EXHIBIT 10.1
SUPPORT AGREEMENT
SUPPORT AGREEMENT (the "Agreement") dated as of May 7, 2003, between
WYNNEFIELD CAPITAL MANAGEMENT, LLC, a Delaware limited liability company
("Wynnefield"), and CROWN CRAFTS, INC., a Georgia corporation (the "Company").
WHEREAS, the Wynnefield Group (as hereinafter defined) currently owns
an aggregate of 1,395,535 shares of the Company's Series A Common Stock, par
value $1.00 per share (such class of common stock being referred to herein as
"Common Stock");
WHEREAS, the Wynnefield Group wishes to acquire additional shares of
Common Stock without triggering the operation of the Company's Shareholder
Rights Plan (the "Rights Plan"), as set forth in that certain Rights Agreement
dated as of August 11, 1995 between the Company and SunTrust Bank (successor by
merger to Trust Company Bank), as amended, and the Company is willing to permit
Wynnefield to do so as long as the Company can be assured of a constructive and
mutually beneficial relationship between it and Wynnefield; and
WHEREAS, in order to assure this type of relationship, the Company and
Wynnefield wish to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties, covenants and agreements set forth
herein, the parties, intending to be legally bound, hereby agree as follows:
1. TERM OF AGREEMENT
The respective covenants and agreements of Wynnefield and the Company
contained in this Agreement will continue in full force and effect until
December 31, 2008 (the "Termination Date"), unless earlier terminated pursuant
to paragraph 5 or subparagraph 6(b) hereof or pursuant to the mutual written
consent of Wynnefield and the Company.
2. COVENANTS OF WYNNEFIELD
Prior to the Termination Date or earlier termination of this Agreement
and subject to the further provisions hereof:
(a) Neither Wynnefield nor any person controlled by (within
the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) Wynnefield (collectively and together with Wynnefield, the
"Wynnefield Group") will, directly or indirectly, acquire any Voting Securities
(as hereinafter defined) (except by way of stock dividends or other
distributions or offerings made available to holders of Voting Securities
generally) if the effect of such acquisition would be to increase the aggregate
voting power in the election of directors of all Voting Securities then owned by
all members of the Wynnefield Group to greater than 20% of such total combined
voting power of all Voting Securities then outstanding; provided that this
subparagraph shall not apply if and to the extent that the aggregate percentage
ownership of the Wynnefield Group is increased as a result of a recapitalization
or reincorporation of the Company, any redemption of Voting Securities by the
Company, or any other action taken by the Company or its affiliates (as
hereinafter defined) other than the Wynnefield Group.
(b) Wynnefield shall take such action as may be required so that all
Voting Securities owned by any member of the Wynnefield Group are voted (whether
by proxy or otherwise) in favor of a proposal to effect a reincorporation by
merger of the Company with and into a newly-formed Delaware corporation
wholly-owned by the Company ("Newco") upon the consummation of which Newco will
be substantially identical to the Company, except that (i) the Rights Plan will
be terminated, and (ii) the charter of Newco (A) will impose certain transfer
restrictions on Newco's capital stock to help assure that the Company's net
operating loss carryforwards (the "NOLs") will continue to be available to
offset Newco's current and future taxable income (which transfer restrictions
will lapse once the NOLs have been fully utilized), (B) will provide for
modifications in the conversion ratios applicable to the Series B Common Stock
and Series C Common Stock and corresponding reductions in the number of shares
of capital stock designated as Series B Common Stock and Series C Common Stock
(and a corresponding increase in the number of shares of capital stock
designated as Series A Common Stock), (C) will include an increase in authorized
capital not to exceed 25,000,000 shares of capital stock in the event that the
Company has issued shares of capital stock pursuant to the Rights Plan prior to
the time of such reincorporation, and (D) will be subject to amendment upon the
approval of holders owning a majority of the capital stock of Newco entitled to
vote generally in the election of directors. The members of the Wynnefield
Group, as holders of Voting Securities, shall be present, in person or by proxy,
at all meetings of shareholders of the Company called with respect to such
reincorporation and of which the Wynnefield Group has received due notice, so
that all Voting Securities beneficially owned by them may be counted for the
purpose of determining the presence of a quorum at such meetings.
