EXHIBIT 10.38
EXECUTION COPY
THIRD AMENDMENT TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") made as of the
26th day of August, 2004, by and among TANDY BRANDS ACCESSORIES, INC.
("Borrower"), WELLS FARGO HSBC TRADE BANK, N. A. ("Agent"), and the lenders
specified herein ("Lenders").
WHEREAS, Borrower, Agent and certain lenders entered into a Credit
Agreement dated as of June 27, 2001 (the "Original Credit Agreement"), as
amended by that First Amendment to Credit Agreement dated as of June 28, 2002,
(the "First Amendment"; as amended by that Second Amendment to Credit Agreement
dated as of June 26, 2002 (the "Second Amendment") the Original Credit Agreement
and the First Amendment and the Second Amendment together, the "Credit
Agreement"); and
WHEREAS, Borrower has requested that Agent and Lenders make certain
amendments to the Credit Agreement, and Agent and Lenders are willing to do so
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
in this Amendment shall have the meaning ascribed to them in the Credit
Agreement. Unless otherwise specified, all section references herein refer to
sections of the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
2.1 Recitals
(a) First Recital
The First Recital is revised to read as follows:
"WHEREAS, Borrower has requested that Agent and Lenders
provide Borrower with a $85,000,000.00 revolving credit
facility (the "Revolving Credit Loan") to fund general
corporate and working capital needs of Borrower and its
Subsidiaries."
2.2 Definitions
(a) Applicable Commitment Fee
The chart in clause (b) in the definition of "Applicable
Commitment Fee Percentage" is revised as follows:
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APPLICABLE
COMMITMENT
TOTAL FUNDED INDEBTEDNESS FEE
TO EBITDA RATIO PERCENTAGE
- ---------------------------------------------------------------- -----------
Less than 1.00 to 1.00 0.20%
Greater than or equal to 1.00 to 1.00 but less than 2.00 to 1.00 0.25%
Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00 0.30%
Greater than or equal to 2.50 to 1.00 0.375%
(b) Applicable Margin
The chart in clause (b) in the definition of "Applicable
Margin" is revised as follows:
APPLICABLE
MARGIN FOR
TOTAL FUNDED INDEBTEDNESS EURODOLLAR
TO EBITDA RATIO BORROWINGS
- ------------------------------------------------------------------ -----------
Less than 1.00 to 1.00 1.000%
Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00 1.125%
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00 1.250%
Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00 1.500%
Greater than or equal to 2.50 to 1.00 1.750%
(c) Fixed Charge Coverage Ratio
The definition of "Fixed Charge Coverage Ratio" is
amended to read as follows:
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"`FIXED CHARGE COVERAGE RATIO', means, for the four
consecutive fiscal quarterly periods ending on the date of
determination for Borrower and its Subsidiaries, the ratio of
(a) EBITDA determined on a consolidated basis minus Capital
Expenditures minus federal, state, local and foreign income
taxes divided by (b) Interest Expense plus payments made in
respect of Capitalized Lease Obligations plus any cash
dividend made by Borrower or any of its Subsidiaries, plus any
payments made by Borrower or any of its Subsidiaries in
respect of the redemption, retirement, acquisition, or
prepayment of any Borrower's capital stock, or any other
equity interest, which are more than $5,000,000 in the
aggregate during the term of this Agreement, plus, for any
determination based on the quarterly period ending September
30, 2004 and thereafter, implied principal payments in an
amount equal to one-fifth (1/5th) of Revolving Credit Loans in
excess of $20,000,000 outstanding on the last day of each such
quarterly period, plus any Investments in Sheldon."
(d) Permitted Acquisitions
The definition of "Permitted Acquisition" is revised to
read as follows:
"`Permitted Acquisition' means an acquisition of a business
entity or assets (i) provided the aggregate amount of all
consideration for all such acquisitions from the date of the
Third Amendment until the Termination Date does not exceed
$20,000,000 or (ii) for which Borrower has received the prior
written consent of the Required Lenders."
(e) Permitted Liens
Clause (d) of the definition of "Permitted Liens" is
revised to add the words "or other property" after the words
"equipment or machinery" on line 16 of the definition.
(f) Revolving Credit Notes
The definition of "Revolving Credit Notes" is revised to
read as follows:
"`Revolving Credit Notes' means those certain Revolving Credit
Promissory Notes dated as of the date of the Third Amendment
in the form of Exhibit A attached hereto, executed by
Borrower, as maker, and payable to the order of Lenders, as
payee, in the aggregate original principal amount of
$85,000,000.00, together with any renewals, extensions, or
modifications thereof."
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(g) Security Documents
The definition of "Security Documents" is deleted as is
any reference to "Security Documents" in the Loan Documents.
(h) H.A. Sheldon Canada, Ltd.
The definition of "Sheldon" is added:
" `Sheldon' means H. A. Sheldon Canada, Ltd."
(i) Termination Date
Clause (a) in the definition of "Termination Date" is
revised to read as follows:
"(a) November 30, 2007,"
(j) Third Amendment
The definition of "Third Amendment" is added:
"`Third Amendment' means the Third Amendment to the Credit
Agreement dated August 26, 2004."
