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GLOBAL AMENDMENT NO. 2 TO INTERCREDITOR AGREEMENTS
THIS GLOBAL AMENDMENT NO. 2 TO INTERCREDITOR AGREEMENTS (this "Amendment") is
dated effective as of August 31, 2000, among CROWN CRAFTS, INC. ("Parent"),
CHURCHILL WEAVERS, INC. ("Weavers"), CROWN CRAFTS DESIGNERS, INC. ("Designers"),
CROWN CRAFTS HOME FURNISHINGS, INC. ("Furnishings"), G.W. STORES, INC.
("Stores"), HAMCO, INC. ("Hamco"), CROWN CRAFTS INFANT PRODUCTS, INC.
("Infant"), as successor to Noel Joanna, Inc. ("Joanna") and The Red Calliope
and Associates, Inc. ("Calliope"), WACHOVIA BANK, N.A., Collateral Agent (the
"Collateral Agent") and a Secured Party, Bank of America, N.A., as a Secured
Party, and The Prudential Insurance Company of America, as a Secured Party
(collectively, the "Secured Parties");
WITNESSETH:
WHEREAS, the Collateral Agent and the Secured Parties executed
and delivered those certain Intercreditor Agreements, each dated as of
August 9, 1999 with (i) Parent (the "Parent Intercreditor Agreement"),
(ii) Weavers (the "Weavers Intercreditor Agreement"), (iii) Designers
(the "Designers Intercreditor Agreement"), Furnishings (the
"Furnishings Intercreditor Agreement"), Stores (the "Stores
Intercreditor Agreement"), Hamco (the "Hamco Intercreditor Agreement"),
Infant, as successor to Joanna and Calliope under the Intercreditor
Agreements with such entities (collectively, the "Infant Intercreditor
Agreement"), as amended by Global Amendment No. 1 to Intercreditor
Agreements dated effective as of February 23, 2000 (as so amended, the
("Intercreditor Agreements"); and
WHEREAS, each Company has requested and the Collateral Agent and the Secured
Parties have agreed to certain amendments to certain provisions in the
Intercreditor Agreement with it, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged by the parties hereto, each Company, the Collateral Agent and the
Secured Parties hereby covenant and agree as follows, as to each of the
Intercreditor Agreements:
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1. Definitions. Unless otherwise specifically defined herein,
each term used herein which is defined in the Intercreditor Agreements shall
have the meaning assigned to such term in the Intercreditor Agreements. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Intercreditor Agreements shall from and after the
date hereof refer to the Intercreditor Agreements as amended hereby.
2. Amendments to Intercreditor Agreement.
(a) The following new definitions are hereby added to
Section 1 of the Intercreditor Agreement in proper alphabetical order:
"Wachovia LC's" has the meaning set forth in
Section 32.
"Wachovia LC Cash Collateral" has the meaning set
forth in Section 32.
(b) The following definitions contained in Section 1 of
the Intercreditor Agreement are hereby amended and restated in their
entirety in proper alphabetical order:
"Collateral" means (i) the "Collateral" defined in
the Security Agreement; (ii) the "Collateral" defined in the
Factoring Balances Agreement; (iii) the "Collateral" defined
in the Pledge Agreement; and (iv) the "Collateral" defined in
the Mortgages; provided, that notwithstanding anything to the
contrary in the Security Agreement or the Transaction
Documents, the term "Collateral" shall not include the
Wachovia LC Cash Collateral.
(c) A new Section 32 is hereby added to the Intercreditor
Agreement as follows:
32. Certain Agreements Arising From August
31, 2000 Amendments. The Secured Parties have each amended
their respective Transaction Documents (collectively, the
"August 2000 Transaction Document Amendments"), consisting of
(i) as to each of Wachovia and Bank of America, an Amendment
No. 4 to Revolving Credit Agreement, and (ii) as to
Prudential, an Amendment of 1995 Note Agreement, in each case
dated as of August 31, 2000, and each Secured Party hereby
approves the August 2000 Transaction Document Amendments. As a
result of and in order to reflect the understanding of the
parties contained in the August 2000 Transaction Document
Amendments, the Secured Parties desire to include in this
Intercreditor Agreement the provisions of this Section 32, and
the Company consents and agrees to the terms and provisions
set forth herein. In the event of any conflict between the
provisions of this Section 32 and any other provision of this
Intercreditor Agreement, the provisions of this Section 32
shall govern and control.