(c) No member of the Wynnefield Group shall deposit any Voting
Securities in a voting trust or subject any Voting Securities to any arrangement
or agreement with respect to the voting of such Voting Securities to which any
of the following persons (collectively, the "Bernstein Group") is a party: (i)
Michael Bernstein or any person who any member of the Wynnefield Group knows to
be an affiliate, associate (as hereinafter defined) or relative (whether or not
they occupy the same home as Mr. Bernstein) of Mr. Bernstein or any 13D Group
(as hereinafter defined) of which Mr. Bernstein is a member, (ii) any person
who, to the knowledge of any member of the Wynnefield Group, is employed by any
corporation or other organization (other than the Company and its affiliates and
associates) of which Mr. Bernstein is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities of such corporation or other organization, or (iii) any person who,
to the knowledge of any member of the Wynnefield Group, is casting votes in
respect of Voting Securities beneficially owned by Mr. Bernstein.
(d) No member of the Wynnefield Group shall solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) made by any member of the Bernstein Group.
(e) No member of the Wynnefield Group shall, for the purpose of, or in
connection with, acquiring, holding, voting or disposing of Voting Securities,
(i) join a partnership, limited partnership, syndicate or other group of which,
to its knowledge, any member of the Bernstein Group is, directly or indirectly,
a partner, member or participant, or (ii) otherwise act in concert with any
person who it knows to be a member of the Bernstein Group, or (iii) otherwise
become, together with any person who it knows to be a member of the Bernstein
Group, a "person" within the meaning of Section 13(d)(3) of the Exchange Act (in
each case other than solely with members of the Wynnefield Group).
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(f) No member of the Wynnefield Group shall, directly or indirectly,
offer, sell or transfer any Voting Securities to any person who it knows to be a
member of the Bernstein Group.
3. REPRESENTATIONS AND WARRANTIES
(a) The Company hereby represents and warrants to Wynnefield as
follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia.
(ii) The Company has full legal right, power and authority to
enter into and perform this Agreement, and the execution and delivery
of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by the Board
of Directors of the Company.
(iii) This Agreement constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms except that (A) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (B) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(b) Wynnefield hereby represents and warrants to the Company as
follows:
(i) Wynnefield is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) Wynnefield has full legal right, power and authority to
enter into and perform this Agreement, and the execution and delivery
of this Agreement by Wynnefield and the consummation by Wynnefield of
the transactions contemplated hereby have been duly authorized by the
managers of Wynnefield.
(iii) This Agreement constitutes a valid and binding agreement
of Wynnefield, enforceable against Wynnefield in accordance with its
terms except that (A) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (B) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(iv) As of the date hereof, the Wynnefield Group owns of
record and beneficially an aggregate of 1,395,535 shares of Common
Stock (the "Existing Shares"), and the Existing Shares constitute all
of the shares of the Company's capital stock owned of record or
beneficially by the Wynnefield Group. There are no outstanding options
or other rights to acquire from Wynnefield, or obligations of
Wynnefield to sell or to acquire, any shares of the Company's capital
stock. Wynnefield has, directly or indirectly, the voting power, power
of disposition and power to agree to all of the matters set forth in
this Agreement, in each case
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with respect to all of the Existing Shares with no limitations,
qualifications or restrictions of any kind whatsoever, subject to
applicable securities laws and the terms of this Agreement.
4. CERTAIN DEFINITIONS
For purposes of this Voting Agreement:
(a) "Affiliate" and "associate" shall each have the meaning
set forth with respect thereto in Rule 12b-2 under the Exchange Act.