(k) Total Funded Indebtedness
The following is added to the end of the definition of
"Total Funded Indebtedness:"
"minus, Indebtedness or obligations to a Bank under letters of
credit."
(l) Total Revolving Credit Commitment
The definition of "Total Revolving Credit Commitment" is
revised to read as follows:
"`Total Revolving Credit Commitment' shall mean the sum of the
Lenders' Revolving Credit Commitments, as the same may be
terminated or reduced from time to time in accordance with the
provisions of this Agreement. As of the date of the Third
Amendment, the Total Revolving Credit Commitment is
$85,000,000.00."
2.3 Increases in the Total Revolving Credit Commitment
Section 2.19, Increases in Total Revolving Credit
Commitment, is added to the Credit Agreement as follows:
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"2.19 INCREASES IN TOTAL REVOLVING CREDIT COMMITMENT. The
Borrower may request increases in the Total Revolving Credit
Commitment as follows:
(a) Provided there exists no Event of Default and subject to
the conditions set forth under clause (e) below, upon thirty
(30) Business Days notice to the Agent (which shall promptly
notify the Lenders), the Borrower may, from time to time,
request increases in the Total Revolving Credit Commitment in
an amount not to exceed $25,000,000 in the aggregate;
provided, that each increase of the Total Revolving Credit
Commitment shall be in a minimum amount of $5,000,000, or
integral multiples of $1,000,000 in excess thereof. At the
time of sending such notice, the Borrower (in consultation
with the Agent) shall specify the time period within which
each Lender is requested to respond (which shall in no event
be less than ten (10) Business Days from the date of delivery
of such notice to the Lenders).
(b) Each Lender shall notify the Agent within such time period
whether or not it agrees to increase its Revolving Credit
Commitment and, if so, whether by an amount equal to, greater
than, or less than its percentage share of such requested
increase. Any Lender not responding within such time period
shall be deemed to have declined to increase its Revolving
Credit Commitment.
(c) The Agent shall notify the Borrower and each Lender of the
Lenders' responses to the request made hereunder. To achieve
the full amount of a requested increase and subject to the
approval of the Agent (which approval shall not be
unreasonably withheld), the Borrower may also invite
additional lenders to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Agent and
its counsel.
(d) If the Total Revolving Credit Commitment is increased in
accordance with this subsection, the Agent and the Borrower
shall determine the effective date (such date, the "Increase
Effective Date) and the final allocation of such increase. The
Agent shall promptly notify the Borrower and the Lenders of
the final allocation of such increase in the Total Revolving
Credit Commitment and the Increase Effective Date.
(e) As conditions precedent to such increase, (i) the Borrower
shall deliver to the Agent a certificate dated as of the
Increase Effective Date signed by an Officer of the Borrower
(y) certifying that each of the conditions set forth in
Section 7.2 (a), (b), and (d) have been satisfied by the
Borrower, and (z) certifying and attaching the resolutions
adopted by the Borrower and (ii) the Borrower shall have paid
all fees and expenses due and owing to the Agent and the
Lenders. To the extent necessary to keep the outstanding
Revolving Credit Loans ratable with any revised percentage
shares of the Lenders arising from any nonratable increase in
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the Total Revolving Credit Commitment under this subsection,
the Borrower shall prepay Revolving Credit Loans outstanding
on the Increase Effective Date and/or Lenders shall make
assignments pursuant to arrangements satisfactory to the
Agent."
2.4 Security
(a) Section 6.1 is deleted in its entirety. Further, any
reference to "security," "security interest," and "security
agreement" in the Loan Documents is hereby deleted.
(b) Effective as of the effectiveness of this Amendment,
Agent, the Lenders and WFB hereby release their security
interest in the Collateral owned by the Borrower and its
Subsidiaries.
(c) As soon as practicable following the effectiveness of this
Amendment, the Agent shall file the appropriate UCC Financing
Statement Amendments (Form UCC3) terminating the Lenders'
security interests in the Collateral and shall terminate any
additional security filings.
(d) As soon as practicable following the effectiveness of this
Amendment, the Agent shall return to the Borrower the shares
of stock pledged to the Lenders and the related stock powers.
2.5 After-Acquired Subsidiaries
Section 9.14 is amended by deleting the words "and Security
Agreement" following the words "Subsidiary Guaranty" on line 5 of
such Section.
2.6 Limitations on Indebtedness
(a) Clause (c) of Section 10.3 is revised to read as follows:
"(c) Purchase money financing not to exceed $3,000,000 in any
Fiscal Year;"
(b) Clause (h) is added to Section 10.3 as follows:
"(h) Indebtedness with respect to letters of credit (not
subject to the terms and conditions of this Agreement), issued
by a Bank, such letters of credit not to exceed $20,000,000 in
amounts available to be drawn thereunder at any time."
2.7 Restricted Payments
(a) Section 10.9 is amended to read as follows:
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"10.9 RESTRICTED PAYMENTS. The Borrower and its Subsidiaries
may declare or pay any cash dividend; redeem, retire,
otherwise acquire, or prepay, shares of their capital stock or
any other equity interest; or make any other distribution of
any property or cash to owners of an equity interest in their
capacity as such, if, in respect to payments or distributions
made by the Borrower, (a) such payment or distribution is in
the form of the issuance of the Borrower's own stock, or (b)
at the time of making such payment or distribution and as a
result thereof there exists or would exist no Event of
Default."