(a) With respect to all outstanding letters of
credit issued by Wachovia for the account of the Borrower,
whether outstanding on August 31, 2000 or
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thereafter issued (the "Wachovia LC's"), the August 2000
Transaction Document with Wachovia provides that: (i) on or
before the effective date of the August 2000 Transaction
Documents Amendments, Crown Crafts, Inc. would either cause to
be surrendered to Wachovia for cancellation the Wachovia LC
issued in connection with worker's compensation claims (the
"Worker's Comp LC") in the stated amount of $795,842 or
provide to Wachovia cash collateral in an amount equal to such
stated amount; and (ii) as to all other Wachovia LC's (the
"Other LC's"), (x) those which currently expire prior to
October 31, 2000 shall be permitted to expire, and (y) as to
those which have not expired by October 31, 2000, on such
date, and as to those issued after the Fourth Amendment
Effective Date, on the date of issuance, Crown Crafts, Inc.
shall either cause to be surrendered to Wachovia for
cancellation such unexpired Other LC's or provide to Wachovia
cash collateral in an amount equal to the lesser of (x) the
maximum amount available to be drawn thereunder and (y) an
amount which, together with the amount of cash collateral
provided for the Worker's Comp LC pursuant to clause (i)
above, does not exceed $2,700,000 (the "Cash Collateral
Amount"), and the aggregate stated amount of all Wachovia LC's
for which cash collateral is required pursuant to the
foregoing shall not exceed the Cash Collateral Amount.
(b) The August 2000 Transaction Document
Amendments further provide that except as to any Discretionary
Loans, notwithstanding any provision to the contrary contained
in any of the Transaction Documents or this Intercreditor
Agreement, Crown Crafts may not make any principal payments to
any of Secured Parties other than pro-rata principal payments,
and each Secured Party's pro-rata share shall be calculated as
provided in paragraph (c) of this Section 32, and each of the
Secured Parties acknowledges and agrees to the foregoing as
part of their understanding under this Intercreditor
Agreement.
(c) The August 2000 Transaction Document
Amendments further provide that Crown Crafts, Inc. shall make
payments of principal outstanding on the Senior Debt to the
Secured Parties, prorata, based on the principal amounts of
Senior Debt held by each of them, in the following amounts on
or before the dates set forth below (the "Mandatory Senior
Debt Payments"):
Payment Date Payment Amount
December 8, 2000 $ 7,000,000
December 31, 2000 $ 4,000,000
February 4, 2001 $ 3,000,000
March 4, 2001 $ 2,000,000
April 1, 2001 $ 3,000,000
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Total $19,000,000
Each of the Secured Parties acknowledges and agrees to the
foregoing as part of their understanding under this
Intercreditor Agreement and Prudential hereby agrees,
notwithstanding anything to the contrary contained in this
Intercreditor Agreement, the Security Agreement or the
Transaction Documents, in connection
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with any principal payments made to Prudential (either on a
voluntary basis, on account of the mandatory reductions in
Senior Debt required by the August 2000 Transaction Document
Amendments or from Net Proceeds or pursuant to this
Intercreditor Agreement), no Yield-Maintenance Amount (as
defined in the Prudential Note Agreement) shall accrue or be
payable with respect thereto as to such principal payments
made after the date of the August 2000 Transaction Documents
Amendments not in excess of an aggregate of $7,142,856, and as
to such principal payments made after the date of the August
2000 Transaction Document Amendments in excess of an aggregate
of $7,142,856 (including any payments made at maturity, by
acceleration or otherwise), the Yield-Maintenance Amount with
respect thereto (calculated without taking into account the
shortening of maturity and the change in interest rate
pursuant to the August 2000 Transaction Document Amendments)
shall accrue with respect thereto. Prior to maturity (whether
by acceleration or otherwise), each payment made to the
Secured Parties shall be made on a prorata basis, based solely
on the principal amounts outstanding on such date, but
Prudential shall be entitled to apply its share thereof to its
Yield-Maintenance Amount determined on its principal amount
outstanding immediately prior to receipt of such payment and,
to the extent Prudential does make such application to its
interest or to its Yield-Maintenance Amount and, if applied to
its Yield-Maintenance Amount and the amount of such
Yield-Maintenance Amount is calculated on a treasury rate
basis (as set forth in Paragraph 10A of the Prudential Note
Agreement) which is lower than such treasury rate basis would
have been if calculated on August 31, 2000, then to the extent
of the difference, the other Secured Parties shall be entitled
to apply their payments to interest or other costs (or to then
there are none, held as cash collateral, not subject to
sharing hereunder, for future such application). Upon such
maturity of the Senior Debt (whether by acceleration or
otherwise), notwithstanding any provision of this
Intercreditor Agreement to the contrary, any distributions on
account of the Senior Debt shall be made on a prorata basis,
determined as follows: (i) based solely on the principal
amount outstanding on such date, until distributions have been
made in an aggregate amount equal to such principal amount
outstanding; and (ii) thereafter, based on the aggregate
amount of each Secured Parties' remaining Claim (including,
interest, fees, costs and Prudential's Yield-Maintenance
Amount).
