Crown Crafts (CRWS) 8-K Entry into a Material Definitive Agreement

Exhibit 10.1

THIRD AMENDMENT TO
FINANCING AGREEMENT

THIS THIRD AMENDMENT TO FINANCING AGREEMENT(this “Amendment”), dated as of this 2nd day of July, 2009, 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 CIT’s consent to the purchase by Hamco of substantially all of the assets of Neat Solutions, Inc. (“Neat Solutions”), in accordance with the terms and conditions of the Neat Solutions Purchase Agreement (as hereinafter defined).

C. CIT has agreed to such request, subject to the terms and conditions contained in this Amendment, and to accomplish the foregoing, CIT and the Companies have agreed to enter into 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 contained in this Amendment, CIT consents to the acquisition (the “Neat Solutions Acquisition”) by Hamco of substantially all of the assets of Neat Solutions and the assumption of certain liabilities of Neat Solutions, in each case pursuant to the terms of that certain Asset Purchase Agreement dated as of the date hereof, among Hamco, Neat Solutions and the shareholders of Neat Solutions party thereto (together with all exhibits and schedules thereto, the “Neat Solutions Purchase Agreement”).

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 by adding the following new defined terms in their proper alphabetical sequence:

“Third Amendment Effective Date shall mean the date on which the Third 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.”

“Neat Solutions shall mean Neat Solutions, Inc., a Florida corporation.”

“Neat Solutions Acquisition shall mean the purchase by Hamco of substantially all of the assets of Neat Solutions, and the assumption by Hamco of certain of the liabilities of Neat Solutions, all as more fully described in the Neat Solutions Purchase Agreement.”

“Neat Solutions Purchase Agreement shall mean the Asset Purchase Agreement, dated July 2, 2009, between Hamco, as purchaser, Neat Solutions, as seller, and the shareholders of Neat Solutions party thereto, pursuant to which Hamco has consummated the Neat Solutions Acquisition.”

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2.2 New Sections 7.2(n) and 7.2(o) are added in proper sequence as follows:

“(n)Neat Solutions Acquisition.The Neat Solutions Purchase Agreement is in full force and effect as of the Third 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 Neat Solutions Purchase Agreement are, to the best of Hamco’s knowledge, true and correct in all material respects as of the Third 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 Hamco in connection with the Neat Solutions Acquisition contemplated by the Neat Solutions Purchase Agreement have been duly obtained and no such approvals impose any conditions to the consummation of the transactions contemplated by the Neat Solutions Purchase Agreement or to the conduct of the business of Hamco in the same manner as heretofore conducted. Hamco has not been notified that legal proceedings adverse to the transaction contemplated by the Neat Solutions Purchase Agreement are contemplated by any person, including any governmental body or agency.

(o)Movement of Neat Solutions Inventory.Within thirty (30) days after the Third Amendment Effective Date, Borrower shall move all Inventory purchased from Neat Solutions (other than Inventory previously sold in the ordinary course of business) to a location owned by a Company or a location of a Company for which an existing landlord or warehouseman waiver in favor of CIT is in effect.”

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Companies hereby represent and warrant to CIT that:

3.1Compliance 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.

3.2Representations 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.

3.3No Event of Default. No Default or Event of Default exists.

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ARTICLE IV

CONDITIONS PRECEDENT

This Amendment shall become effective and be deemed effective as of the date hereof upon the satisfaction or waiver by the Lender 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) tax lien, judgment lien and UCC searches on Neat Solutions 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 Neat Solutions, subject only to Permitted Encumbrances;

(iii) resolutions of the Board of Directors of Hamco authorizing the execution, delivery and performance of the Neat Solutions Purchase Agreement, certified by the Secretary or Assistant Secretary of Hamco as of the date thereof;

(iv) copies of the Neat Solutions Purchase Agreement and the other purchase documents related thereto, accompanied by the certificate of the president of Hamco as to certain representations and warranties contained therein and the consummation of the Neat Solutions Acquisition;

(v) a collateral assignment of Hamco’s rights and remedies under the Neat Solutions Purchase Agreement, duly executed by Hamco and acknowledged and agreed to by Neat Solutions and any escrow agent under the Neat Solutions Purchase Agreement; and

(vi) such other documents, instruments and agreements as CIT shall reasonably request in connection with the foregoing matters.

(b) All approvals, licenses, consents and filings necessary to permit the Neat Solutions 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;

(e) Simultaneously with the execution of the Amendment, the Neat Solutions Acquisition shall be consummated in accordance with the terms of the Neat Solutions 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 Neat Solutions Acquisition and the Collateral to be purchased in connection therewith.

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ARTICLE V

GENERAL

5.1Loan 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.

5.2Full 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.

5.3Applicable Law. This Amendment shall be governed by and construed in accordance with the internal laws and judicial decisions of the State of New York.

5.4Counterparts. 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.

5.5Further 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.

5.6Headings. The headings of this Amendment are for the purpose of reference only and shall not effect the construction of this Amendment.

5.7Expenses. The Companies shall reimburse CIT for CIT’s legal fees and expenses (whether in-house or outside) incurred in connection with the preparation, negotiation, execution and delivery of this Amendment and all other agreements and documents contemplated hereby.

5.8Waiver 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 appear on the following pages]

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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/ Olivia Elliott
	Olivia Elliott
	CFO
WEAVERS: CHURCHILL WEAVERS, INC.
By:	/s/ Olivia Elliott
	Olivia Elliott
	CFO
HAMCO: HAMCO, INC.
By:	/s/ Olivia Elliott
	Olivia Elliott
	CFO

[signatures continue on the following page]

CCIP: CROWN CRAFTS INFANT PRODUCTS, INC.
By:	/s/ Olivia Elliott
	Olivia Elliott
	CFO
CIT: THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:	/s/ Vernon Wells
	Vernon Wells
	Vice President