2.8 Investments
(a) Section 10.11 beginning at subsection (c) is hereby
amended to read in its entirety as follows:
"(c) Investments made in connection with Borrower's Benefit
Restoration Plan and Supplemental Employee Retirement
Plan; and
(d) Investments in Subsidiaries."
2.9 Capital Expenditures
Section 10.13 is deleted in its entirety.
2.10 Leverage Ratio
Section 10.14 is amended to read as follows:
"10.14 LEVERAGE RATIO. Borrower shall not permit the ratio of
(a) Total Funded Indebtedness, on a consolidated basis, as of
the last day of each fiscal quarter of the Borrower beginning
September 30, 2004, to (b) EBITDA, on a consolidated basis,
for the four (4) fiscal quarters ending on the date of
determination to exceed 3:00 to 1:00."
2.11 Fixed Charge Coverage Ratio
Section 10.15 is amended to read as follows:
"10.15 FIXED CHARGE COVERAGE RATIO. Borrower shall not permit
the Fixed Charge Coverage Ratio as of the last day of each
fiscal quarter of Borrower beginning September 30, 2004 to be
less than 1.25:1.00."
2.12 Tangible Net Worth
Section 10.16 is amended to read as follows:
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"10.16 TANGIBLE NET WORTH. The Tangible Net Worth of the
Borrower and its Subsidiaries on a consolidated basis shall
never be less than the sum of eighty percent (80%) of Tangible
Net Worth as of June 30, 2004 plus (a) seventy-five percent
(75%) of Consolidated Net Income earned after June 30, 2004
during any fiscal quarter, provided, however that fiscal
quarters in which Consolidated Net Income is a negative amount
will be excluded from the calculation of Consolidated Net
Income earned after June 30, 2004, plus (b) an amount equal to
100% of the net proceeds of any equity offering by the
Borrower or any of its Subsidiaries occurring after June 30,
2004."
2.13 Trading Asset Coverage Ratio
Section 10.17 is amended to read as follows:
"10.17 TRADING ASSET COVERAGE RATIO. Borrower shall not permit
the ratio of (a) Total Funded Indebtedness plus outstanding
Commercial Letters of Credit to (b) Trading Assets, as of the
last date of each fiscal quarter of Borrower beginning
September 30, 2004, to be not less than 1.00 to 1.00. "Trading
Assets" means the sum of (i) seventy-five percent (75%) of net
accounts receivable, plus (ii) fifty percent (50%) of
inventory, plus (iii) 60% of outstanding Commercial Letters of
Credit, all as of the date of determination."
2.14 Hedging
Section 10.20 is deleted in its entirety.
2.15 Exhibit D
Exhibit D, Subsidiaries - Tandy Brands Accessories, Inc.
is revised as attached to this Amendment.
2.16 Schedule 2.1
Schedule 2.1, Revolving Credit Commitments, is revised
as attached to this Amendment.
2.17 Withdrawal of Lender.
On the date of execution of this Amendment by the
parties hereto, Compass Bank shall cease to be a Lender under
the Credit Agreement and shall have no rights or obligations
under the Credit Agreement or the Loan Documents. The Total
Revolving Credit Commitment shall be re-allocated among the
remaining Lenders as set forth on revised Schedule 2.1
attached hereto.
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2.18 Joinder Agreement.
As of the effectiveness of this Amendment, Bank of
America, N.A. and JPMorgan Chase Bank shall each become a
party to the Credit Agreement as a Lender, shall acquire all
of the rights, powers and obligations of a Lender under the
Credit Agreement, and shall each have a Revolving Credit
Commitment equal to $14,000,000. From and after the
effectiveness of this Amendment, all references to "Lenders"
in the Credit Agreement and the other Loan Documents shall be
deemed to include, in any event, Bank of America, N.A. and
JPMorgan Chase Bank.
3. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective upon
receipt by Agent of:
(a) A copy or copies of this Amendment signed by each of the
parties hereto;
(b) The Amended and Restated Notes or Notes, as the case may
be, executed in favor of each Lender;
(c) A Confirmation of Guaranty executed by each Guarantor
(other than Sheldon);
(d) A release of Sheldon's Guaranty executed by Agent;
(e) Additional Subsidiaries Supplements executed by
TBAC-Acquisition, Inc. and Superior Merchandise Company;
(f) A Compliance Certificate executed by Borrower;
(g) A legal opinion to be furnished by counsel to the Borrower
in form and substance satisfactory to the Agent;
(h) Resolutions from the Borrower and each of the Guarantors,
in form and substance satisfactory to the Agent, authorizing
the execution and delivery of and performance under this
Amendment and any documents or agreements entered into in
connection therewith; and
(i) Payment for all other fees and expenses due and owing by
the Borrower.
4. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
(a) The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set
forth in the Credit Agreement and, except as expressly
modified and superseded by this Amendment, the terms and
provisions of the Credit Agreement are ratified and confirmed
and shall continue in full force and effect. Borrower,
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Agent and Lenders agree that the Credit Agreement and the Loan
Documents, as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their
respective terms.
