby agrees to take whatever additional action and execute whatever additional documents the Committee or the Company may in its judgment deem necessary or advisable in order to carry out or effect the express provisions of the Plan and this Agreement.

 

(b) Adjustment of Restricted Shares. The Restricted Shares subject to this Agreement and the vesting provisions applicable thereto will be adjusted from time to time, as determined by the Company, pursuant to Articles 13, 14 and 15 of the Plan.

 

(c) Assignment.  The rights and benefits of the Company under this Agreement shall be assignable by the Company to any one or more persons or entities designated by the Board.  Except as provided in Section 6, the rights and obligations of Director hereunder may only be assigned with the prior written consent of the Company.  This Agreement shall be binding upon and inure to the benefit of the permitted transferees, heirs, executors, administrators, and successors of the parties hereto.

 

(d) No Waiver.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

(e) Entire Agreement.  The Plan and this Agreement constitute the entire contract between the parties hereto with regard to the subject matter hereof.

 

  

-6-

  

(f) Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

(g) Lapse of this Agreement.  This Agreement shall be null and void in the event Director shall fail to sign and return a counterpart hereof to the Company within thirty (30) days of its delivery to Director.

 

(h) No Contract for Service.  This Agreement does not constitute a contract for service as a member of the Board and shall not affect the right of the Company to request Director's resignation as a member of the Board for any reason whatsoever.

 

(i) Construction.  The Committee shall have authority to make reasonable constructions of this Agreement and to correct any defect or supply any omission or reconcile any inconsistency in this Agreement, and to prescribe reasonable rules and regulations relating to the administration of this Agreement.

 

(j) Severability.  In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision, provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

 

(k) Notice.  Any notice relating to this Agreement shall be given in writing and shall be deemed effective upon personal delivery or upon deposit in the United States mail, registered or certified, postage prepaid and addressed to the Company at its main office at 3631 West Davis Street, Suite A, Dallas, Texas 75211 or to such other address as may be hereafter specified by the Company, to the attention of the Company's Assistant Secretary.  All notices to Director shall be delivered to Director at Director's address specified below or to such other address as may be hereafter specified by Director.

 

(l) Governing Instrument and Law.  This Agreement and any Restricted Shares issued hereunder shall in all respects be governed by the terms and provisions of the Plan, which terms and provisions are hereby incorporated herein by reference, and by the laws of the State of Texas, and in the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

 

              (m) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Agreement.  If this Award becomes vested with respect to a fractional share, such installment will instead be rounded to the next highest whole number of shares, except for the final installment, which will be for the balance of the total shares subject to the Award.  If the final installment results in a fractional share, the Committee shall determine, in its sole discretion, whether cash, other securities or other property shall be paid or transferred in lieu of any such fractional shares or whether such fractional shares or any rights thereto shall be cancelled, terminated or otherwise eliminated.

 

  

-7-

  

IN CONSIDERATION FOR THE FOREGOING, the Company and Director hereby agree to be bound by the terms of this Agreement and cause these presents to be duly executed effective as of the Date of Grant.

 

Agreed and Accepted:

 

TANDY BRANDS ACCESSORIES, INC.

 

 

	By:	 	 	 
	Name:	 	 	 
	Title:	 	 	 

 

 

DIRECTOR1

 

 

	 	 	 	 
	 	 	 	 

 

 

	Address:	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

____________________________ 

1 I have received the I.R.C. Section 83(b) election that was attached hereto as Exhibit B. As set forth in Section 11 above, I understand that I, and not the Company, will be responsible for completing the form and filing the election with the appropriate office of the federal and state tax authorities and that if such filing is not completed within thirty (30) days after the date of this Agreement, I will forfeit any tax benefits related to such election.  I understand further that such filing should be made by registered or certified mail, return receipt requested, and that I must retain two (2) copies of the completed form for filing with my state and federal tax returns for the current tax year and an additional copy for my records.

 

  

-8-

  

EXHIBIT A

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED _____________________________ hereby sells, assigns and transfers unto TANDY BRANDS ACCESSORIES, INC., a Delaware corporation (the "Company"), ______________________ (_________) shares of the common stock of the Company standing in the name of _________________ on the books of the Company represented by Certificate No. __________ herewith and does hereby irrevocably constitute and appoint the Assistant Secretary of the Company Attorney-in-Fact to transfer the said stock on the books of the within named Company with full power of substitution and resubstitution in the premises.

 

 

 

	Dated:_________________________________	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	(Signature)	 	(Signature of Spouse, if any)	 
	 	 	 	 
	 	 	 	 
	(Print Name)	 	(Print Name)	 

 

  

  

  

EXHIBIT B

 

FORM OF 83(B) ELECTION

 

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in his or her gross income for the current taxable year, the amount of any compensation taxable to him or her in connection with his or her receipt of the property described below:

 

(1) The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

 

	Name of Taxpayer:	 	 	 
	Address of Taxpayer:	 	 	 
	 	 	 	 
	Taxpayer's ID No.:	 	 	 
	Taxable Year:	Calendar Year ______________	 	 

 

(2) The property with respect to which the election is being made is _________ shares of the common stock of Tandy Brands Accessories, Inc., a Delaware corporation (the "Company").

 

(3) The property was issued on _____________, 2013.

 

(4) The property is subject to forfeiture if the undersigned taxpayer's provision of services to the Company is terminated under certain circumstances.  The forfeiture restrictions lapse in a series of installments over a three-year period ending on ___________, 2016.

 

(5) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $________ per share.

 

(6) The amount paid for such property is $0.00 per share.

 

(7) A copy of this statement was furnished to the Company for whom the undersigned taxpayer rendered the service underlying the transfer of property.

 

(8) This statement is executed as of: ____________________, 2013.

 

	Taxpayer	 	 	 
	 	 	 	 
	 	 	 	 
	(Signature)	 	 	 
	 	 	 	 
	 	 	 	 
	(Print Name)	 	 	 

 

  

  

  

CONSENT OF SPOUSE

I, _______________________, spouse of ___________________ ("Director"), have read and approve the foregoing Agreement.  In consideration of granting to Director _____________ shares of the common stock of Tandy Brands Accessories, Inc. as set forth in the Agreement, I hereby appoint Director as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the community property laws of the State of Texas or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

 

Dated:  _________________

 

 

	 	 	 	 
Spouse of Director

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	(Signature)
	 	 	 	 
	 	 	 	 
	 	 	 	(Print Name)

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