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EXHIBIT 10(a)(VIII)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
Four Gateway Center
Newark, New Jersey 07102
October 12, 1995
CROWN CRAFTS, INC.
1600 Riveredge Parkway
Suite 200
Atlanta, Georgia 30328
Attention: Robert E. Schnelle
Treasurer
Ladies and Gentlemen:
This letter is to amend the Note Agreement dated December 18, 1990
between Crown Crafts, Inc. (the "Company") and The Prudential Insurance Company
of America ("Prudential") pursuant to which the Company issued and Prudential
purchased the Company's 9.22% promissory notes in the original principal amount
of $15,000,000 (as previously amended, the "Note Agreement"). Capitalized
terms used herein without definition have the meanings ascribed to such terms
in the Note Agreement.
Pursuant to paragraph 11C of the Note Agreement, Prudential and the
Company hereby agree as follows:
1. Paragraph 4 of the Note Agreement is hereby amended and
restated in its entirety as follows:
"4. PREPAYMENTS. The Notes shall be subject to required
prepayment as and to the extent provided in paragraph 4A. The Notes
shall also be subject to prepayment under the circumstances set forth
in paragraphs 4B and 4D. Any prepayment made by the Company pursuant
to any other provision of this paragraph 4 shall not reduce or
otherwise affect its obligation to make any required prepayment as
specified in paragraph 4A.
4A. REQUIRED PREPAYMENTS OF NOTES. Until the Notes shall
be paid in full, the Company shall apply to the prepayment of the
Notes, without Yield-Maintenance Amount, the sum of $2,500,000 on May
15 and November 15 in each of the years 1994 through 1995, and
$2,500,000 on May 15, 1996, and such principal amounts of the Notes,
together with interest thereon to the payment dates, shall
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CROWN CRAFTS, INC.
October 12, 1995
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become due on such payment dates. The remaining unpaid principal
amount of the Notes, together with interest accrued thereon, shall
become due on the maturity date of the Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.
The Notes shall be subject to prepayment, in whole at any time or from
time to time in part (in integral multiples of $100,000 and in a
minimum amount of $1,000,000), at the option of the Company, at 100%
of the principal amount so prepaid plus interest thereon to the
prepayment date and the Yield-Maintenance Amount, if any, with respect
to each such Note. Any partial prepayment of the Notes pursuant to
this paragraph 4B shall be applied in satisfaction of required
payments of principal in inverse order of their scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall
give the holder of each Note to be prepaid pursuant to paragraph 4B
irrevocable written notice of such prepayment not less than 10
Business Days prior to the prepayment date, specifying such prepayment
date, the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of the Notes held by such holder to be
prepaid on that date and that such prepayment is to be made pursuant
to paragraph 4B. Notice of prepayment having been given as aforesaid,
the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due
and payable on such prepayment date. The Company shall, on or before
the day on which it gives written notice of any prepayment pursuant to
paragraph 4B, give telephonic notice of the principal amount of the
Notes to be prepaid and the prepayment date to each Significant Holder
which shall have designated a recipient for such notices on the
Purchaser Schedule attached hereto or by notice in writing to the
Company.
4D. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL. The
Company shall give written notice to each holder of a Note of the
occurrence of any Change of Control within 10 days after such
occurrence (which notice is herein referred to as the "CONTROL CHANGE
NOTICE"). A Control Change Notice shall be given by facsimile
communication confirmed by overnight courier sent on the same day of
such facsimile transmission and contain reasonable detail describing
the Change of Control and an offer by the Company to prepay 100% of
such holder's Notes on a closing date designated in such Control
Change Notice, which closing date shall be not less than 30 days or
more than 60 days after the date of such notice (such closing date
being hereinafter referred to as the "CONTROL CHANGE PREPAYMENT
DATE"). Such Control Change Notice shall also provide that each
holder of a Note may accept such offer of prepayment by notice to the
Company not more than 25 days after the
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CROWN CRAFTS, INC.
October 12, 1995
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date of such Control Change Notice. Failure of any holder of Notes to
respond to any offer to prepay pursuant to this paragraph 4D shall
constitute an acceptance of such offer. The Company shall prepay all
of the Notes on the Control Change Prepayment Date of any holder which
has timely accepted (or which has been deemed to have accepted) the
offer of prepayment at a price equal to 100% of the principal amount
of the Notes to be prepaid, plus accrued interest thereon to the
Control Change Prepayment Date plus the Yield-Maintenance Amount, if
any, in respect of each Note to be prepaid.
For purposes of this paragraph 4D, "CHANGE OF CONTROL" shall mean the
acquisition after the date of this Agreement by any Person (as such
term is used in section 13(d) and section 14(d)(2) of the Securities
Exchange Act of 1934 as in effect on the date of this Agreement (the
"Exchange Act") or related persons constituting a group (as such term
is used in Rule 13d-5 under Exchange Act), other than any member of
the Management Group, of beneficial ownership (as such term is used
under Rule 13d-3 under the Exchange Act) directly or indirectly of
Voting Stock sufficient to elect or cause the election of at least a
majority of the Company's Board of Directors, "MANAGEMENT GROUP" shall
mean, collectively, the Company's Employee Stock Ownership Plan and
the officers and directors of the Company and "VOTING STOCK" shall
mean, with respect to any corporation, any shares of stock of such
corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective
of whether at the time stock of any other class or classes shall have
or might have voting power by reason of the happening of any
contingency).