(b) To induce Agent and Lenders to enter into this Amendment,
Borrower ratifies and confirms each representation and
warranty set forth in the Credit Agreement as if such
representations and warranties were made on the even date
herewith, (except to the extent that such representations and
warranties related solely to an earlier date and except to the
extent that the facts upon which such representations are
based have been changed by the transactions contemplated in
the Credit Agreement) and further represents and warrants (i)
that there has occurred since the date of the last financial
statements delivered to Agent and Lenders no event or
circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Change, (ii) that no Event of
Default exists on the date hereof, (iii) that Borrower is
fully authorized to enter into this Amendment, and (iv) that
the Guarantors signing the Confirmation of Guaranty attached
hereto or executing Additional Subsidiaries Supplements are
all of the Borrower's Subsidiaries as of the date of this
Amendment (other than Sheldon).
5. BENEFITS. This Amendment shall be binding upon and inure to the
benefit and Borrower, Agent and Lenders and their respective successors and
assigns; provided, however, that Borrower may not, without the prior written
consent of Agent and Lenders, assign any rights, powers, duties or obligations
under this Amendment, the Credit Agreement or any of the other Loan Documents.
6. CONSTRUCTION. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
7. INVALID PROVISIONS. If any provision of this Amendment is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully several and the remaining provisions of this Amendment shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
8. ENTIRE AGREEMENT. The Credit Agreement, as amended by this
Amendment, contains the entire agreement among the parties regarding the subject
matter hereof and supersedes all prior written and oral agreements and
understandings among the parties hereto regarding same.
9. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and all
other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Credit
Agreement, as amended hereby, are hereby amended so that any reference in the
Credit Agreement to the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.
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10. COUNTERPARTS. This Amendment may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BORROWER:
TANDY BRANDS ACCESSORIES, INC.
By: /s/ Mark J. Flaherty
--------------------------------------
Name: Mark J. Flaherty
Title: Chief Financial Officer
AGENT:
WELLS FARGO HSBC TRADE
BANK, N.A.
By: /s/ Yousuf Omar
----------------------------------------
Name: Yousuf Omar
Title: Senior Relationship Manager
WELLS FARGO BANK, N. A.
By: /s/ John Johnson
----------------------------------------
Name: /s/ John W. Johnson
--------------------------------------
Title: Vice President
-------------------------------------
Tandy Brands Accessories, Inc. - Third Amendment
LENDERS:
WELLS FARGO HSBC TRADE BANK, N. A.
By: /s/ Yousuf Omar
----------------------------------------
Name: Yousuf Omar
Title: Senior Relationship Manager
Address: 1445 Ross Avenue, Suite 450
Dallas, TX 75202
Attention: Yousuf Omar
Fax No.: 214-220-1585
Tandy Brands Accessories, Inc. - Third Amendment
COMERICA BANK
By: /s/ Corey R. Bailey
-------------------------------------
Name: Corey R. Bailey
-------------------------------------
Title: Vice - President - Texas Division
-------------------------------------
Address: 8828 Stemmons, Suite 441
Dallas, TX 75247
Attention: Corey R. Bailey
Fax No.: 214-589-1360
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COMPASS BANK, as withdrawing Lender
By: /s/ Michael H. Keith
--------------------------------------
Name: Michael H. Keith
--------------------------------------
Title: Senior Vice President
-------------------------------------
Address: 8080 N. Central Expressway
Suite 250
Dallas, TX 75206
Attention: Michael Keith
Fax No. 214-346-2746
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BANK OF AMERICA, N.A.
By: /s/ Steven A. MacKenzie
-----------------------------------
Name: Steven A. MacKenzie
Title: Senior Vice President
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
Attention: Steven A. MacKenzie
Fax No. 214-209-3140
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JPMORGAN CHASE BANK
By: /s/ Jerry Petrey
---------------------------------
Name: Jerry Petrey
Title: Vice President
Address: 500 E. Border
P.O. Box 250
Arlington, Texas 76004-0250
Attention: Jerry Petrey
Fax No. 817-856-3183
Tandy Brands Accessories, Inc. - Third Amendment
EXHIBIT D
SUBSIDIARIES - TANDY BRANDS ACCESSORIES, INC.
Number of
Jurisdiction Outstanding Shares
of of Each Class of Owner of Jurisdictions
Incorporation Capital Stock or Outstanding Shares Qualified as Foreign
or Partnership Interest or Interests of Each Corporation or
Subsidiary Organization Owned Such Class Owned Partnership
- ---------------------------- ---------------- ------------------------- ------------------------- ------------------------
TBAC Prince Gardner, Inc. Delaware 1,000 Tandy Brands Texas
Accessories, Inc.
Amity/Rolfs, Inc. Delaware 1,000 Tandy Brands Wisconsin
Accessories, Inc.
TBAC Investments, Inc. Nevada 1,000 Tandy Brands
Accessories, Inc.
TBAC General Management Company Nevada 1,000 Tandy Brands Texas
Accessories, Inc.
Accessory Design Group, Inc. Delaware 1,000 Tandy Brands Texas
Accessories, Inc.
TBAC - Torel, Inc. Delaware 1,000 Tandy Brands
Accessories, Inc.