(b) "Beneficially own", "beneficial ownership" and "beneficial
owner" with respect to any securities means having "beneficial
ownership" of such securities, as determined pursuant to Rule 13d-3
under the Exchange Act, without duplicative counting of the same
securities by the same holder. Securities beneficially owned by a
person include securities beneficially owned by all other persons with
whom such person would constitute a "13D Group" with respect to
securities of the same issuer.
(c) "Person" shall mean any individual, partnership,
corporation, limited liability company, trust or other entity or
association.
(d) "13D Group" shall mean any group of persons formed for the
purpose of acquiring, holding, voting or disposing of Voting Securities
which would be required under Section 13(d) of the Exchange Act and the
rules and regulations thereunder (as now in effect and based on present
legal interpretations thereof) to file a statement on Schedule 13D with
the Securities and Exchange Commission as a "person" within the meaning
of Section 13(d)(3) of the Exchange Act if such group beneficially
owned Voting Securities representing more than 5% of the total combined
voting power of all Voting Securities then outstanding.
(e) "Voting Securities" shall mean all classes of capital
stock of the Company entitled to vote generally in the election of
directors.
5. TERMINATION
Notwithstanding any other provision of this Agreement, either party may
terminate this Agreement, in its sole discretion, if (i) the other party fails
to perform or observe any of its obligations pursuant to this Agreement or (ii)
the members of the Wynnefield Group own, in the aggregate, Voting Securities
representing less than 5% of the total combined voting power of all outstanding
Voting Securities.
6. MISCELLANEOUS
(a) Wynnefield, on the one hand, and the Company, on the other,
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled at
law or equity.
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(b) If any provision of this Agreement is in violation of any statute,
rule, regulation, order or decree of any governmental authority, court or
agency, or subjects any member of the Wynnefield Group to governmental
regulation to which it is not now subject, which violation or regulation would
have a material adverse impact on the operations of the Wynnefield Group taken
as a whole, then such member of the Wynnefield Group shall be relieved of its
obligations under such provision to the minimum extent necessary to cure such
violation or eliminate the applicability of such regulation; provided that this
subparagraph shall not apply to any such violation or regulation resulting from
activities or operations of any member of the Wynnefield Group other than its
ownership of Voting Securities and the consummation of the transactions
contemplated by this Agreement; and provided further that in the event any
member of the Wynnefield Group is relieved of its obligations under any
provision of this Agreement pursuant to this subparagraph, the Company may
terminate this Agreement in its sole discretion.
(c) This Agreement contains the entire understanding of the parties
with respect to the transactions contemplated hereby, and this Agreement may be
amended only by an agreement in writing executed by the parties hereto.
(d) Descriptive headings are for convenience only and shall not control
or affect the meaning or construction of any provision of this Agreement.
(e) For the convenience of the parties, any number of counterparts of
this Agreement may be executed by the parties hereto and each such executed
counterpart shall be, and shall he deemed to be, an original instrument.
(f) All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be in writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (iii) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
THE COMPANY:
Crown Crafts, Inc.
P.O. Box 1028
Gonzales, LA 70707-1028
Attn: Chief Executive Officer
Facsimile No.: (225) 647-9112
WYNNEFIELD:
Wynnefield Capital Management, LLC
450 Seventh Avenue, Suite 509
New York, New York 10123
Attn: Max W. Batzer
Facsimile No.: (212) 760-0824
(g) From and after the Termination Date or earlier termination of this
Agreement in accordance with the terms hereof, the covenants of the parties set
forth herein shall be of no further force or effect, and the parties shall be
under no further obligation with respect thereto.
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(h) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia applicable to contracts made
and to be performed therein.
(i) This Agreement shall become effective as of the day first above
written.
IN WITNESS WHEREOF, Wynnefield and the Company have caused this
Agreement to be duly executed by their respective officers, each of whom is duly
authorized, all as of the day and year first above written.
CROWN CRAFTS, INC.
By:/s/ E. Randall Chestnut
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Name: E. Randall Chestnut
Title: President and CEO
WYNNEFIELD CAPITAL
MANAGEMENT, LLC
By:/s/ Nelson Obus
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Name: Nelson Obus
Title: President