4E. APPLICATION OF REQUIRED PREPAYMENTS. In the case of
each prepayment of less than the entire unpaid principal amount of all
outstanding Notes pursuant to paragraphs 4A or 4D, the amount to be
prepaid shall be applied pro rata to all outstanding Notes (including,
for the purpose of this paragraph 4E only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or
any of its Subsidiaries or Affiliates other than by prepayment
pursuant to paragraph 4A or 4D) according to the respective unpaid
principal amounts thereof.
4F. RETIREMENT OF NOTES. The Company shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to paragraphs 4A or 4D or
upon acceleration of such final maturity pursuant to paragraph 7A), or
purchase or otherwise acquire, directly or indirectly, Notes held by
any holder unless the Company or such Subsidiary or Affiliate shall
have offered to prepay or otherwise retire or purchase or otherwise
acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the
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October 12, 1995
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time outstanding upon the same terms and conditions. Any Notes so
prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates shall not be deemed
to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4E."
2. Paragraphs 5A, 5B, 5C, 5D, 5E, 6A, 6B, 6C, 6D and 7A(iii) of
the Note Agreement are hereby deleted and the provisions of paragraphs 5A, 5B,
5C, 5D, 5E, 6A, 6B, 6C, 6D and 7A(iii) of the 1995 Agreement (as defined below)
are hereby incorporated by reference into the Note Agreement together with all
terms defined in the Note Agreement and used in such provisions (other than the
terms "Required Holders," "Significant Holder" and "Authorized Officer" which
shall have the meanings set forth in the Note Agreement as amended hereby)(the
"Incorporated Provisions"). The Company will, and will cause its Subsidiaries
to, comply with the Incorporated Provisions irrespective of any termination,
modification, amendment, consent or waiver relating to such provisions under
the 1995 Note Agreement and irrespective of whether any promissory notes issued
under the 1995 Note Agreement remain outstanding. For purposes hereof, the term
"1995 Note Agreement" shall mean the Note Purchase and Private Shelf Agreement
dated as of October 12, 1995 between the Company and Prudential and each
Prudential Affiliate (as defined therein) that becomes a party thereto.
3. Paragraphs 10L, 10N, 10O, 10P, 10Q, 10R and 10S of the Note
Agreement are hereby amended and restated in their entirety as follows:
"10L. "REMAINING AVERAGE LIFE" shall mean, with respect to
the Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) each Remaining Scheduled Payment of such Called Principal (but not
of interest thereon) by (b) the number of years (calculated to the
nearest one-twelfth year) which will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment."
"10N. "CALLED PRINCIPAL" shall mean, with respect to any
Note, the principal of such Note that is to be prepaid pursuant to
paragraph 4B or 4D or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires."
"10O. "DISCOUNTED VALUE" shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (as converted to reflect
the periodic basis
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October 12, 1995
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on which interest on such Note is payable, if payable other than on a
semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal."
"10P "REINVESTMENT YIELD" shall mean, with respect to the
Called Principal of any Note, the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City local time) on the
Business Day next preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 678" on the
Telerate Service (or such other display as may replace page 678 on the
Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall
not be ascertainable, (ii) the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields have been so
reported as of the Business Day next preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between yields reported for various
maturities."
"10Q. "REMAINING SCHEDULED PAYMENTS" shall mean, with respect
to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no payment of
such Called Principal were made prior to its scheduled due date."
"10R. "SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to paragraphs 4B or 4D or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context
requires."
"10S. "YIELD-MAINTENANCE AMOUNT" shall mean, with respect to
any Note, an amount equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i) such
Called Principal plus (ii) interest accrued thereon as of (including
interest due on) the Settlement Date with respect to such Called
Principal. The Yield-Maintenance Amount shall in no event be less
than zero."
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4. Paragraph 7A of the Note Agreement is hereby amended by
deleting each reference to "Yield Maintenance Premium" contained therein and
inserting in lieu thereof the term "Yield-Maintenance Amount."
5. Clause (iii) of paragraph 7A of the Note Agreement is hereby
amended by deleting the reference to "$350,000" and inserting in lieu thereof
"$1,000,000".
6. The Note Agreement is hereby amended to add a new paragraph
10AA as follows:
"10AA. "AUTHORIZED OFFICER" shall mean the chief executive
officer, chief financial officer or treasurer of the Company."
7. The Purchaser Schedule attached to the Note Agreement is
hereby replaced with Exhibit A attached hereto.
Except as modified hereby, the terms and conditions of the Note
Agreement shall remain in full force and effect.
If you agree with the foregoing, please sign the enclosed counterparts
of this letter and return them to us, at which time this letter shall become a
binding agreement between the Company and Prudential as of the date first above
written.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Thomas Cecka
--------------------------
Vice President
The foregoing is Agreed to and Accepted
as of the date first above written
CROWN CRAFTS, INC.
By: /s/ Robert E. Schnelle
----------------------
Robert E. Schnelle
Treasurer
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EXHIBIT A
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $15,000,000 $15,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to 9.22% Senior Notes
due 1996, Security No. !Inv. 1242! and the due date
and application (as among principal, interest and
Yield-Maintenance Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment Structure and Pricing
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(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1230 Peachtree Street, N.E.
Suite 2525
Atlanta, Georgia 30309
Attention: Managing Director
(4) Recipient of telephone prepayment notices:
Manager, Investment Structure and Pricing
(201) 802-6429
(5) Tax Identification No.: 22-1211670