Tandy Brands Accessories Delaware 1,000 Tandy Brands
Handbags, Inc. Accessories, Inc.
Stagg Industries, Inc. Alabama 4,700 Class A common Tandy Brands
4,700 Class B common Accessories, Inc.
H.A. Sheldon Canada, Ltd. Ontario, Canada 1,000 Tandy Brands
Accessories, Inc.
TBAC Investment Trust Pennsylvania 100 TBAC Investments, Inc.
TBAC Management Company, LP Delaware 1% partnership interest General Partner -
TBAC General Management
Company
99% partnership interest Limited Partner -
TBAC
Investments, Inc.
TBAC-Mass Merchant Quality Delaware 1,000 Accessory Design Group, Texas
Control, Inc. Inc.
TBAC-Acquisition, Inc. Delaware 1,000 Tandy Brands Texas
Accessories, Inc.
Superior Merchandise Company Louisiana 250 TBAC-Acquisition, Inc.
Tandy Brands Accessories, Inc. - Third Amendment
SCHEDULE 2.1
Revolving Credit Commitments
Amount of Percentage of
Commitment Commitment
Wells Fargo HSBC Trade Bank, N. A. $35,000,000.00 41.176470588%
Comerica Bank $22,000,000.00 25.882352941%
Bank of America, N.A. $14,000,000.00 16.470588235%
JPMorgan Chase Bank $14,000,000.00 16.470588235%
Total: $85,000,000.00 100.00%
Tandy Brands Accessories, Inc. - Third Amendment
CONFIRMATION OF GUARANTY
Reference is made to the Credit Agreement dated as of June 27, 2001, as
amended (the "Credit Agreement") among Tandy Brands Accessories, Inc.
("Borrower"), Wells Fargo HSBC Trade Bank, N. A. ("Agent"), and the lenders
specified therein ("Lenders"). The undersigned Guarantors hereby confirm that
their guaranty under the Subsidiary Guaranty dated as of June 27, 2001 for the
benefit of Agent, Lenders, and Wells Fargo Bank, N. A., continues in full force
and effect notwithstanding the Third Amendment to Credit Agreement dated as of
August 26, 2004, which Third Amendment is hereby accepted and consented to by
each Guarantor. In accordance herewith, the aforesaid guaranty shall be deemed
to cover and support the Obligations at any time due from Borrower to Lenders
pursuant to the Credit Agreement as the latter has been modified by the Third
Amendment. This Confirmation of Guaranty shall be governed by and construed in
accordance with the laws of the State of Texas.
Dated this 26th day of August, 2004.
ACCESSORY DESIGN GROUP, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
AMITY/ROLFS, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
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TANDY BRANDS ACCESSORIES HANDBAGS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC INVESTMENTS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC GENERAL MANAGEMENT COMPANY
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC MANAGEMENT COMPANY L.P.
BY: TBAC GENERAL MANAGEMENT COMPANY,
ITS GENERAL PARTNER
By: ________________________________
Name: ______________________________
Title: _____________________________
TBAC PRINCE GARDNER, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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STAGG INDUSTRIES, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC - TOREL, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC - MASS MERCHANT QUALITY CONTROL,
INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
TBAC INVESTMENT TRUST
By: ____________________________________
Name: __________________________________
Title: _________________________________
ACCEPTED as of the date first written above.
BORROWER:
TANDY BRANDS ACCESSORIES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
Tandy Brands Accessories, Inc. - Third Amendment
COMPLIANCE CERTIFICATE
August 26, 2004
Reference is made to that certain Credit Agreement dated as of June 27,
2001 among Tandy Brands Accessories, Inc. ("Borrower"), Wells Fargo HSBC Trade
Bank, N. A. ("Agent"), and the lenders specified therein ("Lenders"), as amended
by and among Borrower, Agent, and Lenders (the "Credit Agreement"). Terms which
are defined in the Credit Agreement and which are used but not defined herein
shall have the meanings given them in the Credit Agreement. The undersigned,
______________, Borrower's _________, hereby certifies in the name, and on
behalf, of Borrower that Borrower has made a thorough inquiry into all matters
certified herein and based upon such inquiry, experience, and the advice of
counsel, does hereby further certify that:
1. All representations and warranties made by Borrower in any Loan
Document delivered on or before the date hereof (including, without limitation,
the representations and warranties contained in Section 4 of the Third Amendment
to Credit Agreement of even date herewith) are true in all material respects on
and as of the date hereof (except to the extent that such representations and
warranties related solely to an earlier date and except to the extent that the
facts upon which such representations are based have been changed by the
transactions contemplated in the Credit Agreement) as if such representations
and warranties had been made as of the date hereof.
2. No Event of Default exists on the date hereof.
3. Borrower has performed and complied with all agreements and
conditions required in the Loan Documents to be performed or complied with by it
on or prior to the date hereof.
IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
the date first above written.