(d) The August 2000 Transaction Document
Amendments further provide that the Company shall make a
prepayment of principal amount of the Senior Debt from the Net
Proceeds of each Restricted Asset Disposition and each Capital
Market Transaction (as those terms are defined in the
Transaction Documents), except that such Net Proceeds shall
(i) be payable to the Collateral Agent as and when the
aggregate amount thereof since the last such payment of Net
Proceeds pursuant thereto is equal to or in excess of $50,000,
and (ii) be applied to reduce the amount of Mandatory Senior
Debt Payments required to be made pursuant to paragraph (c)
above, with such applications being applied in the order of
maturity of the Payment Dates set forth in paragraph (c)
above. The Company and the Secured Parties hereby agree that
such amounts paid to the
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Collateral Agent shall be held by the Collateral Agent, for
the ratable benefit of the Secured Parties, and distributed to
the Secured Parties as and when the aggregate amount held by
it is at least equal to $250,000, or at such earlier time as
the Secured Parties may agree upon and so instruct the
Collateral Agent, all pursuant to the provisions of this
Section 32.
(e) The August 2000 Transaction Document
Amendments further provide that by October 2, 2000, the
Secured Parties (or their affiliate designees) without any
further consideration payable, shall receive warrants,
exercisable at nominal cost for Crown Crafts, Inc.'s common
stock such that upon issuance the Secured Parties,
collectively, shall own 10% (divided among the Secured Parties
pro rata, according to the following percentages: 19.63% to
Bank of America 33.88% to Prudential; and 46.49% to Wachovia,
which percentages were determined without taking into account
any outstanding Wachovia LC's and shall be applicable so long
as, on the issuance date, cash collateral required to have
been provided for such Wachovia LC's as of such date pursuant
to Section 8.18 of the August 2000 Transaction Document
Amendment with Wachovia has been provided, but shall be
subject to adjustment to the extent such required cash
collateral has not so been provided) of Crown Crafts, Inc.'s
then issued and outstanding common stock exercisable any time
after issuance, but not later than December 31, 2005. Such
warrants (the "Warrants") shall be accompanied by a warrant
holders rights agreement providing each of the Secured Parties
with customary registration "call," "put," "clawback",
antidilution provisions (including with respect to the
exercise of options outstanding on August 31, 2000) )and
similar rights acceptable to each of the Secured Parties.
However, the Secured Parties have agreed and hereby agree, on
a pro rata basis, to extinguish (return) the Warrants,
unexercised, at a rate equal to 2% of such outstanding
Warrants (to the extent not previously exercised) for each 1%
of the amount by which the principal balance of the Senior
Debt outstanding on the August 31, 2000 is reduced by
principal payments made after such date. Each of the Secured
Parties hereby agrees that it will not amend or modify its
Warrant without the written consent of the other Secured
Parties.
3. Effect of Amendment. Except as set forth expressly
hereinabove, all terms of the Intercreditor Agreement shall be and remain in
full force and effect, and shall constitute the legal, valid, binding and
enforceable obligations of the parties thereto. The agreements contained herein
shall be deemed to have prospective application only, unless otherwise
specifically stated herein.
4. Ratification. Each of the parties to the Intercreditor
Agreement hereby restates, ratifies and reaffirms each and every term, covenant
and condition set forth in the Intercreditor Agreement effective as of the date
hereof.
5. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and
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delivered shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same instrument.
6. Section References. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
7. Governing Law. This Amendment shall be governed by and
construed and interpreted in accordance with, the laws of the State of Georgia.
8. Conditions Precedent. This Amendment shall become effective
only upon execution and delivery of this Amendment by each of the parties hereto
and the effectiveness of each of the August 2000 Transaction Document Amendments
in accordance with their respective terms.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
first above written.
COMPANY: CROWN CRAFTS, INC.
By:
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Title:
COMPANY: CHURCHILL WEAVERS, INC.
By:
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Title:
COMPANY: CROWN CRAFTS DESIGNERS, INC.
By:
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Title:
COMPANY: CROWN CRAFTS HOME FURNISHINGS,
INC.
By:
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Title:
COMPANY: G.W. STORES, INC.
By:
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Title:
COMPANY: HAMCO, INC.
By:
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Title:
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COMPANY: CROWN CRAFTS INFANT PRODUCTS, INC.
By:
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Title:
COLLATERAL AGENT: WACHOVIA BANK, N.A., as Collateral Agent
By:
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Title:
SECURED PARTIES: WACHOVIA BANK, N.A., as a Secured Party,
By:
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Title:
BANK OF AMERICA, N.A., as a Secured Party
By:
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Title:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, as a Secured Party
By:
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Title:
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