TANDY BRANDS ACCESSORIES, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
Tandy Brands Accessories, Inc. - Third Amendment
AMENDED AND RESTATED
PROMISSORY NOTE
U.S. $35,000,000.00 August 26, 2004
FOR VALUE RECEIVED, the undersigned, TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of WELLS FARGO
HSBC TRADE BANK, N. A., a national banking association (the "Lender"), for the
account of its Applicable Lending Office (as defined in that certain Credit
Agreement, dated as of June 27, 2001, as amended, by and among the Borrower, the
Lender, certain other lenders from time to time parties thereto (collectively,
the "Lenders"), Wells Fargo HSBC Trade Bank, N.A., a national banking
association, as agent for the Lenders (the "Agent"), and Wells Fargo Bank, N.A.,
a national banking association, as arranger (as amended, modified or
supplemented from time to time, the "Credit Agreement") (capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the Credit
Agreement) or any other office designated by the Agent, the lesser of (i) the
principal sum of THIRTY FIVE MILLION DOLLARS ($35,000,000.00), or (ii) the
aggregate unpaid principal amount of all Advances made by the Lender to the
Borrower under the Revolving Credit Commitment.
The Borrower promises to pay interest on the unpaid principal amount of each
such Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Wells Fargo HSBC Trade Bank, N.A., as Agent, at San Francisco Loan
Center, 201 3rd Street, 8th floor, San Francisco, California 94103, in same day
funds. Each Advance under the Revolving Credit Commitment made by the Lender to
the Borrower and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Amended and Restated Promissory Note (this
"Note"), provided, however, that failure of the Lender to make such notation or
any error therein shall not in any manner affect the obligation of the Borrower
to repay such Advances in accordance with the terms of this Note.
This Note is one of the Revolving Credit Notes referred to in, and is subject to
and entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Advances under the Revolving
Credit Commitment by the Lender to the Borrower from time to time pursuant to
Section 2.1 of the Credit Agreement in an aggregate outstanding amount not to
exceed at any time the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest, notice of intent to
accelerate, notice of acceleration and any other notice of any kind, except as
provided in the Credit Agreement. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.
This Note is in renewal and extension, but not in extinguishment or novation, of
that certain promissory note dated as of June 26, 2003, made by Borrower payable
to the order of Lender in the principal amount of $27,500,000.00.
TANDY BRANDS ACCESSORIES, INC.
By: /s/ Mark J. Flaherty
------------------------------------
Name: Mark J. Flaherty
----------------------------------
Title: Chief Financial Officer
---------------------------------
AMENDED AND RESTATED
PROMISSORY NOTE
U.S. $22,000,000.00 August 26, 2004
FOR VALUE RECEIVED, the undersigned, TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of COMERICA
BANK, a Michigan banking corporation (the "Lender"), for the account of its
Applicable Lending Office (as defined in that certain Credit Agreement, dated as
of June 27, 2001, as amended, by and among the Borrower, the Lender, certain
other lenders from time to time parties thereto (collectively, the "Lenders"),
Wells Fargo HSBC Trade Bank, N.A., a national banking association, as agent for
the Lenders (the "Agent"), and Wells Fargo Bank, N.A., a national banking
association, as arranger (as amended, modified or supplemented from time to
time, the "Credit Agreement") (capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Credit Agreement) or any other
office designated by the Agent, the lesser of (i) the principal sum of TWENTY
TWO MILLION DOLLARS ($22,000,000.00), or (ii) the aggregate unpaid principal
amount of all Advances made by the Lender to the Borrower under the Revolving
Credit Commitment.
The Borrower promises to pay interest on the unpaid principal amount of each
such Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Wells Fargo HSBC Trade Bank, N.A., as Agent, at San Francisco Loan
Center, 201 3rd Street, 8th floor, San Francisco, California 94103, in same day
funds. Each Advance under the Revolving Credit Commitment made by the Lender to
the Borrower and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Amended and Restated Promissory Note (this
"Note"), provided, however, that failure of the Lender to make such notation or
any error therein shall not in any manner affect the obligation of the Borrower
to repay such Advances in accordance with the terms of this Note.
This Note is one of the Revolving Credit Notes referred to in, and is subject to
and entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Advances under the Revolving
Credit Commitment by the Lender to the Borrower from time to time pursuant to
Section 2.1 of the Credit Agreement in an aggregate outstanding amount not to
exceed at any time the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest, notice of intent to
accelerate, notice of acceleration and any other notice of any kind, except as
provided in the Credit Agreement. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.
This Note is in renewal and extension, but not in extinguishment or novation, of
that certain promissory note dated as of June 26, 2003, made by Borrower payable
to the order of Lender in the principal amount of $18,500,000.00.
TANDY BRANDS ACCESSORIES, INC.
By: /s/ Mark J. Flaherty
------------------------------------
Name: Mark J. Flaherty
----------------------------------
Title: Chief Financial Officer
---------------------------------
REVOLVING CREDIT PROMISSORY NOTE
U.S. $14,000,000.00 August 26, 2004
FOR VALUE RECEIVED, the undersigned, TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of BANK OF
AMERICA, N.A., a national banking association (the "Lender"), for the account of
its Applicable Lending Office (as defined in that certain Credit Agreement,
dated as of June 27, 2001, as amended, by and among the Borrower, the Lender,
certain other lenders from time to time parties thereto (collectively, the
"Lenders"), Wells Fargo HSBC Trade Bank, N.A., a national banking association,
as agent for the Lenders (the "Agent"), and Wells Fargo Bank, N.A., a national
banking association, as arranger (as amended, modified or supplemented from time
to time, the "Credit Agreement") (capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit Agreement) or
any other office designated by the Agent, the lesser of (i) the principal sum of
FOURTEEN MILLION DOLLARS ($14,000,000.00), or (ii) the aggregate unpaid
principal amount of all Advances made by the Lender to the Borrower under the
Revolving Credit Commitment.
The Borrower promises to pay interest on the unpaid principal amount of each
such Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Wells Fargo HSBC Trade Bank, N.A., as Agent, at San Francisco Loan
Center, 201 3rd Street, 8th floor, San Francisco, California 94103, in same day
funds. Each Advance under the Revolving Credit Commitment made by the Lender to
the Borrower and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Revolving Credit Promissory Note (this
"Note"), provided, however, that failure of the Lender to make such notation or
any error therein shall not in any manner affect the obligation of the Borrower
to repay such Advances in accordance with the terms of this Note.
This Note is one of the Revolving Credit Notes referred to in, and is subject to
and entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Advances under the Revolving
Credit Commitment by the Lender to the Borrower from time to time pursuant to
Section 2.1 of the Credit Agreement in an aggregate outstanding amount not to
exceed at any time the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest, notice of intent to
accelerate, notice of acceleration and any other notice of any kind, except as
provided in the Credit Agreement.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.
TANDY BRANDS ACCESSORIES, INC.
By: /s/ Mark J. Flaherty
------------------------------------
Name: Mark J. Flaherty
----------------------------------
Title: Chief Financial Officer
---------------------------------
REVOLVING CREDIT PROMISSORY NOTE
U.S. $14,000,000.00 August 26, 2004
FOR VALUE RECEIVED, the undersigned, TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of JPMORGAN
CHASE BANK, a New York banking corporation (the "Lender"), for the account of
its Applicable Lending Office (as defined in that certain Credit Agreement,
dated as of June 27, 2001, as amended, by and among the Borrower, the Lender,
certain other lenders from time to time parties thereto (collectively, the
"Lenders"), Wells Fargo HSBC Trade Bank, N.A., a national banking association,
as agent for the Lenders (the "Agent"), and Wells Fargo Bank, N.A., a national
banking association, as arranger (as amended, modified or supplemented from time
to time, the "Credit Agreement") (capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit Agreement) or
any other office designated by the Agent, the lesser of (i) the principal sum of
FOURTEEN MILLION DOLLARS ($14,000,000.00), or (ii) the aggregate unpaid
principal amount of all Advances made by the Lender to the Borrower under the
Revolving Credit Commitment.
The Borrower promises to pay interest on the unpaid principal amount of each
such Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Wells Fargo HSBC Trade Bank, N.A., as Agent, at San Francisco Loan
Center, 201 3rd Street, 8th floor, San Francisco, California 94103, in same day
funds. Each Advance under the Revolving Credit Commitment made by the Lender to
the Borrower and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Revolving Credit Promissory Note (this
"Note"), provided, however, that failure of the Lender to make such notation or
any error therein shall not in any manner affect the obligation of the Borrower
to repay such Advances in accordance with the terms of this Note.
This Note is one of the Revolving Credit Notes referred to in, and is subject to
and entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Advances under the Revolving
Credit Commitment by the Lender to the Borrower from time to time pursuant to
Section 2.1 of the Credit Agreement in an aggregate outstanding amount not to
exceed at any time the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest, notice of intent to
accelerate, notice of acceleration and any other notice of any kind, except as
provided in the Credit Agreement. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.
TANDY BRANDS ACCESSORIES, INC.
By: /s/ Mark J. Flaherty
------------------------------------
Name: Mark J. Flaherty
----------------------------------
Title: Chief Financial Officer
---------------------------------
August 26, 2004
H.A. Sheldon Canada, Ltd.
c/o Tandy Brands Accessories, Inc.
690 E. Lamar, Suite 200
Arlington, Texas 76011-3862
Re: Release of Sheldon as a Guarantor under the Guaranty (each as hereinafter
defined)
Gentlemen:
Reference is hereby made to (i) that certain Subsidiary Guaranty dated as
of June 27, 2001 (as amended, supplemented and otherwise modified, the
"Guaranty"), executed by certain Subsidiaries of Tandy Brands Accessories, Inc.,
a Delaware corporation ("Borrower"), from time to time party thereto (each a
"Guarantor") including, without limitation, H.A. Sheldon Canada, Ltd., an
Ontario, Canada corporation ("Sheldon"), for the benefit of Wells Fargo HSBC
Trade Bank, N.A., a national banking association, in its capacity as Agent for
the Lenders party to the Credit Agreement described below ("Agent") and Banks;
and (ii) that certain Credit Agreement, dated as of June 27, 2001, by and among
Borrower, Agent, WFB and the other Lenders signatory thereto from time to time
(as amended from time to time, the "Credit Agreement"). Unless otherwise
indicated, all terms used herein shall have the same meanings as in the Credit
Agreement.
Sheldon has unconditionally guaranteed the Obligations of Borrower in
favor of Agent, for itself and the benefit of Lenders, and WFB, pursuant to the
Guaranty. Sheldon has requested that Agent, on behalf of itself and Lenders, and
WFB each release Sheldon from any obligations it may have under the Guaranty and
Agent, on behalf of itself and Lenders, and WFB are each willing to do so.
Effective as of the date hereof, Agent, on behalf of itself and Lenders,
and WFB each hereby releases Sheldon from any obligations it may have under the
Guaranty and any and all claims, actions, and demands whatsoever thereunder and
from any and all responsibilities and obligations which were created under the
Credit Agreement and Loan Documents. Nothing herein shall release any other
Guarantor from all or any portion of its obligations under the Guaranty, the
Credit Agreement or any other Loan Document.
This letter agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
This letter agreement shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of Texas, without
regard to conflicts of laws principals.
Very truly yours,
WELLS FARGO HSBC TRADE BANK, N.A.,
individually and in its capacity as
Agent for the Lenders party to the
Credit Agreement
By:_____________________________________
Name:___________________________________
Title:__________________________________
WELLS FARGO BANK, N.A.
By:_____________________________________
Name:___________________________________
Title:__________________________________
ACCEPTED AND AGREED TO BY:
WELLS FARGO HSBC TRADE BANK, N.A.
By:__________________________________
Name:________________________________
Title:_______________________________
COMERICA BANK
By:__________________________________
Name:________________________________
Title:_______________________________
BANK OF AMERICA, N.A.
By:__________________________________
Name:________________________________
Title:_______________________________
JPMORGAN CHASE BANK
By:__________________________________
Name:________________________________
Title:_______________________________
ACCEPTED AND RELIED UPON:
H.A. SHELDON CANADA, LTD.
By:__________________________________
ADDITIONAL SUBSIDIARIES SUPPLEMENT
This ADDITIONAL SUBSIDIARIES SUPPLEMENT, dated August 26, 2004 to the
Subsidiary Guaranty, dated as of June 27, 2001 (as amended, supplemented and
otherwise modified, the "Guaranty", attached hereto as Exhibit A), made by
certain Subsidiaries of Tandy Brands Accessories, Inc., a Delaware corporation
("Borrower"), from time to time parties thereto (collectively, the
"Guarantors").
RECITALS:
WHEREAS, the Guaranty provides that any Subsidiary of Borrower, although
not a Guarantor thereunder at the time of the initial execution thereof, may
become a Guarantor under the Guaranty upon the delivery to the Agent of a
supplement in substantially the form of this Additional Subsidiaries Supplement;
and
WHEREAS, the undersigned was not a Subsidiary of Borrower on the date of
the Guaranty and, therefore, was not a party to the Guaranty but now desires to
become a Guarantor thereunder;
NOW, THEREFORE, the undersigned hereby agrees as follows:
The undersigned agrees to be bound by all of the provisions of the
Guaranty applicable to a Guarantor thereunder and agrees that it shall, on the
date this Additional Subsidiaries Supplement is accepted by the Agent, become a
Guarantor, for all purposes of the Guaranty to the same extent as if originally
a party thereto with the representations and warranties contained therein being
deemed to be made by the undersigned as of the date hereof.
Unless otherwise defined herein, capitalized terms which are defined in
the Guaranty are used herein as so defined.
IN WITNESS WHEREOF, the undersigned has caused this Additional
Subsidiaries Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
SUPERIOR MERCHANDISE COMPANY,
a Louisiana corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address: 690 E. Lamar
Suite 200
Arlington, Texas 76011-3862
ADDITIONAL SUBSIDIARIES SUPPLEMENT
This ADDITIONAL SUBSIDIARIES SUPPLEMENT, dated August 26, 2004 to the
Subsidiary Guaranty, dated as of June 27, 2001 (as amended, supplemented and
otherwise modified, the "Guaranty", attached hereto as Exhibit A), made by
certain Subsidiaries of Tandy Brands Accessories, Inc., a Delaware corporation
("Borrower"), from time to time parties thereto (collectively, the
"Guarantors").
RECITALS:
WHEREAS, the Guaranty provides that any Subsidiary of Borrower, although
not a Guarantor thereunder at the time of the initial execution thereof, may
become a Guarantor under the Guaranty upon the delivery to the Agent of a
supplement in substantially the form of this Additional Subsidiaries Supplement;
and
WHEREAS, the undersigned was not a Subsidiary of Borrower on the date of
the Guaranty and, therefore, was not a party to the Guaranty but now desires to
become a Guarantor thereunder;
NOW, THEREFORE, the undersigned hereby agrees as follows:
The undersigned agrees to be bound by all of the provisions of the
Guaranty applicable to a Guarantor thereunder and agrees that it shall, on the
date this Additional Subsidiaries Supplement is accepted by the Agent, become a
Guarantor, for all purposes of the Guaranty to the same extent as if originally
a party thereto with the representations and warranties contained therein being
deemed to be made by the undersigned as of the date hereof.
Unless otherwise defined herein, capitalized terms which are defined in
the Guaranty are used herein as so defined.
IN WITNESS WHEREOF, the undersigned has caused this Additional
Subsidiaries Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
TBAC-ACQUISITION, INC.,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address: 690 E. Lamar
Suite 200
Arlington, Texas 76011-3862